Investor Briefing & FY 2016 Performance. March 2017

Transcription

1 Investor Briefing & FY Performance March 2017

2 Turbulent operating environment 2

3 Public confidence dented by failure of 3 commercial banks Significant variance in interbank rates reflect risk aversion in the interbank market and varying liquidity positions between Kenyan banks Bank 1 goes into receivership in August 2015 Bank 2 goes into receivership in October 2015 Bank 3 goes into receivership in April Jan-14 2-Feb-14 2-Mar-14 2-Apr-14 2-May-14 2-Jun-14 2-Jul-14 2-Aug-14 2-Sep-14 2-Oct-14 2-Nov-14 2-Dec-14 2-Jan-15 2-Feb-15 2-Mar-15 2-Apr-15 2-May-15 2-Jun-15 2-Jul-15 2-Aug-15 Weighted Interbank rate Highest interbank rate Lowest interbank rate 2-Sep-15 2-Oct-15 2-Nov-15 2-Dec-15 2-Jan-16 2-Feb-16 2-Mar-16 2-Apr-16 2-May-16 2-Jun-16 2-Jul-16 2-Aug-16 2-Sep-16 2-Oct-16 2-Nov-16 2-Dec-16 2-Jan-17 2-Feb-17 3

4 Deteriorating quality of financial assets portfolio Banking sector gross NPL ratio >10% 7.1% 7.7% 8.4% 8.8% 4.5% 5.0% 5.3% 5.2% 5.2% 5.6% 5.7% 5.4% 5.5% 5.7% 5.7% 5.4% *Equity Bank estimates bank sector gross NPL ratio to now exceed 10% 4

5 Low liquidity ratios in the banking industry Gross reverse repo activity remains elevated Gross Reverse Repo Purchases (Kes Bn) Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 5

6 Interest rate capping and deposit floor 20 Commercial bank lending and deposit rates regulated Bank lending rates Interest rate cap (CBR+400bps) CBR Interest rate floor (70% of CBR) 6

7 Deteriorating profitability of the banking industry PAT Growth 26% 5% -4% *Aggregate profit after tax of the large banks that have reported financial year results 7

8 Lower prices of banking stocks on NSE % % Share prices for the 11 listed banks in Kenya 31st Dec st Dec % % % % % % % % % 9.1 Stanchart Diamond Trust Bank I&M Bank CFC Stanbic KCB Bank NIC Bank Equity Bank Housing Finance Bank Co-operative Bank National Bank Barclays Bank 8

9 Inverse yield curve due to risk pricing challenges Risk free asset yields vs. risk asset yields Reporting period CBR 3m TB 6m TB 364 TB 2 years 5 years 10 years 12 years (IFB) 15 year (IFB) 15 year 20 year Bank lending rates Interest rate cap 9

10 Volatile exchange rate USD /KES exchange rate relatively stable during reporting period albeit foreign reserves came under pressure in Q Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Reporting period USD/KES Import cover (RHS, in months months) (right axis) Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb

11 Rising inflation beyond the targeted rate Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Reporting period Inflation Upper band Lower band Target CBR 11

12 Capping of interest rates and monetary policy challenges Risk free asset yields vs. risk asset yields Reporting period CBR 3m TB 6m TB 364 TB 2 years 5 years 10 years 12 years (IFB) 15 year (IFB) 15 year 20 year Bank lending rates Interest rate cap 12

13 Drought a national disaster On 10 February 2017, Kenya declared the drought, which has affected as much as half the country, a national disaster Worst drought since 1945 according to the UN Famine has also affected neighboring South Sudan and Somalia with the International Federation of the Red Cross says 11 million people in Kenya, Somalia and Ethiopia need assistance Ongoing drought is bound to affect the economy in the following ways:- o Inflation: Food component on the CPI will go up and thus contributing to increase in inflation o Currency: Importation of food will put pressure on the shilling o Energy: Hydro-electric power supply will be affected o Water Supply: Water rationing in parts of the country 13

