KCB Group Plc FY2020 Results

FY 2020 RESULTS

1 KCB Group Plc FY2020 Results

Group Overview

2 KCB Group Plc FY2020 Results Our purpose and thrust

Consistent customer experience across the Group

Customer first, with Targeted growth segments leading value propositions

Enhance our non-branch proposition Digital leader & Digitize and enable more DIY services Simplifying digital to the core your world to enable your progress Step change in Simplified operating model efficiency & Maintain cost efficiency measures productivity

Scale to achieve Closure of ongoing transactions regional relevance Strategic regional expansion

3 KCB Group Plc FY2020 Results Our Footprint

25.2M Customers 7,525 Staff

359 Branches 1,104 ATMs 23,460 Agents & POS / Merchants

Kenya Bank National Bank of KCB Bank KCB Bank KCB Bank KCB Bank KCB Bank Rep Kenya Office Branches 207 Branches and agencies 94 Branches 14 Branches 6 Branches 13 Branches 13 Branches 12 1 Staff ATMs 399 ATMs 105 ATMs 15 ATMs 8 ATMs 26 ATMs 15 ATMs 3 Agents 12,724 Agents 346 Agents 220 Agents 185 Agents 480 Agents 425 Agents 45 Staff 4,901 Staff 1,630 Staff 270 Staff 125 Staff 244 Staff 236 Staff 118

Other investments: KCB Insurance Agency, KCB Foundation, KCB Capital

4 KCB Group Plc FY2020 Results Our MSME and women proposition

Support provided to the segment: 49 45 • Restructured 3,800 SME loans valued at Deepening 24 our MSME Kes 7.5 billion. 11 and women proposition • Women value proposition to the entire KCB Women Loans (Kes B) SME Loans (Kes B) 90 Bank Kenya branch network 83 • Access to the GoK credit guarantee scheme

15 • Roll out of the Retailer financing on Vooma 9

Sourced USD 150 million from IFC, BIO Women Deposits (Kes B) SME Deposits (Kes B) 946,548 855,474 and SANAD fund, for the support of MSMEs (especially women-owned) and 173,489 climate friendly projects 75,683

Women Customers SME Customers

FY 19 FY 20

5 KCB Group Plc FY2020 Results Our Vooma platform

The robust, exciting and dynamic new mobile wallet that enables customers to pay for goods and services, get loans and save money through their phone on any network.

Introduced a retailer financing service for micro and SME businesses: a flexible, cashflow-based weekly loan used to boost working capital requirements to increase stocks from distributors. • Interoperable across mobile networks Opened up standardized APIs to third parties to ease integrations between merchants and businesses to the KCB • Compatible with virtual cards ecosystem for bulk digital disbursements and payments (Visa/MasterCard)

Expanded our agency network thus increasing the digital payment volumes and options to load cash.

Enabled the expansion of our merchant business to >100,000 tills within the retail space through various partnerships to provide a wide payment ecosystem.

6 KCB Group Plc FY2020 Results Ratings

Credit rating at par with the Sovereign rating. KCB BANK KENYA During the annual review, the agency recognized

2020 2019 the following strengths: Rating: B2 Rating: B2 • Reliable profitability metrics

Outlook: Negative Outlook: Stable • Efficiency improvements • Strong domestic franchise • Stable deposit based funding structure, and; • Strong capital metrics.

7 KCB Group Plc FY2020 Results Awards

1.KCB ranked 667th Globally by The Banker’s Top 1000 World Banks ranking. 2.Best Bank in Kenya by the Global Finance’s Best Bank Awards 3.Best Digital Bank by Asian Banker 4.Best Practise in Sustainable Finance by DuPont Sustainable Solutions 5.Safest Bank in Kenya by Global Finance World Safest Banks 6.Best in Customer Satisfaction and Happiness by Global Banking and Finance Awards 2020 7.Top tier 2 bank (NBK) for delivering exceptional digital customer experience by Kenya Bankers Association.

