FY 2019 RESULTS 1 CUSTOMERS 22.8 MILLION OUR REGIONAL 342 - - PowerPoint PPT Presentation

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FY 2019 RESULTS

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OUR REGIONAL PRESENCE

KCB BANK RWANDA KCB BANK BURUNDI KCB BANK TANZANIA KCB BANK KENYA

NATIONAL BANK OF KENYA KCB INSURANCE AGENCY KCB FOUNDATION KCB CAPITAL

342 BRANCHES

1,055 ATMS, 23,302 AGENTS & MERCHANTS

STAFF

7,584

KCB BANK KENYA (ETHIOPIA REPRESENTATIVE OFFICE ) KCB BANK SOUTH SUDAN

Banking Businesses:

• KCB Bank Kenya
• KCB Bank Tanzania
• KCB Bank South Sudan
• KCB Bank Rwanda
• KCB Bank Uganda
• KCB Bank Burundi
• National Bank of Kenya
• Ethiopia Rep. Office

Other Investments:

• KCB Capital Limited
• KCB Insurance Agency
• KCB Foundation
• Kencom House Limited

KCB BANK UGANDA

CUSTOMERS

22.8 MILLION

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OUR FOOTPRINT

Branches 282 ATMs 454 Agents 14,332 Staff 6,469 Branches 11 ATMs 3 Agents 25 Staff117 Agents 522 Staff 330 Branches 6 ATMs 7 Agents 185 Staff 127 Branches 14 ATMs 25 Agents 522 Staff 253 Branches 14 ATMs 15 Agents 144 Staff 287

Kenya South Sudan

Branches 15

Uganda ATMs 18 Burundi Rwanda T anzania Ethiopia

(Representative Office with 1 staff)

Touch Points:

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RATING AGENCY STABLE CREDIT RATINGS

Ratings confirmed in August and September 2019

KCB BANK KENYA SOVEREIGN

B2 (Stable) B+/B B2 (Stable) B+/B

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2019 HIGHLIGHTS

Renewed focus on the sector following the repeal of the rate caps that limited the maximum lending rates to 400bps above CBR.

INTEREST RATE CAP

CBK concluded the withdrawal of the older 1,000 shillings banknotes and introduced new notes.

DEMONETIZATION

Guidelines on the adoption of customer-centric business models by banks, risk-based credit pricing, enhanced transparency & information disclosure and entrenching an ethical culture within banks.

BANKING CHARTER M&As

Sustained interest in the sector with the multiple announcements

• f mergers and acquisitions.

KCB completed the takeover of National Bank of Kenya

Acquisition of NBK

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KCB 2JIAJIRI PROGRAMME HIGHLIGHTS

AGRIBUSINESS

17,570

AUTOMOTIVE ENGINEERING

2,083

BEAUTY AND PERSONAL CARE

3,480

BUILDING AND CONSTRUCTION

9,001

DOMESTIC SERVICES

1,638

34,844

BENEFICIARIES TO DATE

11,564

beneficiaries accessed Business Development Support. Kenya 34,087 Tanzania 357 Rwanda 300 Uganda 100 ‘Young Africa Works’

KShs 10 billion funding

from the MasterCard Foundation to scale up the bank’s 2jiajiri job creation programme

• KShs. 144 million

disbursed to beneficiaries to support their business enterprises.

54:46

Male : Female Ratio

ICT 315

KENYA 2JIAJIRI BENEFICIARIES PER SECTOR

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KCB FOUNDATION CASE STUDIES

George Odhiambo, owner, Pentagon View Investments, Shanzu, Mombasa

• George trained in carpentry at Mombasa Technical

Training School under 2jiajiri programme.

• Used KShs 100,000 2jiajiri funding to expand his

business and now has access finance and financial institutions, thanks to 2jiajiri BDS support.

• Generates an income of KShs 50,000 per month.
• Employs two and also offers apprenticeship to youth.

Tom Mogaka, Owner Smart Digital Electricals, Umoja Innercore, Nairobi

• Trained in electrical installation at Eastlands College
• f Technology under 2jiajiri.
• Granted toolkits that have expanded his business.
• The go-to fundi in Umoja Estate as well as contractor

for DSTV/GOTV installations, basic repairs, TV mounting and aerial installations.

