KCB GROUP PLC INVESTOR PRESENTATION. FY17 FINANCIAL RESULTS

Transcription

1 KCB GROUP PLC INVESTOR PRESENTATION. FY17 FINANCIAL RESULTS JOSHUA OIGARA GROUP CEO & MD LAWRENCE KIMATHI GROUP CFO

2 KCB Group at a glance 6,483 staff 15.7M Customers 153,431 shareholders Market Capitalization $1.5B 2

3 Our Purpose, Values and Strategic Objectives Excellence in Customer experience: NPS target of 60% Excellent operations performance: CIR 45% Digital financial services / AI: NFI contribution 40% Strong shareholder value: ROE >21%, Growth in Youth and Women enterprises 3 Outstanding employee engagement: 85% satisfaction level

4 Recognition of KCB Group: 2017 Group Awards The Banker Awards 2017 Bank of the Year Kenya Sustainable Finance Catalyst Best Bank in Sustainable Finance (Tier 1 Banks) Euro Money Awards Best Bank in Kenya Best Bank for Corporate Social Responsibility in Africa Africa Investor Best Performing Company Best Ai 40 CEO 4

5 KCB 2jiajiri Programme highlights Agribusiness 8,082 Automotive Engineering 524 Beauty and Personal Care 945 Building and Construction 1,877 Domestic Services ,294 beneficiaries 4,519 Business incubation interventions 213 groups with 3,587 individuals 932 individuals 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 2 billion to nurture and grow youthful and SME entrepreneurs 5

6 Improvement in the Macro-Economics: Kenya GDP Growth Rate (%) 5.0% 4.7% 4.9% 4.4% 5.5% Q Q Q P 2018P 3.8% 3.3% 12 Month Private Sector Credit Growth 2.4% 2.1% 1.5% 1.4% 1.6% 1.7% 2.0% 2.7% 2.4% Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Source: CBK, WB 6

7 Improvement in the Macro-Economics: Kenya Overall Inflation USD/KES Exchange Rate % 11.70% 9.21% 6.99% 8.04% 7.06% 5.72% 4.50% Interest Rate Evolution (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 91 day T bill Average lending rates CBR Rate Sources: CBK, KNBS 7

8 Macro-Economic Highlights: Regional GDP (%) Inflation 18.0% 480.0% Uganda Tanzania Rwanda Burundi Ethiopia 6.1% 5.4% 5.8% 3.1% 1.8% 7.1% 7.9% 8.1% 8.1% 1.7% 52.8 % 182.2% (3.7) (7.1) Tanzania Uganda Rwanda Burundi Ethiopia South Sudan 20.0% 91 Day T-Bills 3,484 3,491 Exchange rates to USD 13.6% 11.8% 9.2% 7.1% 3.8% 14.0% 8.6% 9.0% 6.0% 6.4% 4.4% 9.8% 8.8% 4.0% 15.0% 15.0% 7.0% 3.0% 2,186 2, ,629 1, Tanzania Uganda Rwanda Burundi South Sudan Tanzania Uganda Rwanda Burundi Ethiopia South Sudan Sources: IMF, Bloomberg 8

9 87% of Transactions outside the Branch ATMs 10% Agency & POS 20% Branch Teller 13% Mobile 57% Agency & POS, 11% ATMs, 13% Branch Teller, 23% Mobile, 53% Source: KCB data 9

10 42% growth in Agency and POS volumes Agency and POS transactions (M) Agency and POS volume (KShs B) % Source: KCB data 10

11 Marginal change in ATM volumes ATM transactions (M) ATM volume (KShs B) ATMs ATMs Source: KCB data

12 Sustained Growth on Mobile Mobile transactions (M) Mobile Loan Disbursement (KShs B) 67% KCB App Total transactions Source: KCB data 12

13 Over 500% growth on the KCB App 351, , KCB Mobile App Volumes ,000 Customer Utilization % 30, , , , % 25, , , ,000 15, ,000 11, % ,000 10, , ,000 5, Value Transacted (B) Transaction No. (M) Total Downloads Av value per customer Source: KCB data 13

