#1i&M HOLDING S Investor Presentation HY 2020 11th September 2020#2İ&M HOLDINGS Table of Contents Part 1: Economic Overview Part 2: Group Consolidated Performance: HY 2020 Part 3: Subsidiary Performance: HY 2020 Investor Presentation HY 2020#3i&M HOLDINGS Part 1: Economic Overview Investor Presentation HY 2020#4Economic Overview Global Conditions ¹COVID-19 triggered the deepest global recession in decades with lasting impact to labor productivity and potential output Sub Saharan Africa 2 Economic activity is now projected to contract by approx. 3.2%, reflecting a weaker external environment and measures to contain the COVID-19 outbreak. Regional Economic Growth 2Subject to the continued gradual easing of restrictions that has started in recent weeks Growth is projected to recover to 3.4% in 2021 Pandemic Impact 3Commercial banks have continued to extend relief to borrowers as a result of the economic turmoil arising from COVID-19 with loan restructures in Kenya to cushion against the pandemic hitting Kshs.844.4 billion in June 2020. Exchange Rate Developments 3The Kenya Shilling and the regional currencies have noted volatility in the recent months partly due to the uncertainties about the impact of COVID-19. Source: 1World Bank report: Global Economic Outlook June 2020, 2Source IMF report: Regional Economic Outlook June 2020 ³KBA Bulletin July 2020 i&M HOLDINGS 1#5i&M HOLDINGS Part 2: Group Consolidated Performance: HY 2020 Investor Presentation HY 2020#6I&M Holdings PLC - Income Statement Highlights Jun 20 vs Dec-19 Jun-20 Jun-19 Particulars Kshs Mn Kshs Mn Jun 19 Y-Y % ▲ Net Interest Income Non Funded Income 15,510 6,919 7,018 -1% 8,285 4,213 4,536 -7% Total Operating Income 23,795 11,132 11,554 -4% Operating Expenses 9,461 5,024 4,629 9% Profit before Loan Loss Provisions 14,334 6,108 6,925 -12% Loan Loss Provisions 636 1,031 1,109 -7% Profit before Share of JV 13,698 5,077 5,816 -13% Share of Profit from JV 905 (580) 404 -244% Profit Before Tax 14,603 4,497 6,220 -28% Profit After Tax 10,769 3,190 4,526 -30% i&M HOLDINGS 2#7I&M Holdings PLC - Balance Sheet Highlights Dec-19 Jun-20 Jun-19 20 vs 19 Particulars Kshs Mn Kshs Mn Y-Y % ▲ Cash & Bank Balances 15,386 19,068 20,142 -5% Investments & Placements 97,587 107,484 99,481 8% Loans & Advances (net) 175,329 184,565 172,164 7% Other Assets 26,989 29,523 25,267 17% Total Assets Customer Deposits Borrowings 315,291 229,737 10,856 340,640 317,054 7% 252,484 237,242 6% 9,977 10,139 -2% Other Liabilities 13,836 16,110 14,239 13% Total Liabilities 254,429 278,570 261,620 6% Shareholders' Funds 60,862 62,070 55,434 12% I&M HOLDINGS 3#8I&M Holdings PLC - Ratio Analysis 2019 Jun-19 Jun-20 46.9% 47.9% 48.6% Liquidity* Cost/Income Ratio 39% 40% 45% Net NPA 4.6% 4.9% 4.1% Loan to Deposit Ratio 76% 73% 73% Return on Equity Return on Assets Capital Adequacy Ratio* *reflecting anchor Bank ratios I&M Bank Ltd Kenya - i&M HOLDINGS 18% 16% 11% 3.4% 2.9% 2.1% 21% 18% 21% 4#9I&M Holdings PLC - Subsidiary Contribution CONTRIBUTION TO PBT KSHS 'BN' 4.6 0.4 0.1 % CONTRIBUTION TO SHAREHOLDERS' FUNDS % CONTRIBUTION TO TOTAL ASSETS 78% 8% 8% 6% 63% 22% I... 9% 6% (0.6) Kenya Rwanda Tanzania Mauritius Kenya Rwanda Tanzania Mauritius Kenya ■Rwanda Tanzania Mauritius i&M HOLDINGS 5#103% Sectorial Distribution of Loans & Advances as at June 2020 7% 23% 10% 19% 25% 5% 4% 2% 1% 1% 0% Agriculture Building & Energy and Construction Water Financial Manufacturi Services ng Mining & Quarrying Personal/Ho usehold Tourism, Real Estate Restaurants & Hotels Trade Transport & Communicati Government & Parastatals on Jun-20 3% 7% 1% 2% 23% 1% 10% 19% 4% 25% 5% 0% The sectorial distribution comprises the 3 banking subsidiaries i&M HOLDINGS 6#11Distribution of Restructured Loans & Advances Segmentation 21% 3% 1% 75% ■ CORPORATE BANKING BUSINESS BANKING PREMIUM BANKING PERSONAL BANKING The distribution comprises the 3 banking subsidiaries i&M HOLDINGS 43% Sectorial Trade Manufacturing 21% 15% 11% 6% 3% Personal/Household Transport and Communication Building and construction Real Estate Tourism, Restaurant and Hotels 0.2% 0.2% 