Kcb Group Plc · NSEKE:KCB
Kcb — FY2019 Earnings Presentation
36 slides from Kcb's earnings presentation, May 12, 2020
Slide 1: FY 2019 Results
FY 2019 RESULTS 1
Slide 2: Our Regional Presence
CUSTOMERS 22.8 MILLION OUR REGIONAL PRESENCE 342 BRANCHES 1,055 ATMS, Banking Businesses: 23,302 AGENTS & MERCHANTS •KCB Bank Kenya •KCB Bank Tanzania STAFF •KCB Bank South Sudan 7,584 •KCB Bank Rwanda •KCB Bank Uganda •KCB Bank Burundi KCB BANK KENYA (ETHIOPIA •National Bank of Kenya KCB BANK REPRE
Slide 3: Our Footprint
OUR FOOTPRINT Branches 11 Ethiopia South ATMs 3 Agents 25 (Representative Office Sudan Staff 117 with 1 staff) Touch Points: Branches 15 Uganda ATMs 18 Agents 522 Branches 282 Staff 330 ATMs 454 Kenya Agents 14,332 Branches 14 Staff 6,469 ATMs 25 Rwanda Agents 522 Staff 253 Branches 14 ATMs 15 Branc
Slide 4: Credit Ratings
STABLE CREDIT RATING AGENCY SOVEREIGN KCB BANK KENYA RATINGS Ratings confirmed in August and B2 (Stable) September 2019 B2 (Stable) B+/B B+/B 4
Slide 5: 2019 Highlights
Acquisition of KCB completed the takeover of National Bank of Kenya 2019 NBK HIGHLIGHTS Sustained interest in the sector with the multiple announcements M&As of mergers and acquisitions. INTEREST RATE Renewed focus on the sector following the repeal of the rate caps CAP that limited the maximum lend
Slide 6: KCB 2jiajiri Programme Highlights
AGRIBUSINESS KCB 2JIAJIRI KENYA 2JIAJIRI BENEFICIARIES 17,570 PROGRAMME PER SECTOR BUILDING AND CONSTRUCTION HIGHLIGHTS BEAUTY AND 9,001 PERSONAL CARE AUTOMOTIVE 3,480 ENGINEERING 2,083 11,564 DOMESTIC beneficiaries accessed SERVICES Business Development 1,638 Support. 34,844 ICT BENEFICIARIES TO 31
Slide 7: KCB Foundation Case Studies
George Odhiambo, owner, Pentagon View Investments, Shanzu, Mombasa KCB FOUNDATION • George trained in carpentry at Mombasa Technical CASE STUDIES Training School under 2jiajiri programme. • Used KShs 100,000 2jiajiri funding to expand his business and now has access finance and financial institution
Slide 8: Sustainability Update
Mainstreaming our 8 Adopted SDG’s SUSTAINABILITY •182 Business Bankers, Relationship UPDATE Managers and Credit Analysts trained on Environmental, Social Risk screening and Assessment. •90.5% of business units have identified key performance indicators for tracking and monitoring of the 8 SDG’s. UNE
Slide 9: 2019 Group Awards
2019 GROUP GLOBAL FINANCE AWARDS 2019 GLOBAL BUSINESS OUTLOOK 2019 AWARDS Best Digital Transformation in Online Banking Best Bank in Kenya Best CSR Initiative – 2jiajiri BRAND AFRICA AWARDS 2019 GLOBAL BANKING AND FINANCE AWARDS 2019 Most Admired Financial Services Best Corporate Governanc
Slide 10: Macro-Economic Highlights
Macro-Economic Highlights 10
Slide 11: Macroeconomic Highlights: Kenya GDP
MACROECONOMIC HIGHLIGHTS Kenya 18.3 8.4 9.6 7.1 8.6 8.7 6.6 5.7 5.6 5.1% 4.9 4.7 4.8 5.9 4.3 3.2 3.1 7.1 7.6 6.4 4.0 1.8 1.0 AGRICULTURE MANUFACTURING REAL TRADE EDUCATION TRANSPORT & FINANCIAL & CONSTRUCTION ICT HEALTH MINING& ESTATE STORAGE INSURANCE QUARRYING Q3 19 GDP Growth Rate (%) Contributio
Slide 12: Macroeconomic Highlights: Regional GDP Growth
MACROECONOMIC HIGHLIGHTS GDP Growth 2019 Projected (%) Regional GDP Growth 8.7 7.4 6.8 6.1 5.8 5.9 3.3 Ethiopia Rwanda Tanzania Uganda Burundi South Sudan 2019 East Africa Projected GDP Growth Rate(%) Source: AfDB 12
Slide 13: Macroeconomic Highlights: Inflation and Interest Rates
