Equity Group Holdings Limited · NSEKE:EQTY

Equity — Q1 2016 Earnings Presentation

63 slides from Equity's earnings presentation, March 2016

  1. Slide 1: Investor Briefing & Q1 2016 Performance

    Investor Briefing & Investor FY2015Briefing & Performance Q1 2016 Performance March 2016

  2. Slide 2: Equity Group Holdings Limited Headquarters

    Equity Group Holdings Limited Headquarters Equity Centre, Upperhill, Nairobi

  3. Slide 3: Equity Group's Philosophies

    Equity Group’s Philosophies Our Purpose We exist to transform the lives and livelihoods of our people socially and economically by availing them modern, inclusive financial services that maximize their opportunities. Our Vision To be the champion of the socio-economic prosperity of the people of Afr

  4. Slide 4: Macro-economic overview

    Macro-economic overview 2 4

  5. Slide 5: Foreign Exchange Rate - Kenya

    Foreign Exchange Rate - Kenya ! The Kenya Shilling has appreciated by 1.0% on a YTD basis against the USD USD / KES 106.0 105.3 105.0 103.9 104.0 103.0 102.5 102.3 102.3 102.1 101.8 101.7 102.0 101.3 101.1 +1% 0.0 Jul ’15 Aug ’15 Sep ’15 Oct ’15 Nov ’15 Dec ’15 Jan ’16 Feb ’16 Mar ’16 Apr ’16 ! Stab

  6. Slide 6: KES vs East African Currencies

    KES vs East African Currencies USD vs. The Kenya Shilling maintained USH,TSH, stability against RWF, KSH currencies in 2016 the regional 2015 2016 40.0 35.2 35.0 35.0 35.0 34.0 33.3 33.3 32.9 33.0 33.0 33.0 KES / USHS -1% 30.0 25.0 21.4 21.2 21.1 21.4 21.5 21.6 21.7 20.6 20.6 20.5 KES / TSHS +5% 20.

  7. Slide 7: FX Reserves - Kenya

    FX Reserves - Kenya ! FX reserves have risen to five months of import cover giving a significant cushion to the shilling ! Reserves currently stand at $7.62 billion amounting to 4.96 months of import cover. 5.0 5.0 4.6 4.7 4.6 4.5 4.3 4.3 4.3 4.4 4.3 4.1 Months of Import Cover 4.0 Desired Minimum 0.

  8. Slide 8: Current Account balance as a % of GDP - Kenya

    Current Account balance as a % of GDP - Kenya In Percent 2010 2011 2012 2013 2014 2015 2016 0 -1 -2 -3 -4 -5 -5.9 -6 -7 -8.4 -8.2 -8.2 -8 -9.1 -8.9 -9 -10 -10.4 -11 6 8

  9. Slide 9: Inflation - Kenya

    Inflation - Kenya ! The latest inflation figure as at end of April was 5.3% (down from 6.45% in March) due to - Food prices (food index is down due to the rains) - Low fuel prices 10 8.0% 7.8% 8 6.8% 6.5% 6 5.3% 4 2 0 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 9 7

  10. Slide 10: Interest Rates

    Interest Rates ! Due to the high liquidity in the market, interest rates have been dropping since the beginning of February 2015 2016 Political and Economic review in theSep-Oct region Jul Aug Sep Peak Oct Nov Dec Jan Feb Mar Apr Interbank rate 12.89% 18.81% 19.84% 25.84% 14.87% 8.77% 5.19% 6.13% 4.

  11. Slide 11: Kenya's Resilient Economy

    Kenya’s Resilient Economy ! Kenya’s GDP growth rate maintained an upward growth rate with an increasing momentum while Africa is experiencing declining growth rate. ! Kenya’s Gross Domestic Product (GDP) is estimated to have expanded by 5.6% in 2015 which was a slight improvement compared to a 5.3%

  12. Slide 12: Economic growth drivers

    Economic growth drivers ! Kenya Tourism showing positive signs of recovery with enhanced security with Kenya registering the highest growth of 27% in Hotel Bookings For The Period May To July In Africa. Government incentive on reduction of park entry fees from $90 to $60 and More chartered airlines

  13. Slide 13: Macro-economic Indicators – East Africa

    Macro-economic Indicators – East Africa 11 13

  14. Slide 14: Macro-Economic Indicators Summary (East Africa)

    Macro-Economic Indicators Summary (East Africa) Uganda Rwanda Tanzania DRC 91 Days T-Bill 15.56% 5.89% 9.02% 4.7% 182 Days T-Bills 16.28% 6.21% 17.67% 5.4% 364 Days T-Bills 16.19% 8.35% 18.81% 8.1% Central Bank Rate 16.0% 12.0% 12.0% 6.5% Inflation 6.2% 5.8% 5.4% 4.5% 12 14

