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Stanbic IBTC Bank PLC

Financial results presentation

for the year ended 31 December 2010

Stanbic IBTC Bank PLC December 2010 financial results presentation

Contents

This presentation is based on the consolidated financial statements of Stanbic IBTC Bank PLC and its subsidiaries (herein referred to as “Group”). All financial results in thispresentation are presented using Nigerian GAAP (Generally Accepted Accounting Principles), unless otherwise indicated as being on an IFRS (International FinancialReporting Standards) basis.

2

The year in review

Financial analysis

Business unit analysis

Strategy and prospects

Q & A


The year in review

Chris Newson

CEO


Operating environment

4

Market was impacted by:

Significant market liquidity with the resultant

decline in interest rates in the first 9 months of

2010;

Limited profitable investment outlets to channel

excess liquidity;

Relative stability in exchange rate;

Increase in international crude oil prices and

domestic oil production levels;

Slow down in capital market recovery

especially in second half of 2010;

Improved confidence in the money market as a

result of the extension of the Central Bank of

Nigeria interbank guarantee; and

Rapidly changing regulatory environment.

Results reflect the following:

Strong loan growth despite the testing operating

environment;

Marked improvement in asset quality as

evidenced by the significant reduction in non

performing loans and credit impairment charges;

Improvement in deposit mix ;

Continued investment in infrastructure (branch,

ATMs) and people;

Lower cost of funding as a result of declining

interest rates;

Gradual recovery of the capital market in the

first half of 2010; and

Diversified business, strong capital and liquidity

positions.


Financial analysis

Ronald Pfende

CFO


Financial highlights

6

2010 change

%

2009

Total income (Nmillion) 48,394 10 43,823

Profit after tax (Nmillion) 9,455 16 8,138

Gross loans and advances (Nmillion) 187,143 41 133,100

Deposits and current accounts (Nmillion) 186,466 10 169,200

Net interest margin (%) 6.9 7.4

Pre-tax return on average equity (%) 16.5 12.8

Cost-to-income ratio (%) 70.8 65.3

Credit loss ratio (%) 0.3 3.6

Non-performing loans to total loans (%) 7.6 14.1

Total capital adequacy ratio (%) 32.0 35.0

Dividend per share (kobo) 39 30

Price-to-book (times) 2.0 1.7


Summarised group income statement

7

2010

Nmillion

change

%

2009

Nmillion

Interest income 34,359 (16) 40,920

Interest expense 7,989 (49) 15,813

Net interest income 26,370 5 25,107

Net fees and commissions 18,983 38 13,707

Trading revenue 2,658 (36) 4,169

Other revenue 383 (54) 840

Total income 48,394 10 43,823`

Credit impairment charges 620 (87) 4,858

Total income after credit impairment 47,774 23 38,965

Operating expenses 34,246 20 28,623

Profit before tax 13,528 31 10,342

Tax 4,073 85 2,204

Profit after tax 9,455 16 8,138


Revenue evolution

8

34,359

7,989

22,024

620

34,246

13,528

4,0739,455

0

10,000

20,000

30,000

40,000

50,000

60,000

Interest income

Interest expense

Non-interest revenue

Credit impairment

charges

Operating expenses

Profit before

taxation

Taxes Profit after taxation

Nmillion

Gross revenue

Gross revenue by business unit

Corporate & Investment

Banking60%

Personal & Business Banking

25%

Wealth15%

Overview of group income

Comments

The decrease in gross revenue by 5% was occasioned

by the declining interest rates. However this was

somewhat moderated by the 41% growth in gross risk

assets.

Lower yields in interbank and fixed income investments

as a result of the significant market liquidity also affected

gross revenue adversely.

Recovery of non-interest revenue to pre-financial crisis

levels.

