Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Day (May 2009)
57 slides from Standard Bank's investor day presentation, May 7, 2009
Slide 1: Chris Newson, CEO Stanbic IBTC Bank PLC
Chris Newson, Chief executive officer Stanbic IBTC Bank PLC Contents o Brief history o Group structure o Governance and risk management framework o Comparative market analysis o Strategy overview o Financial performance o Conclusion C l i o Questions 2 1
Slide 2: Brief history
Brief history o The Standard Bank Group (SBG) merged its Nigerian operations, Stanbic Bank Nigeria (SBN) with that of IBTC Chartered Bank PLC (IBTC) on 24 September 2007 o The merger, merger by way of the first ever tender offer in Nigeria and a $525 million FDI FDI, the largest in Nigerian financia
Slide 3: SIBTC structure
SIBTC structure Corporate & Personal & Wealth Investment Business Banking G Banking O Finance B V u Human resources s E i Information technology R n Investor relations e N s Payment strategy s A Project management S N Credit u p C Risk & compliance p E Internal audit o r Marketing t Company secretar
Slide 4: Governance framework
Contents o Brief history o SIBTC structure o Governance and risk management framework o Comparative market analysis o Strategy overview o Financial performance o Conclusion C l i o Questions 7 Governance framework Stanbic IBTC Board Shareholders Remuneration Committee Risk Management g Credit Commit
Slide 5: Board of Directors
Board of Directors Atedo Peterside OON (53) (Chairman) Ratan Mahtani (53) BSC MBA Directorships: Stanbic IBTC Bank PLC, Aegan Investments Limited, Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Pension Churchgate Nigeria Limited, First Century International Limited, Foco Managers Limited, Stanbi
Slide 6: Board of Directors; Risk management governance process
Board of Directors Ahmed Dasuki (50) Msc Architecture Moses Adedoyin (60) Directorships: Stanbic IBTC Bank PLC, MTN Nigeria Directorship: Stanbic IBTC Bank PLC Comm. Ltd, Phillips Projects Centre, Tinapa Business Resorts Limited, SASPV Limited, Islama Financial & Investment Trust, Interglobal Limite
Slide 7: Key management: group executive committee
Risk management: standards and policies o Based on the Standard Bank Group risk standards and policies o Based on best practice o Compliant with IFRS requirements o Considerate of appropriate regulatory input by CBN, SARB and FSA (UK) o Modified to give appropriate consideration to Nigerian conditio
Slide 8: Key management: group executive committee
Key management: group executive committee Dr Demola Sogunle (44) Head: Group risk • B.Sc, M.Sc, PhD Marna Roets (42) Executive director: Business support • B Com, CA (SA) Ronald S Pfende (37) Chief financial officer • B Com, MBL, CA(SA), CA(Z) Angela Omo-Dare (49) Company secretary and Head: Legal •
Slide 9: Comparative analysis – shareholders funds and total assets
Comparative analysis – shareholders funds (Nbn’s) 250 200 150 100 50 0 Source : Agusto & Co Banking Industry Report 2007 covering financial year ends up to 30 September 2007 and for Stanbic IBTC Bank as at 31 December 2007 17 Comparative analysis – total assets (Nbn’s) 1 600 1 400 1 200 1 000 800 60
Slide 10: Comparative analysis – return on equity and assets
Comparative analysis – post-tax return on equity 30% 25% 20% 15% 10% 5% 0% Source : Agusto & Co Banking Industry Report 2007 covering financial year ends up to 30 September 2007 and for Stanbic IBTC Bank as at 31 December 2007 19 Comparative analysis – post-tax return on assets 6% 5% 4% 3% 2% 1% 0%
Slide 11: Comparative analysis – cost-to-income ratio
Comparative analysis – cost-to-income ratio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source : Agusto & Co Banking Industry Report 2007 covering financial year ends up to 30 September 2007 and for Stanbic IBTC Bank as at 31 December 2007 21 Contents o Brief history o SIBTC structure o Governance a
Slide 12: Strategy overview
Strategy overview o Balanced contribution from our 3 business units o Focus on quality business relationships without compromising overall return to shareholders o Extend branch footprint and focus on self service channel optimisation o Leverage our market leader position within the wealth segment,
Slide 13: Financial statistics for nine months ended Sep 2008
Financial statistics for nine months ended 30 Sep 2008 2008 change % 2007¹ Profit after tax (Nm) 10 575 82 5 797 Earnings per share (kobo) 56 82 31 NAVPS (kobo) 430 77 242 ROE (%) 17.6 0 17.6 Credit loss ratio (%) 2.49 (30) 3.55 Cost-to-income ratio (%) 50.09 15 43.68 Total Assets ((Nm)) 436 282 52
Slide 14: Revenue contribution by business unit
