Investor Briefing & Q1 2016 Performance April 2016 - - PowerPoint PPT Presentation

Investor Briefing & Q1 2016 Performance

April 2016

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1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

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• 1. Macro-economic overview

2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

4

• The Kenya Shilling has appreciated by 1.0% on a YTD basis against the USD
• Stability in the foreign exchange market continues to be supported by an improved forex reserves currently at USD 7.6

billion (equivalent to 4.96 months of import cover) and a narrowing current account deficit largely due to the following:

• A lower import bill for petroleum products
• Recovery in tourism, tea and horticulture exports
• Slowdown in consumer imports
• Strong diaspora remittances.

4

Foreign Exchange Rate - Kenya

106.0 105.0 104.0 103.0 102.0 0.0 Apr ’16 101.1 +1% Mar ’16 101.3 Feb ’16 101.7 Jan ’16 102.3 105.3 Aug ’15 103.9 Sep ’15 101.8 Oct ’15 102.1 Nov ’15 102.3 Dec ’15 Jul ’15 102.5 USD / KES

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USD vs. USH,TSH, RWF, KSH

KES vs East African Currencies

33.0 33.3 33.0 34.0 33.0 32.9 35.0 35.0 35.2 21.7 21.6 21.5 21.4 21.1 21.2 21.4 20.5 20.6 20.6 7.4 7.5 7.3 7.3 7.3 7.3 7.3 7.0 7.0 6.8 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 33.3 Oct ’15 Sep ’15 Aug ’15 Apr ’16 +9% +5%

• 1%

KES / RWF KES / TSHS KES / USHS Mar ’16 Feb ’16 Jan ’16 Dec ’15 Nov ’15 Jul ’15

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The Kenya Shilling maintained stability against the regional currencies in 2016

2016 2015

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• FX reserves have risen to five months of import cover giving a significant cushion to the shilling
• Reserves currently stand at $7.62 billion amounting to 4.96 months of import cover.
• Key reasons for increase in reserves are:

i.

Lower oil prices

ii.

Falling current account deficit (currently 8.2% of GDP)

iii.

Increased exports and inflow from tourism

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FX Reserves - Kenya

5.0 4.5 4.0 0.0 Q1 14 4.3 4.3

Apr-16

5.0

Q1 16

4.6 Q4 15 4.3 Q3 15 4.1 Q2 15 4.4 Q1 15 4.7 Q4 14 4.6 Q3 14 4.3 Q2 14

Desired Minimum Months of Import Cover

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Current Account balance as a % of GDP - Kenya

• 8.2
• 8.2
• 8.4
• 5.9
• 8.9
• 11
• 10
• 9
• 8
• 7
• 6
• 5
• 4
• 3
• 2
• 1

2010 2011 2012 2013 2014 2015 2016

• 10.4
• 9.1

In Percent

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Inflation - Kenya

• The latest inflation figure as at end of April was 5.3% (down from 6.45% in March) due to
• Food prices (food index is down due to the rains)
• Low fuel prices

2 4 6 8 10 Dec-15 Jan-16 Feb-16 Apr-16 Mar-16 5.3% 6.5% 6.8% 7.8% 8.0%

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Interest Rates

Political and Economic review in the region

91 Days T. Bill 182 Days T. Bill 364 Days T. Bill Interbank rate 11.33% 11.51% 18.61% 21.35% 22.13% 9.21% 10.41% 11.76% 9.32% 8.41% 8.77% 12.89% 18.81% 19.84% 25.84% 14.87% 8.77% 5.19% 6.13% 4.51% 4.09% 4.05% 12.15% 12.36% 14.55% 21.61% 22.29% 10.09% 12.34% 14.18% 11.93% 10.66% 10.69% 12.53% 13.82% 16.30% 21.50% 22.36% 11.93% 12.75% 14.92% 13.25% 11.91% 11.80% Jul Aug Sep Sep-Oct Peak Oct Nov Dec Jan Feb

2015 2016

Mar

• Due to the high liquidity in the market, interest rates have been dropping since the beginning of February
• On March 21st 2016, the MPC met and retained the CBR Rate at 11.5% (keeping it at the same level for the

last 9 months)

• The MPC had earlier also retained the KBRR at 9.87% (on Jan 20th 2016)

Apr

10

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Kenya’s Resilient Economy

• Kenya’s GDP growth rate maintained an upward growth rate with an increasing momentum while Africa is

experiencing declining growth rate.

