Bk Group Plc · NSEKE:BKG
Bk — Bank of Kigali — H1 2015 Earnings Presentation
45 slides from Bk's earnings presentation, 2015
Slide 1: Bank of Kigali Investor Presentation 1H 2015
Bank of Kigali Investor Presentation 1H 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 1H 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 Jun 2015 Rwanda economy grew by 7% in Q2 2015. The Services sector contributed 48% of GDP while the Agriculture sector contributed 31%. The Industry sector contributed 14% and 5% was attributed to adjustment for
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 Source: BNR Monetary Policy Statement 1H 2015 Recent Regulatory Reforms To Improve Access To Credit Banking Sector Review Enactment of Law on Mortgages, requiring the registration of mortgages The capital adequacy rati
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 30% 70% stake in stake in BPR FINA Bank 2010 2011 2012 2013 2014 1H 2015 Bank of Kigali Market Share by Total Assets 27.4%
Slide 15: Banking Sector Overview Cont’d
Banking Sector Overview Cont’d Case study: Rwanda– seven out of ten banks in Rwanda are owned by regional and Pan African banks and have lost market share to locally-run banks Market Share By Total Assets in 2008 Market Share By Total Assets in 2014 Market Share By Total Assets in 1H 2015 Five forei
Slide 16: Competitive Landscape
Competitive Landscape Market Share Dynamics Bank of Kigali Growth vs. Commercial Banks’ Growth, CAGR YE 2010 – 1H 2015 Source: BK Company Filings and published financials statements of Banks Selected Indicators 1H 2015 Concentration of Banking Sector Assets Q2 2015 Others, 24.6% Top 5 Banks , 75.4%
Slide 17: Strong Market Leadership – 1H 2015
Strong Market Leadership – 1H 2015 Rank Total Assets Net Loans Customer Deposits Equity 1 34.2% 33.1% 33.5% 41.0% 2 11.2% 13.0% 12.6% 10.2% 3 9.0% 10.9% 10.6% 11.6% 4 9.8% 9.9% 10.3% 7.6% 5 9.3% 9.9% 8.5% 7.4% 6 8.9% 9.2% 8.5% 6.3% 7 5.9% 6.3% 5.4% 5.6% 8 5.3% 5.0% 5.0% 5.1% 9 3.0% 4.3% 3.8% 4.3% 10
Slide 18: Bank Overview
bk BANK OF KIGALI Financially transforming lives ) @@© AFRICAN BANKER AWARDS 2015
Slide 19: Background and History
Background and History Established in 1966 Current Supervisory Board US$62.5 mln as a JV with management enhanced & Initial Public Signed lines of credit Belgolaise S.A with: team assembled internationalized Offering of 45% • PTA Bank- US$ 10 mln of its shares and • OFID- US$ 10 mln listing on the R
Slide 20: A Snapshot of Bank of Kigali
A Snapshot of Bank of Kigali CAGR 2010- Key Facts US$ million 2010 2011 2012 2013 2014 1H 2015 1H 2015 FRw/USD Period End 594.4 604.4 630.6 670.2 686.1 701.5 The leading bank in Rwanda (34.2% market share by Total Assets as at rate Total Assets 332.6 476.3 511.9 630.2 703.4 769.0 22.1% 30 June 2015)
Slide 21: Corporate Governance
CO R P O R AT E G OV E R N A N C E Page 21
Slide 22: 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 June 2015 Corporate Governance The Board has eight independent non-executive directors Rwanda Social Employees and Security Board Directors (including two non-resident directors with extensive
Slide 23: Share Trading Performance
S h a re Tra d i n g Pe r fo r m a n c e 30 June 2015 Analyst Coverage Current price, FRw 290 Market Cap, US$ mln 271 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 shares ou
Slide 24: 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 25: Business Overview
bk BANK OF KIGALI Financially transforming lives ) @@© AFRICAN BANKER AWARDS 2015
Slide 26: Overview of the Loan Book
Overview of the Loan Book Gross Loan Portfolio Loan Book Segmentation 1H 2015 Corporate Loan Book 1H 2015 *TWC- Transport, Warehousing and Communication Page 26
