nic bank group · nic bank 10% nic bank grew 14% year on year. page 13 at a group level loans and...
TRANSCRIPT
Page 1
NIC Bank GroupAnalyst Breakfast
24 August 2015
John Gachora Group Managing Director
David Abwoga Director, Finance and Strategy
Page 2
Agenda
Who we are
Macro-Economic Overview
Our Strategy
Financial Performance
Closing Remarks
Page 3
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
Page 4
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
Page 5
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
Page 6
Agenda
Who we are
Macro-Economic Overview
Our Strategy
Financial Performance
Closing Remarks
Page 7
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
Page 8
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%
Jan Feb Mar Apr May Jun Jul
• 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
Jan Feb Mar Apr May Jun Jul
KES/US$
Page 9
Agenda
Who we are
Macro-Economic Overview
Our Strategy
Financial Performance
Closing Remarks
Page 10
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
Page 11
Agenda
Who we are
Macro-Economic Overview
Our Strategy
Financial Performance
Closing Remarks
Page 12
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
Page 13
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
Page 14
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.
Page 15
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%)
Page 16
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
Page 17
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
Page 18
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%
Page 19
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%
Page 20
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
Page 21
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%
Jun-14 Dec-14 Mar-15 Jun-15
Yield on Lending
5.6% 5.7% 5.6% 5.4%
Jun-14 Dec-14 Mar-15 Jun-15
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
Page 22
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
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be
r 20
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rch
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201
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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
Page 23
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
Page 24
Agenda
Who we are
Macro-Economic Overview
Our Strategy
Financial Performance
Closing Remarks
Page 25
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
Capital Markets Awards
Investment Bank of the Year (2015)1st Runners Up
Capital Markets Awards
Lead Transaction Advisor (2014)
1st Runners Up
Capital Markets Awards
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
Page 26
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