NATIONAL MICROFINANCE BANK PLCNATIONAL MICROFINANCE BANK PLC

INVESTOR PRESENTATION 

On the occasion of the AGM of NMB T b h ld 28 M 2011To be held on 28 May 2011By Mark WiessingChief Executive Officer

1

Recent History of the Business

History: ‐ Created in 1997 from the break up of the old NBC.‐ Privatised 2005 with sale of 49% to a consortium led by Rabobank.y‐ Listed 2008 with government diversity a further 21%.‐ Current Ownership:

• Rabobank 34.9%• Treasury Registrar 31 8%• Treasury Registrar 31.8%• Public Shareholders 33.3%

Mission: Through innovative distribution and its extensive network, NMB offers ff bl f f l haffordable customer focused financial services to the Tanzanian community in order to realise suitable benefits for all its stakeholders. 

Vision: To be the preferred financial services partner in Tanzania.

Values: What drives us? What binds us? What guides us?‐ Eagerness ‐ Customer focus ‐ Integrity‐ Ownership ‐ Teamwork ‐ Compliance‐ Ownership ‐ Teamwork ‐ Compliance

2

Recent history of the business 2005 – 2010

From: To:

• 600,000 customers 1,400,000 customers• 1,500 staff 2,500 staff• 0 ATMs 400 ATMs• 0 ATMs 400 ATMs• 0 cards over 1 million cards• Limited product range Full product range

‐ Savings accounts ‐ Payments / collectionsSavings accounts Payments / collections‐ Payments ‐ Lending

‐ Liabilities‐ Treasury 

• 100 branches  140 branches• Limited technology Real time online nationwide, 

mobile banking

3

Tanzanian Economy

‐ Limited impact of global crisis

‐ Consistent GDP growth at 6 – 7% pa

‐ Inflation in single digits

‐ TZS outlook stable, depreciation expected in line with inflation differentials

‐ Treasury bill and bond yields reduced significantly in recent years, with significant adverse impact on banking sector revenues

‐ Vulnerability of the economy to uncertain donor flows, commodity price (f d d il) d li(food, crude oil) and power supplies

‐ Overall outlook positive

4

Banking sector overview

‐ Over 40 licensed banks operating in a TZS 17 billion economy.

‐ 8 banks represent bulk of the industry, each with own strategic intent and performance.

‐ Continued high growth of deposits, in line with other markets.

‐ Further upside potential for the industry due to low penetration levels (12% of bankable population are banked).

‐ Net income of industry negatively impacted by lower interest rates and impairmentimpairment.

5

Banking Sector Summary

2006 2007 2008 2009 2010

Assets (Tshs Billions) 5,294 6,904 8,277 9,817 12,214 Loans (Tshs Billions) 2,214 2,833 4,163 4,534 5,386Deposits (Tshs Billions) 4,240 5,229 6,401 7,907 9,655 Shareholder Capital(Tshs Billions) 525 778 974 1,249 1,492 Net Interest Income(Tshs Billions) 332 444 525 583 611Net Income 131 209 210 217 192

38%45%

45%50%14,000 Sector Total Assets

Sector Total Deposits31%

35%

35%

40%12,000Tshs billions

Tshs Billions

8 2779,817

12,214

30%33% 34%

15%20%25%30%35%40%45%

4 000

6,000

8,000

10,000

12,000p

7 9079,655

24%25% 26%

31%

15%

20%

25%

30%

35%

4 000

6,000

8,000

10,000

% %

5,2946,904

8,277

0%5%10%15%

0

2,000

4,000

2006 2007 2008 2009 2010

Total Assets Asset/GDP

4,2405,229

6,4017,907

0%

5%

10%

0

2,000

4,000

2006 2007 2008 2009 2010

CustomerDeposits Deposits/GDPCustomerDeposits Deposits/GDP

6

NMB Market‐Share Statistics

CAGR % Market-share

D it

Share %

2008 15%1 813

21.3%

Deposits(Tshs Billions)

2008 15%

2009 19%

2010 19%

6881,012 1,200

1,4591,813

2006 2007 2008 2009 2010

44.8%

Loans (Tshs Billions)

Share %

2008 12%

2009 15%345571 673

858

9 1%

2009 15%

2010 16%

Share %

137345

2006 2007 2008 2009 2010

9.1%PAT (TshsBillions)

2008 19%

2009 22%

2010 28%

35 3949 48 54

2006 2007 2008 2009 2010

TOTAL ASSETS 795 1,158 1,384 1,669 2,107

21.5%

7

NMB Aspirations 

• Sustainably / sufficiently profitable

d h l ’ b k b d b d ff d bl• Perceived as the people’s bank:  broad based, affordable

