CO-OPERATIVE BANK OF KENYA - Co-OpBank

CO-OPERATIVE BANK OF KENYAGROUP FINANCIAL RESULTSANALYST BRIEFINGQ1202020 May 20201

Macro EconomicHighlights22

Kenya’s Diversified Economy Critical In 2020The economy expanded by 5.4% in 2019. This GDP was contributed by several sectors indicating vast diversification as shownbelow.33

2020 Economic Growth Path Uncertain In 2020, the economic growth path is still quite uncertain. This has meant that GDP forecasts by the CBK (2.3%), IMF(1%) and World Bank (1.5%) are significantly different. The growth forecasts for Kenya’s economic growth in 2020 are as follows;2019 ACTUALAnnual Real GDP GrowthAgricultureIndustryServicesCBK 2020 FORECAST WORLD BANK 1%1.1% All the forecasts assume that :a) A favorable weather pattern in 2020.b) Stable political and domestic security situation.c) That the locust invasion will be well contained.d) Pandemic is contained and ends in 2H2020e) Crude oil prices remains low44

Kenya Shilling (KES) : Exchange Rate The USD has strengthened by 8.5% between the beginning of the year and early April. Locally, the weakness of the KES has been significantly due to low supply of dollars. The export flows, tourism and travelinflows have bottomed. FX inflows from expected foreign borrowings (from IMF and World Bank) will offer temporary relief in the next coupleof weeks.55

Kenya Shilling (KES) : Exchange Rate The USD has strengthened by 8.5% between the beginning of the year and early April. Locally, the weakness of the KES has been significantly due to low supply of dollars. The export flows, tourism and travelinflows have bottomed. FX inflows from expected foreign borrowings (from IMF and World Bank) will offer temporary relief in the next coupleof weeks.66

Short Term Interest Rates The money market remained fairlystable in 1Q 2020. Yields on short-term governmentsecurities have registered onlymarginal change. The average interbank rate fell to4.8% at the end of 1Q2020 comparedto 5.4% at the beginning of the year,indicating high liquidity. Between 1Q2019 and today, thebenchmark CBR has fallen by 200basis points from 9% in 1Q2019 to7.25% in March 2020 and then 7% inApril 2020.77

Trend In Private Sector Credit Growth The 12-month growth in privatesector credit has improved to 8.9% inMarch 2020 from 4.3% in March2019. Further analysis indicates that asignificant proportion of the newlending went to personal loans,MSME, transport and manufacturing. However, we project that it will bedifficulty to maintain this growthtrajectory in credit growth in Q2 of2020.88

COVID 19RESPONSE Regulatory interaction: legal perspectiveWe are compliant with the laws, regulations and guidelines; Ministry of Health guidelines Government of Kenya directives Occupational Safety & Health Policy in line with the OSH Act.(OSHA) Central Bank of Kenya guidelines The Kenya Centre for Disease Control and Prevention (the“CDC”) guidelines World Health Organization guidelines Co-ordination within the bank- Covid19 governance Business Crisis Management Team Multidepartment emergency response team d constantlyand Risk assessment Proactively monitoring trends of the disease and impact onthe Bank’s strategic objectives, business operations andwork plans. We have robust monitoring and reporting toolscapable of collecting, analyzing and reporting case-basedinformation. Policies, procedures and related controls These are promoting the use of technology, education, training and guidance. The Bank has put in place adequate business resiliencearrangements for disaster recovery and businesscontinuity. Specific support to each stakeholder We are providing specific support to our stakeholders. Forour customers we have universal support but we also havetargeted support for customers whose operations/revenues have been halted or materially impacted by thepandemic. In total, a portfolio of over Kshs 15.3 Billion has been realigned to offer our customers this needed support.99

Strategic Focus1010

Our Strategic Focus Optimal returns Sustainability/ Marketshare growthOUR SHAREHOLDERSOUR CUSTOMERSKEYSTAKEHOLDERSOUR STAFFOUR ENTERPRISETHE COMMUNITY Customer centricity Digitized customer journeys Employer of choice Staff productivity Operational efficiency Proactive Risk management Optimal digital strategy Responsible Corporate Citizen Sustainable Economic, Social &Environmental Impact1111

