investor briefing & q1 2016 performance - equity …...investor briefing & q1 2016...
TRANSCRIPT
Investor Briefing &
Q1 2016 Performance
April 2016
2
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
3
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
4
The Kenya Shilling has appreciated by 1.0% on a YTD basis against the USD
Stability in the foreign exchange market continues to be supported by an improved forex reserves currently at USD 7.6
billion (equivalent to 4.96 months of import cover) and a narrowing current account deficit largely due to the following:
- A lower import bill for petroleum products
- Recovery in tourism, tea and horticulture exports
- Slowdown in consumer imports
- Strong diaspora remittances.
4
Foreign Exchange Rate - Kenya
106.0
105.0
104.0
103.0
102.0
0.0
Apr ’16
101.1 +1%
Mar ’16
101.3
Feb ’16
101.7
Jan ’16
102.3
105.3
Aug ’15
103.9
Sep ’15
101.8
Oct ’15
102.1
Nov ’15
102.3
Dec ’15Jul ’15
102.5
USD / KES
5
USD vs. USH,TSH, RWF, KSH
KES vs East African Currencies
33.033.333.034.0
33.032.9
35.035.035.2
21.721.621.521.421.121.221.420.520.620.6
7.47.57.37.37.37.37.37.07.06.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
33.3
Oct ’15Sep ’15Aug ’15 Apr ’16
+9%
+5%
-1%
KES / RWF
KES / TSHS
KES / USHS
Mar ’16Feb ’16Jan ’16Dec ’15Nov ’15Jul ’15
5
The Kenya Shilling maintained stability against the regional currencies in 2016
20162015
6
FX reserves have risen to five months of import cover giving a significant cushion to the shilling
Reserves currently stand at $7.62 billion amounting to 4.96 months of import cover.
Key reasons for increase in reserves are:
i. Lower oil prices
ii. Falling current account deficit (currently 8.2% of GDP)
iii. Increased exports and inflow from tourism
6
FX Reserves - Kenya
5.0
4.5
4.0
0.0
Q1 14
4.34.3
Apr-16
5.0
Q1 16
4.6
Q4 15
4.3
Q3 15
4.1
Q2 15
4.4
Q1 15
4.7
Q4 14
4.6
Q3 14
4.3
Q2 14
Desired Minimum
Months of Import Cover
7
Current Account balance as a % of GDP - Kenya
-8.2-8.2-8.4
-5.9
-8.9
-11
-10
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
2010 2011 2012 2013 2014 2015 2016
-10.4
-9.1
In Percent
8
Inflation - Kenya
The latest inflation figure as at end of April was 5.3% (down from 6.45% in March) due to
- Food prices (food index is down due to the rains)
- Low fuel prices
0
2
4
6
8
10
Dec-15 Jan-16 Feb-16 Apr-16Mar-16
5.3%
6.5%6.8%7.8%8.0%
9
Interest Rates
Political and Economic review in the region
91 Days T. Bill
182 Days T. Bill
364 Days T. Bill
Interbank rate
11.33% 11.51% 18.61% 21.35% 22.13% 9.21% 10.41% 11.76% 9.32% 8.41% 8.77%
12.89% 18.81% 19.84% 25.84% 14.87% 8.77% 5.19% 6.13% 4.51% 4.09% 4.05%
12.15% 12.36% 14.55% 21.61% 22.29% 10.09% 12.34% 14.18% 11.93% 10.66% 10.69%
12.53% 13.82% 16.30% 21.50% 22.36% 11.93% 12.75% 14.92% 13.25% 11.91% 11.80%
Jul Aug SepSep-Oct
Peak Oct Nov Dec Jan Feb
2015 2016
Mar
Due to the high liquidity in the market, interest rates have been dropping since the beginning of February
On March 21st 2016, the MPC met and retained the CBR Rate at 11.5% (keeping it at the same level for the
last 9 months)
The MPC had earlier also retained the KBRR at 9.87% (on Jan 20th 2016)
Apr
1010
Kenya’s Resilient Economy
Kenya’s GDP growth rate maintained an upward growth rate with an increasing momentum while 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 slight
improvement compared to a 5.3% growth in 2014.
