Outline: Skye Bank Overview. Business Environment. Financial Highlights. Risk Management. Strategic Outlook

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2 Disclaimer This presentation may contain certain forward-looking statements, estimates and targets with respect to the operating results, financial condition and business of Skye Bank. Such statements and information, although based upon Skye Bank s best knowledge at present are certainly subject to unforeseen risk and change. Future results or business performance could differ materially from those expressed or implied by such forward-looking statements and forecasts. The statements have been based upon a reference scenario drawing on current market conditions, economic forecasts and assumptions, competitor analysis including the regulatory environment. 2

3 Outline: Skye Bank Overview Business Environment Financial Highlights Risk Management Strategic Outlook 3

4 Skye Bank Overview The Bank was established in 1990 as a Merchant Bank and converted into Commercial Banking in Its current form emerged following the series of efficient acquisitions and further consolidation in Currently, Skye Bank is an International Bank focused on corporate & commercial business and is in the process of divesting its holdings in non-core banking subsidiaries. The Bank has a strong nationwide distribution which covers most cash-rich regions of Nigeria with strong shares in core markets. Market Leader in the area of revenue collection, both at the federal and state levels. Skye Bank has 249 business offices. Three (3) foreign subsidiaries in Sierra Leone, Gambia & Guinea. To support its business activities, Skye Bank has lines of credit with foreign correspondent banks. Strong e-channels capability via over 461 ATMs & E-Arcades in major business regions. Our Credit rating from GCR, Agusto & Co, S&P and DataPro are A-/BBB-/BBB/A- respectively. 4

5 Outline: Skye Bank Overview Business Environment Financial Highlights Risk Management Strategic Outlook 5

6 Business Environment Cash-Lite Economy International Financial Reporting Standard (IFRS) Mobile Banking Licences Power Reforms Fuel Subsidy Removal 6

7 Outline: Skye Bank Overview Business Environment Financial Highlights Risk Management Strategic Outlook 7

8 Financial Summary INCOME STATEMENT MAR-12 *DEC - 11 SEP 11 JUN-11 MAR-11 NGN Mn NGN Mn NGN Mn NGN Mn NGN Mn Gross Earnings 27, ,831 73,290 48,932 24,721 Net Interest Income 11,625 42,039 34,404 22,465 11,070 Operating Income 16,425 74,396 50,899 33,387 16,009 Profit Before Tax 4,089 6,513 11,712 8,287 4,287 BALANCE SHEET MAR-12 *DEC - 11 SEP 11 JUN-11 MAR-11 Total Assets 996, , , , ,470 Loans & Advances (Net) 521, , , , ,814 Total Deposits 781, , , , ,263 Total Equity 114, , , , ,288 *December figures are based on the audited financial statements 8

9 Financial Summary (QoQ) INCOME STATEMENT MAR - 12 DEC - 11 SEP - 11 JUN 11 MAR-11 NGN Mn NGN Mn NGN Mn NGN Mn NGN Mn Gross Earnings 27,839 31,541 24,358 24,211 24,721 Non-Interest Income 4,800 6,106 3,494 3,880 4,522 Net Earnings 17,173 24,266 17,525 17,270 16,165 Loan Loss Provision 18,396 21,423 1, Profit Before Tax 4,089-5,199 3,425 4,000 4,287 BALANCE SHEET MAR - 12 DEC - 11 SEP - 11 JUN 11 MAR-11 Total Assets 996, , , , ,470 Loans & Advances (Net) 521, , , , ,814 Total Deposits 781, , , , ,779 Shareholders Funds 114, , , , ,288 The loss in the fourth quarter of 2011 was due to the provisions made which led to a PBT of N6.5bn at the end of the year. Profit for the first quarter was N5.2 billion 9

10 Financial Snapshot Statement of Comprehensive Income Gross Earnings of N27.8bn N4.1bn Profit Before Tax Statement of Financial Position Total Assets of N996.8bn 4% Loan Growth to N540.4 bn (Gross Loans: N519.7bn Dec 11); 19% Deposit Growth to N781.9bn ( Total Deposits N658.1bn Dec 11) Other Key Ratios Loan to Deposit Ratio % Liquidity Ratio % Cost of Funds - 5.8% The annualized rate for the cost of funds is 5.8% 10

11 Key Ratios Financial Performance % 3 MTHS 12 MTHS 9 MTHs 6 MTHS 3 MTHS MAR-12 DEC-11 SEP-11 JUN-11 MAR-11 ROE 12% 4.7% 11.8% 12.2% 12.3% ROA 1.2% 0.6% 1.6% 1.8% 2.3% Net Interest Margin 6.0% 7.0% 7.7% 7.6% 7.3% NPL Ratio 4.5% 4.9% 4.9% 6.8% 6.8% Coverage Ratio 75.6% 69.5% 102% 74.2% 110.7% Capital Adequacy 17.8% 17.5% 17% 16% 16.4% Cost to Income 71.8% 59.3% 72.4% 71.7% 71% Liquidity 34.4% 32% 32.6% 31% 31% 11

