KCB INVESTOR PRESENTATION FULL YEAR 2014 GROUP FINANCIAL RESULTS
2014 Review Customer numbers Agency Outlets up ATMs 962 Branches up 2% to 242 up 65% to 4.14M 66% to 10,102 54M transactions (31.5M on alternative channels) valued at KShs. 7.8T, being 1.5 Times Kenya’s GDP Agency Transactions 280,154 11M mobile up 135% to 3.3M POS up 75% to 16,000 applications transactions 2
Milestones in 2014 KShs. 589M Smart Launch 1.1M Mobile Loans Inbound Biashara Customer Share Price Growth calls EMV Migration Launched 3 rd KShs. 1 Billion on Sustainability Foundation Report Programmes Over 300% Growth 3
OVERVIEW OF THE MARKET AND INDUSTRY IN 2014
KENYA OVERVIEW The revised GDP was higher by 25.3% to KShs 4.76 trillion; GDP per Rebasing capita is USD 1,246 Kenya issued a $500 million five-year bond paying a coupon of 5.875% Eurobond and $1.5 billion of 10-year bond at 6.875%. The issue attracted bids four times its initial target Kenya’s GDP grew at an estimated 5.3% in 2014, compared to a revised GDP growth of 5.7% in 2013 Regional currencies experienced pressure against the US dollar with the Kenya shilling depreciating least after trading at an average of KShs Currency 90.4 in December 2014, compared to an average of KShs 86.3 in December 2013 In 2014, remittance inflows to Kenya increased by USD 137 million or Remittances (11%) to USD 1,428.5 million compared with USD 1,290.6 million in 2013 Source: WB, IMF 5
KENYA OVERVIEW cont … Inflation Declined from 7.15% in December 2013 to 6.02% in December 2014 The Government has invested in technology and manpower including Security partnerships with the private sector to roll out security infrastructure The rate was set at 9.13% effective 8 th July 2014 and was revised to KBRR 8.54% effective 14 th January 2015 Interest Average lending rate for the banking sector has been on a downward trend; declining from 16.9% in July 2014 to 15.9% in December 2014 Rate • New Prudential Ratios: • Core Capital 10.5% Regulations • Total Capital 14.5% Source: WB, IMF 6
REGIONAL MARKET OVERVIEW Tanzania’s GDP growth has been impressive averaging 6.7% between Tanzania 2009 and 2013. Real GDP is projected to grow by 7.0% in 2014 • Civil strife casting a shadow over the prospects for economic South recovery and development • The declining global oil prices have also affected South Sudan's oil- Sudan dependent economy Uganda economy registered a Real GDP growth of 5.5% in 2014 Uganda compared to a growth of 4.5% in 2013 as indicated in the rebased GDP growth statistics The Rwandan economy continues to recover from the 2013 economic Rwanda slowdown, registering real GDP growth of 7.8% in 2014 Q3 compared to 2.9% recorded in 2013 Q3 The economy is estimated to have recorded a GDP growth of 5.3% in Burundi 2014, compared with a growth of 4.6% in 2013 and 4.2% in 2012 Source: WB, IMF 7
2014 FINANCIALS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (KSHS. MN.) ACTUAL ACTUAL % Y-O-Y DEC 2014 DEC 2013 CHANGE ASSET PORTFOLIO Cash and balances with Central Bank 47,064 23,933 97% Balances with other institutions 37,572 20,409 84% Investments in Government securities 96,333 90,938 6% Investment securities 865 2,058 -58% Net loans and advances 283,732 227,722 25% Fixed assets 10,351 10,030 3% Other assets 14,420 15,761 -9% Total Assets 490,338 390,852 25% DECEMBER 2014 DECEMBER 2013 Fixed & Fixed & Other Government Other Assets & Assets 5% Government Investment 7% & Securities Investment 20% Securities 24% Loans, 58% Cash & Loans, 58% Bank Cash & Balances Bank Balances 17% 13% 9
GROWTH IN LOAN BOOK Net Loans & Advances (KShs. Bn) Key Highlights 500 100.0% 450 90.0% Year on year 2013-2014 the loan book grew by 400 80.0% 350 70.0% 284 25% supported by a steady credit appetite 300 60.0% 228 212 250 50.0% 199 NPL has reduced significantly year on year 2013- 200 40.0% 148 150 30.0% 2014 from 8.1% to 6.3% 100 20.0% 50 10.0% 9.2% 8.1% 6.7% 6.3% 5.9% - 0.0% FY 10 FY 11 FY 12 FY 13 FY 14 Net loans and advances NPL ratio Loan segmentation - 2014 Loan segmentation - 2013 AGRICULTURE 4% 4% 7% 3% 9% 10% CONSTRUCTION 10% 3% 11% MANUFACTURING 10% 12% 13% PERSONAL REAL ESTATE 16% 18% TRADE TRANSPORT 36% 33% OTHERS *others – mining, tourism, financial services & Energy 10
