WHAT DRIVES US. Customer perspective Market share Shared Value Brand position STRATEGY: TRANSFORMATIVE PARTNERSHIPS

Transcription

1 FY 2018 RESULTS

2 OUR STRATEGY WHO WE ARE Our Purpose Simplifying your world to enable your progress Our Promise Go Ahead Our Values Inspiring Simple Friendly WHAT DRIVES US Customer perspective Market share Shared Value Brand position STRATEGY: TRANSFORMATIVE PARTNERSHIPS Learning and growth Staff productivity Staff development Culture change Financial PBT Efficiency Shareholder Value Internal Business processes System reliability Sustainability Control environment HOW WE ACHIEVE IT Business growth while achieving the women and youth agenda Customer centricity Drive shareholder value Growth in Digital Financial services Operational efficiency Talent management 2

3 OUR REGIONAL PRESENCE KShs. 114B TOTAL EQUITY 258 BRANCHES 946 ATMS, 16,642 AGENTS & MERCHANTS Banking Businesses: KCB Bank Kenya KCB Bank Tanzania KCB Bank South Sudan KCB Bank Rwanda KCB Bank Uganda KCB Bank Burundi Ethiopia Rep. Office Other Investments: KCB Capital Limited KCB Insurance Agency KCB Foundation Kencom House Limited KCB BANK SOUTH SUDAN KCB BANK KENYA (ETHIOPIA REPRESENTATIVE OFFICE ) KCB BANK KENYA KCB INSURANCE AGENCY KCB FOUNDATION KCB CAPITAL 6,220 STAFF 17.4 MILLION CUSTOMERS KCB BANK RWANDA KCB BANK BURUNDI KCB BANK TANZANIA 3

4 2018 GROUP HIGHLIGHTS

5 2018 KENYA HIGHLIGHTS Overview of the year to date Adoption of IFRS 9: Impact on capital ratios and the introduction of a 5 year grace period the Central bank of Kenya Impact on the loan book and provisions, subsequent effect on P&L Banking Industry: Momentum for mergers & acquisitions Imperial Bank Limited (In Receivership) (IBLR) -Acceptance of binding offer and verification of part of the assets for transfer to KCB Bank Kenya Increased regulatory oversight on compliance with Kenya s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) and Imposition of a fines Economic drivers: Big Four Housing Healthcare Manufacturing Food security Resilient Kenya Shilling supported by record growth in diaspora remittances, tourism & horticulture 5

6 2018 GROUP HIGHLIGHTS Overview of the year to date TANZANIA Strong growth in the domestic demand and expansion of credit, especially to households trade and manufacturing Expectation is high on the major national projects on the SGR and the facilitation of improved access to modern energy services A favorable monetary policy in 2018 with the BOT slashing its discount rates in from 9% to 7% UGANDA Robust activity in the manufacturing, oil and mining sectors expected to drive growth over 6% in 2019 Growing fiscal deficit driven largely by public infrastructure investment Favorable weather conditions are key to the largely agricultural economy RWANDA Sustained >7% growth over the last decade Primary drivers of the economy diversifying to service, trade and ICT, over and above the mainstay, Agriculture Made in Rwanda initiatives and international conferences boosting tourism and inflow of foreign currency 6

7 2018 GROUP HIGHLIGHTS Overview of the year to date SOUTH SUDAN Improved economic conditions following the signing of the peace agreement Reduced internal conflicts and a moderate improvement in the oil prices supporting the growth of the economy Oil production is expected to recover fully in 2019 boosting the inflow of foreign currency into the economy BURUNDI Moderate recovery of the predominantly agricultural economy Annual GDP growth improving from to 0.5% in 2017 to 2.8% Positive outlook after the referendum held in 2018 Opportunities in mining and the hydropower capacity 7