• Generates KShs 100,000 monthly income from his

business.

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SUSTAINABILITY UPDATE

Mainstreaming our 8 Adopted SDG’s

• 182 Business Bankers, Relationship

Managers and Credit Analysts trained on Environmental, Social Risk screening and Assessment.

• 90.5% of business units have

identified key performance indicators for tracking and monitoring of the 8 SDG’s.

UNEP FI – 6 Principles for RESPONSIBLE BANKING: Launched 2019

Alignment Impact & Target Setting Clients & Customers Stakeholders Governance & Culture Transparency & Accountability

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2019 GROUP AWARDS

EUROMONEY AWARDS FOR EXCELLENCE 2019  East Africa’s Best Bank for SMEs  Kenya's Best Bank GLOBAL FINANCE AWARDS 2019  Best Bank in Kenya BRAND AFRICA AWARDS 2019  Most Admired Financial Services Brand AFRICAN BANKER AWARDS 2019  Best Regional Bank in East Africa  Innovation in Banking GLOBAL BUSINESS OUTLOOK 2019  Best Digital Transformation in Online Banking  Best CSR Initiative – 2jiajiri GLOBAL BANKING AND FINANCE AWARDS 2019  Best Corporate Governance Bank in Kenya  Best Customer Service Bank in Kenya THE BANKER MAGAZINE – TOP 1000 BANK RANKINGS 2019  717th Globally  21st Africa (Highest mover Africa) INTERNATIONAL CUSTOMER EXPERIENCE AWARDS 2019  Gold Award for the Best Customer Experience Team  Gold Award for Customer Experience Leadership  Gold Award for the Best Digital Strategy

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Macro-Economic Highlights

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MACROECONOMIC HIGHLIGHTS Kenya

GDP Growth Rate (%)

18.3 9.6 8.6 8.7

AGRICULTURE MANUFACTURING REAL TRADE EDUCATION TRANSPORT & FINANCIAL & CONSTRUCTION ICT HEALTH MINING& ESTATE STORAGE INSURANCE QUARRYING

7.1 7.6 6.4 1.8 1.0 5.9 4.0

Q3 19

5.1%

*Source: Kenya National Bureau of Statistics

3.2 3.1 4.9 4.7 5.7 7.1 5.6 6.6 8.4 4.8 4.3

Contribution to GDP Q3 19 (%) Q3 19 Growth (%)

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MACROECONOMIC HIGHLIGHTS Regional GDP Growth

GDP Growth 2019 Projected (%)

Tanzania Uganda Rwanda Burundi Ethiopia

5.8 7.4 3.3 8.7 6.1 6.8 East Africa Projected GDP Growth Rate( % )

5.9

South Sudan

Source: AfDB

2019

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MACROECONOMIC HIGHLIGHTS Kenya

Inflation rate Target Upper Target Lower Non Food Fuel

Inflation Evolution(%)

4.70 4.14 4.35 6.58 5.49 5.70 6.27 5.00 3.83 4.95 5.56 5.82

JAN FEB MAR APR M AY JUN JUL AUG SEP OCT NOV DEC 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2019 2 1 9 2 1 9 2019

2.5 7.5 3.51 2.65 12.50 12.51 12.47 12.39 12.47 12.38 9.0 9.0 8.5

JAN FEB MAR APR M AY JUN JUL AUG SEP OCT NOV DEC 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2019 2 1 9 2 1 9 2019

Interest Rates Evolution (%)

91 day bill Average Lending Rate CBR 7.19 7.17 6.65 7.02 6.60 7.08 6.56 7.41 6.65 7.17 6.62 6.90

Sources: Central Bank of Kenya Kenya National Bureau of Statistics

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MACROECONOMIC HIGHLIGHTS Currency Movement

101.6 100.2 100.4 101.1 101.2 101.7 103.2 103.3 103.8 103.7 102.4 101.5

JAN FEB MAR APR M AY JUN JUL AUG SEP OCT NOV DEC 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2019 2 1 9 2 1 9 2019

