Kcb Group Plc · NSEKE:KCB
Kcb — Q1 2022 Earnings Presentation
39 slides from Kcb's earnings presentation, May 25, 2022
Slide 1: Q1 2022 Investor Presentation
Q1 2022 INVESTOR PRESENTATION 2 5 M AY 2 0 2 2
Slide 2: Group Overview
GROUP OVERVIEW
Slide 3: Largest Footprint in the Region
LARGEST FOOTPRINT IN THE REGION 29.6 M Customers 8,768 Staff 496 Branches 1,176 ATMs 26,167 Agents & POS / Merchants Kenya* Tanzania South Sudan Rwanda Uganda Burundi Ethiopia Rep Branches 299 Branches 14 Branches 14 Branches 150 Branches 13 Branches 6 Office ATMs 523 ATMs 15 ATMs 4 ATMs 77 ATMs 16
Slide 4: High Level Organisation Structure
HIGH LEVEL ORGANISATION STRUCTURE Shareholders Accountable to shareholders Board of Directors Reporting to the Board Group Chief Executive Officer 11 Directors Executing delegated powers 9 Non-executive and 2 Executive and Managing Director Delegated authority Accountable to Group delegation of auth
Slide 5: KCB's 2022 Strategy
KCB’s 2022 STRATEGY Our Strategic Our Thrusts Aspirations CES 20% Customer first, with leading value 3 Year Strategy NPS 55 Total assets propositions Vision 1.5 Tr Step change in CIR efficiency & 44.0% productivity The very best in customer experience, driving NFI 33.0% Digital leader & digital a di
Slide 6: Putting the Customer First
PUTTING THE CUSTOMER FIRST Steady improvement in Customer Satisfaction Scores ATM Deposits customer satisfaction driven by the reliability 8% 85% and convenience 90 90 offered by our self serve 55 80 51 80 80 channels. 70 70 60 60 75% 50 43 60 50 of value of ATM transactions are cash 40 40 deposits,
Slide 7: Putting the Customer First: Non-Branch Channel Transactions
PUTTING THE CUSTOMER FIRST Number of non-branch channel transactions in Q1 2022 (Million) 98% of transactions by number YoY growth conducted through non- 2.6 1.7 Mobile Lending 91% branch channels 3.6 14.0 Mobi Service 14% 70% Agency 2% YoY increase in number of total transactions to 156M 72% driven
Slide 8: Driving Efficiency Through Non-Branch Channels
DRIVING EFFICIENCY THROUGH NON-BRANCH CHANNELS Value transacted through digital channels (Kes B) 52% of transactions by value 20 YoY growth conducted through 107 non-branch channels. Mobi Service (5%) 140 Internet banking 54% Value of branch 1% transactions grew 16% to YoY growth 591 Agency (7%) Kes
Slide 9: Driving Efficiency Through Non-Branch Channels: Digital Revenue
DRIVING EFFICIENCY THROUGH NON-BRANCH CHANNELS Digital channels revenue (Kes M) Kes 2.7B YoY growth Total revenue from digital Mobile Lending 84% channels, up 65% YoY driven by mobile lending 91 80 Merchant POS 36% and agency. 93 160 Decline in mobi service Agency 76% driven by fee waivers on 307 tr
Slide 10: Building Momentum from Our Regional Businesses
BUILDING MOMENTUM FROM OUR REGIONAL BUSINESSES Contribution of subsidiaries outside KCB Bank Kenya 77% Profit before tax Total assets Growth of PBT from subsidiaries outside KCB 15.0% 17.2% Bank Kenya to 23.9% 26.4% Kes 2.4B in Q1 2022 85.0% 82.8% 76.1% 73.6% Q1 21 Q1 22 Q1 21 Q1 22 KCB Bank Kenya O
