#1KCB KCB FY 2019 RESULTS 1#2KCB CUSTOMERS 22.8 MILLION 342 BRANCHES 1,055 ATMS, 23,302 AGENTS & MERCHANTS STAFF 7,584 OUR REGIONAL PRESENCE Banking Businesses: •KCB Bank Kenya •KCB Bank Tanzania •KCB Bank South Sudan •KCB Bank Rwanda •KCB Bank Uganda •KCB Bank Burundi •National Bank of Kenya •Ethiopia Rep. Office Other Investments: KCB Capital Limited • KCB Insurance Agency ⚫KCB Foundation •Kencom House Limited KCB BANK SOUTH SUDAN KCB BANK UGANDA KCB BANK RWANDA KCB BANK BURUNDI III KCB BANK KENYA (ETHIOPIA REPRESENTATIVE OFFICE) KCB BANK KENYA NATIONAL BANK OF KENYA KCB INSURANCE AGENCY KCB FOUNDATION KCB CAPITAL KCB BANK TANZANIA 2#3OUR FOOTPRINT Branches 11 South ATMS 3 Agents 25 Sudan Staff 117 Touch Points: KCB Uganda Rwanda Branches 15 ATMs 18 Agents 522 Staff 330 Branches 14 ATMs 25 Agents 522 Staff 253 Ethiopia (Representative Office with 1 staff) Kenya Branches 282 ATMs 454 Agents 14,332 Staff 6,469 Burundi Branches 6 ATMs 7 Agents 185 Staff 127 ⚫ Tanzania Branches 14 ATMs 15 Agents 144 Staff 287 3#4KCB STABLE CREDIT RATING AGENCY SOVEREIGN KCB BANK KENYA RATINGS Ratings confirmed in August and September 2019 S&P Global Ratings B2 (Stable) B2 (Stable) MOODY'S B+/B B+/B INVESTORS SERVICE#5KCB 2019 HIGHLIGHTS M&As Acquisition of NBK INTEREST RATE CAP BANKING CHARTER DEMONETIZATION KCB completed the takeover of National Bank of Kenya Sustained interest in the sector with the multiple announcements of mergers and acquisitions. Renewed focus on the sector following the repeal of the rate caps that limited the maximum lending rates to 400bps above CBR. Guidelines on the adoption of customer-centric business models by banks, risk-based credit pricing, enhanced transparency & information. disclosure and entrenching an ethical culture within banks.. CBK concluded the withdrawal of the older 1,000 shillings banknotes and introduced new notes. LO 5#6KCB KCB 2JIAJIRI PROGRAMME HIGHLIGHTS KENYA 2JIAJIRI BENEFICIARIES PER SECTOR ୮ BEAUTY AND 2JIA JiRi 34,844 ICT BENEFICIARIES TO DATE 315 Male Female Ratio 54:46 ୮ PERSONAL CARE me 3.480 ARA DOMESTIC SERVICES 1,638 AUTOMOTIVE ENGINEERING 2,083 Kenya 34,087 Tanzania BUILDING AND CONSTRUCTION 9,001 AGRIBUSINESS 17,570 ר 357 Rwanda 300 Uganda 100 L 11,564 beneficiaries accessed Business Development Support. KShs. 144 million disbursed to beneficiaries to support their business enterprises. 'Young Africa Works' KShs 10 billion funding from the MasterCard Foundation to scale up the bank's 2jiajiri job creation programme J 6#7KCB FOUNDATION CASE STUDIES KCB George Odhiambo, owner, Pentagon View Investments, Shanzu, Mombasa . • • • George trained in carpentry at Mombasa Technical Training School under 2jiajiri programme. Used KShs 100,000 2jiajiri funding to expand his business and now has access finance and financial institutions, thanks to 2jiajiri BDS support. Generates an income of KShs 50,000 per month. Employs two and also offers apprenticeship to youth. Tom Mogaka, Owner Smart Digital Electricals, Umoja Innercore, Nairobi Besu