FACTS BEHIND THE FIGURES INTERNATIONAL INVESTORS FORUM First Nine Months 2007/08 Sustained Triple Digit Growth Momentum Leads to Excellent Financial Results Presentation by the Management of Access Bank Plc March 4, 2008 The Quest for Excellence 1 1
Presentation Outline • Key Facts About Us • Banking Industry Trends & Our Target Market • Our Unique Market Penetration Strategy • Comparative Performance Analysis • Growth Drivers – Business Segment Contribution • Governance & Risk Management • Capital Raising and Utilisation of Proceeds • Performance Forecast The Quest for Excellence 2 2
Access Bank – Key Facts OUR VISION : To transform our bank into a world-class financial services provider. OUR MISSION : To go beyond the ordinary, to deliver the perceived impossible, in the Quest for Excellence Market Capitalization $3. 4 Billion (Q 3’ 06 – $413 Million) No of Employees 1200 of Africa’s Best Total Assets $6. 45 Billion Credit Rating AA / A- / BBB Geographical Coverage Nigeria, Gambia, Sierra Leone Channels 118 Branches 119 ATMs 104 POS Call Centre (GCR/Agusto/Fitch) Partners Listing NSE (Ordinary Shares & 3 years Convertible Bond) OTC GDR Traded in London Subsidiaries • Access Bank Gambia • Access Bank Sierra Leone • Access Investment & Trust Ltd • Access Bank University of Banking • Access Homes & Mortgages • United Securities Limited The Quest for Excellence 3 3
Banking Industry Trends & Target Market • Increased minimum capital requirements & consolidation pressure in Nigeria and other countries driven by regulation and competition • Banking sector is still very weak and shallow in most Africa countries and therefore does not possess the capacity to support real economic growth • Contribution of the financial sector to funding the private sector i. e Private Sector Credit/GDP is between 10% to 20% and around 100% in developed countries and 185% in most advanced economies • Limited pool of experienced bankers and the economy is still largely cash driven given the very basic payment service available in most countries The Quest for Excellence 4 4
Banking Industry Trends & Target Market • More rigorous supervision and introduction of new international regulations (Risk based supervision, Basle II, IFRS) • Pressure to expand in new areas beyond traditional markets (Corporate Finance, Structured Finance, Project Finance and International Trade Finance) • Search for expansion (Vertical & Horizontal) opportunity by newly consolidated banks and renewed interest among international/regional banking group for acquisition • Increased appetite from local/international investors for banking and financial investment opportunity The Quest for Excellence 5 5
Access Bank’s Target Market Corporate Banking • Very large Corporates with dominant market share in Telecomms, Oil & Gas, Fast Moving Consumer Goods (FMCG) & Commodities (Estimated Total Market size: $77 billion) • Public Sector project finance opportunities owing to infrastructure funding gap $12 bn for Sub-Sahara Africa year on year (Nigeria $8 bn) • Middle-tier Corporates • Distributors to top 3 producers of goods and services in Telecoms, Downstream Oil & Gas, FMCG • Retail/Consumer banking segment penetration is still very low in Africa, In Nigeria there are less than 1 million personal loans against 38 million mobile phones subscribers • Primary target market is the employees of Corporates, SME clients etc • SME’s in the service sector particularly Schools, Hospitality, Professional services e. g. Law firms etc. • High net worth clients particularly owner/managers of our corporate clients • Users of our electronic banking products & services (non-account holders) Multinational players in the oil & gas • Retail & Consumer Banking • • Financial institutions driven by the ongoing reforms in Financial service industry in Africa –Stockbroking, Asset management, Microfinance, Mortgages Public Sector and State Governments The Quest for Excellence 6 6
Access Bank’s Target Market The Quest for Excellence 7 7
Unique Market Penetration Strategy End users Cost/ Income Ratio( %) 59 11, 783 560, 693 120, 047 56 8, 747 365, 774 117, 861 56 6, 876 379, 007 116, 970 Bank PHB 61 6, 698 345, 712 63, 921 UBA 62 5, 811 293, 938 42, 786 65 5, 399 178, 734 94, 786 Zenith 66 4, 690 225, 220 88, 551 Diamond Bank 68 3, 851 169, 829 69, 784 First Bank 65 2, 986 120, 638 54, 159 Union Bank Distributors Access Bank Intercontinental Employees Profit/ Branch Oceanic Large Corporates Total assets/ staff GTBank Suppliers Government Productivity/ Staff 70 2, 091 88, 371 35, 053 Shareholders The Quest for Excellence 8 8
Comparative Performance Analysis Q 3 2007 Q 3 2006 Growth (%) Total Assets $5, 615 $2, 065 172% Loans & Advances $1, 995 $651 206% Deposit Liabilities $1, 763 $791 123% Shareholders Funds $259 $243 7% Net Profit After Tax $76 $23 230% ROE 29% 9. 5% 209% ROA 1. 35% 1. 1% 22% Market Capitalization $1, 371 $747 84% 15 16. 5 172% 103% N/A Key Indicators P/E YOY Growth (Total Assets) Branch Network 118 ATMs 116 Staff 1200 Clients (# of Accounts) Countries The Quest for Excellence 380, 000 4 67 76% 15 673% 681 270, 000 2 76% 41% 100% 9 9
