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Building African ChampionsThe role of Capital Markets
Arnold EKPECEO, Ecobank Transnational Incorporated
16 October 2012
Contents
2
1 The emergence of African capital markets
2 Building an African Banking Champion
© Ecobank Group | African Champions | October 2012
3
Section 1
The emergence of African capital markets
Building African Champions: From Local to Regional Powerhouses
4
SMEs use bank and alternative channels of financing to expand domestically
Developed relationship with banks lead to IPO.
Companies rely on a hybrid structure of market and bank based finance
Equity Markets provide “lift” – a greater level of financing than can be provided by banks.
Higher financing leads to business investment, development & expansion within region
© Ecobank Group | African Champions | October 2012
Building African Champions: From Regional to Global Challengers
5
Local market Post-IPO period sees further development of franchise.
Local market financing plateaus, which leads to development of cross-border financing relations.
Access to larger markets help finance significant scale of franchise development.
Local equity markets continue to provide financial “lift” – but is supplemented by multiple listing (ETI), international listing or bond financing.
Equity, multiple listing (ETI), bond, lead to further business development & global expansion.
© Ecobank Group | African Champions | October 2012
Key benefits
6
Key benefits of capital markets in building African Champions:
• Channelling resources into productive investments
• Solution to finance cross border expansion
• Provide financial flexibility
• Help broaden participation in company ownership
• Increase visibility
• Help improve governance and financial reporting standards
© Ecobank Group | African Champions | October 2012
7
Section 2
Building an African Banking Champion
8
Building A Pan-African Banking Platform
Formative Phase
Initial Expansion
Phase
SecondaryExpansion
Phase
Recent Expansion
Phase
InternationalExpansion
Optimisation
Enjoy status of an
International Financial institution
Shareholders include EBID (formerly ECOWASFund)
12 countries in Africa
Founded in 1985 in Togo with shareholders from 10 African countries
1988 -1990 1998-2001 2006 -2011 2009-2011 From 2010
31 countries in Africa 5 more countries
1.Benin2.Cote
d’Ivoire3.Ghana4.Nigeria5.Togo
6.Burkina Faso
7.Cameroon8.Guinea9.Liberia10.Mali11.Niger12.Senegal
PerformanceRisk
managementand controls
Customer service
and SalesTechnology
andProcess Improvements
Capacity building
13.Burundi14.Cape Verde15.Central
African Rep16.Chad 17.Congo 18.D.R. Congo19.Gabon20.Gambia21.Guinea
Bissau
22.Kenya23.Malawi24.Rwand
a 25.Sao
Tome26.Sierra
Leone27.South
Africa28.Tanza
nia29.Ugand
a30.Zambi
a31.Equat
orial Guinea
31.Angola32.Dubai
(UAE)33.France34.UK35.Zimbab
we
1.Mozambique
2.South Sudan
3.Madagascar 4.Ethiopia5.USA (rep.
office)6.China (rep.
office)
Focus on5 countries in Africa
6 more countries
Shareholders
include IFC andPrince Al- Waleed
•Chad, Central Africa Republic, Rwanda, Malawi, Kenya, Burundi, Zimbabwe: markets entered through an acquisition•Nigeria, and Burkina Faso: markets where acquisitions have been used to enhance growth
© Ecobank Group | African Champions | October 2012
9
Becoming The Dominant Bank in Middle Africa
Built the platform Develop scale in key markets Growth acceleration
Up to 2010 2011-2012 Beyond 2012
• 32 countries in Africa
• Strong organic growth
• Over 14 acquisitions in the last 5 years:
- Nigeria (Oceanic Bank – 2011)- Ghana (TTB – 2011)- Burkina Faso (BACB - 2008)- Kenya (EABS – 2008) - Central Africa Rep. (BICA -
2007)
• Focus on performance: risk management, customer service and capacity building.
