Slide 1: H1 2023 Investor Briefing
H1 2023 Investor Briefing August 2023 ncbagroup.com Go for it
Slide 2: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 3: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 4: Our Group Structure
WHO WE ARE Our Group Structure NCBA BANK KENYA PLC NCBA BANK RWANDA PLC BANKING NCBA BANK UGANDA LTD SUBSIDIARIES NCBA BANK TANZANIA LTD NCBA DIGITAL BUSINESS GROUP PLC NCBA LEASING LLP NON BANKING SUBSIDIARIES NCBA INVESTMENT BANK LTD NCBA INSURANCE AGENCY 4
Slide 5: Our Purpose and Values
WHO WE ARE Our Purpose and Values OUR OUR OUR PURPOSE VALUES CUSTOMER Welcome to the PROMISE bank that says go At NCBA, our customers for it. are at the heart of everything we do – we are To be the DRIVEN driven by our promise to Welcome to the offer exceptional Financial Services OPEN innovative pr
Slide 6: Our Regional Footprint
WHO WE ARE Our Regional Footprint KEY GROUP HIGHLIGHTS CUSTOMERS UGANDA 63M Branches 4 Customers 13.9M STAFF 3227 BRANCHES IVORY COAST KENYA Purely Digital Customers 7.8M Branches 90 107 Customers 30M ATMs TANZANIA RWANDA Branches 8 94 Branches 5 Customers 7.3M CASH DEPOSIT MACHINES Customers 3.8M 9
Slide 7: Awards & Accolades
WHO WE ARE Awards & Accolades • Among Top 10 Most Valuable Brands in Kenya by Brand Finance Brand and Customer • Winner of Top 25 Most Customer Obsessed Brands 2023 by Business Monthly East Africa ed. Experience • 3rd Best in Customer Experience (Tier 1) - Kenya Bankers Association • Gold Seal Certi
Slide 8: We are led by an exceptional team
WHO WE ARE We are led by an exceptional team 8
Slide 9: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 10: Economic growth forecast for 2023 has been revised upwards to 3.0% from 2.8%
OUR OPERATING ENVIRONMENT Economic growth forecast for 2023 has been revised upwards to 3.0% from 2.8% Global growth forecast for 2023 higher in Inflation has remained high across all In response to high inflation, monetary policy has been most advanced economies but Sub Saharan major economies and
Slide 11: Macroeconomic conditions in our regional business economies have varied
OUR OPERATING ENVIRONMENT Macroeconomic conditions in our regional business economies have varied Uganda’s economic growth touched 4.9% in Rwanda’s real GDP expanded by 9.2% in In Tanzania, growth expected to close at 5%.FX 1Q2023. The currency has stabilized in 2023 1Q2023, up from 7.9% in 2022. Th
Slide 12: Kenya posting mixed macro signals
OUR OPERATING ENVIRONMENT Kenya posting mixed macro signals. Growth expectations holding up, however we see risk of further FX depreciation Inflation has moderated down due to a decline in some Kenya’s 1Q2023 real GDP grew at 5.3% on The KES has depreciated in response to supply food prices. In July
Slide 13: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 14: Positive performance across all key financial metrics as we execute our 2020-2024 strategy
OUR STRATEGY Positive performance across all key financial metrics for the Group as we execute our 2020 – 2024 strategy H1 2022 H1 2023 9.3 7.8 Become a Distinguished Brand 20% Known For Customer Experience PBT (KES B) 21.0% 20.8% ROAE Scale Retail Banking: Expand Distribution 13.4% 13.2% NPL Ratio
Slide 15: Strong contribution from the regional banking subsidiaries
OUR STRATEGY Strong contribution from the regional banking subsidiaries Y-o-Y (Our Tanzanian core bank has had a KES 959M positive swing year on year on the back of the turnaround efforts). Amount in KES M Core Bank Digital Business H1 2022 %∆ H1 2023 H1 2022 %∆ H1 2023 +6% Kenya 9,271 9,784 (55)% D
Slide 16: Our focus on expanding our footprint is driving balance sheet growth
OUR STRATEGY Our focus on expanding our footprint is driving balance sheet growth and providing us a cheaper funding base KE Retail Banking Balance sheet (KES B) Branches 89 107 Growing (2020) (2023) Gross Loans Branch Network 11% Counties Present 15 24 79 96 (2020) (2023) 79:211 More Cost CASA rati
Slide 17: We have maintained 60 years leadership in asset finance
OUR STRATEGY We have maintained 60 years leadership in asset finance through innovating relentlessly and building strategic partnerships Disbursement (KES M) 8% 12,501 11,614 32 % H1 2022 H1 2023 Market Share Total Income (KES M) • This September NCBA 1,010 35% will be the premier 747 sponsor of the
Slide 18: Our digital disbursements have increased +35% Y-o-Y
OUR STRATEGY Our digital disbursements have increased +35% Y-o-Y further enabling financial inclusion Evolution of digital disbursements (KES B) Group Fuliza (KE) M-Shwari (KE) Loop (KE) 1.9 51 391 42 +35% 288 0.2 Q1'22 H1 2022 Q1'23 H1 2023 H1Q1'22 2022 H1 2023 Q1'23 H1 2022 Q1'22 H1 Q1'23 2023 458
Slide 19: We have launched our LOOP Super App
STRATEGIC PRIORITIES We have launched our LOOP Super App 1 One Super APP 2 Personalized Discounts 3 Smarter credit for you and for your business
Slide 20: Digital transformation initiatives are improving efficiencies and customer experience
