equity group investor briefing 2016 half year financial ... · 8/22/2016 1 investor briefing &...

8/22/2016

1

Investor Briefing &

H1 2016 Performance

August 2016

2

1. Macro-economic overview

2. Governance & leadership structure

3. Regional expansion and diversification

4. Innovation & digital banking

5. SME strategy

6. Qualitative analysis

7. Social Impact

8. Performance of core business (intermediation)

9. Financial performance

Presentation Outline

8/22/2016

2

3

1. Macro-economic overview2. Governance & leadership structure



5. SME strategy


7. Social Impact



Presentation Outline1

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 improved forex reserves currently at USD 7.8

billion (equivalent to 5.5 months of import cover) as at mid July 2016 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.

§ The slowdown in credit growth, amplified by the rise in lending rates in Q3-2015, also supported a stronger KES

against the USD, as there was less borrowing to finance imports.

4

Foreign Exchange Rate - Kenya

103.0

101.0

0.0

104.0

105.0

106.0

102.0 +1%

Jul ’16

101.4

Jun ’16

101.1

May ’16Oct ’15

101.8

105.3

Aug ’15

103.9

Jul ’15

102.5

Sep ’15

100.8101.1

Mar ’16

101.3

Feb ’16

101.7

Apr ’16

102.3

Dec ’15

102.3

Nov ’15

102.1

Jan ’16

USD / KES

1

8/22/2016

3

5

USD vs. USH,TSH, RWF, KSH

KES vs East African Currencies

33.333.733.433.033.333.034.0

33.032.935.035.035.2

21.621.721.721.721.621.521.421.121.221.420.520.620.6

7.47.47.47.47.57.37.37.37.37.37.07.06.8

0.0

4.0

8.0

12.0

16.0

20.0

24.0

28.0

32.0

36.0

Sep ’15Aug ’15Jul ’15

33.3

Jun ’16

+1%

+2%

+1%

KES / RWF

KES / TSHS

KES / USHS

Jul ’16Oct ’15 May ’16Apr ’16Mar ’16Feb ’16Jan ’16Dec ’15Nov ’15

5

The Kenya Shilling has slightly gained on YTD basis against the regional currencies in 2016

20162015

1

6

§ Foreign currency reserves at record highs of Kshs 779billion (US$ 7.79million) equivalent to 5.5 times the

country’s monthly import bill as at Mid-July 2016. This gives a significant cushion to the shilling.

§ Key reasons for increase in reserves are:

i. Lower oil prices

ii. Increasing exports and inflow from tourism

iii. Increasing diaspora remittances

iv. Increasing Foreign Direct Investments

6

FX Reserves - Kenya

5.5

5.0

4.5

4.0

3.5

0.0Mid Jul 2016

5.5

Q2 16

4.7

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

4.3

Q1 14

4.3

Desired MinimumMonths of Import Cover

1

8/22/2016

4

7

§ Low global oil prices in 2015 and part of 2016 supported Kenya to improve on the deficit

§ CBK expects the Current Account deficit to narrow to 5.5% of GDP in 2016

Current Account balance as a % of GDP - Kenya

-8.2-8.2

-10.4

-8.9

-12

-10

-8

-6

-4

-2

02013 2014 2015 2016

In Percent

1

8

Current Account balance as a % of GDP – East Africa

-12.0

-11.5

-11.0

-10.5

-10.0

-9.5

-9.0

-8.5

-8.0

-7.5

-7.0

-6.52013 2014 2015 2016

-7.1

Uganda

-8.0

-9.3-9.2

-10.6-10.3

-10.6-10.5

-9.7

-11.9

-11.3

-9.6

-7.6

-8.2

-7.4

-7.2

DRC

Tanzania

Rwanda

In Percent

1

Source: IMF

8/22/2016

5

9

East Africa’s Inflation

§ The latest inflation figure as at end of June was

5.8% (down from 8.0% since start of the year)

due to:

- Food prices (food index is down due to the

rains)

