BK Group PLC · NSEKE:BKG
BK — Bank of Kigali — Q1 2014 Earnings Presentation
47 slides from BK's earnings presentation, June 2014
Slide 1: Bank of Kigali Investor Presentation Q1 2014
Bank of Kigali Investor Presentation Q1 2014 Bank of Kigali Investor Presentation Page 1
Slide 2: Disclaimer
Disclaimer This presentation contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial performance. While these forward-lo
Slide 3: Key Executives
Key Executives Lado Gurgenidze Chairman of the Board Email: [email protected] Mobile: +995 599 477 272 Skype:lado.gurgenidze.2008 James Gatera Chief Executive Officer Email: [email protected] Te l : + 2 5 0 2 5 2 5 9 3 1 2 1 Lawson Naibo Chief Operating Officer Email: [email protected] Mobile: +250 78 830 20
Slide 4: Agenda
Agenda 1. Key Investment Highlights 2. Country Overview Information 3. Banking Sector Overview 4. Bank Overview 5. Corporate Governance 6. Business Overview 7. Review of Financial Performance in Q1 2014 & 2013 8. Strategic Outlook 9. Contact Information Bank of Kigali Investor Presentation Page 4
Slide 5: Key Investment Highlights
Key Investment Highlights 1. Best Bank in Rwanda 2013 Politically stable country with sound governance &2014 Very attractive demographic profile: population of 10.5 million with 83% below the age of 40 Sound Macro Robust economic growth of 4.1% - 8 % between 2006-2012 and 6% expected for 2014 Fundam
Slide 6: Country Overview Information
CO U N T RY OV E RV I E W I N FO R M AT I O N Bank of Kigali Investor Presentation Page 6
Slide 7: Rwanda – Country Profile
Rwanda – Country Profile National Facts Business Environment Area 26,338 sq km Ranked second best destination to do business in Africa in the World Population 10.5 million Bank 2014 Doing Business Report. Official Languages Kinyarwanda, French, English Since 2005, Rwanda has implemented over 22 busi
Slide 8: Sound Macro Fundamentals
Sound Macro Fundamentals GDP per Capita continues to grow Population Pyramid for Rwanda Mln US $ 12 Population Nominal GDP per capita 800 724 700 10 693 60 and above 644 600 8 595 540 500 519 6 400 40-59 300 4 200 2 100 10.1 10.4 10.5 10.5 10.5 10.5 20-39 0 0 2009 2010 2011 2012 2013 2104E Healthy G
Slide 9: Macroeconomic Indicators
Macroeconomic Indicators GDP Breakdown By Economic Activity Q1 2014 Trade Structure Information and Public Rwanda’s exports are dominated by coffee, tea and minerals Communication Administration Education2% 3% (tin, coltan and wolfram). 4% Real Estate and The country remains a net importer. Major im
Slide 10: Review of the Macro Economic Environment 2013
Review of the Macro Economic Environment 2013 Macro Economic Review Inflationary Environment Jan 2013 - May 2014 7.0% GDP was 7.4 percent higher in real terms in Q1 2014 compared 6.0% 5.7% 5.1% to the same quarter of 2013. 4.8% 5.0% 5.1% 4.6% Activities in the industry sector grew by 9 percent and 4
Slide 11: Banking Sector Overview
BA N K I N G S EC TO R OV E RV I E W Bank of Kigali Investor Presentation Page 11
Slide 12: Significant Banking Sector Potential
Significant Banking Sector Potential 2012 Banking Assets/GDP 2012 Banking Assets Per Capita5 Large Unbanked Population (US$) Economy is moving away from being cash based through the various financial inclusion initiatives being undertaken by Kenya 72% Kenya 700 financial institutions including the l
Slide 13: Banking Sector Overview