Nbillion

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Dec'07 Dec'08 Dec '09 Dec'10

15.8

41.0 40.9

34.3

13.0

20.2 17.9

22.4

Interest based revenue Non-interest based revenue


24%

Corporate &

Investment Banking

65%

Wealth12%

2010 2009


Revenue evolution

9

Net interest income and margin analysis

9,601 22,362 25,107 26,370

5.8%6.4%

7.4%

6.9%

4.6% 4.9%

5.9% 6.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

-

5,000

10,000

15,000

20,000

25,000

30,000

Dec'07 Dec'08 Dec'09 Dec'10

Net Interest income

Net interest margin before impairment charges on total assets

Net interest margin after impairment charges on total assets

Nmillion

Breakdown of interest income

Comments

Net interest income : CAGR (2007-2010): 40%

Breakdown of non-interest revenue

Net interest income benefited from proactive restructuring

of funding base and replacement of expensive deposits with

lower cost deposits.

Non interest revenue benefitted from steady growth within

our wealth business, increased transactional volumes,

higher level of advisory mandates within investment

banking and a gradual upward trend in capital market

activities in the first half of 2010.

Stable exchange rate limited margins and resulted in

reduction in trading revenue.

Investment securities

30% (2009: 30%)

Placements11%

(2009:11%)

Loans & advances59%

(2009:59%)

Commissions16%

Fees 57%

Other income4%

Trading revenue

23%

Commissions19%

Fees 67%

Trading revenue

12%

Other income2%

2010 2009


Revenue evolution

10

22,480

42,495 43,823

48,394

0

10,000

20,000

30,000

40,000

50,000

60,000


Nmillion

Total operating income

CAGR (2007-2010): 29%

42%52% 57% 54%

4%

11%7% 9%

36%

24% 24% 31%

9%10% 10%

5%9%3% 2% 1%

0%

20%

40%

60%

80%

100%

120%


Net revenue from funds Commissions Fees Trading revnue Other income

Breakdown of operating income

CommentsTotal operating income by business unit

10% growth in operating income despite the testing operating

environment with lending activities accounting for more than

half of total operating income.

Growth in net fees and commission income impacted

operating income positively .

Relative stability in the contribution to operating income by

business unit.

CIB57%

(2009:58%)

PBB25%

(2009:26%)

Wealth18%

(2009:16%)


Credit impairments

11

1,681

4,607 4,504

(835)

362 413 354

1,455

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

(2,000)

(1,000)

0

1,000

2,000

3,000

4,000

5,000


Credit impairment charge on NPLs (specific provision) Credit impairment charge on PLs (general provision) Credit loss ratio

Nmillion

Credit impairment charges & credit loss ratio

Comments

Continued improvement in credit impairment charges and credit loss ratios.

Reduction in credit impairment charges driven by effectiveness of risk management processes and improved loan book quality.

Credit impairments are inclusive of a general debt provision.

Sold margin facilities amounting to N14 million to AMCON, which had an insignificant impact on credit impairment charges.

Credit impairment charges benefitted from improved collection capability and debt servicing ability and portfolio provision releases.


Expenses evolution

12

Breakdown of operating costs

49% 46% 47% 43%

8%6% 9% 12%

49%48% 44% 45%

0%

20%

40%

60%

80%

100%

120%


Staff cost Depreciation Other operating expenses

Operating costs

Operating cost business unit Comments

Investment in infrastructure, people and skills for future growth

continued in 2010. 71 branches and 68 ATMs were opened

and deployed respectively. The investment in infrastructure

will continue in 2011.

Substantial growth in depreciation cost due to investment in

infrastructure.

Continued focus on cost and operational efficiency as

earnings capacity remained constrained in a challenging

operating environment.

