INVESTORS CALL PRESENTATION HALF YEAR 2017 RESULTS POSITIONED FOR RECOVERY AND GROWTH

Transcription

1 INVESTORS CALL PRESENTATION HALF YEAR 2017 RESULTS POSITIONED FOR RECOVERY AND GROWTH

2 This presentation contains or incorporates by reference forward-looking statements regarding the belief or current expectations of Diamond Bank, the Directors and other members of its senior management about the Group s businesses and the transactions described in this presentation. Generally, words such as could, will, expect, intend, anticipate, believe, plan, seek or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and/or its Group and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation. Any forward-looking statement contained in this presentation based on past or current trends and/or activities of Diamond Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company. Each forward-looking statement speaks only as of the date of the particular statement. Diamond Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Diamond Bank s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 2

3 OVERVIEW STRATEGY & BUSINESS UPDATE H RESULTS & ANALYSIS 2017 OUTLOOK & CONCLUSION UZOMA DOZIE CEO UZOMA DOZIE CEO CHIUGO NDUBISI CFO UZOMA DOZIE CEO Q&A 3

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5 Key strengths: - Harnessing the power and potentials of technology and data to connect people and markets. - Leading digital transformation in response to changing consumer lifestyles. - New and existing partnerships with third parties to broaden access to financial services. - Setting new governance benchmarks. Countries where we operate (number of branches) Total Assets Total Equity Nigeria (279), Benin (23), Cote d Ivoire (9), Senegal (9), Togo (10) and UK (1) N2.1 trillion N238.1 billion Key partnerships: MTN Diamond Y ello WWB BETA Banking USAID Mediloan IFC MSME Banking Interswitch Payments Visa Debit & Credit Cards Gates Foundation Financial inclusion ATMs/POS 1,121/16,330 Ratings S&P: B-; Fitch: BB+; GCR: BBB+ Group Head Count 3,429 Share Holding (%) 17.75% Market Capitalization* N28.7bn 61.95% 9.25% 4.95% 6.10% Listing Nigerian Stock Exchange (2005) Ticker (Bloomberg) DIAMONDBNK:NL London Stock Exchange (2008) Ticker (Bloomberg) DBPA:LI Carlyle Kunoch Mr and Mrs. Dozie Diamond Partners Free Float Auditors KPMG Professional Services * Bank, As at June 30,

6 MACRO ECONOMIC ENVIRONMENT CENTRAL BANK OF NIGERIA (CBN) CREATED A SPECIAL FOREX WINDOW (NAFEX) DEDICATED TO INVESTORS FOREX MANAGEMENT FRAMEWORK REMAINED TIGHT AS A RESULT OF SCARCITY IN 2017 THE NATIONAL ASSEMBLY PASSED A RECORD BUDGET BILL FOR 2017; TAX REVENUES ARE ON THE RISE REAL GDP CONTRACTED FURTHER BY 0.52%; FIFTH CONSECUTIVE QUARTER OF DECLINE FEDERAL GOVERNMENT SIGNED EXECUTIVE ORDER TO IMPROVE EASE OF DOING BUSINESS IN NIGERIA INCREASE IN UNEMPLOYMENT RATE RISES FROM 13.9% TO 14.2% IMPAIRMENT CHARGE INCREASE PETROLEUM SLIGHTLY YEAR INDUSTRY ON YEAR GOVERNANCE BILL, PASSED BY THE SENATE RISE IN OIL PRICES MODERATED WITH DECLINE IN SOME MONTHS 6

7 FINANCIAL YEAR 2017: KEY DEVELOPMENTS GROSS INCOME INCREASED YEAR ON YEAR DUE TO HIGHER INTEREST INCOME. NIR DECLINED SHARPENED FOCUS ON TRADE AND ADC UPTAKE TO IMPROVE NIR OPERATING EXPENSE INCREASED YEAR ON YEAR DUE TO INFLATIONARY PRESSURES REVIEW OF KEY EXPENSE LINES AND ADOPTION OF TECHNOLOGY TO DRIVE EFFICIENCIES IMPAIRMENT CHARGE INCREASED SLIGHTLY YEAR ON YEAR POSITIVE OUTCOMES FROM STRENGTHENED RISK MANAGEMENT ARE COMING THROUGH 7

8 FINANCIAL YEAR 2017: KEY DEVELOPMENTS RETAIL DEPOSITS DROP FROM N727 BN IN DEC 2016 TO N709BN IN JUNE 2017 MIGRATION TO HIGH PRICED GOVT SECURITIES TAKE TOLL BUT ACTION IS UNDERWAY TO BOLSTER DEPOSIT CORPORATE LOANS RISE TO N780BN BY END OF JUN 2017 VERSUS N745BN END OF DEC 2016 NAIRA DEVALUATION EFFECTS STILL EVIDENT BUT NEW RELATIONSHIPS HAVE ALSO DRIVEN VOLUME CORPORATE DEPOSITS RISE TO N379BN BY END OF JUN 2017 VERSUS N351BN END OF DEC 2016 AS THE ECONOMY RECOVERS WE EXPECT TO SEE GROWTH IN ALL BUSINESS SEGMENTS 8