8 KCB Group Plc FY2020 Results Our sustainability interventions GCF Accreditation

Energy Livelihoods of Health, food and people and Generation and Transport water security Access communities

KCB Bank Kenya is the first Mitigation Adaptation bank in the region to receive this accreditation to lend to: Building, Cities, Ecosystems and Forest and Land Infrastructure and industries and ecosystem • medium to large climate Use build environment resilient assets appliances services • projects valued at $50 - $250 million.

Source: GCF Infographics 9 KCB Group Plc FY2020 Results Sustainability

Value Kes B Count

Kes 92 billion 31 Value of facilities that have undergone social- environmental assessments 20 17

16 14

4 5 6 3 2 3 5 4 4 4 1 3 3 2 1 Tourism, Agriculture Building & Others Transport & Financial Real Estate Trade Energy & Water Manufacturing Restaurant & Construction Communication Sevices Hotels

10 KCB Group Plc FY2020 Results KCB Foundation Highlights

KCB 2Jiajiri Programme Highlights

13,316

10,565 9,398

36,806 6,370 BENEFICIARIES TO DATE

Male : Female Ratio 54:46 Beneficiaries trained Jobs created 2019 2020

11 KCB Group Plc FY2020 Results

Macroeconomic Highlights

12 KCB Group Plc FY2020 Results Macro Economic Highlights - Kenya

GDP Performance(%) GDP contracted by 0.5% 6.1 6.0 5.8 during the first nine 5.2 4.9 4.4 Q2 2020 Q3 2020 months of 2020 due to economic disruptions occasioned by the Covid- Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019 Q1 2020 19 pandemic -1.1

-5.7

GDP Growth(%) Drivers of GDP Performance Q3 2020 (%) 30 18.2 20 16.2 6.3 4.7 7.3 5.6 10 5.3 5.3 2.9 1.2 6.9 4.3 19.7 2.1 6.9 9.1 7.9 8.7 9.5 4.1 0 1.0 Mining Const ICT Agriculture Health Finance & Real Transport Trade Manufact Education -10 Ins Estate & Storage -2.5 -3.2 2020 2021 -20 Estimated Projected -30

-40 -41.9

-50 Source: IMF and KNBS GDP Contribution GDP Growth Source: KNBS & IMF 13 KCB Group Plc FY2020 Results Regional GDP Performance South Sudan Ethiopia Grew by 4.1% in 2020 and Growth of 1.9% in 2020. Projected expected to contract by 2.3% in rebound to 8.7% in 2021/22 driven 2021 due to effects of the by increased agricultural production pandemic and foreign investments SSA GDP Growth(%) Uganda 3.2 Contracted by 0.3% in 2020. Projected rebound to 4.9% in 2020 Kenya 2021 driven by agriculture, Estimated Growth of 1.0% in 2020. Expected services and industrial growth 2021 growth of 4.7% in 2021 driven by Projected Rwanda recovery in the services sectors -2.6 Growth of 2.0% in 2020 and a e.g. education and manufacturing projection of 6.3% in 2021 as well as resilience in agriculture driven by improvements in the GDP contraction in 2020 business environment and Tanzania due to economic investment in major growth Growth of 1.9% in 2020. Projected disruptions occasioned by sectors. the covid-19 pandemic . to expand by 3.6% in 2021 driven by robust domestic demand and Burundi infrastructure development. Contracted by 3.2% in 2020. Growth of 3.1% expected in 2021 driven by resumption of foreign aid improved coffee exports and increase in public Source: IMF World Economic Outlook (October 2020) investment 14 KCB Group Plc FY2020 Results Macro Economic Highlights

Local currencies continue to Performance of regional currencies against USD in 2020 (%) be strained as a result of the Uganda Shilling Tanzania Shilling Burundi Franc Rwanda Franc Kenya Shilling South Sudan Pound covid-19 pandemic impact on 0.5 the economy. -0.9 -3.4 3.3% -5.4 Growth of exports in 2020 in -7.7 Kenya due to resumption of -10.3 demand in the international markets, imports declined Current account deficit, GDP % 14.6 12.5% due to relatively low 2019 2020 2021 Projected international oil prices. 0.9

