Equity Group Holdings Limited · NSEKE:EQTY
Equity — H1 2016 Earnings Presentation
33 slides from Equity's earnings presentation, August 2016
Slide 1: Investor Briefing & H1 2016 Performance
8/22/2016 Investor Briefing & H1 2016 Performance August 2016 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Innovation & digital banking 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core
Slide 2: Foreign Exchange Rate - Kenya
8/22/2016 1 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Innovation & digital banking 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core business (intermediation) 9. Financial performanc
Slide 3: KES vs East African Currencies; FX Reserves - Kenya
8/22/2016 1 KES vs East African Currencies The Kenya Shilling has slightly USD gainedvs. onUSH,TSH, RWF, the YTD basis against KSH regional currencies in 2016 2015 2016 36.0 35.2 35.0 35.0 34.0 33.4 33.7 33.3 32.9 33.0 33.0 33.3 33.0 33.3 KES / USHS +1% 32.0 28.0 24.0 21.4 21.2 21.4 21.5 21.6 21.7 2
Slide 4: Current Account balance as a % of GDP
8/22/2016 1 Current Account balance as a % of GDP - Kenya § Low global oil prices in 2015 and part of 2016 supported Kenya to improve on the deficit In Percent 2013 2014 2015 2016 0 -2 -4 -6 -8.2 -8.2 -8 -8.9 -10 -10.4 -12 § CBK expects the Current Account deficit to narrow to 5.5% of GDP in 2016 7
Slide 5: East Africa's Inflation; Interest Rates - Kenya
8/22/2016 1 East Africa’s Inflation Kenya East African Peers § The latest inflation figure as at end of June was Uganda Tanzania 5.8% (down from 8.0% since start of the year) Rwanda due to: DRC - Food prices (food index is down due to the rains) - Low fuel prices 8.0 8.0 7.8% 7.6% 7.0 7.0 6.5% 6.2%
Slide 6: Interest Rates – East Africa
8/22/2016 1 Interest Rates – East Africa Uganda 2015 2016 Political and Economic Sep reviewNov Oct in theDec region Jan Feb Mar Apr May June July Interbank rate 13.40% 12.93% 12.87% 14.06% 12.98% 12.46% 11.53% 12.42% 12.84% 14.16% 13.91% 91 Days T. Bill 16.68% 18.75% 18.33% 17.60% 18.22% 18.70% 15.0
Slide 7: East Africa GDP Growth & Projections
8/22/2016 1 East Africa GDP Growth & Projections § Kenya’s GDP growth rate maintained an upward growth rate with an increasing momentum while the rest of 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 sli
Slide 8: Head Winds; H2 2016 Strategic Priorities
8/22/2016 1 Head Winds § The ramifications of Brexit § The sluggish and declining growth rates of China § The politics and elections in 2017 in Kenya, the uncertainty of the Peace Settlement in South Sudan, and the impending elections in DRC § The challenges in the financial sectors reflected by the
Slide 9: Strong Governance & Leadership Structure
8/22/2016 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Innovation & digital banking 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core business (intermediation) 9. Financial performance
Slide 10: Extracting Value From Subsidiaries
8/22/2016 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Innovation & digital banking 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core business (intermediation) 9. Financial performance
Slide 11: Extracting Value From Subsidiaries
8/22/2016 3 Extracting Value From Subsidiaries (Deposits and Loans contribution by countries) Deposits split by Country Loans split by Country 100.0% 100.0% 100.0% 100.0% DRC 0.0% DRC 0.0% Rwanda 2.6% S. Sudan 1.6% 6.4% Uganda 3.1% 5.8% Uganda 3.5% 3.3% Rwanda 3.1% 0.1% Tanzania 4.9% 2.8% 3.9% Tanza
Slide 12: Deposits Growth
8/22/2016 3 Deposits Growth In KES billions Kenya DRC Tanzania Uganda Rwanda S. Sudan 10% 260.5 237.7 -69% 24% -10% 33.3 20.9 +19% 16.8 14.9 13.5 12.6 34% 10.6 10.7 10.3 8.0 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 Consolidated Consolidated w/o
Slide 13: Execution on Digital Banking
8/22/2016 Execution on Digital Banking 4 (Disruptive shift to variable deliverable channels) Variable cost channels Fixed cost channels +271% Transaction numbers in millions 97.8 +24% -17% 29.9 24.1 -12% +37% 15.4 12.8 26.4 12.3 10.9 4.4 3.2 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2015 2016 2015 2016 2015 201
Slide 14: Equity Kenya Channel Market Share Trend
8/22/2016 4 Equity Kenya Channel Market Share Trend Branch ATM Merchants Agents 59% 52% 49% 44% 42% 40% 40% 29% 26% 26% 25% 23% 23% 21% 21% 15% 11% 12% 12% 12% 12% 11% 10%10% 2010 2011 2012 2013 2014 2015 4 Execution on Digital Banking (Equitel customer numbers up 115% growth YoY) KES “000” Linkage
Slide 15: Execution on Digital Banking (Mobile Transactions & Value)
8/22/2016 Execution on Digital Banking 4 (Mobile Customer Transaction Numbers & Value Trend) Cumulative M-Banking Transactions numbers (millions) Cumulative M-Banking Value (KES billions) 400 280 525% 225% 252.8 260 350 233.7 240 215.6 220 300 196.6 200 181.3 264.2 180 250 165.9 233.9 151.0 160 205.