pap SMART DIGITAL ELECTRONICS Autodied Family Bank Agent AND COMPUTER REPAIRS 0700 045 543/0715 228 130/0725 669 197 START SUPERTNARKET TENA ESTATE OPPOSITE SENATI CYBER, ALONG MOI DRIVE ELECTRICALS ESA ELECTRONICS pap PHONE ACCESSORIES EGGS @ WHOLESALE & RETAIL 120 sty at Life Star Times so with MORS Goty zuku GOFUNDI ACCREDITED INSTALLER OECTRIC CAL • Trained in electrical installation at Eastlands College of Technology under 2jiajiri. Granted toolkits that have expanded his business. The go-to fundi in Umoja Estate as well as contractor for DSTV/GOTV installations, basic repairs, TV mounting and aerial installations. Generates KShs 100,000 monthly income from his business. 7#8SUSTAINABILITY UPDATE UNEP PRINCIPLES FOR FINANCE INITIATIVE RESPONSIBLE BANKING KCB Mainstreaming our 8 Adopted SDG's 1 NO POVERTY 8 DECENT WORK AND ECONOMIC GROWTH 9 INDUSTRY, INNOVATION ANDINFRASTRUCTURE REDUCED 10 INEQUALITIES PARTNERSHIPS FOR THE GOALS •182 Business Bankers, Relationship Managers and Credit Analysts trained on Environmental, Social Risk screening and Assessment. •90.5% of business units have identified key performance indicators for tracking and monitoring of the 8 SDG's. 11 SUSTAINABLE CITIES AND COMMUNITIES 12 RESPONSIBLE CONSUMPTION AND PRODUCTION 16 AND STRONG PEACE, JUSTICE 17 INSTITUTIONS UNEP FI - 6 Principles for RESPONSIBLE BANKING: Launched 2019 Alignment Impact & Target Setting Stakeholders Clients & Customers Governance & Culture Transparency & Accountability 8#92019 GROUP AWARDS GLOBAL FINANCE AWARDS 2019 Best Bank in Kenya The Banker TOP 1000 WORLD EN KS BEST BANKS 2019 EUROMONEY AWARDS FOR EXCELLENCE 2019 OOAFRICAN BANKER BRAND AFRICA AWARDS 2019 Most Admired Financial Services Brand AFRICAN BANKER AWARDS 2019 Best Regional Bank in East Africa Innovation in Banking THE BANKER MAGAZINE - TOP 1000 BANK RANKINGS 2019 717th Globally 21st Africa (Highest mover Africa) GLOBAL BUSINESS OUTLOOK 2019 Best Digital Transformation in Online Banking Best CSR Initiative - 2jiajiri GLOBAL BANKING AND FINANCE AWARDS 2019 Best Corporate Governance Bank in Kenya Best Customer Service Bank in Kenya EUROMONEY AWARDS FOR EXCELLENCE 2019 East Africa's Best Bank for SMEs Kenya's Best Bank INTERNATIONAL CUSTOMER EXPERIENCE AWARDS 2019 ✰ Gold Award for the Best Customer Experience Team Gold Award for Customer Experience Leadership Gold Award for the Best Digital Strategy KCB 9#10KCB Macro-Economic Highlights UU 50 MULT- KJUR -> 10#11MACROECONOMIC HIGHLIGHTS Kenya KCB 5.1% Q3 19 GDP Growth Rate (%) *Source: Kenya National Bureau of Statistics 18.3 8.4 9.6 7.1 8.6 8.7 6.6 5.7 5.6 4.9 4.7 4.8 4.3 5.9 3.2 3.1 7.1 7.6 6.4 4.0 1.8 1.0 AGRICULTURE MANUFACTURING REAL ESTATE TRADE EDUCATION TRANSPORT & FINANCIAL & CONSTRUCTION ICT HEALTH STORAGE INSURANCE Contribution to GDP Q3 19 (%) Q3 19 Growth (%). MINING & QUARRYING 11#12MACROECONOMIC HIGHLIGHTS Regional GDP Growth GDP Growth 2019 Projected (% 5.9 2019 East Africa Projected GDP Growth Rate (%) Source: AfDB KCB 8.7 7.4 6.8 6.1 3.3 5.8 Ethiopia