zanaco capital raising document

ZAMBIACOMMERCIALBANKCAPITALRAISE

September2009

Lookingforabiggerpieceofthepie!

Analyst:AnthonyLopesPinto

Tel:+244921647045

Email:[email protected]

2

EQUITYRESEARCH

ZAMBIA

RESEARCH

01SEPTEMBER2009TheZambianNationalCommercialBank(ZANACO)was Zambiaslastandarguablysweetestprivatisationsuccess,consideringthatthe timing of listing coincided with the demise of Lehmanbrothers! In2007,theGovernmentofZambiasolda49%staketotheDutch financialgroupRabobank,and furtherreduced itsinterest to25% following the IPOandcapital raise. ZANACO islookingtoconsolidate itspositionfurtherbyaddingto itstier2capitalbaseviathe issueofbondsamountingtoZMK300billion(US$62,5m).Thiswillplacethebankonasurefootingtobenefitfromthecontinuedgrowthinthecountrysdevelopingeconomy.

TypicallyonAfricanbourses,banking sharesmakeup abouthalfofthecapitalisation. Thethatfactbanks inZambiaonlymakeup10%ofthemarketisaclearindicationthatthelocalbanks are undercapitalised, relative to the fundingrequirements of the countrys productive sectors. Thisargument is further underlined in that total loans for theZambianbankingsectorstandatonlyjust9%ofGDP.

Apart from a high cost to income ratio and a slightly souradvancesbook,Rabobankpurchasedasoundfinancialgroup.Already, the interim results indicate significant progress instreamliningcostsandincreasinglendingcapacitytoenableitto exploit the abundant funding opportunities emerging inoneofSSAsmostprogressivedemocracies.TheplannedTier2 capital injection is the next step in this journey that willconsolidatethegroupsmarketdominance.

PotentiallythemostprofitablebankinSSA

BLOOMBERG:ZANACO:ZL BUYCurrentprice(ZMK) 480TargetpriceUpside/DownsideLiquidityMarketCap(ZMKm) 554,312.9MarketCap(US$m) 115.5Shares(m) 1,154.8FreeFloat(%)AveMonthlyvaluetraded(US$m)AveMonthlyvolume(m)SharePricePerformance6months(%)Relativechange(%)*Relativechange(%)**12monthsRelativechange(%)*Relativechange(%)***RelativetoLuSEindex

**RelativetoMSCIEMindex

Financials 2008 2009F 2010FEPS(ZMK) 45.0 121.9 156.0DPS(ZMK) 15.8 42.6 54.6NAV/Share(ZMK) 279.0 344.8 410.0NetInterestMargin(%) 12.4 12.4 12.4

STRENGTHS WEAKNESSESReputablemajorshareholder:Rabobank RelativelysmallbalancesheetOneofthetop4banksinZambia HighCost/IncomeratioSolidbalancesheet HighNPLslegacyissueLargestbranchnetworkConservativemanagementteamOPPORTUNITIES THREATSCapitalraisetogrowcapacity KwachaweaknessFurthergrowthofdepositsandloanbook CommoditypriceshocksImprovementinprofitabilityand Wellestablishedcompetitionqualityofloanbook andthreatofnewcomers

FINANCIALSUMMARY(ZMKm) 2008 2009F 2010FNetinterestincome 260,746 401,723 482,067Profitbeforetax 86,050 195,491 250,260Attributableearnings 51,985 140,754 180,188RATIOSROE 16.1% 29% 30%ROA 1.8% 3.9% 4.1%Cost/IncomeRatio(%)* 71.8% 58% 54%Advances/Deposits(%) 43.0% 55.0% 55.0%VALUATIONRATIOSPBV(x) 1.8 1.2 1.0PER(x) 11.1 4.1 3.2DividendYield(%) 3% 9% 11%Dividendpayoutratio(%) 35% 35% 35%*Preprovisionforimpairedadvances

3

ExecutiveSummary

TheprivatisationandlistingofZANACOontheLusakaboursewastheZambiangovernmentslastandprobably,mostsuccessfulprivatisationendeavour,havingtakeplaceatthesametimeasthedemiseof Lehman brothers and significant global financial market turbulence. Despite the surroundingdepression, the bank emerged from 2008 virtually unscathed, and reported strong double digitgrowthinabovethelineprofitsduringH12009.

UnderthestewardshipofanewmanagementteamappointedbytheDutchfinancialservicesparentGroup,Rabobank theH109andFY08 resultshavealready registeredanotable improvementoverpreviousyearsandconsequently,thegroupisemergingasaleanerandmoreprofitableplayerintheevolvingZambianFinancialservicesphere.

Whilethemarketischaracterisedbywellestablishedinternational(mostlyBritish)financialservicesgroups,severalmetricspointtoenhancedpotentialforgrowthofthelocalfinancialservicesindustry.Inthefirstinstance,asat30thJune2009,aggregateassetsofthebankingsector(US$2,9bn)standatjustover19%ofGDP,whiletotalloansandadvancesstandatapaltry9%ofGDP1.Consequently,thecountrys growingmining and agricultural industries are starved of credit, andwhere it becomesavailabledoessoatapunitivecost,infact,oneofthehighestinSSA.Withlimitedaffordablelendingoptions, Zambianbankshavehad to jostle for cheapdeposits andmaintain anultraconservativelendingpolicies,characterisedbyan inordinatelyhighCAR ratios. ZANACOsCARasat theendofDecemberwas21%atthetieroneleveland22%includingtiertwocapital.

