Co-operative Bank Of Kenya Ltd. · NSEKE:COOP
Co-operative Bank Of Kenya — Q3 2022 Earnings Presentation
53 slides from Co-operative Bank Of Kenya's earnings presentation, November 2022
Slide 1: Group Financial Results Q3 2022
Co-operative Bank of Kenya Ltd Group Financial Results | Q32022 1 We are You 1
Slide 2: Key Highlights
Key Highlights We are Growing | We are Resilient | We are Agile 2
Slide 3: A Transformational Bank
A Transformational Bank Largest Co-operative Bank in Africa 15 Million Members Successful Universal Banking Model, Increased Dominance in Kenya Growth, Resilience and Agility in a pandemic environment Kshs. 622.1 Billion in Total Assets 4792 Skilled, Motivated Staff Members 3
Slide 4: We are Growing: Creating Value
We are Growing: Creating Value Profit before tax 37.9% Continued focus on optimizing Total Operating 17.6% Income opportunities for growth through Net interest Income 11.7% an innovative array of financial Non-Funded Income 28.3% solutions. Forex trading Income 71.6% 4
Slide 5: We are Resilient: Protecting Value
We are Resilient: Protecting Value Profitable Bank Kshs. 22.7 Billion Strong Capital Buffers Total Capital to RWA 16.8% (Regulatory min 14.5%) Proactive Enterprise Risk Management Framework. Continued gains from our institutionalized Transformation seeking efficiency and growth. Proactive provisioni
Slide 6: We are Agile
We are Agile Fast | Adaptable ▪ Enhanced digitization of internal bank processes and engagement platforms, to ensure contactless capabilities for both customers and staff. Operational efficiency with ▪ New Core Banking Platform implementation on track. 94% Expected Key benefits include enhanced; • B
Slide 7: Macroeconomic Highlights
Macroeconomic Highlights • Economic growth • Inflation and Interest Rate • South Sudan 7
Slide 8: Kenya's Economic Growth Path
KENYA’S ECONOMIC GROWTH PATH 2022 SECTOR 2021 Q1 2022 Q2 2022 PROJECTION • All the sectors of the economy have Agriculture -0.2 -0.1 -2.1 1.0 recorded improved growth from the Mining and Quarrying 18.0 22.1 22.6 11.8 pandemic dip. Manufacturing 6.9 3.7 3.6 3.5 5.0 1.9 5.0 4.8 • The bank has diversif
Slide 9: Inflation & Interest Rates
INFLATION & INTEREST RATES Headline inflation increased to 9.6% in October 2022 from 6.5% in October 2021. • Food inflation rose to 15.8% from 10.6% in a similar period last year and fuel inflation that increased to 12.6% from 9.6% due to increase in fuel and electricity prices. • Non-Food Non-Fuel
Slide 10: South Sudan
SOUTH SUDAN • South Sudan’s real GDP is projected to expand by about 1.5% in 2022, as higher global oil prices boost government revenues and spending. • Headline inflation rate decreased to –ve 2.5% (y-o-y) in August 2022, following several months of base effects. • As the exchange rate moves in fav
Slide 11: Strategic Focus
Strategic Focus Vision 2020-2024 Strategic Themes To be the dominant bank in Kenya and the region, riding 1. Aggressive deepening of our dominance in the Kenya Market on the unique Co-operative Model providing innovative financial solutions for distinctive customer experience. 2. Dominant provider o
Slide 12: Group Structure
Group Structure Co-operative Bank of South Sudan Ltd (51%) Co-op Consultancy and Bancassurance Coop Holdings Intermediary Ltd (100%) Coop Society Ltd Co-operative (64.56%) Co-opTrust Investment Services Ltd (100%) Bank of Kenya Co-operative Bank Of Group Minority Kenya Ltd Shareholder Kingdom Securi
Slide 13: A Successful Universal Banking Model
A Successful This is a sample text. Insert your desired text Universal Banking Model here.This is a sample text. Retail and Business Corporate Government & Banking (Kshs. 235.4 Institutional Banking (Kshs. Billion Loan Book) 95.6 Billion Loan Book) Leasing: Co-operatives Banking (Kshs. Coop Bank Fle
Slide 14: Our Presence
