Investor Briefing & Q Performance. 30 th October, 2017

Transcription

1 Investor Briefing & Q Performance 30 th October,

2 Equity Group Holdings Plc Headquarters Equity Centre, Upperhill, Nairobi

3 Equity Group s Philosophies Our Purpose We exist to transform the lives and livelihoods of our people socially and economically by availing them modern inclusive financial services that maximize their opportunities. Our Vision To be the champion of the socio-economic prosperity of the people of Africa. Our Mission We offer inclusive, customer-focused financial services that socially and economically empower our clients and other stakeholders. Core Values Professionalism Integrity Creativity & Innovation Teamwork Unity of Purpose Respect & Dignity for Customers Effective Corporate Governance Positioning Statement Equity provides inclusive financial services that transform livelihoods, give dignity and expand opportunities. 1

4 Strong Governance & Leadership Structure CBK CMA SHAREHOLDERS NSE RATING AGENCY EQUITY GROUP HOLDING LIMITED PLC Subsidiary Boards Group Board Subsidiary Boards Board Committees Group Board Committees Board Committees CEO soffice 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 InfrastructureServices Group Director, Treasury Chief Technology & Information Officer Group Director, Special Projects Group Director, Bank Applications & Analytics Each subsidiary with own Board of Directors compliant 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 2

5 Group Executive Management JAMES MWANGI, CBS MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER BHARTESH SHAH CHIEF OPERATIONS OFFICER MARY WAMAE DIRECTOR OF CORPORATE STRATEGY AND COMPANY SECRETARY REUBEN MBINDU CHIEF OFFICER, HUMAN CAPITAL AND ADMINISTRATION ANTHONY EMEKA OGBECHIE GROUP FINANCE DIRECTOR BILDARD FWAMBA CHIEF INTERNAL AUDITOR BRENT MALAHAY GROUP DIRECTOR, STRATEGIC PARTNERSHIPS, COLLABORATIONS & INVESTOR RELATIONS JAMES MUTUKU DIRECTOR, TREASURY ROHIT KUMAR SINGH CHIEF OFFICER, CORPORATE AND SME BANKING GERALD WARUI DIRECTOR, OPERATIONS & CUSTOMER EXPERIENCE ELIZABETH GATHAI DIRECTOR, CREDIT ALLAN M. WAITITU DIRECTOR, SPECIAL PROJECTS 3

6 Group Executive Management SAMUEL KIRUBI MANAGING DIRECTOR, EQUITY BANK UGANDA ANTHONY KITUUKA EXECUTIVE DIRECTOR EQUITY BANK UGANDA CELESTIN MUKEBA MUNTUABU MANAGING DIRECTOR, PROCREDIT BANK (DRC) PHILIP SIGWART EXECUTIVE DIRECTOR, PROCREDIT BANK (DRC) HANNINGTON NAMARA MANAGING DIRECTOR, EQUITY BANK RWANDA JOSEPH IHA MANAGING DIRECTOR, EQUITY BANK TANZANIA ADDIS ABABA OTHOW EXECUTIVE DIRECTOR EQUITY BANK SOUTH SUDAN JACK NGARE MANAGING DIRECTOR, FINSERVE AFRICA ERIC GIKONYO KAROBIA EXECUTIVE DIRECTOR FINSERVE AFRICA 4

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8 Inflation Kenya 2017 Inflationary pressure now restrained and currently within the targeted range, inflation rate now on a % downward trend with Q declining to 7.1% CBR Upper band Inflation Target Lower band Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 6

9 Foreign Exchange Kenya The Kenyan Shilling has fluctuated against the dollar in 2017 within the range of Kes 102 and 104 to the USD, depreciating mostly in Jan Mar mostly due to increased importation of food and has significantly been recovering since Aug 105 KES/USD Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

10 Foreign Reserves Kenya Average prices of Crude Oil in the international markets have registered a short term recovery since Jun 2017 FX reserves remain stable at 5 months of Import Cover against the recommended 4 months. The recovery in global oil prices has however slowed down reserves accumulation Monthly Crude Imports (Kes Bn) Months of Import Cover Recommended Months of Import Cover Source: CBK 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 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 8

11 Foreign Reserves Kenya Growing Diaspora remittances supporting the FX reserves Monthly Diaspora Remittances (US$ Millions) Months of Import Cover 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 Mar-17 Apr-17 May-17 Jun-17 Jul-17 9

