ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015

KENYA DEPOSIT INSURANCE CORPORATION

protecting your deposits

VISION To be a best-practice deposit insurance scheme

MISSION :e promote and contribute to pubOic conÀdence in the stabiOit\ oI the nation·s ÀnanciaO s\stem b\ proYidinJ a sound saIet\ net Ior depositors oI member institutions.

STRATEGIC OBJECTIVES

ʌ 3romote an eIIectiYe and eIÀcient deposit insurance scheme ʌ (nhance operationaO eIÀcienc\ ʌ Promote best practice

STRATEGIC PILLARS ʌ 6tronJ superYision and reJuOation ʌ PubOic conÀdence ʌ Prompt problem resolutions ʌ Public awareness ʌ (IIectiYe coordination

OUR CORPORATE VALUES ʌ ,nteJrit\ ʌ ProIessionalism ʌ Team work ʌ Transparenc\ and accountabilit\ ʌ 5ule oI /aw

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 iii protecting your deposits

CORPORATE INFORMATION

.en\a 'eposit ,nsurance &orporation &%. Pension +ouse +arambee $Yenue P. 2. %o[  -  1airobi .en\a

Tel  -  -   

(mail kdiccommunications#depositinsurance.Jo.ke

:ebsite www.depositinsurance.Jo.ke

BANKERS

&entral %ank oI .en\a 1airobi +aile 6elassie $Yenue P. 2. %o[  -  Nairobi

AUDITORS

.P0* .en\a th )loor /onrho +ouse Standard Street P. 2. %o[  -  Nairobi GPO

On behalI oI The $uditor-General .en\a National $udit OIÀce $nniYersar\ Towers 8niYersit\ :a\ P. O. %o[ - Nairobi GPO

iv Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 TABLE OF CONTENTS

Statement from the Chairman of Board ...... 6 Taarifa ya Mwenyekiti wa Bodi ...... 8 Board of Directors...... 10 Senior Management ...... 11 0HVVDJHIURPWKH$FWLQJ&KLHI([HFXWLYH2IÀFHU Ujumbe kutoka kwa Mkurugenzi Mkuu ...... 14 THE YEAR UNDER REVIEW Performance of the Economy ...... 16 BANKING SECTOR PERFORMANCE AND DEVELOPMENTS DURING THE YEAR ENDED 30TH JUNE 2015 Overview, Structure of the Balance Sheet, Loans and Advances, Deposit Liabilities ...... 18  &DSLWDODQG5HVHUYHV$VVHW4XDOLW\3URÀWDELOLW\/LTXLGLW\ FINANCIAL INCLUSION INITIATIVES  &UHGLW,QIRUPDWLRQ6KDULQJ0HFKDQLVP$JHQF\%DQNLQJ0LFURÀQDQFH%DQNV  5HSUHVHQWDWLYH2IÀFHV0RQH\5HPLWWDQFH3URYLGHUV.HQ\D%DQNV5HIHUHQFH5DWH .%55  CORPORATE GOVERNANCE Mandate and Responsibilities, Organization Structure ...... 22 Corporate Governance Approach, Human Resources ...... 23 Strategic Planning ...... 24 Corporate Social Responsibilty ...... 26 DEPOSIT INSURANCE ACTIVITIES  ,QWURGXFWLRQ'HSRVLW,QVXUDQFH&RYHUDJH Member Institutions Contributions ...... 31 Relationship with IADI and ARC ...... 32 LIQUIDATION ACTIVITIES Payment of Protected Deposits ...... 33 Debt Recovery ...... 34 Declaration of Dividends ...... 35 TRANSFORMATION FROM DPFB TO KDIC Historical Background, Transition to Kenya Deposit Insurance Corporation ...... 36 Membership ...... 37 Sources of Income ...... 38  6WDNHKROGHU5HIRUPV FINANCIAL STATEMENTS Directors and Statutory Information, Directors, Board Audit Committee ...... 41 Senior Management, Principal Place of Business, Auditors, Bankers ...... 42 REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2015 Change of Name, Incorporation, Principal Activities, Results, Directors ...... 43 Auditors, Approval of Financial Statements ...... 44 STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE YEAR ENDED 30 JUNE 2014 Approval of the Financial Statements ...... 46 Statement of Corporate Governance, Board of Directors, Board Meetings, Audit Committee ...... 47 Management Structure, Director’s Emoluments and Loans, Code of Ethics, Internal Controls, Authorizations ...... 48  ,QWHUQDO$XGLWDQG5LVN0DQDJHPHQW7UDQVSDUHQF\ REPORT OF THE INDEPENDENT AUDITORS Directors’ Responsibilities for the Financial Statements, Authorised Auditor’s Responsibility, Auditor-General’s Responsibility, Basis of Opinion ...... 50 Opinion ...... 51 6WDWHPHQWRI3URÀWRU/RVVDQGRWKHU&RPSUHKHQVLYH,QFRPHIRUWKH

CHAIRMAN’S FOREWORD

STATEMENT FROM THE ACTING CHAIRMAN OF BOARD ,t is with Jreat honour that , present the Àrst $nnual 5eport oI the .en\a 'eposit ,nsurance &orporation .',& Ior the Ànancial \ear endinJ -une  on behalI oI the %oard oI 'irectors 0anaJement and StaII oI the &orporation. The period under reYiew reJistered satisIactor\ perIormance as the &orporation·s )und closed the \ear at .Shm haYinJ Jrown b\ . Irom .Shm in the preYious \ear. This Jrowth was boosted b\ a net surplus oI .Shs m reJistered durinJ the \ear. The Jrowth oI the bankinJ sector Irom which the &orporation deriYes its reYenue and prudent manaJement oI the &orporation·s )und contributed to this IaYourable perIormance. Net surplus earned b\ the &orporation durinJ the period under reYiew rose b\  Irom a leYel oI .Sh m in  to .Sh m in .This Jrowth in net surplus stemmed Irom a siJniÀcant increase in the &orporation·s reYenue that rose b\ . to .Sh m in  Irom the leYel oI .Sh m reJistered in  that was mostl\ inYested in GoYernment Securities which is the &orporations· maMor source oI inYestment income. The &orporation·s operatinJ e[penses increased b\ .Sh m Irom .Sh m to .Sh m in  an increase oI  owinJ to transitional actiYities includinJ a maMor upJrade oI the &orporation·s ,&T s\stems. Total assets oI the &orporation rose b\ . percent to .Sh m in  Irom the leYel oI .Sh m in . This Jrowth arose mainl\ Irom the &orporation·s re-inYestments in GoYernment Securities and Premium contributions b\ member institutions which Jrew b\ . and . to stand at .Sh m and .Sh m respectiYel\. The bankinJ sector·s asset Tualit\ earninJs and liTuidit\ were all rated stronJ with e[ception oI capital adeTuac\ that was rated satisIactor\ in the \ear endinJ -une . OYerall bankinJ sector balance sheet Jrew b\  Irom .Sh . trillion in -une  to .Sh . trillion in -une  while the oYerall annual pre-ta[ proÀt Jrew b\  Irom .Sh  billion to .Sh . billion. $s at th -une  total deposits with member institutions amounted to .Sh . trillion an increase oI . while total protected deposits amounted to .Shs . billion. The number oI deposit accounts in the sector was  while the number oI Iull\ protected accounts was  representinJ . oI the total number oI accounts in the sector. The Jrowth oI deposits in the bankinJ sector increased the premiums leYied b\ the )und. The 0onetar\ Polic\ &ommittee raised the &entral %ank 5ate &%5 to . percent on th -une  in order to continue anchorinJ inÁationar\ e[pectations and maintain price stabilit\. OYerall -month inÁation increased Irom . in 0arch  to . in -une  on account oI increases in the prices oI Iood and non-Iood Iuel items in the basket

6 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits oI core inÁation. +oweYer the inÁation remained within the corridor set b\ the National Treasur\ “ basis points in relation to the  percent medium term tarJet . ,nterest rates had mi[ed outcomes in the \ear under reYiew with -da\ Treasur\ %ill rate declininJ to . and -da\ Treasur\ %ill rate increasinJ marJinall\ to .. The aJenc\ bankinJ model rolled out b\ the &entral %ank oI .en\a in 0a\  reJistered an increment in the number oI participatinJ banks b\  Irom  to  banks durinJ the \ear. The number oI aJents contracted durinJ the \ear increased b\  Irom  to  in -une  transactinJ  million bankinJ transactions up Irom  million in the preYious \ear. This were Yalued at .Sh  billion in -une  Irom .Sh  billion in -une . Similar Jrowth trends were obserYed in the micro-Ànance market and in the mobile bankinJ. The credit inIormation sharinJ mechanism has continued to e[pand since its launch in -ul\ .The cumulatiYe number oI credit reports reTuested b\ institutions stood at  in -une  up Irom  reports in 0arch . GoinJ Iorward the &orporation will remain Iocused on strateJies that will enable it to achieYe its core mandate. The &orporation·s priorit\ areas will include strenJtheninJ the insurance Iund tarJet Yalue enhancinJ the scope oI coYeraJe pursuinJ an appropriate insurance premium structure complete the implementation oI the ,&T inIrastructure enhance cooperation with the other saIet\ net pla\ers and endeaYour to aim hiJher b\ aliJninJ the &orporation·s operations to the international best practice. To this end .',& will continue to closel\ work with the ,nternational $ssociation oI 'eposit ,nsurers ,$', b\ participatinJ in all their \earl\ actiYities. .',& will also continue to improYe on the competenc\ oI its human resource throuJh eIIectiYe traininJ and coachinJ. , wish to e[press m\ sincere and deep Jratitude to m\ Iellow members oI the %oard oI 'irectors who haYe JiYen me Jreat support durinJ the \ear. , must recoJni]e the Jreat eIIort oI the $J. &hieI ([ecutiYe OIÀcer in leadinJ his 0anaJement team and entire .',& staII whose eIIorts contributed to the Jrowth oI the &orporation·s )und and the success recorded in the \ear under reYiew. , also wish to thank &entral %ank oI .en\a the GoYernment and other stakeholders Ior their support and contributions without which little could haYe been accomplished.

Dr. Julius K. Kipng’etich Ag. Chairman KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board (DPFB))

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 7 protecting your deposits

UTANGULIZI WA KAIMU MWENYEKITI

TAARIFA YA KAIMU MWENYEKITI WA BODI

.wa niaba \a %odi \a :akuruJen]i 8simami]i pamoMa na waIan\aka]i wa Shirika la %ima \a $rbuni nchini .en\a .',&  nina Iuraha kuu kuwaleteeni 5ipoti \a kila mwaka \a Shirika la %ima \a $rbuni nchini .en\a. 5ipoti hii ni \a mwaka wa kiIedha uliokomea mwe]i -uni . .ipindi kinachokaJuliwa kiliandikisha matokeo \a kuridhisha huku +a]ina \a Shirika ikionJe]eka hadi ShilinJi milioni  imariko la asilimia . kutoka ShilinJi milioni  mwaka uliopita. ,mariko hili liliwe]eshwa na Ma]i la ShilinJi milioni  lililoandikishwa mwaka huo. 0atokeo ha\a ma]uri pia \alitokana na kuimarika kwa sekta \a %enki ina\oletea Shirika hili mapato pamoMa na usimami]i mwema wa +a]ina \a Shirika. -a]i la pato \a Shirika katika kipindi kinachokaJuliwa liliimarika kwa asilimia  kutoka ShilinJi milioni  mwaka wa  hadi ShilinJi milioni  mwaka wa . ,mariko la -a]i hili lilitokana na onJe]eko la asilimia . katika mapato \a Shirika kutoka ShilinJi milioni  mwaka wa  hadi ShilinJi milioni  mwaka wa . ,mariko la mapato \a Shirika lilitokana na kuweke]wa tena kwa mapato katika dhamana ]a kiserikali pamoMa na michanJo hitaMika \a wanachama ili\oimarika kwa asilimia . na . hadi ShilinJi milioni  na ShilinJi milioni  mtawalia. 8bora wa rasilimali mapato pamoMa na malimbiko \a sekta \a benki \alikuwa na udhabiti ]aidi isipokuwa rasilimali \a %enki amba\o ilikuwa na udhabiti wastani katika mwaka wa kiIedha uliokomea mwe]i -uni . -umla \a kadiri ]a kiIedha katika sekta \a benki iliimarika kwa asilimia  kutoka ShilinJi trilioni . mwe]i -uni  hadi. ShilinJi trilioni . mwe]i -uni  huku Iaida \a kila mwaka kabla \a kuto]wa ushuru pia ikiimarika kwa asilimia  kutoka ShilinJi bilioni  hadi ShilinJi bilioni .. .uÀkia tarehe  -uni  Mumla \a arbuni katika mashirika wanachama ilikuwa ShilinJi trilioni . na\o Mumla \a arbuni chini \a ulin]i ikiwa ShilinJi bilioni .. -umla \a akaunti ]a arbuni katika sekta hi\o ilikuwa  huku akaunti ]ina]olindwa kikamiliIu ]ikiwa  amba\o ni asilimia . \a akaunti ]ote katika sekta hi\o. ,mariko \a arbuni katika sekta \a benki ilisababisha onJe]eko la michanJo amba\o ha]ina inapokea kutoka kwa wanachama. .amati \a Sera ]a .iIedha ilionJe]a kiwanJo chake cha riba &%5 hadi asilimia . mnamo tarehe  -uni  ili kuendelea kudhibiti miIumuko \a kiIedha na hiY\o basi kuimarisha bei ]a bidhaa na huduma. .wa Mumla kiwanJo cha mIumuko wa kiIedha baada \a mie]i

8 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

 ulionJe]eka kutoka asilimia . mwe]i 0achi  hadi asilimia . mwe]i -uni . OnJe]eko hili lilitokana na onJe]eko katika bei \a chakula pamoMa na bidhaa husika katika kapu la uchumi. +ata hiY\o onJe]eko hili katika kiwanJo cha mIumuko wa bei ulisalia katika YiwanJo YiliY\owekwa na +a]ina .uu asilimia “. ikilinJanishwa na asilimia  ili\olenJwa katika kipindi cha .ati . 9iwanJo Y\a riba Yiliandikisha matokeo toIauti katika kipindi kinachokaJuliwa huku riba \a 'hamana ]a Serikali ]a siku  ikishuka hadi asilimia . na\o riba \a 'hamana ]a Serikali ]a siku  ikionJe]eka kidoJo hadi asilimia .. 0Iumo wa ubenki kupitia mawakala ulioan]ishwa na %enki .uu \a .en\a mwe]i 0ei  uliimarika huku idadi \a benki ]ina]oshiriki ikionJe]eka kwa asilimia  kutoka  hadi  mwaka huo. ,dadi \a mawakala mwaka huo iliimarika kwa asilimia  kutoka  hadi  mwe]i -uni . 0awakala hawa waliIan\a shuJuli milioni  ]a biashara ]a benki kutoka shuJuli milioni  mwaka uliopita. ShuJuli hi]i ]ilikuwa na thamana \a ShilinJi bilioni  mwe]i -uni  kutoka ShilinJi bilioni  mwe]i -uni . +ali hii \a kuimarika pia iliandikishwa katika sekta \a 0ashirika 0adoJo \a .iIedha pamoMa na +uduma ]a %enki kupitia Simu ]a 5ununu. Taratibu ]a uJaYi wa taariIa ]a mikopo pia ime]idi kuimarika tanJu kuan]ishwa kwake mwaka wa . ,dadi \a ripoti ]ili]oitishwa na taasisi toIauti ilikuwa  mwe]i -uni  kutoka ripoti  mwe]i 0achi . Shirika hili lita]idi kuweka mikakati itaka\oiwe]esha kutimi]a malenJo \ake kuu. ShuJuli muhimu ]aidi ]a Shirika ]itakuwa .ustawisha thamana-lenJwa \a ha]ina \a bima kuonJe]a upeo wa Shirika kushuJulikia mIumo bora wa malipo \a bima kukamilisha utekele]aMi wa miundombinu \a 0awasiliano na TeknoloMia ,&T  imarisha ushirikiano na wadau wenJine kuboresha utendaka]i wa Shirika kwa kuambatanisha YiwanJo Y\a shuJuli ]ake sawa na YiwanJo Y\a kimataiIa. Shirika la %ima \a $rbuni nchini .en\a .',& ita]idi kuIan\a ka]i kwa pamoMa na Shirikisho la .imataiIa la :alin]i wa $rbuni ,$', na pia kushiriki katika shuJuli ]ao ]ote ]a kila mwaka. .',& pia itaendelea kuimarisha uMu]i wa waIan\aka]i wake kuwawe]esha wapate maIun]o bora. NinJependa kutoa shukrani ]anJu kwa wen]anJu wote katika %odi \a :akuruJen]i ambao wamekuwa nJu]o kuu kwanJu mwaka huu. NinJependa pia kutambua Muhudi ]a .aimu 0kuruJen]i 0tendaMi kwa kuonJo]a kikosi chake cha wasimami]i pamoMa na waIan\aka]i wote wa .',& ambao Muhudi ]ao ]imechanJia ustawi na kuimarika kwa +a]ina \a Shirika na maIanikio \ali\oandikishwa katika mwaka unaochunJu]wa. NinJependa pia kuishukuru %enki .uu \a .en\a Serikali \a .en\a pamoMa na wadau wote kwa kutuunJa mkono na pia kutoa mchanJo wao ulioIanikisha ha\a \ote.

Dkt. Julius K. Kipng’etich KAIMU MWENYEKITI SHIRIKA LA BIMA YA ARBUNI NCHINI KENYA

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 9 protecting your deposits

BOARD OF DIRECTORS

FROM LEFT TO RIGHT

STANDING -erem\ NJun]e $JJre\ -onathan .. %ett -ane .. ,kun\ua 0artin S. O. Gumo 0r. Samuel NMuJuna .imani and Nasim 'eYMi 0rs .

SEATED ProI. Githu 0uiJai 'r. -ulius .. .ipnJ·etich $J. &hairman and 'r. Patrick NMoroJe.

BOARD AUDIT COMMITTEE 0rs. Nasim 'eYMi &hairperson  'r. -ulius .. .ipnJ·etich -erem\ NJun]e 0r. Samuel NMuJuna .imani and 0artin S. O. Gumo.

10 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

SENIOR MANAGEMENT

STANDING FROM LEFT TO RIGHT 0ohamud $. 0ohamud $ssistant 'irector ² /iTuidations  Stephen 0. Thuo $ssistant 'irector ² )inance $dministration  :alter On\ino $ssistant 'irector ² ,&T .

SEATED FROM LEFT TO RIGHT 0rs. (dith 0. .aJasi 0anaJer ,nternal $udit  $JJre\ -onathan .. %ett $J &(O .',&  -ane .. ,kun\ua %oard Secretar\ .

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 11 protecting your deposits

MESSAGE FROM THE ACTING CHIEF EXECUTIVE OFFICER

,t is m\ humble dut\ to present the Àrst .en\a 'eposit ,nsurance &orporation .',& $nnual 5eport and )inancial Statements Ior the Ànancial \ear ended -une   IollowinJ commencement oI the .en\a 'eposit ,nsurance $ct  .', $ct  on -ul\   that ushered .',& as an independent entit\. The \ear  was a Jood period with accomplishment that marked siJniÀcant proJress Ior .',&. The .',& recorded impressiYe results with its surplus Iunds increasinJ b\  to stand at .shs . billion up Irom .shs. billion in . Total assets Jrew Irom .shs. billion in  to .shs. billion in  an increase oI .. The stronJ operatinJ perIormance and hence the Jrowth oI the )und is attributed to prudent manaJement oI the )und b\ .',& and a stable and Yibrant Ànancial sector. 'urinJ the \ear  the leYel and scope oI coYeraJe and total deposit accounts coYered continued to leYeraJe on the national initiatiYes that promote Ànancial inclusion this resulted in an increase oI retail depositors Irom the preYiousl\ unbanked seJment to the Iormal Ànancial s\stem. OwinJ to the Ànancial inclusion initiatiYes the bankinJ sector continued on an upward Jrowth traMector\ supported b\ rapid technoloJical innoYations that interIaced with telecommunication platIorms. .',& on its part continued to eIIectiYel\ pla\ its role oI deposit insurance to protect particularl\ the small Yulnerable and less Ànanciall\ sophisticated depositors aJainst losses in case oI Iailure oI banks and other deposit-takinJ institutions thereb\ creatinJ public conÀdence in the Ànancial sector. 'urinJ the period under reYiew the deposit coYeraJe leYel remained at .shs per depositor and the number oI deposit accounts Iull\ coYered b\ this leYel increased b\ . Irom .m in the preYious period to .m as at the end oI the period. The number oI deposit accounts in the sector was .m while the number oI Iull\ protected accounts was . meaninJ that . oI all depositors numberinJ .m in total are Iull\. The Iull\ coYered depositors carr\ onl\  oI the total Yalue oI deposits. .en\an %ankinJ Sector·s perIormance improYed with the si]e oI total assets standinJ at .shs . trillion with Jross loans worth .shs . trillion while the deposit base was .shs . trillion and proÀt beIore ta[ oI .shs . billion as at th -une . 'urinJ the \ear under reYiew also .',& continued to reap the beneÀts oI its association with &redit 5eIerence %ureau &5% partners which in eIIect has contributed larJel\ to improYed debt collection. 5eIorms in the -udiciar\ and other GoYernment %odies had also started to bear Iruits especiall\ in the area oI /iTuidation. ,t is our sincere hope that these eIIorts will ultimatel\ translate to Yalue-addition to depositors and creditors oI Iailed institutions.

