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KCB INVESTOR PRESENTATION
Q317 GROUP FINANCIAL RESULTSNOVEMBER 2017
JOSHUA OIGARA GROUP CEO & MD │ LAWRENCE KIMATHI GROUP CFO
Macro-Economic Highlights: Kenya
2
Source: CBK
5.9%
6.5%
5.7% 5.8%6.0% 6.2%
7.5%
6.8%
6.1%
5.6%
6.1%
5.5%5.3%
6.3%
5.7%
6.1%
4.7%
5.0%
4.6%
4.1% 4.3%4.0%
7.1%
3.8%
0.1%
-1.1%
1.4%
Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217
GDP Anchored by Non-Agriculture
Non Agriculture Real GDP Agriculture
4.9%
5.3%5.6%
5.8%
5.0%
2013 2014 2015 2016 2017P
GDP Growth Rate (%)
Macro-Economic Highlights: Kenya
Sources: CBK, KNBS
101.3 101.9 102.5 103.3 103.2 103.4 103.9
103.2
USD/KES Exchange Rate
8.00 7.70 8.40 8.70 8.60 8.62 8.76 8.78 8.61 8.31 8.20 8.14 8.13
13.80 13.70 13.60 13.70
10.00 10.00
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Interest Rate Evolution (%)
91 day T bill Average lending rates CBR Rate
3
6.34% 6.35%6.99%
9.04%
10.28%
11.48%11.70%
9.21%
7.47%
8.04%
7.06%
7.50%
2.50%
5.00%5.50%
3.70%
4.50% 4.30% 3.90%
3.50%
Inflation
Inflation rate Target Upper Target Lower Non Food Non Fuel
Macro-Economic Highlights: Kenya
4
Source: CBK
-10.4%
-6.7%
-5.2%-6.0% -6.2% -5.8%
2014 2015 2016 Est Mar 17 Est May 17 FY17 (Forecast)
Current Account Balance (% of GDP)
4.7% 4.6%4.3% 4.2%
3.8%
3.3%
2.4%2.1%
1.5% 1.4%1.6%
Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17
12 Month Private Sector Credit Growth
Sources: IMF, Bloomberg
Macro-Economic Highlights: Regional
4.9
7.07.0
(3.7)
10.3
5.4
7.0 6.9
(7.1)
9.6
4.4
6.86.0
0.5
5.45.46.3 6.5
(2.1)
6.0
Uganda Tanzania Rwanda Burundi Ethiopia
GDP (%)
2014 2015 2016e 2017p
13.6%11.8%
4.4%
9.8%
3.0%
9.2%
20.0%
6.0%
8.8%7.0%7.1%
14.0%
9.0%
15.0%
7.0%
11.1%9.2%
6.2%
15.0%
4.0%
9.8%
7.6%
4.0%
Tanzania Uganda Rwanda Burundi South Sudan
91 Day T-Bills
2014 2015 2016 1Q 2017 Q3 2017
6.1%
3.1%
1.8%
7.9%8.1%
5.3%5.3%
7.1%
13.9%
10.8%
Tanzania Uganda Rwanda Burundi Ethiopia
Inflation
2014 2015 2016 Q3 17
1.7%
52.8%
480.0%
362.0%
South Sudan
Exchange Rates to USD (Period Average)
Country FY 2016 Q1 2017 Q3 2017
Burundi 1,629 1,690 1,748
Uganda 3,484 3,598 3,638
Tanzania 2,186 2,231 2,239
Rwanda 785.6 822.9 839
South Sudan 44.3 109.0 192.0
Ethiopia* 22.40 22.73 23.38
5
*Ethiopia Birr devalued by 15% in October 2017 to 26.91
DIGITAL CHANNEL PERFORMANCE
7
86% of Transactions outside the Branch
Source: KCB data
28 56
114
168
32
88 111
259
Acquiring Agency banking ATMs Mobile
Channel Volumes KShs B
Q3 16 Q3 17
Branch, 20%
ATM, 11%
Agency, 12%
POS, 5%
Internet Banking , 0%
Mobile, 52%
Q3 2016
Branch, 14%
ATM, 10%
Agency, 14%
POS, 5%
Internet Banking , 0%
Mobile, 57%
Q3 2017
21
288 354
569 493
46
291 356
643 661
Internet ATMs Agency POS Mobile
Channel Revenue KShs M
Q3 16 Q3 17
Source: KCB data
Increased Activity on Mobile
9.1
20.3
Q3 16 Q3 17
Mobile Loan Disbursement (KShs B)