- Low fuel prices

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Mar-16 Jun-16Jan-16

7.8%

5.8%6.5%

1.0

2.0

8.0

Jan-16

5.0

Mar-16

4.0

7.0

0.0

3.0

6.0

Jun-16

6.5%

3.8%

7.6%

2.0%

5.4%

6.2%

2.1%

5.9%

2.2%2.2%

5.5%5.5%

2.0%

4.6%

TanzaniaRwanda

Uganda

DRC

East African PeersKenya

Source: Trading Economics

1

10

Interest Rates - Kenya

Political and Economic review in the region

91 Days T. Bill

182 Days T. Bill

364 Days T. Bill

Interbank rate

21.35% 22.13% 9.21% 10.41% 11.76% 9.32% 8.41% 8.77% 7.71% 7.06% 7.92%

25.84% 14.87% 8.77% 5.19% 6.13% 4.51% 4.09% 3.88% 3.80% 4.48% 5.70%

21.61% 22.29% 10.09% 12.34% 14.18% 11.93% 10.66% 10.69% 10.00% 9.24% 10.21%

21.50% 22.36% 11.93% 12.75% 14.92% 13.25% 11.91% 11.80% 11.29% 10.74% 11.03%

Sep-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

§ CBR Rate remains at 10.5%

§ In July 2016 the MPC reviewed KBRR downwards by one percentage point to 8.90% down from 9.87%

Apr May June July

1

Source: Central Bank of Kenya

8/22/2016

6

11

Interest Rates – East Africa


91 Days T. Bill

182 Days T. Bill

364 Days T. Bill

Interbank rate

16.68% 18.75% 18.33% 17.60% 18.22% 18.70% 15.07% 13.69% 13.54% 13.88% 14.33%

13.40% 12.93% 12.87% 14.06% 12.98% 12.46% 11.53% 12.42% 12.84% 14.16% 13.91%

17.69% 19.64% 19.50% 19.55% 19.79% 20.05% 16.65% 14.13% 14.30% 14.77% 14.38%

Sep Oct Nov Dec Jan Feb 2015 2016

Mar Apr May June July

1

Uganda


91 Days T. Bill

182 Days T. Bill

364 Days T. Bill

Interbank rate

3.68% 4.17% 4.16% 4.66% 9.98% 5.89% 5.78% 5.81% 6.05% 6.17% 6.38%

3.67% 3.45% 3.45% 3.73% 4.93% 4.80% 5.18% 5.60% 5.92% 5.93% 5.93%

4.47% 4.80% 5.51% 5.37% 6.18% 6.25% 6.13% 6.23% 6.27% 6.56% 6.75%

6.40% 6.52% 6.72% 8.10% 8.21% 8.46% 8.32% 8.37% 8.57% 8.85% 8.99%

Sep Oct Nov Dec Jan Feb

2015 2016

Mar Apr May June JulyRwanda

17.66% 19.11% 18.33% 18.54% 19.74% 19.15% 14.44% 13.64% 13.91% 14.92% 14.81%

Source: Bank of Uganda

Source: National Bank of Rwanda

12

Interest Rates – East Africa

2015 2016

1

Tanzania

91 Days T. Bill

182 Days T. Bill

364 Days T. Bill

Interbank rate

8.28% 9.49% 9.28% 9.02% 8.78% 8.59% 8.15% 7.98%

6.62% 12.40% 7.29% 12.02% 13.31% 10.39% 11.17% 12.32%

13.77% 17.75% 17.15% 17.67% 17.79% 17.08% 15.78% 14.86%

14.45% 15.49% 18.72% 18.81% 18.96% 17.83% 16.62% 15.50%

Sep Oct Dec Jan Feb Mar Apr May

Source: Bank of Tanzania

8/22/2016

7

1313

East Africa GDP Growth & Projections

§ Kenya’s GDP growth rate maintained an upward growth rate with an increasing momentum while the rest of

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.

