Investor Briefing & Q1 2016 Performance April 2016
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 2
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 3
Foreign Exchange Rate - Kenya The Kenya Shilling has appreciated by 1.0% on a YTD basis against the USD 106.0 105.0 104.0 103.9 105.3 USD / KES 103.0 102.0 102.5 101.8 102.1 102.3 102.3 101.7 101.3 101.1 +1% 0.0 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 Stability in the foreign exchange market continues to be supported by an improved forex reserves currently at USD 7.6 billion (equivalent to 4.96 months of import cover) and a narrowing current account deficit largely due to the following: - A lower import bill for petroleum products - Recovery in tourism, tea and horticulture exports - Slowdown in consumer imports - Strong diaspora remittances. 4 4
KES vs East African Currencies USD vs. USH,TSH, RWF, KSH The Kenya Shilling maintained stability against the regional currencies in 2016 2016 40.0 35.0 33.3 35.2 35.0 35.0 32.9 33.0 34.0 33.0 33.3 33.0 KES / USHS -1% 30.0 25.0 20.0 20.6 20.6 20.5 21.4 21.2 21.1 21.4 21.5 21.6 21.7 KES / TSHS +5% 15.0 10.0 5.0 6.8 7.0 7.0 7.3 7.3 7.3 7.3 7.3 7.5 7.4 KES / RWF +9% 0.0 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 5 5
FX Reserves - Kenya FX reserves have risen to five months of import cover giving a significant cushion to the shilling Reserves currently stand at $7.62 billion amounting to 4.96 months of import cover. 5.0 4.5 4.0 4.3 4.3 4.3 4.6 4.7 Months of Import Cover Desired Minimum 4.4 4.1 4.3 4.6 5.0 0.0 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Apr-16 Key reasons for increase in reserves are: i. Lower oil prices ii. iii. Falling current account deficit (currently 8.2% of GDP) Increased exports and inflow from tourism 6 6
Current Account balance as a % of GDP - Kenya In Percent 2010 2011 2012 2013 2014 2016 0-1 -2-3 -4-5 -6-5.9-7 -8-9 -9.1-8.4-8.9-8.2-8.2-10 -10.4-11 7
Inflation - Kenya The latest inflation figure as at end of April was 5.3% (down from 6.45% in March) due to - Food prices (food index is down due to the rains) - Low fuel prices 10 8 6 8.0% 7.8% 6.8% 6.5% 5.3% 4 2 0 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 8
Interest Rates Due to the high liquidity in the market, interest rates have been dropping since the beginning of February 2016 Political and Economic review in the Sep-Oct region Jul Aug Sep Peak Oct Nov Dec Jan Feb Mar Apr Interbank rate 12.89% 18.81% 19.84% 25.84% 14.87% 8.77% 5.19% 6.13% 4.51% 4.09% 4.05% 91 Days T. Bill 11.33% 11.51% 18.61% 21.35% 22.13% 9.21% 10.41% 11.76% 9.32% 8.41% 8.77% 182 Days T. Bill 364 Days T. Bill 12.15% 12.36% 14.55% 21.61% 22.29% 10.09% 12.34% 14.18% 11.93% 10.66% 10.69% 12.53% 13.82% 16.30% 21.50% 22.36% 11.93% 12.75% 14.92% 13.25% 11.91% 11.80% On March 21 st 2016, the MPC met and retained the CBR Rate at 11.5% (keeping it at the same level for the last 9 months) The MPC had earlier also retained the KBRR at 9.87% (on Jan 20th 2016) 9