Asaprefacetothebankseffortstobeefupitstiertwocapitalandincreaseitslendingcapacity,weconductthisstudyintoZANACOtoderiveanideaofthegroupsstrength,relativetoitspeersintheZambianmarket.WealsobenchmarkthegroupagainstitspeersinSubSaharanAfrica,toguagethegroupsrenewedpotential,sinceprivatisation.

Ourfindingsareprofound. Onthegroupsnewtrajectory,webelieveacontinueddeliberatefocusonimprovingoperatingefficiencieswillreapsignificantrewardsforthebottomline.Theruleoftwohasheldtrueforthisformerparastatalandasattheendof2008therewasagaping20percentagepoint gap between the groups cost to income ratio and theweighted average for the SSA peergrouping. ThesepotentialcashsavingsaloneamounttoaboutaUS$17mboosttoPBT! Secondly,there had not been a very specific emphasis on loan growth, a situation that had been erodingmarket share. The change in strategy and increased aggression is most clearly marked by theincreaseintheloantodepositratiofrom48%atendH108to60%atendH109,whichatconstantfatmarginsshouldresultinamuchimprovedresultforFY09.

Insummarywehave foundZANACO tobe fundamentallystrongpossessingasoundbalancesheetandsomeofthehighestnetinterestmarginsinSSA.Therearesomelegacyissuessurroundingthequalityoftheadvancesbook,andalthoughimpairmentsat7%arenotalarminglyhigh,theyarestilloutof syncwith theweighted average forour SSApeer groupof 3.3%. We expect thatorganicgrowthoftheloanbookwilldilutethisratioquickly,andweexpectabetterqualityloanbookgoingforward.

Finallywebelievetheretobeadisconnectbetweenthedemandforcapital inthecountryandthequantumof leveragecapitalavailable. WeseeZANACOscapitalbuttressingasapositive thatwillmakeitoneofthemostprofitablebanksinSSA.

Top5Shareholders %RabobankGroup 46%GRZ 25%Public 25%ZNFU 3%Employees(ESOP) 1%

100%

1ZambianGDPwasestimatedat$15,2bnin2008byCIAFactbook

4

ZanacoOverviewof2009InterimFinancialResults

Inunder two years sinceRabobank tookover controlof the Zanaco group, significant strides in the improvementof assetqualityandprofitabilityhaveoccurred.TheimprovementisparticularlyvisibleintheinterimresultstoH109asoutlinedbelow.

Historicallythegrouphasenjoyedaboveparnet interestmarginson itsbook,howeverthesehavebeendilutedbypoorcostcontainmentandinefficienciesinmanagingthecountryslargestbranchnetwork(with44branches).ForH109,thebanksRoEandRoAhavesurgedby11and2percentagepointsrespectively,asignificantfeatposttheslumpinthecountrysfundamentalsbroughtbythedropincopperpricesandZMKweaknessinQ408.

AnimprovementinliquiditywasregisteredbyanincreaseinourrudimentaryCARcomputation(seepage7)attheinterimfrom9%to12%whiledepositsgrewby16%andloansandadvancesby45%.Thecomplexionofthebalancesheetchangedtoo,withtheintroductionofsubordinateddebt,whichwasusedtopropeladvances.Inthemediumtermweexpectthebalancesheettotakeonmoregearingatslimmernetinterestmargins,butwithgreatereconomiesofscale.

100,000

200,000

300,000

400,000

500,000

600,000

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Barclays Zanaco SCB Stanbic Finance Citibank

ZMKmillion

Figure2:ZambianBanks TotalIncome

Source:StockbrokersZambia

500,0001,000,000

1,500,0002,000,000

2,500,0003,000,000

3,500,000

4,000,0004,500,000

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Barclays Zanaco SCB Stanbic Finance Citibank

ZMKmillions

Figure3:ZambianBankingStatistics

TotalAssets Deposits LoansandAdvances

Source:StockbrokersZambia

Barclays seemsoverstretchedcontrarytoZANACOwhichseemsunderlent

Overdrafts28%

PersonalLoans29%

Mortgages2%

commercialLoans41%

Figure4:Zanaco AdvancesdisaggregationDec2008

Source:ZANACO

IncomeStatement(ZMKm) H12008 H12009 %chNetinterestincome 109,679 143,748 31%Otherincome 63,600 77,578 22%TotalIncome 173,279 221,326 28%Provisions (9,149) (24,344) 166%Expenses (140,561) (140,499) 0%Profitbeforetax 23,569 56,483 140%Attributableearnings 23,702 33,191 40%

BalanceSheet(ZMKm) H12008 H12009 %chCashatcentral Bank 315,650 333,712 6%Cashonhand 48,222 67,067 39%Balances withbanks 57,565 203,490 253%Securities 543,139 609,964 12%Loans &Advances 813,645 1,177,930 45%FixedAssets 125,060 146,117 17%Other 54,807 92,874 69%TotalAssets 1,958,088 2,631,154 34%Deposits 1,697,287 1,965,350 16%Duetobanks 1,773 96,226 5327%BorrowedFunds 176,814 n/aOtherl iabilities 111,947 129,830 16%Shareholders'funds 147,081 262,934 79%Totalliabilitiesandequity 1,958,088 2,631,154 34%

Netinterestmargin 15.0% 14.0% 7%Costtoincomeratio 81% 63% 22%RoE 32.0% 43.0% 34.1%

RoA 2.4% 4.3% 78.3%

RoughCAR 9% 12% 27.8%Loan/Deposit 48% 60% 25.0%

5

RelativeComparisons

WehaveanalysedZanacoat theendofFY2008 fromabifocalperspective; firstly relative to its listed financial peers on theZambian stock exchange, and secondly relative to a basket oflisted banks in SSA, that, in our opinion, have similar businessmodels.Ourfindingsaredocumentedbelow:

ZANACOenjoyssomeofthehighestnetinterestmargins

Figure 5 shows that Zanaco exhibits some of the highest netinterest margins in Africa! Being a relatively small market,Zambiahasahighcostofcapitaland itnecessarily follows thatanyplayerwithasourceofcheapdepositsreapstherewards.

