NIC Bank Group · NIC Bank 10% NIC Bank grew 14% year on year. Page 13 At a Group level loans and...

NIC Bank GroupAnalyst Breakfast

24 August 2015

John Gachora Group Managing Director

David Abwoga Director, Finance and Strategy

Agenda

Who we are

Macro-Economic Overview

Our Strategy

Financial Performance

Closing Remarks

National Industrial Credit Bank Limited

incorporated in Kenya

1959

National Industrial Credit Bank Limited obtains Commercial

Banking License

1995

National Industrial Credit Bank Limited merges with African

Mercantile Bank Limited

1997

Renamed NIC Bank Limited

NIC introduces investment banking (NIC Capital) and stock brokerage

services (NIC Securities)

2005

2008

NIC Bank Group is a “One Stop” Financial Services Shop…

Establishment of NIC Bank Tanzania

2009/ 2010

Establishment of NC Bank Uganda

2012

Launch of NOW Banking

2014

Establishment of NIC Leasing (LLP)

2015

Co

rpo

rate

Commercial

Corporate

Institutional

Reta

il

Personal Banking

SME

Product Offering

Tra

nsactional B

ankin

g

Asset F

inance

Insura

nce

Cre

dit C

ard

s

Tre

asury

Mort

gages

Schem

es

Inve

stm

ent B

ankin

g a

nd S

tockbro

kera

ge

Channels

Bra

nch

AT

Ms

Dig

ital C

hannels

Agency

Bankin

g

…and has a broad product and service offering to cater to our local and regional customers

Over the last few months we have focused on enhancing the bench strength of our Executive team

John OkuloMD

NC Uganda

Pankaj Kansara

MD NIC Tanzania

Robert

KibaaraDirector,

Retail

Sankul MandaviaDirector, Treasury

David AbwogaDirector,

Finance and Strategy

Margaret KimumaDirector,

Credit Risk

Julius KamauDirector, Tech

and Ops

Rosalind Gichuru

Director, MCC

Jerry SimuDirector,

Investment Banking

Monicah KihiaDirector, HR

Livingstone Murage

Company Secretary

Alan DoddExecutive Director

John GachoraGroup Managing

Director

Experience: 17 years Previous Employers: HSBC, Discount Securities

Experience: 34 years Previous Employers: Ambank, Mercantile Finance, Mobil Oil, PWC

Experience: 35 years Previous Employer: Standard Chartered

Experience: 21 years Previous Employers: Barclays, Absa, Bank of America, Credit Suisse

Experience: 23 years Previous Employers:Citi, Marshalls EA, Deloitte

Experience: 16 years Previous Employers:Ecobank, Standard Chartered, Citi

Experience: 25 years Previous Employers:CBA, First American Bank

Experience: 21 years Previous Employers: NBK, Standard Chartered, Barclays

Experience: 20 years Previous Employers: Barclays

Experience: 17 Years Previous Employers:Coca Cola, Procter and Gamble

Experience: 18 years Previous Employers: Stanbic, Standard Chartered

Experience: 20 yearsPrevious Employers: Citi

Experience: 25 years Previous Employer: Victoria Commercial Bank, CBA, Citi

Agenda

Who we are


Our Strategy


Closing Remarks

Kenya and Regional Overview

Country 2014 2015 2016

Kenya (%) 5.3 6.0 6.6

Tanzania (%) 7.2 7.2 7.1

Uganda (%) 4.9 5.5 5.7

Kenya

The economy is projected to grow at between 6 - 6.5% in 2015 and to maintain the same pace over the medium term.

This growth is based on:• Lower oil prices

• Increased private consumption

• Ongoing infrastructure projects

• Higher public and private investment in security, ICT, agriculture, energy sector, healthcare, education, and tourism

East Africa Region

• Regional economies growth is projected to remain resilient

Source: World Bank; IMF; CBK

Interest, Inflation and Exchange Rates

• Interest Rates have been on an increasing trend over the last 2 months on the back of a tighter monetary policy.

• The Central Bank raised KBRR by 133bps from 8.54% to 9.87%.

Interbank Rate

13.5%

91 Days T. Bill 10.6%

CBR

11.5%

Jan Feb Mar Apr May Jun Jul

• Inflation declined to 6.6% in July from 7.0% in June supported by lower food prices.

• The inflation rate has remained within the upper limit of CBK target rate of 7.5% in the last 7 months.

