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 6,483 staff 15.7M Customers 153,431 shareholders Market Capitalization $1.5B 2

Our Purpose, Values and Strategic Objectives Excellence in Excellent Customer operations experience: performance: NPS target of 60% CIR 45% Digital financial Outstanding services / AI: employee engagement: NFI contribution 40% 85% satisfaction level Strong shareholder value: ROE >21%, Growth in Youth and Women enterprises 3

2017 Group Awards • The Banker Awards 2017 Recognition of KCB • Bank of the Year Kenya • Sustainable Finance Catalyst • Best Bank in Sustainable Finance (Tier 1 Banks) Group: • Euro Money Awards • Best Bank in Kenya • Best Bank for Corporate Social Responsibility in Africa • Africa Investor • Best Performing Company • Best Ai 40 CEO 4

KCB 2jiajiri Programme highlights Domestic Services - 866 Building and Construction – Beauty and 1,877 Personal Care Automotive – 945 Engineering – Agribusiness – 524 8,082 12,294 beneficiaries Future of 2jiajiri: 4,519 Business • Catalyze job and wealth creation for incubation interventions at least 100,000 youth engaged in the informal sector within Eastern Africa • 213 groups with • Investment of over KShs 2 billion to 3,587 individuals nurture and grow youthful and SME • 932 individuals entrepreneurs 5

Improvement in the Macro-Economics: Kenya GDP Growth Rate (%) 5.5% 5.0% 4.9% 4.7% 4.4% Q1 2017 Q2 2017 Q3 2017 2017P 2018P 12 Month Private Sector Credit Growth 3.8% 3.3% 2.7% 2.4% 2.4% 2.0% 2.1% 1.7% 1.6% 1.5% 1.4% Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Source: CBK, WB 6

Improvement in the Macro-Economics: Kenya Overall Inflation USD/KES Exchange Rate 104.0 103.1 103.2 103.7 103.2 103.2 11.70% 11.48% 9.21% 8.04% 7.06% 6.99% 5.72% Interest Rate Evolution (%) 4.50% 13.66 13.71 13.63 13.66 13.52 10.00 10.00 8.61 8.60 8.76 8.13 8.09 8.20 8.01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 91 day T bill Average lending rates CBR Rate Sources: CBK, KNBS 7

Macro-Economic Highlights: Regional GDP (%) Inflation 10.3 9.6 480.0% 8.5 18.0% 7.0 6.0 7.0 7.0 6.9 6.8 6.5 6.2 4.4 5.4 5.4 4.9 4.4 8.1% 8.1% 7.1% 7.9% 182.2% 0.5 6.1% 5.4% 0.1 5.8% 52 .8 3.1% Uganda Tanzania Rwanda Burundi Ethiopia % 1.8% 1.7% Tanzania Uganda Rwanda Burundi Ethiopia South Sudan (3.7) (7.1) 2014 2015 2016 2017 2014 2015 2016 2017 91 Day T-Bills Exchange rates to USD 20.0% 3,491 3,484 15.0% 15.0% 14.0% 13.6% 2,207 11.8% 2,186 9.8% 9.2% 1,643 8.6% 9.0% 8.8% 1,629 7.1% 7.0% 6.4% 6.0% 827.9 4.4% 785.6 4.0% 3.8% 3.0% 27.58 111.4 44.3 22.40 Tanzania Uganda Rwanda Burundi Ethiopia South Sudan Tanzania Uganda Rwanda Burundi South Sudan 2016 2017 2014 2015 2016 2017 Sources: IMF, Bloomberg 8

87% of Transactions outside the Branch 2017 2016 Agency & POS, 11% Agency & POS 20% ATMs, 13% ATMs 10% Mobile, 53% Branch Mobile Branch Teller, 23% 57% Teller 13% Source: KCB data 9

42% growth in Agency and POS volumes Agency and POS transactions (M) Agency and POS volume (KShs B) 169 119 30 32% 23 2016 2017 2016 2017 Source: KCB data 10

Marginal change in ATM volumes ATM transactions (M) ATM volume (KShs B) 153 152 15 14 ATMs ATMs 2016 2017 2016 2017 Source: KCB data 11

Sustained Growth on Mobile Mobile Loan Disbursement (KShs B) Mobile transactions (M) 67% 88.8 53.1 29.6 14.1 17 6.5 2016 2017 2016 2017 KCB App Total transactions Source: KCB data 12

Over 500% growth on the KCB App KCB Mobile App Volumes Customer Utilization % ∆ 10.00 4.00 900,000 30,000.00 9.00 3.50 800,000 25,243.46 3.34 25,000.00 8.00 700,000 3.00 124% 7.00 600,000 20,000.00 2.50 6.00 500,000 5.00 2.00 15,000.00 763,084 8.72 400,000 11,289.96 117% 4.00 1.50 300,000 10,000.00 3.00 1.00 351,259 200,000 0.81 2.00 5,000.00 0.50 100,000 1.00 1.43 - - - - 2016 2017 2016 2017 Value Transacted (B) Transaction No. (M) Total Downloads Av value per customer Source: KCB data 13

Channel Expansion Branches 7% 7% 1% 263 260 255 255 242 238 226 2012 2013 2014 2015 2016 2017 2018 F Agents 15,082 13,258 11,948 10,102 6,085 4,627 2012 2013 2014 2015 2016 2017 14