Kenya’s GDP growth rate is projected to rise to 5.9% in 2016 and 6.1 % in 2017 predicated on infrastructure
investments. Fiscal consolidation is expected to ease pressure on domestic interest rates and increase credit
uptake by the private sector. The contraction in the current account deficit will continue to be supported by
declining commodity prices and rising exports of tea.
5.65.35.7
4.6
6.1
2013 201520142011 2012
1111
Economic growth drivers
Kenya Tourism showing positive signs of recovery with enhanced security with Kenya registering the highest
growth of 27% in Hotel Bookings For The Period May To July In Africa. Government incentive on reduction of
park entry fees from $90 to $60 and More chartered airlines from Europe to Mombasa, have boosted the
sector.
Kenya recorded the fastest rise in foreign direct investments (FDI) in Africa and the Middle East, at 47%. A total
of 84 projects worth Sh102 billion from real estate, renewable and geothermal energy as well as roads and
railways provide a huge chunk of new jobs for Kenyans. Kenya was ranked 3rd in terms of numbers of projects
initiated after the United Arab Emirates (UAE) at 298 and South Africa at 118.
Kenya’s Agriculture Experiencing Renewed Growth As A Result Of Improved Weather And Rainfall Pattern.
According to the KNBS economic Survey , Agriculture value added rose from 3.5% in 2014 to 5.6% in 2015.
Total value of marketed production at current prices increased by 11.3% from KSh 333.2 billion in 2014 to KSh
371.0 billion in 2015. Total earnings from crop sales increased by 15.5% to KSh 271.8 billion in 2015.
12
Macro-economic Indicators – East Africa
12
13
Macro-Economic Indicators Summary (East Africa)
182 Days T-Bills
364 Days T-Bills
Central Bank Rate
91 Days T-Bill
Uganda Rwanda Tanzania
16.28% 6.21% 17.67% 5.4%
15.56% 5.89% 9.02% 4.7%
16.19% 8.35% 18.81% 8.1%
16.0% 12.0% 12.0% 6.5%
Inflation 6.2% 5.8% 5.4% 4.5%
DRC
14
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
15
Strong Governance & Leadership Structure
Equity Bank
Rwanda
Equity Bank
Tanzania
Equity Bank
Uganda
Equity DRC
(Pro Credit Bank)
Equity Bank
Kenya
Chief Officer,
Finance,
Innovation,
Payments
CEO’s office
Group Director,
Payments
Subsidiary Boards
Each subsidiary with own Board of Directors compliant with local regulations
Consulting
Infrastructure
Services
Subsidiary Boards
Director
Brand,
Culture and
HR
Equity Bank
South Sudan
Chief Technology &
Information Officer
Group Director,
Treasury
Group Director,
Special Projects
Group Director,
Analytics
Group Director,
Finance
Group Director
Strategic Relations
&Partnerships
Risk and
Compliance Officer
Group Director,
Corporate Banking
Group Director,
SME Banking
Group Chief
Operating Officer
Director
Governance,
Strategy, Legal,
Company Secretary
CEO
Group Board
Shareholders
Non-Banking
Subsidiaries
Corporate
Office
2
CBK CMA NSE Rating Agencies
Banking
Subsidiaries*
Equity Group
Foundation
Equity
Investment Bank