14 Regional elections Regional political elections in 2015 and o Tanzania o Uganda Transition countries o South Sudan o DRC Pending 2017 elections in o Kenya o Rwanda 14

15 Global commodity price decline 50% of Sub-Saharan African countries are net commodities exporters. Kenya trades with a number of Sub-Saharan African countries hence regional trade will be affected. In ; o Oil prices fell by 22% o Natural gas prices fell by 15% o Coal prices fell by 3% o Copper Prices down o Non-energy commodity prices fell by 2% 15

16 Effect of Chinese economy slowdown Demand for resources from Africa could diminish affecting countries that are highly dependent on exports to China such as DRC (copper), South Africa (gold and wine) and Angola (oil) Lower commodity prices in China that would also affect African commodity exporters Reduced investment flows in countries that receive direct investment from China which include Kenya and Uganda. Currency devaluation could ease the price of imports from China though minimally as African currencies have also been depreciating against the dollar. 16

17 Global phenomena yet to be quantified Global events have been sighted as to have possible ramifications on African economies: The ramifications of Brexit - the nature and extent unquantified The election of Republican Donald Trump to be the next U.S. president and the impact his administration could have up on African economies 17

18 Scenario planning tempers strategic planning 18

19 FORTIFIED LIQUIDITY position Gross Reverse Repo Purchases (Kes Bn) Liquidity Ratio (Kenya) % 48% 40% % Jan- 16 Feb- 16 Mar- 16 Apr- 16 May- 16 Jun- 16 Jul-16 Aug- 16 Sep- 16 Oct- 16 Nov- 16 Dec- 16 Jan- 17 Feb- 17 Q1 Q2 Q3 Q4 19

20 Equity vs Sector NPL Trend over time EBKL Group Sector > 10.0% 8.4% 8.8% 7.1% 7.7% 6.9% 6.8% 5.8% 5.8% 3.3% 2.9% 3.8% 3.5% 4.6% 4.2% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 *Equity Bank estimates bank sector gross NPL ratio to now exceed 10% 20

21 Segment NPL s KENYA Sector 90-Day NPL 9.0% 7.5% Current Status 5.9% 5.8% 5.8% 6.9% Micro Enterprises SME Large Enterprises Consumer Agriculture Total GROUP Sector 90-Day NPL 9.5% 7.1% 5.9% 5.7% 5.7% 6.8% Micro Enterprises SME Large Enterprises Agriculture Consumer Total 21

22 Agile balance sheet ENHANCED BY LONG-TERM FUNDING BASE Group 11% Growth per Funding Type Group 11% Growth per Asset Class Other Liabilities Borrowed Funds Shareholders Funds (2%) 42.9 (10%) 72.1 (17%) (2%) 46.0 (10%) 82.0 (17%) -13% 7% 14% Other Assets Government Securities Cash & Cash Equivalents (11%) 42.8 (10%) 70.2 (16%) (9%) (21%) 64.4 (14%) -6% 135% -8% Deposits (71%) (71%) 11% Net Loans (63%) (56%) -1% FY 2015 FY FY 2015 FY 22

23 Agile balance sheet ENHANCED BY LONG-TERM FUNDING BASE In KES Billion EBKL Growth per Funding Type EBKL Growth per Asset Class Other Liabilities Borrowed Funds Shareholders Funds (4%) 42.2 (12%) 47.4 (14%) 11% (2%) 43.7 (12%) 52.3 (14%) -56% 4% 10% Other Assets Government Securities Cash & Cash Equivalents (10%) 34.3 (10%) 47.3 (14%) 11% (8%) 93.1 (25%) 42.1 (11%) -12% 171% -11% Deposits (69%) (73%) 17% Net Loans (66%) (56%) -5% FY 2015 FY FY 2015 FY 23

