Co-operative Bank of Kenya Ltd. · NSEKE:COOP
Co-operative Bank of Kenya — H1 2011 Earnings Presentation
37 slides from Co-operative Bank of Kenya's earnings presentation, June 2011
Slide 1: Presentation of 2011 Half Year Financial Results
PRESENTATION OF 2011 HALF YEAR FINANCIAL RESULTS Gideon Muriuki GROUP MANAGING DIRECTOR & CEO
Slide 2: Profit Before Tax
Profit Before Tax Co-op Bank is pleased to report a remarkable Profit Before Tax of Ksh.4.15 billion for the year ended June 30, 2011 representing a commendable 43% growth compared to Ksh.2.91 billion recorded in June 2010.
Slide 3: A Growing Balance Sheet
A Growing Balance Sheet KES Billions June 30, 10 June 30, 11 (%) Change Total Assets 133.6 164.8 23% Loan Book (net) 70.0 95.1 36% Government 24.0 30.1 25% Securities Total Deposits 109.7 130.7 19% Shareholders 17.9 19.9 11% Funds Customer 1.4 M 2.2 M 57% Base Liquidity Ratio 42% 38.1% 9.5%
Slide 4: A Growing Balance Sheet
A Growing Balance Sheet Our growth was mainly underpinned by the growth in our balance sheet notably; Our loan book which grew by Kshs.25.1 billion (36%) Deposits grew by Kshs.21 billion and despite light liquidity we maintained a liquidity ratio of 38%
Slide 5: Capital Strategy
Capital Strategy Our current capital base of Kshs 20 billion can leverage a deposit base of over Kshs. 250 billion We will sustain a proactive capital retention strategy
Slide 6: Income Statement
Income Statement KES Billions June 30, 10 June 30, 11 (%) Change Net Interest 4.07 5.96 46% Income Fees and 2.94 3.38 15% Commissions Total Income 7.01 9.34 33% Loan Loss 0.400 0.403 0.6% Provisions Operating 3.70 4.79 29% Expenses Profit Before Tax 2.91 4.15 43% Profit After Tax 2.34 3.31 41%
Slide 7: Sustainable Growth
Sustainable Growth Sustainable Profitability 5.77 374 4.15 4.0 3.36 23.0 s” 2.32 20 F 1.26 <1.0 a 0.0 2006 2007 2008 2009 2010 Q2 2011 = Profit Before Tax
Slide 8: Summary of Key Ratios
Summary of Key Ratios June 2010 June 2011 Return on Equity (ROE) 26.0% 33.1% NPL/ Loans outstanding 8.3% 5.4% Liquidity 42% 38% Return on Assets (ROA) 4.4% 4.9% Cost Income Ratio 58.5% 56.5% Earnings Per Share KES 0.67 KES 0.95
Slide 9: Summary Growth
Summary Growth Co-op Bank main strategy is focused on balance sheet growth as the key driver of our performance. During the period under review the following were the key highlights of the Bank’s performance:-
Slide 10: Transaction Based Income
Transaction Based Income Our fees and commissions (mainly ATM, personal and business banking commissions, M-Banking, Forex income, Agent Banking commissions and letters of credit) have grown from KSh.2.94 billion in June 2010 to KSh.3.38 billion in June 2011 out of the following key initiatives:-
Slide 11: Transaction Based Income: Customer Growth
Transaction Based Income Customer Growth We continued an aggressive customer growth campaign aimed at increasing our customer base. The all inclusive bank staff initiative grew our customer base from 1.4 million accounts to over 2.2 million accounts registering an over 57% growth. Growth in cu
Slide 12: Transaction Based Income: Branch Network Expansion
Transaction Based Income Branch Network Expansion We have increased our branch network by 36 locations between 2009 to-date, to reach 89 locations, a 68% growth. More branches will be opened in target strategic locations based on their profiles and business potential as well as aligned to the coun
Slide 13: Transaction Based Income: Expanded ATM Network
Transaction Based Income Expanded Automated Teller Machines (ATMs) network We continued to increase our investments in ATM network and are now accessible in over 410 service points. Also invested in over 35 Auto Banking Centre's with deposit taking capabilities thus providing our customers a 24
Slide 14: Transaction Based Income: FOSA Project
Transaction Based Income Front Office Service Activity (FOSA) Project We continued retailing banking services through Sacco’s / Fosa’s to the over 7 million member co- operative movement using this unique model. Our focus being to generate more income through loan products, Sacco link debit card
Slide 15: Transaction Based Income: SACCO Link
Transaction Based Income SACCO Link This ICT switch enables members of Sacco’s cash at our ATM’s and goods/services at Visa branded outlets globally. Over 337,000 cards have been issued and the product targets over 400,000 users by end of the year. This is well supported by the increased investm
Slide 16: Transaction Based Income: Mobile Banking
Transaction Based Income Mobile Banking Our customers can now access a wide range of services such as:- » Air-time top ups » Money transfer to and from Mpesa » Balance enquiry » Utility payments among others » School Fees payments (Mkaro) Our client base continues to increase and now have over 5
Slide 17: Transaction Based Income: Alternative Banking Channels
Transaction Based Income Alternative Banking Channels (ABCs) To enhance and expand our outreach through non brick and mortal, the bank has embarked on key initiatives under ABC Agency Banking 440 Agents have been approved by the Central Bank of Kenya Over 200 agents are fully implemented and ar
Slide 18: Liability Growth
Liability Growth Our strong liability growth from Ksh.109.7 billion to Ksh.130.7 billion (19%) was underpinned by :- Growth in number of accounts which increased to over 2.2 million Accounts; A strong Institutional and Government Banking Sector strategy; This has driven the growth of our bal
Slide 19: Credit Risk Management
Credit Risk Management Prudent Lending The bank continued to enforce strict credit risk management and our overall non performing loans portfolio decreased from 8.3% in 2010 to 5.4% in June 2011. Provisions for bad and doubtful debts increased slightly by 0.6% to Ksh.403 million in June 2011 fro