6.26.15.95.65.35.74.6

6.1

2011 2016P 2018P2015201420132012 2017P

3.5

7.2

5.0

7.1

5.9

2018P

6.87.4

2016P 2017P

7.16.9

Tanzania Uganda South SudanKenya

Source: World Bank

1

1414

East Africa’s Economy

§ Stable macro-economic environment in the East African region (interest rates, inflation, stable exchange rates)

and converging macro-economic drivers

§ Economic growth continues to be higher in the East African region compared to the rest of Africa

§ Significant investment in infrastructure in the East African region

§ Significant mineral resources findings – mining, oil & gas

§ More diversified economies in the East African region that are politically stable

§ The central banks of Kenya and Uganda reduced their bench mark rate by 100bp in H1, while the central banks

of Tanzania and Rwanda chose to maintain a neutral monetary policy.

1

8/22/2016

8

1515

Head Winds

§ The ramifications of Brexit

§ The sluggish and declining growth rates of China

§ The politics and elections in 2017 in Kenya, the uncertainty of the Peace Settlement in South Sudan, and the

impending elections in DRC

§ The challenges in the financial sectors reflected by the failure of 3 institutions over the last year

§ Threat from interest rate capping

1

1616

H2 2016 Strategic Priorities

§ Increased focus on Innovation and Digitization

§ Strengthening focus on SME

§ Greater focus on balance sheet structure to make the Group agile and responsive to changing opportunities

landscape

§ Processes optimization to transform service delivery

§ Channel optimization and customer experience

§ Cost optimization to deliver lower cost to income ratio

1

8/22/2016

9

17


2. Governance & leadership structure3. Regional expansion and diversification


5. SME strategy


7. Social Impact




18

Strong Governance & Leadership Structure

Equity Bank Rwanda

Equity Bank Tanzania

Equity Bank Uganda

ProCredit BankDRC

Equity Bank Kenya

Chief Officer, Finance, Innovation, Payments

CEO’s office

Group Director, Investor Relations

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

Chief 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 Audit

Group Internal Auditor

Group Board Committee

Subsidiary Internal Audit

8/22/2016

10

19



3. Regional expansion and diversification4. Innovation & digital banking

5. SME strategy


7. Social Impact




20

KES “Billion”

Tanzania Rwanda Uganda S. Sudan

Deposits

Loan

Deposits Growth

Loan Growth

Assets

Asset Growth

PBT

PBT Growth

Regional Total

13.5

-10%

14.6

11%

21.5

7%

0.17

-14%

10.7

34%

8.7

17%

13.8

4%

0.16

-25%

12.6

19%

7.4

3%

17.2

14%

0.23

330%

10.3

-69%

0.3

-91%

14.0

-65%

-0.05

-112%

67.9

2%

46.7

48%

96.7

9%

0.75-19%

Extracting Value From Subsidiaries Key Metrics for Banking Subsidiaries3

Regional Contribution

H1 2016

21%

17%

21%

5%

Regional Contribution

H1 2015

22%

13%

22%

8%

DRC

20.8

15.6

30.1

0.24

24%

45%

34%

-5%

Kenya

259.1

10%

222.4

8%

364.0

13%

13.520%

Kenya column above represents all entities in Kenya

8/22/2016

11

21

Extracting Value From Subsidiaries (Deposits and Loans contribution by countries)

3

Deposits split by Country Loans split by Country

3.3%

2.6%6.4%

Kenya

S. Sudan

Tanzania

UgandaRwanda

H2 2016

100.0%

79.2%

3.2%

4.1%

3.9%

H2 2015

100.0%

78.0%

11.0%

4.9%

3.5%

0.0% 1.6%5.8%

Kenya

Tanzania

Rwanda

UgandaS. Sudan

H2 2016

100.0%

82.6%

5.4%

3.2%

2.8%0.1%

H2 2015

100.0%

86.7%

5.6%

3.1%

3.1%

0.0%DRC DRC

22

Extracting Value From Subsidiaries (Assets and PBT contribution by countries)