12 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

'urinJ the period under reYiew .',& continued with its eIIorts to manaJe and liTuidate assets oI ,nstitutions in /iTuidation with emphasis on strateJies aimed at hasteninJ and Iast-trackinJ the process. Since inception to the \ear to -une   .',& has receiYed  institutions Ior liTuidation and has completel\ wound up  oI these. $s at th -une  the cummulatiYe diYidends declared b\ all the institutions in liTuidation amounted to .shs . million compared to .shs . million declared in the preYious \ear resultinJ in an increase oI .shs  million in diYidend declaration Ior the \ear under reYiew. 5eimbursements to 'epositors and &reditors will continue in the ensuinJ period with the obMectiYe oI Iast-trackinJ the liTuidation process and brinJinJ the onJoinJ liTuidations to a close within the ne[t two or so \ears. One institution +eritaJe %ank /imited was wound up durinJ the \ear under reYiew and it is e[pected that two more institutions will be wound up within the ne[t two \ears. :ith the commencement oI .', $ct on -ul\   .',& started the transition Irom 'eposit Protection )und %oard that had operated as a department oI &entral %ank oI .en\a to a Iull\-ÁedJed independent entit\. To Juide this transition .',& Iormulated a transition StrateJic Plan with three strateJic obMectiYes to Juide its operations Irom -anuar\  to -une  namel\ to strenJthen the JoYernance structure and institutional capacit\ oI .',& to eIIectiYel\ and eIÀcientl\ deliYer on its new mandate to promote public awareness and stakeholders· education and to adopt sound business and Ànancial practices to enhance the ,nsurance )und 5eserYes. The plan will Juide the strateJ\ oI the &orporation to Jreater achieYements in the short and lonJ term. The .',& has also Iormulated reJulations to support Iull implementation oI the .', $ct . The .',& continued to promote international cooperation in the Àeld oI deposit insurance in line with ,nternational $ssociation oI 'eposit ,nsurers ,$', ·s strateJic obMectiYe oI IacilitatinJ the sharinJ and e[chanJe oI e[pertise and inIormation. The &orporation actiYel\ participated in Yarious scheduled ,$', traininJ proJrammes and conIerences in Iurtherance oI these obMectiYes. , wish to conclude b\ thankinJ the %oard oI directors Ior their support and Juidance to the &orporation especiall\ at this critical period oI transition. , cannot IorJet the tireless eIIort oI the staII whom we owe so much to the success that .',& had in the \ear . 0\ sincere thanks also Jo to &entral %ank oI .en\a Ior the role which it pla\ed not onl\ b\ parentinJ this &orporation in eYer\ wa\ but also b\ aYailinJ its staII and Iacilities to the &orporation all alonJ. :orkinJ toJether and Juided b\ our Yalues oI inteJrit\ proIessionalism team work rule oI law transparenc\ and accountabilit\ , am conÀdent that we will continue to deliYer success in  and be\ond.

Aggrey Jonathan K. Bett Ag. ChieI E[ecutiYe OIÀcer KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board (DPFB))

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 13 protecting your deposits

UJUMBE KUTOKA KWA KAIMU MKURUGENZI MTENDAJI

Ni Mukumu lanJu kuwaleteeni 5ipoti \a kwan]a \a .ila 0waka \a Shirika la %ima \a $rbuni \a .en\a .',& pamoMa na TaariIa ]a .iIedha ]a mwaka wa kiIedha uliokomea tarehe  -uni . +ii ni kuIuatia utekele]aMi wa Sheria \a %ima \a $rbuni \a  tarehe  -ulai  ili\o ipa Shirika mamlaka na uhuru wa kutekele]a ka]i ]ake. Shirika la .',& liliandikkisha matokeo bora ]aidi Ma]i lake likiwa na onJe]eko la asilimia  hadi ShilinJi bilioni . kutoka ShilinJi bilioni . mwaka wa . -umla \a rasilimali pia iliimarika kutoka ShilinJi bilioni . mwaka wa  hadi ShilinJi bilioni . mwaka wa  imariko la asilimia .. 0atokeo ha\a mema pamoMa na ustawi wa +a]ina hii \amechanJiwa pakubwa na usimami]i bora wa +a]ina \a Shirika pamoMa na sekta \a kiIedha ina\o]idi kunawiri. .ipindi kati \a mwaka wa  kiwanJo na upeo wa ulin]i wa arbuni idadi \a akaunti chini \a ulin]i ili]idi kuonJo]a mikakati nchini .en\a ina\olenJa kutoa huduma ]a kiIedha kwa wale wen\e mapato \a chini katika Mamii Mambo hili lilionJe]a idadi \a wanaMamii wanaotumia huduma ]a %enki. .utokana na mikakati hii \a utoaMi huduma ]a kiIedha kwa wen\e mapato \a chini pamoMa na ubuniIu wa kiteknoloMia katika sekta \a mawasiliano sekta \a %enki ime]idi kuimarika. Shirika la .',& kwa upande wake limeendelea ku\atekele]a maMukumu \ake \a kutoa ulin]i wa arbuni hasa kwa mashirika madoJo \a kiIedha kutokana na hasara ]ina]osababishwa na kusambaratika kwa asasi ]a kiIedha hiY\o basi kuchanJia onJe]eko la imani \a umma katika mIumo wa kiIedha nchini. .atika kipindi hiki kinachochunJu]wa kiwanJo cha bima \a arbuni kilibakia ShilinJi  kwa kila mwekaMi na\o idadi \a akaunti chini \a ulin]i katika kiwanJo hiki ilionJe]eka kwa asilimia . kutoka akaunti milioni . katika kipindi cha awali hadi akaunti milioni . kuÀkia mwisho wa kipindi hiki kinachochanJanuliwa. -umla \a akaunti ]a arbuni katika sekta hii ilikuwa milioni . huku idadi \a akaunti ]ina]olindwa kikamuliIu ikiwa milioni . \en\e maana kuwa asilimia . \a wawekaMi wote ambao ni milioni . wanalindwa kikamiliIu. :awekaMi wanaolindwa kikamiliIu wanamiliki asilimia  tu \a Mumla \a thamana \a arbuni ]ote. 0atokeo katika sekta \a %enki \ali]idi kuimarika huku thamana kamili \a rasilimali ikiwa ShilinJi trilioni . thamana \a mikopo ikiwa trilioni . wiano ]a arbuni katika sekta hii ikiwa ShilinJi trilioni . na Iaida kabla \a kuto]wa ushuru ikiwa ShilinJi bilioni . kuÀkia tarehe  -uni . .atika kipindi hiki kinachochunJu]wa Shirika la .',& lili]idi kunuIaika kutokana na ushirikiano wake na ,dara \a 8simami]i wa +abari ]a 0ikopo &redit 5eIerence %ureau - &5%  Mambo ambalo limechanJia pakubwa kuimarika kwa malipo \a mikopo. 0abadiliko katika idara \a mahakama pamoMa na idara ]inJine ]a kiserikali pia \amean]a ku]aa matunda haswa katika maswala \a utiliIu wa mashirika \ali\osambaratika. Ni matumaini \etu kuwa Muhudi hi]i ]itawaIaidi wateMa na wakopi wa mashirika \ali\osambaratika.

14 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

.atika kipindi kinachochunJu]wa Shirika la .',& liliendelea kusimamia na kuu]a rasilimali \a mashirika \ana\otiliÀwa hasa iki]inJatia mikakati ina\olenJa kurahisisha shuJuli hii. TanJu kuan]ishwa kwake Shirika limepokea mashirika  \a kutiliÀwa na ta\ari imeIunJa  kati \a]o. .uÀkia tarehe  -uni  kiwanJo cha marupurupu kilichotanJa]wa na mashirika \ana\otiliÀwa kilionJe]eka hadi ShilinJi milioni . ikilinJanishwa na ShilinJi milioni . mwaka uliopita onJe]eko la ShilinJi milioni  katika kipindi hiki kinachochunJu]wa. 0alipo kwa wateMa pamoMa na wadai wa mashirika ha\a \ataendelea katika Yipindi YiMa]o lenJo kuu ikiwa kuipa kasi shuJuli \a utiliIu na kukamilisha shuJuli ]a kuIunJa mashirika ha\a kwa muda wa miaka miwili hiYi. %enki \a +eritaJe liliIunJwa katika kipindi hiki kinachochunJu]wa na inataraMiwa kuwa mashirika menJine mawili \ataIunJwa katika mda wa miaka miwili iMa\o. .uIuatia utekele]aMi wa Sheria \a %ima \a $rbuni tarehe  -ulai  Shirika la .',& lilian]a kukiua kutoka 'P)% ili\otekele]a shuJuli ]ake kama idara \a %enki .uu \a .en\a na kuwa shirika huru. ,li kuonJo]a shuJuli hii \a ukiuaMi .',& ilita\arisha mikakati \en\e malenJo tatu \ataka\oonJo]a utendaka]i wake kuan]ia -anuari  hadi -uni  na\o ni .ustawisha mIumo wake wa usimami]i pamoMa na uwe]o wa .',& wa kutekele]a kikamiliIu maMukumu \ake map\a kuendele]a uamsho wa umma na maIun]o kwa wadau na kupitisha n\endo mwaIaka ]a kibiashara na kiIedha ]itaka]oimarisha -a]i \a +a]ina \a %ima. 0panJo huu utaonJo]a mikakati \a Shirika hili kuwa na uIanisi ]aidi katika Yipindi Y\a mda mIupi na mreIu. .',& pia imeweka sheria itaka\oIanikisha utekele]aMi kamili wa Sheria \a %ima \a $rbuni \a .en\a \a mwaka . Shirika hili lime]idi kuendele]a ushirikiano wa kimataiIa katika 8lin]i wa $rbuni kuambatana na moMawapo \a malenJo kuu \a Shirikisho la .imataiIa la :alin]i wa $rbuni ,$', \a kuIanikisha uJaYi na upoke]anaMi wa habari na uMu]i. .',& pia imehusika katika shuJuli n\inJi ]a ,$', ikiwa ni pamoMa na shuJuli ]a maIun]o na konJamano ili kutimi]a malenJo ha\a. Nikitamatisha ninJependa kutoa shukrani ]anJu kwa %odi \a :akuruJen]i kwa kuMitolea kwao pamoMa na uonJo]i wao kwa Shirika la .',& haswa katika kipindi hiki cha ukiuaMi. %ila kusahau Mitihada ]a waIan\aka]i wa .',& ]ili]ochanJia uIanisi wa .',& katika kipindi cha mwaka . Natoa shukrani ]a dhati kwa %enki .uu \a .en\a kwa ka]i ili\oIan\a kuikiranMa Shirika la .',& kwa hali ]ote pamoMa na kutoa waIan\aka]i wake na pia kuMitolea kwa hali na mali. Tuki]idi kuIan\a ka]i pamoMa tukionJo]wa na uadiliIu utaalamu umoMa sheria uwa]i na uwaMibikaMi nina hakika tuta]idi kuIanikiwa mwaka wa  na hata ]aidi.

Aggrey Jonathan K. Bett Kaimu Mkurugenzi Mtendaji SHIRIKA LA BIMA YA ARBUNI YA KENYA

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 15 protecting your deposits

THE YEAR UNDER REVIEW

PERFORMANCE OF THE ECONOMY

The econom\ Jrew b\ . percent in  compared with a Jrowth oI . percent in . Growth in  was larJel\ attributed to $Jriculture 0anuIacturinJ 5eal (state and :holesale and 5etail Trade. ,n the Àrst Tuarter oI  the econom\ reJistered real Jrowth oI . percent compared with . percent in the Àrst Tuarter oI . The improYed economic perIormance was attributed to &onstruction )inance and ,nsurance ,nIormation and &ommunication (lectricit\ and :ater suppl\ :holesale and 5etail trade and Transport and StoraJe $ctiYities. OYerall -month inÁation eased Irom . percent in -une  to . percent in -une  larJel\ reÁectinJ a decline in Iuel inÁation. Non-Iood non-Iuel inÁation rose marJinall\ Irom . percent in -une  to . percent in -une  indicatinJ minimal demand pressures in the econom\. The annual aYeraJe inÁation eased Irom . percent in -une  to . percent in -une . The 0onetar\ Polic\ &ommittee raised the &entral %ank 5ate &%5 b\  basis points to . percent on th -une  in order to mitiJate aJainst emerJinJ demand pressures arisinJ Irom e[chanJe rate Yolatilit\. . The weiJhted aYeraJe interbank rate rose Irom . percent in -une  to . percent in -une  reÁectinJ skewed liTuidit\ distribution &%. Iore[ sale to smoothen the e[chanJe rate Yolatilit\ and &%. open market operations consistent with the adopted tiJhteninJ bias in the interbank market. &ommercial banks· aYeraJe deposit rate held stead\ at . percent in -une - while the aYeraJe lendinJ rate declined Irom . percent to . percent in the period under reYiew. &onseTuentl\ the interest rate spread narrowed Irom . percent in -une  to . percent in -une . The  da\ Treasur\ bill rate declined oYer the \ear under reYiew Irom . percent to . percent while the -da\ Treasur\ bill rate remained stable within a ranJe oI . percent to . percent in the period under reYiew. The .en\a shillinJ displa\ed mi[ed perIormance aJainst international and reJional currencies durinJ the Ànancial \ear . ,t strenJthened b\ . percent aJainst the (uro and . percent aJainst the -apanese

16 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits decreased to 8S'  million . months oI import coYer at the end oI -une  Irom 8S'  million . months oI import coYer at the end oI -une . )oreiJn e[chanJe reserYes held b\ commercial banks increased to 8S'  million at the end oI -une  Irom 8S'  million at the end oI -une . 5esidents· IoreiJn currenc\ deposits increased b\ . percent to 8S'  million Irom 8S'  million oYer the reYiew period. GoYernment budJetar\ operations in the )<  resulted in a budJet deÀcit oI .sh . billion or . percent oI G'P on a commitment basis compared with .sh . billion or . percent oI G'P reported in a similar period in the Àscal \ear . The budJet deÀcit widened due to an underperIormance oI reYenues neYertheless the deÀcit remained within the reYised tarJet oI .sh . billion or . percent oI G'P Ior the )< . 'urinJ the \ear under reYiew . percent oI deÀcit ÀnancinJ came Irom e[ternal sources compared with . percent in the )< . .en\a·s public and publicl\ Juaranteed debt stood at .sh . billion as at end -une . This represents a . percent increase Irom .sh . billion held at the end oI -une . $s a percentaJe oI G'P oYerall public debt stock increased Irom . percent in -une  to . percent in -une  due to the Tap sale oI the SoYereiJn bond in 'ecember . ,n particular the proportion oI e[ternal debt to G'P increased Irom . percent to . percent while domestic debt increased Irom  percent oI G'P to . percent in the period under reYiew. The increase in the oYerall GoYernment debt stock comprised .sh . billion in domestic debt and .sh . billion in e[ternal debt. The percentaJe oI domestic debt to total debt declined Irom . percent in -une  to . percent in -une  while that oI e[ternal debt increased Irom . percent to . percent durinJ the period under reYiew. The eTuities seJment oI the capital markets recorded improYed perIormance in the -month period to -une . The NS(  Share ,nde[ rose b\ . percent while the N$S, rose b\ . percent. Shareholders· wealth measured b\ market capitali]ation Jrew b\ .sh  billion or . percent oYer the \ear under reYiew. The Jood perIormance is attributable to actiYities oI IoreiJn inYestors and improYed appetite Ior risk\ assets like eTuities.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 17 protecting your deposits

BANKING SECTOR PERFORMANCE AND DEVELOPMENTS DURING THE YEAR ENDED 30TH JUNE 2015

OVERVIEW 'urinJ the period ended -une   the .en\an bankinJ sector comprised  commercial banks  mortJaJe Ànance compan\  microÀnance banks  representatiYe oIÀces oI IoreiJn banks  mone\ remittance proYiders  IoreiJn e[chanJe bureaus and  credit reIerence bureaus. The %ankinJ Sector reJistered improYed perIormance in the period ended th -une  as shown below:- ʌ $ssets increased to .sh . trillion Irom .sh . trillion in -une  . ʌ /oans and adYances Jrew to .sh . trillion compared to .sh . trillion as at -une  . ʌ The deposit base e[panded to .sh . trillion Irom .sh . trillion reported in -une  . ʌ ProÀt beIore ta[ was .sh . billion compared to .sh . billion reported in the period ended -une  .

STRUCTURE OF THE BALANCE SHEET

The bankinJ sector balance sheet e[panded b\  per cent Irom .sh . trillion in -une  to .sh . trillion in -une . The main components oI the balance sheet on the asset side were loans and adYances JoYernment securities and placements which accounted Ior . per cent . per cent and . per cent oI total assets respectiYel\. &ustomer deposits were the main component on the liabilities side accountinJ Ior . per cent oI the total liabilities.

LOANS AND ADVANCES

The bankinJ sector Jross loans and adYances rose Irom .sh . trillion in -une  to .sh . trillion in -une  translatinJ to a Jrowth oI . percent. The Jrowth in loans and adYances was in personalhousehold transport and communication enerJ\ and water aJriculture and real estate sectors.

DEPOSIT LIABILITIES

&ustomer deposits were the main source oI IundinJ Ior the bankinJ sector accountinJ Ior . per cent oI total liabilities. The deposit base increased b\ . per cent Irom .sh . trillion in -une  to .sh. . trillion in -une  mainl\ attributed to branch e[pansion remittances receipts Irom e[ports and aJenc\ bankinJ. The number oI deposit accounts increased b\ . per cent Irom . million accounts in -une  to . million in -une .

18 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

CAPITAL AND RESERVES

The bankinJ sector reJistered improYed capital leYels in the period ended -une . The total capital Jrew b\ . per cent Irom .sh . billion in -une  to .sh . billion in -une . The shareholders· Iunds increased b\ . per cent Irom .sh . billion in -une  to .sh . billion in -une . The ratios oI total and core capital to total risk- weiJhted assets increased Irom . per cent and . per cent in -une  to . per cent and . per cent in -une  respectiYel\.

ASSET QUALITY

The Jross non-perIorminJ loans NP/s increased b\ . per cent Irom .sh . billion in -une  to .sh . billion in -une . The ratio oI Jross NP/s to Jross loans remained constant at . per cent in -une  as it was in -une . The increased insecurit\ in the countr\ dela\ed pa\ments to the JoYernment contractors and unIaYourable weather conditions contributed to the increase in NP/s.

PROFITABILITY

The bankinJ sector reJistered .sh . billion pre-ta[ proÀts durinJ the period endinJ -une   which was an increase oI . per cent Irom .sh . billion Ior the period endinJ -une . Total income Ior the period stood at .sh . billion a Jrowth oI . per cent compared with .sh . billion reJistered at the end oI -une . On the other hand total e[penses increased b\ . per cent Irom .sh . billion in -une  to .sh. . billion in -une . ,nterest on loans and adYances oI .sh . billion constituted . per cent oI total income in the period ended -une . On the other hand interest on deposits staII costs and other e[penses were the ke\ components oI e[penses accountinJ Ior  per cent  per cent and  per cent oI total e[penses respectiYel\.

LIQUIDITY )or the period ended th -une  aYeraJe liTuid assets stood at .sh. . billion while aYeraJe liTuid liabilities were worth .sh. . billion resultinJ to an aYeraJe liTuidit\ ratio oI . the same leYel reJistered in -une . The ratio remained aboYe the minimum statutor\ limit oI ..

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 19 protecting your deposits

FINANCIAL INCLUSION INITIATIVES

CREDIT INFORMATION SHARING MECHANISM ʌ On th $pril  &reditinIo &redit 5eIerence %ureau was licensed brinJinJ the number oI licenses credit reIerence bureaus to . The &redit ,nIormation SharinJ &,S mechanism has continued to reJister increased usaJe b\ the banks since its launch in -ul\ . ʌ The cumulatiYe number oI credit reports that had been reTuested b\ banks stood at  in the period ended -une  an increase oI . percent compared with  reports that had been reTuested in the period ended -une . OYer the same period the number oI reports reTuested b\ bank customers increased Irom  to . ʌ %anks haYe now incorporated credit reIerence reports in their credit risk appraisal processes. %orrowers with Jood track record are now able to neJotiate Ior competitiYe credit terms includinJ accessinJ credit based on their credit histor\ without a reTuirement Ior collateral.

AGENCY BANKING ʌ The use oI the aJenc\ bankinJ model b\ banks has continued to improYe access to bankinJ serYices since its launch in . $s at -une   &%. had authori]ed  commercial banks to oIIer bankinJ serYices throuJh third parties aJents . Since  to -une  a total oI  aJents had been contracted b\ the  banks. ʌ These aJents had undertaken oYer . million transactions Yalued at .sh . billion.

MICROFINANCE BANKS ʌ Three 0icroIinance %anks 0)%s were licensed in the \ear. &hoice 0)% was licensed on th 0a\  'araMa 0)% licensed on th -anuar\  and &aritas 0)% licensed on nd -une  brinJinJ the number oI 0icroÀnance %anks 0)%s in operation to  in -une . ʌ $s at -une   the  0)%s had Jranted Jross loans worth .sh . billion compared to .sh . billion reJistered in -une  thus translatinJ to a Jrowth oI . per cent. The deposits base oI the 0)%S stood at .sh . billion representinJ a Jrowth oI . per cent Irom .sh . billion in -une . ʌ The number oI 0)%s deposit accounts stood at . million in -une  compared to . million deposit accounts at end oI -une .

20 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

REPRESENTATIVE OFFICES ʌ The representatiYe oIIices oI IoreiJn banks as at -une  were  as it was in the period ended -une . 8nder the %ankinJ $ct a 5epresentatiYe OIÀce oI a IoreiJn bank in .en\a is not permitted to enJaJe in bankinJ business as deÀned in the $ct onl\ serYe as marketinJ and liaison oIÀces Ior their IoreiJn parent banks and aIÀliates and are not permitted to undertake bankinJ business. There were  onJoinJ applications Ior representatiYe oIÀces and  representatiYe oIÀces had indicated plan to upscale to Iull\ ÁedJed banks in the ne[t  or  \ears.

MONEY REMITTANCE PROVIDERS ʌ The number oI mone\ remittance proYiders 0P5s stood as  as at -une  aIter the transIormation oI  Iore[ bureus into 0P5s . This transIormation has seen the Iore[ bureaus transactions decrease as 05Ps transactions increase.

