Absa Bank Kenya Plc · NSEKE:ABSA
Absa Bank Kenya — FY2022 Earnings Presentation
34 slides from Absa Bank Kenya's earnings presentation, 2023
Slide 1: Absa Bank PLC FY 2022 Investor Briefing
Absa Bank PLC FY 2022 Investor Briefing
Slide 2: Contents
Contents • Chairman’s update • Business Overview • Financial Performance • Strategy for next horizon
Slide 3: Chairman’s update
Chairman’s update Charles Muchene – Board Chairman
Slide 4: CEO Transition Update
CEO Transition Update Update so far Next steps September 2022 • Former Chief Executive Officer and Managing Director Jeremy Awori steps 1. Yusuf Omari continues as interim down Mid October 2022 Chief Executive Officer and • Yusuf Omari appointed interim Chief Executive Officer and Managing Director,
Slide 5: Operating context for 2022
Operating context for 2022 Absa’s Response • Sustained our efforts on Headwinds Tailwinds economic recovery by 1. An escalation in global 1. Receding impact of COVID-19 supporting over 10,000 SMEs geopolitical conflict pandemic with financial and non- 2. Global monetary policy 2. Smooth transition i
Slide 6: Evolution of Absa Bank Kenya PLC through Strategic Horizons
Evolution of Absa Bank Kenya PLC through Strategic Horizons Strategic Horizons: Accelerated momentum and Growth Transformation & transformation to Correcting Returns outperform deceleration 2013 – 2017 2018 – 2022 2023 Onwards Horizon 1 Horizon 2 Horizon 3 6
Slide 7: Business Overview
Business Overview Yusuf Omari – Interim Chief Executive Officer
Slide 8: Strategy Execution Highlights: Growth, Transformation and Returns strategy concluded
Strategy Execution Highlights: We have concluded our Growth, Transformation and Returns strategy for 2018 - 2022 On Growth On Transformation On Returns Key Results Significant growth Market leading Absa stock momentum efficiency levels outperforming the and NSE1 and listed Outcomes banks Notes 1. St
Slide 9: On Growth: Growth significantly accelerated over the last 5 years
On Growth: Our growth has significantly accelerated with GTR1 over the last 5 years, growing by 7x compared to previous strategic horizon Numbers in Kes Billion 46 16bn 30 2bn 28 24 4bn 2008 2013 2017 2022 Driven by: • New products, significant investments and a heightened performance culture 9 Note
Slide 10: On Growth: Evolved towards a full financial services group
On Growth: Over the strategic period, our business has evolved towards a full financial services group driven by a broader proposition set Timiza for Business Retail Banking Timiza Banc- for SME assurance China Retail Corridor Banking Corporate Lending Absa SME Banking 2017 FX Sales today Trade Fina
Slide 11: On Transformation: Optimized structural costs, improving cost to income ratio
On Transformation: We have optimized our structural costs; redesigning the organization towards sales and service and significantly improving our CIR1 to low 40%s Cost to Income Ratio (CIR1) 55% 54% 51% 48% 46% Target of 41% Mid 40%s 2017 2018 2019 2020 2021 2022 Driven by: Revenue growth initiative
Slide 12: On Transformation: The re-investment effort has been all rounded
On Transformation: The re-investment effort has been all rounded Digitization & NextGen NextGen Corporate Level Rebranding Automation of 52% HR System Finance System of our processes New Relationships Cash Customer Experience Various Front-Office with Data Partners Deposit Innovation Enhancements (R
Slide 13: On Transformation: Significant milestones with new brand since 2020
On Transformation: We have achieved significant milestones with our new brand since the re-brand in 2020 Brand Awareness score Most Reputable Bank in Kenya1 92% 82% 48 Absa 45 Bank1 37 32 30 26 Bank 2 28% 22 Bank 3 19 Bank 4 2019 2020 2022 2017 2018 2020 2021 Other scores 73.4% Colleague Brand Love
Slide 14: On Transformation: Magical Kenya Open showcased Absa as a locally relevant brand
On Transformation: Magical Kenya Open showcased Absa as a locally relevant brand, one that embraces the Kenyan tenacious spirit (Africanacity) Highlights • KES 70 million investment in- line with our long-term commitment to nurture sports • We sponsored eight local Pros and one amateur to the tune o
Slide 15: On Transformation: Doubled down on small and medium-sized enterprises
On Transformation: For our customers, we have doubled down on small and medium-sized enterprises We are driving continuous innovation in a bid to make it easier, faster and better for small and medium sized businesses in the market We toured ten counties in Q4 2022 meeting with over 10,000 small and
Slide 16: On Transformation: Supporting customers and clients through the cycles
On Transformation: Supporting our customers and clients through the cycles 2020/21 2022 KES 59bn 396,000 KES 148bn COVID-19 loan Customers qualify for New gross lending to repayment holiday 50% waiver on digital the economy lending 16
Slide 17: On Transformation: Building Absa as an aspirational place to work
On Transformation: We are building Absa as a fun, vibrant and aspirational place to work and recently we have revamped our employee value proposition Revamped Employee Value Proposition Care Culture Contribution Career Growth “I really appreciate that I have “I have grown my career by an employer wh
