4. CfC Stanbic Holdings Ltd Financial results
For the half year ended 30 June 2013

5. Contents Period in review Financial analysis
Corporate and Investment Banking
Personal and Business Banking
Strategy and prospects
Q & A

6. Period in review
Greg Brackenridge
Chief Executive

7. 2013 Operating environment
Headline inflation was just under 5% as at June 2013 compared to 10% in June Inflation is expected to rise in the second half of this year driven by unfavorable base effects and prices of crude oil which have firmed in recent months.
The Central Bank rate year on year has reduced to 8.5% as at June 2013 from 18% in June Further monetary policy easing is unlikely given the risk of weakening the exchange rate. Inflation expectations and the exchange rate will inform the direction of the monetary policy.
The Shilling’s current bias is to weaken, however higher foreign exchange reserves and policy tools ought to support the local currency. 4

8. Overview of the Group’s businesses
CIB is positioned to be the bank of choice for corporates, parastatals and international investors that will help deliver the 2030 vision in key sectors including infrastructure, agriculture, energy and manufacturing.
PBB is focused on the small and medium sized enterprises (SMEs) and larger local corporates, tactically growing the branch footprint and increasing its service to its customers through e-channels such as mobile banking and internet banking.
The equity brokerage will benefit from investors exiting fixed income securities in view of lower returns and the expected domestic and international flows from investors looking for Kenya exposure in anticipation of strong growth. 5

9. CfC Stanbic Holdings Ltd (‘Group’) in brief
Total assets of Kes 151 billion (June 2012: Kes 157 billion).
Revenues of Kes 8,086 million (June 2012: Kes 6,643 million).
Profit after tax of Kes 2,202 million (June 2012: Kes1,213 million).
The Bank (CfC Stanbic Bank Limited) contributes 97% of revenue. 6

10. Financial highlights – Group performance
Results reflect :
Customer loans have declined year on year by 3% mainly due to muted credit appetite coupled with early loan repayment by corporates, partly offset by PBB growth in customer assets.
Improved margins year on year mainly due to lower cost of funding which is explained by falling cost of deposits as well as reduced reliance by the bank on wholesale funding.
Global markets franchise has continued to deliver strong performance as a result of good money markets desk performance and improved margins and higher volumes in the foreign exchange flow.
Focus on cost discipline resulted in cost growth of only 9%, with expansion costs in South Sudan being the main driver of cost growth.
Operations within South Sudan yielded profits of Kes 197m whilst equity brokerage made profits of Kes 77m.
Non-performing loans have reduced 18% year on year due to a various repayments of debt in the last quarter of Decrease of proportion of CIB debt mainly due to recoveries of various CIB non-performing loans. 7

11. Awards received in 2013 8 The bank won the following awards:
Most customer-focused bank - KPMG
Best in transaction methods and systems - KPMG
Best bank in customer satisfaction - Banking awards 2013
Deal of the year African banker awards
Other awards received:
Best bank in Kenya Tier II (2nd place) - Banking awards 2013
Best bank in vehicle and asset finance (3rd place) - Banking awards 2013
Best bank in product marketing - Pure save (3rd place) - Think business awards 2013 8

12. Detailed Financial Analysis
Abraham Ongenge
Financial Controller

13. Financial highlights 10 Income statement highlights Jun-13 Jun-12
Jun-13
Jun-12
Var %
Kes millions
Total income (Kes million)
8,086
6,643
22%
Profit before tax (Kes million)
3,236
1,780
82%
Profit after tax (Kes million)
2,202
1,213
Balance sheet highlights (average balances)
Average loans and advances to customers (Kes millions)
64,332
65,709
(2%)
Average customer deposits (Kes millions)
86,546
84,521 2%
Operational and credit efficiencies
Net interest margin on average assets
4.79%
4.03%
Cost-to-income ratio
55.08%
61.68%
Credit loss ratio
1.26%
2.34%
Non-performing loans to total loans
2.20%
2.59%
Shareholder value
Earnings per share (Shillings)
5.57
4.43
Return on equity (including goodwill)
14.74%
11.26%
Return on equity (excluding goodwill)
21.45%
19.88%
Return on assets (excluding goodwill)
3.11%
1.64% 10

14. Summarised group income statement11

15. Total operating income by business unit
Revenue overview
Breakdown of operating income
Comments
Total operating income has grown by 22% year-on-year .
Corporate and Investment Banking continues to be the main contributor of Group revenues.
Total operating income by business unit 12

