Transcript Title slide – for printed pitch books only

Private and confidential
Nigeria Investment Themes
Nigeria/South Africa - Doing Business Together Workshop
June 2014
Contents
1
Section
1.
Introduction to Stanbic IBTC and Standard Bank Group
2.
Nigeria – Investment Themes
Private and confidential
Section 1
Introduction
Stanbic IBTC Bank and Standard Bank Group
Introduction
Key points
3
Stanbic IBTC Group

Background
Stanbic IBTC Holdings Plc (“Stanbic IBTC Group”) is a
financial Institution in Nigeria that offers end-to-end financial
services such as:

Stanbic IBTC emerged from the merger of Stanbic Bank
Nigeria Limited with IBTC Chartered Bank Plc in 2007

– Corporate and investment banking.
– Personal and business banking.
– Investment management and brokerage.

Sola David-Borha
Chief Executive
Stanbic IBTC Holdings PLC
Yinka Sanni
Chief Executive
Stanbic IBTC Bank PLC
Stanbic IBTC Bank
Plc is Nigeria's only
local bank with a
Fitch AAA rating.

Stanbic IBTC Bank Plc , a subsidiary of Stanbic IBTC
Holdings, is Nigeria's only local bank with a Fitch AAA rating.
Its investment banking subsidiary Stanbic IBTC Capital
Limited is the leading investment banking franchise in Nigeria
with excellent capabilities in advisory and capital markets
transactions.

Other Stanbic IBTC subsidiaries include the leading equities
brokerage firm and the leading pension fund administrator in
Nigeria.

Combines strong domestic coverage with regional and
international reach.

Stanbic IBTC Holdings is 53.2% owned by Standard Bank
Group and can draw on the deep resources within the group.
Key statistics
N213.5bn
Total assets
N763.0bn
Average no. of employees
2001
Merged with Stanbic
Nigeria and Standard
Bank gained control of
the combined entity in
a US$1bn transaction
2005
Incorporated as Investment
Banking & Trust Company
Limited and commenced
operations as a Merchant bank
2007

Holding Company
Structure was
adopted. Stanbic
IBTC Capital
emerged from this
process
2012

Listed on the NSE on 25 April 2005

Merged with Chartered Bank & Regent
Bank and changed name to IBTC
Chartered Bank Plc
Vast Branch Network Across Nigeria

176
branches
nationwide
2013
Market capitalisation
PAT
1989


Obtained
Universal
Banking
Licence in
Nigeria
N20.8bn
2,077
Stanbic IBTC Bank’s presence
Standard Bank is Africa’s largest and leading bank
Key Points
Premier South
African based
financial services
group with on the
ground expertise
across Africa
4
Introduction and Overview

Premier South African-based financial services
group focused on Africa

Full service bank offering:
– Corporate & Investment Banking (“CIB”)
Standard Bank has expertise and specialist knowledge to effectively partner clients
in achieving their emerging market expansion ambitions
Relationship with ICBC (20.1% strategic equity interest in Standard Bank) provides
further international reach and strengthens Standard Bank’s access to what may
soon be the world’s largest economy
– Personal & Business Banking
– Investment Management and Life

Assurance

Global reach with presence in 31 countries

Distribution capabilities in world’s leading financial
centers including New York, London and Hong
Kong, China and Brazil

CIB provides corporate and investment banking
services to corporate clients, financial institutions
and international counterparties focused on
emerging markets around the world
Key statistics
Market capitalisation
– assets over $3.062 trillion

Nearly 100 international branches with
representation in, Frankfurt, Hong Kong,
London, Luxembourg, Macau, Moscow,
New York, Seoul, Singapore

Listed on the Hong Kong Stock Exchange
and the Shanghai Stock Exchange
2013
$20bn
Total assets
$162bn
Headline Earnings
$1.8bn
ROE
14.1%
Employees
Largest commercial bank in China
48, 808
Africa

18 countries
 1 283 branches
 9300 ATMs on the
African continent
Key regional offices
Rest of the World

13 countries outside
Africa

Offices in key financial
centres including
London, Moscow, New
York, Hong Kong,
Nairobi, Lagos, Sao
Paolo and Dubai
Standard Bank – Recent Accolades
Key points
Global Finance:
Best Investment
Bank in Africa (2012)
5
Select 2013, 2012 & 2011 Accolades










Best Bank for Payments and Collections in Africa
Best Foreign Exchange Bank and Provider in Africa
Best Investment Bank in Africa
Best Debt House in Africa
Best Investment Bank in South Africa
Best provider of Money Market Funds in Africa
Best Sub-Custodian in Nigeria
Best Trade Finance Bank in Africa
Best Trade Finance Bank in South Africa
Country awards for Best FX Provider in Nigeria
(Stanbic IBTC) and South Africa


African Bond Deal of the Year: Joint Winner for
restructuring of Senegal Debut Bond
Deal of the Year: Metorex acquisition by Jinchuan