24 Fortified Brand Equity s International Rankings Equity Bank Overall Soundness (Capital Assets Ratio) Performance (Profits on capital) (Return on assets) Global Rank Global Rank Ranked fastest growing large bank in Africa Equity s Global Credit Rating Aug 24

25 Banker Awards Equity has earned substantial accolades in 25

26 Euromoney Awards Equity has earned substantial accolades in Africa s Best SME Bank Kenya s Best Bank 26

27 Banking Superbrand Equity Bank has been recognised for the last 10 years since 2007 as the Top Banking Superbrand in Kenya and in East Africa in 2008 & 2009

28 Think Business Awards Equity has earned substantial accolades in 28

29 Equity has earned recognition in EQUITY BEST BANK IN KENYA FOR 4TH TIME Category 1st 2nd 3rd Best Overall Bank Best Bank Tier 1 (Big Banks) Best Bank in SME Banking Best Bank in Retail Banking Best Microfinance Bank Best in Agency Banking Equity Bank Equity Bank Equity Bank Equity Bank Equity Bank Equity Bank Best in Asset Finance Best Bank in Mortgage Finance Product Marketing Best in Internet Banking Equity Bank Equity Bank Equity Bank Equity Bank Best in Mobile Banking Fastest Growing Bank Equity Bank Equity Bank Best in Customer Satisfaction Equity Bank 29

30 LEADING DEPOSIT FRANCHISE continues to underpin latent value on the balance sheet 2.8% 4.5% 5.8% Equity Kenya deposit market share 6.7% 7.9% 8.4% 8.5% 8.6% 9.3% 9.5% 10.5% ** Equity consistently growing deposits faster than the sector 22% 17% 8% 6% 10% 1% 3% 9% Q1 Q2 Q3 Q4 Equity Kenya deposit growth Kenya banking sector deposit growth (ex-equity)* **Estimate *Q4 for the sector reflects the growth of the large banks that have reported annual results 30

31 Capacity to unlock latent value by redeploying into higher yield assets Liquidity Ratio (Kenya) Loan to Deposit Ratio 89% 79% 48% 33% FY 2015 FY FY 2015 FY 31

32 Innovation shifting from fixed to variable cost +141% Variable cost channels Transaction numbers in millions Fixed cost channels % % % % 20.4 FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY Equitel Agency Merchants ATM Branch Transaction value in KES billion -5% +270% % % , , % FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY 32

33 Convenience through mobile bank KES 000 Linkage to M-Banking (left axis) SIM uptake (right axis) +70% 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,591 89% 1,665 90% 1,761 90% 1,867 91% 1,978 91% 2,095 91% 2,199 92% 2,304 92% 2,398 92% 2,468 92% 2,545 2,627 91% 90% 2,700 90% 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,000 1, Dec 2015 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 33

34 Convenience through mobile bank Cumulative M-Banking Value (KES billions) - left axis Cumulative M-Banking Transactions numbers (millions) - right axis % % 0 Dec 2015 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 34

35 Convenience through mobile bank Value Count Airtel Equitel 1.5% 1.5% 5.6% 7.4% 1.1% 14.5% 1.0% 20.3% Airtel Equitel 2.2% 2.1% 2.4% 2.3% 13.1% 13.0% 15.2% 16.0% Safaricom 92.9% 91.1% 84.4% 78.7% Safaricom 84.8% 84.9% 82.4% 81.7% Dec-15 Mar-16 Jun-16 Sep-16 Dec-15 Mar-16 Jun-16 Sep-16 Equitel market share by value of mobile transactions has grown from 7.4% in Q1 16 to 20.3% in Q3. Total sector value of mobile transactions were 1.08 trillion in Q3. This was a 13% increase from Q2. Equitel market share by count of mobile transactions increased to 16.0% for Q3 compared to 13% at the end of Q1. Total sector number mobile transactions were million in Q3 a 7% increase from Q2. Source: Communications Authority of Kenya 35