REDUCTION IN NPL SIGNIFYING SOUND ASSET QUALITY NPL Ratio Key Highlights 9.3% 8.8% 8.4% 8.1% 7.4% 7.3% 6.7% 6.3% Overall NPL ratio down 180 bps 5.6% 5.2% Increased coverage ratio as a result of higher provisions and prudence in cash flow Q4 13 Q1 14 Q2 14 Q3 14 Q4 2014 estimates Group Kenya Coverage Ratio 69.4% 69.3% 65.2% 65.0% 58.9% 56.4% 55.4% 44.0% 42.2% 39.2% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 CBK IFRS • Increased coverage ratio as a result of prudence in cash flow estimates 11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (KSHS. MN.) ACTUAL ACTUAL % Y-O-Y DEC 2014 DEC 2013 CHANGE FUNDING PORTFOLIO Customer Deposits 377,272 305,659 23% Balances due to other banks 14,194 6,651 113% Other liabilities 11,208 7,467 50% Long-term debt 12,735 7,720 65% Total Liabilities 415,409 327,497 27% Share capital 3,025 2,984 1% Reserves and premium 71,904 60,371 19% Shareholders’ Equity 74,930 63,355 18% Total Liabilities and Equity 490,338 390,852 25% DECEMBER 2014 DECEMBER 2013 Other Other Bank & Debt Bank & Debt Liabilities 2% Liabilities 2% Balances 4% Balances 6% Shareholders Shareholders Funds 16% Funds 15% Deposits 77% Deposits 78% 12
4.1 MILLION CUSTOMERS DRIVING GROWTH OF DEPOSITS Customer Deposits Growth (KShs.Bn) 377 400 100% Steady LD ratio of 75% 350 306 95% 288 300 259 90% 250 197 Improvement in savings accounts by 1% 200 85% 150 77% 80% 75% 75% 75% 100 74% Growth in deposits for the Group year on year 75% 50 0 70% 2013-2014 was 23% Dec- 10 Dec- 11 Dec- 12 Dec- 13 Dec- 14 Deposits L/D Ratio Customer numbers grew from 2.5Mn in 2013 Deposits by Type 68% 67% to 4.1Mn in 2014. 30% 28% 4% 3% Demand Term Savings FY 2013 FY 2014 13
CAPITAL ADEQUACY Core Capital/Total Risk Weighted Assets Total Capital/Total Risk Weighted Assets 22.5% 18.7% 21.6% 18.0% 21.0% 20.7% 17.1% 20.0% 16.0% 15.9% 14.5 % 10.5% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Total Capital to Total Risk Weighted assets Core Capital to Total Risk Weighted assets Liquidity Ratio 40.9% 38.0% The bank is fully compliant with new 33.3% 32.8% 31.3% prudential guidelines 20.0% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Liquidity ratio 14
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (KSHS. MN.) ACTUAL ACTUAL Y-o-Y % Change DEC 2014 DEC 2013 Net interest income 35,949 32,984 9% Foreign exchange income 4,150 3,710 12% Gross fees and commissions 12,739 10,501 21% Other income 2,541 1,005 >100% Total operating income 55,379 48,201 15% Total operating expenses (28,504) (27,081) 5% Net provisions for bad debts (3,088) (996) >100% Profit before tax 23,787 20,124 18% Tax (6,939) (5,782) 20% Profit after tax 16,848 14,342 17% 15
CONSOLIDATION OF REGIONAL BUSINESSES Total Assets Contribution Dec 2014 Total Assets Contribution Dec 2013 Rwanda, 3.1% Rwanda, 2.5% Uganda, 3.2% Burundi, 0.7% Burundi, 0.6% Uganda, 3.3% South Sudan, 10.7% South Sudan, 14.3% Tanzania, 3.4% Tanzania, 3.5% Kenya, 75.2% Kenya, 79.5% Total Revenue Contribution Dec 2014 Total Revenue Contribution Dec 2013 Rwanda, 2.9% Rwanda, 3.0% Burundi, 1.0% Burundi, 0.6% Uganda, 3.0% Uganda, 3.2% South Sudan, 8.6% South Sudan, 10.0% Tanzania, 3.5% Tanzania, 3.0% Kenya, 80.0% Kenya, 81.2% 16
KEY STATISTICS AND PERFORMANCE RATIOS- FULL YEAR 2014 Net Interest Margin 9.7% Return on Average Assets 3.8% Cost of Risk 1.8% Return on Average Equity 24.2% Loan/Deposit ratio 75% Cost to Income 50.2% Gross NPL to Gross Loans 6.3% Debt/Equity 16.8% Growth of Net Loans & Advances NFI to Total Income 38.0% 25% Staff Costs to Total Income 24.1% Growth of Customers Deposits 23% Cost of funds 3.2% Growth of Profit Before Tax 18% 17
KEY DRIVERS AND OUTLOOK
Business Drivers Enhancing Financial inclusion to 10 million customers Building partnerships in the telecommunication, transport and energy sectors and with governments across the region Increase SME contribution to 20% of loan book in two years Increase micro lending to 3 million loans Race to a million homes through our affordable mortgage proposition Integrated product/service offering on bancassurance, investment banking, brokerage services 19
Business Drivers cont … Triple mobile transactions and agency footprint to enhance our digital payments T24 refresh to increase reliability and capacity to over 25 million customers Improved efficiencies : managing the cost to income ratio and loan quality Raising long term capital Consolidating operations in the 6 countries New Market consideration to Eastern DRC, Ethiopia and Somalia 20
Outlook Ratios 4.0% ROA 3.5 - 3.6% CoF 26% ROE 9.5 – 10.0% NIMs 48% CTI 1.5% CoR 5.5% NPL 18% Loan Growth 40.3% NFI/TI 20% Deposit Growth 21
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