Co-operative Bank Of Kenya Ltd. · NSEKE:COOP
Co-operative Bank Of Kenya — FY2023 Earnings Presentation
71 slides from Co-operative Bank Of Kenya's earnings presentation, March 2024
Slide 1: Group Financial Results FY 2023
Group Financial Results FY 2023 1
Slide 2: Key Highlights
Group Financial Results FY 2023 Key •We are Growing •We are Resilient Highlights •We are Agile 2
Slide 3: A Transformational Bank
Group Financial Results FY 2023 A Transformational Bank Largest Co-operative Bank in Africa - 15 Million Members Successful Universal Banking Model, Increased Dominance in Kenya Growth, Resilience and Agility Kshs. 671.1 Billion in Total Assets 5400 Skilled, Motivated Staff Members 3
Slide 4: We are Growing: Creating Value
We are Growing: Creating Value 4
Slide 5: Efficient, Profitable Business Model; Growing Asset Base
Group Financial Results FY 2023 Efficient, Profitable Business Model 32.4 Continued focus on optimizing opportunities for growth through an Profit Before Tax innovative array of financial solutions. (KShs. B) 29.4 FY2022 FY2023 Growing Asset Base 671.1 Total Assets 607.2 (KShs. B) FY2022 FY2023 5
Slide 6: We are Resilient: Protecting Value
We are Resilient: Protecting Value 6
Slide 7: Profitable Bank; Strong Capital Buffers
Group Financial Results FY 2023 Strong Capital Buffers: Total Capital to Risk Profitable Bank Kshs. 32.4 Billion Weighted Assets (RWA) 22.5% (Regulatory 14.5%) Proactive Enterprise Risk Management Continuous support to our customers, staff and Framework. all our other stakeholders. Up to 49.4% of ou
Slide 8: Continued gains from our institutionalized Transformation
Group Financial Results FY 2023 Continued gains from our institutionalized Transformation seeking efficiency and growth. We continue to reap gains from the following projects to strengthen our asset quality; • Credit Review Implementation Project “Project Kilele” • Decentralization of loan portfolio
Slide 9: New Core Banking System
G y} CO-OPERATIVE BANK We are you New Core Banking System
Slide 10: A 'Good to Great' Transformation Journey
A ‘Good to Great’ Transformation Journey Group Financial Results FY 2023 Improved business agility and flexibility A modern, robust and scalable Core Banking Support for Process Automation solution, enhancing the Bank’s response to changes in the industry, continuous and digitization On 12th June 20
Slide 11: We are Agile: Fast | Adaptable
We are Agile: Fast | Adaptable 11
Slide 12: Operational efficiency
Group Financial Results FY 2023 1. Successful migration to a New Core Banking System Expected Key benefits include enhanced; • Business agility & Innovation Operational efficiency with • Customer experience • Cost management • Analytics • Process automation & Digitization 2. Optimization of Omnichan
Slide 13: Macroeconomic Highlights
Group Financial Results FY 2023 •Global Economy Macroeconomic •Kenya’s Economic Growth Highlights •Inflation and Interest Rate •Foreign Exchange Rate 13
Slide 14: Global Economic Resilience in a tight operating environment
Group Financial Results FY 2023 Global Economic Resilience in a tight operating environment 2023 2024 SECTOR 2019 2020 2021 2022 Annual Q1 Q2 Q3 Q4 Est Proj. Est 1. Agriculture 2.7 4.6 -0.4 -1.6 6.1 8.2 6.7 5.8 6.6 4.9 2. Non-Agriculture 5.7 -1.4 9.5 6.3 5.3 4.8 5.7 5.7 5.4 5.9 2.1 Industry 4.0 3.3
Slide 15: Globally, 2023 was characterized by persistent inflationary pressures
Group Financial Results FY 2023 • Globally, 2023 was characterized by persistent inflationary pressures, high interest rates, geopolitical tensions including the Russia-Ukraine conflict, the China –US trade disagreements and the attacks on ships in the Red Sea disrupting supply chains. • Despite the
Slide 16: Strong Headline Growth Driven by Recovery in Agriculture
Group Financial Results FY 2023 Strong Headline Growth Driven by Recovery in Agriculture, Public Sector Spending & Resiliency in the Services Sector 2023 2024 SECTOR 2019 2020 2021 2022 Annual Q1 Q2 Q3 Q4 Est Proj. Est 1. Agriculture 2.7 4.6 -0.4 -1.6 6.1 8.2 6.7 5.8 6.6 4.9 2. Non-Agriculture 5.7 -