Inflation Evolution (%) Inflation Target Target Non Food MACROECONOMIC rate Upper Lower Fuel HIGHLIGHTS 7.5 6.58 6.27 5.70 5.82 5.49 5.56 5.00 4.95 Kenya 4.70 4.14 4.35 3.83 3.51 2.65 2.5 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Inte
Slide 14: Macroeconomic Highlights: Currency Movement
USD/KShs Average Monthly Exchange Rate 103.8 103.7 MACROECONOMIC 103.2 103.3 HIGHLIGHTS 102.4 101.6 101.7 101.5 101.1 101.2 Currency 100.2 100.4 Movement JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Exchange Rates to USD 3,712 3,660 2,30
Slide 15: Macroeconomic Highlights: Current Account and Private Sector Growth
Current Account Balance (% of GDP) MACROECONOMIC HIGHLIGHTS -4.8 -4.6 -5.0 Kenya -6.2 -6.7 -10.5 Current account deficit at 10 year low 2014 2015 2016 2017 2018 2019 12 Month Private Sector Growth Diaspora emittances 2019: $ 2,796M 7.3 7.1 7.0 4% 2018: $ 2,697M 6.1 6.3 6.6 5.2 4.9 4.3 4.4 Tourism Ea
Slide 16: KCB Channel Performance
KCB Channel Performance TROT PRUETT TT “ube § cae Sm qHHBH bios
Slide 17: Our Channel Contribution
December 2018 OUR CHANNEL AGENCY, BRANCH MOBILE INTERNET TELLER ATMS CONTRIBUTION 45% AND POS 12% 11% 32% 97% of transactions December 2019 performed AGENCY, BRANCH outside the MOBILE INTERNET TELLER ATMS 78% AND POS 3% 4% branch 15% 126% growth 23%decrease in average transactions 23% decrease in Nu
Slide 18: Our Channel Contribution: Mobile
Value of Transactions: Mobi Service No. of transactions Mobile Revenue (KShs.B) (M) (KShs.M) OUR CHANNEL 9,873 CONTRIBUTION 281.3 404 3,175 331 290% 62.1 236 Growth in 52.0 2,261 Total Mobile Loans FY 17 FY18 FY19 FY 17 FY18 FY19 FY17 FY18 FY19 Advanced Mobile Transaction type(%) FY 2018 FY 2019 212
Slide 19: Our Channel Contribution: Agency
Value of Transactions No. of transactions Agency Revenue (KShs.B) (M) (KShs.M) OUR CHANNEL CONTRIBUTION 820 542 45.3 481 300 AGENCY 34.7 204 22.8 127 47% FY 17 FY18 FY19 FY17 FY18 FY19 FY 17 FY18 FY19 Growth in Agency Banking Agency Transaction type(%) FY 2018 FY 2019 Value 64.6 37.2 29.9 15.8 15.4
Slide 20: Our Channel Contribution: ATM
OUR CHANNEL CONTRIBUTION Value of Transactions No. of transactions ATM revenue (KShs.B) (M) (KShs M) ATM 17% 496 486 Growth in 152 ATM 465 Value 130 15.4 86 15.0 14.0 Deposits of KShs 59.7B collected through 105 intelligent ATMs FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 20
Slide 21: Our Channel Contribution: Merchant / POS
OUR CHANNEL CONTRIBUTION Value of Transactions (KShs.B) POS Revenue (KShs. M) MERCHANT / POS 6% 944 Growth in the average 856 value per 801 Merchant/ 49 POS 44 transaction 42 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 21
Slide 22: KCB Financial Performance
KCB Financial Performance TROT PRUETT TT “ube § cae Sm qHHBH bios
Slide 23: Balance Sheet Highlights
Government Securities BALANCE SHEET KShs 120.1B KShs 169.2B HIGHLIGHTS Net Loans & Advances 25% KShs 535.4B KShs 455.9B Growth in Total Assets (10.1% excl Customer Deposits NBK) KShs 537.5B KShs 686.6B Total Assets KShs 898.6B KShs 714.3B 2018 2019 23
Slide 24: Loan Book Performance: Sectoral Loans Comparison
Sectoral Loans Comparison Industry* KCB Dec 2019 LOAN BOOK 0.4%0.3% Mining and Quarrying PERFORMANCE 3.6% 2.6% Agriculture 4.2% 2.8% Energy and water 3.0% 4.2% Tourism, restaurants and hotels 3.9% 4.4% Financial services 6.8% 4.6% Transport and communication Key growth segments: 19.3% 6.9% Trade • P
Slide 25: Loan Book Performance: Asset Quality Review
