ANALYSTS DAY PRESENTATION

ANNUAL RESULTS 2012

Dr. Charles Kimei, Managing Director CRDB Bank Public Limited Company

April 4th, 2013

Forward-looking statements
Statements made in this document relating to future status or circumstances, including future performance and other trend projections are forward-looking statements.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forwardlooking statements due to many factors, many of which are outside the control of CRDB Bank.

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Banking Sector Operating Environment - 2012

The global economy growth slowed down in 2012 with advanced economies GDP growth of only 1.3% down from 1.6% in 2011 The inflationary pressure continued in 2012 with inflation rate remaining above 15% for the most part of 2012. Real gross domestic product (GDP) accelerated to 6.8% against 6.0% in the previous year despite a downward trends in prices of Tanzanias commodity exports Tight monetary policy throughout 2012;
with the Statutory Minimum Requirement for government deposits rising from 20% to 40%; and the Net Foreign Open Position cut down from 10% to 7.5%.

The banking sectors deposits and lending rates in the past year have been volatile with very high interbank lending rates due to measures undertaken to reduce inflation. Going forward, the Tanzanian economy is expected to reach 6.8% real GDP growth in 2013.
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Competitive Landscape
The competition within the banking sector continues to escalate with fifty (50) institutions in the banking sector in the year 2012.
During the year, FNB Bank, Equity Bank, Amana Bank and Covenant Bank were operational for their first full year

Expanding with additional physical and e-banking outlets ATMs, mobile banking, internet banking.

Increasing competition for qualified employees

Emergence of new lines of business Mortgage finance, Islamic banking, financial advisory and micro-finance and insurance. Scale expansion major banks investing in new branches, ATMs, banking systems etc. Competition for payment system Credit cards, Debit Cards, prepaid cards. Money transfer and payment system by telecoms i.e. M-Pesa Sector growth accelerated in the last five years, but sector wide profitability is not keeping up.
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Key strategy themes for CRDB in 2012

1

Customer focus

Improvements to Branch network, ATMs and service quality Improvements to Mobile/Internet banking Agency Banking - sub-branch network Quality and depth of customer relationships and quality of sales and service skills as a key source of competitive advantage

Systems and processes

Maximum leverage of Banks economies of scale Consolidation of functions to improve quality, control and efficiency

Management

Building a bank-wide capability for continuous improvement & development Change in top management structure
Upgraded training and talent management SIM Banking, MPESA service, Card-less ATM

Investing in people & IT

Growth beyond Tanzania

First steps in CRDBs journey to becoming an international bank Launch of

CRDB Bank Burundi Capture opportunities of business development in East African countries

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CRDB Bank Plc. 2012 Performance Summary

Year 2012 was the end of the Banks 2008-2012 Business Strategy cycle. The Group has experienced stellar operating and financial performance in 2012.
(TZS Billion)
Net Interest Income Net Fees and commissions Net Foreign Exchange Income Operating Expenses Profit After Tax Loans & Advances to Customers Customer Deposits Shareholder Equity Total Assets Return on Assets Return on Equity NPL/Total Loans
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2011

2012

% Change

153.4 61.9 1.5 135.9 37.7 1,429.3 2,408.7 254.8 2,713.6 1.9% 15% 9.1%

206.3 74.6 22.8 170.6 80.5 1,806.9 2,591.0 317.4 3,074.8 3.5% 25% 6.8%

34.5% 20.5% 1,420% 25.5% 113.5% 26.4% 7.6% 24.6% 13.3%

Investor Pay-out EPS & DPS Growing Strongly

The Board has recommend a dividend of Tshs 12 per share. Total amount of dividend recommended is TZS 26.1 billion, as compared to TZS 19.6 billion paid out in 2011.

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Operational Review
A new and improved mobile banking service (SimBanking) was launched in January 2012. Ability to transfer funds to and from mobile money operators like Vodacom Mpesa in real time, notification by SMS of card transactions

In the period, the Bank opened six new full service branches namely, Tegeta, Tabata, Masasi, Oysterbay, Quality Centre and Chamwino.

Over 30 ATMs, most of them offsite i.e. not in branch premises were installed in year 2012.
The number of merchants with the Banks POS devices grew to 700 in the year. The Banks Card business offering grew with the introduction of e-commerce services. Offerings for premier customers were greatly improved. The Bank also started to roll out new cash back services for card holders.

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CRDB Bank introduced e-statement services.

Launch of CRDB Bank Burundi S.A.