Kenya s Resilient Economy Kenya s GDP growth rate maintained an upward growth rate with an increasing momentum while Africa is experiencing declining growth rate. Kenya s Gross Domestic Product (GDP) is estimated to have expanded by 5.6% in which was a slight improvement compared to a 5.3% growth in 2014. Kenya s GDP growth rate is projected to rise to 5.9% in 2016 and 6.1 % in 2017 predicated on infrastructure investments. Fiscal consolidation is expected to ease pressure on domestic interest rates and increase credit uptake by the private sector. The contraction in the current account deficit will continue to be supported by declining commodity prices and rising exports of tea. 6.1 4.6 5.7 5.3 5.6 2011 2012 2013 2014 10 10
Economic growth drivers Kenya Tourism showing positive signs of recovery with enhanced security with Kenya registering the highest growth of 27% in Hotel Bookings For The Period May To July In Africa. Government incentive on reduction of park entry fees from $90 to $60 and More chartered airlines from Europe to Mombasa, have boosted the sector. Kenya recorded the fastest rise in foreign direct investments (FDI) in Africa and the Middle East, at 47%. A total of 84 projects worth Sh102 billion from real estate, renewable and geothermal energy as well as roads and railways provide a huge chunk of new jobs for Kenyans. Kenya was ranked 3rd in terms of numbers of projects initiated after the United Arab Emirates (UAE) at 298 and South Africa at 118. Kenya s Agriculture Experiencing Renewed Growth As A Result Of Improved Weather And Rainfall Pattern. According to the KNBS economic Survey, Agriculture value added rose from 3.5% in 2014 to 5.6% in. Total value of marketed production at current prices increased by 11.3% from KSh 333.2 billion in 2014 to KSh 371.0 billion in. Total earnings from crop sales increased by 15.5% to KSh 271.8 billion in. 11 11
Macro-economic Indicators East Africa 12 12
Macro-Economic Indicators Summary (East Africa) Uganda Rwanda Tanzania DRC 91 Days T-Bill 15.56% 5.89% 9.02% 4.7% 182 Days T-Bills 16.28% 6.21% 17.67% 5.4% 364 Days T-Bills 16.19% 8.35% 18.81% 8.1% Central Bank Rate 16.0% 12.0% 12.0% 6.5% Inflation 6.2% 5.8% 5.4% 4.5% 13
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 14
2 Strong Governance & Leadership Structure CBK CMA NSE Rating Agencies Equity Group Holdings Limited Shareholders Subsidiary Boards Group Board Subsidiary Boards Board Committees Subsidiary Internal Audit Group Internal Auditor Group Board Committee CEO CEO s office Director Governance, Strategy, Legal, Company Secretary Chief Officer, Finance, Innovation, Payments Director Brand, Culture and HR Board Committees Subsidiary Internal Audit Non-Banking Subsidiaries Corporate Office Banking Subsidiaries* Equity Group Foundation Equity Investment Bank Equity Insurance Agency Consulting Infrastructure Services Group Director, Payments Chief Technology & Information Officer Group Director, Treasury Group Director, Special Projects Group Director, Analytics Group Chief Operating Officer Group Director, Finance Risk and Compliance Officer Group Director Strategic Relations &Partnerships Group Director, Corporate Banking Group Director, SME Banking Equity Bank Kenya Equity Bank Rwanda Equity Bank Tanzania Equity Bank Uganda Equity Bank South Sudan Equity DRC (Pro Credit Bank) Each subsidiary with own Board of Directors compliant with local regulations 15
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 16
3 Regional Expansion Key Metrics for Banking Subsidiaries KES Billion Tanzania Rwanda Uganda S. Sudan DRC Regional Total Regional Contribution Q1 2016 Regional Contribution Q1 Deposits 12.8 10.5 12.5 10.5 20.7 67.0 22% 21% Deposits Growth 1% 23% 21% -61% 31% 14% Loan 15.4 8.6 7.0 0.4 14.2 45.5 17% 13% Loan Growth 37% 21% -1% -89% 71% 56% Assets 21.0 13.9 17.0 14.4 28.8 95.0 21% 20% Asset Growth 21% 19% 12% -57% 49% 23% PBT 0.08 0.06 0.09 0.02 0.07 0.32 5% 10% PBT Growth -12% -50% 2% -95% -41% -45% 17
3 Regional Subsidiaries Size and Contribution (Assets and PBT contribution by countries) Total Assets split by Country PBT split by Country Rwanda Uganda Tanzania DRC S. Sudan 100.0% 100.0% 3.0% 3.1% 4.0% 3.8% 4.6% 0.0% 8.6% 4.7% 6.4% Rwanda Uganda Tanzania DRC S. Sudan 100.0% 1.9% 1.4% 1.5% 0.0% 4.7% 100.0% 0.8% 1.2% 1.1% 1.5% 0.2% 3.2% 95.1% Kenya 79.8% 78.7% Kenya 90.5% Q1 Q1 2016 Q1 Q1 2016 18
3 Net Interest Margin Percentage 10.9 11.1 Kenya 11.4 12.8 15.1 15.6 DRC 14.1 11.8 9.7 Uganda 10.5 9.7 11.5 Q2 15 Q3 15 Q4 15 Q1 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 15 Q3 15 Q4 15 Q1 16 Rwanda Tanzania South Sudan 9.1 8.8 9.3 7.9 4.7 4.7 5.2 4.5 2.6 2.1 3.5-0.1 Q2 15 Q3 15 Q4 15 Q1 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 15 Q3 15 Q4 15 Q1 16 19
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 20
4 Execution on Digital Banking (Increased number of Transaction numbers & values) 11.6 +26% 14.7-15% Transaction numbers in millions +45% +315% 45.6 6.5-15% 5.5 7.8 6.6 1.5 2.2 11.0 Q1 Agency Q1 2016 Q1 ATM Q1 2016 Q1 Q1 2016 Merchants Q1 Q1 2016 Equitel Q1 Q1 2016 Branch 74.5 +37% 102.1 Transaction value in KES billion +43% -6% 51.0 47.8 11.1 7.7 +562% 62.4 372.6-10% 335.1 9.4 Q1 Q1 2016 Q1 Q1 2016 Q1 Q1 2016 Q1 Q1 2016 Q1 Q1 2016 21
4 Execution on Digital Banking (Transaction numbers trend) Transactions (Millions) 80 79.5 Mobile 15 14.7 Agency 11.6 10 5 8.5 6.9 3.7 8.3 6.7 6.6 8.0 8.3 6.8 7.8 7.8 6.4 ATM 6.6 Branch 5.5 0 Q1 2012 Q1 2013 Q1 2014 Q1 Q1 2016 Cash related transactions only 22
4 Execution on Digital Banking (Equitel customer numbers up 180% growth YoY) KES 000 Linkage to M-Banking SIM uptake 2,000 1,750 1,500 1,250 1,000 750 500 666 81% 788 83% 902 85% 1,024 87% 1,085 85% 1,166 86% +180% 1,178 87% 1,369 88% 1,500 89% 1,591 89% 1,665 90% 1,760 90% 1,861 90% 2,000 1,750 1,500 1,250 1,000 750 500 250 250 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2016 Feb 2016 Mar 2016 0 23