Slide 11: Operating Environment Highlights
OPERATING ENVIRONMENT HIGHLIGHTS
Slide 12: Regional GDP Recovery Outlook
REGIONAL GDP RECOVERY OUTLOOK Projected GDP Growth Rates 7.5% Expansion in Kenya’s GDP in 2021, compared to a 10.9% contraction of 0.3% in 2020. 7.5% 7.2% 6.5% 5.7% 6.0% 5.3% 4.9% 4.9%4.8% 3.6% 2.4% Kenya Uganda Rwanda South Sudan Burundi Tanzania 2021 2022 Source: IMF April 2022 World Economic Outl
Slide 13: Regional Currencies Performance
REGIONAL CURRENCIES PERFORMANCE KENYA Performance of regional currencies against USD in Q1 22 vs Q1 21 Diaspora remittances up 22% to USD 3.9B In the 12 months to March 2022 2.0% UGANDA Shilling supported by lower import bill and 0.0% strong FX inflows -3.0% -4.0% -5.0% Regional currencies impacted
Slide 14: Regional Current Accounts Trend
REGIONAL CURRENT ACCOUNTS TREND Projected widening of Current account balance as a percentage of GDP current account deficits across the region in 2022 driven by higher 2021 2022* 2023* *Projected international oil prices 9.5 Kenya’s usable foreign exchange reserves 1.1 provided an import cover of 4
Slide 15: Inflation and Benchmark Rates Movement
INFLATION AND BENCHMARK RATES MOVEMENT Inflation rates Monitoring of inflationary 68.0% pressure in 2022 across the region as a result of rise in prices of oil and 23.0% other imported goods due 13.3% to disruption in global supply chains and 7.5% 7.8% 5.9% 5.6% depreciation of local 2.0% 2.7% 3.7%
Slide 16: Continued Focus on ESG
CONTINUED FOCUS ON ESG OUR APPROACH TO SUSTAINABILITY IS GUIDED BY THE FOLLOWING SDGs KCB Group is committed to creating long term value for shared prosperity through alignment of our strategy to sustainable practices. As we deepen our presence across the region, we seek to address the environmental
Slide 17: Continued Focus on ESG: Communities and Diversity
CONTINUED FOCUS ON ESG Supporting our Communities through shared value Embracing diversity at the workplace Kes 11.2B distributed to the elderly, orphans 46% of all employees and 42% of and vulnerable under the Inua Jamii managers are women programme in 2021 KCB Scholarship programme expanded to 27%
Slide 18: Stable and Strong Ratings
STABLE AND STRONG RATINGS KCB BANK KENYA 2020 2021 2022 Credit ratings at par Rating B2 B2 B2 with the sovereign rating and affirmed in Outlook Negative Negative Negative October 2021 Credit rating affirmed KCB’s: • Solid profitability metrics • Stable deposit-based funding structure, and; • Strong
Slide 19: Global Recognition and Accolades
GLOBAL RECOGNITION AND ACCOLADES The Banker Magazine Top 1,000 Banks KCB ranked 685th Globally, 20th in Africa, 1st in Eastern Africa in 2021 • Best Retail Bank in Kenya by Global • Most Valuable Banking Brand Kenya Finance magazine 2022 by Brand Finance • Best Sustainable Bank 2022 by The • Top 100
Slide 20: Financial Performance
FINANCIAL PERFORMANCE
Slide 21: Substantial Balance Sheet Growth