• Kenya’s Gross Domestic Product (GDP) is estimated to have expanded by 5.6% in 2015 which was a slight

improvement compared to a 5.3% growth in 2014.

• Kenya’s GDP growth rate is projected to rise to 5.9% in 2016 and 6.1 % in 2017 predicated on infrastructure
• investments. Fiscal consolidation is expected to ease pressure on domestic interest rates and increase credit

uptake by the private sector. The contraction in the current account deficit will continue to be supported by declining commodity prices and rising exports of tea. 5.6 5.3 5.7 4.6 6.1 2013 2015 2014 2011 2012

11

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Economic growth drivers

• Kenya Tourism showing positive signs of recovery with enhanced security with Kenya registering the highest

growth of 27% in Hotel Bookings For The Period May To July In Africa. Government incentive on reduction of park entry fees from $90 to $60 and More chartered airlines from Europe to Mombasa, have boosted the sector.

• Kenya recorded the fastest rise in foreign direct investments (FDI) in Africa and the Middle East, at 47%. A total
• f 84 projects worth Sh102 billion from real estate, renewable and geothermal energy as well as roads and

railways provide a huge chunk of new jobs for Kenyans. Kenya was ranked 3rd in terms of numbers of projects initiated after the United Arab Emirates (UAE) at 298 and South Africa at 118.

• Kenya’s Agriculture Experiencing Renewed Growth As A Result Of Improved Weather And Rainfall Pattern.

According to the KNBS economic Survey , Agriculture value added rose from 3.5% in 2014 to 5.6% in 2015. Total value of marketed production at current prices increased by 11.3% from KSh 333.2 billion in 2014 to KSh 371.0 billion in 2015. Total earnings from crop sales increased by 15.5% to KSh 271.8 billion in 2015.

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Macro-economic Indicators – East Africa

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Macro-Economic Indicators Summary (East Africa)

182 Days T-Bills 364 Days T-Bills Central Bank Rate 91 Days T-Bill

Uganda Rwanda Tanzania

16.28% 6.21% 17.67% 5.4% 15.56% 5.89% 9.02% 4.7% 16.19% 8.35% 18.81% 8.1% 16.0% 12.0% 12.0% 6.5% Inflation 6.2% 5.8% 5.4% 4.5%

DRC

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• 1. Macro-economic overview
• 2. Governance & leadership structure

3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

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Strong Governance & Leadership Structure

Equity Bank Rwanda Equity Bank Tanzania Equity Bank Uganda Equity DRC (Pro Credit Bank) Equity Bank Kenya Chief Officer, Finance, Innovation, Payments CEO’s office Group Director, Payments Subsidiary Boards Each subsidiary with own Board of Directors compliant with local regulations Consulting Infrastructure Services Subsidiary Boards Director Brand, Culture and HR Equity Bank South Sudan Chief Technology & Information Officer Group Director, Treasury Group Director, Special Projects Group Director, Analytics Group Director, Finance Group Director Strategic Relations &Partnerships Risk and Compliance Officer Group Director, Corporate Banking Group Director, SME Banking Group Chief Operating Officer Director Governance, Strategy, Legal, Company Secretary CEO Group Board Shareholders Non-Banking Subsidiaries Corporate Office

2

CBK CMA NSE Rating Agencies Banking Subsidiaries* Equity Group Foundation Equity Investment Bank Equity Insurance Agency Equity Group Holdings Limited Board Committees Board Committees Subsidiary Internal Audit Group Internal Auditor Group Board Committee Subsidiary Internal Audit

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• 1. Macro-economic overview

2. Governance & leadership structure

• 3. Regional expansion and diversification

4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

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KES “Billion”

Tanzania Rwanda Uganda

• S. Sudan

Deposits Loan Deposits Growth Loan Growth Assets Asset Growth PBT PBT Growth

Regional Total

12.8 1% 15.4 37% 21.0 21% 0.08

• 12%

10.5 23% 8.6 21% 13.9 19% 0.06

• 50%

12.5 21% 7.0

• 1%

17.0 12% 0.09 2% 10.5

• 61%

0.4

• 89%

14.4

• 57%

0.02

• 95%

67.0 14% 45.5 56% 95.0 23% 0.32

• 45%

Regional Expansion – Key Metrics for Banking Subsidiaries 3

Regional Contribution Q1 2016

22% 17% 21% 5%

Regional Contribution Q1 2015

21% 13% 20% 10%

DRC

20.7 14.2 28.8 0.07 31% 71% 49%

• 41%

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Regional Subsidiaries – Size and Contribution