4 Execution on Digital Banking (Mobile Customer Transaction Numbers & Value Trend) Cumulative M-Banking Transactions numbers (millions) 220 Cumulative M-Banking Value (KES billions) 196.6 200 200 180 151.0 165.9 181.3 177.3 180 160 160 132.4 152.1 140 140 120 100 80 60 40 20 35.8 17.2 48.6 24.4 63.2 33.0 77.7 42.3 85.4 49.5 94.9 58.8 105.4 69.5 118.2 82.5 96.9 114.9 131.9 120 100 80 60 40 20 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2016 Feb 2016 Mar 2016 0 24
25 Execution on Digital Banking (Count of loan disbursements through Mobile vs. Branch) 4 0 400 800 1,200 1,600 2,000 2,400 2,800 3,200 3,600 1,608 (77%) Oct 1,770 450 (25%) 1,320 (75%) Sep 1,503 416 (28%) 1,087 (72%) Aug 1,284 382 (30%) 902 (70%) Jul 1,068 350 (33%) 718 (67%) Jun 944 321 (34%) 623 (66%) May 814 290 (36%) 524 (64%) 493 (23%) Jan 2016 Feb 2016 Dec 2,455 533 (22%) 1,922 (78%) Nov 2,101 601 (20%) 2,456 (80%) 3,381 631 (19%) 2,749 (81%) Apr 688 258 (37%) 430 (63%) Mar 578 225 (39%) 353 (61%) 2,744 Mar 2016 569 (21%) 2,176 (79%) 3,057 Branch Mobile Combined In Thousands Cumulative
4 Execution on Digital Banking (KES 14.1 billion Disbursed through Mobile Channel) Disbursement Count (number) Loan Value Disbursement (KES "Billion") 353,052 2,749,290 +1,012% 14.1 11.8 10.0 8.5 6.9 5.6 1.3 1.6 1.9 2.4 2.9 3.8 4.6 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2016 Feb 2016 Mar 2016 Cumulative figures 26
4 Execution on Digital Banking (Loan Outstanding Trend) In Billions +797% 2.51 1.82 2.01 1.46 1.54 0.82 0.85 1.02 0.28 0.30 0.41 0.47 0.51 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2016 Feb 2016 Mar 2016 27
4 Execution on Digital Banking (Loan Repayment Trend) 28
4 Continuous Growth in Agency Banking Focus on Variable cost model More transactions now processed under 3 rd party infrastructure saving on fixed costs Number of agents increased to 25,388 agents. 31% growth y/y Transactions (Millions) 15 11.6 14.7 +26.2% Agency Agent 10 transactions 8.4 8.5 8.3 8.3 7.8 registered a 8.0 ATM 26.2% 6.4 6.6 7.1 6.9 6.6 6.7 growth 6.8 5.5 More transactions now processed under 3rd party infrastructure 5 0.2 0 Q1 2011 3.7 Q1 2012 Q1 2013 Q1 2014 Q1 Branch Q1 2016 29
4 Number and Value of Agents Transactions 2011-2016 Transactions in million Value in billion kes 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 0.1 1 Mar 2011 0.4 3 Jun 2011 0.7 5 Sept 2011 1.0 7 Dec 2011 1.4 9 Mar 2012 1.5 9 Jun 2012 1.9 12 Sept 2012 2.2 2.2 14 14 Dec 2012 Mar 2013 2.6 2.5 16 16 Jun 2013 Sept 2013 2.5 17 Dec 2013 3.0 3.1 19 19 Mar 2014 Jun 2014 3.5 22 Sept 2014 3.7 4.1 25 26 Dec 2014 Mar 4.2 27 Jun 4.5 31 Sept 4.7 34 Dec 5.2 36 Mar 2016 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 30
4 Number of Merchants Outlets 2011-2016 +679.8% 7,749 8,063 6,864 6,153 5,166 5,618 4,412 1,034 1,065 1,083 1,194 1,658 1,519 2,018 2,139 2,668 2,346 2,824 3,066 3,499 3,720 Mar 2011 Jun 2011 Sept 2011 Dec 2011 Mar 2012 Jun 2012 Sept 2012 Dec 2012 Mar 2013 Jun 2013 Sept 2013 Dec 2013 Mar 2014 Jun 2014 Sept 2014 Dec 2014 Mar Jun Sept Dec Mar 2016 31
