Q3 FINANCIAL RESULTS FOR PERIOD ENDED 30 SEPT 2014

KEY HIGHLIGHTS

KCB Bank Group Largest bank

in East & Central Africa

by assets

No. Of Employees

7,500 FTETotal Equity

Kshs. 3.025bn

Listing

NSE, DSE, USE, RSE

Rating

Subsidiaries

Channels

Awards

Partnerships

Tanzania, S.Sudan, Uganda, Rwanda & Burundi KCB Insurance & KCB Capital

Ordinary shares in issue of Kshs. 1 each

242 branches 962 ATMs 9,238 agents 1M customers on

mobile

Ownership Profile: Foreign Investors 29% Local Institutional 27.5% Local Individuals 26% Government of Kenya 17.5%

GCR Affirms KCB’s rating of AA (Ke) Outlook stable

KCB Bank Group

Largest bank in East & Central Africa

by assets

3

MACRO-ECONOMIC ENVIRONMENT

CommentThe Kenyan Economy:

Kenya’s GDP growth was mainly supportedby robust growth in; construction (18.9%) manufacturing (9.1%) financial & insurance (8.3%) information and communication (6.4%) wholesale and retail trade (6.8%)

this outweighed a decrease in tourism

Revision of the travel advisories by theFrench and UK governments

Consumer-price index will likely hoverbetween 5% to 7% over the next threemonths

Renewed confidence and cooperationbetween Kenya, the United Nations and theWorld Bank

Factors supporting the shilling include FDIflows that are diversifying away fromnatural resources and an increase inDiaspora remittances

Sep-13 Dec-13 Mar-14 June-14 Sep-14

Central Bank Rate

Kenya GDP

Kenya Inflation

FX Rate Interbank (KSHs./$)

Crude Oil Price USD/Barrel

Interbank Rate

8.5 8.5 8.5 8.5 8.5

4.4 4.7 4.15.8 5.8

114.7 113.1 110.2 115.193.0

86.6 86.3 86.4

87.6

89.3

8.612.2

7.310.0

6.8

OPERATING ENVIRONMENT - KENYA

5

7.5

-4.6

5.94.7 4.2

7.4

13.1

4.7

7.4

4.8

Tanzania South Sudan Uganda Rwanda Burundi

East Africa GDP Expansion

Sep-13 Latest-2014

6.35.6

6.1 6.4 6.7

-7.2-8.8

0.4 0.62.6

8.1

6.9

7.15

1.4

6.95

5.08

6.39

4.48

-0.4

12.1

9

3.8

3.3

5.9

East Africa Inflation Trend

Tanzania South Sudan Uganda

Rwanda Burundi

Comment

In Uganda, the prevailing low inflation is likely to push the Central Bank to ease its stance to lower borrowing costs, potentially weakening the local currency

Rwanda expects to enact new investment rules at the start of 2015 that could offer incentives such as seven-year tax holidays for bigger investors and sharply lower corporate taxes –a strategy to wean Rwanda's economy off foreign aid and

bolster receding growth.

The BIF continues a downward trend on the fall in donor

funds due to the on-going political situation and reduced inflows of hard-currency from a drop in coffee prices

In South Sudan, USD scarcity and expensive black market rate (USD being sold at 4.95 while central bank sells at 3.17) makes

it difficult for traders to import goods. Inflation increased to 2.6% in July on higher prices in food & non alcoholic beverages

The TZS weakened and settled at an average of TZS1680 as the rising demand for the dollar continues to pressurize the local currency despite some inflows from agriculture and institutions. Tanzania Central Bank intervened by selling dollars into the economy but impact has been low due to the availability of only 3 month forex cover

OPERATING ENVIRONMENT - REGIONAL

Source: Trading Economics, National Bureau of Statistics, South Sudan

6

MOMENTUM FROM OF REBASING AND KBRR

Bull Case:• Key findings by the government after rebasing:

o The revised GDP is higher by 25.3%; GDP per capita is USD 1,246

o Emerging sectors gaining more significance in the economy (e.g. Real estate and ICT); Agriculture is still the backbone of the economy (5 year average share grew from 24.1% to 25.4% in 2013)

Bear Case:• The instability in the Middle East and North African region as well

as in Ukraine remains a risk to the stability of international oil prices and the overall price stability objective

Impact of KBRR:• Initial data from 22 commercial banks and 6 microfinance banks

indicate that new and existing loans amounting to Ksh. 43 billion

and covering 182,731 loan accounts had benefited from the KBRR framework by end of August 2014

• The average premium that commercial banks charged above the KBRR on commercial mortgages was 3.05 percent while that on corporate loans (1–5years) was 4.09%

