Ncba Group Plc · NSEKE:NCBA
Ncba — H1 2024 Earnings Presentation
43 slides from Ncba's earnings presentation, August 2024
Slide 1: H1 2024 Investor Briefing
H1 2024 Investor Briefing August 2024 ncbagroup.com Go for it
Slide 2: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE H1 2024<
Slide 3: H1 2024 Key Messages
H1 2024 KEY MESSAGES 1 2 3 Growth YoY despite tightening Steady balance sheet outcomes We have delivered on our macro-economic conditions w/ well controlled risks 2020-2024 strategic ambitions ✓ H1 2024 PAT KES 9.8Bn (+5%) ✓ Bigger balance sheet (KES 529Bn ✓ A bigger branch network (116 deposits, +2
Slide 4: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE H1 2024<
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 GROUP PLC DIGITAL BUSINESS NCBA LEASING LLP NON NCBA INVESTMENT BANK LTD BANKING SUBSIDIARIES NCBA BANCASSURANCE INTERMEDIARY LTD AIG KENYA INSURANCE COMPANY
Slide 6: Welcome to the bank that says go for it
WHO WE ARE Welcome to the bank that says go for it, Welcome to the bank that banks on your ambition, Welcome to NCBA Our Purpose To be the Financial Partner that ✓ At NCBA, our customers are at the heart Inspires your Growth of everything we do; ✓ We are driven by our promise to offer Our Values exc
Slide 7: Our Regional Footprint
WHO WE ARE Our Regional Footprint Banking Business KES KES KES UGANDA 101Bn 529Bn 340Bn Capital Deposits Lending Branches 5 +3,000 Staff Customers 11.3Mn ~USD 782Mn ~USD 4Bn ~USD 3Bn KES 478Bn Digital Disbursements+ IVORY COAST KENYA ~USD 4Bn Branches 96 Purely Digital Customers 9.2Mn Customers 36.3
Slide 8: Awards & Accolades
WHO WE ARE Awards & Accolades Brand 85th most valuable Brand in Africa (Brand Finance) Top 10 Most Valuable Kenyan Brands 2024 (Brand Finance) Best Performing Thematic campaign (Mdundo Awards) Distinguished Customer Experience Brand Known for Customer Innovation and Excellence Awards 2024 (I
Slide 9: We are led by an exceptional team
WHO WE ARE We are led by an exceptional team which has demonstrated resilience in managing our business
Slide 10: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE H1 2024 <
Slide 11: Global economic growth is stable, inflation remains sticky
OUR OPERATING ENVIRONMENT Global economic growth is stable, inflation remains sticky but on a downward trend. Fed rate cuts anticipated in Q4 Global economic growth is Headline global inflation Future policy rate cuts in Europe and 1 stable with strong services 2 remains sticky, albeit on a 3 the US
Slide 12: Growth and currency divergences across the region
OUR OPERATING ENVIRONMENT Growth and currency divergences are evident across the region KENYA UGANDA RWANDA TANZANIA • 5.0% GDP growth in H1 24, driven by • Economic activity levels remain • GDP growth rate of 6.6% • GDP surged to 9.7%; solid resilient services sector growth rebound in agriculture a
Slide 13: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE H1 2024 <
Slide 14: Our strategy is delivering a resilient set of results
OUR STRATEGY Despite macroeconomic headwinds, our strategy is delivering a resilient set of results with bottom line growth and our Group ROAE registering at 20.1% H1 23 H1 24 Become a Distinguished Brand 9.8 Known For Customer Experience 9.3 PAT (KES Bn) 21.0% Scale Retail 20.1% Banking: Expand Dis
Slide 15: NCBA Group Brand has settled
OUR STRATEGY NCBA Group Brand has settled and we have seen improvement on scores in addition to receiving various awards Awards & Accolades • Brand and Product Campaigns Brand Power • Strong consistent always on media +1 pt. 6th and 85th Most Valuable Brands in 6.7 • Superior customer service/engage
Slide 16: Expanding branch footprint has grown retail customer base
OUR STRATEGY Our focus on expanding our branch footprint has significantly grown our retail banking customer base and increased its share of Bank performance Our larger footprint in Kenya has … at 31% of Kenyan Bank deposits our … and our new branches have collectively continued to support our custo
Slide 17: #2 Corporate Bank in East Africa
