PANTONE COLOURS PICKED ON THIS LOGO PANTONE COLOURS PICKED ON THIS LOGO
FCMB Group Plc
Annual Report
and Accounts
2015
FCMB GROUP PLC
OUR VISION
To be the Premier
Financial Services Group
of African Origin.
OUR MISSION
To attain the highest
levels of customer
advocacy, be a great
place to work and
deliver superior and
sustainable returns
toourshareholders.
OUR CORE VALUES
Professionalism
Sustainability
Customer focus
Excellence
Annual Report and Accounts
2015
FCMB Group Plc Annual Report and Accounts 2015 1
FCMB Group Plc Annual Report and Accounts 20152
At FCMB, we place great value on
being a responsible institution.
By creating a great place to work for our people, selling our
products and services responsibly, eecting positive social
outcomes and mitigating the environmental impact of our
operations, we believe that we can make a greater positive
contribution to our operating environment.
1
Introduction
2
Operating
Review
3
Corporate
Governance
4
Financial
Statements
5 About FCMB Group Plc
7 From the Archives of theFounder
9 Chairman’s Statement
12 Managing Director’s Report
16 2015 Awards Won
17 Operating Companies’
Performance Highlights
– First City Monument Bank Ltd
– FCMB Capital Markets Ltd
– CSL Stockbrokers Ltd
– CSL Trustees Ltd
23 Sustainability Report
27 Board of Directors
32 Board Evaluation Report
33 Corporate Governance
6
Shareholder
Information
5
Other National
Disclosures
194 Notice of Annual General Meeting
196 Proxy Form and Resolutions
198 Mandate for E-Dividend Payment
200 Electronic Delivery Mandate Form
188 Value Added Statement
189 Five-Year Financial Summary
– Group
191 Five-Year Financial Summary
– Company
7
Branches and Account
Opening Information
202 List of Branches
209 Personal Account
ApplicationForm
38 Directors’ Report
46 Statement of Directors’
Responsibilities
47 Audit Committee Report
48 Independent Auditor’s Report
50 Consolidated and Separate
Statements of Profit or Loss and
Other Comprehensive Income
52 Consolidated and Separate
Statements of Financial Position
54 Consolidated and Separate
Statements of Changes in Equity
58 Consolidated and Separate
Statements of Cash Flows
60 Notes to the Consolidated and
Separate Financial Statements
Read more about our
businesses at:
www.fcmbgroupplc.com
Contents
FCMB Group Plc Annual Report and Accounts 2015 3
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
INTRODUCTION
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
FCMB Group Plc Annual Report and Accounts 20154
About FCMB Group Plc
FCMB Group Plc
FCMB Group Plc’s vision is to be the premier
financial services group of African origin.
Leadership, for us, is defined by the value of
our franchise and the customer experience we
deliver. At the centre of our organisation lies
a talented workforce, focused on providing
comprehensive, yet simple and reliable, services
to customers. Our business activities include
commercial and retail banking, investment
banking, brokerage, wealth management and
trustee services.
FCMB Group Plc is listed on the Nigerian Stock
Exchange (NSE) with the ticker symbol ‘FCMB’
and has 19,802,710,781 ordinary shares held by
over 522,000 shareholders as at 31 December
2015.
FCMB Group Plc and its subsidiaries (the Group)
each function as separate and distinct operating
companies with separate Boards of Directors
and executives.
History
FCMB Group Plc’s roots date back to 1977, with
the formation of City Securities Limited (CSL),
a stockbroking and issuing house and registrar
business. CSL rapidly climbed the league of
issuing houses and brokers between 1977 and
1982, handling the listings and initial public oers
of many of the leading blue-chip companies on
the Nigerian Stock Exchange (NSE).
First City Merchant Bank Limited was established
in 1982 with seed capital from the success of
CSL. It began operations as a licensed deposit
taker and merchant bank on 11 August 1983,
assuming the corporate finance and issuing
house activities of CSL and becoming the first
Nigerian merchant bank to be established
without government or international support.
First City Merchant Bank Limited soon became
a leading merchant bank in Nigeria, as measured
by profitability, and, in 2000, the first and only
merchant bank to achieve N1 billion profit.
With the advent of universal banking in 2001,
First City Merchant Bank Limited converted into
a universal bank. It changed its name to First
City Monument Bank Limited and commenced
commercial banking activities; its corporate
finance activities were spun o into a new
Subsidiary, FCMB Capital Markets Limited. In
2004, the Bank changed status from a private
limited liability company to a public limited
liability company, and was listed on the NSE in
December of that year.
In 2010, the Central Bank of Nigeria (CBN)
issued Regulation 3 (Scope of Banking
Activities and Ancillary Matters, No. 3, 2010),
which required banks to divest their non-
banking businesses or retain them under a CBN-
approved financial group structure. In response,
FCMB Plc developed a group restructuring
plan (Compliance Plan) and secured the CBN’s
approval of the plan in December 2011.
As a result of this reorganisation, the newly
created FCMB Group Plc became the holding
company, with First City Monument Bank Plc
(FCMB Plc), CSL Stockbrokers Limited (CSLS)
and FCMB Capital Markets Limited (FCMB-CM)
as direct subsidiaries. Shareholders of FCMB
Plc were also migrated to FCMB Group Plc via
a one-for-one share exchange between FCMB
Group Plc and FCMB Plc.
FCMB Plc, the Bank, was thereafter re-registered
as a limited liability company, becoming First
City Monument Bank Limited (FCMB Limited). In
2014, CSL Trustees Limited also became a direct
subsidiary of FCMB Group Plc.
Subsidiaries of FCMB Group Plc
FCMB Group Plc’s subsidiaries are leaders in their
respective markets and they provide significant
cross-sell synergies and earnings diversification
for the Group.
FCMB Group Plc Annual Report and Accounts 2015 5
Introduction Operating
Review
Corporate
Governance
Financial
Statements
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Information
Other National
Disclosures
Branches and Account
Opening Information
First City Monument Bank Limited (The Bank)
(100% Beneficial Ownership)
The Bank, the flagship of the Group, employs
over 2,940 full-time sta, and has over
3 million customers and 225 branches distributed
across every state of the Federal Republic of
Nigeria. The Bank is a top 10 lender in Nigeria
and a parent company to two subsidiaries,
FCMB Bank (UK) Limited and Credit Direct
Limited (CDL). CDL is the leading micro-lender
in Nigeria and provided financial support
to 180,000 borrowers, amounting to over
N22 billion, in 2015.
FCMB Capital Markets Limited
(100% Beneficial Ownership)
FCMB Capital Markets Limited is licensed by the
Securities and Exchange Commission of Nigeria
(SEC) as an issuing house and financial advisor.
FCMB Capital Markets Limited specialises in
project and structured finance, equity and debt
capital raising, M&A advice, and other financial
advisory services to top-tier corporate entities.
FCMB Capital Markets remains a market leader
in its field.
CSL Stockbrokers Limited
(100% Beneficial Ownership)
CSL Stockbrokers (CSLS), licensed by the SEC, is a
leading stockbroking and investment management
firm in Nigeria. Its equity and macroeconomic
research is recognised internationally and the firm
executes a significant share of the international
portfolio trades on the NSE.
CSLS is positioning itself to be the leading conduit
for portfolio investment into Sub-Saharan Africa.
CSLS’s subsidiary, First City Asset Management
(FCAM) Limited, provides portfolio and fund
management services to high net worth individuals
and institutional clients. FCAM currently has assets
of N12.4 billion under management.
CSL Trustees Limited
(100% Beneficial Ownership)
CSL Trustees Limited (CSLT), a SEC-licensed
company, partners with clients to ensure fund
assets are kept securely and serviced properly,
in the interest of beneficiaries. CSLT’s expanded
trustee services include debenture trustee,
security trustee, facility agent, escrow agent,
management of private trusts, employee stock
ownership plans and employee welfare trustee.
The Company’s technical specialisation,
individualised client focus, national coverage
(enabled by FCMB Limited’s distribution
network), responsiveness and monitoring
programmes have enabled it to become one of
the fastest growing trustees in the country. CSLT
is increasingly the choice of trustee for lenders,
borrowers and investors.
More information can be found at:
www.fcmbgroupplc.com
FCMB Group Plc, First City Plaza, 44 Marina,
Lagos, Nigeria.
Tel: +234 (0) 1 279 8800 or
+234 (0) 700 3262 69 2265
For further information about the
performance of our subsidiary businesses,
please see pages 17–22.
About FCMB Group Plc
Continued
FCMB Group Plc Annual Report and Accounts 20156
Introduction Operating
Review
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
“Our Retail transformation
strategy is definitely showing the
desired results”
In this season of macro-economic dysfunction
in the Nigerian business environment, one
quality that has sustained us is our “resilience” in
maintaining our “Culture of Excellence”. I hardly
need to tell my readers about the gravity of the
economic problems which have hit the banking,
and indeed the general business environment in
Nigeria. It has been generally tough but in spite
of it all, FCMB propelled by a diligent, competent
and resourceful management team continues
to give us an assurance that we are on the right
track and even though we still have a long haul, I
am confident that all the indications are that our
strategies are the correct ones.
We have had our own share of bad loans,
particularly within the Oil and Gas Sector. We
continue to take remedial measures that will
surely lead us to a bright light at the end of
the tunnel. Just as we have been able to tackle
successfully the recalcitrant names and even
engaged AMCON where it is necessary, we are
confident that our strategies will lead us to a
robust future for our Bank. We have also been
able to review our strategies by concentrating
more on the retail end of the banking business,
and we are already showing good results. Even
then, in spite of the challenging environment, we
have not abandoned the other areas of banking in
which we have competence. We are deleveraging
and right-sizing our wholesale banking business,
to make it more capital ecient. We are also
reviewing our investment banking and capital
market activities to ensure they continue to
contribute both strategically, as a source of
dierentiation, and financially, to FCMB Group.
Our resilience and our Culture of Excellence have
made us to be an all-weather bank, and we are
already showing good results in retail banking,
which has provided an earnings buer for the
dicult year experienced in wholesale and
investment banking. This is the observation of an
interested onlooker. We have been able to use our
group structure to diversify our route to success,
and definitely we are certain that through the
love of God all will be well.
From the Archives of the Founder
Otunba Michael O. Balogun, CON
Founder
FCMB Group Plc Annual Report and Accounts 2015 7
Introduction Operating
Review
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
We started many years ago as an investment
bank, concentrating on financial advisory services
and wholesale banking. We gradually adapted
ourselves to a robust retail franchise and using
technology to excel in increasing our clientele,
without abandoning our other franchises within
our Group. We are on the right track, building
a resilient and highly sustainable group, which
should gladden the heart of an interested
observer. Our brand awareness and relevance
metrics are also showing robust results, so much
so, that FCMB is on the lips of virtually everybody
in the market. FCMB is no longer a bank just for
corporate Nigeria. It is a bank for every Nigerian.
We have grown our customer base to over 3.5
million customers and we have expanded our
financing frontiers to micro-enterprises.
In spite of a 33% growth in customers in 2015,
you will see that we have kept our costs almost
flat. We have improved our eciencies and
we are reducing costs generally. We are using
technology and other innovations to reach
more customers. Our channel strategy has been
remarkable and eective. We have succeeded in
equipping ourselves with the desired eciencies.
We have addressed the shortcomings and we are
optimistic about a robust future.
On this note, I would want to commend
the current management team for their
resourcefulness, their innovativeness and the
courage with which they are leading us. The
leadership has not only made us confident of
the future, but their resourcefulness gives us a
Our resilience and our Culture
of Excellence have made us to
be an all-weather bank, and
we are already showing good
results in all the areas we have
competence.
Otunba Michael O. Balogun
Founder
From the Archives of the Founder
Continued
very bright visage about the future. In a time like
this, the leadership is always the focus. I must
say we have not been disappointed. From time
to time, one hears from the clientele about their
confidence in our leadership and management.
God give us men and women such a time like this
demands; and I on my own can assert that I am
proud of our management team and sta, as well
as their competences and courage.
Otunba Michael O. Balogun, CON
Founder
FCMB Group Plc Annual Report and Accounts 20158
Introduction Operating
Review
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Governance
Financial
Statements
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Information
Other National
Disclosures
Branches and Account
Opening Information
Chairman’s Statement
Structure of the Group
The Board of the Group has responsibility for
monitoring the activities of First City Monument
Bank Limited and those of the other Group
companies under its ownership, which include
FCMB Capital Markets Limited, CSL Stockbrokers
Limited and CSL Trustees Limited. 2015 marked
the second full year of their operations under
the holding company structure, the Central Bank
of Nigeria having granted an Other Financial
Institutions Licence to the Group in May, 2013.
The structure of the Board was maintained during
2015. The Board of the Group therefore consisted
of Mr Peter Obaseki, in the role of Managing
Director, together with Mr Ladi Balogun, Alhaji
Mustapha Damcida, Mr Olutola O Mobolurin, Mr
Martin Dirks, Professor Oluwatoyin Ashiru, and Dr
(Engr) Gregory O Ero as non-executive directors,
and Mr Bismarck Rewane and Mr Olusegun
Odubogun as non-executive independent
directors, while I served as non-executive
Chairman. The Board met on five occasions
during 2015, with an attendance record of 86%.
Dr Jonathan A D Long
Chairman
Ladies and Gentlemen, Fellow
Shareholders, it is once again my
pleasure to welcome you to the
third Annual General Meeting of
FCMB Group Plc ('the Group'), to
present the Group’s annual results
to you and, in particular, to thank
you for your continued support
throughout 2015. I am pleased to
open these remarks by emphasising
that although 2015 posed many
challenges for the Group, it was
again possible to continue the
development of our core banking
franchise and to do so profitably.
FCMB Group Plc Annual Report and Accounts 2015 9
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
The roles of the Statutory Audit Committee, the
Risk, Audit and Finance Committee, and the
Governance and Remuneration Committee were
of great importance to the Board in carrying out its
duties. The Statutory Audit Committee consisted
of thee shareholder representatives and three
representatives of the Board. The shareholder
representatives were Alhaji S B Daranijo, serving
as Chairman, Alhaji B A Batula and Evangelist
Akinola Soares; and the representatives of the
Board were Mr Bismarck Rewane, Mr Olutola O
Mobolurin and Mr Olusegun Odubogun. The Risk,
Audit and Finance Committee consisted of Mr
Bismarck Rewane, Mr Olusegun Odubogun, Dr
(Engr) Gregory O Ero, Mr Ladi Balogun and Mr
Martin Dirks. The Governance and Remuneration
Committee consisted of Mr Olutola O Mobolurin,
Alhaji Mustapha Damcida, Professor Oluwatoyin
Ashiru, and Mr Ladi Balogun. Each of these three
committees met four times during the year.
The tireless work of these committees greatly
supported the activities of the Board and ensured
compliance with statutory and regulatory
requirements.
Macroeconomic Environment
In 2015 Nigeria passed an important political
milestone. On 1 April the Independent National
Electoral Commission announced the result of the
presidential election; Major General Muhammadu
Buhari’s All Progressives Congress had won
the presidency from the incumbent Goodluck
Jonathan of the People’s Democratic Party.
President Jonathan had already conceded defeat
the previous day. This was the first democratic
transfer of the presidency from one party to
another in Nigeria’s history. Market confidence
was high. The equity market gained 17%, in Naira,
from the beginning of the year until mid-April. The
yield of a Nigerian sovereign US dollar bond, with
a maturity in 2023, fell below 6.0%.
However, macroeconomic developments were
not positive. The price of oil fell from an average
of USD98.91 per barrel (of Brent) during 2014 to
an average of USD52.31 per barrel during 2015.
This led to a reduction in earnings of Nigerian
oil exploration companies, while government
revenues from oil were sharply reduced. The
nation’s current account, which usually records a
surplus, turned negative during the fourth quarter
of 2014, and remained negative throughout 2015.
This in turn brought pressure on the exchange rate
of the Naira.
Between the beginning of 2015 and mid-March,
the US dollar value of the Naira fell by 7.9%. From
mid-March the Central Bank of Nigeria enforced
a policy of maintaining the exchange rate, using
administrative measures it had already introduced,
and adding several new regulations. The inter-
bank foreign exchange rate, therefore, varied very
little from N199.0/USD1.0 from mid-March until the
end of the year. The parallel market rate, however,
which reflected the decline in turnover in inter-
bank foreign exchange, fell significantly. During
December the Naira was reported to trade in the
parallel market at an average of N260.5/USD1.0.
While the Nigerian economy continued to grow
in 2015, the rate of growth, at 2.8% year-on-year,
was much slower than the 6.2% achieved in 2014.
During 2015 the rate of growth slowed, with the
economy growing 2.1%, year-on-year, in the fourth
quarter. The output of the oil sector fell by 5.5%
in 2015 and manufacturing output generally fell by
1.5%, whereas in 2014 manufacturing output had
risen by 14.7%. The average rate of inflation rose
from 8.1% in 2014 to 9.0% in 2015. These changes
in fortune may all be attributed, ultimately, to the
fall in international oil prices.
Profits and Per Share Information
In my statement in the 2014 Annual Report and
Accounts, I cautioned that, among other factors,
the fall in oil prices and devaluation of the Naira
presented clear challenges for 2015. Although
these dangers became evident, I believe that
it was thanks to the strength of the Group, its
Board and Committee structure, as well as the
dedication of many professionals and sta, that
it was possible to report profits after tax in 2015
of N4.76 billion. Your Board has recommended
a dividend of 10 kobo per share representing a
dividend appropriation of N1.98 billion and a
dividend payout ratio of 42% on profits after tax.
Chairman’s Statement
Continued
FCMB Group Plc Annual Report and Accounts 201510
Introduction Operating
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Financial
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Other National
Disclosures
Branches and Account
Opening Information
Chairman’s Statement
Continued
Outlook
In 2016 Nigeria finds that the problems of 2015
have not gone away: oil prices remain low;
government finances remain stretched; the
consumer remains under pressure; manufacturing
activity in general is facing very considerable
diculties. The government and the monetary
authorities concur that there is no easy remedy
and, in the absence of a rapid rise in oil prices, it
is dicult to see how these multiple issues can
be overcome.
The authorities have taken steps to encourage
industrial activity, notably by putting downward
pressure on market interest rates, such that the
government’s own one-year Naira-denominated
bond yields less than 10.0%. The Real Sector
Support Facility also aims to encourage lending
to manufacturing and other businesses. Banks
therefore are being given encouragement to
continue making new loans to all businesses,
whether large or small.
Nevertheless, the Group is likely to face significant
headwinds. Some of the stresses experienced by
consumers and companies during 2015 may yet
be realised as losses in 2016. Further deterioration
in business conditions cannot be ruled out, as
well as continuing pressure on the exchange rate
and a generally unfavourable global economic
environment.
However, I am confident that, with the depth
and range of professional excellence among
its sta, and benefiting from its strong Board
and Committee structure, the Group will deal
successfully with the challenges of 2016 and
continue to lay a path to future growth and
prosperity.
Thank you very much for your attention.
Dr Jonathan A D Long
Chairman
FCMB Group Plc Annual Report and Accounts 2015 11
Introduction Operating
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Governance
Financial
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Shareholder
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Other National
Disclosures
Branches and Account
Opening Information
Distinguished Shareholders, it gives me great
pleasure to share with you the key dynamics of
the financial sub-sectors in which we are invested
and operate. The year 2015 was challenging and
came with a lot of adjustments to new realities
and a search for new normal in a number of
areas. A new government at the Federal level
was grappling to settle in and set a totally new
tone around Accountability and Public Trust; the
economic front was bueted by a number of
factors, especially adversely changed balance of
payment and fiscal positions, largely due to the
sharp drop in commodity prices, including crude
oil. As a result of these fragilities, overall growth
was retarded, with GDP down to 2.11% as at the
end of December 2015.
The banking industry, in which our portfolio
of investments is over-weighted, came under
continued stress and slow overall total assets
growth of 2.3%, to N28.1 trillion as at the end
of December. The growths in various deposit
captions were mixed, with an average decline of
5.8%; but the withdrawal of Federal Government
funds from banks in furtherance of the Treasury
Single Account implementation was noteworthy;
deposits from this source, in local currency,
dropped by 93% from N764.5 billion to N53.8
billion, the consequence of replacing this outflow
was a drive-up in the cost of funding. Time
deposits and savings accounts dropped by 4.8%,
from N11.9 trillion to N11.4 trillion, as a result of
continued backlog in salary payments, sluggish
economic activities, retail foreign exchange
hedging and a gradual build-up in inflation
spiral. On the other hand, demand deposits,
mainly business accounts, grew by 12.5%, moving
to N5.9 trillion from N5.2 trillion; this trend
reflects the long queue up for foreign exchange
purchases for import, invisible transactions and
portfolio remittances. Foreign currency deposits
in domiciliary accounts came down by 15.1%,
from N4.5 trillion to N3.9 trillion, explained by the
Treasury Single Account process on the foreign
currency component and pressures from the
general foreign currency illiquidity. The growth
in total loans and advances was muted, around
0.35%, from N12.27 trillion to N12.31 trillion. This
trend reflects a pessimistic outlook for economic
Managing Director’s Report
Peter Obaseki
Managing Director
FCMB Group Plc Annual Report and Accounts 201512
Introduction Operating
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Opening Information
activities, weak industry funding base and the
priority for capital protection. Bonds raising,
predominantly in foreign currency, slowed
down by 11.1%, from N762 billion to N677 billion,
indicating a repayment and even pre-liquidation
mode, in view of exchange rate risks, prospects
of interest rate hikes in the United States and lull
around lending activities.
Our other major investment is in Investment
Banking, where we have a long tradition of
excellence and leadership; our Capital Markets
and Stockbroking businesses witnessed low-
ebbed activities in line with very weak market
conditions. Key NSE (Nigerian Stock Exchange)
indicators were either flat or depressed. The all-
share index, which closed 2014 at 34,657.2 ended
at 28,642.3 for 2015; in similar ways, market
capitalisation closed 2014 at N11.5 trillion and
ended at N9.9 trillion for 2015. The number of
deals done dropped from 90,613 to 53,567 while
value of deals slumped from N129.1 billion to
N55.4 billion.
This trend eroded shareholders’ value significantly
due more to economy-wide concerns that cut
across almost all sectors than company specific
issues; stocks with significant foreign shareholding
appear to have suered disproportionately
from the reverse portfolio capital flows ignited
by foreign exchange policy uncertainties and
concerns about the economic prospects of,
especially currencies, of countries that have
been aected by the steep drop in prices of
commodities on the international markets.
Equity trading data showed that foreign investors
cut-back by 32% from N692.4 billion in 2014 to
N470.8 billion in 2015; domestic institutional
investors came down by 30% from N712.73 billion
in 2014 to N497.9 billion in 2015 while retail
investors dropped by 10% to N382.7 billion from
N423.9 billion in 2014 and 2015, respectively;
most of these reductions by wholesale investors
went into reverse capital flows and rotation to
bonds. As a result, Federal Government bonds
increased from N4.7 trillion in 2014 to N6.4 trillion
in 2015; only four new corporate bonds were
issued, moving the volume from N145 billion in
2014 to N206 billion in 2015; three States' bonds
were issued valued at circa N11.8 billion. The
market for public oers was inactive throughout
the year, due to abysmal valuations and weak
economic conditions.
We are invested 28.3% in a leading Pension Funds
Administrator, Legacy Pension; we continue to
follow the strategic issues in this sector with
keen interest. It is a sector that is amenable to
our Retail thrust and fits into our strategy with
potentials to leverage our distribution, cross sell
into our over 3 million customers and tap our
retail know-how. Industry assets reached N5.17
trillion as at November 2015 and projected to
N5.21 trillion by the end of the year. The flagship
fund is the Retirement Savings Active Account
(RSA), which stood at N3.41 trillion or 66% of
industry fund assets. It recorded a growth of
18% on 2014 level of N2.929 trillion, however new
registration appears to be slowing or stagnant
at 8% for both 2014 and 2015 compared to new
RSA registrations growth of 24% in 2008. The
allocation of funds across securities has been
skewed sharply towards Federal Government
securities, at 73% in 2015 compared to 69% in
2014; on the other hand asset allocations dropped
for publicly quoted equities (from 11.5% in 2014
to 9.7% in 2015) and money market instruments
(from 12.5% to 10%, 2014 and 2015, respectively).
This trend underscores a flight to safety with
adverse repercussion for funds’ returns. The
range of permitted securities was expanded to
include Infrastructure and Private Equity funds
while the closed pension funds continue to
maintain slight investments in Real Estate; the
newly permitted asset classes are still very much
at infancy but training and active sensitisation
have commenced. A key development in this
sector is the phased movement of the Nigerian
Police Pension Fund back to a closed fund.
Under a challenging macro-economic environment,
exacerbated by a one-o provision for a
receivable, our group profit after tax came in
below expectations at N4.8 billion, a variance
of 79% on last year; this does not reflect top-
line trend, where variance is 12% for net interest
income and non-interest revenue, however very
significant impairment charge of N15 billion
aected the bottom line.
FCMB Group Plc Annual Report and Accounts 2015 13
Introduction Operating
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Other National
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Branches and Account
Opening Information
The commercial banking group (First City
Monument Bank Limited, Credit Direct
Limited and FCMB UK) recorded a combined
contribution of 83.1% to the group’s profit
before tax; FCMB Capital Markets contributed
2.7%, CSL Trustees contributed 1.5%, CSL
Stockbrokers Limited recorded a loss and FCMB
Group PLC, contributed N1.2 billion or 15.8%,
arising from realised gain on investments and
treasury activities.
The upward trajectory for return on average
equity of 11.6% in 2013, 14.6% in 2014, slumped
to 3.0% in 2015; earnings per share dropped
to 24 Kobo from 112 Kobo in 2014. In view of
underlying positive momentum and in order to
maintain a trend of steady dividend payment,
after satisfying the need for sustained robust
prudential buers, a cash dividend payment at
the rate of 10 Kobo for every eligible share will be
proposed and if approved, this will translate to a
dividend yield of 12.2% as at 11 March 2016 and a
payout ratio of 42%.
The outlook for 2016 in terms of portfolio strategy
is positive. A leading retail presence is central to
our vision as we seek to build more businesses in
the retail space; we hope to fully launch a micro-
finance business as a full subsidiary of the Group
and seek opportunities to improve controlling
participation in the pension fund industry; we
expect our non-pension asset management
and private trusteeship business to grow more
steadily; a combination of these initiatives will
reduce the pressure on the bank’s balance sheet
and steer activities to less capital intensive
businesses.
Whilst 2016 remain fraught with market
turbulence and economic policy uncertainties,
we are reasonably confident that with strong
capital, more focus on cost eciencies, capital
optimisation and accelerated retail growth, we will
see steady improvement in overall performance
and sustained profitability. We understand that
this requires a committed eort at driving through
changes around risk management, operational
and funding eciencies while progressively
reducing capital-intensive transactions, while
at the same time further strengthening our
capital position.
It is my pleasure to acknowledge our people for
their dedication, professionalism and customer-
focus which has enhanced our franchise value and
resilience; and together, we remain committed
to building a premier financial services group,
deliver superior and sustainable returns to our
shareholders.
Thank you.
Peter Obaseki
Managing Director
FCMB Group Plc
Managing Director’s Report
Continued
FCMB Group Plc Annual Report and Accounts 201514
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OPERATING
REVIEW
FCMB Group Plc Annual Report and Accounts 2015 15
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Introduction
FCMB Group Plc Annual Report and Accounts 2015 15
Operating
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FCMB Group Plc’s commitment to excellence was recognised in 2015
by a number of awards:
2015 Awards Won
BusinessDay Newspaper
Most Customer Friendly Bank
September 2015
First City Monument Bank Limited
Contact Connect Communications
Most Outstanding SMEs Friendly and
Sponsorship Commercial Bank
October 2015
First City Monument Bank Limited
IJGlobal Europe & Africa Awards
Africa: Multi-Sourced Financing:
Azura Edo IPP
2015
FCMB Capital Markets Limited
EMEA Finance Achievement Awards
Best Refinancing in Africa:
Accugas Limited
2015
FCMB Capital Markets Limited
Global Banking and Finance Review
Best Investment Bank in Nigeria
December 2015
FCMB Capital Markets Limited
EMEA Finance African Banking Awards
Best Local Investment Bank in
Nigeria (African Banking Awards)
February 2015
FCMB Capital Markets Limited
FCMB Group Plc Annual Report and Accounts 201516
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First City Monument Bank Limited’s
Business Performance Highlights
Review of the year
2015 was a challenging year for the industry
and for FCMB. We saw a decline in global oil
prices, the implementation of the Treasury Single
Account (TSA) (which saw over N2 trillion of
deposits withdrawn from the banking system)
and greater foreign exchange controls from
the CBN, with its impact on trade and foreign
exchange related income. In the first 3 quarters
of 2015, we also witnessed a continuous rise in
the cash reserve ratio (CRR) stipulated by CBN,
ending with a consolidation of public/private
sector cash CRR to 31% before eventual reduction
to 25%. The consequence of this policy was a
persistent squeeze on net interest margins.
While our customer base grew by 33% to 3.5 million,
the overall outcome of the challenges above resulted
in pressure on our cost of funds, a high cost of risk
and significantly reduced profitability.
Net revenue declined 12% from N96.1 billion in 2014
to N84.9 billion in 2015. The decline in net revenue
was driven mainly by an 11% drop in net interest
income arising from an increase in the cost of
funds as a result of cash reserve requirement hikes.
Fees and commissions rose by 10% due to a strong
surge in cards and electronic banking commissions
o the back of the 33% rise in customers. There
was a 47% decline in other income due to a N4.2
billion in foreign exchange gains.
In spite of the adverse impact of the treasury
single account (TSA), our balance sheet size
remained fairly stable during the year as a result
of our focus on retail banking. Our loan book
declined 5% from N618 billion in 2014 to N593
billion in 2015. Deposit volumes also declined 4%
from N739 billion in 2014 to N711 billion in 2015,
which was mainly due to the eects of TSA and
a conscious decision to replace N23.1 of deposits
with a 5 year fixed rate bond. Underlying trends
in core deposits were however positive. Low cost
deposits grew 10%.
Ladi Balogun
Group Managing Director/
Chief Executive Ocer
First City Monument
Bank Limited
FCMB Group Plc Annual Report and Accounts 2015 17
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The most significant item on our profit and loss
statements were the impairments of N14.1 billion,
an increase of 34% over prior year. Two specific
items stood out: an impairment of N6.2 billion
on a loan to major player in the oil industry;
and N5.4 billion provisioning on a contractual
obligation from the Asset Management
Company of Nigeria (AMCON). We are pursuing
the recovery of both items vigorously and
have since tightened our credit underwriting
standards to prevent a future recurrence.
We were successful in the planned moderation of
our operating expenses. This is a medium term
exercise over 3 years that will gather pace in 2016.
The early stages of the implementation of the
cost curtailment initiative resulted in a modest 2%
growth in operating expenses in 2015, (well below
inflation rate), as against an 11.7% growth in 2014.
We anticipate an absolute reduction of N5 billion
in 2016, taking us below our 2014 figure and a
further reduction in 2017. This measured approach
ensures that while we remove ineciencies and
low productivity resources, we continue to invest
in areas of significant growth potential.
As a result of the various revenue and expense
movements highlighted above, the banking
groups profit before tax declined by 70% from
N22.4 billion in 2014 to N6.1 billion in 2015.
Despite the disappointing financial performance,
our business strategy of building a retail led
commercial bank remains on course, illustrated
by our strong growth in personal banking revenue
in 2015. This was largely driven by 54% growth
in our card and electronic banking income from
N8.6 billion in 2014 to N13.3 billion in 2015.
Moving on to our non-financial goals, in 2015 we
continued to focus on improving our customer
experience. In 2015, our Net Promoter Score
(NPS), which measures customer satisfaction
and advocacy, improved to +44% in December,
against +32% in December 2014. Our ranking of
4th and 5th in the 2015 KPMG Banking Industry
Satisfaction Survey (in the SME and personal
banking segments respectively) provides a
strong platform from which to build as we aspire
to our near-term goal of being ‘top 3’ within our
target segments.
We are now acquiring
55,000 new customers
monthly and disbursing
20,000 new loans, with over
2,000 monthly to women-
owned micro-enterprises.
Ladi Balogun,
Group Managing Director/
ChiefExecutive Ocer
We continued to work towards our ambition to
become a more convenient and accessible bank
in 2015, reaching 689 ATMs, and 12,000 point
of sale terminals across the country. Our Agent
banking initiative is on course, we currently have
71 agents nationwide, with a plan to grow to 800
agents by 2017.
We are now acquiring 55,000 new customers
monthly and disbursing 20,000 new loans,
with over 2,000 monthly to women-owned
micro-enterprises. We are signing on 70,000
new customers every month on our mobile
banking solutions.
We are also making FCMB an even better place
to work, with over 90% of our high performing
employees retained, 78% of our vacancies are
filled with internal appointments and 39% of
our executive management are women. We will
continue to find creative ways to motivate our
employees and build a great institutional culture.
Subsidiaries’ Performance
In contrast to the commercial bank, the
subsidiaries wholly owned by FCMB Limited
faired remarkably better, due to a more benign
regulatory environment for local non-bank
First City Monument Bank Limited’s
Business Performance Highlights continued
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both, which will happen in 2016. As the banking
group moves forward, we see a resilient business
emerging, led by retail banking but continuing to
support corporate Nigeria strongly with eective
lending, payment and transacting solutions. 2016
will remain a challenging year, but we anticipate
a modest improvement in profitability.
Conclusion
Your Bank has a great foundation to continue
to build from, and we are confident that our
strategy is building the necessary resilience.
By executing well, and making meaningful
progress in our turnaround plan, the Bank will
be in a good position to attain our medium-term
performance objectives and create longer-term
shareholder value.