-2.3 -3.2 -4.8 -5.1 -4.4 -5.8 -6.5 -5.9 -8.0 10.6% -9.2 -10.5 -9.2 Growth in diaspora remittances in Kenya to -16.7 -17.9 -20.7- 20.8 USD 3.09B in 2020. Kenya Uganda Tanzania Rwanda Burundi South Sudan

15 KCB Group Plc FY2020 Results Macro Economic Highlights

Inflation rates (%) 69.0 58.0 Inflation eased in most countries in the region 11.9 on account of reduced 9.0 5.8 5.6 4.9 prices of locally 3.6 3.6 3.8 3.9 produced food items. 3.2

Kenya Uganda Tanzania Rwanda Burundi South Sudan

Central Bank rates (%)

15.0 15.0 Interest rates declined in Kenya, Rwanda and Uganda 12.0 12.0 in 2020 supported by 8.5 9.0 accommodative monetary 6.6 7.0 7.0 5.0 policy conditions with 4.0 4.6 lowering of CBR

Rwanda Burundi Kenya Uganda Tanzania South Sudan Dec-19 Dec-20

16 KCB Group Plc FY2020 Results Macro Economic Highlights

29.6% Performance of Selected African Stock Exchanges 2019-2020 The drop in NSE 25 index occasioned by the covid-19 36.4 pandemic which saw net foreign outflow of USD 262 million from the bourse. 20 17.7 14.9 13.8

7.3 7.6

0.3 1.6

-1 securities -4.2 -4.2 exchange ranked 4th -7.6 -10.8 -9.5 among selected African -13.7 -13.3 -15.4 -16.3 stock exchanges based on -16.9 -22 normalized percentage growth in index from 1 -30.6 January 2019 to 31 -34.8 -35.9 December 2020. Nigeria South Africa Morocco Kenya Egypt Botswana Ghana Mauritius 01 Jan 2019 - 31 Dec 2019 01 Jan 2020 - 31 Dec 2020 01 Jan 2019 - 31 Dec 2020

17 KCB Group Plc FY2020 Results

Channel Performance

18 KCB Group Plc FY2020 Results Channel Performance

OUR CHANNEL CONTRIBUTION Proportion of number of transactions per customer touch point

98% Transactions performed outside the branch. Mobile 77% Agency, Internet, POS 18% 19% decline in non-branch ATMs 3% revenue (Kes 1.9B) due to Branch teller waiver of mobile banking 2% fees and reduced mobile lending.

19 KCB Group Plc FY2020 Results Channel Performance

OUR CHANNEL Avg. Transactions / Teller per day CONTRIBUTION 100 82 72 50% 57 51 On average, tellers are now doing half of the daily transactions they used to do five years ago 2016 2017 2018 2019 2020 Number of Branch Transactions (M)

23 66% 19 16 Decrease in number of 13 branch transactions 8 over five years.

2016 2017 2018 2019 2020 20 KCB Group Plc FY2020 Results Channel Performance

MOBILE BANKING Kes 1 Trillion Value of Mobile Transactions (Kes B) No. of Mobile Transactions (M) Mobile Revenue (Kes M) 1,082 Value of mobile banking 261 transactions driven by a 9,873 7X growth in mobile 204 banking deposits. 7,711 616

22% Decline in mobile banking revenues due to fee waivers 2019 2020 2019 2020 2019 2020

21 KCB Group Plc FY2020 Results Channel Performance Mobile Loans Advanced (Kes B) MOBILE BANKING Total Mobile Loans Advanced 212 83% 154 Growth in value of Salary Advance loans disbursed via mobile banking

2019 2020 124 27% Decline in 70 73 total mobile loans 62 2019 Advanced driven by a 2020 50% decline in KCB 19 19 Mpesa disbursements