8
4
13
48.1
65.1
Q3 16 Q3 17
Mobile transactions (M)
KCB App Total transactions
35%
Increased Activity on Digital Channels
9
3.4
5.8
3.2 3.8 4.3
7.7
3.3 4.4
Agency (AverageTrns' per agent per
day)
Mobile (AverageTrns' per activecustomer p.m)
ATM (AverageTrns' per ATM p.m
in '000's)
POS (Average Trns'per POS per day)
Channels Activity
Q3 16 Q3 17
57.6%
17.1%
13.4%
9.0%
1.8%
1.0%
58.2%
17.1%
11.9%
9.6%
1.4%
1.9%
Cash Deposit
Cash Withdrawal
School Fees
Balance Enquiry
Bill Payment
Others
Distribution of Agency transactions
Q3 16 Q3 17
Branch ATM Agency POS InternetBanking
Evolution of Channel Activity
Q3 16 Q3 17
200%
15%
50%
5%
-14%
OUR PERFORMANCE TO DATE
346364 386
419
97100
102
10488 65
73
8527 33
34
36
2015 Q3 2016 2016 Q3 2017
15% Total Assets growth driven by Net Loans & AdvancesKShs B
Net Loans and advances Investment in Govt. Securities Cash and Balances with Central Bank and other Financial Institutions Other Assets
15%
15% 644
595
562558
11
332 354
385
8991
903232
45
2728
31
Q3 2016 2016 Q3 2017
16%
551
505
480
15%
Kenya Asset Portfolio
Composition of the Loan book
12
336
395
29
16 9 4
Sep-16 Retail Corporate Mortgage SME Sep-17
*Gross Loans Kenya KES:B
31.9%
17.1%
11.2%
10.8%
9.1%
5.8%
4.8%
3.4%
3.0%
2.3%
0.6%
25.5%
16.0%
12.2%
19.1%
4.2%
8.5%
3.3%
2.4%
3.8%
4.5%
0.5%
PERSONAL
REAL ESTATE
MANUFACTURING
TRADE
BUILDING & CONSTRUCTION
TRANSPORT
FINANCIALS
TOURISM,RESTAURANT & HOTELS
AGRICULTURE
ENERGY & WATER
MINING & QUARRYING
KCB Sept 2017 Industry Mar 2017
Asset Quality within guidance level
1.4% 1.3% 1.0% 1.0% 1.0%1.0%
6.6%
8.3% 8.0% 7.9% 7.9% 8.0%6.8%
9.1% 9.1% 9.5% 9.9% 10.7%
2015 Q3 2016 2016 Q1 2017 H1 2017 Q3 2017
CoR NPL Group Industry NPL (Kenya)
13
10.9%
14.5%
8.1%
23.9%
10.1%
10.2%7.8%
6.3% 5.7%3.7%
7.3%
20.78%19.54%
16.60%
12.39% 10.01%
8.01%6.94% 4.07%
3.21% 1.20% 0.84%
Mining andQuarrying
Trade Transport andcommunication
Building andconstruction
Manufacturing Agriculture Real estate Personal/Household Energy and water Financial Services Tourism,restaurants and
hotels
NPL Per sector
Industry Mar-17 KCB Sep 17
Stable Coverage Position
14
41.4%45.6%
43.6%
50.8%
44.1%46.5%
79.5%76.0%
69.5%
82.5%
75.4%
85.6%
2015 Q3 2016 2016 Q1 2017 H1 2017 Q3 2017
IFRS CBK
373 387 435
20 26
1979
81
889
11
10
Q3 2016 2016 Q3 2017
424 429 448 496
44 28 36
3081 91
97
103 9 14
14
14
2015 Q3 2016 2016 Q3 2017
15%
77% of Funding from DepositsKShs B
Deposits Bal. to banks and debt Equity Other Liabilities
644
562558
16%
606
15
Kenya Funding Portfolio
551
505
480
15%
17%
Strong deposit mix
Deposits by Type FY 16
66%5%
23%
6%
64%4%
28%
4%
Deposits by Type Q3 16
Demand Savings Term Call
65%4%
26%
5%
Deposits by Type Q3 17
42% 49% 49% 49%
55% 46% 46% 45%
2% 5% 5% 6%
2015 Q3 2016 2016 Q3 2017
Corporate Retail Other
16
Adequate Headroom on Capital Ratios