3

3.7%

4.7%

3.7%

3.2%6.5%

H2 2015

100.0%

78.4%

9.8%

4.9%

0.0%

Kenya

S. Sudan

Tanzania

Uganda

Rwanda

H2 2016

100.0%

79.0%

3.0%3.0%

Total Assets split by Country PBT split by Country

1.8%

1.1%

1.6%

1.2%1.6%

1.7%

Kenya

S. Sudan

RwandaTanzania

Uganda

H2 2016

100.0%

94.8%

-0.4%

H2 2015

100.0%

92.4%

3.8%

0.4% 0.0%DRC DRC

8/22/2016

12

23

Deposits Growth

In KES billions

10%

H1 2016

260.5

H1 2015

237.7

+19%

H1 2016

12.6

H1 2015

10.6

-69%

H1 2016

10.3

H1 2015

33.3

34%

H1 2016

10.7

H1 2015

8.0

H1 2016

13.5

H1 2015

14.9

-10%

24%

H1 2016

20.9

H1 2015

16.8

Kenya DRC Tanzania Uganda Rwanda S. Sudan

7%

H1 2016

320.8

H1 2015

301.0

16%

H1 2016

310.4

H1 2015

267.7

Consolidated Consolidatedw/o S. Sudan

3

24




4. Innovation & digital banking5. SME strategy


7. Social Impact




8/22/2016

13

25

Execution on Digital Banking (Disruptive shift to variable deliverable channels)

Transaction numbers in millions

+24%

H1 2016

29.9

H1 2015

24.1

-17%

H1 2016

12.8

H1 2015

15.4+37%

H1 2016

4.4

H1 2015

3.2

+271%

H1 2016

97.8

H1 2015

26.4

Transaction value in KES billion

+37%

H1 2016

212.3

H1 2015

155.1

+36%

H1 2016

22.3

H1 2015

16.5

+811%

H1 2016

149.3

H1 2015

16.4

-8%

H1 2016

94.0

H1 2015

102.4

Equitel Merchants ATMAgency Branch

-12%

H1 2016

10.9

H1 2015

12.3

-9%

H1 2016

690.4

H1 2015

756.0

4

Variable cost channels Fixed cost channels

26

Execution on Digital Banking (Impact on channel use) 4

10.9

13.713.312.815.4

16.816.4

29.9

24.1

5

30

100

20

15

10

0

95

25

14.3

8.2

Q2 2012 Q2 2014 Q2 2016

97.8

Q2 2015

12.3

26.4

17.416.013.6

Q2 2013

Transactions (Millions)

Agency

ATM

Branch

Mobile

8/22/2016

14

Equity Kenya Channel Market Share Trend4

21%25%

12%

2011

12%11%

2015

52%

23%

11%

20142012

10%

15%

26%

12%

2010

10%

26%

40%

21%

12%

2013

29%

23%

44%40%

42%

49%

59%

MerchantsATMBranch Agents

28

Execution on Digital Banking(Equitel customer numbers up 115% growth YoY)

1,750

2,250

750

1,000

250

2,000

1,250

1,500

500

250

0

500

1,500

750

2,000

0

1,750

1,000

1,250

2,250

Jun2016

2,1962,072

Apr2016

1,7601,861

Feb2016

1,963

Mar2016

Jan2016

1,665

Oct2015

Nov2015

1,500

+115%

1,591

1,369

Sep2015

1,0851,166

Dec2015

1,178

Aug2015

Jun2015

1,024

May2016

Jul2015

Linkage to M-Banking SIM uptake

87% 85%

KES “000”

86% 87%

88%

89%89%

90%

90%90%

91%

92%92%

4

8/22/2016

15

29

Execution on Digital Banking(Mobile Customer Transaction Numbers & Value Trend)

100

120

80

160

280

140

260

180

220

240

60

200

20

0

4050

200

100

0

400

350

150

250

300

58.8

94.9

Jul2015

49.5

85.4

Mar2016

42.3

77.7

525%

264.2

252.8

May2016

233.9

Jun2015

Jun2016

233.7

Apr2016

205.7

215.6

177.3

196.6

Feb2016

152.1

181.3

Jan2016

131.9

165.9

Dec2015

114.9

151.0

Nov2015

69.5

96.9

132.4

Oct2015

82.5

118.2

Sep2015

105.4

Aug2015

Cumulative M-Banking Transactions numbers (millions)Cumulative M-Banking Value (KES billions)

