RESULTS OUR WHAT DRIVES US HOW WE WHO WE ARE STRATEGY ACHIEVE - - PowerPoint PPT Presentation

FY2018 RESULTS

OUR STRATEGY

WHAT DRIVES US HOW WE ACHIEVE IT

Our Purpose Simplifying your world to enable your progress Our Promise Go Ahead Our Values Inspiring Simple Friendly Business growth while achieving the women and youth agenda Drive shareholder value Growth in Digital Financial services Operational efficiency Talent management Customer centricity Customer perspective

Market share Shared Value Brand position

Learning and growth

Staff productivity Staff development Culture change

Financial

PBT Efficiency Shareholder Value

Internal Business processes

System reliability Sustainability Control environment 2015-2019 STRATEGY:

TRANSFORMATIVE PARTNERSHIPS

WHO WE ARE

2

OUR REGIONAL PRESENCE

KCB BANK RWANDA KCB BANK BURUNDI KCB BANK TANZANIA

KCB BANK KENYA

KCB INSURANCE AGENCY KCB FOUNDATION KCB CAPITAL

• KShs. 114B

TOTAL EQUITY

258 BRANCHES

946 ATMS, 16,642 AGENTS & MERCHANTS

6,220 STAFF

17.4 MILLION CUSTOMERS

KCB BANK KENYA (ETHIOPIA REPRESENTATIVE OFFICE ) KCB BANK SOUTH SUDAN

Banking Businesses:

• KCB Bank Kenya
• KCB Bank Tanzania
• KCB Bank South Sudan
• KCB Bank Rwanda
• KCB Bank Uganda
• KCB Bank Burundi
• Ethiopia Rep. Office

Other Investments:

• KCB Capital Limited
• KCB Insurance Agency
• KCB Foundation
• Kencom House Limited

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2018 GROUP HIGHLIGHTS

Economic drivers:

• Big Four –Housing Healthcare Manufacturing Food security
• Resilient Kenya Shilling supported by record growth in diaspora

remittances, tourism & horticulture

Banking Industry:

• Momentum for mergers & acquisitions
• Imperial Bank Limited (In Receivership) (IBLR) -Acceptance of binding offer

and verification of part of the assets for transfer to KCB Bank Kenya

• Increased regulatory oversight on compliance with Kenya’s Anti-Money

Laundering and Combating the Financing of T errorism (AML/CFT)and Imposition of a fines

Adoption ofIFRS 9:

• Impact on capital ratios and the introduction of a 5 year grace

period the Central bank of Kenya

• Impact on the loan book and provisions, subsequent effect
• n P&L

HIGHLIGHTS

Overview of the year to date

2018 KENYA

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TANZANIA

• Strong growth in the

domestic demand and expansion of credit, especially to households trade and manufacturing

• Expectation is high on the

major national projects on the SGR and the facilitation

• f improved access to

modern energy services

• A favorable monetary policy

in 2018 with the BOT slashing its discount rates in from 9% to 7%

UGANDA

• Robust activity in the

manufacturing, oil and mining sectors expected to drive growth over 6% in 2019

• Growing fiscal deficit

driven largely by public infrastructure investment

• Favorable weather

conditions are key to the largely agricultural economy

2018 GROUP HIGHLIGHTS

6

Overview of the year to date

RWANDA

Sustained >7% growth over the last decade Primary drivers of the economy diversifying to service, trade and ICT , over and above the mainstay, Agriculture Made in Rwanda initiatives and international conferences boosting tourism and inflow of foreign currency

SOUTH SUDAN

• Improved economic conditions

following the signing of the peace agreement

• Reduced internal conflicts and a

moderate improvement in the

• il prices supporting the growth
• f the economy
• Oil production is expected to

recover fully in 2019 boosting the inflow of foreign currency into the economy

2018 GROUP HIGHLIGHTS

7

Overview of the year to date

BURUNDI

• Moderate recovery of the

predominantly agricultural economy

• Annual GDP growth

improving from to0.5% in 2017 to 2.8%

• Positive outlook after the

referendum held in 2018

• Opportunities in mining

and the hydropower capacity

2018 Group Awards

THE BANKER AWARDS

Bank of the Year – Banking in the Community (2Jiajiri)

BANKER AFRICA EAST AFRICA AWARDS

Best Retail bank in East Africa

THE EABC AWARDS

Best East African Company

SUSTAINABLE FINANCE CATALYST

• Best Bank in Sustainable

Finance

• Overall Winner, in sustainable

finance integration and practices (Tier 1 Banks) 8

2018 HIGHLIGHTS

AGRIBUSINESS

13,953

AUTOMOTIVE ENGINEERING

1,383

BEAUTY AND PERSONAL CARE

2,119

BUILDING AND CONSTRUCTION

4,459

DOMESTIC SERVICES

1,145

23,059

BENEFICIARIES

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 50 billion

to nurture and grow youthful and SME entrepreneurs

KCB 2jiajiri Programme highlights

Kenya 21,459 Tanzania 1,500 Rwanda 100

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From hustling to an employer – ‘Kodhis’, the Beautician

• Humble beginnings in hawking safari

bags to the realization of the pedicure and manicure business.