Our future is intertwined with the collective
future of our customers and we do not believe we
can succeed if the customers do not. Hence, we
will reinforce our position of being an inclusive
lender, we will support sectors that will drive the
prosperity of the markets in which we operate.
We will bring greater accessibility to a broad
range of financial services. By doing so, we
will build one of the most relevant and resilient
financial services franchises, providing the best
customer experience.
In closing, I would like to thank our valued
customers for their patronage. I also want to
thank the Board of Directors for your confidence
and continued support, particularly in such
a challenging year. I want to recognise all our
employees who work together and share a
genuine desire to serve our customers. Finally,
I give thanks to the Almighty God for His
continued guidance and protection, and pray
that 2016 will bring prosperity to all of us, and
our country, Nigeria.
Ladi Balogun
Group Managing Director/Chief Executive Ocer
First City Monument Bank Limited
financial institutions and international banks.
Credit Direct Limited, our micro-lending
subsidiary witnessed 9% growth in profitability
from N5.2 billion to N5.7 billion in 2015. FCMB
UK broke even in its second year of operation as
a licensed deposit-taking bank in the UK, with a
PBT of N128.94 million. Following this milestone,
FCMB UK will be pursuing a variation of its
permission from a wholesale deposit taker to a
retail deposit taker. This will be consistent with
the overall retail direction of the banking group.
Looking Ahead
We are acutely aware that this has been a
challenging year for the Bank as reflected in the
financial results contained in this report. While
these results reflect the diculties our business
has faced over the year, I want to assure you that
we have moved swiftly and decisively to address
these issues, and in the fourth quarter of 2015,
we began to see early promising signs from the
actions we have taken so far to reset the business
and restore our growth.
Our turnaround plan requires us to stay the course
strategically. 2016 performance improvement is
expected to be driven by the following:
Improvements in operating eciency will be a
key lever in 2016, with a goal to achieve about 9%
in cost savings during the year.
We will continue to intensify our retail banking
investment drive particularly in alternate
channels (ATMs, POS and agent banking). We
will seek to achieve similar levels of revenue
growth as we attained in 2015. However, with
a focus on alternate channels, costs will remain
relatively flat hence profitability in retail banking
will rise significantly.
As a result of the credit losses experienced in
2015, we have made significant changes to our
credit underwriting standards and intensified
our loan recovery eorts. Accordingly, in
both corporate and SME banking where we
experienced the highest impairment levels, we
expect to begin seeing a turnaround, with steadily
reducing cost of risk in both segments. This will
be critical to the restoration of profitability to
FCMB Group Plc Annual Report and Accounts 2015 19
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FCMB Capital Markets Limited is the investment
banking subsidiary of FCMB Group Plc. We are
focused on providing strategic advice to, and
arranging finance for, corporations, governments,
institutions and individuals.
2015 – A Profitable Year, Despite
Industry Challenges
The past financial year was particularly
challenging for business activities in Nigeria due
to the significant and sustained drop in crude oil
prices, political uncertainty in the build-up to the
country’s general elections, and the uncertainties
around foreign currency liquidity in the local
market. Notwithstanding the macroeconomic
headwinds faced, we demonstrated our
adaptability and resilience by remaining
profitable.
Particular highlights for the year included:
We won the EMEA Finance (African Banking
Awards) Best Local Investment Bank in
Nigeria award for the second year running.
We were presented with the award for Best
Investment Bank in Nigeria 2015, by Global
Banking and Finance Review.
We successfully arranged ₦24 billion for
Nigeria’s first greenfield project-financed
independent power project through the
Central Bank of Nigeria/Bank of Industry
Power and Aviation Intervention Fund.
Outlook for 2016
In our view, the macroeconomic challenges
that adversely impacted business activities
in the previous financial year will persist in
2016. Nevertheless, we remain cautiously
optimistic about the year ahead as the current
environment, though very challenging, presents
opportunities for us to provide solutions in
areas such as debt restructuring and refinancing
transactions o the back of lower oil prices and
foreign exchange liquidity constraints. We also
anticipate upside potential for our business
in the current administration’s stated intent
to focus on executing capital projects; we will
seek, where possible, to deliver innovative
financing structures and solutions for our clients
in this regard. In addition, we anticipate that the
expected devaluation of the naira will make asset
values unusually attractive and this may trigger
acquisition interests from oshore investors,
creating advisory opportunities.
Overall, the business has demonstrated overtime
its ability to weather challenging economic
environments, and we remain confident in
our ability to apply a disciplined approach in
delivering tailor-made solutions to our diverse
client base.
Tolu Osinibi
Executive Director
FCMB Capital Markets Limited
FCMB Capital Market Limited’s
Business Performance Highlights
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CSL Stockbrokers Limited (CSLS) is a wholly
owned subsidiary of FCMB Group Plc, and a
market-leading equity brokerage house on the
Nigerian Stock Exchange (NSE). Over the past 35
years, CSLS has evolved to become the broker
of choice to corporate, institutional and high net
worth clients. CSLS is especially recognised for
its robust research and its sales and execution
capabilities delivered from oces in Lagos,
London and New York.
2015 – A Dip in Profitability
In 2015, CSLS maintained its number two
position in terms of value of transactions traded
on the NSE, with 12.8% market share as against
10% in 2014.
The value of trades CSLS executed on the NSE,
however, dipped marginally by -8.1% from N263
billion (US$1.4 billion) in 2014 to N242 billion
(US$1.3 billion) in 2015. The entire market saw a
steeper decline of -27.36% with the value of traded
shares declining from N2.7 trillion (US$14.2 billion)
in 2014 to N1.90 trillion (US$9.7 billion) in 2015.
The Company’s corporate brokerage revenues
declined in 2015 as the business environment
experienced a lot of fundamental macroeconomic
challenges ranging from foreign exchange
restrictions, a significant decline in crude oil prices,
increase in inflation, and political challenges
culminating in a change in government. All these
led to the abysmal performance recorded in
both the primary and secondary market. Despite
these challenges, the Company still maintained
its corporate broking mandate to a leading oil
and gas company, acted as a lead stockbroker
to a Tranche I (N30 billion) and Tranche II (N23.1
billion) bond-raising exercise of a company in the
banking sector, and the acquisition of a majority
stake in an insurance company.
The major challenge witnessed in 2015 was
increased competition from both local and
international brokers. This resulted in a further
squeeze of margins as commission rates fell
from 27 basis points (bp) in 2014 to 22bp in
2015. Management is gradually re-orientating its
business towards direct client business as against
the indirect relationship arrangement currently in
practice, as the former oers more margins than
the latter. This will complement the Company’s
global broker relationship.
Overall, 2015 was a successful year for CSLS
in line with our strategy to grow our market
share and become an invaluable resource for
investors wishing to gain access to the Nigerian
equities market.
Outlook for 2016
With falling oil prices, currency devaluation and
declining foreign exchange reserves, 2016 will
prove to be a challenging year for the Nigerian
stock market. However, we remain confident
about the market’s long-term prospects as we
continue to diversify our revenue sources, expand
into retail and grow market share relative to our
international peers.
Furthermore, with Africa becoming an asset class
in its own right, CSLS will be embarking on its
pan-African (Sub-Saharan Africa excluding South
Africa) strategy in 2016, with the commencement
of our Kenyan product.
CSL Stockbrokers Limited’s
Business Performance Highlights
Gboyega Balogun
Managing Director
CSL Stockbrokers Limited
FCMB Group Plc Annual Report and Accounts 2015 21
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CSL Trustees Limited, is a wholly owned
subsidiary of FCMB Group Plc. We have evolved
in less than five years to become the fastest
growing and leading trust service provider in
Nigeria. As trustee and security agent, we have
within the period participated in numerous
corporate debt-related transactions.
As evidence of our growing market confidence,
our client base has expanded locally and
internationally across various economic sectors,
which include banking, oil and gas, shipping, IT,
real estate, tourism and manufacturing.
Capitalised at N40 million upon incorporation
in 2010, in September 2015 we successfully
completed the recapitalisation exercise as
directed by the Securities and Exchange
Commission (SEC) with a fresh capital injection of
N180 million into the business, thereby increasing
our shareholders’ fund to over N300 million.
2015 – An Improved Cycle of Profitability
Our security agent to corporate debenture and
bonds was our main earnings driver in 2015. This
was in sync with our expectation for the year
despite the low level of activities in the bond
segment of the capital markets.
Other major highlights included:
Our revenue grew by 87.7% from N104 million
in 2014 to N195 million in 2015.
Profit before tax increased by 117.6%, from
N54 million to N118 million.
Total assets grew from N2 billion to N4 billion,
representing an increase of 104.4%.
The shareholders’ funds grew from N82
million to N346 million, an increase of 323.5%.
Outlook for 2016
We expect the lull in the corporate and
municipal bonds to continue in 2016, as well as
a substantial reduction in lending activities by
the banks. Nonetheless, we intend to extend
our service oerings to private trust, which
is the retail segment of the market, and have
developed some estate planning products for
high net worth individuals.
In addition, we shall continue to maintain
stringent control on operating expenses in order
to achieve our cost-to-income ratio target.
Samuel Adesanmi
Managing Director
CSL Trustees Limited
CSL Trustees Limited’s
Business Performance Highlights
FCMB Group Plc Annual Report and Accounts 201522
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Sustainability Report
FCMB and Sustainability
Sustainability is integrated into how we do
business. It guides everything we do, from the
services we provide to our customers, to the
way we run our Bank and support the local
communities across our footprint in the country.
As a major financial institution, our commitment
to society goes beyond creating value for our
shareholders. We seek to ensure that the financing
we provide is sustainable and supports economic
and social development for all stakeholders.
As a Group, we are sustainability-focused and
dynamic in our adaptation to our ever-changing
environment. We are committed to promoting an
inclusive society where meeting the needs of the
present does not compromise the ability of future
generations to successfully meet their own needs.
The Nigerian Sustainable Banking
Principles (NSBPs)
FCMB’s sustainability agenda is largely influenced
by the nine pillars of the Nigerian Sustainable
Banking Principles (NSBPs) developed and
adopted by the Bankers’ Committee in 2012. The
NSBPs encourage banks to promote economic
growth and business opportunities, and enhance
innovation and competitiveness, while protecting
communities and the environment in the normal
course of duty.
Principle 1 – Our Business Activities:
Environmental and Social Risk Management
At FCMB, we actively manage environmental and
social risks by supporting business opportunities
that align with sustainability principles as
a responsible lender. This goal is enforced
through the development of robust policies
and procedures aimed at integrating Social and
Environmental Management System (SEMS)
initiatives into our lending process.
Principle 2 – Our Business Operations:
Environmental and Social Footprint
Environmental Footprint
We are constantly seeking avenues to minimise
our environmental impact and reviewing our
measurement parameters. We have further
identified specific areas where the Bank has the
most impact as follows:
energy/ fuel consumption;
paper use;
water use;
solid waste production;
company fleet;
air travel; and
third party environmental and social issues
(i.e., vendors, contractors etc.).
From the second quarter of 2015, we began
specifically capturing and measuring progress
along these parameters on a quarterly basis. The
quarter-on-quarter comparison aids engagement
and provides management with a holistic picture.
It also helps steer conversation and innovation
that will drive both cost and environmental impact
down significantly.
Social Footprint
Our Employees
The Group is committed to improving the
livelihood of its employees through eective
engagements, health programmes, training and
adequate compensation.
Annual Employee Awards
The Annual Employee Awards, covering several
categories, were instituted to recognise and
celebrate employees and departments that
achieve outstanding results in their primary job
functions at the end of each business year.
Annual Health Week
Now an annual event, FCMB organised a health
week for all employees to promote the adoption
of a healthy lifestyle.
International Women’s Day
In celebration of International Women’s Day
the FCMB Women visited selected schools and
orphanages across the country to present gifts
to the children. They also visited and painted
Maimuna J Katai’s Memorial Orphanage in Lafia
and renovated Bethesda Nursery and Primary
School, Matogun, Ogun State.
FCMB Group Plc Annual Report and Accounts 2015 23
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Principle 3 – Human Rights
FCMB’s human rights policy fosters awareness for
the Group’s position on human rights and guides
all its operations and activities on the subject
as it relates to employees, vendors, contractors,
business partners, customers and the community.
The policy has been communicated to all
employees and is available to the public in the
CSR section of the Bank's website, which can be
accessed by clicking on www.fcmb.com.
Principle 4 – Women’s Economic Empowerment
This year, in addition to the two women on its
board, FCMB Limited elevated a woman to its
Executive Board, with Mrs Yemisi Edun now the
Executive Director of Finance.
Some 40% of our employees are women, and
we currently have close to 10 women in upper
management, holding key roles in the Group.
The Group supports women-owned businesses;
the Bank held a capacity-building workshop for
women entrepreneurs aimed at helping them to
take advantage of the CBN intervention fund for
SME development.
Principle 5 – Financial Inclusion
The FCMB Microfinance initiative is a key platform
for achieving our Financial Inclusion objectives.
Targeted primarily at economically active low-
income earners (99% women), the total number
of customers and groups as at December 2015
was 29,646 and 2,371 respectively, with close
to 27,000 borrowers. Through our business
of banking, we fuel economic activity and job
creation in the country. The credit and other
financial services we provide help businesses to
set up, trade and expand, and ultimately ensure
people can save and protect their wealth for the
future.
In addition, FCMB launched the Flexx Account,
a youth product to encourage young people to
save and grow their wealth early in life.
Principle 6 – Environmental & Social (E&S)
Governance
FCMB continues to foster responsible initiatives
across the organisation through appointed
sustainability champions within operations,
administration, human resources and credit risk
management. This model engenders innovation
and ensures holistic management and integration
of the Bank’s sustainability strategy, as approved
by Executive Management.
Principle 7 – Capacity Building
Knowledge improvement programmes (KIP)
are held to increase employees' awareness on
the importance of sustainability at all levels.
1,970 ocers (including senior management)
completed the Managing Environmental and
Social Performance and the International Finance
Corporation’s (IFC) Sustainability Training
on FCMB’s e-learning programme (STEP),
comprising 13 modules. Engagements with other
players in the industry and major multilateral
agencies, like the IFC and FMO (the Dutch
development bank), also provide crucial support
and knowledge transfer.
We also held a sustainability forum for vendors of
the Bank for knowledge sharing on the subject.
Principle 8 – Collaborative Partnership
FCMB signed on to the largest voluntary corporate
responsibility initiative in the world, the United
Nations Global Compact (UNGC), a strategic
policy initiative for businesses committed to
aligning their operations and strategies with 10
universally accepted principles.
To further promote sustainable banking, we
partnered with IFC to carry out a Sustainable/
Renewable Energy Finance (SEF) pilot project
with a focus on developing our internal capacity
to successfully implement an Energy Eciency/
Renewable Energy (EE/RE) financing line,
targeting SME borrowers in Nigeria.
Sustainability Report
Continued
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Principle 9 – Reporting
In addition to our internal quarterly reporting
on sustainability for monitoring progress and
addressing issues in an independent manner,
we instituted an environmental management
reporting framework covering sustainable
resource consumption as it relates to the areas
mentioned under Environmental Footprint.
FCMB also complies with the CBN’s semi-annual
reports in line with the NSBPs, and submits
periodic reports to the IFC.
Corporate Social
Responsibility (CSR) Initiatives
In 2015, FCMB continued with its CSR focus on
Poverty Alleviation, Environmental Sustainability
with Economic Empowerment taking the larger
portion of allocated resources. We also supported
numerous charitable projects.
The Group spent N202,561,950 on CSR in 2015.
This was a reduction of N160,686,943 from 2014.
The reduction was because of the N175 million
donated to The Victims of Terror, a regulatory fee.
Details of the beneficiaries are contained in the
'i. Donations and Charitable Gifts' segment of
the Directors’ Report in the Financial Statements
section.
Figure 1. CSR expenses in 2015
Economic
Empowerment 50%
Environmental
Sustainability 25%
Poverty Alleviation
15%
Others –
Charitable Gifts 10%
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FCMB Group Plc Annual Report and Accounts 201526
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Operating
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CORPORATE
GOVERNANCE
Board of Directors
Dr Jonathan A D Long
Chairman
Jonathan Long holds a bachelor’s degree (1967)
and master’s degree (1970) from Balliol College;
and a doctorate degree (1973) from St. Anthony’s
College, both based at Oxford University in
the UK.
He began his working career with William & Glyn’s
Bank Limited in 1973 and was appointed Manager,
Corporate Finance with Charterhouse Japhet
Limited in London in 1976, before becoming
General Manager of the Bank’s Swiss Investment
Management subsidiary, Charterhouse Japhet
(Suisse) SA in Geneva in 1979, and eventually
Assistant Director in 1981. He later established
the operations of Standard Chartered Bank Plc in
Geneva, Switzerland in 1982 before joining First
City Merchant Bank Limited in 1985 as Deputy
Managing Director.
He retired from the Board of First City Monument
Bank Limited in 2013 and was, subsequently,
appointed the Chairman of FCMB Group Plc.
Mr Peter Obaseki
Managing Director
Peter Obaseki holds a BSc and MSc in Computer
Science as well as an MBA in Finance from the
University of Lagos; and has received specialised
training from some of the most prestigious
institutions in Europe, America and Africa,
including the Lagos Business School Afrexim
Bank, Egypt and Columbia Business School in
the US.
He commenced his career with KPMG as a
Management Consultant, focused on financial
institutions, before venturing into the banking
industry. He is a Fellow of the Chartered Institute
of Bankers with over 27 years banking experience.
He joined First City Monument Bank Plc in 1997
and was appointed an Executive Director in
September 2008. He also served as the Managing
Director/CEO of FinBank Plc between February
and October 2012.
He was appointed Managing Director of FCMB
Group Plc in 2013.
FCMB Group Plc Annual Report and Accounts 2015 27
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Mr Ladi Balogun
Non-Executive Director
Ladi Balogun holds a bachelor’s degree in
Economics from the University of East Anglia in
the UK and an MBA from Harvard Business School
in the US. He has over 20 years’ experience in
commercial and investment banking in Europe,
the US and Africa.
He began his banking career in 1993 at Morgan
Grenfell & Co Limited, where he worked in
the areas of risk management and corporate
finance (debt origination). He was responsible
for managing the Bank’s trading and investment
positions in debt instruments in Latin America
and Eastern Europe, and also part of a team that
structured numerous complex debt deals in Latin
America, Eastern Europe and the Asian sub-
continent. Subsequently he worked at Citibank
in New York before returning to Nigeria as an
Executive Assistant to the Chairman and Chief
Executive in 1996.
He worked in Treasury, Corporate Banking,
Investment Banking and various other
departments in First City Monument Bank and
was appointed an Executive Director (ED) in
charge of the Institutional Banking Group (IBG)
and Strategy and Business Development in 1997
and 2000 respectively. In 2001 he rose to the
position of the Deputy Managing Director and
was subsequently appointed Managing Director
of the Bank.
Mr Bismarck Rewane
Non-Executive Director
Bismarck Rewane holds a BSc in Economics from
the University of Ibadan and is an Associate of
the Institute of Bankers (England and Wales). He
began his banking career with Barclays Bank, UK
in 1973 and moved to Nigeria where he joined
the First National Bank of Chicago. He moved
on to International Merchant Bank, Nigeria
before leaving in 1996 to start his own company,
Financial Derivatives Company Limited. He is an
outstanding scholar who has addressed many
professional and business gatherings.
Board of Directors
Continued
FCMB Group Plc Annual Report and Accounts 201528
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Alhaji Mustapha Damcida
Non-Executive Director
Alhaji Mustapha Damcida has a Diploma in Law
from Ahmadu Bello University and a BSc in
Business Administration from the Robert Morris
College, Pittsburgh, US. He is the MD/CEO of
Damus International Limited, Damus Security
Solutions Limited and Damson Properties Limited.
He was a Director at the Nigerian-American Bank
Limited between 2004 and 2005. Prior to his
appointment to the Board ofFCMB Group Plc as
a Non–Executive Director, hehad served on the
Board of First City Monument Bank Limited.
Mr Olusegun Odubogun
Non-Executive Director
Olusegun Odubogun qualified as a Chartered
Accountant in 1974 and became a Fellow of the
Institute of Chartered Accountants of Nigeria
in1980.
He worked throughout his career, spanning over
40 years, at Deloitte (previously Akintola Williams
& Co) and through diligence, technical ability and
uncompromising commitment to professionalism
and excellence, he rose rapidly in the practice to
become a Partner in 1980, and in 2003 he was
elected the firm’s Chief Executive Ocer.
He retired in 2008 as the Chief Executive Ocer,
Deloitte West & Central Africa, a regional practice
formed in 2006 under his leadership.
He is one of the foundation members of Business
Recovery and Insolvency Practitioners of Nigeria
(BRIPAN) and a foundation council member of
the Chartered Institute of Taxation of Nigeria
(CITN). He is also a member of the Institute of
Directors as well as the Nigerian Institute of
Management.
In addition to being on the Board of FCMB
Group Plc, he is also on the Board of First City
Monument Bank Limited.
FCMB Group Plc Annual Report and Accounts 2015 29
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Mr Olutola O Mobolurin
Non-Executive Director
Olutola Mobolurin holds a BSc in Accounting and
Finance from the State University of New York
and an MBA from York University, Toronto. He is a
Fellow of the Chartered Institute of Stockbrokers.
He has over 30 years’ of varied exposure and
experience in the financial services industry. He
began his career as an Investment Executive at
Plateau Investments Company in 1977 before
joining City Securities Limited in 1978. He joined
Continental Merchant Bank Limited in 1979, rising
to Head of Corporate Finance until he left in 1988.
He subsequently worked with Capital Bancorp
Ltd as Managing Director from 1988 to 2006. He
joined Crusader (Nigeria) Plc as Vice Chairman
and Group Chief Executive Ocer in 2007 until
his retirement in 2014.
In addition to being on the Board of FCMB
Group Plc, he is also on the Board of First City
Monument Bank Limited.
Mr Martin Dirks
Non-Executive Director
Martin Dirks has over 25 years’ of Senior
Management experience in demanding
international and multicultural environments.
In 1989, he established ID-Drenthe, one of the
first active companies in the field of information
technology providing medium sized businesses
with training programs, consultancy and other IT
services.
He has also served as CEO of Maxx Management
Ltd, an investment company in Kazakhstan,
focused on construction, railway infrastructure
and maintenance; and of Ukrainian Mobile
Communications in the Ukraine.
Martin is highly experienced in growth
scenarios, re-structuring, turn around and
change management.
Board of Directors
Continued
FCMB Group Plc Annual Report and Accounts 201530
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Professor Oluwatoyin Ashiru
Non-Executive Director
Professor Oluwatoyin Ashiru is a graduate of
the University of Sussex, Brighton, UK where
he obtained a BSc in Materials Science and
Engineering. He concluded his PhD in Industrial
Metallurgy at the University of Birmingham, UK.
He began his career as a lecturer in mechanical
engineering at the Universities of Lagos and
Ibadan respectively before serving as Nigeria’s
Senior Research Fellow at the International Tin
Research Institute in the UK. He is currently the
Managing Director and CEO of Tricontinental Oil
Services Ltd.
He is an accomplished Materials and Metallurgical
Engineer with over 30 years’ of comprehensive
professional experience in academia,
entrepreneurship, management engineering,
technologies invention, and consulting for the
enhancement of productivity in major industries
worldwide.
He holds USA, British, European, Brazilian and
other international patents for products and
systems that he has invented. He is a recipient
of several merit awards which include, but
not limited to, his recognition in the US as a
‘Professional with Extraordinary Ability’, with
listings in Who is Who in the World and Dictionary
of International Biography, and the prestigious
Distinguished Innovator Award of the Association
of Tin Producing Countries.
Dr (Engr) Gregory Omosigho Ero
Non-Executive Director
Dr Gregory Ero is a graduate of the University
of Ibadan with a BSc (Hons) in Chemistry. He
also attended Imperial College, London where
he obtained an MSc and DIC in Petroleum
Engineering. He obtained a DMS from
Templeton College, University of Oxford, then
furthered his studies at the Graduate School
of Business, University of Columbia, New York
and the Institute of Management Development,
Lausanne Switzerland.
He began his career as a Petroleum Engineer
in the Lagos oce of the Federal Ministry of
Petroleum and Energy, and thereafter, was
posted to Warri as Head, Federal Ministry of
Petroleum Resources. He spent much of his
career in the public service, where he served
in many capacities spanning three decades.
He also served on the Boards of many Federal
Government Parastatals, including Economic and
Finance Committee of the Federal Government
during the Buhari Administration and Petroleum
Training Institute Warri, amongst others.
Dr Gregory Ero is a Fellow of many professional
bodies, including the Nigerian Academy of
Engineering, Nigerian Society of Engineers; Hon
Fellow, Nigerian Society of Chemical Engineers;
and Fellow, Institute of Directors of Great Britain.
He is presently the Chairman/CEO of Arkleen Oil
& Gas Limited and Chairman, Cardinal Drilling
Company Limited, amongst others.
FCMB Group Plc Annual Report and Accounts 2015 31
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Board Evaluation Report
4 March 2016
The Chairman
Board of Directors
FCMB Group Plc
First City Plaza
44 Marina Lagos, Nigeria.
Report of the External Consultants on the
Performance of the Board of Directors of FCMB
Group Plc (FCMB Group) for the Year Ended
31 December 2015
In line with the provisions of Section 15.6 of the
Securities and Exchange Commission’s Code
of Conduct for Public Companies (SEC Code),
DCSL Corporate Services Limited (DCSL) was
engaged by FCMB Group Plc (“FCMB Group”
or “the Group”) to carry out an appraisal of the
Board’s performance as well as a Peer Review of
the performance of individual Directors for the
year-ended 31 December 2015. This entailed an
examination of the Group’s compliance with the
requirements of the SEC Code, relevant provisions
of the CBN Code of Corporate Governance 2014
as well as corporate governance best practices. In
carrying out this engagement, we embarked on a
comprehensive review of the Group’s corporate
and statutory documents, the Minutes of Board
and Committee meetings, policies currently in
place, other ancillary documents made available
to us, responses to questionnaires administered,
as well as information derived from Director
Interviews.
In undertaking the appraisal, we considered
seven key corporate governance areas as follows:
1. Board Structure and Composition;
2. Strategy and Planning;
3. Board Operations and Eectiveness;
4. Measuring and Monitoring of Performance;
5. Risk Management and Compliance;
6. Corporate Citizenship; and
7. Transparency and Disclosure.
Following our review of the processes put in
place by the Group, we arm that the Board has
substantially complied with the provisions of the
Codes. The composition of the Board of FCMB
Group Plc is in line with the provisions of the SEC
Code with the Directors being individuals with
very relevant skills, competencies and experience.
The Peer Assessment indicates that individual
Directors performed satisfactorily against the
parameters used for the appraisal and remained
committed to enhancing the Company’s growth.
We recommend that the Board should ensure that
Directors continue to receive ongoing relevant
training.
Details of our key findings and other
recommendations are contained in our Report.
Yours faithfully
For: DCSL Corporate Services Limited
Bisi Adeyemi
Managing Director
FRC/2013/NBA/00000002716
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Corporate Governance
Commitment to Corporate Governance
FCMB Group Plc (the Group) remains committed
to institutionalising corporate governance
principles. It continues to adhere to the
implementation of corporate governance rules
of the Central Bank of Nigeria, the Nigerian
Stock Exchange and the Securities and
Exchange Commission.
The Group’s Board (the Board) operates in line
with its responsibilities as contained in Regulatory
Codes of Corporate Governance, the Company’s
Articles of Association and the Companies and
Allied Matters Act. Its oversight of the operations
and activities of the Company are carried out
transparently without undue influence.
The Company has undertaken to create the
institutional framework conducive for defending
the integrity of our Directors, and is convinced
that on account of this, the Group’s Board
is functioning in a highly eective manner.
It is intended that we continue to challenge
ourselves to improve in areas where the need for
improvement is identified.
Board Composition and Independence
The Board is composed of 10 Directors made up
of nine Non-Executive Directors and one Executive
Director, in line with international best practice
which requires the number of Non-Executive
Directors to be more than the Executive Directors.
The appointment of Board members is in line with
the Companies and Allied Matters Act Cap C20
LFN 2004, CBN code of Corporate Governance,
and the Company’s selection criteria for Directors.
The Group’s Board, led by a Non-Executive
Chairman, is composed of individuals with enviable
records of achievement in their respective fields and
who bring on board high levels of competencies
and experience. The Board meets regularly to
set broad policies for the Group’s business and
operations and ensures that an objective and
professional relationship is maintained with the
Group’s internal and external auditors in order
to promote transparency in financial and non-
financial reporting. Directors’ emoluments, as well
as their shareholding information, are disclosed in
the Company’s Annual Report and Accounts.
The Directors are guided by the Code of Conduct
of the Central Bank of Nigeria for Directors.
The Guiding Principles of the Group’s Code of
Corporate Governance are as follows:
all power belongs to the shareholders;
delegation of authority by the owners to the
Board and subsequently to Board Committees
and executives is clearly defined and agreed;
institutionalised individual accountability and
responsibility through empowerment and
relevant authority;
clear terms of reference and accountability for
committees at Board and executive levels;
eective communication and information
sharing outside of meetings;
actions are taken on a fully informed basis,
in good faith with due diligence and care
and in the best interest of the Group and
shareholders;
enhancing compliance with applicable
laws and regulations and the interest of the
stakeholders; where there is any conflict
between the Group’s rules, the local laws and
legislation supersede;
conformity with overall Group strategy and
direction; and
transparency and full disclosure of accurate,
adequate and timely information regarding
the personal interest of Directors in any area of
potential conflict regarding Group’s business.
FCMB Group Plc Annual Report and Accounts 2015 33
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Role of the Board
Investment and capital management, investor
relations, Group financial and statutory
reporting, articulation and approval of Group
policies, setting overall Group strategic
direction, monitoring and coordinating Group
performance, succession planning for key
positions on the Boards of the Group and
operating companies.
Reviewing alignment of goals, major plans
of action, annual budgets and business plans
with overall strategy; setting performance
objectives; monitoring implementation
and corporate performance and overseeing
major capital expenditure in line with the
approved budget.
Ensuring the integrity of the Group’s
accounting and financial reporting systems
(including the independence of Internal
Audit, and that appropriate systems are in
place for monitoring risk, financial control and
compliance with the law).
Selecting, compensating, monitoring and
when necessary, replacing key executives and
overseeing succession planning.
Interfacing with the management of the
Group to ensure harmony in implementing
Group strategy.
Performing all statutory roles as required by law.
Through the establishment of Board
Committees, making recommendations and
taking decisions on behalf of the Board on
issues of expenditure that may arise outside
the normal meeting schedule of the Board.
Ratifying duly approved recommendations
and decisions of the Board Committees.
The Board ensures that the Company has an
eective internal audit and risk management
system in place.
Board of Directors
The Board of Directors met five times during the
year as noted below:
Board of Directors Meetings Held in 2015
9
Mar
2015
24
Apr
2015
24
Jul
2015
23
Oct
2015
18
Dec
2015
Dr Jonathan
A D Long
-
Mr Peter Obaseki
Mr Bismarck
Rewane
- - -
Mr Ladi Balogun
-
Alhaji Mustapha
Damcida
Mr Olusegun
Odubogun
Mr Olutola O
Mobolurin
Mr Martin Dirks
- -
Prof Oluwatoyin
Ashiru
Dr (Engr)
Gregory O Ero
Board Committees
The Board approved the constitution of the
two Board Committees, listed below, with
their respective responsibilities and roles
clearly defined.
Risk, Audit and Finance Committee (RAF)
Its functions include the overseeing of Internal
Control, Internal Audit and Financial Reporting;
providing oversight for strategy articulation and
strategic planning; reviewing the Group’s strategy
and financial objectives, as well as monitoring
the implementation of those strategies and
objectives; and reviewing and approving
proposals for the allocation of capital and other
resources within the Group.
Corporate Governance
Continued
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Membership: The Committee is made up of
five Non-Executive Directors (at least one of
whom should be an Independent Director). The
Managing Director is required to be in attendance
at all meetings of the Committee.
Committee Composition: Mr Bismarck Rewane,
Mr Olusegun Odubogun, Dr (Engr) Gregory O
Ero, Mr Ladi Balogun and Mr Martin Dirks.
Board Risk, Audit and Finance Committee
Meetings Held in 2015
20
Apr
2015
21
Jul
2015
19
Oct
2015
16
Dec
2015
Mr Bismarck Rewane
-
-
Mr Olusegun Odubogun
Dr (Engr) Gregory O Ero
Mr Ladi Balogun
Mr Martin Dirks
- -
Governance and Remuneration Committee
(GRC)
Its functions include nominating new Directors to
the Board; recommending remuneration policy
for the Group; overseeing Board performance and
evaluation within the Group, as well as succession
planning for key positions on the Boards of the
Group and subsidiaries.
Membership: The Committee is made up of only
Non-Executive Directors. The Managing Director
shall be in attendance when required.
Committee Composition: Mr Olutola O Mobolurin,
Alhaji Mustapha Damcida, Professor Oluwatoyin
Ashiru and Mr Ladi Balogun.
Board Governance and Remuneration
Committee Meetings Held in 2015
20
Apr
2015
7
May
2015
19
Oct
2015
14
Dec
2015
Mr Olutola O Mobolurin
Alhaji Mustapha Damcida
Professor Oluwatoyin Ashiru
-
Mr Ladi Balogun
Statutory Audit Committee (SAC)
Section 359 (3) of the Companies and Allied
Matters Act Cap C20 LFN 2004 requires every
public company to establish a Statutory Audit
Committee (SAC) composed of an equal number
of its Directors and representatives of the
shareholders.