Efficiencyalegacyproblemthatwillreaphugerewards

Being a brand new privatisation, it comes as no surprise thatZanacos thecost to income ratio isatrociouslyhighatclose to70%!ThisisacleardemonstrationoftheRuleoftwothatstatesthatgovernmentownedcompanies typicallyoperateathalf theefficiency of private companies, run on a profit maximisationbasis. The reasons for this are obvious, however, vieweddifferently,this isameasureofthepotential increase inpretaxprofits that could be achieved by efficiency gains alone. Weestimate thata reversion to themean cost to income ratio forour SSA sample would result in an annual cost saving in theregionofZMK80bn(US$17m)!Wehavenodoubtthatthiswasanimmediateattractionforthebanksnewsuitors.

TaxationforZambianbanks,aparticularlythornyissue

TheZambiantaxationpolicyisretrogressiveinthatittaxesbanksatahigher rateof40% thanothercompanies thatare taxedat35%.Thisisoneofthereasonsforthehighcostofcapitalinthecountry and a consequence that retards and repels investmentandgrowth. Of the10countriescovered in thisstudy,ZambiahasthehighestweightedaverageeffectivetaxratethatputsitatasignificantdisadvantagetoneighbouringBotswanaandalsotoMauritius, another established International Financial ServicesCentre (IFSC). Inouropinion,as lessseveretaxationregimeforthe financialservicessectorwouldpromote investment therein,with positive implications for not only the capital intensiveMiningandAgricultural sectors,but far reaching implications inareaslikeMicrofinanceandpersonalcredit,twoareasthatcouldbeexpandedfortheirimmediatepotential.

Considering the above, ZANACOs key profitability ratio, RoE,comparedpoorlyagainstlocalandregionalpeers.

0%5%

10%15%20%25%30%35%40%45%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Mauritius

Botsw

ana

SouthAfrica

Ghana

Nigeria

Kenya

Uganda

Cote

d'Ivoire

Morocco

Zambia

Figure7:EffectiveTaxRate(%)

Source:ImaraAfricaSecurities

WeightedAvgincSA

WeightedAvg exSA

0%

10%

20%

30%

40%

50%

60%

70%

80%

StanchartZam

bia

Investrust

Zam

bia

ZANACO

Mauritius

Morocco

Botsw

ana

SouthAfrica

Kenya

Zambia

Nigeria

Ghana

Cote

d'Ivoire

Uganda

Figure6:Costtoincomeratio(%)


WeightedAvgincSA

WeightedAvg exSA

0%

2%

4%

6%

8%

10%

12%

14%

Investrust

Zam

bia

ZANACO

StanchartZam

bia

Cote

d'Ivoire

Kenya

Zambia

Ghana

Nigeria

Botsw

ana

Morocco

Uganda

Mauritius

SouthAfrica

Figure5:NetInterestMargin(%)


WeightedAvgincSA

WeightedAvg exSA

0%

10%

20%

30%

40%

50%

60%

70%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Botsw

ana

Ghana

Zambia

Kenya

Mauritius

SouthAfrica

Morocco

Uganda

Nigeria

Cote

d'Ivoire

Figure8:ReturnonEquity RoE(%)


WeightedAvg exSA

6

Havingoutlinedthesignificantlyhigherinefficienciesandtaxationlevelsin Zambia it necessarily follows that ZANACO has historically rankedlower than itspeersprofitabilitymetrics. RoEstatisticsare lower thantheweightedaverage forour comparativegroupingofbanksandonlyslightly higher than ETI in code dIvoire and Nigeria; although limitedquality lending opportunities in the latter make it more difficult toleveragedepositsprofitably. One candraw the same conclusion fromthereturnonassets,which isthe lowestforthe listedbanks inZambiaandhalf that for Investrust. Consequently,ZANACOsdividendyieldat4% isvery low;especiallywhencompared tokwacha364day treasurybillratewhichendedJulyat19.1%.Onayieldbasis,Kenya,GhanaandNigeriaarethemoreattractivemarkets.

BalancesheetAnalysis

By and large,banks in SSA tend tobe small, stable and for their size,solidlycapitalised,mostlybecauseoftheirexclusionfromglobalcapitalmarketsandhencerelativeisolation.InSSA,onlySouthAfricaistheonlyreal exception, intricately linked to the European,American andAsianglobalmarkets and exhibiting strong correlation. Emerging BotswanaandMauritiusareprobablyatierbelowhoweverbothhavehighlevelsofdisintermediation and are promoting development of their financialsectors,primarilybytheprovisionoftaxation incentives. Theoutlier isNigeria,whoseweightandcloutismoreaconsequenceofthesizeofitseconomy,asinfluencedbysignificantoilrevenues,butalsobythesizeofits real economy, being themost populous country on the continent.Financialdisintermediation ispatchyatbest and the country lacks thelegal and physical infrastructures to benefit from the unbankedpopulation.Indeedtherecentcarnagecausedbythemarginloanfiascois a reminder of just how much behind the curve that market is.ThankfullythesubsequentdramaticandunprecedentedactiontakenbytheCentralBankofNigeriahastakenthecountryagiant leapforwardsinitsmaturity.

