KCB Group Plc Q3 2020 Results

Q3 2020 RESULTS

2 KCB Group Plc Q3 2020 Results Overview Group

Group Economic Macro

Overview Highlights

Performance

Channel Channel

Performance Financial Financial 3 KCB Group Plc Q3 2020 Results Our Regional Presence

22.9 MILLION KCB BANK ( Banking Businesses: CUSTOMERS REPRESENTATIVE •KCB Bank Kenya OFFICE ) •KCB Bank •KCB Bank •KCB Bank 360 BRANCHES KCB BANK •KCB Bank SOUTH SUDAN 1,090 ATMS •KCB Bank KCB BANK KENYA • 23,230 AGENTS & NATIONAL BANK OF KENYA •Ethiopia Rep. Office KCB BANK UGANDA KCB INSURANCE AGENCY MERCHANTS KCB FOUNDATION KCB CAPITAL Other Investments: KENCOM HOUSE LIMITED • KCB Capital Limited KCB BANK RWANDA STAFF • KCB Insurance Agency KCB BANK BURUNDI • KCB Foundation 7,644 • Kencom House Limited

KCB BANK TANZANIA 4 KCB Group Plc Q3 2020 Results Our Footprint

Touch Points: Branches 12 Branches 15 ATMs 3 ATMs 18 Agents 45 Agents 465 Staff 115 Staff 254

Branches 13 Branches 6 ATMs 26 ATMs 7 Agents 431 Agents 98 Staff 247 Staff 125

Branches 300 Branches 14 ATMs 488 ATMs 15 Agents 14,195 Agents 200 Staff 6,616 Staff 276

1 Staff 5 KCB Group Plc Q3 2020 Results Operating Environment Highlights

RESTRUCTURED LOANS Kenya Banking Sector Total restructured loans, 38% of the total banking KShs1.12T sector loan book. Kenya’s banking sector continues to remain stable and LIQUIDITY resilient in the face Liquidity availed by the lowering of CRR advanced of the pandemic with strong liquidity 92% to customers, KShs. 35.2B. and capital adequacy ratios. PROFITABILITY Banking Sector HY20 PBT. Down 27.6% YoY. KShs 63.4B 6 KCB Group Plc Q3 2020 Results Operating Environment Highlights

KENYA PHASED RESUMPTION Partial re-opening of schools in 2020 with 100% reopening 10PM – 4AM OF ECONOMIC scheduled for January 2021 Revised ACTIVITIES Scaling back of public activities and political rallies Curfew Hours Revised operating hours for bars and restaurants Moderate Reinforcement of no mask no service mantra restrictions re-imposed to RWANDA contain the Prohibition of public transport into and out of lifted. 10PM – 5AM spread of the Resumption of the normal Bank opening hours of 8AM to 5PM. Revised coronavirus Curfew Hours across the region. UGANDA Partial re-opening of schools and places of worship. Bars, 9PM – 6AM remain closed. Resumption of international flights. Nationwide Curfew 7 KCB Group Plc Q3 2020 Results Sustainability Update

• KCB Bank Kenya received an approval for SUSTAINABILITY $150M from IFC to support its sustainable climate finance portfolio and scale up FOCUS green and SME lending.

Ongoing • KCB Foundation distributed Covid-19 alignment with Containment interventions worth KShs. 6.5M to impacted individuals. the Principles of Responsible • A call to Global Multilateralism through the Banking UN Global Compact Commitment Charter saw KCB join other 1,294 Global CEOs and 29 Kenyan firms by signing a multilateral deal for equal and sustainable global economic growth. • Despite Covid-19 Restrictions over 67 financed projects – Corporate and SMEs worth KShs. 72.3 Billion were screened for Social and Environment issues through ESDD templates. 8 KCB Group Plc Q3 2020 Results Ranking and Rating

