Bk Group Plc · NSEKE:BKG
Bk — Bank of Kigali — 9M 2015 Earnings Presentation
44 slides from Bk's earnings presentation, September 2015
Slide 1: Bank of Kigali Investor Presentation September 2015
Bank of Kigali Investor Presentation September 2015 Page 1
Slide 2: Disclaimer
Disclaimer This presentation contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial performance. While these forward-lo
Slide 3: Key Executives
Key Executives Marc Holtzman Chairman of the Board Email: mholtzman@bk.rw Mobile: +1 970 948 3353 James Gatera Chief Executive Officer Email: jgatera@bk.rw Te l : + 2 5 0 2 5 2 5 9 3 1 2 1 Lawson Naibo Chief Operating Officer Email: lnaibo@bk.rw Mobile: +250 788 302 076 Nathalie Mpaka Chief Finance
Slide 4: Agenda
Agenda 1. Key Investment Highlights 2. Country Overview Information 3. Banking Sector Overview 4. Bank Overview 5. Corporate Governance 6. Business Overview 7. Review of Financial Performance 9M 2015 & YE 2014 8. Strategic Outlook 9. Contact Information Page 4
Slide 5: Key Investment Highlights
Key Investment Highlights 1. Best Bank in Rwanda 2013 Politically stable country with sound governance & 2015 Very attractive demographic profile: population of 12.4 million with 83% below the age of 40 Sound Macro Robust economic growth averaging 8% pa in the last 5 years, aiming at reaching 11.5%
Slide 6: Country Overview Information
CO U N T RY OV E RV I E W I N FO R M AT I O N Page 6
Slide 7: Rwanda – Country Profile
Rwanda – Country Profile National Facts Business Environment Area 26,338 sq km Population 12.4 million Ranked Third after Mauritius and South Africa as the best destination to Official Languages Kinyarwanda, French, English do business in Africa in the World Bank 2015 Doing Business Report. Capital
Slide 8: Sound Macro Fundamentals
Sound Macro Fundamentals GDP per Capita continues to grow Population Pyramid for Rwanda Healthy GDP growth with moderating inflation US $ Bn Nominal GDP(US $ Bn) Inflation (%) 9 8.3% 8.4 9.0% 7.8 8 7.1 7.2 8.0% 7 6.4 7.0% 6 5.6 6.0% 5 5.0% 3.9% 4 4.0% 54% of the population is under 19 years. 3 3.7%
Slide 9: Macroeconomic Indicators
Macroeconomic Indicators GDP Breakdown By Economic Activity Q1 2015 Trade Structure Taxes less Rwanda’s exports are dominated by coffee, tea and minerals (tin, Subsidies on coltan and wolfram). products , 5% The country remains a net importer. Major imports include fuel and oils, intermediary goods
Slide 10: Review of the Macro Economic Environment
Review of the Macro Economic Environment Macro Economic Review Inflationary Environment September 2015 Real GDP growth increased from 4.7% in 2013 to 7.0% in 2014, exceeding the programmed 6.0% and is projected to rise to 7.5% in both 2015 and 2016. The Services sector contributed 33% of GDP while t
Slide 11: Banking Sector Overview
BA N K I N G S EC TO R OV E RV I E W Page 11
Slide 12: Significant Banking Sector Potential
Significant Banking Sector Potential 2014 Banking Assets/GDP 2014 Banking Assets Per Capita5 Large Unbanked Population (US$) Economy is moving away from being cash-based through the various financial inclusion initiatives being undertaken by financial institutions including the launch of agency bank
Slide 13: Banking Sector Overview
Banking Sector Overview Rwanda Banking System Total Assets Interest Rate Analysis USD Mln +8.2% Key Repo Rate T-Bills Rate Deposit Rate Lending Rate 3,000 2,804 2,800 2,592 20.00% 2,600 2,400 2,252 15.00% 2,200 1,976 2,000 10.00% 1,800 1,474 1,600 5.00% 1,400 1,226 1,200 1,011 0.00% 1,000 September
Slide 14: Timeline of Foreign Investment In The Rwandan Banking Sector
Timeline of Foreign Investment In The Rwandan Banking Sector 80% stake in BCR I &M Bank acquires 40% stake in Cogebanque 80% stake in BCR 2004 2007 2008 2009 2010 2011 2012 2014 2015 30% 70% 90% stake in stake in stake in Agaseke Bank BPR FINA Bank 2010 2011 2012 2013 2014 9M 2015 Bank of Kigali Mar
Slide 15: Competitive Landscape