USD/KShs Average Monthly Exchange Rate Exchange Rates to USD

2019 2018

Tanzania Uganda Rwanda Burundi Ethiopia

158 31 1,881 922 3,660 2,293

South Sudan

3,712 2,300 1,800 876 130 28

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MACROECONOMIC HIGHLIGHTS Kenya

Current Account Balance (% of GDP)

12 Month Private Sector Growth Current account deficit at 10 year low

• 6.7
• 4.8
• 6.2

2015 2016 2017

• 4.6

2019

• 10.5

2014

2018

JAN FEB MAR APR M AY JUN JUL AUG SEP OCT NOV DEC 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2 1 9 2019 2 1 9 2 1 9 2019

3.0 3.4 4.3 4.9 4.4 5.2 6.1 6.3 7.0 6.6 7.3 7.1

Tourism Earnings 2019: KShs 163.6B 2018: KShs 157.4B Diaspora emittances 2019: $ 2,796M 2018: $ 2,697M

39% 4%

• 5.0

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Channel Performance

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OUR CHANNEL CONTRIBUTION December2019

23% decrease in average transactions / tellerper day 23% decrease in Number of branch transactions.

BRANCH TELLER

3%

AGENCY, INTERNET AND POS

15%

MOBILE

78%

ATMS

4%

A

• vg. Transactions / T

eller perday Number of Branch Transactions( M ) Dec 2018 Dec 2019

71.5 55.2 16.2 12.5

97% of

transactions performed

• utside the

branch

Dec 2018 Dec 2019

126% growth

in non-branch revenue to over KShs 12B

MOBILE

45%

AGENCY, INTERNET AND POS

32%

BRANCH TELLER

12%

ATMS

1 1%

December2018

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OUR CHANNEL CONTRIBUTION

404 236

FY 17 FY18 FY19

• No. of transactions

(M) V alueof Transactions: Mobi Service (KShs.B)

331 281.3 52.0 62.1 33.7 32.4 48.1 49.9 16.5 16.4 1.6 1.4

B2C B2B C2B LIPA KARO

MobileTransaction type(%)

FY 17 FY18 FY19

290% Growth in Total Mobile Loans Advanced

FY 2018 FY 2019

2018 54.4B 2019

212.1B

9,873

FY17 FY18

Mobile Revenue (KShs.M )

3,175 2,261

FY19

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OUR CHANNEL CONTRIBUTION

300 127

FY 17 FY18 FY19

204 45.3 22.8 34.7 820 481 542 14.4 64.6 12.1 7.8 0.8 0.3

CASH DEPOSIT CASH WITHDRAWAL SCHOOL FEES BALANCE ENQUIRY BILL PAYMENT OTHERS*

Agency Transaction type(%)

FY17 FY18 FY19 FY 17 FY18 FY19

47%

Growth in Agency Banking Value

*Others: Account opening, mini statement, load cards and Funds transfer

• No. of transactions

(M) V alueof Transactions (KShs.B) Agency Revenue (KShs.M )

FY 2018 FY 2019

15.4 37.2 15.8 29.9 0.1 1.6

AGENCY

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OUR CHANNEL CONTRIBUTION

FY17 FY18

• No. of transactions

(M) V alue of Transactions (KShs.B)

86 130 15.4 15.0

17%

Growth in ATM Value

ATM revenue (KShs M)

465 496

Deposits of KShs 59.7B collected through 105 intelligent ATMs ATM

FY19 152 FY17 FY18 FY19 FY17 FY18 FY19 14.0 486

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OUR CHANNEL CONTRIBUTION MERCHANT / POS

44 42 FY 17 FY18 FY19

POS Revenue (KShs. M) V alue of Transactions (KShs.B)

49 801 856 FY 17 FY18 FY19 944

6%

Growth in the average value per Merchant/ POS transaction

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Financial Performance

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BALANCE SHEET HIGHLIGHTS

Government Securities Customer Deposits Net Loans & Advances Total Assets

KShs 898.6B

25% Growth in Total Assets (10.1% excl NBK)