Banking Sector Overview Rwanda Banking System Total Assets Interest Rate Analysis USD Mln 2400 2,252 Key Repo Rate T-Bills Rate Deposit Rate Lending Rate 2200 21.0% 2000 1,976 18.0% 1800 15.0% 1600 1,474 12.0% 1400 9.0% 1,226 6.0% 1200 1,011 3.0% 1000 0.0% 800 July October August Jan September Novem
Slide 14: Timeline of Foreign Investment In The Rwandan Banking Sector
Timeline of Foreign Investment In The Rwandan Banking Sector 80% stake in BCR Actis sells 80% stake in 40% stake in Cogebanque BCR to I&M Bank 2004 2006 2007 2008 2009 2010 2011 2012 30% 70% stake in stake in Fina Bank BPR 2008 2009 2010 2011 2012 2013 Q1 2014 Bank of Kigali Market Share by Total As
Slide 15: Banking Sector Overview Cont'd
Banking Sector Overview Cont’d Case study: Rwanda– six out of nine banks in Rwanda are owned by regional and Pan African banks and have lost market share to locally-run banks Market Share By Total Assets in 2008 Market Share By Total Assets in 2012 Market Share By Total Assets in Q1 2014 Five foreig
Slide 16: Competitive Landscape
Competitive Landscape Market Share Dynamics* Banking Sector Growth Vs Bank of Kigali Growth Q1 2014 50% 10.0% Banking Sector Bank of Kigali 2012 2013 Q1 2014 45% 43.8%44.9% 7.8% 41.5% 8.0% 7.5% 40% 5.8% 35.8%36.3% 6.0% 35% 4.5% 32.0% 32.0% 31.5%31.4% 32.4%32.2% 4.2% 3.8% 4.0% 3.3% 30% 28.3% 2.0% 25%
Slide 17: Bank Of Kigali Is The Market Leader
Bank Of Kigali Is The Market Leader Rank Total Assets Net Loans Customer Deposits Equity 36.3% 32.2% 44.9% 1 31.4% BANK OF KIGALI BANK OF KIGALI BANK OF KIGALI BANK OF KIGALI 2 12.6% * 14.1% * 13.7% * 11.8% BPR I & M Bank BPR BPR 3 12.0% 11.5% 8.2*% 13.0% I & M Bank I & M Bank I & M Bank BPR 4 7.5*%
Slide 18: Bank Overview
BA N K OV E RV I E W Bank of Kigali Investor Presentation Page 18
Slide 19: Background And History
Background And History Established in 1967 Current Supervisory Board US$62.5 mln as a JV with management enhanced & Initial Public Signed lines of credit Belgolaise S.A with: team assembled internationalized Offering of 45% • PTA Bank- US$ 10 mln of its shares and • OFID- US$ 10 mln listing on the R
Slide 20: A Snapshot Of Bank Of Kigali
A Snapshot Of Bank Of Kigali Key Facts CAGR 2009- The leading bank in Rwanda (36.3% market share by total assets as at 31 US$ million 2009 2010 2011 2012 2013 Q1 2014 2013 Rwf/USD Period End rate 573.2 594.4 604.4 630.6 670.2 677.4 March 2014), offering a wide spectrum of commercial banking services
Slide 21: Corporate Governance
CO R P O R AT E G OV E R N A N C E Bank of Kigali Investor Presentation Page 21
Slide 22: Shareholding Structure & Corporate Governance
S h a re h o l d i n g S t r u c t u re & C o r p o rate G o ve r n a n c e Shareholding Structure as at 31 March 2014 Corporate Governance The Board of Directors has eight independent non-executive Other State Owned directors (including two non-resident directors with extensive Government of Entiti
Slide 23: Share Trading Performance
S h a re Tra d i n g Pe r fo r m a n c e 13 June 2014 Analyst Coverage Current price, RwF 305 Market Cap, US$ mln 299 Recommendation: BUY Free float 45% Target Price: Rwf 390 Free float in US$ mln 135.8 Last coverage report: March 2014 Average daily traded volume in US$ mln 0.1 Common shares outstan
Slide 24: Custodial Service Chain
Custodial Service Chain State Street Bank BNP Paribus Pictet CIE (Africa) Brown Brothers Chase Manhattan Harriman Bank Mutual Northern Trust Citibank Company HSBC Bank PLC Client Safe Custody Credit Suisse RBC Investor Services Kenya Standard Trust CFC Stanbic Commercial Chartered Standard Chartered
