Slide 1: Q3 2023 Investor Briefing
Q3 2023 Investor Briefing November 2023 ncbagroup.com Go for it
Slide 2: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE Q3 2023 < 2023 GUIDANCE <
Slide 3: Q3 2023 Key Messages
Q3 2023 KEY MESSAGES 1. Despite tightening macro-economic conditions we are on course to deliver on our 2023 plans; Q3 2023 PAT KES 14.6B (+14% Y-o-Y) with a 22.4% ROAE 2. We are investing for growth in-line with our strategy • A bigger branch network (109 branches in 24 counties) • A more digitized
Slide 4: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE Q3 2023 < 2023 GUIDANCE <
Slide 5: Our Group Structure
WHO WE ARE Our Group Structure NCBA BANK KENYA PLC NCBA BANK RWANDA PLC BANKING NCBA BANK UGANDA LTD SUBSIDIARIES NCBA BANK TANZANIA LTD NCBA DIGITAL BUSINESS GROUP PLC NCBA LEASING LLP NON NCBA INVESTMENT BANK LTD BANKING SUBSIDIARIES NCBA INSURANCE AGENCY 5
Slide 6: Our Purpose and Values
WHO WE ARE Our Purpose and Values OUR OUR OUR PURPOSE VALUES CUSTOMER Welcome to the PROMISE bank that says go for it. To be the DRIVEN Welcome to the Financial Services We Know You bank that banks OPEN We Back You Partner that on your ambition. Inspires Your RESPONSIVE We Wow You Growth TRUSTED Wel
Slide 7: Our Regional Footprint
WHO WE ARE Our Regional Footprint KEY GROUP HIGHLIGHTS CUSTOMERS UGANDA 60.3M Branches 4 Customers 10.3M STAFF 3315 BRANCHES IVORY COAST KENYA Purely Digital Customers 8.1M Branches 92 109 Customers 30.2M ATMs RWANDA TANZANIA 94 Branches 5 Branches 8 CASH DEPOSIT MACHINES Customers 4.1M Customers 7.
Slide 8: Awards & Accolades
WHO WE ARE Awards & Accolades • Winner, Best Customer Experience Strategy by Institute of Customer Experience Brand and • Winner, Best Customer Service Week Innovation by Institute of Customer Experience Customer Experience • Winner, Top 25 Most Customer Obsessed Brands 2023 by Business Monthly East
Slide 9: We are led by an exceptional team
WHO WE ARE We are led by an exceptional team 9
Slide 10: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE Q3 2023 < 2023 GUIDANCE <
Slide 11: Global growth forecast for 2023 retained at 3.0%, regional divergences widen
OUR OPERATING ENVIRONMENT Economic global growth forecast for 2023 retained at 3.0% regional divergences widen nonetheless Global growth forecast for 2023 is expected Inflation has moderated in response to Central banks in advanced economies halted to slow, potentially impacting Sub-Saharan prior mo
Slide 12: Kenya's domestic borrowing appetite continues to pressure interest rates
OUR OPERATING ENVIRONMENT Kenya’s domestic borrowing appetite continues to put pressure on interest rates despite declining inflation and we expect the KES to depreciate further Kenya’s Headline PMI posted at 47.8 with Inflation slowed to 6.8% owing to a combined decline in The KES is expected to re
Slide 13: Macroeconomic conditions in East Africa remain varied
OUR OPERATING ENVIRONMENT Macroeconomic conditions in the East Africa regional economies remain varied Uganda’s economy expanded by 6.8% in Q2 2023 Rwanda’s real GDP registered a 6.3% growth In Tanzania, growth in Q1 2023 rebounded to compared to 5.6% in the corresponding quarter last in Q2 2023, do
Slide 14: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE Q3 2023 < 2023 GUIDANCE <
Slide 15: Our strategy continues to deliver with all metrics in line with target
OUR STRATEGY Our strategy continues to deliver with all our metrics in line with target with our Group ROAE registering at 22.4% Q3 2022 Q3 2023 18.6 18.2 Become a Distinguished Brand PBT (KES B) Known For Customer Experience 22.4% 21.2% ROAE Scale Retail Banking: Expand Distribution 12.3% 12.6% NPL
Slide 16: Strong contribution from regional banking subsidiaries
OUR STRATEGY Continued strong contribution from the regional banking subsidiaries Y-o-Y with Tanzania core bank delivering a KES 1.3B profitability rebound Amount in KES M Core Banking Subsidiaries Digital Banking Subsidiaries Q3 2022 %∆ Q3 2023 Q3 2022 %∆ Q3 2023 (11%) Kenya 15,743 14,042 Digital B