Group Core Capital to RWA Group Total Capital to RWA
10.5% 10.5% 10.50% 10.50%
15.7%16.6%
18.40%
17.40%
2015 Q3 2016 2016 Q3 2017
Min. Core/RWA Core Capital /RWA
14.5% 14.5% 14.50% 14.50%
16.9%17.9%
19.70%
18.60%
2015 Q3 2016 2016 Q3 2017
Min. Total/TWA Total Capital /RWA
17
Stable Balance Sheet supported by 16% growth in Deposits
KShs Millions KCB Bank Kenya KCB GROUP
Actual Q3-16
ActualQ3-17
Y-O-Y Change
Actual Q3-16
ActualQ3-17
Y-O-Y Change
Cash 6,535 6,119 (6%) 9,898 9,443 (5%)
Balances with Central Bank 16,710 33,081 98% 16,710 33,081 98%
Balances with other institutions 9,087 5,757 (37%) 38,611 42,280 10%
Investments in Government & Other securities
89,104 90,447 2% 100,184 103,647 3%
Net loans and advances* 332,283 384,994 16% 364,332 419,494 15%
Fixed assets 9,032 9,205 2% 12,695 12,816 1%
Other assets 17,477 21,740 24% 19,872 23,072 16%
Total Assets 480,228 551,343 15% 562,302 643,833 14%
Customer Deposits 372,612 435,095 17% 429,321 496,305 16%
Balances due to other banks 4,935 6,915 40% 12,155 15,491 27%
Other liabilities 8,835 9,913 12% 13,544 14,420 6%
Long-term debt 14,733 11,877 (19%) 15,968 14,424 (10%)
Total Liabilities 401,115 463,800 16% 470,988 540,640 15%
Shareholders’ Equity 79,113 87,543 11% 91,314 103,193 13%
Total Liabilities and Equity 480,228 551,343 15% 562,302 643,833 14%
18
*Group Gross Loans: 433,910M
Resilient P&L performance
KShs Millions KCB Bank Kenya KCB GROUP
Actual Q3-16
ActualQ3-17
Y-O-Y Change
Actual Q3-16
ActualQ3-17
Y-O-Y Change
Interest Income 43,688 41,816 (4%) 48,496 46,764 (4%)
Interest Expense (10,442) (9,135) 13% 12,447 11,091 11%)
Net interest income 33,246 32,681 (2%) 36,049 35,673 (1%)
Foreign exchange income 1,618 2,231 38% 3,530 3,632 3%
Net fees and commissions 6,890 8,133 23% 8,949 11,231 26%
Other income 1,908 1,879 (2%) 2,290 2,621 14%
Total operating income 43,662 44,924 3% 50,818 53,157 5%
Total operating expenses (18,977) (21,241) (12%) (22,044) (26,429) (20%)
Net provisions for bad debts (2,977) (2,651) (3%) (3,400) (3,137) (8%)
Profit Before Loss on Monetary Position
21,708 21,032 (3%) 25,374 23,592 (7%)
Loss on Monetary Position - - (3,631) (1,174) 68%
Profit before tax 21,708 21,032 (3%) 21,743 22,418 3%
Tax 6,512 6,542 - 7,390 7,341 1%
Profit after tax 15,196 14,490 (5%) 14,354 15,076 5%
19
Overview of Key Financial Ratios
Return on Average Equity
Cost to Income
Gross NPL to Gross Loans
NPL Coverage
Debt to Equity
Non funded income 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
20.3% 23.6%
52.5% 47.4%
7.9% 7.8%
79.6% 84.6%
23.3% 14.5%
35.0% 28.3%
3.1% 2.8%
7.9% 9.2%
1.0% 0.9%
86.6% 90.7%
14% 19%
8% 16%
20.1%
51.9%
8.0%
85.6%
14.0%
32.9%
2.9%
9.1%
1.0%
87.4%
15%
16%
FY16 Q1 17 H1 17 KENYA GROUP
22.2%
47.6%
8.0%
69.5%
23.8%
32.3%
3.3%
9.6%
1.0%
86.1%
11%
6%
24.1%
47.3%
8.0%
80.2%
13.9%
27.8%
2.8%
9.5%
1.0%
91.5%
16%
17%
20