Equity Insurance
Agency
Equity Group
Holdings Limited
Board
Committees
Board
Committees
Subsidiary
Internal AuditGroup Internal
Auditor
Group Board
Committee
Subsidiary
Internal Audit
16
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
17
KES “Billion”
Tanzania Rwanda Uganda S. Sudan
Deposits
Loan
Deposits Growth
Loan Growth
Assets
Asset Growth
PBT
PBT Growth
Regional
Total
12.8
1%
15.4
37%
21.0
21%
0.08
-12%
10.5
23%
8.6
21%
13.9
19%
0.06
-50%
12.5
21%
7.0
-1%
17.0
12%
0.09
2%
10.5
-61%
0.4
-89%
14.4
-57%
0.02
-95%
67.0
14%
45.5
56%
95.0
23%
0.32
-45%
Regional Expansion – Key Metrics for Banking Subsidiaries3
Regional
Contribution
Q1 2016
22%
17%
21%
5%
Regional
Contribution
Q1 2015
21%
13%
20%
10%
DRC
20.7
14.2
28.8
0.07
31%
71%
49%
-41%
18
Regional Subsidiaries – Size and Contribution(Assets and PBT contribution by countries)
3
4.0% 3.8%
3.0% 3.1%
S. Sudan
Kenya
Rwanda
Tanzania
DRC
3.2%
Uganda
100.0%
Q1 2016
78.7%
4.7%
6.4%8.6%
100.0%
Q1 2015
79.8%
4.6%
0.0%
Total Assets split by Country PBT split by Country
1.1%1.4%
1.2%
1.5%1.5%
1.9%0.8%
90.5%
100.0%
0.0%
4.7%
Q1 2015
0.2%
100.0%
95.1%
Q1 2016
DRC
Kenya
S. Sudan
Tanzania
Rwanda
Uganda
19
Net Interest Margin
Percentage
Kenya
12.8
11.411.110.9
Q1 ’16Q4 ’15Q3 ’15Q2 ’15
11.5
9.710.5
9.7
Q1 ’16Q4 ’15Q3 ’15Q2 ’15
Uganda
4.55.2
4.74.7
Q1 ’16Q4 ’15Q3 ’15Q2 ’15
Tanzania
11.8
14.1
15.615.1
Q4 ’15 Q1 ’16Q3 ’15Q2 ’15
DRC
Rwanda
7.9
9.38.89.1
Q3 ’15Q2 ’15 Q4 ’15 Q1 ’16
South Sudan
-0.1
3.5
2.12.6
Q1 ’16Q4 ’15Q3 ’15Q2 ’15
3
20
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
21
Execution on Digital Banking
(Increased number of Transaction numbers & values)
Transaction numbers in millions+26%
Q1
2016
14.7
Q1
2015
11.6-15%
Q1
2016
6.6
Q1
2015
7.8
+45%
Q1
2016
2.2
Q1
2015
1.5
+315%
Q1
2016
45.6
Q1
2015
11.0
4
Transaction value in KES billion+37%
Q1
2016
102.1
Q1
2015
74.5
+43%
Q1
2016
11.1
Q1
2015
7.7
+562%
Q1
2016
62.4
Q1
2015
9.4
-6%
Q1
2016
47.8
Q1
2015
51.0
EquitelMerchantsATMAgency Branch
Q1
2016
-15%
Q1
2015
6.55.5
-10%
Q1
2016
335.1
Q1
2015
372.6
22
Execution on Digital Banking (Transaction numbers trend)
4
5.5
6.4
6.7
6.96.6
8.38.5
14.7
11.6
80
15
10
5
0
8.0
6.8
Q1 2013
6.6
Q1 2012
3.7
Q1 2016
79.5
Q1 2015
7.87.8
Q1 2014
8.3
Transactions (Millions)
Agency
ATM
Branch
Mobile
Cash related transactions only
23
Execution on Digital Banking(Equitel customer numbers up 180% growth YoY)
4
250
750
1,250
1,000
1,500
500
1,750
2,0002,000
0
250
500
750
1,000
1,250
1,500
1,750
0
Sep
2015
1,369
1,500
Oct
2015
1,591
1,861
Feb
2016
Mar
2016
Dec
2015
1,760
Jan
2016
1,665
+180%
Nov
2015
1,178
Aug
2015
1,166
Jul
2015
1,085
Jun
2015
1,024
May
2015
902
Apr
2015
788
Mar
2015
666
Linkage to M-Banking SIM uptake
85%
81%
83%
87%85%
KES “000”
86%87%
88%
89%
89%
90%
90%
90%
24
Execution on Digital Banking(Mobile Customer Transaction Numbers & Value Trend)
4
160
20
40
60
80
100
120
140
180
0
20
40
60
80
100
120
140
160
180
0
200
200
220
Feb
2016
152.1
Mar
2016
177.3
196.6
Jan
2016
181.3
