Private and confidential

Nigeria Investment Themes Nigeria/South Africa - Doing Business Together Workshop

June 2014

Contents

Section 1.

Introduction to Stanbic IBTC and Standard Bank Group 2.

Nigeria – Investment Themes

1

Private and confidential

Section 1

Introduction Stanbic IBTC Bank and Standard Bank Group

Introduction

Key points Sola David-Borha Chief Executive Stanbic IBTC Holdings PLC Yinka Sanni Chief Executive Stanbic IBTC Bank PLC

Stanbic IBTC Bank Plc is Nigeria's only local bank with a Fitch AAA rating.

Stanbic IBTC Group

 Stanbic IBTC Holdings Plc (“Stanbic IBTC Group”) is a financial Institution in Nigeria that offers end-to-end financial services such as: – – – Corporate and investment banking.

Personal and business banking.

Investment management and brokerage.

 Stanbic IBTC Bank Plc , a subsidiary of Stanbic IBTC Holdings, is Nigeria's only local bank with a Fitch AAA rating.

 Its investment banking subsidiary Stanbic IBTC Capital Limited is the leading investment banking franchise in Nigeria with excellent capabilities in advisory and capital markets transactions.

 Other Stanbic IBTC subsidiaries include the leading equities brokerage firm and the leading pension fund administrator in Nigeria.

 Combines strong domestic coverage with regional and international reach.

 Stanbic IBTC Holdings is 53.2% owned by Standard Bank Group and can draw on the deep resources within the group.

Background

 Stanbic IBTC emerged from the merger of Stanbic Bank Nigeria Limited with IBTC Chartered Bank Plc in 2007 

Obtained Universal Banking Licence in Nigeria



Merged with Stanbic Nigeria and Standard Bank gained control of the combined entity in a US$1bn transaction



Holding Company Structure was adopted. Stanbic IBTC Capital emerged from this process 1989 2001 2005



Incorporated as Investment Banking & Trust Company Limited and commenced operations as a Merchant bank 2007 2012

 

Listed on the NSE on 25 April 2005 Merged with Chartered Bank & Regent Bank and changed name to IBTC Chartered Bank Plc

Vast Branch Network Across Nigeria

 176 branches nationwide

Key statistics

Market capitalisation Total assets PAT Average no. of employees

2013

N213.5bn N763.0bn N20.8bn 2,077 Stanbic IBTC Bank’s presence 3

Standard Bank is Africa’s largest and leading bank Introduction and Overview

Key Points

Premier South African based financial services group with on the ground expertise across Africa

 Premier South African-based financial services group focused on Africa  Full service bank offering: Standard Bank has expertise and specialist knowledge to effectively partner clients in achieving their emerging market expansion ambitions Relationship with ICBC (20.1% strategic equity interest in Standard Bank) provides further international reach and strengthens Standard Bank’s access to what may soon be the world’s largest economy – Corporate & Investment Banking (“CIB”) – Personal & Business Banking – Investment Management and Life Assurance   Global reach with presence in 31 countries Distribution capabilities in world’s leading financial centers including New York, London and Hong Kong, China and Brazil   CIB provides corporate and investment banking services to corporate clients, financial institutions and international counterparties focused on emerging markets around the world   Largest commercial bank in China – assets over $3.062 trillion Nearly 100 international branches with representation in, Frankfurt, Hong Kong, London, Luxembourg, Macau, Moscow, New York, Seoul, Singapore Listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange 4

Key statistics

Market capitalisation Total assets Headline Earnings ROE Employees

2013

$20bn $162bn $1.8bn

14.1% 48, 808    Africa 18 countries 1 283 branches 9300 ATMs on the African continent  Rest of the World 13 countries outside Africa  Key regional offices Offices in key financial centres including London, Moscow, New York, Hong Kong, Nairobi, Lagos, Sao Paolo and Dubai

Standard Bank – Recent Accolades Select 2013, 2012 & 2011 Accolades

Key points

Global Finance: Best Investment Bank in Africa (2012) The Banker: Top Bank in Africa (2012) Project Finance Deal of the Year: Africa Power (2011)

