Clive Tasker Chief Executive, Standard Bank Africa
Agenda
Friday 8 May 2009 Clive Tasker, Chief Executive Standard Bank Africa – Welcome, introduction & 07:30am overview 08:00am Michael Hugman, Emerging Markets Strategist, Standard Bank Plc
08:30am Richard Gush, Chief Executive CIB, Standard Bank Africa
09:00am Terry Moodley, Chief Executive PBB, Standard Bank Africa
09:30am Tea break
09:50am Pindie Nyandoro RMD – Mozambique, Zambia, Swaziland, Malawi, & Zimbabwe
10:30am Kitili Mbathi RMD – Mauritius, Kenya, Tanzania, Uganda
11:10am Dennis Kennedy RMD – Lesotho, Ghana, Botswana & DRC
11:50am Alewyn Burger – RMD Namibia, COO Standard Bank Africa
12: 30pm LhLunch
13:10pm Jonathan Wood – Global Head, Project Finance CIB
13:50pm Guido Haller – Head Global Markets Standard Bank Africa
14:30pm Jacques Taylor – Head Agricultural Banking Standard Bank Africa
15:10pm Clive Tasker, Chief Executive Standard Bank Africa - Close
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1 The largest African Bank
Standard Bank has extensive expertise in the o Standard Bank is the largest African complicated dynamics of emerging markets, enabling bank and a leading emerging us to effectively partner clients in achieving their markets bank, operating on a global strategic objectives scale
o Standard Bank Africa employs over 11,000 people across 16 countries
o Standard Bank’s relationship with ICBC provides it with further international reach and strengthens its access to what will soon be the world’s largest economy
Africa Rest of world 17 African countries 16 countries 681 branches in South Africa outside Africa 332 branches in the rest of 93 branches in Africa Argentina
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Standard Bank Africa Personal & Business Banking
Banking, investment, insurance and other financial services to individuals and small- to medium-sized enterprises
Transactional Instalment sale and CdCard pro duc ts MtMortgage l endi ng Bancassurance products finance leases
o Includes deposit o Credit card o Home loans to o Instalment o Short- to long- taking activities, solutions to individual finance in the term insurance electronic individuals and customers consumer products to banking and businesses market, mainly clients, through cheque accounts vehicles, and third parties, and utilising various finance of financial planning contact channels vehicles and services to equipment in the clients business market
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2 Standard Bank Africa Corporate & Investment Banking
CIB is responsible for all aspects of investment banking services offered to international corporate and institutional clients The combination of experience, diverse skills, product range offered and the substantial capital base of Standard Bank Group enables CIB to provide effective integrated investment banking solutions
Global Transactional Coverage & Global Markets Investment Banking Products & Services Distribution
o Custodial Services o Money Markets o Client facing sales o Acquisition Finance activities within o Transactional o Forex o Equities Corporate and Banking o Corporate Finance o Commodities Investment Banking Trade Services o o DbtCDebt Cap itlMktital Markets division o Equity Capital Markets o Interest Rate Sales o Asset syndication & o Project Finance and Structuring distribution o Private Equity and o Securitisation Specialised Funds o Global Markets o Structured Trade Research Finance o Asset based finance 5
Standard Bank Africa Wealth
Standard Bank, via Liberty Life/ Stanlib, provides investment management and life insurance products to the majority of our markets in Africa
Offering a comprehensive range of long-term insurance products and services to both the individual and corporate markets
Insurance Business Assurance Corporate Benefits Healthcare
Is committed to building long-term African relationships, developing creative solutions to problems and partnering our clients on the road to investment success.
Investment for Investment for Financial Planning Individuals Institutions
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3 Footprint Changes : 2000 vs. 2008
Mediterranean Mediterranean TUNISIA Sea TUNISIA Sea MOROCCO MOROCCO
ALGERIA ALGERIA WESTERN LIBYA WESTERN SAHARA EGYPT SAHARA LIBYA EGYPT
Red Red MAURITANIA Sea MAURITANIA Sea MALI MALI COTE NIGER ERITREA NIGER ERITREA SENEGAL SENEGAL THE CHAD SUDAN THE CHAD GAMBIA DJIBOUTI GAMBIA SUDAN BURKINA BURKINA DJIBOUTI GUINEA GUINEA GUINEA GUINEA BISSAU BENIN BISSAU BENIN TOGO NIGERIA NIGERIA COTE ETHIOPIA TOGO CENTRAL ETHIOPIA SIERRA DTVOIRE GHANA SIERRA DTVOIRE GHANA CENTRAL LEONE AFRICAN LEONE AFRICAN REPUBLIC REPUBLIC LIBERIA LIBERIA CAMEROON CAMEROON
UGANDA UGANDA DEMOCRATIC SOMALIA DEMOCRATIC SOMALIA EQUATORIAL REP. OF EQUATORIAL REPUBLIC KENYA REP. OF REPUBLIC KENYA GUINEA THE GUINEA THE OF THE CONGO OF THE CONGO GABON CONGO GABON CONGO (ZAIRE) Indian (ZAIRE) Indian RWANDA RWANDA BURUNDI BURUNDI Ocean Ocean ANGOLA TANZANIA ANGOLA TANZANIA
MALAWI MALAWI ANGOLA ANGOLA ZAMBIA ZAMBIA
MOZAMBIQUE MADAGASCAR MOZAMBIQUE MADAGASCAR ZIMBABWE No representation NAMIBIA No representation NAMIBIA ZIMBABWE BOTSWANA BOTSWANA
SWAZILAND Representation, but no PBB LESOTHO MitiMauritius Representation, but no PBB SWAZILAND Mauritius Indian LESOTHO Indian SOUTH SOUTH AFRICA SBA representation (PBB& CIB) Ocean SBA representation (PBB& CIB) AFRICA Ocean
We are currently substantially content with our presence in Africa
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Listings and Minority Shareholdings
Listed entities Minorities by country
o Nigeria o Nigeria : 49.23% o Kenya o Kenya : 40% o Malawi o Malawi : 39.82% o Uganda o Uganda : 20%
o Swaziland : 35%
o Lesotho : 20%
o Mozambique : 3.99%
o Ghana : 2.15%
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4 Botswana Game City
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Governance
o Fully constituted Board of Directors in place in all countries
• Independent
• Non-executive
o Standard Bank Group representation
o Strong independent non-executive Chairmen
o Fully mandated set of board sub-committees
• Board Audit Committee
• Board Credit Committee
• Board Risk Committee
• Board Loans Review Committee
• Remuneration Committee
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5 Governance
o Need to comply with both host and home regulator
o Full on-site evaluations byyg host regulator
o Annual prudential session with SARB in Johannesburg
o Each Board undergoes rigorous process of self evaluation annually
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Management structure
Standard Bank Africa GOVCO
Richard Gush Terry Moodley Clive Tasker CE CIB CE PBB CEO Standard Standard Bank Standard Bank Bank Africa Africa Africa
Product Heads Regional Managing Product Heads Risk Directors Risk Operations COO Operations
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6 Major Competitors by region/country
Country Citibank Barclays Stanchart Ecobank UBA ABSA FNB Nedbank
Francophone West Africa DRC XX West Africa Ghana XX X XX Nigeria XXXX East Africa Kenya XX X X Tanzania XX X X Uganda XX X XX CMA Lesotho XX Swaziland XX Namibia XXX Central Africa Angola XX Botswana XX X Malawi XX Mozambique × X Zambia XX X Zimbabwe XX Indian Ocean Mauritius X
Uganda Head Office
7 Headline earnings – Geographic split
31 December 2000 31 December 2008 Rm mix Rm mix CAGR*
South Africa 2 908 79 10 916 77 18
Standard Bank Africa 311 8 1 862 13 25
Outside Africa 567 15 1 378 10 12
Central (113) (3) (6) Standard Bank Group 3 673 100 14 150 100 20
*CAGR based on the period 2000 to 2008
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Headline earnings – CAGR of 25%
2 000 1 862 1 800 1 600
1 400 1 273 1 200 1 000 795 800 721 616 600 482 489 400 311 325 200
Rm 0 2000 2001 2002 2003 2004 2005 2006 2007 2008
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8 Headline Earnings Split : 2000 vs. 2008
24 35 PBB 76 65 PBB CIB CIB
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Botswana training centre
9 Accolades Banker Magazine o Deal of the year for Africa
• ICBC deal
o African Bank of the year
o Bank of the year awards in:
• Botswana
• DRC
• Lesotho
• Malawi
• Namibia
• Swaziland Global Finance • Tanzania and o Best Emerging Market Banks in:- • Zambia • Africa
• Namibia and
• Uganda
Global Business Coalition’s Award o Business Excellence Award for the best HIV/Aids Workplace Programme in the world
Accolades African Banker o “Deal of the Year“ for the deal with IBTC
o Stanbic IBTC Bank the “Best Issuing House in Africa”
Euromoney o The Lekki Epe-Expressway : African PPP Deal of the Year
o African Transport Deal of the Year : TAV Tunisia
o African Power Deal of the Year : Rabai Power
GTR Magazine o Best Trade Finance Bank in sub-Saharan Africa
10 Proposition Beyond 2009– Countries coloured to reflect risk rating
Presence
L
S Zi U Nigeria m Kenya M B MZ DR C Z Ghana NM Angola T MR
“Grow “Maintain” “Grow/Defend & Expand” Aggressively ”
Non Presence L = Lesotho ; S = Swaziland ; M = Malawi ; MR = Mauritius ; MZ = Mozambique ; NM = Namibia ; Z = Zambia ; B = Botswana ; U = Uganda ; T = Tanzania
2009 Focus areas and deliverables
o Focus on – Nigeria, Kenya, Angola, Ghana o Leverage newly installed products with emphasis on quality Home Loans, VAF and Card
o Expand product and channel offerings and grow our network o Deepen customer insight and improve customer service o African Rigour - Improve efficiencies and get the basics right o Improve cross-selling ratio
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11 Conclusion
o Africa is the Group’s calling card o Where relevant we want to be local universal banks o We will capitalise on cross-border flows • Within Africa • Between Africa and other emerging markets
o The ICBC relationship provides an opportunity to access China o Our African operations are uniquely positioned