131.9
165.9
Dec
2015
114.9
151.0
Nov
2015
96.9
132.4
Oct
2015
82.5
118.2
Sep
2015
69.5
105.4
Aug
2015
58.8
94.9
Jul
2015
49.5
85.4
Jun
2015
42.3
77.7
May
2015
33.0
63.2
Apr
2015
24.4
48.6
Mar
2015
17.2
35.8
Cumulative M-Banking Transactions numbers (millions)
Cumulative M-Banking Value (KES billions)
25
Execution on Digital Banking(Count of loan disbursements through Mobile vs. Branch)
4
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
3,600
1,608
(77%)
Oct
2015
1,770
450
(25%)
1,320
(75%)
Sep
2015
1,503
416
(28%)
1,087
(72%)
Aug
2015
1,284
382
(30%)
902
(70%)
Jul
2015
1,068
350
(33%)
718
(67%)
Jun
2015
944
321
(34%)
623
(66%)
May
2015
814
290
(36%)
524
(64%)
493
(23%)
Jan
2016
Feb
2016
Dec
2015
2,455
533
(22%)
1,922
(78%)
Nov
2015
2,101
601
(20%)
2,456
(80%)
3,381
631
(19%)
2,749
(81%)
Apr
2015
688
258
(37%)
430
(63%)
Mar
2015
578
225
(39%)
353
(61%)
2,744
Mar
2016
569
(21%)
2,176
(79%)
3,057
BranchMobileCombined
In Thousands
Cumulative
26
Execution on Digital Banking(KES 14.1 billion Disbursed through Mobile Channel)
4
14.1
11.8
10.0
8.5
6.9
5.6
4.6
3.8
2.92.4
1.91.61.3
Mar
2016
Nov
2015
Oct
2015
Sep
2015
Jul
2015
Jun
2015
May
2015
Apr
2015
Mar
2015
Aug
2015
+1,012%
Dec
2015
Jan
2016
Feb
2016
Loan Value Disbursement (KES "Billion")Disbursement Count (number)
353,052
Cumulative figures
2,749,290
27
Execution on Digital Banking
(Loan Outstanding Trend)4
In Billions
2.51
2.01
1.82
1.541.46
1.02
0.850.82
0.510.470.41
0.300.28
Jan
2016
+797%
Dec
2015
Nov
2015
Oct
2015
Sep
2015
Aug
2015
Jul
2015
Jun
2015
May
2015
Feb
2016
Mar
2016
Apr
2015
Mar
2015
28
Execution on Digital Banking
(Loan Repayment Trend)4
29
Focus on Variable
cost model…
Continuous Growth in Agency Banking4
▪ Number of
agents
increased to
25,388 agents.
31% growth
y/y
… More transactions now processed under 3rd party infrastructure saving
on fixed costs
▪ More
transactions
now
processed
under 3rd
party
infrastructure
▪ Agent
transactions
registered a
26.2%
growth 5.5
6.4
6.87.16.6
7.88.38.58.4
14.7
3.7
0
5
10
15
+26.2%
Q1 2016Q1 2015
11.6
Q1 2014
8.3
8.0
Q1 2013
6.66.7
Q1 2012
6.9
Q1 2011
0.2
Transactions (Millions)
Agency
ATM
Branch
30
Number and Value of Agents Transactions 2011 - 20164
57
9 912
14 1416 16
1719 19
22
25 26 27
31
3436
3
5.2
4.5
4.24.1
3.5
3.0
2.52.6
2.2
1.9
1.51.4
0.7
0.4
0.1
3.1
2.2
1.0
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Mar
2016
Dec
2015
Sept
2015
Sept
2014
Jun
2014
Mar
2014
Dec
2013
Sept
2013
Jun
2013
Mar
2013
Dec
2012
Sept
2012
Jun
2012
Mar
2012
Dec
2011
Sept
2011
4.7
2.5
Jun
2011
Mar
2011
1
3.7
Jun
2015
Mar
2015
Dec
2014
Transactions in million Value in billion kes
31
Number of Merchants Outlets 2011 - 20164
8,0637,749
6,864
6,153
5,618
5,166
4,412
3,7203,499
3,0662,824
2,668
2,3462,1392,018
1,6581,519
1,1941,0651,034 1,083
Sept
2015
Dec
2015
Mar
2016
Jun
2013
Mar
2013
Dec
2012
Sept
2012
Jun
2012
Mar
2012
Sept
2013
Dec
2013
Dec
2011
Sept
2011
Jun
2011
Mar
2011
+679.8%
Jun
2014
Mar
2014
Sept
2014
Dec
2014
