Equity Group Holdings Limited · NSEKE:EQTY
Equity — Shareholder Meeting (June 2021)
41 slides from Equity's shareholder meeting presentation, June 2021
Slide 1: EGH 17th Annual General Meeting Presentation
YOUR HEADLINE W I LthL SIT H E R E EGH 17 Annual General Meeting Presentation 1
Slide 2: The Great Multi Crises - COVID-19
The Great Multi Crises - COVID-19 Global Health crisis Humanitarian and Economic crisis • Cases reported as of 30 April 2021 Y O U R H E A D IMF L I- N E Approximately 107 million people will fall below the poverty line by end of 2021 due to Covid-19 Global Africa W I L L SIT H E R E 151M 3.2M 4.6M
Slide 3: COVID-19 Risk Exposure to the Group
COVID-19 Risk Exposure to the Group Quality of YOUR HEADLINE •W Leading I L L to SITprovisions H E R Eand write offs Asset Capital • Leading to licence risk of non- Erosion compliance Liquidity • Disrupted cash flows Strain • Resource allocation Brand • Inability to keep the promise- purpose Reputat
Slide 4: Management Strategy in Responding to COVID-19 Risk: Defensive
Management Strategy in Responding to COVID-19 Risk • Strengthened capital buffers - Growing retained earnings by Yhalting O 17B U R H dividendE A D L pay-out I KshN E 20B/tier 2 capital raising Ksh W I L L SIT H E R E • Strengthened liquidity position by raising long term funding and growing deposit
Slide 5: Management Strategy in Responding to COVID-19 Risk: Offensive
Management Strategy in Responding to COVID-19 Risk • Capitalising on human behavioural changes, to reposition YtheObusiness U R Hmodel E AofDadopting L I N Edigital channels: ▪ This transforms the bank from a place you visit to what W I L L SIT H E R E you do on devices, reducing in-branch transacti
Slide 6: COVID-19 Regulators and Partners response
COVID-19 Regulators and Partners response • Encouraged financial institutions to accommodate loan restructuring for their clients • YPromotion O U Rof theHuseEofAe-payments D L I Nto Ereduce risk of contaminated bank Key government and banks’ regulator W I L L SIT H E R E notes interventions across
Slide 7: Equity Social Investments Complements Government Efforts against COVID-19
Equity Social Investments Complements Government Efforts against COVID-19 Pandemic Kes 4.4 billion to complement Government’s health and social responses as well as support our customers YOUR HEADLINE W I L L SIT H E R E Health Response Social Response Loan restructuring Capital buffers Risk managem
Slide 8: Impact Investment: Shared Prosperity Business Model and its Social Impact
Impact Investment Shared Prosperity Business Model and its Social Impact 26,304 30,000 2019 Wings to Fly Graduates 2M 26,304 25,000 • 96% secondary school completion 20,000 15,000 Scholarships T 12,488 16,168 15,168 14,168 YOUR HEADLINE • 82% attained university entry grades Farmers impacted 10,572
Slide 9: Governance and Organizational Structure
Governance and Organizational Structure CBK CMA SHAREHOLDERS NSE RATING AGENCY EQUITY GROUP HOLDING PLC Subsidiary Boards Group Board YOUR HEADLINE Subsidiary Boards W I L L SIT H E R E Board Group Board Board Committees Committees Board Committees Structured CEO’s OFFICE Entity CEO Capital Allocati
Slide 10: Breadth and Depth of the Management Team
Governance and Organizational Structure Breadth and Depth of the Management Team Y O U R EGH H Strategy EADLINE W I L L SIT H E R E Alignment of strategy and execution reflected by close interaction between the CEO’s office and Corporate Office Breadth and diversification reflected in Group’s corpor