Slide 18: On Transformation: Embedding sustainability in our business
On Transformation: We continue to embed sustainability in our business 1 2 Environment Education and Skills Development • 80+ Absa properties retrofitted • IFC EDGE certification for five • 250k youth in Kenya impacted of our properties through Ready to Work • Continued implementing our • 300 collea
Slide 19: On Returns: Top quartile returns to stakeholders through the cycle
On Returns: We have delivered top quartile returns to our stakeholders through the cycle well above cost of equity Return on Equity 23% 19% COVID-19 19% 18% impact 16% Target of 5% + cost of 9% equity 2017 2018 2019 2020 2021 2022 Driven by: 19 • Business fundamentals – revenue growth, efficiency ef
Slide 20: On Returns: Absa stock continues to outperform key indices
On Returns: The Absa stock1 continues to outperform key indices, supported by sequential increase in the underlying valuation Absa | ▲14%2 Absa | ▲40%2 Absa | ▲5%2 Absa | ▲23%2 Absa | ▲28%2 Absa 28% ▲ Bank 1 28% ▲ Bank 2 11% ▲ ▲ Bank 3 (2%) ▲ Bank 4 (11%) ▲ Bank 5 (23%) ▲ NSE ASI4 (26%) ▲ Bank 6 (32
Slide 21: Awards and Recognitions in 2022
Awards and Recognitions in 2022: Our efforts are being recognized by external stakeholders Ranked Most Reputable Bank by GlobeScan #1 in Asset Finance by Think Business No 1. Transformative Corporate Brand impacting business #2 Best Bank in Tier 1 by Think Business Awarded Top Employer 2022 and 2023
Slide 22: Financial Performance
Financial Performance Moses Muthui – Interim Chief Financial Officer
Slide 23: FY 2022 Financial Results: Exceeding expectations on all six principal areas
FY 2022 Financial Results: Exceeding expectations on all six principal areas FY 2022 Vs Observed YTD Momentum Highlights Income Statement (KES billions unless stated otherwise) Actual YoY Q1 Q2 Q3 Q4 1. Sustained revenue growth Growth Momentum Income 46.0 25% 12% 17% 22% 25% momentum across all segm
Slide 24: Broad Based Growth Momentum: Accelerated revenue growth across all businesses
1 Broad Based Growth Momentum: Accelerated revenue growth across all businesses Revenue Performance Revenue diversification2 Highlights (KES millions unless stated otherwise) +25% (1) +28% • All businesses are 32,315 delivering double digits in revenue growth 25,257 13,673 • New businesses are +17%
Slide 25: Improved Operating Leverage: Efficiency improved to 41%
2 Improved Operating Leverage: Despite 12% increase in costs towards investments, our efficiency level has improved to 41%; with double-digit JAWs Cost Outlay Efficiency Ratio (Cost to Income at 41%) Highlights (KES billions unless stated otherwise) +12% • Costs increase driven 54% 53% 52% 46% by st
Slide 26: Stand-out Profitability: PAT growth of 34%
3 Stand-out Profitability: Topline-driven-PAT growth of 34%, supporting returns accretion KES 4 billion Profit After Tax growth driven by topline performance Supporting Return On Equity accretion (KES billions unless stated otherwise) 9.1 2.0 1.8 1.6 14.6 2 23% ROE 19% 10.9 14.5% COE3 COVID-19 9% 20
Slide 27: Smart Balance Sheet Origination: Accelerated growth across focus segments
4 Smart Balance Sheet Origination: Accelerated growth across focus segments and products Customer Loans and Advances driven by smart growth Portfolio split by currency Highlights (KES millions unless stated otherwise) +21% • Diversified growth FCY, 34% driven by secured lending and trade 2022 loans
Slide 28: Improving Portfolio Quality: Lower NPL ratio with increased coverage ratio
5 Improving Portfolio Quality: Lower NPL ratio with increased and adequate coverage ratio to help position for any likely macro headwinds Impairment relative to growth Gross NPLs Ratio (KES billions unless stated otherwise) 284 13.3% +21% Industry3 234 7.7% 209 Customer 195 Assets 7.3% +38% 2021 202
Slide 29: Attractive Valuations: Sequential increase in underlying valuations
6 Attractive Valuations: Sequential increase in underlying valuations supporting the investment case Sequential increase in franchise value Supporting Premium valuation (KES billions unless stated otherwise) +96% 2.69 1.60 EPS1 1.37 1.35 1.34 +23% 1.13 1.14 DPS2 1.1 1.05 +44% P/BV=1 63.6 56.4 TNAV3
Slide 30: In Summary: 2022 outcomes have prepared us for an uncertain 2023
In Summary: 2022 outcomes have prepared us for an unusually uncertain 2023 …forms the foundation for 2023 A stand-out performance in 2022 … …and a defense for 2023 headwinds momentum … Revenue momentum sustained in Q1 Repricing cycle to put pressure on Revenue up 25% 2023 credit losses PAT up 34% Ef
Slide 31: Next Horizon Strategy
Next Horizon Strategy Yusuf Omari – Interim Chief Executive Officer
Slide 32: Strategy for the next horizon: priorities and enablers
The strategy for the next horizon is founded on clear priorities and enablers aimed at accelerating momentum and transformation in order to outperform A market leader in Business banking A 3 Priorities powerhouse Corporate & A Modern-Day Investment Consumer Bank in Financial Connecting Services Ecos
Slide 33: Disclaimer
Disclaimer 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 Kenya PLC . Words such as “anticipates”, “estimates”, “expects”, “projects”, “bel
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