KCB INVESTOR AND MEDIA PRESENTATION 2012 FULL YEAR GROUP AUDITED FINANCIAL RESULTS 1
Outline 1. East Africa Macroeconomic View 2. The Bank at a Glance 3. 2012 full year KCB group Financial Results 4. Future Outlook 2/28/2013 2
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Regional Macros EAC GDP Rate(%) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2007 2008 2009 2010 2011 2012 Kenya 7.1% 1.7% 2.6% 5.6% 4.4% 3.5% Tanzania 7.1% 7.4% 6.0% 6.8% 6.1% 7.2% Uganda 8.1% 10.4% 5.3% 5.1% 6.4% 5.6% Rwanda 5.5% 11.2% 4.1% 7.2% 8.6% 7.7% Burundi 3.6% 4.5% 3.5% 3.9% 3.9% 4.8% S. Sudan 8.6% 7.0% 8.0% Higher GDP and lower inflation create an environment for improved performance There were Liquidity challenges in 2012. Focus to drive value from retail channels Banking sector growing in 4-5 multiples of GDP Source: IMF 4
Overall Inflation Dec-11 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Dec-11 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Kenya 19.7% 18.9% 18.3% 16.7% 13.1% 12.2% 10.1% 7.7% 6.1% 5.3% 4.1% 3.3% 3.0% Tanzania 19.2% 19.7% 19.4% 19.0% 18.7% 18.2% 17.4% 15.7% 14.1% 13.5% 12.9% 12.2% 12.2% Uganda 27.0% 25.7% 25.7% 21.2% 20.0% 18.6% 18.0% 14.3% 11.9% 5.4% 4.5% 4.9% 5.5% Rwanda 7.4% 8.3% 7.8% 8.2% 6.9% 8.3% 5.9% 5.6% 5.8% 5.6% 5.4% 4.6% 3.9% Burundi 14.9% 21.6% 22.0% 24.5% 25.2% 22.5% 17.3% 17.6% 16.0% 15.8% 15.9% 11.7% 11.8% South Sudan 65.6% 47.8% 42.4% 50.9% 29.6% 79.5% 74.1% 60.9% 43.3% 42.9% 21.5% 41.1% 25.2% Source: IMF 5
Central Bank Rate Dec-11 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Dec-11 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Kenya 16.5% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 16.5% 16.5% 13.0% 13.0% 11.0% 11.0% Tanzania 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% Uganda 23.0% 23.0% 22.0% 21.0% 21.0% 21.0% 20.0% 19.0% 17.0% 15.0% 12.5% 12.5% 12.0% Rwanda 7.0% 7.0% 7.0% 7.0% 7.0% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% Source: Central Bank 6
Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Jan-12 Feb-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 87.0 86.0 85.0 84.0 83.0 82.0 81.0 86.3 83.2 Currency exchange rate (USD): 82.9 84.4 84.8 KENYA 84.1 84.6 85.2 86.0 86.1 2800 2700 2600 2500 2400 2300 2200 2100 2327 2485 2479 2474 2492 UGANDA 2650 2700 2690 1595 1590 1585 1580 1575 1570 1565 1591 1593 1585 1586 1577 TANZANIA 1584 1579 1577 1581 1579 1580 635 630 625 620 615 610 604 605 600 595 590 607 607 609 612 613 614 RWANDA 623 631 630 627 1600 1550 1500 1450 1407 1399 1401 1412 1400 1350 1300 1440 1466 1473 1477 1487 BURUNDI 1512 1546 3.60 3.40 3.20 3.00 2.80 2.60 2.40 3.00 2.95 3.35 3.40 3.18 3.00 2.95 SOUTH SUDAN 2.85 3.00 3.06 3.06 3.06 Source: Central Bank 7
General macro-economic environment: 1. Tight liquidity position 2. Slow asset growth 3. Large Inflation spread across the region 4. FOREX volatility and availability 5. EAC integration trade opportunities 6. Oil and Gas exploration projects 8
The Group Regional Footprint: The Bank has made tremendous progress with its regional expansion program. GROUP - Asset Base 367 Billion - Capital Base 53 Billion - No. of Branches 230-940 ATM s - No. of Customers 2 Million - No. of Agents 4,627 SOUTH SUDAN- 2006 20 Branches 27 ATMs 321 Staff UGANDA- 2007 14 Branches 16 ATMs 319 Staff KENYA- 1896 BURUNDI- 2012 1 Branch 2 ATMs 173 Branches 864 ATMs 3,891 Staff 53 Staff RWANDA- 2008 11 Branches 18 ATMs 333 Staff TANZANIA- 1997 11 Branches 13 ATMs 245 Staff 9
The Group s Road Map to Accelerated Growth and Profitability Develop best-in-class enabling processes Lay the foundation to Leverage our talent Our Award Winning products Our unmatched regional presence Increased Revenues Reduction in Costs Improved Efficiencies Optimize the subsidiaries The bank is an early adopter of Research and Innovation Profitably grow business l in Kenya Our Growth Drivers Our unmatched Pursuit towards growing sustainable business Improved cost to income ratio International Business Mortgage Micro & SME 10
Increased focus on innovation and mobile banking solutions Our Products Our Channels Our Sponsorships Our Caring Nature New Brands Our Partnership 11
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Group Income Statement (KShs. M) AUDITED Dec 2011 AUDITED Dec 2012 % Change Net interest income 23,885 30,636 28% Foreign exchange income 3,608 3,688 2% Gross fees and commissions 9,185 9,613 5% Other income 881 661 (25%) Total operating income 37,559 44,598 19% Total operating expenses (22,284) (25,292) 13% Profit before provisions & tax 15,275 19,306 26% Provisions for bad debts (2,495) (3,756) 49% Bad debts recovered 2,349 1,658 (29%) Profit before tax 15,129 17,208 14% Tax (4,148) (5,005) 21% Profit after tax 10,981 12,203 11% Earnings per share 3.72 4.11