KENYA BANKS REFERENCE RATE (KBRR) ʌ .%55 was rolled out with eIIectiYe th -ul\  throuJh a circular to commercial banks and microÀnance banks. .%55 was introduced to promote transparenc\ and disclosure on pricinJ oI credit b\ banks. .%55 was a common interest rate base Ior all banks and the banks are reTuired to e[plain the makeup oI an\ premium leYied aboYe .%55. ʌ .%55 is computed as an aYeraJe oI the &entral %ank 5ate &%5 and the two-month weiJhted moYinJ aYeraJe oI the -da\ Treasur\ bill rate. ʌ The &entral %ank oI .en\a throuJh the 0onetar\ Polic\ &ommittee reYiews the .%55 eYer\ si[ months. The current .%55 rate is . per cent as at th -anuar\  drop Irom the preYious rate oI . per cent. ʌ ,nstitutions are reTuired to submit the IollowinJ inIormation on .: • &omponents oI . such as oYerheads customer risk proÀle oYerheads and cost oI Iunds. • The lowest hiJhest and aYeraJe . Ior the Yarious loan products such as consumer loans business loans asset Ànance S0( loans and mortJaJe loans. • New loans issued under the .%55 and an\ old loans conYerted to .%55 computation method.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 21 protecting your deposits

CORPORATE GOVERNANCE

MANDATE AND RESPONSIBILITIES The 'eposit Protection )und %oard 'P)%  the Iorerunner oI .en\a 'eposit ,nsurance &orporation .',&  was established in  throuJh an amendment to the %ankinJ $ct &hapter  oI the laws oI .en\a. The .',& which is a bod\ corporate with perpetual succession and a common seal came into e[istence IollowinJ the promulJation oI the .en\a 'eposit ,nsurance $ct  on 0a\   and commenced operations on st -ul\  with a transition period oI one \ear to th -une . The mandate oI the .',& is to build conÀdence in the bankinJ sector throuJh an eIIectiYe deposit insurance scheme and to Ioster Ànancial stabilit\. The obMect and purpose Ior which the &orporation was established include the IollowinJ:- i ProYide a deposit insurance scheme Ior depositors oI member institutions. ii +old manaJe and appl\ Iunds leYied as contributions Irom member institutions. iii ProYide %ank resolution mechanism Ior IailinJIailed institution s . iY 5eceiYe liTuidate and wind-up operations oI insolYent institutions in respect oI which the &orporation is appointed receiYer or liTuidator. Y Pursue a complementar\ role oI JuaranteeinJ saIet\ and buildinJ public conÀdence in the sector Ior Ànancial stabilit\. .',& %oard is composed oI GoYernor oI &entral %ank oI .en\a PS Treasur\ and $ttorne\ General as ([-OIÀcio members three members Irom the bankinJ industr\ and three independent members one oI whom should be the &hairman. This new %oard is \et to be Iull\ constituted and the old %oard is thus directinJ the aIIairs oI the &orporation. The appointinJ authorit\ has been reTuested to re-constitute the %oard.

ORGANIZATION STRUCTURE The .',& is steered b\ %oard oI 'irectors. The %oard pla\s an oYersiJht role on 0anaJement actiYities and is responsible Ior the .',& perIormance. The .',& manaJement orJani]ational structure comprises Iour 'iYisions namel\: )inance $dministration /iTuidations /eJal SerYices and ,&T. ,n striYinJ to achieYe best Practice .',& has in its structure an ,nternal $udit 8nit and has established a +uman 5esource 8nit. The two units proYide Tualit\ control and risk manaJement oI the &orporation·s resources as well as harnessinJ and enhancinJ manaJement oI the human resource as an asset. The 0anaJement oI the .',& comprises oI an $ctinJ &(O and  members oI staII oI Yarious cadres all oI whom are on secondment Irom &%.. To ensure .',& has the optimum human resource capacit\ to IulÀll its mandate a consultant in +uman 5esource was enJaJed durinJ the \ear under reYiew to undertake a skills assessment oI the staII to ensure proper placinJ and to hiJhliJht an\ Japs that need to be Àlled in line with the e[panded mandate. The e[ercise was nearinJ conclusion as at the end oI the Ànancial \ear.

22 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

CORPORATE GOVERNANCE APPROACH Section  and  oI the .en\a 'eposit ,nsurance $ct  deÀnes the members roles and Iunctions oI the %oard. The &orporation shall be administered b\ a %oard oI 'irectors which shall consist oI a non-e[ecutiYe chairperson appointed b\ the President on the recommendation oI the 0inister proYided that the chairperson appointed shall not be Irom the member institutions oI the &orporation the Permanent Secretar\ in the 0inistr\ Ior the time beinJ responsible Ior matters relatinJ to Ànance or his representatiYe the $ttorne\ General or his representatiYe the GoYernor oI the &entral %ank oI .en\a or his representatiYe ÀYe members not beinJ public oIÀcers and three oI whom shall be Irom institutions appointed b\ the &abinet Secretar\ in consultation with the &orporation. The %oard has deleJated the da\ to da\ operations oI the &orporation to manaJement staII seconded Irom the &entral %ank oI .en\a under a 'irector who acts as the &(O oI the &orporation. The $ctinJ &hieI ([ecutiYe OIÀcer is an e[-oIÀcio member oI the %oard and presents manaJement perIormance to the %oard. 'ecision makinJ on maMor issues is throuJh Yarious manaJement committees where each decision is subMected to critical anal\sis and reYiew b\ the members oI the committees. The budJet oI the &orporation is approYed b\ the &abinet Secretar\ in charJe oI the National Treasur\ and implemented b\ the manaJement on behalI oI the %oard.

HUMAN RESOURCES Section  oI the .', $ct  has mandated the &orporation to appoint such oIÀcers and other staII as necessar\ Ior the proper discharJe oI its Iunctions. .',& procured the serYices oI a &onsultant to undertake a +uman 5esource Stud\ that entails conductinJ Mob eYaluation Mob anal\sis reYiew oI e[istinJ Mob descriptions competenc\ proÀlinJ and deYelopment oI a skills matri[ with a Yiew to desiJninJ a new Iunctional and JradinJ structure. The &onsultant will also conduct a recruitment e[ercise to populate the structure to eIIect the transition Irom 'P)% to .',&. 8ntil such time when the consultanc\ e[ercise is concluded and as proYided Ior in Section   oI the .', $ct all the emplo\ees or oIÀcers oI the &orporation are those persons who were seconded Irom the &entral %ank oI .en\a to the 'eposit Protection )und %oard. The &orporation is responsible Ior +5 deYelopment Ior such staII and all e[penditure on staII in relation to salaries other remunerations medical e[penses and pensions. SuIÀce to mention that emplo\ee compensation and terms oI serYice are peJJed to the &%. schemes.

STRATEGIC PLANNING

The .',& - strateJic plan was drawn Ior a period oI three and halI \ears Irom -anuar\  to -une  to Juide the &orporation in deliYerinJ on its mandate. This strateJic plan succeeded the 'P)% ,nterim StrateJic Plan - hence it is considered a Transition StrateJic Plan aimed at heraldinJ the transIormation oI the current deposit insurance scheme Irom a pa\-bo[ plus to a deposit insurance reJime with enhanced

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 23 protecting your deposits corporate JoYernance and e[panded mandate oI loss and risk minimi]er to Iacilitate eIIectiYe participation in Ànancial stabilit\ and in line with international best practices. $n eYaluation oI the 'P)% strateJic plan Ior - reYealed that some siJniÀcant achieYements were made and lessons learnt Irom the challenJes encountered durinJ the implementation oI the 'P)% strateJic plan. These Iactors were used to enhance the Tualit\ oI the .',& strateJic plan in terms oI preparation process and obMectiYes to be pursued. ,n IormulatinJ this StrateJic Plan .',& 0anaJement took into account the IollowinJ Iactors: a /eJal and 5eJulation )ramework includinJ .', $ct  %ankinJ $ct &%. $ct other releYant statutes best practices b\ other established deposit insurance schemes and ,$', &ore Principles b The e[ternal and internal operational enYironment c The StrateJic direction and other ke\ strateJic obMectiYes and initiatiYes d The %udJetar\ reTuirements and e The outcomes that .',& seeks to achieYe. +aYinJ careIull\ reYiewed its Yision mission mandate strenJths and weaknesses siJniÀcant risks Iaced b\ the &orporation takinJ into consideration its current operatinJ enYironment and the new .', $ct  the IollowinJ were identiÀed as ke\ strateJic issues that need to be urJentl\ addressed in order Ior 'P) to transition smoothl\ to .',& and perIorm its new roles: a GoYernance structure and ,nstitutional capacit\ b Public awareness and stakeholder education and c Sound %usiness and )inancial Practices oI the )und These issues haYe inIormed the .',& starteJic direction -. The .',& strateJic Thrusts and Theme embod\: Sound GoYernance Operational readiness e[cellence and Public conÀdence in the Ànancial s\stem. ,n order to achieYe its 0ission and 9ision the .',& has Iormulated the IollowinJ three strateJic obMectiYes to Juide its operations oYer the planninJ period:

Strategic Objective 1: To strenJthen the JoYernance structure and institutional capacit\ oI .',& to eIIectiYel\ and eIÀcientl\ deliYer on its mandate. This obMectiYe will be achieYed throuJh the IollowinJ strateJies: a )acilitate the reconstitution oI the %oard in line with the new .', $ct b (stablish an optimal orJani]ational structure c ProYide optimal staII compliment and competencies  d 'eYelop a robust ,&T platIorm e StrenJthen internal manaJement s\stems processes and controls with manaJement orJans I 0aintain Ànancial sustainabilit\ oI .',& J (nhance the responsiYeness comprehensiYeness and enIorceabilit\ oI the .',& leJal and reJulator\ Iramework

24 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

h %uild strateJic alliances with releYant institutions i $dopt a 5isk and /oss 0inimi]ation )ramework M 'esiJn eIIectiYe receiYership Iramework k 'esiJn eIÀcient pa\ment solutions and l (nhance and accelerate the onJoinJ liTuidation process.

Strategic Objective 2: To enhance .',& ,maJe and promote depositor education. The strateJies to attain this obMectiYe include: a 'esiJn &orporation /oJo and ,nYest in brandinJ items b 'eYelop and ,mplement communication polic\ and strateJ\ c 'eYelop depositor education and public awareness polic\ and enhance dissemination oI depositor education and public awareness and d (stablish a resource centre.

Strategic Objective 3: To adopt sound business and Ànancial practices oI the Iund. The obMectiYe will be achieYed throuJh the IollowinJ strateJies: a $dopt h\brid premium reJime b Optimi]e ,nYestments and c Set TarJet )und The aboYe strateJic issues strateJic obMectiYes and strateJies haYe inIormed the .',& starteJic plan oYer the period -. The plan will be reYiewed \earl\ Ior releYance and accurac\. The plan will also be implemented throuJh a Iramework that will deYolYe the implementation oI the plan to departmental and indiYidual leYels throuJh deYelopment oI departmental and indiYidual work plans. The plan will be monitored throuJh adoption oI %alanced Score &ard %S& Iramework reJular manaJement reports and brieÀnJs to the %oard oI 'irectors. ,t is e[pected that the strateJic obMectiYes will be achieYed within the planned period.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 25 protecting your deposits

CORPORATE SOCIAL RESPONSIBILTY The mission oI .en\a 'eposit ,nsurance &orporation .',& Iormerl\ 'eposit Protection )und %oard is to promote stabilit\ in the )inancial Sector b\ proYidinJ a deposit insurance scheme Ior depositors oI member institutions. ,n IulÀllinJ this important mandate .',& also recoJnises the need to make a positiYe contribution to the welIare oI the societ\ and to this end The &hairman·s Philanthropic )und was created in Iurtherance oI the &orporate Social 5esponsibilt\. ,n the \ear under reYiew &hairman·s Philanthropic )und e[tended Ànancial support to need\ proMects all oYer the countr\ to educational orphanaJes and health institutions. Some oI the beneÀciaries include: The .en\a Societ\ Ior the %lind Tun\ai &hildren·s &entre- 0eru 0erc\ (ducation &entre-.isii Talent &hildren·s 0ission +ome- (lburJonJ 'ominion &hilren·s +ome-(ldoret The N\eri +ospice )ountin oI Grace-Turkana .en\a $ssociation oI the :elIare oI People with People with (pileps\NJasunoto &%O- 0aralal =ennith (ducational &entre North (astern

Items donated to the Kenya Society for the Blind.

26 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

The Administrator, Mercy Education Centre receiving text books donated by KDIC.

Drugs donated by KDIC to the Nyeri Hospice

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 27 protecting your deposits

A Greenhouse and water tank donated to Dominion Children’s Home, Eldoret by KDIC

A Greenhouse constructed at Dominion Children’s Home, Eldoret by KDIC

28 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

DEPOSIT INSURANCE ACTIVITIES

INTRODUCTION )inancial institutions diIIer Irom most industrial and commercial enterprises in that the\ depend mainl\ on deposits mobili]ed Irom the public Ior their workinJ capital and are hiJhl\ leYeraJed. ,I a Ànancial institution is unable to meet its obliJation to depositors due to operational problems or business Iailure an[ious depositors ma\ cause a run on the banks as well as other health\ institutions. The stabilit\ oI the Ànancial s\stem and social order in Jeneral would also be at risk. 0oreoYer most depositors haYe small deposit amounts and thereIore cannot cost-eIIectiYel\ collect inIormation on the Ànancial institutions the\ do business with. The role oI deposit insurance is to protect depositors particularl\ small Yulnerable less Ànanciall\ sophisticated aJainst losses the\ ma\ Iace as a result oI the Iailure oI banks and other deposit takinJ institutions thus creatinJ public conÀdence in a Ànancial s\stem. $t the same time the aYailabilit\ oI deposit insurance serYes to protect banks aJainst the risk oI ¶runs· and thus contribute to Ànancial stabilit\. 'eposit insurance is t\picall\ proYided primaril\ Ior the beneÀt oI depositors who do not haYe the means or the capacit\ to assess readil\ and comprehensiYel\ the risks Iaced b\ the institutions with which the\ place their saYinJs.

DEPOSIT INSURANCE COVERAGE ,n its endeaYour to proYide a 'eposit ,nsurance Scheme to depositors oI member institutions .',& has ensured that the leYel and scope oI coYeraJe meets public polic\ obMectiYe b\ coYerinJ maMorit\ oI retail depositors in Iull. 0embership to the Iund is mandator\ Ior all deposit takinJ institutions licensed b\ the .en\a 'eposit ,nsurance $ct  while the coYeraJe and limit oI insured deposits has remained at a ma[imum oI .sh  8S   per depositor. $t the current leYel and scope oI coYeraJe total depositors· accounts coYered haYe been maintained at oYer  oYer the \ears in line with ,$',·s minimum benchmark. This is attributed to national initiatiYes that haYe promoted Ànancial inclusion which has seen preYiousl\ unbanked retail depositors enter the Iormal Ànancial s\stem. )or the period ended th -une  total accounts coYered were at . $s shown in the Table and &hart below the total amount insured increased b\ .Shs. . billion Irom .Shs. . billion in -une  to .Shs . billion in -une . The total number oI deposit accounts increased b\ . million durinJ the \ear under reYiew Irom . million in -une  to . million in -une .

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 29 protecting your deposits

Table 1: Trend in Deposits and Coverage

Chart 1: Trend in Deposits and Coverage

,t is to be noted that the scope oI deposit protection coYers deposits receiYed b\ deposit- takinJ Ànancial institutions licenced b\ the &entral %ank includinJ balances in IoreiJn currenc\ accounts e[cept inter-bank balances.

:hereas the ma[imum amount coYered per depositor has remained at .sh.  since the inception oI the deposit insurance scheme in  this is poised Ior reYiew aIter recommendations Irom the onJoinJ consultanc\.

30 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

MEMBER INSTITUTIONS CONTRIBUTIONS

.',& operates an e[-ante deposit insurance scheme where IundinJ is throuJh annual premium contribution b\ all member institutions. +ence maMor sources oI IundinJ are member contribution and income Irom inYestments in GoYernment Securities. The premium is currentl\ charJed at . oI the aYeraJe total deposit liabilities Ior the  months precedinJ the commencement oI the Ànancial \ear or .Shs. . whicheYer is hiJher. )or the \ear ended th -une  'P)% collected a total oI .Shs. . billion Irom member contributions. Table  and chart  below shows the premium contribution b\ member institutions Irom  to date.

Table 2: Trend in Premium Contribution (Kshs m)

Chart 2: Trend in Premium Contribution (Kshs m)

,n eIIorts to streamline risk manaJement in member institutions .',& is conductinJ a stud\ with a Yiew to introduce 'iIIerential Premium. This methodoloJ\ oI member contribution will take into account institutional risk proÀle.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 31 protecting your deposits

RELATIONSHIP WITH IADI AND ARC

.',& is a Iounder member oI the ,nternational $ssociation oI 'eposit ,nsurers ,$', and a member oI its Yarious StandinJ &ommittees as well as the $Irica 5eJional &ommittee $5& .

,$', Iounded  contributes to the stabilit\ oI Ànancial s\stems b\ promotinJ international cooperation in the Àeld oI deposit insurance. ,n adYancinJ its course ,$', amonJ other strateJic obMectiYes striYes to: Iacilitate the sharinJ and e[chanJe oI e[pertise and inIormation on deposit insurance throuJh traininJ deYelopment and education proJrams and undertake research and proYide Juidance on issues relatinJ to deposit insurance.

,n line with the aboYe ,$', obMectiYes .',& durinJ the \ear under reYiew actiYel\ participated in Yarious ,$', actiYities. Some oI these include: ,$', th and th (;&O meetinJs in %oJota &olombia and %asel Swit]erland respectiYel\ and ,$', traininJ proJrams and conIerences in -ordan Taipei &hina .osoYo %asel Swit]erland and 0anila Philippines.

'P)% will continue to cooperate with ,$', and its members with the obMectiYe oI sharinJ e[perience and continuousl\ improYinJ and aliJninJ its deposit insurance s\stem to best practice.

32 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

LIQUIDATION ACTIVITIES

PAYMENT OF PROTECTED DEPOSITS The total protected deposits paid b\ all the institutions so Iar placed in liTuidation b\ the .en\a 'eposit ,nsurance &orporation Iormerl\ 'eposit Protection )und %oard amounted to .shs. million as at -une  . This ÀJure has remained constant Irom the  Ànancial \ear when the two \ear limitation period Ior pa\ment oI protected deposits b\ 'aima %ank /imited ,./. e[pired beinJ the last institution placed in liTuidation b\ the .en\a 'eposit ,nsurance &orporation. &ummulatiYe pa\ment Ior insured deposits since the %oard commenced liTuidation oI banks and Ànancial institutions aYeraJed . oI total insured deposits. 'etails oI pa\ment oI Protected 'eposits b\ each institution are shown on Table  below. ,nstitutions which haYe alread\ been wound up b\ the %oard are listed in the shaded area at the bottom oI the table. Table 3: Payment of Protected Deposits as at June 2015 (Kshs million)

'DWHRI5HOHDVHRI/LTXLGDWRU

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 33 protecting your deposits

DEBT RECOVERY $s at -une   the cummulatiYe recoYer\ oI debts and realisation oI other assets b\ all the institutions so Iar placed in liTuidation b\ the .en\a 'eposit ,nsurance &orporation totalled .shs. . million. This amount represents an increase oI .shs. .m aJainst the total cumulatiYe asset realisation oI .shs. . million achieYed in the preYious Ànancial \ear. The total recoYer\ includes interest earned on Treasur\ %ills and other recoYeries. General perIormance on debt recoYer\ continues to decrease due to poor Tualit\ oI the remaininJ assets. 'urinJ the \ear under reYiew +eritaJe %ank /imited ,./. was successIull\ wound up and the /iTuidatior released. The table  below illustrates the cummulatiYe loan recoYer\ and perIormance b\ all institutions in liTuidation. Onl\  eleYen institutions haYe manaJed to recoYer marJins aboYe  oI the outstandinJ debt portIolio Irom liTuidation to date. Table 4: Debt recovery as at 30th June 2015 (Kshs million)

34 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

DECLARATION OF DIVIDENDS 'urinJ the \ear under reYiew 'aima %ank /imited ,./. and Trust %ank /imited ,./. continued pa\inJ their th diYidend while 5eliance %ank /imited ,./. declared its rd diYidend amountinJ to .shs.  million to 'epositors and &reditors in -une . 'iYidend declaration is reimbursement oI amounts in e[cess oI the protected deposit oI .shs. . per depositor. $s at th -une  the cummulatiYe diYidends declared b\ all the institutions in liTuidation amounted to .shs.. million compared to .shs.. million declared the preYious \ear resultinJ in an increase oI .shs. million in diYidend declaration Ior the \ear under reYiew. $monJ the institutions in liTuidation Post %ank &redit /imited ,./. has made the hiJhest diYidend declaration amountinJ to .shs. . million Iollowed b\ Trust %ank /imited ,./. at .shs.  million and Trade %ank /imited ,./. at .shs. . million. Other institutions are also makinJ the reTuisite arranJements to declare Ànal diYidends in preparation Ior windinJ up their respectiYe liTuidations. Table  below shows cummulatiYe diYidend declared as at th -une  b\ indiYidual institutions in liTuidation. Table 5: Dividends Declared as at 30th June 2015 (Kshs. Million)

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 35 protecting your deposits

TRANSFORMATION FROM DPFB TO KDIC

HISTORICAL BACKGROUND 'eposit Protection )und %oard 'P)% was established in  pursuant to section  oI the %ankinJ $ct &hapter  /aws oI .en\a as an autonomous bod\ corporate. 'P)% commenced operations in  as a 'eposit ,nsurance Scheme with the Moint mandate oI maintaininJ public conÀdence in the bankinJ sector and thereb\ contributinJ to the stabilit\ oI the Ànancial s\stem in .en\a. The protection oI depositors aJainst the loss oI their saYinJs in the eYent oI the collapse oI a member institution oI the )und remains one oI the ke\ obMectiYes oI 'eposit ,nsurance in .en\a.