BalanceSheetleveragerelativelylow

Limited access to international financial liquidity pools leaves mostAfricanbanksofahigher riskofclosure in theeventofanabnormallyhighdefault. Themajorityofthebankshave littleoptionotherthantomaintainmuch higher than firstworld liquidity ratios. Figure 11mayindeed be a measure of the level of the evolution and maturity offinancial markets. The progression would be about right, excludingMauritius,wherehighercorrelationwithglobalmarketsandparticularlythedependenceon tourism,haspromptedbanks tobemore cautiouswhengrowing theirbook.Zanaco leveragedatabout3x seems thatattheexistingfundinglevels,thebankhastheabilitytogrowitsadvancesbook organically. Indeed this is a healthy picture, indicating that thebankhasnotover streched itself. On thewhole, it canbe concluded

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Kenya

Botsw

ana

Ghana

Mauritius

Zambia

Nigeria

SouthAfrica

Morocco

Cote

d'Ivoire

Uganda

Figure9:ReturnonAssets RoA(%)


WeightedAvg exSA

WeightedAvgincSA

0%

2%

4%

6%

8%

10%

12%

14%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Kenya

Ghana

Nigeria

Botsw

ana

SouthAfrica

Uganda

Mauritius

Zambia

Morocco

Cote

d'Ivoire

Figure10:DividendYields(%)


WeightedAvg exSA

WeightedAvgincSA

2.0

4.0

6.0

8.0

10.0

12.0

ZANACO

StanchartZam

bia

Investrust

Zam

bia

Nigeria

Cote

d'Ivoire

Kenya

Mauritius

Zambia

Ghana

Uganda

Botsw

ana

Morocco

SouthAfrica

Figure11:Advances/Equity(x)


WeightedAvg exSA

WeightedAvgincSA

0%

10%

20%

30%

40%

50%

60%

70%

80%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Nigeria

Ghana

Kenya

Uganda

Morocco

Botsw

ana

Zambia

Cote

d'Ivoire

SouthAfrica

Mauritius

Figure12:AdvancesGrowthyoy(%)


WeightedAvg exSA

WeightedAvgincSA

7

that the Zambian banking sector iswell leveraged, relative to theweightedaverageofitspeersinAfrica,excludingSouthAfrica.

Depositgrowthaproxyforsustainableearningsgrowth

For2008ZANACOsadvancesgrowthoflessthan10%yoyin2008wasratherconcerning, primarily because in Kwacha terms this growth was negative,particularlywhenthedepreciationoftheKwachaisbroughtintotheequation.A look at the H109 growth, at 45%, addresses this concern and the morediversifiedfundingbase,shouldensurecontinuedrobustgrowthinthebook.

Depositsgrowthdrivenmyexpansionistmacropolicies.

Muchofthisdecadehasbeencharacterisedbyhighsingledigitrealgrowthforall of the economies covered in our sample. In Zambia, ZANACOs depositsgrewbyahealthy25%in2008.Despitethedropincopperprices,accordingtotheBankofZambia,asatJune2009,monetaryaggregatesweregrowingatanannual rateof20,6%and thisshouldensuresustainedgrowth indeposits forthebank.

Advances/Depositsratioanothermeasureofsolvencyandrisk

We use the proportion of deposits lent out as a proxy to rate liquidity andgrowthpotential.Asawhole,duetoaprudentlyhigh loantodepositratio, itlooks like Zambia would be pretty much sheltered from any significantsystematicorsectoral(e.g.mining) impairment. Puttingthis intoperspective,Zimbabwes load todeposit ratio averages 30%,where there is currently nolenderoflastresort;consequentlyaweightedaverageratioof40%forZambiais very comfortable!whileon theother extremity, SouthAfricanbankshavelent out 100% of their deposits, however, they do have recourse of foreigninternationalcapital liquiditypools ifneeded. UgandanandKenyanBanks,atabout80%lookquitefull.

RoughCapitalAdequacyRatio

In order to level the regulatory playing field regarding the differentclassifications and risk metrics used in the different countries, we havecalculatedourRoughCapitalAdequacyRatioasfollows:

ShareholdersEquity/(Advances+Terminstruments+OtherAssets)

Essentially we have not used a discounted weighting for term instruments(usuallyabout2025%)andhavecompletelyexcludedcashbalances,whichwehaveassumedriskless. Theresult isastrictermeasure,whoseabsolutevaluearrives at a lower absolute CARmeasure, but that can be used to correctlyarriveatmeaningfulcomparatives.

Using this proxy it can be concluded that Nigeria, Kenya Cote dIvoire andMauritiusaresomeofthebestcapitalisedfinancialmarkets.Onastandalonebasis ZANACOs rating of over 15% raises no concerns. South Africa andBotswanaareontheoppositeextremityduetotheproportionallyhigherleveloflendinginthoseeconomies.