Assets Group Balance Sheet (KShs. M) AUDITED Dec 2011 AUDITED Dec 2012 % Change Cash and balances with Central Bank 42,708 36,420 (15%) Balances with other institutions 25,812 10,422 (60%) Investments in Government securities 43,591 86,992 100% Investment securities 2,414 2,299 (5%) Net loans and advances 198,725 211,664 7% Fixed assets 9,683 10,217 6% Other assets 7,783 9,365 20% Total Assets 330,716 367,379 11% Liabilities Customer deposits 259,309 288,037 11% Balances due to other banks 14,105 9,334 (34%) Other liabilities 4,412 7,746 76% Long-term debt 8,525 8,923 5% Total Liabilities 286,351 314,040 10% Share capital 2,969 2,970 <1% Proposed dividends 5,492 5,644 3% Reserves and premium 35,904 44,725 25% Shareholders Equity 44,365 53,339 20% Total Liabilities and Equity 330,716 367,379 11% 14
Financial Highlights Dec 2012 Vs. Dec 2011 Profit Before Tax: KShs. 17.2B, up 14% (Dec 2011: KShs. 15.1B) Strong performance in Kenya business: Pre-tax profit, KShs. 15.8B up 12% (Dec 2011: KShs. 14.1B) Excellent results by International Business: Pre-tax profit, KShs. 1.4B up 39% (Dec 2011: KShs. 1.0B) Net interest income up 28% to KShs. 30.6B (Dec 2011: KShs. 23.9B) Total operating income up 19% to KShs. 44.6B (Dec 2011: KShs. 37.6B) Total operating expenses increased by 13% to KShs. 25.3B (Dec 2011: KShs. 22.3B) Group balance sheet rose by 11% to KShs. 367.4B (Dec 2011: KShs. 330.7B) Net loans and advances up 7% to KShs. 211.7B (Dec 2011: KShs. 198.7B) Customer deposits up 11% to KShs. 288.0B (Dec 2011: KShs. 259.3B) Cost to income ratio lower by 290bp to 57.4% (Dec 2011: 60.3%) Shareholders equity increased by 20% to KShs. 53.3B (Dec 2011: KShs. 44.4B) 15
PBT Growth & Contribution Strong profit growth (KShs. B) Contribution of PBT (KShs. B) 18.0 16.0 14.0 12.0 9.8 15.1 17.2 18.0 16.0 14.0 Subsidiary contribution 7.0% Kenya Business 1.0 39% Subsidiaries 1.4 Subsidiary contribution 8.4% 10.0 8.0 6.0 4.0 2.0 0.0 6.0 6.3 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 12.0 10.0 8.0 6.0 4.0 2.0-14.1 12% 2011 2012 15.8
Stable Margins and Yield on Assets on a high interest rate environment(%) 15 10 7.3 9.0 9.3 10.1 10.9 5 1.8 2.1 1.7 1.9 0 4.2 2008 2009 2010 2011 2012 Net Interest Margin Cost of Funds Comments: Stable NIMs despite high interest rate environment Focus on non-funded income remains crucial to drive earnings Steady decline on CIR is expected 17
Declining Group Cost to Income 68.9% 61.8% 62.8% 60.3% 57.4% FY08 FY09 FY10 FY11 FY12 Comments: Steady decline on CIR is expected One-off restructuring costs of 1.6 Billion in 2011 Bank is not focused on opening more branches this year. Key focus will be on growing Agency Banking and Mobi-Bank) Start up for Burundi Business affected the CIR Shared Service Centre serving the group 18
Healthy Balance Sheet Growth (KShs. Bn) 400 350 300 250 200 150 100 50 0 367 331 288 251 259 197 199 212 191 195 163 148 127 123 94 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Net Loans Customer deposits Total Assets
KEY BANK STATUTORY RATIOS 30.0% 20.0% Core capital/total deposit CBK MIN core capital/total risk wighed assets 25.0% CBK MIN 21.6% 23.1% 20.0% 18.3% 18.7% 19.9% 21.3% 15.0% 10.0% 8.0% 10.0% 5.0% 8.0% 0.0% 2010 Dec 2011 Dec 2012 Dec 0.0% 2010 Dec 2011 Dec 2012 Dec 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Total capital/total risk weighed assets CBK MIN 23.2% 20.7% 22.7% 12.0% 2010 Dec 2011 Dec 2012 Dec 40.0% 30.0% 20.0% 10.0% 0.0% Liquidity ratio CBK MIN 30.7% 31.3% 35.5% 20.0% 2010 Dec 2011 Dec 2012 Dec
Agency Banking and Mobile Bank Agency Banking The number of agents increased by 77% in 2012 to 4,627 5% of the Bank s retail transactions are done through the Agency The mid term goal is to grow the number of agents to 10,000 in the region. Mobile Bank The number of registered mobile banking users increased by 625% in 2012 to 652,384 10% of the Bank s retail transactions are done through Mobile Banking 21
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Outlook for 2013 STRONG PERFORMANCE DRIVEN BY TECHNOLOGY & INNOVATION TOP-LINE GROWTH LEVERAGING NON FUNDED INCOME REDUCTION IN THE NPL RATIO ACROSS THE GROUP LEVERAGE STRONG TALENT ACROSS THE GROUP BUSINESS FOCUS ON REDUCTION OF COST TO INCOME RECOVERIES OF NPL 23
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