THE ASIAN BANKER MIDDLE EAST AND AFRICA GLOBAL FINANCE AWARDS 2020 REGIONAL AWARDS 2020 KCB Group Plc ❖ Best Bank in Kenya. ❖ The Best Digital Bank in Kenya ranked 667th ❖ Best Investment Bank for Sustainable Finance in Kenya by BRAND AFRICA 100: AFRICA’S BEST BRANDS AWARDS The Banker’s GLOBAL FINANCE, 29TH ANNUAL ❖ 10th most liquid bank in Africa WORLD’S SAFEST BANKS RANKINGS top 1000 world ❖ Safest Bank in Kenya bank rankings ASSOCIATION FOR TALENT DEVELOPMENT ❖ Second Best Employee Talent Developer in the World

RATING AGENCY KCB BANK KENYA CREDIT Credit rating at par with the Sovereign rating RATING B2 (Negative)

9 KCB Group Plc Q3 2020 Results Overview Group

Macro Economic Economic Macro

Highlights Highlights

Performance

Channel Channel

Performance Financial Financial 10 KCB Group Plc Q3 2020 Results Macro Economic Highlights

Kenya GDP Kenya Q2 2020 GDP Performance(%) Performance 41.3

Kenya’s GDP 7.1 6.6 6.7 7.4 5.7 5.5 contracted by 5.7% 3.1 1.1 1.6 0.5 in 2Q 2020 due to 6.4 2.2 4.2 3.9 4.3 10.3 10.0 economic disruptions AGRICULTURE MANUFACT REAL TRADE EDUCATION TRANSPORT & FINANCIAL& CONSTRUCTION ICT HEALTH MINING& URING occasioned by the ESTATE STORAGE INSURANCE QUARRYING pandemic. -3.9 -6.9 -56.2 -11.6 GDP Contribution GDP Growth/Decline

Select Kenya Quarterly GDP Performance(%) Kenya GDP Growth(%) 5.6 6.1 6.0 5.3 4.4 4.9 5.4 Q2 2020 1.0 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q1 2020

2019 2020 Projected -5.7 Source: KNBS & IMF 11 KCB Group Plc Q3 2020 Results Macro Economic Highlights

Regional GDP Performance Sub-Saharan Africa GDP Growth Rates (%) economy projected to contract by 3.0% 11.3 in 2020 due to 10.1 9.0 economic disruptions 6.3 occasioned by the 4.9 4.1 coronavirus 1.9 1.8 2.0 1.9 pandemic. Uganda Tanzania Burundi Rwanda South Sudan Ethiopia -0.3

SSA GDP Growth(%) -3.2 3.1

2020 2019 Growth Projected 2020 Projected 2019

-3.0 Source: IMF World Economic Outlook (October 2020) 12 KCB Group Plc Q3 2020 Results Macro Economic Highlights

Inflation Evolution (%) 7.5 6.37 Kenya Inflation 5.82 6.06 5.56 5.78 5.62 5.47 4.95 and Interest 4.59 4.36 4.36 4.20 Rates Evolution 3.83

2.5 Inflation remained 2.65 2.65 2.7 2.43 2.52 2.5 2.2 stable in the third 1.8 1.8 1.6 1.6 1.9 1.7 quarter supported by lower food prices, the Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Inflation NFNF Upper Limit Lower Limit impact of the reduction of VAT and muted demand Interest Rates Evolution (%) pressures. 12.47 12.43 12.38 12.24 12.29 12.19 12.19 11.76 11.87 11.76 11.94 11.92 11.91

9.00 8.50 8.25 7.25 7.00 7.00 7.00

7.29 7.31 7.29 6.56 6.60 6.65 7.17 7.28 7.22 7.09 6.21 6.19 6.29

Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

Source: CBK & KNBS 91 Day T-Bill Avg Lending Rates CBR Rate 13 KCB Group Plc Q3 2020 Results Macro Economic Highlights Kenya Shilling/USD Monthly Exchange Rate Evolution 108.4 Local Currencies 107.3 to USD 106.7 Exchange Rates 103.8 103.7 102.4 101.1 Continued pressure on most currencies as a result of the effects of the SEP-19 OCT-19 NOV-19 DEC-19 JAN-20 FEB-20 MAR-20 APR-20 MAY-20 JUN-20 JUL-20 AUG-20 SEP-20 pandemic. Regional Currencies to USD Exchange Rates