(Assets and PBT contribution by countries)

3

4.0% 3.8% 3.0% 3.1%

• S. Sudan

Kenya Rwanda Tanzania DRC 3.2% Uganda 100.0% Q1 2016 78.7% 4.7% 6.4% 8.6% 100.0% Q1 2015 79.8% 4.6% 0.0%

Total Assets split by Country PBT split by Country

1.1% 1.4% 1.2% 1.5% 1.5% 1.9% 0.8% 90.5% 100.0% 0.0% 4.7% Q1 2015 0.2% 100.0% 95.1% Q1 2016 DRC Kenya

• S. Sudan

Tanzania Rwanda Uganda

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Net Interest Margin

Percentage

Kenya 12.8 11.4 11.1 10.9 Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 11.5 9.7 10.5 9.7 Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 Uganda 4.5 5.2 4.7 4.7 Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 Tanzania 11.8 14.1 15.6 15.1 Q4 ’15 Q1 ’16 Q3 ’15 Q2 ’15 DRC Rwanda 7.9 9.3 8.8 9.1 Q3 ’15 Q2 ’15 Q4 ’15 Q1 ’16 South Sudan

• 0.1

3.5 2.1 2.6 Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15

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• 1. Macro-economic overview

2. Governance & leadership structure 3. Regional expansion and diversification

• 4. Digital bank

5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

21

Execution on Digital Banking

(Increased number of Transaction numbers & values)

Transaction numbers in millions

+26% Q1 2016 14.7 Q1 2015 11.6

• 15%

Q1 2016 6.6 Q1 2015 7.8 +45% Q1 2016 2.2 Q1 2015 1.5 +315% Q1 2016 45.6 Q1 2015 11.0

4

Transaction value in KES billion

+37% Q1 2016 102.1 Q1 2015 74.5 +43% Q1 2016 11.1 Q1 2015 7.7 +562% Q1 2016 62.4 Q1 2015 9.4

• 6%

Q1 2016 47.8 Q1 2015 51.0 Equitel Merchants ATM Agency Branch Q1 2016

• 15%

Q1 2015 6.5 5.5

• 10%

Q1 2016 335.1 Q1 2015 372.6

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Execution on Digital Banking

(Transaction numbers trend)

4

5.5 6.4 6.7 6.9 6.6 8.3 8.5 14.7 11.6 80 15 10 5 8.0 6.8 Q1 2013 6.6 Q1 2012 3.7 Q1 2016 79.5 Q1 2015 7.8 7.8 Q1 2014 8.3

Transactions (Millions)

Agency ATM Branch Mobile

Cash related transactions only

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Execution on Digital Banking

(Equitel customer numbers up 180% growth YoY)

4

250 750 1,250 1,000 1,500 500 1,750 2,000 2,000 250 500 750 1,000 1,250 1,500 1,750 Sep 2015 1,369 1,500 Oct 2015 1,591 1,861 Feb 2016 Mar 2016 Dec 2015 1,760 Jan 2016 1,665 +180% Nov 2015 1,178 Aug 2015 1,166 Jul 2015 1,085 Jun 2015 1,024 May 2015 902 Apr 2015 788 Mar 2015 666 Linkage to M-Banking SIM uptake

85% 81% 83% 87% 85%

KES “000”

86% 87% 88% 89% 89% 90% 90% 90%

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Execution on Digital Banking

(Mobile Customer Transaction Numbers & Value Trend)

4

160 20 40 60 80 100 120 140 180 20 40 60 80 100 120 140 160 180 200 200 220 Feb 2016 152.1 Mar 2016 177.3 196.6 Jan 2016 181.3 131.9 165.9 Dec 2015 114.9 151.0 Nov 2015 96.9 132.4 Oct 2015 82.5 118.2 Sep 2015 69.5 105.4 Aug 2015 58.8 94.9 Jul 2015 49.5 85.4 Jun 2015 42.3 77.7 May 2015 33.0 63.2 Apr 2015 24.4 48.6 Mar 2015 17.2 35.8 Cumulative M-Banking Transactions numbers (millions) Cumulative M-Banking Value (KES billions)