5.5% 5.6%

6.3%

7.1%6.9% 7.0%

6.6%


• The shilling declined by 11.5% against the dollar in the 7 months to July to 102.52/US$ due to:

− The strengthening of the dollar on the back of US economy recovery

− Falling export revenues from tourism, tea and horticulture

− Widening of the current account deficit

Interest Rates

Inflation

Exchange Rates

91.67

102.52


KES/US$

Agenda

Who we are


Our Strategy


Closing Remarks

We have a clear roadmap for the next 3 years

• Achieve an acceptable Return on Capital• Most innovative

Bank in East Africa

• Retain market leadership in Asset Finance

• Employer of Choice

• First choice bank for Local Corps (their employees), selected Retail customers and SMEs

• Substantial contribution from our subsidiaries • Branch expansion

Brand Positioning

Target Market Talent War

Scale

Return on

CapitalStep Change Reposition Grow

Agenda

Who we are


Our Strategy


Closing Remarks

The Group posted solid results for H1 2015, growing 10% year on year

2,725

3,10962

34

123

68

H1 '14 H1 '15

Group Segmental Performance, KES millions

2,910

3,211

Regional Subs.

Kenyan Subs.

NIC Bank

10%

NIC Bank grew 14% year on

year

At a Group level loans and advances were up 18%, while customer deposits were up 12%

Net Loans and Advances, KES billions

84

1008

8

H1 '14 H1 '15

Customer Deposits, KES billions

869778

H1 '14 H1 '15

18%12%

92108

93105

Subs

Bank

Subs

Bank

NIC Bank Profit and Loss, KES millions

June 2015 June 2014 June 2015vs June 2014Actual Actual

Interest Income 7,019 5,992 17.1%

Interest Expense 2,913 2,555 (14.0%)

Net Interest Income 4,106 3,437 19.5%

FX Income 585 543 7.7%

Fees and Commissions 722 526 37.3%

Other Income 363 278 30.6%

Non Funded Income 1,670 1,347 24.0%

Total Net Revenue 5,776 4,784 20.7%

Total Expenses 2,167 1,806 (20.0%)

Provisions for Bad debts 500 252 (98.4%)

Profit Before Tax 3,109 2,726 14.0%

The Bank delivered a 14% growth in PBT benefitting from growth in NII as well as transactional income

Commentary

• The growth over 2014 is attributed to a higher NII of 19%, whilst competition remains strong, we continue to actively manage our liability mix resulting in relatively stable margins.

• The growth in Operating Expenses can be attributed to investments in talent, technology, premises and building brand awareness.

2,258 3,111 3,438

4,105

1,338

1,243 1,345

1,671

H1 '12 H1 '13 H1 '14 H1 '15

Non Funded Income Net Interest Income

40% 35%

39% 43%

21% 22%

H1 '14 H1 '15

Other Income Fees and Commissions Foreign Exchange Income

Funded Income and Non Funded Income (NFI), KES millions

Non Funded Income Composition

3,596

4,3544,783

5,776

Operating Income has grown by 20.7% year on year, with NFI (24%) growing at a faster rate than NII (19%)

737 855 914

1,127

626

777 892

1,040

H1' 12 H1 '13 H1 '14 H1 '15

Other costs Staff compensation

Operating Expenses, KES millions

Strategic use of Direct sales staff to manage headcount and costs: IT Expenses line impacted by new project

costs, including channel and innovation projects; Increased media visibility and campaigns. We remain

focused on controlling expenses while investing to support our growth.

1,363

1,632

1,806

2,167

Operating Expense growth was driven by investments in talent, technology, premises and brand positioning

Cost/ Income Ratio

38% 37% 38% 38%

June 2012June 2013June 2014June 2015

Our investment

in resources has

primarily been in revenue

generating Front Office

Roles

Asset Portfolio

We have built momentum on lending in the Retail and Corporate Business, whilst managing Risks and Margins over last year. Loans growth was attributed to good

sales and marketing drives.

