KCB GROUP PLC INVESTOR PRESENTATION. Q3 2018 FINANCIAL RESULTS - PowerPoint PPT Presentation

KCB GROUP PLC INVESTOR PRESENTATION. Q3 2018 FINANCIAL RESULTS

MACRO-ECONOMIC HIGHLIGHTS

Macro-Economic Highlights: Kenya KENYA GDP Growth Rate (%) 6.3% 6.2% 5.8% 5.6% 5.3% 4.9% 4.9% 2013 2014 2015 2016 2017 2Q18 2018P KENYA 23.23% 12.60% 6.60% 7.80% 7.70% 9.62% 6.30% 6.10% 5.60% 8.37% 6.10% 7.23% 6.91% 6.88% 3.50% 5.78% 5.43% 3.10% 3.47% 1.82% 0.96% 2.30% Agriculture Manufacturing Real estate Trade Education Transport & Financial & Construction ICT Health Mining & Storage Insurance Quarrying Contribution to GDP Q2'2018 Q2'2018 Growth Source: CBK, WB 3

Macro-Economic Highlights: Kenya Kenya Inflation 7.50% 7.06% 5.70% 5.72% 4.83% 4.70% 4.18% 4.35% 4.50% 3.90% 4.00% 4.04% 3.50% 3.60% 3.50% 3.73% 3.60% 3.10% 2.70% 2.50% Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Inflation rate Target Upper Target Lower Non Food Non Fuel

Macro-Economic Highlights: Kenya USD/KES Exchange Rate 103.2 103.2 103.3 101.4 100.7 100.6 100.8 100.6 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Interest Rate Evolution (%) 13.69 13.64 13.68 13.22 13.22 10.00 9.50 9.00 8.13 8.09 8.01 8.04 8.03 8.02 8.00 8.01 7.97 7.73 7.67 7.64 7.63 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 91 day T bill Average lending rates CBR Rate Sources: CBK, KNBS 5

Macro-Economic Highlights: Kenya Current Account Balance (% of GDP) -5.2% -5.4% -6.2% -6.7% -10.4% 2014 2015 2016 2017 F 2018 F 12 Month Private Sector Credit Growth 4.3% 4.3% 3.9% 4.3% 2.8% 2.7% 2.7% 2.1% 2.4% 2.0% 2.0% 1.7% Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Source: CBK 6

Macro-Economic Highlights: Regional GDP Inflation 10.60% 9.60% 182.0% 8.50% 18.0% 7.00% 7.35% 6.90% 6.40% 5.40% 13.1% 8.1% 65.4% 7.1% 0.10% 5.8% 5.4% 4.6% 3.3% Uganda Tanzania Rwanda Burundi Ethiopia 3.4% 2.1% Tanzania Uganda Rwanda Burundi Ethiopia South Sudan 2017 Q1 2018 Q2 2018 Q3 2018 2015 2016 2017 Q1 2018 -7.10% 15.0% 15.0% 91 Day T-Bills Exchange Rates to USD 3,765 3,638 10.1% 8.6% 2,261 2,239 6.4% 1,783 1,748 5.2% 4.0% 3.8% 864 839 3.0% 130 192 27 23 Tanzania Uganda Rwanda Burundi Ethiopia* South Tanzania Uganda Rwanda Burundi South Sudan Sudan Q3 2017 FY2017 Q1 2018 Q2 2018 Q3 2018 2017 Q1 2018 Q2 2018 Q3 2018 7

THE GROUP

Our Philosophy Simplifying your world to enable Our your progress Purpose Our Go Ahead Promise Strategic Enablers Excellent Outstanding Excellence Digital Strong Growth in Operations Employee in Customer Financial Shareholder Youth and Performance Engagement Experience Services Value Women 85% Enterprises CIR > 45% NPS > 60% NFI > 40% ROE > 21% Satisfaction

KCB Group – An Overview Access to East African Banking Network, Presence in Assets: Deposits: 7 Kshs 684 Bn Kshs 527 Bn Countries CAGR: 7.3% CAGR: 7.3% Market 14 15 16 17 18 14 15 16 17 18 Capitalization (Sept 18): Advances: Customers: 17M 1,214.3 USD m Rwanda 3% Tanzania Total ATMs: 970 Others 3% 2% Total Branches: 257 Agents: 16,678 Kenya Staff: 6,189 Listed in: 92% NSE , DSE , USE and RSE