8 2018 Group Awards THE BANKER AWARDS Bank of the Year Banking in the Community (2Jiajiri) THE EABC AWARDS Best East African Company BANKER AFRICA EAST AFRICA AWARDS Best Retail bank in East Africa SUSTAINABLE FINANCE CATALYST Best Bank in Sustainable Finance Overall Winner, in sustainable finance integration and practices (Tier 1 Banks) 8

9 2018 HIGHLIGHTS KCB 2jiajiri Programme highlights DOMESTIC SERVICES 1,145 AUTOMOTIVE ENGINEERING 1,383 BUILDING AND CONSTRUCTION BEAUTY AND 4,459 PERSONAL CARE 2,119 AGRIBUSINESS 13,953 FUTURE OF 2JIAJIRI 23,059 BENEFICIARIES Kenya 21,459 Tanzania 1,500 Rwanda 100 Catalyze job and wealth creation for at least 100,000 youth engaged in the informal sector within Eastern Africa Investment of over KShs 50 billion to nurture and grow youthful and SME entrepreneurs 9

10 2018 HIGHLIGHTS KCB Foundation Case studies From hustling to an employer Kodhis, the Beautician Humble beginnings in hawking safari bags to the realization of the pedicure and manicure business. Introduced to KCB Foundation s 2Jiajiri in 2016, and now after his expansion journey, employs 15. Starting a garage business: One entrepreneur s journey Joseph Mutai was a mechanic training on the job at a garage in Kericho when he was introduced to the 2Jiajiri programme in He is now a proud owner of a motor vehicle spares and garage business with 8 employees. 10

11 MACRO- ECONOMIC HIGHLIGHTS

12 MACRO- ECONOMIC HIGHLIGHTS Kenya Contribution to GDP Q32018 (%) Q Growth (%) % AGRICULTURE MANUFACTURING REAL TRADE EDUCATION TRANSPORT & FINANCIAL & CONSTRUCTION ICT HEALTH MINING& ESTATE STORAGE INSURANCE QUARRYING 2018P GDP Growth Rate(%) 12

13 MACRO- ECONOMIC HIGHLIGHTS GDP Growth (%) Regional GDP Growth % 2.8 South Sudan Ethiopia Rwanda Tanzania Uganda Burundi 2018P* East Africa GDP Growth Rate (%) *Source: AfDB, Africa Economic Outlook 2019

14 Inflation Evolution (%) MACRO- ECONOMIC HIGHLIGHTS Kenya Inflation rate Target Upper Target Lower Non Food Fuel JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Interest Rate Evolution (%) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC day bill Avg lending rates CBR rate 14

15 USD/KES Exchange Rate(%) MACRO- ECONOMIC HIGHLIGHTS Currency Movement JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Exchange Rates to USD 3,712 2,300 1, Uganda Tanzania Burundi Rwanda South Sudan Ethiopia 15

16 MACRO- ECONOMIC HIGHLIGHTS Kenya Overall reduction on infrastructure spending Increased exports of tea and horticulture Increased diaspora remittances Strong receipts from tourism Lower imports of food Kenya Malawi Uganda Nigeria Seychelles Mauritius Tanzania Rwanda BRVM Ghana Botswana South Africa Zambia Only African currency to strengthen against the USD in % -2.0% -2.0% -2.5% -2.5% -3.0% -5.0% -7.0% -7.2% -8.0% -14.0% -16.0% 1.0% 16

17 MACRO- ECONOMIC HIGHLIGHTS Current Account Balance (% ofgdp) Kenya Month Private Sector CreditGrowth F 2018F 4.3% 4.3% 3.9% 4.4% 2.7% 2.1% 2.0% 2.8% 3.0% 2.4% JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

