Co-operative Bank Of Kenya Ltd. · NSEKE:COOP
Co-operative Bank Of Kenya — H1 2024 Earnings Presentation
69 slides from Co-operative Bank Of Kenya's earnings presentation, August 2024
Slide 1: Group Financial Results H1 2024
Group Financial Results H1 2024 1
Slide 2: Key Highlights
Group Financial Results H1 2024 Key •We are Growing •We are Resilient Highlights •We are Agile 2
Slide 3: A Transformational Bank
Group Financial Results H1 2024 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. 716.9 Billion in Total Assets 5,426 Skilled, Motivated Staff Members 3
Slide 4: We are Growing
We are Growing Creating Value 4
Slide 5: Efficient, Profitable Business Model Growing Asset Base
Group Financial Results H1 2024 Efficient, Profitable Business Model 18.2 Continued focus on optimizing opportunities for growth through an Profit Before Tax innovative array of financial solutions. (KShs. B) 16.4 H12023 H12024 Growing Asset Base 716.9 Total Assets 664.9 (KShs. B) H12023 H12024 5
Slide 6: We are Resilient
We are Resilient Protecting Value 6
Slide 7: Profitable Bank; Strong Capital Buffers
Group Financial Results H1 2024 Strong Capital Buffers: Total Capital to Risk Weighted Profitable Bank Kshs. 18.2 Billion. Assets (RWA) 21.3% (Regulatory 14.5%) Proactive Enterprise Risk Management Continuous support to our customers, staff and all other Framework. stakeholders. Up to 50.6% of our l
Slide 8: Continued gains from our institutionalized Transformation
Group Financial Results H1 2024 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
Te, 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 H1 2024 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
We are agile Fast | Adaptable 11
Slide 12: Operational efficiency with new core banking system
Group Financial Results H1 2024 1. New Core Banking System goes Live Expected Key benefits include enhanced; • Business agility & Innovation Operational efficiency with • Customer experience • Cost management • Analytics • Process automation & Digitization 2. Optimization of Omnichannel: Integrates
Slide 13: Macroeconomic Highlights
Group Financial Results H1 2024 •Global Economy Macroeconomic •Kenya’s Economic Growth Highlights •Inflation and Interest Rate •Foreign Exchange Rate 13
Slide 14: Global Growth is weak but building
Group Financial Results H1 2024 Global Growth is weak but building WORLD ECONOMIC OUTLOOK UPDATE JULY 2024 GDP GROWTH (%) 2023 2024 2025 4.4 4.3 4.3 3.3 3.2 3.3 1.7 1.7 1.8 GLOBAL ECONOMY ADVANCED ECONOMIES EMDES 14
Slide 15: Agriculture remains the key anchor for overall economic activities
Group Financial Results H1 2024 Agriculture remains the key anchor for overall economic activities KENYA REAL GDP GROWTH (%) Q1 2022 Q1 2023 Q1 2024 AGRICULTURE INDUSTRY SERVICES OVERALL REAL GDP GROWTH 8.3 6.8 6.4 6.2 6.1 5.9 5.5 5.2 5.0 1.5 -0.9 0.1 15
Slide 16: Interest rates remain high despite fall in inflation
0.0 2.0 4.0 6.0 8.0 12.0 14.0 16.0 18.0 10.0 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 3.7 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 3.8 Nov-19 Jan-20 Mar-20 Inflation May-20 Jul-20 Sep-20 4.2 NPLs Nov-20 Jan-21 Mar-21 May-21 364-Tbill Jul-21 Sep-21 Nov-21 Jan-22 M
Slide 17: Funding pressures will see the sovereign remain active in domestic market
Group Financial Results H1 2024 Funding pressures will see the sovereign remain active in the domestic market, influencing yield levels. Domestic Borrowing, Actual (KES BILLION) Public debt repayment, Actual (% of tax revenue) Development spending(% of tax revenue) 1,400 80% 71.6% 69.7% 1,200 70% 55
Slide 18: Kenya Shilling seen stable in 2H2024
Group Financial Results H1 2024 Kenya Shilling seen stable in 2H2024 on reduced external pressures & available FX buffers. However, recent domestic events pose downside risks USD/KES Exchange Rate Rate of Depreciation/Appreciation 6.0% 160.08 180 .00 154.09 152.03 151.84 149.40 146.77 143.93 141.45
Slide 19: Corporate Strategic Plan 2020 – 2024
Group Financial Results H1 2024 2020 – 2024 Corporate Strategic Plan 19
