Oceanic Bank signs Transaction Implementation Agreement (TIA) with Ecobank Transnational Incorporated (ETI)

Oceanic Bank International Plc, ("the Bank") is pleased to announce that following the completion of an extensive selection process and negotiations, it has entered into a Transaction Implementation Agreement ("TIA") in respect of the re-capitalization of the Bank with its preferred bidder, Ecobank Transnational Incorporated ("ETI"). In addition, the Central Bank of Nigeria has conveyed its "no objection" for the Bank to enter into the TIA with ETI.

The execution of the TIA represents an important milestone in the process of recapitalizing the Bank.
The Bank and ETI will now begin the process of seeking shareholder and regulatory approvals in accordance with the relevant laws of the Federal Republic of Nigeria, including the provision of full transaction details to shareholders at the appropriate time.

The Board of Directors of the Bank remains confident that a transaction will be completed within the required time line to comply with the Central Bank of Nigeria's deadline of September 30, 2011.
Ecobank Transnational Incorporated is the parent company of the Ecobank Group, a pan-African banking group with banking operations in 31 African countries and France, as well as representative offices in South Africa, London, Angola and Dubai.

Accordingly, shareholders are advised to exercise caution when dealing in the Bank's shares until full transactions details is disclosed.

John O. Aboh
Group Managing Director/CEO

The National Bureau of Statistics (NBS) indicated that real Gross Domestic Product (GDP) grew by 8.29% in the fourth quarter of 2010, up from 7.86% recorded in the third quarter. The overall GDP growth for 2010 was estimated to be 7.85%, compared to the revised growth rate of 6.96% recorded in 2009. Provisional data from the NBS revealed that real GDP was projected to grow by 7.43% in Q1 2011, compared with the 7.36% recorded in the corresponding period of 2010. The non-oil sector remains the major driver of overall growth with Agriculture growing by 5.6% and contributing 40.1% to GDP in Q4 2010.

The Federal Government 2011 budget was passed on 16 March 2011 with a total projected spending of N4.97 trillion (US$31.87 billion). The current budget shows a marginal reduction of 5.3% compared to the N5.25 trillion (US$33.67 billion) budget of 2010. The approved oil price benchmark of US$75 per barrel is US$10 per barrel higher than the earlier proposed US$65 per barrel.

It would seem that inflationary pressures declined as the inflation rate continued its downward trend since mid-2010 as a result of stagnation in credit creation while the prices of key food items moderated following the end of the festive season. The Year-on-Year inflation rate declined from 14.1% in June 2010 to 11.1% in February 2011. We expect a moderate reversal of this trend in the second quarter when the effect of election spending works its way into the system.

The CBN extended the guarantee on inter-bank transactions and foreign credit lines by three months from 30 June 2011 to 30 September 2011. This is expected to maintain the stability being experienced in the financial system. There was a steep increase in the Monetary Policy Rate (MPR) in two steps, 25 basis points in January 2011 and 100 basis points in March 2011, bringing the MPR rate from 6.25% p.a. to 7.50% p.a.

The symmetric corridor +/- 200 basis points was however retained throughout the quarter. Following a rise in MPR, the average monthly Nigerian Inter-Bank Offer Rate (NIBOR) rose from 10.7% p.a. in January 2011 to 11.8% p.a. in February 2011 and then to 12.2% p.a. in March 2011. The Naira experienced a slight depreciation from an average of N149.05/$ in January to N150.99/$ in March but remained within the +/- 3% band to which the CBN is committed. The Foreign Reserves increased by US$2 billion to US$35.0 billion in March.

The banking industry appears to be on the path of recovery due to CBN reforms and AMCON intervention. At the end of the first quarter, 10 banks (Access, Diamond, Fidelity, First Bank of Nigeria, GTBank, Skye, Stanbic IBTC, Sterling, UBA Plc and Zenith) had released their 2010 financial year end results, all these banks recorded profitability before and after taxation.

The ratio of Non Performing Loans to Gross Loans for all these banks declined with the exception of UBA and First Bank of Nigeria which experienced marginal increases. There was a marked improvement of the Earnings per Share across the banking industry.

In Q1 2011, gross income was N28.22 billion versus N24.69 billion budgeted for the period. The positive variance in gross income was due primarily to an increased focus on non interest income and interest earned from Asset Management Corporation of Nigeria (AMCON) Bonds. The Bank’s profitability improved significantly as we recorded a Profit Before Tax of N3.36 billion in the Q1 2011 compared with a budgeted loss of N0.72 billion and N1.73 billion attained in Q1 2010.

Overview of Oceanic Bank’s Q1 2011 Financial Performance

N'Billion	Q1 ‘11	Q1 ‘10
Gross Earnings	28.27		28.71
Net Interest Income	8.00		6.46
Other Income	7.46		4.13
Operating Expenses	(16.26)		(16.24)
Write-backs for losses	4.16		7.38
Profit Before Tax	3.37		1.73

Deposits grew to N637.2 billion by Q4 2010 from N595.3 billion in Q1 2010, but dropped by N51 billion to N586.2 billion by the end of Q1 2011. This decline was largely due to haemorrhaging from de-marketing in January 2011 and the deliberate decision to reduce expensive time deposits in the Bank’s portfolio.