KCB INVESTOR PRESENTATION 1H2016 GROUP FINANCIAL RESULTS AUGUST, - - PowerPoint PPT Presentation

KCB INVESTOR PRESENTATION 1H2016 GROUP FINANCIAL RESULTS

AUGUST, 2016

JOSHUA OIGARA

GROUP CEO

LAWRENCE KIMATHI

GROUP CFO

OPERATING ENVIRONMENT

Strong Kenyan Macro Environment

4

90.60 99.25 103.10 101.10

2014 Jun-15 2015 Jun-16

Kenya Exchange Rate

6.9% 7.0% 6.7% 5.8% 2014 Jun-15 2015 Jun-16

Kenya Inflation

7.2% 10.7% 14.5% 9.1% 8.5% 11.5% 10.9% 7.1% 2014 Jun-15 2015 Jun-16

Kenya Interest Rates

Interbank Rate 91 Day T-Bill

5.7% 5.3% 5.6% 5.9%

2013 2014 2015 1Q-16

Kenya GDP

Stable Regional Macro Indicators

5

*SSP is currently at 51.07 up from 18.5 FY15

6.1% 3.1% 1.8% 7.90% 5.5% 5.9% 6.3% 3.90%

Tanzania Uganda Rwanda Burundi Regional Inflation 2014 Jun-15 2015 Jun-16

13.6% 11.8% 4.4% 7.6% 15.3% 6.4%

Tanzania Uganda Rwanda Regional Interest Rates 2014 Jun-15 2015 Jun-16

1,733.00 2,771.00 689.81 1,595.08 2,190.00 3,410.00 779.00 1,676.90

Tanzania Uganda Rwanda Burundi Regional Currencies 2014 Jun-15 2015 Jun-16

7.3% 4.7% 4.7% 4.8%

7.4% 5.5% 6.9%

• 7.0%

Tanzania Uganda Rwanda Burundi

Regional GDP

2013 2014 2015

BANKING SECTOR

Chase Bank (IR) Engagement

7

Available services ATM Clearing RTGS Telegraphic Transfers Trade Money Transfer Visa Performance to date:

Transaction volumes 460,951 Total deposits KES 12.362B Total withdrawals KES 12.210B New customers 3,000

All branches re-opened 27 April 2016 Appointment for 1 year

Chase Bank (IR) Milestones

8

Reopen the bank

• April/May 2016
• KCB

Operationalize the bank

• June/July 2016
• KCB

Independent Business Review

• August 2016
• KDIC

New Investor

• September 2016
• CBK
• KCB’s assignment at Chase Bank (IR) is complete
• KCB to scale back resources:
• 50% by 31 August
• 100% by 30 September 2016

The Banking (Amendment) Bill, 2015

9

The new section:

• the maximum interest rate chargeable in Kenya at no more than four percent,

the base rate set and published by the CBK; and

• the minimum interest granted on a deposit held in interest earning in Kenya to

at least seventy percent, the base rate set and published by the CBK

KCB

• Personal

16.74%

• Business

19.90%

• Corporate

17.35%

• Average

17.99% Industry

• Personal

18.33%

• Business

19.26%

• Corporate

17.36%

• Average

18.32%

Lending Rates as at June 2016:

CAPITAL RAISE

Capital Raise

11

• Scrip performance - 54% participation by

shareholders in the issue

• Strong cash flow expected for the FY 2016

leading to the rescheduling of the Rights Issue

• Debt capital exercise to close in Q3-16

DIGITAL CHANNEL PERFORMANCE

13

Branch Transactions 22% Non Branch Transactions 78%

1H16 Transactions

Branch Transactions 31% Non Branch Transactions 69%

1H15 Transactions

78% of Transaction outside the Branch

Number of deposit accounts

• To June 2016 6.5M
• To June 2015 2.1M

Number of loans

• To June 2016 6.1M
• To June 2015 0.8M

Value of Loans

• To June 2016 KES 11.3B
• To June 2015 KES 2.1B

14

47% Growth in Channel Revenue

21 178 205 271 119 305 193 376

Agency Mobile ATMs POS

Channel Revenues KES 'M'

Jun-15 Jun-16

458% 71%

• 5%

39%

Agency Merchants Mobile

121%

(1H15) 3.0 Mn (1H16) 6.7 Mn

46%

(1H15) 2.1 Mn (1H16) 3.0 Mn

53%

(1H15) 20.3Mn (1H16) 31.1Mn

2%

(1H15) 13.1Mn (1H16) 13.3Mn

5%

(1H15) 6.3 Mn (1H16) 6.7 Mn

Branch ATM

Transactions

2.8 4.7 2.9 3.2 3.1 5.6 3.1 3.8

Agent banking (Ave. Trnx/day) Mobile banking (Ave. Trnx/month) ATM (Ave. Trnx/Month '000's) POS (Ave.Trnx/day)

