FUTURE OUTLOOK 1. Regional operating environment characterized by strong collaboration of economic drivers and harmonization of reform agenda and policies characterized by stable micro economic indicators with average GDP growth of 6% against a background of 1.5% GCP growth of Sub-Sahara Africa provide impact for rapid growth. The region has become a leading investment destination for global capital and have witnessed massive infrastructure investment by the respective countries. Diaspora remittances and tourism industry are on the rise and early signs of economic diversification and transformation are visible providing optimism for business growth. 2. It is not our practice to share our predictions and prefer allowing investors to seek to understand the business drivers of value and make their projections based on their templates. However, we are persuaded to share some fundamental facts that are a result of the new law capping interest rate and the market reaction that will continue to shape the performance of the Group. i. The ratio of interest earning and non-interest earning deposits is likely to remain within the range of 35:65% of total deposits with the effective cost of funds being within the range of 3%. ii. Deposit growth is likely to be within double digit rate as interest capping has removed pricing consideration in favor of risk consideration which favors attractiveness of the Group. Digitization and launch of Eazzy pay and Eazzy Biz are likely to have current account and transaction floats increase significantly. The Bank is well positioned to attract deposits by leveraging on superior customer experience, convenience, a strong balance sheet and a strong and trusted brand. iii. Digitization is likely to favour the use of online, mobile channels and Agency network which are cost effective, variables cost 3rd party channels which will play a key role in the digitization of cash, reducing operational costs and improving cost income ratio to 42% in the medium term. iv. Interest on loan book is likely to be 250 basis points above the CBR rate driven by a weighted average cost, a mix of SME & retail loans and corporate loans of 70% and 30% respectively, the former yielding 400 basis point above CBR with the net interest above 9%. v. Average yield on Treasury Investments is likely to be 100 basis points above the CBR reducing the difference between the yield on loan book and yield on government investments (narrowing the spread)]]>
