Co-operative Bank Of Kenya Ltd. · NSEKE:COOP
Co-operative Bank Of Kenya — Q1 2024 Earnings Presentation
71 slides from Co-operative Bank Of Kenya's earnings presentation, May 2024
Slide 1: Group Financial Results Q1 2024
Group Financial Results Q1 2024 1
Slide 2: Key Highlights
Group Financial Results Q1 2024 Key •We are Growing •We are Resilient Highlights •We are Agile 2
Slide 3: A Transformational Bank
Group Financial Results Q1 2024 A Transformational Bank Largest Co-operative Bank in Africa - 15 Million Members Successful Universal Banking Model, Increased Dominance in Kenya Growth, Resilience and Agility Kshs. 714.7 Billion in Total Assets 5,361 Skilled, Motivated Staff Members 3
Slide 4: We are Growing: Creating Value
We are Growing: Creating Value 4
Slide 5: Efficient, Profitable Business Model; Growing Asset Base
Group Financial Results Q1 2024 Efficient, Profitable Business Model 9.0 Continued focus on optimizing opportunities for growth through an Profit Before Tax innovative array of financial solutions. (KShs. B) 8.1 Q12023 Q12024 Growing Asset Base 714.7 Total Assets 631.1 (KShs. B) Q12023 Q12024 5
Slide 6: We are Resilient: Protecting Value
We are Resilient: Protecting Value 6
Slide 7: Profitable Bank; Strong Capital Buffers
Group Financial Results Q1 2024 Strong Capital Buffers: Total Capital to Risk Weighted Profitable Bank Kshs. 9.0 Billion Assets (RWA) 21.6% (Regulatory 14.5%) Proactive Enterprise Risk Management Continuous support to our customers, staff and all other Framework. stakeholders. Up to 50.1% of our loa
Slide 8: Continued gains from our institutionalized Transformation
Group Financial Results Q1 2024 Continued gains from our institutionalized Transformation seeking efficiency and growth. We continue to reap gains from the following projects to strengthen our asset quality; • Credit Review Implementation Project “Project Kilele” • Decentralization of loan portfolio
Slide 9: New Core Banking System
G y} CO-OPERATIVE BANK We are you New Core Banking System
Slide 10: A 'Good to Great' Transformation Journey
A ‘Good to Great’ Transformation Journey Group Financial Results Q1 2024 Improved business agility and flexibility A modern, robust and scalable Core Banking Support for Process Automation solution, enhancing the Bank’s response to changes in the industry, continuous and digitization On 12th June 20
Slide 11: We are Agile: Fast | Adaptable
We are Agile: Fast | Adaptable 11
Slide 12: Operational efficiency with New Core Banking System
Group Financial Results Q1 2024 1. New Core Banking System goes Live Expected Key benefits include enhanced; • Business agility & Innovation Operational efficiency with • Customer experience • Cost management • Analytics • Process automation & Digitization 2. Optimization of Omnichannel: Integrates
Slide 13: Macroeconomic Highlights
Group Financial Results Q1 2024 •Global Economy Macroeconomic •Kenya’s Economic Growth Highlights •Inflation and Interest Rate •Foreign Exchange Rate 13
Slide 14: Global Economy has Steadied though Growth remains low
Group Financial Results Q1 2024 Global Economy has Steadied though Growth remains low with regional divergence. Real GDP Growth, Annual Percent Change 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 15: Headline Inflation has generally moderated
Group Financial Results Q1 2024 Headline Inflation has generally moderated though inflationary pressures persists in some markets, especially the United States. Headline Inflation Core Inflation 2018M7 2022M7 2018M1 2018M4 2019M1 2019M4 2019M7 2020M1 2020M4 2020M7 2021M1 2021M4 2021M7 2022M1 2022M4
Slide 16: Inflation firmly within target, Interest rates have peaked
Group Financial Results Q1 2024 Inflation firmly within target, Interest rates have peaked. Trend In Overall Inflation Rate Interest Rates Have Peaked, Funding Pressure Persists 14.8 14.8 14.5 14.3 14.2 13.8 13.8 13.8 13.7 13.6 13.4 13.4 13.4 13.1 12.9 12.8 12.7 12.3 10.3 10.2 10.1 8.6 8.3 7.9 7.9 7
Slide 17: Strong Headline Growth Driven by Recovery in Agriculture