Slide 17: Domestically, 2023 was characterized by weak demand
Group Financial Results FY 2023 • Domestically, 2023 was characterized by weak demand because of high inflation, high interest rates, significant depreciation of the Kenyan shilling, increased taxation and deteriorating asset quality on a weak macro environment. • Headline growth remained strong des
Slide 18: Inflation Trending downwards, Projected Firmly Within CBK Target Band
Group Financial Results Full Year 2023 Inflation Trending downwards, Projected Firmly Within CBK Target Band Trend In Overall Inflation SHORT TERM INTEREST RATES 18 18.00 16 16.00 14 14.00 12 12.00 10 10.00 8 8.00 6 4 6.00 2 4.00 0 2.00 0.00 Feb-21 Feb-22 Feb-23 Feb-24 food fuel NFNF Overall 91-day
Slide 19: Improved external flows & Eurobond buyback
Group Financial Results FY 2023 Improved external flows & successful Eurobond buyback in February 2024 has resulted in positive sentiments for Kenya, reduced demand for foreign currency debt repayments & giving room for smoothening volatilities in the FX market. Rates appear to have peaked in most m
Slide 20: Corporate Strategic Plan 2020 – 2024
Group Financial Results FY 2023 2020 – 2024 Corporate Strategic Plan 20
Slide 21: Purpose, Vision, Mission
Group Financial Results FY 2023 PURPOSE VISION MISSION A financial institution predominantly owned by To be the dominant bank in Kenya and the To offer a wide range of innovative financial solutions leveraging the Kenyan Co-operative movement, region, riding on the unique Co-operative Model on our h
Slide 22: Co-operative Bank Group Structure
Group Financial Results FY 2023 Co-operative Bank Group Structure 22
Slide 23: Group Structure
Group Financial Results FY 2023 Co-operative Bank of South Sudan Ltd (51%) Co-op Consultancy and Bancassurance Intermediary Ltd (100%) 15M Member Co-operative Movement Co-optrust Investment Services Ltd (100%) Co-op Holdings Co-op Society Ltd (64.56% Strategic Ownership) Kingdom Securities Ltd (60%)
Slide 24: A Successful Universal Banking Model
Group Financial Results FY 2023 A Successful Universal Banking Model Corporate Government & Retail and Business Banking Institutional Banking (Kshs. (Kshs.251.2 Billion Loan Book) 114.3 Billion Loan Book) Leasing: Co-operatives Banking (Kshs. Coop Bank Fleet Africa Ltd 35.5 Billion Loan Book) (Kes.1
Slide 25: Our Presence
Group Financial Results FY 2023 Our Presence 17000+ 194 Branches Co-op Kwa Jirani 24hr Contact Centre Agents 5M Omni Channel 21K Diaspora Banking Customers Customers 5,400 Staff 599 ATMs & Cash 484 Sacco Front New Core Banking Deposit Machines offices Branch System (CDMs) Network
Slide 26: "Soaring Eagle" Transformation
Group Financial Results FY 2023 “Soaring Eagle” Transformation
Slide 27: "Soaring Eagle" Transformation Agenda focuses on
Group Financial Results FY 2023 “Soaring Eagle” Transformation Agenda focuses on 1. Branch Transformation 2. MSME Transformation 3. Sales Force Effectiveness 4. Shared Services & Digitization “The Digital Bank” 5. NPL Management & Credit Processes 6. Cost Management 7. Data Analytics 8. Staff Produc
Slide 28: "Soaring Eagle" Transformation: Key achievements
Group Financial Results FY 2023 “Soaring Eagle” Transformation: Key achievements E-CREDIT FOCUS: KSHS.352.2B DISBURSED SO FAR Short-term tenor Average disbursement of Ksh.6.3B per month. 91% of total transactions are on Alternative Channels. Consumer Based that is on salary checkoff deductions at so
Slide 29: "Soaring Eagle" Transformation: Key achievements
Group Financial Results FY 2023 “Soaring Eagle” Transformation: Key achievements MSME Transformation Customers onboarded Customers Trained (MSME Gold, Silver, Bronze) 58,850 208,000 Non-Financial Services 107 Webinars 160 Clinics Government of Kenya Credit Guarantee Scheme 35 networking forums https
Slide 30: "Soaring Eagle" Transformation: Key achievements