7.0%

1.5%

2.7%

5.8%

4.4% 4.6% 4.7%

6.9%

0.2%

3.3%

8.4%

6.1%

4.5%

5.7%

2007 2008 2009 2010 2011 2012 2013

Kenya's Revised GDP Post Rebasing

Previous GDP Revised GDP

KBRR Bull Case:• Expected increase in uptake of loans

across the industry that will enhance development in the country

KBRR Bear Case:• Average lending interest rates have

declined in 2014 relative to 2013 while average deposit rates have increased across all bank categories as a result NIMs have experienced a slight deterioration

Increase on average deposit rates

Decline on average lending rates

*Source: Kenya National Bureau of Statistics

7

KEY STRATEGIC THEMES

DELIGHTFUL CUSTOMER EXPERIENCE

9

0%

75%

Average

45%

Best

Occupancy Rate

Target 90%2013: 8%

LaggingLeading 85%

96%

15

20

Average

45

Best

LaggingLeading

13

Average Speed of AnswerTarget 10 seconds

Average Talk TimeTarget 140 Seconds

2013: 221

315

180

Shortest

LaggingLeading

240

Average

140

145

Driving highly engaged customers

•Fastest growing in the social media community and now the most popular bank on Twitter in Kenya

•85% positive sentiment

•@kcbgroup ranked top 20 most trended topics during #KCB loves you Customer Focus week

53,890 58,191

90,476

151,372

24,522 25,790 33,941

43,188

Jan Mar Jun Sep

Social Media Growth

Facebook Likes Twitter Followers

RETAIL & BUSINESS BANKING

Growing entrepreneurs to drive Extraordinary Change

Account numbers – 1M new accounts in 2014 57% growth in SME and Retail ABF assets in 2014 37% growth in Micro Banking assets in 2014 30% growth in Personal banking assets in 2014

Growth of agency to 9,238 outlets, over 4M transactions and KShs 9.2B deposits collected in 2014

Only bank able to open accounts at agency outlets with nearly 300,000 accounts opened to date

Partnering to enhance financial inclusion: Over 2,000 groups in JOYWO Groups now operating as KCB Agents

10

Disruptive Payment Solutions

Biashara smart and Mobi Loans – KShs 500M loans disbursed in 3 months to over 100,000 customers via mobile recruitment

Enhancing digital payments with over 7.6M transactions on mobile in 2014 (12M by close of the year)

Payment solutions – JCB and Union Pay in 2014

Transit cards – Certification and approval to issue 1M Pepeacards received from the CBK and NTSA

Driving a cash lite environment through card issuance, acquiring and integration of POS terminals

RETAIL & BUSINESS BANKING

11

TRANSFORMING TRANSACTION BANKING

12

Strong card growth through customer acquisition and partnerships such as Nakumatt Global and Abiria

• Accelerated growth in Mbenki accounts with inclusion of mobi loan application

• 80% account activity in 90 days• 92% account activity in 120 days

Increased activity on M-Benki account as well as enhanced user experience and services to all mobile banking service users

1,307,000

2,185,500

2013 Q3 2014

Number of Cards

67%

DELIVERING GREAT AGENCY SOLUTIONS

13

6,948

9,238

2013 Q3 2014

Number of Agents

60,408 45,231

1,434,650

553,681

Deposit Transactions Withdrawal Transactions

Number of Transactions

2013 Q3 2014

7,720

10,920

2013 Q3 2014

Value of Transactions (Mn)

41%

…inspiring extra ordinary possibilities and futures

Increased services from 6 to 11

33%2,275% 1,124%

CORPORATE BANKING

Deals of over KShs 1B in 2014 in Education, Financial Services, Government, Energy, Transport, Communication, Mining, Agriculture, Trade and Construction

KCB is working with various government bodies on infrastructure, rail, road, compensation, banking contractors and sub-contractors both for the businesses and individual staff

Custody Business: Market Share of 20% holding assets valued at over 650B Driving implementation of new products and market

initiatives: REITS, Asset Backed Securities Partnered with RBA and other industry stakeholders to

promote pension savings in the informal sector The leading provider of Trustee Services for collective

investment schemes (market share of approx. 80%)

14

MORTGAGES RACE TO A MILLION HOMES

Mortgage Asset Book growth in 2014 by KShs 4.3B

Improved interest rates: Bundled product offering at 12.9% 105% Mortgage product

Partnerships: Technology reliant low cost housing developers targeting to build 6,400 houses for Government through S&L Investment Company.

Enabling the dignity of owning a home for more people every day.