Asset Quality Review 13.3% 13.0% LOAN BOOK 12.0% 12.0% 10.6% 11.9% PERFORMANCE 10.9% 9.1% 19% 6.9% 81% 8.0% 8.5% 7.4% - KCB Group NPL excl NBK, up 40 bps 1.5% 1.8% 1.0% 0.7% LCY FCY KShs 7.8 billion FY 2016 FY 2017 FY 2018 FY 2019 reduction in the Industry NPL (Kenya) NPL Group CoR Combined NPL NBK
Slide 26: Group Coverage Ratio
Group Coverage Ratio LOAN BOOK 100 PERFORMANCE 90 81.1% 81.4% 80 72.5% 70 72.1% 68.6% Strong coverage 60 despite increase NPL 50 40 42.6% 30 20 10 0 FY 2017 FY 2018 FY 2019 CBK Coverage Ratio IFRS Coverage Ratio 26
Slide 27: Balanced Deposit Mix
3% 2% 2% BALANCED 46% 48% 48% DEPOSIT MIX 51% 49% 50% 2017 2018 2019 Corporate Retail Others Currency Mix Deposits by type FY18 Deposits by type FY19 8% 12% 17% 24% 21% 63% 62% 83% 5% 5% Demand Savings Term Call LCY FCY 27
Slide 28: Strong Capital Buffers
Core Capital to RWA Total Capital to RWA Group Group STRONG CAPITAL 18.1% 19.5% 17.2% 19.0% BUFFERS 15.4% 16.6% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 2017 2018 2019 2017 2018 2019 Kenya Kenya 16.4% 15.6% 14.9% 17.8% 17.5% 16.1% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 2017 2018 2019 2017 2018 2019 Min. Cor
Slide 29: P&L Highlights
Net Interest Income KShs 56.1B P&L KShs 48.8B HIGHLIGHTS Total Non Interest Income Profit KShs 28.2B KShs 23.0B before tax up 9.0% (5% growth Operating Expenses excl NBK) KShs (35.0B) KShs (38.5B) 4.9% Net Earnings Profit before tax growth to Kshs 25.2B KShs 36.9B KShs 33.9B (Flat excl NBK) 2018 201
Slide 30: P&L Highlights: International Businesses
KShs. M Net Loans & advances PBT (13%) KCB Bank 664 P&L 735 911 578 South Sudan HIGHLIGHTS 25% International KCB Bank 274 3,044 220 Businesses Burundi 2,397 (118%) KCB Bank Uganda 6,520 446 7.4% growth in 6,274 International (81) business PBT 124% KCB Bank Rwanda 14,628 949 12,776 424 KCB Bank 28% T
Slide 31: Strong Balance Sheet
KCB Group KCB Bank Kenya Actual Actual Y-O-Y Actual Actual Y-O-Y KShs Billion 2018 2019 Change 2018 2019 Change Strong Balance Cash and balances with Sheet 42.0 60.8 45% 39.1 42.2 8% central bank Balances with other KShs 79.5B growth 40.1 48.2 20% 16.6 19.7 18% institutions in net loans Investments
Slide 32: 5% Growth in Earnings
KCB Group KCB Bank Kenya 5% GROWTH IN Actual Actual Y-O-Y Actual Actual Y-O-Y KShs Billion EARNINGS 2018 2019 Change 2018 2019 Change Interest income 66.3 74.4 12% 59.3 63.7 8% Interest expense (17.5) (18.2) 4% (15.0) (14.9) (1%) Net interest income 48.8 56.1 15% 44.3 48.9 10% Foreign exchange incom
Slide 33: Overview of Key Financial Ratios
OVERVIEW OF KEY FINANCIAL RATIOS FY 18 HY 19 Q319 KENYA GROUP 21.9% 23.5% 21.8% Return on Average Equity 24.9% 20.7% 48.3% 45.7% 44.7% Cost to Income 42.1% 45.9% 6.9% 7.8% 8.3% Gross NPL to Gross Loans 7.3% 10.9% 72.4% 60.8% 56.0% NPL Coverage 90.8% 72.1% 19.7% 19.1% 18.3% Debt to Equity 19.9% 16.6%
Slide 34: 2019 Dividend
2019 DIVIDEND KCB Group paid an interim dividend of KShs 1.00 per share in November 2019. The Directors recommend a final dividend for the year ended 31 December, 2019 of KShs 2.50 34
Slide 35: FY 2020 Outlook
Non funded income growth 25.0% NFI Ratio 36.2% Cost/ Income ratio 45.0% FY 2020 OUTLOOK Cost of funds 2.8% Cost of Risk 1.8% NPL Ratio 8.0% NIM 7.8% Asset yield 11.1% Loan growth 14.0% Deposit growth 14.0% ROA 3.5% ROE 22.9% 35
Slide 36: Investor Relations
Investor Relations [email protected] www.kcbgroup.com 36