KCB GROUP PLC INVESTOR PRESENTATION. H FINANCIAL RESULTS

Transcription

1 KCB GROUP PLC INVESTOR PRESENTATION. H FINANCIAL RESULTS

2 MACRO-ECONOMIC HIGHLIGHTS

3 Macro-Economic Highlights Kenya GDP Growth Rate (%) 5.7% 5.3% 4.7% 4.7% 6.2% Kenya 5.2% 1.0% Q Q Q Q P 2.3% 1.3% 6.8% 6.1% 6.3% 4.8% 6.7% 5.7% 9.4% 7.1% Agriculture Manufacturing Real Estate Trade Education Transport and storage 5.3% 2.6% Financial and Insurance 8.2% 7.2% 12.5% 12.0% 5.7% 4.7% Construction ICT Health Mining and Quarrying 7.1% 4.5% Q growth Q growth Source: CBK, WB 3

4 Macro-Economic Highlights Kenya Inflation 11.70% 9.21% 7.50% 8.04% 4.30% 4.20% 3.90% 4.50% 3.10% 3.90% 3.73% 4.40% 4.00% 2.50% May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Inflation rate Target Upper Target Lower Non Food Non Fuel Sources: CBK, KNBS 4

5 Macro-Economic Highlights Kenya KShs/USD Exchange Rate Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Kenya Interest Rate Evolution (%) Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Sources: CBK, KNBS 91 day T bill Average lending rates CBR Rate 5

6 Macro-Economic Highlights Kenya Current Account Balance (% of GDP) -6.7% -5.2% -6.2% -5.4% -10.4% F 2018 F Kenya 12 Month Private Sector Credit Growth 3.9% 4.3% 1.5% 1.4% 1.6% 1.7% 2.0% 2.7% 2.4% 2.7% 2.1% 2.0% 2.8% Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Source: CBK 6

7 Macro-Economic Highlights: Regional GDP (%) Inflation Uganda Tanzania Rwanda Burundi Ethiopia 5.0% 3.6% 5.7% 6.6% 1.9% 9.6% 2.5% 9.7% 7.9% 14.0% 52.8% 1.7% 480.0% 182.2% Tanzania Uganda Rwanda Burundi Ethiopia South Sudan (7.1) Q Q % 91 Day T-Bills 15.0% 15.0% Exchange Rates to USD % 9.0% 7.1% 5.3% 3.6% 2.0% Tanzania Uganda Rwanda Burundi South Sudan Q Q Tanzania Uganda Rwanda Burundi Ethiopia* South Q22017 FY2017 Q Q Sudan Sources: IMF, Bloomberg 7

8 2018 HIGHLIGHTS

9 Overview of the year to date Finance Bill: Interest rate cap repeal Debate of the financial market conduct authority Robin hood tax Political Climate: Goodwill from the Handshakes Kenya South Sudan Economic drivers: Big Four Housing Healthcare Manufacturing Food security Record growth in diaspora remittances, tourism, horticulture key to stability of the shilling Adoption of IFRS9 Impact on capital ratios Grace period provided by the Central bank of Kenya Impact on the loan book and provisions 9

10 Awards and recognition B+ B+ B+ Best Practice in Sustainable Finance Best Retail Bank in East Africa 10

11 KCB Foundation Interventions Provision of assistive devises and learning material to 47 students living with disabilities Scholarship offering to 47 students living with disabilities in partnership with the Kenya Institute of Special Education & MPESA Foundation Academy Over 5,500 beneficiaries in groups and individuals have accessed business development support Loans valued at over KShs 70 million have been disbursed to over 326 entities 11

12 KCB Foundation Interventions Livestock value chain in Dairy, Meat, Honey and Fish. Loans of over KShs 100M to 34 Co-operatives RFID tagging for over 39,000 for livestock identification and traceability 45% increased milk production Over 1,500 secondary student scholarships countrywide since 2005 Secondary education fees, stipend and allowance to 240 students Training of youth in a 3- month innovative hydroponics farming initiative mainly producing leafy vegetables, tomatoes, strawberries and livestock fodder among other food crops. 12

13 OUR CHANNEL CONTRIBUTION

14 87% of transactions performed outside the branch JUNE 2017 JUNE 2018 ATMs 13% Branch Teller 17% Agency, Internet and POS 25% ATMs 12% Branch Teller 13% Agency, Internet and POS 33% Mobile 45% Mobile 42% Avg. Transactions / Teller per day 88.0 Number of Branch Transactions (M) (14%) (15%) HY 2017 H HY 2017 H