  15. Slide 15: Governance & leadership structure

    Governance & leadership structure 13 15 15

  16. Slide 16: Strong Governance & Leadership Structure

    2 Strong Governance & Leadership Structure CBK CMA NSE Rating Agencies Equity Group Holdings Limited Shareholders Subsidiary Boards Group Board Subsidiary Boards Group Board CEO’s office Board Committee Chief Officer, Board Director Governance, Director Committees Finance, Committees Brand, CEO Stra

  17. Slide 17: Regional expansion and diversification

    Regional expansion and diversification 15 17

  18. Slide 18: Regional Expansion – Key Metrics for Banking Subsidiaries

    Regional Expansion – Key Metrics for Banking 3 Subsidiaries KES “Billion” Regional Regional Regional Contribution Contribution Tanzania Rwanda Uganda S. Sudan DRC Total Q1 2016 Q1 2015 Deposits 12.8 10.5 12.5 10.5 20.7 67.0 22% 21% Deposits Growth 1% 23% 21% -61% 31% 14% Loan 15.4 8.6 7.0 0.4 14.2 4

  19. Slide 19: Regional Subsidiaries – Size and Contribution

    3 Regional Subsidiaries – Size and Contribution (Assets and PBT contribution by countries) Total Assets split by Country PBT split by Country 100.0% 100.0% 100.0% 100.0% Rwanda 3.0% 3.1% 1.9% 0.8% Rwanda 1.2% Uganda 4.0% 3.8% Uganda 1.4% 1.1% Tanzania 1.5% 1.5% Tanzania 4.6% 4.7% 0.0% 0.2% DRC DRC 0

  20. Slide 20: Net Interest Margin

    3 Net Interest Margin Percentage Kenya DRC Uganda 15.1 15.6 12.8 14.1 11.5 10.9 11.1 11.4 10.5 11.8 9.7 9.7 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 Rwanda Tanzania South Sudan 9.1 8.8 9.3 7.9 5.2 4.7 4.7 4.5 3.5 2.6 2.1 -0.1 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 Q2

  21. Slide 21: Digital bank

    . ’ Digital bank ety EQUITY 19 Group Holdings Limited.

  22. Slide 22: Execution on Digital Banking

    Execution on Digital Banking 4 (Increased number of Transaction numbers & values) Transaction numbers in millions +315% +26% -15% 45.6 14.7 6.5 11.6 5.5 -15% +45% 7.8 6.6 11.0 2.2 1.5 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 Agency ATM Merchants Equitel Branch

  23. Slide 23: Execution on Digital Banking (Transaction numbers trend)

    Execution on Digital Banking 4 (Transaction numbers trend) Transactions (Millions) 80 79.5 Mobile 15 14.7 Agency 11.6 10 8.5 8.3 8.0 7.8 8.3 6.7 7.8 ATM 6.6 6.8 6.6 6.9 6.4 Branch 5 5.5 3.7 0 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Cash related transactions only 21 23

  24. Slide 24: Execution on Digital Banking (Equitel customer numbers)

    Execution on Digital Banking 4 (Equitel customer numbers up 180% growth YoY) KES “000” Linkage to M-Banking SIM uptake +180% 2,000 2,000 1,861 1,760 1,750 1,665 1,750 1,591 90% 1,500 1,500 90% 1,500 1,369 90% 89% 1,250 1,166 1,178 89% 1,250 1,085 1,024 88% 1,000 902 87% 1,000 86% 788 85% 87% 750 666

  25. Slide 25: Execution on Digital Banking (Mobile Transactions & Value)

    Execution on Digital Banking 4 (Mobile Customer Transaction Numbers & Value Trend) Cumulative M-Banking Transactions numbers (millions) Cumulative M-Banking Value (KES billions) 196.6 220 200 181.3 200 180 165.9 180 177.3 151.0 160 160 152.1 132.4 140 140 118.2 131.9 120 120 105.4 114.9 94.9 100 100

  26. Slide 26: Execution on Digital Banking (Loan disbursements Mobile vs Branch)

    4 Execution on Digital Banking (Count of loan disbursements through Mobile vs. Branch) In Thousands Combined Mobile Branch 3,600 3,381 3,200 3,057 2,800 2,744 2,455 2,400 2,101 2,749 2,000 2,456 (81%) 1,770 2,176 (80%) 1,600 1,503 1,922 (79%) 1,284 1,608 (78%) 1,200 1,320 (77%) 1,068 944 1,087 (75%)

