Absa Bank Kenya Plc · NSEKE:ABSA
Absa Bank Kenya — Investor Presentation (March 2020)
41 slides from Absa Bank Kenya's investor presentation, March 2020
Slide 1: Absa Bank Kenya PLC Investor Briefing Pack March 2020
Absa Bank Kenya PLC Investor Briefing Pack March 2020
Slide 2: Contents
Contents The Strategic Positioning of Absa 3 Financial Performance 15 Strategy Execution Update 25 In Conclusion 38
Slide 3: The Strategic Positioning of Absa
The Strategic e tt tt u e adad ppUU n n iio o ccu ee xxEE Positioning of Absa ppoossittioonninnggooffAAbbssaa Jeremy Awori - Chief Executive Officer 01 JeerreemmyyAAwwoorri––CChhieeffExExeeccuuttiiveveOOff ee cc n adan iid uuGG nn o iisso u llccu nn ooCC 3
Slide 4: Positioning of Absa: leading Pan African financial services group
Absa is a leading Pan African financial services group and the 3 rd largest banking group in Africa positioning of Absa credentials strategy The strategy comprises of a guiding purpose, three strategic priorities that outline the business’ objectives in terms of what is required to succeed and three
Slide 5: Absa Kenya's philosophy and strategy in execution
positioning of Absa Absa Kenya’s philosophy and strategy are in execution motion; for 2 years now Philosophy strategy: Growth, Transformation and Returns Our customer vision experience Purpose Priorities Our values We drive performance to We are obsessed with We have an African Our people are Enable
Slide 6: Our Purpose
Our Purpose To bring your possibility to life 4
Slide 7: Delivering our Purpose: Kenyan people
8 Delivering our Purpose: Bringing possibilities to life for the Kenyan people =< 6 2 xmevcwlirleste Ss C d é - : hnancial access 3.8 7 3.2 ey Kes20bn ~ i 4 million Approx. 3 with Timiza customers ‘ : Lending KENNETH NDUA We have almost 4 million new believers in our purpose and our brand in 2 years
Slide 8: Delivering our Purpose: young people
Delivering our Purpose: Bringing possibilities to life for the young people Investing in education, skill development and employment © a a < e 6 on = = We are investing in the future of the youth through skills development via our ReadyToWork program The strategic po: ee i 160,000 574 70,000 youth b
Slide 9: Delivering our Purpose: Investing in education
Delivering our Purpose: £ Investing in education, skill development and employment ‘o on € 6 5 KES20mn Abs of possibilities i Construct ablution ‘h blocks in 40 8 primary schools a rf 2 i The Torch of Possibilities is characteristic of who we are as a people, always ready to inspire and mentor futur
Slide 10: Delivering our Purpose: Kenyan economy
Delivering our Purpose : inging possibiliti life for the Kenyan economy Opening up a world of possibilities from Kenya to 500 million homes globally to the world The strategic positioning of Absa -Amongst the world’s best golftournaments oO -Elevated to the elite European Tour J Longest and biggest
Slide 11: Delivering our Purpose: Women & Entrepreneurs
The strategic positioning of Absa Absa Business club Delivering our Purpose: Bringing possibilities to life for Women & Entrepreneurs illenenetcesrt SheTrades (Women programme) & Wezesha (SME proposition) to create opportunities for millions of Kenyans and networking opportunities f Women Entreprene
Slide 12: Our transformation highlights from 2013 until today
positioning of Absa When we focus on our purpose, we transform our business Our transformation highlights from 2013until Today Talent Management Bring your 2X 9X Growth in Strategy (HR Talent Circle of possibility to life Growth in Growth in aided customers Management Excellence Strategy (HR 2019) A
Slide 13: Absa Kenya is now a full services financial group
Absa Kenya is now a full services financial group, ready to scale towards a market leadership position by scale positioning of Absa Pre 2013 New Capabilities Today Asset Fixed Corporate Corporate Retail Mngt. Income Banking Banking Banking Brokerage Asset Mngt. Trade Risk Banc- China Mngt Finance Co
Slide 14: Our operating environment