9,444 22,850 28,623 34,246

44.7%

53.8%

65.3%

70.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000


Nmillion

2010

Nmillion

change

%

Staff cost 14,781 10

Depreciation 4,034 57

Other operating cost 15,431 23

Total operating cost 34,246 20


Summarised group balance sheet

13

2010 Change 2009

Nmillion % Nmillion

AssetsCash and balances with central banks 10,048 29 7,772Treasury bills 12,428 9 11,378Due from other banks 88,659 15 76,954Loans and advances to customers 163,952 48 110,508Advances under finance lease 13,502 44 9.377Investment securities 47,585 (33) 71,462Investment in subsidiaries - (100) 1 Deferred tax assets 939 58 594Other assets 16,176 (37) 25,566Property and equipment 31,252 16 26,878

Total assets 384,541 13 340,490

Liabilities

Customer deposits 186,466 10 169,200

Due to other banks 36,152 46 38,334

Other borrowings 18,272 44 12,647

Other liabilities 34,220 - 34,052

Current income tax 4,197 (10) 4,660

Deferred tax liabilities 108 8 100

Total liabilities 299,415 16 258,993

Equity

Share Capital 9,375 - 9,375

Reserves 74,375 5 71,105

Shareholders' funds 83,750 4 80,480

Minority interest 1,376 35 1,017

Liabilities and equity 384,541 13 340,490


Loans and advances

14

93

113

133

187

0

20

40

60

80

100

120

140

160

180

200


Gross loans and advances

Overdrafts35%

Home loans6%

Term loans51%

Instalment sales (VAF)

8%

Loans and advances by type

Loans and advances by industry Comments

Loans and advances by business unit


31% (2009:22%)

Corporate Investment

Banking 69%

(2009:78%)

Loan book grew by 41% despite limited industry growth

and increased competition for good quality credits.

Loan growth was achieved without compromising risk

management as credit management principle.

Growth in the contribution of PBB to loan portfolio. PBB

loan book doubled in 2010.

Nbillion

Oil and gas5.7%

Consumer credit7.3%

Manufacturing20.6%

Mining & Quarrying

5.7%Mortgage5.7%Real estate and

constr4.1%

Government2.1%

Power6.2%

Other public utilities21.0%

Transportation3.2%

Communication17.1%

Others1.4%

CAGR (2007-2010): 26%


Loans and advances performance

15

11,162 15,537 18,830 14,237

12.0%

13.7%

14.1%

7.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000


Non performing loans NPL/ total loans

Others0.1%

General commerce

22.4%

Oil & gas56.4%

Finance &Ins5.6%

Transportation12.7%

Communication2.7%

Non-performing loans

PBB32%CIB

68%

Comments

Non-performing loans by business segment

Non-performing loans by industry

Significant improvement in asset quality as non-

performing loan was down by 24% to N14.2 billion from

N18.8 billion in December 2009.

Continued improvement in the ratio of non performing

loans to total loans. The ratio was 7.6% at end December

2010 (FY 2009: 14.1).

Participation in the sale of toxic assets to AMCON has

insignificant impact on non-performing loans and credit

impairment charges.

Nmillion


Loans and advances performance

16

12.0% 13.7% 14.1%7.6%

103.6%

67.2% 70.2%

68.0%

0%

20%

40%

60%

80%

100%

120%


NPL /ratio Provision adequacy

NPL balance

Nmillion

Security

NPV

Nmillion

Provision

Adequacy

without security

%

Provision

Adequacy with

security

%

Oil & gas 8,025 9,190 52 166

Other sectors 6,212 4,392 89 160

Total 14,237 13,582 68 163

NPL breakdown

2010

Nmillion

% of total

NPL

2010

2009

Nmillion

% of total

NPL

2009

Top 2 CIB NPLs

(2009: Top 4) 8,676 60.9 10,541 56.0

Other CIB NPLs 1,054 7.4 2,419 12.8

PBB NPLs 4,507 31.7 3,947 21.0

Margin NPLs - - 1,924 10.2

Total NPLs 14,237 100.0 18,830 100.0

NPL concentration by business unit NPL and coverage ratio

Provision adequacy Comments

Resolved two major NPLs in last year and strongly

believe the other 2 major NPLs are recoverable and

efforts are geared towards their collection.

We will participate in the second phase of sales of

toxic assets to AMCON but the participation will not

significantly influence improvement in asset quality.

Continued improvement in credit collection capabilities

and processes coupled with enhancement of credit

systems to support exposure monitoring.