  27. Slide 27: Execution on Digital Banking (KES 14.1 billion Disbursed through Mobile)

    Execution on Digital Banking 4 (KES 14.1 billion Disbursed through Mobile Channel) Disbursement Count (number) Loan Value Disbursement (KES "Billion") 353,052 2,749,290 +1,012% 14.1 11.8 10.0 8.5 6.9 5.6 4.6 3.8 2.9 2.4 1.9 1.3 1.6 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2015 2015 2015 2

  28. Slide 28: Execution on Digital Banking (Loan Outstanding Trend)

    Execution on Digital Banking 4 (Loan Outstanding Trend) In Billions +797% 2.51 2.01 1.82 1.54 1.46 1.02 0.82 0.85 0.47 0.51 0.41 0.28 0.30 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2016 2016 2016 26 28

  29. Slide 29: Execution on Digital Banking (Loan Repayment Trend)

    Execution on Digital Banking 4 (Loan Repayment Trend) 27 29

  30. Slide 30: Continuous Growth in Agency Banking

    4 Continuous Growth in Agency Banking Focus on Variable … More transactions now processed under 3rd party infrastructure saving on cost model… fixed costs ▪ Number of Transactions (Millions) agents 14.7 increased to 15 Agency 25,388 +26.2% agents. 31% 11.6 growth y/y ▪ Agent 10 transactions 8.4 8.5

  31. Slide 31: Number and Value of Agents Transactions 2011 - 2016

    4 Number and Value of Agents Transactions 2011 - 2016 Transactions in million Value in billion kes 38 5.5 5.2 36 34 5.0 4.7 32 4.5 4.5 30 4.1 4.2 28 4.0 26 3.7 3.5 24 3.5 3.1 22 3.0 3.0 20 2.6 2.5 2.5 18 36 34 2.5 16 2.2 2.2 31 14 1.9 2.0 26 27 12 25 1.5 1.4 22 10 1.5 19 19 8 1.0 17 16 16 14 14 1.0

  32. Slide 32: Number of Merchants Outlets 2011 - 2016

    4 Number of Merchants Outlets 2011 - 2016 +679.8% 8,063 7,749 6,864 6,153 5,618 5,166 4,412 3,720 3,499 3,066 2,824 2,668 2,346 2,018 2,139 1,658 1,519 1,034 1,065 1,083 1,194 Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar 2011 2011 2011 2011 2012 2012 2012

  33. Slide 33: Merchants Turnover and Revenue 2011 - 2016

    6 Merchants Turnover and Revenue 2011 - 2016 Revenue in million kes Turnover in billion kes 88 88 4.5 90 4.0 80 70 3.5 66 70 64 63 3.0 60 53 2.5 50 44 4.4 2.0 38 40 36 3.9 29 3.2 3.3 1.5 26 2.9 30 25 2.7 23 20 2.1 1.0 17 18 20 16 1.8 1.8 12 1.6 9 11 1.3 1.3 1.2 0.5 1.0 1.1 10 0.8 0.8 0.8 0.5 0.5 0.6

  34. Slide 34: Merchant Business and Payments

    Merchant Business and Payments 32 34

  35. Slide 35: We are building on our momentum in Payment Processing and Merchants

    We are building on our momentum in Payment Processing and 4 Merchants… We have partnered with key payment …which has allowed us to grow our number of transactions companies… and commissions Volume (Millions) Commissions (Millions) +43% 11,057 +59% 7,735 4,854 259 +43% 181 +54% 117 ▪ Equity is leadin

  36. Slide 36: SME strategy

    SME strategy 34 36

  37. Slide 37: SME contribution to the Loan Book and CASA

    5 SME contribution to the Loan Book and CASA Loan book split by type Deposit base split by type 100.0% 100.0% 100.0% 100.0% Agriculture 2.8% 2.6% Term 19.9% 21.1% 21.7% Consumer 22.7% Deposits 5.9% Micro 6.6% Savings 43.0% 42.7% SME 49.8% 55.1% Current 35.9% 35.6% Accounts Large 18.0% 16.5% Enterpri

  38. Slide 38: Growing Non-funded Income as a result of cross-selling to SMEs

    5 Growing Non-funded Income as a result of cross-selling to SME’s Non Funded Income by Type 15.6 Other 13.3% 15.9% Income 13.2bn 5.2 (33%) Foreign 11.1bn 20.5% 16.2% Exchange 10.2bn 5.6 (42%) 9.0bn 4.1bn 3.3bn (37%) Non- 3.3bn (33%) Funded (37%) 10.4 Fees & 68.0% 66.2% (67%) Commission 6.9bn 7.0bn 7

  39. Slide 39: Qualitative analysis

    Qualitative analysis ia 37 Group Holdings Limited.

