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

KCB INVESTOR PRESENTATION 1H2016 GROUP FINANCIAL RESULTS AUGUST, 2016 JOSHUA OIGARA LAWRENCE KIMATHI GROUP CEO GROUP CFO

OPERATING ENVIRONMENT

Strong Kenyan Macro Environment Kenya Exchange Rate Kenya GDP 5.7% 5.9% 103.10 101.10 5.6% 5.3% 99.25 90.60 2013 2014 2015 1Q-16 2014 Jun-15 2015 Jun-16 Kenya Interest Rates Kenya Inflation Interbank Rate 91 Day T-Bill 7.0% 6.9% 14.5% 6.7% 11.5% 5.8% 10.9% 9.1% 8.5% 10.7% 7.2% 7.1% 2014 Jun-15 2015 Jun-16 2014 Jun-15 2015 Jun-16 4

Stable Regional Macro Indicators Regional Currencies Regional GDP 3,410.00 7.3% 7.4% 6.9% 2,771.00 5.5% 4.8% 4.7% 4.7% 2,190.00 1,733.00 1,676.90 1,595.08 779.00 Tanzania Uganda Rwanda Burundi 689.81 Tanzania Uganda Rwanda Burundi -7.0% 2014 Jun-15 2015 Jun-16 2013 2014 2015 Regional Interest Rates Regional Inflation 7.90% 15.3% 13.6% 6.3% 6.1% 5.9% 11.8% 5.5% 3.90% 7.6% 6.4% 3.1% 4.4% 1.8% Tanzania Uganda Rwanda Burundi Tanzania Uganda Rwanda 2014 Jun-15 2015 Jun-16 2014 Jun-15 2015 Jun-16 *SSP is currently at 51.07 up from 18.5 FY15 5

BANKING SECTOR

Chase Bank (IR) Engagement Appointment for 1 year All branches re-opened 27 April 2016 Performance to date: Transaction volumes Total deposits Total withdrawals New customers 460,951 KES 12.362B KES 12.210B 3,000 Available services Telegraphic Money ATM Clearing RTGS Trade Visa Transfers Transfer 7

Chase Bank (IR) Milestones Reopen the bank Operationalize the Independent Business New Investor bank Review • April/May 2016 • September 2016 • June/July 2016 • August 2016 • KCB • CBK • KCB • KDIC • KCB’s assignment at Chase Bank (IR) is complete • KCB to scale back resources: • 50% by 31 August • 100% by 30 September 2016 8

The Banking (Amendment) Bill, 2015 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 Lending Rates as at June 2016: KCB Industry • Personal 16.74% • Personal 18.33% • Business 19.90% • Business 19.26% • Corporate 17.35% • Corporate 17.36% • Average 17.99% • Average 18.32% 9

CAPITAL RAISE

Capital Raise • 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 11

DIGITAL CHANNEL PERFORMANCE

78% of Transaction outside the Branch 1H16 Transactions 1H15 Transactions Branch Branch Transactions Transactions 22% Non Branch 31% Non Branch Transactions Transactions 69% 78% Value of Loans • To June 2016 KES 11.3B Number of loans • To June 2015 KES 2.1B • To June 2016 6.1M Number of deposit • To June 2015 0.8M accounts • To June 2016 6.5M • To June 2015 2.1M 13

47% Growth in Channel Revenue Channels activity Channel Revenues KES 'M' 5.6 458% 71% -5% 39% 4.7 376 3.8 305 3.2 3.1 3.1 2.9 271 2.8 205 193 178 119 21 Agent banking (Ave. Mobile banking (Ave. ATM (Ave. POS (Ave.Trnx/day) Trnx/day) Trnx/month) Trnx/Month '000's) Agency Mobile ATMs POS Jun-15 Jun-16 Jun-15 Jun-16 Agency Merchants ATM Mobile Branch Transactions 121% 46% 53% 5% 2% (1H15) (1H15) (1H15) (1H15) (1H15) 3.0 Mn 2.1 Mn 20.3Mn 6.3 Mn 13.1Mn (1H16) (1H16) (1H16) (1H16) (1H16) 6.7 Mn 31.1Mn 3.0 Mn 6.7 Mn 13.3Mn 14

OUR PERFORMANCE TO DATE

8% Growth in Loans and Advances KShs B Group Asset Portfolio Kenya Asset Portfolio -1% 560 567 558 25 27 27 9% 468 467 23 37 108 90 88 428 440 47 34 41 23 26 371 97 96 82 78 77 113 21 86 45 95 90 347 8% 11% 315 346 312 321 283 244 214 1H-15 2015 1H-16 1H-13 1H-14 1H-15 2015 1H-16 Net Loans and advances Investment in Govt. Securities Cash and Balances with Central Bank and other Financial Institutions Other Assets 16