Subject to such other additional functions
and powers that the Company’s Articles of
Association may stipulate, the objectives and
functions of the Statutory Audit Committee shall
be to:
ascertain whether the accounting and
reporting policies of the Company are in
accordance with legal requirements and
agreed ethical practices;
review the scope and planning of audit
requirements;
review the findings on management matters
in conjunction with the external auditors and
departmental responses therein;
keep under review the eectiveness of the
Company’s system of accounting and internal
control;
make recommendations to the Board with
regard to the appointment of, removal and
remuneration of the external auditors of the
Company;
authorise the internal auditor to carry out
investigations into any activities of the
Company which may be of interest or concern
to the Committee; and
examine the Auditors’ Report and make
recommendations thereon to the Annual
General Meeting as it may think fit.
Membership
The Statutory Audit Committee shall
consist of an equal number of Directors
and representatives of the shareholders
(subject to a maximum of six members). Such
members of the Audit Committee shall not be
entitled to remuneration and shall be subject
to re-election annually.
FCMB Group Plc Annual Report and Accounts 2015 35
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The members will nominate any member of
the Committee as the Chairman of the Audit
Committee from time to time.
Any member may nominate a shareholder as
a member of the Audit Committee by giving
notice in writing of such nomination to the
Company Secretary of the Company at least
21 days before the Annual General Meeting.
A quorum for any meeting is a simple majority
of three members with a minimum of two
representatives of the shareholders.
Statutory Audit Committee Meetings Held
in 2015
9
Mar
2015
21
Apr
2015
22
Jul
2015
20
Oct
2015
Alhaji S B Daranijo
Alhaji B A Batula
Evangelist Akinola
Soares
Mr Bismarck Rewane
- - -
Mr Olutola O
Mobolurin
Mr Olusegun
Odubogun
Management Committees
The Board was supported by the Executive
Management Committee (EMC) and the Group
Executive Committee (GEC).
Executive Management Committee (EMC)
The EMC, usually chaired by the Managing Director
of the Company, comprises all departmental
heads. The EMC deliberates and makes decisions,
as necessary, to optimise the resources of the
Company and ensure the eective and ecient
management of the Company. The EMC also
articulates issues to be discussed by the Board.
The Managing Director is responsible for the daily
running and performance of the Company.
Group Executive Committee (GEC)
The GEC is usually chaired by the Managing
Director of the Group while other members are
the Chief Executive Ocers of the Operating
companies in the Group and the Group Chief
Financial Ocer. The Company Secretary serves
as Secretary to the Committee. The GEC shall,
from time to time, invite to its meetings any
other person as may be required.
Shareholder Participation
The Group leverages the significant experience,
contributions and advice of shareholder members
of the Statutory Audit Committee.
The Group continues to take necessary steps to
promote shareholder rights.
All stakeholders are invited to report any concern
about a threatened/suspected breach of any
corporate governance requirement to the oce
of the Company Secretary.
Security Trading Policy
The Company has a security trading policy which
is being adhered to.
Disclosure to the Shareholders
The Directors’ fees for the financial year
ending 31 December 2016 shall be fixed at
N200,000,000.00 only and a resolution to
approve same shall be proposed.
Mrs Funmi Adedibu
Company Secretary
FRC/2014/NBA/00000005887
Corporate Governance
Continued
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FINANCIAL
STATEMENTS
FCMB Group Plc Annual Report and Accounts 2015 37
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Directors’ Report
for the year ended 31 December 2015
The Directors present their annual report on the
aairs of FCMB Group Plc ('the Company') and
its subsidiaries ('the Group'), together with the
financial statements and independent auditor's
report for the year ended 31 December 2015.
a. Legal Form
FCMB Group Plc was incorporated in Nigeria as a
financial holding company on 20 November 2012,
under the Companies and Allied Matters Act.
b. Principal Activity and Business Review
The Company is a non-operating financial holding
company, regulated by the Central Bank of
Nigeria (CBN). The principal activity of the Group
continues to be the provision of comprehensive
banking and financial services to its wholesale
and retail customers. Such services include
cash management, trade, loans and advances,
corporate finance, investment banking, securities
brokerage, money market activities and foreign
exchange operations.
Through ownership of FCMB Group Plc,
shareholders own 100% of all subsidiaries,
including FCMB Capital Markets Limited, CSL
Trustees Limited, CSL Stockbrokers Limited
(including its subsidiary First City Asset
Management Ltd) and First City Monument
Bank Limited (and its subsidiaries Credit Direct
Limited, FCMB (UK) Limited and FCMB Financing
SPV Plc).
The Group does not have any unconsolidated
structured entity.
c. Operating Results
The gross earnings and profit after income
tax recorded by the Group for the year ended
31 December 2015 was N152.51 billion and
N4.76 billion respectively. The Directors arm
that the Group is strategically poised for
continued growth and development. Highlights
of the Group’s operating results for the year
ended are as follows:
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Gross earnings
152,507,947 148,637,409 4,200,904 6,672,890
Profit before minimum tax and income tax
7,768,664 23,942,893 2,548,286 5,450,877
Minimum tax
(900,532) - - -
Income tax expense
(2,107,466) (1,809,636) (25,231) (53,969)
Profit attributable to equity holders of the Company
4,760,666 22,133,257 2,523,055 5,396,908
Total comprehensive income for the year
6,976,534 22,586,829 2,523,055 5,396,908
Appropriations:
Transfer to statutory reserve
661,992 3,067,607 - -
Transfer to retained earnings
4,098,674 19,065,650 2,523,055 5,396,908
4,760,666 22,133,257 2,523,055 5,396,908
Basic and diluted earnings per share (Naira)
0.24 1.12 0.13 0.27
Dividend per share (Naira)
0.10 0.25 0.10 0.25
Total non-performing loans and advances
25,370,162 22,962,196 - -
Total non-performing loans to total gross loans
and advances (%)
4.15% 3.63% - -
FCMB Group Plc Annual Report and Accounts 201538
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Proposed Dividend
The Board of Directors recommended a cash
dividend of 10 kobo per issued and paid up
ordinary share for the year ended 31 December
2015. This is subject to approval at the Annual
General Meeting.
Payment of dividends is subject to withholding
tax at a rate of 10% in the hand of recipients.
d. Directors’ Shareholding
The direct and indirect interests of Directors in the
issued share capital of the Company as recorded
in the register of Directors shareholding and/or
as notified by the Directors for the purposes of
sections 275 and 276 of the Companies and Allied
Matters Act Cap C20, Laws of the Federation
of Nigeria 2004 and listing requirements of the
Nigerian Stock Exchange are as noted below:
Shareholding as at
31 December 2015
Number of 50 kobo ordinary
shares held
Shareholding as at
31 December 2014
Number of 50 kobo ordinary
shares held
Direct
holdings
Indirect
holdings
Direct
holdings
Indirect
holdings
Dr Jonathan A D Long (Chairman)
11,149,220 – 11,149,220 –
Mr Peter Obaseki (Managing Director)
5,369,945 – 5,369,945 –
Mr Ladipupo O Balogun (Non-Executive Director)
190,166,756 – 190,166,756 –
Mr Bismarck Rewane
(Non-Executive Independent Director)
1,112,280 – 1,112,280 –
Mr Olusegun Odubogun
(Non-Executive Independent Director)
190,000 – 190,000 –
Alhaji Mustapha Damcida (Non-Executive Director)
– – - –
Mr Olutola O Mobolurin (Non-Executive Director)
2,120,000 – 1,520,000 –
Mr Martin Dirks (Non-Executive Director)
– – - –
Professor Oluwatoyin Ashiru (Non-Executive Director)
1,041,887 – 920,000 –
Dr (Engr) Gregory O Ero (Non-Executive Director)
– – - –
FCMB Group Plc Annual Report and Accounts 2015 39
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e. Directors’ Interests in Contracts
For the purpose of section 277 of the
Companies and Allied Matters Act Cap C20,
Laws of the Federation of Nigeria 2004, none
of the Directors/Major Shareholders had direct
or indirect interest in contracts or proposed
contracts with the Company during the year.
f. Property and Equipment
Information relating to changes in property and
equipment is given in Note 29 to the financial
statements. In the Directors’ opinion, the market
value of the Group’s properties is not less than
the value shown in the financial statements.
g. Shareholding Analysis
The shareholding pattern of FCMB Group Plc as
at 31 December 2015 is as stated below:
31 December 2015
Share range No. of Shareholders % of Shareholders No. of Holdings % of Shareholdings
1–10,000
490,562 93.98 391,693,209 1.98
10,001–50,000
24,076 4.62 481,531,637 2.43
50,001–100,000
3,399 0.65 234,871,356 1.19
100,001–500,000
3,095 0.59 593,867,954 3.00
500,001–1,000,000
331 0.06 230,047,138 1.16
1,000,001–5,000,000
372 0.07 710,915,187 3.59
5,000,001–10,000,000
41 0.01 275,582,650 1.39
10,000,001–50,000,000
64 0.01 1,258,032,369 6.35
50,000,001–100,000,000
5 0.00 370,401,503 1.87
100,000,001–500,000,000
22 0.01 5,615,592,389 28.36
500,000,001–1,000,000,000
2 0.00 1,045,436,075 5.28
1,000,000,001–19,802,710,781
3 0.00 8,594,739,314 43.40
Total
521,972 100 19,802,710,781 100
31 December 2014
Share range No. of Shareholders % of Shareholders No. of Holdings % of Shareholdings
1–10,000
492,130 94.02 392,910,467 1.98
10,001–50,000
24,251 4.63 483,154,936 2.44
50,001–100,000
3,319 0.63 228,025,004 1.15
100,001–500,000
2,948 0.56 557,509,856 2.82
500,001–1,000,000
295 0.06 205,093,434 1.04
1,000,001–5,000,000
331 0.07 604,809,147 3.05
5,000,001–10,000,000
48 0.01 337,804,553 1.71
10,000,001–50,000,000
69 0.01 1,317,834,711 6.65
50,000,001–100,000,000
15 0.00 1,186,109,213 5.99
100,000,001–500,000,000
27 0.01 7,411,355,801 37.43
500,000,001–1,000,000,000
6 0.00 4,437,629,078 22.41
1,000,000,001–19,802,710,781
2 0.00 2,640,474,581 13.33
Total
523,441 100 19,802,710,781 100
Directors’ Report
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 201540
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Branches and Account
Opening Information
h. Substantial Interest in Shares
The Company's authorised share capital is N15 billion divided into 30 billion ordinary shares of 50
kobo each of which 19,802,710,781 ordinary shares are issued and fully paid. According to the register
of members no shareholder other than the under-mentioned held more than 5% of the issued share
capital of the Company as at 31 December 2015:
i. Donations and Charitable Gifts
The Group made contributions to charitable and non-political organisations amounting to
N202,561,950 (2014: N363,448,893) during the year.
The shareholding analysis into domestic and foreign shareholders of the Company is as stated below:
31 December 2015
Shareholder category No. of Shareholders % of Shareholders No. of Holdings % of Shareholdings
Domestic shareholders
521,647 99.94 12,135,629,163 61.28
Foreign shareholders
325 0.06 7,667,081,618 38.72
Total
521,972 100 19,802,710,781 100
31 December 2014
Shareholder category No. of Shareholders % of Shareholders No. of Holdings % of Shareholdings
Domestic shareholders
523,096 99.93 11,576,818,366 58.46
Foreign shareholders
345 0.07 8,225,892,415 41.54
Total
523,441 100 19,802,710,781 100
31 December 2015 31 December 2014
Shareholder category No. of Shares % of Holdings No. of Shares % of Holdings
1. Capital IRG Trustees Limited
1,557,955,397 7.87 1,539,045,397 7.77
2. Stanbic Nominees Nig. Limited – Custody
5,704,007,750 28.80 6,288,451,314 31.76
3. Asset Management Corporation of
Nigeria (AMCON)
1,332,776,167 6.73 1,281,403,966 6.47
Beneficiary Amount (N)
Dare to Dream Youth Empowerment Programme
25,000,000
PAN Atlantic University
25,000,000
St Saviours School, Ikoyi
20,000,000
Abubakar Tafawa Balewa University
12,915,000
Central Bank of Nigeria: Financial Literacy Curriculum
10,257,450
Ojude Oba Festival
10,000,000
Bethesda Child Support Foundation
7,940,398
Tulsi Chanrai Foundation
7,000,000
River State Microfinance Agency
6,500,000
Kwara State University
6,500,000
House of TARA International Limited
5,600,000
The Life House: Woman Rising 2015 & The Film Festival
5,250,000
Ikoyi Club (Nigeria Cup Tournament)
5,000,000
Kwechi Energy Limited
4,750,000
FCMB Group Plc Annual Report and Accounts 2015 41
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Beneficiary Amount (N)
Financial Reporting Council of Nigeria (FRCN)
4,000,000
University of Jos
3,994,725
SME Merchant Conference
3,000,000
Veepee General Enterprises
2,660,000
Chartered Institute of Bankers of Nigeria
2,500,000
SIFE Foundation Limited
2,500,000
Dragon African Limited
2,449,103
Association of Nigerian Women Academic Doctors
2,000,000
Nigerian American Chambers of Commerce
2,000,000
Market Cleaning Campaign
1,761,600
Swift Think: Edge Series Student Summit
1,500,000
AIESEC National Training
1,500,000
Lost in Lagos Business Forum
1,200,000
International Alliance of Patients Organisations
1,070,000
7 Star Worker Conference
1,000,000
AOL: Women in Journalism Sponsorship
1,000,000
GEM Publication
1,000,000
Havard Business School Alumni Nigeria
1,000,000
The Nigerian Stock Exchange (NSE) 2015 Corporate Challenge
1,000,000
Handicraft Empowerment Community
785,000
Inner Beauty Outward Radiance (IBOR)
700,000
Foundation for Global Compact
681,870
VAMA Wave Foundation
600,000
Akarigbo Coronation Anniversary
500,000
Ecologistics Integrated Service: World Environmental Day
500,000
Golden Hearts Touching Lives Initiatives
500,000
Grange School
500,000
Kamdora Limited: Women Supporting Event
500,000
Maharaja Ball Donation
500,000
Nigerian Conservation Foundation: World Environment Day
500,000
Remo Divisional High School
500,000
Women in Management and Business
500,000
Emmanuel Goodness
475,510
Nigerian Alliance for Clean Cook Stoves
460,000
Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN)
400,000
Ambassadors Summit & Branding Services
300,000
Heritage Point Media Limited
300,000
Hope for Girls Empowerment Organisation
300,000
Buharian Culture Organisation
250,000
St Paul Catholic Church
250,000
Kinetic Sports
200,000
Pace Setters
200,000
Prof. Benjamin Osayawe
200,000
Skylak Sports Club of Nigeria
200,000
World Federation Investor
200,000
Directors’ Report
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 201542
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j. Events after the reporting period
There were no events after the balance sheet
date which could have a material eect on the
financial position of the Group as at 31 December
2015 and profit attributable to equity holders
on that date which have not been adequately
adjusted for or disclosed.
k. Human Resources
Employment of Disabled Persons
The Group operates a non-discriminatory policy
on recruitment. Applications by disabled persons
are always fully considered, bearing in mind
the respective aptitudes and abilities of the
applicants concerned. In the event of members
of sta becoming disabled, every eort is
made to ensure that their employment with the
Group continues and that appropriate training is
arranged. It is the policy of the Group that the
training, career development and promotion of
disabled persons should, as far as possible, be
identical to those of other employees. Currently,
the Group has four persons on its sta list with
physical disabilities.
Health, Safety and Welfare at Work
The Group continues to prioritise sta health
and welfare. The Group retains top-class private
hospitals where medical facilities are provided for
sta and their immediate families at the Group’s
expense. A contributory pension fund scheme,
in line with the Pension Reform Act 2014 (as
amended), exists for employees of the Group.
Employee Code of Business Conduct and Ethics
Employees are bound by the code of business
conduct and ethics signed at the time of
employment.
Diversity in Employment
The number and percentage of women employed
in the Group during the year ended 31 December
2015 and the comparative year regarding total
workforce is as follows:
2015
Number %
Male Female Total Male Female
Employees
2,545 1,598 4,143 61 39
2014
Number %
Male Female Total Male Female
Employees
2,752 1,678 4,430 62 38
Beneficiary Amount (N)
Yaba College of Technology
180,000
Orphanage House Lafia
167,000
National Youth Service Corps
150,000
Atlantic Hall Educational Trust Council
100,000
Edgewood College
100,000
Joseph Edgar’s Kidney Trust Fund
100,000
Julius Akpovire Enyeh
50,000
Others
1,864,294
Total
202,561,950
FCMB Group Plc Annual Report and Accounts 2015 43
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2015
Number %
Male Female Total Male Female
Managing Director
1 - 1 10 -
Other Executive Directors
- - - - -
Non-Executive Directors
9 - 9 90 -
Total
10 - 10 100 -
2014
Number %
Male Female Total Male Female
Managing Director
1 - 1 10 -
Other Executive Directors
- - - - -
Non-Executive Directors
9 - 9 90 -
Total
10 - 10 100 -
Gender analysis of the Board of the Company is as follows:
l. Employee Involvement and Training
The Group places considerable value on the
involvement of its employees and has continued
its practice of keeping them informed on matters
aecting them as employees and the various
factors aecting the performance of the Group.
2015
Number %
Male Female Total Male Female
Assistant General Manager
(AGM)
23 6 29 38 10
Deputy General Manager (DGM)
15 6 21 25 10
General Manager (GM)
7 3 10 12 5
Total
45 15 60 75 25
2014
Number %
Male Female Total Male Female
Assistant General Manager
(AGM)
23 7 30 33 10
Deputy General Manager (DGM)
19 8 27 28 12
General Manager (GM)
9 3 12 13 4
Total
51 18 69 74 26
Gender analysis of Top Management of the Group is as follows:
This is achieved through regular meetings
between management and sta of the Group.
The Group has in-house training facilities
complemented with additional facilities from
educational institutions (local and oshore) for
the training of its employees.
Directors’ Report
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 201544
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Other National
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Branches and Account
Opening Information
m. Customer Complaints
FCMB Group Plc is committed to ensuring an
eective and responsive complaints management
process hence the banking subsidiary has put in
place a complaints management policy to ensure
that the causes of complaints are fully addressed
and to assure stakeholders and members of the
public that their concerns will be handled in a fair
and appropriate manner. Customers' complaints
are lodged with the Complaints Ocer at
complaints@fcmb.com for necessary action.
The banking subsidiary had pending complaints
of 64 at the beginning of the year and received
additional 46,620 (2014: 50,096) during the year
ended 31 December 2015, of which 46,572 (2014:
49,897) complaints were resolved (inclusive
Number Amount claimed (N’000) Amount refunded (N’000)
Description
2015 2014 2015 2014 2015 2014
Pending complaints B/F
64 28 - - - -
Received complaints
46,620 50,096 2,910,339 12,608,409 - -
Total complaints
46,684 50,124 2,910,339 12,608,409 - -
Resolved complaints
46,572 49,897 582,186 872,282 485,550 668,644
Unresolved complaints
escalated to CBN for
intervention
27 163 2,328,153 11,736,127 395,166 379,264
Unresolved complaints
pending with the bank C/F
85 64 - - - -
n. Disclosure
The Directors’ fees for the financial year ending
31 December 2016 shall be fixed at N200,000,000
only and a resolution to approve shall be
proposed at the Annual General Meeting.
o. Auditors
KPMG Professional Services has indicated its
willingness to continue in oce as auditors in
accordance with section 357 (2) of the Companies
and Allied Matters Act, Cap C20, Laws of the
Federation of Nigeria 2004.
of pending complaints brought forward) and
85 (2014: 64) complaints remained unresolved
and pending with the Bank as at the end of the
reporting year. The total amount resolved and
refunded was N485.55 million (2014: N668.64
million) while the total disputed amount in cases
which remained unresolved stood at N2.33 billion
(2014: N11.7 billion). These unresolved complaints
were referred to the Central Bank of Nigeria for
intervention. The Directors are of the opinion
that these complaints will be resolved without
adverse consequences to the Banking subsidiary.
No provisions are therefore deemed necessary
for these claims.
By Order of the Board
Mrs Funmi Adedibu
Company Secretary
44 Marina
Lagos State
Nigeria
FRC/2014/NBA/00000005887
11 March 2016
FCMB Group Plc Annual Report and Accounts 2015 45
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Statement of Directors’ Responsibilities in
Relation to the Financial Statements
for the year ended 31 December 2015
The Directors accept responsibility for the preparation of the annual financial statements set out on
pages 50 to 186 that give a true and fair view in accordance with International Financial Reporting
Standards (IFRS) and in the manner required by the Companies and Allied Matters Act, Cap C20,
Laws of the Federation of Nigeria 2004, the Financial Reporting Council of Nigeria Act, 2011, the
Banks and Other Financial Institutions Act of Nigeria 2004 and relevant Central Bank of Nigeria
regulations.
The Directors further accept responsibility for maintaining adequate accounting records as required
by the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria 2004, and for
such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement whether due to fraud or error.
The Directors have made assessment of the Company’s ability to continue as a going concern and
have no reason to believe that the Company will not remain a going concern in the year ahead.
Signed on behalf of the Board of Directors by:
Dr Jonathan Long
Chairman
FRC/2013/IODN/00000001433
11 March 2016
Peter Obaseki
Managing Director
FRC/2014/CIBN/00000006877
11 March 2016
FCMB Group Plc Annual Report and Accounts 201546
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For the financial year ended 31 December 2015 to
the members of FCMB Group Plc.
In compliance with Section 359 (6) of the
Companies and Allied Matters Act Cap
C20, Laws of the Federation of Nigeria
2004 and the Central Bank of Nigeria's
Code of Corporate Governance, we have
reviewed the Audit Report for the year ended
31 December 2015 and, hereby, state as follows:
The scope and planning of the audit were
adequate in our opinion;
The account and reporting policies of
the Group conformed with the statutory
requirements and agreed ethical practices;
The internal control system was constantly
and eectively monitored;
The whistle blowing channel, run by an
external and independent third party, was
found adequate;
The external auditor’s management controls
report received a satisfactory response from
Management; and
The gross value of related party loans as
at 31 December 2015 was N2.03 billion
(N9.89 billion as at 31 December 2014). All
related party loans are performing.
The Audit Committee comprises the following
Non-Executive Directors and Shareholders’
representatives:
1. Alhaji S B Daranijo
Chairman/Shareholders’ representative
2. Evangelist Akinola Soares
Shareholders’ representative
3. Alhaji B A Batula
Shareholders’ representative
4. Mr Bismarck Rewane
Non-Executive Director
5. Mr Olusegun Odubogun
Non-Executive Director
6. Mr Olutola Mobolurin
Non-Executive Director
The Group’s Head, Internal Audit, acts as
secretary to the Committee.
Audit Committee Report
Alhaji S B Daranijo
Chairman, Audit Committee
FRC/2014/ICSAN/00000007262
10 March 2016
FCMB Group Plc Annual Report and Accounts 2015 47
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To the Members of FCMB Group Plc
Report on the Financial Statements
We have audited the accompanying financial
statements of FCMB Group Plc (“the Company”)
and its subsidiary companies (together “the
Group”), which comprise the consolidated and
separate statements of financial position as at
31 December 2015, and the consolidated and
separate statements of profit or loss and other
comprehensive income, the consolidated and
separate statements of changes in equity, and the
consolidated and separate statements of cash
flows for the year then ended, and a summary
of significant accounting policies and other
explanatory information, as set out on pages 50
to 186.
Directors’ Responsibility for the Financial
Statements
The directors are responsible for the preparation
of financial statements that give a true and fair
view in accordance with International Financial
Reporting Standards and in the manner required
by the Companies and Allied Matters Act of
Nigeria, the Financial Reporting Council of
Nigeria Act, 2011, the Banks and Other Financial
Institutions Act of Nigeria, and relevant Central
Bank of Nigeria circulars, and for such internal
control as the directors determine is necessary
to enable the preparation of financial statements
that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with
International Standards on Auditing. Those
standards require that we comply with ethical
requirements and plan and perform the audit
to obtain reasonable assurance about whether
the financial statements are free from material
misstatement.
An audit involves performing procedures
to obtain evidence about the amounts and
disclosures in the financial statements. The
Independent Auditor’s Report
procedures selected depend on the auditor’s
judgment, including the assessments of the
risks of material misstatement of the financial
statements, whether due to fraud or error. In
making those risk assessments that give a true
and fair view in order to design audit procedures
that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on
the eectiveness of the entity’s internal control.
An audit also includes the appropriateness of
accounting policies used and the reasonableness
of accounting estimates made by the directors,
as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have
obtained is sucient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, these financial statements give
a true and fair view of the financial position
of FCMB Group Plc (“the Company”) and its
subsidiaries (together “the Group”) as at 31
December 2015, and of the Group and Company’s
financial performance and cash flows for the year
then ended in accordance with International
Financial Reporting Standards and in the manner
required by the Companies and Allied Matters
Act of Nigeria, the Financial Reporting Council
of Nigeria, 2011, the Banks and Other Financial
Institutions Act of Nigeria, and relevant Central
Bank of Nigeria circulars.
Report on Other Legal and Regulatory
Requirements
Compliance with the requirements of Schedule
6 of the Companies and Allied Matters Act of
Nigeria
In our opinion, proper books of account have
been kept by the Group, so far as appears from
our examination of those books and the Group’s
statement of financial position and statement of
profit or loss and other comprehensive income
are in agreement with the books of account and
returns.
FCMB Group Plc Annual Report and Accounts 201548
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Compliance with Section 27 (2) of the Banks and
Other Financial Institutions Act of Nigeria and
Central Bank of Nigeria circular BSD/1/2004
i. The Company did not pay any penalty in
respect to contraventions of the Banks and
Other Financial Institutions Act during the year
ended 31 December 2015. However, the Group
paid penalties in respect of the contraventions
of the Banks and Other Financial Institutions
Act during the year ended 31 December 2015.
Details of these contraventions and penalties
paid are as disclosed in note 45 to the financial
statements.
ii. Related party transactions and balances are
disclosed in note 43 of the financial statements
in compliance with the Central Bank of Nigeria
circular BSD/1/2004.
Signed:
Adetola P Adeyemi, FCA
FRC/2012/ICAN/00000000620
For: KPMG Professional Services
Chartered Accountants
17 March 2016
Lagos, Nigeria
FCMB Group Plc Annual Report and Accounts 2015 49
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Branches and Account
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
Gross earnings 152,507,947 148,637,409 4,200,904 6,672,890
Interest income 7 123,583,565 117,984,048 536,426 438,029
Interest expense 8 (59,646,733) (45,350,521) - -
Net interest income 63,936,832 72,633,527 536,426 438,029
Fee and commission income 10 18,998,969 16,906,087 - -
Fee and commission expense 10 (3,164,615) (2,468,185) - -
Net fee and commission income 15,834,354 14,437,902 - -
Net trading income 11 940,285 765,819 - -
Net income from other financial instruments
at fair value through profit or loss 12 149,846 131,428 - -
Other income 13 8,835,282 12,850,027 3,664,478 6,234,861
9,925,413 13,747,274 3,664,478 6,234,861
Net impairment loss on financial assets 9 (15,033,459) (10,639,877) (689,742) -
Personnel expenses 14 (25,487,681) (27,803,903) (238,360) (306,667)
Depreciation and amortisation expenses 15 (4,363,016) (3,590,762) (23,260) (20,225)
General and administrative expenses 16 (24,845,639) (23,608,396) (401,085) (388,760)
Other expenses 17 (12,282,705) (11,300,982) (300,171) (506,361)
Results from operating activities 7,684,099 23,874,783 2,548,286 5,450,877
Share of post tax result of associate 28 84,565 68,110 - -
Profit before minimum tax and income tax 7,768,664 23,942,893 2,548,286 5,450,877
Minimum tax 19 (900,532) - - -
Income tax expense 19 (2,107,466) (1,809,636) (25,231) (53,969)
Profit for the year 4,760,666 22,133,257 2,523,055 5,396,908
Other comprehensive income
Items that will never be reclassified to profit
or loss
Remeasurements of defined benefit liability
- (272,017) - -
Related tax - 261,400 - -
- (10,617) - -
Items that are or may be reclassified to profit
or loss
Foreign currency translation differences for
foreign operations
498,494 1,065,152 - -
Net change in fair value of available-for-sale
financial assets 1,717,374 (600,963) - -
2,215,868 464,189 - -
Consolidated and Separate Statements of
Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2015
FCMB Group Plc Annual Report and Accounts 201550
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Branches and Account
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
Other comprehensive income for the year,
net of tax 2,215,868 453,572 - -
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR 6,976,534 22,586,829 2,523,055 5,396,908
Profit attributable to:
Equity holders of the Company
4,760,666 22,133,257 2,523,055 5,396,908
Non-controlling interests - - - -
4,760,666 22,133,257 2,523,055 5,396,908
Total comprehensive income attributable to:
Equity holders of the Company
6,976,534 22,586,829 2,523,055 5,396,908
Non-controlling interests - - - -
6,976,534 22,586,829 2,523,055 5,396,908
Basic and diluted earnings per share (Naira) 18 0.24 1.12 0.13 0.27
The Notes are an integral part of these consolidated financial statements.