Our operating environment – the emerging realities indicate a volatile and uncertain operating environment positioning of Absa Setting the context for 2019 financial results and 2020 Guidance Global Macro’s Kenya Macro’s Therefore 4 things to be mindful of as a bank September 2019 Today September 20
Slide 15: Performance
Conclusion Execution Update positioning of 15 performance Absa Performance Yusuf Omari – Chief Finance Officer 02 15
Slide 16: Transition Update
performance Transition Update: The transition project is now behind us, with a Kes 1.5bn of related costs incurred in 2019 Kes mn Transition Income 2019 2019 one-off statement Normalized • Re-branding the real estate Published Adjustment o 85 Branches o 209 ATMs Total Revenue 33,766 - 33,766 o 2 HQs
Slide 17: Financial Results: 2019 FY
performance Financial Results: in 2019 Assets grew by 15%, Revenue grew by 7% and Normalized PBT increased by 15% Financial Results 2019 FY (In KES millions unless stated otherwise) Indicators FY 2019 FY 2018 Comment 7% growth driven balance sheet Income 33.8 bn 31.8 bn Expansion, NFI & lower COF 5%
Slide 18: Key ratios
performance Key ratios: CIR showing marked improvement, with industry-wide margins under pressure, loss loan ratio within target and adequate coverage ratio Key ratios performance 2019 FY Indicators FY 2019 FY 2018 B/(W) vs. PY Normalised Return on Equity 18.4% 16.8% Marked improvement Cost to Incom
Slide 19: Double digit balance sheet growth across segments
performance Double digit balance sheet growth across all business segments and products (In KES billions unless stated otherwise) and Advances Deposits YOY 15% YOY 10% 238 235 230 224 195 194 187 207 180 177 Dec 18 Mar 19 Jun 19 Sep 19 Dec 19 Dec 18 Mar18 Jun 19 Sep 19 Sep 19 LDR of Focus is on
Slide 20: Timiza: Over 3.8 million registered customers
performance Timiza: Over 3.8 million registered customers since launch with KES20bn of lending (In KES billions unless stated otherwise) and Advances Turnover (Kes Bn) to date No. of registered users (Mn) 25.0 4.0 3.8 3.4 3.5 registered 20.0 3.2 customers since 3.0 3.0 launch 2.5 new 15.0 2.4 re
Slide 21: Income growth boosted by non-interest income
Income growth boosted by non-interest income (31% of total revenue) and new revenue streams performance (In KES billions unless stated otherwise) and NFI 7% 33.8bn NFI growth driven by: 31.7bn Scale up of Virtual Banking 10,588 NFI 9,702 9% Risk Managed Products trading Bancassurance 23,179
Slide 22: Cost contained at 1% below inflation
performance Cost contained at 1% significantly below inflation (5.20%) (In KES billions unless stated otherwise) Cost : 2018-2019 1% 17.2bn 17.3bn Investments in E-statement Paperless banking Staff Cost Staff Cost 9,768 10,158 channels: Intelligent ATMs, Internet banking, Mobile bankin
Slide 23: Loan Loss Ratios maintained
performance Loan Loss Ratios maintained; ratios with adequate coverage (In KES billions unless stated otherwise) Impairment: 2018-2019 15% Total Assets Total Assets 9% Significant improvement in the levels of underwriting standards as well as internal efficiencies on the collections and recoveries
Slide 24: Balance sheet ratios
Balance sheet ratios: Improving balance sheet optimization while retaining strong capital and liquidity ratios to support future growth and capital distribution performance Ratio Ratio Ratio Core Capital Ratio Regulatory Minimum Total Capital Ratio Regulatory Minimum Liquidity Ratio Regulatory Minim
Slide 25: Execution Update
positioning of Absa performance Execution Update Execution Update Moses Muthui – Country Strategy Director & CIB Finance Head Conclusion 25
Slide 26: Our strategic horizons
Our strategic horizons: The transition phase is successfully behind us, we are now entering our acceleration horizon Our 3 strategic horizons Strategy Update Acceleration Acceleration Aiming to be the best bank in customer Transition experience as an enabler for growth Transition Introducing the Abs
Slide 27: Strides on Growth, Transformation and Returns strategy
Strategy Update We have made significant strides on executing our Growth, Transformation and Returns strategy Financial Measure Financial Measure and outcomes: and outcomes: Revenue growth Assets growth CIR Improved Best growth Normalized Normalized CIR gain in over fastest in 10 CIR from 56% in a d