Slide 11: Geographical Expansion and Business Diversification
Geographical Expansion and Business Diversification YOUR HEADLINE W I L L SIT H E R E • Present in 6 countries and a commercial representative office in Ethiopia • We are a Top 2 bank in our two largest markets and in the Top 5 in three other markets • Population of ~385 million • Nominal GDP of ~US
Slide 12: Geographical and Business Diversification: Ratios - Banking Subsidiaries
Geographical and Business Diversification Ratios - Banking Subsidiaries RoAE RoAA Subsidiary EBKL FY 2019 28.7% Y O U17.9% R H E AEBKL FY 2020 DLINE Subsidiary FY 2019 4.0% FY 2020 2.4% EBUL 19.0% W 22.0% I L L SIT EBUL HERE 2.6% 3.1% EBRL 24.9% 22.0% EBRL 3.6% 3.4% EBTL -13.1% -7.9% EBTL -1.3% -1.1
Slide 13: Regional subsidiaries are high-growth assets
Geographical Expansion and Business Diversification Regional subsidiaries are high-growth assets, with UG and RW becoming high-return subsidiaries as well Equity Kenya return history INVESTMENT PHASE HIGH RETURN PHASE (ROA reaches 4%) Equity Uganda return history 4.0% 20.0% 13% 11% YOUR HEADLINE 2.0
Slide 14: Subsidiaries achieving high returns in shorter periods
Geographical Expansion and Business Diversification Subsidiaries achieving high returns in shorter periods Years to achieve high return (ROA above 4%) 6.0% YOUR HEADLINE 4.0% W I L L SIT H E R E 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Y
Slide 15: Productivity gains from improving access to credit and infrastructure
Geographical Expansion and Business Diversification Productivity gains coming from improving access to credit and infrastructure Low credit penetration highlights significant Improving access to infrastructure will support productivity gains in funding value chains productivity gains YOUR HEADLINE 1
Slide 16: Regional trade and growing connectivity to global trade
Geographical Expansion YOUR HEADLINE GOESand Business Diversification HERE Regional trade and growing connectivity to global trade underpinned by expanding YOUR LONGER SUBHEAD GOES HERE trade corridors East and Central Africa increasing infrastructure Growing linkages to global trade and commerce co
Slide 17: Equity Group regional presence to drive cross-border trade
Geographical Expansion YOUR HEADLINE and Business Diversification GOES HERE Equity Group YOUR LONGER regional SUBHEAD presence to drive cross-border trade and support informal traders GOES HERE NORTHERN CORRIDOR YOUR HEADLINE Gateway through Kenya to landlocked countries of Uganda, Rwanda, Burundi,
Slide 18: DRC significant resource endowment
Geographical Expansion and Business Diversification DRC significant resource endowment • DRC has the largest reserves of Coltan/tantalite (estimated at 60-80% of global reserves). Coltan is used in YOUR HEADLINE many electronic devices including mobile phones • DRC also has huge copper and cobaltW I
Slide 19: Landmark Oil Pipeline deal signed by Uganda and Tanzania
Geographical Expansion and Business Diversification Landmark Oil Pipeline deal signed by Uganda and Tanzania YOUR HEADLINE • Tripartite East African Crude Oil Pipeline project agreement (EACOP) signed off on 11 W I L L SIT H E R E April 2021 between Uganda, Tanzania and large oil companies • The dea