12 10 Interest Rates Kenya

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14 Temporary Headwinds Tempers Economic Growth Momentum The strong economic indicators of low and stable interest rates, inflation within target, stable exchange rate and high forex reserves have not reflected in high GDP growth as a result of the following temporary headwinds: 1. Protracted Presidential elections causing political uncertainty with adverse effect on the NSE and tourism bookings 2. Prolonged devastating drought affecting food inflation & disposable income for low income families 3. Adverse effect of interest rate capping with negative impact on private sector credit growth 4. Turbulence impacting banking industry reflected by low asset quality, liquidity challenges, solvency and sustainability challenges, business model challenges and contracting cash circulation 12

15 Protracted Presidential Election Impacting NSE Pre-election Pre-results Results disputed Results annulled Opposition withdrawals 4,150 4,100 4,050 4,000 3,950 3,900 3,850 3,800 3,750 3, Aug-17 2-Aug-17 3-Aug-17 4-Aug-17 7-Aug-17 9-Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug-17 1-Sep-17 4-Sep-17 5-Sep-17 6-Sep-17 7-Sep-17 8-Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep-17 2-Oct-17 3-Oct-17 4-Oct-17 5-Oct-17 6-Oct-17 9-Oct Oct Oct Oct-17 NSE 20 Share Index 13

16 Tourist Arrivals Kenya In thousands +18% % % % % +7% % Jan Feb Mar Apr May Jun Jul JKIA and MIA arrivals

17 Jun-17 May-17 Mar-16 Apr-17 Mar-17 Feb-17 Jan-17 Dec-16 Nov-16 Apr-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Oct-16 Sep-17 Sep-16 Aug-16 Jul-16 Jun-16 May-16 Aug-17 Jul-17 Food Inflation Total Inflation % Food Inflation Kenya

18 Private Sector Credit Growth Trend 21.2% 21.0% 20.8% 19.5% 18.7% 18.0% 17.0% 16.0% 15.5% 13.5% 11.1% 8.6% 7.1% 5.3% 4.4% 4.6% 4.2% 4.1% 3.9% 3.5% 3.0% 2.3% 1.9% 1.5% 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 Mar-17 Apr-17 May-17 Jun-17 16

19 Apr- 17 Feb- 17 Dec- 16 Oct- 16 Feb- 16 Apr- 16 Aug- 16 Jun- 16 Jul- 15 Sep- 15 Nov- 15 Jan- 16 Mar- 16 May- 16 Jul- 16 Sep- 16 Nov- 16 May- 17 Mar- 17 Jan- 17 Jun- 17 Aug- 15 Oct- 15 Dec- 15 % Money Supply (M2) Growth Trend

20 Banking Industry - Profit Market Share Trend 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Top 12 Banks 90.0% 91.2% 91.6% 96.0% 95.2% 95.4% All other 31 Banks 10.0% 8.8% 8.4% 4.0% 4.8% 4.6% Q Q Q Q Q Q

21 Sector Asset Quality Deterioration Poses Risks to the Banking Sector 6.8% 6.8% 6.6% 5.8% 5.9% 5.7% 6.2% 5.7% 5.7% 5.8% 5.7% 5.6% 5.7% 5.4% 7.7% 7.8% 9.9% 9.5% 9.3% 9.7% 9.5% 9.2% 9.0% 9.1% 9.1% 9.0% 8.6% 8.5% 9.9% 9.6% 10.7% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Aug

22 Disaggregating Interbank Rates Reflect Continued Risk Aversion Between Banks Skewed liquidity - significant vairance in interbank rates reflect varying liquidity positions and risk aversion between banks Jan-13 2-Feb-13 2-Mar-13 2-Apr-13 2-May-13 2-Jun-13 2-Jul-13 2-Aug-13 2-Sep-13 2-Oct-13 2-Nov-13 2-Dec-13 2-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 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 2-Mar-17 2-Apr-17 2-May-17 2-Jun-17 2-Jul-17 2-Aug-17 2-Sep-17 2-Oct-17 Interbank High Low CBR 20

23 Near-term Headwinds Impacting GDP Growth Rate 7.1% 5.8% 4.4% 4.5% 5.9% 5.4% 5.7% 5.8% 4.7% 5.0% 5.5% 5.0% 5.0% 2.7% 1.5% Q Q World Bank 2017F IMF 2017F Treasury 2017F GDP Growth 21

