Stanbic ibtc annual report 2008

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Stanbic ibtc annual report 2008

  1. 1. 08 Annual Report RC 125097
  2. 2. Being part of a bigger picture is exactly how we see our purpose in the financial services environment. In such a diverse world, finances are not just about money. They define how communities grow, work together and help connect solid ideas and practical innovations through improved networks. Our aim is to ensure that our customers are at the centre of our business and reap the reward of our combined strengths. This kind of cause and effect is no puzzle to us at Stanbic IBTC Bank PLC. We will continue to elevate the bar in real service delivery to all our customers. It is our connections and interlocking abilities that allow us to find the correct solution that really fits. From customers to shareholders to the capability of our people; every piece is essential for our vision. Overview Our vision values 4 Highlights 6 Stanbic IBTC - the group in brief 7 Recognition 10 Standard Bank Group at a glance 12 Business review 14 Chairman’s statement 16 Chief executive’s review 20 Economic review 23 Financial review 25 Executive committee 34 Personal and Business Banking 36 Corporate and Investment Banking 40 - Case study: The Lagos State Bond 44 - Case study: Lekki Concession Company (“LCC”) 46 - Case study: Lafarge Cement WAPCO Nigeria Limited 48 - Case study: MTN Nigeria Communications Limited (MTN Nigeria) 50 Wealth 52 Corporate governance risk management 54 Board of directors 56 Corporate governance report 58 Risk management 70 Annual financial statements 84 Directors’ report 86 Audit committee report 91 Consolidated financial statements 92 Report of the independent auditor 94 Statement of directors’ responsibilities 95 Statement of significant accounting policies 96 Balance sheet 100 Profit and loss account 101 Statement of consolidated cash flows 102 Notes to the consolidated financial statements 104 Statement of value added 133 Five year consolidated financial summary 134 Other information 136 Management team 138 Branch network 142 www.stanbicibtcbank.com Contents
  3. 3. Respecting each other We have the highest regard for the dignity of all people. We respect each other and what Stanbic IBTC stands for. We recognise that there are corresponding obligations associated with our individual rights. Our vision values One vision To be the best financial solutions team - the customer’s choice. We will deploy our local knowledge and global emerging market expertise to deliver superior value to all our stakeholders, We will only succeed if we are able to attract, retain, develop and deploy teams of people with energy, passion and skills. Eight values Growing our people We encourage and help our people to develop to their full potential and measure our leaders on how well they grow and challenge the people they lead. We, and all aspects of our work, are interdependent. We appreciate that, as teams, we can achieve much greater things than as individuals. We value teams within and across business units, divisions and countries. Working in teamsServing our customers We do everything in our power to ensure that we provide our customers with the products, services and solutions to suit their needs, provided that everything we do for them is based on sound business principles. We strive to stay ahead by anticipating rather than reacting, but our actions are always carefully considered. Delivering to our shareholders We understand that we earn the right to exist by providing appropriate long-term returns to our shareholders. We try extremely hard to meet our various targets and deliver on our commitments. Guarding against arrogance We have confidence in our ability to achieve ambitious goals and we celebrate success, but we never allow ourselves to become arrogant. Upholding the highest levels of integrity Our entire business model is based on trust and integrity as perceived by our stakeholders, especially our customers. Being proactive Overview
  4. 4. Stanbic IBTC the group in brief Stanbic IBTC highlights Stanbic IBTC bank’s results reflect the resilience of the group amidst continued global financial market turmoil. The strong capital position and healthy liquidity profile has positioned the bank to take advantage of business opportunities in its chosen growth markets. Subsidiaries Stanbic IBTC Asset Management Ltd. Stanbic IBTC Ventures Ltd. Stanbic IBTC Pension Managers Ltd. R.B. Resources Ltd. Stanbic Equities Ltd. Stanbic Nominees (Nigeria) Ltd. Overseas correspondent banks Australia and New Zealand Banking Group Citibank Commerzbank Credit Suisse Den Norske Deutsche Bank HSBC ING Financial Institutions Nordea Bank Standard Bank Group Standard Chartered Registered address head office Stanbic IBTC Bank PLC I.B.T.C. Place Walter Carrington Crescent P. O. Box 71707 Victoria Island Lagos, Nigeria Telephone: +234 (1) 2712400 Swift: SBICNGLX Facsmile: +234 (1) 2626541/2 E-Mail: info@stanbic.com Web: www.stanbicibtcbank.com 114% Gross revenue growth 32% Total loan growth 33% Deposit growth 52% Profit after tax growth 15% Return on equity Stanbic IBTC Bank PLC, a member of the Standard Bank Group is a full service universal bank with a clear focus on three main business pillars - Corporate Investment Banking, Personal Business Banking and Wealth Management. The Standard Bank Group, which has a controlling stake of 50.7% in Stanbic IBTC, has been in business for 146 years and is Africa’s largest banking group ranked by assets and earnings. The Stanbic IBTC Bank launch was announced in Lagos on 31 March 2008, signaling the successful conclusion of the merger. The launch of the merged entity was a significant step in the evolution of a new era of banking in Nigeria; assuming a leadership role in the transformation of the industry. Overview N61.2 billion Gross revenue Profit before tax Shareholders funds AAA Fitch rating N14.6 billion N80.7 billion
  5. 5. Overview A broad-based financial services business Stanbic IBTC has consolidated its position in Nigeria over the past 18 months as a diversified business with a strong capital position and proven track record. Through focusing on the three key business segments – Corporate Investment Banking, Personal Business Banking and Wealth, we have continued to leverage the skills, economies of scale and synergies that come from being part of an international group and our excellent Nigerian pedigree. Personal Business Banking (PBB) Gross revenue N14.4 billion Banking and other financial services to individual customers and small to medium sized enterprises. Wealth Gross revenue N9.0 billion Investment management, pension fund administration and pension asset management Corporate Investment Banking (CIB) Gross revenue N39.8 billion Corporate and investment banking services to larger corporates, financial institutions and international counter- parties in Nigeria. 14% 23% 63% CIB PBB Wealth CIB PBB Wealth 3% 24% 73% CIB PBB Wealth 53% 17% 30% Gross revenue contribution Total Assets Profit before tax contribution
  6. 6. 10 11 Recognition 4. Euromoney, African PPP Deal of the year 2008 – Standard Bank Group and Stanbic IBTC Bank PLC served as international arranger and biggest lender for the Lekki – Epe express way project. The project and structured finance team received this award for this groundbreaking project. Overview 2. This Day Awards 2009, Pension Fund Managers of the Year – Stanbic IBTC Pensions Managers Ltd has been awarded ‘Pension Fund Managers’ of the year 2009. SIPML remains Nigeria’s largest PFA (Pensions Fund Administrator), with over 600,000 retirement savings accounts and retirement assets in excess of N200 billion under management. SIPML currently pays over N550 million to over 13,000 retirees monthly. 5. Project Finance International, Africa Infrastructure Deal of the year - the project and structured finance team received this award for the Lekki – Epe express way deal 3. Bank of the Year, ACQ Finance Magazine Global Awards 2009 – The ACQ Finance Magazine Global Awards is an annual event that celebrates the top mergers and acquisitions dealmakers and their transactions. Stanbic IBTC Bank has been awarded ‘Bank of the Year, Africa, 2009. Getting an accolade of this value amidst several other notable competitors is a very important nod for Stanbic IBTC. 1. Ai Analyst of the Year, 2009 – Stanbic IBTC was awarded Analyst of the Year 2009, for raising awareness about African Capital Market opportunities. The Ai Financial Reporting Awards are the only African Awards that recognise the crucial importance professional financial reporting plays in informing investors and decision makers contemplating investments in Africa. This inaugural, but highly contested Analyst of the Year Award for the Banking Sector, was won by Yemi Kale and Muyiwa Oni of the research department in Stanbic IBTC. 6. 2009 Global Finance Magazine Award for the Best Investment Bank in Nigeria – this award was in recognition of Stanbic IBTC’s market share, number of deals as well as innovation in the Investment Banking Industry. 7. 2008 Nigeria Investment Banking League Award for Best Private Equity Deal in Nigeria – this award was in respect of the $550 million Private Placement by Starcomms Plc. Stanbic IBTC Bank PLC acted as a Joint Issuing House to the Placement.
