half year 2015 earnings release - kcb group limited · event ticketing using the kcb pepea card...
TRANSCRIPT
HALF YEAR 2015 EARNINGS RELEASE
2.1 million customers, Loans KShs 2.1 billion, Deposits KShs 128 million, Loan accounts 800,000
Over 250 Branches,11,000 Agency Outlets
(up 39%)
Customer Numbers: Over 7 million (up 69% Dec-14 )
Enhancing Financial Inclusion
KShs. 1,000,000,000on Foundation
Digital channels
69% of total Transactions
Milestones to Date
972,491 loan applications
(up 330% ) 71% on mobile
2
KShs 3B disbursed
East Africa Awards for 2015
3
Best Commercial Bank
Best Regional Bank Most Socially Responsible Bank
Kenya Commercial Bank Limited AA(KE) and A1+(KE) in the long term and short term respectively; outlook Stable.
4
Channel Transactions in Millions
4.6
1.2
1.8
6.3
10.4
8.8
3.0 3.3
6.2
9.6
Mobile Banking Agency Banking POS ATMs Branch Teller
Jun-14
Jun-15
Up 91%
Up 150%
Up 83%
Down 2%
Down 8%
Strong growth in Mobile and Digital channels, contributing 69% of all transactions
5
Deepening Financial Inclusion with KCB Mpesa - Over KShs 2B new loans and 2M Customers
7.9%
20.4%
25.8%
22.0%23.7%
0.3%
18 - 25 26 - 30 31 - 35 36 - 40 41 - 65 >66
Loan Amount Bracket
Age profile Loan Maturity
KCB Mpesa (KShs M)
0.8%2.3% 1.2%
11.3%
16.6%
23.9% 24.7%
17.0%
2.1%
0 - 200 200 -500
500 -1,000
1,000 -2,500
2,500 -5,000
5,000 -10,000
10,000 -20,000
20,000 -50,000
50,000 -100,000
362
700
937 954
387
957
1,341
1,796
Mar-15 Apr-15 May-15 Jun-15
Net Loans Total Disbursements
40%37%
23%
1 month 3 months 6 months
6
Digital Channels delivering stronger overall growth – over 2/3 transactions
57%
43%
69%
31%
Alternative Channels
Branch Transactions
Jun-15 Jun-14
Event Ticketing using the KCB Pepea Card• 6 Billers launched in Jun-15• Transactions over KShs
4.7M• 140,000 KCB Pepea
transactions valued at KShs 0.3 Billion
Good Momentum in Growing the SME Book
7
Growing customers by
30%
$150M in long term funds from
IFC in 2015
3 year KShs 1B Start up fund
Increase lending to SME to KShs 40B in 3 years
SME Activities:•Over 300 SME Workshops•Over 26,000 customers
trained•Over 2,200 customers
exposed to new markets
SME Performance:• 30% growth in customer
numbers• 29% L/D Ratio• Improved NPL to 6%•Opportunity to grow the
Assets
KCB’s SME Experience
MACRO-ECONOMIC OVERVIEW
Sep-14 Dec-14 Mar-15 June-15 Current
Central Bank Rate
KBRR
Interbank Rate
Kenya Inflation
Crude Oil Price USD/Barrel
Average Lending Rate
FX Rate (KShs./$)
8.5 8.5 8.510.0 11.5
9.1 9.18.5 8.5 9.9
16.2
16.015.4 15.2 15.2
6.7 7.2 8.210.6
14.7
6.66.0 6.3
7.07.0
97.553.0 53.3
63.2 57.8
89.4 90.6 92.4 99.3
100.8
Operating Environment - Kenya
9
Dec-14 Mar-15 June-15
91 day T-Bill
Tanzania Inflation
FX Rate (TShs./$)
13.26.86 7.5
4.8 4.3 6.1
Operating Environment – Tanzania & Uganda
10
