Kcb Group Plc · NSEKE:KCB
Kcb — Q1 2024 Earnings Presentation
49 slides from Kcb's earnings presentation, May 22, 2024
Slide 1: Q1 2024 Investor Presentation
Q1 2024 Investor Presentation Nairobi, 22 May 2024 Regulated by the Central Bank of Kenya
Slide 2: We are
We are >Business Update Financial Performance Appendices For People. For Better.
Slide 3: Well diversified business model
Well diversified business model. Q1 2024 Investor Presentation KCB That matches the meaningful role we play in the region and supports our aspiration to do more. KCB Bank Kenya 100% | Ethiopia Rep Office 100% National Bank of Kenya KCB Bank Tanzania KCB Bank South Sudan BPR Bank Rwanda KCB Bank Buru
Slide 4: Largest footprint in the region
Q1 2024 Investor Presentation | KCB Largest footprint in the region. Opening doors of opportunity for millions of people in the region. 1.2 M Agents and merchants Doors of Since 1896. (waa since 1896 : ! For People. For Better. ‘il Appendices Kenya | Tanzania | South Sudan Rwanda | Uganda | Burundi
Slide 5: Sound corporate governance structure that safeguards value
Sound corporate governance structure that safeguards value. Q1 2024 Investor Presentation KCB Clearly defined governance structure which provides for oversight, delegation & clear lines of authority. Accountable to shareholders [ Shareholders >} | } For People. For Better. ( ») Accountable BOARD OF
Slide 6: Our Group Executive Committee
Q1 2024 Investor Presentation Our Group Executive Committee. Mandated to ensure KCB remains well positioned & responsive to regional opportunities for growth. aa ea av Paul Russo, EBS Lawrence Kimathi Annastacia Kimtai Cosmas Kimario Japheth Achola Group Chief Executive Group Finance Managing Direct
Slide 7: Subsidiary Managing Directors
Q1 2024 Investor Presentation Subsidiary Managing Directors. Mandated to ensure KCB remains well positioned & responsive to regional opportunities for growth. & im & Annastacia Kimtai Oliver Meisenberg George Odhiambo Patience Mutesi Managing Director, Managing Director, Managing Director, Managing
Slide 8: Operating environment
Q1 2024 Investor Presentation Operating environment. We are well positioned to power the strong projected GDP growth across the region in 2024. Real GDP growth and KCB gross loans growth GDP growt driven by 1% (68. 2% 13% 10% 28% 652% > Strong rebound in agriculture 6.9% driven by improved weather =
Slide 9: Operating environment
Operating environment. Q1 2024 Investor Presentation Higher-for-longer interest rates while inflation starts to drop across the region in 2024. 91-day interest rates/policy rate and cost of funding Average annual inflation rates across the region 32.6% 31.0% 21.2% 116.7% 7.0% 9.2% 9.0% 91% gay 79% 4
Slide 10: Operating environment
Q1 2024 Investor Presentation Operating environment. Kenya shilling strengthened against the US dollar in 2024, depreciation for the other currencies in the region has also moderated. Movement of local currencies vs USD in Q1 2024 Strengthening of the South Kenya shilling on the . . i" back of impro
Slide 11: Operating environment
Operating environment. Q1 2024 Investor Presentation KCB Kenya's overall balance of payments is projected to record a surplus of $1.4B in 2024 compared to an estimated deficit of $0.7B in 2023. Kenya current account balance (percent of GDP) 2021 2022 2023 est 2024 proj -3.8% 5.2% =5.0% For People. F
Slide 12: Our new 2024 - 2026 strategy: Transforming Today Together
Q1 2024 Investor Presentation Our new 2024 - 2026 strategy: Transforming Today Together. Hinged on putting customers first and delivering sustainable returns for our shareholders. 12 PILLARS ENABLERS KCB Transforming GROUP Today STRATEGY Together For People. For Better. Customer-Centered MOTEEENELTT
Slide 13: Strategic pillar 1: Customer-centered value propositions
Q1 2024 Investor Presentation KCB Strategic pillar 1: Customer-centered value propositions. We have continued to embed customer obsession & rollout strong customer value propositions. SS | rem in For People. For Better Seamless digital Over Ksh 119 billion in 10% growth in trade Mortgage unit drivin
Slide 14: Strategic pillar 1: Customer-centered value propositions
Q1 2024 Investor Presentation Strategic pillar 1: Customer-centered value propositions. Propositions in key segments delivering strong revenue growth. nya Re Tenzin Rwanda A50% A39% Kasxunss A28% A23% A1l0% V8% Ksh 0.9B Ksh 1.3B NBK Ksh 7.0B Ksh 1.6B Ksh 2.4B Ksh 0.4B A22% Ksh 3.48 | Non-banking a _
Slide 15: Strategic pillar 2: Leverage Group capabilities for efficient scale
Q1 2024 Investor Presentation KCB Strategic pillar 2: Leverage Group capabilities for efficient scale. Supported by technology evolution through building future-ready capabilities. > Improved efficiencies led to reduction in cost to income ratio to 43.3% in Q1 2024, down from 51.2% in Q1 2023. > Aut
Slide 16: Strategic pillar 3: Digital leadership
Q1 2024 Investor Presentation KCB Strategic pillar 3: Digital leadership. Our digital channels offer unmatched convenience for customers. Mobile banking Mobile lending > KCB One Till enables > Introduced longer businesses to receive tenures for mobile payments straight to loans. their bank account.