SUBSTANTIAL BALANCE SHEET GROWTH Q1 2022 19% Growth in balance sheet Government Securities 281.8 33% 69.3 size to Kes 1.17 trillion Net loans 704.4 18% 107.3 18% Customer deposits 845.8 13% 96.4 Loan book growth driven by improved corporate and retail lending in Long term debt 37.8 5% 1.9 Kenya and
Slide 22: Resurgence in Mobile Lending
RESURGENCE IN MOBILE LENDING Mobile loan product split Sustained recovery in mobile lending Kes 45 B 45 Value of mobile loans 43 5 41 advanced in Q1 2022. 4 5 Q1 22 38 4 Increase driven by limit 36 5 45 B enhancements for 3 qualifying customers 4 12 12 Q1 21 11 36 B 12 11 12 11 21 28 28 25 27 21 23
Slide 23: Double Digit Loan Book Growth
DOUBLE DIGIT LOAN BOOK GROWTH Gross loans growth 55 16% 54 769 Growth in gross loans driven 19% by personal, trade, transport 660 LCY and communication FCY and real estate sectors. 81% Q1 21 Retail Corporate Q1 22 Gross loans per segment Q1 21 325 274 61 660 Q1 22 380 291 98 769 Corporate Retail (Ex
Slide 24: Asset Quality
ASSET QUALITY NPL evolution 17.0% 25.0% 130.9 Group NPL ratio up 50 120.0 bps in Q1 2022 driven by 98.0 the manufacturing, 20.0% 100.0 building and construction, 17.0% and hospitality sectors 80.0 14.8% 15.0% 60.0 14.5% 14.0% 40.0 10.0% 20.0 5.0% 0.0 -20.0 0.0% -40.0 Q1 21 Q1 22 NPL ratio Kenya indu
Slide 25: Distribution of the Non-Performing Book
DISTRIBUTION OF THE NON-PERFORMING BOOK NPL breakdown by segment 29.3% 16.4% KCB Bank Kenya NPL ratio 19.3% in March 2022 up from 14.1% 13.6% 15.9% in December 2021 9.6% 7.3% 2.8% 2.4% CHECK OFF MORTGAGE CORPORATE SME & MICRO Q1 21 Q1 22 14.0% Kenya industry NPL ratio NPL breakdown by subsidiary in
Slide 26: Asset Quality: Cost of Risk
ASSET QUALITY Cost of risk Cost of risk vs ECL charge Gross loans staging improvement driven by (28%) reduced provisions in 3.5 10.0 131 corporate and digital 9.0 523 loans 3.0 2.9 8.0 2.5 7.0 115 2.1 6.0 2.0 5.0 1.5 4.0 Stage 1 IFRS provisions staging 1.0 3.0 Stage 2 2.0 8.4 Stage 3 0.5 3.8 1.7% 1.
Slide 27: Coverage Ratio Evolution
COVERAGE RATIO EVOLUTION Coverage ratios 61.6% Regulatory coverage ratio impacted by growth in 72.3% the non-performing book Medium term target, 70% 67.7% 61.6% 55.9% Q1 21 Q1 22 IFRS Coverage Ratio CBK Coverage Ratio 27
Slide 28: Diversified Deposit Portfolio
DIVERSIFIED DEPOSIT PORTFOLIO Deposit mix Deposit growth (Kes B) 13% 21 15 Retail, Growth in customer 36 47% Retail, 48% deposits due to organic 25 growth of Kes 66B and 846 M&A of Kes 30B 749 Corporate, Corporate, 53% 52% Q1 21 Demand Term Savings Call Q1 22 Q1 2 1 Q1 2 2 Deposits by type Q1 21 Dep
Slide 29: Significant Capital Headroom
SIGNIFICANT CAPITAL HEADROOM All Group subsidiaries KCB Group excluding KCB Uganda above minimum core 8.3% 7.3% capital ratios. 7.7% 8.7% NBK below total capital requirement by 80bps, 14.5% 14.5% 10.5% 10.5% improved by 100bps in Q1. Loan recoveries and retained earnings to bridge Q1 21 Q1 22 Q1 21
Slide 30: Strong Growth in Group Profitability
STRONG GROWTH IN GROUP PROFITABILITY Q1 22 54% Interest from customer loans 18.8 19% 3.0 Growth in PBT driven by Interest from govt securities 1.7 increased income from 7.7 28% loans and investments in government securities, Interest expense 6.9 31% 1.6 foreign exchange and a decline in the provisio