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Questions
12 Michael Hugman Africa – emerging from the crisis stronger?
Overview
o What was the bull-market case for investing in Africa? o How have global economic events impacted the continent? • Inflation shock in mid-08 • Falling commodity prices hurt external balance, fiscal revenue and growth • Capital outflows in H2:08 o What has the policy response been? • Allowing currency flexibility and managing FX reserves • Using disinflation to achieve positive real interest rates • Moderating fiscal policy goals o How does this change the case for investing in Africa? • Stabilisation in commodity prices will support diversification • Africa among the few regions with positive growth and low leverage • Reduced capital flows deliver higher yield to Africa investors (including China)
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1 The Bull-Market case for Africa
Figure 1: Rising growth, falling debt External support % GDP % y/y o Commodity price cycle 80 7 o Debt relief and other concessional cash-flows 60 5 o Remittance flows o Global search for yield 40 3
20 1 Internal factors o Improved policy making 0 -1 o HiliHuman capital returning 1980 1984 1988 1992 1996 2000 2004 2008 Ext. debt (%GDP, LHS) GDP (% y /y, RHS) Structural transformation o average grow th 80-00 average grow th 01-09 from rural societies supports high growth: just as in China Sources: IMF WEO & IFS, Standard CIB Global Research in the 1980/90s
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The impact of the crisis
Figure 2: Global prices drive African inflation Inflation shock in mid-08 % y/y CRB o Africa had solved the high 20.0 500 inflation problems of the 1980/90s 15.0 375 o However, African economies remain more exposed to global prices, particularly for food 10.0 250 o The impact of the commodities bubble was felt more acutely 5.0 125 here
0.0 0 Jan-03 Jul-04 Dec-05 May-07 Oct-08
Africa inflation (% y/y) Global inflation (% y/y) CRB (RHS) Sources: Reuters/Jefferies, EcoWin, Standard CIB Global Research
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2 The impact of the crisis
Figure 3: Spiking commodity prices Falling commodity prices Jan00=100 630 o Sharp increase in prices in 08 hurt net importers of oil o Created a liquidity 488 management challenge o Rapid price reversal has put government revenue under 345 pressure
o Trade balance suffers 203 • Price effect as terms of trade are negative • Volume effect as output 60 falls with production shut- Jul-99 Jun-01 May-03 Apr-05 Feb-07 Jan-09 downs CRB Index Gold Oil
Sources: Reuters/Jefferies, EcoWin
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The impact of the crisis
Figure 4: The end of EM capital flows? Capital outflows in H208 USDbn EM USDbn A F o Africa had benefited from the 1,000 40 broader flow of capital into emerging markets 750 29 o Global growth and the search for yield opened up new markets o There will be a sharp reversal in 500 18 all flows into emerging markets, although we forecast Africa will do better than average 250 7 o Remittance flows will also fall, although thi s will b e off set b y 0 -4 lower profit outflows from 1991 1994 1997 2000 2003 2006 2009f extractive industries Net private sector financing Emerging Markets Net private sector financing to Africa/ME Sources: IIF, Standard CIB Research
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3 The policy response
Figure 5: Getting back to positive territory Aiming for positive real interest y/y rates 18.0 o Central banks were caught out by the sharp increase in inflation 14.5 o In response, African markets have been much more cautious 11.0 about cutting rates, instead looking to benefit from global disinflation 7.5
4.0 Sep-02 Apr-04 Dec-05 Aug-07 Mar-09
AF10 CPI AF10 91-d T-bills
Sources: African Central Banks, Standard CIB Global Research
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115 The policy response Figure 6
99
FX flexibility and protecting FX 83 reserves 66 o In contrast to previous commodity busts, policy- makers have allowed nominal 50 Aug-99 Jan-02 Jun-04 Oct-06 Mar-09 exchange rates (NEER) to Figure 7 REER NEER weaken USD bn o This has ensured that real 160.0 exchange rates have Sources: remained fair value, Bloomberg, 120.0 Ecowin, preserving competitiveness Standard CIB
o FX reserves accumulated 80.0 Glo ba l Researc h during the commodity boom are being protected, 40.0 providing a stable platform for economic management 0.0 Apr-94 Jan-98 Oct-01 Jul-05 Apr-09 FX reserve (AF10)
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4 The policy response
Figure 8: Tightening the fiscal belt Moderating fiscal policy % goals 31 o African governments now have alternative sources of 30 funding to draw on • Sovereign savings 29 • Local currency bond markets o Nevertheless, they are 28 looking to avoid a return to high debt levels by modiderating spen diiding in 27 2009 2007 2008 2009 AF10 govt expenditure (% GDP)
Sources: African Finance Ministries, Standard CIB Global Research
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The evolving outlook for Africa
Figure 9: Commodities finding support Stabilizing commodity prices Dec08=100 o Since the end of the year 140 we have seen significant support across commodity classes 120 o Prices have stabilized at levels that remain high on 100 an historic basis o Moderate, stable commodity prices are ideal 80 for African growth
60 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 CRB Index Gold Oil Sources: Reuters/Jefferies, EcoWin
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5 The evolving outlook for Africa
Figure 10: Staying positive on growth Positive growth and low % y/y leverage 15 o Only in the strongest markets do we anticipate 10 growth to stay positive in 2009 o Markets with low leverage 5 at both the sovereign and corporate level are set to outperform, driven by real 0 productivity growth
-5 Oct-99 Feb-02 May-04 Sep-06 Jan-09
China Brazil OECD Hungary SSA
Sources: Country authorities, OECD, Standard CIB Global Research
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The evolving outlook for Africa 280.0
227.5 Figure 11
Rewards African investors 175.0 o The stronger growth outlook is being reflected in 122. 5 stabilizing equity prices
o At the same time, yields for 70.0 committed Africa investors Figure 12 Oct-04 Apr-06 Oct-07 Apr-09 have risen back to levels MSCI EM AF 10 w eighted average bps better aligned with risk 1,800 o Growing importance of Sources: Bloomberg, direct investment and trade 1,350 Standard CIB flows between Latin Global Research America, Africa, Asia and 900 CIS
450
0 Nov-07 Mar-08 Jul-08 Dec-08 Apr-09
Africa USD bond index EMBI
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6 Questions
7 Richard Gush
Chief Executive
Corppgorate and Investment Banking Africa
Financial highlights for 2008
o 14.6% return on equity o 35% increase in headline earnings to R1,209 million o 57% growth in loans and advances to R35.2 billion o R85.7 billion total assets
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1 Headline earnings
1 200
1 000
800 m
600 ZAR 400
200
0 2005 2006 2007 2008
CAGR 2005 – 2008: 24%
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Current CIB market positioning
Five major markets with different focus and stages of evolution
o Nigeria o East Africa (including Kenya,Tanzania, and Uganda) o Ghana o South and Central Africa (including Zambia, Malawi, DRC, Zimbabwe, Botswana, Mozambique, Namibia, Lesotho and Swaziland)
o Angola And Mauritius , a service centre with opportunity
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2 Key market statistics
Nominal Nominal GDP GDP per GDP GDP Population (US$bn at Capita change CAGR (millions) PPP fx rates) (US$bn/m) 98-08 04-08 Nigeria 146 279 1.9 211% 7.4%
East African region 111 148 1.3 215% 7.9%
Ghana 24 34 1.4 207% 7%
South and Central Africa 133 108 0.8 177% 6.4%
Angola 17 84 4.9 265% 10.2%
Mauritius 1 10 10 119% -3.7%
South Africa 49 492 10 187% 6.1% Source: Economist Intelligence Unit - Based on World Bank figures, World Development Indicators
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CIB strengths
o Existing network of good banks in key markets o Great people in selected markets and products o Brand recognition as "an African Bank" o Recognition that a universal bank model is more sustainable o Some understanding of how emerging markets evolve o We are committed to Africa, we realise it is our distinguishing attribute o Portfolio effect of African business
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3 Things CIB could do better
o An integrated CIB approach necessary for sustainability o Ambition for multiproduct leadership o "One common standard" for everything we do o Improve our customer coverage model o Seamless technology platform o More good people o Scale
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What will be tested in the year ahead?