Comparative Performance Analysis : P & L Contribution Q 3’ 06 N 0. 5 Bn N 13. 5 Bn N 5. 4 Bn N 8. 5 Bn N 5. 4 Bn N 3. 2 Bn N 0. 9 Bn N 1. 0 Bn Net Interest income Fees & Comm. FX income Q 3’ 07 Net Operating Earnings Expenses Loan loss Tax PAT N 29 Bn N 1. 4 Bn N 8. 6 Bn N 19 Bn N 8. 9 Bn N 10. 3 Bn N 1. 8 Bn N 4. 2 Bn Net Interest income Fees & Comm. The Quest for Excellence FX income Net Earnings Operating Expenses Loan loss Tax PAT 10 10
Business Segment Contribution to Profitability • Improved risk rating and enhanced brand profile is propelling our penetration of Nigeria’s top tier corporates 176% growth in our Risk Asset portfolio has led to 126% growth in net income • Public sector contribution to our commercial bank’s revenue has grown significantly. Our nationwide branch coverage has enabled us sign on several state & federal govt. accounts • Investment banking income includes fees from 5 major issuing house mandates; our Treasury Group is one of the strongest fixed income & FX players in the sub region • Retail banking has not contributed significantly to current year profitability, but has significantly complemented our corporate & commercial bank’s business The Quest for Excellence 11 11
Corporate Governance & Risk Management Key principles Risk management structure Governance Group/Bank • The Board of Directors consists of 14 members; a Chairman, MD, DMD, EDs, 7 Non-Executive Directors (2 independent Directors) • The Corporate HQ resides in Lagos, Nigeria and is responsible for all Governance and Risk policies. Country Executives are responsible for Execution • Group appointed executives supervise the execution of group policies in all subsidiaries Group Board of Directors Board Credit Committee Board Committee on Human Resources Risk Management Committee Management Credit Committee Enterprise Risk Management Committee Asset and Liability Committee (ALCO) Risk Management • Risk management embedded in corporate culture and • policies • Iimplemented Enterprise Risk Management Framework developed together with KPMG Professional Services ? Covers Credit, Market , Operational , Compliance and Reputational Risk ? Risk Management Division has been staffed with a crop of experienced bankers from leading financial insitutions • Advanced anti-money laundering practice • Adoption of advanced systems in all areas of risk. Retail Loan system already implemented • Basel II Implementation has commenced The Quest for Excellence Internal Audit Department Group Executive Management Finance Risk Management Board Audit Committee Compliance Business Unit Risk Champion 12 12
Capital Raising & Utilisation of Proceeds Deployed as follows Human Capital Management Current Equity base $49 mm 4% Pre Offer equity $100 mm 9% Africa & OECD bank subsidiaries 2007 Public offer Technology (communication, infrastructure, equipment) $200 mm 17% $1. 4 Bn $1. 1 Bn $239 mm Non Banking Subsidiaries & Investments Nigeria branch expansion ROE of 29% will drop to 15. 5% due to 488% increase in equity, but will return to 34% by 2012 Capital requirement to support Nigeria business -Capital adequacy - Single obligor - Open Position Limit -Underwriting Capacity The Quest for Excellence $49 mm 4% $150 mm 13% $612 mm 53% 13 13
Human Capital Strategy Technology and Information System strategy Regional & OECD Expansion Satellite Branch New Country • Establish university campus to host our global capacity building infrastructure • Implement the group governance & workforce management which we developed in partnership with Accenture Gambia Data Centre Nigeria To continuously remain a top 3 bank in total remuneration for employees • Build a world class Human Resource function The Quest for Excellence Single network communication platform for all Access Bank subsidiaries • • • Implement a custom designed Flexcube application solution for the Access Bank Group (Citibank did this in 2003) • Single global and integrated communication process platform • Establishment of a Group Technology Information SBU that supports the strategic requirements of all Access Bank subsidiaries 14 14
Non-Bank Subsidiaries NATURE OF BUSINESS Registrars Asset Management Mortgage& Housing Finance Insurance Brokerage The Quest for Excellence STRATEGIC FIT • Sophisticated shareholders are demanding higher levels of service • Alternative investment vehicles to ensure higher returns • Expand the range our service offering to Institutional & Private Banking clients • Provision of housing stock to be refinanced with Mortgage loans • Mortgage schemes to employees of Public & private clients • Area of critical interest to DFIs i. e. IFC, FMO, AFdb • To enable us cross-sell insurance to our customers 15 15
Performance Forecast (March 2008) Mar-07 Mar-08 Mn Mn $3, 494 $7, 265 108% $921 $1, 961 113% $1, 754 $4, 274 144% Shareholders Funds $243 $1, 427 488% Net Profit After Tax $52 $129 149% ROAE 21% 15. 5% - 27% ROAA 2. 0% 2. 4% 21% NPL/Total Loans 9. 0% 4. 0% -56% Provisions/Total Loans 98% 101% 3% Capital Adequacy Ratio 18% 46% 156% 100% 108% 80 123 54% ATMs 90 240 160% Staff 729 1300 78% 270, 000 400, 000 48% 2 5 150% Key Indicators Total Assets Loans & Advances Deposit Liabilities YOY Growth (Total Assets) Branch Network Clients (# of Accounts) Countries The Quest for Excellence Growth (%) 16 16
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