Deposits

17

71,391

95,262

169,200

186,466

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000


Nmillion

PBB 44%

(2009:44%)

CIB56%

(2009:56%)

Deposit liabilities Breakdown of deposits

Deposit contribution by business unit Comments

CAGR (2007 -2010): 38%

In the light of declining interest rates, focus in 2010 was

largely on reducing the overall cost of funding by changing the

deposit mix. The ratio of lower cost deposits improved to 55%

in 2010 from 52% in previous year.

Increased deposit gathering capabilities. Bank network

doubled during the year.

We believe that with our on-going footprint expansion, service

excellence and our continued focus on attracting lower priced

deposits the deposit mix will continue to show signs of

improvement.

45% 50%40% 42%

7%6%

3%5%

13%17%

9%8%

35%27%

48% 45%

0%

20%

40%

60%

80%

100%

120%


Current deposit Savings deposit Domiciliary deposit Term deposit


Funding, liquidity and capital

18

Stable source of funding to exploit market opportunities.

Total assets funded chiefly from deposit liabilities.

Active in the interbank market as a net placer of funds.

The liquidity ratio decreased to 31% in line with our pursuit for

more profitable investment outlets resulting in measured risk

assets growth but was still 6% above the regulatory minimum

of 25% as at end of December 2010.

Strong capital adequacy ratio of 32% to pursue growth

opportunities and support business risks and contingencies.

•

23% 27%

50% 49%

30% 27%

15% 19%23% 23%

11% 10%

24% 23% 24% 22%

0%

20%

40%

60%

80%

100%

120%


Deposits Borrowings Other liabilities Equity

41.7 41.5

35.032.0

0

5

10

15

20

25

30

35

40

45


Capital adequacy ratio Statutory minimum

%

79%73%

51%

31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


Liquidity ratio Statutory minimum

Liquidity ratio

Capital adequacy

Funding mix

Comments


Group shareholder value

19

75,563 78,114 80,572 82,115

12.8%

16.5%

9.5%

10.7%

0%

5%

10%

15%

20%

25%

72,000

74,000

76,000

78,000

80,000

82,000

84,000


Shareholders' funds (average) ROaE (PBT) ROaE (PAT)

Nmillion

25

40

30

3942

64

45

50

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

0

10

20

30

40

50

60

70


Dividend per share Earnings per share Dividend cover

koboTimes

Earnings and dividend per share Return on equity

Comments

Increased dividend payout ratio. Proposed dividend of 39k, 30% growth over 30k paid in 2009.

Improvement in return on average equity despite the challenging operating conditions.

Continued focus on increasing shareholder value.


Business segment review


Corporate & Investment Banking

Yinka Sanni

Deputy CEO


Abridged income statement and key ratios

2010

Nmillion

change

%

2009

Nmillion

Net interest income 18,109 12 16,117

Non-interest revenue 9,373 (1) 9,649

Total income 27,482 7 25,558

Credit impairment charges (513) >(100) 3,820



Net interest margin (%) 7.2 8.5


NPL/total loan ratio (%) 7.5 12.5

Gross loans (Nmillion) 129,807 26 103,379

Deposits 104,222 11 94,186

22

Investment banking

29%

Transactional products and

services33%

Global markets

38%

2010

Contribution to total income by business unit

Investment banking

24%

Transactional products and

services34%

Global markets

42%

2009


Key achievements in 2010

23

Maintained dominance in stock broking business with market share of over 25%.

Grew holdings under custody by 44% year-on-year to N525 billion at end of December 2010 and

continued to maintain our leadership in non-pension asset custody business.

Maintained market leadership in project finance, investment banking and global markets businesses.

Thought leadership – actively participating in developing and deepening the Nigerian capital market and

infrastructure financing.

Appointed as one of the licensed Money Market & Fixed Income Custodians.

Growth in commissions and fees driven by increased advisory activities within the investment banking

unit, increased transaction volumes and activities as well as the gradual recovery in the capital market

prices in the first half of the year, which affected positively the revenue of our stock-broking business.