• Urban / rural distribution

• Employee and customer satisfaction

• Organisation structured to meet the needs of the business

• Use technology advantage to achieve benefit of scale at low cost

• Clear segmentation to drive business direction and resourcing

• Grow at least at market growth rates

• Target lead position in the chosen markets

• Efficiency rations to trend to market / Africa best practice by 2013

• Enhance link with Rabobank for technical assistance on a needs basis

8

NMB Activities

Retail Banking:

‐ Retail banking is the foundation of NMB. ‐ Key segments served:

• Individuals / salaried: ‐ Over 1.4 million customers‐ 40% of Tanzanians who have a bank account hold their account at NMB 

• MSME / SACCOs: ‐ More than 50,000 MSME customers‐ 30,000 individuals reached through SACCOs, g

• Agric / Amcos: ‐ 1,500 individual farmers‐ 275,000 households reached through Amcos and warehouse receipt financing

Retail lending book to over 250 000 individuals represents over 50% of total loan‐ Retail lending book to over 250,000 individuals represents over 50% of total loan portfolio.

‐ Ongoing efforts to improve service delivery across the branch network.

9

NMB Activities (continued)

Wholesale Banking

‐ Wholesale banking increasing contribution to NMB

‐ Focus on the nation’s top corporates, NGOs and government entities

‐ Able to offer:

• Short / long term lending solutions

• Transactional solutions (nationwide payments / collections)

• Electronic solutions

• Automated payroll remittances

• Treasury and trade finance

• Deposits / investments

10

NMB Activities (continued)

Leadership in distribution:

‐ Over the last 5 years

• From 100 to 140 branches• From 100 to 140 branches

• From 0 to 400 ATMs

• 450,000 registered mobile banking users

‐ Network profile:

34% f ll b k b h i T i• 34% of all bank branches in Tanzania

• 43% of all ATMs in Tanzania

• 55% of NMB branches are in districts where there are no other banks

• 60% of NMB branches are in rural areas

‐ In 2010

‐ Opening of:

• NMB Arusha Market (Arusha)

• NMB Usongwe (Mbeya)

• NMB Mt Uluguru (Morogoro)

• NMB Airport (Dar es Salaam)

• NMB Itigi (Singida)

‐ Installation of 90 new ATMs

‐ Need to continuously review distribution models to allow for cost effective growth.

11

NMB Activities (continued)

ICT / Operations

‐ Leadership in technology:

• Realtime on line nationwide

• Mobile banking pioneers

• ATM, cards, Pesa Fasta

‐ Crossing over to new cutting edge core banking system in 2011.

‐ Increasing ratio of electronic transactions to total transactions processed.

‐ Capex focused on

• Branch refurbishments

• New branches

• Core system

• Branch IT

‐ Increasing number of transactions per customer.

‐ Continued opportunity for productivity improvements.pp y p y p

12

NMB Activities

CSR

‐ CSR activities focused on agriculture, education and health.

‐ 1% of PAT applied to donations and sponsorships of worthy causes.

‐ NMB Foundation for Agricultural Development building governance and skills for over 200 agricultural cooperatives, representing over 100,000 households.

‐ Future efforts to focus on building financial literacy in schools and for MSMEs.

‐ “NMB System” paid over TZS 120 billion in corporate and payroll taxes over the last 55 years.

13

NMB Financial Performance 2010

2010(TZS million) 

2009(TZS million)

Change(Percentage)

Revenues  199,999 167,933 19%

• NII (net interest income) 130,410 127,518 2%

• NFI (non funded income) 69,589 40,415 72%

Cost 119,880 92,870 29%

• Staff  (46,460) (35,072) 32%

• Opex (73,420) (57,798) 27%

Impairment (1,674) (7,025) ‐76%

PBT 78,445 68,038 15%

Tax (24,464) (20,488) 19%

PAT 53,981 47,550 14%

Cost to Income Ratio 60% 55%

NPL Ratio 2% 4%

Loan to Deposit Ratio 47% 46%Loan to Deposit Ratio 47% 46%

14

NMB Financial Performance 2010

‐ Total income up 19% to TZS 201 billion

‐ Total assets up 26% to TZS 2.1 trillion

‐ Customer deposits up 24% to TZS 1.8 trillion

‐ Non interest income growing to 35% of total income

‐ NPL ratio remains acceptable at 2%

‐ ROE remains at a commendable 23%

‐ Strong growth in loans and advances at 27%

‐ Loan to deposit ratio grew to 47% with continued scope for growth

15

NMB Financial Summary

2006 2007 2008 2009 2010 Assets (Tshs Billions) 795 1,158 1,384 1,669 2,107 Loans (Tshs Billions) 137 345 571 673 858 Deposits (Tshs Billions) 688 1 012 1 200 1 459 1 813Deposits (Tshs Billions) 688 1,012 1,200 1,459 1,813Shareholder Capital(Tshs Billions) 91 122 160 192 231 Net Income 35 39 49 48 54 Earnings per Share 70 78 97 95 108