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Execution on Digital Banking

(Count of loan disbursements through Mobile vs. Branch)

4

400 800 1,200 1,600 2,000 2,400 2,800 3,200 3,600 1,608 (77%) Oct 2015 1,770 450 (25%) 1,320 (75%) Sep 2015 1,503 416 (28%) 1,087 (72%) Aug 2015 1,284 382 (30%) 902 (70%) Jul 2015 1,068 350 (33%) 718 (67%) Jun 2015 944 321 (34%) 623 (66%) May 2015 814 290 (36%) 524 (64%) 493 (23%) Jan 2016 Feb 2016 Dec 2015 2,455 533 (22%) 1,922 (78%) Nov 2015 2,101 601 (20%) 2,456 (80%) 3,381 631 (19%) 2,749 (81%) Apr 2015 688 258 (37%) 430 (63%) Mar 2015 578 225 (39%) 353 (61%) 2,744 Mar 2016 569 (21%) 2,176 (79%) 3,057 Branch Mobile Combined In Thousands Cumulative

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Execution on Digital Banking

(KES 14.1 billion Disbursed through Mobile Channel)

4

14.1 11.8 10.0 8.5 6.9 5.6 4.6 3.8 2.9 2.4 1.9 1.6 1.3 Mar 2016 Nov 2015 Oct 2015 Sep 2015 Jul 2015 Jun 2015 May 2015 Apr 2015 Mar 2015 Aug 2015 +1,012% Dec 2015 Jan 2016 Feb 2016 Loan Value Disbursement (KES "Billion")

Disbursement Count (number)

353,052 Cumulative figures 2,749,290

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Execution on Digital Banking (Loan Outstanding Trend) 4

In Billions

2.51 2.01 1.82 1.54 1.46 1.02 0.85 0.82 0.51 0.47 0.41 0.30 0.28 Jan 2016 +797% Dec 2015 Nov 2015 Oct 2015 Sep 2015 Aug 2015 Jul 2015 Jun 2015 May 2015 Feb 2016 Mar 2016 Apr 2015 Mar 2015

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Execution on Digital Banking (Loan Repayment Trend) 4

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Focus on Variable cost model…

Continuous Growth in Agency Banking 4

▪ Number of

agents increased to 25,388 agents. 31% growth y/y … More transactions now processed under 3rd party infrastructure saving

• n fixed costs

▪ More

transactions now processed under 3rd party infrastructure

▪ Agent

transactions registered a 26.2% growth

5.5 6.4 6.8 7.1 6.6 7.8 8.3 8.5 8.4 14.7 3.7 5 10 15 +26.2% Q1 2016 Q1 2015 11.6 Q1 2014 8.3 8.0 Q1 2013 6.6 6.7 Q1 2012 6.9 Q1 2011 0.2 Transactions (Millions) Agency ATM Branch

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Number and Value of Agents Transactions 2011 - 2016

4

5 7 9 9 12 14 14 16 16 17 19 19 22 25 26 27 31 34 36 3 5.2 4.5 4.2 4.1 3.5 3.0 2.5 2.6 2.2 1.9 1.5 1.4 0.7 0.4 0.1 3.1 2.2 1.0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Mar 2016 Dec 2015 Sept 2015 Sept 2014 Jun 2014 Mar 2014 Dec 2013 Sept 2013 Jun 2013 Mar 2013 Dec 2012 Sept 2012 Jun 2012 Mar 2012 Dec 2011 Sept 2011 4.7 2.5 Jun 2011 Mar 2011 1 3.7 Jun 2015 Mar 2015 Dec 2014 Transactions in million Value in billion kes

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Number of Merchants Outlets 2011 - 2016

4

8,063 7,749 6,864 6,153 5,618 5,166 4,412 3,720 3,499 3,066 2,824 2,668 2,346 2,139 2,018 1,658 1,519 1,194 1,065 1,034 1,083 Sept 2015 Dec 2015 Mar 2016 Jun 2013 Mar 2013 Dec 2012 Sept 2012 Jun 2012 Mar 2012 Sept 2013 Dec 2013 Dec 2011 Sept 2011 Jun 2011 Mar 2011 +679.8% Jun 2014 Mar 2014 Sept 2014 Dec 2014 Mar 2015 Jun 2015