o A reshaped leadership team o Credit provisioning and risk management o Liquidity management o Some sovereigns under pressure in the capital markets o Our ability to manage a complex business in a changing environment o Our ability to roll out a business in Angola o Our ability to follow our key EM customers into Africa
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4 CIB Business Model
Strategic Advice Primary Market Access Leverage Products & Complex Derivatives
Core Banking & Basic Derivatives
Franchise Products Volume Coverage
Transactional Products Coverage Value Coverage
Client Base
Business Enablers
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Represented another way
Strong cross Strong domestic border player player •For intl. customers •For local customers •Investment banking •Retail •Transactional platform •Investment banking •Global coverage •Transactional platform •Global Markets •Corporate banking coverage •Global Markets •Business enablers •Business enablers
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5 Competitors
Established International Competitors L ike StanChart, ABSA/Barclays, SocGen and BNP
African Niche competitors Local competitors like Ecobank, Dyer & Blaire First Bank UBA, BIM, BPC Market Afrivest
Opportunistic competitors like RMB, JP Morgan, Citi, BES
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Competitors
o Strong local competition in most markets o Standard Chartered and ABSA/Barclays are competitive but neither across entire prod uc t or geography h
o Other internationals have different priorities now o Standard Bank franchise burning brightly for now o A good time to build capacity and hire great people
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6 Key Market Themes for 2009
o Investment and Trade into Africa from EU, USA, Brazil, China, Russia and Middle East
o IfttInfrastructure and dE Energy d evel opment across conti titnent o Capital Markets Development • Access to liquidity • DFIs • Local market evolution o Trade becomes more important in illiquid markets o Commodities remain important
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Themes – Africa an investment destination
Europe Russia & Turkey E. Europe North America Middle East
India
Rest of China Latam
Rest of Brazil & Asia Argentina
Traditional world developed mkts Core Standard Bank mkts Other Emerging mkts
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7 CIB Africa internal themes
o Product focus • Deepening product penetration in key markets • Broadeninggp product ran ge • Enhancing business enabler capacity to support delivery o Right people in the right jobs in the right structure o Competitors growing strongly in key markets, especially Nigeria o Prioritisation of capital and liquidity to support growth of the franchise o Building effective leverage points with PBB o Avoiding accidents o Full CIB platform for key clients o In country expertise, international skills coordination
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Questions
8 Terry Moodley Personal & Business Banking
Financial highlights for 2008
o 20.0% return on equity o 72% increase in headline earnings to R653 million o 51% growth in loans and advances to R18.1 billion o R23 billion total assets
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1 Focus areas for 2009-2011
Focus themes Objectives Outcomes
• Customer Centricity • Prioritise higher potential • Headline earnings growth markets/segments • Service excellence • Minimum market share of • Get service right 10% • Sustainable growth • Transactional/liability lead • Effectiveness • Rigour • Perfect the basics • NIR 50% of total revenue • Focus on People • Grow our people • Talent magnet
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Prioritising the geographic opportunities
Core (grow): Ghana Kenya High ● Ug Nigeria ● Nam Mozambique ● Nig R100m Core (expand): Uganda ● Moz Namibia Medium Botswana ● Bots Les ● Fix: Zambia R50m Swazi ●
BB Headline Earnings BB Headline ● Zambia Maintain: Lesotho P ● Ghana Malawi ? ● Mal Low ● Tanz ● Zim Swaziland ● Ken Investigate: Tanzania Low Medium High Zimbabwe Market Share/Penetration Key: Arrow reflects movement in countries position over 3 years
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2 Products by Country
Country Transactional Home loans VAF Lending products Credit card products 2000 2008 2000 2008 2000 2008 2000 2008 2000 2008
Angola No No No No No No No No No No Botswana Yes Yes No Yes No Yes Yes Yes No Yes DRC NoYesNoNoNoNoNoNoNoNo Ghana No Yes No Yes No Yes No Yes No No Kenya Yes Yes No Yes No Yes Yes Yes No Yes Lesotho Yes Yes No Yes No Yes Yes Yes Yes Yes Malawi Yes Yes No Yes No Yes Yes Yes No No Mauritius No Yes No Yes No No No Yes No No Mozambiq No Yes No Yes No Yes No Yes No Yes Namibia Yes Yes No Yes No Yes Yes Yes Yes Yes Nigeria No Yes No Yes No Yes No Yes No No Swaziland Yes Yes No Yes No Yes Yes Yes Yes Yes Tanzania Yes Yes No Yes No Yes Yes Yes No No Uganda Yes Yes No Yes No Yes Yes Yes No Yes Zambia No Yes No Yes No Yes No Yes No No Zimbabwe Yes Yes No Yes No Yes Yes Yes No No
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Stanbic Africa- Branches and ATMs
Country Branches ATM’s
2000 2008 2000 2008 Angola 00 0 0 Botswana 49 0 14 DRC 02 0 0 Ghana 2210 21 Kenya 3160 31 Lesotho 22 15 1 38 Malawi 0190 36 Mauritius 01 0 1 Mozambique 18 30 0 37 Namibia 32 43 20 126 Nigeria 3 61 0 55 Swaziland 11 11 5 43 Tanzania 59 2 18 Uganda 2 68 2 136 Zambia 7112 38 Zimbabwe 14 16 12 26 Total 123 332 44 620
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3 Stanbic Africa vs Major Competitor – Branches
2008
Standard Major Countries Bank Africa Competitor Name of Competitor
Angola 0 98 BFA
Botswana 9 46 Barclays
DRC 2 11 BCDC
Ghana 21 147 GCB
Kenya 16 110 Barclays
Lesotho 15 6 Nedbank
Malawi 19 23 NBK
Mocambique 1 100 BIM
Mauritius 30 42 MCB
Namibia 43 38 Bank Windhoek
Nigeria 61 638 UBA
Swaziland 11 8 Nedbank
Tanzania 9 125 NMB
Uganda 68 40 Barclays
Zambia 11 69 Barclays
Zimbabwe 16 33 Barclays 7
Africa in context
o As at 2008 2,2m customers and 3,1m accounts
o 332 Branches
o 620 ATMs
o Full product set once Credit Cards and branch roll-out implemented
o 11 000 private banking customers
o 136 000 business banking relationships
o 7 558 Personal & Business Banking staff in 16 African countries
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4 Business model
o Segment • mid and upper value segment (personal and business)
o Product • transactional, deposit lead with loans expansion through selective cross selling into transactional base
o Channel • multi-channel with emphasis on scaling self-service channels
o Geography • focus on core country portfolios (Nigeria , Kenya and Uganda, Namibia, Mozambique and Botswana)
o Differentiators • Low cost, highest service delivery, full financial services group and pan-African brand
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Operating model
o Head office • portfolio earnings accountability
• country enablement through the design and construction of value propositions
• product/channel solutions, with ongoing support to country operations
• portfolio oversight role
o In country • executes accountability for earnings growth
• day-to-day running of the business
• implementation of new/enhanced solutions
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5 2009 deliverables
o Get service right o Lead with transactional and deposit products o Selective growth of loans portfolio by emphasising cross selling into transactional base
o Expansion of a Bancassurance in selected countries (Botswana, Kenya, Namibia and Uganda )
o Develop physical and self-service channels to optimise our reach o Improve cross sell ratio
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Opportunities
o We can do more with the infrastructure we have established over many years
o Alongside CIB we are a formidable combination o South African expertise may be relevant o Cross-sell opportunities to 2 Million customers o Positioned for increased demand from emerging consumers
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6 Challenges
o Infrastructure • physical and technical o Attracting sufficient local skills in country o Variations in local regulations o Sophisticated and rigorous competition
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Conclusion
o Comfortable that the business model is working o Substantial investment in Africa startinggpy to pay off o Transactional customers have been attracted o Established appropriate risk appetites within jurisdictions o Piloting a more expansionary model o Concentrate on the basics of • service • low cost delivery • to ensure the model is sustainable
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7 Questions
8 Pindie Nyandoro Regional Managing Director
Swaziland, Malawi, Mozambique, Zambia and Zimbabwe
Mediterranean TUNISIA Sea MOROCCO
ALGERIA WESTERN LIBYA SAHARA EGYPT
Red MAURITANIA Sea
MALI
NIGER ERITREA SENEGAL THE CHAD SUDAN GAMBIA DJIBOUTI BURKINA
GUINEA GUINEA BISSAU BENIN NIGERIA TOGO ETHIOPIA CENTRAL SIERRA DTVOIRE LEONE GHANA AFRICAN REPUBLIC LIBERIA CAMEROON
DEMOCRATIC UGANDA SOMALIA EQUATORIAL REP. OF REPUBLIC GUINEA THE KENYA OF THE CONGO GABON CONGO (ZAIRE) Indian RWANDA
BURUNDI Ocean ANGOLA TANZANIA
ANGOLA MALAWI
ZAMBIA
MOZAMBIQUE MADAGASCAR ZIMBABWE NAMIBIA
BOTSWANA
SWAZILAND LESOTHO Indian SOUTH MAURITIUS AFRICA Ocean
1 Swaziland
Swaziland financial results
o Headline earnings of R66m in 2008 • Up 11% in ZAR and LC • CAGR since 2000 19%
4
2 Bank profile
o Universal Bank: CIB – 49%, mainly sugar and large corporates PBB – 51%, large VAF book, group schemes and private individuals o Number of staff : 442 o Number of branches : 11 o Number of ATMs : 43 o Market share – Loans 29% o Market share – Deposits 34% * Now inclusive of Building Society, previously not included o Achievements 2008 • First bank to introduce Bancassurance in Swaziland • First bank to launch ATM mobile top-up • Won the tender for the Swazi Government Public Enterprises Unit Account • Bank of the Year – Banker Magazine
5
Competitive environment
o 4 Commercial banks ( 3 – South African , 1 government-owned ) o 1 Buildinggy() Society (local) o No International Banks o 4 major microfinance institutions o Standard Bank has the largest branch and ATM network, servicing a large customer base
6
3 A day in the life of Standard Bank Swaziland
o Regulatory Environment – Regulatory reporting and compliance o Asset & Liabilityyg Management – Higgph loan to deposit ratios, stron g emphasis on managing liquidity and funding
o Customer Interactions - retention o Finding new business o People management o Debt and collections management
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Challenges