Best Bank of the Year – South Africa
Best Investment Bank – Africa
The Banker: Top
Bank in Africa (2012)











Project Finance Deal of the Year:
Africa Power (2011)

Best Bank in Nigeria (2012)
Best Bank in Uganda (2012)
Best Risk Advisor in Africa (2012, 2011)
Best Debt House in Africa (2012, 2011)
Best M&A House in South Africa (2012)
Best Project Finance House in Africa (2012)
Best Private Banking Services overall for Mauritius
(2012)
Deal of the Year: Namibian debut 10year bond
transaction (2012)








First in Corporate Banking in South Africa
First in Foreign Exchange Trading in South Africa
(peer ranking)
First in Listings in South Africa (peer ranking)
First in Money Markets in South Africa (peer
ranking)



Accugas – African Midstream Oil & Gas Deal of the
Year
Nordstream – European Midstream Oil & Gas Deal
of the Year
Pulkovo–European Airport Deal of the Year
PA Resources – African Upstream Oil & Gas Deal
of the Year
Africa's top bank in The Banker magazine's annual
ranking of the world's top banks. Standard Bank
was ranked 112 out of the world's top 1000 banks
(2012)
Deal of the Year: Bonds: Joint bookrunner for
Namibia’s debut USD500 million 10 year 5.50%
Eurobond (2012)
Deal of the Year: Loans: Sole Lead Arranger and
Bookrunner for Helios Towers Tanzania USD85
million financing (2012)
Most Innovative Bank from Africa (2012)












Africa's top bank in The Banker magazine's annual
ranking of the world's top banks. Standard Bank
was ranked 112 out of the world's top 1000 banks
(2012)
Deal of the Year: Bonds: Joint bookrunner for
Namibia’s debut USD500 million 10 year 5.50%
Eurobond (2012)
Deal of the Year: Loans: Sole Lead Arranger and
Bookrunner for Helios Towers Tanzania USD85
million financing (2012)
Most Innovative Bank from Africa (2012)
Best cash management services in Africa
Best Investment Bank in Africa
Best Bank Malawi
Best Investment Bank in Angola
Best Investment Bank in Namibia
Best Investment Bank in Nigeria (awarded to
Stanbic IBTC Bank)
Best Investment Bank in Zambia
Best Local Investment Bank in South Africa
Accugas – African Midstream Oil & Gas Deal of the
Year (2011)
Deal of the Year: Africa Mining (2011)
Deal of the Year: Africa Oil & Gas (2011)
Deal of the Year: Africa Power (2011)
Deal of the Year: Africa Renewables (2011)
Nordstream – European Midstream Oil & Gas Deal
of the Year (2011)
Private and confidential
Section 2
Economic Overview of Nigeria
Nigeria: An Overview
Overview
Strong economic
growth forecast for
Nigeria in spite of
recent challenges

Nigeria is the largest economy in Africa

Africa’s largest consumer market with a population of 171
million people

Africa’s largest oil producer and 12th largest in the world,
producing high-value, low-sulfur content crude oil
Government policy
has been focused
 Third-largest recipient of FDI
on stabilizing the
financial services
 Oil & Gas reserves: 1,080MMbbl & 1.69tcf, 2013 production
sector, privatization
approx 1.8MM bpd
of key industries
 Sovereign Ratings (2012): Fitch: BB-, S&P: BB-, Moody’s:
and stimulating
Ba3
growth

7
Investment rationale

Largest population in Africa with positive demographic trends

Large proven oil and gas reserves

Generally constructive fiscal and monetary policies

Relatively low levels of government indebtedness

Major banking sector reforms have improved health of the
financial sector

Policies encouraging investment in key sectors
FX reserves (USD bn) : 36.9
The business environment

Good economic growth – over 6.5% annually

Focus on oil & gas and agricultural potential

USD 31bn trade surplus

Increased FDI

Key challenge is administration’s ability to deliver
Economic
change and implement structural reforms
Political

Hampered by bureaucratic bottlenecks

Population is young and growing

High unemployment

Increased internet connectivity and mobile phone
Socio-cultural
Technological
usage
Key risks

Economy remains heavily dependent on recycling oil earnings
through fiscal channels