36 Market share by Value of Mobile Financial Services Safaricom Dec Mar Jun Equitel 1 Airtel Sep-16 Market share for the value of Mobile financial services have grown by 233% between December 2015 and September going by the CA statistics. 36

37 Convenience through mobile bank In Thousands Execution on Digital Banking (Count of loan disbursements through Mobile vs. Branch) 6,400 6,000 5,600 5,200 Mobile Branch 5,035 5,347 5,674 6,001 6,334 4,800 4,671 4,400 4,000 3,600 3,200 2,800 2,400 2,000 1,600 1,200 2,337 1,764 (75%) 2,629 2,017 (77%) 2,944 2,297 (78%) 3,270 2,591 (79%) 3,640 2,927 (80%) 3,981 3,238 (81%) 4,327 3,558 (82%) 3,876 (83%) 4,207 (84%) 4,501 (84%) 4,804 (85%) 5,095 (85%) 5,402 (85%) (25%) Dec (23%) Jan 646 (22%) Feb 679 (21%) Mar 713 (20%) Apr 743 (19%) May 769 (18%) Jun 795 (17%) Jul 827 (16%) Aug 846 (16%) Sep 870 (15%) Oct 906 (15%) Nov 932 (15%) Dec Cumulative 37

38 Convenience through mobile bank Disbursement Count (number) Loan Value Disbursement (KES "Billion") 1,763,555 5,401, % Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Cumulative figures 38

39 Adoption of alternative channels continues to gain traction Focus on Variable cost model More transactions now processed under 3 rd party infrastructure Number of agents increased to 29,561 agents. 23% growth y/y Transactions (Millions) Equitel Agent transactions registered a 21% growth y/y More transactions now processed under 3rd party infrastructure FY FY FY FY Agency 24.8 ATM Branch 20.4 FY 39

40 Adoption of alternative channels continues to gain traction Number and Value of Agents Transactions Value in billion kes (Left Axis) Transactions in million (Right Axis) Sept 2011 Dec 2011 Mar 2012 Jun 2012 Sept 2012 Dec 2012 Mar 2013 Jun 2013 Sept 2013 Dec 2013 Mar 2014 Jun 2014 Sept 2014 Dec 2014 Mar 2015 Jun 2015 Sept 2015 Dec 2015 Mar Jun Sep Dec

41 Diversification of Income Streams Merchant banking We have partnered with key payment companies which has allowed us to grow our number of transactions and commissions In KES millions +25% 47,637 38,161 1, % Equity is leading in Acquiring and Issuing Best in class payment channel services work well with merchants 2015 Merchant Transaction Volumes Merchant Commissions 41

42 Diversification of Income Streams Merchant banking 30 Merchant Outlets (In Thousands) - Left Axis Merchant Transactions (In Millions) - Right Axis Mar Jun Sept Dec Mar 2013 Jun 2013 Sept 2013 Dec 2013 Mar 2014 Jun Sept Dec 2014 Mar 2015 Jun Sept Dec 2015 Mar Jun Sep Dec

43 Diversification of Income Streams Diaspora VISA Direct Equity Direct 1% 4% 4% 1% 1% 4% 1% 0% 0% 0% 0% 6% 7% 7% 7% 7% PayPal 11% 14% 14% 16% 23% 24% 23% 27% MoneyGram 26% 24% 23% 22% 20% 19% 20% 18% Western Union 58% 57% 57% 56% 51% 49% 50% 47% Q Q Q FY2015 Q1 Q2 Q3 FY 43

44 Digitization Banking made Eazzy Channels available to customers.the tools Advanced security to protect your transactions multiple factor authentication EazzyNet Consumer Online Banking accessible on all devices EazzyBiz SME and Corporate Online Banking Cash and liquidity management EazzyAPI Exposing Equity Bank s capabilities to all digital ecosystem players Only bank in the region to be certified on PCIDSS 24/7 monitoring and protection against cyber threats with monitoring locations across 3 continents Eazzy Diaspora Banking for Global Africans EazzyApp Most advanced APP on the planet My Money. My Phone. My Life. Available on over 15m devices across Kenya Secure, open loop systems capable of integrating into ecosystems Eazzy, Secure and Convenient 44