The crowning moment for year 2012 for CRDB Bank was the launch of its subsidiary bank in Burundi. The bank opened a new subsidiary in Bujumbura capital city of Burundi. CRDB Bank Burundi was officially launched on 7th December, 2012 after the soft opening on 2nd November 2012. The subsidiary, with one branch (Inyenyeri), one mobile branch and five ATMs was officially opened by the President of the Republic of Burundi, His Excellency Pierre Nkurunziza. CRDB Bank Burundi deposits and total assets at year end stood at TZS 1.12 billion and TZS 18.65 billion respectively. For the year 2012, with less than one month of operation, the net loss for the year stood at TZS 0.3 billion, which is within our expectations.
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Strong Retail and Corporate Banking

Retail Banking Corporate Banking

Retail Banking
The total retail banking deposits rose to TZS 1,440 billion, a 16% increase. The bank approved and disbursed a total of TZS 167 billion in retail loans. A total of 35 new Memorandums of Understanding were signed with employers by the Bank

Corporate Banking
New Agribusiness Unit which was separated from Corporate Unit. Corporate Loan portfolio recorded a growth by 24%. Established two desks that will offer specialized services relating to Loan Syndications and Chinese Business Relationships.

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SME Business
Loan portfolio and income grew by 28.43% and 33.52% respectively. Loans outstanding amount was TZS 123.8 billion. Gross income grew to TZS 20.2 billion.
increase in loan size is attributed to growth in crop financing.

Microfinance Operations
Currently the CRDB Bank has managed to reach 127 districts in within Tanzania,
with 422 partner MFIs serving over 635,000 clients.

Establishment of Insurance Agency Transformation of wholesale microfinance has enabled 189 affiliated microfinance institutions to access more than TZS 144 billion. Commencement of the Warehouse Operations Support Services The first two Service Centres are in Mbezi Luis Dar es Salaam and in Ngaramtoni Arusha.

The number of AMCOs financed for cashew nut increased significantly in Mtwara and Lindi. WAFI loans - which are new loan product to women. New loan product to fresh Agribusiness graduates - the loans are granted under AfDB/USAID Guarantee.
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Treasury Operations
Treasury technology infrastructure was also strengthened to improve effectiveness in foreign exchange risk management and to facilitate product penetration to large corporate customers. CRDB Bank Treasury continued to support the local financial market development by being an active market-maker in both foreign exchange and money markets.

IT and Communication Technology

Internet banking upgrade was done to facilitate transfers to other banks, tax payments to Tanzania Revenue Authority and mobile top-ups. The Bank implemented an AntiMoney laundering System (AMLS) and E-statement solution. The Bank also continues to upgrade its communication system to match the emerging new technologies through connection to the national fiber optic network across its branches

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Capacity Building and Human Resources Investments

The average number of employees during the year was 1,898 employees Vs. 1,658 employees in 2011.
The annual growth in staffing was 14%, in line with the business growth. Growth in Headcount driven by new branches, agencies and Subsidiary in Burundi.

During the year, the Group spent TZS 4.1 billion (2011- TZS 4.3 billion) on staff training in order to improve employees technical skills and performance. In year 2012, the Bank introduced an E Learning facility which will enable employees pursue certification in different professional skills on line. In year 2012 the Bank introduced an Employee Wellness Programme (EWP) that would support its workforce in managing the work/life balance and hence increase work morale and raise productivity.
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Key Financial Highlights

Funding mix
Other Liabilities 1% Equity 10% Current Accounts 29%

Deposits from Banks 4% Term Deposits 29%

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Savings Accounts 27%

Loan Portfolio Distribution - 2012

The net loan portfolio grew by 26% from TZS 1,429 billion as at December 31st 2011 to TZS 1,807 billion as at December 31st, 2012.
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Future Outlook -2013

The Groups focus in the coming year is on expanding delivery channels through to both traditional and e- channels to provide convenient service to our customers.

The goals for 2013 is for the Group include;

an ongoing effort in cost management, harnessing the talents of the Groups workforce, optimized ICT investments, expanding the outreach through existing and new subsidiaries both locally and regionally. The Group will place particular emphasis in further reducing the Groups nonperforming loans ratio (NPL) to less than 5%.

The assets of the Bank are expected to grow by 17%. This growth is expected to be achieved while ensuring adequacy of capital and liquidity.

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CRDB Target Position by the year 2017

During the year, the Banks Business Strategy for 2013-2017 was developed and approved by the Board.
Substantial strengthening of the
banks competitive position in majority of products Maintain position in total assets, loans & Advances, and the corporate deposits market Target share of banking system assets of 20%-25%

Market position

Financial results
After tax profits increasing 2
fold vs. 2012 Cost-income ratio decreased from 62% to 50-55% ROE: 22% - 25% Headcount of 3,000 employees

Qualitative indicators
Leading skills and capabilities in the
market customer service & IT Strong corporate culture Highly qualified employees Effective and reliable systems and processes Strong brand and loyal customers

CRDB Group In Tanzania & Regionally

International markets
~ 3-5% of net income to come from
international operations Build foothold in East African markets Target market share of 5% or more in Burundi by 2017. Prepare for consolidation regionally

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Awards in 2012
The Bank won the second best Employer of the Year Award which was coordinated by the Association of Tanzania Employers (ATE).
The Bank won the second best Presented Financial Statement Award in the financial institutions category as announced by National Board of Accountants and Auditors. The Bank had also received the award for Best Company in Leadership & Corporate Governance The award for Best Company in Human Resources Policies.

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QUESTIONS

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