  40. Slide 40: Equity earned recognition in 2015

    6 Equity earned recognition in 2015 Equity’s International Rankings Overall Soundness Performance Equity Bank (Capital Assets Ratio) (Profits on capital) (Return on assets) 2015 Global Rank 916 88 18 8 2014 Global Rank 999 112 8 4 Equity’s Global Credit Rating 38 40

  41. Slide 41: Equity Group's stock creates excitement Globally

    6 Equity Group’s stock creates excitement Globally Reuters: Equity Group Holding yielding a higher return at a lower risk Yield per unit of Risk STOCK Beta Yield (%) ROaE (Yield/Beta) KCB 1.44 4.68% 25.0% 3.25% EGHL 1.28 4.88% 25.5% 3.81% COOP 1.18 4.10% 25.2% 3.47% Financial Times: Equity Group Hol

  42. Slide 42: Equity Bank – Most valuable lender listed at the NSE

    6 Equity Bank – Most valuable lender listed at the NSE 40 42

  43. Slide 43: Equity Bank scoops 12 Awards at the 2016 Think Business Banking Awards

    Equity Bank scoops 12 Awards at the 6 2016 Think Business Banking Awards Equity has earned substantial accolades in 2016 Best Bank in SME Banking (2016, 2015) 43 41

  44. Slide 44: Banker Africa – East Africa Awards 2016

    Banker Africa – East Africa Awards 2016 Best Mobile Banking Service, Most Innovative Bank Equitel 42 44

  45. Slide 45: Performance of core business (intermediation)

    Performance of core business (intermediation) 45 43

  46. Slide 46: Funding Base (Significant improvement in funding profile)

    Funding Base 7 (Significant improvement in funding profile) 15.5% growth in funding with deposits accounting for 70% In KES “Billion” 15.5% Growth per Class 430.2 14.7 102% 46.0 (3%) 372.5 7.3 (11%) 76% Other Liabilities 26.2 (2%) Borrowed Funds (7%) 69.1 60.9 (16%) 13% Shareholders’ Funds (16%) 300

  47. Slide 47: Deposits by Entity & Type

    7 Deposits by Entity & Type Deposit split by Type Deposit split by Entity 100.0% 100.0% 100.0% 100.0% Rwanda 3.0% 3.3% 3.4% Term 21.1% 21.7% S. Sudan 9.6% 4.0% Deposits 4.1% Uganda 3.6% Tanzania 4.5% 6.7% DRC 0.0% Savings 43.0% 42.7% 79.3% 78.5% Kenya Current 35.9% 35.6% Accounts Q1 2015 Q1 2016 Q1

  48. Slide 48: Assets of KSH 430 Billion driven by stable Deposit base

    7 Assets of KSH 430 Billion driven by stable Deposit base In KES billion 15% growth in asset base while still maintaining portfolio diversification +15.5% 430.2 Growth per Asset Class 44.5 (10.3%) 21% 372.5 36.9 62.4 Other Assets 28% (9.9%) (14.5%) 48.9 Government Securities 48.3 (13.1%) -22% (11.2%

  49. Slide 49: Loan book by Segment and Entity

    7 Loan book by Segment and Entity Split across Segments Split across the entities within the Group 100.0% 100.0% 100.0% 100.0% 2.8% 2.6% 2.0% 0.2% Agriculture S. Sudan 2.5% Uganda 3.1% 3.1% 22.7% 19.9% Rwanda 3.1% Consumer 0.0% 5.2% DRC 4.9% 5.9% Tanzania Micro 6.6% 5.6% SME 49.8% 55.1% Kenya 86.9%

  50. Slide 50: Increasing Net Interest Margin

    5 Increasing Net Interest Margin Percentage Yield on interest Earning Assets Net Interest Margin 11.7 14.5 13.5 12.5 12.3 12.7 10.5 10.2 9.9 9.8 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Cost of funds 2.6 2.5 2.5 3.0 2.8 Q1 ’15 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 Q1 ’15 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 48 50

  51. Slide 51: Stable NPL Trend over time

    7 Stable NPL Trend over time EBKL Group 4.4% 4.5% 4.3% 4.1% 4.1% 3.9% 3.8% 3.5% 3.3% 2.9% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 51 49

  52. Slide 52: Non-Performing Loans: High Coverage Levels

    7 Non-Performing Loans: High Coverage Levels (Spec. Prov. + Int. Susp) / Gross NPL (Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPL 92.8% 87.0% 88.7% 86.2% 84.0% 63.2% 65.0% 62.5% 60.6% 56.0% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 50 52

  53. Slide 53: Financial performance

    ia 51 Group Holdings Limited.

