2016 Full Year Investor Presentation

KCB INVESTOR PRESENTATION
FY2016 GROUP FINANCIAL RESULTS
9 MARCH 2017
JOSHUA OIGARA GROUP CEO & MD LAWRENCE KIMATHI GROUP CFO
Macro-Economic Highlights: Kenya
USD/KES Exchange rate
GDP Growth rate (%)
105.3
6.1
5.7
6.0
5.6
5.3
6.0
102.3
2013
2014
2015
2016P
Jan-15 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
2017P
Interest Rates 2016 (%)
Inflation (%)
18.20
7.50
7.78
18.18
17.79
7.50
6.84
6.45
6.39
5.27
5.80
6.26
6.34
6.47
6.68
6.35
5.00
11.5
11.4
2.5
Mar
Apr
May
Inflation rate-2016
Jun
Jul
Aug
Target: Upper
Sep
Oct
Nov
Dec
Jan
8.9
Feb
Mar
Apr
91 day T bill
Target: Lower
Source: Bloomberg, CBK
2
10.0
10.6
8.2
2.5
Feb
13.70
13.80
10.0
10.5
8.7
Jan
102.4
92.3
91.7
2012
101.3
100.9
98.6
4.6
2011
101.3
May
7.3
Jun
8.4
8.0
7.7
Aug
Sep
Oct
8.4
8.7
Nov
Dec
6.2
Jul
Average lending rates
CBR Rate
Macro-Economic Highlights: Regional
7.4%
7.0% 7.2%
6.8%
47
6.0
%
Inflation
GDP
9.3%
7.0%6.9%
5.5%6.5%
6.0%
5.0%
5.0%4.9%
Tanzania
Uganda
4.7%
4.6%
Rwanda
3.0%
Burundi
2.9%
South-0.2%
Sudan
-2.8%
9.3%
8.4%
6.8%
6.8%
6.5%
6.1%
6.6%
5.7% 4.9%
5.0%
3.1%
1.8%
Indicators
Tanzania
2013
2014
2015
52.8%
1.7%
0.0%
Uganda
2013
2016
9.0% 7.9% 9.6%
7.1%
Rwanda
2014
2015
Burundi
South Sudan
2016
-13.1%
Interest Rates - 91 Day T-Bills
SSP Exchange Rate
20.0%
83.90
15.0%
14.0%
13.6%
11.8%
9.8%
9.0% 9.0%
8.8%
9.2%
6.0%
7.1%
6.0%
6.0%
4.4%
2.4%
7.0%
3.6% 3.0%3.0%
18.50
3.06
Tanzania
Uganda
2013
Rwanda
2014
2015
Burundi
South Sudan
2016
2.95
2013
Source:IMF
3
2014
2015
2016
KCB 2016 HIGHLIGHTS
Significant Issues for KCB in 2016
1. Interest Rate
Cap.
•Banking
Amendment Act
2016 (CBR+4%)
6. Capital Raising
2. South Sudan
Hyperinflation
•Rights issue
cancelled
•Debt of $75M with
IFC
•Loss on net
Monetary position
KCB Group PLC
5. Chase Bank
(IR)
3. Credit Quality
•Slow progress due
to large corporate
names
•End of assignment
•CBK Resolution by
31/03/2017
4. T24 R14
•Increased Capacity
for over 30M
customers
5
Impact of Interest Rate Capping
Downside
Upside
6
Milestones for KCB in 2016
Brand awareness (Our Brand tracker) up 400bps to 23%
Customer retention rose 10% from 89% to 99%.