Competitive Landscape Market Share Dynamics Bank of Kigali Growth vs. Commercial Banks’ Growth, CAGR YE 2010 – 9M 2015 Source : 9M 2015 published financials statements for Commercial Banks Selected Indicators 9M 2015 Concentration of Banking Sector Assets Q3 2015 25.0% 23.2% Banking Sector Bank of K
Slide 16: Strong Market Leadership – 9M 2015
Strong Market Leadership – 9M 2015 Rank Total Assets Net Loans Customer Deposits Equity 1 33.1% 33.3% 31.1% 41.9% 2 10.8% 12.0% 10.0% 12.8% 10.5% 11.2% 9.0% 3 10.6% 10.4% 10.4% 7.7% 4 10.2% 10.1% 9.8% 10.4% 7.2% 5 9.7% 9.5% 9.0% 6.3% 6 7 6.0% 6.5% 5.7% 5.8% 8 4.7% 4.7% 5.3% 4.8% 9 4.0% 4.5% 4.3% 2.7
Slide 17: Bank Overview
BANK OF KIGALI ' B AFRICAN BANKER Financially transforming lives
Slide 18: Background and History
Background and History Established in 1966 Current Supervisory Board US$62.5 mln Initial Signed lines of credit as a JV with management enhanced & Public Offering of with: Belgolaise S.A internationalized 45% of its shares • PTA Bank- US$ 10 mln team and listing on the • OFID- US$ 10 mln assembled R
Slide 19: A Snapshot of Bank of Kigali
A Snapshot of Bank of Kigali CAGR 2010- Key Facts US$ million 2010 2011 2012 2013 2014 9M 2015 9M 2015 FRw/USD Period End 594.4 604.4 630.6 670.2 686.1 701.5 The leading bank in Rwanda (33.1 % market share by Total Assets as at rate Total Assets 332.6 476.3 511.9 630.2 703.4 735.9 21.5% 30 September
Slide 20: Corporate Governance
CO R P O R AT E G OV E R N A N C E Page 20
Slide 21: Shareholding Structure & Corporate Governance
S h a re h o l d i n g S t r u c t u re & C o r p o rate G o ve r n a n c e Shareholding Structure as at 30 September 2015 Corporate Governance Employees and The Board has Seven independent non-executive directors Directors, 1.5% (including two non-resident directors with extensive expertise in Inte
Slide 22: Share Trading Performance
S h a re Tra d i n g Pe r fo r m a n c e 30 September 2015 Analyst Coverage Current price, FRw 280 Market Cap, US$ mln 258 Recommendation: HOLD Free float 45% Target Price: FRw 325 Free float in US$ mln 127.4 Last coverage report: 10 March 2015 Average daily traded volume in US$ mln 0.38 Common shar
Slide 23: Custodial Service Chain
Custodial Service Chain State Street Bank BNP Paribus Pictet CIE (Africa) Brown Brothers Chase Manhattan Harriman Bank Mutual Northern Trust Citibank Company HSBC Bank PLC Client Safe Custody Credit Suisse RBC Investor Services Kenya Standard Trust CFC Stanbic Commercial Chartered Standard Chartered
Slide 24: Business Overview
BANK OF KIGALI ' B AFRICAN BANKER Financially transforming lives
Slide 25: Overview of the Loan Book
Overview of the Loan Book Gross Loan Portfolio Loan Book Segmentation FRw Bn Corporate Loans Retail Loans 9M 2015 YE 2014 350.0 +22.9% 303.1 300.0 61.3 250.0 246.7 211.9 Retail Loans 194.0 59.0 Retail Loans 200.0 20.2% 65.5 23.9% 61.5 150.0 130.7 105.5 32.5 241.8 100.0 20.7 187.7 Corporate Corporate
Slide 26: Overview of Deposit Structure
Overview of Deposit Structure Total Deposits Growth Customer Deposit Segmentation Corporate Deposits Retail Deposits Bank's and OFIs Deposits 9M 2015 YE 2014 FRw Bn 400.0 +10.3% 374.8 350.0 339.8 105.7 297.8 80.5 Bank's and Bank's and 300.0 OFIs Deposits OFIs Deposits 250.0 243.1 61.3 Corporate 31.3
Slide 27: Corporate Banking
Corporate Banking Description Key Segments at 9M 2015 NBAs Loans Clients include corporate, SMEs and NBAs* 3.3% Interest rates are in the 16.0% - 18.5% range. Key products: NBAs Deposits 20.3% CAPEX loans: long-term loans for investment or SMEs expansion of the business Loans 26.5% Corporate Commerc
Slide 28: Executing The Retail Strategy
Executing The Retail Strategy Page 28
Slide 29: Retail Banking
Retail Banking Description Retail Lending Retail Deposits The Bank’s retail business is primarily focused on mortgages and Other 2.1% consumer loans with notable share of salary backed overdrafts Term Key products: Deposits Savings 11.2% Mortgage loan: up to 15 years with typical customer Deposits 7
Slide 30: Growing Our Distribution Network