OUR STRATEGY We are the #2 Corporate Bank in East Africa with a substantial deposit base of KES 213Bn and growing our cross border relationships albeit with pressures on our corporate funding base We maintained our market positioning in The rising interest rate environment has But fundamental growth
Slide 18: Leadership in asset finance
OUR STRATEGY We have maintained our leadership in asset finance through innovating relentlessly and building strategic partnerships We have grown our asset finance market share… And delivered healthy top and bottom line outcomes Market Share Total Income (Kes Mns) 1,880 +86% 37% 1,010 H1 23 H1 24 PB
Slide 19: Core bank digital investments
OUR STRATEGY Our core bank digital investments have improved process efficiencies, reduced cost and enhanced customer experience… Modernize Our Enhance our Cyber Security Deliver an Improved Infrastructure Protections Customer Experience Investment* ~ USD Investment ~ USD 3.2Mn Investment ~ USD 11.5
Slide 20: 87% of transactions executed digitally
OUR STRATEGY …with 87% of our transactions now executed digitally even with growing transactional volumes Channel transactions Branch transactions NCBA NOW APP Digital Loans (KES Bn) Channel NPS 4.4 66 12.7% 20.1% +57% 58 2.8 87.3% 79.9% H1 23 H1 24 H1 23 H1 24 H1 23 H1 24
Slide 21: KES 478Bn digital loans disbursed
OUR STRATEGY Our investment in digital financial services enabled us to disburse KES 478Bn digital loans in H1- 24, supporting our financial inclusion agenda and diversifying our customer base across Sub Saharan Africa Evolution of digital disbursements (KES Bns) Group Fuliza (KE) Mshwari (KE) Loop
Slide 22: LOOP Super App
OUR STRATEGY Leveraging on our heritage in digital payments, we launched our LOOP Super App and we are seeing the platform gaining consumer acceptance through strong customer & merchant acquisition with strong unit economics H1 23 H1 24 H1 23 H1 24 LOOP Super App Rating 233,042 45 >100% >100% 3.8 22
Slide 23: Corporate internet banking platform pilot
OUR STRATEGY We are at the tail end of launching our corporate internet banking platform through a pilot, with exceedingly positive feedback highlighting its ease of navigation & useful added features Customer Feedback (Select Verbatim Responses) Key Benefits and Features ✓ Easy Payments ❑ "The look
Slide 24: Change The Story Commitments
OUR STRATEGY We continue to scale our impact and are on course in implementing our ‘Change The Story’ Commitments Scaling Our Impact… ✓ 519K Cumulative trees Planted (H1 24 = 175,044) ✓ 51.4% of Waste recycled at HQs and pilot branches ✓ 76.3% Reduction in plastic used ingifting ✓ USD 50Mn Green & S
Slide 25: Completed acquisition of AIG Kenya
OUR STRATEGY Having received regulatory approvals we completed the acquisition of AIG Kenya now fully owned by NCBA Group; we are now on the path to completion of integration activities as stipulated in the transition plan agreed with AIG Group Aug 2023 Feb 2024 May 2024 Dec 2024 Initial discussions
Slide 26: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE H1 2024 <
Slide 27: NCBA Group Financial Performance: subsidiaries
NCBA GROUP FINANCIAL PERFORMANCE Our diversified business model continues to demonstrate resilience, with strong contribution from our non banking and digital banking subsidiaries PBT Amount in KES Mns PBT Amount in KES Mns Core Banking Subsidiaries Digital Banking H1 23 H1 24 H1 23 H1 24 %∆ %∆ (15%
Slide 28: Contribution from subsidiaries
NCBA GROUP FINANCIAL PERFORMANCE Our focus on enhancing the contribution from subsidiaries has demonstrated success with our Group deriving 19% of top line from subsidiaries in addition to positive profitability outcomes REVENUE % CONTRIBUTION EFFICIENCY RETURNS TOTAL INCOME COST TO INCOME RATIO RET
Slide 29: Strong fundamentals with positive CAGR
NCBA GROUP FINANCIAL PERFORMANCE Our Group continues to demonstrate strong fundamentals with positive CAGR over the strategy period Amounts in KES Bns Balance Sheet Income Statement Total Assets Customer Deposits Gross Loans Total Income PAT CAGR 6.8% CAGR 6.2% CAGR 20.7% CAGR 4.0% CAGR 12.1% 689 52
Slide 30: Deposit base and funding mix