Slide 28: On Growth
On Growth: Our revenue grown in 2019 was one of the fastest in 10 years and balance sheet growing at double digit in second year in a row Strategy Update strategy business lines: 2018-To date growth in 2019: One of the fastest in 10yrs areas 1% decline ex. sale Interest rate caps Industry revenue Ou
Slide 29: On Transformation
On Transformation Our efficiency ratio is at 51%, the best levels since 2012 Strategy Update strategy innovations: 2018-To date ratio: 2016-2019 pillars Customer experience transformation Introduced New Culture 56% 54% Culture transformation 53% Robotics E2E Processing 51% Transformational partnersh
Slide 30: Returns: stock market validated strategy execution
Returns The stock market has validated the successful execution of our strategy with ABK stock being the best performing bank stock among the NSE listed banks, as at Dec 2019; recording a 39% improvement from the commencement of our 2018-2020 strategy (Jan 2018) Strategy Update strategy has rewarded
Slide 31: Forward looking comment
Comment Forward looking comment (1) The drivers of forward valuations below are exposed to topical macro events that are constantly evolving and subject to change (¬KES 46Bn Total Capital or 16.7% with ¬KES 6Bn Surplus to Regulatory ratio of 14.5%) Normalized EPS up 14% from 1.37 in 2018 to 1.56 in
Slide 32: Our strategic priorities
Strategy Update our 4 strategic priorities Jeremy Awori – Chief Executive Officer
Slide 33: Priority 1: Customer obsessed, digitally enabled bank
Strategic priority 1: Building a customer obsessed, digitally enabled bank We built Timiza to be a fully fledged digital bank with impressive response from our Customers Strategy Update value (Kes, billion) Customer Transactions via distribution channels: 2015 vs 2019 Digital 36% 133% Branch 19.9 13
Slide 34: Priority 2: Grow, diversify and transform Retail and Business Banking
Strategic priority 2: Strongly grow, diversify and transform Retail and Business Banking Business banking growth super-charged, with records set in 2019 Strategy Update balance sheet in over 5 years diversifying from retail dominance Positive revenue growth post interest rate caps Business Banking C
Slide 35: Priority 3: Build the powerhouse Institutional Bank
positioning of Absa Strategic priority 3: Build the powerhouse Institutional Bank We have largely concluded the portfolio fit-out for CIB – and we now have a holistic offering for our institutional clients in CIB diversification Pre 2018 Today Market Position Medium Product Today Term Goal We have a
Slide 36: Priority 4: Force for Good sustainability programme
Strategic priority 4: Force for Good: We have established a Sustainability programme in the Kenya Market Business initiatives New & existing Bring your memberships and capabilities possibility to life Absa Kenya sustainability Corporate Social Investment programme programs High Impact SDG’s Stakehol
Slide 37: Priority 4: aspirational, fun and vibrant place to work
Strategic priority 4: And we are creating an aspirational, fun and vibrant place to work in the Kenya Market towards our transition to Absa ‘‘Absa Kenya has a fantastic work environment & great team ethos – Head Equity Research Kenya 90% Would recommend Absa as a great place to work Ambition ‘‘I lov
Slide 38: Conclusion
Conclusion Execution Update positioning of 38 performance Absa Conclusion Jeremy Awori – Chief Executive Officer 05 38
Slide 39: Our Key priorities for 2020
Our Key priorities for 2020 Conclusion experience Building Risks Diversification & Agenda to gain Market Investments Share 39
Slide 40: Forward-looking statements
Forward-looking statements Certain statements in this document are forward looking that relate to, among other things, the plans, objectives, goals, strategies, future operations and performance of Absa Bank of Kenya PLC. Words such as “anticipates”, “estimates”, “expects”, “projects”, “believes”, “
Slide 41: (absa)
) (absa) (