FY 2018 RESULTS - KCB Group Limited · 2020-03-02 · 2018 HIGHLIGHTS AGRIBUSINESS 13,953...

FY2018

RESULTS

OUR STRATEGY

WHAT DRIVES US HOW WE ACHIEVE IT

Our Purpose

Simplifying

your world to

enable your

progress

Our Promise

Go Ahead

Our Values

Inspiring

Simple

Friendly

Business growth while

achieving the women

and youth agenda

Drive shareholder

value

Growth in Digital

Financial services

Operational efficiency

Talent

management

Customer centricity

Customer perspective

Market share

Shared Value

Brand position

Learning and growthStaff productivity Staff

development

Culture change

FinancialPBT

Efficiency

Shareholder Value

Internal Business

processesSystem reliability

Sustainability

Control environment

2015-2019 STRATEGY:

TRANSFORMATIVE

PARTNERSHIPS

WHO WE ARE

2

OUR REGIONAL PRESENCE

KCB BANK

RWANDA

KCB BANK

BURUNDIKCB BANK

TANZANIA

KCB BANK KENYA

KCB INSURANCE AGENCY

KCB FOUNDATION

KCB CAPITAL

KShs. 114BTOTAL EQUITY

258 BRANCHES946 ATMS, 16,642 AGENTS & MERCHANTS

6,220 STAFF17.4 MILLION CUSTOMERS

KCB BANK KENYA

(ETHIOPIA

REPRESENTATIVE

OFFICE )KCB BANK

SOUTH

SUDAN

Banking Businesses:

•KCB Bank Kenya

•KCB Bank Tanzania

•KCB Bank South Sudan

•KCB Bank Rwanda

•KCB Bank Uganda

•KCB Bank Burundi

•Ethiopia Rep. Office

Other Investments:

• KCB Capital Limited

• KCB Insurance Agency

• KCB Foundation

• Kencom House Limited

3

2018 GROUPHIGHLIGHTS

Economic drivers:• Big Four – Housing Healthcare Manufacturing Food security

• Resilient Kenya Shilling supported by record growth in diaspora

remittances, tourism & horticulture

Banking Industry:• Momentum for mergers & acquisitions

• Imperial Bank Limited (In Receivership) (IBLR) -Acceptance of binding offer

and verification of part of the assets for transfer to KCB Bank Kenya

• Increased regulatory oversight on compliance with Kenya’s Anti-Money

Laundering and Combating the Financing of Terrorism (AML/CFT)and

Imposition of a fines

Adoption of IFRS 9:• Impact on capital ratios and the introduction of a 5 year grace

period the Central bank of Kenya

• Impact on the loan book and provisions, subsequent effect

on P&LHIGHLIGHTS

Overview of the year to date

2018 KENYA

5

TANZANIA

• Strong growth in the

domestic demand and

expansion of credit,

especially to households

trade and manufacturing

• Expectation is high on the

major national projects on

the SGR and the facilitation

of improved access to

modern energy services

• A favorable monetary policy

in 2018 with the BOT

slashing its discount rates in

from 9% to 7%

UGANDA

•Robust activity in the

manufacturing, oil and

mining sectors expected

to drive growth over 6% in

2019

•Growing fiscal deficit

driven largely by public

infrastructure investment

•Favorable weather

conditions are key to the

largely agricultural

economy


6

Overview of the year to date RWANDA

Sustained >7% growth over

the last decade

Primary drivers of the

economy diversifying to

service, trade and ICT, over

and above the mainstay,

Agriculture

Made in Rwanda initiatives

and international conferences

boosting tourism and inflow of

foreign currency

SOUTH SUDAN

• Improved economic conditions

following the signing of the

peace agreement

• Reduced internal conflicts and a

moderate improvement in the

oil prices supporting the growth

of the economy

• Oil production is expected to

recover fully in 2019 boosting the

inflow of foreign currency into the

economy


7

Overview of the year to date

BURUNDI

•Moderate recovery of the

predominantly agricultural

economy

•Annual GDP growth

improving from to0.5% in

2017 to 2.8%

•Positive outlook after the

referendum held in 2018

•Opportunities in mining

and the hydropower

capacity

2018 Group AwardsTHE BANKER AWARDS

Bank of the Year –

Banking in the

Community (2Jiajiri)

