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Guinea Mauritania Niger Senegal Benin Mali
A Partnership to promote non-interest banking
across Africa
This report is solely for the use of intended recipients. No part of it may be circulated, quoted, or
reproduced for distribution outside the client organization without prior written approval from TAH.
This material was used by TAH during an oral presentation; it is not a complete record of the
discussion.
Nouakchott, April 16, 2012
Agenda
1. Background & Profile of the Partners
2. Context and Challenges
3. Overall Vision and challenges ahead
4. Strategy Blueprint
5. Hightlights of the turnaround results
Background & Rationale For Establishing the Holding
In 2010, ICD has acquired controlling stakes in Islamic banks of Niger, Guinea and Senegal and secured a license to operate an Islamic Bank in Mauritania (“the Banks”)
Due to the weak market positions of the Banks, ICD invited Bank Asya (Turkey) for setting up a partnership that aims at achieving leadership position and promoting non-interest banking.
Tamweel Africa Holding was established to:
Access to larger market
Achieve operational synergies
Strengthen leadership across the target markets :the “Power of One”.
Build an organization with best practices and processes
Better alignment with the strategic Partner
The Partnership capitalize on complementarities to optimize returns…
Platform
Market knowledge
Brand Name
Long term resources
Lines of trade financing operations/ SME development
Capital
Operational excellence
Technical expertise
Systems & best practices
Human resources
International network
Capital
ICD
Current Holding Structure
Mauritania Senegal
Guinea
Niger
60% 40%
ICD
Overview of ICD Mission and Vision
The Islamic Corporation for the Development of the Private Sector (ICD), is the private sector arm of the Islamic Development Bank (IDB), a multilateral development finance institution
IDB, headquartered in Jeddah, Saudi Arabia, is a USD 50bn+ bank with 56 member countries mainly located in Asia, Middle East and Africa
ICD was established in 1999 with an authorized capital of USD 2bn and a membership of 49 countries. It is 50% owned by IDB, 20% by public financial institutions and 30% by the member countries
The Vision of ICD is to be a major player in the development of the private sector as a vehicle for economic and social growth, and prosperity in Islamic countries
The Mission of ICD is to complement the role played by IDB through
Providing Islamic financial services and products
Promoting competition and entrepreneurship in member countries
Advising governments and businesses
Encouraging cross border investments
6
Overview of ICD’s Portfolio
7
ICD has already leveraged its position in the market to provide USD 1.4bn in financing projects.
Investment by Mode of Financing
Investments by Geography Investment Status
ICD is currently funding 162 projects on its own balance sheet and 43 projects through managed funds
Approved projects amount for USD 1,467mn on its balance sheet and USD 540mn through managed funds
ICD has funded projects in 29 countries and is looking forward to expand its investments to other member countries
As of end of 1431H
As of end of 1431H
Summary Profile of Bank Asya
Bank ASYA commenced its activities in , 1996 as the sixth private finance house of Turkey..
The capital has increased from TL 2 million in inception to its current level of TL 900 million TL (circa USD 500 million).
As of December 31st, 2011, Bank Asya posted:
Total Assets above USD 9.6 billion
Total deposit of USD 6.9 billion
Total Loan portfolio of USD 12.7 billion
Net Profit of USD 120.2 million
The main objective of Bank Asya is to spread interest-free finance system to larger masses by using the latest opportunities of technology in accordance with customer-oriented service mentality.
Besides traditional distribution channels, namely branches, Bank Asya aims at offering uninterrupted, rapid and effective service via Online Banking, Alo Asya Telephone Banking, ATM and POS stations
With cumulative non-cash transactions above USD 5.2 billion, Bank Asya is an ideal foreign trade partner in Turkey with its strong presence in the sector and with a large network of over 1000 banks in more than 100 countries.
Bank Asya, the first private finance house in Turkey having ISO 9001 Quality Management System Certification
9
Bank Asya has proven track record in network deployment since its inception in 1996
Number of branches Number of personnel
10
Bank Asya enjoys a leading edge in IT banking solutions…
Bank Asya was displayed the bank having the most effective performance in "Top 1000
World Banks" list of world-known financial magazine, The Banker.
AsyaCard DIT was awarded for "the Best Cash Displacement Initiative" at "Visa Europe
Member Awards" and "the Best New Credit Card Product Launch" at Cards & Payments
Awards.