  7. 7. 12 13 Standard Bank Group at a glance 12 13 Overview * Market capitalisation R127 billion (US$14 billion) * Total assets R1.5 trillion (US$162 billion) * Operating in 17 African countries and 16 countries outside Africa * 50,321 employees (1941 in Nigeria) * 1,106 branches (62 in Nigeria) * 5,174 ATMs (68 in Nigeria) Branches in Nigeria Lagos Island - 14 South South - 8 Lagos Mainland - 12 North West - 6 South West - 7 FCT Abuja - 5 South East - 5 North East - 5 ATM Lagos Island - 20 South South - 7 Lagos Mainland - 11 North West - 6 South West - 9 FCT Abuja - 6 South East - 4 North East - 5
  8. 8. 14 15 Business review 15 • Chairman’s statement • Chief executive’s review • Economic review • Financial review • Executive committee • Personal and Business Banking • Corporate and Investment Banking • Case studies: * The Lagos State Bond * Lekki Concession Company * Lafarge Cement WAPCO Nigeria Limited * MTN Nigeria Communications Limited • Wealth Business review
  9. 9. 16 17 I t gives me great pleasure to preside over this 20th Annual General Meeting of our bank (AGM), which is coming shortly after we marked our 20th anniversary as a legal entity on 2 February 2009. It is particularly pleasing for me to be able to stand before you today to confirm unequivocally that, unlike many other financial institutions around the globe, Stanbic IBTC Bank remains in very sound financial shape. This is in spite of the twin effects of the global financial crisis which has ravaged several leading financial institutions and the economic recession, which is eroding income per capita in several leading economies. Stanbic IBTC Bank has retained its triple A (AAA) rating from Fitch. Our parent, the Standard Bank Group (“SBG”) achieved satisfactory results in 2008, reflecting the diversification and resilience of their businesses amidst continued global financial market turmoil. The capital injection from Industrial and Commercial Bank of China (ICBC) in March 2008 helped to ensure that SBG’s capital position remained strong. SBG’s liquidity profile remains healthy with liquidity management practices rigorously applied within a liquidity management framework. SBG’s vision of growing a full service, emerging markets financial organisation is unchanged and SBG continues to seek organic and acquisitive growth opportunities in Africa and other chosen markets which would enhance our own opportunities to service our customers wherever they operate. SBG remains committed to Nigeria. It is perhaps pertinent to emphasise that at Stanbic IBTC Bank we learnt several important lessons along the way in 2008. In my opinion, the single most important lesson is that we must continually uphold all those good habits, discipline and rigour that enabled us to speedily put up our “defences” even at the risk of being branded alarmists. Our board and management team were unanimous in recognising, relatively early, that what we were facing in 2008 was a global financial crisis of epic proportions. The accompanying credit crunch and de-leveraging led to falling asset values across several asset classes around the globe, including equities quoted on The Nigerian Stock Exchange (NSE). Commodity prices also collapsed very rapidly in some cases. Indeed, the severe and rapid fall in crude oil prices (a key determinant of Nigeria’s total export earnings) in the second half of 2008, from $147 a barrel to close to $40 a barrel, took Nigeria from an unprecedented boom into a period of severe belt-tightening in the space of a few months. The financial markets in Nigeria experienced significant volatility. In the first half of the year, on the back of an exceptional stock market performance in 2007 (The Nigerian Stock Exchange All Share Index gained 74% in 2007) and supported by a strong naira and growing foreign exchange reserves, the market was down by only 4% at 30th June 2008, an excellent return compared to the turmoil that was being experienced in other developed and emerging markets. With the benefit of hindsight it is easy to see that the high oil prices (surging towards $150 per barrel) and the ‘intervention’ of sovereign wealth funds in the financial crisis in the more developed markets helped mask the underlying weakness of the Nigerian market, especially the slower growth and high valuations, and encouraged the feeling of insulation from the world financial crises. The reality was that Nigeria was in fact not immune to the global financial problems as shown in the second half of the year. The market slowdown of the second quarter turned to a full scale crash as oil prices reversed sharply; foreign investors scrambled to exit the markets as their domestic liquidity crises deepened and the local financial markets witnessed their own share of liquidity squeeze. The impact was significant as the first half performance turned to second half blues and the market lost over 61% of its value from its all time high during the year and was down 45% for the year. Chairman’s statement “Stanbic IBTC Bank PLC remains in very sound financial shape. This is in spite of the twin effects of the global financial crisis which has ravaged several leading financial institutions and the economic recession, which is eroding income per capita in several leading economies. Stanbic IBTC Bank has retained its triple A (AAA) rating from Fitch” 16 Business review
  10. 10. 18 19 Chairman’s statement Our bank participated in providing margin lending facilities to clients who were purchasing equities on the NSE. However, internal concentration guidelines, and a reduced risk appetite for this type of product stemming from the falling equity markets across the globe, resulted in a gradual reduction in our exposure to margin facilities from the first quarter of 2008. Unfortunately, due to the sharp decline in the stock prices during the last quarter of 2008, a number of borrowers were unable to keep up with the contractual margin requirements and thus, as a result of the strict application of the terms of these facilities, forced sales of these equities became necessary. Not withstanding our meticulous monitoring of these facilities, we sustained some losses, largely as a result of the NSE’s unexpected rule change via the sudden introduction of a more severe “circuit breaker”, which operated for a few months in the second half of 2008 and did not allow share prices to fall by more than 1% a day. In this atmosphere, several equities became unsaleable because the market felt they were overpriced but the stock prices were not allowed to speedily adjust downwards. We therefore witnessed a sustained erosion of the agreed margins, whilst being unable to trade significant volumes of equities. The circuit breaker was reinstated to the historical 5% level by the NSE in late 2008 which resulted in an increase in volumes to allow for the execution of a number of outstanding trades. Given the severity of the downturn by year end, a portion of our loan book reflected collateral shortfalls. To ensure that we complied with our historical accounting policies, which remain unaltered, it necessitated a N1.6 billion loan loss provision linked specifically to margin lending facilities. Our gross outstanding balance as at 31 December 2008 for margin lending was down to N8.30 billion. Accordingly, the financial statements which are being put before shareholders today for approval, have been prepared on the same conservative basis that our bank group has always utilised and after adjusting for the full impact of all known loan losses. The results are pleasing because they were achieved against a backdrop of severe financial turmoil. Income statement Gross earnings increased from N28.65 billion in the 9-month period ended 31 December 2007 to N61.24 billion for the year ended 31 December 2008. The 114% increase in Stanbic IBTC and its subsidiaries (“the group”) gross income is extremely pleasing and also demonstrates some of the immediate benefits of the merger with the Standard Bank Group. As part of gross income, non-interest revenue recorded an impressive increase of 57% from N12.88 billion in the 9-month period ended 31 December 2007 to N20.27 billion for the year ended 31 December 2008, stemming mainly from significant capital market transactions and activities during the first half of the year. The group’s net interest income increased correspondingly by 133% from N9.60 billion to N22.37 billion. The net interest increases are a result of transactional volume increases and an expanding customer base. The group’s operating expenses similarly increased by 143% from N9.44 billion to N22.98 billion in the corresponding period. The significant cost increase is a result of the groups continued investment in infrastructure and skills in order to build a base for sustainable future growth, and this is expected to continue in 2009 as we prepare a scalable platform. In addition cognisance must be taken of the fact that the previous financial year had nine months. A provision of N5.02 billion for loan and other asset impairments resulted in the group profit before tax amounting to N14.63 billion, which is a 33% increase over the N10.99 billion profit before tax for the nine months ended 31 December 2007. Group profit after tax and minority interest increased by 52% from N7.58 billion in the nine month period ended 31 December 2007 to N11.56 billion for the year ended 31 December 2008. Balance Sheet The Group’s total assets grew by 11% from N315.11 billion as at 31 December 2007 to N351.25 billion as at 31 December 2008; while the total liabilities grew by 13% in the same period from N239.09 billion to N269.88 billion. Shareholders’ funds grew by 7% from N75.57 billion to N80.67 billion. The change in shareholders’ funds merely represents the undistributed portion of the current year’s profits. The loans and advances portfolio has been conservatively and well provided against. At 31 December 2008 the total non - performing loan (NPL) book amounted to N15.54 billion representing 14% of the total loans and advances. Against this book are specific provisions of N9.43 billion representing 61% of the NPL’s. Your directors have recommended a dividend payout of 40 kobo per ordinary share of 50 kobo, amounting to N7.50 billion which is 60% higher than the dividend of 25 kobo paid last year for the nine month period ended 31 December 2007. Shareholders will recall that at an extra-ordinary general meeting held on 24 February 2009 they approved, subject to the approval of the Federal High Court, the write off of the losses that arose from the reinstatement and impairment of the goodwill attributable to our 2005 and 2007 mergers, which was previously written off directly against shareholders funds (capital) and is now required to be impaired through the profit and loss account. The reinstatement and impairment was done in accordance with the Nigerian Accounting Standard on Business Combinations (SAS 26). It should be noted that this change did not impact total shareholders funds. During the course of 2008, two new directors were appointed to the board of directors. The directors in question are Dr Alewyn Burger and Mr Rahtan Mahtani. Their appointments will be tabled for approval at this meeting. Mr Bond resigned from the board on account of his redeployment to China by the Standard Bank Group. We thank Mr Craig Bond for his immense contribution to our bank while he served on the board. In accordance with Article 81 of the Bank’s Memorandum and Articles of Association, six directors – Mr Ahmed Dasuki, Mrs Sola David-Borha, Mrs Ifeoma Esiri, Mr Ben Kruger, Mr Bhagwan Mahtani and Ms Marna Roets are retiring today as directors and, being eligible, are offering themselves for re-election. Later in the meeting, we will also be required to vote on nominations received in relation to our audit committee. As a group we are committed to upholding the highest levels of corporate governance and have implemented a comprehensive governance framework. Full details of this framework are provided elsewhere in this annual report. We are making significant investments in recruiting, retaining and managing highly talented people as this is a critical success factor in maintaining a competitive advantage. We believe that to be an employer of choice, a total value proposition to our staff needs to be considered. In this regard training, and in particular leadership development, has become a key differentiating factor for your bank. Amongst other forms of exposure and learning, the Standard Bank Group’s Global Leadership Centre (GLC) situated in South Africa plays an important role in developing excellence among our executive and senior management. The GLC offers internationally designed management development programmes aligned to global best practice and the group’s values and strategy. We also launched the Stanbic IBTC Bank training centre situated in