1 Engineers Conference 2012 Financing Projects County
2 Equity Bank at a Glance
3 About Us 2. NSE Publicly Listed/Cross Listed at USE 4 rd largest company at the NSE Shareholders Funds KES 32.9 Billion Largest bank by customer numbers Total Assets -KES Billion Over 30,000 shareholders Strategic Investors Helios EB British American Insurance Staff: Individuals/ESOP 11 Directors
4 Uniquely combining shareholder value with social impact Key Initiatives / Strategy Continuing Roll-out and Embedding of Agency Banking Enhancing Mobile Telecommunication Solutions / ICT Investment Brand Development and Impact Investment Bank has embarked on a number of initiatives to create brand awareness and develop the local economy Wings to fly program -3,486 scholarships awarded to bright needy students to date with a target of 10,000 by 2015 Financial Literacy Training (FIKA) Program -314,952 people trained already with target to train 1,000,000 people by 2014 The Bank embedded the agency model in 2011 which allows the Bank to leverage on third party infrastructure for cash transactions Extremely successful initiative which has seen the number of agents increase from just 875 at the beginning of the year 2011 to 3,991 agents by March 2012 (c.356% increase) –Agency banking now contributes more than 20% of all cash transactions No of Operational Agents Jan-11 to Mar-12 Growth Trend The Bank have made large investments in ICT and continue to enhance their mobile banking services / solutions –Mobile banking customers have increased from 417,194 in January 2011 to 1,553,865 by end of March 2012 (c.272% increase) –Eazzy-247 connected to all the 4 telcos Number of EAZZY-247 Customers
5 Taking Banking Services to the People Number of CustomersNumber of Branches Number of ATMsNumber of POS 21% 14% 10% 130% 144% MM 3.
6 Our Regional Footprint: Traditional and Alternative Channels 3.
7 Understanding The Opportunity
8 Only 5 counties are more than 50 percent urban; a strong indication that the demand for infrastructure projects will soar upon the creation of the county governments. This presents a major opportunity for all projects stakeholders. Low Levels of Urbanization
9 Varying Capacity to Meet Service Delivery Costs Counties will have varying needs for project funding with the more rural Counties presenting a greater need for external financing.
10 County Pattern of Infrastructure Development
11 Relevant Product Features
Asset Financing 4. Product DefinitionAsset Finance is designed to assist our SME customers acquire capital assets for their businesses through installment finance. This will work the same way that the current vehicle finance is working, with only a few adjustments on terms and collaterals due to nature of assets. Loan AmountMinimum = Kshs. 0.3m Maximum = Kshs. 10m Whereas this is the target market, we shall remain open to amounts above kshs 10m. Audited (formal) financials will however only be required where loan amounts exceed kes 5m, though again we acknowledge that many of the local business people run sizeable but very informal businesses. Interest RatesThe rates will largely remain the same, though we may have exceptions as proposed under loan processing costs. 14% pa flat rate
LPO Financing 4. Product DefinitionThis is a short term loan granted to customers, supplying to Government of Kenya and its related bodies for working capital funding. It is meant to ease the customer’s cash flows, by giving upfront value to their LPOs. The bank has recourse to the client in case of non-payment. Loan AmountThe Bank shall discount not more than 80% of the VAT exclusive value of any confirmed LPO presented; Maximum loan approved will depend on the customer’s repayment ability. Any other requirements in excess of the above to be considered on case by case basis. Interest Rates Commission :2% Flat rate (recoverable upfront) Interest rate : 25% p.a. reducing balance for the discount period (recoverable upfront). Lodgment fee : Kshs. 1,000/= per LPO financed. Retirement Commission 0.25% of loan amount (minimum Kshs. 2,500/= and maximum Kshs. 10,000/=).
Invoice Discounting 4. Product DefinitionThis is a short term loan granted to customers, supplying to Government of Kenya and its related bodies for working capital funding. It is meant to ease the customer’s cash flows, by giving upfront value to their invoices. The bank has recourse to the client in case of non- payment. Loan AmountMinimum amount = Kshs. 100,000 Maximum amount = N/A Interest RatesCommission : 1% Flat rate (recoverable upfront) Interest rate : 25% p.a. reducing balance for the discount period (recoverable upfront). Lodgment fee : Kshs. 500/= per discounted invoice. Retirement Commission: 0.25% of loan amount (minimum Kshs. 2,500/= and maximum Kshs. 10,000/=). Ledger fee: NIL
15 Case Studies
16 Revitalization of Cotton Industry in Kenya A partnership between Equity Bank, the Ministry of Agriculture, the Cotton Development Authority (CODA), National Irrigation Board (NIB), Cotton Ginners and Bura Farmers Association has begun to restore cotton production in Bura. In this partnership, Equity Bank provides credit for farm inputs and payments to farmers while NIB is responsible for maintenance of canals that channel water to farms in the Bura irrigation scheme.
17 Empowering Households on Renewable Energy Equity Bank with various stakeholders in biogas promotion has been supporting households mitigate the challenges of fuel in their homes. This is one of the areas in climatic change adoption as intensive farming continues to take root. Implementation of units will go a long way in helping in mitigation of methane production from the zero grazing units.
18 Financial Literacy (FiKA) and Entrepreneurship Equity Group Foundation and The MasterCard Foundation have partnered to offer free financial education and entrepreneurship targeting 1 million women and youth across the country by Equity group hired master trainers to implement the FIKA program most of whom have master’s degrees in entrepreneurship or a related field. A pilot entrepreneurship training program for 10,000 youth and women focused on developing practical and applicable business knowledge have commenced.