o Economic downturn • Increase in bad debts • Lack of new investments • Decline in export revenue • Increase in national unemployment o Skills migration to South Africa o High local Inflation impacting costs of doing business o Decline in SACU revenues impacting government – one of our largest customers
o HIV/Aids prevalence still very high – affecting domestic productivity
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4 Opportunities
o Custody, local asset requirement of 30%, courting insurance companies for business
o Foreign currency hedging opportunities o Property finance, shortage of both residential and business premises o Project finance, projects are mainly government driven o Transactional business growth potential
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Malawi
5 Malawi financial results
o Headline earnings of R77m in 2008 • Up 93% in ZAR
• Up 68% in LC
• CAGR since 2000 in ZAR 39%
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Bank Profile
o Universal Bank: CIB 70% and PBB 30% o Key clients include Illovo, Alliance One, Limbe Leaf and recently Paladin Africa o Number of staff : 611 o Number of branches: 19 o Number of ATMs: 36 o Market share – Loans 21% o Market share – Deposits 22% o Achievements 2008 • 1 new service centre opened
• Banker to the Malawi Government
• Bank of the Year – Banker Magazine
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6 Competitive Environment
o There are 11 Banks that operate in Malawi o Market share as at December 2008: deposits 22.6%, loans & advances 21.3% ranked second
o National Bank commands 38% of deposits and 30% of loans & advances. NBS Bank are strong in SMEs whereas MSB are strong in rural markets
o International Commercial Bank and FDH Bank are the latest to enter the market
o Our key competitive edge • We dominate Tobacco and Fertiliser deals as well as International organisations
• Leader in Global markets revenue
• Model of high banking standards
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A day in the life of Standard Bank Malawi
o General risk aversion given the global economic downturn o Scarcity of foreign exchange vs. high concentration of trading income and appetite for foreign currency lending
o Cut-throat competition with an increase in players, many expansion programmes (key competitors: National Bank and NBS Bank)
o Focus on customer service o Contain revenue leakages o Retaining and motivating people geared towards high performance o Entrenching a culture of compliance at all levels o Regulatory interventions
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7 Challenges
o Fraud threats sensed via the levels of thwarted frauds o Process failures, which give rise to small but high frequency operational losses o Continued focus on NPLs in business banking o Tighter regulatory intervention leaning towards disintermediation o Country risk perceptions regarding the May 19th general elections
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Opportunities
o Malawi economy expected to grow by 8% in 2009 o Commissioning of Uranium mining expected to improve Malawi’s export earnings o Public infrastructure spending creating opportunities o Expanding telecommunications sector o Chinese cotton ginnery o Prospects of niobium mining
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8 Mozambique
Mozambique financial results
o Headline earnings of R233m in 2008 • Up 42% in ZAR • Up 15% in LC
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9 Bank Profile
o Universal Bank: CIB 70% and Retail 30% o Number of staff: 674 o Number of branches: 30 o Number of ATMs: 37 o Market share: Loans 14% o Market share: Deposits 24% o Achievements – 2008 • Consistent growth across all areas of the operation for the fourth year running • Excellent growth in the retail side of the business through introduction of new products • Retention of key skills in a very demanding labour market
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Competitive Environment
o Overbanked market • large Portuguese banks; Caixa and BCP as well as Barclays the main competitors
• large number of smaller niche players like MCB, FNB and ABC
• Resulting in pricing and staffing pressures
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10 A day in the life of Standard Bank S.A.R.L Mozambique
Business environment
o Larggye Hydro and minin gpjg projects in which Standard Bank has more than its current market share
o Environment dominated by the NGO sector who support over 50% of the government budget
o Large corporations with limited manufacturing capacity, key success in this sector is service
o Standard Bank Mocambique leads this sector by being main banker to 50% of NGO market
21
Challenges
o People • Low skills level with continuous investment in training and skills
• Mismatch between wage demands and productivty levels
o Business Environment • Extremely small business sector with imports dominating
• Establishing a new business in Mocambique continues to be a challenge
• Simplified laws have aided the process slightly however bureaucratic delays still exist
22
11 Opportunities
o Potential to be one of the largest Hydro energy producers in the region
o Large mineral deposits yet to be explored fully such as Coal and Uranium
o Increase in natural gas exports predominately for the South African market
o Investment in agricultural projects will assist in making the country self sufficient and increase exports
o Long term investment plans supported by donors around improving infrastructure
o Stable government which is most likely to win elections later on in the year
o Donor support continues even in tough economic times
23
Zambia
12 Zambia financial results
o Headline earnings of R71m in 2008 • Down 54% in ZAR
• Down 63% in LC
25
Bank profile
o Universal Bank: CIB 60% PBB 40% o Key clients: ZAIN, Zambia Sugar, Kansanshi Mines, Z/ Breweries o Num ber o f s taff : 505 o Number of branches: 11 o Number of ATMs : 38 o Market share – Loans 14% o Market share – Deposits 13% o Achievements 2008 • Lead Banker for Celtel/ ZAIN Initial Public Offering
26
13 Competitive environment
o 15 banks (both local & international) 3 more entrants expected to enter the market in the short term
o Market is dominated by a few large players, the largest six banks accounted for 87% and 83% of loans and deposits, respectively
o Financial sector is characterised by low financial intermediation (with limited access to financial services for the rural population and low-to-middle income earners)
27
A day in the life of Stanbic Zambia Limited
o Regulator strict, need to constantly manage relationship
o CtCustomer servi ce key
o Ensure we maintain 1st Position in Global Markets and Investment Banking
o Focus is on operational efficiencies and cleaning up
o Constantly monitor USD liquidity and review deal pipeline accordingly
28
14 Challenges
o Poor customer service delivery
o Disengage d s ta ff l eadi ng to loss o f s kille d s ta ff to compe titors
o New entrants (FNB, UBA, Access Bank)
o New provisions for loan losses arising from both CIB and PBB
o Margin squeeze
29
Opportunities
o Government commitment to prudent debt management
o Donors remain engaged with Zambia and their support is expected to continue resulting in more donor flows through the bank
o Healthy deal pipeline
o Untapped personal banking sector
o Trade Finance opportunities using ICBC link and IFC facility
30
15 Zimbabwe
Bank Profile
o Universal bank: CIB 80% and PPB 20% o Main sources of business are: • Service industries 29% • Manufacturers 25% • Agriculture 22% • Distribution 13% • Other 11% o Current staff numbers: 687 o Branches 16 and 26 ATMs o Market share – Loans 19% @ 31 December 2007 o Market share – Deposits - 31% @ 28 February 2009 o Achievements 2008 • Bank of the Year – Banker Magazine 32
16 Competitive environment
o Very competitive, 18 commercial banks, 3 merchant banks, 3 discount houses and 4 building societies o Competitive edge • Provision of foreign currency for working captial • Capex o Competition able to access lines from Afrexim Bank and African Development Bank o Debit and credit cards major competitive advantage in the economy
33
Pre Government of National Unity era
o The era before the formation of the government of national unity (GNU) was characterised by: • Unbridled growth in monetary supply arising from the Reserve Bank of Zimbabwe’s (RBZ) currency printing activities, which, in turn, caused hyperinflation • IT systems for financial recording and reporting were besieged by the growth in transaction values • Low capacity utilisation across the board but more obviously in the manufacturing sector (down to 30%) • Restrictive price controls imposed by the government in an attempt to control prices of goods and services • Huge unemployment levels peaking at around 70% and emergence of informal sector • Collapsing infrastructure and public services e.g. health, sanitation, education
34
17 Post Government of National Unity
o The formation of the GNU has resulted in the following changes: • Elimination of the Zimbabwe dollar as both a reporting and functional currency, and the consequent elimination of hyperinflation • Costs have become ‘real’ because they are now denominated in hard currencies, thus pushing many companies to the brink of bankruptcy • Dollarisation has enforced financial discipline on the government • High tariffs imposed by service providers (e.g. water, electricity, rates) • Prices of goods of have continuously come down since January
35
A day in the life of Stanbic Bank Zimbabwe
o The recent positive developments on the political front have meant establishment of a market economy, reengagement with the international community, retooling/refurbishment of commerce industry. These have been absent from the market for the past 10 years
o Companies require access to lines of credit that will enable them to retool and commence or upgrade operations so that GDP growth and profitability improves
o Outstanding issues in the GNU can derail the little that has been achieved thus far
o The current increase in fraud and theft remains a concern now that the economy has dollarised
o The Bank is behind in the introduction of new products especially on the personal banking front
o The retention of key human resources who are sufficiently skilled to enable the bank to prosper in the new environment
36
18 Challenges
o Country risk perception and the pursuant difficulty in raising credit lines o Improving economic activity however remains low limiting financial performance
o Overcharging by service providers particularly utilities o Increasing criminal activity
37
Opportunities
o Market reforms arising from the GNU o Significant funding opportunities are present across the economy e.g. public infrastructure, mineral exploitation
o Largest deposit market share o Significant corporate action anticipated e.g. IPO’s, venture capital activity, private equity investment etc.