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Merchants Turnover and Revenue 2011 - 2016

6

0.5 0.5 0.6 0.8 0.8 0.8 1.0 1.3 1.1 1.3 1.2 1.6 1.8 1.8 2.1 3.2 2.7 2.9 3.3 4.4 3.9 88 88 66 64 70 38 36 26 23 29 18 16 17 12 11 9 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 10 20 30 40 50 60 70 80 90 Dec 2015 Sept 2015 44 Sept 2014 Jun 2014 Mar 2014 Dec 2013 Sept 2013 Jun 2013 Mar 2013

Dec 2012

Sept 2012 Jun 2012 Mar 2012 Dec 2011 Sept 2011 53 25 Jun 2011

Mar 2011

Mar 2016 63 20 Jun 2015 Mar 2015 Dec 2014 Revenue in million kes Turnover in billion kes

33

We are building on our momentum in Payment Processing and Merchants…

4

We have partnered with key payment companies… …which has allowed us to grow our number of transactions and commissions

▪ Equity is leading in Acquiring and

Issuing

▪ Best in class payment channel

services work well with merchants +43% +43% +59%

+54%

Q1 2016 259 Q1 2015 181

7,735

Q1 2014 117

4,854 11,057

Merchant Commissions Merchant Transaction Volumes

Volume (Millions) Commissions (Millions)

34

• 1. Macro-economic overview

2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank

• 5. SME strategy

6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

35

SME contribution to the Loan Book and CASA 5

6.6% 5.9% 22.7% 2.8% 2.6% Q1 2015 100.0% 18.0% 49.8% 19.9% Large Enterprises Agriculture SME Micro Consumer Q1 2016 100.0% 16.5% 55.1% Loan book split by type Deposit base split by type Current Accounts Savings Term Deposits Q1 2016 100.0% 35.6% 42.7% 21.7% Q1 2015 100.0% 35.9% 43.0% 21.1%

36

Growing Non-funded Income as a result of cross-selling to SME’s

5

Highlights

▪ Non Funded Income: Dropped by 7% YoY mainly due drop in to FX income and Commissions on Loans ▪ Funded Income: Interest Income grew by 37% YoY due to growth in loan book and improving NIMs

Funded Non- Funded

Q1 2016

15.6 10.4 (67%) 5.2 (33%)

Q1 2015

13.2bn 7.6 (58%) 5.6 (42%)

Q1 2014

11.1bn 7.0bn (63%) 4.1bn (37%)

Q1 2013

10.2bn 6.9bn (67%) 3.3bn (33%)

Q1 2012

9.0bn 5.7 (63%) 3.3bn (37%)

Non Funded Income by Type

Fees & Commission Foreign Exchange Other Income Q1 2016 68.0% 16.2% 15.9% Q1 2015 66.2% 20.5% 13.3%

37

• 1. Macro-economic overview

2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy

• 6. Qualitative analysis

7. Performance of core business (intermediation) 8. Financial performance

Presentation Outline

38

Equity has earned recognition in 2015

Equity’s International Rankings Equity’s Global Credit Rating

Equity Bank Overall Soundness Performance

(Capital Assets Ratio) (Profits on capital) (Return on assets)

2015 Global Rank 916 88 18 8 2014 Global Rank 999 112 8 4

6

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Equity Group’s stock excites Globally

STOCK Beta Yield (%) ROaE Yield per unit of Risk (Yield/Beta) KCB 1.44 4.68% 25.0% 3.25% EGHL 1.28 4.88% 25.5% 3.81% COOP 1.18 4.10% 25.2% 3.47% Reuters: Equity Group Holding yielding a higher return at a lower risk Financial Times: Equity Group Holding to outperform the market in 2016

6

40

Equity Bank – Most valuable lender listed at the NSE

6

41

Equity has earned substantial accolades in 2016

Equity Bank: Winner Best Bank in Kenya

6

Overall Winner Best Bank in Kenya (2016, 2015, 2014 East Africa, 2013, 2012, 2009) Winner Best Bank Tier 1 (2016, 2015, 2014 East Africa, 2013, 2012 )