Group Financial Results FY 2023 “Soaring Eagle” Transformation: Key achievements Sales Force Effectiveness for Corporates and Cooperatives Sector focus; Tailor-made go-to-market strategies for different Advanced data analytics sectors. Supporting Data-led sales, reporting and decision making Scale u
Slide 31: Credit Review Implementation Project
Group Financial Results FY 2023 Credit Review Implementation Project 31
Slide 32: Credit Review Implementation Project: Project Kilele
Group Financial Results Credit Review Implementation Project: FY 2023 Project Kilele Comprehensive diagnostic review on each area of credit risk, including: • Credit risk management framework with a key focus on risk governance, credit risk E2E assessment of credit risk appetite, origination and und
Slide 33: Project Kilele Key Achievements
Group Financial Results FY 2023 Project Kilele Key Achievements Roll out of new Application For Facility forms. Underwriting process optimization Improving Turn Around Time for facilities. Auto disbursements. Reclassification of sectors and sub- Business Process Management System optimization sector
Slide 34: Environmental Social and Governance (ESG)
Group Financial Results FY 2023 Environmental Social and Governance (ESG) 34
Slide 35: ESG Policy Statement
Group Financial Results FY 2023 Environmental Social and Governance (ESG) Policy Statement The Co-operative Bank Group objectives under this policy are: • To incorporate strong environmental, social, and corporate governance principles throughout all operations and business activities. • To comply w
Slide 36: ESG Policy Framework
Group Financial Results FY 2023 ESG Policy Framework Environmental and Social Climate Risk Management Sustainable Finance ESG Policy Statement ESG Risk Management Management System Integration Framework Our ESG Policy Framework is a cohesive structure guiding Co-operative Bank's strategic approach t
Slide 37: ESG Impact
Group Financial Results FY 2023 ESG Impact MSME Financing Affordable Basic Infrastructure Renewable Energy 12.3 Billion Access to Essential Green Buildings Food Security Services Employment Generation Youth Banking Affordable Housing 10,264 • Kshs.100M Co-op Bank Capacity-building & Sustainable Wate
Slide 38: Awards: MSME Transformation
Group Financial Results FY 2023 Awards : MSME Transformation ✓ Affirms our MSME Transformation strategy, developing co-created solutions catering to the needs of MSMEs. ✓ We are passionate about transforming their aspirations into concrete milestones 38
Slide 39: Sustainability Awards
Sustainability Awards Most Sustainable Bank in Kenya Most Innovative Bank Best in financing Commercial Clients Best in Promoting Gender Inclusivity Best In promoting People with Disability (PWD) 1ST Runners up – Best in Financing MSMEs 2ND Runners Up – Best in Sustainable Finance 39
Slide 40: Award-Winning Brand
Group Financial Results Award-Winning Brand FY 2023 Best Women and Youth empowerment Programs. • Education Scholarship Program • Adoption of Agribusiness and use of Renewable KBA CUSTOMER SATISFACTION SURVEY 2022 & 2023 Energy Technologies for Agriculture by Youth in Kenya Best Overall in Satisfacto
Slide 41: Regional Business, Kshs. Millions
Group Financial Results FY 2023 Regional Business, Kshs. Millions 10,580 7,639 6,928 4,429 4,024 1,861 Total Assets Total Deposits Loans And Advances FY2022 FY2023 1,531 1,240 972 857 4 Branches in Juba 453 291 5 Non-oil collection centers 202 133 Owns 31% of CIC Africa Ltd- South Sudan Total operat
Slide 42: Channel Performance
Group Financial Results FY 2023 Channel Performance 42
Slide 43: Growing Digital Channels
Group Financial Results FY 2023 Growing Digital Channels 91% of our Transactions are on alternative Channels providing opportunities for efficiency. Digital Channels Vs Branch (%) 91% Mobile Internet 9% ATM & Agency CDM Branch Digital Channels 43
Slide 44: MCo-op Cash Mobile Wallet A unique Offering
Group Financial Results FY 2023 MCo-op Cash Mobile Wallet A unique Offering 44
Slide 45: MCo-op Cash Mobile Wallet A unique Offering
