Zanaco 2016 Performance & Strategic Direction
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Transcript of Zanaco 2016 Performance & Strategic Direction
Zanaco 2016 Performance & Strategic Direction
Henk MulderManaging Director & CEOZanaco PlcMarch 30th, 2017
Presentation To The 47th Annual General Meeting
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Content
Macro economic highlights
Banking Sector Indicators & Trends
Zanaco Strategic Intent
Conclusion
2017 Significant Developments
Zanaco Performance
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Macro-Economic Highlights
Source: BOZ
• Kwacha steeply depreciated in Nov 2015, thereafter, it remained relatively stable
through-out the FY 2016
• Inflation went up sharply in Nov 2015; and remained high during the most part of 2016,
until quarter 4 when it begun to decline upto reaching single digit level
• Consequently, T-bill rates went up: 26% for 364 days T-bills
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Selected Banking Sector Indicators
Source: BOZ
• Average interbank rate went up-from 15% in 2015 to 21% 2016
• Average lending rates also went up-from 20% to 30% during the same period
• Loans to Deposits Ratio (LDR) declined
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2016 Competitive Landscape (Total Assets & Deposits)
Source: BOZ Prudential numbers
Mkt Size: ZMK 65bn, Zanaco: Mkt Share 13% , # 4
Mkt Size: ZMK 47bn, Zanaco: Mkt Share 13% , # 3
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2016 Competitive Landscape (Revenue & Profit After Tax)
Source: BOZ Prudential numbers
Mkt Size: ZMK 7bn, Zanaco: Mkt Share 16% , # 2
Mkt Size: ZMK 0.99bn, Zanaco: Mkt Share 0% , # 12
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Balance Sheet: Zanaco vs Banking Sector
Source: BOZ Prudential numbers
• CAGR
Zanaco: 11%, 1%, & 6% for deposits, loans & advances, & total assets
Market: 16%, 3%, & 15% for deposits, loans & advances, & total assets
8Source: BOZ, Zanaco MI
Non-Performing Loans (NPLs): Zanaco vs Banking Sector
• Mkt NPLs are trending up
• Zanaco NPLs rising faster than market: erratic electricity & weather patterns adversely
affected the Food & Agriculture portfolio
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Deposits: Zanaco vs Banking Sector
Source: BOZ Prudential numbers
• CAGR
Zanaco: Demand 12%, Saving 4%, Term 25%
Market: Demand 23%, Saving -2%, Term 6%
• Market share for;
Demand deposits remained flat at 12% in 2016
Savings deposits improved from 28% in 2015 to 31% 2016
Term deposits increased from 8% in 2015 to 12% in 2016
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Zanaco Performance: Balance Sheet
Source: 2016 Zanaco Annual Report (IFRS)
• YoY (2015 vs 2016)
NPLs 39%, Capital 4%, L & A -2%, Deposits 4%, Total Assets 3%
• Drivers of Performance
Sector exposure to the Food & Agriculture
Tight liquidity impacted in growth of loan book
11Source: 2016 Zanaco Annual Report
• YoY (2015 vs 2016)
Revenue 13%, Operating Cost 14%, PBT -56%
• Drivers of Performance
Strong revenue model especially the Fees & Commissions
Large expenses relating to transformation of the Bank impacted PBT
Costs relating to legacy legal issue (ex-staff) impacted PBT
Zanaco Performance: Profit & Loss
Macro-
economic
• Copper prices: recovery > US $ 5,800-5,900 per ton
• Sustained single digit inflation
• Kwacha stability
• Yield rates on GRZ paper trending downwards towards mid teens
• However, economy still vulnerable to fiscal challenges, & imported inflation
Regulatory
• MPR reduced from 15.5% to 14% signaling improved inflationary outlook and
downward trends on lending rates
• Statutory Reserve Ratio reduced from 18% to 15.5% resulting in liquidity easing
• Overnight lending window further relaxed and rates dropped from 25.5% to 20%
Market
• Residual credit risk still high: debt servicing by clients still a major challenge
• Wholesale funding cost trending down
• Liquidity impacted by the lucrative GRZ securities auctions
2017 Significant Developments
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Vision (aspired)
• To be the Universal Bank serving (Retail, Public Sector, Corporates, Food & Agric,
& SME)
• Top Transactional Bank by 2020
Mission
(aspired)
• To be the top of the mind transactional bank for our core segments, while
delivering excellent financial services efficiently, and supported by an
empowered and motivated staff
Aspiration
• Improve segmentation and product offering
• Refine product offering
• Technology developments: Focus on digital transformation
• Improve sales & service
• Optimise distribution channels
• Invest in people
Zanaco 3.0: Revising our Strategic Medium Term Plan 2017-2020 to engender growth and improved shareholder value