15 Agency banking: 84% growth in volumes Volume of Transactions (KSHs. B) 101 No. of transactions (M) 16.3 Ave.Trns'/Agent p.d) Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H % 58.0% Agency Transaction type 16.8% 14.8% 13.7% 14.0% 8.7% 8.2% 1.8% 0.9% 0.9% 0.4% CASH Deposit CASH Withdrawal School Fees Balance Enquiry Bill Payment *Others H H *Others: Account opening, mini statement, load cards and Funds transfer 15

16 Mobile banking: 34% growth in volumes 55 Volume of Transactions (KShs. B) Number of Transactions (M) Av. Transaction/ active customer/mobile Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H % 49.7% Mobile Transaction Types 31.6% 22.4% 19.3% 16.7% 1.8% 1.9% B2C B2B C2B LIPA KARO Jun-17 Jun-18 16

17 10% growth in the average value per POS transaction Volume of Transactions (KShs B) POS Revenue Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H

18 4% growth in ATM volumes Performance Volume of Transactions (KShs. B) Ave.Trns'/ATM p.m Number of Transactions (M) Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H1 18 Q1 17 Q1 18 H1 17 H

19 Channel Development Branches % 1% Jun Jun-18 Kenya Intl. Businesses Group ATMs H H ,085 6,085 16,678 15,246 15,082 13,258 11,948 10,102 9,958 Agents 14,832 16,172 14,668 11,784 12, H H Merchant/POS 6,476 5,839 4,460 4,760 3,280 6,000 5,531 1,805 2,050 4,200 4,605 3,165 1,805 2, H H Kenya Group Kenya Group Kenya Group 19

20 Over KShs 1.4B in revenue from non-branch channels KShs: M H H Mobile Merchant POS Agency ATMs Internet 20

21 Non-Funded Income Mix KShs: M 11,269 11,488 11,481 10,389 2,411 10,400 1,633 1,881 2,500 2,220 1,163 2,014 1,350 2,351 1,576 1,294 2,645 2,824 2,051 1,294 4,506 5,494 5,179 5,159 5,482 Q2 14 Q2 15 Q2 16 Q2 17 Q2 18 Other Fees & Commission Lending Fees Exchange Income Other Income 21

22 OUR FINANCIALS

23 Total Assets growth of 6% despite impact of IFRS 9 KCB Group KCB Bank Kenya Net Loans and advances Net Loans and advances up 4% up 3% KShs: 421B Group Asset Portfolio up 6% KShs: 668B Fixed and other Assets up 40% Investment in Govt. Securities down 3% KShs: 113B Cash and Balances with Central Bank and other Financial Institutions Up 17% KShs: 87B KShs: 387B KCB Bank Kenya Asset Portfolio up 8% KShs: 583B Fixed and other Assets up 49% Investment in Govt. Securities down 5% KShs: 97B Cash and Balances with Central Bank and other Financial Institutions up 58% KShs:60B KShs: 47B KShs: 39B 23

24 Diversified loan portfolio Sectoral loan book comparison 0.5% 0.3% Mining and Quarrying 3.7% 2.9% Agriculture 5.2% 3.4% Energy and water 2.5% 3.3% Tourism, restaurants and hotels 7.7% 4.6% Transport and communication 3.3% 5.7% Financial Services 19.1% 8.4% Trade 4.6% 8.3% Building and construction 12.6% 10.7% Manufacturing 15.8% 17.8% Real estate 25.1% Industry Dec 2017 KCB Jun % Personal/Household * Group gross loans KShs.B % LCY FCY % Jun-17 Retail Corporate Mortgage Jun-18 24

25 NPL Migration and Concentration 9.8% 8.5% 7.9% 7.9% 8.0% 8.4% 8% 92% 1.0% 1.0% 1.0% 1.5% 0.6% 0.4% Q Q Q Q Q CoR NPL Group LCY FCY 14.8% 16.4% 15.5% 16.3% 15.2% 10.4% 11.0% 11.6% 7.3% 7.8% 7.4% 7.8% 3.2% 3.3% 3.2% 3.2% CHECK OFF MORTGAGE CORPORATE SME & MICRO Q Q Q Q

26 Good Improvement in coverage 50, % 45,000 40,000 35,000 30, % 71.8% 69.2% 75.4% 32,978 33, % 43, % 37, % 72.6% 80.0% 60.0% 25,000 20,000 15,000 21, % 24, % 33.9% 37.5% 40.0% 10, % 5,000 - Q2 14 Q2 15 Q2 16 Q2 17 Q1 18 Q2 18 Gross NPL CBK Coverage Ratio IFRS Coverage Ratio 0.0% 26