0.1% School and religious Professional Firms 7#12Deposit Mix As businesses contract due to the pandemic there has been less investment, with businesses opting to hold funds in higher yielding deposits Currency Mix June 2020 30% 70% The deposit mix comprises the 3 banking subsidiaries i&M HOLDINGS Deposit Mix 66% 70% 34% ■LCY - FCY Jun-2019 ■ Low Cost 30% Jun-2020 ■ High Cost 8#13NFI [Kshs Mn] 4,536 -7% Fee/Cost vs Fee/Income -O-Fee/Cost Fee/Income 4,213 98% 90% 891 88% 84% 959 +8% Other income includes; 1. Net income on 1,290 financial assets at fair value 942 -27% through profit or loss 39% 38% (FVTPL), 33% 35% 2. Rental income 1,227 1,100 -10% 3. income from sale of property and equipment 1,128 1,212 +7% Jun-19 Fees & Commissions on Loans FX Income Fee implies Non Funded Income [NFI] I&M HOLDINGS Jun-20 Other Fees & Commissions Other Income 2018 FY Jun-19 2019 FY Jun-20 NFI reduced as a result of the impact of Covid-19 and Central Bank of Kenya (CBK) emergency measures announced in Mid-March to ease the burden of transactions on consumers. 9#14Gross NPLS 24,399 -9% Consolidated Loans & Advance and NPLs Interest on Advances Coverage Ratio +5% 22,106 48% 55% 10,250 10,766 Jun-19 Jun-20 Jun-19 Jun-20 Loan Loss Provisions Jun-19 Jun-20 -7% 1,109 Gross NPA 13% 11% 1,031 Net NPA 5% 4% Jun-19 Jun-20 I&M HOLDINGS Cost of Risk 0.62% 0.58% Jun-19 Jun-20 10#15i&M HOLDINGS Trend Analysis Investor Presentation HY 2020#16Loans (Kshs Bn) Total Assets (Kshs Bn) Performance Trend Analysis 2018 167 289 +9% +5% +8% 315 317 341 2019 Jun-19 Jun-20 +8% 175 172 185 2018 2019 Jun-19 Jun-20 I&M HOLDINGS PBT (Kshs Bn) Deposits (Kshs Bn) 11.5 213 +6% +8% 230 237 252 2018 2019 Jun-19 Jun-20 +27% 14.6 -27% 6.2 4.5 2018 2019 Jun-19 Jun-20 11#17Return on Equity i&M HOLDINGS Value to Shareholders 17% 18% 16% 11% 2018 2019 Jun-19 Jun-20 Return on Assets 3.4% 2.9% 2.9% 2.1% 2018 2019 Jun-19 Jun-20 12#18Group Highlights: FY 2020 Business Focus - Post Covid-19 1 MA 2 3 ✓ Rethinking the organization - including driving culture change and building on agility to ensure preparedness to crisis amongst others ✓ Rebuilding operations - by centralization, further digitization and reviewing workspace configurations including flexible working. ✓ Recovering Revenue - by protecting revenue from existing customers and seeking new business opportunities, equipping staff to drive the same and exploring acquisition opportunities. ✓ Accelerating Digital - Capacity building, Enhancing Analytics/Data driven decisioning, driving stakeholder adoption of digital and customer centric digital offerings amongst others. Regional Expansion - I&M Holdings has signed a Sale & Purchase Agreement (SPA) for the acquisition of 90% of the shareholding of Orient Bank Ltd, Uganda. I&M HOLDINGS 13#19Group Highlights: FY 2020 Expansion of Digital Value Proposition Technology Leveraging technology and digital innovations focused on improving customer experience and operational efficiencies. Centralisation of Reconciliation Creating better efficiencies through standardization & automation of the reconciliation processes. I&M HOLDINGS ම A $ Card Management System Operationalization of an End-to-end solution on Cards for Issuing and Acquiring of Debit, Credit, Prepaid and Multi-Currency Prepaid card including merchant management and 3D Secure Omni Channel Introduction of Multiple Channel platform for Mobile banking enhancing the secured experience for customers while transacting from their mobile phone 14#20Market Driven Solutions: FY 2020 оо O De i&M HOLDINGS Small World Money Transfer service Allows both customers and non-customers to send money to their loved ones or business partners in Kenya through Small World agents abroad. I&M WebPay Divert An e-commerce solution that allows businesses to accept payments from their customers through VISA, MasterCard and Union Pay cards. Businesses do not need to have a website to enjoy this service Revamp of the Diaspora Banking offering Deal Facilitation service for buying property; Special Diaspora Assistance at USD30 - USD50; a unique I&M Web-Pay facility and I&M Custody