BANKER AFRICA EAST AFRICA AWARDS

Best Retail bank in

East Africa

THE EABC AWARDS

Best East African Company

SUSTAINABLE FINANCE CATALYST

•Best Bank in Sustainable

Finance

•Overall Winner, in sustainable

finance integration and

practices (Tier 1 Banks)

8

2018

HIGHLIGHTS AGRIBUSINESS

13,953

AUTOMOTIVE

ENGINEERING

1,383

BEAUTY AND

PERSONAL CARE

2,119

BUILDING AND

CONSTRUCTION4,459

DOMESTIC

SERVICES

1,145

23,059BENEFICIARIES

FUTURE OF 2JIAJIRI

Catalyze job and wealth

creation for at least

100,000youth engaged in the informal

sector within Eastern Africa

Investment of over

KShs 50 billionto nurture and grow youthful and

SME entrepreneurs

KCB 2jiajiri Programme highlights

Kenya

21,459

Tanzania

1,500

Rwanda

100

9

From hustling to an employer – ‘Kodhis’, the Beautician

• Humble beginnings in hawking safari

bags to the realization of the pedicure

and manicure business.

• Introduced to KCB Foundation’s 2Jiajiri in

2016, and now after his expansion

journey, employs 15.

Starting a garage business: One entrepreneur’s journey

• Joseph Mutai was a mechanic training

on the job at a garage in Kericho when

he was introduced to the 2Jiajiri

programme in 2016.

• He is now a proud owner of a motor

vehicle spares and garage business with

8 employees.

10

2018

HIGHLIGHTS

KCB Foundation Case studies

MACRO-ECONOMIC HIGHLIGHTS


Kenya

2018P

GDP Growth Rate(%)

Contribution to GDP

Q32018(%)Q3 2018

Growth (%)

6.2%

18.89

5.20

9.628.73 8.69

AGRICULTURE MANUFACTURING REAL TRADE EDUCATION TRANSPORT&

FINANCIAL& CONSTRUCTION ICT HEALTH MINING&

ESTATE STORAGE INSURANCE QUARRYING

7.12 7.336.15

1.85 1.12

5.75

3.20

5.806.80

6.00 5.40

2.60

6.80

9.10

3.78

5.10

8.50

12

GDP Growth (%)

Tanzania UgandaRwanda BurundiEthiopia

-6.3

8.0

2.8

7.2

6.1

7.1

2018P*

East Africa

GDP Growth Rate(%)

5.7%South

Sudan

*Source: AfDB, Africa Economic Outlook 2019


Regional GDP

Growth

13

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018

Inflation

rate

Target

Upper

Target

Lower

Non Food

Fuel

91daybill Avg lendingrates CBRrate

8.03

10.00

13.65 13.49 13.2212.78 12.61 12.61

8.04 8.02 8.00 7.97 7.73

9.00

7.67 7.64 7.63 7.56 7.36 7.34


2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018

Interest Rate Evolution (%)

7.50

4.83

2.50

4.20

5.71

3.50


Kenya

Inflation Evolution (%)

14

9.50

USD/KES Exchange Rate(%)

