Absa Bank Kenya Plc · NSEKE:ABSA
Absa Bank Kenya — Q3 2022 Earnings Presentation
31 slides from Absa Bank Kenya's earnings presentation, Nov 29, 2022
Slide 1: Q3 2022 Earnings
Q3 2022 Earnings 29 November 2022
Slide 2: Contents
Contents Business Financial Recap Overview Performance
Slide 3: Business Overview
Business Overview Yusuf Omari – Interim Chief Executive Officer
Slide 4: Kenya's GDP growing above SSA average; inflation pressure in Q3 2022
Kenya’s GDP growing above SSA average Observed inflation pressure in the third quarter of 2022 Head winds Kenya 1. Muted Foreign Direct 8% 7.5% Investments 6% 6% SSA 6% 6% 2. Inflation Pressure 5% 5% 8.7% average 5.3% 4% 4% 3. Global Geopolitical Risks 3.7% 3.6% Kenya SSA 4% 1% average 2010 2011 201
Slide 5: Purpose, Strategy Pillars and Enablers
Purpose Strategy Pillars Strategy Enablers Notes 1. GTR – Growth Transformation and Returns Strategy
Slide 6: Strategy Execution Highlights
Strategy Execution Highlights: \ • • • Notes 1. Stock price performance measured from commencement of our strategy (1st January 2018)
Slide 7: Absa today
Timiza for Business Retail Banking Timiza for Banc- SME assurance China Retail Corridor Banking Corporate Lending Absa SME Banking 2017 FX Sales today Trade Finance Asset Securities Management Brokerage Risk Fixed Management Trading Products (derivatives) Investment Fixed Banking Income Advisory Bro
Slide 8: Revenue growth, customer deposits and assets since 2017
(In Kes billions unless stated otherwise) ¬1.7x 22% Revenue Growth Rates ¬1.5x COVID-19 7% 281 bn 289 bn 2% 7% 5% Customer Deposits Customer Assets 186 bn 168 bn 2017 2018 2019 2020 2021 Q3 2021 Q3 2022 2017 Q3 2022
Slide 9: Branches, cost to income ratio and staff since 2017
70% (28%) (32) 92% 115 83 Branches Branches 22% Branches 2017 Q3 2022 2017 Q3 2022 (15%) (10%) (203) 55% 2,268 2,065 40% CIR1 CIR1 FTE2 FTE CIR1 2017 Q3 2022 2017 Q3 2022 Notes 1. CIR - Cost to Income Ratio 2. FTE – Full Time Employee
Slide 10: The re-investment effort has been all rounded
Corporate Level Front-Office Back-Office The re-investment effort has been all rounded Rebranding Digitization & Automation of 52% of our processes NextGen HR System NextGen Finance System New Relationships with Data Partners (Retail Financing FMCG Agiza) Cash Deposit Machines Various Enhancements (
Slide 11: Significant milestones with our new brand since the 2020 re-brand
On Transformation: We have achieved significant milestones with our new brand since the re-brand in 2020 Brand Awareness score Most Reputable Bank in Kenya1 92% 82% 48 Absa 45 Bank1 37 32 30 26 Bank 2 28% 22 Bank 3 19 Bank 4 2019 2020 2022 2017 2018 2020 2021 Other scores 72% Colleague Brand Love sc
Slide 12: Revamped Employee Value Proposition
Revamped Employee Value Proposition
Slide 13: Doubling down on small and medium-sized enterprises
enterprises Weare driving continuous innovation ina bid to make it easier, faster and better for small and medium sized businesses in the market We have toured ten counties over the last 30 days meeting with over 10,000 small and medium enterprises For our customers, we have doubled down on small an
Slide 14: COVID-19 restructured loans and waiver on mobile loans
COVID-19 restructured Loans Outstanding restructured loans 50% Waiver on Mobile Loans 94.1% regularized 5.9% Outstanding 396k KES 3.5 bn distributed in Customers of loans various sectors restructured including KES 1.8bn of mobile loans previously manufacturing, written off and impaired through P&L a
Slide 15: Education and Skills Development, Environment, Inclusive Financing
Environment Education and Skills • 80+ Absa properties retrofitted, Development reducing energy and water • 229,684 youth in Kenya impacted consumption by 31% and 30% through Ready to Work respectively • 203 colleagues trained as Ready to • IFC EDGE certification for five of our Work champions and f
Slide 16: Awards and rankings
Ranked Bank by GlobeScan1 #1 in Asset Finance by Think Business No 1. impacting business #2 Best Bank in Tier 1 by Think Business Awarded #2 Best in Corporate banking by Think Business Local currency 2022 #2 Best in Retail Banking by Think Business No 1. as by Women on Board Network #2 Best in Agric
Slide 17: Financial Performance
Financial Performance Moses Muthui– Interim Chief Finance Officer
