KCB GROUP PLC INVESTOR PRESENTATION. FY17 FINANCIAL RESULTS JOSHUA - - PowerPoint PPT Presentation

KCB GROUP PLC INVESTOR PRESENTATION. FY17 FINANCIAL RESULTS

JOSHUA OIGARA GROUP CEO & MD LAWRENCE KIMATHI GROUP CFO

KCB Group at a glance

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6,483 staff 15.7M Customers 153,431 shareholders Market Capitalization $1.5B

Our Purpose, Values and Strategic Objectives

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Excellence in Customer experience:

NPS target of 60%

Digital financial services / AI:

NFI contribution 40%

Excellent

• perations

performance:

CIR 45%

Outstanding employee engagement:

85% satisfaction level

Strong shareholder value: ROE >21%, Growth in Youth and Women enterprises

2017 Group Awards

Recognition of KCB Group:

• The Banker Awards 2017
• Bank of the Year Kenya
• Sustainable Finance Catalyst
• Best Bank in Sustainable Finance

(Tier 1 Banks)

• Euro Money Awards
• Best Bank in Kenya
• Best Bank for Corporate Social

Responsibility in Africa

• Africa Investor
• Best Performing Company
• Best Ai 40 CEO

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KCB 2jiajiri Programme highlights

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12,294 beneficiaries

Agribusiness – 8,082 Automotive Engineering – 524 Beauty and Personal Care – 945 Building and Construction – 1,877 Domestic Services - 866

4,519 Business incubation interventions

• 213 groups with

3,587 individuals

• 932 individuals

Future of 2jiajiri:

• Catalyze job and wealth creation for

at least 100,000 youth engaged in the informal sector within Eastern Africa

• Investment of over KShs 2 billion to

nurture and grow youthful and SME entrepreneurs

Improvement in the Macro-Economics: Kenya

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Source: CBK, WB

4.7% 5.0% 4.4% 4.9% 5.5% Q1 2017 Q2 2017 Q3 2017 2017P 2018P

GDP Growth Rate (%) 3.8% 3.3% 2.4% 2.1% 1.5% 1.4% 1.6% 1.7% 2.0% 2.7% 2.4%

Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17

12 Month Private Sector Credit Growth

Sources: CBK, KNBS

104.0 103.2 103.7 103.1 103.2 103.2

USD/KES Exchange Rate

8.60 8.76 8.61 8.20 8.13 8.09 8.01 13.66 13.52 13.66 13.71 13.63 10.00 10.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Interest Rate Evolution (%)

91 day T bill Average lending rates CBR Rate

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6.99% 11.48% 11.70% 9.21% 8.04% 7.06% 5.72% 4.50%

Overall Inflation

Improvement in the Macro-Economics: Kenya

Sources: IMF, Bloomberg

Macro-Economic Highlights: Regional

4.9 7.0 7.0 (3.7) 10.3 5.4 7.0 6.9 (7.1) 9.6 4.4 6.8 6.0 0.5 5.4 4.4 6.5 6.2 0.1 8.5

Uganda Tanzania Rwanda Burundi Ethiopia

GDP (%)

2014 2015 2016 2017 13.6% 11.8% 4.4% 9.8% 3.0% 9.2% 20.0% 6.0% 8.8% 7.0% 7.1% 14.0% 9.0% 15.0% 3.8% 8.6% 6.4% 4.0% 15.0% Tanzania Uganda Rwanda Burundi South Sudan

91 Day T-Bills

2014 2015 2016 2017

6.1% 3.1% 1.8% 7.9% 8.1% 5.4% 5.8% 7.1% 18.0% 8.1%

Tanzania Uganda Rwanda Burundi Ethiopia

Inflation

2014 2015 2016 2017 1.7% 52 .8 % 480.0% 182.2%

South Sudan

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2,186 3,484 785.6 1,629 22.40 44.3 2,207 3,491 827.9 1,643 27.58 111.4 Tanzania Uganda Rwanda Burundi Ethiopia South Sudan

Exchange rates to USD

2016 2017

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87% of Transactions outside the Branch

Source: KCB data

Mobile, 53% Branch Teller, 23% ATMs, 13% Agency & POS, 11%

2016

Mobile 57% Branch Teller 13% ATMs 10% Agency & POS 20%

2017

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42% growth in Agency and POS volumes

Source: KCB data

23 30

Agency and POS transactions (M)

2016 2017

119 169

Agency and POS volume (KShs B)

2016 2017

32%

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Marginal change in ATM volumes

Source: KCB data

14 15 ATMs

ATM transactions (M)

2016 2017 153 152 ATMs

ATM volume (KShs B)

2016 2017

Source: KCB data

Sustained Growth on Mobile

14.1 29.6 2016 2017

Mobile Loan Disbursement (KShs B)

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6.5 17 53.1 88.8 2016 2017

Mobile transactions (M)