Tanzania Highlights:TShs depreciated 21% in the last yearInflation driven by food costGeneral Elections - October 2015 (Current president not eligible)
Uganda Inflation
FX Rate (Ugx./$)
1.8 1.9 4.9
Uganda Highlights:• UGX currency depreciation hit 3,500 July 2015• Inflation rise due to food prices• Widening current account deficit• Electioneering process underway
91 day T-Bill
2771 2975 3300
11.3 13.2 14.1
1733 1865 1995
Dec-14 Mar-15 June-15
91 day T-Bill
Rwanda Inflation
FX Rate (RWF/$)
Operating Environment – Rwanda & Burundi
11
Highlights:• Fitch affirmed B+ rating• Parliamentary support for Presidential 3rd term• Key interest rate left unchanged at 6.5% since cutting it by 50bp in 2014• Growth forecast at 6.5% in 2015 & 2016
Burundi Inflation
FX Rate (BIF/$)
3.8 4.77.7
Highlights:• Political Crisis and uncertainty• Increasing inflation and cost of essential commodities due to political unrest
689.8 690.5707.4
4.43.4 3.5
1.9-1.3
2.7
15951558.9 1562.5
12
Operating Environment – South Sudan
Highlights:
• Political conflict in the 3rd year
• Lower revenue collection (oil and non-oil related)
• Fiscal Budget deficit:
• Expenditure SSP 10.6B
• Revenue SSP 3.2B (Oil revenue SSP 1.2B, Non Oil SSP 1.7B, Donors SSP SSP 0.3B)
• Deficit SSP 7.4B
• Introduction of new tax framework to enhance non-oil revenues
• Cautious optimism on Peace Agreement
FINANCIAL PERFORMANCE
Asset Distribution
Actual Jun-15
ActualJun-14
% Y-O-Y Change
Asset Portfolio
Cash and balances with Central Bank 27,884 25,486 9%
Balances with other institutions 79,985 51,787 54%
Investments in Government securities 112,595 93,330 21%
Investment securities 876 2,008 -56%
Net loans and advances 320,601 244,014 32%
Fixed assets 11,039 9,889 12%
Other assets 13,630 13,188 3%
Total Assets 566,610 439,701 29%
4%
20%
19%
57%
5%
22%
18%
55%
0% 10% 20% 30% 40% 50% 60%
Other Assets
Securities
Cash & Bank Balances
Loans
Jun-14 Jun-15
14
Asset Portfolio and Distribution (KShs Mn.)
Growth in Loan Book
Net Loans & Advances (KShs. Bn)
Loan segmentation June 2015
35% 14% 32%15% 6%
CAGR-16.4%
*Others:- Mining,Energy&Water,Tourism,Restaurant,Hotels and Financial Services
175202 214
244
321
Jun-11 Jun-12 Jun-13 Jun-14 Jun-15
15
3%
13%
7%
6%
18%32%
13%
8% Agriculture
Manufacturing
Building and Construction
Transport and Communication
Real Estate
Personal/Household
Trade
Others*
3%
16%
12%
4%
16%
33%
10%
6%
Loan segmentation June 2014
Asset Quality and NPL Coverage
NPL Ratio
Coverage Ratio
8.8%
6.7% 6.3%7.1% 7.3%7.3%
5.6% 5.2%
6.4% 6.5%
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15Group Bank
Improved NPL Ratios in H1 2015 compared to H1 2014
IFRS=(IFRS Provisions/Gross NPL) CBK=(Interest in Suspense+General Provision+Specific Provision)/(Gross NPL)
44.0%
54.8% 56.4% 55.5%
45.7%
68.6%77.1% 85.0% 77.6%
71.8%
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15
IFRS CBK
16
Liabilities and Funding Base (KShs Mn.)