 Best Bank for Payments and Collections in Africa  Best Foreign Exchange Bank and Provider in Africa  Best Investment Bank in Africa  Best Debt House in Africa  Best Investment Bank in South Africa  Best provider of Money Market Funds in Africa  Best Sub-Custodian in Nigeria  Best Trade Finance Bank in Africa  Best Trade Finance Bank in South Africa  Country awards for Best FX Provider in Nigeria (Stanbic IBTC) and South Africa  African Bond Deal of the Year: Joint Winner for restructuring of Senegal Debut Bond  Deal of the Year: Metorex acquisition by Jinchuan   Best Bank of the Year – South Africa Best Investment Bank – Africa     Africa's top bank in The Banker magazine's annual ranking of the world's top banks. Standard Bank was ranked 112 out of the world's top 1000 banks (2012) Deal of the Year: Bonds: Joint bookrunner for Namibia’s debut USD500 million 10 year 5.50% Eurobond (2012) Deal of the Year: Loans: Sole Lead Arranger and Bookrunner for Helios Towers Tanzania USD85 million financing (2012) Most Innovative Bank from Africa (2012)  Best Bank in Nigeria (2012)  Best Bank in Uganda (2012)  Best Risk Advisor in Africa (2012, 2011)   Best Debt House in Africa (2012, 2011) Best M&A House in South Africa (2012)  Best Project Finance House in Africa (2012)  Best Private Banking Services overall for Mauritius (2012)  Deal of the Year: Namibian debut 10year bond transaction (2012)  Accugas – African Midstream Oil & Gas Deal of the Year  Nordstream – European Midstream Oil & Gas Deal  of the Year Pulkovo –European Airport Deal of the Year  PA Resources – African Upstream Oil & Gas Deal of the Year  First in Corporate Banking in South Africa  First in Foreign Exchange Trading in South Africa (peer ranking)  First in Listings in South Africa (peer ranking)  First in Money Markets in South Africa (peer ranking)  Africa's top bank in The Banker magazine's annual ranking of the world's top banks. Standard Bank was ranked 112 out of the world's top 1000 banks (2012)  Deal of the Year: Bonds: Joint bookrunner for Namibia’s debut USD500 million 10 year 5.50% Eurobond (2012)  Deal of the Year: Loans: Sole Lead Arranger and Bookrunner for Helios Towers Tanzania USD85 million financing (2012)  Most Innovative Bank from Africa (2012)  Best cash management services in Africa  Best Investment Bank in Africa  Best Bank Malawi  Best Investment Bank in Angola  Best Investment Bank in Namibia  Best Investment Bank in Nigeria (awarded to Stanbic IBTC Bank)  Best Investment Bank in Zambia  Best Local Investment Bank in South Africa  Accugas – African Midstream Oil & Gas Deal of the Year (2011)  Deal of the Year: Africa Mining (2011)  Deal of the Year: Africa Oil & Gas (2011)  Deal of the Year: Africa Power (2011)  Deal of the Year: Africa Renewables (2011)  Nordstream – European Midstream Oil & Gas Deal of the Year (2011) 5

Private and confidential

Section 2

Economic Overview of Nigeria

Nigeria: An Overview Overview

Strong economic growth forecast for Nigeria in spite of recent challenges

 Nigeria is the largest economy in Africa  Africa’s largest consumer market with a population of 171 million people 

Government policy has been focused on stabilizing the financial services sector, privatization of key industries and stimulating growth

    Africa’s largest oil producer and 12 th largest in the world, producing high-value, low-sulfur content crude oil Third-largest recipient of FDI Oil & Gas reserves: 1,080MMbbl & 1.69tcf, 2013 production approx 1.8MM bpd Sovereign Ratings (2012): Fitch: BB-, S&P: BB-, Ba3 FX reserves (USD bn) : 36.9

Moody’s: Economic Political

The business environment

Socio-cultural  Good economic growth – over 6.5% annually  Focus on oil & gas and agricultural potential  USD 31bn trade surplus  Increased FDI  Key challenge is administration’s ability to deliver change and implement structural reforms  Hampered by bureaucratic bottlenecks  Population is young and growing  High unemployment Technological  Increased internet connectivity and mobile phone usage

Investment rationale

 Largest population in Africa with positive demographic trends  Large proven oil and gas reserves  Generally constructive fiscal and monetary policies  Relatively low levels of government indebtedness  Major banking sector reforms have improved health of the financial sector  Policies encouraging investment in key sectors 7

Key risks

 Economy remains heavily dependent on recycling oil earnings through fiscal channels  Onshore oil production remains vulnerable to security disruptions in the delta  Weak political / judicial institutions and physical infrastructure  Ethnic and religious differences continue to divide the country  Physical security and crime remain problematic

Nigeria Remains a Key Strategic Market in Sub-Saharan Africa A regional hub for Western Africa

Increasingly friendly business environment

Within West Africa:

• Nigeria’s population is the largest on the African continent and eight largest in the world • Largest GDP in Africa • US$37 billion in foreign reserves • Huge hydrocarbon resources, the largest producer of crude oil in Africa with the second largest oil resources base in Africa and 8 th largest gas reserve base globally • Nigeria is the emerging economic locomotive of the African continent

Southern Africa East Africa West Africa

Note: Size of bubble reflects relative GDP of each country

C-Re locations

8 Increasing population

Sources: IMF World Economic Database, Standard Bank Group Economics, EIU.

