Slide 1: FY 2023 Investor Briefing
FY 2023 Investor Briefing March 2024 ncbagroup.com Go for it
Slide 2: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE FY 2023 < 2024 GUIDANCE <
Slide 3: FY 2023 Key Messages
FY 2023 KEY MESSAGES 1 2 3 Growth YoY despite tightening Significant momentum in our We have delivered on our macro-economic conditions underlying financial drivers 2020-2024 strategic ambitions • FY 2023 PAT KES 21.5B • Bigger balance sheet (KES 579B • A bigger branch network (109 (+56% YoY) deposi
Slide 4: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE FY 2023 < 2024 GUIDANCE <
Slide 5: Our Group Structure
WHO WE ARE Our Group Structure NCBA BANK KENYA PLC NCBA BANK RWANDA PLC BANKING NCBA BANK UGANDA LTD SUBSIDIARIES NCBA BANK TANZANIA LTD NCBA GROUP PLC DIGITAL BUSINESS NCBA LEASING LLP NON BANKING SUBSIDIARIES NCBA INVESTMENT BANK LTD NCBA BANCASSURANCE INTERMEDIARY LTD
Slide 6: Welcome to NCBA
WHO WE ARE Welcome to the bank that says go for it, Welcome to the bank that banks on your ambition, Welcome to NCBA Our Purpose To be the Financial Partner that • At NCBA, our customers are at the heart Inspires your Growth of everything we do; • We are driven by our promise to offer Our Values exc
Slide 7: Our Regional Footprint
WHO WE ARE Our Regional Footprint Banking Business UGANDA KES KES KES Branches 4 Customers 10.4M 100Bn 579Bn 370Bn +3,000 Staff Capital Deposits Lending ~USD 637M ~USD 4B ~USD 2B KES 930Bn Digital Disbursements IVORY COAST KENYA 109 Branches ~USD 6B Branches 92 Purely Digital Customers 30.8M Custome
Slide 8: Awards & Accolades
WHO WE ARE Awards & Accolades Brand and Customer ESG Business Units Recognition Experience • Top 25, Most Influential CEOs • Best Bank Corporate • Winner, Private Sector Legal Impacting Business, John Governance - Institute of Department of the Year - Gachora – Business Monthly Corporate Governance
Slide 9: Led by an exceptional team
WHO WE ARE We are led by an exceptional team which has demonstrated resilience in managing our business
Slide 10: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE FY 2023 < 2024 GUIDANCE <
Slide 11: Our Operating Environment: global growth forecast
OUR OPERATING ENVIRONMENT Global economic growth is forecasted at 3.1% in 2024 reflecting uncertainty in geopolitics, China’s growth trajectory and US economic resilience 1 Accelerating global growth 2 Receding inflationary 3 End of monetary tightening expectations expectations cycle IMF World Econo
Slide 12: Our Operating Environment: regional markets
4.8% 5.9% KE 5.6% 5.7% 2022 6.8% 7.2% RW 6.2% 6.6% Q3-2023 6.4% 4.1% UG 2023F 5.8% 4.7% OUR OPERATING ENVIRONMENT 4.4% 2024F 5.3% TZ 1 Divergent growth forecasts 5.3% 5.8% 2 Feb-22 Apr-22 Jun-22 Aug-22 KE Oct-22 Dec-22 UG Feb-23 CBR Apr-23 TZ Jun-23 Aug-23 Oct-23 RW Dec-23 Policy rate hikes in Kenya
Slide 13: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE FY 2023 < 2024 GUIDANCE <
Slide 14: Our strategy continues to deliver against targets
OUR STRATEGY Our strategy continues to deliver with all our metrics in line with targets, with our Group ROAE registering at 24.1% 2020 2023 Become a Distinguished Brand 21.5 Known For Customer Experience 4.6 PAT (KES B) Scale Retail 6.6% 24.1% Banking: Expand Distribution ROAE Deepen Leadership in
Slide 15: Branch footprint expansion grew retail customer base
OUR STRATEGY Our focus on expanding our branch footprint has grown our retail banking customer base and delivered tangible balance sheet growth …the network effects have made Increased our footprint in Kenya & …Our 25 new branches have our retail business a more acquired more customers… collectively
Slide 16: #2 Corporate Bank in East Africa
OUR STRATEGY We are the #2 Corporate Bank in East Africa with a substantial deposit base of KES 206B (20% YoY Growth) and growing cross border relationships A large and growing deposit base With impact across the East African Region Corporate Lending (KES B) Corporate Deposits (KES'B) 246 243 241 Cr
Slide 17: Leadership in asset finance
OUR STRATEGY We have maintained our leadership in asset finance through innovating relentlessly and building strategic partnerships Asset Finance Ecosystem Diverse Asset Finance portfolio Controlled Risks No. of Schemes Market Share Income (KES'B) Cost of Risk Avg. Disbursement (KES'B) 4.6% 36% 33%