4

225%

30

Execution on Digital Banking(Count of loan disbursements through Mobile vs. Branch)

0

400

800

1,200

1,600

2,000

2,400

2,800

3,200

3,600

4,000

4,400

4,800

5,200

5,600

743(19%)

3,981

May2016

3,558(82%)

769(18%)

4,327

Jun2016

3,238(81%)

Apr2016

3,640

713(20%)

2,927(80%)

Mar2016

3,270

679(21%)

2,591(79%)

Feb2016

2,944

646(22%)

2,297(78%)

Jan2016

2,629

612(23%)

2,017(77%)

Dec2015

2,337

573(25%)

1,764(75%)

Nov2015

1,981

531(27%)

1,450(73%)

Oct2015

1,659

485(29%)

1,174(71%)

Sep2015

1,415

449(32%)

966(68%)

Aug2015

1,226

412(34%)

815(66%)

Jul2015

1,061

378(36%)

683(64%)

+308%

MobileMobile Branch

In Thousands

Cumulative

4

8/22/2016

16

31

Execution on Digital Banking(KES 20.8 billion disbursed through Mobile Channel with KES 5.6 billion outstanding)

20.8

17.2

14.0

11.0

8.7

6.95.4

3.82.5

1.60.90.3

+6,470%

May’16

Jun’16

Apr’16

Mar’16

Feb’16

Jan’16

Dec’15

Nov’15

Oct’15

Sep’15

Aug’15

Jul’15

Loan Value Disbursement (KES "Billion")

Disbursement Count (number)

683,174

Cumulative figures

3,557,913

5.6

4.7

3.6

2.52.01.8

1.51.51.00.80.8

0.5

Jun’16

Apr’16

Mar’16

Feb’16

Jan’16

Dec’15

Nov’15

Oct’15

Sep’15

Aug’15

Jul’15

+985%

May’16

Eazzy Loan Volume Outstanding

4

32

Execution on Digital Banking(Loan Repayments)

4

8/22/2016

17

33

Focus on Variable cost model…

Continuous Growth in Agency Banking4

▪ Number of agents increased to 26,593 agents. 26% 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 24.3% growth

16.816.4

0

5

10

15

20

25

30

+24.3%

Q2 2016

29.9

12.810.9

Q2 2015

24.1

15.4

12.3

Q2 2014

17.4

16.0

13.6

Q2 2013

14.3 13.7

Q2 2012

8.2

13.3

Transactions (Millions)Agency

ATM

Branch

34

Number and Value of Agents Transactions 2011 - 20164

57 9 9

1214 14 16 16 17 19 19

2225 26 27

3134

36 37

3

4.24.1

3.5

3.13.0

2.52.6

2.22.2

1.9

1.51.4

1.0

0.7

0.4

5.15.2

4.5

0

5

10

15

20

25

30

35

40

45

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Sept2012

Mar2013

Jun2013

Sept2013

Dec2013

2.5

Mar2014

Jun2014

Sept2014

Dec2014

3.7

Mar 2015

Jun2015

Sept2015

Dec2015

4.7

Mar2016

Jun2016

Dec2012

Jun2012

Mar2012

Dec2011

Sept2011

Jun2011

Transactions in million Value in billion kes

8/22/2016

18

35

Number of Merchants Outlets 2012 - 2016

8,5178,3718,063

7,749

6,864

6,153

5,6185,166

4,412

3,7203,499

3,0662,8242,668

2,3462,1392,018

1,6581,519

June2016

May2016

Mar2016

Dec2015

Sept2015

Jun2015

Mar 2015

Dec2014

Sept2014

Jun2014

Mar2014

Dec2013

Sept2013

Jun2013

Mar2013

Dec2012

Sept2012

Jun2012

Mar2012

4

36

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 channelservices work well with merchants

22,296

+34%

+36%+59%

+57%

H1 2016

514

H1 2015

384

16,454

H1 2014

244

10,320

Merchant CommissionsMerchant Transaction Volumes

Volume (Millions)Commissions (Millions)

