KCB Group PLC · NSEKE:KCB
KCB — Q3 2022 Earnings Presentation
45 slides from KCB's earnings presentation, Nov 15, 2022
Slide 1: Investor Presentation Q3 2022 Performance
INVESTOR PRESENTATION Q3 2022 Performance Nairobi, 15 November 2022
Slide 2: Disclaimer
Disclaimer The information contained herein has been prepared by KCB Group Plc (“KCB”). This presentation has been prepared for information purposes only and is not and does not form part of any offer for sale or solicitation of any offer to subscribe for or purchase or sell any securities nor shall
Slide 3: Group Overview
Group Overview
Slide 4: Customers, branches and regional footprint
Group Overview | Operating Environment | Financial Performance | Appendices Our wide regional footprint enables us to facilitate seamless service, intra-regional trade and investment flows for our stakeholders. Customers 30.9M Branches 498 Employees 8,803 ATMs 1,172 Agents & Merchants 29,810 4 Q3 20
Slide 5: Shareholders and governance structure
Group Overview | Operating Environment | Financial Performance | Appendices We create value supported by a clearly defined governance structure which provides for oversight, delegation and clear lines of authority. Audit and Risk Human Resources Committees Accountable and Governance BOARD OF DIRECTO
Slide 6: Our senior management team
Group Overview | Operating Environment | Financial Performance | Appendices Our senior management team mandated to ensure we remain well positioned and responsive to regional opportunities for growth. Paul Russo Lawrence Kimathi Samuel Makome Japheth Achola Simon Mbogo Group Chief Executive Officer
Slide 7: On track towards 2022 aspirations under Beyond Banking strategy
We are on track towards meeting our 2022 aspirations under the Beyond Banking strategy which is aimed at delivering exceptional customer experience and driving a digital future. Our Strategic Our Thrusts Aspirations CES 20% Customer first, with leading value 3 Year Strategy NPS 55 Total assets propo
Slide 8: Enhanced financial access through digital channels
Group Overview | Operating Environment | Financial Performance | Appendices We have continued to enhance financial access through our digital channels which offer convenience and seamless service to customers. 98% of transactions by number Number of non-branch channel transactions in Q3 2022 (M) YoY
Slide 9: Growth in the mobile lending book
Group Overview | Operating Environment | Financial Performance | Appendices Consistent growth in the mobile lending book to personal customers and micro enterprises 21% YoY growth in value of Value of mobile loans disbursed in Q3 2022 (KShs B) mobile loans disbursed Fuliza driven by Fuliza and Up 29
Slide 10: 35% growth in value of digital channel transactions
Group Overview | Operating Environment | Financial Performance | Appendices 35% growth in the value of transactions transacted through digital channels 54% of transactions by value Value transacted through digital channels in Q3 2022 (KShs B) 69 YoY Change 320 conducted through non Mobi Service* 29%
Slide 11: Non funded income from digital channels grew 21%
Group Overview | Operating Environment | Financial Performance | Appendices Non funded income (NFI) from digital channels grew by 21% supported by increased usage of internet banking, mobile banking and merchant POS transactions Digital channels non funded income in Q3 2022 (KShs M) YoY Change Mobil
Slide 12: >KShs 1 trillion transacted, digital ecosystem orchestrator
Group Overview | Operating Environment | Financial Performance | Appendices We remain a digital ecosystem orchestrator through creating trust and network-effect by improving our systems to upgrade the services on offer and reach to customers >KShs 1 trillion transacted, driven by growth of active us
Slide 13: BPR Bank Rwanda delivering integration benefits
Group Overview | Operating Environment | Financial Performance | Appendices BPR Bank Rwanda delivering integration benefits and positive return to the shareholders • Upgrade and alignment of the core banking system to close in Q4 2022 • Rebranding of branches ongoing 112% growth in profit before tax
Slide 14: Entry into DRC through acquisition of TMB
Group Overview | Operating Environment | Financial Performance | Appendices KCB’s entry into DRC through the acquisition of TMB draws closer Both KCB and TMB shareholders have approved the transaction. Central Bank of Kenya has provided its approval while approvals are awaited from the COMESA Compet
Slide 15: Key benefits of the TMB acquisition
Group Overview | Operating Environment | Financial Performance | Appendices The acquisition of TMB will contribute positively to KCB’s growth and diversification objectives. We anticipate the following key benefits: Regional expansion Synergies • Increased scale of operations and • Balance sheet opt