Group Financial Results Q1 2024 Strong Headline Growth Driven by Recovery in Agriculture, Public Sector Spending & Resiliency in the Services Sector. 2023 2024 SECTOR 2019 2020 2021 2022 Q1 Q2 Q3 Q4 Est Annual Est Projected 1. Agriculture 2.7 4.6 -0.4 -1.6 6.1 8.2 6.7 5.8 6.6 4.9 2. Non-Agriculture
Slide 18: Foreign Exchange market in better balance in 2024
Group Financial Results Q1 2024 Supply and demand mismatch observed in the Foreign Exchange market in 2022- 2023 have eased, with the Foreign exchange market in better balance in 2024. USD/KES Exchange Rate Rate of Depreciation/Appreciation 180 6.0% 160 154 152 152 149 160 4.0% 147 144 141 140 137 1
Slide 19: Long-term Macroeconomic forecasts for South Sudan
Group Financial Results Q1 2024 Long-term Macroeconomic forecasts for South-Sudan Positive for Economic Activities. Long-Term Macroeconomic Forecasts (South Sudan 2024-2029) 2016 2017 2018 2019 2020 2021 2022 2023 2024f 2025f 2026f 2027f 2028f 2029f Real GDP growth, % y-o-y -13.3 -5.8 -2.1 0.9 -6.5
Slide 20: Corporate Strategic Plan 2020 – 2024
Group Financial Results Q1 2024 2020 – 2024 Corporate Strategic Plan 20
Slide 21: Purpose, Vision, Mission
Group Financial Results Q1 2024 PURPOSE VISION MISSION A financial institution predominantly owned by To be the dominant bank in Kenya and the To offer a wide range of innovative financial solutions leveraging the Kenyan Co-operative movement, region, riding on the unique Co-operative Model on our h
Slide 22: Co-operative Bank of Kenya Group Structure
Group Financial Results Q1 2024 Co-operative Bank of Kenya Group Structure
Slide 23: Group Structure
Group Financial Results Q1 2024 Co-operative Bank of South Sudan Ltd (51%) Co-op Bancassurance Intermediary Ltd (100%) 15M Member Co-operative Movement Co-optrust Investment Services Ltd (100%) Co-op Holdings Co-op Society Ltd (64.56% Strategic Ownership) Kingdom Securities Ltd (60%) Co-operative Ba
Slide 24: A Successful Universal Banking Model
Group Financial Results Q1 2024 A Successful Universal Banking Model Corporate Government & Retail and Business Banking Institutional Banking (Kshs. (Kshs.257.7 Billion Loan Book) 112.3 Billion Loan Book) Leasing: Co-operatives Banking (Kshs. Coop Bank Fleet Africa Ltd 36.8 Billion Loan Book) (Kes.2
Slide 25: Our Presence
Group Financial Results Q1 2024 Our Presence 16000+ 195 Branches Co-op Kwa Jirani 24hr Contact Centre Agents 5M Omni Channel 16K Diaspora Banking Customers Customers 5,361 Staff 605 ATMs & Cash 484 Sacco Front Deposit Machines New Core Banking offices Branch System (CDMs) Network 25
Slide 26: "Soaring Eagle" Transformation
Group Financial Results Q1 2024 “Soaring Eagle” Transformation 26
Slide 27: Soaring Eagle Transformation Agenda
Group Financial Results Q1 2024 “Soaring Eagle” Transformation Agenda focuses on 1. Branch Transformation 2. MSME Transformation 3. Sales Force Effectiveness 4. Shared Services & Digitization “The Digital Bank” 5. NPL Management & Credit Processes 6. Cost Management 7. Data Analytics 8. Staff Produc
Slide 28: Soaring Eagle Transformation: Key achievements
Group Financial Results Q1 2024 “Soaring Eagle” Transformation: Key achievements E-CREDIT FOCUS: KSHS.370.3 DISBURSED SO FAR Short-term tenor Average disbursement of Ksh.6 B per month. 93% of total transactions are on Alternative Channels. Consumer Based that is on salary checkoff deductions at sour
Slide 29: Soaring Eagle Transformation: Key achievements (MSME)
Group Financial Results Q1 2024 “Soaring Eagle” Transformation: Key achievements MSME Transformation Customers onboarded Customers Trained (MSME Gold, Silver, Bronze) 60,850 214,000 Non-Financial Services 115 Webinars 164 Clinics Government of Kenya Credit Guarantee Scheme 39 networking forums https
Slide 30: Soaring Eagle Transformation: Key achievements
Group Financial Results Q1 2024 “Soaring Eagle” Transformation: Key achievements Sales Force Effectiveness for Corporates and Cooperatives Sector focus; Tailor-made go-to-market strategies for different Advanced data analytics sectors. Supporting Data-led sales, reporting and decision making Scale u