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New Regulatory Developments-IFRS 9 & Basel II
IFRS 9
• Provisioning likely to grow due changes towards using the new loss model
• Potential impact on revenue growth: It will influence the profit profile of assets
over time through the need to recognize impairments immediately the loan is
contracted. Other consideration include risk appetite, risk adjusted pricing
• Potential impact on capital demands (both tier 1 & 2)
Basel II • Targeted to be implemented by 2018: may demand for additional capital
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15Source: Published prudential
Capital Position
Demand for
Capital
• Likely to increase in order to Prepare for IFRS 9 Basel II implementation Create a buffer for
residual credit risks Continue building a
sustainably growing Bank
Capital building
• Requires organic growth via higher retained earnings
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Opportunities
for growth
remain good
• We believe the outlook is good despite the economy still remaining
vulnerable
• Growth opportunities exist: good rainfall patterns and reduced load shedding
• Transformation agenda: to be bolstered by a revised strategy for enhanced
growth
• Revenue model to remain strong
• Technology to play a vital role in banking products and service delivery
• Credit portfolio: recovery is expected as overall economic productivity starts
to improve
• Additional capital will be required in order to comply with regulatory
requirements (Basel II, IFRS 9)
Conclusion
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Thank You
Disclaimer
Zambia National Commercial Bank PLC, (hereafter “Zanaco”) has taken all reasonable care to ensure that to the best of its knowledge this presentation is true and correct in
all material respects, does not contain any untrue statement of a material fact, is not misleading and does not omit to state any material fact, the result of which would make
the statements, opinions and intentions herein, in the context in which they are made, misleading in any material respect. This presentation and any other information
supplied is not intended to provide the basis of any evaluation, and should not be considered as a recommendation by Zanaco. Any recipient of this presentation, or of any
other information supplied in connection with this presentation should make its own independent investigation of the financial condition and affairs, and its own appraisal, of
Zanaco, including the merits and risks involved. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any Zambia National Commercial
Bank PLC, ordinary shares in any jurisdiction to any person. Zanaco does not represent that this presentation may lawfully be distributed, or that any Zambia National
Commercial Bank PLC, ordinary shares may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an
exemption available there under, or assumes any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by Zanaco that would
permit a public offering of any Zambia National Commercial Bank PLC ordinary shares or distribution of this document in any jurisdiction where action for that purpose is
required. Accordingly, this presentation may not be re-distributed or re-published in any jurisdiction, except with the express approval of Zanaco.
Forward-looking statements
This presentation may include “forward-looking statements” which include all statements other than statements of historical facts, including, without limitation, those
regarding Zambia National Commercial Bank PLC’s financial position, profit and revenue forecasts, business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to Zambia National Commercial Bank PLC’s products and services) and any statement preceded by, followed
by or that includes the word “projects”, “estimates”, “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “could” or “seeks” or any similar
expression or the negative thereof. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other
important factors beyond Zambia National Commercial Bank PLC’s control that could cause the actual results, performance and/or achievements of Zambia National
Commercial Bank PLC, to be materially different from future results, performance and/or achievements expressed or implied by such forward-looking statements. Forecasts or
projections made in this presentation are based on assumptions that may or may not materialize. While such forecasts or projections have been prepared with due care and
objectivity, no representation, warranty or undertaking, express or implied is made and no responsibility is accepted for the reasonableness of any forecast or projection.
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