103.3

101.4

101.3100.6

101.0

100.6 100.8

101.1

102.6

102.3100.7


2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018

Exchange Rates to USD

TanzaniaUganda RwandaBurundi Ethiopia

130

28

1,803

876

3,712

2,300

South

Sudan


Currency

Movement

15

•Overall reduction on

infrastructure

spending

• Increased exports of

tea and horticulture

• Increased diaspora

remittances

•Strong receipts from

tourism

•Lower imports of

food


Kenya

16

-16.0%

-14.0%

-8.0%

-7.2%

-7.0%

-5.0%

-3.0%

-2.5%

-2.5%

-2.0%

-2.0%

-0.8%

1.0%

Zambia

South Africa

Botswana

Ghana

BRVM

Rwanda

Tanzania

Mauritius

Seychelles

Nigeria

Uganda

Malawi

Kenya

Only African currency to strengthen against the USD in 2018

Current Account Balance (% ofGDP)

2014

-10.4

-6.7

-5.2-6.2

-5.4

2015 2016 2017F 2018F


Kenya


2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018

2.7%2.1% 2.0%

2.8%

4.3% 4.3%3.9%

4.4%

3.0%2.4%

12 Month Private Sector CreditGrowth

17

CHANNEL

PERFORMANCE

December2017

December2018

14% decrease in average transactions

/ tellerper day15% decrease in Number of branch

transactions.

OUR

CHANNEL

CONTRIBUTION

BRANCH

TELLER

12%

AGENCY,

INTERNET

AND POS

32%

MOBILE

45%ATMS

11%

Avg. Transactions / Teller perday Number of Branch Transactions(M)

Dec 2017

Dec 2018

81.9

71.5

18.6

16.2

88% of

transactions

performed

outside the

branch

Dec 2017

Dec 2018

27% growth in

non-branch

revenue to

over 5.2B

MOBILE

45%

AGENCY,

INTERNET

AND POS

26%

BRANCH

TELLER

16%

ATMS

13%

19

331

172

FY 16 FY17 FY18

No. of transactions

(M)

Valueof Transactions

(KShs.B)

236 62.1

32.9

52.0

24.3

32.4

55.049.9

19.416.2

1.31.4

B2C B2B C2B LIPA

KARO

MobileTransaction type(%)

OUR

CHANNEL

CONTRIBUTION

FY 16 FY17 FY18

84%

Growth in

Mobile

Loans

Advances

FY 2018 FY 2017

2017

29.6B

2018

54.4B

20

3,175

FY17 FY18

Mobile Revenue

(KShs.M)

2,261

204

78

FY 16 FY17 FY18

Agent revenue

(KShs M)No. of transactions

(M)

Valueof Transactions

(KShs.B)

127

34.7

15.8

22.8

542

431481

14.417.9

58.8

64.6

12.111.2 9.4 7.81.7 0.8 1.0 0.3

CASH

DEPOSIT

CASH

WITHDRAWAL

SCHOOL

FEES

BALANCE

ENQUIRY

BILL

PAYMENT

OTHERS

Agency Transaction type(%)

OUR

CHANNEL

CONTRIBUTION

FY16 FY17 FY18 FY 16 FY17 FY18

61% Growth in

Agency

Banking

Value

*Others: Account opening, mini statement, load cards and Funds transfer

FY 2018FY 2017

21

78

FY 16 FY17 FY18

No. of transactions

(M)

Value of Transactions

(KShs.B)

OUR

CHANNEL

CONTRIBUTION

FY 16 FY17 FY18

86

130

15.4

7.4

15.0

51% Growth in

ATM

Value

22

ATM revenue

(KShs M)

390

FY 16 FY17 FY18

465

496

Over KShs 22.6B

collected through 70

intelligent ATMs

49

41

FY 16 FY17 FY18

POS Revenue (KShs. M)Value of Transactions (KShs.B)