FCMB Group Plc Annual Report and Accounts 2015 51
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
ASSETS
Cash and cash equivalents
20 180,921,698 126,293,809 7,231,196 4,056,165
Restricted reserve deposits 21 125,552,318 146,105,573 - -
Non-pledged trading assets 22 1,994,350 741,917 - -
Derivative assets held for risk management 23 1,479,760 4,503,005 - -
Loans and advances to customers 24 592,957,417 617,979,790 - -
Assets pledged as collateral 26 51,777,589 53,812,420 - -
Investment securities 25 135,310,147 148,286,830 2,013,621 2,828,220
Investment in subsidiaries 27 - - 118,246,361 118,756,103
Investment in associates 28 731,964 647,399 418,577 418,577
Property and equipment 29 29,970,738 28,391,807 41,263 56,337
Intangible assets 30 8,968,539 8,348,310 1,845 2,808
Deferred tax assets 31 8,166,241 8,166,241 - -
Other assets 32 21,703,415 26,087,683 1,425,398 5,452,080
Total assets 1,159,534,176 1,169,364,784 129,378,261 131,570,290
LIABILITIES
Derivative liabilities held for risk management
23 1,317,271 4,194,185 - -
Deposits from banks 33 5,461,038 4,796,752 - -
Deposits from customers 34 700,216,706 733,796,796 - -
Borrowings 35 113,700,194 99,540,346 - -
On-lending facilities 36 33,846,116 14,913,521 - -
Debt securities issued 37 49,309,394 26,174,186 - -
Retirement benefit obligations 38 50,544 115,056 - -
Current income tax liabilities 19(v) 3,497,954 4,363,544 25,231 114,246
Deferred tax liabilities 31 68,438 41,487 - -
Other liabilities 39 89,675,234 121,063,480 1,003,037 678,428
Total liabilities 997,142,889 1,008,999,353 1,028,268 792,674
Consolidated and Separate
Statements of Financial Position
as at 31 December 2015
FCMB Group Plc Annual Report and Accounts 201552
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Other National
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Branches and Account
Opening Information
Dr Jonathan A D Long
Chairman
FRC/2013/IODN/00000001433
Peter Obaseki
Managing Director
FRC/2014/CIBN/00000006877
Patrick Iyamabo
Chief Financial Ocer
FRC/2013/ICAN/00000003316
The financial statements and the accompanying Notes and significant accounting policies
were approved by the Board of Directors on 11 March 2016 and signed on its behalf by:
GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
EQUITY
Share capital
40(b) 9,901,355 9,901,355 9,901,355 9,901,355
Share premium 41 115,392,414 115,392,414 115,392,414 115,392,414
Retained earnings 41 17,181,437 26,238,677 3,056,224 5,483,847
Other reserves 41(b) 19,916,081 8,832,985 - -
162,391,287 160,365,431 128,349,993 130,777,616
Total liabilities and equity 1,159,534,176 1,169,364,784 129,378,261 131,570,290
FCMB Group Plc Annual Report and Accounts 2015 53
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Shareholder
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Other National
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Branches and Account
Opening Information
GROUP
Share
capital
N
’000
Share
premium
N’000
Retained
earnings
N’000
Statutory
reserve
N’000
SSI
reserve
N’000
Actuarial
reserve
N’000
Translation
reserve
N’000
Available-
for-sale
reserve
N’000
Treasury
shares
N’000
Regulatory
risk reserve
N’000
Total
equity
N’000
Balance at
1 January 2014 9,901,355 115,392,414 13,109,779 2,284,984 - 10,617 12,509 272,991 (8,625) 2,730,705 143,706,729
Profit - - 19,065,650 3,067,607 - - - - - 22,133,257
Other
comprehensive
income, net of tax - - - - - (10,617) 1,065,152 (600,963) - - 453,573
Total
comprehensive
income for the
year - - 19,065,650 3,067,607 - (10,617) 1,065,152 (600,963) - - 22,586,829
Transactions with
owners recorded
directly in equity
Elimination of
treasury shares - - - - - - - - 8,625 - 8,625
Dividend paid - - (5,940,813) - - - - - - - (5,940,813)
Recognised
reserve due to
consolidated
subsidiary - - 4,061 - - - - - - - 4,061
Total
contributions by
and distributions
to equity holders - - (5,936,752) - - - - - 8,625 - (5,928,127)
Balance at
31 December 2014 9,901,355 115,392,414 26,238,677 5,352,591 - - 1,077,661 (327,972) - 2,730,705 160,365,431
Consolidated and Separate
Statements of Changes in Equity
FCMB Group Plc Annual Report and Accounts 201554
Introduction Operating
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Financial
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Shareholder
Information
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Branches and Account
Opening Information
GROUP
Share
capital
N
’000
Share
premium
N’000
Retained
earnings
N’000
Statutory
reserve
N’000
SSI
reserve
N’000
Actuarial
reserve
N’000
Translation
reserve
N’000
Available-
for-sale
reserve
N’000
Treasury
shares
N’000
Regulatory
risk reserve
N’000
Total
equity
N’000
Profit for the year - - 4,098,674 661,992 - - - - - 4,760,666
Other
comprehensive
income, net of tax - - - - - - 498,494 1,717,374 - - 2,215,868
Total
comprehensive
income for the
year - - 4,098,674 661,992 - - 498,494 1,717,374 - - 6,976,534
Contributions by
and distributions
to equity holders
Transfer from
regulatory risk
reserve - - (8,205,236) - - - - - - 8,205,236 -
Dividend paid - - (4,950,678) - - - - - - - (4,950,678)
Total contributions
by and
distributions to
equity holders - - (13,155,914) - - - - - - 8,205,236 (4,950,678)
Balance at
31 December 2015 9,901,355 115,392,414 17,181,437 6,014,583 - - 1,576,155 1,389,402 - 10,935,941 162,391,287
FCMB Group Plc Annual Report and Accounts 2015 55
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Branches and Account
Opening Information
COMPANY
Share
capital
N
’000
Share
premium
N’000
Retained
earnings
N’000
Statutory
reserve
N’000
SSI
reserve
N’000
Actuarial
reserve
N’000
Translation
reserve
N’000
Available-
for-sale
reserve
N’000
Treasury
shares
N’000
Regulatory
risk reserve
N’000
Total
equity
N’000
Balance at
1 January 2014 9,901,355 115,392,414 6,027,752 - - - - - - - 131,321,521
Profit for the year - - 5,396,908 - - - - - - - 5,396,908
Other
comprehensive
income, net of tax - - - - - - - - - - -
Total
comprehensive
income for the
year - - 5,396,908 - - - - - - - 5,396,908
Transactions with
owners recorded
directly in equity
Transfer to
regulatory risk
reserve - - - - - - - - - - -
Dividend paid - - (5,940,813) - - - - - - - (5,940,813)
Total
contributions by
and distributions
to equity holders - - (5,940,813) - - - - - - - (5,940,813)
Balance at
31 December 2014 9,901,355 115,392,414 5,483,847 - - - - - - - 130,777,616
Consolidated and Separate
Statements of Changes in Equity
continued
FCMB Group Plc Annual Report and Accounts 201556
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Opening Information
COMPANY
Share
capital
N
’000
Share
premium
N’000
Retained
earnings
N’000
Statutory
reserve
N’000
SSI
reserve
N’000
Actuarial
reserve
N’000
Translation
reserve
N’000
Available-
for-sale
reserve
N’000
Treasury
shares
N’000
Regulatory
risk reserve
N’000
Total
equity
N’000
Profit for the year - - 2,523,055 - - - - - - - 2,523,055
Other
comprehensive
income, net of tax - - - - - - - - - - -
Total
comprehensive
income for the
year - - 2,523,055 - - - - - - - 2,523,055
Contributions by
and distributions
to equity holders
Transfer from
regulatory risk
reserve - - - - - - - - - - -
Dividend paid - - (4,950,678) - - - - - - - (4,950,678)
Total
contributions by
and distributions
to equity holders - - (4,950,678) - - - - - - - (4,950,678)
Balance at
31 December 2015 9,901,355 115,392,414 3,056,224 - - - - - - - 128,349,993
FCMB Group Plc Annual Report and Accounts 2015 57
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
Cash flows from operating activities
Profit for the year
4,760,666 22,133,257 2,523,055 5,396,908
Adjustments for:
Net impairment loss on financial assets
9 15,033,459 10,639,877 689,742 -
Fair value gain on financial assets held for
trading 48(i) (3,143) (889) - -
Net income from other financial instruments at
fair value through profit or loss 12 (149,846) (131,428) - -
Depreciation and amortisation 15 4,363,016 3,590,762 23,260 20,225
Gain on transfer of subsidiary 13 - (40,000) - (40,000)
Gain on disposal of property and equipment 13 (231,328) (332,350) (108) (165)
Gain on disposal of investment securities 13 (2,584,955) - (1,915,875) -
Share of profit of associates 28 (84,565) (68,110) - -
Foreign exchange gains 13 (5,431,496) (9,769,431) (201,710) (320,163)
Net interest income 48(ix) (63,936,832) (72,633,527) (536,426) (438,029)
Dividend income 13 (532,552) - (218,510) (70,102)
Tax expense 19 3,007,998 1,809,636 25,231 53,969
(45,789,578) (44,802,203) 388,659 4,602,642
Changes in operating assets and liabilities
Net (increase)/decrease restricted reserve
deposits
48(x) 20,553,255 (72,632,477) - -
Net (increase)/decrease non-pledged trading
assets 48(xii) (1,237,693) 2,179,441 - -
Net (increase)/decrease loans and advances
to customers 48(xiii) 25,022,373 (167,446,825) - -
Net (increase)/decrease in property and
equipment - - - (34,674)
Net (increase)/decrease in other assets 48(xiv) 4,384,268 (1,595,325) 4,026,682 2,227,806
Net (increase)/decrease derivative assets held 48(xi) 3,420,397 (2,805,399) - -
Net increase/(decrease) in deposits from
banks 48(xv) 664,286 4,796,752 - -
Net increase/(decrease) in deposits from
customers 48(xvi) (33,580,090) 18,582,604 - -
Net increase in on-lending facilities 48(xvii) 18,359,414 14,913,521 - -
Net increase/(decrease) in derivative liabilities
held 48(xviii) (3,278,455) 26,174,186 - -
Net increase/(decrease) in other liabilities and
others 48(vii) (33,094,394) 36,787,786 309,057 578,037
(44,576,217) (185,847,939) 4,724,398 7,373,811
Consolidated and Separate
Statements of Cash Flows
for the year ended 31 December 2015
FCMB Group Plc Annual Report and Accounts 201558
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
Interest received 48(ii) 128,810,492 124,724,717 484,314 436,694
Interest paid 48(iii) (74,313,914) (50,147,105) - -
Dividends received 13 532,552 467,415 218,510 70,102
VAT paid 48(iv) (770,249) (1,474,442) - -
Income taxes paid 19(v) (3,883,168) (3,854,856) (114,246) -
Net cash generated/(used in) from
operating activities 5,799,496 (116,132,210) 5,312,976 7,880,607
Cash flows from investing activities
Investment in subsidiaries
27 - - (180,000) -
Purchase of interests in associates 28 - (10,777) - (10,777)
Purchase of property and equipment and
intangible assets 29,30 (6,992,056) (8,242,744) (7,223) (31,125)
Proceeds from sale of property and
equipment and intangible assets 48(viii) 89,004 1,292,314 108 165
Acquisition of investment securities 48(v) (85,257,087) (150,405,709) (440,698) -
Proceeds from sale and redemption of
investment securities 48(v) 106,775,458 139,576,195 3,434,934 -
Net cash generated/(used in) from investing
activities 14,615,319 (17,790,721) 2,807,121 (41,737)
Cash flows from financing activities
Dividends paid
(4,950,678) (5,940,813) (4,950,678) (5,940,813)
Proceeds from long-term borrowing 35(b) 28,781,222 45,066,628 - -
Repayment of long-term borrowing 35(b) (14,742,847) (13,313,964) - -
Proceeds from debt securities issued 37(b) 23,135,208 26,000,000 - -
Net cash generated from financing activities 32,222,905 51,811,851 (4,950,678) (5,940,813)
Net increase/(decrease) in cash and cash
equivalents 52,637,721 (82,111,080) 3,169,419 1,898,057
Cash and cash equivalents at start of year 20 126,293,809 199,700,305 4,056,165 2,150,389
Effect of exchange rate fluctuations on cash
and cash equivalents held 48(vi) 1,990,168 8,704,584 5,612 7,719
Cash and cash equivalents at end of year 20 180,921,698 126,293,809 7,231,196 4,056,165
FCMB Group Plc Annual Report and Accounts 2015 59
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1 Reporting Entity
FCMB Group Plc was incorporated in Nigeria as a
financial holding company on 20 November 2012,
under the Companies and Allied Matters Act, in
response to the CBN’s Regulation on the Scope
of Banking Activities and Ancillary Matters
(Regulation 3).
The principal activity of FCMB Group Plc is to
carry on business as a financial holding company,
investing in and holding controlling shares in, as
well as managing equity investments in Central
Bank of Nigeria approved financial entities. The
Company has four direct subsidiaries; First City
Monument Bank Limited (100%), FCMB Capital
Markets Limited (100%), CSL Stockbrokers
Limited (100%) and CSL Trustees Limited
(100%).
FCMB Group Plc is a company domiciled in
Nigeria. The address of the Company’s registered
oce is 44 Marina Street, Lagos Island, Lagos.
These audited reports for the year ended 31
December 2015 comprise the Company and its
subsidiaries (together referred to as the
‘Group’).
The consolidated financial statements were
authorised for issue by the Board of Directors on
11 March 2016.
2 Significant Accounting Policies
The Group has consistently applied the following
accounting policies to all periods presented in
these consolidated financial statements, unless
otherwise stated.
The principal accounting policies adopted in the
preparation of these financial statements are set
out below.
(a) Basis of Preparation
(i) Statement of compliance
The consolidated financial statements have been
prepared in accordance with International
Financial Reporting Standards (IFRSs) as issued
by the International Accounting Standard Board
(IASB) in the manner required by the Companies
and Allied Matters Act, Cap C20, Laws of the
Federation of Nigeria 2004, the Financial
Reporting Council of Nigeria Act, 2011, the Banks
and Other Financial Institutions Act of Nigeria,
and relevant Central Bank of Nigeria circulars.
The IFRS accounting policies have been
consistently applied to all periods presented.
(ii) Basis of measurement
These consolidated financial statements have
been prepared on the historical cost basis except
for the following material items in the statement
of financial position:
Non-derivative financial instruments, at fair
value through profit or loss are measured at
fair value.
Available-for-sale financial assets are
measured at fair value through other
comprehensive income (OCI). However, when
the fair value of the available-for-sale financial
assets cannot be measured reliably, they are
measured at cost less impairment.
Financial assets and liabilities held for trading
are measured at fair value.
Derivative financial instruments are measured
at fair value.
(iii) Functional and presentation currency
These consolidated financial statements are
presented in Naira, which is the Company’s
functional currency. Except where indicated,
financial information presented in Naira has been
rounded to the nearest thousand.
(iv) Use of estimates and judgements
The preparation of the consolidated financial
statements in conformity with IFRS requires
management to make judgements, estimates
and assumptions that aect the application of
policies and reported amounts of assets and
liabilities, income and expenses. The estimates
and associated assumptions are based on
historical experience and various other factors
that are believed to be reasonable under the
circumstances, the results of which form the
basis of making the judgements about carrying
values of assets and liabilities that are not readily
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015
FCMB Group Plc Annual Report and Accounts 201560
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apparent from other sources. Actual results may
dier from these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimate is revised and in any
future periods aected.
Information about significant areas of estimation
uncertainties and critical judgements in applying
accounting policies that have the most significant
eect on the amounts recognised in the
consolidated financial statements are described
in Note 4.
(b) Basis of Consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group.
The Group ‘controls’ an entity if it is exposed to,
or has the rights to, variable returns from its
involvement with the entity and has the ability to
aect those returns through its power over the
investee. The Group reassesses whether it has
control if there are changes to one or more of
elements of control. This includes circumstances
in which protective rights held become
substantive and lead to the Group having power
over an investee.
The financial statements of subsidiaries are
included in the consolidated financial statements
from the date that control commences until the
date that control ceases. Investment in
subsidiaries are measured at cost less impairment
in the Company’s separate financial statements.
(ii) Special purpose entities
Special purpose entities (SPEs) are entities that
are created to accomplish a narrow and well-
defined objective such as the execution of a
specific borrowing or lending transaction. An
SPE is consolidated if, based on an evaluation of
the substance of its relationship with the Group
and the SPE’s risks and rewards, the Group
concludes that it controls the SPE.
The Group established FCMB Financing SPV Plc,
as a special purpose entity to raise capital
from the Nigerian Capital Markets or other
international markets either by way of a stand-
alone issue or by the establishment of a
programme. Accordingly, the financial
statements of FCMB Financing SPV Plc have
been consolidated.
(iii) Loss of control
On the loss of control, the Group derecognises
the assets and liabilities of the subsidiary, any
non-controlling interests and the other
components of equity related to the subsidiary.
Any surplus or deficit arising on the loss of
control is recognised in profit or loss. If the
Group retains any interests in the previous
subsidiary, then such interests are measured at
fair value at the date that control is lost.
Subsequently that retained interests is
accounted for as an equity-accounted investee
or in accordance with the Group’s accounting
for financial instruments.
(iv) Investments in associates (equity-
accounted investees)
Associates are those entities in which the Group
has significant influence, but not control, over the
financial and operating policies. Significant
influence is presumed to exist when the Group
holds between 20 and 50 percent of the voting
power of another entity.
Investments in associates are accounted for using
the equity method (equity-accounted investees)
and are recognised initially at cost. The cost of
the investment includes transaction costs.
The consolidated financial statements include the
Group’s share of the profit or loss and other
comprehensive income of equity-accounted
investments, after adjustments to align the
accounting policies with those of the Group, from
the date that significant influence commences
until the date that significant influence ceases.
When the Group’s share of losses exceeds its
interest in an equity-accounted investee, the
carrying amount of that interest, including any
long-term investments, is reduced to zero, and
the recognition of further losses is discontinued
except to the extent that the Group has an
obligation or has made payments on behalf of
the investee.
FCMB Group Plc Annual Report and Accounts 2015 61
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(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any
unrealised income and expenses arising from
intra-group transactions, are eliminated in
preparing the consolidated financial statements.
Unrealised gains arising from transactions with
equity-accounted investees are eliminated
against the investment to the extent of the
Group’s interest in the investee. Unrealised losses
are eliminated in the same way as unrealised
gains, but only to the extent that there is no
evidence of impairment.
(c) Foreign Currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated
into the respective functional currencies of the
operations at the spot exchange rates at the
dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at
each reporting date are translated into the
functional currency at the spot exchange rates as
at that date. The foreign currency gain or loss is
the dierence between amortised cost in the
functional currency at the beginning of the year,
adjusted for eective interest and payments
during the year, and the amortised cost in foreign
currency translated at the spot exchange rate at
the end of the year.
Non-monetary assets and liabilities denominated
in foreign currencies that are measured at fair
value are retranslated into the functional currency
at the spot exchange rate at the date that the fair
value was determined. Non-monetary assets and
liabilities that are measured in terms of historical
cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
Foreign currency dierences arising on
translation are recognised in profit or loss, except
for dierences arising on the translation of
available-for-sale equity instruments, which are
recognised in other comprehensive income.
(ii) Foreign operations
The assets and liabilities of foreign operations,
including goodwill and fair value adjustments
arising on acquisition, are translated to Naira at
spot exchange rates at the reporting date. The
income and expenses of foreign operations are
translated to Naira at spot exchange rates at the
dates of the transactions.
Foreign currency dierences are recognised in
other comprehensive income, and presented in
the foreign currency translation reserve
(translation reserve) in equity. However, if the
foreign operation is a partly owned subsidiary,
then the relevant proportion of the transaction
dierence is allocated to non-controlling
interests. When a foreign operation is disposed
of such that control is lost, the cumulative
amount in the translation reserve related to that
foreign operation is reclassified to profit or loss
as part of the gain or loss on disposal. When the
Group disposes of only part of its interest in a
subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the
cumulative amount is reattributed to non-
controlling interests.
When the settlement of monetary item receivable
from or payable to a foreign operation is neither
planned nor likely in the foreseeable future,
foreign currency gains and losses arising from
such item are considered to form part of a net
investment in the foreign operation and are
recognised in other comprehensive income, and
presented in the translation reserve in equity.
(d) Interest
Interest income and expense are recognised in
profit or loss using the eective interest
method.
The eective interest rate is the rate that exactly
discounts the estimated future cash payments
and receipts through the expected life of the
financial asset or liability (or, where appropriate,
the next repricing date) to the carrying amount
of the financial asset or liability. When calculating
the eective interest rate, the Group estimates
future cash flows considering all contractual
terms of the financial instruments but not future
credit losses.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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The calculation of the eective interest rate
includes contractual fees and points paid or
received, transaction costs, and discounts or
premiums that are an integral part of the eective
interest rate. Transaction costs are incremental
costs that are directly attributable to the
acquisition, issue or disposal of a financial asset
or liability.
Interest income and expense presented in the
statement of comprehensive income include:
Interest on financial assets and liabilities
measured at amortised cost calculated on an
eective interest rate basis.
Interest on available-for-sale investment
securities calculated on an eective interest
rate basis
Interest income and expense on all trading assets
and liabilities are considered to be incidental to
the Group’s trading operations and are presented
together with all other changes in the fair value
of trading assets and liabilities in net trading
income.
(e) Fees and Commission
Fees and commission income and expenses that
are integral to the eective interest rate on a
financial asset or liability are included in the
measurement of the eective interest rate which
is used in the computation of interest income.
Fees, such as processing and management fees
charged for assessing the financial position of
the borrower, evaluating and reviewing
guarantees, collateral and other security,
negotiation of instruments’ terms, preparing and
processing documentation and finalising the
transaction, are an integral part of the eective
interest rate on a financial asset or liability and
are included in the measurement of the eective
interest rate of financial assets or liabilities.
Other fees and commission income, including
loan account servicing fees, investment
management and other fiduciary activity fees,
sales commission, placement fees and
syndication fees, are recognised as the related
services are performed. When a loan commitment
is not expected to result in the draw-down of a
loan, loan commitment fees are recognised on a
straight-line basis over the commitment period.
Other fees and commission expense relates
mainly to transaction and service fees, which are
expensed as the services are received.
(f) Net Trading Income
Net trading income comprises gains less losses
related to trading assets and liabilities, and
includes all realised and unrealised fair value
changes, dividends and foreign exchange
dierences.
(g) Net Income from Other Financial
Instruments at Fair Value Through Profit or Loss
Net income from other financial instruments at
fair value through profit or loss relates to fair
value gains or losses on non-trading derivatives
held for risk management purposes that do not
form part of qualifying hedge relationships and
financial assets and liabilities designated at fair
value through profit or loss. It includes all
realised and unrealised fair value changes,
interest, dividends and foreign exchange
dierences.
(h) Dividend Income
Dividend income is recognised when the right to
receive income is established. Dividends on
trading equities are reflected as a component of
net trading income. Dividend income on long-
term equity investments is recognised as a
component of other operating income.
(i) Lease Payments
(i) Lease payments – Lessee
Payments made under operating leases are
recognised in profit or loss on a straight-line
basis over the term of the lease. Lease incentives
received are recognised as an integral part of the
total lease expense, over the term of the lease.
Minimum lease payments made under finance
leases are apportioned between the finance
expense and the reduction on the outstanding
liability. The finance expense is allocated to each
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period during the lease term so as to produce a
constant periodic rate of interest on the
remaining balance of the liability.
Contingent lease payments are accounted for by
revising the minimum lease payments over the
remaining term of the lease when the lease
adjustment is confirmed.
(ii) Lease assets – Lessee
Assets held by the Group under leases that
transfer to the Group substantially all of the
risks and rewards of ownership are classified as
finance leases. The leased asset is initially
measured at an amount equal to the lower of its
fair value and the present value of the minimum
lease payments. Subsequent to initial
recognition, the asset is accounted for in
accordance with the accounting policy
applicable to that asset.
Assets held under other leases are classified as
operating leases and are not recognised in the
Group’s statement of financial position.
(iii) Lease assets – Lessor
If the Group is the lessor in a lease agreement
that transfers substantially all of the risks and
rewards incidental to ownership of the asset to
the lessee, then the arrangement is classified as a
finance lease and a receivable equal to the net
investment in the lease is recognised and
presented within loans and advances (see (o)).
Finance charges earned are computed using the
eective interest method which reflects a
constant periodic return on the investment in the
finance lease. Initial direct costs paid are
capitalised to the value of the lease amount
receivable and accounted for over the lease term
as an adjustment to the eective rate of return.
(j) Income Tax
Income tax expense comprises current and
deferred tax. Current and deferred tax are
recognised in profit or loss except to the extent
that they relate to items recognised directly in
equity or in other comprehensive income.
(i) Current income tax
Income tax payable is calculated on the basis of
the applicable tax law in the respective jurisdiction
and it consists of Company income tax, Education
tax and NITDA tax. Company income tax is
assessed at 30% statutory rate of total profit
whereas Education tax is computed as 2% of
assessable profit while NITDA tax is a 1% levy on
Profit Before Tax of the Company and Group.
Current income tax is recognised as an expense
for the period and adjustments to past years
except to the extent that current tax related to
items that are charged or credited in other
comprehensive income or directly to equity. In
these circumstances, current tax is charged or
credited to other comprehensive income or to
equity (for example, current tax on available-for-
sale investment).
Where the Group has tax losses that can be
relieved only by carry-forward against taxable
profits of future periods, a deductible temporary
dierence arises. Those losses carried forward are
set o against deferred tax liabilities carried in the
consolidated statement of financial position.
The Group evaluates positions stated in tax
returns, ensuring information disclosed is in
agreement with the underlying tax liability, which
has been adequately provided for in the financial
statement.
(ii) Deferred tax
Deferred tax is recognised in respect of
temporary dierences between the carrying
amounts of assets and liabilities for financial
reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognised
for:
temporary dierences on the initial
recognition of assets or liabilities in a
transaction that is not a business combination
and that aects neither accounting nor
taxable profit or loss;
temporary dierences related to investments
in subsidiaries to the extent that it is probable
that they will not reverse in the foreseeable
future; and
taxable temporary dierences arising on the
initial recognition of goodwill.
The measurement of deferred tax reflects the tax
consequences that would follow the manner in
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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which the Group expects, at the end of the
reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are
expected to be applied to temporary dierences
when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
Deferred tax assets and liabilities are oset if
there is a legally enforceable right to oset
current tax liabilities and assets, and they relate
to taxes levied by the same tax authority on the
same taxable entity or on dierent tax entities,
but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
Additional taxes that arise from the distribution
of dividend by the Company are recognised at
the same time as the liability to pay the related
dividend is recognised. These amounts are
generally recognised in profit or loss because
they generally relate to income arising from
transactions that were originally recognised in
profit or loss.
A deferred tax asset is recognised for unused tax
losses, tax credits and deductible temporary
dierences to the extent that it is probable that
future taxable profits will be available against
which it can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced
to the extent that it is no longer probable that
the related tax benefit will be realised.
Unrecognised deferred tax assets are reassessed
at each reporting date and recognised to the
extent that it has become probable that future
taxable profits will be available against which
they can be used.
(iii) Tax exposures
In determining the amount of current and
deferred tax, the Group takes into account the
impact of uncertain tax position and whether
additional taxes and interest may be due. This
assessment relies on estimates and assumptions
and may involve a series of judgements about
future events. New information may become
available that causes the Company to change its
judgement regarding the adequacy of existing
tax liabilities; such changes to tax liabilities will
impact tax expense in the period that such a
determination is made.
(k) Financial Assets and Financial Liabilities
(i) Recognition
The Group initially recognises loans and
advances, deposits, bonds, treasury bills and
securities on the date that they are originated. All
other financial assets and liabilities (including
assets and liabilities designated at fair value
through profit or loss) are initially recognised on
the trade date at which the Group becomes a
party to the contractual provisions of the
instrument.
All financial assets or financial liabilities are
measured initially at their fair value plus
transaction costs, except in the case of financial
assets and financial liabilities recorded at fair
value through profit or loss. Subsequent
recognition of financial assets and liabilities is at
amortised cost or fair value.
(ii) Classification
Financial assets
The classification of financial instruments
depends on the purpose and management’s
intention for which the financial instruments were
acquired and their characteristics. The Group
classifies its financial assets in one of the
following categories:
loans and receivables;
held to maturity;
available-for-sale; and
at fair value through profit or loss and within
the category as:
– held for trading; or
– designated at fair value through profit
or loss.
See Notes 3(m) (n) and (p).
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Financial liabilities
The Group classifies its financial liabilities, other
than financial guarantees and loan commitments,
as measured at amortised cost or fair value
through profit or loss.
(iii) Derecognition
Financial assets
The Group derecognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire, or when it transfers the
rights to receive the contractual cash flows on
the financial asset in a transaction in which
substantially all of the risks and rewards of
ownership of the financial asset are transferred.
Any interest in transferred financial assets that is
created or retained by the Group is recognised as
a separate asset or liability.
On derecognition of a financial asset, the
dierence between the carrying amount of the
asset (or the carrying amount allocated to the
portion of the asset transferred), and the sum of
(i) the consideration received (including any new
asset obtained less any new liability assumed)
and (ii) any cumulative gain or loss that had been
recognised in other comprehensive income is
recognised in profit or loss.
The Group enters into transactions whereby it
transfers assets recognised on its statement of
financial position, but retains either all or
substantially all of the risks and rewards of the
transferred assets or a portion of them. If all or
substantially all risks and rewards are retained,
then the transferred assets are not derecognised.
Transfers of assets with retention of all or
substantially all risks and rewards include, for
example, securities lending and repurchase
transactions.
In transactions in which the Group neither retains
nor transfers substantially all the risks and
rewards of ownership of a financial asset and it
retains control over the asset, the Group
continues to recognise the asset to the extent of
its continuing involvement, determined by the
extent to which it is exposed to changes in the
value of the transferred asset.
The rights and obligations retained in the transfer
are recognised separately as assets and liabilities
as appropriate. In transfers where control over
the asset is retained, the Group continues to
recognise the asset to the extent of its continuing
involvement, determined by the extent to which
it is exposed to changes in the value of the
transferred asset.
Financial liabilities
The Group derecognises a financial liability when
its contractual obligations are discharged,
cancelled or expire.
(iv) Osetting
Financial assets and liabilities are set o and the
net amount presented in the statement of
financial position when, and only when, the
Group has a legal right to set o the amounts
and it intends either to settle them on a net basis
or to realise the asset and settle the liability
simultaneously.
Income and expenses are presented on a net
basis only when permitted under IFRS, or for
gains and losses arising from the group of similar
transactions such as in the Group’s trading
activity.
(v) Amortised cost measurement
The amortised cost of a financial asset or liability
is the amount at which the financial asset or
liability is measured at initial recognition, minus
principal repayments, plus or minus the
cumulative amortisation using the eective
interest method of any dierence between the
initial amount recognised and the maturity
amount, minus any reduction for impairment.
(vi) Fair value measurement
‘Fair value’ is the price that would be received to
sell an asset or paid to transfer a liability in an
orderly transaction between market participants
at the measurement date in the principal or, in
its absence, the most advantageous market to
which the Group has access at that date. The
fair value of a liability reflects its non-
performance risk.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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When available, the Group measures the fair
value of an instrument using the quoted price in
an active market for that instrument. A market is
regarded as active if transactions for the asset or
liability take place with sucient frequency and
volume to provide pricing information on an
ongoing basis.
If there is no quoted price in an active market,
then the Group uses valuation techniques that
maximise the use of relevant observable inputs
and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of
the factors that market participants would take
into account in pricing a transaction.
The best evidence of the fair value of a financial
instrument at initial recognition is the transaction
price, i.e. the fair value of the consideration given
or received, unless the fair value of that
instrument is evidenced by comparison with
other observable current market transactions in
the same instrument (i.e. without modification or
repackaging) or based on a valuation technique
whose variables include only data observable
from markets. When the transaction price
provides the best evidence of fair value at initial
recognition, the financial instrument is initially
measured at the transaction price and any
dierence between this price and the value
initially obtained from a valuation model is
subsequently recognised in profit or loss on an
appropriate basis over the life of the instrument
but not later than when the valuation is supported
wholly by observable market data or the
instrument is closed out.
If an asset or a liability measured at fair value has
a bid price and an ask price, then the Group
measures assets and long positions at a bid price
and liabilities and short positions at an ask price.
Portfolios of financial assets and financial
liabilities that are exposed to market risk and
credit risk that are managed by the Group on the
basis of the net exposure to either market or
credit risk are measured on the basis of a price
that would be received to sell a net long position
(or paid to transfer a net short position) for a
particular risk exposure. Those portfolio level
adjustments are allocated to the individual assets
and liabilities on the basis of the relative risk
adjustment of each of the individual instruments
in the portfolio.
For more complex instruments, the Group uses
internally developed models, which are usually
based on valuation methods and techniques
generally recognised as standard within the
industry. Valuation models are used primarily to
value derivatives transacted in the over-the-
counter market, unlisted debt securities and
other debt instruments for which markets were
or have become illiquid. Some of the inputs to
these models may not be market observable and
are therefore estimated based on assumptions.
The impact on net profit of financial instrument
valuations reflecting non-market observable
inputs (level 3 valuations) is disclosed in the Note
to the accounts.
In cases when the fair value of unlisted equity
instruments cannot be determined reliably, the
instruments are carried at cost less impairment.
The fair value for loans and advances as well as
liabilities to banks and customers are determined
using a present value model on the basis of
contractually agreed cash flows, taking into
account credit quality, liquidity and costs. The
fair values of contingent liabilities correspond to
their carrying amounts.
The fair value of a demand deposit is not less
than the amount payable on demand, discounted
from the first date on which the amount could be
required to be paid.
The Group recognises transfers between levels of
the fair value hierarchy as of the end of the
reporting period during which the change has
occurred.
(vii) Identification and measurement of
impairment
Assets classified as loan and advances and
held-to-maturity investment securities
At each reporting date the Group assesses
whether there is objective evidence that financial
assets not carried at fair value through profit or
loss are impaired. A financial asset or a group of
financial assets is impaired when objective
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evidence demonstrates that a loss event has
occurred after the initial recognition of the
assets(s), and that the loss event has an impact
on the future cash flows of the asset(s) that can
be estimated reliably.
Objective evidence that financial assets are
impaired can include:
(a) a breach of contract, such as a default or
delinquency in interest or principal payments;
(b) significant financial diculty of the issuer or
obligor;
(c) the lender, for economic or legal reasons
relating to the borrower’s financial diculty,
granting to the borrower a concession that the
lender would not otherwise consider;
(d) it becomes probable that the borrower will
enter bankruptcy or other financial
reorganisation;
(e) the disappearance of an active market for that
financial asset because of financial diculties; or
(f) observable data indicating that there is a
measurable decrease in the estimated future
cash flows from a portfolio of financial assets
since the initial recognition of those assets,
although the decrease cannot yet be identified
with the individual financial assets in the portfolio,
including:
(i) adverse changes in the payment status of
borrowers in the portfolio; and
(ii) national economic conditions that
correlate with defaults on the assets in the
portfolio.
The Group first assesses whether objective
evidence of impairment exists individually for
financial assets that are individually significant,
and individually or collectively for financial assets
that are not individually significant. If the Group
determines that no objective evidence of
impairment exists for an individually assessed
financial asset, whether significant or not, it
includes the asset in a group of financial assets
with similar credit risk characteristics and
collectively assesses them for impairment. Assets
that are individually assessed for impairment and
for which an impairment loss is or continues to
be recognised are not included in a collective
assessment of impairment.
The amount of the loss is measured as the
dierence between the asset’s carrying amount
and the present value of estimated future cash
flows (excluding future credit losses that have
not been incurred) discounted at the financial
asset’s original eective interest rate. The
carrying amount of the asset is reduced through
the use of an allowance account and the amount
of the loss is recognised in the consolidated
income statement. If a loan or held to maturity
investment has a variable interest rate, the
discount rate for measuring any impairment loss
is the current eective interest rate determined
under the contract. As a practical expedient, the
Group may measure impairment on the basis of
an instrument’s fair value using an observable
market price.
The calculation of the present value of the
estimated future cash flows of a collateralised
financial asset reflects the cash flows that may
result from foreclosure less costs for obtaining
and selling the collateral, whether or not
foreclosure is probable.
For the purposes of a collective evaluation of
impairment, financial assets are grouped on the
basis of similar credit risk characteristics (that is,
on the basis of the Group’s grading process that
considers asset type, industry, geographical
location, collateral type, past-due status and
other relevant factors). Those characteristics are
relevant to the estimation of future cash flows for
groups of such assets by being indicative of the
debtors’ ability to pay all amounts due according
to the contractual terms of the assets being
evaluated.
Future cash flows in a group of financial assets
that are collectively evaluated for impairment are
estimated on the basis of the contractual cash
flows of the assets in the group and historical
loss experience for assets with credit risk
characteristics similar to those in the group.
Historical loss experience is adjusted on the basis
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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of current observable data to reflect the eects
of current conditions that did not aect the
period on which the historical loss experience is
based and to remove the eects of conditions in
the historical period that do not currently exist.
Estimates of changes in future cash flows for
groups of assets should reflect and be
directionally consistent with changes in related
observable data from period to period (for
example, changes in unemployment rates,
property prices, payment status, or other factors
indicative of changes in the probability of losses
in the Group and their magnitude). The
methodology and assumptions used for
estimating future cash flows are reviewed
regularly by the Group to reduce any dierences
between loss estimates and actual loss
experience.
When a loan is uncollectible, it is written o
against the related allowance for loan impairment.
Such loans are written o after all the necessary
procedures have been completed and the
amount of the loss has been determined.
Impairment charges relating to loans and
advances to banks and customers are classified
in loan impairment charges whilst impairment
charges relating to investment securities (held-
to-maturity categories) are classified in ‘Net
gains/(losses) from financial instruments at fair
value’.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can
be related objectively to an event occurring after
the impairment was recognised (such as an
improvement in the debtor’s credit rating), the
previously recognised impairment loss is reversed
by adjusting the allowance account. The amount
of the reversal is recognised in the profit or loss.