Ikeja, which opened on 22 August 2008. The training centre can accommodate 90 learners across four classrooms. A total of 646 staff, participating in 1,128 learning interventions, have passed through the centre since inauguration. During 2008 we continued to donate funds towards various organisations.For 2009,aspartofourcorporatesocialresponsibilities, we will be focusing particularly on the health and education sectors. The outlook for global economic growth has deteriorated significantly in the past six months. Dislocations in developed financial markets have inevitably had a knock-on effect in developing markets and Nigeria has not been immune. Growth rates are expected to slow in 2009. In this regard a number of temporary measures were put in place by the Central Bank of Nigeria (“CBN”) to stabilise and protect the Nigerian economy. To stem the rapid decline in the naira from N117:1US$ to a high of N150 in the first quarter of 2009, tighter controls over foreign currency trading were instituted. These primarily made the CBN the primary buyer and seller of foreign currency effectively closing down the interbank currency market, significantly reducing the allowed net open position held by banks and limiting the spread/margin allowed on foreign currency transactions. In addition, in an effort to limit upward pressure on interest rate stemming from tighter liquidity in the market, maximum deposit and lending rates of 15% and 22% respectively were also introduced in the first quarter of 2009. We are pleased to note that all of these “extreme” measures have subsequently been relaxed. The outlook for global economic growth deteriorated significantly in the latter part of 2008 and early part of 2009. Dislocations in developed financial markets have inevitably had a knock-on effect in developing markets and Nigeria has not been immune thereto, particularly given the importance of oil revenues. Growth rates are expected to slow in 2009. Trading conditions will continue to be tough, largely impacting our businesses that are directly or indirectly dependent on the capital market, at the same time the market is expected to remain extremely competitive. These operating conditions will create both risks and opportunities across the group’s diverse financial services operations. The board is confident that with our skilled and passionate people and highly disciplined approach to risk management, the group is well positioned. Our focus will however remain on prudent risk management and the preservation of liquidity and capital. Finally, I would like to thank all the clients, shareholders and staff who have continued to stand with our institution during a very trying period of considerable financial turmoil. ATEDO N.A. PETERSIDE OON CHAIRMAN Business review
  11. 11. 20 21 I t is a pleasure to report on the first full trading year as a merged entity. 2008 for Nigeria was a year characterized by mixed fortunes. The early part of the year saw a continuation of the growth trend of 2007 across most sectors of the economy, while the second half of the year saw the impacts of a sharply lower capital market and the global financial crisis taking hold. Stanbic IBTCs’ performance for 2008 in many ways mirrors that of the macro environment. However, overall we are pleased with the banks financial performance for 2008. You will find included herein a number of reports outlining individual business unit performances. As one might expect certain of the businesses found the environment considerably tougher in the second half, while others continued to make great strides. Notable contributions were made by Global Markets, Investment Banking, Stock Broking and Pension Managers businesses. We set ourselves ambitious targets for the banking businesses which in general were not fully achieved. However to describe this as a failure would not be doing justice to the many individuals who have built a great platform from which we would hope to see notable returns from in 2009.The launch of our new Business Online platform in December 2008 is an example thereof. The Bank made considerable and necessary investments in building capacity and improving the integrity of systems for today and the future, as well as in People and Infrastructure in general. While endeavouring to maximize returns from our existing and potential market leading businesses to compensate therefore, such investments have had a negative impact on certain efficiency ratios. Such ratios however were broadly in line with expectations. We are grateful that as an indicator of some key successes, 2008 saw Stanbic IBTC receiving a number of accolades and awards, including: • Best Issuing House in Africa-African Bankers Award • Award of Excellence as Global Custodian in Nigeria • African PPP Deal of the Year-Lekki-Epe Expressway-Euromoney • African Infrastructure Deal of the Year-Lekki-Epe Expressway-Project Finance International • Best Bond House-Euromoney • This Day Awards 2009, Pension Fund Managers of the Year • 2009 Global Finance Magazine Award for the Best Investment Bank in Nigeria • 2008 Nigeria Investment Banking League Award for Best Private Equity Deal in Nigeria A big thank you to all our customers and staff without whom none of the above would have been possible. 20 Chief executive’s review 2008 for Nigeria was a year characterised by mixed fortunes. The early part of the year saw a continuation of the growth trend of 2007 across most sectors of the economy, while the second half of the year saw the impacts of a sharply lower capital market and the global financial crisis taking hold. Stanbic IBTCs’ performance for 2008 in many ways mirrors that of the macro environment. However, overall we are pleased with the banks financial performance for 2008. Business review
  12. 12. 22 23 Chief executive’s review Globally, 2008 has demonstrated the value and importance of a universal banking model, alongside the need for the skills and disciplines required for effective risk management. The value of the universal banking model is now far better understood. We are already such an institution, however continue to strive to achieve a more balanced contribution from our three core franchises. On the risk side we have implemented and continuously endeavour to refine an Enterprisewide Risk Management Framework which we adopted in line with global and Standard Bank Group best practices. To all our stakeholders who have assisted in making 2008 a reality – thank you. I particularly would like to thank our Customers, the executive committee team, my deputy – Sola David-Borha, the chairman – Atedo Peterside and the board for their commitment, contribution and invaluable support. Given that global and domestic markets have contrived to present a very challenging landscape for 2009, we will continue to adopt a measured approach to short term gains versus long term sustainability. We however enter the year with a quiet optimism and sense of anticipation of what could be achieved. CHRIS NEWSON CHIEF EXECUTIVE Stanbic IBTC continues to believe and invest in its People. The launching of the new brand in March 2008, incorporating our core values, was an important step in ensuring all staff feel part of a new beginning, understand what it is we stand for and act appropriately with each other, customers and all stakeholders. Our training and development drive has received a considerable boost with the opening of our own training centre in Ikeja - The Blue Academy. Already we have seen the number of training interventions with our staff increase dramatically. We also firmly believe that our ability to develop true leaders will sustain and grow our organisation into the future. In this regard the ability to leverage off the Standard Banks’ Global Leadership Centre is fantastic. A number of our senior staff members have already attended courses in Johannesburg. Critical to our future success will be the ability to ensure that an appropriate performance based culture prevails in the bank. Significant effort has gone into designing processes, educating staff and defining key measures aligned to each function and individual. Equally part of building the right performance culture is also the ability to attract and retain great talent – something which is a key responsibility of all management. As mentioned in my report last year, we have organized ourselves around three core business units being Corporate Investment Banking, Personal Business Banking and Wealth. Such a structure is designed around customer needs and to facilitate our ability to cross sell and work in teams. We believe that customers and the bank are starting to extract the benefits there from but a continued focus thereon remains a priority. A key aspect of teamwork is the ability to leverage off our parentage, that being the Standard Bank Group. We continue to strive to ensure that customers and staff benefit from the value that this relationship brings. 2008 has seen the launching of new localised products, the building of new business initiatives, the execution of significant transactions, the building of infrastructure and the acquisition of new customers as a direct consequence thereof. The recent affirmation by Fitch of Stanbic IBTCs’ AAA local rating (the only bank in Nigeria to attain this) is a further tangible benefit of being part of the Standard Bank Group. Business reviewEconomic review Global economic environment The first half of 2008 saw a gradual but managed unwinding of excess leverage by the international financial system, combined with a slowdown in developed economies. Financial and real economy asset prices started to fall sharply, but growth continued to be robust across all emerging markets. The strong outlook for growth in these newly established economies, combined with a lack of alternative asset classes to absorb excessive global liquidity, led to a rapid rise in commodity prices. In particular, oil prices rose rapidly to over US$ 100/bbl, and this put further downward pressure on growth in developed markets. However, in August 2008, a series of correlated shocks hit OECD financial markets, as underlying problems with mortgage backed securities caused instability in financial institutions. This in turn led to the collapse of Lehman Brothers and government intervention to rescue key financial players such as AIG, with later equity injections into most large financial institutions. The bankruptcy of Lehman led to the effective closure of key credit and commercial paper markets. These financial shocks helped to significantly enhance the slowdown in OECD growth, and a fall in export demand combined with a freeze in international lending and a rapid decline in commodity prices have placed significant downward pressure on growth across all emerging markets. 2009 will see one of the sharpest periods of global slowdown in the last century. Impact on commodity prices In the first half of 2008, global commodity prices rose very rapidly due to a combination of short-term supply constraints and a perception in the financial markets of continued demand from emerging markets. Commodity prices became extremely overbought due to a rapid increase in financial flows into commodity indexes. The rapid slowdown in the global growth outlook since August 2008, combined with enormous wealth destruction in the financial markets, led to a swift reversal of this final leg of the commodity cycle. The price of oil fell from US$ 147/bbl in July 2008 to around US$45/bbl in December. Whilst financial de-leveraging continues and more negative news on global growth emerges, the price of oil may fall further, although supply constraints will provide more support to commodities in general in the second half of 2009. Impact of international capital flows In the second half of 2008, international capital flows dropped sharply. At the same time, many asset classes around the world sold off heavily, pushing up yields on investment grade credits to over 20%. At the same time, banks efforts to delever their balance sheets led to a contraction in trade financing. Nigeria felt the effects of these global shifts, with international credit lines squeezed in the fourth quarter of 2008. With relative yields in the international markets much higher going into 2009, Nigerian banks and corporates will face greater challenges in raising international financing. Official foreign exchange assets: CBN reserves and sovereign savings 0 10000 20000 30000 40000 50000 60000 H2:08fH1:08H2:07H1:07H2:06H1:06 US$ m CBN foreign exchange Reserves Sovereign Savings