Slide 18: Core bank digital investments
OUR STRATEGY Our core bank digital investments have improved process efficiencies, reduced cost and enhanced customer experience Enhance our Cyber Security Deliver an Improved Customer Modernize Our Infrastructure Protections Experience Investment ~ USD 18M Investment ~ USD 3M Investment ~ USD 10M •
Slide 19: KES 930Bn disbursed digitally in 2023
OUR STRATEGY Our investment in Digital Banking enabled us to disburse KES 930Bn digitally in 2023 (up 27% YoY), supporting our financial inclusion agenda and diversifying our customer base across Sub Saharan Africa Evolution of digital disbursements (KES B) Group Fuliza (KE) Mshwari (KE) Loop (KE) 1
Slide 20: LOOP Super App
OUR STRATEGY Leveraging on our heritage in digital payments, we launched our LOOP Super App, delivering unparalleled features for merchants and consumers backed by strong comparative unit economics 2022 2023 Market Leader Buyers Count 269,000 304,000 32,100,000 Merchants Count - 10,000 252,000 Payme
Slide 21: Sustainability agenda and Change The Story commitments
OUR STRATEGY We launched our Sustainability agenda and are on course to implement our ‘Change The Story’ Commitments Our Pillars Scaling Our Impact… 344K Cumulative trees Planted 1. Minimize Our Direct Impact On the Climate and Amplify 34% Waste recycled at HQs and pilot branches Our Tree Planti
Slide 22: USD 50M facility with Proparco
OUR STRATEGY We have signed a USD 50M facility with Proparco to mobilize funding towards sustainable financing Our 2030 Commitment 40% Green Projects We will support the Climate Transition by mobilizing KES 30Bn in 30% sustainable financing by Women Related Projects 2030 30% SME Projects
Slide 23: High-performance culture and employee satisfaction
OUR STRATEGY We have maintained a high-performance culture, with high levels of employee satisfaction, positioning us as an employee of choice Number of staff 3,022 3,252 2,392 2,635 We have grown our Promotions / staff compliment… 448 Appointments 2020 2021 2022 2023 Interns 61 Engaged by Staff Ret
Slide 24: Acquisition of AIG Kenya Insurance
OUR STRATEGY Our announced acquisition of AIG Kenya Insurance is on track and is underpinned by 4 strategic 01 02 03 04 Universal Business Scale Distribution Own Motor Ecosystem Digitize Insurance Model • Full service financial • >100 branches • #1 Asset Finance • #1 Digital micro group in 6 markets
Slide 25: Five key thematic areas for 2023
OUR 2023 STRATEGIC PRIORITIES We identified five key thematic areas of focus for the year 2023 Thematic Area Objective Balance Sheet • Enhance the value generated from our substantial balance Optimization sheet Customer Growth • Increase the number of customers we attract and retain across NCBA Grow
Slide 26: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE FY 2023 < 2024 GUIDANCE <
Slide 27: Group financial performance by subsidiary
NCBA GROUP FINANCIAL PERFORMANCE Our diversified business model continues to demonstrate growth and resilience, with strong contribution from our regional banking subsidiaries YoY Amount in KES Millions(PBT) Amount in KES Millions(PBT) Core Banking Subsidiaries Digital Banking Subsidiaries 2022 2023
Slide 28: Subsidiaries contribution to Group PBT
NCBA GROUP FINANCIAL PERFORMANCE Our focus on enhancing the contribution from our subsidiaries has demonstrated success with our subsidiaries contributing 15% from 2% in 2022 Contribution to Group PBT in FY 2022 Contribution to Group PBT in FY 2023 Regional Banking Regional Subsidiaries Banking (1%)
Slide 29: Banking subsidiaries performance
NCBA GROUP FINANCIAL PERFORMANCE All subsidiaries across our operating markets contributed positively to growth and returns REVENUE % CONTRIBUTION EFFICIENCY RETURNS TOTAL INCOME COST TO INCOME RATIO RETURN ON AVERAGE EQUITY KES 53Bn NCBAK 83% 43.3% ▲22.0% Banking Subsidiaries ▼(-1%) KES 3Bn NCBAU ▲
Slide 30: Strong fundamentals with positive CAGR
NCBA GROUP FINANCIAL PERFORMANCE Our Group continues to demonstrate strong fundamentals with positive CAGR over the strategy period Amounts in KES Bn Balance Sheet Income Statement Total Assets Customer Deposits Gross Loans Total Income PBT CAGR 11.5% CAGR 11.0% CAGR 22.9% CAGR 13.8% CAGR 30.3% 370