Current Context
Entered pre-2009
Entered in 2010
To be entered in 2012
Potential option considered post 2011
Mauritania
Niger Mali
Senegal
Gambia
Guinea
Benin
Mauritania ▪ 1 Main branch
▪ 3 new branch
in 2012
Gambia
▪ Discussions for
potential entry
Guinea
▪ 2 branches
▪ 3 new branches
planned in 2011
Mali ▪ License to be acquired
▪ EUR 15 million capital
committed
▪ No branch & no
operation
Niger
▪ 1 branch
▪ 3 new branches
planned in 2011
Geographic footprint as of 16 March 2012
Senegal
▪ Main market
▪ 6 branches
▪ 12 new branches
planned in 2011
Tamweel is looking to quickly establish itself as a
regional player
Benin
▪ License to be
acquired
▪ No branch & no
operation
McKinsey & Company | 12
Current Context
2.3
3.3
8.7
Benin
Mali 12.3
Mauritania
Guinea
Niger 15.6
Senegal 12.3
Muslim population 2010, Millions
SOURCE: Global Insight; Customer survey; Wikipedia
Sizable Muslim population in these countries …
… having unsatisfied appetite for non-interest
banking products
Is indifferent 46.0
Would choose
conventional bank 14.0
Would choose
Islamic bank 40.0
Percent of respondents
96%
98%
84%
99%
92%
25%
Half would
even choose
non-interest
bank if prices
and services
are the same
XX% Muslim as % of total population
Tamweel has grown through its corporate banking franchise via Partners relationships & support
AssetsTamweel 1, m
USD
Net Income1, m
USD
ROA, % 3.9 2.5 -1.5
Due to losses
in Niger
2008 2010 2011 2009
Branches, # 3 7 9 27
2.6
141298
57
255
199 41
138
133
97
431
5.5Series
2.8 6.4
10.0
5.1 1.3
-2.1
0.1 -2.2 7.2
BIS
BIN & BIM & BIG
40-50% of
corporate profit
are from IDB
referrals
Aspirations and core values of Tamweel Group
Visions – aspirations for the Group
Achieve reference regional
bank position in West Africa –
top 2 to top 5 position in each
country
5
Create strong brand image, associated with quality, competitiveness,
innovation, social responsibility and Islamic-compliance
Top 3
1,000-1,500
Top 10
255
1
2 Deliver good metrics for
shareholders (aligned on inter-
national player in the market), at
both Group and country level
ROE top quartile
3 Create a universal bank with broad retail and corporate footprints
4 Leverage synergies with shareholders in a 3 way partnership, at
Group and country level
X 4-6
Assets
6
Talent management and cultural transformation as key ingredients for
success
Mission - Values
Promote non-interest banking
in West-Africa, as a key
contributor to socio-economic
development
Fully uphold non-interest banking
principles and rules
II
Provide customers with
competitive and quality
services
III
Create a values and performance
driven organization
IV
Create an appealing work climate
to attract top talent1
V
Create significant value for the
shareholders I
VI
Tamweel focus on building its UNIVERSAL banking ‘target business model’ in Senegal first…
▪ Position Tamweel as regional universal bank
▪ Develop Tanweel around a standard “business
and operating model”
– Countries with similar fundamentals (clients,
competitors, regulation)
– Need to build a scalable model (small size of
markets) to be competitive
▪ Build and implement Tamweel’s target business
model in Senegal
▪ In parallel, build the Holding company –and critical
capabilities/ functions (e,g. IT, HR, risk …)
▪ Capture opportunistically the regional
opportunity
– Establish presence in priority countries
– Focus on serving key corporate clients (e.g.
regional clients, synergies IDB, prime
corporate)
– Focus on serving affluent retail clients
– Do not expand mass retail franchise (max 2-3
branches) before Horizon 2
▪ Full roll-out of target business model across markets
using Senegal as reference case and ‘centre of
excellence’
– Replicate implemented and refined Senegal
model in other markets
– Implementation team supports the full rollout
– Senegal ‘champions’ in key areas (e.g., product,
distribution) support other countries make the
transition
▪ New entered countries follow the target business
model with modifications for local conditions
2011 - 2013 2013 - onward
Horizon 2 & 3: Conquer West-Africa by
full roll out of strategy and ‘target business model’
in existing/ new markets
Horizon 1: Implement ‘target business model’ and
use an opportunistic approach in other countries
Align product portfolio to non-interest banking principles and then provide offering based on 3 key axis…
.. Focusing on satisfying critical customer needs …
Targeted catching up with the competition …
… and offering differentiating yet simple solutions
IV
III
Alignment with
non-interest
banking value
proposition
▪ Transform current
products into non-
interest products
▪ Offer range of non-
interest products
that fits market
relative conditions
and needs
II I
▪ “No brainers” : Transfers/ remittances,
savings and current accounts, cards are the
basic covered needs of the customers
▪ Selective offering : Housing loans, insurance,
quick loans and e-banking are the most desired /
not satisfied products by customers
▪ Important services are missing in Tamweel’s
portfolio compared to the top competitors, in
particular credit card and e-banking
▪ Enrich current product portfolio with innovative
solutions on critical products (e.g. remittances)
▪ Also potential for differentiation can be observed
in the market (e.g. overdraft, insurance, quick
loans)
Roll out of universal bank model upon implementation of target business and