Delivering Value to our Shareholders NAV (KShs) ROE > COE DIVIDEND/SHARE ROE COE 34.56 34.40 3.00 3.00 25.0% 31.50 24.0% 26.50 22.2% 2.00 21.1% 20.4% 18.8% 1.00 18.5% 18.2% FY 15 FY 16 FY 17 Q3 18 FY 15 FY 16 FY 17 Q3 18 FY 15 FY 16 FY 17 Q3 18

OUR CHANNEL CONTRIBUTION

87% of transactions performed outside the branch SEPTEMBER 2017 SEPTEMBER 2018 Agency, Agency, Internet Internet and POS Mobile Mobile and POS 26% 44% 42% 33% Branch Branch Teller ATMs ATMs Teller 17% 13% 12% 13% Avg. Transactions / Teller per day Number of Branch Transactions (M) 14.6 86 (14%) (14%) 12.5 73.6 Q3 2017 Q3 2018 Q3 2017 Q3 2018 13

Agency banking: 74% growth in volumes Volume of Transactions Ave.Trns ’ /Agent ( p.d) No. of Transactions (M) 6.6 (KSHs. B) 6.4 25.4 153 4.3 4.0 16.8 16.3 101 88 10.2 55 H1 17 H1 18 Q3 17 Q3 18 H1 17 H1 18 Q3 18 Q3 18 H1 17 H1 18 Q3 17 Q3 18 Agency Transaction type 62.4% 57.6% 17.1% 14.8% 13.4% 13.4% 9.0% 8.2% 1.8% 0.9% 1.0% 0.4% CASH Deposit CASH Withdrawal School Fees Balance Enquiry Bill Payment Others* Sep-17 Sep-18 *Others: Account opening, mini statement, load cards and Funds transfer 14

Mobile banking: 34% growth in volumes Volume of Transactions Number of Transactions (M) Av. Transaction/ active (KShs. B) customer/per month 41.0 37.8 242 6.9 181 26.6 25.7 156 6.5 6.5 116 6.3 H1 17 H1 18 Q3 17 Q3 18 H1 17 H1 18 Q3 17 Q3 18 H1 17 H1 18 Q3 17 Q3 18 Mobile Transaction Types 56.1% 49.9% 31.8% 23.6% 18.6% 16.5% 1.6% 1.7% B2C B2B C2B LIPA KARO Sep-17 Sep-18 15

16% growth in the average value per POS transaction Volume of Transactions POS Revenue (Kshs B) 702 37 643 32 470 451 24 22 H1 17 H1 18 Q3 17 Q3 18 H1 17 H1 18 Q3 17 Q3 18 16

36% growth in ATM volumes Performance Volume of Transactions Ave.Trns'/ATM p.m Number of Transactions (M) (KShs. B) 117 11.5 11.1 86 3.4 3.4 7.7 77 74 7.4 3.3 3.3 H1 17 H1 18 Q3 17 Q3 18 H1 17 H1 18 Q3 17 Q3 18 H1 17 H1 18 Q3 17 Q3 18 17

Over KShs 2.2B in revenue from non-branch channels KShs: M 66 361 46 328 405 356 702 643 735 661 Q3 2017 Q3 2018 Mobile Merchant POS Agency ATMs Internet 18

Non-Funded Income Mix KShs: M 17,942 17,484 17,334 16,930 3,252 2,621 14,769 4,083 4,638 2,290 3,632 3,685 2,927 3,530 3,212 2,126 3,159 2,146 2,042 1,869 8,879 8,178 8,073 7,080 7,038 Q3 14 Q3 15 Q3 16 Q3 17 Q3 18 Other Fees & Commission Lending Fees Exchange Income Other Income 19