Slide 17: Expanding branch footprint driving balance sheet growth
OUR STRATEGY Our focus on expanding our branch footprint is driving balance sheet growth and providing us a cheaper funding base KE Retail Banking Balance sheet (KES B) Branches 89 109 Growing (2020) (2023) Gross Loans Branch 100 Network Counties Present 15 24 86 16% (2020) (2023) More Cost 81:191 Q
Slide 18: 60 years leadership in asset finance
OUR STRATEGY We have maintained 60 years leadership in asset finance through innovating relentlessly and building strategic partnerships Disbursements (KES M) Scaling Dealers Agency Network 19,609 • Renewed 13 of the existing schemes +19% • Signed new schemes with Ashok Leyland, 16,466 Sinotruck Ltd
Slide 19: Digital disbursements up 31% Y-o-Y
OUR STRATEGY Our digital disbursements have increased by 31% Y-o-Y allowing us to continue boosting financial inclusion in our diverse customer base Evolution of digital disbursements (KES B) Group Fuliza (KE) M-Shwari (KE) Loop (KE) 0.9 85.6 658.8 71.7 +31% 504.8 0.5 Q3Q1'22 2022 Q1'23 Q3 2023 Q3 2
Slide 20: Expanding into a B2C play anchored on digital payments
STRATEGIC PRIORITIES We also see an opportunity to build on our heritage and expand into a B2C play anchored on digital payments….. Wallets Payments Strategic rationale • P2P transfers • Merchant acquiring & • Airtime purchases Gateways ❑ Own the customer • Payment • processing ❑ Own the data • Paym
Slide 21: Launching our LOOP Super App
STRATEGIC PRIORITIES ….hence launching our LOOP Super App with unparalleled features for merchants & consumers 21
Slide 22: Digital transformation initiatives improving efficiencies
STRATEGIC PRIORITIES Our digital transformation initiatives are improving process efficiencies, reducing cost and enhancing customer experience Deployed in 41 key processes Investing in ✓ Faster reconciliation 90,000 Man Hours Saved through RPA Robotic ✓ Efficient customer account management Process
Slide 23: Sustainability Strategy & Commitments launched
OUR STRATEGY We launched our comprehensive Sustainability Strategy & Commitments, catalyzing action towards a greener & more sustainable future for the communities that we serve and for NCBA ✓ Launched a pilot tree growing project Growing with Boreka Community Group 300,000 Trees Planted 10M Trees b
Slide 24: Our 15 'Change the Story' Commitments
OUR STRATEGY Our 15 ‘Change the Story’ Commitments 1. We will Grow 10,000,000 trees by 2030 7. We will fully eliminate single use 12. We will ignite our 3000+ staff to plastic and recycle 100% of our make a difference through the “I waste by 2030 Change the Story” program 2. We will mobilize & steer
Slide 25: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE Q3 2023 < 2023 GUIDANCE <
Slide 26: 5 key areas requiring greater attention in 2023
NCBA GROUP FINANCIAL PERFORMANCE We identified 5 key areas requiring greater attention in 2023 Thematic Area Objective Balance Sheet • Enhance the value generated from our substantial balance sheet Optimization Customer • Increase the number of customers we attract and retain across NCBA Growth Grow
Slide 27: Our Group continues to demonstrate strong fundamentals growth
NCBA GROUP FINANCIAL PERFORMANCE Our Group continues to demonstrate strong fundamentals growth Amounts in KES B Income Statement Balance Sheet Total Income PBT Total Assets Customer Deposits Gross Loans CAGR 10.3% CAGR 10.6% CAGR 11% 14% 679 CAGR 13.4% CAGR 29.3% 19% 548 341 +2% +2% +16% 46.7 18.6 5
Slide 28: Subsidiaries' contribution to Group PBT
NCBA GROUP FINANCIAL PERFORMANCE Our focus on enhancing the contribution from our subsidiaries is showing demonstrable success (16% contribution in Q3 2023 up from 1% in Q3 2022) Contribution to Group PBT in Q3-2022 Contribution to Group PBT in Q3 -2023 Uganda, 5% Uganda, 2% Tanzania, -5% Tanzania,
Slide 29: Customer growth driving deposit mobilization
NCBA GROUP FINANCIAL PERFORMANCE Customer growth and retention efforts are driving deposit mobilization (19% up Y-o-Y), while balance sheet optimization efforts are improving our funding mix Amounts in KES B Despite the macro economic conditions our deposits have ….and we have improved our CASA rati