Slide 20: Promising Tanzania Operating Environment
Geographical Expansion and Business Diversification Promising Tanzania Operating Environment • The newly sworn in Tanzania president, Samia YOUR HEADLINE Suluhu Hassan’s, visit to Kenya in early May eased bilateral relations the two trade partners. W I L L SIT H E R E The two countries agreed to eli
Slide 21: Innovation and Digitization: Transaction numbers
Innovation and Digitization Transformation from a place you go to; to something you do. Digitized Banking - Moving from fixed cost to variable cost Transaction numbers in millions YOUR HEADLINE 874.2 880 870 Transactions in millions W I L L SIT H E R E Digital banking (Eazzy banking suite, 710 705.4
Slide 22: Innovation and Digitization: Transaction volumes
Innovation and Digitization Transformation from a place you go to; to something you do. Digitized Banking - Moving from fixed cost to variable cost 3,100 Volumes in Kes Billions Volumes in Billions YOUR HEADLINE 3,050.6 Digital banking 2,700 W I L L SIT H E R E 2,713.9 (Eazzy banking suite, Agency a
Slide 23: Migrating from Fixed to Variable Cost Delivery Infrastructure
Innovation and Digitization Migrating from Fixed to Variable Cost Delivery Infrastructure Variable cost channels Fixed cost channels +54% Transaction numbers in millions +2% 267.7 274.0 495.9 YOUR HEADLINE -13% 321.5 +78% * W I L L SIT H E R E +21% +97% +56% 87.1 75.7 -17% -23% -26% 27.0 24.0 20.8 1
Slide 24: Fintech Innovations in Digital Payments
Fintech Innovations in Digital Payments Steady adoption of Eazzy banking solutions Quarterly No of Transactions (Millions) Cumulative No. of Transactions (Millions) YOUR HEADLINE 199.8 242.2 779.2 595.1 +31% 143.0 154.6 161.1 W I L L SIT H E R E 154.8 182.5 136.4 FY 2019 FY 2020 Q1 2019 Q2 2019 Q3 2
Slide 25: Fintech Innovations in Diaspora Remittances
Fintech Innovations in Diaspora Remittances +104% YOUR HEADLINE 279.4 W I L L SIT H E R E 136.9 1.5 +76% 0.9 FY 2019 FY 2020 Transaction Volumes in Kes Bn Diaspora Commissions in Kes Bn 25
Slide 26: Fintech Innovations in Fx Trading
Fintech Innovations in Fx Trading Kes Billion Y O•UThe R Hclient E AFx volumes DLINE diaspora flows account for 32% of all W I L L SIT H E R E +51% Fx Trading Income 863.2 570.5 +77% 583.8 (68%) 6.2 Other FX 433.6 Flows (76%) 3.5 279.4 (32%) Diaspora 136.9 Flows (24%) FY 2019 FY 2020 FY 2019 FY 2020
Slide 27: Asset Quality
Asset Quality Split by market segmentation Split by economic sectors Building & Agriculture 100% 3% 22% 100% 6% YOUR HEADLINE Mining & Quarrying construction Manufacturing 3% Personal Financial services 3% Consumer Micro 3% 21% W I L L SIT H E R E 4% 4% 26% household 3% Tourism & Hospitality 5% Ener
Slide 28: Asset Quality, Distribution and Risk Mitigation: NPLs
Asset Quality, Distribution and Risk Mitigation NPL’s –Industry vs EGH Plc as at Q1 2021 NPL per sector as at Q1 2021 Industry-Kenya Group YOUR HEADLINE 13.6% 14.1% 14.6% 13.1% 12.8% 12.7% 12.6% 12.0% 12.7% 10.9% W I L L SIT H E R E 10.7% 10.4% 11.0% 11.3% 10.1% 15.5% 11.3% 9.0% 9.0% 9.1% 8.1% 8.6%
Slide 29: Prudent approach to credit risk management
Asset Quality, Distribution and Risk Mitigation Prudent approach to credit risk management 53.5 Gross loans staging as at Q1 2021 Coverage and provisions as at Q1 2021 Kes Billion YOUR HEADLINE 60.6 Stage 3 W I L L SITProvisions HERE *7.1 61.2 Credit Risk Guarantees (11%) Stage 2 34.9 69.7 (13%) 99.