3,684 3,712 2,315 Sep 19 2,289 1,915 1,863 1,138 Sep 20 910 164 160 37 28

Uganda Tanzania Burundi Rwanda South Sudan Ethiopia Source: Regional Central Banks 14 KCB Group Plc Q3 2020 Results Macro Economic Highlights

Kenya Current Account Balance (% of GDP) Kenya Macros Highlights

-5.0 -5.1 6.5% -5.8 -5.8 -5.8 Cumulative yoy growth in -6.9 Diaspora Remittances to -7.2 US $2.97B 2015 2016 2017 2015 2019 12 moths to 2020 Sep 2020 Projected

Kenya 12 Month Private Sector Growth CBK Foreign Exchange 9.0% reserves stood at 7.7% 7.6% 8.3% 6.6% 7.1% US $8,605M, representing 5.22 months of import cover.

SEP-19 OCT -19 NOV-19 DEC-19 JAN-20 FEB-20 MAR-20 APR-20 MAY-20 JUN-20 JUL-20 AUG-20

Source: of Kenya 15

KCB Group Plc Q3 2020 Results Overview Group Group

Channel Economic Macro

Performance Highlights

Performance

Channel

Performance Financial Financial 16 KCB Group Plc Q3 2020 Results Channel Performance

OUR CHANNEL Proportion of transactions per customer touch point CONTRIBUTION Q3 2019

AGENCY, BRANCH MOBILE INTERNET ATMS TELLER AND POS 98% 75% 5% 5% of transactions 15% performed outsidethe Q3 2020 branch.

AGENCY, BRANCH MOBILE ATMS INTERNET TELLER 77% AND POS 4% 13% 17% 2% decline in non- branch revenue 16% decrease in average transactions / teller per day 43% decrease in Number of branch transactions. Q3 2019 by KShs. 1.1B Q3 2019 60.0 10.2 due to waiver of Q3 2020 Q3 2020 5.8 mobile banking 50.5 fees. Avg. Transactions / Teller per day Number of Branch Transactions (M) 17 KCB Group Plc Q3 2020 Results Channel Performance

MOBILE Value of Mobile Transactions (KShs.B) No. of Mobile Transactions (M) Mobile Revenue (KShs.M) BANKING 182 683 6,949 6,025 149 26% 454 272 Decline in 41 2,051 total mobile loans advanced driven by a 49% decline in KCB Mpesa Q3 18 Q3 19 Q3 20 Q3 18 Q3 19 Q3 20 Q3 18 Q3 19 Q3 20 disbursements Total Mobile Loans Advanced (KShs. B) KCB Mpesa(KShs. B) Fuliza (KShs. B) MobiLoan (KShs. B) 159.4 117.7 97.9 53.3 49.7 47.8 13.7 14.7

Q3 19 Q3 20 Q3 19 Q3 20 Q3 19 Q3 20 Q3 19 Q3 20 18 KCB Group Plc Q3 2020 Results Channel Performance

MobiTransaction Type (%) MOBILE BANKING Q3 2019 48.0 44.4 Q3 2020

33.8 33.6 21.2 91% 16.5 Q/Q growth in 2.0 values of C2B 0.6 transactions driven B2C B2B C2B Lipa Karo by the push to digital transactions Month on Month Evolution of C2B Transactions 2 1.84 60 and fee waivers 1.74 1.8 1.58 50 during the Covid-19 1.6

1.4 1.27 Period. 40 1.2 1.06

1 30 0.75 52 54 0.8 0.57 47 0.51 0.50 20 0.6 35 0.4 28 17 10 0.2 6 5 8 0 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Value (KShs. B) Number (M) 19 KCB Group Plc Q3 2020 Results Channel Performance

Month on Month Evolution of B2C Transactions MOBILE 4.5 3.96 35 4 3.58 BANKING 3.35 30 3.5 3.15 25 3 2.67 2.39 2.51 2.5 20