Assets classified as available for sale
The Group assesses at each date of the
consolidated statement of financial position
whether there is objective evidence that a
financial asset or a group of financial assets is
impaired. In the case of equity investments
classified as available for sale, a significant or
prolonged decline in the fair value of the security
below its cost is objective evidence of impairment
resulting in the recognition of an impairment loss.
If any such evidence exists for available-for-sale
financial assets, the cumulative loss – measured
as the dierence between the acquisition cost
and the current fair value, less any impairment
loss on that financial asset previously recognised
in profit or loss – is removed from equity and
recognised in the consolidated income statement.
Impairment losses recognised in the consolidated
income statement on equity instruments are not
reversed through the consolidated income
statement. If, in a subsequent period, the fair
value of a debt instrument classified as available
for sale increases and the increase can be
objectively related to an event occurring after
the impairment loss was recognised in profit or
loss, the impairment loss is reversed through the
consolidated income statement. Assets classified
as available for sale are assessed for impairment
in the same manner as assets carried at amortised
cost.
(l) Cash and Cash Equivalents and Restricted
Deposits
Cash and cash equivalents include bank notes
and coins on hand, unrestricted balances held
with central banks and highly liquid financial
assets with original maturities of less than three
months, which are subject to insignificant risk of
changes in their fair value, and are used by the
Group in the management of its short-term
commitments. Cash and cash equivalents are
carried at amortised cost in the statement of
financial position. Restricted reserve deposits are
restricted mandatory reserve deposits held with
the Central Bank of Nigeria, which are not
available for use in the banking subsidiary and
Group’s day-to-day operations. They are
calculated as a fixed percentage of the banking
subsidiary’s deposit liabilities.
(m) Financial Assets and Liabilities at Fair Value
Through Profit or Loss
This category comprises two sub-categories:
financial assets classified as held for trading, and
financial assets designated by the Group as at
fair value through profit or loss upon initial
recognition.
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Financial liabilities for which the fair value option
is applied are recognised in the consolidated
statement of financial position as ‘Financial
liabilities designated at fair value through profit
or loss’. Fair value changes relating to financial
liabilities designated at fair value through profit
or loss are recognised in ‘Net gains on financial
instruments designated at fair value through
profit or loss’.
(i) Trading assets and liabilities
Trading assets and liabilities are those assets and
liabilities that the Group acquires or incurs
principally for the purpose of selling or
repurchasing in the near term, or holds as part of
a portfolio that is managed together for short-
term profit.
Trading assets and liabilities are initially
recognised and subsequently measured at fair
value in the statement of financial position with
transaction costs recognised in profit or loss. All
changes in fair value are recognised as part of
net trading income in profit or loss.
(ii) Designation at fair value through profit
or loss
The Group designates certain financial assets
upon initial recognition as at fair value through
profit or loss (fair value option). This designation
cannot subsequently be changed. According to
IAS 39, the fair value option is only applied when
the following conditions are met:
the application of the fair value option
reduces or eliminates an accounting mismatch
that would otherwise arise; or
the financial assets are part of a portfolio of
financial instruments which is risk managed
and reported to management on a fair
value basis.
Financial assets for which the fair value option is
applied are recognised in the consolidated
statement of financial position as ‘Financial
assets designated at fair value’. Fair value
changes relating to financial assets designated at
fair value through profit or loss are recognised in
‘Net gains on financial instruments designated at
fair value through profit or loss’.
(iii) Reclassification of financial assets and
liabilities
The Group may choose to reclassify a non-
derivative financial asset held for trading out of
the held-for-trading category if the financial
asset is no longer held for the purpose of selling
it in the near-term. Financial assets other than
loans and receivables are permitted to be
reclassified out of the held-for-trading category
only in rare circumstances arising from a single
event that is unusual and highly unlikely to recur
in the near-term. In addition, the Group may
choose to reclassify financial assets that would
meet the definition of loans and receivables out
of the held-for-trading or available-for-sale
categories if the Group has the intention and
ability to hold these financial assets for the
foreseeable future or until maturity at the date of
reclassification.
Reclassifications are made at fair value as of the
reclassification date. Fair value becomes the new
cost or amortised cost as applicable, and no
reversals of fair value gains or losses recorded
before reclassification date are subsequently
made. Eective interest rates for financial assets
reclassified to loans and receivables and held-to-
maturity categories are determined at the
reclassification date. Further increases in
estimates of cash flows adjust eective interest
rates prospectively.
(n) Assets Pledged as Collateral
Financial assets transferred to external parties
that do not qualify for derecognition (see k(iii))
are reclassified in the statement of financial
position from investment securities to assets
pledged as collateral, if the transferee has
received the right to sell or re-pledge them in the
event of default from agreed terms. Initial
measurement of assets pledged as collateral is at
fair value, whilst subsequent measurement is
based on the classification of the financial asset.
Assets pledged as collateral are designated as
available for sale or held to maturity. Where the
assets pledged as collateral are designated as
available for sale, subsequent measurement is at
fair value through equity. Assets pledged as
collateral designated as held to maturity are
measured at amortised cost.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(o) Loans and Advances
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active market
and that the Group does not intend to sell
immediately or in the near term.
Loan and receivables to customers and others
include:
those classified as loan and receivables;
finance lease receivables; and
other receivables (other assets).
Loan and receivables are initially measured at fair
value plus incremental direct transaction costs,
and subsequently measured at their amortised
cost using the eective interest method.
When the Group is the lessor in a lease agreement
that transfers substantially all of the risks and
rewards incidental to ownership of the asset to
the lessee, the arrangement is classified as a
finance lease and a receivable equal to the net
investment in the lease is recognised and
presented within loans and advances.
When the Group purchases a financial asset and
simultaneously enters into an agreement to resell
the asset (or a substantially similar asset) at a
fixed price on a future date (‘reverse repo or
borrowing’), the arrangement is accounted for as
a loan or advance, and the underlying asset is not
recognised in the Group’s financial statements.
Loans and advances are initially measured at fair
value plus incremental direct transaction costs,
and subsequently measured at their amortised
cost using the eective interest method.
(p) Investment Securities
Investment securities are initially measured at fair
value plus, in case of investment securities not at
fair value through profit or loss, incremental
direct transaction costs and subsequently
accounted for depending on their classification
as either held for trading, held to maturity, fair
value through profit or loss or available for sale.
(i) Held-to-maturity
Held-to-maturity investments are non-derivative
assets with fixed or determinable payments and
fixed maturity that the Group has the positive
intent and ability to hold to maturity, and which
are not designated at fair value through profit or
loss or available for sale.
Held-to-maturity investments are carried at
amortised cost using the eective interest
method. A sale or reclassification of a significant
amount of held-to-maturity investments would
result in the reclassification of all held-to-
maturity investments as available-for-sale, and
prevent the Group from classifying investment
securities as held-to-maturity for the current
and the following two financial years. However,
sales and reclassifications in any of the
following circumstances would not trigger a
reclassification to available-for-sale:
sales or reclassifications that are so close to
maturity that changes in the market rate of
interest would not have a significant eect on
the financial asset’s fair value;
sales or reclassifications after the Group has
collected substantially all the asset’s original
principal; and
sales or reclassifications attributable to non-
recurring isolated events beyond the Group’s
control that could not have been reasonably
anticipated.
(ii) Fair value through profit or loss
The Group designates some investment securities
at fair value with fair value changes recognised
immediately in profit or loss.
(iii) Available-for-sale
Available-for-sale investments are non-derivative
investments that are not designated as another
category of financial assets. Unquoted equity
securities whose fair value cannot be reliably
measured are carried at cost. All other available-
for-sale investments are carried at fair value.
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Interest income is recognised in profit or loss
using the eective interest method. Dividend
income is recognised in profit or loss when the
Group becomes entitled to the dividend. Foreign
exchange gains or losses on available-for-sale
debt security investments are recognised in
profit or loss.
Other fair value changes are recognised directly
in other comprehensive income until the
investment is sold or impaired whereupon the
cumulative gains and losses previously
recognised in other comprehensive income are
recognised to profit or loss as a reclassification
adjustment.
A non-derivative financial asset may be
reclassified from the available-for-sale category
to the loans and receivable category if it
otherwise would have met the definition of loans
and receivables and if the Group has the intention
and ability to hold that financial asset for the
foreseeable future or until maturity.
(q) Derivatives Held for Risk Management
Purposes
Derivatives held for risk management purposes
include all derivative assets and liabilities that are
not classified as trading assets or liabilities.
Derivatives are recognised initially at fair value in
the statement of financial position, while any
attributable costs are recognised in profit or loss
when incurred. Subsequent to initial recognition,
derivatives are measured at fair value with fair
values changes recognised in profit or loss.
(r) Property and Equipment
(i) Recognition and measurement
Items of property and equipment are measured
at cost less accumulated depreciation and
impairment losses. Cost includes expenditures
that are directly attributable to the acquisition of
the asset.
When parts of an item of property or equipment
have dierent useful lives, they are accounted for
as separate items (major components) of
property and equipment.
The gain or loss on disposal of an item of
property and equipment is determined by
comparing the proceeds from disposal with the
carrying amount of the item of property and
equipment and are recognised net within other
income in profit or loss.
The assets’ carrying values and useful lives are
reviewed, and written down if appropriate, at
each date of the consolidated statement of
financial position. Assets are impaired whenever
events or changes in circumstances indicate that
the carrying amount is less than the recoverable
amount; see Note (t) on impairment of non-
financial assets.
(ii) Subsequent costs
The cost of replacing part of an item of property
or equipment is recognised in the carrying
amount of the item if it is probable that the future
economic benefits embodied within the part will
flow to the Group and its cost can be measured
reliably. The carrying amount of the replaced part
is derecognised. The costs of the day-to-day
servicing of property and equipment are
recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is recognised in the statement of
comprehensive income on a straight-line basis to
write down the cost of each asset, to their
residual values over the estimated useful lives of
each part of an item of property and equipment.
Depreciation begins when an asset is available
for use and ceases at the earlier of the date that
the asset is derecognised or classified as held for
sale in accordance with IFRS 5. A non-current
asset or disposal group is not depreciated while
it is classified as held for sale. Freehold land is
not depreciated.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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The estimated useful lives for the current and
comparative periods of significant items of
property and equipment are as follows:
Leasehold land Over the shorter of
the useful life of the
item or lease term
Buildings 50 years
Computer hardware 4 years
Furniture, fittings
and equipment 5 years
Motor vehicles 4 years
Depreciation methods, useful lives and residual
values are reassessed at each reporting date and
adjusted if appropriate.
(iv) Derecognition
An item of property and equipment is
derecognised on disposal or when no future
economic benefits are expected from its use or
disposal. Any gain or loss arising on de-
recognition of the asset (calculated as the
dierence between the net disposal proceeds
and the carrying amount of the asset) is
included in profit or loss in the year the asset is
derecognised.
(s) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of the
acquisition over the Group’s interest in the net
fair value of the identifiable assets, liabilities and
contingent liabilities of the acquired subsidiaries
at the date of acquisition. When the excess is
negative, it is recognised immediately in profit or
loss; goodwill on acquisition of subsidiaries is
included in intangible assets.
Subsequent measurement
Goodwill is allocated to cash-generating units or
groups of cash-generating units for the purpose
of impairment testing. The allocation is made to
those cash-generating units or groups of cash-
generating units that are expected to benefit
from the business combination in which the
goodwill arose identified in accordance with IFRS
8. Goodwill is tested annually as well as whenever
a trigger event has been observed for impairment
by comparing the present value of the expected
future cash flows from a cash-generating unit
with the carrying value of its net assets, including
attributable goodwill and carried at cost less
accumulated impairment losses. Impairment
losses on goodwill are not reversed. Gains and
losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity
sold.
(ii) Software
Software acquired by the Group is stated at cost
less accumulated amortisation and accumulated
impairment losses.
Subsequent expenditure on software assets is
capitalised only when it increases the future
economic benefits embodied in the specific asset
to which it relates. All other expenditure is
expensed as incurred.
Amortisation is recognised in profit or loss on a
straight-line basis over the estimated useful life
of the software, from the date that it is available
for use since this most closely reflects the
expected pattern of consumption of the future
economic benefits embodied in the asset. The
maximum useful life of software is four years.
Amortisation methods, useful lives and residual
values are reviewed at each reporting date and
adjusted if appropriate.
(t) Impairment of Non-Financial Assets
The Group’s non-financial assets with carrying
amounts other than investment property and
deferred tax assets are reviewed at each
reporting date to determine whether there is any
indication of impairment. If any such indication
exists then the asset’s recoverable amount is
estimated. For goodwill and intangible assets
that have indefinite useful lives or that are
available for use, the recoverable amount is
estimated each year at the same time.
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit
exceeds its recoverable amount. A cash-
generating unit is the smallest identifiable asset
group that generates cash flows that largely are
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independent from other assets and groups.
Impairment losses are recognised in profit or
loss. Impairment losses recognised in respect of
cash-generating units are allocated first to
reduce the carrying amount of any goodwill
allocated to the units and then to reduce the
carrying amount of the other assets in the unit
(group of units) on a pro rata basis.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use
and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are
discounted to their present value using a pre-tax
discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset.
An impairment loss in respect of goodwill is not
reversed. In respect of other assets, impairment
losses recognised in prior periods are assessed at
each reporting date for any indications that the
loss has decreased or no longer exists. An
impairment loss is reversed if there has been a
change in the estimates used to determine the
recoverable amount. An impairment loss is
reversed only to the extent that the asset’s
carrying amount does not exceed the carrying
amount that would have been determined, net of
depreciation or amortisation, if no impairment
loss had been recognised.
(u) Deposits, Debt Securities Issued,
On-Lending Facilities and Borrowings
Deposits, debt securities issued, onlending
facilities and borrowings are the Group’s sources
of funding. When the Group sells a financial asset
and simultaneously enters into a ‘repo’ or
‘lending’ agreement to repurchase the asset (or a
similar asset) at a fixed price on a future date, the
arrangement is accounted for as a deposit, and
the underlying asset continues to be recognised
in the Group’s financial statements.
Deposits, debt securities issued, onlending
facilities and borrowings are initially measured at
fair value plus transaction costs, and subsequently
measured at their amortised cost using the
eective interest method, except where the
Group chooses to carry the liabilities at fair value
through profit or loss.
(v) Sale and Repurchase Agreements
Securities sold subject to repurchase agreements
(‘repos’) remain on the statement of financial
position; the counterparty liability is included in
amounts due to other banks, deposits from
banks, other deposits or deposits due to
customers, as appropriate. Securities purchased
under agreements to resell (‘reverse repos’) are
recorded as money market placement. The
dierence between sale and repurchase price is
treated as interest and accrued over the life of
the agreements using the eective interest
method.
Securities lent to counterparties are also retained
in the financial statements. Securities borrowed
are not recognised in the financial statements,
unless these are sold to third parties, in which
case the purchase and sale are recorded with the
gain or loss included in trading income.
(w) Provisions
Provisions for restructuring costs and legal claims
are recognised when: the Group has a present
legal or constructive obligation as a result of past
events; it is more likely than not that an outflow
of resources will be required to settle the
obligation; and the amount has been reliably
estimated. The Group recognises no provisions
for future operating losses.
(x) Financial Guarantees and Loan
Commitments
Financial guarantees are contracts that require
the Group to make specified payments to
reimburse the holder for a loss it incurs because
a specified debtor fails to make payment when
due in accordance with the terms of the debt
instrument. Loan commitments are firm
commitments to provide credit under pre-
specified terms and conditions.
Liabilities arising from financial guarantees or
commitments to provide a loan at a below-
market interest rate are initially measured at fair
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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value and the initial fair value is amortised over
the life of the guarantee or the commitment. The
liability is subsequently carried at the higher of
this amortised amount and the present value of
any expected payment to settle the liability when
a payment under the contracts has become
probable. Financial guarantees and commitments
to provide a loan at a below-market interest rate
are included within other liabilities.
(y) Employee benefits
(i) Retirement benefit obligations
A retirement benefit obligation is a defined
contribution plan. A defined contribution plan is
a post-employment benefits plan under which an
entity pays fixed contributions into a separate
entity and has no legal or constructive obligation
to pay further amounts. Obligations for
contributions to defined contribution plans are
recognised as personnel expenses in profit or
loss in the period during which related services
are rendered. Prepaid contributions are
recognised as an asset to the extent that a cash
refund or a reduction in the future payments is
available.
(ii) Short-term employee benefits
Short-term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided. A
liability is recognised for the amount expected to
be paid under short-term cash bonus or profit-
sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a
result of past service provided by the employee
and the obligation can be estimated reliably. If
benefits are payable more than 12 months after
the reporting date, then they are discounted.
(z) Share Capital and Reserves
(i) Share issue costs
Incremental costs directly attributable to the
issue of an equity instrument are deducted from
the initial measurement of the equity instrument.
(ii) Dividend on the Company’s ordinary shares
Dividends on ordinary shares are recognised in
equity in the period in which they are approved
by the Company’s shareholders. Dividends for
the year that are declared after the date of the
consolidated statement of financial position are
dealt with in the subsequent events note.
Dividends proposed by the Directors but not yet
approved by members are disclosed in the
financial statements in accordance with the
requirements of the Companies and Allied
Matters Act of Nigeria.
(aa) Earnings Per Share
The Group presents basic earnings per share
(EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss
attributable to ordinary shareholders of the
Company by the weighted average number of
ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and
the weighted average number of ordinary shares
outstanding for the eects of all dilutive potential
ordinary shares, which comprise share options
granted to employees.
(ab) Segment Reporting
Segment results that are reported to the
Executive Management Committee (being the
chief operating decision maker) include items
directly attributable to a segment as well as
those that can be allocated on a reasonable
basis. Unallocated items comprise mainly
corporate assets (primarily the Company’s
headquarters), head oce expenses, and tax
assets and liabilities.
(ac) New Standards and Interpretations Not Yet
Adopted
A number of new standards, amendments to
standards and interpretations are eective for
annual periods beginning after 1 January 2015,
and have not been applied in preparing these
consolidated financial statements. Those which
may be relevant to the Group are set out below.
The Group does not plan to adopt these
standards early.
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(i) Equity method in separate financial
statements (amendments IAS 27)
The amendments allow an entity to apply the
equity method in its separate financial statements
to account for its investments in subsidiaries,
associates and joint ventures.
The amendment is eective for annual reporting
periods beginning on or after 1 January 2016,
with early adoption permitted. The amendments
apply retrospectively.
(ii) IFRS 15 – revenue from contracts with
customers
IFRS 15 establishes a comprehensive framework
for determining whether, how much and when
revenue is recognised. It replaces the existing
revenue recognition guidance, including IAS 18
Revenue, IAS 11 Construction Contracts and IFRIC
13 Customer Loyalty Programmes.
IFRS 15 is eective for annual reporting periods
beginning on or after 1 January 2017, with early
adoption permitted. The Group is assessing the
potential impact on its consolidated financial
statements resulting from the application of
IFRS 15.
The Group has assessed and evaluated the
potential eect of this standard. Given the nature
of the Group’s operations, this standard will have
no impact on the Group’s financial statements.
(iii) IFRS 9 – financial instruments
IFRS 9, published in July 2014, replaces the existing
guidance in IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 includes
revised guidance on the classification and
measurement of financial instruments, including a
new expected credit loss model for calculating
impairment on financial assets, and the new general
hedge accounting requirements. It also carries
forward the guidance on recognition and
derecognition of financial instruments from IAS 39.
IFRS 9 is eective for annual periods beginning
on or after 1 January 2018 with early adoption
permitted. The Group has commenced the
process of evaluating the potential eect of this
standard but is awaiting finalisation of the limited
amendments before the evaluation can be
completed. Given the nature of the Group’s
operations, this standard is expected to have a
pervasive impact on the Group’s financial
statements.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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3 Financial Risk Management
(a) Introduction and Overview
Risk management at FCMB Group is critical to
the attainment of the Group’s strategic business
objectives. It provides the mechanism to identify
and explore growth opportunities and manage
inherent risks in operating and business
environments, ensure compliance with corporate
governance standards and regulatory
stipulations. Our risk management practices are
integrated, structured, enterprise-wide and
continuous across the Group for identifying and
deciding on appropriate responses to, and
reporting on, opportunities and threats that may
aect the achievement of the strategic business
objectives. Based on its strategic business and
operational objectives, the Group is exposed to
a wide range of risks such as credit, liquidity,
market, operational, strategic and regulatory
risks and has put in place a robust risk
management framework for the proactive
identification, assessment, measurement and
management of such risks, including a capital
management policy that ensures it has enough
capital to support its level of risk exposures
while also complying with the regulatory
requirements. The framework seeks to
strengthen the administration and supervision
of the Group’s enterprise risk management and
ensure that the Group’s corporate governance
principles, risk philosophy and culture, risk
appetite and risk management processes are
implemented in line with the Board’s
expectations. It also provides management with
clear, comprehensive and unbiased analysis of
the adequacy, existence and eectiveness of
internal controls and risk processes.
GROUP
Corporate Banking
Credit risk High
Operational
risk High
Market risk High
Business Banking
(Commercial & SME)
Credit risk Medium
Operational
risk Medium
Market risk Low
Retail Banking
Credit risk Medium
Operational
risk Low
Market risk Low
Investment Banking Trustees
Credit risk Low
Operational
risk Medium
Market risk Low
Credit risk Low
Operational
risk Low
Market risk Low
Business units and risk exposures
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This chart represents the Group’s exposure to
each of the risks above, being its major risk
exposures. The classification to high, medium
and low is based on the capital allocated to the
businesses in line with their exposures to these
risks.
As implied from this chart, credit risk is the
largest risk exposure of the Group, next to this is
operational risk and then market risk, which has
increased in recent times resulting from Naira
devaluation and scarcity of foreign currency
required to meet obligations. Corporate Banking,
having the largest exposure to credit risk takes
most of the capital allocation, followed by
Business Banking, Retail Banking, Investment
Banking (treasury, brokerage, advisory, asset
management businesses, etc.) and Trustees.
Despite the presence of counterparty risks, credit
risk is low for treasury functions, but market risk,
which used to be low because of the nature of
instruments traded in Nigeria, is no more so due
to the devaluation of the Naira and scarcity of
foreign exchange, resulting from the drop in oil
price and the high dependence of the Nigerian
economy on importation. The Trustee business
has the least capital allocation due to low
portfolio risk. The Group continues to identify
and proactively manage its various risk exposures
at the transaction and portfolio levels, making
sure that appropriate mitigants are in place for
the various balance sheet exposures.
The disclosures here therefore give details of the
Group’s exposures to these risks and the
appropriate policies and processes for managing
them accordingly, including a summary of the
capital management policy of the Group.
Risk management framework
The Board of FCMB Group has the risk oversight
role, setting and approving the risk appetite
and other capital management initiatives to
be implemented by the Executive Management
Committee. The Executive Management Committee
coordinates the activities of the sub-committees
to provide support to the Board in managing risk
and ensuring that capital is adequate, and
optimally deployed. The Boards of FCMB Group
Plc and its subsidiaries continue to align the
business and risk strategy of the Group through
a well-articulated risk appetite for all significant
risks, and make sure (through appropriate sub-
committees) that all risk taking activities are
within the set appetite or tolerance, failing which
an appropriate remedial action should be taken
within a reasonable period. The responsibility for
day-to-day management of these risks has been
delegated to Executive Managements through its
related committees (Risk Management
Committee, Management Credit Committee,
Asset and Liability Committee, Investment
Committee and Executive Management
Committee). The Risk Committee focuses on risk
governance and provides a strong forward-
looking view of risks and their mitigation. The
Risk Committee is a sub-committee of the Board
and has responsibility for oversight and advises
the Board, inter alia, on the Group’s risk appetite,
tolerance and strategy, systems of risk
management, internal control and compliance.
Additionally, the Risk Committee ensures the
alignment of the reward structures and the
maintenance and development of a supportive
culture, in relation to the management of risk,
which is appropriately embedded through
procedures, training and leadership actions. In
carrying out its responsibilities, the Risk
Committee is closely supported by the Chief Risk
Ocer and the Chief Financial Ocer, together
with other business functions within their
respective areas of responsibility. In line with
global standards, the Group sets its risk tone at
the top as this is central to its approach to
balancing risk and reward. Personal accountability
is reinforced by the Group’s values, with sta
expected to act with integrity in conducting their
duties. Sta are supported by a disclosure line
that enables them to raise concerns in a
confidential manner. The Group also has in place
a suite of mandatory training to ensure a clear
and consistent attitude is communicated to sta;
mandatory training not only focuses on the
technical aspects of risk but also on the Group’s
attitude towards risk and the behaviours
expected by its policies.
The illustration below highlights significant risk
exposures of the Group and the respective Board
and Executive Management committees
responsible for oversight and risk control.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Enterprise risk universe and governance structure
FCMB Risk Universe and Responsibility Matrix
Risk
universe
Credit
risk
Concentration
risk
Market
risk
Liquidity
risk
Operational
risk
Strategic
risk
Legal
risk
Reputational
risk
Compliance
risk
Primary
risk owner
Chief Risk Officer Treasurer
Head of
Operations
and
Technology
Division
Head of
Strategy
General
Counsel
Head of
Corporate
Comm/
Brand
Marketing
Chief
Compliance
Officer
Secondary
risk owner Chief Risk Officer
Chief
Compliance
Officer
Management
committee Management Credit
Committee
Assets and
Liability
Management
Committee
Risk Management Committee
Executive Management
Committee
Risk Management Committee
Board
committee
Board Credit Committee Board Risk and Audit and Finance Committee
Board of
Directors
Board of Directors
A three line of defence system is in place for the
management of enterprise risks as follows:
(i) Oversight function by the Board of Directors
and Executive Management and the primary
responsibility of the business lines and process
owners within the Group for establishing an
appropriate risk and control environment in order
to align risk management with business
objectives.
(ii) Independent control function over the
business processes and related risks to ensure
that the business and process owners operate
within defined appetite and approved policies
and procedures. It is provided by functions such
as risk management, internal control, compliance,
and finance. These departments develop policies
and procedures, risk management processes and
controls, monitor and report on risks accordingly
for prompt decision-making.
(iii) Independent assurance to the Board of
Directors on the eective implementation of
the risk management framework and validates
the risk measurement processes. There are two
complementary parts to this – the internal and
external audits.
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Details of the Group’s three lines of defence mechanism is described below:
Board Risk, Audit and Finance Committee
Risk taking
• Board
• Business Line Management
Risk oversight
• Risk Management
• Internal Control
• Compliance
• FINCON
Risk assurance
• Group Internal Audit
• External Audit
• Sets risk appetite
• Promotes risk culture
• Owns the risk
management process
and implements control
• Responsible for daily
management of risk
• Develops policies and
standards
• Develops the risk
management processes
and controls
• Monitors and reports
on risk
• Provides independent
challenge to the levels of
assurance provided by
the first and second
levels of defence
• Validates processes in
risk management
framework
First line of defence
(a) Board level
I. The Board of Directors sets the appetite for risk
and ensures that senior management and
individuals responsible for managing risks
possess sound expertise and knowledge to
undertake risk management functions within the
Group.
II. The Board Risk, Audit and Finance Committee
(BRAFC) and, as necessary, the subsidiaries’ risk
committees provide direct oversight for
enterprise risk management and act on behalf of
the Board on all risk management matters. The
BRAFC ensures that all decisions of the Board on
risk management are fully implemented and risk
exposures are in line with agreed risk appetite.
The committee also reviews the enterprise risk
management framework on a periodic basis to
ensure its appropriateness and continued
usefulness in line with the size, complexity and
exposure of the Group to risks in addition to
compliance with regulatory requirements. The
BRAFC meets every quarter.
III. The Board Credit Committee’s (BCC) function
is more transactional. It approves amendments
to the credit policy, changes in target market or
risk acceptance criteria, large exposure requests
within pre-defined limits, exceptional approvals
where necessary, specific provisions, credit write-
os and remedial/corrective measures.
IV. The BRAFC is responsible for assessing the
adequacy and scope of internal controls, audit of
the financial statements and overall compliance.
(b) Executive management level
I. The Risk Management Committee (RMC) is a
management committee, which reports to the
BRAFC, has direct responsibility for implementing
the enterprise risk management framework and
related policies approved by the Board. The RMC
meets on a periodic basis (monthly) to review all
risk exposures (including Key Risk Indicators,
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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credit portfolio reports, market risk exposures,
etc.) and recommends risk mitigating strategies
and actions. The RMC is also responsible for
portfolio planning, capital management and
providing oversight for all enterprise risk
management initiatives.
II. The Management Credit Committee (MCC)
appraises and approves loans and other credit
related transactions as stated in the credit policy.
The committee ensures full compliance with the
Board’s approved credit policy.
III. The Asset and Liability Committee (ALCO) is
responsible for managing the composition and
pricing of the assets and liabilities, making policy
decisions, and providing direction/oversight for
market and liquidity risk management practices.
(c) Business unit management level
I. Business Unit Management as a risk originator
has first line responsibility and ownership of risks.
The business units take on risks within set
boundaries and manage the risks taken on a day-
to-day basis to protect the Group from the risk of
loss.
II. Each business unit has a dedicated Operational
Risk Committee responsible for reviewing critical/
significant risks and recommending appropriate
remedial measures. The committee reviews the
outcome of Risk and Control Self-Assessment
(RCSA) for their respective business units, major
risk exposures as measured by their Key Risk
Indicators/Key Control Indicators, agrees action
plans and assigns responsibilities for resolving
identified issues and exposures.
Second line of defence
(a) Risk Management Division
The Risk Management Division is an independent
control function with primary responsibility for
the following:
risk strategy – development of the risk
management strategy in alignment with
overall growth and business strategy of the
Group.
risk compliance – ensuring compliance with
risk strategy, risk appetite, regulatory
requirements at enterprise and business unit
levels.
risk advisory – identification, assessment,
measurement and disclosure of all significant
risk exposures and providing
recommendations/guidance for risk taking
and exposures.
risk control – proactive management of all
risks to minimise losses and capital erosion.
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The Risk Management Division is functionally structured as shown in the chart below:
The Group also has robust Collection and
Recovery teams, which report to the Executive
Managements. The teams complement the post-
disbursement monitoring responsibilities through
eective enforcement of credit covenants and
approval terms. The process automation on the
Axe Credit Portal also facilitates proactive credit
performance monitoring and collection through
the configuration of specific performance
triggers for intermittent notifications to
Relationship Managers and borrowers in some
cases. Where warranted, remedial actions and/or
recovery activities are recommended and
followed through by this department.
(b) Internal Control and Compliance Division
The Internal Control and Compliance Division is
primarily charged with the following:
The Internal Control and Compliance teams
work hand-in-hand. Internal control is directly
responsible for enforcing and confirming
compliance with Group-wide policies,
procedures and internal controls. It conducts
routine control checks across all businesses
and processes. It is responsible for eective
and ecient control environment that ensures
that minimal operational losses from frauds,
errors, operational gaps, and other
irregularities. It monitors control activities and
ensure compliance with minimum control
standards defined by the Board.
The Compliance team ensures the Group
fully complies with the spirit and letter of
laws, corporate governance standards, all
regulatory requirements, such as KYC, Anti-
Money Laundering (AML) regulations and
indeed all requirements of the Central Bank of
Nigeria (CBN) and other authorities, such as
Nigerian Deposit Insurance Corporation
(NDIC), Securities and Exchange Commission
and Nigerian Stock Exchange among others.
Enterprise Risk Management
Risk Policy and
Administration
Risk policy
Credit administration
Business risk
Operational risk
Non-specialised loan
monitoring
Specialised loan
monitoring
Marketing and
Operational Risk
Management
Audit, Monitoring
and MIS
Corporate
underwriting
Regional underwriting
(Lagos and
South West)
Regional underwriting
(South East and
South South)
Regional underwriting
(North)
Credit Underwriting
Market risk
Capital computation/
ICAAP
ERM implementation
and coordination
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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The Internal Control and Compliance Division is functionally structured as shown in the chart below:
Chief Compliance Ocer
Internal Control
Head Office Control
Regional Control
System Control and Business
Continuity Management
Corporate Governance, Regulatory
and Legal Compliance
AML/CFT Programme Management
and Reporting
Compliance
Transactions and
Exceptions Monitoring
Branches and Subsidiaries
Compliance Coordination and
Sanctions Management
Zonal Compliance
Subsidiaries Compliance
(c) Group Finance Division
The Group Finance Division develops the
Group’s strategic and capital plan and clearly
outlines the actual and projected capital
needs, anticipated capital expenditure and
desired level of capital.
It reviews the Group’s capital structure and
ensures the desired level of capital adequacy
in the Group.
It drives all activities relating to the Group’s
responses to any proposed regulatory change
that might aect the Group’s capital and
provides all necessary information on
portfolio, product and profitability metrics
and any analysis to support the material risk
assessment process.
Third line of defence
(a) Internal Audit
Group Internal Audit provides independent
assessment of the adequacy of, and compliance
with, the Group’s established policies and
procedures. The function is responsible, among
others, for monitoring compliance with the
enterprise risk management framework and
validating the adequacy and ecacy of risk
assessment systems (including rating and
measurement models).
(b) External Audit
External auditors apart from establishing whether
the financial position reflects a true and fair
position of the organisation, also have an
important impact on the quality of internal
controls through their audit activities and
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Credit risk appetite for 31 December 2015
Risk category Selected risk appetite metrics Risk appetite
Credit risk Credit loss ratio 5%
Weighted average risk rating of
the portfolio
BB- (Probability of default – 3.09%).
Sector concentration <=20% of total portfolio in any single sector.
Exposure limit Large exposure is defined by CBN as 10% of SHF
and regulatory aggregate exposure limit for large
exposures is set at 800% of SHF. However, the
internal limit is defined as 400% of SHF.