Slide 17: Strategic pillar 3: Digital leadership
Q1 2024 Investor Presentation KCB Strategic pillar 3: Digital leadership. Enhanced self-serve capabilities led to increased utilization of digital channels. Number of non-branch channel transactions in Q1 2024 (M) Value transacted through digital channels in Q1 2024 (Ksh B) YoY change @ Mobile lendi
Slide 18: Strategic pillar 4: Optimize data and analytics
Q1 2024 Investor Presentation Strategic pillar 4: Optimize data and analytics. To drive customer obsession, enhance our solutions and increase uptake of products. > Use of lead generation algorithms to pre-score customers enabled business teams to cross- sell and upsell solutions. > Improved limit m
Slide 19: Value created through diligent execution of our strategy in Q1 2024
Q12024 Investor Presentation KCB Value created through diligent execution of our strategy in Q1 2024. Delivered strong shareholder value and enhanced employee value proposition. For our investors > > = Grew shareholder's equity by 11% to Ksh 231 billion. Improved earnings per share by 63% to Ksh 20.
Slide 20: Sustainability
. ape. Q1 2024 Investor Presentation Sustainability The Group continues to align its practices to address climate related risks and tap on opportunities in financing projects aimed at addressing climate change. Governance Strategy Risk management Metrics and targets > Board oversight ESG > 10% decli
Slide 21: Creating shared value through products, policies and programmes
Q1 2024 Investor Presentation Fo To create shared value, we leverage our products, policies and programmes to deliver social and economic impact in the markets we operate in (continued) th employment through 2Jiqjiri iajiri Impa * 2,912 MSMEs undergoing Business development - - - in Q1 2024. Created
Slide 22: Creating shared value through products, policies and programmes (continued)
Q1 2024 Investor Presentation Fo To create shared value, we leverage our products, policies and programmes to deliver social and economic impact in the markets we operate in (continued) 14 ASAL Counties under Mifugo ni Mali program Scholarship Programme . we neve pupported constuction OF it Supporte
Slide 23: Financial Performance
We are CONN Business Update > Financial Performance Appendices For People. For Better.