8/22/2016

19

37




4. Innovation & Digital banking

5. SME strategy6. Qualitative analysis

7. Social Impact




38

Loans

Effect of SME’s on Loans & Deposits

H1 2015

76.8(24%)

301.0

135.2(42%)

108.8(34%)

56.3(19%)

126.7(42%)

118.1(39%)Current Accounts

+7%

Savings

Term deposits

H1 2016

320.8

DepositsIn Billion

5

6.7% 5.6%Micro

SME

Agriculture

Consumer

H1 2015

68.4%

22.0%

100.0%2.9%

100.0%

70.2%

H1 2016

2.8%

21.4%

8/22/2016

20

39





5. SME strategy

6. Qualitative analysis7. Social Impact




40

Equity has earned recognition in 2016

Equity’s International Rankings

Equity’s Global Credit Rating

6

Aug 2016

Equity Bank Overall Soundness(Capital Assets Ratio)

Performance(Profits on capital) (Return on assets)

2016 Global Rank 835 43 34 8

2015 Global Rank 916 88 18 8

8/22/2016

21

41

Equity has earned recognition in 20166

Category 1st 2nd 3rd

Best Overall Bank Equity Bank

Best Bank Tier 1 (Big Banks) Equity Bank

Best Bank in SME Banking Equity Bank

Best Bank in Retail Banking Equity Bank

Best Microfinance Bank Equity Bank

Best in Agency Banking Equity Bank

Best in Asset Finance Equity Bank

Best Bank in Mortgage Finance Equity Bank

Product Marketing Equity Bank

Best in Internet Banking Equity Bank

Best in Mobile Banking Equity Bank

Fastest Growing Bank Equity Bank

Best in Customer Satisfaction Equity Bank

EQUITY BEST BANK IN KENYA FOR 4TH TIME

42

Equity has earned substantial accolades in 2016

Think Business Awards6

8/22/2016

22

43


Banker Awards6

44


Euromoney Awards6

8/22/2016

23

45

Market Capitalization(as at 30th June 2016)

In KES billion

2.46.1

21.132.4

41.6

53.5

68.771.8

99.6

143.4

43.4

HF NBKCoop CfC Stanbic

BBK I&M NICStanchartKCBEquity DTB

6

Source: B.D

Equity Bank’s market capitalization constitutes 25% of the total market value of the 11 banks listed on the NSE

46




4. Innovation & Digital banking

5. SME strategy


7. Social Impact8. Performance of core business (intermediation)



8/22/2016

24

47

EGF 7 Programmatic Pillars

Monitoring and

evaluation

1

2

4

3

Education and

Leadership Development

Agriculture

Entrepreneurship

Health

Innovation

Financial Inclusion and

Literacy

Environment

7

6

5

▪ Equity Afia

▪ Cash transfers▪ Fanikisha▪ Fanikisha+ (Tanzania)▪ Financial Knowledge for

Africa training programme

▪ Forest restoration

▪ Energy program

▪ Wings to Fly Learning

▪ Equitel - MY LIFE

▪ Entrepreneurship training program

▪ Transforming smallholder farmers

▪ Accelerating medium size farms

▪ Wings to Fly▪ Equity African Leaders

Programme

EGF 7 Programmatic Pillars6

48

Championing Social-Economic Revolution

12,488TOTALWINGS TO FLY

SCHOLARS

1312112010 14 15

USD221,890,909TOTAL FUNDS RAISED SINCE 2010 FOR PROGRAMS

Kenyan women and youth

completed the financial literacy education.