o Development of the Zimbabwean financial market to bring it on par with those in comparative economies
38
19 Questions
20 Kitili Mbathi Regional Managing Director
Mauritius, Kenya, Tanzania, Uganda
Mediterranean TUNISIA Sea MOROCCO
ALGERIA WESTERN LIBYA SAHARA EGYPT
Red MAURITANIA Sea
MALI
NIGER ERITREA SENEGAL THE CHAD SUDAN GAMBIA DJIBOUTI BURKINA
GUINEA GUINEA BISSAU BENIN NIGERIA TOGO ETHIOPIA CENTRAL SIERRA DTVOIRE LEONE GHANA AFRICAN REPUBLIC LIBERIA CAMEROON
DEMOCRATIC UGANDA SOMALIA EQUATORIAL REP. OF REPUBLIC GUINEA THE KENYA OF THE CONGO GABON CONGO (ZAIRE) Indian RWANDA
BURUNDI Ocean ANGOLA TANZANIA
ANGOLA MALAWI
ZAMBIA
MOZAMBIQUE MADAGASCAR ZIMBABWE NAMIBIA
BOTSWANA
SWAZILAND LESOTHO Indian SOUTH MAURITIUS AFRICA Ocean
1 Mauritius
2 Mauritius financial results
o Headline earnings of R63m in 2008 • Up >100% in ZAR
• Up >100% in LC
5
Bank profile
o Standard Bank (Mauritius) came of age and matured into a well established wholesale brand and has set the platform for a sustainable future o Branch 1 and ATM 1 o During 2008 • Successful brand building and healthy asset growth • Good performance of new products lines rolled out • New product drive • Strong liability growth • Crisis in global financial system • Global liquidity crisis • Slowdown in US Dollar asset growth • Widening of credit margins due to global credit weakness • Repricing of US Dollar funding levels • Volatility in forex and capital markets o Staff headcount reaching 111 by year end 6
3 Day in the life of Standard Bank Mauritius
o A major Corporate and Investment Bank in the Indian Ocean region o Full range of services to support needs of corporate, institutional and private clients • Corporate banking, global markets, investment banking, custody & investor services, trade finance & services, global transactional banking, cross border finance and private banking & wealth management o Capitalise on Mauritius’ position at the centre of the region and as the conduit between India/China and Africa, to capture our share of the financing and investment banking opportunities that cross its shores o Achievements • Voted No .1 Private Bank in Mauritius by Euromoney in 4 categories • First MUR denominated Forex derivative hedging in the World • Largest on-shore Foreign Exchange transaction • Advisor to “Waste to Energy” Project & Casino Bid • Advisor to on Debt Capital Market reforms in Mauritius
7
Challenges
o Advisory and risk management services o Corporate Finance o Project Finance o Debt Capital Markets o Challenges remain with liquidity and term funding but are manageable
8
4 Opportunities
o Rollout of core Transactional Banking Products & Services o Trade Finance o Global Transactional Banking ( NBOL/ PALM/ Internet Banking ) o Custody o Focus on key target markets and customer segments o Growth Sectors in the Domestic economy o International network o China / India Trade clients
9
Kenya
5 Kenya financial results
o Headline earnings of R91m in 2008 • Up 9% in ZAR
• Down 3% in LC
11
Bank profile
o Universal Bank o CfC Stanbic Bank Limited was born following the merger of the banking business of CfC Bank and Stanbic Bank Kenya Limited on 1 June 2008 o Number of staff : 680 o Number of branches : 16 o Number of ATMs : 31 o Market share – Loans 7% o Market share – Deposits 7%
12
6 A day in the life of CFC Stanbic Bank Kenya
o Central Bank of Kenya and South Africa Reserve Bank regulatory bodies o Main competitors • Barclays, Standard Chartered, KCB, Equity, Citibank
o Deals • Payments System for Tea Sector • Kenya Pipeline Corp. US$ 100mn loan syndication • Safaricom – Joint mandate to raise US$250mn
13
Challenges
o Global financial crisis & slow domestic growth o Subdued local business environment o Non presence in major towns o Strains in Coalition Government
14
7 Opportunities
o Merger synergies o Regional hub for major international organisations o China investments through ICBC o Business • Grow organically or by acquisition o Political stability of the grand coalition government o Economy • Short term weakened domestic growth • Increased cost of doing business o Social o Focus on infrastructure development • transport, power and telecommunications
15
16
8 Tanzania
Tanzania
9 Tanzania financial results
o Headline earnings of R68m in 2008 • Up 54% in ZAR
• Up 29% in LC
• CAGR since 2000 in ZAR 20%
19
Bank profile
o Fully fledged commercial service bank targeting both Corporate clients and Personal and Business Banking o Number of staff : 304 o Number of branches : 9 o Number of ATMs : 18 o Market share – Loans 10% o Market share – Deposits 9% o Recognized as the Best Bank inTanzania in 2008, by The Banker
20
10 A day in the life of Stanbic Bank Tanzania
o Established in Tanzania in 1995, with 10 branches in the country’s important economic zones with a good relationship with Bank of Tanzania o Core activities include retail, corporate and global markets operations o Major competitors • NMB (local with shares from Rabobank) • CRDB (local) • NBC (local with shares from Absa) • Standard Chartered • Citibank • Barclays Bank o Deals • Syndication of Tanesco (major power company, US$250m) • Lead arranger Celtel deal (US$270m) • Vodacom sydication (US$60m) • Lead arranger Tigo (US$110)
21
Challenges
o Liquidity (local currency) o Attracting, motivating and retaining key staff o Brand Profile (confusion with Standard Chartered) o Legal environment (contract enforcement and frauds)
22
11 Opportunities
o A healthy deal pipeline exists to achieve reasonable growth in loans and advances while improving our long term liquidity
o Potential growth on the medium/high net worth retail space o Strategy focus on the Chinese Market
23
Uganda
12 Uganda
Uganda financial results
o Headline earnings of R298m in 2008 • Up 72% in ZAR and • Up 48% in LC • CAGR since 2000 26%
26
13 Bank profile
o Universal bank which became the largest bank in Uganda after the acquisition of Government owned Uganda Commercial Bank in 2002 o Added retail bankinggpg to historical corporate banking o Number of staff : 1 339 o Number of branches : 68 o Number of ATMs : 136 o Market share – Loans 23% o Market share – Deposits 27% o Number of licensed banks in operation 22
27
Challenges
o Lower than projected economic growth • Government and IMF estimate between 5.5% - 6% compared to 8-9% achieved over the last ten years
o Managing the impact of the global economic crisis on our customers o Reduction in inward foreign exchange flows o Newly licensed banks beginning to settle down • increasing competition, particularly for liabilities o Efficiently servicing large numbers of customers o New entrants into the market
28
14 Opportunities
o Discovery of oil o Infrastructure investement • Inadequate supply of electricity
o Growth in business banking sector o Leverage off large Branch network
29
Questions
15 Dennis Kennedy Regional Managing Director
Lesotho, Ghana, Botswana and Democratic Republic of Congo
Mediterranean TUNISIA Sea MOROCCO
ALGERIA WESTERN LIBYA SAHARA EGYPT
Red MAURITANIA Sea
MALI
NIGER ERITREA
SENEGAL THE CHAD SUDAN GAMBIA DJIBOUTI BURKINA
GUINEA GUINEA BISSAU BENIN NIGERIA TOGO ETHIOPIA CENTRAL SIERRA DTVOIRE GHANA LEONE AFRICAN REPUBLIC LIBERIA CAMEROON
DEMOCRATIC UGANDA SOMALIA EQUATORIAL REP. OF REPUBLIC KENYA GUINEA THE OF THE CONGO GABON CONGO (ZAIRE) Indian RWANDA
BURUNDI Ocean ANGOLA TANZANIA
ANGOLA MALAWI
ZAMBIA
MOZAMBIQUE MADAGASCAR ZIMBABWE NAMIBIA
BOTSWANA
SWAZILAND LESOTHO Indian SOUTH MAURITIUS AFRICA Ocean
1 LESOTHO
Lesotho financial results
o Headline earnings of R106m in 2008 • Up 49% in ZAR and LC • CAGR since 2000 19%
4
2 Bank profile
o Universal Bank, strong PBB and CIB franchise o Number of staff : 518 o NbNumber o fbhf branches : 15 o Number of ATMs : 38 o Market share – Loans 70% o Market share – Deposits 63% o Achievements – 2008 • Bank of the Year – Banker Magazine • Bank of the Year – PMR Magazine • Best asset manager in Lesotho
5
A day in the life of Standard Lesotho Bank
o Three of the big 4 South African banks operating in the market o Cooperation between ministry of finance and central bank involvement in the deve lopmen t o f the financ ia l sec tor o Continued focus on service and back office efficiency due to competitive environment o High liquidity levels and low loan/deposit ratio’s with local Alco team working with CIB Johannesburg seeking yield opportunities o Staff retention an ongoing challenge with new market entrants o Monitor stress in the textile and diamond sectors due to economic downturn
6
3 Challenges
o Lesotho economy affected by adverse impact on local textile sector o Dominant market share makes us prime target for competitors o Staff retention, skills migration to South Africa
7
Opportunities
o Utilise deposit base to enhance yield o Leverage market share via increased cross sales o Customer service and back office efficiency o Cautious and prudent plan for 2009
8
4 GHANA
Ghana financial results
o Headline earnings of R116m in 2008 • Up 63% in ZAR
• Up 62% in LC
• CAGR since 2000 in ZAR 70%
10
5 Bank profile
o Universal Bank, developing PBB franchise o Number of staff : 436 o NbNumber o fbhf branches : 21 o Number of ATMs : 21 o Market share – Loans 5% o Market share – Deposits 6% o Achievements 2008 • 11 new branches opened • 10 new ATM’s installed • 6th largest bank on profitability measure
11
A day in the life of Standard Bank Ghana
o Competitive market with 25 banks and a number of new entrants from Nigeria o Liquidity management critical • currently wholesale funded base o Target new branch activity on transactional and deposit accounts o Manage cost of organic growth driven branch rollout o Work with specialists in London, New York, Johannesburg and China, on development of the offshore oil fields and general infrastructure o Enhance parastatal and government relationships on power and agriculture sectors o Staff training on product and risk skills given rapid branch rollout o Risk assurance and control measures closely monitored given branch expansion
12
6 Challenges
o Ghana economy vulnerable to external shock due to relatively low reserves o Major exports of gold and cocoa holding up well but slowdown in donor flow andfd forei gn rem ittances o New Government with no major policy shifts o Develop retail funding base to enhance long term funding ratio
13
Opportunities
o Offshore oil holds good prospects 2011/2012 onwards o Expand retail base, loan product opportunity o Bank consolidation after rapid branch expansion o Further expansion in China/Africa infrastructure development o Excellent future potential, given democratic commitment in country and good policy choices
14
7 BOTSWANA
Botswana financial results
o Headline earnings of R155m in 2008 • Up 23% in ZAR • Up 15% in LC • CAGR since 2000 in ZAR 21%
16
8 Bank profile
o Universal Bank – previously strong CIB base but now 50/50 o Number of staff : 480 o Number of branches : 9 o Number of ATMs : 14 o Market share – Loans 17% o Market share – Deposits 19% o Achievements 2008 • 3 new branches opened • Debt deal of the year – Currency Trader Magazine • Bank of the Year – Banker Magazine • Focussed marketing on key industries and major corporates has enhanced quality of our base
17
A day in the life of Stanbic Bank Botswana
o Competitive market with 4 major banks and 4 smaller banks o Liaise with product houses and specialists to support the diversification didrive o f governmen t o Liaise with teams in London, Johannesburg and China to support government spend on infrastructure o Monitor trends in property market, commercial and residential given fall in GDP in 2009 o Staff retention an ongoing challenge with new market entrants o Monitor loan book following downturn in mining sector and the knock-on effect on downstream suppliers to the sector
18
9 Challenges
o Botswana economy facing difficult period – collapse in Diamond prices o 40 years of fiscal discipline, 28 months import cover, providing for a rainy day o Wholesale funding dominates deposit structure, continue seeking greater stability in long-term funding ratio o Manage book quality given economic stresses
19
Opportunities
o Government spend on infrastructure creating opportunities in power, water, roads, university etc. o FthFurther expansi iithChi/Afiifttdon in the China/Africa infrastructure deve lopmen t o Cautious and prudent plans for 2009 targeting specific opportunities