Assets, KES millions H1 ‘15 H1 ‘14 Growth Y/Y

Net Loans 99,865 83,958 18.9%

Cash & Balances with Bank 6,160 5,070 21.5%

Government Securities 19,928 20,293 -1.8%

Investment in Subsidiaries 4,308 3,915 10,0%

Other Assets 3,890 5,386 -27.8%

Total Assets 143,197 120,499 18.8%

Net Loans and Advances and Total Assets grew by 19% over the period under review

Gross Loan Book

Most product lines are exhibiting growth year on year

* Includes a KES 1.1bn write-off

The growth in our lending portfolio has been led by Corporate and Retail Lending

Lending Products, KES millions

H1 ‘15 H1 ‘14 Growth YoY

Loans 40,210 29,854 35%

Hire Purchase 26,804 25,796 4%

Overdraft 22,274 18,510 20%

Other 12,879 12,416 4%

Mortgages 2,681 2,027 32%

104,848 88,603 18%

Liabilities and Funding Sources

Liabilities, KES millions H1 ‘15 H1 ‘14 Growth Y/Y

Deposits 97,212 85,658 13.5%

Borrowed Funds 14,294 5,706 150.5%

Other Liabilities 7,542 10,125 (25.5%)

Shareholders’ Funds 24,149 19,010 27.0%

Total Liabilities & Capital 143,197 120,499 18.8%

Deposits have grown by 14%, while borrowed funds grew by 150%

Customer Deposits, KES millions

41.345.0

50.8 49.8 46.4 45.352.9 51.4 53.6

45.7 51.453.6

51.8

1.21.3

1.3 1.31.5 1.5

1.4 1.41.5

1.5

1.41.5

1.6

42.542.9

42.238.7

42.6 44.337.0 38.6

40.1

41.238.6

40.1 43.2

Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

Current Accounts Savings Accounts Term and Call Deposits

85.0 89.2 94.3 89.8 90.5 91.1 91.3 91.4 95.2 88.4 91.4 95.2 96.6

While Customer Deposits have grown by KES 11bn, our market share has remained fairly stable

Net Interest Margin

5.7%

6.0% 6.0%6.2%

Jun-14 Dec-14 Mar-15 Jun-15

Net Interest Margin

11.3% 11.7% 11.6% 11.6%


Yield on Lending

5.6% 5.7% 5.6% 5.4%


Cost of Funds

Whilst competition in lending remains strong we continue to actively manage our liability

mix and this has led to a relatively stable

margin

Stable yields on lending coupled with efforts to reduce our Cost of Funds has protected NIM

Capital Adequacy

21.5%

19.6%18.5%

20.0%

14.1%14.8% 14.7%

14.0%

17.0% 17.3% 16.8%

20.3%J

un

e 2

01

4

De

cem

be

r 20

14

Ma

rch

20

15

Ju

ne

201

5

Ju

ne

201

4

De

cem

be

r 20

14

Ma

rch

20

15

Ju

ne

201

5

Ju

ne

201

4

De

cem

be

r 20

14

Ma

rch

20

15

Ju

ne

201

5

Core capital / total deposit liabilities Core capital / total risk weightedassets

Total capital / total risk weightedassets

14.5%

10.5%

8.0%

Minimum statutory

ratios

We now have an ICAAP policy that will ensure that will effectively monitor our capital adequacy as we strive to our achieve our strategic ambitions.

We are well capitalized with sufficient buffers above all statutory ratios

H1 ‘15H1 ‘14

Growth in PBT

Net Interest Margin

Cost/Income Ratio

Fee/Income Ratio

Return on Capital Employed

Loan/ Deposit Ratio

Return on Assets

Return on Lending

Growth in Customer Deposits

Growth in Net Loans

14%

6.2%

37.5%

28.9%

25.9%

107.9%

4.4%

11.6%

13.5%

18.9%

8%

5.7%

37.8%

28.1%

28.9%

103.4%

4.6%

11.3%

16.3%

31.2%

We have seen improved momentum across most of the key ratios year on year

Interim Dividends KES 0.25Nil

Agenda

Who we are


Our Strategy


Closing Remarks

Capital Markets Awards

Bond Deal of the Year (2014)

Winner

Banking AwardsBest Bank in Asset Finance (2014/5)1st Runners Up

FiRe AwardsCorporate

Governance (2014)1st Runner Up

MSK AwardsBest Integrated

Campaign (2014)Winner


Investment Bank of the Year (2015)1st Runners Up


Lead Transaction Advisor (2014)

1st Runners Up


Best Stock Broker (2014)

2nd Runners Up

The Banker East Africa Awards

Best Online Platform (2015) Winner

We have developed a strong reputation in the market; our accolades speak for themselves

In closing…

Good momentum in H1

Exchange Rate and Interest Rate challenges

Expansion in Retail and SME

Clear focus on costs

Continued investments in people and technology

NIC Bank Group · NIC Bank 10% NIC Bank grew 14% year on year. Page 13 At a Group level loans and...

Documents

Transcript of NIC Bank Group · NIC Bank 10% NIC Bank grew 14% year on year. Page 13 At a Group level loans and...