Slide 31: Credit Review Implementation Project
Group Financial Results Q1 2024 Credit Review Implementation Project 31
Slide 32: Credit Review Implementation Project: Project Kilele
Group Financial Results Credit Review Implementation Project: Q1 2024 Project Kilele Comprehensive diagnostic review on each area of credit risk, including: • Credit risk management framework with a key focus on risk governance, credit risk E2E assessment of credit risk appetite, origination and und
Slide 33: Project Kilele Key Achievements
Group Financial Results Q1 2024 Project Kilele Key Achievements Roll out of new Application For Facility forms. Underwriting process optimization Improving Turn Around Time for facilities. Auto disbursements. Reclassification of sectors and sub- Business Process Management System optimization sector
Slide 34: Environmental Social and Governance (ESG)
Group Financial Results Q1 2024 Environmental Social and Governance (ESG) 34
Slide 35: ESG Policy Statement
Group Financial Results Q1 2024 Environmental Social and Governance (ESG) Policy Statement The Co-operative Bank Group objectives under this policy are: • To incorporate strong environmental, social, and corporate governance principles throughout all operations and business activities. • To comply w
Slide 36: ESG Policy Framework
Group Financial Results Q1 2024 ESG Policy Framework Environmental and Social Climate Risk Management Sustainable Finance ESG Policy Statement ESG Risk Management Management System Integration Framework Our ESG Policy Framework is a cohesive structure guiding Co-operative Bank's strategic approach t
Slide 37: ESG Impact
Group Financial Results Q1 2024 ESG Impact MSME Financing Affordable Basic Infrastructure Renewable Energy 12.3 Billion Access to Essential Green Buildings Food Security Services Employment Generation Youth Banking Affordable Housing 10,264 • Kshs.100M Co-op Bank Capacity-building & Sustainable Wate
Slide 38: Awards: MSME Transformation
Group Financial Results Q1 2024 Awards : MSME Transformation ✓ Affirms our MSME Transformation strategy, developing co-created solutions catering to the needs of MSMEs. ✓ We are passionate about transforming their aspirations into concrete milestones 38
Slide 39: Sustainability Awards
Sustainability Awards Most Sustainable Bank in Kenya Most Innovative Bank Best in financing Commercial Clients Best in Promoting Gender Inclusivity Best In promoting People with Disability (PWD) 1ST Runners up – Best in Financing MSMEs 2ND Runners Up – Best in Sustainable Finance 39
Slide 40: Award-Winning Brand
Group Financial Results Award-Winning Brand Q1 2024 Best Women and Youth empowerment Programs. • Education Scholarship Program • Adoption of Agribusiness and use of Renewable KBA CUSTOMER SATISFACTION SURVEY 2022 & 2023 Energy Technologies for Agriculture by Youth in Kenya Best Overall in Satisfacto
Slide 41: Regional Business, Kshs. Millions
Group Financial Results Q1 2024 Regional Business, Kshs. Millions 8,506 6,432 6,749 4,655 3,262 2,258 Total Assets Total Deposits Loans And Advances Q12023 Q12024 414 388 342 260 4 Branches in Juba 113 128 5 Non-oil collection centers 74 Owns 31% of CIC Africa Ltd- South Sudan Total operating Income
Slide 42: Channel Performance
Group Financial Results Q1 2024 Channel Performance 42
Slide 43: Growing Digital Channels
Group Financial Results Q1 2024 Growing Digital Channels 93% of our Transactions are on alternative Channels providing opportunities for efficiency. Digital Channels Vs Branch (%) 93% Mobile Internet 7% ATM & Agency CDM Branch Digital Channels 43
Slide 44: MCo-op Cash Mobile Wallet
Group Financial Results Q1 2024 MCo-op Cash Mobile Wallet A unique Offering 44
Slide 45: MCo-op Cash Mobile Wallet A unique Offering
Group Financial Results Q1 2024 MCo-op Cash Mobile Wallet A unique Offering MCo-op Cash is an all-telco, all products mobile banking service that enables customers to enjoy access to a variety of banking services, money transfer and payment services. It’s a virtual account with a simple menu where t
Slide 46: Omnichannel Banking