2 KShs.0.5T 1.38 30 15 1.5 1.24 24 26 20 22 20 10 1 18 13 18 5 …amount facilitated 0.5 by KCB via mobile 0 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 during the Covid-19 Value (KShs. B) Number (M) period. Month on Month Evolution of B2B Transactions

60 25 52 53 48 50 50 47 46 46 44 20 40 40 15

30

21 10 19 20 14 11 12 12 12 5 10 10 10

0 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Value (KShs. B) Number ('000) 20 KCB Group Plc Q3 2020 Results Channel Performance

Value of Transactions (KShs.B) No. of Transactions (M) Agency Revenue (KShs.M) AGENCY BANKING 308 33.7 33.9 653 42% 217 631 153 20.9 405 Growth in agency banking volumes to Kshs. 308 billion Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 Q3 20 due to continued Q3 20 Q3 20 shift to digital Agency Transaction Type (%) channels. Q3 2019

38.6 Q3 2020 37.2 29.4 33.2 15.4 *Others: Account 14.8 16.8 opening, mini 11.5 statement, load 1.8 1.3 cards and Funds 0.1 0.1 transfer

Cash Cash School Fees Balance Bill Payment Others* Deposit Withdrawal Inquiry 21 KCB Group Plc Q3 2020 Results Channel Performance

ATMs Value of Transactions (KShs.B) No. of Transactions (M) ATM Revenue (KShs.M) 6% Increase in ATM volumes 161 11.5 to KShs. 161B 152 361 10.4 359 117 8.7 274

Q3 18 Q3 19 Q3 20 Q3 18 Q3 19 Q3 20 Q3 18 Q3 19 Q3 20 22 KCB Group Plc Q3 2020 Results Channel Performance

MERCHANT / POS

Value of Transactions (KShs.B) POS Revenue (KShs. M) 14% Decrease in volume of POS 702 transactions to 37 611 KShs. 28B 33 459 28

Q3 18 Q3 19 Q3 20 Q3 18 Q3 19 Q3 20 23

KCB Group Plc Q3 2020 Results Overview Group Group

Financial Economic Macro

Performance Highlights

Performance

Channel Channel

Performance Financial 24 KCB Group Plc Q3 2020 Results Balance Sheet Highlights

Government Securities KShs 236.2B 27% Growth KShs 128.5B in Total Assets Net Loans & Advances KShs 577.5B 84% growth in KShs 486.4B Gov. securities and 19% growth in Customer Deposits loans funded KShs 772.7B by KShs 586.7B 32% growth in deposits Total Assets KShs 972.0B KShs 764.3B

Q3 19 Q3 20 25 KCB Group Plc Q3 2020 Results Sectoral Distribution of Restructured Loans

5000 35 4,616 22% 4500 30

4000 30.1

KShs 25 3500 9% 105B

3000 69% 20

2500

15 2000 15.9 Corporate Retail Mortgage 14.5 13.6 1500 10 10.3 9.3 1000 987 8,478 Loan 913 5.9 545 5 accounts with a 500 506 142 3.7 total value of 291 182 296 1.7 0 0 KShs. 105.0B REAL ESTATE TOURISM, MANUFACTURING PERSONAL BUILDING & TRADE TRANSPORT & FINANCIAL OTHERS RESTAURANT & CONSTRUCTION COMMUNICATION SERVICES restructured as HOTELS at Q3 2020.

Value (KShs. B) Count 26 KCB Group Plc Q3 2020 Results KCB Covid-19 Response

Contributed over Waiver of charges for KShs.150M towards Customer Restructured 8,478 loan transfers between mobile emergency interventions interventions accounts valued at money wallets and bank to cushion vulnerable KShs 105 billion accounts citizens affected by the Our focus has COVID-19 been safeguarding the wellbeing and Support provided to SME customers: safety of all our stakeholders. • repayment holidays and moratoriums to over 3,500 customers • restructured SME loans valued at KShs 6 billion • offered a wide range of business development skills to entrepreneurs through webinars

Support provided to Learning institutions: • Support to public and private schools through assistance with PPEs • Provided financing for water tanks, hand washing points, gloves, masks, fumigation services, desks, chairs and all sanitization needs, needed for back to school activities. 27 KCB Group Plc Q3 2020 Results KCB Covid-19 Response