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25 Equity Bank Business Model Post Capping (Adjusting and Adapting to the New Norm) Focus areas: 1. Non-funded income growth 2. Treasury operations 3. Regional and business diversification 4. Strengthening liquidity and balance sheet agility 5. Asset quality 6. Innovation and digitization 7. Efficiencies and cost optimization 23

26 Focus Area 1: Non-funded Income Growth Total Interest Income Growth Trend Loan Interest Income Growth Loan Interest Trend Income Non Funded Income Growth Non-Funded Trend Income +26% -11% 39.8 Treasury Interest Income (11%) 5.8 (15%) (29%) +21% -26% % +28% 21.2 Loan Interest Income 28.1 (89%) 34.0 (85%) 25.0 (71%) Q Q Q Q Q Q Q Q Q

27 Focus Area 1: Non-funded Income Growth 25

28 Focus Area 1: Non-funded Income Growth We have partnered with key payment companies which has allowed us to grow our number of transactions and commissions Volume (Millions) Commissions (Millions) +30% 34, % 40,304 26, % +27% Equity is leading in Acquiring and Issuing Best in class payment channel services work well with merchants Q Q Merchant Transaction Volumes Q Merchant Commissions 26

29 Focus Area 2: Treasury Operations In KES Billion Government Securities Portfolio Yield on Government Securities In KES Billion Treasury Gross Income Contribution In KES Billion Treasury Income Mix 37% % Treasury Income (14%) 0% (23%) 63% (19%) % All Other Income (ex Treasury Income) 48.3 (86%) 43.4 (77%) Interest Income Placements Bond Trading Income FX Income (30%) 9.8 (74%) Interest Income Gov. Securities 5.1 (63%) Q Q Q Q Q Q Q Q Note: Income calculation above is before funding costs 27

30 Focus Area 3: Regional & Business Diversification Double digit growth in profitability across most subsidiaries Enhanced PBT contribution to Group from 7% to 10% In KES Billion Uganda Tanzania Rwanda S. Sudan DRC Regional Total Kenya Regional Contribution Q Regional Contribution Q Deposit % 20% Growth 42% 25% 45% -35% 34% 27% 7% Loan % 19% Growth 43% 11% 4% -59% 20% 18% -7% Assets % 20% Growth 38% 8% 41% -26% 31% 22% 7% PBT % 7% Growth 37% 38% 72% 229% -9% 53% -8% Kenya column above represents all entities in Kenya 28

31 Focus Area 3: Regional & Business Diversification Deposits split by Country Loans split by Country S.Sudan Rwanda Uganda Tanzania DRC 100.0% 100.0% 2.4% 1.4% 3.0% 3.9% 3.7% 4.7% 4.3% 4.9% 6.5% 7.9% S. Sudan Rwanda Uganda Tanzania DRC 100.0% 0.1% 3.5% 3.2% 5.5% 6.2% 100.0% 0.0% 3.7% 4.6% 6.3% 7.6% EBKL 80.1% EBKL 81.5% 77.7% 77.1% Q Q Q Q

32 Focus Area 3: Regional & Business Diversification Total Assets split by Entity PBT split by Country S.Sudan Rwanda Tanzania Uganda DRC EIA EIB Finserve 100.0% 100.0% 2.4% 1.6% 2.8% 3.6% 4.8% 4.7% 3.8% 4.8% 6.5% 0.5% 0.1% 7.8% 0.2% 0.1% 0.4% 0.2% Tanzania Rwanda DRC Uganda EIB Finserve EIA 100.0% 100.0% 1.4% 0.8% 1.3% 1.9% 2.4% 2.2% 2.3% 0.7% 0.2% 2.2% 1.8% 3.2% 0.6% 0.7% 2.1% EBKL 78.9% 76.7% EBKL 90.6% 86.1% Q Q S.Sudan -0.6% Q Q

33 Focus Area 3: Regional & Business Diversification 31

34 Focus Area 3: Regional & Business Diversification Total Assets split by Entity PBT split by Country S.Sudan Rwanda Tanzania Uganda DRC EIA EIB Finserve 100.0% 100.0% 2.4% 1.6% 2.8% 3.6% 4.8% 4.7% 3.8% 4.8% 6.5% 0.5% 0.1% 7.8% 0.2% 0.1% 0.4% 0.2% Tanzania Rwanda DRC Uganda EIB Finserve EIA 100.0% 100.0% 1.4% 0.8% 1.3% 1.9% 2.4% 2.2% 2.3% 0.7% 0.2% 2.2% 1.8% 3.2% 0.6% 0.7% 2.1% EBKL 78.9% 76.7% EBKL 90.6% 86.1% Q Q S.Sudan -0.6% Q Q

