Equity Group Holdings Limited · NSEKE:EQTY
Equity — FY2013 Earnings Presentation
32 slides from Equity's earnings presentation, Feb 27, 2014
Slide 1: Investor Briefing FY 2013 Results
Investor Briefing FY 2013 Results 27 February 2014
Slide 2: The Creation of an East African Powerhouse
The Creation of an East African Powerhouse 1 CEO named Forbes 1 Kenya’s Top Tax Payers 2013 Building Person of the Year 2012 1 Best Bank in Kenya Tier 1 1 CEO named CNBC African Strategy Leader of the Year 1 Lowest Charges Bank Establishing CEO named EY World Capacity Entrepreneur of the year 1 RSM
Slide 3: Update on Macroeconomic Environment
Update on Macroeconomic Environment 3 3
Slide 4: Operating Environment
Operating Environment 5.1% of GDP growth projected by World Bank Macroeconomic Inflation expected to remain at single digits (currently 7.2%) Environment Stable Foreign Exchange rate (USD/KES86) Current Account deficit projected to narrow down Oil, Mining and Gas activities expected to become centra
Slide 5: Key Kenyan Macro Economy Indicators
Key Kenyan Macro Economy Indicators Real GDP Growth (%) 1 FX Evolution 2 KES/USD 8.70% 8.60% 7.40% 7.30% 10.0% 100 7.00% 6.80% 6.60% 5.80% 8.0% 80 4.80% 4.40% 6.0% 60 4.0% 40 2.0% 0.0% 20 Ghana Nigeria Tanzania Uganda Kenya 0 Aug-13 Sep-13 Nov-13 Mar-13 Apr-13 Jul-13 May-13 Jun-13 Feb-13 Feb-14 Oct-
Slide 6: Update on Strategic Initiatives
Update on Strategic Initiatives 6 6
Slide 7: The Equity Story
The Equity Story 1 2 Strategically Positioned in Market Leadership and East Africa Recognition 6 3 With Innovation and Outstanding Growth Technology Driving Trajectory and Growth Profitability 5 4 Strong Management Team Asset Quality with Strong and Proven Track Record Funding 7
Slide 8: Strengthening the Management Team
Strengthening the Management Team Group Strategic Team Recent Appointments DR. JAMES MWANGI, CBS Chief Executive Officer & Managing Director RAPHAEL HUKAI, § Holds a Bachelor of Commerce degree and is a Certified Public Accountant Chief Information Officer § Over 25 years of management experience §
Slide 9: Strategic Initiatives Driving Growth in 2013
Strategic Initiatives Driving Growth in 2013 22% growth in PBT 3- Bancassurance 36% growth in 5- International Linkages & 4- Merchant Business & 47% growth in Diaspora Development Payment Processing commissions remittances 55% growth 28% growth in In number of 1- Agency Banking agents 2- SME Strateg
Slide 10: 1- Agency Banking Driving Growth
1- Agency Banking Driving Growth Key Initiatives Results § Extremely successful initiative in Kenya – number of agents § Deposit growth of c. 26% from Agency network increased from 875 at the beginning of 2011 to 10,260 agents in the region by December 2013 § Agency network accounts for a third of a
Slide 11: 2- SME Banking: Nurturing Client Evolution
2- SME Banking: Nurturing Client Evolution SME Large Enterprises 50% 50% 46% 41% 40% 40% 30% 30% 20% 16% 20% 10% 10% 3% 0% 0% 2009 2013 2009 2013 § Increased lending to SME as a proportion of the loan book § Focusing on value chain & clusters within large enterprises Consumer and Agriculture Micro E
Slide 12: 3- Increased Focus on Bancassurance
3- Increased Focus on Bancassurance Contribution to Group Revenue PBT Evolution Insurance PBT (KESm) 1.80% 450 407 1.60% 1.50% 400 1.50% 334 1.30% 350 1.20% 300 0.90% 250 223 0.90% 200 0.60% 150 100 67 0.30% 50 17 0.00% 0 2010 2011 2012 2013 2009 2010 2011 2012 2013 Insurance Contribution to Group P
Slide 13: 4- Payment Processing & Merchant Business
4- Payment Processing & Merchant Business Turnover and Commissions Mobile Banking Customers Turnover (m) Commissions (m) 2,000 50 3,000,000 2,777,192 1,600 40 2,500,000 2,165,659 1,200 30 2,000,000 800 20 1,500,000 1,281,816 400 10 1,000,000 0 0 500,000 Apr-10 Jul-10 Apr-11 Jul-11 Apr-12 Jul-12 Apr-
Slide 14: 5- Consolidating International Linkages
5- Consolidating International Linkages Equity Bank Currently Leads Monthly Diaspora Remittances (USDm) USD (m) 60 53.4 50 47.8 44.5 38.3 39.1 40 33.9 33.3 30.6 30 § Remittances are a good source of short term FX 20 funding and profitable line of business 10 0 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
Slide 15: 2013 Thematic Areas
2013 Thematic Areas 15 15
Slide 16: Tapping into our Competitive Advantages
Tapping into our Competitive Advantages In 2013 we Consolidated our leadership in our core market by: 1 2 3 Investing in Technology & Leveraging Off Core Themes Enhancing Product Offering Infrastructure Strengths & Capabilities ¾ Moved from Version 7 to ¾ Recruited and trained world ¾ Increased the
Slide 17: 2013 Results and Key Financials
2013 Results and Key Financials 17 17
Slide 18: 600,000 New Customers Driving Growth of Deposits