Key Economic Reform Initiatives

GDP growth trajectory alone is unlikely to deliver the overall uplifts desired in quality of life for consumers Persistent inequality of distribution and the apparent lack of upward mobility Economic inefficiencies that give rise to a sustained high cost of living need to be tackled in order to elevate and unshackle the consumer

Power Sector

     Government has concluded its divestiture of assets from the PHCN; most were handed over on 1 November 2013 Introduction of appropriate pricing regime - ongoing Contracting out the management of the Transmission Company of Nigeria (TCN) NIPP asset sales; preferred bidders identified, payments have begun Implementation of National Gas master plan, in order to enhance fuel-to-power capabilities

Oil and Gas

     Accounts for 90% of foreign exchange earnings,70% of government revenues Introduction of Local Content Act 2010. Resulting in divestment of IOCs from onshore asset operations to more technologically intense offshore assets Local content policies for services companies. Skills development occurring across the value chain Development of refining capacity necessary to reduce import bill Petroleum Industry Bill yet to be passed. This will result in a revision on how royalties are paid on exploited oil.

Source: Stanbic IBTC Research

Agricultural Transformation

    Contributes 22%% of Nigeria's GDP; employs 70% of the population in agriculture and related agro-business. Identification of 10 key crops in which Nigeria is deemed to have a competitive advantage and supporting the build out of value chains Policy of promoting local production through tariffs, quotas on imports, with focus on key commodities (rice, cassava, sorghum, cocoa and cotton) Backward integration underway by large firms such as UAC, Dangote, Flour Mills, Olam

Sovereign Wealth Fund

  The spirit behind the SWF was to replace the ECA, which is yet to occur The fund now stands at $1.55bn

 The Nigeria Sovereign Investment Authority (NSIA) is meant to invest excess crude revenues in three funds:  The Future Generations Fund (32.5%)  Nigerian Infrastructure Fund (32.5%)  Stabilization Fund (20%) 9

Other Key Investment Areas

Nigeria's fundamentals will provide long-term demand for infrastructure Government policies focused on manufacturing growth to provide employment, reduce import bill Emerging consumer sector needs to be served with appropriate goods, retail experience and communication links

Infrastructure

     Nigeria's fundamentals will provide long-term demand for infrastructure growth. A population of170mn with a growing middle class will demand more houses, more power and better transport links.

Huge infrastructure deficit Many efforts underway (private, public, PPPs) to bridge the gap Projects underway include ports, highways, bridges, airport, light rail 40% of sovereign wealth fund is dedicated to infrastructure     

FMCG and Retail

Nigeria’s growing affluent population has appetite for well-produced consumer goods Success seen by well-executed brands that meet local needs and tastes (e.g. Indomie Noodles) Nigeria significantly underserved with formal retail Enabling real estate emerging slowly. Malls in major ciities: Lagos (Ikeja and Palms), Abuja, Enugu, Port Harcourt, Enugu Interesting potential in serving mass market with formal retail

Manufacturing

   Historically under-developed sector – 70% of goods consumed in Nigeria are imported Government pursuing a policy of promoting local manufacturing through tariffs, quotas on imports.

Assembly of automobiles by major OEMs expected to commence in 2014

Telecoms and Technology

    One of the great success stories of Nigeria’s economic transformation; MTN Nigeria now larger than MTN South Africa Market well-penetrated with voice; focus is on data, broadband links, quality of service High adoption of digital services, forcing change on traditional formats of banking and retail Expect significant investments in upgrading IT services and infrastructure

Source: Stanbic IBTC Research

10

Conclusions Nigeria Continues to be an Attractive Investment Market

As Africa’s largest economy with a high growth rate, investors cannot afford to ignore Nigeria’s economy and potential

 

The headlines surrounding the rebasing of the economy and Nigeria’s status as the Africa’s largest economy have refocused investor interest on Nigeria Economic reforms have resulted in strong historical growth and are likely to continue to deliver similar performance going forward



Power reforms will change the face of Nigeria its just a question of timing



Successfully addressing structural bottlenecks that sustainably reduce the cost of living and allow for more diversified consumer expenditure is key to the development of the Nigerian consumer in our opinion



Security concerns have had a limited impact on economic growth, to this point



Foreign investors continue to have a meaningful role to play in spurring and supporting economic growth.