Slide 20: Asset Growth
Asset Growth Our portfolio stood at KShs.95.1 billion net on a well diversified loan portfolio as hereunder: ASSET BOOK KSh million % Corporate 18,109.00 19.0% Mortgage 3,067.95 3.2% MCU 3,695.70 3.9% SME 4,666.00 4.9% Asset Finance 3,402.14 3.6% Personal 33,456.95 35.2% Agri-business 6,806.00 7.2%
Slide 21: Asset Growth: Corporate and Trade Finance
Asset Growth Corporate and Trade Finance The bank has strengthened capacity thus growing the Corporate and Trade Finance book The result has been growth in our Forex income to over Kshs.535 million The bank is now a key player in the corporate market with significant portfolio’s in corporate l
Slide 22: Asset Growth: Co-operative Sector Lending
Asset Growth Co-operative Sector Lending The bank has strengthened its focus in this key market segment. During the first half of the year, our loan portfolio grew to over Ksh.21 billion mainly due to:- Sacco Personal Loans; and Working Capital Loans
Slide 23: Asset Growth: Personal and Business Banking
Asset Growth Personal and Business Banking Our Personal Loan Book grew to over Ksh.33 billion mainly from employer based check-off loans. This is a good quality book drawn from the various sectors of the economy.
Slide 24: Asset Growth: Mortgage
Asset Growth Mortgage Our product “Good Home Mortgage” is fast growing and continues to perform well in the market with a drawn book of over Ksh.3 billion. Focusing on Co-operative captive market segment, this is proving to be a cash cow for the bank. The product has over Ksh.4.5 billion in co
Slide 25: Asset Growth: Small and Medium Enterprise Sector
Asset Growth Small and Medium Enterprise Sector This has be re-strategized as a key business focus area, particularly with county government structure. Our book grew to Ksh.4.6 billion in line with increased growth of this sector We are among the 3 appointed banks to disburse SME government fu
Slide 26: Asset Growth: Commodity Financing
Asset Growth Commodity Financing Commodity and structured financing is a new growth area where the bank has now build capacity. With tailor made credit enhancement structures already in place, we target to grow this book to over Ksh.3 billion by end of 2011
Slide 27: Subsidiaries Contribution
Subsidiaries Contribution The subsidiaries contribution is as hereunder:- June 30, 11 (Ksh) Kingdom Securities Ltd 25.2 million Co-op Trust Investments 34.4 million Ltd Co-op Consultancy Ltd 3.2 million
Slide 28: Subsidiaries Contribution: Co-op Trust Investment Services
Subsidiaries Contribution Co-op Trust Investment Services Limited Co-op Trust is now the largest locally owned fund management company with a portfolio of over Kshs 25.8 bilion funds under management. It contributed a Profit Before Tax of Kshs 34.4 million for the period up to June 2011.
Slide 29: Subsidiaries Contribution: Kingdom Securities Limited
Subsidiaries Contribution Kingdom Securities Limited (KSL) KSL made a Profit Before Tax of Ksh.25.2 million as at June 30, 2011 compared with a PBT of Ksh.15.2 million as at June 30, 2010, a remarkable growth of 65.8%. Broadening the group’s performance by taking stock brokerage services to the
Slide 30: Other Investments
Other Investments Co-operative Insurance Company of Kenya Limited (CIC) Towards the end of last year the bank increased its shareholding in CIC (K) Ltd to 21% and fully took its rights during the rights issue, thereby becoming a substantial/ single largest shareholder. The new venture will resul
Slide 31: Cost Rationalisation
Cost Rationalisation The bank has optimized over 300 positions in the last 2 years and thus was able to open additional branches with the same staff compliment. Only 34 top heavy staff were retrenched. All cost lines continue to be monitored to eliminate waste and avoid budget overruns. Most o
Slide 32: Human Resources
Human Resources The key competitive edge for Co-operative Bank group is continued investment in our people. The bank has heavily invested in performance management systems that are tied to compensation. Both local and overseas training remains key with minimum training hours a target for every
Slide 33: Core Banking Software
Core Banking Software Bank Master/Branch Power from Misys has been with the bank for over 10 years. The Bank is at an advanced stage in implementing a new core-banking software (Bank Fusion Universal Banking) also from Misys aimed at positioning the Bank for future growth. The other specialise
Slide 34: Regional Expansion
Regional Expansion The establishment of Co-operative Bank of Southern Sudan is in progress with ownership as hereunder: 70% owned by Co-operative Bank of Kenya; and 30% by Government of South Sudan, on behalf of South Sudan’s Co-operative movement. Currently negotiating strategic partnerships in c
Slide 35: Co-op Bank Foundation
Co-op Bank Foundation The bank has continued to play its co-operate social responsibility role by assisting the needy as hereunder; Paying full secondary school fees to over 1,300 students from all over the country. The foundation targets bright but needy students. With effect from 2011, paying un
Slide 36: Conclusion
Conclusion Given the various initiatives and business strategies highlighted above we project to sustain the growth momentum. We sincerely thank you and all our stakeholders for the continued support over the years that has seen the success of the Kingdom Bank.
Slide 37: Thank you
Thank you and may God richly bless you all.
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