Slide 16: Execution on Digital Banking (Loan Disbursements)
8/22/2016 4 Execution on Digital Banking (KES 20.8 billion disbursed through Mobile Channel with KES 5.6 billion outstanding) Disbursement Count (number) Eazzy Loan Volume Outstanding Loan Value Disbursement (KES "Billion") 683,174 3,557,913 +6,470% 20.8 17.2 +985% 5.6 14.0 4.7 11.0 3.6 8.7 6.9 2.5
Slide 17: Continuous Growth in Agency Banking
8/22/2016 4 Continuous Growth in Agency Banking Focus on Variable … More transactions now processed under 3rd party infrastructure saving cost model… on fixed costs Transactions (Millions) ▪ Number of Agency agents 30 29.9 increased to 26,593 agents. +24.3% 26% growth 25 24.1 y/y ▪ Agent 20 17.4 tra
Slide 18: Number of Merchants Outlets 2012 - 2016
8/22/2016 4 Number of Merchants Outlets 2012 - 2016 8,371 8,517 8,063 7,749 6,864 6,153 5,618 5,166 4,412 3,720 3,499 3,066 2,668 2,824 2,346 2,018 2,139 1,519 1,658 Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar May June 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 201
Slide 19: SME strategy: Effect of SMEs on Loans & Deposits
8/22/2016 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Innovation & Digital banking 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core business (intermediation) 9. Financial performance
Slide 20: Equity has earned recognition in 2016
8/22/2016 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Innovation & digital banking 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core business (intermediation) 9. Financial performance
Slide 21: Think Business Awards
8/22/2016 6 Equity has earned recognition in 2016 EQUITY BEST BANK IN KENYA FOR 4TH TIME Category 1st 2nd 3rd Best Overall Bank Equity Bank Best Bank Tier 1 (Big Banks) Equity Bank Best Bank in SME Banking Equity Bank Best Bank in Retail Banking Equity Bank Best Microfinance Bank Equity Bank Best in
Slide 22: Banker Awards; Euromoney Awards
8/22/2016 6 Banker Awards Equity has earned substantial accolades in 2016 43 6 Euromoney Awards Equity has earned substantial accolades in 2016 44 22
Slide 23: Market Capitalization
8/22/2016 6 Market Capitalization (as at 30th June 2016) In KES billion Equity Bank’s market capitalization constitutes 25% of the total market value of the 11 banks listed on the NSE 143.4 99.6 71.8 68.7 53.5 43.4 41.6 32.4 21.1 6.1 2.4 Equity KCB Stanchart Coop BBK DTB I&M CfC NIC HF NBK Stanbic S
Slide 24: EGF Programmatic Pillars
8/22/2016 6 EGF 7 Programmatic Pillars EGF 7 Programmatic Pillars ▪ Cash transfers ▪ Fanikisha ▪ Wings to Fly 1 ▪ Fanikisha+ (Tanzania) 7 ▪ Equity African Leaders Education ▪ Financial Knowledge for Financial and Programme Africa training Inclusion and Leadership programme Literacy Development ▪ Tra
Slide 25: Funding Base
8/22/2016 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strategy 6. Qualitative analysis 7. Social Impact 8. Performance of core business (intermediation) 9. Financial performance 49 Funding Base