KCB Mpesa Fuliza Mobi loan

22 KCB Group Plc FY2020 Results Channel Performance

MOBILE BANKING Mobi Transaction Type (%) 2019 2020 7x 48 51 YoY growth in C2B 32 34 volumes driven by 17 17 the shift to digital 2 1 transactions and waiver of mobile B2C B2B C2B Lipa Karo banking fees Month on Month Evolution of C2B Transactions 3 90 470 2.53 80 2.5 2.28 2.12 70 1.84 2 1.74 60 1.58 50 1.5 1.27 83 40 1.06 72 1 0.75 64 30 52 54 0.51 0.50 0.57 47 67 35 20 0.5 28 10 8 17 0 6 5 0 C2B Volume (Kes B) Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

FY 19 FY 20 Value (Kes B) Number (M) 23 KCB Group Plc FY2020 Results Channel Performance

Value of Transactions (Kes B) No. of Transactions (M) Agency Revenue (KesM) AGENCY BANKING 448 46 763 50% 300 566 Growth in 45 Agency Banking Volumes to Kes 448B due to continued shift to 2019 2020 2019 2020 2019 2020 digital channels. Agency Transaction Type (%) 37 38 35 30

15 15 16 11 2 1

Cash deposit Cash withdrawal School fees Balance inquiry Others *Others: Account opening, mini statement, load 2019 2020 cards, bill payment and Funds transfer 24 KCB Group Plc FY2020 Results Channel Performance Value of Transactions (Kes B) No. of Transactions (M) ATMs 247 15 17% 12 Increase in ATM volumes 211 driven by 113% growth in ATM deposit values to Kes 127B

2019 2020 2019 2020 Value of ATM Deposits (Kes B) ATM Revenue (Kes M) 127 52% 486 Proportion of ATM cash deposit values making ATMs a net 364 deposit mobilizer in 2020. 60

2019 2020 2019 2020

25 KCB Group Plc FY2020 Results Channel Performance

MERCHANT / POS

Value of Transactions (Kes B) Number of Transactions ( M) POS Revenue (Kes M)

4% 44 8 801 Decrease in volume of POS transactions to Kes 43B

18% 43 7 680 Increase in number of POS transactions to 8 million 2019 2020 2019 2020 2019 2020

26 KCB Group Plc FY2020 Results

Financial Performance

27 KCB Group Plc FY2020 Results Balance Sheet Highlights

Government Securities Kes 208.8B Kes 169.2B 10% Growth

Net Loans & Advances Kes 595.3B 77% of Total Kes 535.4B assets are in the Kenya business Customer Deposits Kes 767.2B Kes 686.6B

Total Assets Kes 987.8B Kes 898.6B

FY 19 FY 20

28 KCB Group Plc FY2020 Results Loan Book Performance Stable Loan Industry Sep 2020 KCB Dec 2020 Book distribution 0.8% 0.1% Mining and Quarrying over the period. 3.1% 1.6% 3.6% 2.0% Energy and water Private sector credit 3.5% 2.9% Agriculture growth recovered to 3.3% 4.4% Tourism, restaurants and hotels 8.4% in Dec 2020 Transport and communication from 7.1% in Dec 7.7% 4.8% 2019 driven by 17.7% 6.6% Trade recovery in economic 4.1% 6.7% Building and construction activity in Q4 13.7% 13.9% Manufacturing 14.7% 18.4% Real estate 27.8% 38.6% Personal/Household Group Gross Loans (Kes B)

14% 18 658 Growth in Gross 29 19% Loans driven by 30 LCY personal and FCY

manufacturing 581 81% sectors Dec-19 Retail Corporate Mortgage Dec-20 29 KCB Group Plc FY2020 Results Loan Book Performance Asset Quality Review 90 81.1 81.4 120,000 80 72.5 96,613 100,000 14.7% 70 69.0 72.1 60 68.6 66.7 80,000 Group NPL ratio driven 63,396 50 by Tourism, restaurants 60,000 40 42.6 & hotels and 37,496 30 32,692 40,000 manufacturing sectors 14.7 20 10.9 8.5 6.9 20,000 10 1.5 1.8 4.6 0 0.7 0 2017 2018 2019 2020 14.1% Gross NPL (Kes B) CoR (%) CBK Coverage Ratio (%) IFRS Coverage Ratio (%) NPL Ratio (%) Industry NPL (Kenya) NPL Breakdown as at December 2020, 18.6% up from 12.0% in 14.4% 13.9% December 2019 8.7% 8.6% 7.4%

