Equity Group Holdings Limited · NSEKE:EQTY

Equity — Q1 2013 Earnings Presentation

25 slides from Equity's earnings presentation, May 2013

  1. Slide 1: Investor Briefing Q1 2013 Results

    Investor Briefing Q1 2013 Results May 2013

  2. Slide 2: Update on Strategic Initiatives

    Update on Strategic Initiatives 2 2

  3. Slide 3: Agency Banking Model Proving Key Driver of Growth

    Agency Banking Model Proving Key Driver of Growth Key Initiatives More Than 6,000 Agents Across The Region  Agency model started in 2011 allows the Bank to Number of Agents (‘000) 6.9 6.5 6.4 leverage on third party infrastructure for cash 6.3 6.2 6.0 5.5 transactions 5.3 5.2 5.0  Extremely succes

  4. Slide 4: Increasing Strategic Focus on SMEs to Nurture Client Evolution

    Increasing Strategic Focus on SMEs to Nurture Client Evolution We Are Following Our Customers Evolution Increasing Focus on SMEs Loan Book Large Enterprises 2009 March 2013 SMEs Micro Enterprises Consumer and Agriculture SMEs and Large Enterprises Other Contribution to loan book Low Risk Strategy Ke

  5. Slide 5: Regional Expansion

    Regional Expansion Regional Expansion Opportunity Equity Bank Presence in East 2007 Assets Africa 2012 Assets 2007 Revenues Q1 2013 Revenues  Commenced regional expansion with acquisition in Uganda in South Sudan Rwanda 2008 6.5% 1.1% South Sudan Uganda (9 branches) Tanzania 3.9%  Now present in 5

  6. Slide 6: Bancassurance: A New Strategic Initiative

    Bancassurance: A New Strategic Initiative Bancassurance Division – Key Highlights PBT Evolution  Operations started at the beginning of 2008 with a pilot process in 4 branches  Equity Bank currently distributes insurance products through a network of over 150 branches with a staff compliment of 18

  7. Slide 7: Diaspora Remittances Initiative

    Diaspora Remittances Initiative Equity Bank Monthly Diaspora Remittances (US$ Millions) 13.78 13.37 13.54 13.71 12.88 12.46 11.56 11.78 11.91 10.97 11.05 10.73 10.42 US$ Millions 9.15 7.74 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Share

  8. Slide 8: Payment Processing & Merchant Business

    Kshs Millions 1,000 1,200 1,400 200 400 600 800 - Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Monthly Turnover Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 8 Kshs Millions 10 15 20 25 30 35 0 5 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11

  9. Slide 9: Facilitating a Cashless Society

    Facilitating a Cashless Society  Beba Pay  PayPass-MPOS Technology  Tap and Go-Application of Near Field Technology  Cash Points 9

  10. Slide 10: Update on Macroeconomic Environment

    Update on Macroeconomic Environment 10 10

  11. Slide 11: Key Macroeconomic Updates

    Key Macroeconomic Updates 1 Peaceful Kenyan elections impacting trade in Q1 2013 2 Ripple effects from delays in government payments to SMEs in Dec 2012  Payments expected to take place in the remainder of the year 3 Stability in FX rate  Appreciation of KES vs. USD from 87.6 in Dec-2012 to 85.6 a

  12. Slide 12: Evolution of Key Macroeconomic Indicators

    Evolution of Key Macroeconomic Indicators  Stable Interest Rates, However Increased Liquidity KES Displayed Less Volatility in Q1 2013 Resulted in a Declining Interbank Rate in Kenya 90.00 15 20,000 KES/USD Q1 2013 89.00 Rates Q1 2013 88.00 13 15,000 87.00 11 Rate (%) 86.00 Rate 10,000 85.00 9 84.0

  13. Slide 13: Q1 2013 Results and Key Financials

    Q1 2013 Results and Key Financials 13 13

  14. Slide 14: Structure of Funding Portfolio

    Structure of Funding Portfolio Mar 2012 Mar 2013 Growth Liabilities & Capital (Bn) KES KES % Deposits 153.68 175.32 14% Borrowed Funds 14.90 24.78 66% Other Liabilities 7.49 11.30 51% Shareholders’ Funds 32.90 40.83 24% Total Liabilities & Capital 208.97 252.23 21% 14

  15. Slide 15: Sources of Funding

    Sources of Funding  Deposits Evolution  Key Commentary KESbn  Strong growth in deposits achieved in Q1 2013 180 175.3 90% despite tough trading conditions 175 85% 167.9 170 79.9 % 164.6  Focus on low cost savings and terminating 80% 165 80.8 % 78.8 % 79.6 % 160 79.8 % 75% expensive deposits 155.