TRANSITION TO KENYA DEPOSIT INSURANCE CORPORATION GiYen the leYel oI deYelopment in the Ànancial s\stem oI .en\a it was considered that the 'P)% mandate oI a ¶pa\-bo[ plus· scheme was considered to be too narrow. &onseTuentl\ 'P)% made a strateJic decision to e[pand its mandate Irom a pa\-bo[ to a risk minimi]er with powers to undertake bank resolution oI distressed member institutions licensed b\ the &entral %ank oI .en\a. ThereIore this culminated in 'P)% transIorminJ to .en\a 'eposit ,nsurance &orporation .',& under a new leJal Iramework the .en\a 'eposit ,nsurance $ct . The .en\a 'eposit ,nsurance &orporation is a statutor\ institution pursuant to the promulJation oI .en\a 'eposit ,nsurance $ct  and commenced operations on st -ul\ . .',& was Jranted with a transition period oI two \ears to th -une . The oYerall obMectiYe oI the new $ct is to ensure that .',& enJaJes in Ànancial stabilit\ proactiYel\ as the resolution authorit\ b\ actiYel\ participatinJ in problem bank resolution with receiYership powers and enhanced corporate JoYernance. .',&·s prime responsibilit\ and mandate is thereIore to Ioster Ànancial stabilit\ and promote public conÀdence in the .en\an bankinJ s\stem b\ proYidinJ an eIIectiYe and eIÀcient deposit insurance scheme Ior customers oI member institutions and to receiYe liTuidate and wind up an\ institution in respect oI which the &orporation is appointed receiYer or liTuidator. $s at the close oI the period under reYiew the .en\a 'eposit ,nsurance 5eJulations  is due to be Ja]etted. Plans are alread\ underwa\ to Iurther improYe the desiJn oI deposit insurance to meet international best practice throuJh enhanced coYeraJe leYel and the establishment oI a tarJet Iund. ,n particular the proposed tarJet Iund aims to set achieYable tarJet leYels to deal with problem situations to Iorestall crises in the Ànancial sector. The law proYides Ior a reYised contribution approach based on a diIIerential premium s\stem. This will once implemented serYe to proYide incentiYes to adopt sound risk manaJement practices amonJ member institutions hence will promote Ànancial stabilit\.

36 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

.',& has taken oYer the IollowinJ mandate Irom 'P)%: ʌ Pa\-bo[ plus - ,nsure deposits oI retail customers and Iacilitate prompt pa\ment oI protected deposits wheneYer a bank collapses ʌ 8ndertake the liTuidation and windinJ-up oI Iailed and insolYent member institutions, ʌ To hold, manaJe and appl\ Iunds leYied as contributions Irom member institutions. .',& has adopted the IollowinJ new additional mandates: ʌ 5eceiYer or Statutor\ 0anaJer oI problem bank institutions, an e[ercise that was preYiousl\ handled b\ &entral %ank oI .en\a, ʌ )ormulate incentiYes Ior the implementation oI sound risk manaJement policies in the Ànancial s\stem, and, iI necessar\, undertake eIIectiYe interYention measures in a pro-actiYe manner throuJh prompt correctiYe action. This means that the perIormance oI member institutions shall be monitored closel\ and reJularl\ 5isk 0inimi]inJ role , ʌ $ct in such a manner as to minimi]e costs to the &orporation and Ànancial s\stem at larJe b\ e[ercisinJ the ¶least cost option· in the resolution oI problem banks. .',& will continuall\ seek to adopt sound and eIIectiYe principles as well as best practices in ke\ areas oI deposit insurance, accordinJ to the core principles oI ,$', ,nternational $ssociation oI 'eposit ,nsurers . These include, but are not limited to, public polic\ obMectiYes, mandates and powers, JoYernance, membership and coYeraJe, IundinJ, prompt correctiYe action, problem resolution as well as public awareness. .',& will also continue to build strateJic alliances with the JoYernment oI .en\a, &entral %ank oI .en\a, other saIet\ net pla\ers and stakeholders in the Ànancial s\stem in .en\a, in pursuit oI the obMectiYe oI achieYinJ the aspirations enYisaJed in the countr\·s ¶9ision ·. $s a Moint saIet\ net pla\er in the Ànancial sector, the .',& will pursue its complementar\ role oI JuaranteeinJ saIet\ oI deposits locall\ and cross-border throuJh inIormation sharinJ, consumer protection and buildinJ public conÀdence in the oYerall stabilit\ oI the Ànancial s\stem.

MEMBERSHIP 0embership to the )und is 0andator\ Ior all deposit takinJ institutions licensed under the %ankinJ $ct, %uildinJ Societies $ct and the 0icroÀnance $ct %ankinJ $ct   , .',& $ct   . The 0embership to the )und, as at th -une, , comprised the IollowinJ: i. )ort\ three  &ommercial %anks ii. One  0ortJaJe )inance ,nstitution iii. TwelYe  'eposit-TakinJ 0icroÀnance ,nstitutions.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 37 protecting your deposits

SOURCES OF INCOME The )und has Iour maMor sources oI income, namel\: a Seed &apital Irom the Sponsor: This was a one-oII GoYernment contribution throuJh the National Treasur\. ,n this reJard, 'P)% receiYed .Shs.  million as ¶Seed &apital· at the inception oI the )und b Premium contributions: .',& leYies premium on 0ember ,nstitutions annuall\ at . oI the aYeraJe total deposit liabilities durinJ the precedinJ  months period with a minimum oI .Shs. ,. >appro[imatel\ 8S ,@ c ,nYestment income: This is mainl\ Irom ,nYestment oI Iunds which is restricted to GoYernment Securities. This ensures: i. PreserYation oI capital ii. SaIe custod\ iii. /iTuidit\ and iY. /onJ term Jrowth oI the capital. d /onJ term borrowinJ: The )und is allowed to borrow Irom the &entral %ank oI .en\a, in the eYent that the )und balance is insuIÀcient Ior pa\-out, in case oI a bank Iailure, or the &onsolidated )und in case oI a s\stemic crises. The ma[imum amount oI protected deposits that is paid out to each depositor, in the eYent oI a bank Iailure, has remained at .Shs.,  >8S , since the inception oI the )und, but a stud\ was commissioned b\ the OIÀce oI the Technical assistance oI the 8S Treasur\, to establish $deTuate &oYer, Optimal TarJet )und and 5isk- %ased &ontribution. The coYeraJe leYel is set Ior reYiew, thouJh to be limited to a leYel, adeTuate and credible enouJh, to instil conÀdence in the Ànancial s\stem. The planned reYiew, hence, will balance the current economic conditions and moral ha]ard in order to meet public polic\ obMectiYes with a Joal to maintain Ànancial stabilit\. The establishment oI a tarJet Iund, it is e[pected, will serYe to address periodic Iailures that are not s\stemic in nature. PraJmatic resolution approaches will inIorm achieYable tarJet leYels. The current premium rate oI . will continue to appl\ with the e[pectation that tarJet Iund, a reYised coYeraJe leYel and risk based premiums ma\ be introduced as per Section   oI the .', $ct, , which proYides a ma[imum rate oI .. $ll t\pes oI deposit accounts in the insured institutions are eliJible Ior coYer e[cept inter-bank balances. The reYised contribution approach will be based on a diIIerential premium s\stem. This will serYe to proYide incentiYes to adopt sound risk manaJement practices amonJ member institutions, hence, will promote Ànancial stabilit\. 'eposit insurance contributions will, thereIore, diIIerentiate risk proÀles oI member institutions, thereb\, introducinJ a more obMectiYe and risk-based approach to premium contribution. $s at th -une, , deposit accounts Iull\ coYered were . million while the eIIectiYe coYer was . To date, .',& has taken oYer  collapsed institutions. SeYen oI these institutions haYe been wound up leaYinJ seYenteen institutions underJoinJ liTuidation.

38 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

STAKEHOLDER REFORMS

5eIorms, in the Ànancial and leJal sectors, haYe pla\ed a complimentar\ role in enhancinJ the %oard·s operations. The reIorms in the Mudiciar\ continue to pla\ a siJniÀcant role in the socio-economic and political deYelopment in the nation. The streamlininJ oI the court processes, and the continued eIIorts to automate the court processes, and diJiti]ation oI the court reJistr\ s\stem, haYe all enhanced eIÀcienc\, particularl\, the timeliness oI the resolution oI matters throuJh the Mudicial process. This eIÀcienc\ has had a positiYe impact on Ànali]ation oI the litiJation matters relatinJ to ,nstitutions in /iTuidation.

The &redit ,nIormation SharinJ 0echanism, throuJh &redit 5eIerence %ureaus &5%s , introduced in the Ànancial s\stem in the recent past, has contributed Jreatl\ to the reduction oI incidences oI bad debts in the bankinJ industr\. This, in turn, has improYed the Tualit\ oI the asset portIolios oI member institutions, as well the credit processinJ, thereb\, contributinJ to Ànancial stabilit\. SpeciÀcall\, credit inIormation sharinJ has encouraJed some debtors to resolYe their outstandinJ indebtedness in ,nstitutions under /iTuidation b\ .',&, thereb\, boostinJ debt reali]ation and recoYer\.

The introduction oI the .en\a (lectronic Pa\ment and Settlement S\stem .(PSS , and the e[pansion oI its scope, has been a collaboration eIIort between the &entral %ank oI .en\a, and the %ankinJ Sector. $ncillar\ reIorms around it, such as the cheTue truncation, and cappinJ oI pa\ments, and, recentl\, the adoption oI internet bankinJ, haYe contributed to the enhancement oI real time settlement. One oI the &ore Principles Ior an (IIectiYe 'eposit ,nsurance S\stem is ´Prompt Pa\-Out Processµ. ThrouJh .(PSS, 'P)% has manaJed to make prompt diYidend disbursements to depositors and other creditors oI ,nstitutions in /iTuidation.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 39 protecting your deposits

40 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

FINANCIAL STATEMENTS

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

DIRECTORS AND STATUTORY INFORMATION

DIRECTORS &hairman - 9acant 'r. -ulius .. .ipnJ·etich - $ctinJ &hairman 'r. Patrick NJuJi NMoroJe - GoYernor, &entral %ank oI .en\a ² w.e.I  -une  ProI. NMuJuna NdunJ·u - GoYernor, &entral %ank oI .en\a ² up to  0arch  'r. .amau ThuJJe - Principal Secretar\, National Treasur\ 0r. 0artin S.O. Gumo - $lternate to Principal Secretar\, National Treasur\ ProI. Githu 0uiJai - $ttorne\ General Tom Odede - $lternate to the $ttorne\ General 0rs. Nasim 'eYMi∗ - Member Mr. -erem\ ,. NJun]e - Member Mr. Samuel N. Kimani - Member Mr. $JJre\. -. K. %ett - K',& $ctinJ &(O ([-oIÀcio Ms. -ane K. ,kun\ua - K',& $ctinJ %oard Secretar\ ∗ %ritish

BOARD AUDIT COMMITTEE Mrs. Nasim 'eYMi - &hairperson 'r. -ulius K. KipnJ·etich - Member Mr. -erem\ ,. NJun]e - Member Mr. Samuel N. Kimani - Member Mr. Martin S. O. Gumo - $lternate to Principal Secretar\, Treasur\ Mrs. (dith M. KaJasi - %oard $udit &ommittee Secretar\

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 41 protecting your deposits

SENIOR MANAGEMENT Mr. $JJre\ -. K. %ett - $ctinJ &(O Mr. Stephen M. Thuo - $ssistant 'irector ² )inance $dministration Ms. -ane K. ,kun\ua - $ssistant 'irector ² /eJal Mr. Mohamud $. Mohamud - $ssistant 'irector ² /iTuidations 'r. :alter O. On\ino - $ssistant 'irector ² ,&T

PRINCIPAL PLACE OF BUSINESS &%K Pension +ouse Iormerl\ Marshall +ouse +arambee $Yenue P. O. %o[  -  Nairobi

AUDITORS KPMG Ken\a On behalI oI: The $uditor-General th )loor, $%& Towers Ken\a National $udit OIÀce :ai\aki :a\ $nniYersar\ Towers P. O. %o[  -  8niYersit\ :a\ Nairobi GPO P.O. %o[  - , Nairobi GPO

BANKERS &entral %ank oI Ken\a &entral %ank oI Ken\a %uildinJ +aile Selassie $Yenue P. O. %o[  -  Nairobi

42 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2015 The directors haYe pleasure in submittinJ their report toJether with the audited Ànancial statements Ior the \ear ended th -une , which disclose the state oI aIIairs oI the &orporation.

1. CHANGE OF NAME The &orporation chanJed its name Irom 'eposit Protection )und %oard to Ken\a 'eposit ,nsurance &orporation the ¶&orporation· on st -ul\ .

2. INCORPORATION The Ken\a 'eposit ,nsurance &orporation Iormerl\ 'eposit Protection )und %oard is established under the Ken\a 'eposit ,nsurance $ct,  K', $ct  .

3. PRINCIPAL ACTIVITIES The &orporation is established and administered under the K', $ct,  with the principal obMect to proYide a deposit insurance scheme Ior customers oI member institutions, to receiYe, liTuidate and wind up an\ institution in respect oI which the &orporation is appointed receiYer or liTuidator in accordance with the K', $ct. The &orporation commenced operations on st -ul\ , with a transition period oI one \ear, to th -une . The obMectiYes oI the &orporation is to proYide deposit insurance scheme Ior depositors oI member institutions , monitor the soundness oI institutions throuJh anal\sis, and undertake problem bank resolution throuJh receiYership, liTuidation and windinJ up oI collapsed bank institutions.

4. RESULTS The results Ior the \ear are set out on paJe .

5. DIRECTORS The directors who serYed durinJ the \ear are set out on paJe .

6. AUDITORS The $uditor-General is responsible Ior the statutor\ audit oI the &orporation·s books oI account in accordance with Section  and  i oI the Public $udit $ct. This $ct empowers the $uditor-General to appoint other auditors to carr\ out the audit on his behalI. KPMG Ken\a, who were appointed b\ the $uditor-General, carried out the audit oI the &orporation·s Ànancial statements Ior the \ear ended th -une .

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 43 protecting your deposits

7. APPROVAL OF FINANCIAL STATEMENTS The Ànancial statements were approYed at a meetinJ oI the %oard oI 'irectors held on th $uJust .

BY ORDER OF THE BOARD Ms. JANE K. IKUNYUA AG. BOARD SECRETARY

Date: 27 August 2015

44 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE YEAR ENDED 30 JUNE 2014

The directors are responsible Ior the preparation and presentation oI the Ànancial statements oI Ken\a 'eposit ,nsurance &orporation Iormerl\ 'eposit Protection )und %oard set out on paJes  to  which comprise the statement oI Ànancial position at th -une , the statement oI proÀt or loss and other comprehensiYe income, statement oI chanJes in Iund balance and statement oI cash Áows Ior the \ear then ended, and a summar\ oI siJniÀcant accountinJ policies and other e[planator\ inIormation. The directors· responsibilities include: determininJ that the basis oI accountinJ described in Note  is an acceptable basis Ior preparinJ and presentinJ the Ànancial statements in the circumstances, preparation and presentation oI Ànancial statements in accordance with ,nternational )inancial 5eportinJ Standards and in the manner reTuired b\ the %ankinJ $ct and Ior such internal control as the directors determine is necessar\ to enable the preparation oI Ànancial statements that are Iree Irom material misstatements, whether due to Iraud or error. 8nder the K', $ct, the directors are reTuired to prepare Ànancial statements Ior each Ànancial \ear which JiYe a true and Iair Yiew oI the state oI aIIairs oI the &orporation as at the end oI the Ànancial \ear and oI the operatinJ results oI the &orporation Ior that \ear. ,t also reTuires the directors to ensure the &orporation keeps proper accountinJ records which disclose with reasonable accurac\ the Ànancial position oI the &orporation. The directors accept responsibilit\ Ior the annual Ànancial statements, which haYe been prepared usinJ appropriate accountinJ policies supported b\ reasonable and prudent MudJments and estimates, in conIormit\ with ,nternational )inancial 5eportinJ Standards and in the manner reTuired b\ the K', $ct. The directors are oI the opinion that the Ànancial statements JiYe a true and Iair Yiew oI the state oI the Ànancial aIIairs oI the &orporation and oI its operatinJ results. The directors Iurther accept responsibilit\ Ior the maintenance oI accountinJ records which ma\ be relied upon in the preparation oI Ànancial statements, as well as adeTuate s\stems oI internal Ànancial control. The directors haYe made an assessment oI the &orporation·s abilit\ to continue as a JoinJ concern and haYe no reason to belieYe the &orporation will not be a JoinJ concern Ior at least the ne[t twelYe months Irom the date oI this statement.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 45 protecting your deposits

APPROVAL OF THE FINANCIAL STATEMENTS The Ànancial statements, as indicated aboYe, were approYed b\ the %oard oI 'irectors on th $uJust  and were siJned on its behalI b\:

&hairman Member

46 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF CORPORATE GOVERNANCE The Ken\a 'eposit ,nsurance &orporation K',& is a bod\ corporate established under the Ken\a 'eposit ,nsurance $ct, . The &orporation is committed to maintaininJ the hiJhest standards oI inteJrit\, proIessionalism and business ethics in all its operations.

BOARD OF DIRECTORS The K', $ct Section    proYides that the %oard oI directors shall be composed oI ÀYe members not beinJ public oIÀcers, appointed b\ the &abinet Secretar\ oI the National Treasur\, three oI whom shall be Irom the ,nstitutions, one oI whom shall be appointed as a non-e[ecutiYe &hairperson b\ the President on the recommendation oI the Minister, proYided that the &hairperson appointed shall not be Irom the member institutions oI the &orporation, the GoYernor oI &entral %ank oI Ken\a, Principal Secretar\ to the National Treasur\, the attorne\ General representinJ the member institutions and the &hieI ([ecutiYe OIÀcer who shall be an e[-oIÀcio member. The members representinJ the institutions durinJ the period under reYiew are: Mrs. Nasim 'eYMi, 'r. -ulius KipnJ·etich, Mr. -erem\ NJun]e and Mr. Samuel Kimani.

BOARD MEETINGS The %oard meets eYer\ Tuarter and has a Iormal schedule oI aJenda items due Ior deliberations. The directors are JiYen appropriate and timel\ inIormation to maintain Iull and eIIectiYe control oYer strateJic, Ànancial and operational issues. The %oard is not inYolYed in the conduct oI da\-to-da\ business as this is a responsibilit\ JiYen to the $J. &hieI ([ecutiYe OIÀcer $J. &(O oI K', $ct. ,t howeYer retains responsibilit\ Ior determininJ the policies oI the )und.

AUDIT COMMITTEE The members oI the $udit &ommittee are Mrs. Nasim 'eYMi, Mr. Martin Gumo, 'r. -ulius KipnJ·etich, Mr. -erem\ NJun]e and Mr. Samuel Kimani. The\ are all non-([ecutiYe 'irectors and haYe e[perience in %ankinJ, )inance, $ccountinJ, $dministration and ManaJement. The committee meets eYer\ Tuarter, and as necessar\, two weeks beIore the Iull %oard meetinJ. The committee·s responsibilities are to reYiew the eIÀcienc\ and eIIectiYeness oI ,nternal &ontrols, )inancial 5eportinJ, ,nternal $udit Iunction, ([ternal audit work, and 5isk ManaJement policies and procedures. Towards this end, a selI-eYaluation tool which measures the committee·s perIormance has been deYeloped and implemented.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 47 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF CORPORATE GOVERNANCE &RQWLQXHG  MANAGEMENT STRUCTURE The K',& senior manaJement is made up oI the $J. &(O, Iour $ssistant 'irectors, each headinJ the 'iYision oI )inance $dministration, /eJal, ,&T and /iTuidations. The K',& senior manaJement meets reJularl\ to reYiew oYerall perIormance oI the &orporation. 'ecision makinJ is throuJh seYeral manaJement committees which meet reJularl\ to deliberate and adYise the $J. &(O on speciÀc issues. $ll K',& staII are emplo\ees oI &entral %ank oI Ken\a seconded to the &orporation.

DIRECTOR’S EMOLUMENTS AND LOANS The remuneration paid to the directors Ior serYices rendered durinJ the Ànancial \ear  is disclosed in Note  oI the Ànancial statements. The directors, who are all non- e[ecutiYe, are paid a monthl\ retainer Iee and a sittinJ allowance Ior eYer\ meetinJ attended. There were no loans to Non-([ecutiYe 'irectors durinJ the \ear.

CODE OF ETHICS The &orporation is committed to the hiJhest standards oI inteJrit\, behaYior and ethics. $ Iormal code oI ethics Ior all emplo\ees oI &entral %ank oI Ken\a e[ists and is Iull\ implemented. $ll emplo\ees oI the &orporation are e[pected to aYoid actiYities and Ànancial interests which could JiYe rise to conÁict oI interest with their responsibilities. Strict rules oI conduct appl\ to the staII oI &%K, includinJ those in K',&, under the staII rules and reJulations.

INTERNAL CONTROLS The manaJement oI the &orporation has put in place a series oI internal control mechanisms to ensure the reportinJ oI complete and accurate accountinJ inIormation. Procurement oI Joods and serYices is strictl\ done in accordance with the Public Procurement 'isposal $ct, . ,n all operational areas oI the &orporation, workÁows haYe been structured in a manner that allows adeTuate seJreJation oI duties.

AUTHORIZATIONS $ll the e[penditure oI the &orporation must be authori]ed in accordance with a comprehensiYe set oI the &orporation·s policies and procedures. There is a budJet which is approYed b\ the %oard beIore commencement oI the Ànancial \ear. The %oard receiYes reJular manaJement accounts comparinJ actual outcomes aJainst budJet as a means oI monitorinJ actual Ànancial perIormance oI the &orporation.