12 JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC JAN 2012 FEB 2012 MAR 2012 Deposit Liabilities Deposit Volume & cost of funds Deposit Mix (NGN Bn) Mar ,000, ,000, % 8.00% 7.00% ,000, ,000, ,000, ,000, % 5.00% 4.00% 3.00% 2.00% 1.00% ,000, % DEPOSIT VOL 0 Term Demand Savings Domicilliary Total deposits was N781.9bn at the-end of the first quarter this includes the interbank takings of N56.7billion. Term Deposits contributed 47% of the deposits while Demand Deposits, Savings makes up and Domiciliary contributed 34%, 10.3% and 8.5% respectively. Domiciliary went up 35% from the N45.9bn in December 2011 to N61.9bn at the end of the first quarter. 12

13 Outline: Skye Bank Overview Business Environment Financial Highlights Risk Management Strategic Outlook 13

14 Risk Management Structure GMD/CEO Executive Director/ Chief Risk Officer Remedial Assets Head, Enterprise Risk Management Head, Credit Risk Management Origination and Measurement Market Risk Operational Risk Loan Review Lending Platform ALM Strategic Risk Chief Credit Officer Credit Admin & Compliance Rating and Capital Charge Trade & Liquidity Risk Operational Risk Management Credit Analysis Collateral Review Portfolio MIS Subsidiaries Legal Risk Retail Risk Predictive Analytics BCP Subsidiaries Subsidiaries Subsidiaries Robust Corporate Governance practice Independent of any controlling interest 14

15 Loan Portfolio Public Sector 6% Real Estate 8% Telecommunication 4% Others 6% Building & Construction 15% Education & Educational Services 4% Financial Services 4% General Commerce 12% Oil & Gas 23% Professional Services 3% Aviation & Maritime 5% Manufacturing companies 6% Hospitality 4% The Bank maintains a diversified loan book that cuts across various promising sectors in the economy. 15

16 New Loans Generated Building & Construction (B&C): New loans booked to the building and construction sector was N13bn in the first quarter. B&C accounts for over 15% of the loan portfolio. This sector is one of the Bank s identified growth sector with beneficial opportunities. Oil & Gas: The Oil & Gas upstream sub sector accounted for most of the growth in the oil and gas sector. Oil & Gas upstream currently stands at N70bn accounting for 64% of the total exposure to the oil & gas sector. Other sectors that experienced growth in business with the Bank include real estate and hospitality among others. 16

17 Developments in Risk Management In a bid to improve on the asset quality of the Group, integration of the lending platform of offshore subsidiaries has been completed with the following attendant benefits: A unified loan origination system group wide that is Basle II compliant and meets the basic tenets of our various credit policies. A centralized group loan origination database that is easily accessible. Enhanced group wide portfolio planning. Continuous development of our risk infrastructure and people to manage the Bank s growing operations as well as maintaining the risk governance Framework remain our commitment. 17

18 Outline: Skye Bank Overview Business Environment Financial Highlights Risk Management Strategic Outlook 18

19 Strategic Outlook: Corporate Focus Business Focus Areas: Oil and Gas, Telecommunications, Maritime, Retail Banking, Non-Bank Financial Institutions Based on expanding opportunities, reforms, new segments/markets, bridging existing gaps Business Enablers: ICT/related channel deployment Best Human Resources Credit Ratings Additional Capital Optimal Customer Service Operations: Enhanced Risk Management Corporate Governance Efficiency 19

20 Strategic Outlook: Major Ratios ROE NIM CIR NPL WACF LOAN GROWTH DEPOSIT GROWTH Current (Q1-2012) 12% 6.0% 71.8% 4.5% 5.8% 4% 19% Midterm (within 1 yr) 15% 7.5% 55% Sub 5% 5% 30% 40% Long-term (3 5 yr) 20% 8% 50% Sub 5% Sub 5% 40% 40% 20

21 Caution regarding forward-looking statements This presentation may contain certain forward-looking statements, estimates and targets with respect to the operating results, financial condition and business of Skye Bank. Such statements and information, although based upon Skye Bank s best knowledge at present are certainly subject to unforeseen risk and change. Future results or business performance could differ materially from those expressed or implied by such forward-looking statements and forecasts. The statements have been based upon a reference scenario drawing on current market conditions, economic forecasts and assumptions, competitor analysis including the regulatory environment. 21

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