Mar
2015
Jun
2015
32
Merchants Turnover and Revenue 2011 - 20166
0.5 0.5 0.60.8 0.8 0.8 1.0
1.31.1
1.3 1.2
1.61.8 1.8
2.1
3.2
2.72.9
3.3
4.4
3.9
8888
6664
70
3836
2623
29
181617
12119
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0
10
20
30
40
50
60
70
80
90
Dec
2015
Sept
2015
44
Sept
2014
Jun
2014
Mar
2014
Dec
2013
Sept
2013
Jun
2013
Mar
2013
Dec
2012Sept
2012
Jun
2012
Mar
2012
Dec
2011
Sept
2011
53
25
Jun
2011
Mar
2011Mar
2016
63
20
Jun
2015
Mar
2015
Dec
2014
Revenue in million kes
Turnover in billion kes
33
We are building on our momentum in Payment Processing and
Merchants…4
We have partnered with key payment
companies…
…which has allowed us to grow our number of transactions
and commissions
▪ Equity is leading in Acquiring and
Issuing
▪ Best in class payment channel
services work well with merchants
+43%
+43%
+59%
+54%
Q1 2016
259
Q1 2015
181
7,735
Q1 2014
117
4,854
11,057
Merchant CommissionsMerchant Transaction Volumes
Volume (Millions)Commissions (Millions)
34
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
35
SME contribution to the Loan Book and CASA5
6.6%5.9%
22.7%
2.8% 2.6%
Q1 2015
100.0%
18.0%
49.8%
19.9%
Large
Enterprises
Agriculture
SME
Micro
Consumer
Q1 2016
100.0%
16.5%
55.1%
Loan book split by type Deposit base split by type
Current
Accounts
Savings
Term
Deposits
Q1 2016
100.0%
35.6%
42.7%
21.7%
Q1 2015
100.0%
35.9%
43.0%
21.1%
36
Growing Non-funded Income as a result of cross-selling to SME’s5
Highlights
▪ Non Funded Income: Dropped by 7% YoY mainly due drop in to FX income and Commissions on Loans
▪ Funded Income: Interest Income grew by 37% YoY due to growth in loan book and improving NIMs
Funded
Non-
Funded
Q1 2016
15.6
10.4
(67%)
5.2
(33%)
Q1 2015
13.2bn
7.6
(58%)
5.6
(42%)
Q1 2014
11.1bn
7.0bn
(63%)
4.1bn
(37%)
Q1 2013
10.2bn
6.9bn
(67%)
3.3bn
(33%)
Q1 2012
9.0bn
5.7
(63%)
3.3bn
(37%)
Non Funded Income by Type
Fees &
Commission
Foreign
Exchange
Other
Income
Q1 2016
68.0%
16.2%
15.9%
Q1 2015
66.2%
20.5%
13.3%
37
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
38
Equity has earned recognition in 2015
Equity’s International Rankings
Equity’s Global Credit Rating
Equity BankOverall Soundness Performance
(Capital Assets Ratio) (Profits on capital) (Return on assets)
2015 Global Rank 916 88 18 8
2014 Global Rank 999 112 8 4
6
39
Equity Group’s stock excites Globally
STOCK Beta Yield (%) ROaE
Yield per unit of Risk
(Yield/Beta)
KCB 1.44 4.68% 25.0% 3.25%
EGHL 1.28 4.88% 25.5% 3.81%
COOP 1.18 4.10% 25.2% 3.47%
Reuters: Equity Group Holding yielding a higher return at a lower risk
Financial Times: Equity Group Holding to outperform the market in 2016
6
40
Equity Bank – Most valuable lender listed at the NSE6
41
Equity has earned substantial accolades in 2016
Equity Bank: Winner Best Bank in Kenya6
Overall Winner Best Bank in Kenya (2016, 2015, 2014 East Africa, 2013, 2012, 2009)
Winner Best Bank Tier 1 (2016, 2015, 2014 East Africa, 2013, 2012 )
42
Equity has earned substantial accolades in 2016