181 Branches 5M Omni channel Customers (Mobile & Internet) 550 ATMs Our Presence Co-op Kwa Jirani Agents 466 Sacco Front Offices Branch network 24hr Contact Centre 20K Diaspora Banking Customers 14
Slide 15: Soaring Eagle Transformation Initiatives
Staff Sales Force Productivity Effectiveness Branch Shared Services Key Pillars Transformation: Customer Experience & Digitization ‘The Digital & Retail SFE “Soaring Eagle” Bank’ MSME Transformation Transformation Data Analytics Initiatives Cost • Growth Management • Efficiency NPL Management & Cred
Slide 16: Soaring Eagle Transformation: Key achievements
“Soaring Eagle” Transformation: Key achievements E-Credit Focus: Kshs.254.9B Disbursed so far 1.Short term tenor of maximum 6 months . 2.Average disbursement of Ksh.6.9B per month. 3.Consumer Based that is on salary checkoff deductions at source. 4.Low credit risk ✓ Average queue time of 8.6 Minutes
Slide 17: Soaring Eagle Transformation: Key achievements
“Soaring Eagle” Transformation: Key achievements Sales Force Effectiveness for CIBD and Cooperatives; ✓ Sector focus; Tailor-made go to market strategies for different sectors. ✓ Scale up value chain business. ✓ Leasing- Partnership with coop fleet to offer assets on lease ✓ Digitization: Core Banki
Slide 18: Project Kilele
Credit Review Implementation Project “Project Kilele” Comprehensive diagnostic review on each area of credit risk, including: E2E assessment of credit ✓ Credit risk management framework with a key focus on risk governance, credit risk management practices risk appetite, origination and underwriting
Slide 19: Project Kilele
Credit Review Implementation Project ✓ Roll out of new Application For Facility forms. “Project Kilele” ✓ Improving Turn Around Time for facilities. ✓ Auto disbursements. Key Achievements; ✓ Business Process Management System optimization ✓ Training for Frontline staff and service teams done to enab
Slide 20: ESG Policy Statement
Environmental, Social and Governance (ESG) Policy Statement Introduction Co-operative Bank of Kenya Ltd was formed by Co-operators through their Co-operative Societies in 1968 to ensure delivery of affordable financial services to the Co-operative movement for maximum benefit of the societies’ membe
Slide 21: Our ESG Framework
Our ESG Framework Our aim is to have positive impact on the economy, society, and the environment. Environmental Social Governance Bolster environmental health Contribute to inclusive economic Build enterprise resilience through through sustainable practices, outcomes through our business ESG integr
Slide 22: ESG Focus Areas
ESG Focus Areas Environmental Social Governance Environment & Climate Responsible Resource Financial Inclusion Economic Inclusion Social Inclusion ESG Integration Change Use • Supporting the • Encourage the • Enable access to • Financial • Enabling • Strong business transition to a low- responsible
Slide 23: Our ESG Performance
Our ESG Performance Governance Social Environment & Climate change • 9553 Students sponsored by the Bank • Board committees provide ongoing oversight • Well diversified Board • 3230 Consultancies to the Co-operative Movement on key risks skillset • Ongoing implementation of the CBK • 166,500 MSMEs o
Slide 24: Sustainability Awards
Sustainability Awards Most Sustainable Bank in Kenya • Most Innovative Bank • Best in financing Commercial Clients • 1ST Runners up – Best in Sustainable Finance • 1ST Runners up – Best in Covid 19 response • 2ND Runners Up – Best in Financing MSME 24
Slide 25: Award Winning Brand
Award Winning Brand A bank continuously feted for its commitment to drive sustainable impact 18th ENERGY MANAGEMENT AWARDS (EMA) 2022 Electricity Savings Award – Small Consumers - 1st Runners UP Service Sector Award-1st Runners Up Best New Entrant Award-Winner EMEA FINANCE AFRICAN BANKING AWARDS 202