2017 Staff Rationalization programme The key drivers of the programme Distribution • Right sizing of the company’s resource 249 requirements • Alignment to advancements and changes of technology and todays’ business operating models 67 KCB Bank Kenya KCB Subsidiaries Staff Released: 316 Total Spend (Kshs B) 2.016 65% 35% 0.186 Average age: 45 years 2016 2017 15

OUR PERFORMANCE TO DATE

9% Total Assets growth driven by Net Loans & Advances KCB Group KCB Bank Kenya Net Loans and Net Loans and advances advances up 10% up 10% KShs: 423B KShs: 388B Investment in Investment in Govt. Govt. Securities up Securities up 7% 4% KCB Bank Group Asset KShs: 110B KShs: 95B Kenya Asset Portfolio up Portfolio up 9% 10% Cash and Cash and Balances with KShs: 647B Balances with KShs: 556B Central Bank Central Bank and other and other Financial Financial Institutions Institutions up 21% 0% Fixed and Fixed and KShs:39B KShs:73B other Assets other Assets up 21% up 23% KShs: 41B KShs: 34B 17

Well-diversified loan book KCB Kenya Dec 2017 Industry Sept 2017 MINING & QUARRYING 0.5% 0.5% ENERGY & WATER 2.4% 4.8% 2.8% AGRICULTURE 3.8% TOURISM,RESTAURANT & HOTELS 3.3% 2.5% FINANCIALS 4.7% 3.5% TRANSPORT 5.4% 8.2% BUILDING & CONSTRUCTION 8.5% 4.7% TRADE 8.9% 18.8% MANUFACTURING 11.4% 12.3% REAL ESTATE-OTHERS 17.1% 15.7% 35.1% PERSONAL 25.2% * Group Loans KShs.B 9 9 19 423 386 Dec-16 Retail Corporate Mortgage Dec-17 18

2017 NPL Movement 8.5% 7.9% 8.0% 7.9% 1.5% 1.0% 1.0% 1.0% Q1 2017 Q2 2017 Q3 2017 2017 CoR NPL Group 16.4% 15.5% 13.1% 12.3% 11.0% 10.4% 10.4% 10.4% 7.8% 7.3% 6.5% 6.2% 3.7% 3.6% 3.3% 3.2% CHECK OFF MORTGAGE CORPORATE SME & MICRO Q1 2017 Q2 2017 Q3 2017 Q4 2017 19

Steady Coverage Position INDUSTRY 74.4% 69.5% 48.7% 43.6% 37.70% 34.5% 2016 2017 2016 2017 IFRS CBK 2017 industry position as at September 20

79% of Funding from Deposits KCB Group KCB Bank Kenya Deposits up Deposits up 11% 14% KShs: 500B KShs: 440B Balances to Balances to banks and banks and Debt down Debt down 28% KCB Bank 40% Group Kenya KShs: 26B KShs: 16B Liabilities and Liabilities and Equity up 9% Equity up 10% KShs: 647B KShs: 556B Equity up 10% Equity up 10% KShs:106B KShs:89B Other Other Liabilities up Liabilities 6% down 3% KShs: 15B KShs: 11B 21

Well-funded and Diverse Portfolio 2% 3% 3% 46% 47% 55% 51% 50% 42% 2015 2016 2017 Corporate Retail Other Deposits by Type FY 16 Deposits by Type FY 17 5% 6% 26% 24% 65% 5% 65% 4% Demand Savings Term Call 22

Strong capital foundation for the future Group Core Capital to RWA Group Total Capital to RWA 18.00% 17.80% 16.9% 15.7% 15.30% 15.50% 14.5% 14.50% 14.50% 10.5% 10.50% 10.50% 2015 2016 2017 2015 2016 2017 Min. Core/RWA Core Capital /RWA Min. Total/TWA Total Capital /RWA 23

Resolute strategy delivers 9% balance sheet growth KCB Group KCB Bank Kenya Actual Actual Y-O-Y Actual Actual Y-O-Y KShs Billions 2016 2017 Change 2016 2017 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 102.5 110.0 7% 91.0 94.6 4% securities 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% 448.2 499.5 11% 386.6 440.2 14% Customer Deposits 13.1 11.0 (16%) 5.6 5.2 (7%) Balances due to other banks 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 KCB Group KCB Bank Kenya Actual Actual Y-O-Y Actual Actual Y-O-Y 2016 2017 Change 2016 2017 Change KShs Billions 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%) 15.3 Total other operating income 22.5 23.0 2% 16.9 11% (25.9) Total other operating expenses (32.9) (34.9) (6%) (28.6) (9%) (3.8) Net provisions for bad debts (3.8) (5.9) 55% (5.0) 32% Profit Before Loss on Monetary 32.7 30.5 (7%) 27.5 28.5 (4%) Position (3.6) (1.4) (61%) 0.0 0.0 Loss on Monetary Position - 29.1 29.1 0% 27.5 Profit before tax 28.5 (4%) (9.4) (9.4) 0% (8.2) Tax (8.7) (5%) Profit after tax 19.7 19.7 0% 19.8 19.2 (3%) 25