Building African Champions The role of Capital Markets Arnold EKPE CEO, Ecobank Transnational...

Building African ChampionsThe role of Capital Markets

Arnold EKPECEO, Ecobank Transnational Incorporated

16 October 2012

Contents

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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


Building African Champions: From Regional to Global Challengers

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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.


Key benefits

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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


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Section 2

Building an African Banking Champion

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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


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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


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


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


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• 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


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


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• 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


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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


Thank you

Building African Champions The role of Capital Markets Arnold EKPE CEO, Ecobank Transnational...

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