Slide 26: Regional Business (Kshs. Million)
Q32021 Q32022 5,514 4,685 Regional Business 3,807 (Kshs. Million) 2,678 1,453 972 Total Assets Total Deposits Loans And Advances Q32021 Q32022 820 630 4 branches in Juba 484 5 Non-oil collection centers. 380 Owns 31% of CIC Africa Ltd- 170 190 South Sudan 92 Total operating Net Interest Income Total
Slide 27: Channel Performance
Channel Performance 27
Slide 28: Growing Digital Channels
Growing Digital Channels 94% of our Transactions are on alternative Channels providing opportunities for efficiency. • Mobile • Internet • ATM • Agency Digital Channels Vs Branch (%) 94% 6% Branch Digital Channels 28
Slide 29: Mco-op Cash Mobile Wallet
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 the customers mobile number acts
Slide 30: Omnichannel Banking
Omnichannel Banking We have successfully migrated our customers to the Omni-channel, integrating accessibility and user experience. Successful offering continues to scale: Commissions - Millions 8,483 Our omnichannel interfaces online banking through personal computers, mobile phones and USSD availi
Slide 31: Digital Lending Focus E-credit
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.254.9B disbursed to Date. ✓ Kshs.6.9 Billion disbursed per month on average. ✓ Consumer based salary checkoff hence lower credit risk. ✓ Short term tenure
Slide 32: E-Credit
Cumulative Mcoop Cash Loan Customer Numbers ( In '000’) 8,218 E-Credit 6,577 4,641 A superior product for our customers that continues to 2,924 scale and is a key revenue 1,389 source 694 388 183 Kshs.62.2B Disbursed YTD 28 FY 2014 FY2015 FY 2016 FY2017 FY2018 FY2019 FY2020 FY2021 Q32022 Flexi Salar
Slide 33: Agency Banking
Total No. of Transactions Deposits Generated by (Millions) Agents (Ksh.Bn) 29 27 146 Agency Banking Q32021 Q32022 Total Revenue (Millions) 131 336 Growing Co-op Kwa Jirani Agency Banking 335 ▪ Deposits mobilized through Agency banking up by 11.5% Q32021 Q32022 Q32021 Q32022 Agency Banking Sept '21 O
Slide 34: Agency Banking
Transaction Type (%) 46% 43% 27% 29% Agency 15% 14% Banking 13% 13% Growing Co-op Kwa Jirani Agency Deposits Withdrawal Bal Enquiry Others Banking Q32021 Q32022 • Key deposit mobilization Transaction Value distribution (%) channel 65% 61% • Higher deposit than withdrawal 29% 27% 10% 8% Deposit Withd
Slide 35: Financial Highlights
Financial Highlights 35
Slide 36: Strong Financial Position (Kshs. Billion)
Strong Financial Position (Kshs. Billion) Total Assets Net Loan book 622.1 335.2 592.9 306.3 Q32021 Q32022 Q32021 Q32022 Total Deposits Shareholder's Funds 442.5 100.9 424.3 95.0 Q32021 Q32022 Q32021 Q32022 36
Slide 37: Strong Financial Position (Kshs. Billion)
Strong Financial Position (Kshs.Billion) Q32022 Q32021 YoY Change Total Assets 622.1 592.9 4.9% Net Loan book 335.2 306.3 9.4% Government Securities 182.4 193.3 -5.7% Total Deposits 442.5 424.3 4.3% Borrowed Funds 41.9 43.8 -4.3% Shareholder's Funds 100.9 95.0 6.2% 37
Slide 38: Diversified Loan Book
•Diversified across segments. •Highest book is in Personal Banking; Diversified loan book Check off; deductions are done at source. Diversified across various Government/quasi-government employees. Appraisal of both employer and employee for optimal risk-return. Q32021 Q32022 48.7% 48.7% 26.2% 26.3%
Slide 39: Diversified Loan Book Across Sectors
Diversified loan book across sectors 50.9% in Personal consumer which is well performing Low relative exposure in high-risk sectors Mining & Quarrying 0.0% Q32021 Q32022 0.0% Tourism, Restraurant & Hotels 0.7% 0.7% Building & construction 1.8% 1.5% Agriculture 1.5% 1.8% Energy & Water 2.9% 2.3% Manu
Slide 40: Improving Non-Performing Loan Book