Rwanda Tanzania Uganda Burundi South Sudan 12#13MACROECONOMIC HIGHLIGHTS Inflation Evolution (%) Inflation rate 7.5 Kenya 4.70 4.35 4.14 3.51 Target Upper Target Lower Non Food Fuel 6.58 6.27 5.82 5.70 5.49 5.56 5.00 4.95 3.83 2.65 2.5 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Interest Rates Evolution (%) 12.50 12.51 12.47 12.39 12.47 12.38 9.0 9.0 8.5 7.19 7.02 7.08 7.41 7.17 7.17 6.90 6.62 6.65 6.56 6.60 6.65 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Sources: Central Bank of Kenya Kenya National Bureau of Statistics 91 day bill Average Lending Rate CBR KCB 13#14103.8 103.7 103.2 103.3 102.4 101.5 MACROECONOMIC HIGHLIGHTS Currency USD/KShs Average Monthly Exchange Rate 101.6 101.7 101.1 101.2 100.4 100.2 KCB Movement JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Exchange Rates to USD 3,712 2018 3,660 2,300 1,881 2,293 1,800 922 876 158 130 31 28 2019 Uganda Tanzania Burundi Rwanda South Sudan Ethiopia 14#15MACROECONOMIC HIGHLIGHTS Kenya Current Account Balance (% of GDP) -4.6 -4.8 -5.0 -6.2 -6.7 -10.5 Current account deficit at 10 year low 2014 2015 2016 2017 2018 2019 12 Month Private Sector Growth Diaspora emittances 2019: $2,796M 7.3 7.0 7.1 4% 6.6 2018: $ 2,697M 6.1 6.3 5.2 4.9 4.3 4.4 Tourism Earnings 3.4 3.0 2019: KShs 163.6B 39% 2018: KShs 157.4B JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 KCB 15#16KCB Channel Performance 103 UU 50 MULT- KJUR -> 16#17KCB December 2018 OUR CHANNEL CONTRIBUTION MOBILE 45% AGENCY, INTERNET AND POS 32% BRANCH TELLER 12% 97% of transactions performed outside the branch December 2019 MOBILE 78% ATMS 11% AGENCY, INTERNET AND POS BRANCH TELLER ATMS 4% 15% 3% 126% growth in non-branch revenue to over KShs 12B 23% decrease in average transactions /tellerper day Dec 2018 23% decrease in Number of branch transactions. 71.5 Dec 2018 16.2 Dec 2019 55.2 Dec 2019 12.5 Avg. Transactions/Teller perday Number of Branch Transactions (M) 17#18KCB OUR CHANNEL CONTRIBUTION 290% Growth in Total Mobile Loans Advanced 54.4B 2018 212.1B Value of Transactions: Mobi Service (KShs.B) No. of transactions (M) Mobile Revenue (KShs.M) 404 331 236 FY 17 FY 18 FY 19 Mobile Transaction type (%) 52.0 62.1 281.3 FY 17 FY 18 FY 19 FY 2018 FY 2019 2,261 3,175 9,873 FY 17 FY 18 FY 19 49.9 48.1 33.7 32.4 16.5 16.4 1.6 1.4 2019 B2C B2B C2B LIPA KARO 18#19OUR CHANNEL CONTRIBUTION AGENCY Value of Transactions (KShs.B) No. of transactions (M) 127 204 300 Agency Revenue (KShs.M) 820 542 45.3 481 34.7 22.8 47% Growth in FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 Agency Banking Value Agency Transaction type (%) 64.6 37.2 CASH DEPOSIT FY 2018 29.9 FY 2019 15.8 15.4 14.4 12.1 7.8 0.8 0.1 1.6 0.3 CASH WITHDRAWAL SCHOOL FEES BALANCE ENQUIRY BILL OTHERS* PAYMENT KCB *Others: Account opening, mini statement, load cards and Funds transfer 19#20OUR CHANNEL CONTRIBUTION ATM 17% Growth in ATM Value Deposits of KShs 59.7B collected through 105 intelligent ATMs KCB Value of Transactions (KShs.B) No. of transactions (M) 130 86 152 15.4 