Group Financial Results FY 2023 MCo-op Cash Mobile Wallet A unique Offering MCo-op Cash is an all-telco, all products mobile banking service that enables customers to enjoy access to a variety of banking services, money transfer and payment services. It’s a virtual account with a simple menu where t
Slide 46: Omnichannel Banking
Group Financial Results FY 2023 Omnichannel Banking We have successfully migrated our customers to the Omni- channel integrating accessibility and user experience. Our omnichannel interfaces online banking through personal computers, mobile phones, and USSD availing our services to all customers thr
Slide 47: Digital lending focus E-credit
Group Financial Results FY 2023 Digital lending focus E-credit A superior product for our customers that continues to scale and is a key revenue source • A key focus area, Kshs. 352.2B disbursed to Date. • Kshs. 6.3 Billion disbursed per month on average. • Consumer based salary checkoff hence lower
Slide 48: E-credit: Kshs 352.2B Disbursed since inception
E-credit Group Financial Results FY 2023 Cumulative Mcoop Cash Loan Customer Numbers ( In '000’) 10,727 8,774 A superior product for our customers that continues to scale and is a key revenue source 6,577 4,641 Kshs 75.3B Disbursed YTD 2,924 1,389 694 Kshs 352.2B Disbursed since inception. 183 388 2
Slide 49: Growing Co-op Kwa Jirani Agency Banking
Group Financial Results FY 2023 Growing Co-op Kwa Jirani Agency Banking No. of Agents Total No. of Transactions Deposits Generated by Agents 17,959 (Millions) (Ksh.Bn) 35 196 17,056 29 153 FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 Agency Banking Dec'22 Jan '23 Feb'23 Mar'23 Apr'23 May'23 Jun'23 Jul'
Slide 50: Agency Banking
Group Financial Results FY 2023 Agency Banking Transaction Type (%) 2022 2023 43.1% 45.4% 28.7% 29.3% 14.4% 13.3% 13.9% 12.0% Growing Co-op Kwa Jirani Agency Banking Deposits Withdrawals Balance Inquiry Others ✓ Key deposit mobilization Transaction Value distribution (%) channel 2022 2023 ✓ Higher d
Slide 51: Financial Highlights
Group Financial Results FY 2023 Financial Highlights 51
Slide 52: Strong Financial Position (Kshs. Billions)
Group Financial Results FY 2023 Total Assets Net Loan book 671.1 374.2 607.2 339.4 FY2022 FY2023 Strong Financial Position FY2022 FY2023 (Kshs. Billions) Total Deposits Total Shareholder's Funds 456.1 113.6 424.9 107.7 FY2022 FY2023 FY2022 FY2023 52
Slide 53: Strong Financial Position: Balance Sheet
Group Financial Results FY 2023 Balance Sheet Ksh. Billions FY2023 FY2022 % Growth Total Assets 671.1 607.2 10.5% Net Loan book 374.2 339.4 10.3% Strong Financial Position (Kshs. Billions) Government Securities 189.0 173.3 9.1% Total Deposits 456.1 424.9 7.3% Borrowed Funds 67.3 48.1 40.0% Sharehold
Slide 54: Diversified loan book
Group Financial Results FY 2023 FY2022 FY2023 Diversified loan book 46.8% 46.4% • Diversified across segments. • Highest book is in Personal Banking; • Check off; deductions are done at 28.5% 27.4% source. • Diversified across various Government/quasi-government 16.9% 15.8% employees. • Appraisal of
Slide 55: Diversified loan book across sectors
Group Financial Results FY 2023 FY2023 FY2022 Tourism, Restraurant & Hotels 0.7% 0.7% 0.9% Diversified loan book across Building & construction 1.5% sectors Agriculture 1.7% 1.7% 49.4% in Personal consumer which Energy & Water 1.7% is performing well 2.1% Manufacturing 3.4% Low relative exposure in
Slide 56: Portfolio Trends – Sector NPL
Group Financial Results FY 2023 FY2022 FY2023 16.1% Portfolio Trends – 15.7% 14.8% Sector NPL 13.6% 13.3% 12.7% Supporting NPL Management; • Proactive Credit Management Strategies. • Business Growth. • Consumers and Businesses resilience amid tight economic environment. Bank Group Industry 56
Slide 57: Portfolio Trends – Sector NPL
Group Financial Results FY 2023 FY2023 FY2022 Energy & Water 4.6% 0.3% Portfolio Trends – Financial services 6.4% 7.9% Sector NPL Personal consumer 7.0% 6.0% Agriculture 12.6% 11.5% Transport & Communication 15.2% 11.8% Tourism, Restraurant & Hotels 18.3% 28.1% Manufacturing 18.4% 31.3% Trade 33.7%