45 Transactions Trend (Count) Digitization EazzyBiz Volumes Trend (In Kes Billions) +8,487% ,064% 126, ,299 75, ,861 51, , , Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 45

46 Downloads Trend (Count) Digitization EazzyApp Transactions Trend (Count in Millions) Volumes Trend (In Kes Billions) +86% % % +76% 160, , % % , Nov 16 Dec 16 Jan 17 Nov 16 Dec 16 Jan 17 Nov 16 Dec 16 Jan 17 46

47 Digitization EazzyNet Registration Trend (Count) Transactions Trend (Count) Volumes Trend (In Kes Billions) +23% +34% % 39, % 2.2 7, % 8, % 9,482 22,566 29, Nov 16 Dec 16 Jan 17 Nov 16 Dec 16 Jan 17 Nov 16 Dec 16 Jan 17 47

48 Cautious underwriting of risk Slowdown in risk taking (net loan growth) 25% 23% 27% 27% 24% 26% 22% 18% 20% 17% 14% 8% 3% 2% -1% -5% Q Q Q Q Q1 Q2 Q3 Q4 Equity Group Equity Kenya 48

49 Gross Loans Breakdown In KES billion EBKL Group Growth per Growth per Segment % Segment % Large Enterprises 48.1 (17%) 31.6 (11%) -34% Large Enterprises 48.1 (21%) 31.6 (14%) -34% Small & Medium Enterprises (48%) (54%) 8% Small & Medium Enterprises (55%) (60%) 10% Micro Enterprises 16.2 (7%) 12.6 (6%) -22% Micro Enterprises 16.8 (6%) 13.3 (5%) -21% Consumer 49.6 (21%) 51.7 (23%) 4% Consumer 54.9 (20%) 58.3 (21%) 6% Agriculture 6.9 (3%) 6.4 (3%) -8% Agriculture 6.9 (2%) 6.4 (2%) -7% FY 2015 FY FY 2015 FY 49

50 NPL per segment and Coverage NPL increase in collateralized segments Coverage (Group) 2015 CBK IFRS 92.8% 63.9% 64.4% 58.5% 9.5% 8.0% 7.1% 5.9% 4.6% 5.7% 5.0% 5.7% 6.8% 3.1% 3.3% 0.0% Micro Enterprises SME Large Enterprises Agriculture Consumer Total FY 2015 FY 50

51 Asset Quality Equity vs Sector NPL Trend EBKL Group Sector > 10.0% 8.4% 8.8% 7.7% 7.1% 6.9% 6.8% 5.8% 5.8% 2.9% 3.3% 3.5% 3.8% 4.2% 4.6% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 *Equity Bank estimates bank sector gross NPL ratio to now exceed 10% 51

52 Conservative write-off Policy NPA Coverage (with and without write-offs) Coverage (Kenya) Cost of Risk (Kenya) 2015 CBK IFRS Cost of Risk 100.7% 100.5% 100.7% 63.4% 70.5% 69.9% 63.4% 51.2% 2.3% 0.6% NPA Coverage (with write-offs) NPA Coverage (without write-offs) FY 2015 FY FY 2015 FY 52

53 Return vs risk trade-off Group 11% Growth per Asset Class Loan to Deposit Ratio Liquidity Ratio (Kenya) (9%) -6% 89% Other Assets Government Securities 45.2 (11%) 42.8 (10%) (21%) 135% 79% Cash & Cash Equivalents 70.2 (16%) 64.4 (14%) -8% 48% 33% Net Loans (63%) (56%) -1% FY 2015 FY FY 2015 FY FY 2015 FY 53