KShs 535.4B

KShs 120.1B KShs 455.9B

KShs 686.6B

KShs 537.5B KShs 714.3B

2018 2019

KShs 169.2B

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477 581 36 66 2

Dec-18 Retail Corporate Mortgage Dec-19 * Group gross loans KShs.B

LOAN BOOK PERFORMANCE

14.8% 13.0% 4.2% 19.3% 6.8% 3.9% 3.0% 4.2% 3.6% 0.4% 37.8% 17.8% 11.5% 7.0% 6.9% 4.6% 4.4% 4.2% 2.8% 2.6% 0.3% Personal/Household Real estate Manufacturing Building and construction Trade Transport and communication Financial services Tourism, restaurants and hotels Energy and water Agriculture Mining and Quarrying

26.8%

Industry* KCB Dec 2019

Sectoral Loans Comparison

*CBK Data as at June 2019

81% 19%

LCY FCY

Key growth segments:

• Personal: 68%
• Tourism: 57%
• Manufacturing: 25%

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LOAN BOOK PERFORMANCE

81% 19% LCY FCY

Asset Quality Review NPL Breakdown

3.7% 6.2% 10.4% 13.1% 2.3% 7.4% 8.6% 14.4% CHECK OFF MORTGAGE CORPORATE SME & MICRO 2016 2017 2018 2019

7.4% - KCB Group NPL excl NBK, up 40 bps KShs 7.8 billion reduction in the NBK gross NPL in Q4 2019 NBK NPL ratio down in Q4 2019 to 43% from 50% in Q3 2019

9.1% 10.6% 12.0% 12.0% 8.0% 8.5% 6.9% 10.9% 1.0% 1.5% 0.7% 1.8% 13.3% 13.0% 11.9%

FY 2016 FY 2017 FY 2018 FY 2019 Industry NPL (Kenya) NPL Group CoR Combined NPL

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LOAN BOOK PERFORMANCE Group Coverage Ratio

72.5% 81.1% 81.4% 42.6% 68.6% 72.1%

10 20 30 40 50 60 70 80 90 100

FY 2017 FY 2018 FY 2019 CBK Coverage Ratio IFRS Coverage Ratio

Strong coverage despite increase NPL

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BALANCED DEPOSIT MIX

Currency Mix Deposits by type FY18 Deposits by type FY19

63% 5% 24% 8% Demand Savings Term Call

51% 49% 50% 46% 48% 48% 3% 2% 2% 2017 2018 2019

Corporate Retail Others

83% 17%

LCY FCY

62% 5% 21% 12%

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STRONG CAPITAL BUFFERS Core Capital to RWA Total Capital to RWA

Kenya Kenya Group Group

14.5% 14.5% 14.5% 16.1% 17.8% 17.5%

2017 2018 2019

• Min. Total / RWA

Total Capital / RWA

14.5% 14.5% 14.5% 16.6% 19.5% 19.0%

2017 2018 2019

10.5% 10.5% 10.5% 15.4% 18.1% 17.2%

2017 2018 2019

10.5% 10.5% 10.5% 14.9% 16.4% 15.6%

2017 2018 2019

• Min. Core / RWA

Core Capital / RWA

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Net Interest Income Operating Expenses Total Non Interest Income Profit before tax

KShs 36.9B KShs 28.2B

KShs 48.8B KShs 23.0B

KShs (38.5B)

KShs (35.0B) KShs 33.9B

2018 2019

KShs 56.1B

P&L HIGHLIGHTS Profit before tax up 9.0% (5% growth excl NBK) 4.9% Net Earnings growth to Kshs 25.2B (Flat excl NBK)

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P&L HIGHLIGHTS International Businesses

Net Loans & advances PBT

• KShs. M

2018 2019

KCB Bank South Sudan KCB Bank Burundi KCB Bank Uganda KCB Bank Rwanda KCB Bank Tanzania

424 949 777 998 735 911 2,397 3,044 6,274 6,520 12,776 14,628 16,465 17,443 220 274 446 (81)

25% (118%) 124% 28%

664 578

(13%)

7.4% growth in International business PBT

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Strong Balance Sheet KShs 79.5B growth in net loans