KCB App Total transactions

67%

Source: KCB data

Over 500% growth on the KCB App

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1.43 8.72 0.81 3.34

• 0.50

1.00 1.50 2.00 2.50 3.00 3.50 4.00

• 1.00

2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

2016 2017

KCB Mobile App Volumes

Value Transacted (B) Transaction No. (M) 351,259 763,084 11,289.96 25,243.46

• 5,000.00

10,000.00 15,000.00 20,000.00 25,000.00 30,000.00

• 100,000

200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

2016 2017

Customer Utilization

Total Downloads Av value per customer

117% 124% % ∆

Channel Expansion

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226 238 242 255 260 263 255

2012 2013 2014 2015 2016 2017 2018 F

Branches

7% 1% 7% 4,627 6,085 10,102 11,948 13,258 15,082

2012 2013 2014 2015 2016 2017

Agents

2017 Staff Rationalization programme

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Average age: 45 years

Staff Released: 316 35% 65%

249 67 KCB Bank Kenya KCB Subsidiaries

Distribution

0.186 2.016 2016 2017

Total Spend (Kshs B)

The key drivers of the programme

• Right sizing of the company’s resource

requirements

• Alignment to advancements and

changes of technology and todays’ business operating models

OUR PERFORMANCE TO DATE

Group Asset Portfolio up 9% KShs: 647B

Net Loans and advances up 10% KShs: 423B Investment in Govt. Securities up 7% KShs: 110B

Cash and Balances with Central Bank and other Financial Institutions 0% KShs:73B

Fixed and

• ther Assets

up 21% KShs: 41B

KCB Bank Kenya Asset Portfolio up 10% KShs: 556B

Net Loans and advances up 10% KShs: 388B Investment in Govt. Securities up 4% KShs: 95B

Cash and Balances with Central Bank and other Financial Institutions up 21% KShs:39B

Fixed and

• ther Assets

up 23% KShs: 34B

9% Total Assets growth driven by Net Loans & Advances

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KCB Group KCB Bank Kenya

Well-diversified loan book

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386 423 19 9 9

Dec-16 Retail Corporate Mortgage Dec-17 * Group Loans KShs.B 35.1% 17.1% 11.4% 8.9% 8.5% 5.4% 4.7% 3.3% 2.8% 2.4% 0.5% 25.2% 15.7% 12.3% 18.8% 4.7% 8.2% 3.5% 2.5% 3.8% 4.8% 0.5% PERSONAL REAL ESTATE-OTHERS MANUFACTURING TRADE BUILDING & CONSTRUCTION TRANSPORT FINANCIALS TOURISM,RESTAURANT & HOTELS AGRICULTURE ENERGY & WATER MINING & QUARRYING KCB Kenya Dec 2017 Industry Sept 2017

2017 NPL Movement

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1.0% 1.0% 1.0% 1.5% 7.9% 7.9% 8.0% 8.5%

Q1 2017 Q2 2017 Q3 2017 2017 CoR NPL Group 3.7% 6.2% 10.4% 13.1% 3.6% 6.5% 10.4% 12.3% 3.2% 7.3% 10.4% 15.5% 3.3% 7.8% 11.0% 16.4% CHECK OFF MORTGAGE CORPORATE SME & MICRO Q1 2017 Q2 2017 Q3 2017 Q4 2017

Steady Coverage Position

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43.6% 48.7% 69.5% 74.4% 2016 2017 IFRS CBK

2017 industry position as at September

37.70% 34.5% 2016 2017

INDUSTRY

Group Liabilities and Equity up 9% KShs: 647B

Deposits up 11% KShs: 500B Balances to banks and Debt down 28% KShs: 26B Equity up 10% KShs:106B Other Liabilities up 6% KShs: 15B

KCB Bank Kenya Liabilities and Equity up 10% KShs: 556B

Deposits up 14% KShs: 440B Balances to banks and Debt down 40% KShs: 16B Equity up 10% KShs:89B Other Liabilities down 3% KShs: 11B

79% of Funding from Deposits

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KCB Group KCB Bank Kenya

Well-funded and Diverse Portfolio

Deposits by Type FY 16

65% 5% 24% 6%

Demand Savings Term Call

65% 4% 26% 5%

Deposits by Type FY 17

42% 50% 51% 55% 47% 46% 2% 3% 3% 2015 2016 2017 Corporate Retail Other

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Strong capital foundation for the future

Group Core Capital to RWA Group Total Capital to RWA

10.5% 10.50% 10.50% 15.7% 15.30% 15.50% 2015 2016 2017

• Min. Core/RWA

Core Capital /RWA 14.5% 14.50% 14.50% 16.9% 18.00% 17.80% 2015 2016 2017

• Min. Total/TWA

Total Capital /RWA

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Resolute strategy delivers 9% balance sheet growth