  16. Slide 16: Asset Portfolio

    Asset Portfolio Mar 2012 Mar 2013 Growth Assets (Bn) KES KES % Net Loans 121.13 139.56 15% Cash & Cash Equivalents 38.36 48.06 25% Government Securities 29.64 40.32 36% Other Assets 19.84 24.29 22% Total Assets 208.97 252.23 21% 16

  17. Slide 17: Asset Creation

    Asset Creation  Customer Loans Evolution  Key Commentary KESbn 139.6  Continued growth in the loan book, despite tough 135.7 trading conditions 131.3  Growth in the quarter driven by SME loans 124.5 121.1  Strategy focussed on following graduation process of clients Q1 2012 Q2 2012 Q3 2012 Q4 2

  18. Slide 18: Capital Position

    Capital Position  Capital Ratio Evolution  RWA Evolution 30.1% 27.3% 27.2%  Reduction in CT1 and CAR driven by introduction of 23.5% 22.7% new regulatory prudential guidelines for RWA 17.7% 19.9% 15.0% calculation including: 18.0% 18.3% 10.5% 8.0% — Foreign exchange risk — Operational risk Q1 201

  19. Slide 19: Solid 1Q 2013 Performance: Income Statement

    Solid 1Q 2013 Performance: Income Statement KESm Q1 2012 Q1 2013 Q1 2013 vs. Q1 2012 Interest Income 7,322 7,987 9.1% Interest Expense (1,626) (1,115) (31.4)% Net Interest Income 5,696 6,872 20.6% Other Income 3,318 3,336 0.5% Total Income 9,014 10,208 13.2% Provisions (729) (682) (6.4)% Operating C

  20. Slide 20: Revenues

    Revenues  Total Income Evolution  Key Commentary KESbn 10.2 10.2  Strong revenue performance despite softness in 9.0 9.1 8.5 trading conditions due to uncertainties around 34% 33% elections 37% 35% 35%  Stable net interest margin — Decrease in yield on interest earning assets driven 66% 67% 63%

  21. Slide 21: Impairments

    Impairments  Loan Loss Provision Evolution NPL Ratio Evolution2 KESm 2012: 1.29% 2.48% 1.68% 1.01% 0.13% 1.98% 729 682 515 323 42 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013  New prudential guidelines requiring longer Loan Loss Ratio¹ (%) observation period  Coverage Ratio Evolution4  SMEs impacted

  22. Slide 22: Costs

    Costs  Cost to Income Ratio  Key Commentary 50.9% 51.0%  Operating costs under control (Q1 2013 C/I ratio 48.8% 48.8% 49.5% 45.0% 1.5% lower than Q1 2012) driven by increased leverage on agency model  Agency model is shifting cost structure from fixed to variable  Continued focus on cost manage

  23. Slide 23: Profitability

    Profitability  PAT Evolution  Key Commentary KESbn  Q1 2013 profitability metrics in line with 2012 full 3.8 year figures 3.2 2.6 2.8 2.9  Solid performance in Q1 2013 achieving 22% growth in PAT vs. Q1 2012  Continued focus on profitability with a Return on Equity of 31% despite strong capital

  24. Slide 24: Q1 2013 Results - Summary

    Q1 2013 Results - Summary Key Highlights Key Figures  Solid performance in Q1 2013 achieving 22% growth Mar 2012 Mar 2013 % Change in PAT vs. Q1 2012 and RoE of 31%  21% growth in PBT achieved in Q1 2013 vs. Q1 Income (KES bn) 9.01 10.21 +13% 2012 PBT (KES bn) 3.73 4.52 +21%  Continued focus on p

  25. Slide 25: THANK YOU

    THANK YOU Dr James Mwangi, CBS Group Managing Director & CEO Email: [email protected] Web site: www.equitybankgroup.com 25

Equity Group Holdings — Q1 2013 Earnings Presentation on 6ix