• Facilitation of staff to work from home through support towards set up of Staff home offices, provision of internet connectivity and a closed user group for Interventions voice calls. Our focus has • Deployment of teams to work in shifts at the branches and the provision of been safeguarding the wellbeing and reusable face masks, hand sanitizers and infrared thermometers in all safety of all our stakeholders. workplaces. • Health talks and trainings to create awareness and break the stigma about the pandemic. • Availed additional access, through our Health Care Partners, to specialized treatment, ambulance services and counsellors to offer psychological support. 28 KCB Group Plc Q3 2020 Results Loan Book distribution

Stable Loan KCB Sep 2019 KCB Sep 2020 Book distribution 0.1% 0.1% Mining and Quarrying over the period. 4.9% 1.7% 2.8% 1.7% Energy and water 3.6% 2.7% Agriculture 4.3% 4.4% Tourism, restaurants and hotels 4.6% 4.6% Transport and communication 6.8% 6.7% Trade 6.9% 6.8% Building and construction 12.1% 14.1% Manufacturing 17.9% 18.5% Real estate Personal/Household 25% 37.0% 38.6% Growth in Gross Group Gross Loans (KShs. B) Loans split 46 24 639 511 58 between 12% 19% organic and 13% LCY inorganic. FCY

81%

Sep-19 Retail Corporate Mortgage Sep-20 29 KCB Group Plc Q3 2020 Results Asset quality review

Increase in NPL driven 120,000 85.6 90.0 96,991 80.0 by the consolidation 100,000 68.6 66.1 58.9 70.0 63.5 with NBK and the 80,000 62.4 60.0 56.0 50.0 Corporate banking 60,000 customers 41.5 42,583 40.0 40,000 34,731 34,780 30.0 15.2 20.0 20,000 8.0 7.5 8.3 4.8 10.0 0 1.0 0.6 1.7 - 3Q17 3Q18 3Q19 3Q20 Gross NPL (KShs M) CoR (%) CBK Coverage Ratio (%) IFRS Coverage Ratio (%) NPL Ratio (%) NPL Breakdown

16.9% 14.7% 13.5% 10.4% 9.4% 8.7%

2.8% 2.9%

CHECK OFF MORTGAGE CORPORATE SME & MICRO LCY FCY 3Q19 FY19 HY20 3Q20 30 KCB Group Plc Q3 2020 Results Deposit mix

Strong 3% 3% 1% funding mix drives down cost of funds 46% 47% 46%

51% 50% 53%

3Q18 3Q19 3Q20 Corporate Retail Others

Currency Mix Deposits by type Q3 19 Deposits by type Q3 20 8% 6%

16% 21% 26%

5% 61% 68% 84% 5%

LCY FCY Demand Savings Term Call 31 KCB Group Plc Q3 2020 Results Strong Capital Buffers All capital ratios Core Capital to RWA (%) Total Capital to RWA (%) Group Group adequately 18.1 17.8 above the 16.3 19.5 19.6 internal and 17.8 regulatory limits 10.5 10.5 10.5 14.5 14.5 14.5

3Q18 3Q19 3Q20 3Q18 3Q19 3Q20 Kenya Kenya 17.8 17.3 15.0 16.5 16.0 16.5

14.5 14.5 14.5 10.5 10.5 10.5

3Q18 3Q19 3Q20 3Q18 3Q19 3Q20 Min. Core / RWA Core Capital / RWA Min. Total / RWA Total Capital / RWA 32 KCB Group Plc Q3 2020 Results Group P&L highlights

37% decline in Net Interest Income PBT KShs 47.9B KShs 38.7B 43% decline in PAT, driven by 243% Total Non Interest Income increase in KShs 21.3B provision KShs 20.9B

Operating Expenses KShs (32.0B) KShs (26.6B)

Profit Before Tax KShs 17.1B KShs 27.2B

Q3 19 Q3 20 33 KCB Group Plc Q3 2020 Results Banking Subsidiaries P&L highlights

KShs Million KShs 2.5 billion 722 contribution in 679 PBT from the 624 banking 537 483 subsidiaries 442 404 385 358