Co-operative Bank of Kenya GroupCo-operative Bank of Kenya Group StructureCo-operative Bank of South Sudan LtdCoopHoldingsCoop SocietyLtd(64.56%)(51%)Co-operativeBank of KenyaLtdCo-op Consultancy and Insurance Agency Ltd(100%)Co-optrust Investment Services Ltd(100%)Kingdom Securities LtdMinorityShareholders(35.44%)(60%)Co-operative Insurance Society Ltd(33.41%)Co-op Bank Fleet Africa Leasing Limited(25%)1212

ng(Kshs.30.1BLoan Book)Fundmanagement( Kshs.106.58B,Q12019 Kshs.85.16B)Retail andBusinessBanking(Kshs.159 BLoan rate,Government &InstitutionalBanking(Kshs.105BLoan Book)LeasingKshs.375M Disbursed in2019Stock BrokerageConsultancyand capacitybuilding2800InsuranceBrokerage 13%(YoY) growth inInsuranceCommission Share tradingservices Online ShareTrading1313

Our Presence159Branches584ATMs8.8MAccount holders5.6MMcoop Cash Customers16K Co-op Kwa Jirani Agents92K Internet banking Customers464Sacco Front Offices Branchnetwork16.5K Diaspora Banking Customers24Hr.Contact Centre4514 Staff1414

Proposed Acquisition of 100% Shares of Jamii Bora Bank Limited The Board of Directors of Co-operative Bank of Kenya Limited has approved the progression ofdiscussions with Jamii Bora Bank Limited, which if successful, would lead to the Co-operative Bank ofKenya Limited acquiring 100% shareholding in Jamii Bora Bank Limited. Jamii Bora Bank is a Kenyan bank incorporated under the Companies Act with over 350,000 customersin 17 branches and asset base of KShs. 12.5 billion. The bank has a strategic niche in MSME banking,Microfinance, leasing and Insurance agency. In accordance with the standard process, the transaction is subject to successful completion of thefollowing; Due diligence by the relevant professionals. Board of Directors and shareholders’ approval by both Co-operative Bank of Kenya Ltd andJamii Bora Bank. Regulatory approvals. Notably: Central Bank of Kenya, Capital Markets Authority andCompetition Authority of Kenya. Due diligence for the acquisition is ongoing.1515

BranchTransformation.: CustomerExperience &Retail SFE1“Soaring Eagle”TransformationInitiatives3KeyPillars; Growth5 EfficiencySales ForceEffectivenessNPLManagement& redServices &Digitization‘The 616

“Soaring Eagle” Transformation: Key achievements E-Credit Focus: Kshs. 79.8B Disbursed so far. 40% of our income is Non Funded. Average queue time of 10.6 Minutes. 89% transactions on alternative channels. MSME Transformation: 5000 trained 85252 onboarded on the new packages (Gold, Silver, Bronze) Supply chain financing: 132 Anchors Non-Financial Services (NFS):128 NFS clinics, 9 Networking forums,2 international business trips in 2019. Sales Force Effectiveness: Sector focus, Reorganized relationship models. Digitization: Core Banking System (ongoing), Omnichannel, Business Process Management System, Customerjourneys among others. Sustained proactive credit management: 9.5% (9.98% Q12019), loan book grew by 9.8% Cost management initiatives continue. Predictive data analytics. Sustained staff productivity.1717

Championing Social Economic EmpowermentCo-op Consultancy &Insurance Agency Ltd 2825 Consultancies 20 DedicatedConsultants 464 FOSA- FinancialInclusion DeepeningCo-op Foundation Financing the SME and MCU sector 7657 students supported Sustainable financing towards;to date 2019 (2834) 2018(2826) 1.18 Billion since Big 4 Agenda Vision 2030 and MDGs Staff CSR Involvement CorporateSocialResponsibility:Firstinception (2019- OverLady’s Beyond Zero Campaign 2019151Million)(Kshs.20 Million) Other Programmes with; Private sector-led Covid-19 Emergency Ford FoundationResponse Fund. Donated Kshs. 100 Embassy of FinlandMillion to support critical medical supplies Energy De Portugaland equipment such as ventilators.1818

Award Winning BrandKENYA BANKERS ASSOCIATION:CATALYST AWARDS 2019Overall Winner Winner: Client case study- FinancingSME2nd - Best in sustainable finance3rd - Client Case study-FinancingCommercial Clients2nd - Bank case study-BankOperations2nd - Bank case study- Financing andsupporting clients in the informalsector3rd - Most Innovative BankFINANCIAL REPORTING AWARDS2019 Winner: EnvironmentalSustainability ReportingANNUALENERGYMANAGEMENTAWARDSKENYA ASSOCIATION OFMANUFACTURERS Best Bank in Sustainable Financein Kenya - 2019 GLOBAL SME FINANCE AWARDS 2019 Product innovation of the yearAdded in MSCI Index in May2020 under Frontiers Indexsmall Index, raising the Bankvisibility in the InternationalMarket1919