Single obligor limit (SOL): maximum in line with
regulatory requirement is 20% of SHF. The Group
monitors compliance at transaction level to ensure
all large exposures are kept within limit.
recommendations for improvement of internal
controls. Our external auditors have been helpful
in providing guidance on new developments in
risk management, corporate governance and
financial accounting and controls.
Risk appetite
Risk appetite is an expression of the level and
type of risks that the Group is willing to accept/
retain for a given risk-reward ratio in order to
achieve its strategic goals. In FCMB, Risk Appetite
is set by the Board of Directors and enforced
by the Risk Management Division. It is a key
component of the risk management framework
and central to the annual planning process. This
appetite guides all risk creation activities and
risks inadvertently assumed by Business Groups.
The Group has a well developed risk appetite,
prepared to establish a common understanding
among all employees and other stakeholders
regarding the desirable risks underlying execution
of the Group’s strategy. It represents the
combined view of the FCMB leadership and the
governance bodies. The risk appetite is not
intended to ‘handcu’ management but to
become a benchmark for discussing the
implications of pursuing value creation
opportunities as they arise. It therefore defines
boundary within which the Group is expected to
operate when pursuing its strategy, by aligning
risk and decision-making. It provides a
cornerstone for the Group’s Enterprise Risk
Management Framework, setting a clear strategic
direction and tolerances around controls.
The Group’s risk appetite framework and
statements have served the following benefits
among others:
sets foundation for the risk culture of the
Group;
helps to communicate the Board’s vision in
practical terms;
guides all sta in their decision-making on all
risk related activities;
helps to ensure an alignment between the
expectations of the Board and the business;
and
serves as a benchmark for monitoring and
reporting of abnormal events or exposures.
In FCMB, all Risk Appetite metrics are tracked
and reported monthly to the Risk Management
Committee (RMC) in fulfilment of the
committee’s oversight responsibilities. The Risk
Management Division monitors the risk metrics
on a more regular basis to make certain that
risk expsoures are within the approved
boundaries. Exposures that are outside of set
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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boundaries are investigated to understand the
underlying causes and consider ways to
mitigate or avoid them within the shortest
period.
The Group’s risk appetite is reviewed at least
once a year or more frequently as may be
required in the event of significant/material
changes in the Group’s strategy or in line with
regulatory requirements or other external
demands.
(b) Credit risk
Credit risk is the risk that the Group may not be
able to recover funds and suer losses because a
customer or counterparty is unable or unwilling
to meet contractual obligations to the Group
when due. It is the most significant risk of the
Group.
The Group takes on credit risk through the
following principal activities:
lending/leasing: the Group grants credit to its
customers (loans, advances, temporary
overdrafts, etc.) or finances a lease or grants
an advance or a loan to its employees (sta
loans, cash advances, etc.);
bank guarantees: the Group issues a bond or
guarantee (contingent exposure); and
trading (money market placement, foreign
currency trading, etc.) activities: the Group
makes money market placements in another
bank/institution or engages in trading
activities where the exchange of monetary
value and transfer of ownership of purchased
assets is not simultaneous.
The Group uses its internal ratings framework to
assess the risk of default (probability that a
customer will become 90 days past due on an
obligation) and the risk of loss in the event of
default (the estimated size of loss the Group will
incur in the event of a default). The Group’s credit
risk rating systems and processes dierentiate
exposures in order to highlight those with greater
risk factors and higher potential severity of loss.
This provides predictive capability for assessing
borrower’s likelihood of default and the
acceptable risk mitigants required to cushion
residual credit risks for each transaction.
Our ratings framework measures the following
key components:
financial factors (sales terms/conditions,
strength of operations, liquidity and capital in
addition to debt service capacity);
industry: structure, performance, economic
sensitivity and outlook;
management quality (ownership experience,
skills and turnover) and company standing
(reputation, ownership and credit history);
and
security/collateral arrangements, seniority of
debt, ability to cancel debt at the point of
default and loss given default (LGD)
computation for each security/collateral type
supporting the exposure.
The above components help the Group to
establish the following:
Obligor risk rating (ORR), mapped to an
estimated probability of default (PD).
Although the PD is not based on the Group’s
internal experience presently, a PD validation
is done internally to ensure the rating
continues to be predictive of default and
dierentiates borrowers based on their ability
to serve their obligations. This will be further
reinforced with a rating and validation/
backtesting.
Facility risk rating (FRR) for each transaction
is mapped to Basel II loss given defaults
(LGDs) grades.
Both the ORR and FRR produce the expected
loss % (EL) which is the product of the PD
and LGD, i.e. EL = f(PD, LDG). The EL
represents the risk premium which is applied
to transaction pricing under the risk-based
pricing.
The use of our internal ratings framework extends
beyond credit appraisals/assessments (at the
point of origination) to the computation of
capital adequacy ratio (CAR), allocation of
capital across business lines and computation of
economic profit based on Basel II principles.
FCMB Group Plc Annual Report and Accounts 2015 85
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The Group’s internal rating scale and mapping to external ratings as at 31 December 2015 and 31
December 2014 is shown below:
2015 2014
Internal
rating
scale Description
External
rating scale
(Moody's)
External
rating scale
(S&P) PD %
PD –
decimals PD %
PD –
decimals
AAA VERY LOW
RISK
Aaa AAA 0.0185 0.000185 0.0185 0.000185
AA
Aa1 AA+ 0.0308 0.000308 0.0308 0.000308
AA-
Aa2 AA 0.0320 0.000320 0.0514 0.000514
A+
Aa3 AA- 0.0435 0.000435 0.0857 0.000857
A
A1 A+ 0.0514 0.000514 0.1428 0.001428
A-
A2 A 0.0704 0.000704 0.1785 0.001785
BBB+
A3 A- 0.0857 0.000857 0.2231 0.002231
BBB
Baa1/Baa2 BBB+/BBB 0.1428 0.001428 0.3540 0.003540
BBB-
Baa3/Ba1 BBB-/BB+ 0.1785 0.001785 0.5445 0.005445
BB+ LOW RISK
Ba2 BB 0.2231 0.002231 1.3750 0.013750
BB
Ba3 BB- 0.3540 0.003540 2.0625 0.020625
BB-
B1 B+ 0.5445 0.005445 3.0938 0.030938
CCC+ ACCEPTABLE
RISK
B2 B 4.6407 0.046407 4.6407 0.046407
CCC
B3 B- 6.1876 0.061876 6.1876 0.061876
CCC-
B3 B- 7.7345 0.077345 7.7345 0.077345
CC+ MODERATELY
HIGH RISK
Caa1 CCC+ 9.2814 0.092814 9.2814 0.092814
CC
Caa2 CCC 10.8283 0.108283 10.8283 0.108283
CC-
Caa2 CCC 12.3750 0.123750 12.3750 0.123750
C+
Caa3 CCC- 13.9221 0.139221 13.9221 0.139221
C HIGH RISK
Caa3 CCC- 54.6900 0.546900 54.6900 0.546900
C-
D NA 100.0000 1.000000 100.0000 1.000000
Mapping to external scale has been done on the basis of estimated PDs for corporate, commercial,
institutional and SME exposures.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Management of credit risk
The Group manages its credit risk through an
appropriate measurement, management and
reporting process underpinned by sound credit
risk systems, policies and well qualified personnel.
A combination of risk management tools and
policies are adopted to stimulate the creation of
quality risk assets. It is managed centrally by
various departments within the Risk Management
Division who have responsibilities for policy
setting and review, credit underwriting, approval,
credit administration, monitoring and portfolio
management.
The credit risk management function of the
Group is achieved through a combination of the
following:
Appropriate credit policies: the Group
formulates appropriate risk management
policies in conjunction with the business units
and other stakeholders, covering all the key
areas of credit origination, management,
collection, portfolio management, etc. while
also ensuring compliance with all regulatory
requirements. The credit policies reinforce all
the Group’s lending and credit management
decisions.
Lending driven by internal rating system: the
Group’s lending and policy enforcement is
driven by an internal rating system, with
scorecards built for dierent classes of
customers such as corporate, commercial,
small and medium enterprises (SME), public
sector, consumer and project finance. The
rating of obligors and transactions has been
useful in the quantification of credit risk and
underwriting decisions, including serving as a
guide for pricing, portfolio management and
computation of required capital to support
the dierent business lines.
Establishment of credit approval limits and
authorities: there are various approval limits
for dierent kinds of credit exposures and
approval authorities, including the various
risk committees such as the Management
Credit Committee (MCC) and the Board
Credit Committee (BCC). These limits are also
guided by statutory impositions such as the
single obligor limit and other concentrations
limits set by the Central Bank of Nigeria
(CBN). The Group’s single obligor limit is
benchmarked to the regulatory cap of 20% of
shareholders’ funds unimpaired by losses with
the internal limits also mapped to obligor risk
rating. The sector limits are set based on the
perceived riskiness of each sector but the
Government exposures are capped at the
regulatory limit of 10% of total loans.
As part of its continuous process improvement
and enhanced risk management strategies,
the Group procured a robust end-to-end
credit application software (Axe Credit Portal)
to drive lending activities from origination
to recovery. The application provides strong
capability for limit setting and tracking at
transaction and portfolio levels. This also
gives better visibility and MIS capabilities for
risk management within the portfolio and
improves loan management throughout each
facility’s lifecycle.
In order to further strengthen its credit
process, the Group has dierentiated the
approval route for its corporate/commercial
credits from retail credits. Credit approval for
each area is supervised by very experienced
personnel referred to as Senior Credit
Underwriters, who also function as Senior
Credit Ocers and are members of the
Management Credit Committee.
Loan monitoring and reviews: the various
loans are monitored at both transaction and
portfolio levels to ensure a balanced and
healthy portfolio in line with the portfolio
development and balancing strategy of the
Group.
Collateral review, monitoring and management:
the Legal department reviews the collateral
proposed by customers as part of the credit
approval process to determine acceptability
of the collateral. Beyond the initial assessment
at the point of credit origination, however, the
Group also has good collateral management
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policies in place to reduce the risk of loss
in the event of default. Our collateral
management policy is linked to the internal
ratings framework and has helped to reduce
the estimated expected loss and capital
charge on transactions. The framework
provides a risk-based approach to managing
the Group’s collateral database as it focuses
on periodic evaluation of coverage for each
facility type. This includes mark to market for
stocks and commodities, revaluation
benchmarking for properties and acceptable
standards for eligibility on all forms of
collaterals.
The principal collateral types eligible as
security and used primarily to mitigate
transaction risk include the following: cash
and marketable securities; legal mortgage; all
assets debenture; account receivables of
obligors rated BB- and above. Other
admissible collateral (accepted for comfort
only but not eligible as credit risk mitigants)
include domiciliation agreements, trust
receipts and negative pledges.
Another mitigant used to reduce the risk of
credit exposures is master netting agreements
with obligors that have investments in liability
products so that in the event of default,
exposures to the obligor will be settled on a
net basis. These agreements are executed by
the representatives of the obligor and are
generally enforceable with no further recourse
to the obligor or a third party.
Generally, all the contingent liabilities are also
supported by tangible collaterals or a charge
over the underlying goods depending on the
assessment of the performance risks.
Limit concentrations for various exposures:
the Group complies fully with the
concentration policy of the CBN as specified
in the Prudential Guidelines and is even more
prudent, having internal limits that are more
stringent in some cases than specified by
the apex regulatory authority. The limit
concentration policy of the Group covers all
forms of exposures such as customers,
large exposures, counterparties, collateral,
geography, sector, products, ratings bands
and facility types among others.
Reporting: an important part of the Group’s
risk management framework is reporting to
ensure that all vital information is brought to
the attention of stakeholders and appropriate
decisions are taken to further improve the risk
culture and ultimately ensure all identified
issues are brought within the Board-approved
risk appetite. This internal reporting has
imposed discipline within the Group, thereby
improving its risk management culture.
In line with the Group’s three line defence
mechanism, each of the business units has
primary responsibility for managing the credit
relationships with customers, and hence is
responsible for the quality and performance of
their credit portfolio. Risk management however
continues to provide oversight for the entire
credit portfolio and all credit relationships apart
from ensuring that the businesses operate within
the approved framework and policies. Risk
Management is also assisted in this role by the
internal control, which does a regular post
disbursement check to ensure that the credits
booked comply with the approved policies and
that they continue to operate within approved
conditions and guidelines. The internal audit
function provides independent assurance for the
entire credit process of the Group.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP COMPANY
Loans and advances
to customers
Loans and advances
to customers
Note
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Maximum exposure to credit risk
Carrying amount
24(a) 592,957,417 617,979,790 - -
Amount committed/guaranteed 42(c) 141,031,528 211,047,130 - -
733,988,945 829,026,920 - -
Individually impaired (at amortised cost)
Very low risk
- - - -
Low risk 2,088,706 105,480 - -
Acceptable risk 11,612,776 4,846,825 - -
Moderately high risk 1,322,432 3,193,484 - -
High risk - - - -
Gross amount 15,023,914 8,145,789 - -
Collectively impaired (at amortised cost)
Very low risk
- - - -
Low risk 1,083,434 649,216 - -
Acceptable risk 5,629,642 7,487,430 - -
Moderately high risk 3,633,172 6,678,585 - -
High risk - 1,176 - -
Gross amount 10,346,248 14,816,407 - -
Past due but not impaired (at amortised
cost)
Very low risk
- 67,848 - -
Low risk 12,895,661 267,499 - -
Acceptable risk 46,213,785 2,295,894 - -
Moderately high risk 2,721,234 2,789,467 - -
High risk - - - -
Carrying amount 61,830,680 5,420,708 - -
Past due but not impaired comprises
1–29 days
59,549,626 1,787,940 - -
30–59 days 28,249 2,430,908 - -
60–89 days 2,252,805 1,201,860 - -
Carrying amount 61,830,680 5,420,708 - -
Exposure to credit risk
FCMB Group Plc Annual Report and Accounts 2015 89
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GROUP COMPANY
Loans and advances
to customers
Loans and advances
to customers
Note
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Neither past due nor impaired (at amortised
cost)
Very low risk
36,032,521 47,426,258 - -
Low risk 97,365,534 152,762,173 - -
Acceptable risk 328,144,790 301,463,481 - -
Moderately high risk 62,316,014 103,220,298 - -
High risk - 120,083 - -
Gross amount 523,858,859 604,992,293 - -
Total gross amount (at amortised cost) 611,059,701 633,375,197 - -
Impairment allowance:
Specific
24(c)(i) (11,488,991) (6,574,749) - -
Collective 24(c)(ii) (6,613,293) (8,820,658) - -
Carrying amount 592,957,417 617,979,790 - -
GROUP COMPANY
Loans and advances
to customers
Loans and advances
to customers
Note
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Financial guarantees 141,031,528 211,047,130 - -
141,031,528 211,047,130 - -
In addition to the above, the Group had entered into lending commitments and financial guarantee
contracts of N141billion (31 December 2014: N211billion) with counterparties as set below;
Credit risk exposure relating to o-balance sheet
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Set out below is an analysis of the gross and net (of allowances for impairment) amounts of
individually impaired assets by risk grade:
GROUP
Loans and advances
to customers
Investment
securities
31 December 2015
Gross
N
’000
Net
N’000
Gross
N’000
Net
N’000
Very low risk - - - -
Low risk 2,088,706 1,260,628 - -
Acceptable risk 11,612,776 1,062,235 - -
Moderately high risk 1,322,432 1,212,060 - -
High risk - - - -
Unrated - - 1,349,826 49,912
15,023,914 3,534,923 1,349,826 49,912
GROUP
Loans and advances
to customers
Investment
securities
31 December 2014
Gross
N
’000
Net
N’000
Gross
N’000
Net
N’000
Very low risk - - - -
Low risk 105,480 51,480 - -
Acceptable risk 4,846,825 206,572 - -
Moderately high risk 3,193,484 1,312,988 - -
High risk - - - -
Unrated - - 1,437,208 61,896
8,145,789 1,571,040 1,437,208 61,896
Past due but not impaired loans
Past due but not impaired loans are those for
which contractual interest or principal payments
are past due, but the Group believes that
specific impairment is not appropriate on the
basis of the level of security/collateral available
and/or the stage of collection of amounts owed
to the Group.
Loans with renegotiated terms and the
forbearance policy
The Group may renegotiate loans when there is
a material change in the customer’s financial
position, operating dynamics, industry and
environment or anything that gives reasonable
doubt that the debt may not be repaid or
serviced as and when due. This is usually done
through concessions, which agree new terms
and conditions that are more favourable to the
borrower in order to increase the chance of
collection/recovery and thereby reduce the risk
of default. Renegotiation of terms may take
forms such as extension of tenor, reduction of
pricing, introduction of moratorium or
restructuring of facility from one form to the
other (e.g overdraft to term loan) or other
forms of amendments to the terms and
conditions earlier contracted with the customer.
The objective of renegotiation is to ensure
recovery of the outstanding obligations and
the request could be at the instance of the
customer or the Group.
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Write-o policy
The Group has a write-o policy approved by
the Board of Directors, which also meets the
requirements as specified in the prudential
guidelines of the Central Bank of Nigeria for
deposit money banks.
In line with the Group’s approved write-o policy,
the Management Credit Committee (MCC) may
authorise a write-o of outstanding balances on
a loan account, where it is apparent that the
exposure may not be recovered from any of the
available repayment sources. However, the Group
must have fully provided for the facility and such
credits must also receive the approval of the
Board of Directors. The approval process for
write-o is as follows:
The Loan Recovery Unit originates the write-o
requests:
Credit Risk Management obtains the approval
of the Management Credit Committee (MCC)
and the Board Credit Committee (BCC) for
the request;
all write-os must be ratified by the full
Board; and
Credit Risk Management sends notification of
the balances approved for write-o to the
Central Bank of Nigeria (CBN ).
The write-o must also satisfy the following
requirements of Central Bank of Nigeria (CBN):
the facility must be in the Group’s book for at
least one year after the full provision;
there should be evidence of Board approval;
if the facility is insider or related-party credit,
the approval of CBN is required; and
the fully provisioned facility is appropriately
disclosed in the audited financial statement
of the Group.
A gross loan amount of N7.17 billion, which was
impaired was written o during year ended 31
December 2015 (31 December 2014: N7.37
billion).
Collateral held and other credit enhancements
and their financial eects
The Group also has a good collateral
management policy in place to reduce the risk
of loss in the event of default. Our collateral
management policy is linked to the internal
ratings framework and has helped to reduce the
estimated expected loss and capital charge on
transactions.
The Group holds collateral and other types of
credit enhancements against its credit exposures.
The next table gives the principal collateral types
eligible as security and used primarily to mitigate
transaction risk:
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Percentage of exposure that is
subject to an arrangement that
requires collaterisation
Type of credit exposure Principal type of collateral held for
secured lending
2015
%
2014
%
Loans and advances to banks
Reverse sale and purchase agreements Marketable securities
100 100
Security borrowing Marketable securities 100 100
Loans and advances to retail customers
Mortgage lending Residential property
100 100
Personal loans None – –
Credit cards None – –
Loans and advances to corporate
customers
Finance leases Property and equipment
100 100
Other lending to corporate customers
Legal mortgage, mortgage
debenture, fixed and floating
charges over corporate assets,
account receivables 89 92
Reverse sale and repurchase agreements Marketable securities 100 100
Investment debt securities None – –
Other admissible credit risk mitigants (accepted
for comfort only) but not eligible as collateral
include domiciliation agreements, trust receipts,
negative pledges and master netting agreements
with obligors that have investments in liabilities.
The Group typically does not hold collateral
against investment securities, and no such
collateral was held at 31 December 2015 or 31
December 2014.
Details of collateral held and their carrying
amounts as at 31 December 2015 are as follows:
GROUP COMPANY
Note
Total
exposure
N’000
Value of
collateral
N’000
Total
exposure
N’000
Value of
collateral
N’000
Secured against real estate 100,519,015 140,870,907 – –
Secured by shares of quoted companies 2,099,461 1,622,509 – –
Cash collateral, lien over fixed and floating
assets 282,659,034 331,992,720 – –
Otherwise secured 78,410,455 32,835,059 – –
Unsecured 147,371,736 - – –
24(d) 611,059,701 507,321,195 – –
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Details of collateral held and their carrying amounts as at 31 December 2014 are as follows:
GROUP COMPANY
Note
Total
exposure
N’000
Value of
collateral
N’000
Total
exposure
N’000
Value of
collateral
N’000
Secured against real estate 97,287,082 100,802,180 – –
Secured by shares of quoted companies 1,104,522 1,993,325 – –
Cash Collateral, lien over fixed and floating
assets 237,109,675 291,054,410 – –
Otherwise secured 199,763,165 160,657,974 – –
Unsecured 98,110,753 - – –
24(d) 633,375,197 554,507,889 – –
Loans and advances to corporate customers
The Group’s loans and advances to corporate
obligors are subject to rigorous credit appraisals
commencing with rating of obligor via our
Moody’s Risk Analysis Methodology to determine
the credit worthiness of the customer or its
probability of default known as the obligor risk
rating (ORR) – the Probability of Default (PD) of
a customer is a measure of the obligor risk rating.
Collateral in the form of first charge over real
estate (legal mortgage or mortgage debenture)
or floating and fixed charges over corporate
assets is usually taken to provide additional
comfort to the Group. The measure of the
collateral pledged by the customer is given by
the Facility Risk Rating (FRR) mapped to the
Basel II defined loss given default (LGD)
estimates. The FRR or LGD therefore assesses
the transaction of the customer – risk of loss on
the transaction in the event of default.
All non-retail and retail-SME exposures are
assigned a risk grade by independent Credit
Analysts within our Risk Management Division
based on inputs/discussions with relationship
management teams and verifiable facts. While
the obligor risk rating model dierentiates
borrower risk (i.e. risk of default), the facility risk
rating model dierentiates transaction risk (i.e.
risk of loss in the event of default), taking the
structure of the facility (availability of credit risk
mitigants) into consideration:
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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The Group’s credit analysts are fully guided by
our internal ratings framework and lending
policies, and exhibit a high level of
professionalism and judgement in their
recommendations to Approving Authorities.
Model overrides, if any, require the exceptional
approval of the Chief Risk Ocer and in certain
cases may be escalated to the Board Credit
Committee.
The Group’s Facility Risk Rating model (for non-
retail and retail SME) also reflects the expected
loss (EL) on each transaction, which fully
incorporates both borrower strength (PD) and
loss severity (LGD) considerations. The expected
loss (EL) generated is used as a guide to price
for transactions, being the risk premium and
forms the basis of the treatment provision for
the purpose of capital computation and
allocation to the business groups.
The Group also holds collateral in the form of
cash and marketable securities in respect of sale
and repurchase transactions and securities
borrowing. Receivables relating to reverse sale
and repurchase agreements and securities
borrowing transactions are usually collaterised
on a gross exposure basis. The Group undertakes
master netting agreements with all
counterparties and margin agreements with
some counterparties.
Derivative assets held for risk management
For derivatives, under margin agreements,
collateral is held against net positions that are
partially or fully collateralised. Exposures under
margin agreements are marked to market daily
to assess attendant risks to the Group. There are
no derivative trading assets as at the reporting
period. However, details of derivative transactions
taken for Risk Management is presented below:
2015 2014
9 grades LGD model – facility risk rating
LGD
%
LGD –
MIN %
LGD –
MAX %
LGD
GRADE
LGD
%
LGD –
MIN %
LGD –
MAX %
LGD
GRADE
SECURED 0 0 4.99 AAA 0 0 4.99 AAA
5 5 9.99 AA 5 5 9.99 AA
10 10 14.99 A 10 10 14.99 A
15 15 19.99 BBB 15 15 19.99 BBB
20 20 34.99 BB 20 20 34.99 BB
35 35 39.99 B 35 35 39.99 B
40 40 44.99 CCC 40 40 44.99 CCC
UNSECURED 45 45 74.99 CC 45 45 74.99 CC
75 75 100.00 C 75 75 100.00 C
2015
Fair value
2014
Fair value
Derivative assets held
1,479,760 4,503,005
Derivative liabilities held
1,317,271 4,194,185
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Concentration of credit risk
The Group monitors concentrations of credit risk by sector and by geographic location. An analysis
of concentration of credit risk from loans and advances, lending commitments, financial guarantees
and investment is shown below:
Concentration by location for loans and advance, and for lending commitments and financial
guarantees is based on the customer’s region of domicile within Nigeria. Concentration by location
for investment securities is based on the country of domicile of the issuer of the security.
GROUP
Loans and advances to
customers
Lending commitments and
financials guarantees
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Administrative and support services
2,810,887 2,736,223 792,815 -
Agriculture
36,130,698 38,153,184 6,421,100 3,835,398
Commerce
62,435,107 75,760,760 22,651,529 23,550,581
Construction
6,795,618 8,261,207 34,280,476 53,666,213
Education
6,011,626 6,118,693 - -
Finance and insurance
25,929,197 31,220,948 3,755,806 5,007,763
General – others
2,415,254 4,053,605 30,000 7,819,784
Government
828,927 28,770,132 - -
Hospitality
5,631,602 5,334,617 5,141,978 -
Individual
134,670,018 118,738,098 - -
Information and communication
27,080,934 29,589,230 983,784 1,431,135
Manufacturing
53,827,478 50,032,160 41,794,084 82,551,867
Oil and gas – downstream
47,194,990 55,982,256 6,679,938 17,377,325
Oil and gas – upstream and services
98,261,888 92,130,028 5,580,400 2,651,211
Power and energy
27,227,859 24,706,597 567,476 613,852
Professional services
4,182,228 2,708,453 86,954 -
Real estate
62,106,778 50,253,947 11,807,237 11,840,614
Transportation
7,518,612 8,825,059 457,951 701,387
611,059,701 633,375,197 141,031,528 211,047,130
GROUP
Loans and advances to
customers
Lending commitments and
financials guarantees
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
North East
5,764,706 4,616,782 107,828 388,200
North Central
54,159,227 69,699,385 17,712,686 27,979,023
North West
22,080,705 19,302,058 435,697 1,191,040
South East
13,250,670 14,353,780 2,595,316 1,743,509
South South
25,179,752 30,890,802 13,045,893 16,254,848
South West
477,705,054 487,396,177 107,134,108 163,490,510
Europe
12,919,587 7,116,213 - -
611,059,701 633,375,197 141,031,528 211,047,130
Concentration by sector
Concentration by location
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Trading assets
The Group’s trading book comprises only
debt securities and bills issued by the
Federal Government of Nigeria. The capital
charge for the trading book is computed using
the standardised approach. The standardised
approach adopts a building block approach to
capital computation, where the individual capital
requirements for the dierent risk positions are
summed together. Under the methodology,
capital charge is computed for Issuer Risk,
otherwise known as specific risk and for General
Market Risk, which may result from adverse
movement in market price. The capital charges
cover the Group’s debt and market instruments
in the trading book and the total banking book
for Foreign Exchange. The standardised method
ignores diversification of risk and the risk
positions are captured as on the day and not for
a period.
The deployment of Value at Risk (VaR) will
enable the Group to migrate to the internal
model approach, which measures market risk
loss at a given level of confidence and over a
specified period. Also, this approach accounts
for diversification (which is not done under
standardised method).
An analysis of the counterparty credit exposure
for the trading assets is as shown in the table
below:
GROUP
31 December 2015
Issuer
rating
0–30 days
N’000
31–90 days
N’000
91–180 days
N’000
181–365 days
N’000
Above
365 days
N’000
Total
N’000
Security type
FGN bonds
BB-
591,882 - - - - 591,882
Nigerian treasury bills
BB-
1,247,395 - - - - 1,247,395
Equity investments
BB-
155,073 - - - - 155,073
1,994,350 - - - - 1,994,350
GROUP
31 December 2014
Issuer
rating
0–30 days
N’000
31–90 days
N’000
91–180 days
N’000
181–365 days
N’000
Above
365 days
N’000
Total
N’000
Security type
FGN bonds
BB-
- - - - - -
Nigerian treasury bills
BB-
110,961 - - - - 110,961
Equity investments
BB-
630,956 - - - - 630,956
741,917 - - - - 741,917
Cash and cash equivalents
The Group held cash and cash equivalents of
N180.93 billion as at 31 December 2015 (31
December 2014: N126.29 billion). The cash and
cash equivalents are held with the Central Bank,
financial institutions and counterparties which
are rated BBB- to AA based on acceptable
external rating agency’s ratings.
Settlement risk
The Group, like its peers in the industry, is
exposed to settlement risk – the risk of loss due
to the failure of an entity to honour its obligations
to deliver cash, securities or other assets as
contractually agreed.
This risk is generally mitigated through
counterparty limits set to manage the Group’s
FCMB Group Plc Annual Report and Accounts 2015 97
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exposure to these counterparties. The
counterparty limits are approved by the Executive
Management and the Board of Directors.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will
encounter diculty in meeting obligations
associated with its financial liabilities that are
settled by delivering cash or other financial assets.
It is the potential loss to the Group arising from
either its inability to meet its obligations or to fund
committed increases in assets as they fall due
without incurring unacceptable costs or losses.
Management of liquidity risk
The Board of Directors sets the strategy for
liquidity risk and delegates the responsibility for
oversight and implementation of the policy to
the Assets and Liability Committee (ALCO). The
liquidity position is managed daily by Treasury
and Financial Services in conjunction with Market
Risk Management. Assessment of liquidity is
carried out through daily and weekly reports
aimed at evaluating limit compliance across all
the key liquidity management criteria e.g. funding
gap, liquidity mismatches, etc.
ALCO has the primary responsibility for
managing liquidity risk arising from assets and
liability creation activities. Deliberate strategies
put in place to ensure the Group is protected
from liquidity risk include:
liquidity risk identification at transaction,
portfolio and entity levels using the defined
early warning liquidity risk indicators with
quantified metrics for measurement on
parameters, such as deposit attrition, funding
mismatch and funding concentrations, to
mention a few;
establishment of the Group’s liquidity risk
appetite, which is the amount of risk FCMB is
willing to accept in pursuit of value using
relevant liquidity risk ratios and assets, and
liability funding gaps;
establishment of methodologies for measuring
and reporting on the Group’s liquidity risk
profile against set appetite and also sensitising
against unforeseen circumstances using
liquidity risk scenario analysis;
establishment of preventive (limit-setting and
management) as well as corrective
(contingency funding plan – CFP) controls
over liquidity risk;
maintaining a diversified funding base
consisting of customer deposits (both retail
and corporate) and wholesale market
deposits, and maintaining contingency
deposits and contingency liabilities;
carrying a portfolio of highly liquid assets,
diversified by currency and maturity; and
monitoring liquidity ratios, maturity
mismatches, behavioural characteristics of
the Group’s financial assets and liabilities, and
the extent to which they are encumbered.
The Group conducts regular stress testing on its
liquidity position using dierent scenarios
including normal, mild and severe stress
situations. The scenarios anticipate changes in
key financial indicators, such as interest rate
movement, sharp reduction in Development
Financial Institutions (DFIs) as a result of current
security challenges, and economic downturn
among others. Stress results are presented to
ALCO to elicit proactive liquidity management
decisions. The committee’s resolutions are
tracked for impact assessment and anticipated
stability in liquidity management.
The Risk Management Division provides the
necessary analytics (Maturity/Repricing Gap and
Balance Sheet Analysis) required for taking
proactive liquidity management decisions. The
Group’s Treasury and Financial Services Division
is responsible for executing ALCO decisions and
in particular, ensuring that the Group is optimally
and profitably funded at any point in time.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Liquidity ratio, which is a measure of liquidity risk, is calculated as a ratio of Naira liquid assets to
local currency deposits and it is expressed in percentages.
The exposure to liquidity risk during the review period is as presented below:
Maturity analysis for financial assets and liabilities
The table below analyses financial assets and liabilities of the Group into relevant maturity groupings
based on the remaining period at balance sheet date to the contractual maturity date. These include
both principal and interest cash flows across the dierent maturity periods. The following tables
show the undiscounted cash flows on the Group’s financial assets and liabilities and on the basis of
their earliest possible contractual maturity. The Gross nominal inflow/(outflow) disclosed in the table
is the contractual, undiscounted cash flow on the financial assets and liabilities.
2015 2014
At 31 December
35.8% 32.3%
Average for the year
38.6% 34.5%
Maximum for the year
48.6% 47.1%
Minimum for the year
33.0% 30.9%
Exposure to liquidity risk
The key measures adopted by the Group for
liquidity management are maturity profile on
and o balance sheet and maturity analysis.