Slide 25: Business Overview
B U S I N ES S OV E RV I E W Bank of Kigali Investor Presentation Page 25
Slide 26: Overview of the Loan Book
Overview of the Loan Book Gross Loan Portfolio Loan Book Segmentation Q1 2014 YE 2013 250.0 Corporate Loans Retail Loans 211.9 221.4 CAGR 27.2%* 200.0 194.0 65.7 66.7 61.5 29.7% 31.5% 150.0 130.7 105.5 32.5 68.5% 100.0 20.7 80.9 14.4 145.2 155.7 70.3% 132.5 50.0 98.2 84.8 66.5 0.0 2009 2010 2011 201
Slide 27: Customer Deposit Base
Customer Deposit Base Customer Deposits Growth Customer Deposit Segmentation RwF Bn Q1 2014 YE 2013 350.0 Corporate Deposits Retail Deposits 300.0 296.8 280.5 250.0 CAGR 26.5%* 76.0 74.6 211.9 25.6% 26.6% 200.0 181.0 62.9 73.0% 150.0 52.3 74.4% 135.7 109.8 36.4 100.0 27.8 50.0 81.6 99.3 128.7 148.9
Slide 28: Corporate Banking
Corporate Banking Description Key Segments as at Q1 2014 Clients include corporate, SMEs and NBAs* 2.5% Interest rates are in the 16-18.5% range. Key products: 20.5% CAPEX loans: long-term loans for investment or expansion of the business 37.8% 9.0% Commercial mortgage loans: typical customer 59.7%
Slide 29: Executing The Retail Strategy
Executing The Retail Strategy Bank of Kigali Investor Presentation Page 29
Slide 30: Retail Banking
Retail Banking Description Retail Lending Retail Deposits The Bank’s retail business is primarily focused on mortgages and Other loans 1.2% consumer loans with notable share of salary backed overdrafts Key products: Term Savings Deposits, Deposits, Mortgage loan: up to 15 years with typical customer
Slide 31: Growing Our Distribution Network
Growing Our Distribution Network Ubiquitous footprint Agency Banking 100 89 Agency Banking platform BK Yacu began operating Branches 83 77 80 71 in Nov 2012. 65 65 59 60 620 operational agents as at 31 March 2014 with over 150,905 transactions processed during the 40 quarter with net deposits mobili
Slide 32: Expanding Our Self Service Products
Expanding Our Self Service Products Growing our Card Business Increasing our Mobile product offering Key Achievements 1. Enhancing our mobile banking service Launch of Visa Classic and Visa Gold Credit Our mobile banking service Mobiserve allows customers Cards to perform the following transactions:
Slide 33: Review of Financial Performance in Q1 2014 & 2013
REVIEW OF FINANCIAL P E R FO R M A N C E I N Q 1 2 0 1 4 Bank of Kigali Investor Presentation Page 33
Slide 34: Balance Sheet Highlights
Balance Sheet Highlights Total Assets Customer Deposits Rwf bn Rwf bn 500.0 350.0 453.9 450.0 422.4 296.8 CAGR 29.1%* 300.0 400.0 CAGR 26.5%* 280.5 350.0 250.0 322.8 287.9 211.9 300.0 200.0 181.0 250.0 200.0 197.7 150.0 135.7 151.9 109.5 150.0 100.0 100.0 50.0 50.0 0.0 0.0 2009 2010 2011 2012 2013 Q
Slide 35: Maturity Profile
Maturity Profile Loans On demand 1 - 3 months 3 – 12 months 1-5 years over 5 years Years Rwf Bn Period (yrs) 90.0 5.0 4.7 80.0 4.5 70.0 3.6 4.0 3.8 3.7 3.5 3.5 3.5 60.0 3.0 50.0 2.5 40.0 2.0 30.0 1.5 20.0 1.0 10.0 0.5 - - 2009 2010 2011 2012 2013 Q1 2014 Customer Deposits Rwf Bn Avg days On demand 1
Slide 36: Asset Quality
Asset Quality Cost of Risk**, % Improving Coverage Ratio Rwf Bn 5.0% 18.0 NPLs Coverage ratio 120.0% 4.5% 4.5% 99.8% 16.0 4.0% 3.8% 100.0% 14.0 87.4% 3.5% 3.0% 3.0% 12.0 80.0% 2.5% 69.1% 70.3% 2.5% 2.2% 10.0 60.0% 2.0% 1.9% 8.0 57.1% 1.5% 45.8% 6.0 40.0% 1.0% 4.0 0.5% 20.0% 0.0% 2.0 6.7 9.0 10.9 12.