Channels activity

Jun-15 Jun-16

OUR PERFORMANCE TO DATE

8% Growth in Loans and Advances

16

KShs B

214 244 321 346 347 90 95 113 97 96 45 77 108 88 90 21 23 25 27 27 1H-13 1H-14 1H-15 2015 1H-16

Group Asset Portfolio

440 560 558 567 371

• 1%

8%

283 312 315 86 78 82 26 41 47 34 37 23 1H-15 2015 1H-16

Kenya Asset Portfolio

9%

Net Loans and advances Investment in Govt. Securities Cash and Balances with Central Bank and other Financial Institutions Other Assets

11%

428 467 468

196,654 86,239 1,151,840 1,282,898 281,225 171,031 1,714,269 8,666,898 Net loans and advances Other Assets Investments in Government securities Cash and Balances with Central Banks and other Financial Institutions

Assets: SSP ‘000

1H-15 1H-16

576% 49% 98% 43%

• 70% Balance Sheet Impact in South Sudan

17

2,363,273 17,407 238,801 98,150 9,322,313 99,609 943,384 464,547 Deposits Bal.to banks and debt Equity Other

Funding: SSP ‘000

1H-15 1H-16 6 3 19 60 1 3 23 Net loans and advances Other Assets Investments in Government securities Cash and Balances with Central Banks and other Financial Institutions

Assets: KES ‘B

1H-15 1H-16

• 88%
• 86%
• 86%
• 62%

76

• 8

4 23 2 1 Deposits Bal.to banks and debt Equity Other

Funding: KES ‘B

1H-15 1H-16

• 70%
• 71%
• 71%
• 294%

472% 295% 373%

Balanced Loan Segmentation

18

32% 31% 18% 17% 13% 12% 13% 13% 7% 8% 6% 6% 3% 3% 4% 5%

1% 2%

3% 3%

H1-15 H1-16

Personal Real Estate Manufacturing Trade Building & Construction Transport Financials Agriculture Tourism, Restaurant & Hotels Energy & Water Mining & Quarying

Marginal Drop in Asset Quality

19

0.6% 1.9% 1.7% 1.4% 1.2% 8.4% 8.8% 7.3% 6.6% 8.9% 1H-13 1H-14 1H-15 2015 1H-16

CoR NPL Group

• 2016 NPL Increase driven by 3 key accounts; Construction and Government related
• Loans fully covered by collateral
• Full recovery expected by year end

Coverage Levels supported by increased provisioning

20

36.9% 44.0% 45.7% 41.4% 36.0% 52.7% 69.3% 71.8% 79.5% 71.1%

1H-13 1H-14 1H-15 2015 1H-16 IFRS CBK

288 352 443 424 433 22 17 35 44 26 56 65 78 81 91 6 6 11 9 10

1H-13 1H-14 1H-15 2015 1H-16

77% of Funding from Deposits

21

KShs B

• 2%
• 1%

317 348 367

31 32 17 73 81 72 7 7 13 1H-15 2015 1H-16

Kenya Funding Portfolio

16% 428 467 468

9% Deposits

• Bal. to banks and debt

Equity Other Liabilities

371 440 567 558 560

72% Current and Savings Account Deposits

22

Deposits by Type 1H16 Deposits by Type 1H15

64% 8% 23% 5% 66% 6% 23% 5% 45% 42% 51% 50% 50% 54% 55% 44% 47% 48% 2% 2% 5% 3% 2% 1H13 1H14 1H15 2015 1H16 Corporate Retail Other

60% 6% 30% 4%

Deposits by Type FY15

Demand Savings Term Call

Sufficient Core Capital, Total Capital to increase through Tier 2 Capital

23

10.5% 10.5% 10.5% 10.5% 10.5% 16.5% 15.9% 14.6% 14.1% 14.7% 1H-13 1H-14 1H-15 2015 1H-16

• Min. Core/RWA

Core Capital /RWA 14.5% 14.5% 14.5% 14.5% 14.5% 21.0% 20.7% 15.9% 15.4% 16.0% 1H-13 1H-14 1H-15 2015 1H-16

• Min. Total/TWA

Total Capital /RWA

19% Kenya PBT and 14% Group PBT Growth

24

9.0 10.7 11.8 14.0 1H-13 1H-14 1H-15 1H-16 KENYA PBT KShs B 10.1 11.7 13.2 15.1 1H-13 1H-14 1H-15 1H-16 GROUP PBT KShs B

19% growth in Kenya PBT strengthens the Group

25

Profitability 1H15 Revenue 1H15 Revenue 1H16 Profitability 1H16

Kenya, 93.6% Uganda, 0.0% Tanzania, 1.3% Rwanda, 0.8% South Sudan, 4.0%Burundi, 0.2% Kenya, 86.6% Uganda, 2.6% Tanzania, 2.9% Rwanda, 2.8% South Sudan, 4.3%Burundi, 0.9% Kenya, 80.2% Uganda, 2.6% Tanzania, 3.2% Rwanda, 2.7% South Sudan, 10.5% Burundi, 0.7% Kenya, 90.0% Uganda, 0.5% Tanzania, 1.4% Rwanda, 1.3% South Sudan, 6.9% Burundi, 0.0%