20
10 DEMOCRATIC REPUBLIC OF CONGO
DRC financial results
o Headline earnings of R3m in 2008 • Down 70% in ZAR
• Down 77% in LC
22
11 Bank profile
o CIB Bank (wholesale) o Number of staff : 82 o NbNumber o fbhf branches : 2 o Market share – Loans 5% o Market share – Deposits 6% o Achievements 2008 • Opened new branch in Lubumbashi • Bank of the year – Banker Magazine
23
A day in the life of Stanbic Bank DRC
o Competitive environment • Citi and Stanbic Bank only international banks • 13 banks operating, with new entrants from Nigeria o Staff retention an ongoing challenge with new market entrants o Manage risk given fragile institutional frameworks o Maintain focus on multi-national companies, top South African corporates and Government and International Organisations o ALCO focus on liquidity management given dollarised economy
24
12 Challenges
o DRC economy vulnerable to external shocks, especially mining sector o Business environment still challenging with political instability o Dollarised economy, funding is an ongoing challenge
25
Opportunities
o Re-building of infrastructure, the China impact in DRC o Mineral wealth remains a big opportunity once commodity prices stabilise o Enhance global CIB relationships in multi-national corporations, South African corporates and Government and International organisations o Cautious and prudent approach for 2009 plan
26
13 Questions
14 Dr Alewyn Burger
RMD Namibia and COO Standard Bank Africa (IT & Operations)
Mediterranean TUNISIA Sea MOROCCO
ALGERIA WESTERN LIBYA SAHARA EGYPT
Red MAURITANIA Sea MALI NIGER ERITREA SENEGAL THE CHAD SUDAN GAMBIA DJIBOUTI BURKINA GUINEA GUINEA BISSAU BENIN NIGERIA TOGO ETHIOPIA CENTRAL SIERRA DTVOIRE GHANA LEONE AFRICAN REPUBLIC LIBERIA CAMEROON
DEMOCRATIC UGANDA SOMALIA EQUATORIAL REP. OF REPUBLIC GUINEA THE KENYA OF THE CONGO GABON CONGO (ZAIRE) Indian RWANDA
BURUNDI Ocean ANGOLA TANZANIA
ANGOLA MALAWI
ZAMBIA MOZAMBIQUE MADAGASCAR ZIMBABWE NAMIBIA
BOOSTSWANA
SWAZILAND LESOTHO Indian SOUTH MAURITIUS AFRICA Ocean
1 Namibia
Namibia financial results
o Headline earnings of R308m in 2008 • Up 23% in ZAR and LC • CAGR since 2000 11%
4
2 Bank profile
o Full service universal bank offering products to the public, companies, local corporations and multi nationals
o 1 156 permanent employees o 43 Branches and agencies o 126 ATMs o Total lending market share 25% o Total deposits market share 27%
5
A day in the life of Standard Bank Namibia
o Dominant bank operating in the market o Continued focus on service and back office efficiency due to competitive environment
o Mature market with constant cost management o Staff retention an ongoing challenge with new market entrants
6
3 Challenges
o Economic slowdown evident with tightening of credit criteria o Localisation of core banking systems with significant local processing capabilities
o Introduction of new regulatory requirements in the form of Basel II o Political pressure on pricing and fees o Easing of monetary policy o Attracting, motivating and retaining key staff
7
Opportunities
o Expansionary national budget o Local stimulation of the economy by the national government shou ld a dvance the tim ing o f long term pro jec ts
o Strong uranium prices continue to present opportunities in the mining space
o Rollout of bancassurance in conjunction with Liberty Life Namibia
8
4 Standard Bank Africa Operations
Standard Bank Africa - operations
o Strategic objectives • To be knowledgeable partners forming an integral part of business decisions and solutions • Enable in-country businesses to achieve their objectives through operational improvement and support • Improve business processes and procedures • Improve cost-to-income ratio by focusing on cost reduction and strategic procurement alliances • Implement minimum security standards • Improve operational risk profile in Stanbic Africa by ensuring adherence to laid down policies and procedures
10
5 Change the Bank
o Cash management • Determine the cash value chain per country to reduce the overall cost of cash processing and provide a framework for the distribution of cash to branches and ATM fulfilment across the network • Implement an automated cash management system to re-engineer disparate business processes within the cash centres o Business process management • Identify and re-engineer business processes to eliminate non value add activities • Continuous improvement and process optimisation to achieve cost reduction and improve customer service
11
Change the Bank cont.
o Productivity services • Use organisational analysis to entrench all aspects of organisational design and ppyroductivity and headcount mana gppgement principles • Develop a resourcing model that enables the branch network to optimise on resource utilisation o Projects and operations support • Process modelling, design and implementation of assigned projects • Improve credibility through effective delivery and implementation of operational projects within the agreed timeframe and costs • Update and align group reference guide (GRG) to business processes and procedures
12
6 Property, premises and integrity
o Property Department • Leasing • Stand ar dise the leas ing o f prem ises across Stan dar d Ban k Afr ica within the legal framework of each country • Structuring and vetting all lease agreements • Property management • Managing and controlling the operating costs on all Bank owned properties and 3rd party leases • Property asset management • Bank owned property valuations, new property developments, sale and purchasing of all Bank owned properties
13
Property, premises and integrity cont.
o Premises Department The implementation of premises projects for all points of representation with regards to: • Premises design/kit of parts/new look and feel • Procurement of material and appointment of contractors • Shipping of material • Project management of all installations o Integgyrity • Support countries in their efforts to reduce operational losses • Assist countries in improving their overall level of compliance
14
7 Operations support
o Regional operations managers • Supporting operations within a country and serve as a conduit for the country to raise issues and seek guidance • Facilitate training for key roles within a country • Drive delivery of key processes and procedures in the areas of risk, cash management, security and procurement • Identify improvements in capacity planning and procurement
15
Operations support
o Global markets • Build a reliable and scalable back office system with maximum processing efficiency • Align systems, processes and protocol with South Africa where possible and ensure risk mitigation o Trade services • Create a trade centre of excellence and reduce the branch involvement in trade • Customer at the forefront of decisiodecisionn on processing model and the proposed new standardised processing platform
16
8 Operations support
o Transactional products and services • The primary focus of the Africa support programme has been on the rollout of Africa Trade Gatewayy( (ATG) for multi national cong lomerates • Implementation of customer contact centres to support new business online roll out
17
Supply chain management services
o Optimisation of procurement • Implementation and entrenchment of strategic sourcing methodology as a wayygp of doing procurement • Establish procurement uniformity across countries through deployment of governance framework • Provide guidance and support to procurement in countries on various aspects of sourcing and procuring goods and services • Establish enterprise wide contracts for commonly used products and services. • Establishment of country specific service level agreements
18
9 Special projects
o The purpose is to drive key strategic projects for the Bank across its geographic expanse. There are currently 3 projects on the go • African riggypour 2009 which focuses on key operational areas in need of attention across Africa • The establishment of a greenfields bank and the take up of the banking license in Angola • Establishing a new area for end-to-end business project which will include change management relating to these projects
19
Standard Bank Africa Information technology
10 Banking industry context: Increasing complexity
Banks’ quest to differentiate and build scale has dramatically increased complexity over the past decades 1980s 2000s Specific Issue Client examples
EFTPOS • Confusion caused • 43 different New Channels 3rd Parties Branch by multiple products transactions accounts ATM Supermark Customer et Telephone - IVR that meet the same at a top 100 bank Telephon Branch ATM Complexity need e Financial Advisor Post Office Internet • Frustration caused • 30+ product by duplicate application forms a information requests New Products# Products - Top 100 Bank major Australian bank >350 • Duplication of • 40+ processing centres processes and with target of 5-7 for < 100 Back-Office resources one client Today Complexity 1985 • Too many products, • Of a range of 350+, the Young Youth which are mostly average salesperson New Segments FamiliesInvestors unprofitable makes 90% of their Personal Retirees Small sales from 6 products Business Business Mid (large US bank) Large Corporat Market e Global Business • Duplication of • 7 product systems for Corporat e IT capability across savings accounts vs Value of Global FS M&A silos due to lack of target of 2 and 15+ A Wave of >540B Complexity US$B standards data warehouses at EU Mergers… bank < 100B • Multiplicity of • 50 primary, 150 interfaces secondary interfaces to 1990 1999 primary account keeping system Source: Accenture High Performance Banking Model 21
The next generation of high performers will exhibit 3 core attributes
…prioritise execution as a core capability: managing the investments & risks of changgpe prog rams creating a culture to stick to the strategy operationally …simplicity in everything they do: Execution standardised products, mastery …a clear view of what processes & systems makes them unique – identifying where they need whether product, service, scale and how to get it brand or business mode
Differentiate Simplify on on the the inside outside
22
11 Design principles of standardised solution
o Elimination of duplicate functions/processes o Optimised straight through processing across the organisation o Flexibility for rapid product development and business expansion o Transportability for rapid deployment o Lower TCO to provide improved ROI o Modern technology architecture for quicker adoption of new developments in technology o Lesser complexity o International Industry Standards applied o Integrated modular approach for customisable deployment but with organisational alignment o Upgrade path from vendor with global customers driving new innovation o Generic International skills market to support
23
Benefits of a standardised systems approach
o Accelerated requirements mapping and design o Construct new product from solution inventory o Pre-configured end-to-end business scenarios ⇒ Reduces implementation time and costs Faster
Banking Solution Factory
ClComplete RliblReliable
o Accumulated Best Practices deliver complete o Continuously growing knowledge base (skills) business expertise to enhance competitiveness o Growing solution inventory for all to use and pre- o Implementation methodology & accelerators tested and proven o Capacity building, skills transfer and ownership o Repeatability, re-use, quality (reduced risk) o ⇒ Optimizes business processes & ensures ROI ⇒ A safe investment
24
12 Current Standard Bank IT context
Faced with disparate IT systems across Africa, escalating maintenance costs and inefficient operations, Standard Bank has embarked on an IT transformation journey to achieve the following targets:
o Rationalise IT costs: Systems, Operations and Organization
o Make systems evolution and maintenance cheaper and easier
o Develop interchangeable operational standards
o Efficiency Improvement (CIR)
o Efficient software and product evolution
o Improve universal service delivery
o Streamline and integrate Back Office operations
o Maximize the commercial franchise
o Improve group reporting and control
25
Current Standard Bank IT context cont.
