INVESTOR PRESENTATION

FINANCIAL RESULTS FOR PERIOD ENDED 30 JUN 2014

DISCLAIMER

The following presentation is being made only to, and is only directed at, persons to whom such presentations

may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or

rely on this presentation or its contents.

The information contained herein is preliminary and based on Company data available at the time of the

earnings presentation. It speaks only as of the particular date or dates included in the accompanying slides.

Kenya Commercial Bank Ltd. does not undertake an obligation to, and disclaims any duty to, update any of the

information provided.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement

to any person to underwrite subscribe for or otherwise acquire securities in within the Company.

1

MACRO-ECONOMIC ENVIRONMENT

GDP CONTRIBUTION – 1Q2014

• The World Bank lowered Kenya’s economic growth forecast for this year and next after a delay in seasonal

rains reduced the outlook for agricultural production and amid worsening insecurity.

• Kenya will probably expand at 4.7% percent in 2014 and 2015 which is lower that the 5.1% and 5.2% initially

projected.

3

FOREX MOVEMENT

4

BURUNDI KENYA

UGANDA TANZANIA

INFLATION TRENDS

5

• The Monetary Policy Committee (MPC) set the Central Bank

Rate (CBR) at 8.50 percent

• The Central Bank of Kenya (CBK) set the KBRR at 9.13 percent

• KBRR will be used by Banks and Mortgage Finance Companies

to price their flexible/variable credit facilities with effect from 8th

July 2014.

KENYA BANK’S REFERENCE RATE (KBRR)

6

KENYA BANK’S

REFERENCE RATE

(KBRR)

K Interest

Rate

Component

Factors:

• CBR

• 91 Day T-Bill Rate

Factors:

• COF

• Statutory Ratios

• Administrative Costs

• Loss Provisions

• Risk Premium

• Profit Margin

Total Cost of Credit

Bank Charges & Fees

Interest Rate Component

3rd Party Costs

Annual

Percentage

Rate (APR)

KEY STRATEGIC THEMES

KEY STRATEGIC THEMES

Innovation

Customer Leadership

Business Efficiency

International Business

Consolidation

Sustainability

Insurance

8

Business Efficiency and Growth

9

● Efficiency to drive low CIR

● Unique distribution model leveraging on

branches, agencies, ATMs, mobile and internet

Banking

● Introduction of new products leveraging off

KCB’s existing distribution platform

● Stable CIR

Growth Potential CIR of KCB Group

Financial Inclusion Momentum

Mobile Banking Transactions in 2014

Evolution of transactions in Alternative Channels

10

• Sustained growth in utilization of alternative channels

• Successful migration to EuroPay Mastercard Visa (EMV)

• Initialization of the core banking refresh

Transformative Partnerships

11

KShs 1 BILLION IN LIVESTOCK INVESTMENT CASH LITE PLATFORMS

Transformative Partnerships – Small Businesses

Access to Finance

Build capacity

Scale up and grow

• Speed

• Ease of Access

• Business

Insurance

• SME Toolkit

• Comprehensive

Information Access

• Single Contact

Point

JOINT

PROPOSITION

• Bundled financial

and

communication

solutions.

• One Contact

Center

• One Online Portal

• One Club S

OL

UT

ION

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12

Consolidation of Regional Businesses

13

Total Assets Contribution 2014

Total Revenue Contribution 2013 Total Revenue Contribution 2014

Total Assets Contribution 2013

TOP 1,000 BANK GLOBALLY

GCR Affirms KCB’s Rating of AA(KE); Outlook

Stable.

14

The Banker ranks KCB

as the world’s 846th

largest bank Based on

Assets

The Banker ranks KCB

as Africa’s 3rd best Bank

Based on ROA

Q2 FINANCIAL RESULTS

Group Statement of Financial Position (KShs. Mn.)

ACTUAL

JUNE 2014

ACTUAL

JUNE 2013

% Y-O-Y

Change

ACTUAL

DEC 2013

Asset Portfolio

Cash and balances with Central Bank 25,486 26,561 (4%) 23,933

Balances with other institutions 51,787 18,455 >100% 20,409

Investments in Government securities 93,330 88,212 6% 90,938

Investment securities 2,008 2,259 (11%) 2,058

Net loans and advances 244,014 214,085 14% 227,722

Fixed assets 9,889 10,016 (1%) 10,030

Other assets 13,188 11,324 16% 15,762

Total Assets 439,701 370,911 19% 390,852

JUNE 2014

Fixed & other

assets 6%

Gvt. & investment

securities 24%

Cash & bank

balances 12%

Loans 58%

JUNE 2013

Fixed & other

assets 5%

Gvt. &

investment

securities 22%

Cash & bank

balances 18%

Loans 55%

16

Asset Growth

Net Loans & Advances (KShs. Bn) NPL Ratio

Loan segmentation Coverage Ratio

130

175202 214

244

June- 10 June- 11 June- 12 June- 13 June- 14

52.7% 54.9%58.9%

65.0%69.3%

Jun- 13 Sep- 13 Dec- 13 Mar- 14 Jun- 14

12%

33%

3% 16%

10%

4%

16%

6%

Construction

Personal

Agriculture

Manufacturing

Trade

Transport

Real Estate

Others

17

Central Bank Rules Vs. IFRS

18

Provisioning Policy Under Central Bank Rules

Financial Statement- December 2013

4.2

8.5 10.1

Evolution of Provisions for Loans (KShs. Mn.)