42

Equity has earned substantial accolades in 2016

Equity Bank: Winner Best Bank in SME Banking

6

Best Bank in SME Banking (2016, 2015)

43

Equity has earned substantial accolades in 2016

Equity Bank: Winner Best Bank in Retail Banking

6

Best Bank in Retail Banking (2016, 2015)

44

Equity has earned substantial accolades in 2016

Equity Bank: Winner Best Bank in Agency Banking

6

Best Bank in Agency Banking (2016, 2015)

45

Equity has earned substantial accolades in 2016

Equity Bank: Winner Best Bank in Micro-Finance

6

Best Bank in Micro-Finance (2016, 2015, 2012, 2011, 2010, 2009)

46

Equity has earned substantial accolades in 2016

Equity Bank: 1st Runner Up Best Bank in Customer Satisfaction

6

(1st Runner up 2016, 2nd Runner up 2015)

47

Equity has earned substantial accolades in 2016

Equity Bank: 2016 Other Awards

6

48

Equity has earned substantial accolades in 2016

Equity Bank: 2016 Other Awards

6

49

• 1. Macro-economic overview

2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis

• 7. Performance of core business (intermediation)

8. Financial performance

Presentation Outline

50

76% 13%

102%

8%

Growth per Class

Funding Base (Significant improvement in funding profile)

15.5% Deposits Shareholders’ Funds Borrowed Funds Other Liabilities Q1 2016 430.2 300.3 (70%) 69.1 (16%) 46.0 (11%) 14.7 (3%) Q1 2015 372.5 278.2 (75%) 60.9 (16%) 26.2 (7%) 7.3 (2%) In KES “Billion” 15.5% growth in funding with deposits accounting for 70%

7

51

Deposits by Entity & Type

3.6% 4.0% 9.6% 3.4% 3.0% 3.3% Rwanda Q1 2016 Uganda

• S. Sudan

DRC Tanzania Kenya 100.0% 78.5% 100.0% 79.3% Q1 2015 6.7% 4.1% 0.0% 4.5%

Deposit split by Entity

21.1% 35.9% 43.0% Current Accounts Savings Term Deposits Q1 2016 Q1 2015 100.0% 42.7% 21.7% 100.0% 35.6%

Deposit split by Type

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52

48.3 (11.2%) 275.0 (63.9%)

Q1 2015

372.5 36.9 (9.9%) 48.9 (13.1%) +15.5% Government Securities Other Assets 62.0 (16.6%) 224.8 (60.3%) Cash & Cash Equivalents Net Loans

Q1 2016

430.2 44.5 (10.3%) 62.4 (14.5%)

• 22%

28% 21% 22%

Growth per Asset Class 15.5% growth in asset base while still maintaining portfolio diversification

Assets of KSH 430 Billion driven by stable Deposit base

In KES billion

7

53

Loan book by Segment and Entity

3.1% 3.1% 3.1% 2.5% 2.0% Kenya Tanzania DRC Rwanda Uganda

• S. Sudan

Q1 2016

100.0% 83.4% 5.6% 5.2% 0.2%

Q1 2015

100.0% 86.9% 4.9% 0.0% Split across the entities within the Group Split across Segments 49.8% 55.1% 6.6% 5.9% 22.7% 19.9% Large Enterprises SME Micro Consumer Agriculture

Q1 2016

100.0% 16.5% 2.6%

Q1 2015

100.0% 18.0% 2.8%

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54

Increasing Net Interest Margin

5

Cost of funds

Percentage

Net Interest Margin Yield on interest Earning Assets 11.7 10.5 10.2 9.8 9.9 Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 Q1 ’15 2.8 3.0 2.5 2.5 2.6 Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 Q1 ’15 14.5 13.5 12.7 12.3 12.5 Q1 16 Q4 15 Q3 15 Q2 15 Q1 15

55

3.5% 2.9% 4.1% 4.1% 3.9% 3.8% 3.3% 4.5% 4.4% 4.3% Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Group EBKL

Stable NPL Trend over time

7

56

56.0% 60.6% 65.0% 62.5% 63.2% 84.0% 92.8% 88.7% 86.2% 87.0% Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 (Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPL (Spec. Prov. + Int. Susp) / Gross NPL

Non-Performing Loans: High Coverage Levels

7

57

• 1. Macro-economic overview

2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation)