0%

10%

20%

30%

40%

50%

60%

70%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Nigeria

Botsw

ana

Kenya

Ghana

Zambia

Uganda

Cote

d'Ivoire

SouthAfrica

Mauritius

Morocco

Figure13:DepositGrowthyoy(%)

Source: Imara Africa Securities

WeightedAvg exSA

WeightedAvgincSA

0%

20%

40%

60%

80%

100%

120%

ZANACO

Investrust

Zam

bia

StanchartZam

bia

Botsw

ana

Zambia

Nigeria

Cote

d'Ivoire

Ghana

Mauritius

Morocco

Kenya

Uganda

SouthAfrica

Figure14:Advances/Deposits(%)


WeightedAvg exSA

WeightedAvgincSA

0%

5%

10%

15%

20%

25%

30%

ZANACO

StanchartZam

bia

Investrust

Zam

bia

Nigeria

Kenya

Cote

d'Ivoire

Mauritius

Zambia

Morocco

Ghana

Uganda

Botsw

ana

SouthAfrica

Figure15:RoughCapitalAdequacyRatio CAR(%)

WeightedAvg exSA

WeightedAvgincSA


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Investrust

Zam

bia

StanchartZam

bia

ZANACO

Cote

d'Ivoire

Morocco

Botsw

ana

Ghana

SouthAfrica

Zambia

Uganda

Mauritius

Nigeria

Kenya

Figure16:NonPerformingLoans/Advances(%)

WeightedAvg exSA

WeightedAvgincSA


8

Bank year Price PBVend T+1 T+2 T+1 T+2 T+1 T+2 2009F

Botswana 2,434 18% 8% 24% 34% 1249% 1129% 6% 6% 8.1BancABC Dec08 BWP1.20 26 0.0% 0.1% 24% 33% 44% 80% 1.7 1.2 10.1% 11.0% 0.3BarclaysBotswana Dec08 BWP5.75 717 0.9% 2.1% 22% 10% 39% 34% 9.5 8.6 6.8% 7.5% 5.3FirstNationalBankofBots. Jun08 BWP2.60 975 1.2% 2.8% 9% 11% 29% 45% 14.4 12.3 3.6% 4.2% 7.0StanchartBotswana Dec08 BWP17.00 716 0.9% 2.1% 26% 3% 1% 18% 13.3 12.9 6.8% 7.0% 12.7

Coted'Ivoire 754 9.0% 3.0% 20.4% 23.0% 8.8 8.5 1.6% 1.7% 0.7EcobankTransnationalInc. Dec08 XOF51.00 754 0.9% 2.2% 9% 3% 20% 23% 8.8 8.5 1.6% 1.7% 0.7

Ghana 372 83% 74% 69% 31% 8.1 4.7 11% 20% 5.9StanchartGhana Jan00 29.00 348 0.4% 1.0% 90% 77% 70% 31% 8.4 4.7 11.9% 21.1% 6.3CalBank Dec08 0.22 23 0.03% 0.07% 15% 25% 46% 27% 4.3 3.4 1.9% 2.4% 1.0

Kenya 2,783 36% 33% 44% 33% 8.7 6.9 12% 17% 2.3BarclaysBankKenya Dec08 KES48.00 855 1.0% 2.5% 8% 9% 6% 16% 8.8 8.1 5.2% 4.9% 2.6DiamondTrustBank Dec07 72.50 103 0.1% 0.3% 10% 10% 55% 54% 13.9 12.7 2.1% 2.3% 1.7EquityBank Dec08 15.75 765 0.9% 2.2% 53% 44% 102% 60% 9.8 6.8 29.1% 41.9% 2.4KenyaCommercialBank Dec08 21.25 557 0.7% 1.6% 72% 68% 45% 34% 5.9 3.5 8.1% 13.6% 1.8NationalBankofKenya Dec07 KES40.00 89 0.1% 0.3% 59% 25% 8% 5% 6.5 5.2 0.0% 0.0% 1.3NationalIndustrialCreditBank Dec08 33.75 156 0.2% 0.5% 32% 40% 35% 42% 7.3 5.2 2.0% 2.8% 1.6StanchartKenya Dec08 KES145.00 259 0.3% 0.8% 10% 10% 10% 7% 11.0 10.0 7.6% 8.4% 3.4

Mauritius 1,731 32% 43% 18% 21% 7.2 5.3 5% 7% 1.6MauritiusCommercialBank Dec07 MUR131.00 1,033 1.2% 3.0% 34% 32% 18% 26% 6.6 8.9 4.7% 6.1% 1.5StateBankofMauritius Jun08 MUR73.00 698 0.8% 2.0% 29% 61% 18% 13% 8.2 0.2 4.4% 7.1% 1.7

Morocco 13,359 16% 22% 28% 16% 17.9 14.3 2% 2% 4.2Attijariwafa Jan00 MAD271.00 6,639 7.9% 19.3% 26% 10% 29% 16% 13.3 12.0 2.5% 2.5% 3.5BCP Jun08 MAD250.00 2,098 2.5% 6.1% 6% 15% 19% 4% 10.5 9.2 2.4% 2.8% 3.1BMCE Jan00 MAD229.00 4,623 5.5% 13.5% 7% 41% 30% 21% 28.0 19.9 1.4% 2.0% 5.6

Nigeria 12,021 97% 34% 70% 57% 5.7 4.3 10% 13% 1.0FirstBank Mar09 NGN15.80 2,512 3.0% 7.3% 338% 40% 59% 71% 7.1 5.1 7.0% 9.8% ZenithBank Sep08 NGN13.85 1,483 1.8% 4.3% 30% 30% 55% 87% 3.5 2.7 16.0% 20.7% 0.6UBA Sep08 NGN12.98 1,789 2.1% 5.2% 65% 35% 40% 47% 4.1 3.1 12.7% 17.1% 2.0Intercontinental Feb08 NGN7.03 833 1.0% 2.4% 36% 35% 62% 126% 2.8 2.1 14.5% 19.5% 0.5UnionBank Mar08 NGN14.02 1,211 1.4% 3.5% 40% 38% 62% 58% 5.2 3.8 7.5% 10.4% 1.9GuarantyTrustBank Feb08 NGN11.87 679 0.8% 2.0% 13% 12% 149% 21% 5.4 4.8 8.4% 9.4% 1.0AccessBankNigeria Feb09 NGN7.03 739 0.9% 2.2% 37% 37% 68% 22% 4.0 2.9 12.5% 17.1% 0.6FirstCityMerchantBank Apr08 NGN5.33 1,351 1.6% 3.9% 33% 52% 123% 34% 4.3 2.9 9.3% 14.0% 0.6StanbicIBTC Dec08 NGN7.50 1,423 1.7% 4.1% 2% 17% 70% 34% 11.5 9.8 5.2% 6.1% 2.0