The transformation journey will be a multi year program including: o Infrastructure o Communications and Network o Universal Core Banking Solution for all market segments (Corporate, Wealth, Business and Personal Banking) o Channels o Peripheral Systems
26
13 Progress to date
o Infrastructure – well advanced o Communications – improving, continental service to be awarded soon o Core Banking – Zimbabwe compp,gleted, Nigeria started o Channels – well advanced (internet banking, mobile, Bol) o Peripheral Systems (in progress)
27
Questions
14 Global Markets Guido Haller, Head Global Markets Standard Bank Africa
Overview
o Client and business focus o The business model o A rappyidly evolvin g business
1
1 Client and business focus
Global markets business focus
o Servicing Standard Bank’ s clients for their African treasury needs o Supporting Standard Bank Africa’s asset funding and liability management needs
2
Products and clients
Product and client focus o Core Products • Foreign exchange • Term interest rate • Money market • Credit • Repo’s o Clients • Multinationals • Local corporates • Developmental institutions • Offshore and onshore portfolio investors • Banks
3
2 Clients and business focus
Revenues by Country
Lesotho Swaziland Mauritius Congo Namibia Ghana Tanzania Nigeria Botswana Kenya
Uganda
Malawi
JHB London (Africa Desk) (Africa Desk) Mozambique Zambia
4
Clients and business focus
Distribution of daily trading revenues 2008
60
50
40
30 Frequency 20
10
0
USD m
Total of 8 down days for global markets Africa in 2008
5
3 Business model
Coverage Issuers / Consumers Clients serviced with funding, working capital, hedges & liability management tools
Lagos Nairobi Lusaka
Corporates Bank Governments
Global Markets Foreign Exchange Interest Rates
ALM & Money Markets Trading
Client Finance Credit Trading Sales & Sales & Structuring
Research Credit Sales Syndication Distribution London Joburg New York etc…
Investors / Producers Distribution-led demand determines risk-taking ability of Global Markets – repackaging risk in structured/leveraged format to provide access to illiquid and exotic markets High Volume, Low Complexity
Low Volume, High Complexity
6
Business model The banks transactional engine room - example Single loan stimulates numerous risk redistribution & trading opportunities
5 Year NGN1,470m Fixed Rate Loan Investment Banking Govern- 5 Year 3 Year NGN1,470m USD7.5m CLN ment Fixed Rate Loan Issuer Hedge Fund Credit Trading Client
Nigerian 5 Year USD2.5m FX & Local Currency IR Floating Loan Importer 5 Year NGN/USD 10m USD10m CCIR swap Coverage
USD/NGN Distribution Spot FX 5 Year Money Markets USD7.5m Fix/Floating IRS
NGN 1,470m Repo plus sale of collateral to create fixed rate hedge
Flow of credit risk Flow of NGN Fixed interest - NGN Nigeria Interbank Flow of USD Naira repo plus bond sale Floating interest - USD 7
4 Business model Delivering product expertise to our clients
Global market Africa product hub in London • Cross border structuring & distribution
Regional global market hubs in Lagos, Nairobi & Johannesburg • Derivatives marketing & specialist functions • Critical mass of opportunity to attract and retain top staff • Bring global markets expertise closer to our clients/ transaction opportunities 4 41 Global market centres – Investment in client coverage 12 12 • More proactive sales model with cross product 2 capabilities 9 • Trading focus on effective market making in flow products (foreign exchange, money market and 13 22 17 bond trading) 6 7 10 13 Leverage the comparative strength of our in country 3 presence by bringing product capabilities closer to clients 4
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Business model
Competitive advantages
The combination of our relative skills across Standard Bank Africa, combined with Johannesburg and International ggpgpglobal market platforms gives us a competitive edge o Standard Bank Africa global market centres • Close to client/ integrated into the banking franchise • In country balance sheet • Market information, close to policy makers o Johannesburg • Strong foreign exchange trading skills built from the development of the SA capital markets • World class ALM and risk control functions o London • Exotic emerging market risk management and structuring skills • Established African risk distribution platform • Leading African research team
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5 A rapidly evolving business
Pre 2006 2006-2007 2008 -
LC Bond Mkts Development Offshore Portfolio Investors Highly Regulated Onshore Financial Deregulation / FX Yield Curve Extension Illiquid FX Markets Sophisticated Corporate Liquidity Business Treasuries Environment Offshore Portfolio Investors Cross Sophisticated Risk Mgmt needs Mainly GIO and DFI flow Commodity Driven Export Increase Pricing Transparency Border FDI Increase
Bonds and MM Simple Local Currency Derivs FX Product FX Fwds Struct Financing Solutions
Proactive Sales Servicing CIB/PBB Franchise Proactive Client Partnership with Global Business Cross Border GIO / Multi- Offshore Distribution CIB national FX Repackaging and Research Focus Systems and Processes Markets Africa ALM African Currency Prop Trading
Centralised Trading & Sales Business Country Focus Matrix Product / Country support Coordination to leverage Regional Hubs to transfer JHB Mgmt Support Structure offshore clients Skills Onshore Onshore GM Platforms
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A rapidly evolving business
Revenue contribution by Product
2006 2008 10% 20%
4% 56%
20% 90%
FX Fixed Income FX Local Curr IR MM & Interest Fixed Income
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6 A rapidly evolving business
Revenue Growth
Acquisitions in 300 Kenya & Nigeria operational 250 Offshore impact 200 Sales Model roll out 150
100
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0 2005 2006 2007 2008 Africa SA London
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Questions
7 Jonathan Wood
Global Head of Project Finance
Corppgorate and Investment Banking
Project Finance at Standard Bank
o One of 5 Investment Banking products that are globally managed o 65 professionals in 5 centres – Johannesburggg, London, Lagos, Sao Paulo, Beijing
o Core markets – Africa, Russia, Turkey, Brazil, South East Asia o Focus sectors include Mining, Oil & Gas, Power and Infrastructure o Strong relationships with development finance institutions (DFI’s) and export credit agencies (ECA’s)
o Our modus operandi is to package lending with advisory and other value- add products. Thus a strong structuring culture (often the modelling or technical bank)
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1 Emerging Market franchise
Significance of Project Finance for Standard Bank o Our core markets are resource rich and infrastructure poor
o Cross border connectivity, especially China play
o Co-incidence with client centric model (great client proximity)
o Cross sell opportunities (hedging, foreign exchange, transactional banking, deposits)
o Development agenda – projects often transformational, politically visible, and require environmental impact mitigation
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Current market conditions
o Mixed sector outlook • Mining deals being restructured / shelved • Oil & Gas projects being re-evaluated for lower price decks • Power & Infrastructure pipeline still strong
o Liquidity crisis affecting most deals • Large underwritings have been replaced by club deals • Tenors and gearing reduced • Pricing and covenants increased • Flex and market disruption clauses now the norm
o Standard Bank has some advantages • Links with Chinese credit sources • Long standing relationships with DFI’s have born fruit (AfDB, FMO etc) • Local capital markets access • Advisory capacity
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2 Facilitating cross border emerging market investment into Africa
TAV Tunisia Airports EUR600m
Advising HCH (and Strabag) on US$900m Indorama’s Eleme Nairobi Toll Road Petrochemicals US$300m refurb
Illovo on US$160m MTN Nigeria ZamSugar expansion US$2bn refinance
BPC/CNEC on Morupule Vale (CVRD) on Power Project US$850m US$1bn Moatize (with ICBC) Project
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A lifecycle of opportunity
Product Opportunity (example)
M&A Advisory/ leverage (CMG/Sasol, Tupras)
ECM / IPO Advisory/ underwriting (Copperbelt Energy, Celtel Zambia)
Expansion/ refinancing Refi Advisory/ underwriting (TRAC N4, Sasol Temane pipeline) (often DCM)
• Project Advisory (Nairobi Toll Road, Moatize) Greenfield Project • Bridge Finance (Zorlu, TAV) (usually banks, DFIs) • Prop Equity (Sinogold, Nairobi Toll Road) • Debt Arranging and Underwriting • Hedging
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3 Case study – Lekki-Epe Expressway
Source of Funding USD Millions Percent of (N120 = $1) Total Funding
Local Equity (ARM, Larue, Hitech) 33 8% International Equity (AIIF) 25 6%
Mezzanine (Lagos State) 42 10%
Total “Equity” 99 23%
Revenue During Construction 100 23%
Local Bank Debt (FBN, UBA etc) 73 17%
International Bank Debt (Standard Bank) 92 22%
Development Finance (AfDB) 62 15%
Total “Debt” 227 53%
Total Funding 426 100%
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Key Transactions and Accolades
Euromoney The Banker
Best Bank on the African continent (2008) African Bank of the Year (2008) Best Bond House for Stanbic IBTC Bank (2008) Most Innovative Bank in Trade and Project Finance (2008) Best Debt House in Nigeria (2008) Celtel Tanzania (2007) Best Project Finance House in Africa (2007) Lumwana copper project, Zambia (2007)
Africa Investor Project Finance International
African Transport Deal of the Year – Lekki African Infrastructure Deal of the Year – Lekki Expressway (2008) Expressway (2008) Infrastructure Deal of the Year – Gautrain high-speed African Power Deal of the Year – Rabai Power rail link, South Africa (2007) Project, Kenya (2008)
Euromoney Project Finance Magazine Emeafinance Magazine
African PPP Deal of the Year – Lekki Expressway Best Investment Bank in Africa (2008) (2008) Best Bank in South Africa (2008) African Transport PPP Deal of the Year – TAV Tunisie (2008) Middle East Transport Deal of the Year – Red Sea Gateway, Saudi Arabia (2007)
Breaking News: Standard Bank wins the Infrastructure Journal 2008 Transport Financial Advisor of the Year