Slide 31: Steady Growth in Interest Earning Assets
STEADY GROWTH IN INTEREST EARNING ASSETS Net interest income up Loans and Govt. securities (Kes B) Yields vs Cost of funds 18% to Kes 19.7 B driven by increase in earning 11.1% assets and interest write-backs on 9.8% restructured facilities. 10.1% 282 9.7% 213 704 3.0% 597 2.4% Q1 21 Q1 22 Q1 21 Q1
Slide 32: Operating Costs Outlay
OPERATING COSTS OUTLAY 16.8% 9.9% 11.1 12.9 0.7 YoY cost growth (adjusted for acquisitions) 4.5 BPR 3.6 Other opex Growth in operating 1.4 1.4 Depreciation expenditure driven by Staff costs consolidation of BPR and 6.1 6.3 increase in marketing, Amounts in Kes B advertising and outsources services i
Slide 33: Asset Contribution per Subsidiary
ASSET CONTRIBUTION PER SUBSIDIARY 26.4% 15% 8% 182% 34% 21% (8%) 24% Proportion of total 859 assets in subsidiaries outside of KCB Bank Kenya. 744 141 130 74 43 26 32 21 25 18 17 10 12 KCB Kenya NBK BPR Bank KCB Tanzania KCB Uganda KCB South KCB Burundi Sudan Amounts in Kes B Q1 21 Q1 22 YoY change
Slide 34: Profitability Growth and Distribution per Subsidiary
PROFITABILITY GROWTH AND DISTRIBUTION PER SUBSIDIARY 17.2% PBT contribution from subsidiaries outside of KCB Bank Kenya 50% 277% 59% 36% 44% 17% 10% 2% 11,813 7,854 766 564 355 342 203 251 165 238 193 225 140 154 122 125 KCB Kenya BPR Bank NBK KCB Tanzania KCB KCB South Sudan KCB Burundi KCB Uganda
Slide 35: Overview of Key Financial Ratios
OVERVIEW OF KEY FINANCIAL RATIOS KCB GROUP Q1 2022 Q1 21 H1 21 FY 21 KCB KENYA KCB GROUP 17.6% 20.7% 22.4% Return on Average Equity 26.4% 23.4% 48.0% 44.3% 44.0% Cost to Income 37.8% 44.5% 14.8% 14.3% 16.5% Gross NPL to Gross Loans 16.4% 17.0% 65.2% 70.1% 60.0% NPL Coverage 55.2% 61.6% 24.4% 22.9% 2
Slide 36: Measuring Up Against Our 2022 Outlook
MEASURING UP AGAINST OUR 2022 OUTLOOK 32.0% 33.0% On track towards meeting NFI Ratio the 2022 targets with 44.0% 44.5% significant improvement Cost/Income ratio noted in NFI ratio, cost of 13.0% 17.0% risk and loans and NPL ratio deposits growth. 1.2% 1.8% Cost of risk Increase in cost of funds due
Slide 37: Summary Statement of Financial Position
SUMMARY STATEMENT OF FINANCIAL POSITION KCB Group KCB Bank Kenya Kes Billion Y-O-Y Y-O-Y Q1 21 Q1 22 Q1 21 Q1 22 Change Change Cash and balances with central bank 47.3 44.5 (6%) 35.5 31.0 (13%) Balances with other institutions 38.3 40.7 6% 7.8 10.1 28% Investments in Government & other securities 21
Slide 38: Summary Statement of Comprehensive Income
SUMMARY STATEMENT OF COMPREHENSIVE INCOME KCB Group KCB Bank Kenya Kes Billion Y-O-Y Y-O-Y Q1 21 Q1 22 Q1 21 Q1 22 Change Change Interest income 22.0 26.6 21% 17.0 19.6 15% Interest expense (5.2) (6.9) 31% (3.7) (4.7) 25% Net interest income 16.7 19.7 18% 13.3 14.9 12% Foreign exchange income 1.2 1.
Slide 39: Thank You
THANK YOU KCB Investor Relations investorrelations@kcbgroup.com www.kcbgroup.com