Slide 20: Purpose, Vision, Mission
Group Financial Results H1 2024 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 21: Co-operative Bank Group Structure
Group Financial Results H1 2024 Co-operative Bank Group Structure
Slide 22: Group Structure
Group Financial Results H1 2024 Co-operative Bank of South Sudan Ltd (51%) Co-op 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%) Co-operative Ba
Slide 23: A Successful Universal Banking Model
Group Financial Results H1 2024 A Successful Universal Banking Model Corporate Government & Retail and Business Banking Institutional Banking (Kshs. (Kshs.258.8 Billion Loan Book) 111.1 Billion Loan Book) Leasing: Co-operatives Banking (Kshs. Coop Bank Fleet Africa Ltd 34.5 Billion Loan Book) (Kes.8
Slide 24: Our Presence
Group Financial Results H1 2024 Our Presence 17000+ 199 Branches Co-op Kwa Jirani Agents 24hr Contact Centre 5M Omni Channel 16K Diaspora Banking Customers Customers 5,426 Staff 604 ATMs & Cash 484 Sacco Front Deposit Machines offices Branch New Core Banking (CDMs) Network System 24
Slide 25: "Soaring Eagle" Transformation
Group Financial Results H1 2024 “Soaring Eagle” Transformation 25
Slide 26: "Soaring Eagle" Transformation Agenda focuses on
Group Financial Results H1 2024 “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 27: "Soaring Eagle" Transformation: Key achievements
Group Financial Results H1 2024 “Soaring Eagle” Transformation: Key achievements E-CREDIT FOCUS: KSHS.388.6 DISBURSED SO FAR Short-term tenor Average disbursement of Ksh.6.1 B per month. 93% of total transactions are on Alternative Channels. Consumer Based that is on salary checkoff deductions at so
Slide 28: "Soaring Eagle" Transformation: Key achievements (MSME)
Group Financial Results H1 2024 “Soaring Eagle” Transformation: Key achievements MSME Transformation Customers onboarded Customers Trained (MSME Gold, Silver, Bronze) 63,500 223,000 Non-Financial Services 115 Webinars Value adding webinar series 180 Clinics https://msme.co- opbank.co.ke/knowledge- 5
Slide 29: "Soaring Eagle" Transformation: Key achievements
Group Financial Results H1 2024 “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 30: Credit Review Implementation Project
Group Financial Results H1 2024 Credit Review Implementation Project 30
Slide 31: Credit Review Implementation Project: Project Kilele
Group Financial Results Credit Review Implementation Project: H1 2024 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 32: Project Kilele Key Achievements
Group Financial Results H1 2024 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 33: Environmental Social and Governance (ESG)
Group Financial Results H1 2024 Environmental Social and Governance (ESG) 33
Slide 34: ESG Policy Statement
Group Financial Results H1 2024 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 35: ESG Policy Framework
Group Financial Results H1 2024 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 36: ESG Impact
Group Financial Results H1 2024 ESG Impact MSME Financing Affordable Basic Infrastructure Renewable Energy 12.3 Billion Access to Essential Green Buildings Food Security Services KES 37.4 Billion Employment Generation Youth Banking Affordable Housing Portfolio of loans above USD 1 million affirmsour
Slide 37: Awards: MSME Transformation
Group Financial Results H1 2024 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 37
Slide 38: 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 38
Slide 39: Award-Winning Brand
Group Financial Results Award-Winning Brand H1 2024 KBA CUSTOMER SATISFACTION SURVEY 2022 & 2023 Best Women and Youth empowerment Programs. • Education Scholarship Program Best Overall in Satisfactory Customer Experience. • Adoption of Agribusiness and use of Renewable 33000 respondents from 38 memb
Slide 40: Regional Business, Kshs. Millions
Group Financial Results H1 2024 Regional Business, Kshs. Millions H12023 H12024 8,786 7,441 6,710 5,743 3,747 2,949 Total Assets Total Deposits Loans And Advances H12023 H12024 1,482 1,230 5 Branches 725 689 395 5 Non-oil collection centers 182 (36) Owns 31% of CIC Africa Ltd- South Sudan (252) Tota