600,000 New Customers Driving Growth of Deposits Deposits Evolution Highlights KESbn 79% 81% 88% § Our deposits comprising 70% of total funding 88% 91% 75% § Term deposits accounted for 14% of deposits, Savings 58% and demand accounts 28% as at end of Q4 2013 194,839 167,913 144,165 § Share holders
Slide 19: 26% Growth of the Loan Book
26% Growth of the Loan Book… Net Customer Loans Evolution Key Commentary KESbn § Continued growth in the loan book achieving a 26% growth y/y 171,363 and 13% growth in loan accounts 135,692 § Growth in loan book in the year mainly driven by SMEs 113,824 § Loan book split into 5 client types: Consume
Slide 20: Reduction in NPLs in Q4
Reduction in NPLs in Q4 Gross NPL Ratio – Improved in Q4 2013 NPL Ratio Evolution Impacted by the challenging macro-economic conditions across all 6.0% target markets and region, main reasons being: 5.5% 5.1% 5.19% 5.0% 5.0% § With the new devolved structures, SMEs continued to experience delayed go
Slide 21: Well Capitalised and Liquid Balance Sheet
Well Capitalised and Liquid Balance Sheet Core Capital to Risk Weighted Assets Total Capital to Risk Weighted Assets 18.6% 28.1% 22.7% 22.3% 22.6% 22.2% 15.0% 14.9% 14.9% 14.6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Old Guidelines New Guidelines Old Guidelines New Guidelines
Slide 22: Reduction in Base Rate Impacting Revenue Growth
Reduction in Base Rate Impacting Revenue Growth Net Interest Margin Revenues § Net Interest Income grew by 11% while non-interest income grew by 19% y/y High stable NIMS despite tough economic conditions and volatile interest rate environment § Forex income contributed 4.5% of total operating income
Slide 23: Focus on Costs: Reduction of Cost to Income Ratio to 48.5%
Focus on Costs: Reduction of Cost to Income Ratio to 48.5% Cost to Income Ratio IFRS Coverage Ratio Evolution2 51.0% 99.5% 50.9% 50.9% 49.5% 48.8% 48.8% 48.5% 48.5% 72.3% 47.8% 65.3% 45.0% 45.1% 41.9% Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4 2013 2012 2012 2012 2012 FY 2013 2013 2013 2013 FY 2009 2010 2011 2012
Slide 24: 28% ROE, 11% PBT Growth despite Challenging Environment
28% ROE, 11% PBT Growth despite Challenging Environment PBT Evolution¹ Key Commentary KESbn 20 § Group Profit before Tax & exceptional items 15 grew by 11% y/y to KES19.15bn, mainly 10 impacted by the reduction in lending rates and 5 South Sudan impairment by KES 0.7bn 0 § Poor Q2 and Q3 performance
Slide 25: Structure & Asset Portfolio
Structure & Asset Portfolio Dec-12 Dec-13 Growth Assets (bn) KES KES % Net Loans 135.69 171.63 26% Cash & Cash Equivalents 45.13 34.53 (23)% Government Securities - HTM 30.80 34.01 10% Government Securities - AFS 10.00 10.36 4% Other Assets 21.55 27.20 26% Total Assets 243.17 277.73 14% Asset Distri
Slide 26: Structure & Funding Portfolio
Structure & Funding Portfolio Dec-12 Dec-13 Growth Liabilities & Capital (Bn) KES KES % Deposits 167.91 194.84 16% Borrowed Funds 26.57 26.73 1% Other Liabilities 5.77 4.60 (20)% Shareholders’ Funds 42.92 51.56 20% Total Liabilities & Capital 243.17 277.73 14% Funding Distribution § Shareholders’ Fu
Slide 27: 2013 Performance
2013 Performance December 2013 vs. KESm December 2012 December 2013 December 2012 Interest Income 30,848 31,890 3% Interest Expense (6,884) (5,399) (22)% Net Interest Income 23,964 26,491 11% Other Income 12,863 15,371 19% Total Income 36,827 41,861 14% Provisions (1,608) (2,402) 49% Staff Costs (7,
Slide 28: Equity Bank: 2013 Dashboard
Equity Bank: 2013 Dashboard HIGHLIGHTS GROWTH • Exceptional results despite challenging environment: • 11% growth in PBT • South Sudan instability • Q2 and Q3 impacted by reduction in Base Rate • Reduction of Base Rate by 8.0% • Stabilization in Q4: 73% growth Q4 vs. Q3 • Dividend policy maintained:
Slide 29: What to Expect in 2014
What to Expect in 2014 29 29
Slide 30: Growth and Return Story
Growth and Return Story Past Accomplishments Future Aspirations? 2007 2013 2014 ¾ 1.8 million customers ¾ 8.4 million customers ¾ 10 million customers ¾ ROE: 22.1% ¾ ROE: 28.1% ¾ ROE: 30% ¾ ROA: 5.2% ¾ ROA: 5.1% ¾ ROA: 5.3% ¾ CIR: 59% ¾ CIR: 49% ¾ CIR: 47% ¾ Deposit: KES32bn ¾ Deposit: KES195bn ¾ De
Slide 31: 2014 – What to Expect…
2014 – What to Expect… ¾ Increased focus on deepening each business line thereby accelerating growth ¾ Aim to Accelerate growth and market share to: Ø Tanzania: c.4% spurred by massive oil find plus Bagamoyo port coming into operation Ø Uganda: c.6% as a result of a 30% growth in deposits Ø Kenya: c
Slide 32: Thank You
THANK YOU Dr James Mwangi, CBS Group Managing Director & CEO KeEquityBank @KeEquityBank Email: info@equitybank.co.ke Web site: www.equitybankgroup.com 32