KCB INVESTOR PRESENTATION FY2016 GROUP FINANCIAL RESULTS 9 MARCH 2017 JOSHUA OIGARA GROUP CEO & MD LAWRENCE KIMATHI GROUP CFO

Transcription

1 KCB INVESTOR PRESENTATION FY2016 GROUP FINANCIAL RESULTS 9 MARCH 2017 JOSHUA OIGARA GROUP CEO & MD LAWRENCE KIMATHI GROUP CFO

2 Macro-Economic Highlights: Kenya GDP Growth rate (%) USD/KES Exchange rate P 2017P Jan-15 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Inflation (%) Interest Rates 2016 (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Inflation rate-2016 Target: Upper Target: Lower Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 91 day T bill Average lending rates CBR Rate Source: Bloomberg, CBK 2

3 Macro-Economic Highlights: Regional GDP 7.4% 7.0% 7.2% 6.8% 7.0% 6.9% 5.5% 6.5% 6.0% 5.0% 4.9% 5.0% 4.7% 4.6% 3.0% 9.3% 2.9% Inflation % Tanzania Uganda Rwanda Burundi South -0.2% Sudan -2.8% 8.4% 6.8% 6.1% 5.0% Indicators 9.3% 9.0% 7.9% 9.6% 6.5% 6.8% 7.1% 5.7% 6.6% 4.9% 3.1% 1.8% Tanzania Uganda Rwanda Burundi 52.8% 1.7% 0.0% South Sudan % Interest Rates - 91 Day T-Bills 20.0% 13.6% 14.0% 11.8% 9.2% 9.0% 6.0% 7.1% 6.0% 6.0% 4.4% 2.4% 15.0% 9.8% 9.0% 8.8% 7.0% 3.6% 3.0% 3.0% Tanzania Uganda Rwanda Burundi South Sudan Source:IMF SSP Exchange Rate

4 KCB 2016 HIGHLIGHTS

5 Significant Issues for KCB in Capital Raising Rights issue cancelled Debt of $75M with IFC 1. Interest Rate Cap. Banking Amendment Act 2016 (CBR+4%) 2. South Sudan Hyperinflation Loss on net Monetary position KCB Group PLC 5. Chase Bank (IR) End of assignment CBK Resolution by 31/03/ T24 R14 Increased Capacity for over 30M customers 3. Credit Quality Slow progress due to large corporate names 5

6 Impact of Interest Rate Capping Downside Upside 6

7 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

8 DIGITAL CHANNEL PERFORMANCE

9 Strong Momentum on Mobile Customer footprint, over 10 million customers Mobile Customers (M) 90% of Total Loans processed on mobile 53% of customer interactions are on mobile Mobile Banking Mbenki KCB M-PESA Total Source: KCB data Mobile Loans KCB M-Mpesa Loan Count (M) Loans Disbursed (KShs B) FY 2015 FY 2016 Loan Count (M) Loans Disbursed (KShs B) FY 2015 FY

10 77% of Transactions outside the Branch FY 2015 Agency Banking 5% FY 2016 Agency Banking 4% POS 7% POS 7% ATM's 13% OTC - Branch 27% Mobile Banking 48% ATM's 13% OTC - Branch 23% Mobile Banking 53% 32% Growth In Channel Revenue 83% 95% -5% 123% Channels Activity POS Mobile Agency ATM Internet Source: KCB data FY 2015 FY 2016 Agency (Ave. Trnx per agent per day) Mobile (Ave. Trnx per active customer p.m.) FY 2015 FY 2016 ATM (Ave. Trnx per ATM p.m. in `000s) POS (Ave. Trnx per POS per day) 10

11 OUR PERFORMANCE TO DATE

12 11% Growth in Loans and Advances driven by the Kenya Business KShs B Kenya Asset Portfolio Net Loans and advances Investment in Govt. Securities Cash and Balances with Central Bank and other Financial Institutions Other Assets 12

13 Improvement in Asset Quality 8.1% 8.5% 8.9% 8.3% 8.0% 6.3% 6.6% 2015 Contribution 2016 Contribution YOY Growth Corporate 43% 49% 55% SME 15% 16% 46% Consumer 12% 12% 31% Mortgage 12% 12% 32% Other 18% 11% -17% 1.3% 1.8% 1.4% 1.6% 1.2% 1.3% 1.0% Q 16 2Q 16 3Q CoR NPL Group 13

14 Stable Coverage Position 85.0% 79.5% 69.5% 56.4% 36.9% 46.6% 41.4% 43.6% IFRS CBK 14

15 KShs B 75% of Funding from Deposits Kenya Funding Portfolio Deposits Bal. to banks and debt Equity Other Liabilities 15

16 65% of Deposits Primarily Demand Deposits 2% 2% 3% 0% 54% 55% 47% 47% 45% 42% 50% 53% Corporate Retail Other Deposits by Type FY15 4% Deposits by Type FY16 5% 30% 26% 60% 4% 65% 6% Demand Savings Term Call 16

17 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% 14.5% 14.5% 14.5% 14.5% Min. Core/RWA Core Capital /RWA Min. Total/TWA Total Capital /RWA 17

18 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 %. 31 December 2016 at 1,285.30%. The average annual CPI 31 December 2016 at 1,592.32% 18 Source: IMF data

19 Group Balance Sheet KShs Millions Actual Dec - 15 KCB GROUP Actual Dec - 16 Y-O-Y Change Cash 11,965 11,375 (5%) Balances with Central Bank 23,962 18,055 (25%) Balances with other institutions 52,579 43,507 (17%) Investments in Government & Other securities 96, ,471 6% Net loans and advances 345, ,745 11% Fixed assets 10,592 12,674 20% Other assets 16,078 21,412 33% Total Assets 558, ,240 7% Customer Deposits 424, ,174 6% Balances due to other banks 23,138 13,123-43% Other liabilities 9,182 14,395 57% Long-term debt 20,130 22,982 14% Total Liabilities 476, ,674 5% Shareholders Equity 81,254 96,566 19% Total Liabilities and Equity 558, ,240 7% 19

20 KShs Millions 10% Growth in PBT 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% Loss on net monetary position - 3,458 Profit before tax 26,538 29,091 10% Tax 6,915 9,369 35% Profit after tax 19,623 19,722 1% 20

21 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% Loan to Deposit Ratio 91.3% 86.1% 16% 8% 5% Growth of Net Loans and Advances 13% 11% 7% -2% -7% Growth of Customer Deposits 11% 6% 21

22 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

23 Our Outlook Exponentially grow our digital financial services and Fintech Excellence in Customer Experience Achieve Stronger International Business Performance Grow non interest revenue Net Interest Margin Non Funded Income Cost to Income Ratio Staff CTI Return on Equity Return on Assets NPL % 33.1% 51.4% 26.5% 20.0% 3.0% 8.0% Best In class information technology Champion our sustainable business priorities Manage emerging risks in a difficult operating environment Cost of Funds Customer Deposit Growth Net Loans Growth 3.2% 12% 6% 23

24 YOU CAN REACH US ON: Investor Relations Department