and Investment Services Automation of Trade Finance processes Provision of digital interventions that minimize the need for the customer to visit the bank's physical branch to deliver documents. Automation had been achieved and is currently under Production 15#21i&M HOLDINGS Part 3: Subsidiary Performance Investor Presentation HY 2020#22Kenyan Banking Sector Overview & 2020 Highlights GDP GDP growth in Kenya is estimated to contract for the first time in almost 3 decades. Shrinking by 0.3% Banking Sector The banking system is sound and stable. Well capitalized and with sufficient buffers Policy Measure on Impact of Pandemic % Reduction of the Cash Reserve Ratio (CRR) to 4.25 percent, thus releasing Kshs 35.2 billion as additional liquidity to the banking sector • Loan restructuring for • borrowers affected as a result of the pandemic while allowing for flexibility regarding loan classification and provisioning Extension of the maximum tenor of Repurchase Agreements (REPOs) from 28 to 91 days Increase in NPLs Decline of asset quality is noted due to effects from the pandemic as households and businesses capacity to service their debts weakens. Digital Lending Banks have seen reduced levels of digital lending, with moderate deterioration of asset book Source KBA bulletin I&M HOLDINGS 16#23I&M Bank Ltd, Kenya - Financial highlights Highlights June 2020 Vs June 2019 Reported PBT 2019: 4.9bn 2020: 4.5bn Net Revenue 2019: 9.0bn 2020: 8.6bn Cost/Income 2019: 35% 2020: 35% Fee/Income 2019: 34% 2020: 39% Loans/Deposits 2019: 68% 2020: 68% Gross NPL Ratio 2019: 13% 2020: 11% Figures in Kenyan Shillings I&M HOLDINGS Assets (Kshs Bn) Loans (Kshs Bn) 137.3 +6% Jun-19 253.6 +7% Jun-19 146.1 Jun-20 272.3 Jun-20 Equity (Kshs Bn) Deposits (Kshs Bn) 201.8 +6% Jun-19 214.1 Jun-20 +14% 48.0 42.1 Jun-19 Jun-20 17#24Economic Review - Tanzania GDP GDP is seen expanding 6.0% Covid-19 is set to curb growth this year, although the economy should avoid recession, defying the regional trend. Source Focus Economics Newsletters i&M HOLDINGS Economic Outlook • Annual growth fell to an over two-year low of 5.7% in the first quarter (Q4 2019: +6.2%) due to Covid-19; nonetheless, the economy remained relatively sturdy, supported by booming demand for gold-the country's key export commodity-which bolstered mining and quarrying activity. • Tanzania has gained access to international credit markets after the World Bank upgraded its status to a lower-middle-income country, from a low-income one 18#25I&M Bank (T) Ltd, Tanzania- Financial highlights Highlights June 2020 Vs June 2019 Reported PBT 2019: 0.17bn 2020: 0.16bn Net Revenue 2019: 0.73bn 2020: 0.75bn Cost/Income 2019: 65% 2020: 70% Fee/Income 2019: 32% 2020: 28% Loans/Deposits 2019: 109% 2020: 102% Gross NPL Ratio 2019: 14.38% 2020: 14.24% Figures in Kenyan Shillings ✩i&M HOLDINGS Assets (Kshs Bn) Loans (Kshs Bn) 15.1 +2% Jun-19 22.8 +5% Jun-19 15.4 Jun-20 24 Jun-20 Equity (Kshs Bn) Deposits (Kshs Bn) +8% 7 13.9 15.1 Jun-19 3.4 Jun-19 Jun-20 +8% 3.7 Jun-20 19#26Economic Review - Mauritius GDP Mauritian economy is expected to contract by 6.8% in 2020, as the tourism sector ground to a halt owing to the coronavirus pandemic. Banking Sector High exposure to troubled domestic sectors such as tourism, construction and real estate is expected to lead to an increase in restructured and problem loans. Source World Bank Report: Global Economic Outlook June 2020 i&M HOLDINGS 20#27Bank One, Mauritius- Financial highlights Highlights June 2020 Vs June 2019 Reported PBT 2019: 0.8bn 2020: -1.3bn Net Revenue 2019: 2.1bn 2020: 2.0bn Cost/Income 2019: 50% 2020: 52% Fee/Income 2019: 28% 2020: 29% Loans/Deposits 2019: 64% 2020: 47% Gross NPL Ratio 2019: 5.46% 2020: 7.26 % Figures in Kenyan Shillings ✩i&M HOLDINGS Assets (Kshs Bn) Loans (Kshs Bn) 67.6 +2% Jun-19 120.1 Jun-19 +39% 68.9 Jun-20 166.9 Jun-20 Equity (Kshs Bn) Deposits (Kshs Bn) 105.2 Jun-19 8.4 Jun-19 +38% 145.6 Jun-20 +10% 9.2 Jun-20 21#28i&M HOLDINGS Non Banking Subsidiaries Investor Presentation 2020#29I&M Burbidge Capital Ltd I&M Insurance Agency Ltd D i&M HOLDINGS Revenue