Equity Bank: Winner Best Bank in SME Banking6
Best Bank in SME Banking (2016, 2015)
43
Equity has earned substantial accolades in 2016
Equity Bank: Winner Best Bank in Retail Banking6
Best Bank in Retail Banking (2016, 2015)
44
Equity has earned substantial accolades in 2016
Equity Bank: Winner Best Bank in Agency Banking6
Best Bank in Agency Banking (2016, 2015)
45
Equity has earned substantial accolades in 2016
Equity Bank: Winner Best Bank in Micro-Finance6
Best Bank in Micro-Finance (2016, 2015, 2012, 2011, 2010, 2009)
46
Equity has earned substantial accolades in 2016
Equity Bank: 1st Runner Up Best Bank in Customer
Satisfaction6
(1st Runner up 2016, 2nd Runner up 2015)
47
Equity has earned substantial accolades in 2016
Equity Bank: 2016 Other Awards6
48
Equity has earned substantial accolades in 2016
Equity Bank: 2016 Other Awards6
49
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
50
76%
13%
102%
8%
Growth per Class
Funding Base
(Significant improvement in funding profile)
15.5%
Deposits
Shareholders’ Funds
Borrowed Funds
Other Liabilities
Q1 2016
430.2
300.3
(70%)
69.1
(16%)
46.0
(11%)
14.7
(3%)
Q1 2015
372.5
278.2
(75%)
60.9
(16%)
26.2
(7%)
7.3
(2%)
In KES “Billion” 15.5% growth in funding with deposits accounting for 70%
7
51
Deposits by Entity & Type
3.6%
4.0%9.6%
3.4%
3.0% 3.3%Rwanda
Q1 2016
Uganda
S. Sudan
DRC
Tanzania
Kenya
100.0%
78.5%
100.0%
79.3%
Q1 2015
6.7%
4.1%
0.0%4.5%
Deposit split by Entity
21.1%
35.9%
43.0%
Current
Accounts
Savings
Term
Deposits
Q1 2016Q1 2015
100.0%
42.7%
21.7%
100.0%
35.6%
Deposit split by Type
7
52
48.3
(11.2%)
275.0
(63.9%)
Q1 2015
372.536.9
(9.9%)48.9
(13.1%)
+15.5%
Government Securities
Other Assets
62.0
(16.6%)
224.8
(60.3%)
Cash & Cash Equivalents
Net Loans
Q1 2016
430.2
44.5
(10.3%)
62.4
(14.5%)
-22%
28%
21%
22%
Growth per Asset Class
15.5% growth in asset base while still maintaining portfolio diversification
Assets of KSH 430 Billion driven by stable Deposit base
In KES billion
7
53
Loan book by Segment and Entity
3.1%3.1%
3.1%
2.5%2.0%
Kenya
Tanzania
DRC
Rwanda
Uganda
S. Sudan
Q1 2016
100.0%
83.4%
5.6%
5.2%
0.2%
Q1 2015
100.0%
86.9%
4.9%
0.0%
Split across the entities within the GroupSplit across Segments
49.8% 55.1%
6.6%5.9%
22.7%19.9%
Large Enterprises
SME
Micro
Consumer
Agriculture
Q1 2016
100.0%
16.5%
2.6%
Q1 2015
100.0%
18.0%
2.8%
7
54
Increasing Net Interest Margin5
Cost of funds
Percentage
Net Interest MarginYield on interest Earning Assets
11.7
10.510.2
9.89.9
Q1 ’16Q4 ’15Q3 ’15Q2 ’15Q1 ’15
2.83.02.52.52.6
Q1 ’16Q4 ’15Q3 ’15Q2 ’15Q1 ’15
14.513.5
12.712.312.5
Q1 16Q4 15Q3 15Q2 15Q1 15
55
3.5%
2.9%
4.1%4.1%3.9%
3.8%
3.3%
4.5%4.4%4.3%
Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
GroupEBKL
Stable NPL Trend over time7
56
56.0%60.6%
65.0%62.5%63.2%
84.0%
92.8%88.7%
86.2%87.0%
Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
(Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPL
(Spec. Prov. + Int. Susp) / Gross NPL
