NATIONAL MICROFINANCE BANK PLC INVESTOR PRESENTATION On the occasion of the AGM of NMB To be held on 28 May 2011 By Mark Wiessing Chief Executive Officer 1
Recent History of the Business History: Created in 1997 from the break up of the old NBC. Privatised 2005 with sale of 49% to a consortium led by Rabobank. Listed 2008 with government diversity a further 21%. Current Ownership: Rabobank 34.9% Treasury Registrar 31.8% Public Shareholders 33.3% Mission: Through innovative distribution and its extensive network, NMB offers affordable customer focused financial services to the Tanzanian community in order to realise suitable benefits for all its stakeholders. Vision: To be the preferred financial services partner in Tanzania. Values: What drives us? What binds us? What guides us? Eagerness Customer focus Integrity Ownership Teamwork Compliance 2
Recent history of the business 2005 2010 From: To: 600,000 customers 1,400,000 customers 1,500 staff 2,500 staff 0 ATMs 400 ATMs 0 cards over 1 million cards Limited product range Full product range Savings accounts Payments / collections Payments Lending Liabilities Treasury 100 branches 140 branches Limited technology Real time online nationwide, mobile banking 3
Tanzanian Economy Limited impact of global crisis Consistent GDP growth at 6 7% pa Inflation in single digits TZS outlook stable, depreciation expected in line with inflation differentials Treasury bill and bond yields reduced significantly in recent years, with significant adverse impact on banking sector revenues Vulnerability of the economy to uncertain donor flows, commodity price (food, crude oil) and power supplies Overall outlook positive 4
Banking sector overview Over 40 licensed banks operating in a TZS 17 billion economy. 8 banks represent bulk of the industry, each with own strategic intent and performance. Continued high growth of deposits, in line with other markets. Further upside potential for the industry due to low penetration levels (12% of bankable population are banked). Net income of industry negatively impacted by lower interest rates and impairment. 5
Banking Sector Summary Assets (Tshs Billions) 5,294 6,904 8,277 9,817 12,214 Loans (Tshs Billions) 2,214 2,833 4,163 4,534 5,386 Deposits (Tshs Billions) 4,240 5,229 6,401 7,907 9,655 Shareholder Capital(Tshs Billions) 525 778 974 1,249 1,492 Net Interest Income(Tshs Billions) 332 444 525 583 611 Net Income 131 209 210 217 192 Tshs billions 14,000 Sector Total Assets 38% 45% 12,000 33% 34% 30% 10,000 8,000 6,000 12,214 9,817 4,000 8,277 6,904 5,294 2,000 0 Total Assets Asset/GDP 50% 12,000 35% 40% Tshs Billions 45% Sector Total 31% Deposits 35% 10,000 40% 25% 26% 30% 35% % 24% % 8,000 30% 25% 25% 6,000 20% 20% 9,655 15% 15% 4,000 7,907 6,401 10% 10% 5,229 2,000 4,240 5% 5% 0% 0 0% CustomerDeposits Deposits/GDP 6
NMB Market Share Statistics CAGR % Market-share Share % Deposits (Tshs Billions) 688 1,012 1,200 1,459 1,813 21.3% 2008 15% 2009 19% 2010 19% Share % Loans (Tshs Billions) 858 571 673 345 137 44.8% 2008 12% 2009 15% 2010 16% Share % PAT (Tshs Billions) 35 39 49 48 54 91% 9.1% 2008 19% 2009 22% 2010 28% 21.5% TOTAL ASSETS 795 1,158 1,384 1,669 2,107 7
NMB Aspirations Sustainably / sufficiently profitable Perceived as the people s l bank: broad dbased, affordable Urban / rural distribution Employee and customer satisfaction Organisation structured to meet the needs of the business Use technology advantage to achieve benefit of scale at low cost Clear segmentation to drive business direction and resourcing Grow at least at market growth rates Target lead position in the chosen markets Efficiency rations to trend to market / Africa best practice by 2013 Enhance link with Rabobank for technical assistance on a needs basis 8
NMB Activities Retail Banking: Retail banking is the foundation of NMB. Key segments served: Individuals / salaried: Over 1.4 million customers 40% of Tanzanians who have a bank account hold their account at NMB MSME / SACCOs: More than 50,000 MSME customers 30,000 individuals reached through SACCOs Agric / Amcos: 1,500 individual farmers 275,000 households reached through Amcos and warehouse receipt financing Retail lendingbook to over 250,000000 individuals represents over 50% of total loan portfolio. Ongoing efforts to improve service delivery across the branch network. 9
NMB Activities (continued) Wholesale Banking Wholesale banking increasing contribution to NMB Focus on the nation s top corporates, NGOs and government entities Able to offer: Short / long term lending solutions Transactional solutions (nationwide payments / collections) Electronic solutions Automated payroll remittances Treasury and trade finance Deposits / investments 10
NMB Activities (continued) Leadership in distribution: Over the last 5 years From100 to 140 branches From 0 to 400 ATMs 450,000 registered mobile banking users Network profile: 34% of all bank branches in Tanzania 43% of all ATMs in Tanzania 55% of NMB branches are in districts where there are no other banks 60% of NMB branches are in rural areas In 2010 Opening of: NMB Arusha Market (Arusha) NMB Usongwe (Mbeya) NMB Mt Uluguru (Morogoro) NMB Airport (Dar es Salaam) NMB Itigi (Singida) Installation of 90 new ATMs Need to continuously review distribution models to allow for cost effective growth. 11