48 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF CORPORATE GOVERNANCE ... &RQWLQXHG 

INTERNAL AUDIT AND RISK MANAGEMENT The ,nternal $udit Iunction is perIormed b\ ,nternal $udit 8nit, which is responsible Ior monitorinJ and proYidinJ adYice on the internal control Iramework. $ll reports oI the ,nternal $udit are aYailable to the $udit &ommittee oI the %oard.

TRANSPARENCY The &orporation publishes an $nnual 5eport which e[plains the perIormance oI the %ankinJ sector, membership status and other pertinent inIormation. On an annual basis, the )inancial Statements are published in the Ken\a Ga]ette and placed in the website oI the &orporation. K',& shared its  StrateJic Plan with the stakeholders and will carr\ out a mid- term reYiew oI the implementation status at the end oI  Ànancial \ear.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 49 protecting your deposits

REPORT OF THE AUDITOR GENERAL ON KENYA DEPOSIT INSURANCE CORPORATION FOR THE YEAR ENDED 30 JUNE 2015

50 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

REPORT OF THE AUDITOR GENERAL ON KENYA DEPOSIT INSURANCE CORPORATION FOR THE YEAR ENDED 30 JUNE 2015 ...continued

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 51 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015

2015 2014 Note KShs’ 000 KShs’ 000 REVENUE $VVHVVPHQWLQFRPH  D    ,QYHVWPHQWLQFRPH  E    2WKHULQFRPH   

8,610,782 7,370,888

EXPENSES $GPLQLVWUDWLRQDQGHVWDEOLVKPHQW  

SURPLUS FOR THE YEAR 8,330,358 7,119,692

Other comprehensive income - -

TOTAL COMPREHENSIVE INCOME 8,330,358 7,119,692

The notes set out on paJes  to  Iorm an inteJral part oI these Ànancial statements.

52 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015

2015 2014 ASSETS Note KShs‘000 KShs‘000 Non-current assets 3URSHUW\DQGHTXLSPHQW   Prepaid operating lease rentals 10 3,218 3,317 Investment 11 100 100 *RYHUQPHQWVHFXULWLHV    28,714,402 26,866,537 Current assets 5HFHLYDEOHVDQGSUHSD\PHQWV  D    *RYHUQPHQWVHFXULWLHV   Cash and bank balance 16 115,375 1,025 

TOTAL ASSETS 54,961,531 46,643,512

FUND BALANCE AND LIABILITIES )XQGEDODQFH 3DJH     Current liabilities 3D\DEOHVDQGDFFUXDOV    'XHWRUHODWHGSDUW\  D    'HIHUUHGLQFRPH    

TOTAL FUND BALANCE AND LIABILITIES 54,961,531 46,643,512

The Ànancial statements on paJes  to  were approYed b\ the %oard oI 'irectors on th $uJust  and were siJned on its behalI b\:

&hairman Member

The notes set out on paJes  to  Iorm an inteJral part oI these Ànancial statements.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 53 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF CHANGES IN FUND BALANCE FOR THE YEAR ENDED 30 JUNE 2015

Fund balance Shs‘000

2015: %DODQFHDW-XO\  Surplus for the year 8,330,358 Balance at 30 June 2015 54,914,117

2014: %DODQFHDW-XO\  6XUSOXVIRUWKH\HDU  Balance at 30 June 2014 46,583,759

The notes set out on paJes  to  Iorm an inteJral part oI these Ànancial statements.

54 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015

2015 2014 Note KShs‘000 KShs‘000 Cash ÁoZs Irom operatinJ activities 6XUSOXVIRUWKH\HDU    Adjustment for: 'HSUHFLDWLRQRISURSHUW\DQGHTXLSPHQW    $PRUWLVDWLRQRISUHSDLGRSHUDWLQJOHDVHUHQWDOV  *DLQRQGLVSRVDO      ,QWHUHVWLQFRPH      OperatinJ surplus beIore ZorNinJ capital chanJes 2,873,438 2,455,703 ChanJe in ZorNinJ capital 5HFHLYDEOHVDQGSUHSD\PHQWV       3D\DEOHVDQGDFFUXDOV    'HIHUUHGLQFRPH       'XHWRUHODWHGSDUW\       Net cash ÁoZs Jenerated Irom operatinJ activities 2,859,824 2,447,019 Cash ÁoZs Irom investinJ activities 1HWPRYHPHQWLQJRYHUQPHQWVHFXULWLHV     3XUFKDVHRISURSHUW\DQGHTXLSPHQW      Proceeds from disposals 1,030 - Interest received 5,466,351 4,675,863

Net cash ÁoZs Irom investment activities (2,757,184) (2,815,910) 1HWLQFUHDVH GHFUHDVH LQFDVKDQGFDVK HTXLYDOHQWV     &DVKDQGFDVKHTXLYDOHQWVDWWKHEHJLQQLQJ RIWKH\HDU    Cash and cash eTuivalents at the end oI the year 16 148,601 45,961

The notes set out on paJes  to  Iorm an inteJral part oI these Ànancial statements.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 55 protecting your deposits

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015

1. REPORTING ENTITY The &orporation is established under the Ken\a 'eposit ,nsurance $ct  and is domiciled in Ken\a. The address oI its reJistered oIÀce is as Iollows: &%K Pension +ouse Iormerl\ Marshall +ouse +arambee $Yenue P. O. %o[  -  Nairobi

2. BASIS OF PREPARATION

A. BASIS OF ACCOUNTING The Ànancial statements haYe been prepared on the historical cost conYention.

B. STATEMENT OF COMPLIANCE The Ànancial statements haYe been prepared in accordance with ,nternational )inancial 5eportinJ Standards ,)5Ss .

C. FUNCTIONAL AND PRESENTATION CURRENCY These Ànancial statements are presented in Ken\a ShillinJs KShs , which is the &orporation·s Iunctional currenc\.

D. USE OF ESTIMATES AND JUDGEMENTS The preparation oI Ànancial statements in conIormit\ with ,nternational )inancial 5eportinJ Standards reTuires the use oI estimates and assumptions that aIIect the reported amounts oI assets and liabilities and disclosures oI continJent liabilities at the date oI Ànancial statements and the reported amounts oI reYenues and e[penses durinJ the reportinJ period. The estimates and assumptions are based on the directors· best knowledJe oI current eYents, actions, historical e[perience and Yarious other Iactors that are belieYed to be reasonable under the circumstances, the results oI which Iorm the basis oI makinJ the MudJements about the carr\inJ Yalues oI the assets and liabilities that are not readil\ apparent Irom other sources. $ctual results ma\ diIIer Irom these estimates.

56 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

D. USE OF ESTIMATES AND JUDGEMENTS  FRQWLQXHG The estimates and underl\inJ assumptions are reYiewed on an onJoinJ basis. 5eYisions to the accountinJ estimates are recoJnised in the period in which the estimate is reYised iI the reYision aIIects onl\ that period or in the period oI reYision and Iuture periods iI the reYision aIIects both current and Iuture periods. ,n particular, inIormation about siJniÀcant areas oI estimation and critical MudJement in appl\inJ accountinJ policies that haYe the most siJniÀcant eIIect on the amount recoJnised in the Ànancial statement is described in Note .

3. SIGNIFICANT ACCOUNTING POLICIES The principal accountinJ policies applied in the preparation oI these Ànancial statements are set out below. These policies haYe been consistentl\ applied to all the \ears presented, unless otherwise stated.

A. REVENUE RECOGNITION $ssessed income comprises contributions leYied to the contributor\ institutions and is recoJni]ed in the period when the\ are receiYable. Such contributions are assessed at a rate oI . per cent oI the aYeraJe oI the institutions· total deposit liabilities durinJ the period oI  months prior to the date oI leY\ notice. ,nterest income is recoJni]ed in the proÀt or loss Ior all interest earninJ instruments on an accrual basis usinJ the eIIectiYe interest method based on the actual purchase price. Interest income includes coupon earned and unamortised discount and premium.

B. TRANSLATION OF FOREIGN CURRENCIES Transactions in IoreiJn currencies durinJ the \ear are conYerted into Ken\a ShillinJs at the e[chanJe rate rulinJ at the date oI the transaction. )oreiJn currenc\ monetar\ assets and liabilities are translated at the e[chanJe rate rulinJ at the reportinJ date. 5esultinJ e[chanJe diIIerences are recoJnised in proÀt or loss Ior the \ear. Non-monetar\ assets and liabilities denominated in IoreiJn currenc\ are recorded at the e[chanJe rate rulinJ at the date oI transaction.

C. PROVISIONS OF PAYMENTS TO DEPOSITORS ProYisions Ior pa\ments to protected depositors are recoJni]ed in the Ànancial statements in the period the contributor\ institutions are placed under liTuidation. $n\ pa\ments that e[ceed the proYisions made are taken into account in determininJ operatinJ proÀt. ProYisions that relate to unclaimed protected deposits are written back to income on e[pir\ oI the statutor\ notice period.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 57 protecting your deposits

D. LEASES /eases where the lessor retains substantiall\ all the risks and beneÀts oI ownership oI the asset are classiÀed as operatinJ leases. Pa\ments made under operatinJ leases are recoJni]ed as an e[pense in the proÀt or loss on a straiJht-line basis oYer the lease term.

E. EMPLOYEE ENTITLEMENTS (mplo\ee entitlements are recoJni]ed when the\ accrue to emplo\ees. $ proYision is made Ior the estimated liabilit\ Ior such entitlements as a result oI serYices rendered b\ emplo\ees up to the reportinJ date. The estimated monetar\ liabilit\ Ior emplo\ees· accrued annual leaYe entitlement at the reportinJ date is recoJni]ed as an e[pense accrual. The &orporation·s emplo\ees are eliJible Ior retirement beneÀts under a deÀned beneÀt plan proYided throuJh a separate Iund. The deÀned beneÀt plan is Iunded b\ the &orporation and the &entral %ank, the main sponsor. The retirement beneÀt asset is wholl\ recoJni]ed in the Ànancial statements oI the &entral %ank while the &orporation recoJni]es contributions to the Iund as iI it were a deÀned contribution scheme b\ charJinJ them to the proÀt and loss account in the \ear to which the\ relate. The &orporation also contributes to a statutor\ deÀned contribution Pension Scheme, the National Social Securit\ )und NSS) . The &orporation·s contributions are charJed to the income statement in the \ear to which the\ relate. The &orporation has no Iurther obliJation once the contributions haYe been paid.

F. TAXATION The &orporation·s income is not subMect to ta[ as it has been Jranted e[emption b\ the statute. ThereIore no proYision Ior current ta[ or deIerred ta[ is made in the Ànancial statements.

G. FINANCIAL ASSETS AND LIABILITIES (i) Recognition The &orporation recoJni]es all Ànancial assets and liabilities on the trade date at which the &orporation becomes a part\ to the contractual proYision oI the instrument. $ Ànancial asset or liabilit\ is initiall\ measured at Iair Yalue plus Ior an item not subseTuentl\ measured at Iair Yalue throuJh proÀt or loss transaction costs that are directl\ attributable to its acTuisition or issue. SubseTuentl\, held-to-maturit\ inYestments and loans and receiYables are measured at amortised cost.

58 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

G. FINANCIAL ASSETS AND LIABILITIES ...continued

(ii) ClassiÀcation The &orporation classiÀes its Ànancial assets in the held-to-maturit\ and loans and receiYables cateJor\. The &orporation classiÀes its Ànancial liabilities as measured at amortised cost. ManaJement determines the classiÀcation oI its inYestments at initial recoJnition. Held-to-maturity +eld-to-maturit\ inYestments are non-deriYatiYe Ànancial assets with À[ed or determinable pa\ments and À[ed maturities that the &orporation·s manaJement has the positiYe intention and abilit\ to hold to maturit\. :ere the &orporation to sell other than an insiJniÀcant amount oI held-to-maturit\ assets, the entire cateJor\ would be tainted and reclassiÀed as aYailable Ior sale. These include inYestment in JoYernment securities. Loans and receivables /oans and receiYables are Ànancial assets with À[ed or determinable pa\ments and À[ed maturities that are not Tuoted in an actiYe market. The\ arise when the &orporation proYides mone\ directl\ to borrowers, other than those created with the intention oI short-term proÀt takinJ. The\ are recoJnised at the date mone\ is disbursed to the borrower or when the\ are transIerred to the &orporation Irom a third part\. SubseTuent to initial recoJnition, these are carried at amortised cost, which is the present Yalue oI the e[pected Iuture cash Áows, discounted at the instrument·s oriJinal eIIectiYe interest rate. /oan oriJination Iees toJether with related direct costs are treated as part oI the cost oI the transaction. $mortised cost is calculated usinJ the eIIectiYe interest rate method. The amortisation and accretion oI premiums and discounts is included in interest income.

2tKer Ànancial liabilities Other Ànancial liabilities are measured at amortised cost. These include other pa\ables and amounts due to related companies.

(iii) IdentiÀcation and measurement of impairment of Ànancial assets $t each reportinJ date the &orporation assesses whether there is obMectiYe eYidence that Ànancial assets not carried at Iair Yalue throuJh proÀt or loss are impaired. )inancial assets are impaired when obMectiYe eYidence demonstrates that a loss eYent has occurred aIter the initial recoJnition oI the asset, and that the loss eYent has an impact on the carr\inJ amount.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 59 protecting your deposits

G. FINANCIAL ASSETS AND LIABILITIES ...continued

(iii) IdentiÀcation and measurement of impairment of Ànancial assets ...continued Impairment losses on assets carried at amorti]ed cost are measured as the diIIerence between the carr\inJ amount oI the Ànancial assets and the present Yalue oI estimated cash Áows discounted at the assets· oriJinal eIIectiYe interest rate. /osses are recoJni]ed in proÀt or loss and reÁected in an allowance account. Interest on the impaired asset continues to be recoJni]ed throuJh the unwindinJ oI the discount. :hen a subseTuent eYent causes the amount oI impairment loss to decrease, the impairment loss is reYersed throuJh proÀt or loss.

(iv) Derecognition The &orporation derecoJni]es a Ànancial asset when the contractual riJhts to the cash Áows Irom the Ànancial asset e[pire, or when it transIers the riJhts to receiYe the contractual cash Áows on the Ànancial asset in a transaction in which substantiall\ all the risks and rewards oI ownership oI the Ànancial asset are transIerred. $n\ interest in transIerred Ànancial assets that is created or retained b\ the &orporation is recoJni]ed as a separate asset or liabilit\. The &orporation derecoJni]es a Ànancial liabilit\ when its contractual obliJations are discharJed or cancelled or e[pire. The &orporation enters into transactions whereb\ it transIers assets recoJni]ed on its statement oI Ànancial position, but retains either all or substantiall\ all oI the risks and rewards oI the transIerred assets or a portion oI them. II all or substantiall\ all risks and rewards are retained, then the transIerred assets are not derecoJni]ed Irom the statement oI Ànancial position.

(v) Offsetting of Ànancial assets and Ànancial liabilities )inancial assets and Ànancial liabilities are oIIset and the net amount reported on the statement oI Ànancial position when there is a leJall\ enIorceable riJht to oIIset the recoJnised amounts and there is an intention to settle on a net basis, or to reali]e the asset and settle the liabilit\ simultaneousl\. Income and e[penses are presented on a net basis onl\ when permitted under I)5Ss, or Ior Jains and losses arisinJ Irom a Jroup oI similar transactions such as in the &orporation·s tradinJ actiYit\.

60 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

G. FINANCIAL ASSETS AND LIABILITIES ...continued

(vi) Fair value of Ànancial assets and liabilities )air Yalue oI Ànancial assets and Ànancial liabilities is the price that would be receiYed to sell an asset or paid to transIer a liabilit\ respectiYel\ in an orderl\ transaction between market participants at the measurement date.

H. IMPAIREMENT FOR NON FINANCIAL ASSETS The carr\inJ amounts oI the &orporation·s non-Ànancial assets, are reYiewed at each reportinJ date to determine whether there is an\ indication oI impairment. II an\ such indication e[ists then the assets· recoYerable amount is estimated. $n impairment loss is recoJni]ed iI the carr\inJ amount oI an asset or its cash- JeneratinJ unit e[ceeds its recoYerable amount. $ cash-JeneratinJ unit is the smallest identiÀable asset Jroup that Jenerates cash Áows that larJel\ are independent Irom other assets and Jroups. Impairment losses are recoJni]ed in proÀt or loss. Impairment losses recoJni]ed in respect oI cash-JeneratinJ units are allocated Àrst to reduce the carr\inJ amount oI an\ Joodwill allocated to the units and then to reduce the carr\inJ amount oI the other assets in the unit Jroup oI units on a pro- rata basis. The recoYerable amount oI an asset or cash-JeneratinJ unit is the Jreater oI its Yalue in use and its Iair Yalue less costs to sell. In assessinJ Yalue in use, the estimated Iuture cash Áows are discounted to their present Yalue usinJ a pre-ta[ discount rate that reÁects current market assessments oI the time Yalue oI mone\ and the risks speciÀc to the asset.

I. INVESTMENTS HELD FOR SALE InYestment held Ior sale relates to inYestment in a subsidiar\ which is accounted Ior under I)5S  ¶Non-current assets held Ior sale and discontinued operations·. The inYestment is stated at the lower oI its carr\inJ amount and the Iair Yalue less costs to sell.

J. CASH AND CASH EQUIVALENTS )or the purposes oI the statement oI cash Áows, cash and cash eTuiYalents comprise cash on hand, bank balances and JoYernment securities maturinJ within  da\s Irom the date oI issue.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 61 protecting your deposits

K. PROPERTY AND EQUIPMENT (i) Recognition and measurement Items oI propert\ and eTuipment are measured at cost less accumulated depreciation and impairment losses. &ost includes e[penditures that are directl\ attributable to the acTuisition oI the asset.

(ii) Subsequent costs The cost oI replacinJ part oI an item oI propert\ or eTuipment is recoJnised in the carr\inJ amount oI the item iI it is probable that the Iuture economic beneÀts embodied within the part will Áow to the &orporation and its cost can be measured reliabl\. The costs oI the da\-to-da\ serYicinJ oI propert\ and eTuipment are recoJnised in proÀt or loss as incurred.

(iii) Depreciation 'epreciation is recoJnised in proÀt or loss on a straiJht line basis oYer the estimated useIul liYes oI each part oI an item oI propert\ and eTuipment as Iollows: /onJ term leasehold land OYer the lease period %uildinJs  &omputer eTuipment . I&T (Tuipment  OIÀce eTuipment, Iurniture and ÀttinJs  Motor Yehicles  'epreciation methods, useIul liYes and residual Yalues are reassessed and adMusted, iI appropriate, at each reportinJ date. Gains and losses on disposal oI propert\ and eTuipment are determined b\ reIerence to their carr\inJ amount and are recoJni]ed in proÀt or loss in the \ear in which the\ arise.

L. RELATED PARTIES In the normal course oI business, the &orporation has entered into transactions with related parties. The related part\ transactions are at arm·s lenJth.

M. GRANTS Other Jrants are recoJnised initiall\ as deIerred income at Iair Yalue when there is reasonable assurance that the\ will be receiYed and the &orporation will compl\ with the conditions.

62 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

N. COMPARATIVES :here necessar\, comparatiYe ÀJures haYe been adMusted or e[cluded to conIorm to chanJes in presentation in the current \ear.

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (a) Standards, amendments and interpretations to existing standards effective in 2015 and relevant to the Corporation New standard or amendments Effective for annual periods beginning on or after ʌ $mendments to I$S  - OIIsettinJ )inancial $ssets and )inancial /iabilities   -anuar\  ʌ InYestment (ntities- $mendments to I)5S , I)5S , and I$S    -anuar\  ʌ $mendments to I$S  - 5ecoYerable $mount 'isclosures Ior Non-)inancial $ssets   -anuar\  ʌ NoYation oI 'eriYatiYes and &ontinuation oI +edJe $ccountinJ $mendments to I$S   -anuar\  ʌ I)5I&  /eYies   -anuar\ 

Impact oI releYant new and amended standards and interpretations to published standards on the Ànancial statements Ior the \ear ended  -une  are as Iollows: ʌ Amendments to IAS 32: Offsetting Financial Assets and Financial Liabilities eIIectiYe Ior annual periods beJinninJ on or aIter  -anuar\  The amendments to I$S  clariI\ the oIIsettinJ criteria in I$S  b\ e[plaininJ when an entit\ currentl\ has a leJall\ enIorceable riJht to set-oII and when Jross settlement is eTuiYalent to net settlement. The &orporation·s polic\ is to oIIset Ànancial assets and Ànancial liabilities when there is a leJall\ enIorceable riJht to oIIset the recoJnised amount and there is an intention to settle on a net basis, or to reali]e the asset and settle the liabilit\ simultaneousl\. The clariÀcation contained in these amendments reinIorces the &orporation·s polic\ and would not alter the manner in which oIIsettinJ arranJements are accounted Ior

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 63 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued ʌ Amendments to IFRS 10, IFRS 12 and IAS 27: Investment entities eIIectiYe Ior annual periods beJinninJ on or aIter st -anuar\  The amendments clariI\ that a TualiI\inJ inYestment entit\ is reTuired to account Ior inYestments in controlled entities, as well as inYestments in associates and Moint Yentures, at Iair Yalue throuJh proÀt or loss the onl\ e[ception would be subsidiaries that are considered an e[tension oI the inYestment entit\·s inYestment actiYities. The consolidation e[emption is mandator\ and not optional. The application oI these amendments haYe had no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial Assets eIIectiYe Ior annual periods beJinninJ on or aIter st -anuar\  The amendments reYerse the unintended reTuirement in I)5S  )air 9alue Measurement to disclose the recoYerable amount oI eYer\ cash-JeneratinJ unit to which siJniÀcant Joodwill or indeÀnite-liYed intanJible assets haYe been allocated. 8nder the amendments, the recoYerable amount is reTuired to be disclosed onl\ when an impairment loss has been recoJnised or reYersed. The application oI this amendment has had no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements. ʌ Amendments to IAS 39: Novation of Derivatives and Continuation of Hedge Accounting eIIectiYe Ior annual periods beJinninJ on or aIter st -anuar\  The amendments permit the continuation oI hedJe accountinJ in a situation where a counterpart\ to a deriYatiYe desiJnated as a hedJinJ instrument is replaced b\ a new central counterpart\ known as ¶noYation oI deriYatiYes· , as a conseTuence oI laws or reJulations, iI speciÀc conditions are met. The application oI this amendment has had no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ IFRIC 21: Levies eIIectiYe Ior annual periods beJinninJ on or aIter st -anuar\  I)5I&  deÀnes a leY\ as an outÁow Irom an entit\ imposed b\ a JoYernment in accordance with leJislation. It conÀrms that an entit\ recoJnises a liabilit\ Ior a leY\ when ² and onl\ when ² the triJJerinJ eYent speciÀed in the leJislation occurs.