STRATEGIC PRIORITIES The digital transformation initiatives are improving process efficiencies, reducing cost and enhancing customer experience Invested in 22 Bots from 6 (2022) Investing in ✓ Faster reconciliation 19,320 Man Hours Saved through RPA Robotic ✓ Quicker Social media responses Process ✓
Slide 21: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 22: We identified 5 key areas requiring greater attention in 2023
NCBA GROUP FINANCIAL PERFORMANCE We identified 5 key areas requiring greater attention in 2023 Thematic Area Objective Balance Sheet • Enhance the value generated from our substantial balance sheet Optimization Customer • Increase the number of customers we attract and retain across NCBA Growth Grow
Slide 23: Our Group continues to demonstrate strong fundamentals, 11% growth in PBT
NCBA GROUP FINANCIAL PERFORMANCE Our Group continues to demonstrate strong fundamentals, 11% growth in PBT Y-o-Y Amounts in KES B Income Statement Balance Sheet Total Income PBT Total Assets Customer Deposits Gross Loans CAGR 10.3% 9.3% CAGR 8.7% CAGR 8.4% +17% CAGR 13.7% CAGR 29.1% 660 10.3% 324 60
Slide 24: Enhancing the contribution from our subsidiaries
NCBA GROUP FINANCIAL PERFORMANCE Our focus on enhancing the contribution from our subsidiaries is showing demonstrable success (14% contribution in H1 2023 up from 7% in H1 2022) Contribution to Group PBT in H1-2022 Contribution to Group PBT in H1-2023 Uganda 5% Tanzania Uganda, 3% 2% Investment Ban
Slide 25: Customer growth and retention driving deposit mobilization
NCBA GROUP FINANCIAL PERFORMANCE Customer growth and retention efforts are driving deposit mobilization (10% up Y-o-Y), while balance sheet optimization efforts are improving our funding mix Amounts in KES B Despite the macro economic conditions our deposits ….and we have improved our CASA ratio to
Slide 26: Customer growth agenda increased lending by 17% Y-o-Y
NCBA GROUP FINANCIAL PERFORMANCE Our customer growth agenda has seen us increase our lending substantially (+17% Y-o-Y) with well controlled credit risk outcomes Amounts in KES B NCBA Group Gross Loans accelerated in H1-23 while NPL …NCBA Group credit risk outcomes continue to buck industry ratio ed
Slide 27: Balance sheet optimization delivered margin expansion and 16% NII growth
NCBA GROUP FINANCIAL PERFORMANCE Our balance sheet optimization efforts have delivered healthy margin expansion and 16% growth in NII Amounts in KES M Amounts in KES M Optimization of our balance sheet has seen us deliver NIM … and subsequently 16% Y-o-Y NII growth uplift despite the pressure on cos
Slide 28: Franchise strengths supported growth in foreign currency deposits
NCBA GROUP FINANCIAL PERFORMANCE Our franchise strengths have supported growth in our foreign currency deposits and transactional volume growth has shored up our NFI outcomes as FX margins moderated Amounts in KES B Amounts in KES M We continue growing our market leading FCY deposit ….and our transa
Slide 29: Investment in growth initiatives and inflation pressure cost efficiency
NCBA GROUP FINANCIAL PERFORMANCE Investment in strategic growth initiatives & inflationary pressures have led to near term pressure on cost efficiency; this will resolve in the medium term as investments break even Amounts in KES M OPEX Increased by 24% y-o-y in H1-23…. …as we continued to invest in
Slide 30: The Group remains effectively capitalized across our core markets
NCBA GROUP FINANCIAL PERFORMANCE The Group remains effectively capitalized across our core markets providing ample room to invest in growth Total Capital/RWA across our markets 26.25% 20.47% 16.08% 17.96% 17.63% 14.25% 3.36% 3.13% 5.97% 1.08% Buffers 14.50% 14.50% 14.50% 15.00% Minimum 12.00% Requir
Slide 31: Our strategy is delivering the desired return outcomes for a Tier 1 institution
NCBA GROUP FINANCIAL PERFORMANCE Our strategy is delivering the desired return outcomes for a Tier 1 institution We are delivering on post merger promises on ROE …while matching similar sized peers on ROA 21.7% 3.0% 19.60% 2.70% 12.50% 1.70% H1-21 H1-22 H1-23 H1-21 H1-22 H1-23 31
Slide 32: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 33: 2023 Guidance
2023 GUIDANCE • Return on Equity > 17% • NPL ratio < 13% Our FY 2023 • Cost to Income Ratio: 40-45%. Guidance • Capital Adequacy: Maintain a 300Bps buffer above regulatory limits • Core Bank Cost of Risk: 1.5% - 2.0% 33
Slide 34: PG |
PG | 34
Slide 35: Statement of Profit & Loss
APPENDIX I Statement of Profit & Loss Amounts in KES Millions NCBA Bank Kenya NCBA Group Consolidated 1H23 1H22 ∆% 1H23 1H22 ∆% Interest Income 27,015 22,345 21% 30,346 24,931 22% Interest Expenses -11,956 -9,207 30% -13,135 -10,131 30% Net Interest Income 15,059 13,139 15% 17,211 14,800 16% FX Inco
Slide 36: Statement of Financial Position
APPENDIX II Statement of Financial Position Amounts in KES Millions NCBA Bank Kenya NCBA Group Consolidated 1H23 1H22 ∆% 1H23 1H22 ∆% Assets Net Loans and Advances 257,973 224,828 15% 292,380 250,499 17% Investments 208,169 212,562 (2%) 231,679 232,082 (0%) Cash and Balances with Banks 71,529 56,733