5 Non-oilcollectioncenters.Loans and Advances(Net)Owns 31% ofCIC AfricaLtd- SouthSudanTotal AssetsQ1201924478214Customer DepositsRetained EarningsQ1202020218451Net Interest Income42Total Operating Income Total Operating ExpensesQ120193153,5922,5926,4181764 branches inJuba1,3931,8305,153Regional Business (Kshs. Million)30Profit Before TaxQ120202020

ChannelPerformance2121

Growing Digital ChannelsChannel Transactions ‘000’Merchant/POS Banking140197Branch BankingInternet Banking89% of our4,6364,387Transactions are onalternative Channels560582E-Credit is a key focusarea, Kshs. 79.8Bdisbursed to Date.10,853ATM7,53211,25310,813Agency Banking10,406Mco-op Cash16,393Q12019Q120202222

E-CreditCumulative Mcoop Cash Loan Customer Numbers ( In '000’)2,9243,42312%1,38928FY 2014183388FY2015FY 20164%694FY2017FY2018E-Credit – Key GrowthFocusFY2019Q12020Cummulative MCo-op Cash loan Book - In Millions79,76184%63,7612251,6444,865FY 2014FY2015FY 201610,102FY201720,169E- Flexi (Salary advance)BusinessFY2018FY2019Q12020Unsecured Business Plus2323

Transactions - Millions16MOBILEBANKING(MCOOP CASH)LeveragingMobile Bankingto growcommissionsDeposits through Mobile(Billions)401030Q12019Q12020Commission - Millions1,639744Q12019Q12020Q12019Q120202424

No. of AgentsTotal Revenue rowingCo-op KwaJiraniAgencyBanking25Q12019Total No. of Transactions(Million)119Q12020Deposits Generated by Agents 20WITHDRAWALMar '19 Apr '19 May '19 Jun '19 Jul '19 Aug '19 Sep '19 Oct '19 Nov '19 Dec '19 Jan '20 Feb '20 Mar '2025

Transaction Type (%)56%52%24%AGENCYBanking14%CASH WITHDRAWALMar-19BALANCE ENQUIRY6%OthersMar-20Transaction Value Distribution (%)72%67%22%27%5%CASH DEPOSITCASH WITHDRAWALMar-192615%6%CASH DEPOSITGrowingCo-op KwaJiraniAgencyBanking27%5%OthersMar-2026

FinancialHighlights2727

Strong Financial Position (Kshs. Billion)Total AssetsLoan book (Net)276.2470.4251.6425.7Q12019Q12020Q12019Total DepositsQ12020Shareholders 12020Q12019Q120202828

Strong Financial PositionPosition (Kshs.(Kshs. Billion)Billion)Q12020Q12019% Change(YoY)FY2019Total Assets470.4425.710.5%457.0Loan book (Net)276.2251.69.8%266.7Government Securities115.9103.911.5%117.8Total Deposits341.3319.96.7%333.0Borrowed Funds27.423.715.5%26.4Shareholders Funds82.072.812.6%79.38.88.18.6%8.76Kshs. BillionsNo. of account holders (Millions)2929

Q12020CorporateMortgageAsset 1201940.9%Diversified loan bookAgribusinessSacco3030

Diversified loan bookQ12020Tourism, Restraurant & HotelsQ120191%1%Personal consumer40%10%12%Real Estate11%10%Financial services9%9%Transport & Communication14%15%Trade2%2%Building & construction5%6%Energy & Water2%3%ManufacturingMining & QuarryingAgriculture45%0%0%2%2%3131

Well-diversified Liability PortfolioQ12020Q120195.2%6.7%Corporate Banking20.2%21.2%Institutional BankingCall Deposits24.2%23.3%RetailTransactionAccountsCurrent Accounts13.8%9.6%10.2%MCUSavings Government BankingAgribusinessDeposit Distribution Q12020Fixed Deposit33.9%0.5%0.6%9.6%7.1%3232

Optimally balanced Kenya Shilling asset & funding bookFunding (Local Vs Foreign Currency)Q120204%Loan Book (Local Vs Foreign Currency)Q120207%Foreign CurrencyDeposits11%Foreign CurrencyBorrowed Funds89%Local CurrencyFundingForeign CurrencyLocal Currency89%3333