operating model in Senegal
2011 2012 2013 2014
Core
geography
Other
existing
locations
New
locations (other
attractive
countries)
Senegal
Guinea
Niger
Mauritania
Mali
Benin
Gambia
Upon the achievement of key milestones (to be
defined for each workstream – IT, ops,
distribution, products, HR)
Step 3 : target business model in place
Step 2 : Launch roll out of target business model (including fine-tune to local/ country specifics)
Step 1 : Focus on the « low hanging fruits » : focus on corporate and synergies
Establish presence
2010 - 2014 Focus
Mauritania
Niger
Guinea
Benin
Mali
Senegal
Identify growth opportunities in adjacent territories: Mali, Benin, Gambia
Improve branding and customers:
• New logos
• New branch design
• Several clients referred by ICD & bank Asya
Achieve superior returns through well selected clients
Operating
To be launched
Major initiatives : 2011-2014
Rationale Status
New IT System
Path solution has been selected
Mauritania has gone live,
Senegal will go live in April
Other BU will follow
Be equipped with high standard IT system
Ensure good quality service to customers
Ensure Sharia compliance
Proactively launch innovative products
Ensure quality reporting and control
Network
deployment
Ensure good branding & market perception
Enlarge network coverage
New branch layout has been designed
Inner land network coverage has started
HR Reform Attract and retain high talents
Define comprehensive performance mgt
Become a Reference Employee
HR audit is being conducted
Action team is on place
Define a sound business model
Ensure standardized processes across the BUs Strategy Project
Assignment completed by Mc Kinsey
Implementation is ongoing
Product
Innovation
Need to transform conventional products into
Islamic products in order to serve Islamic
sensitive clients
A Steering Committee on Islamization of
Banking Products has been established
A Product development Manager is
being hired
.. Image improving is leading to better perception..
Confused design
Professional design
visual identity and brand is confused
“Banderole
s”
Quality of building not optimal
Simple, clear and modern design; clear visual identity
Old branches
Old branches New branches
Targeted catching up with the competition …
BIS – 2009-2011 Summarized Performance
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
2009 2010 2011
Evolution of Deposits (Euro)
Current deposits Term deposits
Current deposits and term deposits have increased with a CAGR of 66%
and 104% respectively
Cash credit and non-cash credit have increased with a CAGR of 111% and
400% respectively
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
2009 2010 2011
Evolution of Credits (Euro)
Cash Credits Non-Cash Credits
BIS – 2009-2011 Summarized Performance
Total assets has increased with a CAGR of 87%
Equity and Net Profit have increased with a CAGR of 103% and 1837%
respectively
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
2009 2010 2011
Evolution Total Assets (Euro)
Total Assets
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
2009 2010 2011
Evolution of Equity & Net Profit (Euro)
Shareholder's Equity Net Profit
BIS – 2009-2011 Summarized Performance
The ratios (NPL/cash credit) and NPL/Provisions have declined with a
CAGR of 53% and 12% respectively
ROE and ROC have increased with a CAGR of 650% and 514% respectively
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2009 2010 2011
Evolution of NPL & Provisions (Euro)
NPL Provisions
2009 2010 2011
ROC 2.00% 19.64% 48.30%
ROE 1.03% 13.56% 25.65%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Evolution of ROE & ROC
BIS – 2009-2011 Summarized Performance
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2009 2010 2011 Total
New Management 0 97,356 45,139 142,495
Old Management 1,613,676 1,742,682 2,379,432 5,735,790
Evolution of Provisions Related to NPL (Euro)
Performance in Senegal has been shrunken by heavy heritage
A cumulative amount of Euro 5.7 million has been provisioned for NPL
related to transactions that took place before November 2009
Effect of the Turnaround Strategy - Case of BIS
2009 2010 2011
1.75%
3.01%
7.74%
Evolution of BIS Market Share 2009 - 2011
Source : Central Bank Statistics
Development of Capital Market – Senegal Sukuk
Government Of Senegal
Management Company
(BOAD TITRISATION)
Depositary
Claims
(BIS)
Claims Manager
(BIS)
Investors
JLM
(ICD/Citi)
Securitizition Fund
(FCTC)
4. Produit
du Sukuk
3. Produit
du Sukuk
1. Acquisition du droit réel sur
l’actif identifie (par bail )*
2.Sukuk Issuance
6. Paiement
de loyers
Regulators (CREMPF/Central Bank)
5. Mise en location
de
l’actif identifie**
7 .Répartition des loyers
entre investisseurs
6. Loyers
SUKUK AL-IJARA
The proposed structure reconciles prevailing regulatory framework and non-
interest banking principles
This is a the first Sukuk planned to be issued in Africa
Key underlying enabling factors
The Blessing of Allah
Strong support from the Board of Directors and the Partners
Significant turnover growth mainly in Senegal and Niger
Commitment to deliver from the management and the staff (center and business units) and adherence to cor
Elimination of «value destroyers» mainly NPL
Leveraging on Bank Asya’s expertise mainly on IT and trade finance
Leveraging on IDB’s Group mainly ICIEC to secure leadership position on trade finance
THANK YOU