Slide 24: Ksh 2.0 trillion balance sheet with strong growth
Q1 2024 Investor Presentation Ksh 2.0 trillion balance with strong growth across key funding and utilization lines. Largest balance sheet in the region enabling businesses and facilitating trade. Funding Utilization A22% Growth in total assets driven by increase in customer deposits and loans mainly
Slide 25: Balance distribution across the Group
Q1 2024 Investor Presentation Balance distribution across the Group. Balanced growth driven by KCB Bank Kenya, Uganda, South Sudan and TMB. Total assets distribution YoY Change 33.5% m KCB Kenya 33% Proportion of assets in subsidiaries outside of = TMB 14% KCB Bank Kenya, compared 5 to 38.2% in Q1 2
Slide 26: Gross loans growth and staging of gross loans
Gross loans growth Staging of gross loans 205 177
Slide 27: Group NPL ratio increased to 18.2%
Q1 2024 Investor Presentation KCB Group NPL ratio increased to 18.2% impacted by downgrades in Kenya. Increase of stock driven by downgrades in trade, manufacturing and real estate. Group NPL stock evolution 176.5 aves 130.9 7 a 17.0% 17.3% 18.2% Qi22 Q123 Qi24 mag NPLratio —e—Gross NPL (Ksh B) For
Slide 28: KCB Bank Kenya, NBK and TMB drove the increase in NPL stock
Q1 2024 Investor Presentation KCB Bank Kenya, NBK and TMB drove the increase in NPL stock. Movement in NPL stock per subsidiary (Ksh million) mpege=a = —972— —659— 34 29 74 —1951— Q123 KCB Kenya NBK TMB Uganda South Sudan Burundi Tanzania BPR Q124 NPL ratios per subsidiary 24.3% 21.2% gQ123 mQ124 9
Slide 29: 53% increase in ECL charge to build loan loss provisions
Q1 2024 Investor Presentation 53% increase in ECL charge to build up loan loss provisions in KCB Bank Kenya and TMB. Low early vintage supported by tightening of loan underwriting process. Impairment Vs. Cost of risk Aging of NPLs in KCB Bank Kenya Less than 12 months: 2.8% .3% 3.2% y mBelow 6 mBelo
Slide 30: Increase in provisions charge to build coverage towards 70% target
Q1 2024 Investor Presentation Increase in provisions charge to build coverage towards the 70% target. Taking measures to maintain adequate coverage both from provisions and securities held. Coverage ratios The non-performing loan book has full coverage from IFRS Coverage Regulatory Coverage cash pro
Slide 31: KCB's largest sector has single digit NPL ratio
Q1 2024 Investor Presentation KCB’s largest sector has single digit NPL ratio. NPL concentrated within <20 large tickets in manufacturing, transport, construction & trade sectors. Contribution to Grossloans Sector NPL ratio Contribution to NPL stock Financial services 1.6% BN «14.7% 1.3% Mining and
Slide 32: Adequate capital to drive growth of risk weighted assets
Q1 2024 Investor Presentation Adequate capital to drive growth of risk weighted assets. KCB Bank Kenya buffers now above our internal minimum at 300bps+ Subsidiaries core capital ratio 37.0% Subsidiaries total capital ratio 24.6% 23.4% 25.8% 22.0% 12.8% 15.3% ° 14.1% 17.5% 14.9% 15.4% 16.1% 15.2% 12
Slide 33: Customer deposits increased to Ksh 1.5 trillion
Q1 2024 Investor Presentation Customer deposits increased to Ksh 1.5 trillion. Driven by organic growth in demand and savings deposits across all businesses. Growth in customer deposits (Ksh B) Deposits by type Q124 A25.4% YoY increase in customer deposits. 33.6% Proportion of customer Q123 Demand T
Slide 34: Net interest margin up 80bps on improved asset yield
Q1 2024 Investor Presentation Net interest margin up 80bps on improved asset yield which netted off the high cost of funds. Uptick in asset yield driven by implementation of risk-based pricing and high market rates. Loans and government securities Yields vs cost of funds Interest rates trend Assets
Slide 35: We delivered a strong growth in revenue
Q1 2024 Investor Presentation KCB We delivered a strong growth in revenue. From new business lines, deepening of digital channels and innovative customer value propositions. Aw 32 % Interest expense ° Deposits, 13.1 A 68% Increase in revenue Interest income driven by interest income From loans, 33.6
Slide 36: Operating costs grew slower than revenues
Q1 2024 Investor Presentation Operating costs grew slower than revenues resulting in positive jaws. Growth in operating costs driven by customer acquisition activities and investments in technology. A 11% a Growth in operating | os expenses. is) 0.4 — 25.4% . 20.2% Growth in staff costs driven by in
Slide 37: Group PBT increased by 53% to Ksh 21.2 billion
Q1 2024 Investor Presentation Group PBT increased by 53% to Ksh 21.2 billion in the first quarter. Supported by growth in revenue lines and management of costs across all businesses. A4M% Growth in net interest income. Driven by increase in earning assets, rise in rates and implementation of risk-ba
Slide 38: Strong growth in profit across all subsidiaries
Q1 2024 Investor Presentation Strong growth in profit across all subsidiaries. PBT from subsidiaries outside of KCB Bank Kenya remained strong at 35.0% PBT contribution per subsidiary YoY Change 35.0% akcBkenye Share of PBT from subsidiaries outside of KCB Bank Kenya, marginally up from 34.9% in Q1
Slide 39: High return on equity across subsidiaries
Q1 2024 Investor Presentation High return on equity across subsidiaries. Group return on equity improved by 900bps to 28.7% on increased profitability. 89.3% 86.1% 73.5% 55.5% 54.79 36.8% 30.8% 33.09 28.7% D 27.8% 7 so.8% 24.5% 27.1% 9 8% 22.6% 5 9 19.7% 1.4% 19.3% 1g 94 19.0% \ 19.9 21.2% 13.6% 8.8
Slide 40: Profitability ratios and pace of deposits growth in line with guidance
Q1 2024 Investor Presentation Profitability ratios and pace of deposits growth in line with guidance. High cost of funding impacted net interest margins. Resolving NPLs remains a key focus area. Outlook Increase in cost of funds NFI Ratio | 33.5% 35.0% driven by rise in interest Cost/Income ratio 43
Slide 41: Appendices
Business Update Financial Performance > Appendices For People. For Better.