Growth in asset book in a highly competitive operating environment.

Significant reduction in cost of funds as expensive deposits were replaced with lower costs deposits.

Reduction in credit impairment charges and non-performing loans through improvement in asset quality

and collection capabilities.

Set up a carbon trading desk.

Stanbic IBTC Bank PLC December 2010 financial results presentation24

Recognitions in 2010:

Best Brokerage House Award, EMEA Finance;

Stock Broker of the Year, Finance Magazine Global Awards;

Best Investment Bank in Nigeria Euromoney Awards;

Best Issuing House in Africa, African Bankers Award;

Best Sub –Custodian in Nigeria Global Finance Award;

Best Investment Bank in Nigeria Award, EMEA Finance; and

Best Equity House and Best Investment Bank of the Year; Nigerian Investment Banking League



Key focus - 2011

25

Build on the already laid foundation to grow our transactional products and services franchise, specifically

franchise collections and electronic banking.

Medium term financing and growing the risk asset book.

Optimising funding mix.

Grow market share of trade finance through suitable trade finance model that meets the needs of

customers.

Continued investment in human capital required to build a sustainable market leading investment

banking franchise.

Operational and cost efficiency.

Cross border leverage of the group - one global CIB.

Maintain leadership in corporate finance, project finance, global markets and stock broking.

Aggressive client acquisition drive.



Jacques Troost

Executive Director



27

2010

Nmillion

change

%

2009

Nmillion

Net interest income 7,691 (4) 8,052

Non-interest revenue 4,545 39 3,266

Total income 12,236 8 11,318

Credit impairment charges 1,133 9 1,038


Profit before tax (1,429) >(100) 1,126

Net interest margins (%) 6.3 5.6


NPL to total loan ratio (%) 7.9 19.8

Gross loans (Nmillion) 57,335 93 29,721

Deposits (Nmillion) 82,444 10 75,014

Lower cost deposits to total

deposits (%)72 61

Personal Banking

58%

Business Banking

42%

2009


Personal Banking

61%

Business Banking

39%

2010



452,912 Customers 587,609

2009 2010

1.61.9

12.3mATM

transactions volume

18.6m

70 Branches 141

2009 2010

N29bnRisk asset

growthN57bn

N75bnLiability growth

N82bn

132 ATMs 200

N17.4bnATM

transactions value

N28.1bn



29

The group investment in footprint has started yielding the desired results as evidenced by:

30% growth in number of customers to about 600,000.

56% increase in volume of business transactions.

Strong growth (60%) in savings volumes.

Significant improvement in deposit mix. Lower cost deposits accounted for 72% (2009: 61%) of the

division’s total deposits.

Double digit asset acquisition on the back of improved credit capability. PBB business contribution

increased from 22% in 2009 to 31% in 2010.

More than 40,000 accounts opened in the first six month of E.susu introduction into the traders

market.

Our hub and spoke branch strategy is anchored on proximity to customers, speed of roll out and cost

efficiency, whilst not compromising on customer service and geographical coverage.


Key focus - 2011

Continued focus on responsibly increasing the customer and account base.

Significant focus on quality of service as a key market differentiator.

Enhancing the internal credit and risk management systems and process e.g. credit scoring and

behavioural profiling.

Cost containment and operational efficiencies.

Enhancing our product and service offering to unlock the opportunities within Business Banking.

Innovation and expertise in mobile and electronic channels to be enhanced.

Responsible asset growth across core business segments.

Sweating the “investment” in PBB business.

30


Wealth

Obinnia Abajue

Acting CEO, SIPML



32

2010

Nmillion

change

%

2009

Nmillion

Net interest income 570 (39) 938

Non-interest revenue 8,106 36 5,981

Total income 8,676 25 6,919




Assets under management

(Nbillion)580.2 51 384.1

Asset management

24%

Pension management

76%

2010


Asset management

28%

Pension management

72%

2009



33

Maintained the clear market leadership in pension and asset management businesses measured by

either assets under management or number of individual clients

Grew asset under management by 51% to N580 billion ($3.8billion).

