Absa Bank Kenya Plc · NSEKE:ABSA
Absa Bank Kenya — H1 2022 Earnings Presentation
29 slides from Absa Bank Kenya's earnings presentation, Aug 25, 2022
Slide 1: H1 2022 Earnings
H1 2022 Earnings 25 August 2022
Slide 2: Table of Contents
Table of Contents Business Financial Overview Performance Outlook In Summary
Slide 3: Business Overview
Business Overview Jeremy Awori – Chief Executive Officer
Slide 4: Operating Environment: Navigating a complex operating environment with addressable risks and opportunities
Operating Environment: We are navigating a complex operating environment with addressable risks and opportunities Head winds Kenya’s GDP growing above SSA average Observed inflation pressure in the second quarter of 2022 Kenya 8% 1. Political Transition 7.5% 2. Geopolitical Risks 6% 6% SSA 6% 6% 5.7
Slide 5: Business Transformation: evolution towards a full financial services group
Business Transformation: Over time, our business has evolved towards a full financial services group driven by a broader proposition set Timiza for Business Retail Banking Timiza for Banc- SME assurance China Retail Corridor Banking Corporate Lending Absa SME Banking 2011 FX Sales today Trade Financ
Slide 6: On Growth: We have accelerated our diversification efforts in 2022
On Growth: We have accelerated our diversification efforts in 2022 New Business established in 2022 Opportunity Set Asset Management As value add to our business and savings retail customers, we are (Institutional and Retail including High Net Worth expanding the investment opportunities in unit tru
Slide 7: On Growth: We have doubled our balance sheet with revenue growth accelerating
On Growth: We have doubled our balance sheet with our revenue growth accelerating fastest in 2022 (in KES billions unless stated otherwise) 17% ¬2x Revenue Growth Rates ¬2x 17% ¬2x Revenue Growth Rates ¬2x COVID-19 7% COVID-19 7% 2% 282 bn 38bn 262 bn 34bn 7% Interest rate caps 2% 7% Customer Deposi
Slide 8: On Transformation: We have optimized our structural costs
On Transformation: We have optimized our structural costs; re-designing the organization towards sales and service and significantly improving productivity (in KES millions unless stated otherwise) (32%) (953) (25%) (21) 104 3,001 83 2,048 Branches Branches FTE1 FTE1 2013 H1 2013 H1 2022 2022 2.3X (
Slide 9: On Transformation: Innovation over the years towards delivering for the customer
On Transformation: Innovation over the years towards delivering for the customer Back End Investments Investments (2013 - 2022) (2013 - 2022) Migration of Credit Card Platform from Digital Channels rollout Unified Mpesa collections Paperless Workflow Robotics Process automation Prime 3 to Vision+; e
Slide 10: On Transformation: Significant milestones with our new brand
On Transformation: We have achieved significant milestones with our new brand since the re-brand in 2019/2020 Brand Awareness score Most Reputable Bank in Kenya1 92% 82% 48 Absa 45 Bank1 37 32 30 26 Bank 2 28% 22 Bank 3 19 Bank 4 2019 2020 2022 2017 2018 2020 2021 Other scores 72% Colleague Brand Lo
Slide 11: On Transformation: Building Absa as a fun, vibrant and inspirational place to work
On Transformation: We are building Absa as a fun, vibrant and inspirational place to work Won 2022 Employer of Choice Enabled by: Award
Slide 12: On Transformation: We continue to embed sustainability in our business
On Transformation: We continue to embed sustainability in our business Delivering our Role in Society through four pillars Environment Education and Skills Development • 80+ Absa properties assessed through Edge • 211,000 youths in Kenya reached t date and retrofitted driving 31% energy and 30% thro
Slide 13: On Returns: Absa stock continues to outperform key indices
On Returns: Absa stock1 continues to outperform key indices with ROE3 above industry average ▲ ▲ ▲ ▲ ▲ 29% ▲ 24% ▲ 20% ▲ 1% ▲ (21%) ▲ (34%) ▲ (36%) ▲ (15%) ▲ (52%) ▲ Absa Stock Price2 #1 #1 #2 #2 #1 Dividend Yield #2 #1 - #2 Top Quartile Absa ROE3 17% 18% 9% 19% 23% Industry ROE3 16% 15% 11% 16% 19%
Slide 14: Awards and Recognitions in H1 2022
Awards and Recognitions in H1 2022: Our efforts are being recognized by external stakeholders Ranked Bank by GlobeScan1 #1 in Asset Finance by Think Business No 1. impacting #2 Best Bank in Tier 1 by Think Business business Awarded #2 Best in Corporate banking by Think Business Local currency #2 Bes