Slide 16: Operating Environment
Operating Environment
Slide 17: Operating environment: currency depreciation and rising inflation
Group Overview | Operating Environment | Financial Performance | Appendices Operating environment characterized by currency depreciation and rising inflation, however we remain well positioned to navigate these challenges. Tailwinds Headwinds Improved macroeconomic environment Sustained pressure on
Slide 18: Sustainability agenda and future-proof responsible business
Group Overview | Operating Environment | Financial Performance | Appendices Our sustainability agenda is hinged on building a future-proof responsible business Sustainability at KCB means going beyond the ESDD Green lending normal operations of a KShs 191.6B in Q3 2022 13.0% of the loan portfolio ba
Slide 19: KCB Foundation programmes drive shared value
Group Overview | Operating Environment | Financial Performance | Appendices Our targeted programmes under KCB Foundation drive the creation of shared value Enterprise Development Education ✓ 42,024 beneficiaries engaged ✓ 3,558 High School Scholarships Awarded across 429 Schools ✓ 18,870 beneficiar
Slide 20: Tripled annual high school scholarships
Group Overview | Operating Environment | Financial Performance | Appendices We have tripled the annual high school scholarships provided and incorporated a university scholarship and apprenticeship programme No. of students supported to date The programme focuses on improving gender KCB Group invest
Slide 21: Ratings, rankings and awards
Group Overview | Operating Environment | Financial Performance | Appendices We take pride in having consistently been rated and ranked among the leading financial institutions in the continent based on various parameters • Best Bank in Kenya by Euromoney Awards for Excellence 2022 • Best Sustainable
Slide 22: Financial Performance
Financial Performance
Slide 23: 14% balance sheet growth to KShs 1.28T
Group Overview | Operating Environment | Financial Performance | Appendices We registered a 14% balance sheet growth driven by strong loan growth across all our businesses Q3 2022 KShs 1.28T balance sheet size Government Securities 277.1 10% 24.7 Increase in long term debt Net loans 758.8 16% 107.0
Slide 24: Regional businesses accelerate contribution to the Group
Group Overview | Operating Environment | Financial Performance | Appendices Our regional businesses continue to register meaningful growth and accelerate their contribution to the Group Assets distribution per subsidiary (KShs B) YoY Change 27% Proportion of assets in KCBK 15% subsidiaries outside o
Slide 25: Strong growth in gross loans across all segments
Group Overview | Operating Environment | Financial Performance | Appendices We posted a strong growth in gross loans across all segments of the business Gross loans growth 61 822 15% 43 19% Growth in gross customer 718 LCY loans driven by improved FCY lending in personal, building & construction 81%
Slide 26: NPL ratio improved by 330bps in Q3
Group Overview | Operating Environment | Financial Performance | Appendices NPL ratio improved by 330bps in Q3 as a result of concerted effort to bring down the stock of the nonperforming book especially in the KCB Bank Kenya and NBK businesses Significant reduction in Non-performing loans evolution
Slide 27: Improvement in asset quality and NPL ratios per segment
Group Overview | Operating Environment | Financial Performance | Appendices Significant improvement in asset quality in Q3 and further action on key accounts to be taken in Q4 with the primary focus being preservation of value for all stakeholders 15%-17% NPL ratios per segment 37.6% Target NPL for
Slide 28: Regulatory and IFRS coverage ratios
Group Overview | Operating Environment | Financial Performance | Appendices Regulatory and IFRS coverage ratios impacted by growth in the non-performing book 70% Coverage ratios Medium term target level 71.8% 67.9% for Regulatory and IFRS 61.4% coverage ratios 54.6% 46.1% 42.6% Q3 21 H1 22 Q3 22 IFR
Slide 29: Assets yield down 20bps YoY to 10.0%
Group Overview | Operating Environment | Financial Performance | Appendices Assets yield down 20bps YoY to 10.0% due to the impact of loans and advances that migrated to NPL therefore suspending interest despite the growth in the loan book 11.7% Loans and Govt. securities Yields vs Cost of funds Yie
Slide 30: Customer deposits increase