Employee satisfaction rose from 82% to 87%
Sustainable Finance Initiative training (KBA) certification score
of 84%
Operationalisation of the Group Holding Company
Difficult operating environment in South Sudan, Tanzania and
Burundi
7
DIGITAL CHANNEL PERFORMANCE
Strong Momentum on Mobile Customer footprint, over 10 million customers
Mobile Customers (M)
90%
53%
of Total Loans
processed on
mobile
of customer
interactions
are on mobile
Mobile
Banking
0.3
0.4
1.5
2.1
Mbenki
4.7
KCB M-PESA
7.8
6.5
Total
10.3
2015
2016
Source: KCB data
KCB M-Mpesa
Mobile Loans
14
9.9
6.6
8.5
5.3
5.7
3.2
3.5
Loan Count (M)
Loans Disbursed (KShs B)
FY 2015
FY 2016
Loan Count (M)
FY 2015
9
Loans Disbursed (KShs B)
FY 2016
77% of Transactions outside the Branch
FY 2015
FY 2016
Agency Banking
4%
Agency Banking
5%
POS
7%
POS
7%
ATM's
13%
ATM's
13%
Mobile Banking
48%
OTC - Branch
23%
OTC - Branch
27%
Channels Activity
Growth In Channel Revenue
32%
6.1
83%
5.1
95%
123%
Mobile
Agency
FY 2015
ATM
3.7
3.5
-5%
POS
Mobile Banking
53%
Internet
3.1 2.9
2.1
Agency (Ave. Trnx Mobile (Ave. Trnx ATM (Ave. Trnx per POS (Ave. Trnx per
per agent per day) per active customer ATM p.m. in `000s)
POS per day)
p.m.)
FY 2015
FY 2016
Source: KCB data
10
4.1
FY 2016
OUR PERFORMANCE TO DATE
11% Growth in Loans and Advances driven by the Kenya Business
KShs B
Kenya Asset Portfolio
595
504
558
73
468
34
37
490
88
391
85
27
24
97
41
102
27
32
91
78
44
26
97
93
354
386
346
312
284
228
2013
Net Loans and advances
2014
Investment in Govt. Securities
2015
2016
2015
Cash and Balances with Central Bank and other Financial Institutions
12
2016
Other Assets
Improvement in Asset Quality
8.9%
8.5%
8.3%
8.1%
8.0%
2015
2016
YOY
Contribution Contribution Growth
6.6%
6.3%
1.8%
1.4%
1.3%
2013
1.6%
2014
Corporate
43%
49%
55%
SME
15%
16%
46%
Consumer
12%
12%
31%
Mortgage
12%
12%
32%
Other
18%
11%
-17%
1.3%
1.0%
1.2%
2015
1Q 16
CoR
NPL Group
13
2Q 16
3Q 16
2016
Stable Coverage Position
85.0%
79.5%
69.5%
56.4%
46.6%
43.6%
41.4%
36.9%
2013
2014
2015
IFRS
14
CBK
2016
75% of Funding from Deposits
KShs B
Kenya Funding Portfolio
595
558
490
9
97
81
10
391
76
504
14
36
44
468
7
11
81
81
26
32
7
27
63
14
448
424
387
377
306
2013
348
2014
Deposits
2015
2016
Bal. to banks and debt
15
Equity
2015
Other Liabilities
2016
65% of Deposits Primarily Demand Deposits
2%
2%
3%
0%
54%
55%
47%
47%
45%
42%
50%
53%
2013
2014
2015
2016
Corporate
Retail
Deposits by Type FY15
Other
Deposits by Type FY16
5%
4%
26%
30%
60%
4%
6%
Demand
Savings
16
Term
Call
65%
Finalised Tier II Capital Program in Q3 with IFC
Core Capital to RWA
Total Capital to RWA
18.7%
22.5%
17.1%
16.8%
21.0%
19.9%
14.1%
15.4%
10.5%
10.5%
10.5%
10.5%
2013
2014
2015
2016
Min. Core/RWA
Core Capital /RWA
14.5%
14.5%
14.5%
14.5%
2013
2014
2015
2016
Min. Total/TWA
17
Total Capital /RWA
Accounting for Hyperinflation
Financial Reporting in Hyperinflationary Economies applies where an entity's functional
currency is that of a hyperinflationary economy.
Indicators of hyperinflation:
•The cumulative inflation rate over three years is approaching, or exceeds, 100%.
•The general population regards monetary amounts not in terms of the local currency but in
terms of a relatively stable foreign currency. Prices may be quoted in that currency;
The cumulative three year inflation for South Sudan:
• 31 December 2015 at 110.18%.