1,270,871 WOMEN & YOUTH

WtF Graduating Performance• 3,578 WtF Scholar graduate from

2010,2011,2012 Classes • 98% secondary school completion• 93% of WtF achieving university grade• 32% achieving A grade at KCSE• 86% take on school and community

leadership roles

3,405 UNIVERSITY SCHOLARS

Attending 329 universities globally

KES

32B18B

§ Loans to empower women under Fanikisha

500,000 PEASANT FARMERS TRANSFORMED TO AGRI-BUSINESSES

2,400 MEDIUM-SIZEDFARMERS SUPPORTED

2016

§ Loans given to empower the youth

Kenyans reached with Renewable Energy products

Content availed through mobile channels• Secondary School Revision Content

availed WtF scholars• MAMA for Mothers• Financial Education• Wikipedia

25,303MSMEs trained

6

14,000

8/22/2016

25

49




4. Digital bank

5. SME strategy


7. Social Impact

8. Performance of core business (intermediation)9. Financial performance


50

48%

16%

2%

7%

Growth per Funding Type

Funding Base(Proactive management of a quality balance sheet in a challenging environment)

444.4

Deposits

11%

27.1(7%)

40.2(9%)

8.0(2%)

65.0(16%)

301.0(75%)

401.0

H1 2015

Shareholders’ Funds

Borrowed Funds 75.4(17%)

320.8(72%)

H1 2016

Other Liabilities 7.9(2%)

In KES “Billion”

8

8/22/2016

26

51

Loan & Deposits Accounts

10.710.310.09.99.79.5

Jun 16Mar 16Dec 15Sep 15Jun 15Mar 15

Deposits & Deposit Accounts

Number of Deposit AccountsIn Million

126.7(42%)

56.3(19%)

H1 2016

320.8

108.8(34%)

135.2(42%)

76.8(24%)

H1 2015

301.0

118.1(39%)

Savings

Current Accounts

+7%

Term Deposits

DepositsIn Billion

8

52

320.8301.0

7%

H1 2016H1 2015

Effect of South Sudan on Deposits Growth

With South SudanIn KES Billion

8

310.4

267.7

16%

H1 2016H1 2015

Without South SudanIn KES Billion

8/22/2016

27

53

42.6(10%)

73.0(16%)

11%

Other Assets

Government Securities

Cash & Cash Equivalents

H1 2016H1 2015

401.047.3

(12%)50.6

(13%)

66.3(17%)

236.8(59%)

444.4

269.0(61%)

59.8(13%)

Net Loans

-10%

44%

-10%

14%

Growth per Asset Class

Assets of KSH 444 Billion driven by stable Deposit base

In KES billion

8

54

Effect of South Sudan on Assets Growth

Without South SudanWith South SudanIn KES BillionIn KES Billion

430.4

360.7

19%

H1 2016H1 2015

444.4

401.0

11%

H1 2016H1 2015

8

8/22/2016

28

Equity Kenya continues to gain market share8

8.2%

2015 Q1 2016

20142011 2013

9.5%

8.2%8.8%

9.5%

8.2%

2012

Deposits Market Share Loans Market Share Assets Market Share

2011

10.0%9.4%

2012

9.9%

2013

9.2%

10.7%

2015 Q1 2016

10.8%

2014 Q1 2016

2012 201520142013

9.8%

8.7%8.8%

9.7%

8.8%9.3%

2011

56

4.2%

3.5%2.9%

4.1%4.1%

4.6%

3.8%

3.3%

4.5%4.4%

8.2%7.8%

6.8%

5.4%5.7%

Sep-15 Mar-16 Jun-16Dec-15Jun-15

Group SectorEBKL

Equity vs Sector NPL Trend over time8

Q2 2016 sector data is as at Apr 2016

8/22/2016

29

57

48.5%50.2%55.2% 53.9%56.0%

60.6%64.5%

79.0%84.0%

92.8%88.0%

Q1 2016YE 2014 H1 2016YE 2015

Sector (Spec. Prov. + Int. Susp) / Gross NPL

Equity (Gen. Prov. + Spec. Prov. + Int. Susp) / Gross NPLEquity (Spec. Prov. + Int. Susp) / Gross NPL

Non-Performing Loans: High Coverage Levels8

Sector data for H1 2016 not yet available

58

Cost to Income Ratio Trend

▪ Total Operating Income up 22% y/y mainly attributed to improved NIM

▪ Operating expenses up 26% y/y mainly attributed to growth in loan loss provisions