-70% Balance Sheet Impact in South Sudan Assets: SSP ‘000 Assets: KES ‘B 576% 43% 98% 49% -88% -86% -86% -62% 8,666,898 60 23 19 1,714,269 1,282,898 1,151,840 281,225 6 3 171,031 3 1 196,654 0 86,239 Net loans and Other Assets Investments in Cash and Balances Net loans and Other Assets Investments in Cash and Balances advances Government with Central Banks advances Government securities with Central Banks securities and other Financial and other Financial 1H-15 1H-16 1H-15 1H-16 Institutions Institutions Funding: KES ‘B Funding: SSP ‘000 294% 472% 295% 373% -70% - -71% -71% 9,322,313 76 2,363,273 23 943,384 464,547 8 238,801 99,609 98,150 17,407 4 2 1 - 0 Deposits Bal.to banks and debt Equity Other Deposits Bal.to banks and debt Equity Other 1H-15 1H-16 1H-15 1H-16 17

Balanced Loan Segmentation 1% 2% 3% 3% 3% 3% 4% 5% 6% 6% 7% 8% 13% 13% 13% 12% 18% 17% 32% 31% H1-15 H1-16 Personal Real Estate Manufacturing Trade Building & Construction Transport Financials Agriculture Tourism, Restaurant & Hotels Energy & Water Mining & Quarying 18

Marginal Drop in Asset Quality 8.8% 8.9% 8.4% 7.3% 6.6% 1.9% 1.7% 1.4% 1.2% 0.6% 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 19

Coverage Levels supported by increased provisioning 79.5% 71.8% 71.1% 69.3% 52.7% 45.7% 44.0% 41.4% 36.9% 36.0% 1H-13 1H-14 1H-15 2015 1H-16 IFRS CBK 20

77% of Funding from Deposits KShs B Kenya Funding Portfolio 567 -1% 560 558 11 10 9 468 9% 467 7 13 78 81 91 428 7 81 72 440 35 44 26 6 73 17 32 65 371 31 6 17 56 22 443 -2% 433 424 367 16% 352 348 288 317 1H-13 1H-14 1H-15 2015 1H-16 1H-15 2015 1H-16 Deposits Bal. to banks and debt Equity Other Liabilities 21

72% Current and Savings Account Deposits 2% 3% 2% 2% 5% 48% 47% 44% 54% 55% 51% 50% 50% 45% 42% 1H13 1H14 1H15 2015 1H16 Corporate Retail Other Deposits by Type 1H16 Deposits by Type FY15 Deposits by Type 1H15 4% 5% 5% 23% 23% 30% 60% 8% 64% 6% 66% 6% Demand Savings Term Call 22

Sufficient Core Capital, Total Capital to increase through Tier 2 Capital 16.5% 15.9% 21.0% 14.7% 14.6% 20.7% 14.1% 16.0% 15.9% 15.4% 10.5% 10.5% 10.5% 10.5% 10.5% 14.5% 14.5% 14.5% 14.5% 14.5% 1H-13 1H-14 1H-15 2015 1H-16 1H-13 1H-14 1H-15 2015 1H-16 Min. Core/RWA Core Capital /RWA Min. Total/TWA Total Capital /RWA 23

19% Kenya PBT and 14% Group PBT Growth KShs B KShs B GROUP PBT KENYA PBT 15.1 14.0 13.2 11.7 11.8 10.7 10.1 9.0 1H-13 1H-14 1H-15 1H-16 1H-13 1H-14 1H-15 1H-16 24

19% growth in Kenya PBT strengthens the Group Revenue 1H16 Revenue 1H15 Burundi, 0.7% South Sudan, 4.3% Burundi, 0.9% South Sudan, 10.5% Rwanda, 2.8% Rwanda, 2.7% Tanzania, 2.9% Tanzania, 3.2% Uganda, 2.6% Uganda, 2.6% Kenya, 80.2% Kenya, 86.6% Profitability 1H16 Profitability 1H15 South Sudan, 6.9% Burundi, 0.0% South Sudan, 4.0%Burundi, 0.2% Rwanda, 1.3% Rwanda, 0.8% Tanzania, 1.4% Tanzania, 1.3% Uganda, 0.5% Uganda, 0.0% Kenya, 90.0% Kenya, 93.6% 25

9% growth of Kenya Balance Sheet boosts overall contribution Deposits 1H16 Deposits 1H15 Burundi, 1% Burundi, 1% South Sudan, 5% Rwanda, 3% South Sudan, 17% Tanzania, 3% Uganda, 3% Rwanda, 3% Tanzania, 3% Uganda, 5% Kenya, 85% Kenya, 71% Total Assets 1H16 Total Assets 1H15 Burundi, 1% Burundi, 1% South Sudan, 5% South Sudan, 15% Rwanda, 3% Tanzania, 4% Uganda, 3% Rwanda, 3% Tanzania, 4% Uganda, 4% Kenya, 73% Kenya, 84% 26

Asset Portfolio Summary KShs Millions KCB BANK KENYA KCB GROUP Actual Actual % Y-O-Y Actual Actual % Y-O-Y Jun - 16 Jun - 15 Change Jun - 16 Jun - 15 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 82,116 85,706 -4% 96,352 113,471 -15% securities 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% 27

Funding Portfolio Summary KShs Millions KCB BANK KENYA KCB GROUP Actual Actual % Y-O-Y Actual Actual % Y-O-Y Jun - 16 Jun - 15 Change Jun - 16 Jun - 15 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% 488,512 -4% Total Liabilities 396,297 354,940 12% 468,986 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% 28