Slide 27: Customer Deposit Base
Customer Deposit Base Total Deposits Growth Customer Deposit Segmentation Corporate Deposits Retail Deposits Bank's and OFIs Deposits FRw Bn 450.0 402.5 400.0 350.0 339.8 96.6 297.8 80.5 300.0 243.1 61.2 78.4 250.0 31.3 73.4 200.0 68.2 227.5 62.9 150.0 185.9 148.9 168.4 100.0 50.0 .0 2012 2013 2014
Slide 28: Corporate Banking
Corporate Banking Description Key Segments at 1H 2015 Clients include corporate, SMEs and NBAs* Interest rates are in the 16.0% - 18.5% range. Key products: CAPEX loans: long-term loans for investment or expansion of the business Commercial mortgage loans: typical customer participation at 30% of pr
Slide 29: Executing The Retail Strategy
Executing The Retail Strategy Page 29
Slide 30: Retail Banking
Retail Banking Description Retail Lending Retail Deposits The Bank’s retail business is primarily focused on mortgages and consumer loans with notable share of salary backed overdrafts Key products: Mortgage loan: up to 15 years with typical customer participation at 30% of property value Consumer l
Slide 31: Growing Our Distribution Network
Growing Our Distribution Network Ubiquitous footprint Agency Banking Agency Banking platform BK Yacu began operating in Nov 2012. Expanded the agency banking network to 944 operational agents as at 30 June 2015 Agents are able to perform cash in and cash out transactions, open customer accounts as w
Slide 32: 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 33: Review of Financial Performance
REVIEW OF FINANCIAL P E R FO R M A N C E Page 33
Slide 34: Balance Sheet Highlights
Balance Sheet Highlights Total Assets Net Loans and Advances Customer Balances and Deposits Shareholder’s Equity Page 34
Slide 35: Maturity Profile
Maturity Profile Loans and Advances to Clients Customer Balances and Deposits Page 35
Slide 36: Asset Quality
Asset Quality Cost of Risk**, % Improving Coverage Ratio Notes: ** LLP charge / Average gross loans for period NPLs by segment Manageable NPL Ratio 1H 2015 YE 2014 Page 36
Slide 37: Asset Quality
Asset Quality Cost of Risk by Segment NPL by Segment Gross loan Yield by Segment Page 37
Slide 38: Funding
Funding Funding Structure, % Significant Potential For Growth In Higher Yielding Assets 1H 2015 YE 2014 Highlights Strong Capital And Liquidity Position Deposits are the primary source of funding with the share of customer deposits at 71.2% as at 30 June 2015 Strong growth in deposits has been drive
Slide 39: Income Statement Highlights
Income Statement Highlights Total Operating Income Composition of Total Operating Income YE 2014 Total Recurring Operating Costs Composition of Total Operating Expenses 1H 2015 YE 2014 Page 39
Slide 40: Consistent Profitable Growth
Consistent Profitable Growth Sustainable Net Interest Margin % Attractive Cost/Income ratio Stable Returns To Shareholders % Strong Return on Average Assets % Source: Bank of Kigali Audited 2010-2014 IFRS Statements and Q2 2015 published financial statements Page 40
Slide 41: 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 42: Strategic Outlook
bk BANK OF KIGALI Financially transforming lives ) @@© AFRICAN BANKER AWARDS 2015
Slide 43: 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 44: Management Targets
Management Targets Return on Average Equity Branch Expansion Other Selected Management 2015 targets Net Income CAGR- 5 years >22% Total Assets CAGR- 5 years >20% Non funded income ratio : 40% of the total operating income Reduce NPL ratio to < 5% Increase number of retail current accounts by 100,000
Slide 45: 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