35 Focus Area 4: Strengthening Liquidity Position and Agile Balance Sheet.to mitigate economic uncertainty and shocks and to support responsiveness and agility Liquidity Ratio (Kenya) 53.2% 54.4% 54.8% 39.9% 44.8% 47.7% Q Q Q Q Q Q

36 Focus Area 4: Strengthening Liquidity Position and Agile Balance Sheet 34

37 Focus Area 4: Strengthening Liquidity Position and Agile Balance Sheet 35

38 Focus Area 5: Asset Quality NPL s Sector vs EGH Plc as at Q Group Sector 9.5% 9.1% 8.8% 8.4% 7.7% 7.1% 7.1% 6.8% 5.8% 7.3% 9.9% 7.4% 10.7% 16.0% NPL per sector as at Q % 8.3% 7.6% 7.4% 4.6% 3.3% 3.8% 0.0% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Micro Enterprises SME Large Enterprises Agriculture Consumer Total NPL Coverage 71.0% 64.5% 50.3% 48.2% (Spec. Prov. + Int. Susp) / Gross NPL (Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPL Aug Sep-16 Sep-17 *Aug 2017

39 Focus Area 6: Innovation and Digitization 3rd Party Infrastructure 37

40 Focus Area 6: Innovation and Digitization Diaspora In KES Billion Diaspora Volume +54% (29%) -2% Wave PayPal (14%) (23%) 4.2 (28%) Western Union 5.7 (58%) 4.8 (50%) 3.9 (26%) MoneyGram Equity Direct 2.3 (23%) 0.4 (4%) 1.9 (20%) 0.7 (7%) 0.8 (5%) 1.7 (11%) Q Q Q

41 Focus Area 6: Innovation and Digitization (Market Share of National Money Transfer) Count Value Airtel 2.2% 2.1% 2.4% Equitel 13.1% 13.0% 15.2% 2.3% 16.0% 2.1% 19.7% 1.7% 20.8% 0.5% 20.3% Airtel Equitel 5.6% 1.5% 1.5% 7.4% 1.1% 14.5% 1.0% 20.3% 0.6% 21.9% 0.5% 23.3% 0.1% 25.6% Safaricom 84.8% 84.9% 82.4% 81.7% 78.3% 77.5% 79.3% Safaricom 92.9% 91.1% 84.4% 78.7% 77.6% 76.2% 74.3% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Total sector number of mobile transactions were million in Q a 2% increase from Q Total sector value of mobile transactions were 1.22 trillion in Q This was a 4% increase from Q Source: Communications Authority of Kenya Source: Communications Authority of Kenya 39

42 Focus Area 6: Innovation and Digitization (Market Share of National Money Transfer) (Market Share of National Money Transfer) % of value transacted % Safaricom Equitel Q Q Q Q Q Q Airtel Q Source: Communications Authority of Kenya

43 Focus Area 6: Innovation and Digitization Source: Communications Authority of Kenya 41

44 Focus Area 6: Innovation & Digitization (Agency Banking) Monthly Agents Deposit (Kes Bn) Monthly Agents Withdrawal (Kes Bn) 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 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 42

45 Focus Area 7: Efficiencies and Cost Optimization 43

46 Focus Area 7: Efficiencies and Cost Optimization Group Net Interest Margin % Yield on Interest Earning Assets % Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Cost of funds % Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 44

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48 Moody s Investor Service Rates Equity Bank Kenya Best Credit in Kenya Strong investor interest has resulted in Moody s Investor Service rating and assigning Equity Bank Kenya a global and national scale credit rating Moody s rate Equity Bank Kenya the same as Kenya Government on a Global Rating of B1, Stable Outlook Moody s rate Equity Bank the highest credit within Kenya with a National Scale Rating of Aa1 Moody s credit ratings affirm Equity Bank Kenya s: - Strong brand recognition - Solid liquidity buffers and resilient funding profile - Established domestic franchise - Extensive adoption of digital and alternative distribution channels Moody s highlights that this compares with the bank s peers that have a more aggressive loan growth strategy despite the challenging environment 46