9 RETAIL BANKING VALUE CHAIN COST CONTAINMENT IMPROVED UNDERWRITING & RISK MANAGEMENT Technology led customer acquisition and service delivery. Innovation and expansion of service options on ADCs. Spread our footprint without increasing the traditional banking channels. Migrate more customers to the electronic banking channels and cards. Develop additional merchant relationships. Increase volume of asset finance loans and advances. Retain status as a leading agent of financial inclusion. Promoting business synergy between corporate, Retail/MSME and business banking. Connect people and markets. Promote collaboration with ecosystem partners to create value for customers. Improve ADC uptake to reduce cost of branch services. Balance sheet management guided growth to improve efficiency Zero by 2017 Non value adding processes and resources. Reduce cost of funds by leveraging financial inclusion. Strengthen enterprise risk management framework. Improve post disbursement loan monitoring. Focus on recoveries from delinquent or previously written off loans. 9

10 STRATEGY AND BUSINESS UPDATE UZOMA DOZIE, CEO

11 RETAIL BANKING: DELIVERING THE STRATEGY PERFORMANCE SNAPSHOT LOANS (GROSS) N80bn N75bn N64bn N60bn N61bn 29% 25% 27% 28% 28% CHANNEL TRANSACTION SPLIT 17% 15% 14% 12% 27% 28% 26% 26% 41% 45% 41% 41% 41% 8% 7% 8% 8% 8% 7% 5% 5% 5% 3% 15% 18% 19% 18% 20% Jun. 16 Sep. 16 Dec. 16 Mar. 17 Jun. 17 Personal Loan Auto Loan & Lease Mortgages MSME Credit Card DEPOSITS N694bn N690bn N727bn N729bn N709bn 13% 10% 9% 9% 4% 87% 90% 91% 91% 96% Jun Sep Dec Mar Jun Low Cost Deposits Fixed Deposits LOANS DEPOSITS CHANNELS SPLIT 50% 52% 55% 58% 6% 6% 5% 4% Q Q Q Q Diamond Online Mobile Banking ATM Branch Retail loan portfolio remained flat Q-on-Q but declined by N20 billion Y-o-Y. This reflects our conservative approach to underwriting and the fact that most of this loans are short term in nature with tenures of less than 12 months. Deposits increased year on year, but decreased quarter on quarter. Competing high priced government securities account for this. Growing transaction volume via Mobile banking shows the positive results of our technology led retail strategy and continued success of migration from traditional banking, to digital banking. 11

12 FASTEST GROWING RETAIL BANK IN NIGERIA FINANCIAL INCLUSION CUSTOMERS 9,510,997 EMERGING BUSINESS CUSTOMERS 304,262 OTHER RETAIL CUSTOMERS 6,620,010 6,878, ,325 5,762,888 Jun Jun Jun Jun Jun Jun AGENT NETWORK 22,775 42,004 Jun Jun NO. OF DEBIT & CREDIT CARDS IN ISSUE 5,529,840 4,675,319 Jun Jun ATM STATISTCS FUTURE FOCUS Number of Active ATMs 1,121 ATM transaction count 68 m ATM income earned N639m Deliver beyond banking and lifestyle products. Drive financial inclusion of the female unbanked population and attract first time bank account customers. Innovative solutions to maximize customer banking convenience. Expand service offerings on our e- payment solutions. 12

13 MOBILE APPS PHONE AIRTIME PURCHASE 10,226,049 7,412,882 8,570,789 2,186,349 1,762,707 4,747,544 3,875,980 6,059,291 8,402,483 3,864,021 3,114,949 6,875,683 Mar Jun Sep Dec Mar Jun Volume (N'000) Count MOBILE APPS BILLS PAYMENT 3,095,104 2,464,265 2,632,359 1,616,708 1,165, , , , , , , ,567 Mar Jun Sep Dec Mar Jun Mobile Banking Our flagship app, Diamond Mobile continues to deliver convenience in banking to our customers. In January 2017, the two millionth customer signed on. Volume (N'000) Count 13

14 BUSINESS BANKING PERFORMANCE SNAPSHOT LOAN (GROSS) N137bn N147bn N116bn N114bn N109bn 1% 1% 1% 1% 1% NUMBER OF BUSINESS BANKING CUSTOMERS 155,546 99% 99% 99% 99% 99% 32,256 Jun Sep Dec Mar Jun Jun Jun Middle Market Others DEPOSITS N186bn 10% N172bn N151bn N144bn N138bn 1% 1% 1% 1% LOANS DEPOSITS Loan volume decreased quarter on quarter, and year on year due to a conservative approach to loan underwriting. Deposits dropped quarter on quarter due to competing high priced government securities. 90% 99% 99% 99% 99% Jun Sep Dec Mar Jun Middle Market Others CUSTOMERS The drop in customer number is due more to internal recategorization, than loss of customers. In total the number of customers at the bank increased. 14