Growing Our Distribution Network Ubiquitous footprint Agency Banking 90 Branch Expansion 85 Agency Banking platform BK Yacu began 80 80 74 75 70 operating in Nov 2012. 70 65 60 59 Expanded the agency banking network to 1,006 50 operational agents as at 30 September 2015 40 30 Agents are able to perf
Slide 31: Expanding Our Self Service Products
Expanding Our Self Service Products Growing our Card Business Increasing our Mobile Product Offering Key Achievements Enhancing our mobile banking service Launch of Visa Classic and Visa Gold Credit Our mobile banking service Mobiserve allows customers Cards to perform the following transactions: Ov
Slide 32: Review of Financial Performance
REVIEW OF FINANCIAL P E R FO R M A N C E Page 32
Slide 33: Balance Sheet Highlights
Balance Sheet Highlights Total Assets Net Loans and Advances FRw Bn FRw Bn 600.0 +8.8% 350.0 525.1 +26.4% 295.0 500.0 482.6 300.0 422.4 233.4 250.0 400.0 199.0 322.8 200.0 185.1 300.0 287.9 150.0 123.1 200.0 100.0 100.0 50.0 - - YE 2011 YE 2012 YE 2013 YE 2014 9M 2015 YE 2011 YE 2012 YE 2013 YE 2014
Slide 34: Maturity Profile
Maturity Profile Loans and Advances to Clients Customer Balances and Deposits Page 34
Slide 35: Asset Quality
Asset Quality Cost of Risk**, % Improving Coverage Ratio % FRw Bn 5.0% NPLs Coverage ratio % 4.5% 4.5% 22.0 100.0% 4.0% 3.8% 20.0 87.4% 90.0% 3.5% 3.3% 18.0 81.8% 80.0% 69.1% 70.3% 3.0% 2.6% 16.0 70.0% 2.5% 2.5% 2.2% 14.0 60.0% 2.0% 1.9% 12.0 40.4% 50.0% 1.5% 10.0 45.8% 40.0% 1.0% 8.0 6.0 30.0% 0.5%
Slide 36: Asset Quality
Asset Quality Cost of Risk by Segment NPL by Segment retail Corporate NPL 8.5% retail Corporate 9.0% 16.0% 8.0% 14.0% 14.0% 7.0% 6.0% 12.0% 10.2% 10.6% 4.9% 5.0% 4.4% 10.0% 4.0% 8.0% 2.5% 2.8% 5.4% 3.0% 6.0% 4.4% 2.0% 3.9% 2.0% 4.0% 1.0% 2.0% 0.0% 0.0% YE 2013 YE 2014 9M 2015 YE 2013 YE 2014 9M 2015
Slide 37: Funding
Funding Funding Structure, % Significant Potential For Growth In Higher Yielding Assets 9M 2015 YE 2014 % Net Loans/Customer Deposits Net Loans/Assets 100.0% 9.2% 11.1% 90.0% 87.4% 82.3% 80.0% 74.7% 68.0% 71.0% 72.1% 70.0% 18.3% 18.5% 60.0% 57.3% 56.2% 51.3% 48.4% 50.0% 47.1% 42.8% 3.2% 3.2% 67.2% 4
Slide 38: Income Statement Highlights
Income Statement Highlights Total Operating Income Total Recurring Operating Costs Net Profit Composition of Total Operating Income Composition of Total Operating Expenses YE 2014 9M 2015 YE 2014 Page 38
Slide 39: Consistent Profitable Growth
Consistent Profitable Growth Sustainable Net Interest Margin % Attractive Cost/Income ratio 12.0% 11.1% 10.2% 60.0% 52.8% 9.6% 9.9% 48.4% 47.9% 50.0% 47.5% 48.4% 45.7% 9.0% 8.3% 8.4% 40.0% 6.0% 30.0% 20.0% 3.0% 10.0% 0.0% 0.0% 2010 2011 2012 2013 2014 9M 2015 2010 2011 2012 2013 2014 9M 2015 Stable
Slide 40: Regional Landscape
Regional Landscape East African Banks - Cost of Risk Nigerian Banks - Cost of Risk East African Banks - NPLs & Coverage ratio Nigerian Banks - NPLs & Coverage ratio East African Banks - ROAE Nigerian Banks - ROAE Source: Bank of Kigali Audited 2010-2014 IFRS Statements and Q1 2015 published financia
Slide 41: Strategic Outlook
BANK OF KIGALI ' B AFRICAN BANKER Financially transforming lives
Slide 42: Strategic Outlook
Strategic Outlook Objectives Strategies Action Outcomes Build a ubiquitous branch footprint Expand the branch network to 75+ branches by YE 2015 Benefit from first-mover advantage throughout the country outside the capital city, making it more difficult for the competitors to follow suit Increase th
Slide 43: Management Targets
Management Targets Return on Average Equity Branch Expansion Other Selected Management 2015 targets Net Income CAGR- 5 years >22% 25.0% 22.9% 23.2% 120 Total Assets CAGR- 5 years >20% 20.0% 100 Reduce NPL ratio to < 5% 80 74 75 Increase number of retail current accounts by 15.0% 100,000. 60 10.0% 40
Slide 44: Contact Information
Contact Information For further information please contact: Marc Holtzman James Gatera Chairman of the Board Chief Executive Officer Email: mholtzman@bk.rw Email: jgatera@bk.rw Mobile: +1 970 948 3353 Mobile: +250 788 143 000 Lawson Naibo Nathalie Mpaka Chief Operating Officer Chief Finance Officer