64 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued

ʌ IFRIC 21: Levies ...continued The application oI this interpretation has had no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

Impact of relevant new and amended standards and interpretations to published standards on the Ànancial statements for the year ended 30 June 2015 New standard or amendments Effective for annual periods beginning on or after • 'eÀned %eneÀt Plans: (mplo\ee st -ul\  &ontributions $mendments to I$S  • Sale or &ontribution oI $ssets between an st -anuar\  InYestor and its $ssociate or -oint 9enture $mendments to I)5S  and I$S  • $ccountinJ Ior $cTuisitions oI Interests in st -anuar\  -oint Operations $mendments to I)5S  • $mendments to I$S  - %earer Plants st -anuar\  $mendments to I$S  and I$S  • $mendments to I$S  and I$S  ² st -anuar\  &lariÀcation oI $cceptable Methods oI 'epreciations and $mortisation • (Tuit\ Method in Separate )inancial st -anuar\  Statements $mendments to I$S  • I)5S  5eJulator\ 'eIerral $ccounts st -anuar\  • InYestment (ntities: $ppl\inJ the st -anuar\  &onsolidation ([ception $mendments to I)5S , I)5S  and I$S  • 'isclosure InitiatiYe $mendments to I$S  st -anuar\  • I)5S  5eYenue Irom &ontracts with st -anuar\  &ustomers • I)5S  )inancial Instruments  st -anuar\ 

$ll Standards and Interpretations will be adopted at their eIIectiYe date e[cept Ior those Standards and Interpretations that are not applicable to the &orporation .

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 65 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued

Impact of relevant new and amended standards and interpretations to published standards on the Ànancial statements for the year ended 30 June 2015 ...continued

ʌ DeÀned beneÀt plans ² Employee contributions $mendments to I$S  The amendments introduce relieI that will reduce the comple[it\ and burden oI accountinJ Ior certain contributions Irom emplo\ees or third parties. Such contributions are eliJible Ior practical e[pedient iI the\ are: set out in the Iormal terms oI the plan linked to serYice and independent oI the number oI \ears oI serYice. :hen contributions are eliJible Ior the practical e[pedient, a &ompan\ is permitted but not reTuired to recoJnise them as a reduction oI the serYice cost in the period in which the related serYice is rendered. The amendments appl\ retrospectiYel\ Ior annual periods beJinninJ on or aIter st -ul\  with earl\ adoption permitted. The application oI this amendment will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ Sale or Contribution of Assets between an Investor and its Associate or Joint Venture $mendments to I)5S  and I$S  The amendments reTuire the Iull Jain to be recoJnised when assets transIerred between an inYestor and its associate or Moint Yenture meet the deÀnition oI a ¶business· under I)5S  %usiness &ombinations. :here the assets transIerred do not meet the deÀnition oI a business, a partial Jain to the e[tent oI unrelated inYestors· interests in the associate or Moint Yenture is recoJnised. The deÀnition oI a business is ke\ to determininJ the e[tent oI the Jain to be recoJnised. ʌ Sale or Contribution of Assets between an Investor and its Associate or Joint Venture $mendments to I)5S  and I$S  - continued The amendments will be eIIectiYe Irom annual periods commencinJ on or aIter st -anuar\ . The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

66 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued

Impact of relevant new and amended standards and interpretations to published standards on the Ànancial statements for the year ended 30 June 2015 ...continued

ʌ Accounting for Acquisitions of Interests in Joint Operations $mendments to I)5S  The amendments reTuire business combination accountinJ to be applied to acTuisitions oI interests in a Moint operation that constitutes a business. %usiness combination accountinJ also applies to the acTuisition oI additional interests in a Moint operation while the Moint operator retains Moint control. The additional interest acTuired will be measured at Iair Yalue. The preYiousl\ held interest in the Moint operation will not be re-measured. The amendments appl\ prospectiYel\ Ior annual periods beJinninJ on or aIter  -anuar\  and earl\ adoption is permitted. The application oI this amendment will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements. ʌ Amendments to IAS 41- Bearer Plants $mendments to I$S  and I$S  The amendments to I$S  Propert\, Plant and (Tuipment and I$S  $Jriculture reTuire a bearer plant which is a liYinJ plant used solel\ to Jrow produce oYer seYeral periods to be accounted Ior as propert\, plant and eTuipment in accordance with I$S  Propert\, Plant and (Tuipment instead oI I$S  $Jriculture. The produce JrowinJ on bearer plants will remain within the scope oI I$S . The new reTuirements are eIIectiYe Irom  -anuar\ , with earlier adoption permitted. The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ ClariÀcation of Acceptable Methods of Depreciation and Amortisation $mendments to I$S  and I$S  The amendments to I$S  Propert\, Plant and (Tuipment e[plicitl\ state that reYenue-based methods oI depreciation cannot be used Ior propert\, plant and eTuipment. The amendments to I$S  IntanJible $ssets introduce a rebuttable presumption that the use oI reYenue-based amortisation methods Ior intanJible assets is inappropriate. The presumption can be oYercome onl\ when reYenue and the consumption oI the economic beneÀts oI the intanJible asset are ¶hiJhl\ correlated·, or when the intanJible asset is e[pressed as a measure oI reYenue.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 67 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued

Impact of relevant new and amended standards and interpretations to published standards on the Ànancial statements for the year ended 30 June 2015 ...continued

ʌ ClariÀcation of Acceptable Methods of Depreciation and Amortisation $mendments to I$S  and I$S  - continued The amendments appl\ prospectiYel\ Ior annual periods beJinninJ on or aIter st -anuar\  and earl\ adoption is permitted. The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ Equity Method in Separate Financial Statements $mendments to I$S  The amendments allow the use oI the eTuit\ method in separate Ànancial statements, and appl\ to the accountinJ not onl\ Ior associates and Moint Yentures but also Ior subsidiaries. The amendments appl\ retrospectiYel\ Ior annual periods beJinninJ on or aIter st -anuar\  with earl\ adoption permitted. The application oI this amendment will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ IFRS 14: Regulatory Deferral Accounts I)5S  proYides Juidance on accountinJ Ior reJulator\ deIerral account balances b\ Àrst-time adopters oI I)5S. To appl\ this standard, the entit\ has to be rate- reJulated i.e. the establishment oI prices that can be charJed to its customers Ior Joods and serYices is subMect to oYersiJht andor approYal b\ an authorised bod\. The standard is eIIectiYe Ior Ànancial reportinJ \ears beJinninJ on or aIter st -anuar\  with earl\ adoption is permitted. The application oI this standard will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ Investment Entities: Applying the Consolidation Exception $mendments to I)5S , I)5S  and I$S  The amendment to I)5S  &onsolidated )inancial Statements clariÀes which subsidiaries oI an inYestment entit\ are consolidated instead oI beinJ measured at Iair Yalue throuJh proÀt and loss. The amendment also modiÀes the condition in the Jeneral consolidation e[emption that reTuires an entit\·s parent or ultimate parent to prepare consolidated Ànancial statements.

68 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued

Impact of relevant new and amended standards and interpretations to published standards on the Ànancial statements for the year ended 30 June 2015 ...continued

ʌ Investment Entities: Applying the Consolidation Exception ...continued The amendment clariÀes that this condition is also met where the ultimate parent or an\ intermediar\ parent oI a parent entit\ measures subsidiaries at Iair Yalue throuJh proÀt or loss in accordance with I)5S  and not onl\ where the ultimate parent or intermediate parent consolidates its subsidiaries. The amendment to I)5S  'isclosure oI Interests in Other (ntities reTuires an entit\ that prepares Ànancial statements in which all its subsidiaries are measured at Iair Yalue throuJh proÀt or loss in accordance with I)5S  to make disclosures reTuired b\ I)5S  relatinJ to inYestment entities. The amendment to I$S  InYestments in $ssociates and -oint 9entures modiÀes the conditions where an entit\ need not appl\ the eTuit\ method to its inYestments in associates or Moint Yentures to aliJn these to the amended I)5S  conditions Ior not presentinJ consolidated Ànancial statements. The amendments introduce relieI when appl\inJ the eTuit\ method which permits a non-inYestment entit\ inYestor in an associate or Moint Yenture that is an inYestment entit\ to retain the Iair Yalue throuJh proÀt or loss measurement applied b\ the associate or Moint Yenture to its subsidiaries.

ʌ Investment Entities: Applying the Consolidation Exception $mendments to I)5S , I)5S  and I$S  ... continued The amendments appl\ retrospectiYel\ Ior annual periods beJinninJ on or aIter  -anuar\ , with earl\ application permitted. The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ Disclosure Initiative $mendments to I$S  The amendments proYide additional Juidance on the application oI materialit\ and aJJreJation when preparinJ Ànancial statements. The amendments appl\ Ior annual periods beJinninJ on or aIter st -anuar\  and earl\ application is permitted. The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 69 protecting your deposits

O. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ...continued

Impact of relevant new and amended standards and interpretations to published standards on the Ànancial statements for the year ended 30 June 2015 ...continued

ʌ IFRS 15: Revenue from Contracts with Customers This standard replaces I$S  &onstruction &ontracts, I$S  5eYenue, I)5I&  &ustomer /o\alt\ ProJrammes, I)5I&  $Jreements Ior the &onstruction oI 5eal (state, I)5I&  TransIer oI $ssets Irom &ustomers and SI&- 5eYenue ² %arter oI Transactions InYolYinJ $dYertisinJ SerYices. The standard contains a sinJle model that applies to contracts with customers and two approaches to recoJnisinJ reYenue: at a point in time or oYer time. The standard speciÀes how and when an I)5S reporter will recoJnise reYenue as well as reTuirinJ such entities to proYide users oI Ànancial statements with more inIormatiYe, releYant disclosures. The standard proYides a sinJle, principles based ÀYe-step model to be applied to all contracts with customers in recoJnisinJ reYenue beinJ: IdentiI\ the contract s with a customer IdentiI\ the perIormance obliJations in the contract 'etermine the transaction price $llocate the transaction price to the perIormance obliJations in the contract and recoJnise reYenue when or as the entit\ satisÀes a perIormance obliJation. I)5S  is eIIectiYe Ior annual reportinJ periods beJinninJ on or aIter st -anuar\ , with earl\ adoption is permitted. The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

ʌ IFRS 9: Financial Instruments (2014) On  -ul\  the I$S% issued the Ànal I)5S  )inancial Instruments Standard, which replaces earlier Yersions oI I)5S  and completes the I$S%·s proMect to replace I$S  )inancial Instruments: 5ecoJnition and Measurement. This standard introduces chanJes in the measurement bases oI the Ànancial assets to amorti]ed cost, Iair Yalue throuJh other comprehensiYe income or Iair Yalue throuJh proÀt or loss. (Yen thouJh these measurement cateJories are similar to I$S , the criteria Ior classiÀcation into these cateJories are siJniÀcantl\ diIIerent. In addition, the I)5S  impairment model has been chanJed Irom an ´incurred lossµ model Irom I$S  to an ´e[pected credit lossµ model. The standard is eIIectiYe Ior annual periods beJinninJ on or aIter st -anuar\  with retrospectiYe application, earl\ adoption is permitted. The application oI these amendments will haYe no material impact on the disclosures or on the amounts recoJnised in the &orporation·s Ànancial statements.

70 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

4. RISK MANAGEMENT

STRUCTURE AND REPORTING The %oard oI 'irectors are responsible Ior the oYerall risk manaJement approach and Ior approYinJ the risk manaJement polic\ and strateJies. There are other orJans that monitor the assessment and manaJement oI risks within the &orporation includinJ

AUDIT COMMITTEE OF THE BOARD The $udit &ommittee assists the %oard in the IulÀllment oI its oYersiJht responsibilities. The &ommittee Juides and monitors the implementation oI controls b\ the &orporation.

DEPOSIT INSURANCE AND RISK MANAGEMENT SECTION The &orporation has an established 'eposit Insurance 5isk ManaJement Section that receiYes oII-site inIormation on deposits Irom member institutions Ior anal\sis and works closel\ with &entral %ank oI Ken\a to monitor the perIormance oI the %ankinJ industr\.

INTERNAL AUDIT AND RISK MANAGEMENT UNIT The operations oI the &orporation are subMect to internal audit b\ the Internal $udit 8nit oI the Ken\a 'eposit Insurance &orporation 'eposit Protection )und %oard . The Internal $udit 8nit emplo\s Iull scope audit approach in planninJ and carr\inJ out its audit enJaJements. The business processes are assessed with reJard to business continuit\ procedures, ph\sical saIet\, s\stem saIet\, conIormit\ to leJal reTuirements and reJulations, suIÀcienc\ oI human resources and inIormation saIet\. In addition, the Ànancial risks and reputation risks are also determined.

&ontrols that are desiJned to reduce these risks to acceptable leYels are assessed in terms oI suIÀcienc\ and eIIectiYeness additional controls are recommended in order to increase eIIectiYeness.

The main risks Iaced b\ the &orporation in respect oI its principal non-deriYatiYe Ànancial instruments are interest rate risk and liTuidit\ risk. The directors reYiew and aJree on policies Ior manaJinJ these risks. The &orporation maintains a conserYatiYe polic\ reJardinJ interest rate and liTuidit\ risks. The &orporation does not enJaJe in speculation in the markets. In addition, the &orporation does not speculate or trade in deriYatiYe Ànancial instruments.

The &orporation·s principal Ànancial instruments comprise inYestments held to maturit\ cash and cash eTuiYalents receiYables pa\ables and accruals and amounts due to related parties.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 71 protecting your deposits

(a) Credit risk

&redit risk is the risk oI Ànancial loss to the &orporation iI a customer or counterpart\ to a Ànancial instrument Iails to meet its contractual obliJations, and arises principall\ Irom the &orporation·s receiYables, JoYernment securities and cash and bank balances. The &orporation·s e[posure to credit risk is inÁuenced mainl\ b\ the indiYidual characteristics oI each customer and inYestment.

The &orporation establishes an allowance Ior impairment that represents its estimate oI incurred losses in respect oI receiYables and inYestments. The main components oI this allowance are a speciÀc loss component that relates to indiYiduall\ siJniÀcant e[posures, and a collectiYe loss component established Ior Jroups oI similar assets in respect oI losses that haYe been incurred but not \et identiÀed. The collectiYe loss allowance is determined based on historical data oI pa\ment statistics Ior similar Ànancial assets.

The carr\inJ amount oI Ànancial assets represents the ma[imum credit e[posure. The ma[imum e[posure to credit risk at the reportinJ date was:

72 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

4. RISK MANAGEMENT FRQWLQXHG

INTERNAL AUDIT AND RISK MANAGEMENT UNIT  FRQWLQXHG

2015 2014 KShs’000 KShs’000 Receivable    ,PSDLUPHQWORVVHVUHFRJQLVHGLQWKH\HDU 1RWH E    

10,838 9,563

The aJinJ oI receivables at the reportinJ date Zas:

1RWSDVWGXH   3DVWGXH²GD\V   3DVWGXH²GD\V   3DVWGXHDERYHGD\V  

10,838 111,908

The moYement in the allowance Ior impairment in respect oI receiYables durinJ the \ear was as Iollows:

2015 2014 KShs’000 KShs’000 %DODQFHDW-XO\   Made in the year - - :ULWHEDFNV    

Balance at 30 June - 102,345

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 73 protecting your deposits posed to [ es in market interest es in market J    nancial instruments that are e uctuate due to chan    bonds. À \ Á s · orporation & bills and Treasur \ the I  FRQWLQXHG , o nancial instrument will \ À a I maturit \ ows o ested in Treasur Á Y 26,120,916 6,424,662 15,204,124 7,011,772 54,761,474 15,204,124 26,120,916 6,424,662 19,766,387 10,785,237 11,317,539 4,700,423 46,569,586 11,317,539 19,766,387 10,785,237 amount b J in \ alue and cash Y orporation are in interest rate KShs’000 KShs’000 KShs’000 KShs’000 KShs’000  FRQWLQXHG & the \ table sets out the carr unds held b

I J cess ([ ollowin I rates. rates. Interest rate risk is the that interest rate risk: The The Interest sensitivity gap At 30 June 2015 4. RISK MANAGEMENT 4. RISK INTERNAL AUDIT AND RISK MANAGEMENT UNIT Risk (b) Market (i) Interest rate risk management ,QYHVWPHQWVKHOGWRPDWXULW\     Interest sensitivity gap At 30 June 2014 2014: ,QYHVWPHQWVKHOGWRPDWXULW\    

74 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

4. RISK MANAGEMENT FRQWLQXHG

INTERNAL AUDIT AND RISK MANAGEMENT UNIT  FRQWLQXHG

(i) Interest rate risk management .. continued The IollowinJ table demonstrates the sensitiYit\ to a reasonabl\ possible chanJe in the interest rates, with all other Yariables held constant, on the &orporation·s surplus. The sensitiYit\ computations assume that Ànancial assets maintain a constant rate oI return Irom one \ear to the ne[t.

2015 2014 KShs’000 KShs’000 (IIHFWRQVXUSOXVIRUWKH\HDURID FKDQJHLQLQWHUHVWUDWHV   (IIHFWRQVXUSOXVIRUWKH\HDURID FKDQJHLQLQWHUHVWUDWHV   

(ii) Currency risk The &orporation operates wholl\ within Ken\a and its assets and liabilities are reported in the local currenc\. It does not transact in IoreiJn currencies.

(c) Liquidity risk management

/iTuidit\ risk is the risk that the &orporation will encounter diIÀcult\ in meetinJ obliJations Irom its Ànancial liabilities. The &orporation·s approach to manaJinJ liTuidit\ is to ensure, as Iar as possible, that it will alwa\s haYe suIÀcient liTuidit\ to meet its liabilities when due, without incurrinJ unacceptable losses or riskinJ damaJe to the &orporation·s reputation. In the course oI its operations the &orporation inYests its capital in Iorms that Yar\ in liTuidit\ ranJinJ Irom JoYernment securities that are readil\ conYertible and sundr\ receiYables. Simultaneousl\ it carries current liabilities in Iorm oI proYisions Ior protected deposits, sundr\ pa\ables and related part\ liabilities. The entit\ matches its current assets to the current liabilities IallinJ due to mitiJate the risk oI low liTuidit\. The &orporation·s Ànancial liabilities amount to KShs ,,  - KShs ,, and are all short term.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 75 protecting your deposits  74  115,375 20,858 1,025    Fair   J nancial position: À 100 100 100 100

I       amounts as shown in the statement o amounts as shown J in \                       23,467 - - - 23,467 23,467 29,877 - - - 29,877 29,877 nancial Loan and Held to Fair Total carryin À nancial assets and liabilities is the same as carr À

I alue o Y air I Payables and accruals 20,858 - - Investment held for sale - 20,858 Cash and bank balances 5HFHLYDEOHV - - - - 1,025 100 - - 1,025    (d) Fair value (d) Fair The Other 2014: Financial assets *RYHUQPHQWVHFXULWLHV   2015: Financial assets Government securities Investment held for sale Cash and bank balances - Receivables - - - - 54,761,474 - 115,375 - 54,761,474 Financial liabilities 100 - 54,761,4 $PRXQWVGXHWRJURXSFRPSDQLHV -  115,375 liability receivables KShs ’000 maturity KShs ’000 - KShs ’000 value 10,838 value KShs ’000 - Value KShs ’000 - 10,838 10,838 - 126,213 54,761,474 Financial liabilities 100 $PRXQWVGXHWRJURXSFRPSDQLHV 54,887,787  54,887,787 3D\DEOHVDQGDFFUXDOV 

76 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

4. RISK MANAGEMENT FRQWLQXHG INTERNAL AUDIT AND RISK MANAGEMENT UNIT  FRQWLQXHG (e) Capital management The primar\ obMectiYes oI the &orporation·s capital manaJement are to ensure that the &orporation maintains health\ capital ratios in order to support its business and to ma[imi]e the Yalue Ior the insured depositors in member institutions. The &orporation manaJes its )und and makes adMustments to it, as per the reTuirements oI the %ankinJ $ct. The total accumulated )und as at  -une  was KShs , million  - KShs , million .

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

(stimates and MudJements are continuall\ eYaluated and are based on historical e[perience and other Iactors, includinJ e[perience oI Iuture eYents that are belieYed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions

(i) Property and equipment &ritical estimates are made b\ the manaJement in determininJ depreciation rates Ior propert\ and eTuipment. The rates used are set out in the accountinJ polic\ Ior propert\ and eTuipment.

(ii) Impairment of receivables The &orporation reYiews its receiYables· portIolio reJularl\ to assess the likelihood oI impairment. This reTuires an estimation oI the amounts that are irrecoYerable especiall\ debts incurred b\ institutions under liTuidation.