Uganda 461 26% 21% 38% 24% 12.0 10.0 5% 6% 5.0DFCUBankLtd Dec07 850 58 0.1% 0.2% 30% 30% 23% 56% 7.1 5.4 5.7% 7.4% 1.5StanbicUganda Dec08 165 403 0.5% 1.2% 25% 20% 40% 20% 12.7 10.6 5.0% 6.0% 5.5

SouthAfrica 49,878 38% 26% 19% 22% 7.0 5.6 6% 7% 1.3ABSA Dec08 126 11,680 13.9% 35% 35% 17% 23% 6.3 4.8 1.9% 2.4% 1.5FirstRand Dec08 15 11,216 13.3% 88% 19% 15% 16% 4.0 3.3 10.0% 11.9% 1.1Nedbank Dec08 114 7,195 8.5% 0% 14% 16% 21% 8.7 7.6 5.8% 6.6% 1.3StandardBank Dec08 99 19,786 23.5% 25% 30% 24% 24% 8.5 6.5 5.0% 6.5% 1.4

Zambia 415 72% 31% 23% 29% 8.0 6.1 6% 7% 2.8StanchartZambia Dec08 339 289 0.3% 0.8% 35% 33% 30% 30% 9.7 7.3 4.3% 5.1% 3.3InvestrustZambia Dec08 17 10 0.0% 0.0% 0% 0% 39% 35% 4.7 4.2 7.4% 7.4% 1.9ZANACO Dec08 480 116 0.1% 0.3% 171% 28% 5% 27% 4.1 3.2 8.9% 11.4% 1.4

WeightedAverage 84,208 100% 100% 42% 27% 29% 27% 8.8 7.0 5.8% 7.3% 2.034,330 48% 27% 44% 34% 11.5 9.2 6.2% 8.2% 3.0WeightedAverageexSouthAfricanBanks

MarketCapitalisation(US$m)

WeightingincSA

EarningsGrowth PER(x) Dividendyield(%)WeightingexSA

AdavancesGrowth

DepositGrowth

9

Effectivetaxrate

Advances/Deposits

NPL/Advances

Provexp/Advances

Debt/Equity RoE RoA

Advances/Equity

RoughCAR Bank

5,608 414 172 6% 42% 20% 42% 0% 1% 77% 63% 3% 710% 7%580 27.0 12.5 6.9% 59.2% 28.1% 79.7% 6.4% 2.0% 137.0% 19.6% 2.2% 5.1 13% BancABC

2,029 169.0 61.7 8.3% 47.7% 22.4% 46.5% 0.0% 1.1% 122.8% 55.3% 3.0% 7.2 7% BarclaysBotswana1,680 109.4 54.7 2.7% 37.1% 16.7% 40.1% 0.0% 0.5% 44.8% 51.6% 3.3% 5.5 7% FirstNationalBankofBots.1,319 108.5 42.8 7.0% 43.6% 21.1% 39.1% 0.0% 1.5% 72.7% 87.2% 3.2% 9.3 4% StanchartBotswana

8,306 826 94 9% 67% 32% 65% 3% 33% 9% 1% 3.6 19% Coted'Ivoire8,306 826.1 94.1 8.7% 67% 32% 65% 0% 3% 33% 9% 1% 3.6 19% EcobankTransnationalInc.

913 31 11 6.8% 58.6% 24.9% 68.4% 0.4% 0.5% 66% 38.3% 3.0% 5.3 9% Ghana716 15.4 5.7 6.7% 59.4% 25.0% 65.4% 0.0% 0.5% 52.2% 39.2% 3.1% 5.3 0.1 StanchartGhana197 15.4 5.7 7.7% 47.1% 23.4% 112.8% 5.7% 0.7% 271.3% 24.0% 2.9% 4.7 14% CalBank

8,296 1,033 276 8.5% 55.0% 27.0% 80.4% 5.1% 1.8% 1% 24.6% 4.3% 4.1 24% Kenya2,215 310.1 89.3 8.3% 60.6% 26.8% 91.0% 0.0% 0.0% 1.4% 33.3% 4.0% 5.6 13% BarclaysBankKenya472 31.7 9.0 6.1% 51.1% 29.9% 79.7% 1.8% 0.5% 26.1% 12.6% 1.9% 4.2 17% DiamondTrustBank697 165.9 51.3 10.5% 52.2% 22.1% 87.8% 4.0% 2.3% 0.0% 20.0% 7.4% 2.3 48% EquityBank

2,509 288.0 55.0 6.8% 55.7% 30.3% 73.8% 11.1% 4.0% 0.0% 19.9% 2.2% 4.4 16% KenyaCommercialBank543 61.4 14.7 9.5% 52.9% 30.5% 22.6% 34.6% 7.6% 0.8% 22.5% 2.7% 1.6 13% NationalBankofKenya559 41.9 13.6 5.0% 47.4% 30.1% 85.0% 3.9% 0.7% 0.0% 18.8% 2.4% 5.4 15% NationalIndustrialCreditBank