49 Global Credit Rating Co. Rates Equity Group Equity s Global Credit Rating September 2017 GCR has affirmed the national scale ratings assigned to Equity Group Holdings Plc of AA-(KE) and A1+(KE) in the long term and short term respectively; with the outlook accorded as Stable. The accorded ratings assigned to EGH Plc reflects its strong competitive position in Kenya s banking industry, which is underpinned by a favorable market reputation, as well as a resilient and innovative financial services business, spread across East Africa and the Democratic Republic of Congo. The rating is also as a result of its Robust internal capital generation and strong Profitability which remained resilient in FY16 despite challenging operating conditions, characterized by economic and political uncertainty and unfavorable banking developments in Kenya. 47

50 High and Improving Global Ranking Equity Bank Overall Soundness (Capital Assets Ratio) Performance (Profits on capital) (Return on assets) 2017 Global Rank Global Rank Global Rank Global Rank Note: Lower Profits on Capital and Return on Assets ranking in 2016 and 2017 are driven by investments in DRC, the effect of the currency devaluation in South Sudan, and additive capital injection in Uganda, Tanzania and Rwanda. 48

51 Euromoney Awards Africa s Best Bank 2016: Equity Bank Africa s Best SME BANK Kenya s Best Bank 49

52 2017 African Banker Awards Equity Bank has been named as the: Best Retail Bank in Africa Best Digital Bank in Kenya Best CSR East Africa Equity Bank CEO, Dr James Mwangi, named Banker of the Year in East Africa 50

53 Equity has Earned Recognition in 2017 Think Business Awards 51

54 Banking Superbrand Banking Superbrand Equity Bank has been recognised for the last 10 years since 2007 as the Top Banking Super-brand in Kenya and in East Africa in 2008 &

55 Geopoll Survey Ranks Equity Bank as Most Preferred Lender in Kenya Equity Bank, GT Bank and Capitec are among the most preferred banks in Kenya, Nigeria and South Africa respectively Customer Satisfaction Straw Poll Survey based on a sample of 2,825 respondents in Nigeria, South Africa & Kenya 53

56 Brand Building through Social & Impact Investment 1. Scholarships & Sponsorships 1. 14,168 Wings to Fly secondary school scholars in partnership with The MasterCard Foundation 2. 5,060 Equity Leadership University Scholars Equity Leadership Airlift (Global Universities) Scholars 2. FIKA financial literacy & Entrepreneurship Training 1. 1,455,759 youth and women entrepreneurs trained for 13 weeks with loans of over Kshs 50bn disbursed ,402 enterprises receive 3 years entrepreneurship training and mentorship 3. Agricultural Transformation ,000 peasant farmers transformed into agri-business through training 2. Specific loan products rolled out for farmers Kilimo Biashara and loans worth Kshs 7.5bn disbursed agriculture extension officers/specialists offering training and extension service 4. 2,000 medium size farms supported through training, building capacity and market linkages. 5. In partnership with government and development partners rolled out a subsidy programme, Kenya Cereals Enhancement Program targeting 40,000 farmers 54

57 Social Payments SECTORS TOTAL Social Protection WINGS Refugees Urban & Refugee TO Settlements FLY SCHOLARS Agriculture input subsidies Education 926, Water Payment Model Program Growth Bank Accounts/ Households Social Payments Geographical reach Kenya Rwanda South Sudan Biometric and PIN Bio POS Branch Hubs Bank Agents KES 41.7 Billion Disbursed KES 55

58 API and Digital Powering the digital economy & creating opportunities 25 Start-up business from all over Kenya in the Pilot Program 40 developers from innovation hubs trained on use of the EazzyAPIs 2,000 new opportunities for the youth in the digital economy by December Technical Incubation environments created Partnerships: 156 SME businesses received payments from the API Platform on e-commerce by Sept 2017 Google Cloud, Microsoft Azure, Amazon Cloud Services, MasterCard Fintech Intiative, BelCash Ethiopia etc Target: 500 Developers, 2,000 SMEs, Startups & 6 Innovation hubs in East, Central & Southern Africa by December