  54. Slide 54: Broad base liabilities & funding sources

    8 Broad base liabilities & funding sources Q1 2015 Q1 2016 Growth Y/Y Liabilities & Capital (Bn) KSH KSH % Deposits 278.2 300.3 8% Borrowed Funds 26.2 46.0 76% Other Liabilities 7.3 14.7 102% Shareholders’ Funds 60.9 69.1 13% Total Liabilities & Capital 372.5 430.2 15% Funding Distribution Q1 2015 Q

  55. Slide 55: Asset Portfolio & Distribution

    8 Asset Portfolio & Distribution Q1 2015 Q1 2016 Growth Y/Y Assets (Bn) KSH KSH % Net Loans 224.8 275.0 22% Cash & Cash Equivalents 62.0 48.3 -22% Government Securities 48.9 62.4 28% Other Assets 36.9 44.5 21% Total Assets 372.5 430.2 15% Asset Distribution Q1 2015 Q1 2016 Other Assets Other Assets

  56. Slide 56: Delivering 20% growth in PAT

    8 Delivering 20% growth in PAT KES (Billion) Q1 2015 Q1 2016 Growth Interest Income 9.5 12.9 36% Interest Expense (1.9) (2.4) 32% Net Interest Income 7.6 10.4 37% Non-Funded Income 5.6 5.2 -7% Total Income 13.2 15.6 18% Loan Loss Provision (0.3) (0.7) 104% Staff Costs (2.5) (3.0) 21% Other Operating

  57. Slide 57: Positive Financial Ratios

    8 Positive Financial Ratios Kenya Kenya Group Group Q1 2015 Q1 2016 Q1 2015 Q1 2016 Profitability NIM 10.9% 12.8% 9.9% 11.7% Cost to Income Ratio (with provisions) 50% 46% 54% 53% Cost to Income Ratio (without provision) 48% 43% 51% 49% RoAE 35.9% 37.4% 27.6% 29.1% RoAA 5.2% 5.4% 4.8% 4.8% Asset Qua

  58. Slide 58: Cost to Income Ratio Trend

    8 Cost to Income Ratio Trend Group Bank 50.9% 49.5% 51.2% 47.8% 48.7% 47.8% 48.9% 46.5% 45.4% 43.3% Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 ▪ Total Operating Income up 18% y/y mainly attributed to improved NIM ▪ Operating expenses up 17% y/y 56 58

  59. Slide 59: RoAA and RoAE overtime

    8 RoAA and RoAE overtime RoAE 37.4% 35.9% 35.0% 33.0% 33.9% EBKL 29.1% 27.6% 26.6% Group 25.3% 25.5% Q1 ’15 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 5.2% 5.2% 5.4% 4.8% 5.1% 5.0% 4.8% RoAA 4.6% 4.3% 4.5% EBKL Group Q1 ’15 Q2 ’15 Q3 ’15 Q4 ’15 Q1 ’16 59 57

  60. Slide 60: Notes

    Notes _______________________________________________________________________________________________ _______________________________________________________________________________________________ _______________________________________________________________________________________________ ______

  61. Slide 61: Notes

    Notes _______________________________________________________________________________________________ _______________________________________________________________________________________________ _______________________________________________________________________________________________ ______

  62. Slide 62: Equity has set an ambitious growth target across Africa over the next 10 years

    Equity has set an ambitious growth target across Africa over the next 10 years 6 countries in East & Central Africa 15 countries across Africa = Population of 145 Million = Population of 810 Million (29 million are banked) = Nominal GDP of USD 2,259 Bn = Nominal GDP of USD 150 Bn = 10million members

  63. Slide 63: Equity Centre, Hospital Road, Upper Hill, Nairobi

    Equity Centre, Hospital Road, Upper Hill, P.O. Box 75104-00200 Nairobi, Tel: + 254763 063 000, Fax: + 254-020-2737276, Info@equitygroupholdings.com, www.equitygroupholdings.com @KeEquityBank KeEquityBank 63

Equity Group Holdings — Q1 2016 Earnings Presentation on 6ix