15 CORPORATE BANKING PERFORMANCE SNAPSHOT LOANS (GROSS) N678bn N736bn N745bn N769bn N780bn CUSTOMER COLLECTIONS (N m) 356,516 60% 62% 61% 62% 63% 343,177 16% 16% 16% 15% 15% 24% 22% 23% 23% 22% Jun Sep Dec Mar Jun Jun Jun DEPOSITS Institutional banking Infrastructure & Transport Energy Business N453bn N539bn N351bn N353bn N379bn 38% 27% 25% 24% 43% 30% 25% 22% 25% 26% 37% 31% 43% 50% 54% Jun Sep Dec Mar Jun Institutional banking Infrastructure & Transport Energy Business LOANS DEPOSITS COLLECTIONS Corporate banking loans decreased by 5% Y-o-Y on the basis of conservative asset creation in the challenging economic environment. Deposits have increased since Dec as we leveraged relationships, payment gateways and VCM. Improved collections reflect successes in VCM as we increased share with existing clients and signed on more corporates. 15

16 H RESULTS & ANALYSIS CHIUGO NDUBISI, CFO

17 2017 HALF YEAR FINANCIAL SUMMARY GROSS EARNINGS IMPROVED DRIVEN BY INCREASE IN INTEREST INCOME PROFIT IS UP MARGINALLY MODERATED BY INCREASED IMPAIRMENT CHARGES AND OPERATING EXPENSES TOTAL ASSETS AND GROSS LOANS BOTH IMPROVE YEAR ON YEAR AS DEPOSITS DECLINE SLIGHTLY OPERATING EXPENSE IS UP A FALLOUT OF DEPRECIATED NAIRA VALUE NPL RATIO IS UP BUT IMPLEMENTATION OF NEW FRAMEWORK AND IMPROVED LOAN BOOK WILL CHECK THIS 17

18 FINANCIAL HIGHLIGHTS INCOME STATEMENT JUN N bn JUN N bn CHANGE Gross Revenue Net Interest Income Non-Interest Revenue (NIR) Profit before Tax Profit after Tax % 23.4% (18.0%) 2.9% 2.2% BALANCE SHEET JUN N bn FY 2016 N bn CHANGE Total Assets Gross Loans & Advances Customers Deposits Total Shareholders Fund 2, , , , , , % 1.0% (1.8%) 5.0% KEY RATIOS JUN JUN JUN Net Interest Margin Cost-to-Income Ratio Capital Adequacy Ratio (CAR)* NPL Ratio ROE Cost of Risk EPS 6.4% 62.7% 15.4% 10.5% 8.0% 3.8% 81K 5.6% 61.4% 15.6% 8.9% 8.1% 4.1% 78k 6.5% 65.3% 18.6% 5.0% 11.3% 3.2% 105k *Bank Figures Only See Details in Appendix 18

19 GROSS LOAN BREAKDOWN BY ECONOMIC SECTORS JUN (DEC. 2016) GROSS LOAN BREAKDOWN BY BUSINESS SEGMENTS JUN (DEC. 2016) Oil & Gas 40% (40%) General Comm 16% (16%) 83% Retail 6% (7%) 10% 8% Manufacturing 10% (11%) Business Banking 11% (13%) 16% 7% 1% 1% 2% 1% Real Est & Const 8% (7%) Power & Energy 7% (7%) 11% 6% Corporate Banking 83% (80%) 4% Government 1% (1%) 1% Transportation 1% (1%) Agriculture 2% (2%) GROSS RISK ASSETS (N BN) 40% 9% Education 1% (1%) 1120 Information & Communication 4% (4%) Finance & insurance 1% (2%) Others 9% (8%) Jun Sep Dec Mar Jun

20 NPL BY SECTOR (JUN.2017) NPL BY CLASSIFICATION 11% 45% 4% 1% 9% General Commerce 11% Oil & Gas 45% Real Estate & Construction 4% Finance & Insurance 1% Manufacturing 9% N93.0bn N116.1bn N100.4bn N109.7bn N112.2bn 5% 18% 3% 3% 3% 40% 42% 57% 61% 62% 55% 40% 40% 36% 35% 9% 21% Information & Communication 21% Jun Sep Dec Mar Jun Others 9% Substandard Doubtful Lost NPL BY SECTOR (DEC. 2016) NON PERFORMING LOANS & PROVISIONS (N BN) General Commerce 11% 11% 36% 13% 5% 1% 24% 10% Oil & Gas 36% Real Estate & Construction 5% Finance & Insurance 1% Manufacturing 10% Information & Communication 24% Jun Sep Dec Mar Jun Others 13% Non Performing Loans Provisions 20