16. Overview of income
Net interest income and margin
Gross revenue
Comments
Interest income has declined year on year due to reduced base rates from 24% in 2012 to 16% in 2013.
Margins have improved year on year due to lower cost of funding, this is partly because of falling market rates on deposits as well as reduced reliance by the bank on wholesale funding. 13

17. Credit impairments charges & credit loss ratio
Comments
Reduction in net credit impairment charges attributed to the lower loan book hence no increase in general debt provisions together with improved recoveries in 2013. 14

18. Operating expenses breakdown
Expenses evolution
Operating expenses
Operating expenses breakdown
Comments
Jun-13
Jun-12
Var %
Staff cost
2,036
1,730
18%
Other operating cost
2,418
2,367 2%
Total operating cost
4,453
4,098 9%
Other operating expenses have grown by 2% reflective of the Group’s focus to contain cost growth.
Staff costs have grown 18% year on year. Staff costs in 2013 include 6 months staff costs for the South Sudan operations which opened in April 2012. 15

19. Summarised group balance sheet
Jun-13
Jun-12
Var
Kes millions %
 Assets
Financial investments
29,535
26,728
11%
Loans and advances to banks
16,046
32,151
(50%)
Loans and advances to customers
63,006
65,281
(3%)
Other assets
29,977
19,707
52%
Property and equipment
2,198
2,358
(7%)
Intangible assets
10,231
10,535
Total assets
150,993
156,760
(4%)
Liabilities
Deposits from banks
23,397
31,444
(26%)
Deposits from customers
83,074
83,764
(1%)
Borrowings
5,839
6,859
(15%)
Other liabilities
8,804
13,145
(33%)
Total liabilities
121,114
135,212
(10%)
Equity
Total equity
29,879
21,548
39%
Liabilities and equity 16

20. Loans and advances
Average loans and advances to customers
Loans and advances by business unit
Loans and advances by type
Comments
Loans and advances to customers declined by 3% in 2013 due to reduced credit appetite as well as large loan repayments by corporates.
Increased diversification in the loan portfolio, with growth in the contribution of PBB to the loan portfolio. PBB loan book increased year on year by 4%. 17

21. Loans and advances performance
Non-performing loans
Non-performing loans by business segment
Non-performing loans by product
Comments
Non-performing loans have reduced year on year due to a various repayments of debt in the last quarter of Decrease of proportion of CIB debt mainly due to recoveries of various CIB non-performing loans. 18

22. Average customer deposits Deposit contribution by business unit
Breakdown of deposits
Deposit contribution by business unit
Comments
Focus over the year has been to grow core balances (current accounts and savings accounts). Fixed deposits balances have declined year on year as a result of this, and so has funding cost to the Bank. 19

23. Funding, liquidity and capital
Funding mix
Liquidity ratio (Bank only)
Capital adequacy (Bank only)
Comments
Total assets funded mainly from deposits.
The liquidity and capital requirements have been complied with for the period. 20

24. Group shareholder value
Earnings per share
Shillings
Return on equity and Return on assets (excluding goodwill) 21

25. Corporate and Investment Banking
Mike Blades
Regional head, Corporate and Investment Banking (East Africa)

26. CIB - Income statement and key ratios
Jun-13
Jun-12
Var
Kes millions
Kes millions %
Net interest income
2,086
1,724 21
Non-interest revenue
3,984
3,076 30
Total income
6,070
4,800 26
Net interest margin (%) (on total assets)
3.6%
2.8%
NPL/total loan ratio (%)
0.09%
0.89%
Total loans (Kes millions)
51,660
73,350
(30)
Deposits
75,704
90,817
(17)
Total assets
115,936
122,835
(6)
Contribution to total income by product
Contribution to total income by revenue type 23

27. CIB Strategic Aspirations
Group CIB:
“We aspire to be the leading Corporate and Investment Banking business in, for and across Africa, with a specialisation in natural resources.”
CIB Kenya:
“To be the dominant CIB franchise in Kenya and the hub of the leading East African franchise.”
Our core purpose will be driven by customer first, accountability, simplicity, reliability and value for money.
CIB to contribute to CfC Stanbic’s aspiration of being a top-four bank in Kenya.
What does winning mean for us?:
Be the most profitable and efficient CIB business, measured by ROE and Cost to Income Ratio.
Creating sustainable client revenues which will form the bulk of our CIB’s overall revenue. 24