Slide 37: Asset Quality
Asset Quality Gross loan Yield 25.0% Corporate Retail 20.8% 20.1% 20.1% 19.9% 20.0% 17.8% 17.4% 16.0% 14.8% 15.0% 10.0% 5.0% 0.0% 2011 2012 2013 Q1 2014 Cost of Risk 10.0% Corporate Retail 8.5% 8.0% 6.8% 6.0% 4.2% 4.0% 3.8% 2.5% 2.3% 2.1% 2.0% 0.0% -2.0% 2011 2012 2013 Q1 2014 -4.0% -6.0% (5.8%) *an
Slide 38: Funding
Funding Funding Structure, % Significant Potential For Growth In Higher Yielding Assets Q1 2014 YE 2013 100.0% Net Loans/Customer Deposits Net Loans/Assets 90.0% 87.4% 13.4% 12.7% 80.0% 74.7% 71.0% 70.4% 69.5% 70.0% 68.0% 16.8% 60.0% 57.3% 16.7% 50.8% 51.3% 66.4% 50.0% 47.1% 42.8% 45.4% 4.1% 40.0% 4
Slide 39: Q1 2014 Performance Highlights
Q1 2014 Performance Highlights Net Interest Income Net Non-Interest Income Total Operating Income Rwf bn Rwf bn Rwf bn 12.0 6.0 16.0 25.1% 14.8 21.2% 5.2 14.0 10.0 27.3% 9.6 5.0 4.2 12.0 11.8 8.0 7.6 4.0 10.0 6.0 3.0 8.0 6.0 4.0 2.0 4.0 2.0 1.0 2.0 0.0 0.0 0.0 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013
Slide 40: 2013 Performance Highlights
2013 Performance Highlights Net Interest Income Net Non-Interest Income Total Operating Income Rwf bn Rwf bn Rwf bn 40.0 21.0 60.0 47.9% 35.2 26.5% 18.6 39.8% 53.8 35.0 18.0 50.0 30.0 15.0 14.7 40.0 38.5 25.0 23.8 12.0 20.0 30.0 9.0 15.0 20.0 10.0 6.0 3.0 10.0 5.0 0.0 0.0 0.0 YE 2012 YE 2013 YE 2012
Slide 41: Income Statement Highlights
Income Statement Highlights Total Operating Income Composition of Total Operating Income Q1 2014 YE 2013 Rwf bn 16.0 25.1% 14.8 3.6% 2.6% 14.0 13.9% 16.1% 12.0 11.8 10.0 65.2% 18.0% 8.0 15.1% 65.5% 6.0 4.0 2.0 Net interest income Fees & Commisions 0.0 FX related income Other non- interest income Q1
Slide 42: Fees & Commission Income
Fees & Commission Income Q1 2014 Commissions from Other fees from services transactions with other 8% banks 12% Commissions on operations of accounts Commissions received 26% from financing commitments Commissions on 10% Commission on loans payment facility services 21% 23% YE 2013 Other fees from s
Slide 43: Consistent Profitable Growth
Consistent Profitable Growth Sustainable Net Interest Margin % Attractive Cost/Income ratio Nigeria average: 60% Nigeria average: 7.8% SA average: 6.8% 60.0% SA average: 59.1% 12.0% 11.1% 52.8% 10.3% 50.0% 48.2% 48.3% 9.6% 47.5% 46.8% 44.1% 9.0% 8.3% 8.4% 8.2% 40.0% 6.0% 30.0% 20.0% 3.0% 10.0% 0.0%
Slide 44: Strategic Outlook
ST R AT EG I C O U T LO O K Bank of Kigali Investor Presentation Page 44
Slide 45: Strategic Outlook
Strategic Outlook Objectives Strategies Action Outcomes Build a ubiquitous branch footprint Expand the branch network to 70+ branches by YE 2014 Benefit from first-mover advantage throughout the country outside the capital city, making it more difficult for the competitors to follow suit Increase th
Slide 46: Management Targets
Management Targets Return on Average Equity Branch expansion Other Selected Management targets 30.0% 80 Q1 2014 Grow net income by 20% Y-o-Y 27.0% 71 27.0% 70 65 24.0% 22.7% 65 branches Grow total assets by 20% Y-o-Y 22.1% 60 Q1 2014 21.0% Non funded income ratio - 40% of the total 50 52.4% 18.0% 9M
Slide 47: Contact Information
Contact Information For information please contact: Lado Gurgenidze James Gatera Chairman of the Board Chief Executive Officer Email: [email protected] Email: [email protected] Mobile: +995 599 477 272 Mobile: +250 78 814 3000 Lawson Naibo John Bugunya Chief Operating Officer Chief Finance Officer Email