54 Cost to Income Ratio Trend (YoY) cost optimization & efficiencies of digitization EBKL Group 48.8% 45.0% 43.8% 48.5% 51.9% 48.3% 47.1% 52.9% 44.8% 50.7% FY 2012 FY 2013 FY 2014 FY 2015 FY 54

55 Capital management Well capitalized Group positioned for growth opportunities Dividend Yield 6.7% 5.0% 24.2% 23.4% 22.5% 23.3% 18.3% 19.6% 18.7% 19.8% 18.0% 19.0% 18.7% 19.7% FY 2015 FY Pay-out Ratio 43.6% 45.6% Q1 Q2 Q3 Q4 Core Capital/RWA Total Capital/RWA Core Capital/Deposits FY 2015 FY 55

56 Strong Governance & Leadership Structure supportive of executing differentiated performance CBK CMA SHAREHOLDERS NSE RATING AGENCY EQUITY GROUP HOLDING LIMITED Subsidiary Boards Group Board Subsidiary Boards Board Committees Group Board Committees Board Committees CEO s OFFICE Subsidiary Internal Audit Group Internal Auditor CEO Director Governance, Strategy, Legal, Company Secretary Director, Strategic Execution & Innovation Director, Brand, Culture & HR Director, Strategic Partnerships & IR Subsidiary Internal Audit Equity Group Foundation Non-Banking Subsidiaries CORPORATE OFFICE Group Chief Operating Officer Banking Subsidiaries Equity Bank Kenya Equity Investment Bank Equity Insurance Agency Consulting Infrastructure Services Group Director, Treasury Chief Technology & Information Officer Group Director, Special Projects Group Director, Bank Applications & Analytics Each subsidiary with own Board of Directors compliant with local regulations Group Director, Finance Chief Risk and Compliance Officer Group Director, Corporate Banking Group Director, SME Banking Equity Bank Rwanda Equity Bank Tanzania Equity Bank Uganda Equity Bank South Sudan ProCredit Bank DRC 56

57 Committed Strategic shareholder base NSE Publicly Listed/ Cross Listed at USE at RSE 11.4 million customers 6 countries Market Capitalization: ~ Kshs billion (as at 31 st Dec ) Ownership Over 30,000 shareholders Strategic Investors Arise Africa (Norfund, FMO, Rabo Bank) British American Investments Company (Kenya) Limited Genesis Equity Bank ESOP Regional presence Kenya, Rwanda, Tanzania, Uganda, South Sudan & DRC 57

58 Intermediation & Financial Performance 58

59 Funding Base of KES 474 Billion In KES Billion EBKL Growth per Funding Type Group 11% Growth per Funding Type Other Liabilities Borrowed Funds (4%) 42.2 (12%) 11% (2%) 43.7 (12%) 52.3 (14%) -56% 4% 10% Other Liabilities Borrowed Funds Shareholders Funds (2%) 42.9 (10%) 72.1 (17%) (2%) 46.0 (10%) 82.0 (17%) -13% 7% 14% Shareholders Funds 47.4 (14%) Deposits (69%) (73%) 17% Deposits (71%) (71%) 11% FY 2015 FY FY 2015 FY 59

60 Deposits growth assures embedded value for future asset growth In KES billion EBKL Growth per Segment Group +11% Growth per Segment Interest Bearing (19%) +17% (25%) 50% Interest Bearing (25%) (30%) 30% Non Interest Bearing (81%) (75%) 9% Non Interest Bearing (75%) (70%) 5% Dec-15 Dec-16 Dec-15 Dec-16 60

61 Deposits Growth In KES billions Kenya DRC Tanzania Uganda Rwanda S. Sudan 17% % % % % % 7.4 FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY FY 2015 FY Total with South Sudan % Total without South Sudan % FY 2015 FY FY 2015 FY 61