• 31 December 2016 at 1,285.30%.
• The average annual CPI 31 December 2016 at 1,592.32%
Source: IMF data
18
Group Balance Sheet
KShs Millions
KCB GROUP
Actual
Dec - 15
Actual
Dec - 16
Y-O-Y
Change
Cash
Balances with Central Bank
Balances with other institutions
Investments in Government & Other securities
Net loans and advances
Fixed assets
Other assets
Total Assets
11,965
23,962
52,579
96,949
345,969
10,592
16,078
558,094
11,375
18,055
43,507
102,471
385,745
12,674
21,412
595,240
(5%)
(25%)
(17%)
6%
11%
20%
33%
7%
Customer Deposits
Balances due to other banks
Other liabilities
Long-term debt
Total Liabilities
Shareholders’ Equity
Total Liabilities and Equity
424,391
23,138
9,182
20,130
476,841
81,254
558,094
448,174
13,123
14,395
22,982
498,674
96,566
595,240
6%
-43%
57%
14%
5%
19%
7%
19
10% Growth in PBT
KShs Millions
KCB GROUP
Actual
Dec - 15
Actual
Dec - 16
Y-O-Y
Change
Interest Income
56,384
62,806
11%
Interest Expense
17,148
15,779
-8%
Net interest income
39,236
47,027
20%
Foreign exchange income
4,067
5,494
35%
Net fees and commissions
14,160
12,625
-11%
Other income
2,794
4,332
55%
Total operating income
60,257
69,475
15%
Total operating expenses
31,365
33,102
6%
Net provisions for bad debts
2,355
3,824
62%
Profit Before Loss on Monetary Position
26,538
32,549
15%
-
3,458
Profit before tax
26,538
29,091
10%
Tax
6,915
9,369
35%
Profit after tax
19,623
19,722
1%
Loss on net monetary position
20
Overview of Key Financial Ratios
1Q16
2Q16
3Q16
KENYA
GROUP
22.4%
24.4%
24.6%
Return on Average Equity
24.3%
22.2%
48.4%
47.9%
47.7%
Cost to Income
45.2%
47.6%
8.5%
8.9%
8.3%
Gross NPL to Gross Loans
7.8%
8.0%
69.1%
71.1%
76.0%
NPL Coverage
79.6%
69.5%
23.3%
19.5%
17.4%
Debt to Equity
25.5%
23.8%
26.0%
31.6%
28.9%
Non funded income to total income
26.7%
32.3%
4.5%
3.9%
3.6%
Cost of funds
3.3%
3.3%
9.4%
9.7%
10.0%
Net Interest Margin
10.4%
9.6%
1.6%
1.4%
1.3%
Cost of risk
1.1%
1.0%
84.4%
80.2%
84.0%
91.3%
86.1%
16%
8%
5%
Growth of Net Loans and Advances
13%
11%
7%
-2%
-7%
Growth of Customer Deposits
11%
6%
Loan to Deposit Ratio
21
Dividend for 2016
AGM to be held on 21 April 2017, at Safaricom Kasarani
Indoor Stadium
At the AGM, we shall propose a final dividend of KShs: 3:00
per share up 50% from KShs: 2:00 per share declared in 2015
22
Our Outlook
2017
Exponentially grow our digital
financial services and Fintech
Excellence in Customer
Experience
Achieve Stronger International
Business Performance
Grow non interest revenue
Best In class information
technology
Champion our sustainable
business priorities
Manage emerging risks in a
difficult operating environment
23
Net Interest Margin
8.5 – 9.0%
Non Funded Income
33.1%
Cost to Income Ratio
51.4%
Staff CTI
26.5%
Return on Equity
20.0%
Return on Assets
3.0%
NPL
8.0%
Cost of Funds
3.2%
Customer Deposit Growth
12%
Net Loans Growth
6%
YOU CAN REACH US ON:
Investor Relations Department
Email: investorrelations@kcb.co.ke
www.kcbbankgroup.com

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