15.0 14.0 ATM revenue (KShs M) 465 496 486 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 20 20#21OUR CHANNEL CONTRIBUTION MERCHANT / POS KCB 6% Growth in the average value per Merchant/ Value of Transactions (KShs. B) POS Revenue (KShs. M) POS transaction 42 49 44 856 944 801 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 21 24#22Financial Performance 103 UU 50 MULT- KJUR -> KCB 222#23KCB BALANCE SHEET HIGHLIGHTS Government Securities KShs 120.1B 25% Growth in Total Assets Net Loans & Advances KShs 455.9B KShs 169.2B KShs 535.4B (10.1% excl NBK) Customer Deposits KShs 686.6B KShs 537.5B Total Assets KShs 714.3B 2018 2019 KShs 898.6B 23#24LOAN BOOK PERFORMANCE Sectoral Loans Comparison 0.4% 0.3% Key growth segments: Personal: 68% Tourism: 57% Manufacturing: 25% Industry* KCB Dec 2019 3.6% 2.6% 4.2% 2.8% 3.0% -4.2% 3.9% 4.4% 6.8% 4.6% 19.3% 6.9% 4.2% 7.0% 13.0% 11.5% 14.8% 17.8% 26.8% 37.8% Group gross loans KShs. B 66 36 Mining and Quarrying Agriculture Energy and water Tourism, restaurants and hotels Financial services Transport and communication Trade Building and construction Manufacturing Real estate Personal/Household *CBK Data as at June 2019 2 581 19% 477 LCY FCY 81% Dec-18 Retail Corporate Mortgage Dec-19 KCB 24 24#25LOAN BOOK PERFORMANCE Asset Quality Review 13.3% 13.0% 12.0% 12.0% 10.6% 11.9% 10.9% 19% 81% 9.1% 6.9% 8.5% 7.4% -KCB Group 8.0% NPL excl NBK, up 40 bps 1.5% 1.8% 1.0% 0.7% KShs 7.8 billion reduction in the NBK gross NPL in Q4 2019 FY 2016 FY 2017 FY 2018 FY 2019 ■ Industry NPL (Kenya) -NPL Group --COR -Combined NPL NPL Breakdown ■LCY FCY 14.4% 13.1% 10.4% NBK NPL ratio 8.6% 7.4% down in Q4 2019 6.2% 3.7% to 43% from 50% in Q3 2019 2.3% KCB CHECK OFF MORTGAGE CORPORATE SME & MICRO 2016 2017 2018 2019 25#26LOAN BOOK PERFORMANCE Group Coverage Ratio Strong coverage despite increase NPL KCB 72.5% 42.6% 81.1% 81.4% 72.1% 68.6% FY 2017 FY 2018 FY 2019 CBK Coverage Ratio --IFRS Coverage Ratio 26#273% 2% 2% BALANCED DEPOSIT MIX 46% 48% 48% 51% 49% 50% 2017 2018 Corporate Retail Others Currency Mix Deposits by type FY18 8% 17% 24% 83% 5% KCB LCY FCY 2019 Deposits by type FY19 12% 21% 63% 5% Demand Savings Term Call 62% 27#28STRONG CAPITAL BUFFERS KCB Group Core Capital to RWA 18.1% 17.2% 15.4% Group Total Capital to RWA 19.5% 19.0% 16.6% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 2017 2018 2019 2017 2018 2019 Kenya Kenya 16.4% 15.6% 14.9% 17.8% 17.5% 16.1% 14.5% 14.5% 14.5% 10.5% 10.5% 10.5% 2017 2018 2019 2017 2018 Min. Core / RWA --Core Capital / RWA Min. Total / RWA 2019 --Total Capital / RWA 28#29KCB P&L HIGHLIGHTS Net Interest Income KShs 48.8B Profit before tax up 9.0% KShs 56.1B Total Non Interest Income KShs 23.0B KShs 28.2B (5% growth Operating Expenses excl NBK) KShs (38.5B) KShs (35.0B) 4.9% Net Earnings growth to Kshs 25.2B (Flat excl NBK) Profit before tax KShs 33.9B KShs 36.9B 2018 2019 29#30KShs. M Net Loans & advances PBT (13%) KCB Bank P&L HIGHLIGHTS 735 911 664 South Sudan 578 25% International Businesses KCB Bank Burundi 