Slide 58: Cost of risk has improved to 1.7% in FY2023
Group Financial Results FY 2023 Cost of risk has improved to 1.7% in FY2023 compared to 2.7% in FY2022. Cost of Risk IFRS Coverage Coverage with security 2.7% 72.5% 105.4% 63.9% 1.7% 104.8% FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 58
Slide 59: Well-diversified Liability Portfolio
Group Financial Results FY 2023 Well-diversified Liability Portfolio FY2023 FY2022 Transactions Accounts Fixed Deposits Current Accounts Call Deposits 7.7% Savings Accounts Government Banking 10.3% 8.4% Sacco and Agri-Business 8.6% 7.7% 11.1% 27.6% Institutional Banking 18.1% 16.5% 20.4% Corporate b
Slide 60: Strong capital to support future growth
Group Financial Results FY 2023 Strong capital to support future growth Capital buffers for sustainable growth Core capital/Total deposits Core capital/Total risk weighted Total capital/Total risk 23.4% assets weighted assets 21.9% 18.2% 22.5% 16.9% 18.0% 14.5% 14.5% 10.5% 10.5% 8.0% 8.0% FY2022 FY2
Slide 61: Optimally balanced Kenya Shilling Asset & Funding book
Group Financial Results FY 2023 An Optimally balanced Kenya Shilling Asset & Funding book Funding Book: Loan Book: Local vs. Foreign Currency Local vs. Foreign Currency LCY Deposits FCY Borrowing FCY Deposits Local currency Foreign currency 7.8% 11.9% 7.5% 84.7% 88.1% 61
Slide 62: Optimal Asset and Funding Mix
Group Financial Results Optimal Asset and Funding Mix FY 2023 FY2023 FY2022 7.2% Net Loans Net Loans 9.3% 8.8% 6.3% Government Government Securities Securities Asset Categories Cash and Cash Cash and 28.2% 55.8% Equivalent 28.5% 55.9% Cash Equivalent Other Assets Other Assets FY2023 FY2022 5.1% 4.4%
Slide 63: Strong Liquidity to Support Investments
Group Financial Results FY 2023 Strong Liquidity to Support Investments Liquidity ratio Loans /(Deposits+Borrowed 52.0% Funds) 71.8% 71.5% 48.3% FY2022 FY2023 Total Loans to Total Deposits 79.9% 82.0% FY2022 FY2023 FY2022 FY2023 63
Slide 64: Sustainable Profitability Growth
Group Financial Results FY 2023 Sustainable Profitability Growth Kshs. Billions FY2023 FY2022 YoY Change Total Interest Income 69.1 61.7 11.9% Total Interest Expenses 23.8 16.2 46.9% Net Interest Income 45.2 45.5 (0.6%) Fees and commissions on loans and advances 12.3 7.5 63.0% Other Fees and commiss
Slide 65: Group Financial Results FY2023 FY2022
Group Financial Results FY 2023 FY2023 FY2022 Growth Growth KShs '000' KShs '000' KShs '000' % Co-operative Bank of Kenya Ltd 29,616,456 26,871,740 2,744,715 10.2% Co-operative Bank of South Sudan 291,299 132,725 158,574 119.5% Co-opTrust Investment Services Ltd 226,021 208,140 17,881 8.6% Co-op Con
Slide 66: Sustainable Returns
Group Financial Results FY 2023 Sustainable Returns Return on Average Assets Return on Average Equity) Earnings per share 3.7% 3.6% 21.2% 21.0% 4.0 3.8 FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 66
Slide 67: Key Ratios
Group Financial Results FY 2023 Key Ratios Average return on Interest NIM on Loans NIM on Interest earning Assets earning assets 8.5% 12.4% 8.9% 7.6% 7.8% 12.0% FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 67
Slide 68: Key Ratios
Group Financial Results FY 2023 Key Ratios CIR - Group CIR - Bank 59.3% 58.9% 55.3% 54.4% 47.1% 47.0% 46.5% 45.9% FY2022 FY2023 FY2022 FY2023 With provision Without provision With provision Without provision 68
Slide 69: Key Ratios
Group Financial Results FY 2023 Key Ratios Non-Funded to Total Operating Cost of Customer deposits Total Cost of funds Income 4.3% 36.9% 3.5% 4.8% 3.5% 36.1% FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 69
Slide 70: Dividend Payment
Group Financial Results FY 2023 Dividend Payment The Co-operative Bank Group continues to execute a proactive growth strategy anchored on a strong enterprise risk management framework and deepening of our market dominance. We shall, riding on the unique synergies in the over 15-million-member co-ope
Slide 71: Thank You
T H A N K YO U Ge) CO-OPERATIVE BANK
Co-operative Bank of Kenya — FY2023 Earnings Presentation on 6ix