• Introduced to KCB Foundation’s 2Jiajiri in

2016, and now after his expansion journey, employs 15. Starting a garage business: One entrepreneur’s journey

• Joseph Mutai was a mechanic training
• n the job at a garage in Kericho when

he was introduced to the 2Jiajiri programme in 2016.

• He is now a proud owner of a motor

vehicle spares and garage business with 8 employees.

10

2018 HIGHLIGHTS

KCB Foundation Case studies

MACRO- ECONOMIC HIGHLIGHTS

MACRO- ECONOMIC HIGHLIGHTS

Kenya

2018P GDP Growth Rate( % )

Contribution to GDP Q32018(%) Q3 2018 Growth (%) 6.2%

18.89 5.20 9.62 8.73 8.69

AGRICULTURE MANUFACTURING REAL TRADE EDUCATION TRANSPORT & FINANCIAL& CONSTRUCTION ICT HEALTH MINING& ESTATE STORAGE INSURANCE QUARRYING

7.12 7.33 6.15 1.85 1.12 5.75 3.20 5.80 6.80 6.00 5.40 2.60 6.80 9.10 3.78 5.10 8.50

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GDP Growth (%)

Tanzania Uganda Rwanda Burundi Ethiopia

• 6.3

8.0 2.8 7.2 6.1 7.1 2018P* East Africa GDP Growth Rate( % )

5.7%

South Sudan

*Source: AfDB, Africa Economic Outlook 2019

MACRO- ECONOMIC HIGHLIGHTS

Regional GDP Growth

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JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2018 2 1 8 2 1 8 2018

Inflation rate Target Upper Target Lower Non Food Fuel 91da ybill A vg lendingrates CBRrate

8.03 10.00 13.65 13.49 13.22 12.78 12.61 12.61 8.04 8.02 8.00 7.97 7.73 9.00 7.67 7.64 7.63 7.56 7.36 7.34

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2 1 8 2 1 8 2 1 8 2018 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2018

Interest Rate Evolution(%)

7.50 4.83

2.50

4.20 5.71 3.50

MACRO- ECONOMIC HIGHLIGHTS

Kenya Inflation Evolution(%)

14

9.50

USD/KES Exchange Rate(%)

103.3 101.4 101.3 100.6 101.0 100.6 100.8 101.1 102.6 102.3 100.7

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2 1 8 2 1 8 2 1 8 2018 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2018

Exchange Rates to USD

Tanzania Uganda Rwanda Burundi Ethiopia

130 28 1,803 876 3,712 2,300

South Sudan

MACRO- ECONOMIC HIGHLIGHTS

Currency Movement

15

• Overall reduction on

infrastructure spending

• Increased exports of

tea and horticulture

• Increased diaspora

remittances

• Strong receipts from

tourism

• Lower imports of

food

MACRO- ECONOMIC HIGHLIGHTS

K enya 16

• 16.0%
• 14.0%
• 8.0%
• 7.2%
• 7.0%
• 5.0%
• 3.0%
• 2.5%
• 2.5%
• 2.0%
• 2.0%
• 0.8%

1.0%

Zambia South Africa Botswana Ghana BRVM Rwanda Tanzania Mauritius Seychelles Nigeria Uganda Malawi Kenya

Only African currency to strengthen against the USD in 2018

Current Account Balance (%

• fGDP)

2014

• 10.4
• 6.7
• 5.2
• 6.2
• 5.4

2015 2016 2017F 2018F

MACRO- ECONOMIC HIGHLIGHTS

K enya

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2 1 8 2 1 8 2 1 8 2018 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2 1 8 2018

2.7% 2.1% 2.0% 2.8% 4.3% 4.3% 3.9% 4.4% 3.0% 2.4%

12 Month Private Sector CreditGrowth

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CHANNEL PERFORMANCE

December2017 December2018

14% decrease in average transactions / tellerper day 15% decrease in Number of branch transactions.