11

Disclaimer

This presentation is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly confidential. It is not to be delivered nor shall its contents be disclosed to anyone other than the entity to which it is being provided and its employees and shall not be reproduced or used, in whole or in part, for any purpose other than for the consideration of the financing or transaction described herein, without the prior written consent of a member of the Standard Bank Group. The information contained in this presentation does not purport to be complete and is subject to change. This is a commercial communication. This presentation may relate to derivative products and you should not deal in such products unless you understand the nature and extent of your exposure to risk. The presentation does not include a personal recommendation and does not constitute an offer, or the solicitation of an offer for the sale or purchase of any financial product, service, investment or security. The investments and strategies discussed here may not be suitable for all investors; if you have any doubts you should consult your investment advisor. The investments discussed may fluctuate in price or value Whilst every care has been taken in preparing this presentation, no member of the Standard Bank Group gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information in this presentation Past performance is not indicative of future results. For the avoidance of doubt, our duties and responsibilities shall not include tax advisory, legal, regulatory accounting or other specialist or technical advice or services. You are to rely on your own independent appraisal of and investigations into all matters and things contemplated by this presentation. By accepting this presentation, you agree to be bound by the foregoing limitations. Kindly note that this presentation does not represent an offer of funding since any facility to be granted in terms of this presentation would be subject to the Standard Band Group obtaining the requisite internal and external approvals. Copyright 2010 Standard Bank Group. All rights reserved.

UK Residents

This presentation is not intended for the use of retail clients and must not be acted on or relied on by persons who are retail clients. Any investment or investment activity to which this presentation relates is only available to persons other than retail clients and will be engaged in only with such persons. Standard Bank Plc (SB Plc) is authorised and regulated by the Financial Services Authority (FSA), entered in the FSA’s register (register number 124823) and has approved this presentation for distribution in the UK only to persons other than retail clients. Persons into whose possession this presentation comes are required by SB Plc to inform themselves about and to observe these restrictions. Telephone calls may be recorded for quality and regulatory purposes. Standard Bank Plc, 20 Gresham Street, London, EC2V 7JE.

South African Residents

The Standard Bank of South Africa Limited (Reg.No.1962/000738/06) is regulated by the South African Reserve Bank and is an Authorised Financial Services Provider and Credit Provider.

United States Residents

In the US, Standard Bank Plc is acting through its agents, Standard Americas, Inc. and Standard New York Securities, Inc. Both are affiliates of Standard Bank Plc. Standard Americas, Inc is registered as a commodity trading advisor and a commodity pool operator with the NFA. Standard New York Securities, Inc is a member of FINRA and SIPC. Neither are banks, regulated by the United States Federal Reserve Board, nor insured by the FDIC.

Hong Kong Residents

Standard Bank Asia Limited is a fully licensed bank under the Banking Ordinance and is a registered institution under the Securities and Futures Ordinance in Hong Kong. Standard Securities Asia Limited is a licensed corporation with the Securities and Futures Commission. Any investments and services contained or referred to in this presentation may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about such investments or investment services.

Dubai Residents

Standard Bank Plc, Dubai Branch, is regulated by the Dubai Financial Services Authority (‘DFSA) (register number F000028). Within the Dubai International Financial Centre, (‘DIFC’) the financial products or services to which this marketing material relates will only be made available to Professional Clients, including a Market Counterparty, who meet the regulatory criteria of being a Client.

Turkey Residents

Standard Unlu Menkul Degerler A.S. and Standard Unlu Portfoy Yonetimi A.S. are regulated by the Turkish Capital Markets Board “CMB”). According to CMB’s legislation, the information, comments and recommendations contained in this presentation are not investment advisory services. Investment advisory services are provided under an investment advisory agreement between a brokerage house, a portfolio management company, a bank that does not accept deposits or other capital markets professionals and the client. The comments and recommendations contained in this presentation are based on the personal opinions of the authors. These opinions may not be appropriate for your financial situation and risk and return preferences. For that reason, investment decisions relying solely on the information contained in this presentation may not meet your expectations. 12