Group Financial Results Q1 2024 Omnichannel Banking We have successfully migrated our customers to the Omni- channel integrating accessibility and user experience. Our omnichannel interfaces online banking through personal computers, mobile phones, and USSD availing our services to all customers thr
Slide 47: Digital lending focus E-credit
Group Financial Results Q1 2024 Digital lending focus E-credit A superior product for our customers that continues to scale and is a key revenue source • A key focus area, Kshs. 370.3B disbursed to Date. • Kshs. 6.0 Billion disbursed per month on average. • Consumer based salary checkoff hence lower
Slide 48: E-credit: Kshs. 18.1B Disbursed YTD
E-credit Group Financial Results Q1 2024 Cumulative Mcoop Cash Loan Customer Numbers ( In '000’) 11,144 A superior product for our customers that continues to 10,727 scale and is a key revenue source 8,774 Kshs. 18.1B Disbursed YTD 6,577 4,641 2,924 Kshs 370.3B Disbursed since inception. 1,389 388 6
Slide 49: Growing Co-op Kwa Jirani Agency Banking
Group Financial Results Q1 2024 Growing Co-op Kwa Jirani Agency Banking No. of Agents Total No. of Transactions Deposits Generated by Agents 17,061 8.9 (Millions) (Ksh.Bn) 16,189 48 42 7.1 Q12023 Q12024 Q12023 Q12024 Q12023 Q12024 Agency Banking Mar'23 Apr'23 May'23 Jun'23 Jul'23 Aug'23 Sep'23 Oct'2
Slide 50: Agency Banking
Group Financial Results Q1 2024 Agency Banking Transaction Type (%) 45.0% 44.4% 28.4% 26.9% 17.4% 13.8% 11.3% 12.8% Growing Co-op Kwa Jirani Agency Banking Deposits Withdrawals Balance Inquiry Others Q12023 Q12024 ✓ Key deposit mobilization Transaction Value distribution (%) channel 62.6% 64.3% ✓ Hi
Slide 51: Financial Highlights
Group Financial Results Q1 2024 Financial Highlights 51
Slide 52: Strong Financial Position (Kshs. Billions)
Group Financial Results Q1 2024 Total Assets Net Loan book 378.1 714.7 631.1 360.1 Q12023 Q12024 Q12023 Q12024 Strong Financial Position (Kshs. Billions) Total Deposits Shareholder's Funds 501.6 127.1 441.5 112.6 Q12023 Q12024 Q12023 Q12024 52
Slide 53: Strong Financial Position (Kshs. Billions)
Group Financial Results Q1 2024 BALANCE SHEET % Ksh. Billions Q12024 Q12023 Growth Total Assets 714.7 631.1 13.2% Net Loan book 378.1 360.1 5.0% Strong Financial Position (Kshs. Billions) Government Securities 200.2 179.2 11.7% Total Deposits 501.6 441.5 13.6% Borrowed Funds 60.1 48.4 24.1% Sharehol
Slide 54: Sustainable Profitability Growth
Group Financial Results Q1 2024 Sustainable Profitability Growth Kshs. Billions Q12024 Q12023 YoY Change Total Interest Income 19.4 15.6 24.7% Total Interest Expenses 7.7 4.8 60.8% Net Interest Income 11.7 10.8 8.6% Fees and commissions on loans and advances 2.9 3.4 -14.7% Other Fees and commissions
Slide 55: Diversified loan book
Group Financial Results Q1 2024 Loan Book By Segment Diversified loan book 47.7% 47.7% • Diversified across segments. • Highest book is in Personal Banking; • Check off; deductions are done at source. 27.2% 27.6% • Diversified across various Government/quasi-government employees. 15.9% 15.6% • Appra
Slide 56: Diversified loan book across sectors
Group Financial Results Q1 2024 Q12024 Q12023 Tourism, Restraurant & Hotels 0.6% 0.5% Diversified loan book across 0.9% Building & construction 1.4% sectors Agriculture 1.7% 1.8% 50.1% in Personal consumer which Energy & Water 2.1% is performing well 1.9% Manufacturing 3.0% Low relative exposure in
Slide 57: Supporting NPL Management
Group Financial Results FY 2023 Q12024 Q12023 15.5% 15.7% 15.3% 14.0% 13.9% Supporting NPL 13.2% Management; • Proactive Credit Management Strategies. • Business Growth. • Consumers and Businesses resilience amid tight economic environment. Industry Group Bank 57
Slide 58: Portfolio Trends – Sector NPL
Q12024 Q12023 Sector Size 3.2% Energy & Water 2.1% 0.3% 5.2% Portfolio Trends – Financial services 6.5% 9.8% Sector NPL Personal consumer 7.2% 50.1% 6.0% 11.1% Agriculture 1.7% 9.0% 15.0% Transport & Communication 9.8% 12.2% 17.4% Manufacturing 3.0% 18.2% 20.0% Tourism, Restraurant & Hotels 0.6% 22.