28. Key achievements in 2013
Maintained market leadership in global markets and investment banking, with several high profile franchise building transactions.
Awarded ‘Best in Transaction Methods and Systems’ by KPMG and ‘Deal of the Year Award’ in the Africa Banker Awards through the involvement in the USD 67 Million Umeme IPO deal, the largest IPO in the Uganda Stock Exchange to date.
Deepened our penetration of existing clients to win key mandates and deliver sophisticated solutions to both the corporate and government sectors.
Implementing the Client Engagement Model in ensuring that we create sustainable client revenues.
Drive the culture of client budgeting and client profitability (ROE).
Strengthened focus and operational efficiency of transactional products and services (TPS) business, leading to increased interest income and fees and commissions.
Contained credit impairment charges and non-performing loans through improvement in asset quality and significant recoveries. 25

29. Key focus areas for the second half of the year
Remain intensely focused on serving our customers and raise the overall customer experience.
Grow the customer franchise – assets, liabilities, Non Interest Revenue.
Position ourselves to take advantage of emerging industries- Oil & Gas and Mining.
Continue to capitalize on our regional and Group footprint.
Delivering a competitive transactional banking platform that fulfils clients’ needs. Core banking system implementation/upgrades: improve system stability and capability; serve customers more accurately and efficiently.
Continue building our business in South Sudan which has continued to perform in line with expectations.
Continued focus on developing our human capital to retain leadership in key products and build them across our chosen industry segments. 26

30. Personal and Business Banking
Ben Wandawanda
Head, Business Banking

31. PBB – Summary financial information
Jun-13
Jun-12
Var
Kes millions %
Net interest income
1,533
1,432 7
Non-interest revenue
483
411 18
Total income
2,016
1,843 9
Net interest margin (%) (on total assets)
8.7%
8.4%
NPL/total loan ratio (%)
4.89%
4.29%
Total loans (Kes millions)
27,392
24,082 14
Deposits
30,766
24,391 26
Total assets
35,057
33,925 3
Contribution to total income by business unit
Contribution to total income by revenue type 28

32. Key achievements in 2013
Grew customer deposits by 26% and customer loans by 14%.
Revenue has grown by 9%, impacted by reduction in base rates in 2013.
Rated “Most customer-focused bank” by KPMG and “Best bank in customer satisfaction” by Think Business Banking Awards 2013.
Grew customer numbers by 8%.
Increased market share in Instalment sales (VAF). 29

33. Key focus areas for the second half of the year
Overarching strategy:
Retain existing clients.
Acquire new to bank clients.
Value for money and transparency.
Enhanced service delivery.
Balance sheet
Asset growth focus.
Income statement
Interest margin management.
Fees and commission – focus on Business Banking.
Grow market share in our targeted markets – Business Banking & targeted Personal Banking segments.
Further invest in distribution network.
People – retain and recruit the best. 30

34. Strategy and prospects
Greg Brackenridge
Chief Executive

35. Where are we now?
Significant investment in infrastructure, core banking system and people over the past three years.
Achieving scale in our Personal and Business Banking business:
Number of branches (21) has doubled since the merger between CfC Bank and Stanbic Bank Kenya.
ATMs (41) have increased as have partnerships with other service providers to provide greater access to our banking services.
Growing transactional volumes.
Responsibly growing our balance sheet.
Cost increases have been largely in line with expectations. However, there is still need to drive better efficiency – further decrease in cost to income ratio expected. 32

36. Looking forward
We expect the following changes in our operating environment:
Credit growth expected, especially due to reduction in base rates;
Relatively stable exchange rate.
In the short term the Group will focus on the following objectives:
Consolidation of CIB market position;
Expansion in South Sudan;
Growth in the PBB business;
Growth of the equity franchise. 33

37. Medium term goals Cost discipline – target CIR of 55%.
ROE performance – target of 20%+.
Non Interest Revenue as a proportion of total income – target of 50%.
Funding mix – increase share of core accounts (transactional, current and savings accounts).
Increase PBB contribution to PAT and balance sheet. 34

38. Contact Details 35 Chief Operations Officer +254 20 363 8310
Marna Roets
Chief Operations Officer
Edwin Mucai
Chief Financial Officer 35