21 2017 OUTLOOK & CONCLUSION UZOMA DOZIE, CEO

22 GUIDANCE AND OUTLOOK FOR 2017 GUIDANCE H PERFORMANCE FY 2017 GUIDANCE ROE 8.0% 8.0% Net Interest Margin 6.4% ~ 6.0% Cost to Income Ratio 62.7% ~ 60.0% NPL Ratio 10.5% ~ 10.0% Cost of Risk 3.8% 4.0% Risk Asset Growth 1.0% 5.0% Deposit Growth (1.8%) ~ 5.0% Profit before Tax N10.8 Billion ~ N20 Billion Total Assets N2.1 Trillion ~ N2.2 Trillion 22

23 REITERATION OF TECHNOLOGY-LED RETAIL STRATEGY EFFICIENT ALLOCATION OF ASSETS TO DELIVER OPTIMUM VALUE. MACRO CONDITIONS ARE IMPROVING WITH A CAUTIOUSLY OPTIMISTIC OUTLOOK AHEAD RE-POSITIONING OF THE BANK TO TAKE MAXIMUM ADVANTAGE OF NIGERIA S ECONOMIC RECOVERY 23

24 Q&A

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26 GROUP COMPREHENSIVE INCOME STATEMENT H ACTUAL N BILLION H ACTUAL N BILLION Y-o-Y % Δ GROSS EARNINGS INTEREST INCOME INTEREST EXPENSE (27.4) (17.8) (53.9) NET INTEREST INCOME IMPAIRMENT CHARGE (20.3) (19.0) (6.8) NET INTEREST INCOME (AFTER IMPAIRMENT CHARGE) OTHER INCOME (NET) (18.9) OPERATING INCOME OPERATING EXPENSES (52.1) (47.0) (10.9) PROFIT BEFORE TAX PROFIT AFTER TAX OTHER COMPREHENSIVE INCOME (71.2) TOTAL COMPREHENSIVE INCOME (30.5) 26

27 GROUP STATEMENT OF FINANCIAL POSITION H ACTUAL N BILLION H ACTUAL N BILLION YoY % Δ FY 2016 ACTUAL N BILLION QoQ % Δ CASH & BALANCES WITH CENTRAL BANKS LOANS & ADVANCES TO BANKS LOANS & ADVANCES TO CUSTOMERS INVESTMENTS (25.8) PLEDGED ASSETS OTHER ASSETS FIXED ASSETS & INTANGIBLES DEFERRED TAX ASSET TOTAL ASSETS 2, , DEPOSITS FROM BANKS (4.1) DEPOSITS FROM CUSTOMERS 1, , DERIVATIVE LIABILITY (86.7) OTHER LIABILITIES BORROWINGS LONG TERM DEBT EQUITY TOTAL EQUITY & LIABILITIES 2, , (7.5) (1.1) (8.9) (0.6) , ,424.7 (1.8) 2.2 (90.9) (8.6) ,

28 KEY PERFORMANCE METRICS H FY 2016 H Q FY 2015 H Q FY 2014 NET INTEREST MARGIN (NIM) 6.4% 5.9% 5.6% 5.8% 6.1% 6.5% 6.3% 6.6% COST OF RISK 3.8% 6.3% 4.1% 4.2% 6.7% 3.2% 3.1% 3.4% COST OF FUNDS 3.2% 2.8% 2.5% 3.0% 3.2% 3.2% 3.0% 3.6% COST INCOME RATIO 62.7% 60.3% 61.4% 60.6% 61.0% 65.3% 62.0% 64.6% EPS (ANNUALISED) 81K 15K 78K 100K 24K 105K 123K 166K NET ASSETS PER SHARE (N) ROE (ANNUALISED) 8.0% 1.6% 8.1% 10.6% 2.7% 11.3% 13.4% 14.7% GROSS RISK ASSETS (N BILLION) 1, , , NPL (N BILLION) PROVISIONS (N BILLION) NPL RATIO 10.5% 9.4% 8.9% 7.1% 6.9% 5.0% 5.0% 5.1% NPL COVERAGE RATIO 77.5% 65.0% 61.9% 107.2% 100.4% 87.9% 111.8% 93.3% NPL COVERAGE RATIO (REG. RISK RSRV INCL) 96.7% 93.7% 85.1% 143.2% 138.4% 87.9% 111.8% 93.3% CAR 15.4% 15.0% 15.6% 16.2% 16.3% 18.6% 18.2% 18.4% LIQUIDITY RATIO 35.9% 42.3% 39.8% 52.4% 52.8% 35.7% 37.3% 41.7% 28