Slide 31: Deposit growth and CASA base
NCBA GROUP FINANCIAL PERFORMANCE Customer growth and retention efforts are driving deposit mobilization (15% up YoY), while balance sheet optimization efforts are growing our CASA base (25% up YoY) Amounts in KES Bn Despite the macro economic conditions our deposits We now have KES 282Bn in CASA Dep
Slide 32: Lending growth and NPL ratio
NCBA GROUP FINANCIAL PERFORMANCE Our customer growth agenda has seen us increase our lending substantially (20% up YoY) with well controlled credit risk outcomes NCBA Group Gross Loans accelerated in 2023 while NPL …NCBA Group credit risk outcomes continue to buck industry ratio edged down….. trends
Slide 33: 88% of credit portfolio performing
NCBA GROUP FINANCIAL PERFORMANCE 88% of our credit portfolio is performing and the YoY movement in NPL has been nominal Gross Loans and Advances Stage 1 Stage 2 Stage 3 Amounts in KESB 369 12% 308 KES 39Bn 286 286 7% 13% 14% 16% 10% KES 39Bn 18% 16% 81% 77% 68% 69% Net Accrued 2020 2021 2022 2023 20
Slide 34: Provisions and coverage
NCBA GROUP FINANCIAL PERFORMANCE We are adequately provisioned with sufficient coverage across our loan classification buckets Provisions Coverage Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 73.6% 60.9% 57.6% 55.2% 64% 78% 80% 76% 23.2% 32% 16.9% 14.7% 14% 10.7% 16% 11% 10% 0.8% 1.2% 1.0% 1.1% 6
Slide 35: Margin expansion and NII growth
NCBA GROUP FINANCIAL PERFORMANCE Our balance sheet optimization efforts have delivered healthy margin expansion and 13% growth in NII Optimization of our balance sheet has seen us deliver NIM uplift despite the pressure on cost of funding… … and subsequently 13% YoY NII growth Amounts in KES M Yield
Slide 36: FCY deposits and non-funded income
NCBA GROUP FINANCIAL PERFORMANCE Our franchise strengths have supported growth in our foreign currency deposits and transactional volume growth has shored up our NFI outcomes as FX margins moderated We continue growing our market leading FCY deposit ...and our transactional fee generation has booste
Slide 37: Opex growth and cost to income ratio
NCBA GROUP FINANCIAL PERFORMANCE Strategic investments and inflationary pressures have impacted our CIR; expect to abate as investments break even Amounts in KES M OPEX Increased by 17% in 2023... …putting pressure on our CIR Total Income OPEX +5% 63,680 60,935 +17% +17% 29,085 24,860 2022 2023 2022
Slide 38: Group capitalization across core markets
NCBA GROUP FINANCIAL PERFORMANCE The Group remains effectively capitalized across our core markets providing ample room to invest in growth TOTAL CAPITAL/RWA ACROSS OUR MARKETS Minimum Buffer Total Requirements Group 14.5% 3.5% 18.0% NCBAK 14.5% 3.0% 17.5% NCBAU 12.0% 20.5% 32.5% NCBAT 14.5% 6.3% 20
Slide 39: Return outcomes and cash returns to shareholders
NCBA GROUP FINANCIAL PERFORMANCE Our strategy is delivering the desired return outcomes for a Tier 1 Bank and we are delivering consistent cash returns to our >27,000 shareholders over the last 3 years We are delivering on post merger promises on ROE PAT Cash Dividends 24.1% 21,456 17.2% 13.6% 13,77
Slide 40: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE FY 2023 < 2024 GUIDANCE <
Slide 41: Key Messages
KEY MESSAGES 1 2 3 Growth YoY despite tightening Significant momentum in our We have delivered on our macro-economic conditions underlying financial drivers 2020-2024 strategic ambitions • FY 2023 PAT KES 21.5B • Bigger balance sheet (KES 579B • A bigger branch network (109 (+56% Y-o-Y) deposits, +1
Slide 42: What is guiding our view for 2024
KEY MESSAGES What is guiding our view for 2024 Tailwinds • Macro economic uplift; GDP growth, strengthening shilling, reduced inflationary expectations • Reversion to a normal yield curve • Increase pay-off from our investments; new businesses, branches, systems, brand and people Headwinds • Deposit
Slide 43: FY 2024 Guidance
FY 2024 GUIDANCE We expect a continued and strong underlying growth trajectory across the following metrics Metric FY24 Guidance Commentary • Create value for our shareholders and re-invest Return on Equity >22% internal capital generated to foster growth • Unlock more capital allocation to new unde
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