OUR CHANNEL CONTRIBUTION

BRANCH TELLER

12%

AGENCY, INTERNET AND POS

32%

MOBILE

45%

ATMS

1 1%

A

• vg. Transactions / T

eller perday Number of Branch Transactions( M ) Dec 2017 Dec 2018

81.9 71.5 18.6 16.2

88% of

transactions performed

• utside the

branch

Dec 2017 Dec 2018

27%

growth in non-branch revenue to

• ver 5.2B

MOBILE

45%

AGENCY, INTERNET AND POS

26%

BRANCH TELLER

16%

ATMS

13% 19

331 172

FY 16 FY17 FY18

• No. of transactions

(M) V alueof Transactions (KShs.B)

236 62.1 32.9 52.0 24.3 32.4 55.0 49.9 19.4 16.2 1.3 1.4

B2C B2B C2B LIPA KARO

MobileTransaction type(%)

OUR CHANNEL CONTRIBUTION

FY 16 FY17 FY18

84% Growth in Mobile Loans Advances

FY 2018 FY 2017

2017 29.6B 2018

54.4B 20

3,175

FY17 FY18

Mobile Revenue (KShs.M )

2,261

204 78

FY 16 FY17 FY18

Agent revenue (KShs M)

• No. of transactions

(M) V alueof Transactions (KShs.B)

127 34.7 15.8 22.8 542 431 481 14.4 17.9 58.8 64.6 12.1 11.2 9.4 7.8 1.7 0.8 1.0 0.3

CASH DEPOSIT CASH WITHDRAWAL SCHOOL FEES BALANCE ENQUIRY BILL PAYMENT OTHERS

Agency Transaction type(%)

OUR CHANNEL CONTRIBUTION

FY16 FY17 FY18 FY 16 FY17 FY18

61%

Growth in Agency Banking Value

*Others: Account opening, mini statement, load cards and Funds transfer

FY 2018 FY 2017

21

78 FY 16 FY17 FY18

• No. of transactions

(M) V alue of Transactions (KShs.B)

OUR CHANNEL CONTRIBUTION

FY 16 FY17 FY18 86 130 15.4 7.4 15.0

51%

Growth in ATM Value

22 ATM revenue (KShs M)

390 FY 16 FY17 FY18 465 496

Over KShs 22.6B collected through 70 intelligent ATMs

49 41 FY 16 FY17 FY18

POS Revenue (KShs. M) V alue of Transactions (KShs.B)

42

OUR CHANNEL CONTRIBUTION

944 822 FY 16 FY17 FY18 856

17%

Growth in the average value per Merchant/ POS transaction

23

OUR FINANCIAL PERFORMANCE TO DATE

BALANCE SHEET HIGHLIGHTS

• Govt. Securities

Customer Deposits Net Loans & Advances Total Assets

KShs 714.3B

10% Total Assets growth

KShs 455.9B KShs 120.1B

KShs 110.0B KShs 422.7B

KShs 537.5B

KShs 499.5B KShs 647.7B

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2017 2018

LOAN BOOK PERFORMANCE

8%

Growth in Net Loans and Advances

26.0% 15.5% 13.0% 4.8% 18.9% 3.6% 6.8% 2.6% 4.7% 3.7% 0.4% 36.0% 17.0% 11.0% 8.0% 8.0% 6.0% 5.0% 3.0% 3.0% 3.0% 0.0%

Personal/Household Real estate Manufacturing Building and construction Trade Financial Services Transport and communication Tourism, restaurants and hotels Energy and water Agriculture Mining and Quarrying Industry Sept 2018 KCB Dec 18

Sectoral Loans Comparison

439 477 19 17 2

Dec-17 Retail Corporate Mortgage Dec-18 * Group gross loans KShs.B

81% 19% LCY FCY

26

LOAN BOOK PERFORMANCE

6.9%

Asset quality improvement Asset Quality Review NPL Breakdown

6.8% 9.1% 10.6% 12.0% 1.4% 1.0% 1.5% 0.7% 6.6% 8.0% 8.5% 6.9%

FY 2015 FY 2016 FY 2017 FY 2018 Industry NPL (Kenya)

89% 11%

LCY FCY

3.2% 7.4% 14.8% 16.3% 3.3% 7.9% 8.5% 13.0%

CHECK OFF MORTGAGE CORPORATE SME & MICRO Q1 2018 Q2 2018 Q3 2018 FY 2018

27

LOAN BOOK PERFORMANCE

15%

Decrease in stock of Non- Performing Loans Improved IFRS Coverage

31,813 37,496 32,692 69.5% 72.5% 72.4% 37.3% 42.6% 68.6%

30.0% 60.0% 90.0% 120.0% 150.0% 20,000 30,000 40,000 FY 16 FY17 FY 18 Gross NPL Central Bank Coverage Ratio IFRS Coverage Ratio