Slide 30: Lending increased with well controlled credit risk
NCBA GROUP FINANCIAL PERFORMANCE Our customer growth agenda has seen us increase our lending substantially (+14% Y-o-Y) with well controlled credit risk outcomes Amounts in KES B NCBA Group Gross Loans accelerated in Q3 -23 while NPL …NCBA Group credit risk outcomes continue to buck industry ratio e
Slide 31: Balance sheet optimization delivering margin expansion and NII growth
NCBA GROUP FINANCIAL PERFORMANCE Our balance sheet optimization efforts have delivered healthy margin expansion and 12% growth in NII Amounts in KES M Optimization of our balance sheet has seen us deliver NIM … and subsequently 12% Y-o-Y NII growth uplift despite the pressure on cost of funding 11.1
Slide 32: FCY deposits and transactional volume growth
NCBA GROUP FINANCIAL PERFORMANCE Our franchise strengths have supported growth in our foreign currency deposits and transactional volume growth has shored up our NFI outcomes as FX margins moderated Amounts in KES B Amounts in KES M We continue growing our market leading FCY deposit ….and our transa
Slide 33: Investment in growth and inflation pressure on cost efficiency
NCBA GROUP FINANCIAL PERFORMANCE Investment in strategic growth initiatives & inflationary pressures have led to near term pressure on cost efficiency; this will resolve in the medium term as investments break even Amounts in KES M OPEX Increased by 19% y-o-y in Q3-23…. …as we continued to invest in
Slide 34: The Group remains effectively capitalized
NCBA GROUP FINANCIAL PERFORMANCE The Group remains effectively capitalized across our core markets providing ample room to invest in growth Total Capital/RWA across our markets 29.7% 19.9% 15.2% 17.2% 16.7% 16.8% Buffers 5.4% 2.7% 2.2% 1.8% Minimum 14.5% 14.5% 14.5% 15% 14.5% Requirements Group Keny
Slide 35: Delivering desired return outcomes for a Tier 1 institution
NCBA GROUP FINANCIAL PERFORMANCE Our strategy is delivering the desired return outcomes for a Tier 1 institution We are delivering on post merger promises on ROE …while matching similar sized peers on ROA 22.4% 3.0% 21.2% 2.9% 11.6% 1.6% Q3'21 Q3'22 Q3'23 Q3'21 Q3'22 Q3'23 35
Slide 36: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT< UPDATE ON STRATEGY< FINANCIAL PERFORMANCE H1 2023 < 2023 GUIDANCE <
Slide 37: Q3 2023 Key Messages
Q3 2023 KEY MESSAGES 1. Despite tightening macro-economic conditions we are on course to deliver on our 2023 plans; Q3 2023 PAT KES 14.6B (+14% Y-o-Y) with a 22.4% ROE 2. We are investing for growth in-line with our strategy • A bigger branch network (109 branches in 24 counties) • A more digitized
Slide 38: 2023 Guidance
2023 GUIDANCE • Return on Equity > 17% • NPL ratio < 13% Our FY 2023 • Cost to Income Ratio: 40-45%. Guidance • Capital Adequacy: Maintain a 300Bps buffer above regulatory limits • Core Bank Cost of Risk: 1.5% - 2.0% 38
Slide 39: PG |
PG | 39
Slide 40: Statement of Profit & Loss
APPENDIX I Statement of Profit & Loss Amounts in KES Millions NCBA Bank Kenya NCBA Group Consolidated Q3’23 Q3’22 ∆% Q3’23 Q3’22 ∆% Interest Income 41,661 34,793 20% 46,968 38,781 21% Interest Expenses (19,073) (14,140) 35% (21,011) (15,533) 35% Net Interest Income 22,588 20,654 9% 25,957 23,247 12%
Slide 41: Statement of Financial Position
APPENDIX II Statement of Financial Position Amounts in KES Millions NCBA Bank Kenya NCBA Group Consolidated Q3’23 Q3’22 ∆% Q3’23 Q3’22 ∆% Assets Net Loans and Advances 270,633 238,315 14% 308,701 266,110 16% Investments 206,542 214,938 (4%) 230,645 232,648 -1% Cash and Balances with Banks 73,387 42,
Slide 42: Loan book across product, currency and industry
APPENDIX III Loan book across product, currency and industry Q3 2023 Loan Book Loan Book by Sector Loan Book by Segment Loan Book by Currency Manufacturing 26.7% Personal 18.7% Trade 15.0% FCY 31% Transport 12.6% Consumer 25% Financial Services 9.5% Corporate Mortgate & Real Estate 7.7% 62% LCY Ener