• Optimise balance sheet: diversify funding sources and optimise capital allocation
• Develop key businesses
• Proactive inorganic opportunities
• 6 countries to go
• Exploit international opportunities
• Capture efficiency and process improvements through centralized processes and outsourcing
• Investment in key growth drivers
• Enhance profitability and operating efficiency
© Ecobank Group | African Champions | October 2012
Progress towards top 3 (1)
Building Scale
Series1
1. Burkina Faso 2. Chad 3. CAR 4. Ghana 5. Guinea6. Liberia 7. Mali 8. Togo
9. Benin (No.2)10.Cote d’Ivoire (No.2)11. Guinea Bissau (No.2)12.Sao Tome (No.3)13.Rwanda (No.3)
14. Burundi (No. 4)15. Gabon (No. 4)16. Niger (No. 4)17. Senegal (No. 4)18.Cameroon (No. 5)19. Congo B. (No.5)20. Gambia (No. 5)21. Sierra Leone (No. 5)22. Nigeria (No. 6)23. Cape Verde (No. 7)24. DRC (No. 9)25. Malawi (No. 10)
26. Zambia (No. 16)27. Uganda (No. 16)28. Zimbabwe (No.17)29. Kenya (No. 17)30. Tanzania (No.28)
No. of Markets in which we are:
No. 1 Top 3 Top 10 Not yet Top 10
Ecobank operations in these countries are under 3 years
8 5
25
13
Chart is cumulative
(1) Ranked using total assets
© Ecobank Group | African Champions | October 2012 10
Simple strategy; Value focused
Scale
• Build on Middle Africa dominance
• Grow assets
• Aim to be top 3 in all markets
Efficiency
• ‘One Bank’ model drives efficiencies
• Single IT platform and shared services
• Centralized Risk management
• Disciplined on expenses
Diversification
• Diversification along geography, businesses and products to reduce overall risk to growth
Growth
• Focus on revenue growth
• Selectively increase the loan book
• Invested in branches & alternate delivery channels
• Win customers
Shareholder Return
1
2
3
4
© Ecobank Group | African Champions | October 2012 11
Prospects for long term growth remain strong
Focus on Middle Africa
• Middle Africa: SSA ex RSA is a fast growing and under-banked region with 44 countries, 780mn people and $1 trillion in GDP
• SSA GDP growth forecast to outpace growth of World and Advanced Economies
• FDI up six-fold in past decade; forecast to reach $150bn by 2015World Output Advanced
EconomiesSSA
3.9
1.6
5.1
3.5
1.4
5.4
4.1
2.0
5.3
GDP Growth
2011 2012 2013
• Middle Africa holds 10% of the World’s oil reserves
• Mineral resource-rich: 40% of gold reserves
• 80-90% of chromium & platinum
• Growing intra- Africa trade (currently c.11% with huge unrecorded cross-border trade – c.10%)
• Emerging middle class: 60m households have income >3k pa, expected to rise to 100m by 2015
© Ecobank Group | African Champions | October 2012 12
13
• One rationalized core banking system
• Centralized telecommunications platform
• Standard and independent risk processes
• Centralized procurement: taking advantage of economies of scale
• Central data centres
Building Efficiency At The Core Of Our Business
Our ‘One Bank’ concept
© Ecobank Group | African Champions | October 2012
World class partners extend capabilities and customer reach
Strategic alliances
• Airtel for mobile banking opportunities across 14 African countries in which we jointly operate
• Collaboration with Mastercard to bring their payment solutions to the Continent
• The Ecobank Nedbank alliance offers clients a ‘One Bank’ experience across Africa with more than 1,500 branches in 35 countries. And provides tailored banking and business advisory solutions to clients with a view to growing and doing business in Africa
• International trade and investment pact with Bank of China providing dedicated China desks in key African locations
• Microfinance services in key African countries with Accion
• Leverage Ecobank’s distribution network to offer life assurance, pension fund administration and unit trust management in conjunction with Old Mutual
© Ecobank Group | African Champions | October 2012 14
15
• Leading pan-African full service banking group
• Present in 33 African countries, more than any other bank
• Vision to be world class and operates to international standards – reports in US$ and in line with IFRS. Compliant with IFC corporate governance principles
• Total assets of $17.8 billion, over 9 million customers, more than 1,200 branches, +2,000 ATMs and 18,000+ employees
• Listed on 3 stock exchanges: NSE, GSE and BRVM
Serving More African Countries Than Any Other Bank
Ecobank Today
© Ecobank Group | African Champions | October 2012
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Key Competitive Advantages
• The largest network across Middle Africa
• Full service banking operation (Cards, Mobile Banking,…)
• Pan-African ethos and culture
• Diversification provides consistent profitability
• Continue organic and inorganic growth plans
• World class strategic partnerships
• Focus on performance and risk management
• Corporate Governance: US$ and IFRS reporting, IFC Corporate Governance Guidelines
• Listed on 3 stock exchanges
Positioned for sustained growth
© Ecobank Group | African Champions | October 2012
Thank you