(b) Critical judgements in applying the entity’s accounting policies In the process oI appl\inJ the &orporation·s accountinJ policies, manaJement has made MudJements in determininJ whether assets are impaired.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 77 protecting your deposits

6. INCOME

2015 2014 (a) Assessment income KShs’000 KShs’000 Total average deposits of institutions Assessed as contributors 2,020,657,850 1,782,902,148  RIWRWDODYHUDJHGHSRVLWV   Minimum contribution from 8 Deposit  7DNLQJ0LFURÀQDQFH '70  ²    Total assessment income 3,033,387 2,675,853

(b) Investment income (i) Interest earned on treasury bills received  'LVFRXQWRQGD\WUHDVXU\ELOOV    'LVFRXQWRQGD\WUHDVXU\ELOOV   Discount on 364 day treasury bills 1,734,468 1,207,278    

(ii) Interest earned on treasury bonds received  0DWXUHGERQGV   Discount on purchase 128,262 140,445  $PRUWLVDWLRQRISUHPLXP          Total investment income 5,466,351 4,675,863

7. OTHER INCOME Recoveries from subrogated claims 776 522 Gain on sale/disposal of assets 738 - Penalty charges on late contributions 786 6,215 Miscellaneous Income 412 - Recoveries from institutions in  OLTXLGDWLRQ    *UDQWLQFRPH   111,044 19,172

78 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

8. ADMINISTRATION AND ESTABLISHMENT EXPENSES

2015 2014 KShs’000 KShs’000 Staff costs 180,557 157,710 Depreciation 10,011 11,775 /HDVHDPRUWL]DWLRQ   Auditors remuneration 1,481 1,100 'LUHFWRUV·HPROXPHQWVIHHV   Legal and professional fees 305 10 2FFXSDQF\FRVWV   2WKHU   280,424 251,196

9. RECEIVABLES AND PREPAYMENTS 2015 2014

(a) Receivables and prepayments  5HFHLYDEOHVDQGSUHSD\PHQWV   Provision for impairment losses  1RWH E     10,838 9,563

(b) Provisions Ior impaired receivables  $VDW-XQHWKHUHZDVQRSURYLVLRQIRUUHFHLYDEOHV  .6KVPLOOLRQ 

$W-XO\   Additional provision - - %DG'HEWVUHFRYHUHG     At 30 June (Note 18(a)) - 102,345

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 79 protecting your deposits

e Y  ,         ,         KShs I   23,890 70,526      uipment Total   T   29,862 59,921   - 2,001 in ICT     ress E     N J     these assets at normal ha rates it would I depreciated assets with a cost o \ ull I ear on the cost o \ certain I the . J  , ed durin  , J  ear in respect o      \                                         - KShs uipment vehicle Computers pro         T         or the I ce & Kitchen Motor Wor      

IÀ  ,  s e , J  at the results depreciation had been char J I ttin in À KShs Y I s & J ed in arri J t or loss o À Furniture O and are still in use. I and are still in use. e to pro  J ,  ,  amount amount J J - KShs amounted to a char  2015 Cost: $W-XO\    KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 Buildin $GGLWLRQV/HVVGLVSRVDOV$W-XQH          Depreciation $W-XO\&KDUJHIRUWKH\HDU  /HVV'HSRQGLVSRVDO    $W-XQH   Carryin  At 30 June 2015  2014 Cost: 12,273 10,102 $W-XO\ 2,498 2,458  2,090 17,215   10. PROPERTY AND EQUIPMENT Additions $W-XQH  -  325  545 - 1,131 - Depreciation $W-XO\    &KDUJHIRUWKH\HDU  $W-XQH     Carryin At 30 June 2014 12,322 No depreciation has been char 10,049 2,812 3,569 1,307 -

80 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

11. PREPAID OPERATING LEASE RENTALS

2015 2014 KShs‘000 KShs‘000 Cost $W-XO\DQG-XQH   Amortization $W-XO\   $PRUWL]DWLRQIRUWKH\HDU   $W-XQH   CarryinJ value at 30 June 3,218 3,317

12. INVESTMENT InYestment in &onsolidated %ank oI Ken\a /imited ,, ordinar\ shares oI KShs  each. 200,000 200,000 3URYLVLRQIRUGLPLQXWLRQLQYDOXH      100 100

The &orporation owns ,, ordinar\ shares oI the &onsolidated %ank oI Ken\a /imited that were acTuired usinJ a Jrant Irom the National Treasur\ Ior K'I&'P)% to resolYe a bankinJ crisis at the time. $t the time oI acTuisition oI the inYestment, the %ankinJ $ct allowed the &orporation to acTuire, hold or dispose shares oI an institution that miJht otherwise result in a loss to the &orporation. The %ankinJ $ct was later amended and now preYents the &orporation Irom holdinJ inYestments other than in JoYernment securities. The GoYernment, throuJh the National Treasur\ plans to priYati]e &onsolidated %ank and has thereIore directed the PriYati]ation &ommission to e[plore and adYise on how the shares are to be sold. $ &onsortium has been appointed to Juide on the intended PriYati]ation. 'ue to the aboYe, the reTuirement Ior consolidation on I$S  does not appl\. The inYestment was last Yalued in 'ecember  b\ e[ternal consultants and the Yalue oI the shares was considered to be eIIectiYel\ nil. In the opinion oI the directors, the additional diminution in Yalue oI KShs ,, based on this Yaluation, is not material Ior recoJnition in the Ànancial statements. It is to be noted that Section  oI the K'I $ct, , allows the 'eposit Insurer to acTuire, hold shares, and make loans and adYances Ior purposes oI reducinJ or aYertinJ a risk to an institution or the Ànancial s\stem or a threatened loss to the &orporation.

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 81 protecting your deposits

13. GOVERNMENT SECURITIES 2015 2014 KShs’000 KShs’000 7UHDVXU\ELOOVPDWXULQJZLWKLQGD\VRI SODFHPHQW 1RWH    7UHDVXU\ELOOVPDWXULQJDIWHUGD\VIURP GDWHRISODFHPHQW   7UHDVXU\ERQGVPDWXULQJZLWKLQ\HDU   7UHDVXU\ERQGVPDWXULQJDIWHU\HDU   54,761,474 46,569,586

ComprisinJ: Maturing within 1 year of the Statement of )LQDQFLDO3RVLWLRQGDWH   Maturing after 1 year of the Statement of )LQDQFLDO3RVLWLRQGDWH   54,761,474 46,569,586

The weiJhted aYeraJe eIIectiYe interest rate on held to maturit\ inYestments as at  -une  was .  ² . .

14. PAYABLES AND ACCRUALS

Sundry payables and accruals 20,858 10,966

15. RELATED PARTY TRANSACTIONS The &entral %ank oI Ken\a and the &orporation are related parties, perIorminJ connected duties oI bank superYision and deposit protection respectiYel\. No tradinJ is carried with the &entral %ank. The IollowinJ transactions howeYer take place between the two orJanisations:

(a) Due to Central BanN oI Kenya 2,609 18,911 (b) Directors’ emoluments and senior manaJement remuneration  )HHVWRGLUHFWRUV    5HPXQHUDWLRQWRVHQLRUPDQDJHPHQW   (c) Cash and balances held Zith Central BanN oI Kenya 115,375 1,025

82 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

d The &entral %ank pa\s some operatinJ e[penses on behalI oI the &orporation. These are Iull\ reimbursed. e The staII oI the &orporation are contractuall\ emplo\ees oI the &entral %ank but seconded to the &orporation. Salaries oI these staII are met b\ the &entral %ank and Iull\ reimbursed b\ the &orporation. In the \ear, salaries paid to staII b\ the &entral %ank amounted to KShs . million  - KShs . million . I The &entral %ank is also the sponsor oI the &%K StaII Pension )und to which the &orporation contributes on behalI oI emplo\ees seconded to it Irom the &entral %ank. In the \ear, the &orporation·s contribution to the )und amounted to KShs . million  - KShs . million . J The &entral %ank proYides the &orporation with oIÀce space and charJes it rent. The &orporation also reimburses maintenance costs incurred b\ the &entral %ank on its behalI. In the \ear, rent and maintenance costs charJed amounted to KShs . million.  - KShs . million .

16. DEFERRED INCOME

2015 2014 KShs’000 KShs’000

Unamortized Jrant income 23,947 29,876

$mount relates to deIerred Jrant income receiYed under the )inancial and /eJal Sector Technical $ssistance ProMect )/ST$P in relation to the I&T proMect. )/ST$P had purchased I&T serYers Ior K'I&. The I&T serYers shall be used in the I&T proMect commissioned in . The amounts are thereIore amortised at the rate oI  per annum on a reducinJ balance oYer a useIul liIe oI  \ears.

17. CASH AND CASH EQUIVALENTS &ash and cash eTuiYalents included in the statement oI cash Áows comprise oI the IollowinJ statement oI Ànancial position amounts:

2015 2014 KShs’000 KShs’000 7UHDVXU\ELOOVPDWXULQJZLWKLQGD\V IURPWKHGDWHRISODFHPHQW 1RWH    Cash and bank balance 115,375 1,025 148,601 45,961

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 83 protecting your deposits

18. COMMITMENTS (a) Capital commitments 2015 2014 KShs’000 KShs’000 Authorised but not contracted for 202,460 184,010

&apital commitments authorised relates mainl\ to OIÀce Iurniture, oIÀce eTuipment, I&T proMect inIrastructure costs, motor Yehicle, Jodown capital costs includinJ the &&T9 network connections.

(b) Operating lease commitments Falling due within one year 18,728 16,515  )DOOLQJGXHEHWZHHQRQHDQGÀYH\HDUV   37,735 33,030

'urinJ the Ànancial \ear ended  -une , KShs . million  ² KShs . million was recoJni]ed as rental e[pense.

19. CONTIGENT LIABILITIES

Litigation Mr. $Ma\ Shah Iormer ManaJinJ 'irector oI Trust %ank /imited Àled a case in  claiminJ Jeneral damaJes and special damaJes amountinJ to KShs  million aJainst Trust %ank /imited In /iTuidation and the &orporation on alleJations oI deIamation and publication oI malicious Ialse statements. The suit is pendinJ hearinJ. No proYision has been made in the Ànancial statements because, in the opinion oI the directors, the claim is unlikel\ to succeed and K'I& is sued as the /iTuidator oI Trust %ank /td I/ . ThereIore, in case MudJment is entered aJainst K'I&, the costs shall be paid b\ Trust %ank /td I/ .

20. SUBSEQUENT EVENTS

Pursuant to the proYisions oI Sections   ,   and   oI the Ken\a 'eposit Insurance $ct, , Ken\a 'eposit Insurance &orporation was appointed b\ &entral %ank oI Ken\a on  $uJust  as the receiYer oI 'ubai %ank Ken\a /imited and subseTuentl\ the liTuidator. The &orporation is currentl\ makinJ arranJements to pa\ all insured deposits amountinJ to KShs  million in the Ànancial \ear . In accordance with the law, a subroJated claim will be made b\ K'I& to recoYer this amount.

84 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

APPENDIX I

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

COMMERCIAL BANKS AND OTHER FINANCIAL INSTITUTIONS ASSESSED CONTRIBUTORS FOR THE YEAR ENDED 30 JUNE 2015

COMMERCIAL BANKS 1. African Banking Corporation Limited 2. Bank of Africa Kenya Limited 3. Bank of Baroda Kenya Limited 4. Bank of India 5. Barclays Bank of Kenya Limited 6. CfC Stanbic Bank Limited &KDUWHUKRXVH%DQN/LPLWHG XQGHUVWDWXWRU\PDQDJHPHQW 8. Chase Bank Kenya Limited &LWLEDQN1$ 10. Commercial Bank of Africa Limited 11. Consolidated Bank of Kenya Limited 12. Co-operative Bank of Kenya Limited 13. Credit Bank Limited 14. Development Bank of Kenya Limited 15. Diamond Trust Bank of Kenya Limited 16. Dubai Bank Kenya Limited 17. Ecobank Kenya Limited (TXDWRULDO&RPPHUFLDO%DQN/LPLWHG (TXLW\%DQN/LPLWHG 20. Family Bank Limited 21. Fidelity Commercial Bank Limited 22. Guaranty Trust Bank

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 85 protecting your deposits

23. First Community Bank Limited 24. Giro Commercial Bank Limited 25. Guardian Bank Limited 26. Gulf African Bank Limited 27. Habib Bank A.G. Zurich 28. Habib Bank Limited ,PSHULDO%DQN/LPLWHG 30. I&M Bank Limited -DPLL%RUD%DQN/WG 32. Kenya Commercial Bank Limited 33. K-Rep Bank Limited 34. Middle East Bank Kenya Limited 35. National Bank of Kenya Limited 36. NIC Bank Limited 37. Oriental Commercial Bank Limited 38. Paramount Universal Bank Limited 3ULPH%DQN/LPLWHG 40. Standard Chartered Bank of Kenya Limited 41. Transnational Bank Limited 42. UBA Kenya Bank Ltd 43. Victoria Commercial Bank Limited 44. Housing Finance Company of Kenya Limited

86 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

APPENDIX II

KENYA DEPOSIT INSURANCE CORPORATION (Formerly Deposit Protection Fund Board)

COMMERCIAL BANKS AND OTHER FINANCIAL INSTITUTIONS ASSESSED CONTRIBUTORS FOR THE YEAR ENDED 30 JUNE 2015  FRQWLQXHG

MICRO FINANCE INSTITUTIONS 1. Faulu Kenya 2. Kenya Women Finance Trust 3. SMEP DTM 4. REMU DTM 5. Uwezo DTM  5DÀNL'70 7. Sumac DTM 8. Century DTM  8 ,'70 10. Daraja DTM 11. Choice DTM 12. Caritas DTM

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 87 protecting your deposits

APPENDIX III BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 1. African Banking Richard Omwela Non-Executive -Chairman 11 Deloitte & Corporation Shamaz Savani Executive - Group MD Touche P.O. Box 13889-00800, Nairobi Ashraf Savani Non-Executive Tel: +254-20- 4263000, Joseph Kamande Muiruri Non-Executive 4447352, 4447353, 2223922 Anil Ishani Non-Executive Website: Alban Mwendar Non-Executive http://www.abcthebank.com Sridhar Natarajan Executive -Group CEO

2. Bank of Africa Kenya Ltd Ambassador Dennis Awori Non-Executive-Chairman 34 KPMG Kenya P.O. Box 69562-00400 Alexandre Randrianasolo Non-Executive Nairobi Vincent De Brouwer Non-Executive Tel: +254-20- 3275000 Bernardus A. M. Zwinkels Non-Executive Abdelkabir Bennani Non-Executive Website: www.boakenya.com Susan Kasinga Non-Executive Eunice Mbogo Non-Executive Amine Bouabid Non-Executive Anis Kaddouri Executive

3. Bank of Baroda Mr. Ranjan Dhawan Non-Executive -Chairman 12 Grant Thornton House 29, Koinange Street Mr. Yatish Chander Tewari Executive - MD pending P.O. Box 30033 – 00100 Nairobi Mr. Rajiv Shripad Abhyankar Non-Executive approval Tel: +254-20-2248402/12, Mr. Patrick Karuiki Njoroge Non-Executive 2248402/12 Mr. Philip Burh Executive Website: Mr. Vikram C. Kanji Non-Executive www.bankofbaroda kenya.com

4. Bank of India R. K. Verma Executive - CEO 6 Grant Thornton P.O. Box 30246 - 00100 Nairobi Manubhai Chandaria Advisory Committee Tel: +254-20-2221414 /5 /6 Mary W. Ngatia Advisory Committee Website: www.bankofindia.com A. N. Ngugi Advisory Committee Website: www.boikenya.com M. K. Srivastava Executive

5. Barclays Bank of Kenya Francis Okomo-Okello Non-Executive -Chairman 119 Pricewaterhouse P.O. Box 30120 – 00100, Jeremy Edward Awori Executive - MD Coopers Nairobi Rose N. Ogega Non-Executive Tel: +254-20- 4254000, 4256000 Jane W. Karuku Non-Executive Brown M. Ondego Non-Executive Email: Ashok K. M. Shah Non-Executive [email protected] Winnie Ouko Non-Executive Website: Norah Odwesso Non-Executive www.barclays.co.ke Laila Macharia Non-Executive Yusuf Omari Executive -Director Waweru G Mathenge Company Secretary

6. CFC Stanbic Bank Ltd Fred N’cruba Ojiambo, Mbs, Sc Non-Executive -Chairman 24 Pricewaterhouse P.O. Box 72833 - 00200 Gregroy R. Brackenridge Non-Executive Coopers Nairobi Philip Odera Chief Executive Tel: +254-20-3638000/11/ Kitili Mbathi Non-Executive 17/18/20/21 Rose W. Kimotho Non-Executive Edward A. Waweru Njoroge Non-Executive Email: [email protected] Charles Kahara Muchene Non-Executive Ruth Theddesia Ngobi Non-Executive Michael Alan Blades Executive Christopher J. Blandford-Newson Non-Executive Peter Nderitu Gethi Non-Executive

7. Charterhouse Bank Manjunath Prabhu General Manager 10 KPMG P.O. BOX 43252- 00100 Mehraz Ehsani Non Executive Director Nairobi Sanjay Ramniklal Shah Managing Director Tel: +254-20-242246-53 Manoj Ramjiklal Non Executive Director Atul Kumar Shah Non Executive Director Email: Hamed Ehsani Non Executive Director [email protected]

88 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 8. Chase Bank Muthoni Kuria Non-Executive 49 Deloitte & P.O. Box 66049-00800, Rafiq Shariff Non-Executive Touche Nairobi Richard Carter Non-Executive Tel: +254 730 175 000 Anthony F Gross Non-Executive + 254 709 800 000 Laurent Demey Non-Executive Zafrullah Khan Chairman Email: [email protected] Duncan Kabui Executive Paul Njaga Executive

9. Citibank N.A Joyce-Ann Wainaina General Manager 3 KPMG Kenya P.O. Box 30711-00100 Nathan Njoroge Mgt Committee Nairobi Nicholas Kamere Mgt Committee Tel: +254-20-2754000,2711221 Paul Njiiri Mgt Committee Michael Mutiga Mgt Committee Website: www.citibank.com Ignatius Chicha Mgt Committee Wycliff Osso Mgt Committee Maryanne Mwaura Mgt Committee Linda Muturi Mgt Committee Esther Chibesa Mgt Committee Maina Kamau Mgt Committee

10. Commercial Bank of Africa Desterio Oyatsi Andadi Non-Executive -Chairman 27 Pricewaterhouse P.O. Box 30437 – 00100, Jeremy Ikundi Ngunze Executive - CEO Coopers Nairobi Isaac Odundo Awuondo Executive Tel: +254-20-2884000, 2734555 John Stuart Armitage Non-Executive Muhoho Kenyatta Non-Executive Website: www.cbagroup.com Nelson Joel Manyeki Mainnah Non-Executive Mukesh Kanji Rupshi Shah Ind. Non-Executive Nicholas Alexander Nesbitt Ind. Non-Executive Abdirahin Haither Abdi Ind. Non-Executive

11. Consolidated Bank Dr. Benson A. Ateng’ Non-Executive -Chairman 17 Deloitte & P.O. Box 51133 - 00200, Thomas Kipkemei Kiyai Executive -CEO Touche Nairobi Bertha J. Dena Non-Executive Tel: +254-20-215000, Amb. Charles M. Amira Non-Executive 340836,340551 Evans G. Vitisia Non-Executive Cell: 0703 016 000 Papius K. Muhindi Non-Executive Miriam Cherogony Non-Executive Email: Ps- Treasury Non-Executive [email protected] Managing Trustee - NSSF Non-Executive Website: www.consolidated-bank.com

12. Co-operative Bank of Kenya Stanley C. Muchiri Non-Executive- Chairman 140 Ernest & Young P.O. Box 48231-00100 Gideon Maina Muriuki Executive – GMD & CEO Nairobi Julius Riungu Non-Executive Tel: +254-20-3276000 Lawrence Charo Karissa Non-Executive Macloud Mukiti Malonza Non-Executive Website:www.co-opbank.co.ke Richard L. Kimanthi Non-Executive Wilfred M. Ongoro Non-Executive Julius K. Sitienei Non-Executive Benedict Wekesa Simiyu Non-Executive John Kamau Murugu Non-Executive Rose Kaburo Simani Non-Executive Wanyambura Mwambia Non- Executive

13. Credit Bank Hon. Simeon Nyachae Non-Executive -Chairman 14 Pricewaterhouse P.O. Box 61064-00200 Phares Chege Thumbi Chief Executive Officer Coopers Nairobi Mrs. Grace Nyachae Non-Executive Tel: +254-20-2283000/ Moses Mwendwa Non-Executive 2222300 Jay Karia Non-Executive Ketan D. Marjaria Non-Executive Website: www.creditbank.co.ke Robinson N. Gachogu Non-Executive

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 89 protecting your deposits

BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 14. Development Bank Prof. H.K. Mengech Non-Executive -Chairman 1 Pricewaterhouse P.O. Box 30483 - 00100, Victor Kidiwa Chief Executive Coopers Nairobi C.S. Treasury Non-Executive Tel: +254-20-340401 /2 /3, I.C.D.C. Non-Executive 340416 Prof. J. H. Kimura Non-Executive Zephania Mbugua Non-Executive Website: www.devbank.com

15. Diamond Trust Bank Kenya Abdul Samji Non-Executive - Chairman 52 Pricewaterhouse Limited Nasim Devji Executive - Managing Director Coopers P.O. Box 61711 - 00200, Pamella Ager Non-Executive Nairobi Shaffiq Dharamshi Non-Executive Tel: +254-20-2849000, Amin Merali Non-Executive 2210988/9 Irfan Keshavjee Non-Executive Mwaghazi Mwachofi Non-Executive Website: Moez Jamal Non-Executive http://www.dtbafrica.com Jamaludin Shamji Non-Executive Ismail Mawji Non-Executive Zakir Mahmood Non-Executive

16. Dubai Bank H.A. Abdul Hafedh Zubeidi Non-Executive – Chairman 4 Howarth Erastus P.O. Box 11129-00400, Binay Kumar Dutta Execuive- MD & Co. Certified Nairobi Prof. Wilson Hassan Nandwa Non-Executive Public Tel: +254-20-311109/14/23/ Ali Bashir Sheikh Non-Executive Accountants 24/32