Group Overview | Operating Environment | Financial Performance | Appendices Customer deposits increase supported by 8.1% growth in Kenya and 6.4% increase across regional subsidiaries 7.4% Growth in customer deposits (KShs B) 11 2 Deposits by type Growth in customer Q3 2022 16 deposits driven by dem
Slide 31: Core capital positions adequate to support growth
Group Overview | Operating Environment | Financial Performance | Appendices Core capital positions across banking subsidiaries in the Group are adequate to support growth of risk weighted assets Core capital adequacy ratios to RWA KCB Group KCB Bank Kenya NBK was below the 6.8% 4.7% 4.0% 2.1% minimu
Slide 32: Revenue up 15.3%; PBT KShs 43.3 billion
Group Overview | Operating Environment | Financial Performance | Appendices Revenue improved by 15.3% driven by non-funded income (NFI) from lending fees, forex and trade finance as well as funded income from investment in Government securities Q3 2022 21% Interest from customer loans 58.9 10% 5.4 G
Slide 33: ROE of 23.3% and interim dividend
Group Overview | Operating Environment | Financial Performance | Appendices We continue to consistently deliver value to our shareholders with an ROE of 23.3% and KShs 3.213 billion in interim dividends for 2022 The Board of Directors recommend an interim DPS (KShs) dividend of KShs 1.00 per share,
Slide 34: Subsidiaries outside KCB Bank Kenya increased PBT by 30%
Group Overview | Operating Environment | Financial Performance | Appendices Subsidiaries outside of KCB Bank Kenya increased their PBT by 30% YoY, driven by Rwanda, Uganda and Tanzania businesses. 16.3% PBT contribution per subsidiary (KShs B) YoY Change 22% PBT contribution from KCBK subsidiaries o
Slide 35: Operating costs grew by 19.6%
Group Overview | Operating Environment | Financial Performance | Appendix Operating costs grew by 19.6% driven by the BPR amalgamation activities, increased spend on customer acquisition initiatives, investments in technology and increases in overall staff remuneration 45.1% Operating costs outlay 3
Slide 36: On track towards 2022 targets
Group Overview | Operating Environment | Financial Performance | Appendices We are on track towards meeting our 2022 targets across key parameters Change in Q3 Significant improvement noted in NFI, CoR, and NFI Ratio 33.0% 33.2% +110bps ROE ratios in Q3 2022 Cost/Income ratio 44.0% 45.1% -60bps NPL
Slide 37: Appendices
Appendices
Slide 38: Overview of key financial ratios
Group Overview | Operating Environment | Financial Performance | Appendices Overview of key financial ratios KCB GROUP Q3 2022 KCB KCB Q3 21 FY 21 H1 22 Kenya Group 22.0% 22.4% 23.0% Return on average equity 26.3% 23.3% 43.5% 44.0% 45.7% Cost to income 37.5% 45.1% 13.7% 16.5% 21.5% Gross NPL to gros
Slide 39: Summary statement of financial position
Group Overview | Operating Environment | Financial Performance | Appendices Summary statement of financial position as at 30 September 2022 KCB Group KCB Bank Kenya KShs Billion Y-O-Y Y-O-Y Q3 21 Q3 22 Q3 21 Q3 22 Change Change Cash and balances with central bank 68.1 73.1 7% 56.5 60.0 6% Balances w
Slide 40: Summary statement of profit or loss
Group Overview | Operating Environment | Financial Performance | Appendices Summary statement of Profit or Loss for the period ended 30 September 2022 KCB Group KCB Bank Kenya KShs Billion Y-O-Y Y-O-Y Q3 21 Q3 22 Q3 21 Q3 22 Change Change Interest income 73.5 83.5 14% 56.9 61.0 7% Interest expense (
Slide 41: Key operating data
Group Overview | Operating Environment | Financial Performance | Appendices Key operating data Q3 2021 FY 2021 H1 2022 Q3 2022 KCB Footprint Branches 491 492 494 498 Number of Customers (Million) 25.9 28.4 30.1 30.9 ATMs 1,154 1,178 1,168 1,172 Agency outlets 18,655 16,441 18,156 21,176 POS/Merchant
Slide 42: KCB regional footprint and key macros
Group Overview | Operating Environment | Financial Performance | Appendices KCB regional footprint and key macros as at 30 September 2022 Kenya1 Tanzania South Sudan Rwanda2 Uganda Burundi KCB Footprint Branches 297 15 14 152 14 6 ATMs 519 17 3 77 15 8 Agency outlets 19,550 354 44 711 347 170 POS/Me
Slide 43: Shareholding as at 30 September 2022
Group Overview | Operating Environment | Financial Performance | Appendices Shareholding as at 30 September 2022 Shareholders per category Category Number of shareholders Number of shares % Shareholding Local Institutional Investors 6,672 2,075,974,830 64.60% Local Individual Investors 186,089 842,6
Slide 44: Company information
Group Overview | Operating Environment | Financial Performance | Appendices Company information Stock listing Share registrars Registered office Image Registrars Limited KCB Group Plc th Primary 5 Floor, Absa Towers Kencom House Nairobi Securities Exchange Loita Street Moi Avenue Trading symbol: KCB
Slide 45: Thank You
THANK YOU