KShs Billions KCB Group KCB Bank Kenya Actual 2016 Actual 2017 Y-O-Y Change Actual 2016 Actual 2017 Y-O-Y Change Cash and balances with central bank 29.4 29.1 (1%) 26.1 26.0 (1%) Balances with other institutions 43.7 43.9 0% 6.1 13.1 115% Investments in Government & Other securities 102.5 110.0 7% 91.0 94.6 4% Net loans and advances 385.7 422.7 10% 353.9 387.9 10% Fixed assets 12.7 14.0 10% 9.2 9.5 3% Other assets 21.2 27.1 28% 18.4 24.5 33% Total Assets 595.2 646.7 9% 504.8 555.6 10% Customer Deposits 448.2 499.5 11% 386.6 440.2 14% Balances due to other banks 13.1 11.0 (16%) 5.6 5.2 (7%) Other liabilities 14.4 15.2 6% 11.0 10.7 (3%) Long-term debt 23.0 14.9 (35%) 20.6 10.6 (49%) Total Liabilities 498.7 540.7 8% 423.8 466.6 10% Shareholders’ Equity 96.6 106.0 10% 81.0 89.0 10% Total Liabilities and Equity 595.2 646.7 9% 504.8 555.6 10% 24

Stable profitability despite interest rate pressure

KShs Billions KCB Group KCB Bank Kenya Actual 2016 Actual 2017 Y-O-Y Change Actual 2016 Actual 2017 Y-O-Y Change Interest Income 62.8 63.7 1% 56.2 56.9 1% Interest Expense (15.8) (15.3) (3%) (13.3) (12.8) (3%) Net interest income 47.0 48.4 3% 42.9 44.1 3% Foreign exchange income 5.5 4.7 (15%) 2.2 2.9 33% Net fees and commissions 12.6 14.7 16% 9.1 10.7 18% Other income 4.3 3.6 (16%) 4.0 3.3 (18%) Total other operating income 22.5 23.0 2% 15.3 16.9 11% Total other operating expenses (32.9) (34.9) (6%) (25.9) (28.6) (9%) Net provisions for bad debts (3.8) (5.9) 55% (3.8) (5.0) 32% Profit Before Loss on Monetary Position 32.7 30.5 (7%) 28.5 27.5 (4%) Loss on Monetary Position (3.6) (1.4) (61%) 0.0 0.0

• Profit before tax

29.1 29.1 0% 28.5 27.5 (4%) Tax (9.4) (9.4) 0% (8.7) (8.2) (5%) Profit after tax 19.7 19.7 0% 19.8 19.2 (3%) 25

Income Distribution

83% 82% 80% 16% 17% 19% 1% 1% 1% 2015 2016 2017

Interest Income & Growth

Loans and advances

• Govt. Securities

Placements & Money Markets

% ∆

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47% 42% 46% 13% 14% 18% 17% 24% 20% 22% 19% 16%

2015 2016 2017

NFI Mix & Growth

Fees and Commission Lending Fees Fx Income Other Income

14%

• (18%)

(15%)

29% 13% % ∆

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

23.6% 20.1% 47.4% 51.9% 7.8% 8.0% 84.6% 85.6% 14.5% 14.0% 28.3% 32.9% 2.8% 2.9% 9.2% 9.1% 0.9% 1.0% 90.7% 87.4% 19% 15% 16% 16% 19.5% 46.2% 8.5% 74.4% 14.0% 32.2% 3.0% 8.9% 1.5% 85.1% 10% 11%

Q1 17 Q217 Q3 17 KENYA GROUP

20.3% 52.5% 7.9% 79.6% 23.3% 35.0% 3.1% 7.9% 1.0% 86.6% 14% 8% 22.6% 46.8% 8.5% 75.9% 11.9% 27.7% 2.9% 9.1% 1.4% 88.7% 10% 14%

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*excluding one off restructuring costs

2017 Dividend

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KCB Group paid an interim dividend in October 2017

• f KShs. 1.00 per share.

At the AGM to be held on 27 April 2018, at Safaricom Kasarani Indoor Stadium, we shall propose a final dividend of KShs. 2.00 per share. Based on the 2017 performance of the Group, the proposed dividend is maintained at the same payout level as 2016. Taking into consideration business performance during the current year, the Group anticipates it shall be able to pay an interim dividend to shareholders.

Outlook 2018

Return on Average Equity Cost to Income Ratio* Gross NPL to Gross Loans Non funded income ratio Cost of Funds Net Interest Margin Cost of Risk Cost of Funds Customer Deposit Growth

2018

21.1% 46.0% 3.3% 8.7% 3.3% 7.0% 30.9% 1.3% 11% 29

Strategic Initiatives:

• Excellence in Customer experience: NPS 60%
• Digital financial services / AI: NFI 40%
• Strong shareholder value: ROE >21%
• Growth in Youth and Women enterprises
• Excellent operations performance: CIR 45%
• Outstanding employee engagement: 85%

satisfaction level

Net Loans Growth

8%

Targets:

• Continue to improve efficiency
• Increase shareholder value
• Manage asset quality
• Full digital transformation
• Relentless drive for excellence in customer

experience

*excluding one off restructuring costs

Thank you.

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