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BALANCED DEPOSIT MIX

50% 51% 49% 47% 46% 48% 3% 3% 2%

2016 2017 2018 Corporate Retail Other

Currency Mix Deposits by Type 2017 Deposits by Type 2018

88% 12%

LCY FCY

65% 5% 24% 6%

Demand Savings Term Call

63% 5% 24% 8%

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STRONG CAPITAL BUFFERS

Core Capital to RWA T

• tal Capital to RWA

Kenya Kenya Group Group

10.5% 10.5% 10.5% 15.3% 15.4% 18.1% 2016 2017 2018 14.5% 14.5% 14.5% 18.0% 16.6% 19.5% 2016 2017 2018 10.5% 10.5% 10.5% 16.9% 14.9% 16.4% 2016 2017 2018 14.5% 14.5% 14.5% 19.9% 16.1% 17.8% 2016 2017 2018

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P&L HIGHLIGHTS 22% earnings growth to KShs 24.0B

Net interest income Profit before tax Operating Expenses Total non Interest Income

KShs 33.9B KShs (35.0B) KShs 23.0B KShs 48.8B

KShs 48.4B KShs 23.0B KShs (36.4B) Profit before tax Up 16% KShs 29.1B

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2017 2018

P&L HIGHLIGHTS: International Businesses 64% growth in subsidiary PBT

• KShs. M

Net loans & advances PBT KCB Bank South Sudan KCB Bank Burundi KCB Bank Uganda KCB Bank Rwanda KCB Bank Tanzania

14,283 16,465 11,899 12,776 379 735 1,403 2,397 281 446 59% 19 777 3,989% 567 424 (25%) 568 664 109 220 102%

17%

6,777 6,274

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2017 2018

Strong balance sheet driven by KShs 33B growth in net loans

KShs Billion KCB Group KCB Bank Kenya Actual 2017 Actual 2018 Y-O-Y Change Actual 2017 Actual 2018 Y-O-Y Change Cash and balances with central bank 29.1 50.1 72% 26.0 39.1 51% Balances with other institutions 43.9 32.0 (27%) 14.4 16.6 15% Investments in Government & Other securities 110.0 120.1 9% 94.6 103.0 9% Net loans and advances 422.7 455.9 8% 387.9 417.2 8% Fixed assets 14.0 14.1 1% 9.5 10.1 6% Other assets 27.1 42.1 56% 23.2 35.7 54% Total Assets 646.7 714.3 10% 555.6 621.7 12% Customer deposits 499.5 537.5 8% 440.2 475.4 8% Balances due to other banks 11.0 20.1 82% 5.2 11.2 114% Other liabilities 15.2 20.6 36% 10.7 18.4 72% Long-term debt 14.9 22.4 51% 10.6 18.9 79% Total Liabilities 540.7 600.7 11% 466.6 523.9 12% Shareholders’ equity 106.0 113.7 7% 89.0 97.8 10% Total liabilities and equity 646.7 714.3 10% 555.6 621.7 12%

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KShs Billion KCB Group KCB Bank Kenya Actual 2017 Actual 2018 Y-O-Y Change Actual 2017 Actual 2018 Y-O-Y Change

Interest income 63.7 66.3 4% 56.9 59.3 4% Interest expense (15.3) (17.5) 14% (12.8) (15.0) 17% Net interest income 48.4 48.8 1% 44.1 44.3 0% Foreign exchange income 4.7 4.4 (6%) 2.9 2.7 (6%) Net fees and commissions 14.7 14.2 (3%) 10.7 11.9 11% Other income 3.6 4.4 20% 3.3 3.9 20% Total other operating income 23.0 23.0 0% 16.9 18.6 10% Total other operating expenses (36.4) (35.0) 4% (28.6) (28.3) 1% Provisions for bad debts (5.9) (2.9) (50%) (5.0) (3.1) (37%) Profit before tax 29.1 33.9 16% 27.5 31.4 14% Tax (9.4) (9.9) 5% (8.2) (9.0) 9% Profit after tax 19.7 24.0 22% 19.2 22.4 17% 22% GROWTH IN EARNINGS

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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

23.5% 22.8% 48.2% 49.7% 8.4% 7.5% 75.0% 82.7% 20.9% 19.7% 32.3% 33.3% 3.0% 3.2% 8.3% 8.0% 0.4% 0.5% 85.5% 88.0% 4% 4% 9% 6% 21.9% 48.3% 6.9% 72.4% 19.7% 32.0% 3.2% 8.1% 0.7% 84.8% 8% 8% FY17 H1 18 Q3 18 KENYA GROUP 19.5% 51.0% 8.5% 72.5% 14.0% 32.2% 3.0% 8.9% 1.5% 85.1% 10% 11% 24.4% 45.1% 6.9% 65.3% 19.6% 29.5% 3.2% 8.1% 0.7% 91.8% 8% 8%

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2018 DIVIDEND

17% dividend increase to KShs. 3.50 KCB Group paid an interim dividend of KShs 1.00 per share in November 2018. The Directors recommend a final dividend for the year ended 31 December, 2018 of KShs 2.50

Dividend 36