• 8. Financial performance

Presentation Outline

58

Funding Distribution Q1 2016

Broad base liabilities & funding sources

Q1 2015 Q1 2016 Growth Y/Y Liabilities & Capital (Bn) KSH KSH % Deposits 278.2 300.3 8% Borrowed Funds 26.2 46.0 76% Other Liabilities 7.3 14.7 102% Shareholders’ Funds 60.9 69.1 13% Total Liabilities & Capital 372.5 430.2 15%

Q1 2015

Borrowed Funds 7% Shareholders’ Funds 16% Other Liabilities Deposits 2% 75% Other Liabilities Deposits 11% 3% 70% Borrowed Funds 16% Shareholders’ Funds

8

59

Asset Distribution Q1 2016 Q1 2015

Asset Portfolio & Distribution

Q1 2015 Q1 2016 Growth Y/Y Assets (Bn) KSH KSH % Net Loans 224.8 275.0 22% Cash & Cash Equivalents 62.0 48.3

• 22%

Government Securities 48.9 62.4 28% Other Assets 36.9 44.5 21% Total Assets 372.5 430.2 15%

60% Net Loans 13% Cash & Cash Equivalents Government Securities Other Assets 17% 10% 10% Cash & Cash Equivalents Government Securities Other Assets 15% 11% 64% Net Loans

8

60

KES (Billion) Q1 2015 Q1 2016 Growth Interest Income 9.5 12.9 36% Interest Expense (1.9) (2.4) 32% Net Interest Income 7.6 10.4 37% Non-Funded Income 5.6 5.2

• 7%

Total Income 13.2 15.7 18% Loan Loss Provision (0.3) (0.7) 104% Staff Costs (2.5) (3.0) 21% Other Operating Expenses (4.3) (4.7) 8% Total Costs (7.1) (8.4) 17% PBT 6.1 7.3 19% Tax (1.8) (2.2) 19% PAT 4.3 5.1 20%

Delivering 20% growth in PAT

8

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Positive Financial Ratios

Kenya Kenya Group Group Q1 2015 Q1 2016 Q1 2015 Q1 2016 Profitability NIM 10.9% 12.8% 9.9% 11.7% Cost to Income Ratio (with provisions) 50% 46% 54% 53% Cost to Income Ratio (without provision) 48% 43% 51% 49% RoAE 35.9% 37.4% 27.6% 29.1% RoAA 5.2% 5.4% 4.8% 4.8% Asset Quality Cost of Risk 0.46% 0.67% 0.63% 1.03% Liquidity / Leverage Loans / Deposits 86.5% 94.0% 80.8% 91.6% Loans / (Deposits + Borrowed Funds) 77.8% 79.8% 73.8% 79.4% Loans / (Deposits + Borrowing Funds + S/H Funds) 66.1% 67.5% 61.5% 66.2% Liquidity 32.9% 29.4% 39.3% 34.9% Capital Adequacy Ratios Core Capital to Risk Weighted Assets 14.7% 14.8% 16.2% 18.3% Total Capital to Risk Weighted Assets 16.8% 16.1% 18.2% 19.6% Core Capital to Deposits Ratio 18.5% 20.5% 18.8% 24.2% Customer Numbers

• No. of Customers

8,274,425 8,971,514 9,547,596 10,313,468

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Cost to Income Ratio Trend

▪ Total Operating Income up 18% y/y mainly attributed to improved NIM ▪ Operating expenses up 17% y/y

51.2% 48.7% 49.5% 50.9% 48.9% 47.8% 45.4% 46.5% 47.8% 43.3% Q1 2012 Q1 2013 Q1 2015 Q1 2014 Q1 2016 Group Bank

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37.4% 33.9% 33.0% 35.0% 35.9% 29.1% 25.5% 25.3% 26.6% 27.6% Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 Q1 ’15 Group EBKL

RoAE

5.4% 5.2% 5.0% 5.1% 5.2% 4.8% 4.5% 4.3% 4.6% 4.8% Q1 ’16 Q4 ’15 Q3 ’15 Q2 ’15 Q1 ’15 Group EBKL

RoAA

RoAA and RoAE overtime 8

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THANK YOU

Dr James Mwangi, CBS

Group Managing Director & CEO KeEquityBank @KeEquityBank

Email: info@equitybank.co.ke Web site: www.equitybankgroup.com