42

OUR

CHANNEL

CONTRIBUTION

944

822

FY 16 FY17 FY18

856

17% Growth in

the

average

value per

Merchant/

POS

transaction

23

OUR FINANCIAL

PERFORMANCE

TO DATE

BALANCE

SHEET

HIGHLIGHTS

Govt. Securities

Customer

Deposits

Net Loans &

Advances

Total Assets

KShs 714.3B

10% Total

Assets

growth

KShs 455.9B

KShs 120.1BKShs 110.0B

KShs 422.7B


KShs 647.7B

25 2017 2018

LOAN

BOOK

PERFORMANCE

8%Growth in

Net Loans

and

Advances

26.0%

15.5%

13.0%

4.8%

18.9%

3.6%

6.8%

2.6%

4.7%

3.7%

0.4%

36.0%17.0%

11.0%

8.0%

8.0%

6.0%

5.0%

3.0%

3.0%

3.0%

0.0%

Personal/Household

Real estate

Manufacturing

Building and construction

Trade

Financial Services

Transport and communication

Tourism, restaurants and hotels

Energy and water

Agriculture

Mining and Quarrying

Industry Sept 2018 KCB Dec 18

Sectoral Loans Comparison

439

477 19

17 2

Dec-17 Retail Corporate Mortgage Dec-18

* Group gross loans KShs.B

81%

19%

LCY

FCY

26

LOAN

BOOK

PERFORMANCE

6.9%Asset quality

improvement

Asset Quality Review

NPL Breakdown

6.8%

9.1%

10.6%

12.0%

1.4%1.0%

1.5%0.7%

6.6%8.0% 8.5% 6.9%

FY 2015 FY 2016 FY 2017 FY 2018

Industry NPL (Kenya)

89%

11%

LCY FCY

3.2%

7.4%

14.8%16.3%

3.3%

7.9% 8.5%

13.0%

CHECK OFF MORTGAGE CORPORATE SME & MICRO

Q1 2018 Q2 2018 Q3 2018 FY 201827

LOAN

BOOK

PERFORMANCE

15%Decrease in

stock of Non-

Performing

Loans

Improved IFRS Coverage

31,813

37,496

32,692

69.5%

72.5% 72.4%

37.3%42.6%

68.6%

30.0%

60.0%

90.0%

120.0%

150.0%

20,000

30,000

40,000

FY 16 FY17 FY 18

Gross NPL Central Bank Coverage Ratio IFRS Coverage Ratio

28

BALANCED

DEPOSIT

MIX

50% 51% 49%

47% 46% 48%

3% 3% 2%

2016 2017 2018

Corporate Retail Other

Currency Mix Deposits by Type 2017 Deposits by Type 2018

88%

12%

LCY FCY

65%5%

24%

6%

Demand Savings Term Call

63%5%

24%

8%

29

STRONG

CAPITAL

BUFFERS

Core Capital to RWA Total Capital to RWA

Kenya Kenya

Group Group

10.5% 10.5% 10.5%

15.3% 15.4%

18.1%

2016 2017 2018

14.5% 14.5% 14.5%

18.0% 16.6%

19.5%

2016 2017 2018

10.5% 10.5% 10.5%

16.9%14.9%

16.4%

2016 2017 2018

14.5% 14.5% 14.5%

19.9%

16.1% 17.8%

2016 2017 2018

30

P&L

HIGHLIGHTS

22%

earnings

growth to

KShs

24.0B

Net interest

income

Profit before tax

Operating

Expenses

Total non

Interest Income

KShs 33.9B

KShs (35.0B)

KShs 23.0B


KShs 23.0B

KShs (36.4B)

Profit

before

tax

Up 16%

KShs 29.1B

31 2017 2018

P&L

HIGHLIGHTS:

International

Businesses

64%

growth in

subsidiary

PBT

KShs. M Net loans & advances PBT

KCB BankSouth Sudan

KCB BankBurundi

KCB BankUganda

KCB BankRwanda

KCB BankTanzania

14,28316,465

11,899 12,776

379735

1,4032,397

281 446

59%

19

777 3,989%

567

424

(25%)