Increased retirement savings accounts to 834,298 representing a 15% growth.

Introduced two fixed income funds – Stanbic IBTC Money Market and Stanbic IBTC Bond Funds.

Obtained all regulatory approvals for the establishment of a trusteeship business – Stanbic IBTC

Trustees Limited. Will commence operations in 2011.

Closer working relationship with the bank to improve overall share of wallet from each customer.

Established a robust distribution platform by leveraging on the increased footprint to drive customer

acquisition and improve service levels.


Key focus - 2011

Enhancing the client service experience, and leveraging the group growing footprint.

Continued focus on operating and cost efficiency.

Leverage on the quality and safety of the parent.

Positioned to take advantage of opportunity created by the divestment in non-banking business by

other banks.

Maintain market leadership in key business segments.

Building and establishing the trusteeship business.

34


Strategy and prospects

Chris Newson

CEO


Business Enablers

Personal - Client Base - Business

Transactional & Short Term

Liability

(Current & Transactional)

Investment & Savings

(Savings & Term Deposits)

Simple Lending Products

Simple Insurance

Products & Complex Lending

Products

Wealth

Products

Wealth

Advisory

Business Enablers

Client Base

Transactional Products

Franchise Products

Core Banking & Basic Derivatives

Leverage Products

& Complex Derivatives

Primary

Market

Access

Strategic

Advice

Core banking, payments and infrastructure

World Class Full Service Domestic Franchise

Offshore

Private

Banking

& Wealth

Cross

border &

FDI

advisory

Portfolio

flows, risk

manageme

nt products

Project,

structured

&

leveraged

finance

Cross

border trade

&

transactional

products

What we are building


Where are we now?

37

Significant investment in infrastructure, core banking system and people over the past 2 years.

Achieving scale in our retail and commercial banking business:

o Number of branches double in 2010 and we are now represented in every state.

o ATMs have increased to 200 from a base of 20 in 2007.

Hub and spoke model ensures network expansion is cost effective without compromising customer

service and geographical coverage.

Growing banking transactional volumes. Transactional revenues increased by 56% to N24.3bn in 2010.

Responsibly growing our balance sheet ahead of the market average.

Growth in both lending book and reduces cost of funding as a result of network expansion.

Replacement of core banking system to be completed in 3Q 2011.

Cost increases have been largely in line with expectations. However, there is still need to drive better

efficiency – no further increase in cost to income ratio planned.

Investment will continue in 2011 albeit at a slightly reduced pace.


Key strategic imperatives

38

Core strategy to build a scalable domestic universal banking franchise remains unchanged.

Continue to build the Stanbic IBTC brand synonymous with integrity, excellent service and reliability.

Capitalise on and maintain our market leadership position in Corporate Finance, Custody & Wealth

Management.

Continue to expand our business within Personal & Business Banking space while “sweating” our existing

assets.

Enhance operational efficiency through cost management & control – shared services, core banking

project.

Broaden term funding base for both naira and dollars and continue to responsibly grow the risk asset

book.

Focus on trade & commercial banking to further grow our annuity income.

Leverage the China and emerging market franchise of Standard Bank to capture cross-border

opportunities.

Best people practices.

Establish a holding structure in order to retain all the existing business lines.


Prospects

In the short term, we expect :

• Some margin pressure with margins declining 25-30bps over the next year.

• Risk asset and deposit growth of 25-30%.

• Cost to income ratio has peaked and will gradually start to decline.

• Further improvements in overall asset quality.

39


Prospects

Strategically we are well positioned for growth:

Strong capital base to support planned growth and take advantage of business opportunities;

Existing Enterprise Risk Management framework;

Market leader in investment banking and wealth business;

Talented people – local and international professionals;

Robust corporate governance structure and culture;

Quickly achieving critical mass in network expansion, without compromising excellent customer

service; and

Strong parentage - member of Africa’s largest bank.

We are excited about the future

40

Stanbic IBTC Bank PLC December 2010 financial results presentation41

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