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4 Infrastructure credentials
Lekki Concession Strabag/HCH Gautrain Trans African Concessions
Roads USD 430 million USD 900 million ZAR 20 billion ZAR 3 billion
& Rail Toll Road, Nigeria Nairobi Northern Corridor Toll Road High speed Rail Toll Road Refinancing Advisor/Lender Advisor & Mandated Lead Arranger Arranger/Underwriter Underwriter/Arranger
mps Tusdeer Maputo Port Monastir & Enfidha A.P.Moller-Maersk & Airport Concessions Bollore Consortium
Ports & USD 500 million USD 70 million EUR 600 million USD 60 million
Airports Container Terminal, Saudi Arabia Port Concession Mandated Lead Arranger Tema Port Advisor, Arranger Advisor/Arranger and Underwriter Lead Arranger and Underwriter
Botswana Power Gamma Energy Ltd Geometric Power Copperbelt Energy Corporation Waste-to-Energy Project Nigeria Corporation
Power Current Current USD 90 million USD 825 million USD 140 million USD 206 million
Bridge Facility Joint MLA with ICBC Mandated Lead Arranger Acquisition Finance Facility Co-Lead Arranger Financial Advisor & Co-Underwriter
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Oil & gas / industrial / mining credentials
Afren Okoro Ltd Oando Trading Ltd Tullow Oil plc Matola Gas Company SARL Nigeria Nigeria Mozambique Oil & Gas USD 200 million USD 42 million USD 1.8 billion Current USD 25.5 million Senior Secured Borrowing Refined Oil Imports & Senior Secured Revolving Base Facility Borrowing Base Facility Arranger of refinance facilities and Hedggging Facilit y Senior Lead Mandated Arranger Carbon Credit-backed facilities Arranger and Underwriter
Moatize Coal and related Zambia Zambia Paladin Resources infrastructure project
Mining US$400 million USD 584 million USD 130 million USD 1.5 billion Corporate Facility Financing of the Lumwana Langer Heinrich Uranium Project Financial Advisor Lead Arranger copper project Joint Arranger & Leader Senior Facilities Coordinator and Lead Arranger
INDORAMA
Zambia Sugar plc Eleme Petrochemicals Lafarge Cement WAPCO Expansion Project Limited, Nigeria Nigeria Plc Industrial USD 125 million €225 million USD 160 million (Multi-Currency) equivalent in ZMK Financial Arranger Medium Term Loan Facility Joint Mandated Lead Arrangers Mandated Lead Arranger & Underwriter
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5 Questions
6 Jacques Taylor Head, Agricultural Banking Standard Bank Africa
Definition of Agriculture 2
Wholesale buyers of Agricultural Inputs Production produce for the purpose of: Processing Input suppliers
Omnia Processing plants
Monsanto Millers
Barlow World Abattoirs John Deere Packaging & distribution Input retailers
Co-operations Export companies
Afgri Cold storage & transport Service providers Silo owners Croppp insurance providers
Crop spray companies Trade
Irrigation companies Freshmark
Marketing companies Grain traders
Secondary Agricultural Primary Agricultural Secondary Agricultural business business business
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1 Agriculture in Africa
o The cost of producing food in first world countries is high and land is scarce. Sub – Sahara Africa has enormous natural, physical and human potential. The continent uses less than 25% of the arable land and less than 14% of the irrigation potential
o Glo ba lly the deman d for foo d r ises 3. 3% per annum w hils t the supp ly o f lan d a t bes t 1% per annum;
o Africa’s total food demand is roughly $50B annually and is estimated to grow to $100B by 2015
o Africa’s use of fertilizer is only 2% of the world average with Tanzania having the lowest average in the world
o Cereal yield is the lowest in Sub-Saharan Africa (1,3t/ha) compared to 3,5t/ha in Europe and 5,5t/ha in North America
o In the America's, farmland is being lost to development at the rate of 2,880 acres a day - 425, 600 hectares per year
o In the last decade China lost 8m hectares to urbanization
o Agriculture is the engine for economic growth - Traditional agriculture can be transformed rapidly into a modern sector through adoption of science-based technology
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Agriculture in Africa: Size of the opportunity
Country Ghana Kenya Namibia Zambia Nigeria Uganda Mozambique Tanzania
GDP 15 35 7 15 211 16 10 20 ($ billion) Agric % of 40% 28% 6% 13% 42% 16% 24% 45% GDP Agric’s share 19% 36% 21% - - 41% 11% 16% of FX earnings
o Agriculture makes up 30 – 40% of Africa’s GDP;
o Accounts for a major share of foreign exchange earnings throughout the continent;
o 60% - 70% of agricultural produce is produced by small farmers and is the exact area the donor community is looking to develop;
o Agriculture employs +- 75% of Africa’s population.
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2 Integrated offering
Agricultural Banking
Execution
Sales Network: Soft Commodity Structure Trade Investment BB & CIB Desk Finance Banking /Project Finance
Agric Specialists in country, Centralised Agric Credit Function Agric ‘Centre of Excellence’ at H/O Risk Multi Nationals
IT, Ops, Finance IT, & Corp Agric
Agri-Business & Commercial Agric
Small Scale Commercial Leverage off DFI’s
Smallholder Agriculture
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Agricultural banking offering
The Value Chain and Standard Bank’s Offering Pre Production Farming: Finance Harvesting/ Processing/ Buyer/ Producing Logistics/ Value (Agricultural Physical Value Adding/ External Off Chain Agric Export Production Stock Milling taker Products Loans)
Repurchase Invoice Agreements and discounting Term Loans; Facilitate / Input / Commodity finance Facilities Working provide: Production Allowing the mill/ Debtor facilities Standard capital; Price hedging Crop insurance Processor to procure Commodity Letters of Bank Asset instruments; / Weather Index at the optimal time. Finance Credit; Finance; Forward Offering Insurance Bank also offers: Bank also offers: Commodity Transactional contracts; Minimum price Working Capital; Working Capital; Finance; Products Secure markets; Contracts / Term Loans; Term Loans; Trade Savings Commodity Forward Asset Finance; Asset Finance; Finance Products finance contracts Transactional, Transactional, Savings and Savings and Investment products IttInvestment products
Soft Soft Commodity Structure Responsible Soft Commodity Commodit/ Structured Trade Division BB / CIB BB / CIB Structured Finance Structure Finance Finance / CIB Trade/ BB CIB CIB
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3 Smallholder Agriculture
Characteristics:
o Low yields o Low quality seeds o One of the lowest levels of fertiliser usage in the world o Lack of access to finance, insurance and price hedges o Lack of post harvest services o High production costs due to no economies of scale o Lack of enforceable market agreements or formal market access o Unstructured and fragmented private sector engagement
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Smallholder Agriculture
Summarised into 3 critical areas to be addressed:
oLarge scale access to farmer base Lack of Inadequate access to farming oSecure market linkages affordable practices finance oImproving farming productivity and post harvest practices
High production oDevelopment of a financing facility costs & no marketing agreements oPartnership facilitation, monitoring and evaluation
5 main activators identified for a “Fast track package of co-ordinated activities”
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4 Smallholder Agriculture: our approach
o “Risk Management” by way of contract farming where the bank can influence a farmer’s decisions regarding production and marketing. A fixed / hedged commodity price and weather insurance form the two cornerstones of the “contract farminggpp” approach
o Leverage off and work with larger donor organisations / NGO’s
o Essentially a wholesale model that leverages commercial aggregators in the value chain
o Through these aggregators, gain informed access to a large farmer base - access to smallholder farmers at scale
o Secure market linkage through aggregators
o Abilityyggggg to provide insurance and price hedging products at bulk aggregator level
o Resulting per farmer transaction and service cost is lowered
o Partnership with risk partners and technical assistance providers
o Opportunity to build a credit history of individual farmers in order to integrate into the formal banking economy
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Smallholder Agriculture: our approach
Land owned by Farmers have a right to occupy Community Africa Commodity Price Discovery Mechanism 2007 / 2008
Standard Bank developed a process to Management Assistance & Mark to Market all soft commodities it Intermediary Small Farmers off- take agreement SPV (private land) currently finances in countries where (Warehouse Commodity Exchanges are non prevalent exporter, miller) covering Zambia, Mozambique, Zimbabwe, Malawi, Kenya, Ethiopia and Working Capital / Tanzania by collating data from the local Production finance Strategic partner provides -market on a twice a week basis to guaranteed off take, ensure determine the real collateral value of its acceptable crop management Risk Partner assets in a African Country. 350 000 tons of Bank grains and fertilizers where funded traded 1st Loss by means of joint venture Guarantee partnerships in Southern Africa during 2008. Bank is also working with WFP
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5 Innovation
o Lesotho Small Farmers • Public Private Partnership with Lesotho Government • Started in the 2005/6 production season; • 2007 /8 season the Bank advanced R105m to 30 farmer groups; • Average yields have increased from 0.6tons per hectare to 2.5-3.5tons per hectare o Malawi Fertilizer • Award from: Global Trade Review , 2009 • Deal size: USD 56,5m; • In support of Malawi Government’s subsidy program for farmers; • Bank provided a end-to end solution to import fertilizer and manage price risk
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Innovation cont.
o Farmsecure Capital Pty Ltd • Trade Finance Deal of the Year award, 2009; • Standard Bank co-funded a US$ 100m facility; • Farmsecure provides production finance to maize and wheat producers through contract growing;
• Operations in South Africa, Zambia, Namibia and Botswana o Alliance for a Green Revolution: • Launched a US$100m agricultural fund in support of AGRA
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