Onshore oil production remains vulnerable to security
disruptions in the delta

Weak political / judicial institutions and physical infrastructure

Ethnic and religious differences continue to divide the country

Physical security and crime remain problematic
8
Nigeria Remains a Key Strategic Market in Sub-Saharan Africa
A regional hub for Western Africa
Southern Africa
Increasingly friendly
business environment
Within West Africa:
• Nigeria’s population is the largest on the African
continent and eight largest in the world
• Largest GDP in Africa
• US$37 billion in foreign reserves
• Huge hydrocarbon resources, the largest
producer of crude oil in Africa with the second
largest oil resources base in Africa and 8th
largest gas reserve base globally
• Nigeria is the emerging economic locomotive of
the African continent
East Africa
West Africa
Note: Size of bubble
reflects relative
GDP of each
country
C-Re locations
Increasing population
Sources: IMF World Economic Database, Standard Bank Group Economics, EIU.
Key Economic Reform Initiatives
GDP growth
trajectory alone is
unlikely to deliver
the overall uplifts
desired in quality of
life for consumers
Persistent inequality
of distribution and
the apparent lack of
upward mobility
Economic
inefficiencies that
give rise to a
sustained high cost
of living need to be
tackled in order to
elevate and
unshackle the
consumer
9
Power Sector

Government has concluded its divestiture of assets
from the PHCN; most were handed over on 1
November 2013

Introduction of appropriate pricing regime - ongoing

Contracting out the management of the Transmission
Company of Nigeria (TCN)

NIPP asset sales; preferred bidders identified,
payments have begun

Implementation of National Gas master plan, in order
to enhance fuel-to-power capabilities
Agricultural Transformation

Contributes 22%% of Nigeria's GDP; employs 70% of the
population in agriculture and related agro-business.

Identification of 10 key crops in which Nigeria is deemed
to have a competitive advantage and supporting the build
out of value chains

Policy of promoting local production through tariffs,
quotas on imports, with focus on key commodities (rice,
cassava, sorghum, cocoa and cotton)

Backward integration underway by large firms such as
UAC, Dangote, Flour Mills, Olam
Oil and Gas
Sovereign Wealth Fund

Accounts for 90% of foreign exchange earnings,70%
of government revenues

The spirit behind the SWF was to replace the ECA, which is
yet to occur

Introduction of Local Content Act 2010. Resulting in
divestment of IOCs from onshore asset operations
to more technologically intense offshore assets

The fund now stands at $1.55bn

The Nigeria Sovereign Investment Authority (NSIA) is
meant to invest excess crude revenues in three funds:

Local content policies for services companies. Skills
development occurring across the value chain

The Future Generations Fund (32.5%)

Nigerian Infrastructure Fund (32.5%)

Development of refining capacity necessary to
reduce import bill

Stabilization Fund (20%)

Petroleum Industry Bill yet to be passed. This will
result in a revision on how royalties are paid on
exploited oil.
Source: Stanbic IBTC Research
Other Key Investment Areas
Nigeria's
fundamentals will
provide long-term
demand for
infrastructure
Government policies
focused on
manufacturing
growth to provide
employment, reduce
import bill
Emerging consumer
sector needs to be
served with
appropriate goods,
retail experience
and communication
links
10
Infrastructure
Manufacturing
Nigeria's fundamentals will provide long-term demand
for infrastructure growth. A population of170mn with
a growing middle class will demand more houses,
more power and better transport links.

Historically under-developed sector – 70% of goods
consumed in Nigeria are imported

Government pursuing a policy of promoting local
manufacturing through tariffs, quotas on imports.

Huge infrastructure deficit


Many efforts underway (private, public, PPPs) to
bridge the gap
Assembly of automobiles by major OEMs expected to
commence in 2014

Projects underway include ports, highways, bridges,
airport, light rail

40% of sovereign wealth fund is dedicated to
infrastructure

FMCG and Retail

Nigeria’s growing affluent population has appetite for
well-produced consumer goods

Success seen by well-executed brands that meet
local needs and tastes (e.g. Indomie Noodles)

Nigeria significantly underserved with formal retail

Enabling real estate emerging slowly. Malls in major
ciities: Lagos (Ikeja and Palms), Abuja, Enugu, Port
Harcourt, Enugu

Interesting potential in serving mass market with
formal retail
Source: Stanbic IBTC Research
Telecoms and Technology

One of the great success stories of Nigeria’s economic
transformation; MTN Nigeria now larger than MTN South
Africa

Market well-penetrated with voice; focus is on data,
broadband links, quality of service

High adoption of digital services, forcing change on
traditional formats of banking and retail

Expect significant investments in upgrading IT services and
infrastructure
Conclusions
11
Nigeria Continues to be an Attractive Investment Market
As Africa’s largest
economy with a high
growth rate,
investors cannot
afford to ignore
Nigeria’s economy
and potential

The headlines surrounding the rebasing of the economy and Nigeria’s status as the
Africa’s largest economy have refocused investor interest on Nigeria

Economic reforms have resulted in strong historical growth and are likely to continue
to deliver similar performance going forward

Power reforms will change the face of Nigeria its just a question of timing

Successfully addressing structural bottlenecks that sustainably reduce the cost of
living and allow for more diversified consumer expenditure is key to the development
of the Nigerian consumer in our opinion

Security concerns have had a limited impact on economic growth, to this point

Foreign investors continue to have a meaningful role to play in spurring and
supporting economic growth.
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