18 CHANNEL PERFORMANCE

19 OUR December 2017 CHANNEL CONTRIBUTION MOBILE 45% AGENCY, INTERNET AND POS 26% BRANCH TELLER 16% ATMS 13% 88% of transactions performed outside the branch December 2018 MOBILE 45% AGENCY, INTERNET AND POS 32% BRANCH TELLER 12% ATMS 11% 14% decrease in average transactions / tellerper day 15% decrease in Number of branch transactions. 27% growth in non-branch revenue to over 5.2B Dec 2017 Dec 2018 Avg. Transactions / Teller perday Dec 2017 Dec 2018 Number of Branch Transactions(M)

20 OUR CHANNEL CONTRIBUTION 84% Growth in Mobile Loans Advances Value of Transactions (KShs.B) FY 16 FY17 FY18 No. of transactions (M) FY 16 FY17 FY18 Mobile Revenue (KShs.M) 2,261 FY17 3,175 FY18 Mobile Transaction type(%) FY 2018 FY B 54.4B B2C B2B C2B LIPA KARO 20

21 OUR CHANNEL CONTRIBUTION 61% Growth in Agency Banking Value Value of Transactions (KShs.B) FY 16 FY17 FY18 Agency Transaction type(%) No. of transactions (M) Agent revenue (KShs M) FY16 FY17 FY18 FY 16 FY17 FY18 FY 2017 FY CASH DEPOSIT CASH WITHDRAWAL SCHOOL FEES BALANCE ENQUIRY BILL PAYMENT OTHERS 21 *Others: Account opening, mini statement, load cards and Funds transfer

22 OUR CHANNEL Value of Transactions (KShs.B) No. of transactions (M) ATM revenue (KShs M) CONTRIBUTION 51% Growth in ATM Value Over KShs 22.6B collected through 70 intelligent ATMs FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 22

23 OUR CHANNEL CONTRIBUTION Value of Transactions (KShs.B) POS Revenue (KShs. M) 17% Growth in the average value per Merchant/ POS transaction FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 23

24 OUR FINANCIAL PERFORMANCE TO DATE

25 BALANCE SHEET HIGHLIGHTS 10% Total Assets growth Govt. Securities KShs 110.0B Net Loans & Advances KShs 422.7B KShs 120.1B KShs 455.9B Customer Deposits KShs 499.5B KShs 537.5B Total Assets KShs 647.7B KShs 714.3B

26 Sectoral Loans Comparison LOAN Industry Sept 2018 KCB Dec 18 BOOK PERFORMANCE 0.4% 3.7% 4.7% 0.0% 3.0% 3.0% Mining and Quarrying Agriculture Energy and water 8% Growth in Net Loans and Advances 2.6% 6.8% 3.6% 18.9% 4.8% 13.0% 3.0% 5.0% 6.0% 8.0% 8.0% 11.0% Tourism, restaurants and hotels Transport and communication Financial Services Trade Building and construction Manufacturing 26.0% 15.5% 17.0% 36.0% Real estate Personal/Household * Group gross loans KShs.B % LCY FCY 81% Dec-17 Retail Corporate Mortgage Dec-18 26

27 Asset Quality Review LOAN BOOK PERFORMANCE 9.1% 10.6% 12.0% 11% 6.9% Asset quality improvement 6.8% 6.6% 1.4% 8.0% 8.5% 1.0% 1.5% 6.9% 0.7% LCY FCY 89% FY 2015 FY 2016 FY 2017 FY 2018 NPL Breakdown Industry NPL (Kenya) 14.8% 16.3% 13.0% 7.4% 7.9% 8.5% 3.2% 3.3% CHECK OFF MORTGAGE CORPORATE SME & MICRO 27 Q Q Q FY 2018

28 Improved IFRS Coverage LOAN BOOK PERFORMANCE 40,000 37, % 15% Decrease in stock of Non- Performing Loans 30,000 31,813 32, % 90.0% 72.5% 72.4% 69.5% 68.6% 60.0% 37.3% 42.6% 20,000 FY 16 FY17 FY % Gross NPL Central Bank Coverage Ratio IFRS Coverage Ratio 28