Slide 18: Q3 2022 Financial Results: Exceeding expectations on all six principal areas
Q3 2022 Financial Results: Exceeding expectations on all six principal areas Q3 2022 Vs Observed YTD Momentum Income Statement Highlights (KES billions unless stated otherwise) Actual YoY Q1 Q2 Q3 Growth Momentum • Sustained revenue growth 01 Retail 16.9 16% 9% 14% 16% • Outperformance on Business B
Slide 19: Growth momentum: Accelerated revenue growth across all businesses
1 Growth momentum: Accelerated revenue growth across all businesses Performance diversification1 Highlights (KES millions unless stated otherwise) +25% +22% • All businesses are 23,275 delivering double 18,576 10,175 digits in revenue growth +16% YoY 16% 33% 29% 25% 8,738 • New businesses are accele
Slide 20: Operating Leverage: efficiency improved to 40% with double-digit JAWS
2 Operating Leverage: Despite 10% increase in costs towards investments, our efficiency level has improved to 40%; with double-digit JAWS Ratio (Cost to Income at 40%) Highlights (KES billions unless stated 54% otherwise) +10% 53% 52% • Costs increase driven 46% 13.3 45% by strategic 42% 0.6 One-off
Slide 21: Profitability: PAT growth of 30%, supporting returns accretion
3 Profitability: Topline-driven-PAT growth of 30%, supporting returns accretion driven by topline performance Return On Equity accretion (KES billions unless stated 6.1 1.2 otherwise) 1.6 5.4 24% ROE 10.7 19% 8.2 14.5% COE 9% Q3 2021 Revenue Costs Impairment TAX 1 Q3 2022 Notes 1. Expected Tax Rate
Slide 22: Balance Sheet Production: Accelerated growth across focus segments
4 Balance Sheet Production: Accelerated growth across focus segments and products and Advances split by currency Highlights (KES millions unless stated otherwise) +26% FCY, 38% • Growth driven by secured lending and trade loans in YoY 34% 3% 21% 76% 18% 3% corporate and LCY, 62% business bank Averag
Slide 23: Portfolio Quality: Improved portfolio quality with adequate coverage
5 Portfolio Quality: Improved portfolio quality with adequate coverage actions relative to growth Ratio (KES billions unless stated otherwise) 289 14.7% +26% Industry 229 209 8.6% Customer 195 6.9% Assets +48% Q3 2021 Q3 2022 Ratio 4.3% 67% 2.3% Loan 2.2% Loss 2.0% Ratio 62% 59% 1 Industry Q3 2021 Q
Slide 24: Valuations: Premium valuation
6 Valuations: Premium valuation 1.12 1.13 1.14 2.65 1.03 2.33 1.01 P/BV=1 2.19 2.01 EPS 1 0.92 TNAV 2 46.5 56.4 59.2 56.2 60.3 2020 2021 Q1 2022 Q2 2022 Q3 2022 2020 2021 Q1 2022 Q2 2022 Q3 2022 Notes 1. EPS (Earning Per Share) has been annualized for the quarterly results 2. TNAV - Tangible Net Ass
Slide 25: Top Quartile ROE and stock price performance
6 ▲ ▲ ▲ ▲ ▲ 21% ▲ 20% ▲ 13% ▲ (12%) ▲ (21%) ▲ (24%) ▲ (25%) ▲ ▲ (33%) (56%) ▲ Absa Stock Price2 #1 #1 #2 #2 #1 Dividend Yield #2 #1 - #2 Top Quartile Absa ROE3 17% 18% 9% 19% 24% Industry ROE3 16% 15% 11% 16% 20% Notes 1. Stock price performance as at Friday the 23rd November 2022 2. The stock price
Slide 26: Record growth rates, sustained portfolio quality and ROE above cost of equity
Our business is achieving While sustaining portfolio And creating capacity to With Return on record growth rates quality (at levels better invest for the future and Equity at than observed industry confidence to continue significant levels levels) and carrying forward generating upside on above Cost
Slide 27: In Summary
In Summary Yusuf Omari– Interim Chief Executive Officer
Slide 28: Accelerated business performance gives confidence to continue out-performing
Accelerated business Gives us confidence to performance continue out-performing as we conclude Q4 2022 Record financial performance Balance sheet momentum continues Growth momentum on our side Revenue growth sustained New businesses beginning to contribute towards growth Returns to continue above CO
Slide 29: 2013 – 2017, 2018 – 2022, 2023 – 2028
❖ ❖ ❖ 2013 – 2017 2018 – 2022 2023 – 2028
Slide 30: Disclaimer
Disclaimer Forward-looking statements Certain statements in this document are forward looking that relate to, among other things, the plans, objectives, goals, strategies, future operations and performance of Absa Bank Kenya PLC . Words such as “anticipates”, “estimates”, “expects”, “projects”, “bel
Slide 31: (absa)
) (absa) (