OUR FINANCIALS

Stable strategy delivers 6% balance sheet growth KShs Billions KCB Group 435.3 419.5 119.7 103.6 42.5 42.5 39.4 39.5 39.7 26.2 9.4 10.6 Fixed assets Other assets Balances with other Cash and balances Investments in Net loans and institutions with central bank Government & Other advances* securities Q3 2017 Q3 2018 KCB Bank KShs Billions 398.4 385.0 102.3 90.4 39.2 35.4 36.8 22.4 13.5 7.6 8.3 6.0 Fixed assets Balances with other Other assets Cash and balances Investments in Net loans and institutions with central bank Government & Other advances* securities Q3 2017 Q3 2018 21

Diversified loan portfolio Sectoral loan book comparison 0.5% 0.3% Mining and Quarrying 3.6% 2.8% Agriculture 5.2% 3.8% Energy and water 2.5% 3.2% Tourism, restaurants and hotels 6.8% 4.7% Transport and communication 3.5% 5.3% Financial Services 19.0% 8.2% Trade 4.8% 8.6% Building and construction 12.8% 10.6% Manufacturing 15.8% 17.1% Real estate 25.6% 35.5% Personal/Household Industry Mar 2018 KCB Sep 18 * Group gross loans KShs.B 2 16 463 11 18% LCY FCY 434 82% Sep-17 Retail Corporate Mortgage Sep-18 22

NPL Migration 12.7% 12.0% 11.8% 10.7% 10.6% 9.9% 9.8% 8.5% 8.0% 8.4% 7.9% 7.5% 1.4% 1.0% 1.0% 0.6% 0.4% 0.6% Q2 2017 Q3 2017 2017 Q1 2018 Q2 2018 Q3 2018 Industry NPL (Kenya) CoR NPL KCB Group 16.4% 16.3% 15.2% 14.8% 14.3% 11.6% 11.0% 9.6% 7.8% 7.8% 7.4% 7.5% 3.3% 3.2% 3.2% 2.4% CHECK OFF MORTGAGE CORPORATE SME & MICRO Q4 2017 Q1 2018 Q2 2018 Q3 2018 23

Sustained Improvement in coverage 40,000 100.0% 82.7% 35,000 34,731 34,780 80.1% 80.0% 80.8% 77.1% 76.0% 75.9% 30,000 31,097 25,000 60.0% 54.8% 24,548 20,000 18,490 40.0% 47.9% 15,000 41.5% 38.9% 10,000 20.0% 5,000 - 0.0% Q3 14 Q3 15 Q3 16 Q3 17 Q3 18 Gross NPL Regulatory Coverage Ratio IFRS Coverage Ratio 24

Deposit growth driven by KCB Bank Kenya KShs Billions KCB Group Plc 526.8 496.3 105.5 103.2 18.5 20.7 15.5 12.6 14.4 14.4 Balances due to other banks Other liabilities Long-term debt Shareholders’ Equity Customer Deposits Q3 2017 Q3 2018 KShs Billions KCB Bank Kenya 472.0 435.1 87.5 86.5 15.1 17.1 11.9 6.9 9.9 3.2 Balances due to other banks Other liabilities Long-term debt Shareholders’ Equity Customer Deposits Q3 2017 Q3 2018 25

Balanced deposit mix 2% 3% 3% 3% 46% 46% 47% 55% 51% 51% 50% 42% 2015 2016 2017 Q3 2018 Corporate Retail Other Deposits by Type Q3 2017 Deposits by Type Q3 2018 Currency Mix 6% 8% 11% 23% 26% 5% 61% 66% 89% 5% LCY FCY Demand Savings Term Call 26

Strong capital position Core Capital to RWA Total Capital to RWA Group Group 18.7% 17.4% 17.2% 15.7% 17.8% 16.6% 15.1% 15.4% 16.3% 15.3% 14.5% 14.5% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 10.5% 10.5% Q3 2017 2017 Q1 2018 H1 2018 Q3 2018 Q3 2017 2017 Q1 2018 H1 2018 Q3 2018 Kenya Kenya 14.8% 15.0% 14.9% 15.0% 16.4% 16.5% 16.1% 13.6% 16.5% 15.0% 14.5% 14.5% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 10.5% 10.5% Q3 2017 2017 Q1 2018 H1 2018 Q3 2018 Q3 2017 2017 Q1 2018 H1 2018 Q3 2018 27