NMB Activities (continued) ICT / Operations Leadership in technology: Realtime on line nationwide Mobile banking pioneers ATM, cards, Pesa Fasta Crossing over to new cutting edge core banking system in 2011. Increasing ratio of electronic transactions to total transactions processed. Capex focused on Branch refurbishments New branches Core system Branch IT Increasing number of transactions per customer. Continued opportunity for productivity improvements. 12
NMB Activities CSR CSR activities focused on agriculture, education and health. 1% of PAT applied to donations and sponsorships of worthy causes. NMB Foundation for Agricultural Development building governance and skills for over 200 agricultural cooperatives, representing over 100,000 households. Future efforts to focus on building financial literacy in schools and for MSMEs. NMB System paid over TZS 120 billion in corporate and payroll taxes over the last 5 years. 13
NMB Financial Performance 2010 2010 (TZS million) 2009 (TZS million) Change (Percentage) Revenues 199,999 167,933 19% NII (net interest income) 130,410 127,518 2% NFI (non funded income) 69,589 40,415 72% Cost 119,880 92,870 29% Staff (46,460) (35,072) 32% Opex (73,420) (57,798) 27% Impairment (1,674) (7,025) 76% PBT 78,445 68,038 15% Tax (24,464) (20,488) 19% PAT 53,981 47,550 14% Cost to Income Ratio 60% 55% NPL Ratio 2% 4% Loan to Deposit Ratio 47% 46% 14
NMB Financial Performance 2010 Total income up 19% to TZS 201 billion Total assets up 26% to TZS 2.1 trillion Customer deposits up 24% to TZS 1.8 trillion Non interest income growing to 35% of total income NPL ratio remains acceptable at 2% ROE remains at a commendable 23% Strong growth in loans and advances at 27% Loan to deposit ratio grew to 47% with continued scope for growth 15
NMB Financial Summary Assets (Tshs Billions) 795 1,158 1,384 1,669 2,107 Loans (Tshs Billions) 137 345 571 673 858 Deposits (Tshs Billions) 688 1,012 1,200 1,459 1,813 Shareholder Capital(Tshs Billions) 91 122 160 192 231 Net Income 35 39 49 48 54 Earnings per Share 70 78 97 95 108 NMB Total Assets NMB Total Deposits 45.7% 2,500 50% 2,000 60% 48.0% 45% 1,800 50% 2,000 40% 1,600 Tshs billions 26.2% 35% % 1,400 Tshs Billions % 40% 1,500 20.6% 30% 1,200 19.5% 23.7% 15.2% 25% 1,000 21.6% 30% 1,000 2,107 20% 800 17.9% 1,669 11.5% 1,200 1,813 20% 1,384 15% 600 1,012 500 1,158 10% 1,459 400 795 688 10% 5% 200 0 0% 0 0% Total Assets %G Growth CustomerDeposits %Growth 16
NMB Performance Trend NII/ Avg. Earnings Assets(%) 9.6% 9.1% 11.8% 10.7% 12.6% Average ROA (%) 4.7% 4.3% 3.4% 30% 3.0% 3.9% NPL/Total Gross Loans(%) 6.0% 5.6% 4.5% 3.7% 2.3%
NMB Dividend Summary Earnings per Share 56.0 77.7 97.4 95.1 108.0 Earnings per share Growth % 38.8% 25.4% -2.4% 13.6% Dividends Per Share (Adj) 16.0 22.0 30.0 31.4 35.6 Dividend Per Share Growth % 37.5% 36.4% 4.7% 13.4% Total Dividends (Tshs Billions) 8 11 15 16 18 Pay-Out Ratio (%) 28.6% 28.3% 30.8% 33.0% 33.0% Dividend Yield (%) 3.1% 3.9% 5.5% NAV (Tshs per Share) 182 244 320 384 462 NAV Growth Rate 34.1% 31.2% 20.0% 20.3% 18
Dividend Yield to Fundamentals NMB Yield Vs Inflation Rate NMB Yield Vs Savings Rate 10.3% 12.1% 1% 5.5% 3.9% 3.1% 3.9% 6.0% 5.5% 3.1% 2.7% 2.8% 2.4% 2008 2009 2010 2008 2009 2010 Inflation Rate NMB Yield Savings Rate NMB Yield 19
Conclusion Solid performance of the bank Increasing market shares Increasing contribution of non funds income Continued focus on long term sustainability through: Prudent risk and credit practices Adequate capitalisation Operational and financial efficiency Increased scrutiny of costs, productivity and distribution models Roll out new core system in 2011 Inherent risks remain: Interest rate developments Loan portfolio deterioration Competitive pressures (banks, mobile network operators) Favourable outlook 2011 20
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National Microfinance Bank Plc ( NMB ), has taken all reasonable care to ensure that this presentation is true and correct in all material aspects. This presentation and any other information supplied is not intended to provide the basis of any evaluation or as a recommendation by NMB, nor does it constitute an offer, to sell or buy any NMB shares. Any recipient of this presentation should make its own independent assessment of the condition and affairs of NMB. This presentation may include forward looking statements t t which h includes all statements t t other than historical i facts and data, including statements on the banks financial position, strategy or other plans and possible future scenarios. Such statements, if any, are not guarantees of future performance, and involve known and unknown risks and factors that could cause the actual results to be materially different from the forward looking statements. No responsibility is accepted for the reasonableness of any such forward looking statements. NMB does not represent that this presentation may lawfully be distributed in any jurisdiction, and this presentation may not be re distributed except with the express approval of NMB. 5/28/2011 22