29 BALANCED DEPOSIT MIX 3% 3% 2% 47% 46% 48% 50% 51% 49% Corporate Retail Other Currency Mix Deposits by Type 2017 Deposits by Type % 8% 12% 24% 24% 88% 5% 65% 5% 63% 29 LCY FCY Demand Savings Term Call

30 Core Capital to RWA Total Capital to RWA STRONG CAPITAL BUFFERS Group 15.3% 15.4% 18.1% Group 18.0% 16.6% 19.5% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% Kenya Kenya 16.9% 14.9% 16.4% 19.9% 16.1% 17.8% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5%

31 P&L HIGHLIGHTS Profit before tax Up 16% 22% earnings growth to KShs 24.0B Net interest income KShs 48.4B Total non Interest Income KShs 23.0B Operating Expenses KShs (36.4B) Profit before tax KShs 29.1B KShs 48.8B KShs 23.0B KShs (35.0B) KShs 33.9B

32 P&L KShs. M Net loans & advances PBT HIGHLIGHTS: International Businesses KCB Bank South Sudan % 64% growth in subsidiary PBT KCB Bank Burundi KCB Bank Uganda 1,403 2,397 6,777 6, % 59% KCB Bank Rwanda 11,899 12, (25%) KCB Bank Tanzania 14,283 16, ,989%

33 Strong balance sheet driven by KShs 33B growth in net loans KShs Billion Actual 2017 KCB Group Actual 2018 Y-O-Y Change KCB Bank Kenya Actual 2017 Actual 2018 Y-O-Y Change Cash and balances with central bank % % Balances with other institutions (27%) % Investments in Government & Other securities % % Net loans and advances % % Fixed assets % % Other assets % % Total Assets % % Customer deposits % % Balances due to other banks % % Other liabilities % % Long-term debt % % Total Liabilities % % Shareholders equity % % Total liabilities and equity % % 33

34 22% GROWTH IN EARNINGS KShs Billion Actual 2017 KCB Group Actual 2018 Y-O-Y Change Actual 2017 KCB Bank Kenya Actual 2018 Y-O-Y Change Interest income % % Interest expense (15.3) (17.5) 14% (12.8) (15.0) 17% Net interest income % % Foreign exchange income (6%) (6%) Net fees and commissions (3%) % Other income % % Total other operating income Total other operating expenses % % (36.4) (35.0) 4% (28.6) (28.3) 1% Provisions for bad debts (5.9) (2.9) (50%) (5.0) (3.1) (37%) Profit before tax % % Tax (9.4) (9.9) 5% (8.2) (9.0) 9% 34 Profit after tax % %

35 OVERVIEW OF KEY FINANCIAL RATIOS FY17 H1 18 Q3 18 KENYA GROUP 19.5% 23.5% 22.8% Return on Average Equity 24.4% 21.9% 51.0% 48.2% 49.7% Cost to Income 45.1% 48.3% 8.5% 8.4% 7.5% Gross NPL to Gross Loans 6.9% 6.9% 72.5% 75.0% 82.7% NPL Coverage 65.3% 72.4% 14.0% 20.9% 19.7% Debt to Equity 19.6% 19.7% 32.2% 32.3% 33.3% Non funded income to total income 29.5% 32.0% 3.0% 3.0% 3.2% Cost of funds 3.2% 3.2% 8.9% 8.3% 8.0% Net Interest Margin 8.1% 8.1% 1.5% 0.4% 0.5% Cost of risk 0.7% 0.7% 85.1% 85.5% 88.0% Loan to Deposit Ratio 91.8% 84.8% 10% 4% 4% Growth of Net Loans and Advances 8% 8% 11% 9% 6% Growth of Customer Deposits 8% 8% 35

36 Dividend 2018 DIVIDEND 17% dividend increase to KShs KCB Group paid an interim dividend of KShs 1.00 per share in November The Directors recommend a final dividend for the year ended 31 December, 2018 of KShs

37