Slide 26: Deposits & Deposit Accounts
8/22/2016 8 Deposits & Deposit Accounts Deposits Loan & Deposits Accounts Number of Deposit Accounts In Billion In Million +7% 10.7 320.8 10.3 9.9 10.0 9.5 9.7 301.0 76.8 56.3 Term Deposits (24%) (19%) 126.7 135.2 Savings (42%) (42%) 118.1 108.8 Current Accounts (39%) (34%) H1 2015 H1 2016 Mar 15 Ju
Slide 27: Assets of KSH 444 Billion driven by stable Deposit base
8/22/2016 8 Assets of KSH 444 Billion driven by stable Deposit base In KES billion Growth per Asset Class 11% 444.4 42.6 401.0 -10% (10%) 47.3 Other Assets 73.0 (12%) 44% (16%) 50.6 Government Securities (13%) 59.8 -10% 66.3 (13%) Cash & Cash Equivalents (17%) 269.0 14% 236.8 (61%) Net Loans (59%) H
Slide 28: Equity Kenya continues to gain market share
8/22/2016 8 Equity Kenya continues to gain market share Deposits Market Share Loans Market Share Assets Market Share 10.8% 10.7% 9.9% 10.0% 9.8% 9.7% 9.5% 9.5% 9.3% 9.2% 9.4% 8.8% 8.8% 8.8% 8.7% 8.2% 8.2% 8.2% 2011 2012 2013 2014 2015 Q1 2011 2012 2013 2014 2015 Q1 2011 2012 2013 2014 2015 Q1 2016 2
Slide 29: Non-Performing Loans: High Coverage Levels
8/22/2016 8 Non-Performing Loans: High Coverage Levels Sector (Spec. Prov. + Int. Susp) / Gross NPL Equity (Spec. Prov. + Int. Susp) / Gross NPL Equity (Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPL 92.8% 88.0% 84.0% 79.0% 64.5% 60.6% 55.2% 56.0% 53.9% 50.2% 48.5% YE 2014 YE 2015 Q1 2016 H1 2016
Slide 30: RoAA and RoAE Trend
8/22/2016 8 RoAA and RoAE Trend RoAE 35.9% 35.0% EBKL Group 26.6% 27.3% H1 2015 H1 2016 RoAA 5.1% 5.2% 4.6% 4.6% EBKL Group H1 2015 H1 2016 59 Presentation Outline 1. Macro-economic overview 2. Governance & leadership structure 3. Regional expansion and diversification 4. Digital bank 5. SME strateg
Slide 31: Broad base liabilities & funding sources
8/22/2016 9 Broad base liabilities & funding sources H1 2015 H1 2016 Growth Y/Y Liabilities & Capital (Bn) KSH KSH % Deposits 301.0 320.8 7% Borrowed Funds 27.1 40.2 48% Other Liabilities 7.9 8.0 2% Shareholders’ Funds 65.0 75.4 16% Total Liabilities & Capital 401.0 444.4 11% Funding Distribution H1
Slide 32: Delivering 18% growth in PAT
8/22/2016 9 Delivering 18% growth in PAT KES (Billion) H1 2015 H1 2016 Growth Interest Income 19.3 26.1 35% Interest Expense (3.8) (4.9) 29% Net Interest Income 15.5 21.2 37% Non-Funded Income 10.8 10.8 0% Total Income 26.3 32.1 22% Loan Loss Provision (0.7) (1.9) 182% Staff Costs (5.1) (6.1) 19% Ot
Slide 33: Positive Financial Ratios; Thank You
8/22/2016 9 Positive Financial Ratios Kenya Kenya Group Group H1 2015 H1 2016 H1 2015 H1 2016 Profitability NIM 10.9% 12.5% 9.8% 11.7% Cost to Income Ratio (with provisions) 49.0% 48.6% 54.0% 55.6% Cost to Income Ratio (without provision) 47.5% 43.6% 51.4% 49.6% RoAE 35.0% 35.9% 26.6% 27.3% RoAA 5.1
Equity Group Holdings — H1 2016 Earnings Presentation on 6ix