Revenue contribution by business unit 21% 51% 28% CIB PBB Wealth For the nine months ended 30 Sep 2008 27 Contents o Brief history o SIBTC structure o Governance and risk management framework o Comparative market analysis o Strategy overview o Financial performance o Conclusion C l i o Questions 28
Slide 15: Impact of global financial crisis; Conclusion
Impact of global financial crisis o SIBTC is well capitalised with a high level of liquidity o Relatively small exposure to the capital market o Limited impact on corporate default rate o Adverse revenue impact on business units whose revenue is derived from capital markets – Partly offset through d
Slide 16: Questions
Questions Er ee W Stanbic IBTC Bank Amomeer of tamed Bens Umea 16
Slide 17: Nigeria – assessing the potential of Africa's giant
Michael Hugman, Emerging market strategist Nigeria – assessing the potential of Africa’s giant Overview o Nigeria: the underlying investment story – Hydrocarbon potential – Strong sovereign balance sheet – Policy reforms o Coping with the current oil price shock – Fiscal policy and debt – FX reserve
Slide 18: The underlying investment story
The underlying investment story Hydrocarbon potential Figure 1: Oil and gas galore o Nigeria remains one of the 5,600 boe m /y worlds most exciting hydrocarbons prospects 4,200 – 70bn boe known reserves 2,800 – Further 38bn boe potential 1,400 o The potential for this asset wealth to combine with st
Slide 19: Structural reforms; Coping with the oil shock
The underlying investment story Structural reforms key to unlocking opportunities o Financing development – Pension reforms – Bank consolidation – Debt capital markets – Equity capital markets o Supporting growth via the public sector – Critical fiscal policy reforms to increase stability – Privatis
Slide 20: Coping with the oil shock: external debt, FX reserves
Coping with the current oil shock External debt Figure 4 o In the past, higher oil USD m revenues provided access 40,000 to international borrowing, leaving substantial debt as 30,000 oil booms faded o This time around, fiscal 20,000 surpluses funded a ground- 10,000 breaking debt buy-back leaving m
Slide 21: Coping with the oil shock: inflation, growth
Coping with the current oil shock Inflation Figure 6 o Oil inflows and rapid spending % yy/yy 36.00 increases created chronic 27.00 inflation problems during previous oil cycles 18.00 o Structural reforms and fiscal 9.00 controls have protected against a repeat of this 0.00 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Slide 22: Future risks and rewards
Future risks and rewards Staying steady through 2009 Figure 8: Currency flexibility is better o Re-pricing of currency was 170 critical to reflect lower oil prices and allow the 130 economy to adjust rather than facing a more severe crisis later 90 o Lower revenues must be used as a driver to renew
Slide 23: Questions
Questions Er ee W Stanbic IBTC Bank Amomeer of tamed Bens Umea
Slide 24: Corporate & Investment Banking
Sola David-Borha, Deputy chief executive officer Corporate & Investment Banking Outline o Introduction o Global Gl b l Markets M k t o Investment Banking o Transactional Products & Services / Custody o Institutional & Corporate Banking o Conclusion 2 1
Slide 25: Introduction
Introduction o Corporate & Investment Banking (CIB) is the wholesale banking arm split into Global Markets Markets, Investment Banking and Transactional Products & Services / Corporate Banking o Our aim is to be the leading Corporate & Investment Banking franchise in Nigeria o We have a track record
Slide 26: Corporate & Investment Banking structure
Corporate & Investment Banking structure CIB Transactional products and Global Markets Investment Banking services and Corporate Banking Advisory & Equity Transactional Capital Management Banking Debt Capital Trade Services Management Institutional & Project Finance Corporate Banking Brokerage Inves
Slide 27: Global Markets
Global Markets Foreign Exchange Fixed Income We are one of the leading market makers An appointed primary dealer and market in this business, being one of the largest maker for Federal Government of Nigeria suppliers of foreign exchange to the bonds and the number one bank by turnover market and in
Slide 28: Corporate Finance - recent deals
Corporate Finance - recent deals • US$1 billion MTN Nigeria Private Placement Equity q y • Largest private placement in the history of the Nigerian capital market Capital • US$550 million illi Starcomms St Plc Pl PPrivate i t Placement Pl t Markets • 110% subscribed. First telecoms company to be lis
Slide 29: Project & Structured Finance - recent deals