Total liabilities increased by 29 % due to; Deposits up 26% due to customer number
growth. Borrowed funds up 71% due to additional
funding from IFC, SCB & GIB ($170M)
2%
78%
14%
6%
1%
80%
15%
4%
Other Liabilities
Deposits
ShareholdersFunds
Bank & Debt Balances
Jun-14 Jun-15
Liability & Equity Contribution Key Highlights
ActualJun-15
ActualJun-14
% Y-O-YChange
Funding Portfolio
Customer Deposits 443,036 351,603 26%Balances due to other banks 12,273 3,639 237%
Other liabilities 10,728 6,488 65%Long-term debt 22,474 13,117 71%
Total Liabilities 488,512 374,846 30%
Share capital 3,025 2,984 1%Reserves and premium 75,072 61,870 21%
Proposed dividend 0 0 0%Shareholders’ Equity 78,097 64,855 20%
Total Liabilities and Equity 566,610 439,701 29%
17
Deposits GrowthCustomer Deposits Growth (KShs.Bn) Deposits by Type
216
279 288
352
443
81%
72% 74%69%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50
100
150
200
250
300
350
400
450
500
Jun-11 Jun-12 Jun-13 Jun-14 Jun-15
Deposits L-D Ratio
13% 3%29% 26%22%
CAGR-19.7%
64%
8%
23%
5%
52%
18%
23%
7%
0% 10% 20% 30% 40% 50% 60% 70%
Demand
Savings
Term
Call
Jun-14 Jun-15
18
16.8%
19.2%20.9% 21.0%
17.2%
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15
20.7% 20.0%21.0%
18.1%15.9%
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15
15.9% 16.0%
17.1% 17.1%
14.6%
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15
Capital Adequacy
19
Core Capital/ Risk Weighted Assets
10.5%
Total Capital/ Risk Weighted Assets Core Capital/ Total Deposits
14.5%
8.0%
Distribution of PBT by Country
June 2015
20
Burundi, 0.0%
Rwanda, 1.3%Uganda, 0.4% Tanzania, 1.4%
South Sudan, 6.9%
Kenya, 90.0%
Burundi, 0.0%
Rwanda, 0.6%
Uganda, -1.2% Tanzania, 0.7%
South Sudan, 7.1%
Kenya, 92.7%
June 2014
Consolidated Statement of Profit or Loss (KShs. Mn.)
ACTUAL Jun-15
ACTUAL Jun-14
Y-o-Y % Change
Interest Income 25,854 22,409 15%
Interest Expense (6,408) (5,275) 21%
Net interest income 19,446 17,134 13%
Foreign exchange income 2,014 2,220 -9%
Gross fees and commissions 6,844 5,669 21%
Other income 2,411 2,500 -4%
Total operating income 30,715 27,523 12%
Total operating expenses (14,919) (13,639) 9%
Provisions for bad debts (2,593) (2,210) 17%
Profit before tax 13,202 11,674 13%
Tax (3,961) (3,502) 13%
Profit after tax 9,242 8,172 13%
21
Key Statistics and Performance Ratios
22
Return on Average Assets
Return on Average Equity
Cost to Income
Gross NPL to Gross Loans
NPL Coverage
Debt to Equity
Non funded income to total income
Staff costs to total income
Cost of funds
Net Interest Margin
Cost of risk
Loan to Deposit Ratio
Growth of Net Loans and Advances
Growth of Customer Deposits
Growth of Profit before tax
4.0% 3.8% 3.5% 3.5%
25.2% 24.2% 22.5%
48.3% 50.2% 51.2%
6.7% 6.3% 7.1%
69.4% 65.2% 77.6%
18.5% 16.8% 16.0%
39.5% 38.0% 33.3%
24.7% 24.1% 27.4%
3.2% 3.2% 2.9%
9.5% 9.7% 8.7%
1.6% 1.8% 0.8%
75% 75% 74%
17% 25% 27%
16% 23% 27%
17% 18% 12%
24.0%
48.6%
7.3%
71.8%
28.8%
36.7%
25.1%
2.9%
8.5%
1.7%
72%
31%
26%
13%
Q2’14 Q3’14 FY’14 Q1’15 H1 ‘15
3.9%
25.5%
49.6%
8.8%
68.6%
20.2%
37.7%
24.9%
3.1%
9.5%
1.9%
75%
17%
16%
17%
Focused on our Business Drivers
23
Over 7 million customers
KCB MpesaRoad Annuity
Revenue Collection – CountiesSocial Safety Net
Relaunch S&L as a developer for affordable housing
14% Contribution
Launch of KCB Insurance and Recruitment for Brokerage complete
69% of transactions up from 57%
Overall Project Status:41% complete
CIR: 100bps improvement to 48.6%NPL:150bps improvement to 7.3%
Good adequacy ratiosNon Operating Holding
Company to be operationalizedConsideration for 2016
ACHIEVED
Enhancing Financial inclusion to 10 million customers
Building partnerships in the telecommunication, transport and energy sectors and with governments across the region
Race to a million homes through our affordable mortgage proposition
Integrated product/service offering on bancassurance, investment banking, brokerage services
Triple mobile transactions and agency footprint to enhance our digital payments
T24 refresh to increase reliability and capacity to over 25 million customers
Improved efficiencies: managing the cost to income ratio and loan quality
Raising long term capital (Equity & Debt)
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