Slide 30: Long-term and Prudent approach driven by deep knowledge of customers
Asset Quality, Distribution and Risk Mitigation Long-term and Prudent approach driven by deep knowledge and understanding of the Bank’s customers As part of the Group’s commitment to support lives and livelihoods and keeping the lights of the economy on, the Group accommodated Kes 171 billion of loa
Slide 31: Proactive Prudent Management of Covid-19 accommodated loans
Asset Quality, Distribution and Risk Mitigation – Proactive Prudent Management Covid-19 accommodated loans (Kes 171 Bn); Kes 59B resumed repayment, additional Kes 66B expected to resume in 6 Months Moratorium expiry intensifies within the next 6 Months Performing Y O UGroup R H E A D L I N E30 Bn 11
Slide 32: Balance Sheet
Balance Sheet Kes Billion FY 2019 FY 2020 Growth Assets YOUR HEADLINE Cash & Cash Equivalents W I L L SIT H86.4E R E 247.1 186% Government Securities 172.2 217.4 26% Net Loans 366.4 477.8 30% Other Assets 48.7 72.8 50% Total Assets 673.7 1,015.1 51% Liabilities & Capital Deposits 482.8 740.8 53% Bor
Slide 33: Balance Sheet Efficiency, Optimization and Agility
Balance Sheet Efficiency, Optimization and Agility Kes Billion Funding Structure and Leverage Asset Mix Group Group YOUR HEADLINE +54% 1,066.4 YoY Growth +54% 1,066.4 YoY Growth W I L L SIT H E R E 89.6 45.8 (4%) 105% 78.8 (7%) 61% Deposits 63% Net Loans (8%) Gross Loans 258.9 +58% 140.4 21% (24%) 3
Slide 34: Balance Sheet Resilience and Agility
Balance Sheet Resilience and Agility Kes Billion Funding Split Asset Split Group Group YOUR HEADLINE 1,015.1 38.6 YoY Growth 1,015.1 YoY Growth W I L L SIT H E R E 97.1 (10%) (4%) 72% Net Loans 72.8 (7%) 50% Deposits 71% Gross Loans 217.4 138.6 (21%) +53% (14%) 24% 26% Other 673.7 673.7 740.8 Liabil
Slide 35: Income Statement
Income Statement Kes Billion FY 2019 FY 2020 Growth Interest Income Y O U R H E A59.7 D L I N E 73.8 24% Interest Expense 14.7 18.7 26% Net Interest Income W I L L SIT H 45.0E R E 55.1 23% Non-Funded Income 29.8 37.8 27% Total Income 74.8 92.9 24% *Loan Loss Provision 4.3 25.9 496% Staff Costs 12.8
Slide 36: Financial Ratios
Financial Ratios EBKL EBKL Group Group FY 2019 FY 2020 FY 2019 FY 2020 Profitability Interest Yield from Loans & Advances Y O U R H 11.6% E A D L I11.6% NE 12.6% 12.4% Interest Yield from Gov’t Securities Yield from Earning Assets W I L L SIT 10.2% 11.0% H E R E 10.9% 10.3% 10.1% 11.2% 10.7% 10.0% C
Slide 37: RoAE and RoAA Trend
RoAE and RoAA Trend RoAE 28.7% Y O U R H E21.8% ADLINE FY 2019 FY 2020 W17.9% I L L SIT H E15.3% RE EBKL Group RoAA 4.0% 3.6% FY 2019 2.4% 2.3% FY 2020 EBKL Group 37
Slide 38: Revised 2021 Outlook – Group
Revised 2021 Outlook – Group Revised 2021 2021 Outlook Q1 2021 Actual Outlook Loan Growth YOUR HEADLINE 25% - 30% 20% - 25% 29% Deposit Growth W I L L SIT H E R E 20% - 25% 20% - 25% 58% Net Interest Margin 7.0% - 8.0% 7.0% - 8.0% 6.4% Non Funded Income Mix 38% - 43% 40% - 43% 42% Cost to Income Rat
Slide 39: Performance Trend Analysis
Performance Trend Analysis Value in KES YOU 1991 R H2001 1996 E A D2006 L I N E2011 2016 2020 Funding 29m W302m I L L SIT 1.6b H16.3b E R E 159b 337b 740.8b Loans 8.6m 169m 0.8b 10.9b 113.8b 266b 477.8b Total Assets 24m 213m 1.9b 20.0b 196.5b 474b 1015.1b Profit Before Tax (4)m 10.6m 55m 1.1b 12.8b
Slide 40: Wealth Creation for Shareholders
Wealth Creation for Shareholders Share Change # of Shares Price (KSH) Value Value Change YOUR HEADLINE 2000: Before split 1 W I L L 20.00 SIT H E R E 20 0 2000: 1:3 Split 4 50.00 200 1,000% 2004: Bonus 1:5 20 50.00 1,000 5,000% 2007: Bonus 1:3 60 84.50 5,070 25,350% 2009: Split 1:10 600 12.50 7,500
Slide 41: Thank You
YOUR HEADLINE W I L L SIT H E R E THANK YOU Dr James Mwangi, CBS Group Managing Director & CEO KeEquityBank @KeEquityBank Email: info@equitybank.co.ke Website: www.equitybankgroup.com 41
Equity Group Holdings — Shareholder Meeting (June 2021) on 6ix