2.3% 2.6%

CHECK OFF MORTGAGE CORPORATE SME & MICRO LCY FCY FY19 HY20 3Q20 FY20

30 KCB Group Plc FY2020 Results Restructured Loans

Sectoral Distribution of Restructured Loans 19.6% 5,058 30.0 80.0% Proportion of KCB’s 69.3% 70.0% restructured loan book 25.0 27.6 representing 8,251 60.0% loan accounts with a 20.0 44.8% 50.0% total value of 41.5% Kes. 106.1 billion 15.0 16.6 16.7 40.0% 31.4% 16.0 30.0% 10.0 22.3% 11.3 27.6% 9.0% 20.0% 12.7% 10.1% 54.2% 5.0 6.8 1.8% 5.8 8.0% 10.0% Proportion of Kenya 0.0 0.2 1.6 3.6 banking industry - 0.0% restructured loan book with a value of Kes 1.63 trillion.

Count Value (Kes B) % Restructured

31 KCB Group Plc FY2020 Results Customer Deposits Deposit Mix Corporate Retail Others Balanced

Deposit Mix 2% 4%

48% Stable CASA deposit 47% base

50% 48%

2019 2020 Currency Mix Deposits by type 2019 Deposits by type 2020 Corporates 5% 14% 5% and SMEs, 32%

Individuals, 62% 21% 67% 23% 21%

Government, 45% 86% 12% 7% LCY FCY Demand Savings Term Call

32 KCB Group Plc FY2020 Results Capital Ratios Core Capital to RWA (%) Total Capital to RWA (%) Total capital in Group Group excess of 18.1 17.2 18.2 21.6 Kes.170.3B 19.5 19.0

26.0% Debt to equity 14.5 14.5 14.5 10.5 10.5 10.5 ratio following increase in Tier II by $150M 2018 2019 2020 2018 2019 2020

Kenya Kenya 16.4 15.6 15.6 19.4 17.8 17.5

10.5 10.5 10.5 14.5 14.5 14.5

2018 2019 2020 2018 2019 2020 Min. Core / RWA Core Capital / RWA Min. Total / RWA Total Capital / RWA

33 KCB Group Plc FY2020 Results Group P&L Highlights

Net Interest Income 22% decline in Kes 67.9B PAT Kes 56.1B

Total Non Interest Income Kes 28.1B Kes 28.2B

Operating Expenses Kes (43.2B) Kes (38.5B)

Profit After Tax Kes 19.6B Kes 25.2B

FY19 FY20

34 KCB Group Plc FY2020 Results Key subsidiary highlights (Kes M)

1,281 Subsidiaries outside KCB Bank 949 999 Kenya 672 578 634 547 512 493 435 Kes 3.6 billion 274 313 contribution in PBT 129

(79) KCB South KCB Rwanda KCB Uganda KCB Burundi KCB Tanzania KCB Insurance NBK Sudan Agency FY19 FY20

71.2% Improvement on LDR 69.7% consolidated key 60.3% ratios for the CIR 61.2% subsidiaries 44.6% NFI 44.0% 8.3% NIM 8.3% FY 20 FY 19

35 KCB Group Plc FY2020 Results Statement of Financial Position KCB Group KCB Bank Kenya Actual Actual Y-O-Y Actual Actual Y-O-Y Kes Billion FY19 FY20 Change FY19 FY20 Change Healthy and strong Balance Sheet Cash and balances with 60.8 46.8 (23%) 42.2 35.5 (16%) Balances with other institutions 48.2 44.0 (9%) 19.7 17.7 (10%) Investments in Government & Other 10% growth in total 169.2 208.8 23% 118.4 140.5 19% assets driven by securities Kes. 60B loan Net loans and advances 535.4 595.3 11% 447.2 492.5 10% growth Fixed assets 32.3 31.6 (2%) 20.8 20.6 (1%) Other assets 52.7 61.4 16% 26.1 51.5 97% Total Assets 898.6 987.8 10% 674.3 758.3 12%