6 Merchants Turnover and Revenue 2011-2016 Revenue in million kes Turnover in billion kes 4.5 88 88 90 4.0 80 3.5 70 64 66 63 70 3.0 53 60 2.5 2.0 36 38 44 4.4 3.9 50 40 1.5 1.0 0.5 0.0 9 11 12 0.5 0.5 0.6 Mar 2011 Jun 2011 Sept 2011 17 16 18 0.8 0.8 0.8 1.0 Dec 2011 Mar 2012 Jun 2012 20 Sept 2012 29 1.3 Dec 2012 23 1.1 Mar 2013 26 1.3 1.2 Jun 2013 25 Sept 2013 1.6 Dec 2013 1.8 1.8 Mar 2014 Jun 2014 2.1 Sept 2014 3.2 Dec 2014 2.7 Mar 2.9 Jun 3.3 Sept Dec Mar 2016 30 20 10 0 32
4 We are building on our momentum in Payment Processing and Merchants We have partnered with key payment companies which has allowed us to grow our number of transactions and commissions Volume (Millions) Commissions (Millions) +43% 11,057 4,854 +59% 7,735 259 181 +43% Equity is leading in Acquiring and Issuing Best in class payment channel services work well with merchants 117 Q1 2014 Q1 Merchant Transaction Volumes Q1 2016 +54% Merchant Commissions 33
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 34
5 SME contribution to the Loan Book and CASA Loan book split by type Deposit base split by type Agriculture Consumer 100.0% 100.0% 2.8% 2.6% 22.7% 19.9% Term Deposits 100.0% 21.1% 100.0% 21.7% Micro 6.6% 5.9% Savings 43.0% 42.7% SME 49.8% 55.1% Large Enterprises 18.0% 16.5% Current Accounts 35.9% 35.6% Q1 Q1 2016 Q1 Q1 2016 35
5 Growing Non-funded Income as a result of cross-selling to SME s Non Funded Income by Type 15.6 Non- Funded 9.0bn 3.3bn (37%) 10.2bn 3.3bn (33%) 11.1bn 4.1bn (37%) 13.2bn 5.6 (42%) 5.2 (33%) Other Income Foreign Exchange 13.3% 20.5% 15.9% 16.2% Funded 5.7 (63%) 6.9bn (67%) 7.0bn (63%) 7.6 (58%) 10.4 (67%) Fees & Commission 66.2% 68.0% Q1 2012 Q1 2013 Q1 2014 Q1 Q1 2016 Q1 Q1 2016 Highlights Non Funded Income: Dropped by 7% YoY mainly due drop in to FX income and Commissions on Loans Funded Income: Interest Income grew by 37% YoY due to growth in loan book and improving NIMs 36
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 37
6 Equity has earned recognition in Equity s International Rankings Overall Soundness Performance Equity Bank (Capital Assets Ratio) (Profits on capital) (Return on assets) Global Rank 916 88 18 8 2014 Global Rank 999 112 8 4 Equity s Global Credit Rating 38
6 Equity Group s stock excites Globally Reuters: Equity Group Holding yielding a higher return at a lower risk STOCK Beta Yield (%) ROaE Yield per unit of Risk (Yield/Beta) KCB 1.44 4.68% 25.0% 3.25% EGHL 1.28 4.88% 25.5% 3.81% COOP 1.18 4.10% 25.2% 3.47% Financial Times: Equity Group Holding to outperform the market in 2016 39
6 Equity Bank Most valuable lender listed at the NSE 40
6 Equity Bank: Winner Best Bank in Kenya Equity has earned substantial accolades in 2016 Overall Winner Best Bank in Kenya (2016,, 2014 East Africa, 2013, 2012, 2009) Winner Best Bank Tier 1 (2016,, 2014 East Africa, 2013, 2012 ) 41