Project & Structured Finance - recent deals • N100 billion Commercial Paper Programme for Dangote Industries Limited Industrial • €28.3 million bridge facility to Lafarge Cement WAPCO Nigeria Plc & Mining • €225 million Multi-Currency Syndicated Term Facilities for Lafarge WAPCO • N21 billion Syndic
Slide 30: Transactional Products & Services
Outline o Introduction o Global Gl b l Markets M k t o Investment Banking o Transactional Products & Services / Custody o Institutional & Corporate Banking o Conclusion 13 Transactional Products & Services o Payments: electronic payments through % Pay direct collections and market share N bn 3.5 2.5
Slide 31: Custody
Custody o Largest custodian in Nigeria with more than N740 billion Assets Under Custody (AUC) as at 30 September 2008 o Identified the growth potential available in the local market. Local AUC is 11.4% of the total portfolio o Bidding to be one of 3 domestic custodians in the Money Market o Won the
Slide 32: Institutional & Corporate Banking (ICB)
Institutional & Corporate Banking (ICB) o ICB is CIB’s team of Relationship Managers (RMs). Our RMs are the champions of the customer centricity service model employed across SBG o ICB key goal is to ensure that all the client’s financial service needs are met thereby increasing product cross sell o
Slide 33: Conclusion
Outline o Introduction o Global Gl b l Markets M k t o Investment Banking o Transactional Products & Services / Custody o Institutional & Corporate Banking o Conclusion 19 Conclusion o One of the most comprehensive product suite and service offering on the market o nBOL a proven electronic channel i
Slide 34: Questions
Questions a ) Stanbic IBTC Bank A meee Seamer fre Ur 11
Slide 35: Global Markets
Kayode Solola Global Markets Global Markets o Team of treasury specialists – traders, sales managers and research analysts, spread over the different countries where the group has a banking presence o Dedicated trading and sales teams, focusing on – market making and customer relationships – providi
Slide 36: Global Markets: What we do
Global Markets o Our commitment is to continue being the market leader in innovation and the professional execution of capital guaranteed, yield enhancement and risk management strategies – providing clients with solutions that meet their needs and/or requirements – providing an ongoing sales servic
Slide 37: What we offer
What we offer Foreign Exchange Structuring & Derivatives o We are one of the leading market makers in this o With the support of our teams in London and New business, being one of the largest suppliers of York and our Corporate Finance teams; we are one foreign exchange to the market and in the top
Slide 38: Revenue contribution 2007 and 2008
Revenue contribution 2007 Money Market Foreign 52% Exchange 31% Fixed Income 16% 7 Revenue contribution 2008 Foreign E h Exchange 29% Money M Market M k t 61% Fixed Income 10% 8 4
Slide 39: History of FX management; Where are we
History o 6 different ways of FX management were used between 1983 – 2008 – Import I t License, Li SFEM, SFEM DAS, DAS AFEM, AFEM IFEM and d WDAS o They ranged between fully, part or minimal regulation (Minimal 2006-2008) o All FDI’s into Nigeria require a Certificate of Capital Importation (CCI) in
Slide 40: Impact on GM business; Looking forward
Impact on GM business o Over regulation seen as a deterrent to trading o Reduced interbank FX liquidity o Though all FX demand still being filled by CBN, there is uncertainty which investors see as a source of discouragement thus minimising expected FDI’s o CBN cap on interest rate will minimise abi
Slide 41: Looking forward: Opportunities and threats
Looking forward Opportunities o First in with solutions (on/off shore cooperation) o Turn around time o Trade Lines o Access to foreign funding based on high credit rating o Flight to quality Threats o Competition o “Briefcase” bankers o Regulatory environment 13 Questions 7
Slide 42: Stanbic IBTC Wealth
Obinnia Abajue Stanbic IBTC Wealth Group What is the Wealth Group? Non-Pension Asset Management Mutual Funds Stanbic Portfolio Management IBTC Asset Investment Advisory Services Managemen Scheme S h Ad Administration i i t ti 100% t Limited owned Stanbic IBTC Wealth Stanbic IBTC Group Pension 70
Slide 43: What is the Wealth Group?
What is the Wealth Group? The Stanbic IBTC Wealth Group is the largest wealth management business in Nigeria by assets under management (AUM) o The individual businesses are the market leaders in their segments o Stanbic IBTC Asset Management Limited – Mutual funds, investment advice, individuals an
Slide 44: Why wealth management?