  13. 13. 24 25 Financial review Nigerian policy environment Nigeria’s policy environment continued to reflect the benefits derived from the last five years of reform in a range of economic policy areas. Government continued to employ a benchmark budget oil price to insulate spending from the high levels of volatility in oil price, while oil savings are being earmarked for key power infrastructure spending. The local debt markets continued to evolve, with the yield curve lengthened to twenty years and local government debt also being developed. The ongoing growth of the Nigerian private pension industry continues to add investor funds in the market, supporting liquidity. The Central Bank of Nigeria (CBN) continued to develop its frameworks on monetary policy management, moving towards an interest rate framework based around a single lending (repo) rate, with open market operations increasingly important for managing liquidity. Interest rates trended marginally up during the first half of the year as the CBN tightened rates to fight inflation, but have fallen sharply since September as the CBN allowed more liquidity in part to offset the impact of the global crisis. Credit growth and core inflation -20 0 20 40 60 80 100 Oct’08Apr’08Oct’07Apr’07Oct’06Apr’06Oct’05Apr’05Oct’04Apr’04Oct’03Apr’03Oct’02Mar-02 Broadway Y/Y% CPI EXC FOOD Y/Y% In the dynamic environment of Nigeria’s growing economy, inflation management continued to be challenging, with inflation rates rising in the second half of 2008 due to rapid increases in bank lending to the private sector. This will continue to be a challenge in 2009. Crucially, towards the end of 2008, the CBN has also chosen to reflect the changing macroeconomic fundamentals of lower oil prices by allowing the naira to depreciate against the US dollar, to ensure Nigeria remains in external equilibrium. This trend will continue into the early part of 2009 until oil prices recover later in the year. Real economy developments The real economy continued to grow rapidly at around 8.5% year-on- year in 2008, as increased government spending helped to support continued rapid expansion of banking and other service sectors. This momentum showed in strong corporate earnings across a range of sectors, in turn ensuring that increased employment continues to expand the size and potential of the domestic market. In 2009, with prudent fiscal spending based on a US$ 45/bbl oil price limiting the role of government spending in further expansion, we expect GDP growth to cool. Still, with strong domestic demand particularly for services, we expect 5% non-oil economic growth, which will be above average for emerging markets. Summary The first half of 2008 saw Nigeria sustain strong economic performance alongside a strong naira. However, testing global conditions have since begun to feed through to the local economy through tighter international credit and a softer oil price, which has caused the naira to weaken and will lead to lower fiscal spending in 2009. Nonetheless, with very low external debt levels and strong domestic demand, the economy will remain well positioned to strengthen again as oil prices rise in the second half of next year. Business reviewEconomic review Overview of financial results The Group posted strong results in the first half of the year, contrasted by a tougher second half which was characterised by more challenging local and international markets. Profit after tax grew by 52% and the group achieved an after tax return on average equity of 15%. The relatively high return on equity reflects a continued philosophy to maximise shareholder returns by engaging in profitable business relationships (quality) without an undue focus on volumes or short term gains while still investing for the future. The tougher trading conditions and decreased liquidity in the second half of the year adversely affected the business segments that derive their revenue primarily from capital market activities. The impacted business segments are: • Asset management • Stockbroking • Corporate finance due to limited capital raising opportunities • Custody services Despite the tougher trading conditions, the group continued to grow transactional banking and foreign exchange volumes in the second half of the year. Return on equity Return on equity (profit before tax) 19% 19% Return on equity (profit after tax) 15% 14% 2007 Duringtheyearthebankmadeconsiderableandnecessaryinvestments in people and infrastructure. As part of our focus on talent, we invested in recruiting skilled people. Furthermore, we concentrated on building the capacity and integrity of our platforms, risk systems and businesses for today and for future growth. Such investment has had a negative impact on certain of the banks’ efficiency ratios and is set to continue during the coming year. Economic factors impacting the results Globally, the systemic credit and liquidity crisis deepened as interbank and wholesale funding markets stalled in the wake of fading confidence amongst financial institutions. Significant deleveraging followed as financial institutions realised assets to cover liquidity shortfalls, resulting in dramatic repricing. The lack of liquidity and the dramatically reduced risk appetite severely limited both the ability and willingness of global financial institutions to finance normal corporate requirements, bringing about a slowdown in market activity and a collapse in commodity prices. This market turmoil and consequent loss of confidence resulted in investors withdrawing funds from emerging markets and currencies devalued significantly. On the back of rising inflation in the second half of 2008 and reduced liquidity, lending rates increased. The bank’s prime lending rate had increased to 20.5% at the end of the December 2008. December’08December’07March’07March’06 Shareholders’ fund (average) ROE (PAT) Funds 0 10,000 20,000 30,000 40,000 50,000 60,000 70000 80,000 90,000 0% 5% 10% 15% 20% 25% 30% ROE 2008 Oct’02 Oct’03 Oct’04 Oct’05 Oct’06 Oct’07 Oct’08
  14. 14. 26 27 Profit and loss analysis 0 10 20 30 40 50 60 70 80 Dec’08Dec’07Mar’07Mar’06 Earnings per share (Kobo) Net interest income Interest income 40,973,373 15,772,018 160% Interest expense (18,611,300) (6,170,948) 202% Net interest income 22,362,073 9,601,070 133% Growth in net interest income of 133% was supported by strong growth in all asset classes coupled with wider interest margins due to rising interest rates. Significant growth areas were commercial paper, medium term advances and infrastructure financing to corporate customers. Net interest margin (“NIM”) was 6.04% compared to the prior year of 5.79%. The improvement in NIM was largely due to the endowment impact of higher interest rates on shareholder‘s funds and the growth in transactional deposits in Personal Business Banking coupled with higher lending rates. Financial review Net interest income and net interest margin CAGR (2006-2008) 66% Non-interest revenue Net fees and commission increased significantly by 65%. Strong growth in fee income was experienced in all major product categories supported by strong investment banking flows, significant volume increases within our asset management and stockbroking businesses and growth in transactional banking volumes. Fee and commissions 14,995,807 9,088,614 65% Trading revenue 4,115,433 1,990,370 107% Other revenue 1,155,901 1,800,034 (36%) Non interest income 20,267,141 12,879,018 57% Trading revenue grew significantly by 107%. An excellent trading performance was achieved in foreign exchange and debt capital markets. Foreign exchange trading revenue improved significantly on the back of increased customer flows, the repatriation of investments by foreign investors in response to the global financial crisis and increased volatility. Debt capital market trading posted strong results in the first half of the year but this was not sustained in the second half due to the reduced liquidity and investment flows in the market, both locally and offshore. Decline in other income by 36% resulted mainly from the non- recurrence of substantial gains from the sale of property and equity investments in the prior period. Business review Year ended 31 Dec 2008 9 months ended 31 Dec 2007 Change N 000’s Mar’06 Mar’07 Dec’07 Dec’08 0 5,000 10,000 15,000 20,000 25,000 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Net Interest income Margin before impairment charges Margin after impairment charges N’mn Year ended 31 Dec 2008 9 months ended 31 Dec 2007 ChangeN 000’s Composition of non interest revenue CAGR (2006-2008) 72% Non interest revenue Mar’06 Mar’07 Dec’07 Dec’08 Fees Commission Trading income Other income N’mn 0 5,000 10,000 15,000 20,000 25,000 Mar’06 Mar’07 Dec’07 Dec’08 Non-interest revenue Percentage of total revenue 0 5,000 10,000 15,000 20,000 25,000 0% 10% 20% 30% 40% 50% 60% 70% N’mn Credit impairment charges Specific provisions 4,540,861 1,681,913 170% General provisions 478,974 361,770 32% Total 5,019,835 2,043,683 146% The146%increaseincreditimpairmentchargesisduetoourcontinued prudent provisioning policy in light of deteriorating economic conditions. As a function of the depreciating currency, rapid fall in oil prices and general predictions for slow growth in Nigeria, we have taken a prudent stance in classifying potential exposures in sectors that are likely to be affected; coupled with additional provisioning in respect of margin facilities as a consequence of declining share prices. A N1.6 billion loan loss provision specifically for margin facilities was raised during the year. Consequently the credit loss ratio deteriorated from 2.5% to 5.1% The group has not modified its provisioning policy and continues to impair assets using the same principles it used in the previous years. The group’s gross exposure to margin loans continues to be prudently managed, and as at 31 December 2008 the gross margin lending book at N8.3 billion represents 8% of the gross loan book. Credit impairment charges 12 months ended 31 Dec 2008 9 months ended 31 Dec 2007 ChangeN 000’s 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Mar’06 Mar’07 Dec’07 Dec’08 Credit impairment charges on NPLs Credit loss ratio Credit impairment charges on PLs 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% N millions Earnings per share (Kobo)
  15. 15. 28 29 Non-performing loans (NPL) increased by 39% to N15.5billion which represents 14% of the gross loan book an increase from 12% in 2007. The marginal increase is a reflection of the increased inherent risk partly offset by our comprehensive risk management framework and prudent provisioning policies. The group continues to hold adequate credit provision. Provision adequacy after taking into account the net present value (NPV) of security held stands at 188%. The group has not modified its provision policy and continues to impair assets using the same principles it used in previous years. Total deposits and current accounts increased by 33% to N95 billion. Customer liabilities increased following the growth in our demand deposit customer base and increased term funding as we continued to structure products and facilities to attract term funding from a very competitive market. Liquidity Liquidity conditions in international money markets and debt capital markets tightened considerably during 2008, and ongoing risk aversion of investors remains evident. In response to the adverse market conditions, heightened focus was placed on the frequency and rigour of the application of prudent practices within the bank’s liquidity management framework. Surplus liquidity buffers, comprising unencumbered and readily available marketable assets, amounted to N104 billion as at 31 December 2008. Further information on the group’s liquidity management is contained in the risk management section starting on page 70. Operating expense Operating expenses increased significantly by 143%, comprising 124% growth in staff costs and 164% in other operating expenses respectively. On an annualised basis operating expenses increased by 68%. The cost-to-income ratio deteriorated from 42% to 54%. This was a year in which the two legacy banks integrated their systems, operations and brands and therefore incurred significant one-off expenses. Excluding the effect of non-recurring integration costs incurred in 2008, operating expenses grew by 106% and the cost to income ratio was 48%. Staff costs 10,834,830 4,843,220 124% Auditor’s remuneration 130,000 88,870 46% Communication 359,891 152,648 136% Depreciation 1,433,223 771,336 86% Information technology 824,603 354,009 133% Marketing expenses 460,765 461,288 0% Premises 756,100 821,502 -8% Training, travel accomodation 1,343,794 300,344 347% Other 4,158,714 1,651,060 152% Total other operating Expenses 9,467,091 4,601,057 106% Integration costs 2,680,563 – n/a Total operating expeses 22,982,484 9,444,277 143% Variable remuneration as a % of fixed remuneration 41% 32% – Variable remuneration as a % of total staff costs 28% 23% – Cost-to-income ratio 54% 42% – The significant cost increases are as a result of the group continuing its investment and growth strategy, and as such, is investing in infrastructure that is designed to ensure