9% growth of Kenya Balance Sheet boosts overall contribution

26

Total Assets 1H15 Deposits 1H15 Deposits 1H16 Total Assets 1H16

Kenya, 84% Uganda, 3% Tanzania, 4% Rwanda, 3% South Sudan, 5% Burundi, 1% Kenya, 85% Uganda, 3% Tanzania, 3% Rwanda, 3% South Sudan, 5% Burundi, 1% Kenya, 73% Uganda, 4% Tanzania, 4% Rwanda, 3% South Sudan, 15% Burundi, 1% Kenya, 71% Uganda, 5% Tanzania, 3% Rwanda, 3% South Sudan, 17% Burundi, 1%

Asset Portfolio Summary

27

KShs Millions KCB BANK KENYA KCB GROUP Actual Jun - 16 Actual Jun - 15 % Y-O-Y Change Actual Jun - 16 Actual Jun - 15 % Y-O-Y Change Cash 6,591 6,788

• 3%

10,913 16,209

• 33%

Balances with Central Bank 34,926 11,675 199% 34,926 11,675 199% Balances with other institutions 5,797 7,458

• 22%

43,827 79,985

• 45%

Investments in Government & Other securities 82,116 85,706

• 4%

96,352 113,471

• 15%

Net loans and advances 315,327 283,200 11% 347,396 320,601 8% Fixed assets 8,683 7,377 18% 11,094 11,039 0% Other assets 14,680 26,169

• 44%

15,434 13,630 13% Total Assets 468,119 428,374 9% 559,942 566,610

• 1%

Funding Portfolio Summary

28

KShs Millions KCB BANK KENYA KCB GROUP Actual Jun - 16 Actual Jun - 15 % Y-O-Y Change Actual Jun - 16 Actual Jun - 15 % Y-O-Y Change Customer Deposits 366,821 317,059 16% 433,424 443,036

• 2%

Balances due to other banks 1,136 10,185

• 89%

8,570 12,273

• 30%

Other liabilities 12,854 6,781 90% 9,246 10,728

• 14%

Long-term debt 15,487 20,914

• 26%

17,746 22,474

• 21%

Total Liabilities 396,297 354,940 12% 468,986 488,512

• 4%

Shareholders’ Equity 71,822 73,434

• 2%

90,956 78,097 16% Total Liabilities and Equity 468,119 428,374 9% 559,942 566,610

• 1%

Growth in Profitability supported by Increased Margins

29

KShs Millions KCB BANK KENYA KCB GROUP Actual Jun - 16 Actual Jun - 15 % Y-O-Y Change Actual Jun - 16 Actual Jun - 15 % Y-O-Y Change Interest Income 28,291 22,525 26% 31,638 25,854 22% Interest Expense 7,783 5,442 43% 9,109 6,408 42% Net interest income 20,508 17,083 20% 22,529 19,446 16% Foreign exchange income 1,036 1,213

• 15%

1,576 2,014

• 22%

Net fees and commissions 4,613 4,544 2% 6,473 6,844

• 5%

Other income 2,111 1,613 31% 2,351 2,411

• 3%

Total operating income 28,268 24,453 16% 32,929 30,715 7% Total operating expenses 12,529 11,219 12% 15,763 14,919 6% Provisions for bad debts 1,775 1,450 22% 2,071 2,593

• 20%

Profit before tax 13,964 11,783 19% 15,095 13,203 14% Tax 4,189 3,535 19% 4,595 3,961 16% Profit after tax 9,775 8,248 19% 10,500 9,242 14%

Overview of Key Financial Ratios

30 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

25.0% 22.4% 50.1% 48.4% 6.6% 8.5% 79.5% 69.1% 24.8% 23.3% 37.3% 26.0% 3.9% 4.5% 8.8% 9.4% 1.4% 1.6% 83.8% 84.4% 22% 16% 12% 7% 24.4% 47.9% 8.9% 71.1% 19.5% 31.6% 3.9% 9.7% 1.2% 80.2% 8%

• 2%

1H15 FY15 1Q16 KENYA GROUP

24.0% 48.6% 7.3% 71.8% 28.8% 36.7% 2.9% 8.5% 1.7% 72.0% 32% 26% 27.5% 44.3% 8.5% 71.4% 21.6% 27.5% 4.1% 10.7% 1.1% 86.0% 11% 16%

For further information please contact Investor Relations department Email: investorrelations@kcb.co.ke www.kcbbankgroup.com