Slide 41: Channel Performance
Group Financial Results H1 2024 Channel Performance 41
Slide 42: Growing Digital Channels
Group Financial Results H1 2024 Growing Digital Channels 93% of our Transactions are on alternative Channels providing opportunities for efficiency. Digital Channels Vs Branch (%) 93% Mobile Internet 7% ATM & Agency CDM Branch Digital Channels 42
Slide 43: MCo-op Cash Mobile Wallet
Group Financial Results H1 2024 MCo-op Cash Mobile Wallet A unique Offering 43
Slide 44: MCo-op Cash Mobile Wallet A unique Offering
Group Financial Results H1 2024 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 45: Omnichannel Banking
Group Financial Results H1 2024 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 46: Digital lending focus E-credit
Group Financial Results H1 2024 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. 388.6B disbursed to Date. • Kshs. 6.1 Billion disbursed per month on average. • Consumer based salary checkoff hence lower
Slide 47: E-credit disbursements and customers
E-credit Group Financial Results H1 2024 Cumulative Mcoop Cash Loan Customer Numbers ( In '000’) A superior product for our customers that continues to 11,591 10,727 scale and is a key revenue source 8,774 Kshs. 36.4 Disbursed YTD 6,577 4,641 2,924 Kshs. 388.6 Disbursed since inception. 1,389 388 69
Slide 48: Growing Co-op Kwa Jirani Agency Banking
Group Financial Results H1 2024 Growing Co-op Kwa Jirani Agency Banking No. of Agents Total No. of Transactions Deposits Generated by Agents (Ksh. M) (Ksh.Bn) 17,789 17,390 16.0 81.1 15.3 78.2 H12023 H12024 H12023 H12024 H12023 H12024 Agency Banking Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 J
Slide 49: Agency Banking
Group Financial Results H1 2024 Agency Banking Transaction Type (%) 46.5% 46.4% 29.8% 28.5% 13.6% 11.8% 13.3% 10.1% Growing Co-op Kwa Jirani Agency Deposits Withdrawals Balance Inquiry Others Banking H12023 H12024 ✓ Key deposit mobilization channel Transaction Value distribution (%) 63.0% 65.2% ✓ Hi
Slide 50: Financial Highlights
Group Financial Results H1 2024 Financial Highlights 50
Slide 51: Strong Financial Position (Kshs. Billions)
Group Financial Results H1 2024 Total Assets Net Loan book 716.9 375.6 664.9 365.4 H12023 H12024 Strong Financial Position H12023 H12024 (Kshs. Billions) Total Deposits Shareholder's Funds 514.0 126.7 467.5 108.3 H12023 H12024 H12023 H12024 51
Slide 52: Statement of Financial Position
Group Financial Results H1 2024 Statement of Financial Position Kshs. Billions H12024 H12023 % Growth Total Assets 716.9 664.9 7.8% Net Loan book 375.6 365.4 2.8% Strong Financial Position (Kshs. Billions) Government Securities 202.2 188.5 7.3% Total Deposits 514.0 467.5 10.0% Borrowed Funds 50.2 59
Slide 53: Diversified loan book by segment
Group Financial Results H1 2024 Loan Book By Segment H12023 H12024 Diversified loan book 48.1% 48.0% • Diversified across segments. • Highest book is in Personal Banking; • Check off; deductions are done at source. 27.5% 27.3% • Diversified across various Government/quasi-government employees. 15.9%
Slide 54: Diversified loan book across sectors
Group Financial Results H1 2024 Diversified Loan Book H12024 H12023 Tourism, Restraurant & Hotels 0.6% 0.5% Diversified loan book across 0.9% Building & construction 1.4% sectors Agriculture 1.5% 1.6% 50.6% in Personal consumer which 2.0% is performing well Energy & Water 1.7% Manufacturing 3.0% Low
Slide 55: Portfolio Trends – Sector NPL
H12024 H12023 Sector Size 3.4% Energy & Water 2.0% 0.3% 5.9% Portfolio Trends – Financial services 6.6% 9.8% Sector NPL Personal consumer 7.1% 50.6% 6.3% 16.4% Transport & Communication 9.3% 13.1% 16.4% Manufacturing 3.0% 17.2% 24.6% Agriculture 1.5% 12.7% 30.9% Tourism, Restraurant & Hotels 0.6% 19
Slide 56: Supporting NPL Management