6 Equity Bank: Winner Best Bank in SME Banking Equity has earned substantial accolades in 2016 Best Bank in SME Banking (2016, ) 42
6 Equity Bank: Winner Best Bank in Retail Banking Equity has earned substantial accolades in 2016 Best Bank in Retail Banking (2016, ) 43
6 Equity Bank: Winner Best Bank in Agency Banking Equity has earned substantial accolades in 2016 Best Bank in Agency Banking (2016, ) 44
6 Equity Bank: Winner Best Bank in Micro-Finance Equity has earned substantial accolades in 2016 Best Bank in Micro-Finance (2016,, 2012, 2011, 2010, 2009) 45
6 Equity Bank: 1 st Runner Up Best Bank in Customer Satisfaction Equity has earned substantial accolades in 2016 (1 st Runner up 2016, 2 nd Runner up ) 46
6 Equity Bank: 2016 Other Awards Equity has earned substantial accolades in 2016 47
6 Equity Bank: 2016 Other Awards Equity has earned substantial accolades in 2016 48
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 49
7 Funding Base (Significant improvement in funding profile) In KES Billion 15.5% growth in funding with deposits accounting for 70% Other Liabilities Borrowed Funds Shareholders Funds 372.5 7.3 26.2 (2%) (7%) 60.9 (16%) 15.5% 46.0 (11%) 430.2 69.1 (16%) 14.7 (3%) Growth per Class 102% 76% 13% Deposits 278.2 (75%) 300.3 (70%) 8% Q1 Q1 2016 50
7 Deposits by Entity & Type Deposit split by Entity Deposit split by Type 100.0% 100.0% 100.0% 100.0% Rwanda 3.0% 3.3% S. Sudan 9.6% 3.4% 4.0% Term Deposits 21.1% 21.7% Uganda Tanzania DRC 3.6% 4.5% 0.0% 4.1% 6.7% Savings 43.0% 42.7% Kenya 79.3% 78.5% Current Accounts 35.9% 35.6% Q1 Q1 2016 Q1 Q1 2016 51
7 Assets of KSH 430 Billion driven by stable Deposit base In KES billion 15.5% growth in asset base while still maintaining portfolio diversification +15.5% 430.2 Growth per Asset Class Other Assets Government Securities Cash & Cash Equivalents 372.5 36.9 (9.9%) 48.9 (13.1%) 62.0 (16.6%) 44.5 (10.3%) 62.4 (14.5%) 48.3 (11.2%) 21% 28% -22% Net Loans 224.8 (60.3%) 275.0 (63.9%) 22% Q1 Q1 2016 52
7 Loan book by Segment and Entity Split across Segments Split across the entities within the Group Agriculture Consumer Micro 100.0% 2.8% 22.7% 6.6% 100.0% 2.6% 19.9% 5.9% S. Sudan Uganda Rwanda DRC Tanzania 100.0% 2.0% 3.1% 3.1% 0.0% 4.9% 100.0% 0.2% 2.5% 3.1% 5.2% 5.6% SME 49.8% 55.1% Kenya 86.9% 83.4% Large Enterprises 18.0% 16.5% Q1 Q1 2016 Q1 Q1 2016 53
5 Increasing Net Interest Margin Percentage Yield on interest Earning Assets Net Interest Margin 12.5 12.3 12.7 13.5 14.5 9.9 9.8 10.2 10.5 11.7 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Cost of funds 2.6 2.5 2.5 3.0 2.8 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 54
7 Stable NPL Trend over time EBKL Group 3.9% 4.3% 4.1% 4.4% 4.1% 4.5% 3.8% 2.9% 3.3% 3.5% Q1 Q2 Q3 Q4 Q1 2016 55
7 Non-Performing Loans: High Coverage Levels (Spec. Prov. + Int. Susp) / Gross NPL (Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPL 87.0% 86.2% 88.7% 92.8% 84.0% 63.2% 62.5% 65.0% 60.6% 56.0% Q1 Q2 Q3 Q4 Q1 2016 56
Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Performance of core business (intermediation) 8. Financial performance 57
8 Broad base liabilities & funding sources Q1 Q1 2016 Growth Y/Y Liabilities & Capital (Bn) KSH KSH % Deposits 278.2 300.3 8% Borrowed Funds 26.2 46.0 76% Other Liabilities 7.3 14.7 102% Shareholders Funds 60.9 69.1 13% Total Liabilities & Capital 372.5 430.2 15% Funding Distribution Shareholders Funds 16% Other Liabilities 2% Borrowed Funds 7% Q1 Shareholders Funds 16% Other Liabilities 3% Borrowed Funds 11% Q1 2016 75% Deposits 70% Deposits 58
8 Asset Portfolio & Distribution Q1 Q1 2016 Growth Y/Y Assets (Bn) KSH KSH % Net Loans 224.8 275.0 22% Cash & Cash Equivalents 62.0 48.3-22% Government Securities 48.9 62.4 28% Other Assets 36.9 44.5 21% Total Assets 372.5 430.2 15% Asset Distribution Q1 Q1 2016 Other Assets Other Assets 10% 10% Government Securities 13% Government Securities 15% Cash & Cash Equivalents 17% 60% Net Loans Cash & Cash Equivalents 11% 64% Net Loans 59
8 Delivering 20% growth in PAT KES (Billion) Q1 Q1 2016 Growth Interest Income 9.5 12.9 36% Interest Expense (1.9) (2.4) 32% Net Interest Income 7.6 10.4 37% Non-Funded Income 5.6 5.2-7% Total Income 13.2 15.7 18% Loan Loss Provision (0.3) (0.7) 104% Staff Costs (2.5) (3.0) 21% Other Operating Expenses (4.3) (4.7) 8% Total Costs (7.1) (8.4) 17% PBT 6.1 7.3 19% Tax (1.8) (2.2) 19% PAT 4.3 5.1 20% 60
8 Positive Financial Ratios Kenya Kenya Group Group Q1 Q1 2016 Q1 Q1 2016 Profitability NIM 10.9% 12.8% 9.9% 11.7% Cost to Income Ratio (with provisions) 50% 46% 54% 53% Cost to Income Ratio (without provision) 48% 43% 51% 49% RoAE 35.9% 37.4% 27.6% 29.1% RoAA 5.2% 5.4% 4.8% 4.8% Asset Quality Cost of Risk 0.46% 0.67% 0.63% 1.03% Liquidity / Leverage Loans / Deposits 86.5% 94.0% 80.8% 91.6% Loans / (Deposits + Borrowed Funds) 77.8% 79.8% 73.8% 79.4% Loans / (Deposits + Borrowing Funds + S/H Funds) 66.1% 67.5% 61.5% 66.2% Liquidity 32.9% 29.4% 39.3% 34.9% Capital Adequacy Ratios Core Capital to Risk Weighted Assets 14.7% 14.8% 16.2% 18.3% Total Capital to Risk Weighted Assets 16.8% 16.1% 18.2% 19.6% Core Capital to Deposits Ratio 18.5% 20.5% 18.8% 24.2% Customer Numbers No. of Customers 8,274,425 8,971,514 9,547,596 10,313,468 61
8 Cost to Income Ratio Trend Group Bank 50.9% 47.8% 49.5% 46.5% 48.7% 45.4% 51.2% 47.8% 48.9% 43.3% Q1 2012 Q1 2013 Q1 2014 Q1 Q1 2016 Total Operating Income up 18% y/y mainly attributed to improved NIM Operating expenses up 17% y/y 62
8 RoAA and RoAE overtime RoAE EBKL Group 35.9% 27.6% 35.0% 26.6% 33.0% 25.3% 33.9% 25.5% 37.4% 29.1% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 RoAA 5.2% 4.8% 5.1% 4.6% 5.0% 4.3% 5.2% 4.5% 5.4% 4.8% EBKL Group Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 63
THANK YOU Dr James Mwangi, CBS Group Managing Director & CEO KeEquityBank @KeEquityBank Email: info@equitybank.co.ke Web site: www.equitybankgroup.com 64