49.6%51.4%49.7%49.0%49.9%

43.6%47.4%46.0%44.8%46.7%

H1 2016H1 2015H1 2014H1 2013H1 2012

BankGroup

8

8/22/2016

30

59

35.9%35.0%

27.3%26.6%

H1 2016H1 2015

GroupEBKL

RoAE

5.2%5.1%4.6%4.6%

H1 2016H1 2015

EBKL Group

RoAA

RoAA and RoAE Trend8

60




4. Digital bank

5. SME strategy


7. Social Impact




8/22/2016

31

61

Funding Distribution

H1 2016

Broad base liabilities & funding sources

H1 2015 H1 2016 Growth Y/Y

Liabilities & Capital (Bn) KSH KSH %

Deposits 301.0 320.8 7%

Borrowed Funds 27.1 40.2 48%

Other Liabilities 7.9 8.0 2%

Shareholders’ Funds 65.0 75.4 16%

Total Liabilities & Capital 401.0 444.4 11%

H1 2015

Borrowed Funds 7%


16%Other Liabilities

Deposits

2%

75%

Other Liabilities

Deposits

9%

2%

72%

Borrowed Funds

17%


9

62

Asset Distribution

H1 2016H1 2015

Asset Portfolio & Distribution

H1 2015 H1 2016 Growth Y/Y

Assets (Bn) KSH KSH %

Net Loans 236.8 269.0 14%

Cash & Cash Equivalents 66.3 59.8 -10%

Government Securities 50.6 73.0 44%

Other Assets 47.3 42.6 -10%

Total Assets 401.0 444.4 11%

59% Net Loans

13%



Other Assets

17%

12% 10%



Other Assets

16%

13%61%

Net Loans

9

8/22/2016

32

63

KES (Billion) H1 2015 H1 2016 Growth

Interest Income 19.3 26.1 35%Interest Expense (3.8) (4.9) 29%Net Interest Income 15.5 21.2 37%

Non-Funded Income 10.8 10.8 0%Total Income 26.3 32.1 22%

Loan Loss Provision (0.7) (1.9) 182%Staff Costs (5.1) (6.1) 19%Other Operating Expenses (8.4) (9.8) 17%Total Costs (14.2) (17.9) 26%

PBT 12.1 14.2 18%Tax (3.5) (4.1) 17%PAT 8.6 10.1 18%

Delivering 18% growth in PAT9

64

PBT Growth

Without South SudanWith South SudanIn KES BillionIn KES Billion

14.3

11.6

23%

H1 2016H1 2015

14.2

12.1

18%

H1 2016H1 2015

9

8/22/2016

33

65

Positive Financial Ratios

Kenya Kenya Group Group

H1 2015 H1 2016 H1 2015 H1 2016

ProfitabilityNIM 10.9% 12.5% 9.8% 11.7%

Cost to Income Ratio (with provisions) 49.0% 48.6% 54.0% 55.6%

Cost to Income Ratio (without provision) 47.5% 43.6% 51.4% 49.6%

RoAE 35.0% 35.9% 26.6% 27.3%

RoAA 5.1% 5.2% 4.6% 4.6%

Asset QualityCost of Risk 0.34% 1.00% 0.61% 1.43%

Liquidity / LeverageLoans / Deposits 86.3% 85.3% 78.7% 83.9%

Loans / (Deposits + Borrowed Funds) 77.4% 74.6% 72.2% 74.5%

Loans / (Deposits + Borrowing Funds + S/H Funds) 65.6% 63.1% 60.2% 61.6%

Liquidity 28.0% 39.9% 31.0% 37.0%

Capital Adequacy Ratios

Core Capital to Risk Weighted Assets 14.6% 14.4% 17.7% 18.7%

Total Capital to Risk Weighted Assets 16.6% 15.6% 18.3% 19.8%

Core Capital to Deposits Ratio 18.4% 18.9% 20.4% 23.4%

9

66

THANK YOUDr James Mwangi, CBSGroup Managing Director & CEO

KeEquityBank@KeEquityBank

Email: [email protected] site: www.equitybankgroup.com

equity group investor briefing 2016 half year financial ... · 8/22/2016 1 investor briefing &...

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