Slide 42: Overview of Key Financial Ratios
Overview of Key Financial Ratios KCB GROUP Return on average equity Q1 2024 Investor Presentation Q12024 KCB Kenya KCB Group 30.8% Cost to income 37.1% IGross NPL to gross loans 21.2% NPL regulatory coverage 61.4% Debt to equity 42.9% Non funded income (NFI) to total income 33.3% Mobile NFI to total
Slide 43: Summary Statement of Financial Position as at March 2024
Summary Statement of Financial Position as at 31 March 2024 KCB Group Q1 2024 Investor Presentation KCB Bank Kenya Q123 Q124 35.6 49.7 9.5 154.6 205.8 306.9 654.7 698.2 23.5 23.6 66.5 94.8 995.5 1,327.8 728.5 997.1 23.0 16.6 58.1 64.9 Ksh Billion Q123 Q124 Cash and balances with central bank 65.0 79
Slide 44: Summary Statement of Profit or Loss for Q1 2024
Q1 2024 Investor Presentation KCB Summary Statement of Profit or Loss for the First Quarter Ended 31 March 2024 KCB Group KCB Bank Kenya Ksh Billion Q123. 124 Q123 Q124 Interest income 33.6 49.1 21.9 341 Interest expense (11.6) (18.0) (8.0) (13.6) Net interest income 22.1 31.1 13.8 20.5 Foreign exch
Slide 45: Key Operating Data
Q1 2024 Investor Presentation Key Operating Data Q12023 Q3 2023 FY 2023 KCB Footprint Branches Number of customers (million) ATMs! Agency outlets? POS/Merchant outlets? Vooma merchants outlets 1,154,238 Total number of employees 12,287 KCB Share Information Earnings per share (Ksh) Dividend per shar
Slide 46: KCB Regional Footprint and Key Macros as at March 2024
Q1 2024 Investor Presentation KCB Regional Footprint and Key Macros as at 31 March 2024 Kenya! Tanzania South Sudan Rwanda Uganda Burundi DR Congo KCB Footprint Branches 294 7 15 130 13 6 108 Number of customers (thousands) 34,377 60 156 418 106 60 2,290 ATMs 575 19 14 62 15 8 92 Agency outlets 19,4
Slide 47: Disclaimer
KCB The information contained herein has been prepared by KCB Group Ple (“KCB”). This presentation has been prepared for information purposes only and is not and does not form part of any offer for sale or solicitation of any offer to subscribe for or purchase or sell any securities nor shall it or
Slide 48: Company information
Q1 2024 Investor Presentation KCB Company information Registeredoffice Stocklisting : Auditors KCBGroupPic : Primary f PricewaterhouseCoopers LLP q : Nairobi SecuritiesExchange : PwC Tower Kencom HouseM oi Avenue PO | Waiyaki Way / Chiromo Road Box48400- 00100 ! Crosslisting : P. O. Box 43963 - 0010
Slide 49: Thank You
E Thank You For People. For Better. KCB Investor Relations [email protected]