62 Group Assets of KES 474 Billion driven by a growing Deposit base In KES Billion EBKL Growth per Asset Class Group 11% Growth per Asset Class Other Assets Government Securities Cash & Cash Equivalents (10%) 34.3 (10%) 47.3 (14%) 11% (8%) 93.1 (25%) 42.1 (11%) -12% 171% -11% Other Assets Government Securities Cash & Cash Equivalents (11%) 42.8 (10%) 70.2 (16%) 42.6 (9%) (21%) 64.4 (14%) -6% 135% -8% Net Loans (66%) (56%) -5% Net Loans (63%) (56%) -1% FY 2015 FY FY 2015 FY 62

63 Extracting Value From Subsidiaries (Deposits and Loans contribution by countries) Deposits split by Country Loans split by Country Total Assets split by Country DRC Rwanda Uganda Tanzania S.Sudan 100.0% 100.0% 5.9% 6.7% 3.1% 3.6% 4.7% 3.9% 4.1% 4.4% 4.9% 2.1% DRC Rwanda Uganda Tanzania S.Sudan 100.0% 5.0% 3.1% 2.7% 5.8% 0.2% 100.0% 6.4% 3.8% 3.4% 6.1% DRC Rwanda Uganda Tanzania S.Sudan 100.0% 6.2% 6.7% 2.9% 4.2% 4.7% 4.4% 100.0% 3.2% 3.8% 4.9% 2.3% 0.0% Kenya 77.4% 79.3% Kenya 83.2% 80.4% Kenya 77.6% 79.1% FY 2015 FY FY 2015 FY FY 2015 FY Kenya column above represents all entities in Kenya 63

64 Net Interest Margin Percentage Net Interest Margin Yield on Interest Earning Assets Mar-16 Jun-16 Sep-16 Dec-16 Cost of funds Mar-16 Jun-16 Sep-16 Dec-16 Mar-16 Jun-16 Sep-16 Dec-16 64

65 Balance Sheet EBKL Group KES (Billion) FY 2015 FY Growth FY 2015 FY Growth Assets Net Loans % % Cash & Cash Equivalents % % Government Securities % % Other Assets % % Total Assets % % Liabilities & Capital Deposits % % Borrowed Funds % % Other Liabilities % % Shareholder s Funds % % Liabilities & Capital % % 65

66 Delivering 4% growth in PBT KES (Billion) FY 2015 FY Growth Interest Income % Interest Expense (9.3) (10.0) 7% Net Interest Income % Non-Funded Income % Total Income % Loan Loss Provision (2.4) (6.6) 173% Staff Costs (10.3) (11.6) 13% Other Operating Expenses (19.4) (20.8) 7% Total Costs (32.1) (39.1) 22% PBT % Tax (6.6) (8.3) 26% PAT % Other Comprehensive Income (6.9) 0.8 Total Comprehensive Income % 66

67 In KES billion Underlying growth drivers for the business remain intact in spite of lower loan growth Net Loans Total Income Pre-provisioning Operating Profit % % % FY 2015 FY FY 2015 FY FY 2015 FY 67

68 RoAA and RoAE Trend RoAE FY 2015 FY 37.1% 30.5% 25.5% 21.5% EBKL Group RoAA FY 2015 FY 5.2% 4.2% 4.5% 3.7% EBKL Group 68

69 Positive Financial Ratios EBKL EBKL Group Group FY 2015 FY FY 2015 FY Profitability NIM 11.4% 11.5% 10.5% 11.0% Cost to Income Ratio (with provisions) 50% 55% 57% 61% Cost to Income Ratio (without provision) 47% 45% 53% 51% RoAE 37.1% 30.5% 25.5% 21.5% RoAA 5.2% 4.2% 4.5% 3.7% Asset Quality Cost of Risk 0.62% 2.28% 1.01% 2.48% Leverage Loans / Deposits 95.0% 77.1% 89% 78.9% Capital Adequacy Ratios Core Capital to Risk Weighted Assets 14.6% 14.4% 18.7% 18.7% Total Capital to Risk Weighted Assets 16.2% 15.5% 20.2% 19.7% Core Capital to Deposits Ratio 20.1% 18.5% 23.1% 23.3% 69