15

Enhanced Distribution to more KCB branches

Capacity to handle all insurance classes/products: Property & Liability insurance Motor Insurance Micro Business Livestock Insurance Life Insurance Healthcare Insurance

Premium of over KShs 1.22B from Kshs 500M and PBT of KShs 145.5M from KShs 33M

Providing cover to KCB Customers

Installation of an IT system to improve efficiency and speed of service to customers

Way forward:–Leverage the bank’s wide reach & established infrastructure to ensure availability of insurance products/ services countrywide to ease access and convenience to clients

EXPANDING INSURANCE REACH

16

ProductsAdvisory business in debt and equity rolled out

Roads Annuities Inception of an innovative government program with the Infrastructure Ministry and National Treasury PPP Unit

Securities Trading LicenseTrading will be launched during the 1st Quarter of 2015

Way ForwardLeveraging 2014 achievements for growth into other lines of activity and support asset generation activities

CREATING AN INVESTING CULTURE

17

ROBUST & CONSISTENT INFORMATION TECHNOLOGY

System Changes in 2014:

EMV – New system installation for card operations and enhanced security to global standard.

T24 hardware refresh Mobile – enhanced utility & customer experience Internet Banking – Upgrade for enhancement of

customer applications. Agency banking – significant expansion of

services from phone based to POS. Private cloud roll out Biashara Smart – USSD integration with Safaricom

System Changes in 2015 CBS - Technical Upgrade from R8 to R14 at a cost

of $6M

18

COMMUNITY PARTNERSHIPS

Enterprise development 2,000 women trained on financial literacy and agri-business development

through Joyful Women Organization (Joywo)

Growth of Livestock Value Chain 10,000 Farmers reached with the Mifigo ni Mali program to provide capital

& business skills in three counties - Baringo, Taita Taveta and Narok counties

To grow KShs 1B livestock enterprise development fund in 5 years

19

Q3 FINANCIAL RESULTS

PROGRESS ON STRATEGIC PRIORITIES

36%

16%

17%

25.2%

4%

8%

48.3%

6.7%

40%

21%

13%

27.5%

4%

15%

49.9%

6%

Non Interest IncomeContribution

Customer Deposits

Net Loans & Advances

ROE

ROA

Regional BusinessContribution

CIR

NPL

Actual Budget

21

COST TO INCOME RATIO

● CIR improving across the industry with increased adoption of technology

Regional CIR

CIR Benchmark

CIR of KCB Group

● Introduction of new products and channels has positively impacted the CIR

● Strong growth from Non Interest Income sources of KCB● Improved management of operating expenses

48.3%

57.0%

53.0%

51.0%

42.0%

44.0%

46.0%

48.0%

50.0%

52.0%

54.0%

56.0%

58.0%

KCB South AfricanBanks

Nigerian Banks Kenyan Banks

52.10%51.70%

49.10%49.60%

48.30%

52.50%

56.00%

46.60% 46.50%

44.70%

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

Group Kenya

22

Kenya, 82.0%

Tanzania, 3.3%

South Sudan, 8.1%

Uganda, 3.2% Rwanda, 2.9%Burundi, 0.5%

CONSOLIDATION OF REGIONAL BUSINESSES

Kenya, 77.2%

Tanzania, 3.0%

South Sudan, 12.8%

Uganda, 2.6%Rwanda, 3.7% Burundi, 0.6%

Kenya, 77.0%

Tanzania, 3.7%

South Sudan, 12.4%

Uganda, 3.2%Rwanda, 3.2%

Burundi, 0.6%

Kenya, 83.2%

Tanzania, 3.2%

South Sudan, 7.0%

Uganda, 3.2%Rwanda, 2.9%

Burundi, 0.5%

Total Assets Contribution Sep 2014

Total Revenue Contribution Sep 2013Total Revenue Contribution Sep 2014

Total Assets Contribution Sep 2013

23

ASSET GROWTH

Net Loans & Advances (KShs. Bn) NPL Ratio

Coverage Ratio - IFRSLoan segmentation - 2014

4%9%

12%

38%

18%

8%

4%7%

AGRICULTURE

CONSTRUCTION

MANUFACTURING

PERSONAL

REAL ESTATE

TRADE

TRANSPORT

OTHERS

*others – mining, tourism, financial services & Energy

45.7% 46.2%

39.2%44.0%

55.4%

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

24

8.40% 8.10%

9.30%8.80%

6.70%

8.50%

7.40%

8.40%

7.30%

5.60%

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014Group Kenya

138

194209

226

264

Sep- 10 Sep- 11 Sep- 12 Sep- 13 Sep- 14

CUSTOMER DEPOSITS

Customer Deposits (KShs. Bn)

Deposits by sector - September 2014

54%

6%

21% 19%

52%

7%

23%

17%

Current Call Fixed SavingsSep-13 Sep-14

Deposits by Type - September 2014

52%48%

55%

45%

Corporate RetailSep-13 Sep-14

193

252

296 301

350

72%

77%

71%

75% 75%

65%

67%

69%

71%

73%

75%

77%

79%

-

50

100

150

200

250

300

350

400

Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014

Deposits L/D Ratio

25

TOTAL LIABILIES AND EQUITY

26

Key drivers for growth in totalliabilities were 17% growth incustomer deposits and an increasein long term debt

Strong deposit growth witnessed in 2014 fromacross sectors

Strong five year CAGR of 13%

385,210

451,566

Q3 2013 Q3 2014

Total Liabilities and Equity (KShs Mn.)

