2017 Half Year Investors/Analysts Presentation
Outline Outline Macro-economic Macro-economic Review Review Overview of HY 2017 Overview of HY 2017 HY 2017 Performance HY 2017 Performance Review Review Business Segments and Subsidiary Review Business Segments and Subsidiary Review Guidance and Plans for H2 2017 Guidance and Plans for H2 2017
Macro-economic Review
Macro-economic Review for HY 2017 Economic Performance Q3 ‘16 Q4 ‘16 Q1 ‘17 Q2 ‘17 Q1 ‘16 Q2 ‘16 The Federal Government launched its Economic Recovery and Growth Plan (ERGP) in April 2017 aimed at addressing the huge infrastructural GDP Growth deficit, attain food security and promote industrialization driven by the Rate (%) private sector. There was improvement in economic activity following increase in foreign 0.15%e* -0.36% -0.50% -1.30% -2.06% -2.24% exchange liquidity owing to the introduction of the Investors and Exporters’ window in April 2017 with over USD4billion in trades recorded till date. The economy is projected to return to positive growth in Q2 2017 17.50% 18.60% 17.26% 16.50% 16.10% following a 0.52% contraction in Q1 and five (5) consecutive quarters of 12.80% negative growth. Inflation Rate Oil Price and External Reserves y-o-y (%) Nigeria’s crude oil production hit 2.025 mbpd in June 2017, following the suspension of hostilities in the Niger Delta and the lifting of restrictions of exports from the Forcados terminal. 56.1 52.8 48.4 49.1 47.9 Oil prices climbed back up to c.USD49 mbpd in the wake of the decision by 40.4 OPEC and non-OPEC members to extend production cuts by another nine Brent Prices (9) months to March 2018. US$/Barrel Nigeria’s external reserves increased by 16.1% (USD4.2 billion) from USD26.09 billion as at January 2, 2017 to USD30.29 billion in June 2017 following the increased crude receipts. Average 91 days T/Bills yield Average 1-year T/Bills yield 23.04% 22.70% 22.77% 21.46% Inflation, Interest Rate and Exchange Rate 13.99% 13.18% 14.23% 9.98% Headline inflation moderated for the fifth consecutive month to 16.1% in 14.35% 14.53% Average 91-day and 1-year 5.07% June 2017 largely as a result of base effect. The inflation rate was 18.72% T/Bills Yield (%) 8.18% in January 2017. PARALLEL NIFEX CBN/INTERBANK Fixed income yields moderated slightly but remained elevated as a result FX Rate N/$ 485 475 of continued tight monetary policy environment during the period. Exchange rate stability improved during the period following the 394 366 353 introduction of the Investors and Exporters window in April 2017. This 323 322.25 315 314.62 resulted in an increase in supply of foreign exchange and a 13% 325 283 appreciation in autonomous rates. 305 305.9 199 305.25 306.35 282.5 5 * - the economy is expected to grow by 0.15% in Q2 2017 Sources: CBN, Bloomberg, National Bureau of Statistics, 197.5
Overview of HY 2017 • CBN's new guide to charges by banks and other • CBN maintains status quo at January 2017 financial institutions becomes effective. MPC meeting. • National Assembly passed 2017 Budget of • CBN announces first Secondary Market N7.441trillion into law. Intervention Sales (SMIS) auction for the • • Inflation drops to 16.25% from 17.24% reported CBN drops FOREX Rate for Invisibles to year in April 2017 N360/$1 from N375/$1; Pumps $185m into • World Bank projects 1% growth rate for • Nigerian economy contracts by -0.52% in Q1 FOREX Market Nigeria in 2017. • 2017 CBN maintains status quo at March 2017 • Headline inflation increased slightly to • CBN maintains status quo at May 2017 MPC MPC meeting 18.72% from 18.6% reported in December • meeting Inflation rate drops further to 17.26% from 2016. • Senate passes Petroleum Industry Governance 17.78% reported in February 2017 Bill, first of four to replace the PIB. • • CBN alters the guidelines for selection of FX Primary CBN sold US$660million in 3 and 5 months currency • dealers (FxPD) as new flexible exchange rate regime forwards to