scalability and sustainable growth in the future. There has been significant investment in the following: • IT infrastructure • IT systems • Branch network In addition, in order to improve our service offering and delivery especially in the personal and business banking market, the staff headcount increased by 61% to 1941. The investment is starting to bear fruit as customer numbers, transactional volumes and service levels are all increasing. Balance sheet analysis Key balance sheet indicators Loans advances to banks 111,592,259 79,578,685 40% Net loans and advance to customers 98,398,273 79,464,605 24% Total loans advances 209,990.532 159,043,290 32% Deposits current acc. 95,240,375 71,390,744 33% Shareholders funds 80,665,041 75,563,215 7% The loans and advances book grew by 32% to N210 billion, comprising a 40% growth in loans and advance to banks and a 24% increase in net loans and advances to customers from N79 billion to N98 billion despite a significant decrease in margin facilities during the year under review. The increase in customer loans and advances is primarily attributable to increased utilisation by corporate clients and sign-on of new clients. Corporate loans and advances grew by 54% on the back of increased overdrafts, term lending and commercial paper. Significant projects financed in 2008 include the Lekki-Epe Expressway. Personal business banking loans and advances declined by 20% largely due to a deliberate slow down of margin lending from March 2008, coupled with a further reduction from July 2008 in light of the declining capital market. The decision to restrict this type of facility was informed by internal concentration guidelines, and a reduced risk appetite for this type of product stemming partly as a function of the falling equity markets across the globe and in Nigeria, resulted in a gradual reduction in our exposure to margin facilities from the first quarter of 2008. Mortgage lending and overdraft balances increased significantly but were fully offset by the reduction of margin facilities. N 000s 31 Dec 2008 31 Dec 2007 Change 31 Dec 2008 31 Dec 2007 Change Gross loans and advances to customers Composition of gross loans and advances Mar’06 Mar’07 Dec’07 Dec’08 Gross loan advances NPLs 0 20 40 60 80 100 120 N billions Commercial paper Medium Term Finance Margin facilities Overdrafts Home Loans Instalment Sales (VAF) Commercial paper Medium Term Finance Margin facilities Overdrafts Home Loans Instalment Sales (VAF) 33% 28% 4% 2% 25% 8% Financial review Business review Year ended 9 months ended Year ended 9 month ended N’000s N 000s 2008 2007 Marketeable assets 58,154 83,657 Short-term foreign currency placements 40,546 20,657 Total unencumbered marketable assets 98,700 104,314 Other readily accessible liquidity 5,500 – Total unencumbered surplus liquidity 104,200 104,314 Provision adequacy N’000s balance suspense value (NPV) NPL adequacy Margin lending 2,995 6 2,289 700 1,672 239% Other balances 12,543 1,255 6,968 4,320 7,759 180% Total 15,538 1,261 9,257 5,020 9,431 188% Gross NPL Interest in Security Net Provision Provision
  16. 16. 30 31 Capital Total shareholder funds grew by 7% to N81 billion on the back of a solid financial performance in 2008. The bank continues to be well capitalised. Regulatory capital increased by 4% from N73 billion to N76 billion during the period under review. Capital adequacy at 31 December 2008 was 36% against a regulatory requirement of 10%. N 000s 2008 2007 Growth Tier I capital 74,797,845 72,609,197 3% Tier II capital 1,003,733 511,853 96% Total qualifying capital 75,801,578 73,121,050 4% Risk weighted assets 210,561,983 180,673,670 17% Capital adequacy Tier I 36% 40% Total 36% 40% Proposed dividend The board of directors has proposed a dividend of 40kobo per share, amounting to N7,500,000,000 for the 12 months ended 31 December 2008 on the issued share capital of 18.75billion ordinary shares, subject to the approval by the shareholders at the next annual general meeting. This represents an increase of 60% over the dividend paid for the period ended 31 December 2007 of 25kobo per share on the issued share capital of 18.75billion ordinary shares amounting to N4,687,500,000. Accounting policies Basis of preparation The balance sheet and profit and loss account and specific disclosures are published in compliance with section 27 (1) of BOFIA Cap B3 Laws of the Federation of Nigeria 2004. The information disclosed has been extracted from the full financial statements of the bank and the group and cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the bank and the group as the full financial statements. Year ended 31 Dec 2008 Year ended 31 Dec 2007 Change (%) Net operating income 42,629,214 29,696,169 44% Operating expenses (22,982,484) (13,713,717) 68% Provision for losses (5,019,835) (4,098,705) 22% Profit before tax 14,626,895 11,883,747 23% Taxation (2,632,465) (3,179,204) -17% Profit after tax 11,994,430 8,704,543 38% Minority interest (430,279) (265,024) 62% Profit after tax and minority interest 11,564,151 8,439,519 37% Key Ratios Earnings per share (kobo) 64 46 38% Cost to income ratio 53.9% 46.2% Net interest margin 6.04% 5.56% Return on equity 15.2% 15.6% Credit loss ratio 5.1% 5.2% Financial review Annualised results Business review Changes in accounting policies The accounting policies are consistent with those adopted in the previous year except for: • The adoption of SAS 26 Business Combinations with an effective date of 1 January 2008 and retrospective application for all transactions subsequent to 1 January 2005. This new standard requires that goodwill arising from an acquisition is not amortised but instead tested for impairment at least annually. The goodwill arising from the acquisition of Chartered Bank and Stanbic Bank Nigeria has been reinstated and tested for impairment in accordance with the new standard. The goodwill arising from the purchase of both Chartered Bank and Stanbic Bank Nigeria has been found to fully impaired. Annualised results (unaudited) The group’s consolidated financial statements are prepared in accordance with, and comply with generally accepted accounting practice (GAAP) as issued by the Nigerian Accounting Standards Board (NASB). However to allow for effective comparison annualised results have been prepared to take into account the changes the company has undergone in the recent past. Following the successful completion of the merger arrangement between IBTC Chartered Bank and Stanbic Bank Nigeria in September 2007, the group changed its accounting year to 31 December with effect from the 2007 year end. This resulted in financial statements for 2007 being prepared for a nine month period. To allow for effective comparison the 2007 financial results shown below have been annualised. The annualised results were arrived at by summing the published results for the 9 month period ended 31 December 2007 with the group’s published results for the quarter ended 31st March 2007.
  17. 17. 32 33 Financial review Business review IFRS Results The Standard Bank Group (‘SBG’) reports its results in accordance with International Financial Reporting Standards (IFRS). Accordingly the group prepares IFRS results for inclusion in SBG’s results. Below are extracts of the income statement and balance sheet for the year ended 31 December 2008 prepared in accordance with IFRS. The fundamental differences between Nigerian GAAP (NGAAP) and IFRS are: • NGAAP employs a historical cost convention whereas IFRS employs fair value. • Credit impairments are calculated based on expected losses (a set percentage based on prudential guidelines) instead of the IFRS incurred loss methodology with fair value calculations for security • Under NGAAP revenue on yield instruments is recognised purely on an accrual basis with no mark to market adjustments Assets Cash and balances with central banks 9,604,745 Pledged assets 16,876,438 Derivative assets 518,334 Trading securities 59,823,043 Financial investments 28,417,474 Loans and advances 229,390,963 Loans and advances to customers 121,034,101 Loans and advances to banks 108,356,862 Other assets 39,433,978 Equity investment 1,100 Other intangible assets 133,601 Property and equipment 8,119,832 Total assets 392,319,508 Equity and liabilities Equity 83,959,372 Equity attributable to ordinary shareholders 83,259,137 Ordinary share capital 9,375,000 Ordinary share premium 84,303,797 Reserves (10,419,660) Minority interest 700,235 Liabilities 308,360,136 Trading liabilities 62,698,142 Deposit and current accounts 147,933,566 Deposits and current accounts with Customers 90,885,434 Deposits and current accounts with Banks 57,048,132 Other liabilities 90,540,067 Current and deferred tax liabilities 7,188,361 Total equity and liabilities 392,319,508 Year ended 31 December 2008 N 000 Balance Sheet Income Statement Year ended 31 December 2008 N 000 Interest income 28,586,216 Interest expense (12,698,369) Net interest income 15,887,847 Non-interest revenue 27,764,495 Net Fees and commissions revenue 14,421,311 Fees and commission revenue 14,554,755 Fees and commission expense (133,444) Trading revenue 11,150,413 Other revenue 2,192,771 Total income 43,652,342 Credit impairment charges (2,961,649) Credit Impairment charges on non-performing loans (2,231,783) Credit Impairment charges on performing loans (729,866) Income after credit impairment charges 40,690,693 Operating expenses (23,786,913) Staff costs (10,606,861) Other operating expenses (13,180,052) Profit before tax 16,903,780
  18. 18. 34 35 Executive committee Kayode SololaDr Demola Sogunle Obinnia Abajue 35 Chris Newson (44) Chief executive officer B.Com CA (SA), CSEP Oversees all business activities of Stanbic IBTC Bank South African institute of Chartered Accontants, CIBN Kandolo Kasongo (53) Head of credit MBA Oversees the credit function, application of best practice underwriting principles and subsequent credit management practices to minimise credit losses. Marna Roets (42) Executive director, Business support B.Com (Hons) CA (SA) Oversees and co-ordinated the activites of business support unit heads South Afrian Institute of Chartered Accountants Angela Omo-Dare (49) Company secretary and head, legal LLB, BL, LLM Oversees and coordinates the company secretariat and legal functions of the bank CIBN, NBA Sola David-Borha (48) Deputy managing director; Executive director, Corporate Investment Banking B.Sc, MBA Oversees and co-ordinates the activities of all Business unit heads under CIB CIBN, NESG, FITC Isioma Ogodazi (51) Head of human resources BA, Post Graduate Diploma Responsible for setting the strategic people agenda for the bank and providing consulting support for executive management. Institute of Personel Developmemt UK Nigeria Sola David-BorhaChris Newson Marna Roets Jacques TroostYinka Sanni Angela Omo-DareIsioma OgodaziKandolo Kasongo Yinka Sanni (43) Executive director, Corporate Investment Banking BA (Hons), MBA ACS Co-Head of CIB, responsible for providing oversight for Transactional Products Services. This includes Institutional and Corporate Banking, Private Client Services, Investor services, Corporate Affairs and Research CIS, CIBN Ronald Pfende (37) Chief financial officer (West Africa) B.Com (Hons), MBL, CA (SA), CA(Z) Responsible for finance in the West Africa region (Nigeria and Ghana) which encompasses financial control, reporting, planning and management. Also oversees the bank’s tax administration. South African Institute of Chartered Accountants, Institute of Chartered Accountants of Zimbabwe Obinnia Abajue (33) Head - wealth group B.Sc, MBA, FCA Head of wealth division which includes Stanbic IBTC Pension Managers Limited and Stanbic IBTC Asset Management Limited ACIB, ACS, – Institute of Chartered Accountants of Nigeria Kayode Solola (41) Head of global markets MBA, ACA Oversees treasury activities which include foreign currency, money and fixed income trading and asset and liability management Institute of Chartered Accountants of Nigeria Jacques Troost (45) Executive director, Personal Business Banking B.Com (Hons) Oversees and coordinates the activities of all business unit heads under PBB Dr. Demola Sogunle (44) Head, group risk B.Sc, M.Sc, PhD, MBA Overseeing the development and implementation of a risk management framework that is consistent with the complexity of the group. CIBN, MMAN Business review Ronald Pfende