Details of the reported ratio of the Group’s net
liquid assets to deposit from customers as at the
reporting period is given as:
GROUP
31 December 2015 Note Carrying amount
Gross nominal
inflow/(outflow)
Non-derivative assets
Cash and cash equivalent
20 180,921,698 180,921,698
Restricted reserve deposits 21 125,552,318 125,552,318
Non-pledged trading assets 22 1,994,350 1,964,546
Loans and advances to customers 24 592,957,417 584,623,850
Assets pledged as collateral 26 51,777,589 51,777,589
Investment securities 25 135,310,147 116,093,996
Other financial assets 16,655,644 34,198,432
Derivative assets
Derivative assets held
23 1,479,760 994,740
1,106,648,923 1,096,127,169
Non-derivative liabilities
Deposits from banks
33 5,461,038 4,933,089
Deposits from customers 34 700,216,706 693,863,607
Borrowings 35 113,700,194 105,135,097
On-lending facilities 36 33,846,116 33,298,618
Debt securities issued 37 49,309,394 49,185,000
Other financial liabilities 39(a) 85,276,384 85,203,116
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GROUP
31 December 2015 Note
0–30
days
N’000
31–90
days
N’000
91–180
days
N’000
181–365
days
N’000
1–5
years
N’000
Above
5 years
N’000
Total
N’000
Non-derivative assets
Cash and cash
equivalent
20 180,921,698 - - - - - 180,921,698
Restricted reserve
deposits 21 125,552,318 - - - - - 125,552,318
Non-pledged trading
assets 22 1,994,350 - - - - - 1,994,350
Loans and advances
to customers 24 90,558,713 100,630,380 33,921,364 34,241,517 283,352,178 41,919,698 584,623,850
Assets pledged as
collateral 26 - - 7,934,482 7,673,500 23,133,198 13,036,409 51,777,589
Investment securities 25 1,399,637 11,345,434 9,110,754 16,289,895 49,141,459 28,806,817 116,093,996
Other financial assets 32(a) 24,181,036 - - 183,009 9,834,387 - 34,198,432
Derivative assets
Derivative assets held
23 - - - - 994,740 - 994,740
424,607,752 111,975,814 50,966,600 58,387,921 366,455,962 83,762,924 1,096,156,973
Non-derivative
liabilities
Deposits from banks
33 4,225,802 707,287 - - - - 4,933,089
Deposits from
customers 34 512,846,734 13,171,236 127,224,832 40,615,725 5,080 - 693,863,607
Borrowings 35 5,605,147 - - 25,323,811 67,630,881 6,575,258 105,135,097
On-lending facilities 36 - - - - 3,062,378 30,236,240 33,298,618
Debt securities issued 37 - - - - - 49,185,000 49,185,000
Other financial
liabilities 39(a) 15,197,205 - 30,636,447 39,369,464 - - 85,203,116
Derivative liabilities
Derivative liabilities
held
23 - - - - - 915,730 915,730
537,874,888 13,878,523 157,861,279 105,309,000 70,698,339 86,912,228 972,534,257
Net liquidity gap (85,717,418) 98,097,291 (106,894,679) (46,921,079) 295,757,623 (3,149,304) 123,622,716
GROUP
31 December 2015 Note Carrying amount
Gross nominal
inflow/(outflow)
Derivative liabilities
Derivative liabilities held
23 1,317,271 915,730
989,127,103 972,534,257
Net liquidity gap 117,521,820 123,595,912
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP
31 December 2014 Note Carrying amount
Gross nominal
inflow/(outflow)
Non-derivative assets
Cash and cash equivalent
20 126,293,809 126,293,809
Restricted reserve deposits 21 146,105,573 146,105,573
Non-pledged trading assets 22 741,917 741,917
Loans and advances to customers 24 617,979,790 617,979,790
Assets pledged as collateral 26 53,812,420 53,812,420
Investment securities 25 148,286,830 148,286,830
Other financial assets 32(a) 21,924,532 21,924,532
Derivative assets
Derivative assets held
23 4,503,005 4,503,005
1,119,647,876 1,119,647,876
Non-derivative liabilities
Deposits from banks
33 4,796,752 4,796,752
Deposits from customers 34 733,796,796 739,238,838
Borrowings 35 99,540,346 99,900,684
On-lending facilities 36 14,913,521 14,913,521
Debt securities issued 37 26,174,186 26,174,186
Other financial liabilities 39(a) 115,082,785 115,082,785
Derivative liabilities
Derivative liabilities held
23 4,194,185 4,194,185
998,498,571 1,004,300,951
Net liquidity gap 121,149,305 115,346,925
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GROUP
31 December 2014 Note
0–30
days
N’000
31–90
days
N’000
91–180
days
N’000
181–365
days
N’000
1–5
years
N’000
Above
5 years
N’000
Total
N’000
Non-derivative assets
Cash and cash
equivalent
20 126,293,809 - - - - - 126,293,809
Restricted reserve
deposits 21 146,105,573 - - - - - 146,105,573
Non-pledged trading
assets 22 741,917 - - - - - 741,917
Loans and advances
to customers 24 91,753,853 62,337,525 10,567,353 37,302,267 415,072,815 945,977 617,979,790
Assets pledged as
collateral 26 3,653,716 - 9,000,000 7,934,482 33,224,222 - 53,812,420
Investment securities 25 22,397,307 17,267,263 22,595,321 31,643,106 13,556,901 40,826,932 148,286,830
Other financial assets 32(a) - - - 13,298,749 6,594,337 2,031,446 21,924,532
Derivative assets
Derivative assets held
23 - 4,503,005 - - - - 4,503,005
390,946,175 84,107,793 42,162,674 90,178,604 468,448,275 43,804,355 1,119,647,876
Non-derivative
liabilities
Deposits from banks
33 4,796,752 - - - - - 4,796,752
Deposits from
customers 34 561,931,289 123,100,819 39,934,113 8,727,618 102,957 - 733,796,796
Borrowings 35 - - 11,187,332 15,606,168 30,539,367 42,207,479 99,540,346
On-lending facilities 36 - - - - 14,913,521 - 14,913,521
Debt securities issued 37 - - - - - 26,174,186 26,174,186
Other financial
liabilities 39(a) 8,143,507 - - 105,261,569 1,825,974 - 115,231,050
Derivative liabilities
Derivative liabilities
held
23 - 4,194,185 - - - - 4,194,185
574,871,548 127,295,004 51,121,445 129,595,355 47,381,819 68,381,665 998,646,836
Net liquidity gap (183,925,373) (43,187,211) (8,958,771) (39,416,751) 421,066,456 (24,577,310) 121,001,040
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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The Group’s expected cash flows on some
financial assets and financial liabilities vary
significantly from the contractual cash flows. The
principal dierences are as follows:
demand deposits from customers are
expected to remain stable or increase;
unrecognised loan commitments are not all
expected to be drawn down immediately; and
retail mortgage loans have an original
contractual maturity of between 10 and
15 years, but an average expected maturity of
six years because customers take advantage
of early repaymentoptions.
As part of the management of liquidity risk
arising from financial liabilities, the Group holds
liquid assets comprising cash and cash
equivalents, and debt securities issued by Central
Bank of Nigeria, which can be readily sold to
meet liquidity requirements. In addition, the
Group maintains agreed lines of credit with other
banks and holds unencumbered assets eligible
for use as collateral with the Central Bank of
Nigeria.
Type of financial instrument Basis on which amounts are compiled
Non-derivative financial liabilities
and financial assets
Undiscounted cash flows, which include estimated interest payments.
Derivative financial liabilities and
financial assets held
Contractual undiscounted cash flows. The amounts shown are the
gross nominal inflows and outflows for derivatives that have
simultaneous gross settlement and the net amounts for derivatives
that are netsettled.
Trading derivative liabilities and
assets forming part of the Group’s
proprietary trading operations
that are expected to be closed out
before contractual maturity
Fair values at the date of the statement of financial position. This is
because contractual maturities are not reflective of the liquidity risk
exposure arising from these positions. These fair values are disclosed
in the ‘less than 0–30 days’ column.
Trading derivative liabilities and
assets that are entered into by the
Group with its customers
Contractual undiscounted cash flows. This is because these
instruments are not usually closed out before contractual maturity and
so the Group believes that contractual maturities are essential for
understanding the timing of cash flows associated with these
derivativepositions.
Issued financial guarantee
contracts and unrecognised loan
commitments
Earliest possible contractual maturity. For issued financial guarantee
contracts, the maximum amount of the guarantee is allocated to the
earliest period in which the guarantee could be called.
The amounts in the table on the previous page have been compiled as follows:
31 December Note
Carrying
amount 2015
N’000
Fair value
2015
N’000
Carrying
amount 2014
N’000
Fair value
2014
N’000
Balances with the Central Banks 45,461,265 45,461,265 8,765,280 8,765,280
Cash and balances with other banks 20 135,460,433 135,460,433 117,528,529 117,528,529
Unencumbered debt securities issued by
Federal Government of Nigeria 98,339,668 75,914,691 117,580,710 105,044,049
Total liquidity reserve 279,261,366 256,836,389 243,874,519 231,337,858
Liquidity reserves
The table below sets out the components of the Group’s liquidity reserve.
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31 December 2015
Encumbered Unencumbered
Note
Pledged as
collateral
N
’000
Other*
N’000
Available as
collateral
N’000
Other**
N’000
Total
N’000
Cash and cash equivalents 20 - - 180,921,698 - 180,921,698
Restricted reserve deposits 21 - 125,552,318 - - 125,552,318
Derivative assets held 23 - - - 1,479,760 1,479,760
Trading assets 22 - - - 1,994,350 1,994,350
Loans and advances 24 - - - 592,957,417 592,957,417
Assets pledged as collateral 26 51,777,589 - - - 51,777,589
Investment securities 25 - - 135,310,147 - 135,310,147
Other assets 32 - - 16,655,644 16,655,644
Total assets 51,777,589 125,552,318 316,231,845 613,087,171 1,106,648,923
31 December 2014
Encumbered Unencumbered
Note
Pledged as
collateral
N
’000
Other*
N’000
Available as
collateral
N’000
Other**
N’000
Total
N’000
Cash and cash equivalents 20 - - 126,293,809 - 126,293,809
Restricted reserve deposits 21 - 146,105,573 - - 146,105,573
Derivative assets held 23 - - - 4,503,005 4,503,005
Trading assets 22 - - - 741,917 741,917
Loans and advances 24 - - - 617,979,790 617,979,790
Assets pledged as collateral 26 53,812,420 - - - 53,812,420
Investment securities 25 - - 148,286,830 - 148,286,830
Other assets 32 - - - 26,087,683 26,087,683
Other non-financial assets 29,30,31 - - 36,740,117 8,813,640 45,553,757
Total assets 53,812,420 146,105,573 311,320,756 658,126,035 1,169,364,784
* Represents assets which are not pledged but the Group believes they are restricted (either by law
or other reasons) from being used to secure funding.
** These are assets that are available i.e. not restricted as collateral to secure funding but the Group
would not consider them as readily available in the course of regular business.
Included in the unencumbered debt securities issued by Federal Government of Nigeria are:
Federal Government of Nigeria (FGN) Bonds N57.83 billion (31 December 2014: N37.78 billion),
Treasury Bills N40.34 billion (31 December 2014: N68.82 billion) under Notes 22, 25(a) and (b).
Financial assets available to support future funding
The table below shows availability of the Group’s assets to support future funding:
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015104
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Financial assets pledged as collateral
The total financial assets recognised in the
statement of financial position that had been
pledged as collateral for liabilities at 31
December 2015 and 31 December 2014 are
shown in the preceding table.
Financial assets are pledged as collateral as part
of securities borrowing, clearing and client’s
collection transactions under terms that are
usual and customary for such activities.
(d) Market Risk
Market risk is the risk that changes in market
prices such as interest rate, equity/commodity
prices, foreign exchange rates will aect the
Group’s income or the value of its holdings in
financial instruments. The objective of the Group’s
market risk management is to manage and control
market risk exposures within acceptable
parameters in order to ensure the Group’s
solvency while optimising the return on risk.
Management of market risk
Market risk is the risk that movements in market
factors, including foreign exchange rates and
interest rates, credit spreads and equity prices,
will reduce the Group’s income or the value of
its portfolios. The Group classifies its market risk
into asset and liability management (ALM) risk,
investment risk and trading risk.
The Group separates its market risk exposures
between trading and non-trading portfolios.
Trading portfolios are mainly held by the
Treasury and Financial Services Group and
include positions from market making and
proprietary positions taking, together with
financial assets and liabilities that are managed
on fair value basis.
The Group has a robust methodology and
procedures for the identification, assessment,
measurement, control, monitoring and reporting
of market risks within its trading portfolio and
the rest of the Group’s balance sheet. The
market risk management unit within the Risk
Management Division is responsible for
measuring market risk exposures in accordance
with the policies defined by the Board,
monitoring and reporting the exposures against
the prescribed limits.
Overall authority for market risk is vested by the
board in ALCO, which sets up limits for each type
of risk in aggregate. However, the market risk unit
within Risk Management is responsible for limit
tracking and reporting to the Chief Risk Ocer
and ultimately, ALCO. The Group employs a
range of tools to monitor and ensure risk
acceptance is kept within defined limit. Details of
market risk exposures as at 31 December 2015
are provided below:
GROUP COMPANY
31 December 2015
Note
Carrying
amount
N’000
Trading
portfolios
N’000
Non-trading
portfolios
N’000
Carrying
amount
N’000
Trading
portfolios
N’000
Non-trading
portfolios
N’000
Assets subject to
market risk:
Cash and cash
equivalents
20 180,921,698 - 180,921,698 7,231,196 - 7,231,196
Trading assets 22 1,994,350 1,994,350 - - - -
Derivative assets held 23 1,479,760 - 1,479,760 - - -
Loans and advances to
customers 24 592,957,417 - 592,957,417 - - -
Assets pledged as
collateral 26 51,777,589 - 51,777,589 - - -
Market risk measures
The table below sets out the allocation of assets and liabilities subject to market risk between trading
and non-trading portfolio.
FCMB Group Plc Annual Report and Accounts 2015 105
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GROUP COMPANY
31 December 2014
Note
Carrying
amount
N
’000
Trading
portfolios
N’000
Non-trading
portfolios
N’000
Carrying
amount
N’000
Trading
portfolios
N’000
Non-trading
portfolios
N’000
Assets subject to
market risk:
Cash and cash
equivalents
20 126,293,809 - 126,293,809 4,056,165 - 4,056,165
Trading assets 22 741,917 741,917 - - - -
Derivative assets held 23 4,503,005 - 4,503,005 - - -
Loans and advances to
customers 24 617,979,790 - 617,979,790 - - -
Assets pledged as
collateral 26 53,812,420 - 53,812,420 - - -
Investment securities 25 148,286,830 - 148,286,830 2,828,220 - 2,828,220
–
Liabilities subject to
market risk: –
Derivative liabilities held 23 4,194,185 - 4,194,185 - - -
Deposits from banks 33 4,796,752 - 4,796,752 - -
Deposits from customers 34 733,796,796 - 733,796,796 - - -
Borrowings 35 99,540,346 - 99,540,346 - - -
On-lending facilities 36 14,913,521 - 14,913,521 - - -
Debt securities issued 37 26,174,186 - 26,174,186 - - -
GROUP COMPANY
31 December 2015
Note
Carrying
amount
N’000
Trading
portfolios
N’000
Non-trading
portfolios
N’000
Carrying
amount
N’000
Trading
portfolios
N’000
Non-trading
portfolios
N’000
Investment securities 25 135,310,147 - 135,310,147 2,013,621 - 2,013,621
Liabilities subject to
market risk:
Derivative liabilities held
23 1,317,271 - 1,317,271 - - -
Deposits from banks 33 5,461,038 - 5,461,038 - -
Deposits from customers 34 700,216,706 - 700,216,706 - - -
Borrowings 35 113,700,194 - 113,700,194 - - -
On-lending facilities 36 33,846,116 - 33,846,116 - - -
Debt securities issued 37 49,309,394 - 49,309,394 - - -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015106
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Exposure to interest rate risk – non-trading
portfolios
The principal risk to which non-trading portfolios
are exposed is the risk of loss arising from
fluctuations in the fair values of future cash
flows from financial instruments because of a
change in the market interest rate. Interest rate
risk is managed principally through active
monitoring of gaps and by having pre-approved
limits for repricing bands. ALCO is the monitoring
body for compliance with these limits and is
assisted by the Treasury and Financial Services
group.
A summary of the interest rate gap position on
non-trading portfolios is as follows:
GROUP
31 December 2015 Note
Carrying
amount
N’000
0–30
days
N’000
31–90
days
N’000
91–180
days
N’000
181–365
days
N’000
1–5
years
N’000
Above
5 years
N’000
Assets subject to
market risk:
Cash and cash
equivalents
20 180,921,698 180,921,698 - - - - -
Derivative assets
held 23 1,479,760 - - - - 994,740 -
Loans and
Advances to
customers 24 592,957,417 98,892,280 100,630,380 33,921,364 34,241,517 283,352,178 41,919,698
Assets pledged as
collateral 26 51,777,589 - - 7,934,482 7,673,500 23,133,198 13,036,409
Investment
securities 25 135,310,147 20,615,788 11,345,434 9,110,754 16,289,895 49,141,459 28,806,817
962,446,611 300,429,766 111,975,814 50,966,600 58,204,912 356,621,575 83,762,924
Liabilities subject to
market risk:
Derivative liabilities
held
23 1,317,271 - 1,317,271 - - - -
Deposits from
banks 33 5,461,038 4,225,802 707,287 - - - -
Deposits from
customers 34 700,216,706 512,846,734 13,171,236 127,224,832 40,615,725 5,080 -
Borrowings 35 113,700,194 - - - 39,477,030 67,630,881 6,575,258
On-lending facilities 36 33,846,116 - - - - 3,062,378 30,236,240
Debt securities
issued 37 49,309,394 - - - - - 49,185,000
903,850,719 517,072,536 15,195,794 127,224,832 80,092,755 70,698,339 85,996,498
FCMB Group Plc Annual Report and Accounts 2015 107
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GROUP
31 December 2014 Note
Carrying
amount
N’000
0–30
days
N’000
31–90
days
N’000
91–180
days
N’000
181–365
days
N’000
1–5
years
N’000
Above
5 years
N’000
Assets subject to
market risk:
Cash and cash
equivalents
20 126,293,809 126,293,809 - - - - -
Derivative assets
held 23 4,503,005 - 4,503,005 - - - -
Loans and advances
to customers 24 617,979,790 91,753,853 62,337,525 10,567,353 37,302,267 415,072,815 945,977
Assets pledged as
collateral 26 53,812,420 3,653,716 - 9,000,000 7,934,482 33,224,222 -
Investment securities 25 148,286,830 22,397,307 17,267,263 22,595,321 31,643,106 13,556,901 40,826,932
950,875,854 244,098,685 84,107,793 42,162,674 76,879,855 461,853,938 41,772,909
Liabilities subject to
market risk:
Derivative liabilities
held
23 4,194,185 - 4,194,185 - - - -
Deposits from banks 33 4,796,752 4,796,752
Deposits from
customers 34 733,796,796 561,931,289 123,100,819 39,934,113 8,727,618 102,957 -
Borrowings 35 99,540,346 - - 11,187,332 15,606,168 30,539,367 42,207,479
On-lending facilities 36 14,913,521 - - - - 14,913,521 -
Debt securities
issued 37 26,174,186 - - - - - 26,174,186
883,415,786 566,728,041 127,295,004 51,121,445 24,333,786 45,555,845 68,381,665
Sensitivity of projected net interest income
The management of interest rate risk against
interest rate gap is supplemented by monitoring
the sensitivity of the Group’s financial assets
and liabilities to various standard and non-
standard interest rate scenarios. Standard
scenarios that are considered on a monthly
basis include a 50 basis point (bp) and 100
basis point parallel fall or rise. The financial
assets and liabilities sensitive to interest rate
risk are loans and advances and deposits. A
weighted average rate has been applied and
the eects are shown in the table below:
GROUP
31 December 2015 Note
Gross
amount
N’000
Weighted
average
interest rate
N
’000
Interest due
at current
weighted
average rate
N
’000
50bp
N’000
(50bp)
N’000
100bp
N’000
Total
(100bp)
N’000
Loans and
advances 24 611,059,701 16% 99,646,910 102,702,209 96,591,611 105,757,507 93,536,313
Deposits 34 700,216,706 6% (45,331,824) (48,832,908) (41,830,740) (52,333,991) (38,329,657)
54,315,086 53,869,301 54,760,871 53,423,516 55,206,656
Impact on net
interest income (445,785) 445,785 (891,570) 891,570
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015108
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Exposure to other market risk non-trading
portfolios
The non-trading book includes the loans,
deposits, investments, placements, etc. Price risk
in non-trading portfolios is measured with
portfolio duration and convexity. The sensitivity
of earnings to specified upward and downward
instantaneous parallel 100 and 200 basis point
shifts in the yield curve, over one-year horizons
under business-as-usual conditions assuming
static portfolio indicates the potential risk.
Exposure to other market risk trading portfolios
The trading book includes Treasury Bills and
Federal Government of Nigeria bonds. The
sensitivity to earnings was not considered
because the portfolio is rather insignificant.
Foreign exchange risk
The Group takes on foreign exchange risks
through its activities in both the trading and
banking books. The Group engages in currency
trading on behalf of itself and creates foreign
currency positions on the banking book in the
course of its financial intermediation role. The
Group is thus exposed to the risk of loss on both
its trading and banking book positions in the
event of adverse movements in currency prices.
The market-to-mark currency rates applied are
the average interbank rates published by FMDQ
OTC Securities Exchange (FMDQ).
However, the Group sets exposure limits (open
position limits) at currency levels and uses a
combination of counterparty, dealer and stop
loss limits to manage market risks inherent in all
foreign currency trading positions. All limits are
set for both overnight and intra-day positions
and approved by the Board of Directors.
Compliance with the Board approved limits is
enforced through daily monitoring by the Risk
Management Division.
GROUP
31 December 2014 Note
Gross
amount
N’000
Weighted
average
interest rate
N
’000
Interest due
at current
weighted
average rate
N
’000
50bp
N’000
(50bp)
N’000
100bp
N’000
Total
(100bp)
N’000
Loans and
advances 24 621,704,427 14% 89,923,116 93,031,638 86,814,594 96,140,160 83,706,072
Deposits 34 733,796,796 5% (38,030,311) (41,699,295) (34,361,327)(45,368,279) (30,692,343)
51,892,805 51,332,343 52,453,267 50,771,881 53,013,729
Impact on net
interest income (560,462) 560,462 (1,120,924) 1,120,924
FCMB Group Plc Annual Report and Accounts 2015 109
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GROUP
31 December 2015 Note
NGN
N’000
USD
N’000
GBP
N’000
EUR
N’000
Other
N’000
Grand total
N’000
ASSETS
Cash and cash equivalents
20 75,327,852 94,493,368 3,778,743 7,319,209 2,526 180,921,698
Restricted reserve deposit 21 125,552,318 - - - - 125,552,318
Non-pledged trading assets 22 1,994,350 - - - - 1,994,350
Derivative assets held 23 - 1,479,760 - - - 1,479,760
Loans and advances (net) 24 355,331,473 237,266,008 233 359,703 - 592,957,417
Investment securities 25 132,490,452 2,801,100 - 18,595 - 135,310,147
Investment in associates 28 731,964 - - - - 731,964
Intangible assets 30 8,920,792 47,747 - - - 8,968,539
Assets pledged as collateral 26 51,777,589 - - - - 51,777,589
Deferred tax assets 31 8,166,241 - - - - 8,166,241
Other assets 32 11,242,207 10,425,032 24,575 11,601 - 21,703,415
Property and equipment 29 29,910,395 60,343 - - - 29,970,738
Total assets 801,445,633 346,573,358 3,803,551 7,709,108 2,526 1,159,534,176
LIABILITIES
Deposits from customers
34 544,384,862 149,156,982 1,566,963 5,107,892 7 700,216,706
Deposits from banks 33 - 5,461,038 - - - 5,461,038
Borrowings 35 13,824,342 99,875,852 - - - 113,700,194
On-lending facilities 36 33,846,116 - - - - 33,846,116
Debt securities issued 37 49,309,394 - - - - 49,309,394
Derivative liability held 23 - 1,317,271 - - - 1,317,271
Current income tax liabilities 19(v) 3,497,954 - - - - 3,497,954
Other liabilities 39 45,306,974 42,888,208 314,517 1,451,445 749 89,961,893
Deferred taxation 31 68,438 - - - - 68,438
Retirement benefit
obligations 38 50,544 - - - - 50,544
Total liabilities 690,288,624 298,699,351 1,881,480 6,559,337 756 997,429,548
Net on-balance sheet
financial position 111,157,009 47,874,007 1,922,071 1,149,771 1,770 162,104,628
Off-balance sheet financial
position 3,172,311 132,813,540 172,260 5,904,089 - 142,062,200
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015110
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Financial
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Shareholder
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Other National
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Branches and Account
Opening Information
GROUP
31 December 2014 Note
NGN
N’000
USD
N’000
GBP
N’000
EUR
N’000
Others
N’000
Grand total
N’000
ASSETS
Cash and cash equivalents
20 40,671,826 73,747,236 3,636,024 8,229,847 8,876 126,293,809
Restricted reserve deposit 21 146,105,573 - - - - 146,105,573
Non-pledged trading assets 22 741,917 - - - - 741,917
Derivative assets held 23 - 4,503,005 - - - 4,503,005
Loans and advances (net) 24 351,685,329 261,344,279 220 4,949,962 - 617,979,790
Investment securities 25 145,927,935 2,358,895 - - - 148,286,830
Investment in associates 28 647,399 - - - - 647,399
Intangible assets 31 8,300,563 47,747 - - - 8,348,310
Assets pledged as collateral 32 53,812,420 - - - - 53,812,420
Deferred tax assets 29 8,166,241 - - - - 8,166,241
Other assets 30 24,656,148 1,373,682 47, 357 10,496 - 26,087,683
Property and equipment 34 28,331,464 60,343 - - - 28,391,807
Total assets 809,046,815 343,435,187 3,683,601 13,190,305 8,876 1,169,364,784
LIABILITIES
Deposits from customers
34 576,309,458 149,556,217 1,863,689 6,067,426 6 733,796,796
Deposits from banks 33 - 4,796,752 - - - 4,796,752
Borrowings 35 14,687,974 84,852,372 - - - 99,540,346
On-lending facilities 36 14,913,521 - - - - 14,913,521
Debt securities issued 37 26,174,186 26,174,186
Derivative liability held 23 - 4,194,185 - - - 4,194,185
Current income tax liabilities 19(v) 4,363,544 - - - - 4,363,544
Other liabilities 39 54,939,765 59,880,806 135,924 6,099,978 7,007 121,063,480
Deferred taxation 31 41,487 - - - - 41,487
Retirement benefit
obligations 38 115,056 - - - - 115,056
Total liabilities 691,544,991 303,280,332 1,999,613 12,167,404 7,013 1,008,999,353
Net on-balance sheet
financial position 117,501,824 40,154,855 1,683,988 1,022,901 1,863 160,365,431
Off-balance sheet financial
position 64,503,116 127,400,475 398,889 3,940,879 - 196,243,359
FCMB Group Plc Annual Report and Accounts 2015 111
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Other National
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Branches and Account
Opening Information
In line with Central Bank of Nigeria guidelines,
the percentage of foreign borrowings to the
shareholders’ fund as at 31 December 2015 is
52.61% (31 December 2014: 39.12%), which is
below the limit of 75%.
Exposure to currency risks – non-trading
portfolios
At 31 December 2015, if foreign exchange rates
at that date had been 10% lower with all other
variables held constant, profit and equity for
the year would have been N4.78 billion (31
December 2014: N4.00 billion) lower, arising
mainly as a result of the higher decrease in
revaluation of loans than the borrowings,
foreign currency deposits and other foreign
currency liabilities. If foreign exchange rates
had been 10% higher, with all other variables
held constant, profit and equity would have
been N4.78 billion (31 December 2014: N4.00
billion) higher, arising mainly as a result of
higher increase in revaluation of loans and
advances than the increase on borrowings,
foreign currency deposits and other foreign
currency liabilities.
The following analysis details the Group’s
sensitivity to a 10% increase and decrease in
the value of the Naira against USD, as the Group
is mainly exposed to USD. 10% is the sensitivity
rate used when reporting foreign currency risk
internally and represents management’s
assessment of the reasonably possible change
in foreign exchange rates. The table below
summarises the impact on profit or loss and
equity for each category of USD financial
instruments held as at 31 December 2015. It
includes the Group’s USD financial instruments
at carrying amounts.
2015 2014
Carrying
amount
N
’000
10%
decrease in
the value
of Naira
against USD
N
’000
10%
increase
in the value
of Naira
against USD
N
’000
Carrying
amount
N’000
10%
decrease in
the value
of Naira
against USD
N
’000
10%
increase
in the value
of Naira
against USD
N
’000
Financial assets
Cash and cash equivalents
94,493,368 9,449,337 (9,449,337) 73,747,236 7,374,724 (7,374,724)
Derivative assets held 1,479,760 147,976 (147,976) 4,503,005 450,301 (450,301)
Loans and advances to
customers 237,266,008 23,726,601 (23,726,601) 261,344,279 26,134,428 (26,134,428)
Investment securities 2,801,100 280,110 (280,110) 2,358,895 235,890 (235,890)
Other assets 10,425,032 1,042,503 (1,042,503) 1,373,682 137,368 (137,368)
Impact on financial assets 346,465,268 34,646,527 (34,646,527) 343,327,097 34,332,711 (34,332,711)
Financial liabilities
Deposits from banks
5,461,038 546,104 (546,104) 4,796,752 479,675 (479,675)
Deposits from customers 149,156,982 14,915,698 (14,915,698) 149,556,217 14,955,622 (14,955,622)
Borrowings 99,875,852 9,987,585 (9,987,585) 84,852,372 8,485,237 (8,485,237)
Derivative liabilities held 1,317,271 131,727 (131,727) 4,194,185 419,419 (419,419)
Other liabilities 42,888,208 4,288,821 (4,288,821) 59,880,806 5,988,081 (5,988,081)
Impact on financial liabilities 298,699,351 29,869,935 (29,869,935) 303,280,332 30,328,034 (30,328,034)
Total increase/(decrease) 47,765,917 4,776,592 (4,776,592) 40,046,765 4,004,677 (4,004,677)
Foreign exchange risk
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015112
Introduction Operating
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Financial
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Other National
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Opening Information
(e) Operational Risk Management
The Group defines operational risk as the risk of
loss resulting from inadequate or failed internal
processes, people and systems or from external
events. Our operational risk processes capture
the following major types of losses:
fraud (internal and external);
fines, penalties or expenses incurred as a
result of settlement delays and regulatory
infractions;
losses arising from litigation processes
including out-of-court settlements;
un-reconciled cash (teller, vault, ATM)
shortages written o in the course of the
year;
losses incurred as a result of damages to the
Group’s assets; and
losses incurred as a result of system
downtime, malfunction and/or disruption.
The Group’s appetite for operational risk losses is
set by the Board Risk, Audit and Finance
Committee (BRAFC) on an annual basis, and this
sets the tone for operational risk management
practices in the course of the year. The appetite
is set in terms of the maximum amount of
operational risk losses the Group expects to incur
given risk-reward considerations for the year.
All business and process owners across the
Group proactively identify weak-points/risks
across their respective functions, activities,
processes and systems using the Risk and
Control Self-Assessment (RCSA), while the Risk
Management Division validates the risk maps for
reasonability of assessments and completeness
and recommends appropriate mitigating controls
to reduce/eliminate inherent process risks. The
Group conducts RCSA twice in a year but the risk
register (outcome of the RCSA) can be updated
at any point in time, triggered by change(s) to
processes, activities, systems or other reasons
such as introduction of a new product/service or
the occurrence of risk events.
Also, Internal Control conducts periodic
independent control tests/checks across the
Group as a key tool for revalidating the outcome
of the RCSA process. This independent
assessment of controls enables the Group to
determine if agreed controls have been fully
implemented and whether they are eective or
not. In addition, the outcome of the independent
control assessment, which further strengthens
the control environment makes the RCSA more
objective and reflective of the risk profile of the
Group.
Operational risk indicators are used to track/
measure as well as monitor operational risk
exposures across all activities, processes and
systems. Key risk indicators (KRIs) are defined
for significant risks that require active monitoring
and control. This process enables us to identify
and resolve control issues before they crystallise
into losses or to minimise losses and other
damages. Tolerance levels are set for each risk
indicator and used as the basis for reporting risk
exposures to the respective risk committees
including departmental/divisional Operational
Risk Committees and the BRAFC.
Operational risk losses are periodically collated
and analysed by the Risk Management Division.
The analysed loss experience enables the Group
to determine causal factors and put in place new
controls/processes to mitigate the risk of re-
occurrence. In addition, the loss collation and
analysis process provides the Group with the
basis for justifying the cost of new/improved
controls and assessing their eectiveness. The
Group’s loss experience is escalated to the
BRAFC supported by clearly defined remedial
action plans to correct the root causes leading to
the losses. Periodic operational risk meetings are
held across the Group to boost risk awareness
and entrench risk management culture in the
Group. This meeting also aords risk owners to
better appreciate control gaps and required
remedial actions.
Operational risk management processes have
been linked to performance management
through the use of a Risk and Control Index that
represents a key component of employee
performance appraisals. This initiative has helped
to drive the desired behaviour in employees,
ensuring that there is a concerted eort by all
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employees to manage operational risks across
the Group.
Independent assurance of the adequacy and
eectiveness of the operational risk management
process is provided by the Group Internal Audit
(GIA) function on an annual basis. The assessment
report is presented to the BRAFC as part of the
annual review process.
The Group uses a combination of provision and
insurance to mitigate residual risks arising from
operational risk events. A number of insurance
policies have been undertaken by the Group to
minimise the loss in the event of an operational
risk incident, while provision is also made for
expected operational risk losses in order to
minimise major variations in the financial
performance of the Group.
Capital is reserved for unexpected operational
risks losses based on Basel II Basic Indicator
Approach, as advised by the Central Bank of
Nigeria. Existing operational risk practices will
enable the Group to adopt more advanced
approaches in the near future – the standardised
and advanced measurement approach (AMA).
The implemented operational risk management
structures provide the Group with the capacity to
continuously improve its processes and controls,
thereby minimising losses and protecting
shareholder value.
Operational risk loss experience
The Group continues to manage its various
operational risk exposures in order to be within
the Board approved risk appetite. It also ensures
that all operational risk losses are recognised
immediately in the financial year.
Internal fraud was largely controlled by FCMB
through the various manual and automated
controls implemented in the course of the
financial period/year, even as it continues to
proer measures to reduce external fraud, which
has increased in recent times. Existing controls
have been strengthened to address the identified
lapses and the Group continues to collaborate
with other stakeholders, including regulators, to
curb the spate of fraud. The implementation of a
Bank Verification Number (BVN) is also expected
to reduce several types of fraud and this is
already yielding positive results.