Group Financial Results FY 2023 H12024 H12023 16.3% 16.5% 16.1% 14.5% 14.4% 13.5% Supporting NPL Management; • Proactive Credit Management Strategies. • Business Growth. • Consumers and Businesses resilience amid tight economic environment. Industry Group Bank 56
Slide 57: Cost of risk has improved to 1.62% in H1 2024
Group Financial Results H1 2024 Cost of risk has improved to 1.62% in H12024 Cost of Risk IFRS Coverage Coverage with security 1.65% 70.0% 113.0% 66.0% 109.2% 1.62% H12023 H12024 H12023 H12024 H12023 H12024 57
Slide 58: Well-diversified Liability Portfolio
Group Financial Results H1 2024 Well-diversified Liability Portfolio H12024 H12023 Savings Accounts Transaction Accounts Current Accounts Term Deposits Accounts 8.0% Sacco and Agri-Business 8.3% Call Deposits 10.0% Corporate banking 9.9% 11% 7% 11.0% Government Banking 10.9% 25% 20.0% 29% Institutio
Slide 59: Strong capital to support future growth
Group Financial Results H1 2024 Strong capital to support future growth Capital buffers for sustainable growth Core capital to Total Deposits Core capital to Total risk Total capital to Total risk weighted assets weighted assets 23.1% 18.1% 21.2% 16.5% 21.3% 20.5% 10.5% 10.5% 14.5% 14.5% 8.0% 8.0% H
Slide 60: An Optimally balanced Kenya Shilling Asset & Funding book
Group Financial Results H1 2024 An Optimally balanced Kenya Shilling Asset & Funding book Funding: Local vs. Foreign Currency Assets: Local Vs. Foreign Currency LCY Deposits FCY Deposits Local Currency Foreign Curency LCY Borrowing FCY Borrowing 0.6% 5.5% 9.3% 16.0% 84.6% 84.0% 60
Slide 61: Optimal Asset and Funding Mix
Group Financial Results H1 2024 Optimal Asset and Funding Mix H12024 H12023 7.7% Net Loans Net Loans 8.0% 11.7% 8.7% Asset Government Government Securities Categories Securities Cash and 52.4% 54.9% Cash and Cash 28.3% Cash 28.2% Equivalent Equivalent Other Assets Other Assets H12024 H12023 4.5% 3.6
Slide 62: Strong Liquidity to Support Investments
Group Financial Results H1 2024 Strong Liquidity to Support Investments Liquidity ratio Total Loans to Total Deposits Loans /(Deposits+Borrowed Funds) 69.4% 54.0% 78.2% 66.6% 52.3% 73.1% H12023 H12024 H12023 H12024 H12023 H12024 62
Slide 63: Sustainable Profitability Growth
Group Financial Results H1 2024 Sustainable Profitability Growth Kshs. Billions H12024 H12023 YoY Change Total Interest Income 39.8 32.0 24.4% Total Interest Expenses 15.9 10.4 52.6% Net Interest Income 23.9 21.5 10.7% Fees and commissions on loans and advances 6.0 6.2 -3.5% Other Fees and commissio
Slide 64: Group Financial Results H1 2024 vs H1 2023
Group Financial Results H1 2024 H12024 H12023 Growth Growth KShs '000' KShs '000' KShs '000' % Co-operative Bank of Kenya Ltd 16,704,469 15,125,220 1,579,249 10.44% Co-operative Bank of South Sudan (252,362) (36,495) (215,867) (591.51%) Co-opTrust Investment Services Ltd 142,727 106,773 35,955 33.67
Slide 65: Competitive returns
Group Financial Results H1 2024 Competitive returns Return on Average Assets Return on Average Equity Earnings per share 23.7% 4.4 3.8% 3.8% 22.1% 4.1 H12023 H12024 H12023 H12024 H12023 H12024 65
Slide 66: Higher average returns on interest earning assets
Group Financial Results H1 2024 Higher average returns on interest earning assets Average Return of Interest NIM on Loans NIM on Interest earning Assets Earning Assets 8.0% 7.2% 7.2% 7.9% 13.1% 11.4% H12023 H12024 H12023 H12024 H12023 H12024 66
Slide 67: Efficient operations
Group Financial Results H1 2024 Efficient operations CIR - Group CIR - Bank 52.8% 52.6% 54.1% 54.2% 44.2% 44.4% 46.0% 46.6% H12023 H12024 H12023 H12024 With provision Without provision With provision Without provision 67
Slide 68: Sustained revenue from non-funded income
Group Financial Results H1 2024 Sustained revenue from non-funded income. Increasing cost of funding due to the interest rate environment in the market Non-Funded to Total Operating Cost of Customer deposits Total Cost of funds Income 39.1% 39.2% 5.6% 5.8% 4.2% 3.8% H12023 H12024 H12023 H12024 H1202
Slide 69: Thank You
T H A N K YO U Ge) CO-OPERATIVE BANK
Co-operative Bank of Kenya — H1 2024 Earnings Presentation on 6ix