  19. 19. 36 37 0 20000 40000 60000 80000 100000 DecNovOctSepAugJulJunMayAprMarFebJan Us-on-us Them-on-us Us-on-them 0 30000 60000 90000 120000 150000 DecNovOctSepAugJulJunMayAprMarFebJan 0 10000 20000 30000 40000 50000 60000 70000 80000 DecemberNovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary Monthly SMS notifications Monthly email notifications ATM withdrawal transactional volumes per usage type ATM volumes of all transaction types per month 0 100000 200000 300000 400000 500000 DecemberNovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary Overview The Personal Business Banking (“PBB”) division focuses on personal customers of all income levels and business clients excluding large corporations, government and institutions. The division provides products and services to clients through the following channels: • suites • branch network • self service channels (ATM and internet banking). Products offered include vehicle and assets finance, unsecured personal loans, bancassurance, mortgage loans, a range of trade finance products. current accounts, savings accounts and various investment products. For PBB 2008 was about establishing the necessary base to become a competitive personal and business banking entity. Resources were utilised to introduce a proven branch operating model, determine the strategy for upgrading and expanding the footprint of both direct and indirect channel, while also ensuring that branches are correctly positioned from a foot flow, customer reach and customer experience perspective. The other key focus was to ensure that basic lending products were made available while upgrading the current range of liability products with a view to reactivating the existing client base, penetrating the mid and upper end of the formal market while improving the service experience of our clients. As a catalyst to achieving the above, significant emphasis was placed on the training and development of our staff and introducing world class people management practices. During 2008 significant investment was made towards upgrading the communication and information technology infrastructure to ensure continued availability of services to customers. Dual communications links were introduced to 53 branches, with the remaining branches being scheduled for completion during the first half of 2009. Uptimes of branches and ATMs are closely monitored to ensure continued improvement to the availability. A detailed review of the PBB concentration in the asset book in the early part of 2008 highlighted an unacceptably high exposure to margin facilities and in light of global trends a decision was quickly taken to reduce the bank’s exposure to this product. Although this decision had a negative impact on the asset book, it ensured that the bank was not exposed to an undue level of risk. By December 2008 the gross margin lending balance had been reduced to N8.3 billion. In addition the bank continues to follow its conservative credit provisioning policy, and an additional N1.6 billion provision was raised in respect of margin facilities. In summary, 2008 year was about getting the basics right and building a sound foundation for future growth. Strategy Our strategy is to serve both the personal as well as the business banking client requirements, from the most basic to the most sophisticated financial service needs, to maintain high standards of customer service by utilising cost efficient delivery channels while significantly growing the transactional volumes. A new branch operating model was introduced, which focuses on an improved customer service experience and at the same time, providing a more effective sales platform for our sales and relationship teams. Where appropriate, processing and back office functions have been centralised. At the same time, alternative service channels are also in the process of being upgraded and rolled out. This will ensure that our clients have a choice of channel for the delivery of their financial needs including ATM and internet banking solutions. The bank continued to invest in its branch and ATM networks through revamping, relocating, and opening branches, replacing and introducing additional ATMs. New products were launched, which include Vehicle and Asset Finance (VAF), mortgage loans and unsecured personal loans while transactional, savings and investment products were upgraded. Business reviewPersonal and Business Banking
  20. 20. 38 39 Financial performance Despite the fact that operating costs grew in absolute terms due to headcount increases in the distribution network, product development, VAF fulfilment, customer strategy and direct channels. This investment in new talent had a positive effect on new customer acquisitions, customer service experience and increased product take up by the customers. The investment in the upgrade of our branch and ATM network also added to the growth in overall operational costs. Notwithstanding all of this transaction volumes grew at an acceptable level during 2008 which had a positive impact on gross revenues which increased to N14.4 billion. Financial highlights N millions Gross revenue 14,378 Total cost 10,024 Tax provision 618 Profit after tax 3,735 Net asset 21,486 Looking ahead In 2009 we foresee a more challenging environment due to rising interest rates, the devaluation of the Naira and reduced government revenue. These factors will impact consumers and could reduce the demand for certain banking products. We want to continue to grow our market share by investing in new branches and ATMs, while also continuing to upgrade and relocate existing branches to ensure that they are all well positioned for increased client activity. More focus will also be placed on cross sell opportunities to the current PBB account base and leveraging off corporate relationships within a framework of operational efficiency. Further to this, additional channels and products will be introduced to the current client base while customers in segments previously not focused on will be catered for by introducing segment specific service and product types. This will be underpinned by continuous investment in our staff through training and development opportunities and in infrastructure. Personal and Business Banking Monthly internet banking transaction volumes Sales volumes DecemberNovemberOctoberSeptemberAugustJulyJune 0 30000 60000 90000 120000 150000 DecNovOctSepAugJulJunMayAprMarFebJan 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 6591 Business review
  21. 21. 40 41 Corporate and Investment Banking Overview Stanbic IBTC’s Corporate Investment Banking (CIB) division serves a wide range of local and international corporate and institutional clients. The services offered include debt and equity advisory, structured and project finance, trades services, transactional banking and lending, global markets, custody, private clients services and private equity funding. We have built up a strong track record in the past and have further enhanced our offering with a structure that facilitates client focus. This will position the bank to participate effectively in growing Nigerian capital markets and financing infrastructure projects. Our CIB franchise has evolved in line with the growing sophistication of clients transactional and financing requirements in Nigeria and continues to enhance its reputation as one of Nigeria’s leading investment banks with a number of landmark transactions in 2008. These include: • The arrangement and co-financing of a N20 billion senior 15-year facility for the construction of additional lanes, rehabilitation, tolling and modernization of the existing 46km Lekki-Epe expressway by Lekki Concession Company being the first successful Public Private Partnership (PPP) project in Nigeria. • Sole issuing house to the private placement of a 9.45% stake up to US$944.7m by MTN Nigeria Communications Limited. This is reputed to be one of the largest successful private placements in the history of the Nigerian Capital Market. • Joint issuing house to the hybrid offerings of N198 billion done by Zenith Bank Plc which was oversubscribed as over N400 billion was raised. • US$550 million (N64.35 billion) private placement of new and existing shares by Starcomms Plc, the first telecommunications company to be listed on the Nigerian Stock Exchange. • Mandated as one of the joint financial advisers / issuing house to the on-going N275 billion debt issuance programme by the Lagos State Government. Stanbic IBTC remains Nigeria’s pre-eminent investment banking institution and leading issuing house by transaction value. At the 2008 African Banker Awards, the bank retained the Best Issuing House award for the second year running. We also won the Best Bond House in Nigeria at the 2008 Euromoney Awards and received a “Commended” rating for 2007/2008 at the Global Custodian Award for Excellence. In addition, the Lekki-Epe expressway PPP project earned the bank the African PPP and African Infrastructure Deal of the Year Awards from Euromoney and Project Finance International respectively. Strategy The year was characterised by taking advantage of the positive synergies arising from the merger of the Stanbic and IBTC brands. Given IBTC’s excellent local pedigree as a leading investment bank and wealth manager in the country and riding upon the strong international experience and reputation of the Standard Bank Group, we were able to strengthen our CIB franchise within the local market. In positioning the bank for a better transactional banking pedigree, we launched new Business Online (nBOL), an electronic banking solution which provides access to electronic statements, electronic transaction initiation, levels of authorisation and enhanced reconciliation of accounts through an internet-based solution. With this, we are well placed to partner with the public and private sectors to deploy electronic payment solutions. This capability will help strengthen our annuity businesses by improving on deposit collections and Web Pay transactions. Our strategy is to consolidate our existing CIB franchise by building expertiseindebtcapitalmarkets,infrastructuralfinancing,derivatives, private equity funding and private client services. Subject to receiving regulatory approvals, a private equity fund of US$200 million is being launched in conjunction with Standard Bank for investment in selected private companies. Business review
  22. 22. 42 43 Corporate and Investment Banking Looking ahead We plan to take full advantage of all opportunities offered us by the current global financial turmoil by strengthening our risk management capabilities. One of the things the global financial crisis has highlighted is the importance of an annuity business to a universal banking franchise. Our primary focus in 2009 will be to grow our deposit base by driving collections and generating more sectoral focused quality loan assets, ensuring that all risks are priced correctly. Although revenue will increasingly be under pressure, we intend to focus on cost management to reduce the strain to the bank’s bottom line. Given the unprecedented collapse of the global financial markets, more focus is aimed at sourcing US dollar funding, capital, liquidity and credit risk management. Our strategy is to move to a product neutral operating model before the end of 2009. This will make us customer-centric with relationship managers who have a sound knowledge of the bank’s products and services, supported by product specialists to ensure we can service all the financial needs of our customers. Business review CIB is also well placed to maximize our cross border capabilities by linking potential investors in South Africa, China, Russia and other emerging markets with Nigerian businesses. We will work with ICBC China, Standard Bank London and Standard Bank South Africa in promoting our custodial and trade businesses. We are also at the forefront of working with key regulators in shaping the regulatory framework to align with global best practices. Our Global Markets expertise remains strong, providing a full range of risk management products, services and structured solutions to our clients. Our presence in the market is evident in the areas of foreign exchange and currency risk, fixed income, interest rate management, money market and securities trading. With this, and our strong international network, we aim to continue to maximise business opportunities and minimise risk in such a way that adds value to our corporate and institutional clientele, most especially in this volatile global economic situation. Investments have been made in recruiting highly skilled people, and we have focused on new products, risk systems to develope scalable infrastructure. This investment is set to continue during the coming year. Financial performance The events in the global financial market and the Nigerian capital markets notwithstanding, the combination of our knowledge of the local market and strong international network and support contributed positively to our financial performance. Financial Highlights N millions Gross revenue 39,734 Total cost 31,343 Tax provision 638 Profit after tax 7,160 Net asset 56,918