clear backlog of dollar demands for CBN directs all banks to pay dollar cash over- becomes effective manufacturing, airlines, agriculture, petroleum sector the-counter. • CBN introduces new FX circular to ease restrictions • etc. President Buhari launches Nigerian Economic and further deepen the market • Nigeria's 15-yr US$1 billion Eurobond notes priced at Recovery and Growth Plan (NERGP). • Unemployment rises to 14.2% in Q2-2017 • 7.875% oversubscribed by $7.8billon (800%). CBN opens special FX window to sell a • Headline inflation was 16.10%, 15 bps down from • Deposit Money Banks (DMB) agree to contribute 5% maximum of US$20,000 per quarter for SMEs 16.25% reported in May 2017 • of their PAT to fund projects meant to drive export. CBN directs banks to remit 5% PAT into • CBN releases new guidelines for FX transactions for Agro/SME Investment scheme (AGSMEIS) • invisibles. PTA/BTA/School fees/Medicals. CBN created a special FX window for • CBN directs banks to sell FX for invisible transactions Investors, exporters and end users. • (e.g. PTA, BTA, School and medical fees etc.) and CBN extends BVN registration exercise for pegged the rate at N375/$ microfinance banks 6
Half Year 2017 Financial Performance Review
Key Performance Ratios Six months ended June 30, 2016 Six months ended June 30, 2017 Net Interest Margin 8.40% 10.42% Cost to Income 40.00% 39.00% 23.10% 18.25% Capital Adequacy 36.87% 48.52% Liquidity 67.06% Loans to Deposits and Borrowings 62.70% Return on Equity (post tax) 33.35% 32.09% Return on Assets (post tax) 5.27% 5.27% 3.71% NPL to Total Loans 4.39% 0.45% Cost of Risk 2.48% Coverage (with Reg. Risk 170.11% 222.94% Reserve) 7
Balance Sheet Snapshot - Group HY 2017 – 3,232.2 HY 2017 – 2,694.2 HY 2017 – 538.0 FY 2016 – 3,116.4 FY 2016 – 2,611.5 FY 2016 – 504.9 3.2% 6.6% 3.7% Total Equity (N ’Bn ) Total Assets (N ’Bn ) Total Liabilities (N ’Bn ) HY 2017 – 690.8 HY 2017 – 1,966.4 HY 2017 – 1,490.8 FY 2016 – 588.5 FY 2016 – 1,986.2 FY 2016 – 1,590.1 (6.2%) (1.0%) 17.4% Customers’ Deposits Total Loans and Investment Securities (N ’Bn ) Advances (N ’Bn ) (N ’Bn ) HY 2017 – 30 HY 2017 – 296 HY 2016 – 25 20% 16.5% HY 2016 – 254 Interim Dividend EPS (Kobo) (Kobo) 8
Balance Sheet Group Group Y-t-d Group Group Y-t-d In millions of Nigerian Naira Jun-2017 Dec-2016 % change Liabilities Deposits from banks 55,608 125,068 -56% In millions of Nigerian Naira Jun-2017 Dec-2016 % change Deposits from customers 1,966,376 1,986,246 -1% Financial liabilities held for trading 10,388 2,065 403% Derivative financial liabilities 639 988 -35% Other liabilities 272,052 115,682 135% Assets Current income tax liabilities 20,136 17,928 12% Cash and cash equivalents 513,291 455,863 13% Deferred tax liabilities 13,511 17,641 -23% Debt securities issued 128,005 126,238 1% Financial assets held for trading 14,728 12,054 22% Other borrowed funds 227,524 219,634 4% Derivative financial assets 691 1,042 -34% Total liabilities 2,694,240 2,611,491 3% Investment securities: – Available for sale 524,558 448,057 17% Equity Capital and reserves attributable to equity – Held to maturity 87,399 80,156 9% holders of the parent entity Assets pledged as collateral 64,076 48,216 33% Share capital 14,716 14,716 0% Loans and advances to banks 797 654 22% Share premium 123,471 123,471 0% Treasury shares (5,291) (5,291) 0% Loans and advances to customers 1,489,958 1,589,430 -6% Retained earnings 97,140 90,274 8% Property and equipment 93,164 93,488 0% Other components of equity 297,827 272,891 9% Intangible assets 14,035 13,859 1% Total equity attributable to owners of the Parent 527,862 496,060 6% Deferred tax assets 1,676 1,578 6% Non-controlling interests in equity 10,135 8,843 15% Restricted deposits & other assets 427,864 371,996 15% Total equity 537,998 504,903 7% Total assets 3,232,238 3,116,393 4% Total equity and liabilities 3,232,238 3,116,393 4% 9
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