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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
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 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
Political and Economic review in the region
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
Political and Economic review in the region
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
1. Macro-economic overview
2. Governance & leadership structure3. 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
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
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification4. Innovation & digital banking
5. SME strategy
6. Qualitative analysis
7. Social Impact
8. Performance of core business (intermediation)
9. Financial performance
Presentation Outline
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
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Innovation & digital banking5. SME strategy
6. Qualitative analysis
7. Social Impact
8. Performance of core business (intermediation)
9. Financial performance
Presentation Outline
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
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Innovation & Digital banking
5. SME strategy6. Qualitative analysis
7. Social Impact
8. Performance of core business (intermediation)
9. Financial performance
Presentation Outline
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
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Innovation & digital banking
5. SME strategy
6. Qualitative analysis7. Social Impact
8. Performance of core business (intermediation)
9. Financial performance
Presentation Outline
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
Equity has earned substantial accolades in 2016
Banker Awards6
44
Equity has earned substantial accolades in 2016
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
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 Impact8. Performance of core business (intermediation)
9. Financial performance
Presentation Outline
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
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Social Impact
8. Performance of core business (intermediation)9. Financial performance
Presentation Outline
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
1. Macro-economic overview
2. Governance & leadership structure
3. Regional expansion and diversification
4. Digital bank
5. SME strategy
6. Qualitative analysis
7. Social Impact
8. Performance of core business (intermediation)
9. Financial performance
Presentation Outline
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%
Shareholders’ Funds
16%Other Liabilities
Deposits
2%
75%
Other Liabilities
Deposits
9%
2%
72%
Borrowed Funds
17%
Shareholders’ Funds
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%
Cash & Cash Equivalents
Government Securities
Other Assets
17%
12% 10%
Cash & Cash Equivalents
Government Securities
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