NCBA GROUP FINANCIAL PERFORMANCE Our sizeable deposit base has grown despite the difficult macro environment and we also see balance in our funding mix between our term and CASA base Amounts in KES Bns Despite the macro economic conditions our deposits have …and we now have KES 260Bn in CASA, an alm
Slide 31: Lending growth and credit risk outcomes
NCBA GROUP FINANCIAL PERFORMANCE Our customer growth agenda has seen us increase our lending noticeably (+5% Y-o-Y) with well controlled credit risk outcomes Our lending continued showing growth in H1-24 while NPL …and NCBA Group’s credit risk outcomes continue to buck ratio edged down… industry tre
Slide 32: Adequately provisioned loan coverage
NCBA GROUP FINANCIAL PERFORMANCE We are adequately provisioned with sufficient coverage across our loan classification buckets Stage 1 Stage 2 Stage 3 10.7% 9.7% Coverage 1.4% 62.0% 1.0% 4.7% 59.8% Ratio (%) 0.9% 57.8% 46 259 43 246 40 35 41 195 37 Gross Loans & Advances (KES Bns) H1 22 H1 23 H1 24
Slide 33: Cost of funds and NIM
NCBA GROUP FINANCIAL PERFORMANCE The high interest rate environment has put pressure on our cost of funds (+2.4% YoY), however asset pricing measures have muted the NIM deterioration (-1% YoY) We continue to see pressure on pricing of our funding base, … this subsequently led to a muted 4% drop in N
Slide 34: Non funded income streams
NCBA GROUP FINANCIAL PERFORMANCE Our non funded income streams received a healthy boost from fees derived from varied solutions we offer our clients whilst we still maintain healthy FX flows presenting opportunities for enhanced trading in 2024 We saw a drop on our FCY deposit book due to translatio
Slide 35: Investing for the future and efficiency
NCBA GROUP FINANCIAL PERFORMANCE We continue to invest for the future and this has negatively impacted our efficiency metrics we are nonetheless confident of improving efficiency outcomes in the future as investments break even OPEX Increased by 16% in H1 24 as we continued to book …notwithstanding
Slide 36: Effectively capitalized across core markets
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 Minimum Buffer Total Requirements Group 14.5% 14.5% 5.4% 19.9% NCBAK 14.5% 14.5% 5.0% 19.5% NCBAU 12.0% 12.0% 22.1% 34.1% N
Slide 37: Return outcomes and cash returns to shareholders
NCBA GROUP FINANCIAL PERFORMANCE Our strategy is delivering the desired return outcomes for a Tier 1 Bank and we are delivering consistent cash returns to our >27,000 shareholders over the last 3 years Our Group is showing resilience on …while matching similar sized peers …and continuing to deliver
Slide 38: Contents
CONTENTS WHO WE ARE < OPERATING ENVIRONMENT < UPDATE ON STRATEGY < FINANCIAL PERFORMANCE H1 24 <
Slide 39: H1 2024 Key Messages
H1 2024 KEY MESSAGES 1 2 3 Growth YoY despite tightening Steady balance sheet outcomes We have delivered on our macro-economic conditions w/ well controlled risks 2020-2024 strategic ambitions ✓ H1 2024 PAT KES 9.8Bn (+5%) ✓ Bigger balance sheet (KES 529Bn ✓ A bigger branch network (116 deposits, +2
Slide 40: Thank you
Slide 41: Statement of Profit & Loss
APPENDIX I Statement of Profit & Loss Amounts in KES Millions NCBA Bank Kenya NCBA Group Consolidated H1 23 H1 24 ∆% H1 23 H1 24 ∆% Interest Income 27,015 33,916 26% 30,346 38,062 25% Interest Expenses (11,956) (19,703) 65% (13,135) (21,612) 65% Net Interest Income 15,059 14,212 (6%) 17,211 16,450 (
Slide 42: Statement of Financial Position
APPENDIX II Statement of Financial Position Amounts in KES Millions NCBA Bank Kenya NCBA Group Consolidated H1 23 H1 24 ∆% H1 23 H1 24 ∆% Assets Net Loans and Advances 257,973 272,873 6% 292,380 309,663 6% Investments 208,169 193,224 (7%) 231,679 218,875 (6%) Cash and Balances with Banks 71,529 93,8
Slide 43: Loan book diversified across product, currency and industry
APPENDIX III Our loan book is well diversified across product, currency and industry H1 24 Loan Book Loan Book by Sector Loan Book by Segment Loan Book by Currency Manufacturing 23% Personal 18% Trade 15% Consum er Financial Services 14% 26% FCY 25% Transport 12% Corporat e LCY Mining & Quarrying 6%