274 3,044 220 2,397 7.4% growth in International business PBT KCB Bank Uganda (118%) 6,520 446 6,274 (81) 124% KCB Bank Rwanda 14,628 949 12,776 424 KCB Bank Tanzania 16,465 17,443 998 777 2018 2019 KCB 28% 30#31KCB Group Actual Actual Y-O-Y KShs Billion 2018 2019 Change KCB Bank Kenya Actual Actual Y-O-Y 2018 2019 Change Strong Balance Sheet Cash and balances with 42.0 60.8 45% 39.1 42.2 8% central bank Balances with other KShs 79.5B growth in net loans 40.1 48.2 20% 16.6 19.7 18% institutions Investments in Government 120.1 169.2 41% & Other securities Net loans and advances 455.9 Fixed assets 14.1 Other assets Total Assets 535.4 17% 26.6 89% 42.1 58.4 39% 714.3 898.6 26% 103.0 118.4 15% 417.2 447.2 7% 10.1 15.1 50% 35.7 31.8 (11%) 621.7 674.3 8% Customer deposits 537.5 Balances due to other banks 20.1 686.6 28% 20.4 1% 475.4 528.1 11.2 8.7 11% (22%) Other liabilities 20.6 40.4 96% 18.4 26.4 43% Long-term debt Total Liabilities Shareholders' equity Total liabilities and equity 714.3 22.4 600.6 768.8 28% 113.7 129.7 14% 898.6 26% 21.5 (4%) 18.9 18.5 (2%) 523.9 581.7 11% 97.8 92.6 (5%) 621.7 674.3 8% KCB 31#325% GROWTH IN EARNINGS KShs Billion KCB Group Actual Actual Y-O-Y 2018 2019 Change KCB Bank Kenya Actual Actual Y-O-Y 2018 2019 Change Interest income Interest expense Net interest income Foreign exchange income Net fees and commissions 4.4 14.2 19.8 66.3 74.4 12% (17.5) (18.2) 4% 48.8 56.1 15% 4.5 59.3 63.7 (15.0) (14.9) 8% (1%) 44.3 48.9 10% 2% 2.7 3.1 16% 40% 11.9 16.8 41% Other income Total other operating income 4.4 23.0 28.2 3.8 (13%) 3.9 3.6 (8%) 22% 18.6 23.5 27% Total other operating expenses (35.0) (38.5) 10% (28.3) (30.5) 8% Provisions for bad debts Profit before tax (2.9) 33.9 36.9 (8.9) 207% (3.1) (8.7) 181% 9% 31.4 33.2 6% Tax (9.9) (11.7) 19% (9.0) (10.5) 16% Profit after tax 24.0 25.2 5% 22.4 22.7 1% KCB 32#33KCB OVERVIEW OF KEY FINANCIAL RATIOS FY 18 HY 19 Q319 KENYA GROUP 21.9% 23.5% 21.8% Return on Average Equity 24.9% 20.7% 48.3% 45.7% 44.7% Cost to Income 42.1% 45.9% 6.9% 7.8% 8.3% Gross NPL to Gross Loans 7.3% 10.9% 72.4% 60.8% 56.0% NPL Coverage 90.8% 72.1% 19.7% 19.1% 18.3% Debt to Equity 19.9% 16.6% 32.0% 34.1% 35.2% Non funded income to total income 32.5% 33.4% 3.2% 2.8% 2.8% Cost of funds 2.8% 2.8% 8.1% 8.3% 7.9% Net Interest Margin 8.1% 8.1% 0.7% 1.3% 1.7% Cost of risk 1.9% 1.8% 84.8% 89.2% 87.0% Loan to Deposit Ratio 89.9% 84.6% 8.0% 14.0% 11.7% Growth of Net Loans and Advances 7.2% 17.4% 8.0% 7.0% 11.4% Growth of Customer Deposits 11.1% 27.7% 33 33#34KCB 2019 DIVIDEND KCB Group paid an interim dividend of KShs 1.00 per share in November 2019. ◆ The Directors recommend a final dividend for the year ended 31 December, 2019 of KShs 2.50 34#35Non funded income growth 25.0% NFI Ratio 36.2% Cost/ Income ratio 45.0% FY 2020 OUTLOOK Cost of funds 2.8% Cost of Risk 1.8% NPL Ratio 8.0% NIM 7.8% Asset yield 11.1% Loan growth 14.0% Deposit growth 14.0% ROA 3.5% ROE 22.9% KCB 35#36KCB THANK YOU Investor Relations [email protected] www.kcbgroup.com 36