Why wealth management? Excellent fit with expanding retail banking business o Product portfolio for distribution network o Pension P i scheme h will ill d drive i ffootfall tf ll tto branch b h network t k o Excellent brand extension potential Decent margins with low capitalisation requirement o Ver
Slide 45: Key Indices as at Dec 2008; 2009 outlook
Key Indices as at 31 Dec 2008 Wealth SIAML SIPML AUM (N billion) N286.4 N48.5 N237.9 Estimated market size (N billion)* 500 1,100 Number of market players** 70 31 Number of individual clients 34 637 640 617 Locations*** 80 4 76 AUM av. growth p.a. (2006 – 2008) 81.37% 13.43% 135.9% The Wealth busine
Slide 46: Conclusion
Conclusion o The Stanbic IBTC Wealth Group has a strong foothold in this market space o A strong potential to increase market share during these ‘difficult’ times – Standard Bank pedigree provides assurance of safety and stability where there’s a flight to quality – Opportunities to expand the franc
Slide 47: Looking back to Jan 2008
Jacques Troost, Executive director Personal & Business Banking Looking back to Jan 2008 o 61 branches across 26 states – no representation in 11 states – overall condition and placement not ideal o 19 ATMs – low volumes and availability o 650 staff – gaps around morale, training, sales and service c
Slide 48: The market
The market Nigerian States by population density … and by population size 1 1 1 2 50% of population is Muslim 2 1 1 1 1 1 4 3 1 1 1 1 1 1 24 1 1 1 2 1 6 1 Top 5 Most densely 5 Least densely Top 5 Most populous states 5 Least populous states 1 Lagos 2,455 1 Taraba 41 (0) 1 Lagos 10.4m 1 FCT 1.4m (4)
Slide 49: Retail banking potential still largely untapped
Retail banking potential still largely untapped Nr branches / Nr ATMs / Nr cards per capita Mortgage loans 10 000 people 10 000 people as a % to GDP Tunisia 1.0 South Africa 3.9 South Africa 0.78 UK 72% South Africa Tunisia Tunisia 0.13 Hong Kong 52% 0.8 1.0 Morocco 0.8 Morocco 0.8 Morocco 0.075 Mal
Slide 50: Banking sector
Banking sector Germany, Factors moving banking industries from emerging to France, rapid growth South Africa o Development of functional credit bureau and credit data base United Kingdom, o Availability of retail infrastructure i.e. branches, Brazil, Russia, USA ATMs, POS, cards, e-payment solutions
Slide 51: Activity
Monthly ATM volumes (All transachons on ow network) Monthly ATM withdrawal volumes per usage type tasea| 000 — 130.000 aoe eum + 10000 tavee vaya sane + = wtee = > 0 antes ae + on ee ee ee ee ee nas = = eres eer em eS = = —Usenes —Themonas —Usentnen Monthly ATM availability Monthly ATM withdrawal va
Slide 52: Ongoing challenges and responses
Ongoing challenges and responses o Volatility on the stock exchange – Margin facilities reduced by N30bn – Strict controls to proactively manage remaining margin book – Grow alternative assets to ensure optimal spread of concentration risk o High cost associated with transfer of property ownership –
Slide 53: Questions
At the end we can only differentiate through the quality of our service In both 2008 and 2009 customer service remain the number one consideration of customers to select their bank 15 Questions 7
Slide 54: Highlights of the Lekki Toll Road Concessions
Chukuka Chukuma Head project and structured finance Lekki-Epe Expressway: Lekki Toll Road Concessions Highlights of the Lekki Toll Road Concessions What is the LTRC & Why? The Path to the LTRC Success The LTRC is a pioneering project mandated Lagos State Ministry of Works began investigating 2H 2000
Slide 55: Highlights of the Lekki Toll Road Concessions
Highlights of the Lekki Toll Road Concessions A transaction of many firsts… Key Project Parties Record tenor and a sophisticated structure, the LTRC achieves a number of ground breaking Asset & Resource Management achievements achievements…. Project j 1 Sponsor Larue o First road infrastructure
Slide 56: Our role & achievements
Our role & achievements Our Role Standard Bank of Accolades Financial Adviser South Africa (SBSA) International Lenders Agent g Standard Bank Structured the longest tenor London (SBL) Naira/US$ cross currency swap ever The LIR Project has so far won 4 executed Standard Bank awards, which has g
Slide 57: Questions
Questions Er ee W Stanbic IBTC Bank Amomeer of tamed Bens Umea