KShs Billion KCB Group KCB Bank Kenya Actual 2018 Actual 2019 Y-O-Y Change Actual 2018 Actual 2019 Y-O-Y Change Cash and balances with central bank 42.0 60.8 45% 39.1 42.2 8% Balances with other institutions 40.1 48.2 20% 16.6 19.7 18% Investments in Government & Other securities 120.1 169.2 41% 103.0 118.4 15% Net loans and advances 455.9 535.4 17% 417.2 447.2 7% Fixed assets 14.1 26.6 89% 10.1 15.1 50% Other assets 42.1 58.4 39% 35.7 31.8 (11%) Total Assets 714.3 898.6 26% 621.7 674.3 8% Customer deposits 537.5 686.6 28% 475.4 528.1 11% Balances due to other banks 20.1 20.4 1% 11.2 8.7 (22%) Other liabilities 20.6 40.4 96% 18.4 26.4 43% Long-term debt 22.4 21.5 (4%) 18.9 18.5 (2%) Total Liabilities 600.6 768.8 28% 523.9 581.7 11% Shareholders’ equity 113.7 129.7 14% 97.8 92.6 (5%) Total liabilities and equity

714.3

898.6 26% 621.7 674.3 8%

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5% GROWTH IN EARNINGS

KShs Billion

KCB Group KCB Bank Kenya Actual 2018 Actual 2019 Y-O-Y Change Actual 2018 Actual 2019 Y-O-Y Change Interest income 66.3 74.4 12% 59.3 63.7 8% Interest expense (17.5) (18.2) 4% (15.0) (14.9) (1%) Net interest income 48.8 56.1 15% 44.3 48.9 10% Foreign exchange income 4.4 4.5 2% 2.7 3.1 16% Net fees and commissions 14.2 19.8 40% 11.9 16.8 41% Other income 4.4 3.8 (13%) 3.9 3.6 (8%) Total other operating income 23.0 28.2 22% 18.6 23.5 27% Total other operating expenses (35.0) (38.5) 10% (28.3) (30.5) 8% Provisions for bad debts (2.9) (8.9) 207% (3.1) (8.7) 181% Profit before tax 33.9 36.9 9% 31.4 33.2 6% Tax (9.9) (11.7) 19% (9.0) (10.5) 16% Profit after tax 24.0 25.2 5% 22.4 22.7 1%

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OVERVIEW OF KEY FINANCIAL RATIOS

Return on Average Equity Cost to Income Gross NPL to Gross Loans NPL Coverage Debt to Equity Non funded income to total income Cost of funds Net Interest Margin Cost of risk Loan to Deposit Ratio Growth of Net Loans and Advances Growth of Customer Deposits

21.9% 48.3% 6.9% 72.4% 19.7% 32.0% 3.2% 8.1% 0.7% 84.8% 8.0% 8.0% 20.7% 45.9% 10.9% 72.1% 16.6% 33.4% 2.8% 8.1% 1.8% 84.6% 17.4% 27.7%

FY 18 HY 19 Q319 KENYA GROUP

24.9% 42.1% 7.3% 90.8% 19.9% 32.5% 2.8% 8.1% 1.9% 89.9% 7.2% 11.1% 23.5% 45.7% 7.8% 60.8% 19.1% 34.1% 2.8% 8.3% 1.3% 89.2% 14.0% 7.0% 21.8% 44.7% 8.3% 56.0% 18.3% 35.2% 2.8% 7.9% 1.7% 87.0% 11.7% 11.4%

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2019 DIVIDEND

 KCB Group paid an interim dividend of KShs 1.00 per share in November 2019.  The Directors recommend a final dividend for the year ended 31 December, 2019 of KShs 2.50

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FY 2020 OUTLOOK Non funded income growth 25.0% NFI Ratio 36.2% Cost/ Income ratio 45.0% Cost of funds 2.8% Cost of Risk 1.8% NPL Ratio 8.0% NIM 7.8% Asset yield 11.1% Loan growth 14.0% Deposit growth 14.0% ROA 3.5% ROE 22.9%

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Investor Relations investorrelations@kcbgroup.com www.kcbgroup.com