Absa Bank Kenya Plc · NSEKE:ABSA
Absa Bank Kenya — Barclays Bank of Kenya — H1 2018 Earnings Presentation
29 slides from Absa Bank Kenya's earnings presentation, Aug 14, 2018
Slide 1: Investor Briefing and Result Announcement Q2 2018
Barclays Bank of Kenya Investor Briefing and Result Announcement Q2 2018 Nairobi, 14th August 2018
Slide 2: Agenda
Agenda 01 Operating Environment 02 Strategy Execution Highlights 03 Strategy Forward Guidance 04 H1 2018 Financial Results 2
Slide 3: Operating Environment
Operating Environment 01 3
Slide 4: The economic environment remains promising, on balance with certain downside risks apparent
The economic environment remains promising, on balance with certain downside risks apparent GDP growth rebounds Strengthening currency 105.0 103.9 104.0 103.7 5.8% 5.7% 5.8% 103.2 4.9% 103.0 102.1 102.0 100.9 101.0 100.3 100.0 99.0 98.0 2016 2017 Q1 2018 FY 2018E 04/17 06/17 08/17 10/17 12/17 02/18
Slide 5: However, the regulatory (and legislative) environment continues to evolve in complexity
However, the regulatory (and legislative) environment continues to evolve in complexity Establish Regulation Excise Duty a Financial by National on money Conduct Removal of 0.05% Treasury transfers Authority rate caps and tax for money 2 minimum 10% to 12% transferred deposits of more than Financial
Slide 6: Strategy Execution Highlights
02 Strategy Execution Highlights 6
Slide 7: Our long-term strategy is now clear and set
Our long-term strategy is now clear and set Growth 7 | Barclays Bank of Kenya – Investor Briefing | Nairobi, 14th August 2018
Slide 8: And in the first 6 months of strategy execution, we have seen promising results
And in the first 6 months of strategy execution, we have seen promising results Gained Revenue 68% transactions out Market Share from of the branches (65% 8.3% in 2017 to 8.5% in in 2017) 2018 Q1 FTE reduced by 5% in Double digit growth in 2018 H1 from 2017 FY Customer Deposits Concluded 2
Slide 9: Timiza is Bringing Possibility to Life and Future Proofing the Retail Bank
Timiza is Bringing Possibility to Life and Future Proofing the Retail Bank Bringing Possibility to Life 2,000,000 800,000+ Customers Loans Issued First 130 Days Future Proofing the Retail Bank Growth ¬2.7M Launched Timiza ¬700K ¬700K 2010 2018 2018 Mar Jul 45 30 Average Average Customer Age Customer
Slide 10: Strategy Forward Guidance
03 Strategy Forward Guidance 10
Slide 11: Our forward guidance on strategy execution is focused on Growth and Transformation
Our forward guidance on strategy execution is focused on Growth and Transformation H2 2018 / H1 2019 Guidance 1 Repositioning our Retail and Business Bank by building on virtual banking capabilities 2 Sustaining a leadership position in our Financial Markets business Growth 3 Taking market share in
Slide 12: Our transformation (and transition) to Absa is well underway
Our transformation (and transition) to Absa is well underway Q1 2018 Q2 2018 Q3 2018 – Q1 2019 Group Name changed from New Brand Launched on 11th Barclays Africa Group Limited July 2018 to Absa Group Limited Barclays PLC 15% Credentials Campaign 41% Absa Group Thematic Campaign Limited Sponsorships
Slide 13: The new brand is designed for the digital era
The new brand is designed for the digital era …to among leading global brands designed We move from… for the digital era …showing up in a spectrum of colours 13 | Barclays Bank of Kenya – Investor Briefing | Nairobi, 14th August 2018
Slide 14: Expected impact of the re-branding (and transition) to our financials
Expected impact of the re-branding (and transition) to our financials Disclosure on Page 7 of 2017 Integrated Report: “The separation will have an impact on the Bank’s financial results for the next few years. Most notably will be increased costs over time as the separation investments are concluded
Slide 15: H1 2018 Financial Results
04 H1 2018 Financial Results 15
Slide 16: H1 Group Performance: Stable balance sheet growth and well managed cost growth
H1 Group Performance: Stable balance sheet growth and well managed cost growth impacted by higher impairment (In KES millions unless stated otherwise) BBK Financial Performance Variance 2018 H1 2017 H1 % YoY Income Statement Net Interest Income 10,967 10,544 ▲ 4% Non Interest Income 4,697 4,394 ▲ 7%
Slide 17: Salient features: Key ratios showing marked improvement