The advisory business reported a 79% reduction in revenues as a Tresult of a challenging origination environment and delay in completion of transactions leading to deferment of revenue recognition. Capital Raising Webinar IMBC in partnership with ISBI and sponsored by PKF Kenya and Walker Kontos hosted its Annual Capital Raising Seminar via webinar Partnered with EAVCA to host a roundtable discussion based on Covid-19 Valuations and Deal Structures Revenue The Insurance agency contributed Kshs 69.2Mn to Group profitability Partnership with Underwriters The agency is continually partnering with underwriters in developing customized products in agriculture, ordinary life assurance and Group life and pension. 22#30I&M Foundation I&M Realty Foundation The Group set up I&M Foundation in 2019 which will now continue to spearhead the Group's shared growth agenda in the areas of Environment and conservation, Education and skills training, Economic empowerment and Philanthropy New I&M Head Quarters Teams have relocated in phases into the new headquarters on 1st Parklands Avenue Construction Fit out works are ongoing for a few more units to relocate into the building. Set up of a COVID-19 relief fund worth Kshs. 50 million to cushion vulnerable members of society from the impact of the pandemic. Partnered with the Kenya Community Development Foundation aimed at inculcating a culture of environmental conservation and sustainable management of resources among Children and Youth in 172 learning institutions; in 4 sub- counties within Narok and Kilifi Counties over a three-year period i&M HOLDINGS 23#31Disclaimer The contents herein have been presented in good faith. The information, statements and opinions set out in this presentation and subsequent discussion do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other financial instruments or any advice or recommendation in respect of such securities or other financial instruments. The information contained in this presentation and subsequent discussion, which does not purport to be comprehensive nor render any form of financial or other advice, has been provided by the Group and has not been independently verified by any party. No responsibility, liability or obligation (whether in tort, contract or otherwise) is accepted by the Group or any member of the Group or any of its affiliates or any of its officers, employees, agents or advisers as to or in relation to this presentation and any subsequent discussions (including the accuracy, completeness or sufficiency thereof) or any other written or oral information made available or any errors contained therein or omissions therefrom, and any such liability is expressly disclaimed. This presentation and subsequent discussion may contain projections, estimates, forecasts, targets, opinions, prospects, results, returns and future outlook with respect to the financial condition, results of operations, capital position and business of the Group. Any such future outlook may involve significant assumptions and subjective judgements which may or may not prove to be correct and there can be no assurance that any of the matters set out are attainable, will actually occur or will be realised or are complete or accurate. The assumptions may prove to be incorrect and involve known and unknown risks, uncertainties, contingencies and other important factors, many of which are outside the control of the Group. Any such future outlook is based on the beliefs, expectations and opinions of the Group at the date the statements are made, and the Group does not assume, and hereby disclaims, any obligation or duty to update, revise or supplement them if circumstances or management's beliefs, expectations or opinions should change. The Financial results of the Group can be sourced from the link https://www.imbank.com/about-us/i-and-m-holdings/investor-relations/financial-results I&M HOLDINGS 45#32i&M HOLDING S Thank You I&M HOLDINGS PLC 1 PARK AVENUE 1ST PARKLANDS P.O. BOX 30238 - 00100 TEL: +254 (0)20 3221000 [email protected] I&M is regulated by the Central Bank of Kenya