243 264

-90

NBK KCB South Sudan KCB Rwanda KCB Tanzania KCB Burundi KCB Uganda 3Q19 3Q20 34 KCB Group Plc Q3 2020 Results Statement of Financial Position KCB Group KCB Bank Kenya Actual Actual Y-O-Y Actual Actual Y-O-Y Resilient KShs Billion Q3 19 Q3 20 Change Q3 19 Q3 20 Change Balance Sheet performance Cash and balances with central bank 54.3 48.6 (11%) 49.6 38.2 (23%) Balances with other institutions 42.5 36.6 (14%) 19.8 8.5 (57%) 27% growth in Investments in Government & Other 128.5 236.2 84% 114.5 166.1 45% Total assets securities driven by Net loans and advances 486.4 577.5 19% 442.0 475.7 8% business growth Fixed assets 17.0 26.7 57% 12.2 14.7 20% and consolidation Other assets with NBK 35.5 46.4 31% 29.5 36.2 23% Total Assets 764.3 972.0 27% 667.6 739.4 11%

Customer deposits 586.7 772.7 32% 522.1 595.9 14% Balances due to other banks 13.5 24.9 84% 5.1 6.2 22% Other liabilities 20.8 18.2 (13%) 17.7 15.3 (14%) Long-term debt 22.1 20.4 (8%) 18.9 17.9 (5%) Total Liabilities 643.1 836.1 30% 563.9 635.2 13% Shareholders’ equity 121.2 135.9 12% 103.8 104.1 0% Total liabilities and equity 764.3 972.0 27% 667.7 739.4 11% 35 KCB Group Plc Q3 2020 Results Statement of Profit or Loss KCB Group KCB Bank Kenya

43% decline in Actual Actual Y-O-Y Actual Actual Y-O-Y KShs Billion earnings Q3 19 Q3 20 Change Q3 19 Q3 20 Change

Interest income 51.4 63.3 23% 45.8 49.9 9% 13% growth in Interest expense (12.8) (15.4) 21% (10.8) (11.4) 5% pre-provision Net interest income 38.7 47.9 24% 34.9 38.5 10% profit. Foreign exchange income 3.5 3.3 (4%) 2.2 2.2 (3%) Net fees and commissions 14.1 14.3 1% 12.3 11.3 (8%) Other income 3.4 3.6 8% 2.9 3.0 5% Total other operating income 21.0 21.3 1% 17.4 16.5 (5%) Total other operating expenses (26.6) (32.0) 20% (21.9) (21.2) (3%) Provisions for bad debts (5.8) (20.0) 243% (5.4) (18.7) 247% Profit before tax 27.2 17.1 (37%) 25.1 15.1 (40%) Tax (8.0) (6.3) (22%) (7.1) (5.3) (26%) Profit after tax 19.2 10.9 (43%) 17.9 9.9 (45%) 36 KCB Group Plc Q3 2020 Results Overview of Key Financial Ratios

GROUP Q3 20 Q3 19 FY 19 HY 20 KENYA GROUP 21.8% 20.7% 11.6% Return on Average Equity 13.4% 10.9%

44.7% 45.9% 47.0% Cost to Income 38.5% 46.3%

8.3% 10.9% 13.7% Gross NPL to Gross Loans 12.2% 15.2%

56.0% 72.1% 61.7% NPL Coverage 67.3% 68.6%

18.3% 16.6% 16.2% Debt to Equity 17.2% 15.0%

35.2% 33.4% 31.0% Non funded income to total income 30.0% 30.8%

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

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

1.7% 1.8% 4.0% Cost of risk 5.0% 4.8%

87.0% 84.6% 80.7% Loan to Deposit Ratio 88.0% 82.7%

11.7% 17.4% 17.0% Growth of Net Loans and Advances 7.6% 18.7%

11.4% 27.7% 34.6% Growth of Customer Deposits 14.1% 31.7% 37 KCB Group Plc Q3 2020 Results

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