58,581

70,978

Q3 2013 Q3 2014

Shareholders' Equity

CENTRAL BANK RULES vs. IFRS

Provisioning Policy Under Central Bank Rules

Financial Statement (KShs. Mn.)

4.2

8.510.1

Evolution of Provisions for Loans (KShs. Bn.)

Provision amount on each individual account iscomputed monthly based on the Central Bankprudential guidelines and the relevant entries passedthrough the P&L in the Bank books of account

Monthly the portfolio is subjected to an impairmentassessment as per IFRS

Impairment as per IFRS is compared to provisionsamount as per Central Bank and if Central Bankprovisions amount is greater than impairment as perIFRS, the difference is accounted for through reserves,otherwise an additional charge is recognized in P&L toincrease provisions to the IFRS assessment

Summary of Central Bank of Kenya Rules

Grade ClassificationClass

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

10,126

Difference between CBK and IFRS provisions is recorded in a reserve included in the Shareholders’ Equity

Liabilities

Loan Loss Reserve

Shareholders Equity*

380,588

4,134

66,844

*Excluding Loan Loss Reserve

274,422

264,296

187,270

8.0 8.9 8.9 8.89.6 10.19.9

12.0 13.3 13.2

14.9 14.2

FY 2011 FY 2012 FY 2013 Q1 2014 Q2 2014 Q3 2014

IFRS CBK

27

24.8%25.8%

CAPITAL ADEQUACY

Minimum ratios in the new prudential guidelines

are; CC/RWA 10.5% and TC/RWA 14.5%

The bank has a buffer of KShs. 27.5Bn over

minimum requirements to fund growth

RWA Evolution (KShs. Bn)

Q3 2014Old Guidelines

Market Risk Operational Risk

Q3 2014New Guidelines

New Prudential Guidelines

254.4 0.8

61.0 316.2

Total Capital/Total Risk Weighted AssetsCore Capital/Total Risk Weighted Assets

10.5%

14.5%

15.3%

18.7% 18.0%15.9% 16.0%

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

19.7%

22.5% 21.6% 20.7% 20.0%

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

28

GROUP STATEMENT OF COMPREHENSIVE INCOMEKShs Mn. ACTUAL SEP 2014 ACTUAL SEP 2013 Y-o-Y % Change ACTUAL DEC 2013

Net interest income 25,827 24,274 6% 32,984

Foreign exchange income 3,212 2,678 20% 3,710

Gross fees and commissions 9,080 7,566 20% 10,501

Other income 1,120 708 58% 1,005

Total operating income 39,239 35,226 9% 48,200

Total operating expenses -20,616 -19,524 6% (27,080)

Net provisions for bad debts -925 -533 74% (996)

Profit before tax 17,698 15,169 17% 20,124

Tax -5,215 -4,353 20% (5,782)

Profit after tax 12,483 10,816 15% 14,342

29

PROFITABILITY

Strong five year CAGR of 22% due to Growth of customer numbers and volume of

transactions Increasing returns from investment in

alternative channels Kenya revenue boosted by new business,

KCB Capital and KCB Bancassurance

PBT Growth (KShs. Bn.)

Distribution of PBT by Region - Sept 2014

8.5

Kenya 89.3%

Kenya 92.6%

6.5

9.1

13.015.2

17.7

Sep- 10 Sep- 11 Sep- 12 Sep- 13 Sep- 14

Distribution of PBT by Region-Sept 2013

Kenya, 91.9%

South Sudan, 6.3%

Bancassurance, 0.8%

Tanzania, 0.8%Rwanda, 0.6%

Burundi, 0.1%

Uganda, -0.5%

Kenya, 89.40%

South Sudan, 8.71%

Bancassurance, 0.21%

Tanzania, 0.13%Rwanda, 0.22%

Burundi, 0.01%

Uganda, 1.33%

30

SUMMARY: KEY STATISTICS AND PERFORMANCE RATIOS - Q3 2014

Market Capitalisation- KShs. 171.1Bn

Customer loans- KShs. 264Bn

Customer deposits- KShs. 350Bn

Assets- KShs. 452Bn

Customers- 4 Mn

Branch network- 242

ATMS- 962

ROAA- 4.0%

ROAE- 25.2%

Tier 1 ratio- 16.0%

Tier 2 ratio - 20.0%

NIM- 9.5%

Cost to Income Ratio – 48.3%

Strong Liquidity – 32.8%

31

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