27 Healthy funding from deposits KCB Group KCB Bank Kenya Deposits up 9% Deposits up 11% KShs: 525 Group Liabilities and Equity up 6% KShs: 668B Balances to banks and Debt Down 9% KShs: 29B Equity up 1% KShs: 470B KCB Bank Kenya Liabilities and Equity up 8% KShs: 583B Balances to banks and Debt down 14% KShs: 17B Equity up 1% KShs: 99B KShs: 83B Other Liabilities down 16% Other Liabilities down 13% KShs: 15B KShs: 12B 27

28 Balanced deposit mix 2% 3% 3% 2% 55% 47% 46% 46% 42% 50% 51% 52% H Corporate Retail Other Currency Mix Deposits by Type H Deposits by Type H % 6% 11% 22% 26% 89% 5% 66% 5% 63% LCY FCY Demand Savings Term Call 28

29 Strong capital position Group 17.4% Core Capital to RWA 15.4% 15.1% 15.7% Group 18.7% Total Capital to RWA 16.6% 15.3% 17.2% 14.5% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 10.5% Kenya H Q H % 14.9% 15.0% 14.8% 10.5% 10.5% 10.5% 10.5% Kenya H Q H % 16.1% 16.4% 15.0% 14.5% 14.5% 14.5% 14.5% H Q H H Q H

30 Resolute strategy delivers 6% balance sheet growth KShs Billions Actual H KCB Group Actual H Y-O-Y Change KCB Bank Kenya Actual Actual H H Y-O-Y Change Cash and balances with central bank % % Balances with other institutions % % Investments in Government & Other securities (3%) (5%) Net loans and advances % % Fixed assets % % Other assets % % Total Assets % % Customer Deposits % % Balances due to other banks (44%) (97%) Other liabilities (16%) (13%) Long-term debt % % Total Liabilities % % Shareholders Equity % % Statutory loan loss reserve (93%) (100%) Total Liabilities and Equity % % 30

31 18% Growth in Earnings KCB Group KCB Bank Kenya KShs Billions Actual H Actual H Y-O-Y Change Actual H Actual H Y-O-Y Change Interest Income % % Interest Expense (7.2) (8.1) 12% (6.0) (6.9) 16% Net interest income % % Foreign exchange income % (16%) Net fees and commissions (6%) % Other income % % Total other operating income % % Total other operating expenses (17.9) (17.7) (1%) (13.7) (13.8) 0% Provisions for bad debts (2.0) (0.8) (59%) (1.6) (0.7) (55%) Profit before tax % % Tax (4.5) (5.0) 11% (4.1) (4.7) 13% Profit after tax % % 31

32 25% growth in International Business PBT KShs. M Net loans & Advances PBT KCB Bank South Sudan (68%) KCB Bank Burundi KCB Bank Uganda KCB Bank Rwanda 1,797 6,475 11,707 1,918 5,610 12, % 164% 25% 5% growth in Total Subsidiary Net loans and Advances KCB Bank Tanzania H H ,964 14, % 32

33 Overview of Key Financial Ratios Q2 17 FY17 Q1 18 KENYA GROUP 23.6% 19.5% 20.2% Return on Average Equity 26.1% 23.5% 51.8% 46.2% 48.3% Cost to Income 45.4% 48.2% 7.8% 8.5% 9.8% Gross NPL to Gross Loans 8.5% 8.4% 75.4% 75.4% 56.9% NPL Coverage 72.9% 75.0% 14.5% 14.0% 22.6% Debt to Equity 20.6% 20.9% 33.5% 32.2% 32.7% Non funded income to total income 27.7% 32.3% 2.9% 3.0% 3.2% Cost of funds 3.0% 3.0% 8.4% 8.9% 8.2% Net Interest Margin 8.4% 8.3% 1.0% 1.5% 0.6% Cost of risk 0.4% 0.4% 86.9% 85.1% 84.3% Loan to Deposit Ratio 87.7% 85.5% 19% 10% 6% Growth of Net Loans and Advances 7% 4% 16% 11% 9% Growth of Customer Deposits 11% 9% 33

34 Interim Dividend Following these results, the Board of Directors approved payment of an interim dividend of KShs: 1.00 per share. The dividend will be paid on or about Friday, 30 November, 2018, to shareholders registered at the close of business on Monday 3 September,

35 Thank you. Investor Relations