568

664

109 220

102%

17%

6,777 6,274

32 2017 2018

Strong balance

sheet driven by

KShs 33B growth

in net loans

KShs Billion

KCB Group KCB Bank Kenya

Actual 2017

Actual2018

Y-O-Y Change

Actual 2017

Actual2018

Y-O-Y Change

Cash and balances with central bank

29.1 50.1 72% 26.0 39.1 51%

Balances with other institutions 43.9 32.0 (27%) 14.4 16.6 15%

Investments in Government & Other securities

110.0 120.1 9% 94.6 103.0 9%

Net loans and advances 422.7 455.9 8% 387.9 417.2 8%

Fixed assets 14.0 14.1 1% 9.5 10.1 6%

Other assets 27.1 42.1 56% 23.2 35.7 54%

Total Assets 646.7 714.3 10% 555.6 621.7 12%

Customer deposits 499.5 537.5 8% 440.2 475.4 8%

Balances due to other banks 11.0 20.1 82% 5.2 11.2 114%

Other liabilities 15.2 20.6 36% 10.7 18.4 72%

Long-term debt 14.9 22.4 51% 10.6 18.9 79%

Total Liabilities 540.7 600.7 11% 466.6 523.9 12%

Shareholders’ equity 106.0 113.7 7% 89.0 97.8 10%

Total liabilities and equity 646.7 714.3 10% 555.6 621.7 12%

33

KShs Billion

KCB Group KCB Bank Kenya

Actual 2017

Actual2018

Y-O-Y Change

Actual 2017

Actual2018

Y-O-Y Change

Interest income 63.7 66.3 4% 56.9 59.3 4%

Interest expense (15.3) (17.5) 14% (12.8) (15.0) 17%

Net interest income 48.4 48.8 1% 44.1 44.3 0%

Foreign exchange income 4.7 4.4 (6%) 2.9 2.7 (6%)

Net fees and commissions 14.7 14.2 (3%) 10.7 11.9 11%

Other income 3.6 4.4 20% 3.3 3.9 20%

Total other operating income

23.0 23.0 0% 16.9 18.6 10%

Total other operating expenses

(36.4) (35.0) 4% (28.6) (28.3) 1%

Provisions for bad debts (5.9) (2.9) (50%) (5.0) (3.1) (37%)

Profit before tax 29.1 33.9 16% 27.5 31.4 14%

Tax (9.4) (9.9) 5% (8.2) (9.0) 9%

Profit after tax 19.7 24.0 22% 19.2 22.4 17%

22% GROWTH

IN EARNINGS

34

OVERVIEW OF KEY FINANCIAL RATIOS

Return on Average Equity

Cost to Income

Gross NPL to Gross Loans

NPL Coverage

Debt to Equity

Non funded income to total income

Cost of funds

Net Interest Margin

Cost of risk

Loan to Deposit Ratio

Growth of Net Loans and Advances

Growth of Customer Deposits

23.5% 22.8%

48.2% 49.7%

8.4% 7.5%

75.0% 82.7%

20.9% 19.7%

32.3% 33.3%

3.0% 3.2%

8.3% 8.0%

0.4% 0.5%

85.5% 88.0%

4% 4%

9% 6%

21.9%

48.3%

6.9%

72.4%

19.7%

32.0%

3.2%

8.1%

0.7%

84.8%

8%

8%

FY17 H1 18 Q3 18 KENYA GROUP

19.5%

51.0%

8.5%

72.5%

14.0%

32.2%

3.0%

8.9%

1.5%

85.1%

10%

11%

24.4%

45.1%

6.9%

65.3%

19.6%

29.5%

3.2%

8.1%

0.7%

91.8%

8%

8%

35

2018

DIVIDEND

17% dividend increase to KShs. 3.50

KCB Group paid an interim dividend of KShs 1.00 per share in November 2018.

The Directors recommend a final dividend for the year ended 31 December, 2018 of KShs 2.50

Dividend

36

FY 2018 RESULTS - KCB Group Limited · 2020-03-02 · 2018 HIGHLIGHTS AGRIBUSINESS 13,953...

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Transcript of FY 2018 RESULTS - KCB Group Limited · 2020-03-02 · 2018 HIGHLIGHTS AGRIBUSINESS 13,953...