Salient features: Key ratios showing marked improvement Key Performance Indicators 2018 H1 2017 H1 Variance Return on Equity 18.6% 17.5% ▲ 1.1% Cost to Income Ratio 55.3% 56.5% ▼ (1.2%) Cost to Income Ratio 50.4% 55.3% ▼ (4.9%) (Adjusted for One-Off Investments) Staff Costs to Total Costs 58.9% 60.8
Slide 18: Customer loans and advances: Growth on account of key corporate deals
Customer loans and advances: Growth on account of key corporate deals (In KES billions unless stated otherwise) Functional Contribution Retail Bank Corporate Bank Business Bank CAGR 10% +8% 176 2017 2018 164 153 134 FCY Proportion 23% 28% 2015 H1 2016 H1 2017 H1 2018 H1 Yield on Loans 12.9% 12.1%
Slide 19: Customer deposits: Increased deposit mobilization across all business segments
Customer deposits: Increased deposit mobilization across all business segments (In KES billions unless stated otherwise) Functional Contribution CAGR 10% +15% Retail Bank Corporate Bank Business Bank 217 189 183 2017 2018 163 Cost of Funds 2.5% 2.6% 2015 H1 2016 H1 2017 H1 2018 H1 Transactional A/C
Slide 20: Income growth boosted by government securities investments and strong liability growth
Income growth boosted by government securities investments and strong liability growth (In KES billions unless stated otherwise) Functional Contribution NII NFI Retail Bank Corporate Bank Business Bank Markets +5% 15,663 14,939 2017 2018 4,697 4,394 10,544 10,967 2017 H1 2018 H1 Consumers and Market
Slide 21: We have continued to invest for future growth whilst driving efficiency
We have continued to invest for future growth whilst driving efficiency (In KES billions unless stated otherwise) 2015-2018 Cost Trajectory (4%) +3% Cost CIR 8,661 10,000 70% 8,433 7,901 9,000 8,661 8,402 8,433 65% 5,105 7,801 5,124 8,000 Staff Costs 60% 56% 55% 7,000 53% 55% 596 52% Rental Costs 63
Slide 22: Continued investments in alternate channels driving efficiency and better customer experience
Continued investments in alternate channels driving efficiency and better customer experience Alternate Channel Usage FY 2015 Alternate Channel Usage FY 2016 POS 5% POS Digital 7% 9% Digital 11% ATM 27% Branch Branch ATM 55% 59% 27% 41% 45% of all transactions of all transactions Alternate Channel U
Slide 23: Impairment: Year on year growth driven by key CIB names
Impairment: Year on year growth driven by key CIB names (In KES billions unless stated otherwise) 27% 1,717 Significant improvement in upstaging the levels of underwriting standards as well as 1,353 internal efficiencies on the collections and recoveries fronts Way Forward: We have invested in p
Slide 24: Capital ratios: Strong capital to support future growth
Capital ratios: Strong capital to support future growth combined with adequate capital structure Buffer Core Capital Ratio Total Capital Ratio Liquidity Ratio Core Capital Ratio Total Capital Ratio Liquidity Ratio Regulatory Minimum Regulatory Minimum Regulatory Minimum 38.3% 36.1% 15.7% 17.8% 14.7%
Slide 25: Interim Dividend
Interim Dividend Dividends H1 2017 H1 2018 Interim Dividend per Share (KES) 0.20 0.20 Earning per Share 0.62 0.66 Total Dividends (KES Mn) 1,086 1,086 The Board recommends payment of interim dividend of KES 0.2 per ordinary share 25 | Barclays Bank of Kenya – Investor Briefing | Nairobi, 14th August
Slide 26: BBK Strategy on a Page
BBK Strategy on a Page Our Strategy Growth Transformation Returns 1 Purpose To bring your possibility to life 4 Priorities PRIORITY 1 PRIORITY 2 PRIORITY 3 PRIORITY 4 Strongly grow, diversify Build the most digital, Build the powerhouse Become a force for good in and transform our customer obsessed
Slide 27: Disclaimer
Disclaimer Forward-looking statements Certain statements in this document are forward looking that relate to, among other things, the plans, objectives, goals, strategies, future operations and performance of Barclays Bank of Kenya. Words such as “anticipates”, “estimates”, “expects”, “projects”, “b
Slide 28: Appendix
Appendix 28
Slide 29: Separation work streams
Separation work streams Workstream Scope • Brand Go To Market (GTM) plan Campaigns development, management & execution 1 Marketing, Brand & Communication Communication Planning and execution and the development of toolkits and playbooks Customer Value Proposition and Customer 2 Experience 3 People &
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