14 Channel Expansion Branches 7% 7% 1% F 10,102 Agents 11,948 13,258 15,082 4,627 6,

15 2017 Staff Rationalization programme The key drivers of the programme Right sizing of the company s resource requirements Alignment to advancements and changes of technology and todays business operating models 249 Distribution 67 Staff Released: 316 KCB Bank Kenya Total Spend (Kshs B) KCB Subsidiaries % 65% Average age: 45 years

16 OUR PERFORMANCE TO DATE

17 9% Total Assets growth driven by Net Loans & Advances KCB Group KCB Bank Kenya Net Loans and advances Net Loans and advances up 10% up 10% KShs: 423B Group Asset Portfolio up 9% KShs: 647B Fixed and other Assets up 21% Investment in Govt. Securities up 7% KShs: 110B Cash and Balances with Central Bank and other Financial Institutions 0% KShs:73B KShs: 388B KCB Bank Kenya Asset Portfolio up 10% KShs: 556B Fixed and other Assets up 23% Investment in Govt. Securities up 4% KShs: 95B Cash and Balances with Central Bank and other Financial Institutions up 21% KShs:39B KShs: 41B KShs: 34B 17

18 Well-diversified loan book KCB Kenya Dec 2017 Industry Sept 2017 MINING & QUARRYING 0.5% 0.5% ENERGY & WATER 2.4% 4.8% AGRICULTURE 2.8% 3.8% TOURISM,RESTAURANT & HOTELS 3.3% 2.5% FINANCIALS 4.7% 3.5% TRANSPORT 5.4% 8.2% BUILDING & CONSTRUCTION 8.5% 4.7% TRADE 8.9% 18.8% MANUFACTURING 11.4% 12.3% REAL ESTATE-OTHERS PERSONAL 35.1% 17.1% 15.7% 25.2% * Group Loans KShs.B Dec-16 Retail Corporate Mortgage Dec-17 18

19 2017 NPL Movement 7.9% 7.9% 8.0% 8.5% 1.0% 1.0% 1.0% 1.5% Q Q Q CoR NPL Group 16.4% 15.5% 10.4% 10.4% 10.4% 11.0% 13.1% 12.3% 6.2% 6.5% 7.3% 7.8% 3.7% 3.6% 3.2% 3.3% CHECK OFF MORTGAGE CORPORATE SME & MICRO Q Q Q Q

20 Steady Coverage Position 69.5% 74.4% INDUSTRY 43.6% 48.7% 37.70% 34.5% IFRS CBK 2017 industry position as at September 20

21 79% of Funding from Deposits KCB Group KCB Bank Kenya Deposits up 11% Deposits up 14% KShs: 500B Group Liabilities and Equity up 9% KShs: 647B Balances to banks and Debt down 28% KShs: 26B Equity up 10% KShs: 440B KCB Bank Kenya Liabilities and Equity up 10% KShs: 556B Balances to banks and Debt down 40% KShs: 16B Equity up 10% KShs:106B KShs:89B Other Liabilities up 6% Other Liabilities down 3% KShs: 15B KShs: 11B 21

22 Well-funded and Diverse Portfolio 2% 3% 3% 55% 47% 46% 42% 50% 51% Corporate Retail Other Deposits by Type FY 16 5% Deposits by Type FY 17 6% 26% 24% 4% 65% 5% 65% Demand Savings Term Call 22

23 Strong capital foundation for the future Group Core Capital to RWA Group Total Capital to RWA 16.9% 18.00% 17.80% 15.7% 15.30% 15.50% 14.5% 14.50% 14.50% 10.5% 10.50% 10.50% Min. Core/RWA Core Capital /RWA Min. Total/TWA Total Capital /RWA 23