1,299 133.6 42.7 9.0% 49.4% 31.1% 54.9% 4.0% 1.0% 0.0% 28.3% 3.3% 3.8 13% StanchartKenya

6,316 387 183 2.8% 37.1% 12.5% 69.0% 2.2% 0.8% 11% 21.3% 2.9% 4.1 16% Mauritius4,188 255.5 116.3 3.2% 39.8% 12.9% 72.6% 2.0% 0.5% 18.9% 22.6% 2.8% 4.7 13% MauritiusCommercialBank2,128 131.1 66.6 2.4% 33.1% 11.8% 63.7% 2.4% 1.1% 0.0% 19.3% 3.1% 3.2 20% StateBankofMauritius

68,533 2,521 739 3.5% 41.9% 33.1% 75.7% 0.0% 1.0% 0% 16.4% 1.2% 7.7 9% Morocco32,870 1,393.6 395.8 3.3% 44.1% 33.9% 86.9% 0.0% 0.4% 0.0% 16.6% 1.2% 8.2 9% Attijariwafa23,399 524.4 188.6 2.3% 36.1% 33.4% 68.9% 0.0% 0.4% 0.0% 8.7% 0.8% 5.6 12% BCP12,263 602.6 154.4 4.4% 41.4% 31.8% 62.8% 0.0% 2.0% 0.0% 19.5% 1.3% 8.0 9% BMCE

65,593 5,607 1,494 6.6% 58.5% 25.7% 59.8% 3.5% 2.1% 9% 13.6% 2.3% 1.9 27% Nigeria12,853 1,027.8 80.4 4.8% 72.3% 54.6% 62.0% 0.0% 2.3% 10.4% 3.7% 0.6% 2.2 18% FirstBank11,433 989.2 330.0 4.2% 59.6% 7.4% 38.5% 1.7% 1.4% 10.0% 15.0% 2.9% 1.3 56% ZenithBank10,698 820.0 263.7 9.8% 60.5% 15.0% 33.6% 3.6% 0.6% 0.0% 21.4% 2.5% 2.3 21% UBA8,903 809.8 217.4 6.2% 57.1% 23.8% 42.6% 3.7% 1.9% 10.1% 17.0% 2.4% 2.2 25% Intercontinental7,225 550.0 164.6 6.3% 54.9% 18.7% 29.5% 13.2% 2.2% 0.0% 21.6% 2.3% 2.2 19% UnionBank4,705 397.0 133.0 4.2% 49.6% 22.6% 79.0% 1.3% 1.4% 9.7% 13.0% 2.8% 1.8 26% GuarantyTrustBank4,542 462.4 134.5 5.5% 52.1% 20.5% 99.3% 2.3% 2.0% 4.9% 11.4% 3.0% 2.3 26% AccessBankNigeria2,988 278.7 96.5 3.7% 45.7% 26.4% 74.2% 2.8% 1.7% 18.4% 11.3% 3.2% 1.4 31% FirstCityMerchantBank2,246 272.6 73.9 13.4% 53.9% 18.0% 103.3% 5.2% 5.1% 18.4% 14.3% 3.3% 1.2 24% StanbicIBTC

363 57 11 3.3% 71.0% 27.9% 83.3% 2.0% 0.1% 31% 15.9% 1.1% 7.1 8% Uganda181 21.0 3.9 3.3% 74.7% 31.6% 120.8% 16.2% 0.7% 244.2% 16.0% 2.2% 3.8 21% DFCUBankLtd181 36.1 6.6 3.3% 70.5% 27.3% 78.0% 0.0% 0.0% 0.0% 15.9% 0.9% 7.5 6% StanbicUganda

471,867 24,497 5,560 0.4% 52.9% 24.7% 103.6% 1.1% 1.2% 127% 21.2% 1.2% 10.7 6% SouthAfrica99,635 5,535 1,363.9 2.4% 51.0% 26.1% 139.2% 1.7% 1.1% 449.7% 28.2% 1.4% 14.2 6% ABSA105,597 5,982 1,508.9 1.2% 56.4% 20.0% 91.4% 0.0% 1.1% 28.6% 24.1% 1.4% 9.2 6% FirstRand73,014 3,581 825.4 3% 49% 24% 93% 2% 1% 40% 18% 1% 12.4 7% Nedbank193,622 9,400 1,862.1 0.6% 53.2% 26.7% 93.4% 1.1% 1.4% 24.6% 16.5% 1.0% 9.0 6% StandardBank

1,281 147 29 7.6% 56.3% 35.4% 44.7% 2.0% 1.7% 14% 29.2% 2.4% 4.5 14% Zambia586 52.5 15.4 5.6% 50.6% 34.4% 45.0% 0.0% 1.1% 1.2% 34.1% 2.6% 5.1 13% StanchartZambia87 11.4 2.8 10.5% 59.6% 16.2% 53.9% 0.0% 3.3% 101.4% 39.4% 3.2% 5.1 12% InvestrustZambia607 83.2 10.8 12.4% 70% 40% 43% 7% 3.2% 37.2% 16.1% 1.8% 3.1 18% ZANACO

637,076 35,519 8,568 2.4% 51.6% 26.0% 88.8% 1.4% 1.3% 80.1% 20.7% 1.6% 8.4 10.5%165,209 11,022 3,008 5.3% 49.9% 27.9% 67.2% 1.8% 1.5% 11.4% 19.8% 2.1% 5.0 17.0%