Slide 59: Cost of risk has improved to 1.7% in Q12024
Group Financial Results Q1 2024 Cost of risk has improved to 1.7% in Q12024 compared to 1.8% in Q12023. Cost of Risk IFRS Coverage Coverage with security 107.4% 1.8% 71.1% 66.8% 1.7% 100.0% Q12023 Q12024 Q12023 Q12024 Q12023 Q12024 59
Slide 60: Well-diversified Liability Portfolio
Group Financial Results Q1 2024 Well-diversified Liability Portfolio Q12024 Q12023 Savings Accounts Transaction Accounts Current Accounts Term Deposits Accounts 6.0% Sacco and Agri-Business 7.4% Call Deposits 11.0% Corporate banking 8.4% 12% 7% 11.9% Government Banking 10.7% 25% 19.0% Institutional
Slide 61: Strong capital to support future growth
Group Financial Results Q1 2024 Strong capital to support future growth Capital buffers for sustainable growth Core capital to Total Deposits Core capital to Total risk Total capital to Total risk 22.7% 22.3% weighted assets weighted assets 18.2% 21.6% 16.3% 17.2% 10.5% 10.5% 14.5% 14.5% 8.0% 8.0% Q
Slide 62: An Optimally balanced Kenya Shilling Asset & Funding book
Group Financial Results Q1 2024 An Optimally balanced Kenya Shilling Asset & Funding book FUNDING BOOK: LOAN BOOK: LOCAL VS. FOREIGN CURRENCY LOCAL VS. FOREIGN CURRENCY LCY deposits FCY dorrowing FCY deposits Local Currency Foreign Curency 8.8% 16.3% 5.6% 85.6% 83.7% 62
Slide 63: Optimal Asset and Funding Mix
Group Financial Results Q1 2024 Optimal Asset and Funding Mix Asset Q12024 Q12023 Categories 8.0% Net Loans 7.3% Net Loans 7.2% 11.1% Government Government Securities Securities 52.9% Cash and Cash and Cash 28.4% 57.1% Cash 28.0% Equivalent Equivalent Other Assets Other Assets Funding Q12024 Q12023
Slide 64: Strong Liquidity to Support Investments
Group Financial Results Q1 2024 Strong Liquidity to Support Investments Liquidity ratio Total Loans to Total Deposits Loans /(Deposits+Borrowed Funds) 51.2% 81.6% 50.6% 73.5% 75.4% 67.3% Q12023 Q12024 Q12023 Q12024 Q12023 Q12024 64
Slide 65: Sustainable Profitability Growth
Group Financial Results Q1 2024 Sustainable Profitability Growth Kshs. Billions Q12024 Q12023 YoY Change Total Interest Income 19.4 15.6 24.7% Total Interest Expenses 7.7 4.8 60.8% Net Interest Income 11.7 10.8 8.6% Fees and commissions on loans and advances 2.9 3.4 -14.7% Other Fees and commissions
Slide 66: Group Financial Results Q12024 vs Q12023
Group Financial Results Q1 2024 Q12024 Q12023 Growth Growth KShs '000' KShs '000' KShs '000' % Co-operative Bank of Kenya Ltd 8,038,686 7,478,370 560,315 7.5% Co-operative Bank of South Sudan 128,461 (71,346) 199,807 280.1% Co-opTrust Investment Services Ltd 75,509 51,145 24,365 47.6% Co-op Bancassu
Slide 67: Key Ratios
Group Financial Results Q1 2024 Key Ratios Return on Average Assets Return on Average Equity Earnings per share 4.0% 22.7% 4.5 3.9% 22.0% 4.2 Q12023 Q12024 Q12023 Q12024 Q12023 Q12024 67
Slide 68: Key Ratios
Group Financial Results Q1 2024 Key Ratios Average Return of Interest NIM on Loans NIM on Interest earning Assets Earning Assets 7.5% 7.2% 13.1% 7.7% 7.6% 11.5% Q12023 Q12024 Q12023 Q12024 Q12023 Q12024 68
Slide 69: Key Ratios
Group Financial Results Q1 2024 Key Ratios CIR - Group CIR - Bank 54.9% 53.7% 52.5% 52.8% 46.3% 44.1% 44.3% 43.4% Q12023 Q12024 Q12023 Q12024 With provision Without provision With provision Without provision 69
Slide 70: Key Ratios
Group Financial Results Q1 2024 Key Ratios Non-Funded to Total Operating Cost of Customer deposits Total Cost of funds Income 39.7% 5.7% 5.9% 37.7% 3.8% 4.0% Q12023 Q12024 Q12023 Q12024 Q12023 Q12024 70
Slide 71: Thank You
T H A N K YO U Ge) CO-OPERATIVE BANK
Co-operative Bank of Kenya — Q1 2024 Earnings Presentation on 6ix