Being part of a bigger picture is exactly how
we see our purpose in the financial services
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.
Our vision values 4
Stanbic IBTC - the group in brief 7
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
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
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
associated with our
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.
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
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
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
We strive to stay ahead by
anticipating rather than reacting,
but our actions are always
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
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.
the group in brief
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
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
ING Financial Institutions
Standard Bank Group
Registered address head office
Stanbic IBTC Bank PLC
Walter Carrington Crescent
P. O. Box 71707
Telephone: +234 (1) 2712400
Facsmile: +234 (1) 2626541/2
Total loan growth
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.
revenue Profit before
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.
Banking and other financial services
to individual customers and small to
medium sized enterprises.
Investment management, pension
fund administration and pension
Corporate and investment banking
services to larger corporates, financial
institutions and international counter-
parties in Nigeria.
Gross revenue contribution Total Assets Profit before tax contribution
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
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
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
– 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
– 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
– 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.
Standard Bank Group
at a glance
* 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
Lagos Island - 20 South South - 7
Lagos Mainland - 11 North West - 6
South West - 9 FCT Abuja - 6
South East - 4 North East - 5
• 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
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.
“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
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
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
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.
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
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
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 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
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
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
• 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
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.
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.
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
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
Official foreign exchange assets: CBN reserves and sovereign savings
CBN foreign exchange Reserves
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
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
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.
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.
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
• 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%
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.
Shareholders’ fund (average) ROE (PAT)
Oct’02 Oct’03 Oct’04 Oct’05 Oct’06 Oct’07 Oct’08
Profit and loss analysis
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.
Net interest income and net interest margin
CAGR (2006-2008) 66%
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.
31 Dec 2008
9 months ended
31 Dec 2007 Change
Mar’06 Mar’07 Dec’07 Dec’08
Net Interest income Margin before impairment charges
Margin after impairment charges
31 Dec 2008
9 months ended
31 Dec 2007
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
Mar’06 Mar’07 Dec’07 Dec’08
Non-interest revenue Percentage of total revenue
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%
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
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
Mar’06 Mar’07 Dec’07 Dec’08
Credit impairment charges on NPLs Credit loss ratio
Credit impairment charges on PLs
Earnings per share (Kobo)
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
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 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%
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
• 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
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
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
Medium Term Finance
Instalment Sales (VAF)
Medium Term Finance
Instalment Sales (VAF)
Financial review Business
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
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
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%
Tier I 36% 40%
Total 36% 40%
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.
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%
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%
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
Financial review Business
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
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 attributable to ordinary shareholders 83,259,137
Ordinary share capital 9,375,000
Ordinary share premium 84,303,797
Minority interest 700,235
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
31 December 2008
Income Statement Year ended
31 December 2008
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
Kayode SololaDr Demola Sogunle
Chris Newson (44)
Chief executive officer
B.Com CA (SA), CSEP
Oversees all business activities of Stanbic
South African institute of Chartered
Kandolo Kasongo (53)
Head of credit
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
Angela Omo-Dare (49)
Company secretary and head, legal
LLB, BL, LLM
Oversees and coordinates the company
secretariat and legal functions of the bank
Sola David-Borha (48)
Deputy managing director; Executive director,
Corporate Investment Banking
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
Sola David-BorhaChris Newson Marna Roets Jacques TroostYinka Sanni
Angela Omo-DareIsioma OgodaziKandolo Kasongo
Yinka Sanni (43)
Executive director, Corporate Investment
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
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
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
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
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.
Us-on-us Them-on-us Us-on-them
Monthly SMS notifications
Monthly email notifications
ATM withdrawal transactional volumes per usage type
ATM volumes of all transaction types per month
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:
• 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
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.
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
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.
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
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
Monthly internet banking transaction volumes
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.
• 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
• 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
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
Our strategy is to consolidate our existing CIB franchise by building
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
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
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.
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
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
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.
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.
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 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
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
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.
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$58.9 million (N6.93 billion) and was
• Asset Resource Management Co Ltd (“ARM”);
• Africa Infrastructure Investment Fund (“AIIF);
• Larue Projects; and
• Hi-Tech Construction.
The debt to equity ratio is 68:32, and the total project value of N50
billion comprises of the senior debt tranche of N30.4 billion, equity
of N6.9 billion, mezzanine debt of N5 billion, and the balance from
other sources including pre-completion revenues.
Lafarge Cement WAPCO Nigeria Plc, one of the
largest cement producing companies in Nigeria plans
to increase its production capacity over the next few
To achieve this, the company is embarking upon an
expansion plan which will increase its production by
2.2 million metric tonnes per annum and will also
construct a 70MW captive power plant operated by
natural gas and / or low pour fuel Oil (“LPFO”) which
will replace its existing power source.
Since conceptualisation of the project in December 2007, a
feasibility study on the expansion project has been undertaken and
an environmental impact assessment (EIA) study, which is mandatory
in Nigeria for a project of this size was completed. The construction
phase commenced in mid 2008, and is expected to be completed by
Q1 / Q2 of 2010. It is expected that the expanded plant will become
fully operational by the first half of 2011 following installation of
electricity supply and plant commissioning.
Stanbic IBTC Bank PLC has been appointed by the company as the
global coordinator for the expansion project funding and as co-lead
arranger on both the Naira and US$ tranches with two other banks.
Financial closure on the transaction was achieved in May 2009.
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
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
WAPCO Nigeria Limited
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.
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 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.
MTN Nigeria Communications
Limited (MTN Nigeria)
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
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
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
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
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.
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
operating efficiencies were extracted leading to improvements in key
operating metrics and in our growth and scaling capabilities.
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.