Improving Non-Performing Loan Book The group’s NPL has improved from 13.9% in Q32021 to 13.6% in Q32022 Q32021 Q32022 14.2% 13.9% Below Industry NPL Level 13.6% 13.6% Supported by; 12.6% 12.5% ✓Proactive Credit Management Strategies. ✓Business Growth. ✓Consumers and Businesses continued recovery fro
Slide 41: Adequate Coverage
Adequate Coverage Kshs. 5.7 Billion loan loss provisions in Q32022 (Kshs. 6.0 Billion in Q32021), indicating improving quality of our asset book. Cost of Risk IFRS Coverage (Bank) 2.7% 77.0% 2.4% 74.1% Q32021 Q32022 Q32021 Q32022 Inclusive of the Discounted Value of Securities, our coverage is at 10
Slide 42: Portfolio Trends – Sector NPL
Portfolio Trends – Sector NPL Q32022 Q32021 Mining & Quarrying 0% 0% Energy & Water 0.2% 0.2% Personal consumer 5% 6% Sector is 50.9% of our loan book Financial services 7% 8% Agriculture 10% 25% Transport & Communication 10% 12% Trade 25% Sector is 12.3% of our loan book 29% Building & construction
Slide 43: Well-diversified Liability Portfolio
Well-diversified Liability Portfolio Q32022 Q32021 Q32022 Current Accounts Transactions Accounts 9.0% Fixed Deposits Call Deposits Corporate Banking Savings Accounts 10.7% 9.5% Government Banking 10.2% 5.3% 9.5% 15.6% Sacco and Agri-business 29.5% 9.0% 18.1% Institutional Banking 18.5% 25.2% 23.1% R
Slide 44: Balanced Kenya Shilling Asset & Funding Book
An optimally balanced Kenya Shilling asset & funding book FUNDING: LOCAL VS. FOREIGN CURRENCY LOAN BOOK: LOCAL VS. FOREIGN LCY Funding FCY Deposits FCY Borrowing CURRENCY LCY FCY 4.1% 7.1% 10.0% 88.8% 90.0% 44
Slide 45: Strong Capital to Support Future Growth
Strong capital to support future growth Capital buffers for sustainable growth Core capital/total risk Core capital/total deposit Total capital/Total risk weighted assets liabilities weighted assets 15.7% 15.0% 16.8% 19.7% 16.5% 18.0% 10.5% 10.5% 14.5% 14.5% 8.0% 8.0% Q32021 Q32022 Q32021 Q32022 Q32
Slide 46: Optimal Asset and Funding Mix
Optimal Asset and Funding Mix Q32022 Q32021 8.9% Net Loans 7.6% Net Loans 7.9% 8.1% Government Government Securities Asset Securities Categories 53.9% Cash and Cash 51.7% Cash and Cash 29.3% Equivalent 32.6% Equivalent Other Assets Other Assets Q32022 Q32021 5.9% 5.0% 6.7% Deposits Deposits 7.4% Fun
Slide 47: Strong Liquidity to Support Investments
Strong Liquidity to support investments Liquidity ratio Loans /(Deposits+Borrowed Funds) 56.5% 52.1% 69.2% Q32021 Q32022 Total Loans to Total Deposits 75.7% 65.4% 72.2% Q32021 Q32022 Q32021 Q32022 47
Slide 48: Sustainable Profitability Growth
Q32022 Q32021 YoY Change Total Interest Income 43.7 39.6 10.5% Total Interest Expenses 11.7 10.9 7.2% Net Interest Income 32.0 28.7 11.7% Fees and commissions on loans and advances 8.4 5.5 52.0% Other Fees and commissions 7.9 6.9 15.4% Sustainable Foreign exchange trading income/(loss) 3.3 1.9 71.6%
Slide 49: Subsidiary Contribution
Q32022 Q32021 Growth Growth Kshs. '000' Kshs. '000' Kshs. '000' % Co-operative Bank of Kenya Ltd 20,834,066 15,358,066 5,476,000 35.7% Co-operative Bank of South Sudan 190,393 (103,994) 294,387 283.1% Co-opTrust Investment Services Ltd 141,030 92,304 48,727 52.8% Subsidiary Co-op Consultancy & Banca
Slide 50: Key Ratios
Key Ratios Return on Average Assets Return on Average Equity EPS 3.8% 23.3% 3.9 2.8% 17.5% 2.6 Q32021 Q32022 Q32021 Q32022 Q32021 Q32022 50
Slide 51: Key Ratios
Key Ratios Average Return on Interest NIM on earning Assets NIM on Loans Earning Assets 7.8% 8.3% 11.1% 8.2% 10.8% 7.5% Q32021 Q32022 Q32021 Q32022 Q32021 Q32022 51
Slide 52: Key Ratios
CIR - Group CIR - Bank 63.0% 61.9% 56.8% 56.4% 49.4% 48.0% 45.8% 44.3% Key Ratios Q32021 Q32022 Q32021 Q32022 With provisions Without provisions With provisions Without provisions Non - Funded to Total Operating Total Cost of funds:( average of Income deposit+borrowed funds) 38.6% 3.32% 35.4% 3.27%
Slide 53: Thank You
Thank You investorelations@co-opbank.co.ke
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