59 Digital & Innovation Services API and Digital (cont.) Branchless Banking Equitel SIM-Card based banking Agency Banking 30day & 2-12 month mobile loans Request-Receive within 20 secs Mobile banking P2P, P2B, B2P, B2B Mobile m-commerce Integration to Credit Bureaus across the region Credit scores at real time within 20 secs Goals Personal Finance Management Insurtech services Premium & claim APIs Card e-commence Mobile Wallets Account transfers Digital & API Services Bills and Airtime Airtime API from all Telcos Utility bills & over 10,000 bills Bill & Invoice management Real-time stock information Buy-Sell stocks real-time Portfolio management Point-of-sale services System integration Merchant services 57

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61 Balance Sheet EBKL Group KES (Billion) Q Q Growth Q Q 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 % % 59

62 -3% growth in PAT (Group) KES (Billion) Q Q Growth Interest Income % Interest Expense % Net Interest Income % Non-Funded Income % Total Income % Loan Loss Provision % Staff Costs % Other Operating Expenses % Total Costs % PBT % Tax (6.4) (6.1) PAT % 60

63 RoAA and RoAE Trend RoAE Q Q % 27.9% 26.0% 22.6% EBKL Group RoAA 5.1% 4.2% 4.5% 3.9% Q Q EBKL Group 61

64 Financial Ratios 62 Profitability EBKL EBKL Group Group Q Q Q Q Yield on Loans 17.0% 11.6% 16.8% 12.6% Yield on Government Securities 9.5% 11.3% 10.0% 11.4% Yield on Interest Earning Assets 14.8% 10.9% 14.2% 11.2% Cost of Deposits 2.4% 2.3% 2.5% 2.4% Cost of Funds 2.6% 2.6% 2.8% 2.6% Net Interest Margin 12.2% 8.3% 11.5% 8.6% Cost to Income Ratio (with provisions) 49.3% 49.9% 56.0% 57.5% Cost to Income Ratio (without provision) 43.1% 44.4% 49.2% 51.6% RoAE 34.0% 27.9% 26.0% 22.6% RoAA 5.1% 4.2% 4.5% 3.9% Asset Quality PAR 5.8% 7.5% 5.8% 7.4% Cost of Risk 1.41% 1.23% 1.63% 1.44% Leverage Loan / Deposit Ratio 81.5% 71.3% 81.9% 72.0% Capital Adequacy Ratios Core Capital to Risk Weighted Assets 14.7% 15.5% 18.0% 19.8% Total Capital to Risk Weighted Assets 15.7% 16.2% 19.0% 20.5% Liquidity Liquidity ratio 44.8% 54.8% 42.7% 52.1%

65 Outlook Kenya & Group Group 2017 Outlook Actual Loan Growth -5% 0% -2% Deposit Growth 12% 17% 11% Net Interest Margin 8% 9% 8.6% Non Funded Income Mix 40% 45% 44% Cost to Income Ratio 47% 50% 51.6% Return on Equity 22% - 25% 22.6% Return on Assets 3.5% - 4.0% 3.9% Cost of Risk 1.50% 1.75% 1.44% NPL 7% 10% 7.4% Regional Contribution (Assets) 30% 22% Regional Contribution (PBT) 10% 12% 10% 63

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67 Ratios - Banking Subsidiaries RoAE Subsidiary Sep-16 Sep-17 EBKL 34.0% 27.9% EBUL 23.6% 25.3% EBRL 9.1% 14.6% EBTL 9.3% 11.9% EBSSL -35.6% 6.9% DRC 10.0% 5.9% RoAA Subsidiary Sep-16 Sep-17 EBKL 5.1% 4.2% EBUL 2.6% 3.5% EBRL 1.9% 2.4% EBSSL -1.2% 2.4% EBTL 1.2% 1.5% DRC 1.4% 0.9% Cost-to-Income Ratio Subsidiary Sep-16 Sep-17 EBKL 43.1% 44.4% EBUL 59.7% 57.0% EBRL 70.7% 58.6% EBTL 67.6% 66.9% DRC 73.0% 81.9% EBSSL 121.3% 90.1% Cost-to-Assets Ratio Subsidiary Sep-16 Sep-17 EBKL 7.0% 6.0% EBTL 6.7% 7.1% EBRL 9.3% 7.9% EBUL 10.6% 10.7% DRC 12.9% 12.5% EBSSL 6.6% 21.5% 65

68 66 Notes

69 Notes 67

70 68 Notes

71 177, , 5, 14, 12, 38, ,561 17,

72 Equity Centre, Hospital Road, Upper Hill, P.O. Box Nairobi, Tel: , Fax: , Info@equitygroupholdings.com, KeEquityBank 70