60%2 00045.7%

50%2 500

NMB Total Assets  NMB Total Deposits

48.0%

17.9%21.6%

23.7% 30%

40%

50%

60%

8001,0001,2001,4001,6001,8002,000

2,10715.2%

19.5%20.6%

26.2%

20%25%30%35%40%45%50%

1,000

1,500

2,000

2,500

Tshs billions % Tshs Billions %

6881,012

1,2001,459

1,81311.5%

0%

10%

20%

0200400600800

2006 2007 2008 2009 2010

CustomerDeposits % Growth

7951,158 1,384

1,669

0%5%10%15%20%

0

500

1,000

2006 2007 2008 2009 2010

T l A % G h CustomerDeposits % GrowthTotal Assets % Growth

16

NMB Performance Trend

%

NII/ Avg. Earnings Assets(%)

9.6% 9.1%11.8%

10.7%12.6%

2006 2007 2008 2009 2010

6.0%

4.5%5.6%

3.7%

4.3%

3.4%

4.7%

3 0%3.9%

Average ROA (%) NPL/Total Gross Loans(%)

3.7%2.3%

2006 2007 2008 2009 2010

3.0%

2006 2007 2008 2009 2010

2006 2007 2008 2009 2010

NMB Dividend Summary

2006 2007 2008 2009 2010

Earnings per Share 56.0 77.7 97.4 95.1 108.0Earnings per share Growth % 38.8% 25.4% -2.4% 13.6% Dividends Per Share (Adj) 16.0 22.0 30.0 31.4 35.6 Dividend Per Share Growth % 37.5% 36.4% 4.7% 13.4%Total Dividends (Tshs Billions) 8 11 15 16 18 Pay-Out Ratio (%) 28.6% 28.3% 30.8% 33.0% 33.0% Dividend Yield (%) 3.1% 3.9% 5.5% NAV (Tshs per Share) 182 244 320 384 462 NAV Growth Rate 34.1% 31.2% 20.0% 20.3%

18

Dividend Yield to Fundamentals

NMB Yield Vs Inflation Rate NMB Yield Vs Savings Rate

12 1%

3.9%

5.5%10.3%

12.1%

2.7% 2.8%2.4%

3.1%6.0%

3.1%3.9%

5.5%

2008 2009 2010

Savings Rate NMB Yield

2008 2009 2010

Inflation Rate NMB Yield

19

Savings Rate NMB YieldInflation Rate NMB Yield

Conclusion

‐ Solid performance of the bank

‐ Increasing market shares

‐ Increasing contribution of non funds income

‐ Continued focus on long term sustainability through:

• Prudent risk and credit practices

• Adequate capitalisation

• Operational and financial efficiency

• Increased scrutiny of costs, productivity and distribution models

‐ Roll out new core system in 2011

‐ Inherent risks remain:

• Interest rate developments

• Loan portfolio deterioration

• Competitive pressures (banks, mobile network operators)

‐ Favourable outlook 2011

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“National Microfinance Bank Plc (“NMB”), has taken all reasonable care to ensure thatthis presentation is true and correct in all material aspects. This presentation and anyother information supplied is not intended to provide the basis of any evaluation or aspp p ya recommendation by NMB, nor does it constitute an offer, to sell or buy any NMBshares. Any recipient of this presentation should make its own independentassessment of the condition and affairs of NMB. This presentation may include“f d l ki t t t ” hi h i l d ll t t t th th hi t i l f t“forward looking statements” which includes all statements other than historical factsand data, including statements on the banks financial position, strategy or other plansand possible future scenarios. Such statements, if any, are not guarantees of futureperformance, and involve known and unknown risks and factors that could cause theactual results to be materially different from the forward looking statements. Noresponsibility is accepted for the reasonableness of any such forward lookingstatements. NMB does not represent that this presentation may lawfully bedistributed in any jurisdiction and this presentation may not be re distributed exceptdistributed in any jurisdiction, and this presentation may not be re‐distributed exceptwith the express approval of NMB.”

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