Provision amount on each individual account is computed

monthly based on the Central Bank prudential guidelines and

the relevant entries passed through the P&L in the Bank

books of account

Monthly the portfolio is subjected to an impairment

assessment as per IFRS

Impairment as per IFRS is compared to provisions amount

as per Central Bank and if Central Bank provisions amount is

greater than impairment as per IFRS, the difference is

accounted for through reserves, otherwise an additional

charge is recognized in P&L to increase provisions to the

IFRS assessment

Summary of Central Bank of Kenya Rules

# Classification

Class

Overdue

Days

Provisioning

required

1 Normal 0-30 1%

2 Watch 31-90 3%

3 Substandard 91-180 20%

4 Doubtful 181-365 100%

5 Loss Over 365 100%

Assets Liabilities

Gross Loans

IFRS Provisions

Net Loans

Other Assets

9,560

Difference between CBK and IFRS

provisions is recorded in a reserve

included in the Shareholders’ Equity

Liabilities

Loan Loss Reserve

Shareholders Equity*

374,846

5,337

59,518

*Excluding Loan Loss Reserve

253,574

244,014

195,687

7,992 8,885

8,888 8,811 9,560 9,858

12,037 13,259 13,182

14,897

FY 2011 FY 2012 FY 2013 Q1 2014 Q2 2014IFRS CBK

Group Statement of Financial Position (KShs. Mn.)

ACTUAL

JUNE 2014

ACTUAL

JUNE 2013

% Y-O-Y Change ACTUAL

DEC 2013

Funding Portfolio

Customer Deposits 351,603 287,721 22% 305,659

Balances due to other banks 3,639 13,481 (73%) 6,651

Other liabilities 6,488 5,671 14% 7,467

Long-term debt 13,117 8,208 60% 7,720

Total Liabilities 374,846 315,081 19% 327,497

Share capital 2,984 2,984 - 2,984

Reserves and premium 61,870 52,845 17% 60,371

Shareholders’ Equity 64,855 55,830 16% 63,355

Total Liabilities and Equity 439,701 370,911 19% 390,852

Customer

deposits 80%

Bank & debt

balances 4%

Shareholders’

funds 15%

Other liabilities 1%

June 2014

Customer

deposits 78%

Bank & debt

balances 6%

Shareholders’

funds 15%

Other liabilities 1%

June 2013

19

Customer Deposits

20

Customer Deposits (KShs. Bn) Deposits by Type- June 2014

• Focus on low cost deposits riding on technology

driven products

• Ideal LD ratio of between 70% and 75% considering

our business model and deposit composition.

• Need for more deposits to grow balance sheet.

• Strong five year CAGR of 13%

Deposits by Sector- June 2014

Capital Adequacy

KShs. Bn

RWA 238.9 263.6 272.6 286.8 292.1

Core Capital/Total Risk Weighted Assets

KShs. Bn

Total Capital/Total Risk Weighted Assets

→Minimum ratios revised upward; CC/RWA from 8%

to 10.5% and TC/RWA from 12% to 14.5%

RWA Evolution (KShs. Bn)

Q2 2014

Old Guidelines

Market Risk Operational

Risk

Q2 2014

New Guidelines

New Prudential Guidelines

226.9 0.7

64.5 292.1

Under new prudential guidelines Under old prudential guidelines

RWA 238.9 263.6 272.6 286.8 292.1

10.5%

14.5%

21

Group Statement of Comprehensive Income (KShs. Mn.)

ACTUAL

JUNE 2014

ACTUAL

JUNE 2013

Y-o-Y %

Change

ACTUAL

DEC 2013

Net interest income 17,134 16,053 7% 32,984

Foreign exchange income 2,220 1,777 25% 3,710

Gross fees and commissions 5,669 5,035 13% 10,501

Other income 1,410 477 >100% 1,005

Total operating income 26,433 23,342 13% 48,200

Total operating expenses (13,649) (11,691) 16% (25,941)

Exceptional expenses (VER) - (997) (100%) (1,139)

Net provisions for bad debts (1,120) (558) >100% (996)

Profit before tax 11,674 10,096 16% 20,124

Tax (3,502) (2,904) 21% (5,782)

Profit after tax 8,172 7,192 14% 14,342

PBT up by 16% to KShs. 11.7Bn. from KShs. 10.1Bn as at the same period last year, supported by;

• Increase in net interest income by 7% due to higher lending volumes

• Growth in gross fees and commissions of 13%. Going forward focus is to grow non-funded income

→Drive utilization of alternative channels

→Strategic partnership

22

Profitability

Strong five year CAGR of 23% due to

‒ Investment in innovation and technology

‒ Increased customer numbers

‒ Improved operational efficiency

‒ Investment in alternative channels

‒ Improved returns from regional operations

PBT Growth (KShs. Bn.)

Distribution of PBT by Region-June 2014

8.5

Kenya 89.3%

Distribution of PBT by Region-June 2013

Kenya 92.6%

23

Summary: Key Statistics and Performance Ratios- Q2 2014

24

Market Capitalisation- Kshs 161.1Bn

Customer loans- 244Bn

Customer deposits- 352Bn

Assets- 440Bn

Customers- 3.3Mn

Branch network- 238

ATMS- 958

ROAA- 3.9%

ROAE- 25.5%

Tier 1 ratio (old prudential guidelines)- 20.2%)

Tier 1 ratio (new prudential guidelines)- 15.9%)

Tier 2 ratio (old prudential guidelines)- 26.3%)

Tier 2 ratio (new prudential guidelines)- 20.7%)

NIM- 9.7%

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