  23. 23. 44 45 Case study: Lagos State Bond Stanbic IBTC has worked closely with the Lagos State Government (“the State ”) over the years to structure innovative solutions to the State’s long term financing needs. In 2002, Stanbic IBTC acted as lead issuing and underwriter to a N15 billion, 7 year redeemable bond issue, which was the largest public debt issue in the history of the Nigerian capital markets at that time. The proceeds of that bond issue, which was recently completely redeemed by the State, were utilised to finance various developmental projects embarked upon by the State at that time. The Programme Stanbic IBTC is currently acting as joint issuing house/arranger and primary dealer to the Lagos State N275 billion debt issuance programme (“the programme”), under which the State expects to issue a series of bonds of varying maturity up to an aggregate amount of N275 billion. The programme, which was approved by the Lagos State Executive Council in January 2009, was created to give the State access to the capital markets as the need arises to finance various infrastructure initiatives through the issuance of long term investment vehicles such as bonds, notes and other securities. These infrastructure initiatives include the construction/upgrade of roads and bridges, water transportation projects, a rail transportation systems, environmental projects, housing sector initiatives, health care initiatives and improvement in the educational system. Financing The first issuance under the programme was a N50 billion 5 year fixed rate bond (Series 1) issued by way of a public offering in January 2009. The bond was issued at a fixed rate coupon of 13% per annum and is the largest state government debt offering ever undertaken in Nigeria. The proceeds of the bond issue, which was oversubscribed, will be utilised to finance ongoing infrastructure projects and refinance loans obtained to make down payments on these infrastructure projects. The distribution of the issue was diverse with the majority being placed with financial institutions, pension funds and asset managers. The issue received an A+ rating from Agusto Co, while Lagos State was assigned an AA (national) and BB- (long term international) rating by Fitch Ratings. Lagos State Lagos State was created in May 1967 and is Nigeria’s financial, commercial and industrial nerve centre. At its current growth rate it is forecast to be the third largest mega city in the world by 2015 and is the only state in Nigeria that generates a significant majority of its revenues internally: the State’s internally generated revenue currently exceeds 200% of its statutory allocation from the Federation Account. The State has developed a medium-term strategy intended to address the issues of accelerated economic growth and sustainable urban development through both government initiatives and public-private partnerships. This should result in a marked increase in productivity, growth and overall development of the State’s economy, and prepare Lagos State for its emergence as a internationally-recognised mega city. Stanbic IBTC will be there to assist the State to achieve its objectives. 45 Business review
  24. 24. 46 47 Case study: Lekki Concession Company (“LCC”) Lekki Concession Company (“LCC”) – a special purpose company, has partnered with the Lagos State Government for construction of the Lekki-Epe expressway on a build, operate and maintain agreement. The agreement is for 30 years, after which the asset will be handed over to the State Government. The Programme Phase 1 of the project is the upgrading of the first 49.4km of the Lekki-Epe road. Phase 2 of the project involves the development of the first 20km of the coastal road with an option to develop the southern bypass. Benefits of the project to the population of Lagos State will be traffic decongestion and a number of services that will be available on the road such as street lighting, break-down assistance, an ambulance service and a customer call centre. The expressway will also have much improved security, and the project will have spillover effects such as employment creation and increased real estate values. Financing Standard Bank Group alongside the Lekki Concession Company closed financing for the US$426 million (N50.1bn) Lekki-Epe Expressway PPP on 17th October 2008. Standard Bank, South Africa, acted as co-financial advisor while Standard Bank London and Stanbic IBTC acted as arranger, underwriter and largest lender to the project. Funding for the project, which should take three years to complete, comes from the Lagos State Government which invested US$42 million (N5 billion) in a twenty year mezzanine debt tranche. The African Development Bank provided US$85 million (N10 billion) senior debt over 15 years. Local lenders, including First Bank of Nigeria and United Bank for Africa, provided a 12-year note issuance facility of US$80 million (N9.4 billion). Other banks that partcipated in this tranche were Zenith Bank, First Inland Bank, Diamond Bank and Fidelity Bank. The remaining term funding was provided by Standard Bank London which became the sole arranger of the US$93 million (N11 billion) 15-year international tranche – underwritten by Standard Bank London and Stanbic IBTC Bank PLC. The project represents a milestone as it is the largest PPP deal closed in Nigeria to date and is the first 15-year tenured financing and longest tenured cross-currency swap. Total equity for the deal is US$58.9 million (N6.93 billion) and was provided by: • Asset Resource Management Co Ltd (“ARM”); • Africa Infrastructure Investment Fund (“AIIF); • Larue Projects; and • Hi-Tech Construction. The debt to equity ratio is 68:32, and the total project value of N50 billion comprises of the senior debt tranche of N30.4 billion, equity of N6.9 billion, mezzanine debt of N5 billion, and the balance from other sources including pre-completion revenues. Business review
  25. 25. 48 49 Lafarge Cement WAPCO Nigeria Plc, one of the largest cement producing companies in Nigeria plans to increase its production capacity over the next few years. To achieve this, the company is embarking upon an expansion plan which will increase its production by 2.2 million metric tonnes per annum and will also construct a 70MW captive power plant operated by natural gas and / or low pour fuel Oil (“LPFO”) which will replace its existing power source. The programme Since conceptualisation of the project in December 2007, a feasibility study on the expansion project has been undertaken and an environmental impact assessment (EIA) study, which is mandatory in Nigeria for a project of this size was completed. The construction phase commenced in mid 2008, and is expected to be completed by Q1 / Q2 of 2010. It is expected that the expanded plant will become fully operational by the first half of 2011 following installation of electricity supply and plant commissioning. Stanbic IBTC Bank PLC has been appointed by the company as the global coordinator for the expansion project funding and as co-lead arranger on both the Naira and US$ tranches with two other banks. Financial closure on the transaction was achieved in May 2009. Financing The estimated project cost (including power station investments of €55 million), will be financed through a mix of internal cash flows and external debt financing. The debt portion of the project amounting to €225 million is to be financed on the balance sheet of Lafarge WAPCO. Total estimated capital expenditure of €354 million will be incurred equally over a three year period commencing in 2008: 33% in 2008, 33% in 2009 and 33% in 2010. Debt tranches - The expansion project funding will comprise of three tranches (each with a tenor of four years): • Facility A - The US Dollar equivalent of €85 million, in the form of a foreign currency term loan. • Facility B - The Naira equivalent of €140 million, in the form of a syndicated medium term discounted note issuance facility. • Facility C - The Naira equivalent of €85 million, in the form of a syndicated medium term discounted note issuance facility. Facility C is, a stand-by facility which may be called or drawn at the option of the company exclusively, to refinance the total amount outstanding under Facility A, on the date when the option is being exercised. 49 Business reviewCase study: Lafarge Cement WAPCO Nigeria Limited
  26. 26. 50 51 MTN Nigeria is the largest mobile network operator in Nigeria, the second largest in Africa and is one of the most recognised brands in Nigeria. As at 31 December 2008, MTN Nigeria had over 23 million subscribers and a 36% market share of the entire Nigerian telecommunications market. MTN and Stanbic IBTC have a relationship spanning over a decade. From underwriting and co-arranging a US$ 450 million facility for the MTN Group in 2001 in anticipation of the Nigerian GSM licence auction, to arranging a US$ 2 billion loan syndication for MTN Nigeria in 2007, Stanbic IBTC has been intimately involved in MTN Nigeria’s expansion from inception. The programme In2008,StanbicIBTCactedassoleissuinghousetoaprivateplacement of a 9.45% equity stake in MTN Nigeria which was undertaken to broaden the Nigerian shareholder base of MTN Nigeria. MTN Group and some of the founding shareholders of MTN Nigeria provided the shares on offer and participation in the placement was restricted to Nigerian individual and institutional investors who met stringent Know Your Cusomer requirements as specified by MTN Nigeria. All prospective investors were specifically invited to participate in compliance with regulatory restrictions. The private placement A total of 38 465 381 linked units comprising 38 465 381 ordinary shares and 38 465 381 preference shares were sold at a price of US$24.46 per linked unit, yielding proceeds of close to US$1 billion. The minimum subscription was US$10 million for financial institutions and US$5 million for other investors, and investors were given an option to pay in either US$ or Naira. Given the high minimum subscription and the limited universe of possible investors, the placement had to be uniquely structured and marketed to ensure success. The placement generated unprecedented domestic demand from Nigerian institutional and individual investors and the securities on offer were placed with less than 80 investors, with an average subscription amount of US$12 million per investor. The placement is currently the largest concluded private placement in the history of the Nigerian capital markets. The market The Nigerian mobile telecommunications market is currently the largest and fastest growing market in Africa. Significant growth is expected in this market given the relatively low penetration levels and the increasing demand for access to communication. MTN Nigeria is well placed to participate in the expected growth in the mobile market, due to its extensive established network infrastructure, market prominence, knowledge and experience of the Nigerian market. Stanbic IBTC will continue to assist MTN Nigeria to maintain its leadership position in the Nigerian telecommunications market. 51 Business reviewCase study: MTN Nigeria Communications Limited (MTN Nigeria)