70 Outlook - Group Group Kenya Loan Growth 0 to +5% 0 to -5% Deposits Growth 25% 25% Net Interest Margin 9-10% 9-10% Non Funded Income Mix 40% 38% Cost to Income Ratio 47% 43% Return on Equity 22-25% Return on Assets 3.5-4% Cost of Risk % NPL 5.5-6% Regional Contribution (Assets) 30% Regional Contribution (PBT) 7-8% 70

71 Appendix 71

72 DIVERSIFIED BUSINESS to support growth across multiple geographies and business lines KES Billion With Sudan Without Sudan Uganda S. Sudan Rwanda Tanzania DRC Regional Total Kenya Regional Contribution FY Regional Contribution FY 2015 Regional Contribution FY Regional Contribution FY 2015 Deposit % 23% 19% 19% Growth -6% -50% 34% 23% 29% 4% 17% Loan % 17% 20% 17% Growth 24% -82% 22% 2% 25% 15% -5% Assets % 22% 19% 19% Growth -3% -43% 24% 14% 19% 2% 11% PBT % 8% 7% 6% Growth 144% -238% 36% -11% -18% -30% 3% Kenya column above represents all entities in Kenya 72

73 Extracting Value From Subsidiaries (PBT contribution by countries) PBT split by Country DRC Rwanda Uganda Tanzania S.Sudan 100.0% 2.5% 1.2% 1.0% 1.6% 1.5% 100.0% 2.0% 1.6% 2.5% 1.4% Kenya 92.2% 94.6% FY % FY Kenya column above represents all entities in Kenya 73

74 DIVERSIFIED BUSINESS to support growth PBT across MULTIPLE GEOGRAPHIES KES billions Kenya DRC Tanzania Uganda Rwanda S. Sudan 3% % % +144% % % FY 2015 FY FY 2015 FY FY 2015 FY Total with South Sudan FY 2015 FY Total without South Sudan FY 2015 FY FY FY 4% 8% FY 2015 FY FY 2015 FY Kenya figures above represents all entities in Kenya 74

75 Equity Kenya Delivers a 2% growth in PBT KES (Billion) FY 2015 FY Growth Interest Income % Interest Expense (7.8) (8.0) 3% Net Interest Income % Non-Funded Income % Total Income % Loan Loss Provision (1.3) (5.0) 293% Staff Costs (7.7) (8.1) 5% Other Operating Expenses (13.4) (14.4) 8% Total Costs (22.3) (27.5) 32% PBT % Tax (6.2) (7.6) 22% PAT % Other Comprehensive Income (1.1) 0.7 Total Comprehensive Income % 75

76 QoQ Performance (Equity Kenya) 2015 QoQ Kshs Bn Q4 Q1 Q2 Q3 Q4 Q vs Q1 Q1 vs Q2 Q2 vs Q3 Q3 vs Q4 YoY FY 2015 vs FY Interest income on loans % 2% -4% -28% 7% Interest income inv. secs & others % 30% 32% 29% 82% Interest expenses (2.60) (1.79) (2.05) (2.05) (2.11) -31% 15% 0% 3% 3% Net interest income % 4% 2% -22% 19% Non interest income % 0% 5% 19% 0% Total income % 3% 3% -10% 13% Loan loss provision % 130% 25% 139% 293% Staff costs % 5% -21% -2% 5% Other operating expenses % 1% 15% 10% 8% Total expenses % 11% 3% 28% 23% Profit before tax % -4% 2% -50% 2% Tax (1.45) (2.00) (1.91) (1.95) (1.70) 38% -4% 2% -13% 22% Profit after tax % -4% 2% -66% -6% 76

77 THANK YOU Dr James Mwangi, CBS Group Managing Director & CEO Web site: 77