24 Resolute strategy delivers 9% balance sheet growth KShs Billions Actual 2016 KCB Group Actual 2017 Y-O-Y Change Actual 2016 KCB Bank Kenya Actual 2017 Y-O-Y Change Cash and balances with central bank (1%) (1%) Balances with other institutions % % Investments in Government & Other securities % % Net loans and advances % % Fixed assets % % Other assets % % Total Assets % % Customer Deposits % % Balances due to other banks (16%) (7%) Other liabilities % (3%) Long-term debt (35%) (49%) Total Liabilities % % Shareholders Equity % % Total Liabilities and Equity % % 24

25 Stable profitability despite interest rate pressure KCB Group KCB Bank Kenya KShs Billions Actual 2016 Actual 2017 Y-O-Y Change Actual 2016 Actual 2017 Y-O-Y Change Interest Income % % Interest Expense (15.8) (15.3) (3%) (13.3) (12.8) (3%) Net interest income % % Foreign exchange income (15%) % Net fees and commissions % % Other income (16%) (18%) Total other operating income % % Total other operating expenses (32.9) (34.9) (6%) (25.9) (28.6) (9%) Net provisions for bad debts (3.8) (5.9) 55% (3.8) (5.0) 32% Profit Before Loss on Monetary Position (7%) (4%) Loss on Monetary Position (3.6) (1.4) (61%) Profit before tax % (4%) Tax (9.4) (9.4) 0% (8.7) (8.2) (5%) Profit after tax % (3%) 25

26 Income Distribution Interest Income & Growth % NFI Mix & Growth % 1% 1% 1% 17% 19% 14% 22% 19% 16% (18%) 16% 17% 24% 20% (15%) 13% 14% 18% 29% 83% 82% 80% - 47% 42% 46% 13% Loans and advances Govt. Securities Placements & Money Markets Fees and Commission Lending Fees Fx Income Other Income 26

27 Overview of Key Financial Ratios Q1 17 Q217 Q3 17 KENYA GROUP 20.3% 23.6% 20.1% Return on Average Equity 22.6% 19.5% 52.5% 47.4% 51.9% Cost to Income* 46.8% 46.2% 7.9% 7.8% 8.0% Gross NPL to Gross Loans 8.5% 8.5% 79.6% 84.6% 85.6% NPL Coverage 75.9% 74.4% 23.3% 14.5% 14.0% Debt to Equity 11.9% 14.0% 35.0% 28.3% 32.9% Non funded income to total income 27.7% 32.2% 3.1% 2.8% 2.9% Cost of funds 2.9% 3.0% 7.9% 9.2% 9.1% Net Interest Margin 9.1% 8.9% 1.0% 0.9% 1.0% Cost of risk 1.4% 1.5% 86.6% 90.7% 87.4% Loan to Deposit Ratio 88.7% 85.1% 14% 19% 15% Growth of Net Loans and Advances 10% 10% 8% 16% 16% Growth of Customer Deposits 14% 11% *excluding one off restructuring costs 27

28 2017 Dividend KCB Group paid an interim dividend in October 2017 of KShs per share. At the AGM to be held on 27 April 2018, at Safaricom Kasarani Indoor Stadium, we shall propose a final dividend of KShs per share. Based on the 2017 performance of the Group, the proposed dividend is maintained at the same payout level as Taking into consideration business performance during the current year, the Group anticipates it shall be able to pay an interim dividend to shareholders. 28

29 Outlook Strategic Initiatives: Excellence in Customer experience: NPS 60% Digital financial services / AI: NFI 40% Strong shareholder value: ROE >21% Growth in Youth and Women enterprises Excellent operations performance: CIR 45% Outstanding employee engagement: 85% satisfaction level Targets: Continue to improve efficiency Increase shareholder value Manage asset quality Full digital transformation Relentless drive for excellence in customer experience Return on Average Equity 21.1% Cost to Income Ratio* 46.0% Gross NPL to Gross Loans 7.0% Non funded income ratio 30.9% Cost of Funds 3.3% Net Interest Margin 8.7% Cost of Risk 1.3% Cost of Funds 3.3% Customer Deposit Growth 11% Net Loans Growth 8% *excluding one off restructuring costs 29

30 Thank you. Investor Relations