  27. 27. 52 53 Wealth Overview In 2008, the Group’s wealth business comprised four separate but related companies and business: • private non-pension asset management and stock broking (asset management)) through Stanbic IBTC Asset Management• pension fund administration (PFA) and management through Stanbic IBTC Pension Managers • proprietary investments (Ventures) through Stanbic IBTC Ventures • stock broking through Stanbic Equities Limited. The wealth businesses form an integral part of the investment banking franchise of Stanbic IBTC upon which the bank’s reputation has been built. These businesses have remained as separate companies due to the local regulatory requirements for participation in each of the sectors. As a result of the merger of Stanbic Bank Nigeria and IBTC Chartered Bank PLC, the Stanbic IBTC Group held two stock broking licences as both banks had stock broking subsidiaries. To comply with regulatory requirements the two stock broking businesses will be consolidated under one licence in 2009. In addition, effective 2009, the stock broking businesses and Ventures will be moved to CIB leaving only the investment management businesses (pension and non-pension management) in Wealth. Over the years, the asset management and PFA businesses have become the largest players in their various business areas in Nigeria. In 2008, despite the significant fall in equities values, our asset management operations remained the largest in Nigeria, measured by assets under management and we continued to manage the largest mutual fund in Nigeria, the Stanbic IBTC Nigerian Equity Fund. We were also the largest stock broking house in Nigeria by transaction value, out of over 250 stockbrokers, trading close to 13% of the market turnover in 2008. Our pension fund administration business on its part remained the largest pension fund administrator in Nigeria by assets under management and number of clients. The PFA won the prestigious Pension Fund Manager of the Year 2008 award from This Day newspapers, one of Nigeria’s leading newspapers, whilst the asset management business had previously won the Fund Manager of the Year award from This Day for its success in the asset management business. During the year, we increased out shareholding in the PFA from 65% to 70.59%. Our shareholding in Stanbic Equities Limited remained at 93.57%. All other businesses are fully owned by the group. An important factor to understanding the wealth business is the management of the regulatory environment in Nigeria. Each of the businesses is subject to a different regulator with different preferences and each with a strong requirement for independence of the business. This is however most pronounced in the PFA business where the regulator, the National Pension Commission, requires a completely independent business and restricts group cooperation with a particular focus on the investment transaction side. Similar tendencies are exhibited by the Securities Exchange Commission in regulating the asset management business and to a more limited extent, The Nigerian Stock Exchange, for the stock broking business. Needless to say, regulatory compliance is a major activity within the wealth business, ensuring that the business structures and activities are completely compliant with regulatory demands. Following the recapitalisation and consolidation of the Nigerian banking sector and the strong market performance that followed, most banks gradually transformed into financial services groups and acquired or established their own wealth management subsidiaries and businesses. In addition, the more forward looking boutiques have seized the opportunity to grow their balance sheets while a number of foreign players also entered the market actively. The year 2008 was therefore focused on restructuring and consolidating the wealth businesses to position them for what is expected to be fierce competition in the market place in the face of increasing globalisation of the Nigerian financial sector. For the PFA business, we are also playing a leading role in the development of self regulatory capacity in line with the requirements of the National Pension Commission. Business review Strategy The wealth business model has been focused essentially on building its fee generation capability while minimising the capital requirements. The businesses were traditionally designed to operate in a ‘hub and spoke’ arrangement from the financial tripod in Nigeria – Lagos, Abuja and Port Harcourt – and provide access to the capital markets for individual and institutional investors on an agency basis. Consequently, the companies held little or no positions in the markets in which they traded, merely acting as agents and providing (and managing) vehicles for investment access to the markets. All of the group’s proprietary investments were therefore made through the Ventures to eliminate potential conflicts with clients. In 2008, the main focus was to consolidate on the strengths of the businesses while repositioning them to extend their lead in the market place. The challenge was therefore to position both businesses for extensive retail expansion and penetration. In the pension space, significant mileage has been achieved with close to 700,000 individual clients and over 7,000 employers representing an estimated 20% of the registered individual pension market now being managed by the PFAs. The asset management and mutual fund business grew its client base across its funds to just over 30,000, while the stockbroking business enjoyed a market share of close to 13% by transaction value. The strategic focus on consolidation paid off handsomely as the businesses successfully seized the opportunity of a buoyant first half to restructure and reposition for the future. Operating platform changes and investments were carried out to position the wealth group as a knowledge business on a sales-and-service platform. The wealth businesses essentially provide our clients with the know-how to grow and preserve their wealth through managed vehicles that are available on a retail (versus wholesale) basis. Appropriate emphasis is now being placed on customer segmentation and on driving group and institutional schemes without neglecting the high net worth individuals. A key result of this consolidation is the focus on integration and cross selling with the bank – on the buy side by providing access to clients for CIB products and on the sell side by providing investment products for the retail platform. This not only creates a formidable distribution platform for the wealth business but also positions the businesses as major counterparties in the Nigerian financial market with significant leverage in the market place. Financial performance Despite the market difficulties, revenues and net earnings grew by over 36% and 8% respectively over the 2007 results for the wealth group. The key driver for 2008 was the PFA business where revenue and earnings growth over 2007 exceeded 100%, reflecting the strength of its underlying business. Total assets under management grew by 29% to N287 billion (ie over US$2 billion). Incentive fees virtually disappeared with the poor equities market performance while stockbroking revenues showed a solid performance largely based on the high market activity of the early part of the year. The 2008 market performance certainly tested the resilience of the wealth business model which was based on helping clients invest predominantly in the equities and fixed income markets in Nigeria. The model has proved to be successful. The gains of the first three quarters could not be reversed by the weakness of the last quarter while the pain was well distributed through the business units with the volatility experienced by the asset management and stockbroking businesses significantly offset by the stability of the PFA’s revenues. Although operating costs grew in absolute terms with headcount increasesanddepreciationofincreasingcapitalexpenditure,significant operating efficiencies were extracted leading to improvements in key operating metrics and in our growth and scaling capabilities. Looking ahead Without doubt, the volatility and challenges of 2008 will ensure that most clients will consider a different approach to investments in 2009 and beyond. With an increasing and more diversified pipeline of mutual funds, we expect that the accumulation of investment assets in 2009 will remain a key driver to income growth. The ongoing and continued flight to safety by local investors provides an excellent opportunity to leverage the heritage of the Standard Bank Group in the local market and provide secure investment options for our clients. We anticipate that opportunities to access, pool and diversify investments conveniently on our wealth platform will provide the necessary attraction to current and potential clients. Recognising the need to provide clients with increased convenience in handling and discussing their personal finances, in 2009, the wealth businesses will be relocating to new premises in Lagos and Abuja as well as expanding the number of hubs throughout the country. The investment in distribution infrastructure, as well as the attendant increase and upskilling of the staff, is expected to yield significant results quickly and ensure that we remain the wealth manager of choice in Nigeria.
  28. 28. 54 5555 • Board of directors • Corporate governance • Risk management Corporate governance Corporate governance risk management
  29. 29. 56 57 Atedo N.A. Peterside OON (53) BSc, MBA Appointed: Director 1989 Chairman 2007 Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Ventures Limited, Stanbic IBTC Asset Management Limited, Nigerian Breweries Plc, Presco Plc Committee member: None Chris Newson (44) B. Com, CA (SA) CSEP Appointed: 2008 Directorships: Stanbic IBTC Bank PLC, Stanbic Equities Nigeria Limited, Stanbic Nominees Nigeria Limited, Stanbic IBTC Asset Management Limited Committee member: Board credit committee, Board risk management committee Yinka Sanni (43) BA, MBA, ACS Appointed: 2005 Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Asset Management Limited, Stanbic IBTC Pension Managers Limited Committee member: Board risk management committee Jacques Troost (45) B.Comm (Hons) Appointed: 2007 Directorships: Stanbic IBTC Bank PLC Committee member: Board credit committee, Board risk management committee Moses Adedoyin (60) Appointed: 2005 Directorships: Stanbic IBTC Bank PLC Committee member: Board credit committee, Statutory audit committee Ben Kruger (49) B. Com (Hons) CA (SA) Appointed: 2007 Directorships: Stanbic IBTC, Standard Bank Plc, SSA Trading (Pty) Ltd Committee member: Chairman. Board credit committee, Board risk management committee, Board remuneration committee Bhagwan Mahtani (55) Appointed: 2005 Directorships: Stanbic IBTC Bank PLC, Aegean Investments Limited, Churchgate Nigeria Limited, First Century International Limited, Foco International Investments Limited, T F Kuboye Co, International Seafoods Limited, International Glass Limited. Committee member: None Atedo N.A. Peterside OON, Chairman Moses Adedoyin, Non-Executive DirectorJacques Troost, Executive DirectorYinka Sanni, Executive DirectorMarna Roets, Executive Director Dr Christopher Kolade CON, Non-Executive Director Ben Kruger, Non-Executive Director Bhagwan Mahtani, Non-Executive Director Chris Newson, Chief Executive Officer Board of directors Sola David-Borha (48) BSc, MBA Appointed: 1994 Directorships: Stanbic IBTC Bank PLC, Stanbic Nominees Nigeria Limited, Stanbic Equities Nigeria Limited, Stanbic IBTC Asset Management Limited, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Ventures Limited, Board Member-Financial Institutions TrainingCentre (FITC) Committee member: Board credit committee, Board risk management committee Marna Roets (42) B.Com (Hons) CA (SA) Appointed: 2007 Directorships: Stanbic IBTC Bank PLC, Stanbic Equities Nigeria Limted, Stanbic Nominees Limted Committee member: Board risk management committee Dr Alewyn Burger (57) Msc, Ph.D, AEP UNISA SPL, AMP Appointed: November 2008 Directorships: Stanbic IBTC Bank PLC, SAP Banking Advisory Board, CIO advisory Board of Accenture Europe, Integrated Process Solutions, MTN Banking Committee member: None Mallam Ahmed Dasuki (50) BSc, MSC Appointed: 1989 Directorships: Stanbic IBTC Bank PLC, MTN Nigeria Communications Limited, Phillips Project Centre Limited, Tinapa Business Resorts Limited, SASpv Limited, Islama Financial and Investment Trust, Interglobal Limited, Celtelcom Investment Limited Committee member: Board remuneration committee Ifeoma Esiri (56) LL, BL, LLM Appointed: 2004 Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Asset Management Limited, Podini International Limited, Veritas Geophysical Nigeria Limited, Ashburt Leisures Limited, Ashburt Beverages Limited, Ashburt Oil and Gas Limited Committee member: Chairperson. Board risk management committee, Statutory audit committee Dr Christopher Kolade CON (76) BA, Dip.Ed Appointed: 2008 Directorships: Stanbic IBTC Bank PLC, Acorn Petroleum PLC, System Specs Nigeria Limited, Cornerstone Insurance PLC Committee member: Board credit committee, Board remuneration committee Ratan Mahtani (53) Appointed: November 2008 Directorships: Stanbic IBTC Bank PLC, Aegean Investments Limited, Churchgate Nigeria Limited, First Century International Limited, Foco International Investments Limited, T F Kuboye Co, International Seafoods Limited Committee member: None Jacko Maree (53) B. Com, MA, PMD Appointed: 2007 Directorships: Stanbic IBTC Bank PLC, Standard Bank Group, The Standard Bank of South Africa, Standard Bank Plc,Liberty Group, Liberty Holdings, Standard International Holding SA Committee member: Chairman. Board remuneration committee Sam Unuigbe (66) BSc Econs, FCA (Eng Wales) FCA (Nig) FCTI Appointed: 1993 Directorships: Stanbic IBTC Bank PLC, Philips Project Centre Limited, Delta Afrik Limited, Delta Tek Engineering Limited, Delta Terra Tek Limited Committee member: Board credit committee, Statutory audit committee Lt Gen (rtd) Mohammed Inuwa Wushishi CFR GCON (69) PSI Appointed: 2005 Directorships: Stanbic IBTC Bank PLC, UAC of Nigeria Plc, UACN Property Development Company PLC Automotive Components Industries Limited, Acorn Petroleum Limited, Umfat Holdings Limited Committee member: Board risk management committee Ifeoma Esiri, Non-Executive DirectorDr Alewyn Burger, Non-Executive Director Ratan Mahtani, Non-Executive Director Lt Gen (rtd) Mohammed Inuwa Wushishi CFR GCON, Non-Executive Director Sam Unuigbe, Non-Executive DirectorJacko Maree, Non-Executive Director Mallam Ahmed Dasuki, Non-Executive Director Sola David-Borha, Deputy Chief Executive Officer 57 Corporate governance

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