Non-Performing Loans: High Coverage Levels7
57
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Performance of core business (intermediation)
8. Financial performance
Presentation Outline
58
Funding Distribution
Q1 2016
Broad base liabilities & funding sources
Q1 2015 Q1 2016 Growth Y/Y
Liabilities & Capital (Bn) KSH KSH %
Deposits 278.2 300.3 8%
Borrowed Funds 26.2 46.0 76%
Other Liabilities 7.3 14.7 102%
Shareholders’ Funds 60.9 69.1 13%
Total Liabilities & Capital 372.5 430.2 15%
Q1 2015
Borrowed Funds 7%
Shareholders’ Funds
16%
Other Liabilities
Deposits
2%
75%
Other Liabilities
Deposits
11%
3%
70%
Borrowed Funds
16%
Shareholders’ Funds
8
59
Asset Distribution
Q1 2016Q1 2015
Asset Portfolio & Distribution
Q1 2015 Q1 2016 Growth Y/Y
Assets (Bn) KSH KSH %
Net Loans 224.8 275.0 22%
Cash & Cash Equivalents 62.0 48.3 -22%
Government Securities 48.9 62.4 28%
Other Assets 36.9 44.5 21%
Total Assets 372.5 430.2 15%
60%Net Loans
13%
Cash & Cash Equivalents
Government Securities
Other Assets
17%
10% 10%
Cash & Cash Equivalents
Government Securities
Other Assets
15%
11%64%
Net Loans
8
60
KES (Billion) Q1 2015 Q1 2016 Growth
Interest Income 9.5 12.9 36%
Interest Expense (1.9) (2.4) 32%
Net Interest Income 7.6 10.4 37%
Non-Funded Income 5.6 5.2 -7%
Total Income 13.2 15.7 18%
Loan Loss Provision (0.3) (0.7) 104%
Staff Costs (2.5) (3.0) 21%
Other Operating Expenses (4.3) (4.7) 8%
Total Costs (7.1) (8.4) 17%
PBT 6.1 7.3 19%
Tax (1.8) (2.2) 19%
PAT 4.3 5.1 20%
Delivering 20% growth in PAT8
61
Positive Financial Ratios
Kenya Kenya Group Group
Q1 2015 Q1 2016 Q1 2015 Q1 2016
Profitability
NIM 10.9% 12.8% 9.9% 11.7%
Cost to Income Ratio (with provisions) 50% 46% 54% 53%
Cost to Income Ratio (without provision) 48% 43% 51% 49%
RoAE 35.9% 37.4% 27.6% 29.1%
RoAA 5.2% 5.4% 4.8% 4.8%
Asset Quality
Cost of Risk 0.46% 0.67% 0.63% 1.03%
Liquidity / Leverage
Loans / Deposits 86.5% 94.0% 80.8% 91.6%
Loans / (Deposits + Borrowed Funds) 77.8% 79.8% 73.8% 79.4%
Loans / (Deposits + Borrowing Funds + S/H Funds) 66.1% 67.5% 61.5% 66.2%
Liquidity 32.9% 29.4% 39.3% 34.9%
Capital Adequacy Ratios
Core Capital to Risk Weighted Assets 14.7% 14.8% 16.2% 18.3%
Total Capital to Risk Weighted Assets 16.8% 16.1% 18.2% 19.6%
Core Capital to Deposits Ratio 18.5% 20.5% 18.8% 24.2%
Customer Numbers
No. of Customers 8,274,425 8,971,514 9,547,596 10,313,468
8
62
Cost to Income Ratio Trend
▪ Total Operating Income up 18% y/y mainly attributed to improved NIM
▪ Operating expenses up 17% y/y
51.2%48.7%49.5%50.9%
48.9%47.8%45.4%46.5%47.8%
43.3%
Q1 2012 Q1 2013 Q1 2015Q1 2014 Q1 2016
Group Bank
8
63
37.4%
33.9%33.0%35.0%35.9%
29.1%
25.5%25.3%26.6%27.6%
Q1 ’16Q4 ’15Q3 ’15Q2 ’15Q1 ’15
Group
EBKL
RoAE
5.4%5.2%5.0%5.1%5.2%4.8%
4.5%4.3%4.6%4.8%
Q1 ’16Q4 ’15Q3 ’15Q2 ’15Q1 ’15
Group
EBKL
RoAA
RoAA and RoAE overtime8
64
THANK YOUDr James Mwangi, CBSGroup Managing Director & CEO
KeEquityBank
@KeEquityBank
Email: [email protected]
Web site: www.equitybankgroup.com