Cost/incomeratio

TotalAssets(US$m)

TotalIncome(US$m)

AtributableIncome(US$m)

Netinterestmargin

10

Imara Africa Securities Block A, Unit 3 Millennium Office Park Kgale Hill, Gaborone Botswana Tel: +267 3188710 Fax: +267 3191767

Imara Securities Angola SCVM Limitada Rua Rainha Ginga 74, 13th Floor, Luanda, Angola

Tel: +244 222 372 029/36 Fax: +244 222 332 340

Imara Edwards Securities (Pvt.) Ltd. Tendeseka Office Park 1st Floor Block 2 Samora Machel Avenue Harare, Zimbabwe Tel: +263 4 790590 Fax: +263 4 791435 4 Fanum House Cnr. Leopold Takawira/Josiah Tongogara Street Bulawayo Tel: +263 9 74554 Fax: +263 9 66024

Imara S P Reid (Pty) Ltd Imara House 257 Oxford Road Illovo 2146 P.O. Box 969 Johannesburg 2000 South Africa Tel: +27 11 550 6200 Fax: +27 11 550 6295 Member of the JSE Securities Exchange

Stockbrokers Malawi Ltd Able House Cnr. Hanover Avenue/ Chilembwe Road Blantyre Malawi Tel: +265 1822803 Member of the Malawi Stock Exchange

Namibia Equity Brokers (Pty) Ltd 1st Floor City Centre Building, West Wing Levinson Arcade Windhoek Namibia Tel: +264 61 246666 Fax: +264 61256789 Member of the Namibia Stock Exchange

Stockbrokers Zambia Ltd 2nd Floor, Design House P O Box 38956 Lusaka Zambia Tel: +260 1227303 Fax: +2601221055 Member of the Zambia Stock Exchange

Thisresearchreportisnotanoffertosellorthesolicitationofanoffertobuyorsubscribeforanysecurities.Thesecuritiesreferredtointhisreportmaynotbeeligibleforsaleinsomejurisdictions.TheinformationcontainedinthisreporthasbeencompiledbyImaraEdwardsSecurities(Pvt.)Ltd.(Imara)fromsourcesthatitbelievestobereliable,butnorepresentationorwarranty ismadeorguaranteegivenbyImaraoranyotherpersonasto itsaccuracyorcompleteness.Allopinionsandestimatesexpressed inthisreportare(unlessotherwiseindicated)entirelythoseofImaraasofthedateofthisreportonlyandaresubjecttochangewithoutnotice.NeitherImaranoranyothermemberoftheImaraGroupofcompaniesincludingtheirrespectiveassociatedcompanies(togetherGroupCompanies),noranyotherperson,acceptsanyliabilitywhatsoeverforanylosshowsoeverarising from any useof this report or its contents or otherwise arising in connection therewith. Each recipient of this report shall be solely responsible formaking its ownindependent investigationof thebusiness, financialconditionandprospectsofcompanies referred to in this report.GroupCompaniesand their respectiveaffiliates,officers,directorsandemployees, includingpersons involved inthepreparationor issuanceofthisreportmay,fromtimetotime(i)havepositions in,andbuyorsell,thesecuritiesofcompaniesreferredtointhisreport(orinrelatedinvestments);(ii)haveaconsulting,investmentbankingorbrokingrelationshipwithacompanyreferredtointhisreport;and(iii)totheextentpermittedunderapplicablelaw,haveacteduponorusedtheinformationcontainedorreferredtointhisreportincludingeffectingtransactionsfortheirownaccountinan investment(orrelated investment) inrespectofanycompanyreferredto inthisreport,priortoor immediatelyfollowing itspublication.Thisreportmaynothavebeendistributedtoallrecipientsatthesametime.Thisreportisissuedonlyfortheinformationofandmayonlybedistributedtoprofessionalinvestors(or,inthecaseoftheUnitedStates,majorUS institutional investors as defined inRule 15a6 of theUS Securities ExchangeAct of 1934) and dealers in securities andmust not be copied, published orreproducedorredistributed(inwholeorinpart)byanyrecipientforanypurpose.ImaraCapital2003

/ColorImageDict > /JPEG2000ColorACSImageDict > /JPEG2000ColorImageDict > /AntiAliasGrayImages false /DownsampleGrayImages true /GrayImageDownsampleType /Bicubic /GrayImageResolution 300 /GrayImageDepth -1 /GrayImageDownsampleThreshold 1.50000 /EncodeGrayImages true /GrayImageFilter /DCTEncode /AutoFilterGrayImages true /GrayImageAutoFilterStrategy /JPEG /GrayACSImageDict > /GrayImageDict > /JPEG2000GrayACSImageDict > /JPEG2000GrayImageDict > /AntiAliasMonoImages false /DownsampleMonoImages true /MonoImageDownsampleType /Bicubic /MonoImageResolution 1200 /MonoImageDepth -1 /MonoImageDownsampleThreshold 1.50000 /EncodeMonoImages true /MonoImageFilter /CCITTFaxEncode /MonoImageDict > /AllowPSXObjects false /PDFX1aCheck false /PDFX3Check false /PDFXCompliantPDFOnly false /PDFXNoTrimBoxError true /PDFXTrimBoxToMediaBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ] /PDFXSetBleedBoxToMediaBox true /PDFXBleedBoxToTrimBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ] /PDFXOutputIntentProfile () /PDFXOutputCondition () /PDFXRegistryName (http://www.color.org) /PDFXTrapped /Unknown

/Description >>> setdistillerparams> setpagedevice

zanaco capital raising document

Documents