Customer deposits 686.6 767.2 12% 528.1 588.6 11% Balances due to other banks 20.5 19.7 (4%) 8.7 2.4 (72%) Other liabilities 39.9 21.5 (46%) 26.4 21.3 (19%) Long-term debt 21.8 37.0 70% 18.5 34.7 88% Total Liabilities 768.8 845.4 10% 581.7 647.1 11% Shareholders’ equity 129.7 142.4 10% 92.6 111.3 20% Total liabilities and equity 898.6 987.8 10% 674.3 758.3 12% 36 KCB Group Plc FY2020 Results Statement of Profit or Loss KCB Group KCB Bank Kenya

22% decline in Actual Actual Y-O-Y Actual Actual Y-O-Y Kes Billion earnings FY 19 FY 20 Change FY 19 FY 20 Change

Interest income 74.4 88.7 19% 63.7 68.9 8% 37% growth in Interest expense (18.2) (20.8) 14% (14.9) (15.4) 4% pre-provision Net interest income 56.1 67.9 21% 48.9 53.5 9% profit Foreign exchange income 4.5 5.4 20% 3.1 3.4 9% 200 bps positive Net fees and commissions 19.8 17.8 (10%) 16.8 14.2 (15%) jaws Other income 3.8 4.9 28% 3.6 4.3 21% Total other operating income 28.2 28.1 0% 23.5 22.0 (7%) Total operating income 84.3 96.0 14% 72.4 75.4 4% Total other operating expenses (38.5) (43.2) 12% (30.5) (28.9) (5%) Provisions for bad debts (8.9) (27.1) 205% (8.7) (23.0) 164% Profit before tax 36.9 25.7 (30%) 33.2 23.6 (29%) Tax (11.7) (6.1) (48%) (10.5) (5.2) (50%) Profit after tax 25.2 19.6 (22%) 22.7 18.3 (19%)

37 KCB Group Plc FY2020 Results Overview of Key Financial Ratios

GROUP FY 20 FY 19 HY 20 Q3 20 KENYA GROUP 20.7% 11.6% 10.9% Return on Average Equity 18.0% 14.4%

45.9% 47.0% 46.3% Cost to Income 38.2% 45.0%

10.9% 13.7% 15.2% Gross NPL to Gross Loans 12.8% 14.7%

72.1% 61.7% 68.6% NPL Coverage 68.3% 66.7%

16.6% 16.2% 15.0% Debt to Equity 31.2% 26.0%

33.4% 31.0% 30.8% Non funded income to total income 29.1% 29.7%

2.8% 2.7% 2.7% Cost of funds 2.5% 2.7%

8.1% 7.8% 7.9% Net Interest Margin 7.7% 7.9%

1.8% 4.0% 4.8% Cost of risk 4.5% 4.6%

84.6% 80.7% 82.7% Loan to Deposit Ratio 91.6% 77.4%

17.4% 17.0% 18.7% Growth of Net Loans and Advances 10% 11%

27.7% 34.6% 31.7% Growth of Customer Deposits 11% 12%

38 KCB Group Plc FY2020 Results 2021 Outlook

Continued support NFI Ratio 33.0% Digital banking for our staff and becoming a way of Cost/Income Ratio 44.7% customers through life the pandemic Cost of Funds 2.6% Cost of Risk 1.8% Asset quality NPL Ratio 12.5% Healthy capital and management liquidity ratios to especially for C-19 NIM 7.4% drive growth affected sectors Asset Yield 10.0% Loan growth 10.0% Embracing ESG Deposit growth 12.0% practices in the 2020 DPS: 1.00 day to day ROA 2.9% activities ROE 20.3%

39 KCB Group Plc FY2020 Results

KCB Investor Relations [email protected] www.kcbgroup.com

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