Website:www.dubaibank.co.ke

17. Ecobank Kenya Ltd Ehouman Kassi Executive - MD 29 Pricewaterhouse P. O Box 45626- 00100 Charles Orony Ogalo Non-Executive Coopers Nairobi Simon Maucho Non-Executive Tel: +254-20-2883000, Mrs. Surindere Pallan Kapila Non-Executive 2249633 /4 Evelyne Tall Group Executive

Website: www.ecobank.com

18. Equatorial Commercial Bank Daniel K. Ameyo Non-Executive -Chairman 13 KPMG P.O. Box 52467-00200 Wanjiru Mwangi Non-Executive Nairobi Christine Sabwa Non-Executive Tel: +254-703047777,4981000 Akif Hamid Butt Non-Executive Robert L. Shibutse Non-Executive www.equatorial.co.ke Teresa M. Mutegi Non-Executive Wilson K. Murage Non-Executive

19. Equity Bank (Kenya) Ltd. Peter Kahara Munga Non-Executive -Chairman 170 Ernst & Young P.O. Box 75104-00200, Dr. James Njuguna Mwangi Group MD & CEO Nairobi Bhartesh Shah Executive Director Tel: +254 763 063 000 Dennis Aluanga Non-Executive Fredrick Mwangi Muchoki Non-Executive Website: http://www. Julius Muia Non-Executive ke.equitybankgroup.com Isaac Muthure Non-Executive Prof: Shem Migot Adholla Non-Executive David Ansell Non-Executive

20. Family Bank Wilfred Kiboro Non-Executive -Chairman 80 Deloitte & P.O. Box 74145-00200 Titus Kiondo Muya Executive - CEO Touche Nairobi Dr. Kabiru Kinyanjui Non-Executive Tel: +254-020- 318173, Prof. David Kimutai Some Non-Executive 318940/2/7 Ruth Waweru Non-Executive David Kimani Non-Executive Website: www.familybank.co.ke Brian Kiondo Muyah Non-Executive Njunge Kamau Non-Executive Mark Keriri Muya Executive

90 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 21. Fidelity Commercial Bank Esther Muchemi Non-Executive 12 KPMG P.O. Box 34886-0100 Rana Sengupta Executive-MD NAIROBI Sultan Khimji Executive Tel: +254-020-2242348, Kabirdin K Khimji Non-Executive 2244187 Amir Ali Shaleh Non-Executive Karim Khimji Non-Executive website: Mayank Patel Non-Executive www.fidelitybank.co.ke Chales Omanga Non-Executive

22. First Community Bank Ltd. Mohamed Hassan Ebrahim Varvani Non-Executive -Chairman 18 Pricewaterhouse P. O. Box 26219-00100, Abdullatif Essajee K Non-Executive Coopers Nairobi Mohamed Mbaye Non-Executive Tel: +254-20-2843000-3 Omar Sheikh Abdullahi General Manager Sumayya Athmani Hassan Non-Executive Website: Jama Mohamed Issa Non-Executive www.firstcommunitybank.co.ke Mussa Juma Assad Non-Executive Abdulhamid Aboo Non-Executive

23. Giro Commercial Bank Chandan Jethanand Gidoomal Non-Executive-Chairman 7 Deloitte & Limited Sanjay Prem Gidoomal Executive - MD Touche P.O Box 13400-00800, Prem Jethanand Gidoomal Non Executive Nairobi Carey Muriithi Ngini Non Executive Tel: +254-20-4229000 Bhanubhai Kalidas Patel Executive–Finance Director Mukesh Shantilal Shah Non Executive Website: www.girobankltd.com

24. Guardian Bank Limited Dr. Maganlal M. Chandaria Chairman 9 branches KPMG Kenya P.O. Box 67681 – 00200, Vasant K. Shetty Managing Director and Head Nairobi Hetul D. Chandaria Executive Director office Tel: +254-020-2226771, Bhavnish D. Chandaria Non-Executive Director 2226774 Harban Rajesh Sahi Non-Executive Director Shantilal R. Shah Non-Executive Director Website: Ajay Shah Non-Executive Director www.guardian-bank.com Dr. Samson Ndegwa Non-Executive Director

25. Guaranty Trust Bank Dhanji Hansraj Chandaria Non-Executive-Chairman 15 Pricewaterhouse (Kenya) Ltd. Julius Olusegun Agbaje Non-Executive Coopers P.O. Box 20613 – 00200, Ademola Odeyemi Non-Executive Nairobi Nalinkumar Narshi Shah Non-Executive Tel: +254-20-3284000, Hanish Dhanji Chandaria Non-Executive 0703 084000 John Mark Wandolo Non-Executive Mary Kimotho M’mukindia Non-Executive Website: www.gtbank.co.ke Ibukunoluwa Odegbaike Executive - CEO Victor Ezaga Executive Director

26. Gulf African Bank Ltd. Jamal Ali Al-Hazeem Non-Executive -Chairman 14 KPMG Kenya P.O. Box 43683 – 00100, Abdalla Abdulkhalik Executive – Managing Director Nairobi Ahmed Said Bajaber Non-Executive Tel: +254-20-2740000, Mustafa Beg Non-Executive 2718608/9 Thantalur Alaga Raja Non-Executive Shuja Sayed Ali Non-Executive Website: www.gulfafricanbank.com

27. Habib Bank AG Zurich Mohammed Ali Hussain Country Manager 5 KPMG Kenya P.O. Box 30584 - 00100 Mohamed Arif Local Mgt Cmtee Nairobi Arshad Mahmood Local Mgt Cmtee Tel: +254-20-341172/76/77, Iqbal H. Somani Local Mgt Cmtee 340835 S. Asad Mustafa Local Mgt Cmtee Website: www.habibbank.com Simon K. Murigi Local Mgt Cmtee

28. Habib Bank Limited Salman Malik Local Mgt Cmtee 5 Ernst & Young P.O. Box 43157 – 00100, Aurangzeb Quadri Local Mgt Cmtee Nairobi Grace Mbogo Local Mgt Cmtee Tel: +254-20-2226433, Patrick Maina Mwangi Local Mgt Cmtee 2222786 John Kasuvu Local Mgt Cmtee Rukiya Abduljabber Local Mgt Cmtee Website: www.hbl.com

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 91 protecting your deposits

BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 29. Imperial Bank Limited Alnashir Popat Non-Executive -Chairman 25 PKF Kenya P.O. Box 44905 – 00100, Abdulmalek Janmohamed Executive - CEO Nairobi Anwar Hajee Non-Executive Tel: +254-20-2874000, Vishnu Dhutia Non-Executive 343416 /12/17/ Jinit Shah Non-Executive Mukesh Kumar Patel Non-Executive Website: Hanif Mohamed Amirali Somji Non-Executive www.imperialbank.co.ke Omurembe Iyadi Non -Executive Independent Eric Gitonga Bengi Non-Executive Independent Christopher Agnelo Diaz Non-Executive Independent

30. I & M Bank S. B. R. Shah Non-Executive -Chairman 30 KPMG Kenya P.O. Box 30238 – 00100, Arun S. Mathur Executive - CEO Nairobi Sarit S. Shah Executive Tel: +254-20, 3221000, Sachit S. R. Shah Non-Executive +254 719 088 000 M. Soundararajan Non-Executive +254 753 221 000 P. C. M. Kibati Non-Executive Dr. Nyambura Koigi Non-Executive Website:http://www.imbank.com E. M. Kimani Non-Executive

31. Jamii Bora Bank Limited James Mwangi Gacheru Non-Executive 24 Deloitte & P.O. Box 22741 – 00400, Samuel Njuguna Kimani Executive - CEO Touche Nairobi Samuel Mwamburi Mwale Director Tel: +254-20- 2224238/9, Lars-Alof-Hellgren Non-Executive 2214976 Stefan Kaiser Non-Executive Timothy Mwaniki Kabiru Executive -Cco Website: Mrs.Pamella Oburu Ager Non-Executive http://www.jamiiborabank.co.ke Dr.Betty Muthoni Gikonyo Non-Executive Cyprian Wekesa Non-Executive Alban Mwendar Non-Executive Richard Kiplangat Non-Executive

32. Kenya Commercial Bank Ngeny Biwott Non-Executive -Chairman S. Sudan 19 KPMG P. O. Box 48400 – 00100, Joshua Nyamweya Oigara Executive - CEO Uganda 16 KPMG Nairobi Henry Rotich Non-Executive Rwanda 14 Deloitte Tel: +254-20-3270000, 2851000 Georgina Maria Malombe Non-Executive Burundi 5 KPMG Catherine Adongo Kola(Mrs) Non-Executive Tanzania 12 KPMG Website: John Akoth Nyerere Non-Executive http//www.kcbbankgroup.com Tom Ipomai Non-Executive Charity Muthoni Muya-Ngaruiya Non-Executive Adil Arshad Khawanja Non-Executive Gen. Rtd Joseph Raymond Kibwana Non-Executive Lawrence Kimathi Kiambi Executive-CFO

33. K-Rep Bank Limited James Mworia Mwirigi Non-Executive -Chairman 37 PWC P.O. Box 25363 – 00603, Titus Muthua Karanja Executive-MD Nairobi Donald Benedict Kipkorir Non-Executive Tel: +254-20- 3906000, Catherine Nimwanga Mturi-Wairi Non-Executive 0711-058000-7 Kimanthi Mutua Non-Executive Polycarp Igathe Kamau Non-Executive Website: www.k-repbank.com Mary Ann Wambui Kirubi-Musangi Non-Executive Tom Kariuki Non-Executive

34. Middle East Bank Akber Abdulla Kassam Esmail Non-Executive-Chairman 4 Pricewaterhouse Kenya Ltd Dhirendra Rana Executive - MD Coopers P.O. Box 47387 - 0100 Anil Devchand Raja Non-Executive Nairobi Nancy Naitore Kaminchia Non-Executive Tel: +254-20-2723120/24, Philip Bernard Ilako Non-Executive 2722879

Website: www.mebkenya.com

92 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 35. National Bank of Mohamed Abdirahman Hassan (Mr.) Non Executive -Chairman 77 Deloitte & Kenya Ltd Eng. Erastus Kabutu Mwongera (Mr.) Non Executive Touche P.O. Box 72866 - 00200 Francis Lumasayi Atwoli (Mr.) Non-Executive Nairobi Cabinet Secretary, National Treasury Corporate Tel: +254-20-2828000, Corporate Managing Trustee, NSSF Corporate Joseph Kimutai Kering (Mr.) Non Executive Website: Linnet Mirehane (Mrs.) Non-Executive www.nationalbank.co.ke Munir Sheikh Ahmed (Mr.) Managing Director / Executive Boniface Biko Amunga (Mr.) Executive

36. NIC Bank J.P.M. Ndegwa Non- Executive-Chairman 25 Pricewaterhouse P.O. Box 44599 - 00100 F.M. Mbiru Non- Executive- Vice Chairman Coopers Nairobi John Gachora Executive Tel +254-20-2888000, A.J. Dodd Executive 2888600 F.N. Mwanzia Non- Executive A.S.M. Ndegwa Non- Executive Website: I. Ochola- Wilson Non- Executive http://www.nic-bank.com Michael Somen Non- Executive George Adams Maina Non- Executive Paras Vinod Shah Non- Executive Kairu Thuo Non- Executive Esther Ngaine Non- Executive Livingstone Murage Group Company Secretary

37. Oriental Commercial Shanti V. Shah Non-Executive -Chairman 8 RSM Ashvir Bank R.B. Singh Executive - CEO P.O. BOX 14357-00800, Prabhulal J. Shah Non-Executive Nairobi Nalinkumar M. Shah Non-Executive Tel: +254-20-3743278/87, Jitendrakumar C. Patel Non-Executive 3743289/98 Ramesh Thakkar Non-Executive Rupen K. Haria Non-Executive Website: www.orientalbank.co.ke

38. Paramount Universal Anwarali Merali Padany Non-Executive - Ag. Chairman 6 Deloitte & Bank Ayaz A. Merali Executive - CEO Touche P.O. Box 14001 -00800 Noorez Padamshi Non-Executive Nairobi Angela Musimba Non-Executive Tel: +254-20-4449266/7/8, Mercy W. Kamau Non-Executive 446106 /7 M. Mujtaba Executive

Website: www.paramountbank.co.ke

39. Prime Bank Limited Dr. R. C. Kantaria Chairman 17 Ernst & Young P.O. Box 43825 – 00100, A. R. Kantaria Executive Director Nairobi Bharat Jani Managing Director Tel: +254-20-4203000/116 T. M. Davidson Non-Executive D. G. M. Hutchison Non-Executive Website: www.primebank.co.ke S. K. Shah Non-Executive J.K. Kibet Non-Executive J. N. Mungai Non-Executive V. N. Ponda Non-Executive Arun Shah Company Secretary

40. Standard Chartered Bank Mrs. Anne Mutahi Board Chair - Non-Executive 38 Branches KPMG Kenya P.O. Box 30003 - 00100 Lamin Manjang Executive – CEO & M.D 1 Sales and Nairobi Kaushik Shah Non-Executive Service Tel: +254-20-3293000, Les Baillie Non-Executive Centre 3293900 Patrick Obath Non-Executive 2 Agencies Kariuki Ngari Non-Executive Website: Chemutai Murgor (Ms) Executive www.standardchartered.com Robin Bairstow Executive Benjamin Dabrah Non-Executive

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 93 protecting your deposits

BANKING INSTITUTIONS DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 41. UBA Kenya Bank Ngugi Kiuna Non-Executive-Chairman 4 Pricewaterhouse P.O. Box 34154 - 00100 Isaac Mwige Executive - MD Coopers Nairobi Kennedy Uzoka Non-Executive Tel: +254-020- 3612000 /1 / 2 James Olubayi Non-Executive Michael Waweru Non-Executive Website: www. ubagroup.com Emeke Iweriobor Non-Executive

42. Trans-National Bank Peter Kemei Non-Executive -Chairman 18 Deloitte & P.O. Box 75840-004000 Sammy Kipng’eno Langat Executive - CEO Touche Nairobi John Kiplangat Kenduiwo Non-Executive Tel: +254-20-2224234/5/6, Andre De Simone Non-Executive 2252188/90 Hellena Cheserem Non-Executive Prof. Daniel Rotich Non-Executive Website: www.tnbl.co.ke Henry Kiptiony Kiplangat Non-Executive

43. Victoria Commercial Bank Kanji D. Pattni Non-Executive-Chairman 3 Branches Pricewaterhouse P.O. BOX 41114 - 00100 Yogesh K. Pattni Ph.D Executive - MD Coopers Nairobi Silvano O. Kola Non-Executive Tel: +254-20-2719499, Rajan P. Jani (Alt. Yadav R. Jani) Non-Executive 0709876000 Ketaki Sheth Non-Executive Mukesh S. Shah Non-Executive Website: www.victoriabank.co.ke Zarqa N. Ahmed Non-Executive

44. Housing Finance Co. Steve Omenge Mainda Non-Executive–Chairman 17 Branches KPMG Kenya of Kenya Frank Marangu Ireri Executive – MD – HF Group P.O. Box 30088-00100 Kaushik Manek Non-Executive – HF Group Tel: +254-20-326000, 3317474 Benson Wairegi Non-Executive - HF Group & HFC Ltd Website: www.housing.co.ke Peter Kahara Munga Non-Executive - HF Group 1 Sales Constance Wangui Gakonyo Non-Executive - HF Group Center Adan Mohamed Non – Executive – HF Group Gladys Ongayo Ogallo Non-Executive – HFC Ltd John Nicholas Ashford-Hodges Non-Executive – HF Group Ltd

94 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 protecting your deposits

DEPOSIT TAKING MICRO-FINANCE DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 1. Caritas Microfinance Bank Patrick Kinyori Chairman 1 Ernest and Limited Fr. Anthony Mwituria Non Executive Young P.O. Box 15352-00100 Riunga Raiji Non Executive NAIROBI Regina Kamau Non Executive TEL: 020 5151500 Margaret Tuto Non Executive Samson Kinyua Kanywuiro Non Executive www.caritas-mfb.co.ke Dominic Simba Non Executive

2. Century Microfinance Bank Abel E. Muriithi Chairman I Branch P.G. Wahome & Limited Christian Lau Larse Non Executive 3 Marketing Company P.O. Box 38319 - 00623, Tom Onyango Non Executive Units NAIROBI. Edith Gathoni Gachanga K. Non Executive Tel: 254 756 305 132, 254 Emily Wairimu Kanina Non Executive 722 168 721

www.century.co.ke

3. Choice Microfinance Bank Bernard Kamiri Chairman 1 Mazaars Limited Lydiah Maina Executive (awaiting CBK P.O. Box 18263 – 00100, Simon Gachunia Non Executive Approval) NAIROBI. Stanley Kasyoka Non Executive Tel: 3882206/7 Mungai Mburu Non Executive Lilian Gachoki Non Executive www.choicemfb.com Catherine Njuguna Non Executive Daniel Leteipa Non Executive 4. Daraja Microfinance Bank Limited Peter Simon Kariuki Chairman 1 Mazaars-Kenya Karandini Rd-Off Naivasha Rd Paul Mwaniki Gachoka Non Executive P.O. Box 100854 – 00101 Peter Gachuki Gachau Non Executive NAIROBI. Isaac Githuku Mwangi Non Executive Tel: 0718444888/ Atanas Kariuki Maina Non Executive 0203879995/6 Edgar Kalya Non Executive Michael Gitau Kimani Non Executive www.darajabank.co.ke Ruth Auma Odera Non Executive email: [email protected]; Victor William Malu Non Executive daraja@darajabank.

5. Faulu Microfinance Bank Dr. Peter W. Muthoka Chairman 34 Deloitte & Limited Charles K. Njuguna Executive Touche P. O. Box 60240 – 00200, George Adams Maina Non Executive NAIROBI. Mwikali Muthiani Non Executive Tel: 3877290-3/7 Beverly Nuthu Non Executive Tavaziva Madzinga Non Executive www.faulukenya.com Kevin Terry Non Executive Peter J. Mogan Non Executive

6. Kenya Women Microfinance Lydia Nyambura Musyimi Non Executive 30 Deloitte & Bank Limited Mary Wacuka Ngatia Non Executive Touche P.O. Box 4179 – 00506, Agnes Nangira Adhiambo Non Executive NAIROBI Dr. Jennifer Nkuene Riria Non Executive Tel: No.: 0703 067 000 Mwangi Githaiga Executive Director Anthony Chege Executive Director Kariuki Kitabu Executive Director www.kwftdtm.com Zipporah Kinanga Mogaka Non Executive Julie Topirian Njeru Non Executive Knut Frigaard Non Executive Dominiek Deconinck Non Executive Jane Jeptanui Rotich Non Executive

7. Rafiki Microfinance Bank (K) Zafrullah Khan Chairman 19 Deloitte & Limited Daniel Mavindu Non-Executive Touche P.O. Box 12755-00400 Ken Obimbo Director Tel: 020-216 6401 Duncan Kabui Gichu Executive Muthoni Kuria Non-Executive www.rafiki.co.ke Michael Fiebig Non-Executive Atif Malik Non-Executive

Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015 95 protecting your deposits

DEPOSIT TAKING MICRO-FINANCE DIRECTORS AND APPROVED AUDITORS

NAME OF INSTITUTION DIRECTORS’ NAMES STATUS BRANCH APPROVED NETWORK AUDITORS 8. Remu Microfinance Stanley M’amuiri Ngaine Ag. Chairman 2 Branches Mazaars Kenya Bank Ltd Peter Mugendi Executive Director 2 Marketing P.O Box 20833 - 00100 Henry Muciimi Mbaka Director Units Nairobi Justus Mutabari Mutiga Director Tel: +254202214483, 215387/8 Felicity Nkirote Biriri Director Titus B. Mutea Ntuchiu Director www.remultd.co.ke Eileen Kagendo Mbaka Director John Benard Nthuku Director Jacob Kabutu Mwirigi Director Susan Wanja Mungiiria Director Daniel Muriungi Mugao Director Luke Kinoti Director Philip Walter Goodwin Director Lydia Kariuki Director

9. SMEP Microfinance Gabriel Comba Njeru K. Chairman 7 Deloitte & Bank Ltd. Rev. Cannon P. K. Mwangi Non Executive Touche P.O. Box 64063-00620, Allan Njoroge Ngugi Non Executive NAIROBI. Sam Awour Non Executive Tel: +254 20 2673327-8 /20 Violet Tsisiga Awori Non Executive 2055761 /20 3572799 Tom Matianyi Mokaya Non Executive

www.smep.co.ke

10. SUMAC Microfinance Bank Duncan Mbugua Mwaniki Executive Director 3 Kimani & Limited John Kibatha Njoroge Non Executive Associates P.O. Box 11687– 00100, Mbugua Muiruri Non Executive NAIROBI Stephen Muregi Chege Non Executive Tel: +254 20 221 2587, Dr. Rufas Maina Kanyogo Non Executive 20 221 0440 Charles Kariuki Njai Non Executive

www.sumamicrofinancebank.co.ke

11. U&I Microfinance Bank Stephen Alois Nganga Non executive 1 Mazaars Kenya Limited Boniface Kihiu Kamau Non executive P.O. BOX 15825-00100 Benson Muturi Kamande Non executive NAIROBI James Mwangi Gicheha Non executive Cell: 0713112791, Denis Gichangi Ndungu Non executive Tel: 0202367288 Dr. Joseph K. Kaniaru Non executive David Mwangi Kiarie Non executive www.uni-microfinance.co.ke

12. Uwezo MFB Limited Fredrick Wamwaki Chairman 3 Horwath P.O. Box 1654 – 00100, Angelica Wangari Kamuyu Non Executive Erastus & Co NAIROBI. Christopher Mwaura Gathee Non Executive (pending CBK Tel: 2212917/9 David Kimani Muiruri Non Executive Approval) David Waititu Non Executive http://uwezomfbank.com/ Brian Collins Mbui Kiai Non Executive Michael Mbugua Wanyoike Non Executive Patrick Kimemia Ndirangu Non Executive Alan Ngugi Gachukia Non Executive

96 Kenya Deposit Insurance Corporation (KDIC)Annual Report 2015