Slide 15: Financial Performance
Financial Performance Yusuf Omari – Chief Finance Officer
Slide 16: 2022 Financial Results: Central Bank Rate remained stable across 2021
2022 Financial Results: Central Bank Rate remained stable across 2021, the rate has now started to pick up after nearly 2yrs As a Yield vs Central Bank Rate movement (%) responsible 11.8 financial 11.4 11.3 partner, we 10.7 10.3 10.2 10.1 10.4 have been 9.6 9.5 9.6 9.7 repricing the book and 9 9 8.5
Slide 17: H1 2022 Financial Results: Growth in balance sheet across all business segments
H1 2022 Financial Results: Growth in balance sheet across all business segments (In KES bn unless stated otherwise) and Advances Deposits YoY +19% YoY +7% Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 ▪ LDR of ▪ Focus is on attracting to lower the ▪ Growth driven by Trade Loa
Slide 18: H1 2022 Financial Results: Revenue up 17% with growth in both NII and NFI
H1 2022 Financial Results: Revenue up 17% with growth in both NII and NFI (In KES bn unless stated otherwise) and NFI functional diversification 17% Markets 6.5 11% 5.9 Corporate NFI Retail 14.4 BB 12.0 NII 20% H1 2021 H1 2022
Slide 19: H1 2022 Financial Results: Cost growth from strategic investments
H1 2022 Financial Results: Cost growth from strategic investments aligned to our plans (In KES mn unless stated otherwise) Cost : H1 2022 per channel: 2022 11% Branch, 10% 8.8 bn POS, 9% of all transactions 8.0 bn outside Branch Staff Cost ATM, 11% Digital, 70% Staff Cost 4,807 4,415 Rental Cost Ren
Slide 20: H1 2022 Financial Results: Accelerated revenue and balance sheet growth
H1 2022 Financial Results: Accelerated revenue and balance sheet growth (In KES bn unless stated otherwise) P&L Indicators H1 2022 H1 2021 Comment Income 20.9 17.8 17% Net Interest Income 14.4 12.0 20% Non Funded Income 6.5 5.9 11% Operating Costs (8.8) (8.0) 11% Impairment (3.0) (1.9) (52%) Profit
Slide 21: H1 2022 Financial Results (Key Ratios)
H1 2022 Financial Results (Key Ratios): Cost Income Ratio showing marked improvement, expansion of our loan margins and improvement in ROE1 Indicators H1 2022 H1 2021 Cost to Income Ratio 42% 45% Marked improvement (300 bps) Increase occasioned by book growth and macro Loan Loss Rate 2.3% 1.8% overl
Slide 22: Financial Results (Key Ratios): Strong capital and liquidity ratios
Financial Results (Key Ratios): Strong capital and liquidity ratios supporting growth and returns recovery Ratio Ratio Ratio Core Capital Ratio Regulatory Minimum Total Capital Ratio Regulatory Minimum Liquidity Ratio Regulatory Minimum 18. 0% 17. 5% 17.3% 17. 5% 16. 5% 38.1% 17. 0% 15. 5% 14.7% 16.
Slide 23: Outlook
Outlook Moses Muthui - Chief Strategy Officer, Absa Finance Director, Absa Corporate and Investment Bank
Slide 24: Concluding the last 5-years strategy in 2022
Concluding the last 5-years strategy in 2022: We are delivering on all our strategic commitments as at H1 2022 After achieving our Efficiency and Returns goals for 2018-2023 by 2021, our 2022 and 2023 strategic 3-Principal Financial Measures Outcomes agenda is anchored on delivering sustainable mark
Slide 25: Re-Investment capacity: significant potential to re-invest
OPEX Re-Investment capacity: We are carrying significant potential to re-invest given outperformance on efficiency targets Previous Cost Philosophy CIR (1) at 45% CIR (1) Forward Cost Philosophy at 42% Increase costs to the extent Holding underlying Excess cost capacity the P&L can afford (+ve Cost
Slide 26: Dynamic Capital Management
Dynamic Capital Management: We have improved our precision on capital management towards supporting growth and distribution to shareholders (In KES bn unless stated otherwise) 14.6% Funding Growth – Net basis (20bps) Interim Dividend 14.4% (40bps) 14.0% Multiplier Effect 2.6% Buffer 2.4% 2.0% Post d
Slide 27: The next Horizon: refreshed strategy for 2023 – 2028
The next Horizon: We are in the process of developing a refreshed strategy for the period 2023 – 2028 2013 – 2017 2018 – 2023 2023 – 2028
Slide 28: 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 Absa Bank Kenya PLC . Words such as “anticipates”, “estimates”, “expects”, “projects”, “bel
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