In response to observed trends and emerging
risks, the Group took the following measures in
the course of the 2015 financial year to curb the
spate of operational risk events:
all-day (24/7) functional fraud monitoring
team;
implementation of fraud monitoring solutions
to detect fraudulent card-related transactions;
implementation of an automated fraud alert
system that monitors suspicious inflow
(transactions from other banks) and outflow
transactions from various e-channel platforms
based on fraud trends;
monthly fraud awareness tips sent to
customers and periodic fraud awareness
training for sta;
proactive implementation of fraud prevention
rules based on global and local fraud trends,
and in line with the Group’s risk appetite; and
activities around the major areas of
vulnerabilities reviewed in order to strengthen
the controls in these areas.
Operational risk awareness
The Group intensified its operational risk awareness
campaign in the course of the year through several
mechanisms including electronic newsletters, risk
meetings/workshops, continuous training and
education of sta and customers. This is to embed
risk management across the entire organisation
and significantly improve the risk management
culture and buy-in among all employees.
Group operational risk practices
The subsidiary companies continue to improve
on their operational risk management activities
and reporting, thereby enhancing the Enterprise
Risk Management practices in the Group.
(f) Capital Management
The Central Bank of Nigeria requires each Bank
with international authorisation to hold minimum
regulatory capital of N50 billion and maintain a
capital adequacy ratio (total regulatory capital to
risk weighted assets) of 15%.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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The Risk Management Committee (RMC) has the
delegated mandate of ensuring that capital levels
(capital adequacy ratio) remain adequate and
appropriate for the level of risks undertaken in
the normal course of business. The committee is
responsible for implementing the capital strategy
of the Group which includes:
ensuring the Group fully complies with
minimum regulatory capital adequacy
requirements and remains a going concern;
ensuring the Group is adequately capitalised
– that the Group has enough capital to
support its level of risk exposures;
ensuring disciplined and selective asset
growth (based on desired obligor risk profile);
maintaining expected losses (EL) within
defined limits as a direct consequence of
selective and disciplined asset growth;
ensuring risks taken by the respective
business lines are within approved limits and
allocated capital;
ensuring business lines generate adequate
risk adjusted returns on allocated capital; and
driving business unit and overall Group
performance through the application of
economic capital budgeting.
The Group’s regulatory capital can be segmented
into two tiers:
tier 1 capital includes share capital, retained
earnings and reserves created by appropriations
to earnings. Book value of goodwill (where
applicable) is deducted in arriving at Tier 1
capital. Deferred tax and regulatory risk reserve
(RRR) are also deducted from capital but, the
RRR is recognised as a balance sheet item
(exposures are risk-weighted net of the
provisions in the RRR).
tier 2 capital includes preference shares,
minority interests arising on consolidation,
qualifying debt stock, fixed assets revaluation
reserves, foreign currency revaluation
reserves, general provisions subject to a
maximum of 1.25% of risk assets, and hybrid
instruments – convertible bonds, debt
security qualifies for the tier 2 capital having
met the conditions specified by CBN.
As directed by the CBN, the banking subsidiary
crossed over to the Basel II capital measurement
standard since October, 2014, replacing the
Basel I capital adequacy ratio (CAR)
computation with the Basel II Standardised
Approach (currently, CBN requires all deposit
money banks in Nigeria to adopt the
standardised approach for the computation of
capital adequacy ratio under pillar 1).
In line with the CBN guideline for the
standardised approach, the risk weighted assets
(RWA) are derived using the CBN specified risk
weights (RW) for the dierent asset classes:
0% for exposures to central government and
Central Bank of Nigeria;
100% for exposures to non-central
government public sector entities;
Exposures to state governments and local
authorities;
– 20% for state government bonds that meet
the CBN eligibility criteria for classification
as liquid assets.
– 100% for other state and local government
bonds and exposures
State and local governments of other
jurisdictions are assigned the sovereign RW
of those jurisdictions:
– 0% for exposures to multilateral
development banks (MDBs).
Exposures to supervised institutions:
– 20% for short-term exposures to supervised
institutions in Nigeria with an original
maturity of three months or less;
– 100% for long-term exposures to supervised
institutions in Nigeria;
– 100% for exposures to corporate and other
persons; and
– 75% for regulatory retail portfolio. However,
to qualify, such exposures must meet the
following criteria:
i) Orientation criterion – the exposure is to
an individual person or persons or to a small
business;
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ii) Product criterion – the exposure takes the
form of any of the following: revolving
credits and lines of credit (including credit
cards and overdrafts), personal term loans
and other term loans (for example,
instalment loans, auto financing loans,
student and educational loans, personal
finance) and small business facilities.
Investment in debt and equity securities,
whether listed or not, are excluded from this
portfolio. Mortgage loans are also excluded
to the extent that they qualify for treatment
as exposures secured by residential
property;
iii) Granularity criterion – the aggregate
exposure to one counterpart cannot exceed
0.2% of the overall regulatory retail portfolio;
iv) Low value of individual exposures – the
aggregate retail exposure to one
counterparty cannot exceed an absolute
threshold of N100 million;
– 75% for exposures secured by
Mortgages on residential property
provided LTV <=80% and some other
conditions are met. Otherwise, 100% is
applied.
– 100% for exposures secured by
mortgages on commercial real estate.
– Qualifying residential mortgage loans
that are past due:
(i) 100% when specific provisions are
less than 20% of the outstanding
amount of the exposure; and
(ii) 50% when specific provisions are
20% or more of the outstanding
amount of the exposure.
– Other unsecured past due exposures
(excluding past due residential
mortgages):
(i) 150% risk weight when specific
provisions are less than 20% of the
outstanding amount of the
exposure; and
(ii) 100% risk weight when specific
provisions are not less than 20%
of the outstanding amount of
the exposure.
– Other assets:
(i) cash in hand and equivalent cash
items shall be assigned a 0%
risk weight; and
(ii) cheques and cash items in transit
shall be assigned a 20% risk weight.
– 100% risk weight for the following:
fixed assets; prepayments; investments
in equity or regulatory capital
instruments (unless deducted from
capital); collective investment
schemes; real estate; bank lending to
subsidiaries in the same group (but to
be deducted from capital where loan
is not fully secured).
– O balance sheet exposures are first
converted to credit equivalent amount
by multiplying the exposures by the
related conversion factors (CCF). The
capital requirement is then derived by
multiplying the credit equivalent by
the risk weight of the counterparty.
– Exposure to oil and gas sector above
20% of the total credit facilities
attracts 125% risk weighting.
Internal capital adequacy assessment process
(ICAAP)
The Group observes the following procedures in
the internal capital adequacy assessment process
(ICAAP):
(i)
material risk identification and assessment
(MRIA) process;
(ii) stress testing and scenario analysis;
(iii) internal capital assessment; and
(iv) ICAAP review and approval.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(i) Material risk identification and assessment
(MRIA) process
One of the key purposes of the ICAAP is to
embed the principles of risk and capital
management in the Group’s business activities.
The MRIA process identifies the key risk
exposures of the Group, determines
management’s assessment of the residual risk
exposures and the corresponding capital
requirements. The steps below are essential to
completing this risk assessment.
Risk identification
A catalogue of material risks relevant to the
Group are identified through a combination of
the following activities:
(a) Review of the Group’s operating environment
– a forward and backward looking analysis of the
Group’s operating environment and business
activities is conducted in order to identify various
threats in the business and operating
environment, including regulatory changes and
implication on the business.
(b) Risk and control self-assessment (RCSA)
review – the RCSA conducted by the various
business and process owners are reviewed to
identify existing and emerging risk factors.
(c) Review of internal control and audit reports
– reports of Internal Control and Group Internal
Audit (GIA) are reviewed to identify observed
lapses, vulnerabilities and trends in the control
environment.
(d) Interviews – interviews are conducted with
key process owners to obtain/validate the
material risks embedded in their functions.
(e) Material risk assessment workshop – a
workshop is held with key stakeholders
(management and key process owners) in
attendance. This serves to validate the material
risks already identified, as well as the controls in
place for managing such risks.
Risk assessment
The activities carried out are as follows:
(a)
an assessment of the identified risks is
conducted by reviewing existing
documentation, discussing with the risk
owners and, where necessary, applying
expert judgement;
(b)
the inherent likelihood of occurrence and
impact of the risk is determined; and
(c)
the controls designed to mitigate the risks are
reviewed in order to determine the residual
risk exposure of the Group.
Although coordinated by Risk Management, the
initial assessment above is done in conjunction
with key stakeholders across the business, before
a more elaborate workshop is held with
management and key business and process
owners. The risk assessment for the material risks
will culminate in the computation of capital for
each risk exposure, with the methodology also
presented and validated at the workshop.
Usually, more than one material risk assessment
workshop is held in order to complete and finalise
the review of the risk exposures, data and
methodology used for the computation. This also
becomes necessary in order to determine and
agree the action plans to address observed
lapses and gaps. The ICAAP documentation for
the MRIA will include:
definition and sources of the risk;
manifestation of the risk and how it could
impact the Group;
current mitigation techniques of the risks; and
capital required for the residual risk exposure.
The ICAAP is also forward looking, ensuring that
the capital plan considers the Group’s strategic
business plan and stress scenarios.
(ii) Stress testing and scenario analysis
This is a simulation technique used to determine
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the eect of dierent financial situations on the
Group’s capital level. These financial situations
are modelled to include dierent scenarios such
as macro-economic stress, slow growth of some
business areas, sector concentration risk, etc.
The stress testing considers:
The assumptions about the level of adverse
shocks (scenarios) and their duration are
plausible but severe enough to appropriately
assess the resilience of the Group in the
financial system.
The framework used to assess the impact of
adverse shocks on solvency (resilience) is
suciently risk sensitive. This requires
changes of risk parameters to be based on
economic measures of solvency, in addition
to the regulatory ones, which may not be
suciently risk-sensitive.
The stress testing is conducted by a team of key
process and business owners and is also given
sucient focus and review at the workshops.
(iii) Assessment of internal capital
This is done by comparing the Group’s total
internal capital (capital required to cover all
material risks) with own funds (the amount of
capital available to run the business). Any gap is
the additional capital required to run the business
of the Group in order to remain solvent and
support its strategic business plan, even under
near catastrophic event(s).
(iv) ICAAP review and approval
Although the Executive Management of the
Group and other key stakeholders play a key role
in the preparation of the Group’s ICAAP, the
Board of Directors has overall responsibility for
the ICAAP. Therefore, it is involved in the review
of the ICAAP and the final approval of the
document lies with it. Subsequent to the final
review and approval of the Board of Directors,
the ICAAP document is forwarded to the Central
Bank of Nigeria (CBN), preparatory to its
Supervisory Review and Evaluation Process
(SREP).
The table below shows the break-down of the
banking group’s regulatory capitals as at 31
December 2015 (31 December 2014):
Tier 1 capital includes; share capital, share
premium, retained earnings and reserves
created by appropriations to earnings, less
book value of goodwill (where applicable),
deferred tax and under-impairment/
regulatory risk reserve (RRR), losses for the
current financial year, investment in own
shares (treasury stock), including cross
holding of related companies’ equity, 50% of
investments in unconsolidated banking and
financial subsidiary/associate companies,
excess exposure(s) over single obligor
without CBN approval, exposures to own
financial holding company, unsecured lending
to subsidiaries within the same group.
Tier 2 capital includes preference shares,
minority interests arising on consolidation,
qualifying debt stock, fixed assets revaluation
reserves, foreign currency revaluation
reserves, hybrid instruments – convertible
bonds, hybrid (debt/equity) capital
instruments, eligible subordinated term debt,
other comprehensive income (OCI) –
(Actuarial and AFS Reserves), 50% of
investments in unconsolidated banking and
financial subsidiary/associate companies.
Elements of tier 2 capital are limited to a
maximum of one-third (i.e. 33.33%) of tier 1
capital, after making deductions for goodwill,
deferred tax asset (DTA) and other intangible
assets but before deductions of investments.
Debt securities issued qualify under tier 2 capital
have met the following Central Bank of Nigeria
conditions: they are unsecured, subordinated
and fully paid-up, they are not redeemable at the
initiative of the holder or without the prior
consent of the Central Bank of Nigeria, the debt
has an original maturity of at least five years;
where there is no set maturity, repayment shall
be subject to at least five years’ prior notice.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Capital adequacy computation: Note on capital adequacy ratio
The Basel II capital adequacy ratio was 16.88%
for the Banking Group, as at 31 December 2015
(31 December 2014: 19.25%), above the CBN
minimum capital adequacy requirements of 15%.
Also, the Group successfully raised additional
Tier 2 capital of N26.0 billion in November, 2014.
the Basel II rule for computation of capital
adequacy ratio only came to force in December,
2014 and has been prospectively applied.
The Group successfully completed its internal
capital adequacy assessment process (ICAAP)
project in order to ensure that all material risk
exposures in the Group are adequately covered
by capital and improve the capital management
practices in the Group.
4 Use of Estimates and Judgements
The preparation of the consolidated financial
statements in conformity with IFRS requires
management to make judgements, estimates
and assumptions that aect the application of
accounting policies and the reported amounts
of assets, liabilities, income and expenses.
Actual results may dier from these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimates are revised and in
any future periods aected.
Management discusses with the Group Audit
Committee the development, selection and
disclosure of the Group’s critical accounting
policies and their application and assumptions
made relating to major estimation uncertainties.
Information about assumptions and estimation
uncertainties that have a significant risk of
resulting in a material adjustment within the
next financial year and about critical judgements
in applying accounting policies that have the
most significant eect on the amounts
recognised in the consolidated financial
statements is disclosed below.
These disclosures supplement the commentary
on financial risk management (see Note 3).
BANKING GROUP
2015
N
’000
2014
N’000
Tier 1 capital
Share capital
2,000,000
2,000,000
Share premium 100,846,691
100,846,691
Statutory reserves 19,036,957
17,326,400
Other reserves 13,957,238
3,036,375
Retained earnings 10,986,648
19,566,097
Less: Goodwill (5,993,863)
(5,993,863)
Deferred tax assets (8,166,240)
(8,166,240)
Regulatory risk
reserve (13,261,612)
(4,170,499)
Investments in
unconsolidated
subsidiaries and
associates -
-
Total qualifying tier 1
capital 119,405,819
124,444,961
Tier 2 capital
Translation reserve
1,576,155
1,077,661
Debt securities issued 26,000,000
26,000,000
Total qualifying tier 2
capital 27,576,155
27,077,661
Total regulatory capital 146,981,974
151,522,622
Less: investments in
unconsolidated
subsidiaries and
associates -
-
Total qualifying capital 146,981,974
151,522,622
Risk weighted assets
Risk-weighted amount
for credit risk
702,145,952
620,622,397
Risk-weighted amount
for operational risk 161,756,043
154,261,415
Risk-weighted amount
for market risk 6,972,450
12,369,525
870,874,445
787,253,337
Capital adequacy ratio 16.88%
19.25%
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Key sources of estimation uncertainty are:
(a) Impairment
Financial assets accounted for at amortised cost
are evaluated for impairment on a basis described
in accounting policy.
The specific component of the total allowances
for impairment applies to financial assets
evaluated individually for impairment and is
based upon management’s best estimate of the
present value of the cash flows that are expected
to be received. In estimating these cash flows,
management makes judgements about a
debtor’s financial situation and the net realisable
value of any underlying collateral. Each impaired
asset is assessed on its merits, and the workout
strategy and estimate of cash flows considered
recoverable are independently approved by the
Credit Risk functions.
A collective component of the total allowable is
established for:
groups of homogeneous loans that are not
considered individually significant; and
groups of assets that are individually
significant but that were not found to be
individually impaired (IBNR).
Collective allowance for the Group’s
homogeneous loans is established using
statistical methods such as roll-rate methodology
or, for small portfolios with insucient
information, a formula approach based on
historic loss rate experience. The roll-rate
methodology uses statistical analysis of historical
data on delinquency to estimate the amount of
loss. The estimate of loss arrived at on the basis
of historical information is then reviewed to
ensure that it appropriately reflects the economic
conditions and product mix at the reporting date.
Roll-rates and loss rates are regularly
benchmarked against actual loss experience.
Collective allowance for groups of assets that are
individually significant but that were not found to
be individually impaired (IBNR) cover credit
losses inherent in portfolios of loans and
advances, and held-to-maturity investment
securities with similar credit risk characteristics
when there is objective evidence to suggest that
they contain impaired loans and advances, and
held-to-maturity investment securities, but the
individual impaired items cannot yet be identified.
In assessing the need for collective loss
allowances, management considers factors such
as credit quality, portfolio size, concentrations
and economic factors. In order to estimate the
required allowance, assumptions are made to
define the way inherent losses are modelled and
to determine the required input parameters,
based on historical experience and current
economic conditions. The accuracy of the
allowances depends on the estimates of future
cash flows for specific counterparty allowances
and the model assumptions and parameters used
in determining collective allowances.
Investments in equity securities were evaluated
for impairment in line with the requirements of
IFRS. For an investment in an equity security, a
significant or prolonged decline in its fair value
below its cost was objective evidence of
impairment. In this respect, the Group regarded a
decline in fair value in excess of 40% to be
significant and a decline in a quoted market price
that persisted for 12 months or longer to be
prolonged.
An assessment as to whether an investment in
debt securities is impaired may be complex. In
making such an assessment, the Group considers
the following factors:
the market’s assessment of credit worthiness
as reflected in the bond yields;
the rating agencies’ assessments of the
creditworthiness;
the ability of the country to access the capital
markets for new debt issuance; and
the probability of debt being restructured
resulting in holders suering losses through
voluntary or mandatory debt forgiveness.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(b) Fair Value
The determination of fair value for financial
assets and financial liabilities for which there is
no observable market price requires the use of
valuation techniques as described in the Group’s
accounting policy. For financial instruments that
trade infrequently and have little price
transparency, fair value is less objective, and
requires varying degrees of judgement
depending on liquidity, concentration, uncertainty
of market factors, pricing assumptions and other
risks aecting the specific instrument.
The Group measures fair values using the
following fair value hierarchy that reflects the
significance of the inputs used in making the
requirements.
Level 1: Quoted market price in an active
market for an identical instrument.
Level 2: Valuation techniques based on
observable inputs. This category includes
instruments valued using: quoted market
prices in active markets for similar
instruments; quoted prices for similar
instruments in markets that are considered
less than active; or other valuation techniques
where all significant inputs are directly or
indirectly observable from market data.
Level 3: Valuation techniques using significant
unobservable inputs. This category includes
all instruments where the valuation technique
includes inputs not based on observable data
and the unobservable inputs have a significant
eect on the instruments valuation. This
category includes instruments that are valued
based on quoted prices for similar instruments
where significant unobservable adjustments
or assumptions are required to reflect
dierences between the instruments.
Fair values of financial assets and financial
liabilities that are traded in active markets are
based on quoted market prices or dealer price
quotations. For all other financial instruments the
Group determines fair value using valuation
techniques.
Valuation techniques include net present value
and discounted cash flow models, comparison
to similar instruments for which market
observable prices exist, Black-Scholes and
polynomial option pricing models and other
valuation models. Assumptions and inputs used
in valuation techniques include risk-free and
benchmark interest rates, credit spreads and
other premia used in estimating discount rates,
bond and equity prices, foreign currency
exchange rates, equity and equity index prices
and expected price volatilities and correlations.
The objective of valuation techniques is to arrive
at a fair value determination that reflects the
price of the financial instrument at the reporting
date, that would have been determined by
market participants acting at arms length.
The Group uses widely recognised valuation
models for determining the fair value of common
and more simple financial instruments, like
interest rate and currency swaps that use only
observable market data and require little
management judgement and estimation.
Observable prices and model inputs are usually
available in the market for listed debt and equity
securities, exchange traded derivatives and
simple over-the-counter derivatives like interest
swaps. Availability of observable market prices
and model inputs reduces the need for
management judgement and estimation and
also reduces the uncertainty associated with
determination of fair values. Availability of
observable market prices and inputs varies
depending on the products and markets and is
prone to changes based on specific events and
general conditions in the financial markets.
For more complex instruments, the Group uses
proprietary valuation models, which are usually
developed from recognised valuation models.
Some or all of the significant inputs into these
models may not be observable in the market
and are derived from market prices or rates or
are estimated based on assumptions. Examples
of instruments involving significant unobservable
inputs include certain over-the-counter
structured derivatives, certain loans and security
for which there is no active market and retained
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interests in securitisations. Valuation models
that employ significant unobservable inputs
require a higher degree of management
judgement and estimation in the determination
of fair value. Management judgement and
estimation are usually required for selection of
the appropriate valuation model to be used,
determination of expected future cash flows on
the financial instrument being valued,
determination of probability of counterparty
default and prepayments and selection of
appropriate discount rates.
The table below analyses financial instruments
measured at fair value at the end of the year, by
the level in the fair value hierarchy into which
the fair value measurement is categorised:
31 December 2015 Note
Level 1
N’000
Level 2
N’000
Level 3
N’000
Total
N’000
ASSETS
Non-pledged trading assets 22
1,994,350 - - 1,994,350
Derivative assets held 23 - 1,479,760 - 1,479,760
Assets pledged as collateral 26 7,934,482 - - 7,934,482
Investment securities 25(c) 41,251,533 1,729,924 - 42,981,457
51,180,365 3,209,684 - 54,390,049
LIABILITIES
Derivative liabilities held
23 - 1,317,271 - 1,317,271
- 1,317,271 - 1,317,271
31 December 2014
ASSETS
Non-pledged trading assets 22
741,917 - - 741,917
Derivative assets held 23 - 4,503,005 - 4,503,005
Assets pledged as collateral 26 8,450,218 - - 8,450,218
Investment securities 25(c) 70,036,025 2,231,806 - 72,267,831
79,228,160 6,734,811 - 85,962,971
LIABILITIES
Derivative liabilities held
23 - 4,194,185 - 4,194,185
- 4,194,185 - 4,194,185
There were no reclassifications to or from level 3 of the fair value hierarchy and as such no table to
show a reconciliation from the beginning balance to the ending balances for fair value measurements
in level 3 of the fair value hierarchy.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Loans and advances to customers are net of
charges for impairment. The estimated fair value
of loans and advances represents the market
value of the loans, arrived at by recalculating the
carrying amount of the loans using the estimated
market rate for the loan types.
Deposits from banks and customers
The estimated fair value of deposits, with no
stated maturity, is the amount repayable on
demand.
The estimated fair value of fixed interest-
bearing deposits not quoted in an active
market is based on discounted cash flows
using the interest rates for new debts with
similar remaining maturity.
Borrowings: the estimated fair value of
borrowings represents the market value of the
borrowings arrived at by recalculating the
carrying amount of the borrowings using the
estimated market rate for the borrowings.
Financial instruments not measured at fair value
The table below sets out the fair value of financial instruments not measured at fair value and analyses
them by level in the fair value hierarchy into which each fair value measurement is categorised.
31 December 2015 Note
Level 1
N’000
Level 2
N’000
Level 3
N’000
Total fair
value
N’000
Total carrying
amount
N’000
ASSETS
Loans and advances to
customers
24 - 635,420,659 - 635,420,659 592,957,417
Assets pledged as collateral 26 - 43,843,107 - 43,843,107 43,843,107
Investment securities 25(a)(d) - 92,328,690 - 92,328,690 92,328,690
LIABILITIES
Deposits from banks
33 - 5,461,038 - 5,461,038 5,461,038
Deposits from customers 34 - 700,216,706 - 700,216,706 700,216,706
Borrowings 35 - 113,371,317 - 113,371,317 113,700,194
On-lending facilities 36 - 30,788,571 - 30,788,571 33,846,116
Debt securities issued 37 - 49,112,859 - 49,112,859 49,309,394
31 December 2014
ASSETS
Loans and advances to
customers
24 - 617,979,790 - 617,979,790 617,979,790
Assets pledged as collateral 26 - 45,362,202 - 45,362,202 53,812,420
Investment securities 25(a)(d) - 76,018,999 - 76,018,999 76,018,999
LIABILITIES
Deposits from banks
33 - 4,796,752 - 4,796,752 4,796,752
Deposits from customers 34 - 733,796,796 - 733,796,796 733,796,796
Borrowings 35 - 99,540,346 - 99,540,346 99,540,346
On-lending facilities 36 - 14,913,521 - 14,913,521 14,913,521
Debt securities issued 37 - 26,174,186 - 26,174,186 26,174,186
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On-lending facilities: the estimated fair value of
on-lending facilities represents the market value
of the on-lending facilities arrived at by
recalculating the carrying amount of the on-
lending facilities using the estimated market rate
for the on-lending facilities.
The carrying amount of all other financial
liabilities are reasonable approximations of their
fair values, which are repayable on demand.
No fair value disclosures were provided for
unquoted equity investment securities of N4.00
billion (2014:N4.04 billion) that are measured at
cost because their fair value cannot be
determined reliably.
(c) Depreciation and Carrying Value of
Property and Equipment
The estimation of the useful lives of assets is
based on management’s judgement. Any material
adjustment to the estimated useful lives of items
of property and equipment will have an impact
on the carrying value of these items.
(d) Determination of Impairment of Property
and Equipment, and Intangible Assets
excluding Goodwill
Management is required to make judgements
concerning the cause, timing and amount of
impairment. In the identification of impairment
indicators, management considers the impact of
changes in current competitive conditions, cost
of capital, availability of funding, technological
obsolescence, discontinuance of services and
other circumstances that could indicate that
impairment exists. The Group applies the
impairment assessment to its separate cash
generating units. This requires management to
make significant judgements and estimates
concerning the existence of impairment
indicators, separate cash generating units,
remaining useful lives of assets, projected cash
flows and net realisable values. Management’s
judgement is also required when assessing
whether a previously recognised impairment loss
should be reversed.
(e) Income Taxes
The Group is subject to income taxes in numerous
jurisdictions. Significant estimates are required in
determining the Group-wide provision for income
taxes. There are many transactions and
calculations for which the ultimate tax
determination is uncertain during the ordinary
course of business. The Group recognises
liabilities for anticipated tax audit issues based
on estimates of whether additional taxes will be
due. Where the final tax outcome of these
matters is dierent from the amounts that were
initially recorded, such dierences will impact the
income tax and deferred tax provisions in the
year in which such determination is made.
(f) Deferred Tax
The Group recognises deferred tax assets based
on management’s profit forecasts (which are
based on the available evidence, including
historical levels of profitability), which indicates
that it is probable that the Group’s entities will
have future taxable profits against which these
assets can be used.
(g) Determination of Regulatory Risk Reserves
Provisions under prudential guidelines are
determined using the time-based provisioning
regime prescribed by the Revised Central Bank
of Nigeria (CBN) Prudential Guidelines. This is at
variance with the incurred loss model required by
IFRS under IAS 39. As a result of the dierences
in the methodology/provision regime, there will
be variances in the impairment allowances
required under the two methodologies.
Paragraph 12.4 of the revised Prudential
Guidelines for Deposit Money banks in Nigeria
stipulates that Banks would be required to make
provisions for loans as prescribed in the relevant
IFRS Standards when IFRS is adopted. However,
banks would be required to comply with the
following:
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(i)
Provisions for loans recognised in the profit
and loss account should be determined based
on the requirements of IFRS. However, the
IFRS provision should be compared with
provisions determined under Prudential
guidelines and the expected impact/changes
in general reserves should be treated as
follows:
Prudential Provisions is greater than IFRS
provisions; the excess provision resulting
should be transferred from the retained
reserve account to a ‘regulatory risk reserve’.
Prudential Provisions is less than IFRS
provisions; IFRS determined provision is
charged to the statement of comprehensive
income. The cumulative balance in the
regulatory risk reserve is thereafter reversed
to the retained reserve account
(ii)
The non-distributable reserve (excluding
regulatory risk reserve) should be classified
under tier 1 as part of the core capital.
31 December
2015
N
’000
Loans and advances:
Specific impairment allowances on loans to customers
9,763,386
Collective impairment allowances on loans to customers 5,959,442
Total impairment allowances on loans 15,722,828
Other financial assets:
Specific impairment allowances on unquoted equity securities
1,299,914
Specific impairment allowances on other assets 17,140,911
Operational risk provision 2,922,889
Total impairment allowances on other financial assets 21,363,714
Total impairment allowances by the Banking subsidiary (a) 37,086,542
Total regulatory impairment based on Prudential Guidelines (b) 48,659,081
Required balance in regulatory risk reserves (c = b - a) 11,572,539
Balance, 1 January 2015 4,170,499
Additional during the year 7,402,040
Balance, 31 December 2015 11,572,539
The banking subsidiary has complied with the requirements of the guidelines as follows:
Prudential adjustments for the year ended 31 December 2015
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Prudential adjustments for the year ended 31 December 2014
31 December
2014
N
’000
Loans and advances:
Specific impairment allowances on loans to customers
5,174,669
Collective impairment allowances on loans to customers 8,283,949
Total impairment allowances on loans 13,458,618
Other financial assets:
Specific impairment allowances on unquoted equity securities
1,299,914
Specific impairment allowances on other assets 11,269,899
Operational risk provision 1,798,491
Total impairment allowances on other financial assets 14,368,304
Total impairment allowances by the Banking subsidiary (a)
27,826,922
Total regulatory impairment based on Prudential Guidelines (b) 31,997,421
Required balance in regulatory risk reserves (c = b - a) 4,170,499
Balance, 1 January 2014 5,112,237
Reversal during the year (941,738)
Balance, 31 December 2014 4,170,499
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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5 Operating Segments
The Group has six reportable segments, as
described below, which are the Group’s strategic
divisions. The strategic divisions oer dierent
products and services, and are managed
separately based on the Group’s management
and internal reporting structure. For each of the
strategic divisions, the Group Executive
Management Committee reviews internal
management reports on at least a quarterly basis.
The following summary describes the operations
in each of the Group’s reportable segments.
Investment Banking – provides comprehensive
services to highly structured large corporate
organisations. The Group is also involved in
capital raising activities for organisations both in
money and capital markets as well as providing
financial advisory services to organisations in
raising funds.
Business Banking – provides banking services to
Small and Medium Enterprises (SME) and
commercial registered businesses with an annual
turnover of less than N2.5 billion.
Corporate Banking – incorporating direct debit
facilities, current accounts, deposits, overdrafts,
loan and other credit facilities, foreign currency
and derivative products. Corporate Banking
caters for the specific needs of companies and
financial institutions with an annual turnover in
excess of N5 billion.
Personal Banking – incorporating private banking
services, private customer current accounts,
savings, deposits, investment savings products,
custody, credit and debit cards, consumer loans
and mortgages. Retail Banking caters for the
needs of individuals.
Institutional Banking – government financing,
financial institutions, multilateral agencies. The
business unit caters for governments at various
levels and their agencies.
Treasury and Financial Markets – provides
funding support to various business segments
while ensuring the liquidity of the Bank is not
compromised. The Group is also involved in
currency trading incorporating financial
instruments trading and structured financing.
Information regarding the results of each
reporting segment is included below.
Performance is measured based on segment
profit before tax, as included in the internal
management reports that are reviewed by the
Executive Management Committee. Segment
profit is used to measure performance as
management believes that such information is
the most relevant in evaluating the results of
certain segments relative to other entities that
operate within these industries.
No single external customer accounts for 10% or
more of the Group’s revenue.
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GROUP 31 December 2015
Investment
Banking
N
’000
Business
Banking
N’000
Corporate
Banking
N’000
Retail
Banking
N’000
Institutional
Banking
N’000
Treasury
and
Financial
Markets
N
’000
Total
N’000
External revenues:
Net interest income
1,667,921 14,606,283 12,758,277 27,033,390 6,945,370 925,591 63,936,832
Net fee and
commission income
2,068,067 3,286,628 3,428,280 5,020,879 449,371 1,581,129 15,834,354
Net trading income
(248,070) - - - - 1,188,355 940,285
Net loss from other
financial instruments
at fair value through
profit or loss
- - - - - 149,846 149,846
Other revenue
2,435,433 2,561,910 1,729,177 871,580 1,039,894 197,288 8,835,282
Inter-segment revenue
- 829,551 (762,562) 620,215 406,402 (1,093,606) -
Total segment revenue
5,923,351 21,284,372 17,153,172 33,546,064 8,841,037 2,948,603 89,696,599
Other material non-
cash items
Impairment losses on
financial assets
931,397 1,994,935 10,541,514 1,494,055 71,558 - 15,033,459
Reportable segment
profit before income tax
1,729,924 (2,664,482) (588,888) 7,023,666 898,549 1,369,895 7,768,664
Reportable segment
assets
28,803,998 122,418,693 315,271,530 90,717,183 27,584,490 399,868,722 984,664,616
Reportable segment
liabilities
8,954,853 279,014,993 184,546,597 222,354,905 104,533,209 192,804,125 992,208,682
(i) The business segment results are as follows:
Information about operating segments
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP 31 December 2014
Investment
Banking
N
’000
Business
Banking
N’000
Corporate
Banking
N’000
Retail
Banking
N’000
Institutional
Banking
N’000
Treasury
and
Financial
Markets
N
’000
Total
N’000
External revenues:
Net interest income
1,487,754 17,479,207 18,046,140 27,053,846 7,149,166 1,417,414 72,633,527
Net fee and
commission income
3,080,405 4,542,461 3,424,150 824,285 785,052 1,781,549 14,437,902
Net trading income
32,362 - - - - 733,457 765,819
Net loss from other
financial instruments
at fair value through
profit or loss
- - - - - 131,428 131,428
Other revenue
981,148 2,649,272 1,967,394 3,621,664 475,620 3,154,929 12,850,027
Inter-segment revenue
- 699,765 (841,140) 462,834 697,524 (1,018,983) -
Total segment revenue
5,581,669 25,370,705 22,596,544 31,962,629 9,107,362 6,199,794 100,818,703
Other material non-
cash items
Impairment losses on
financial assets
117,019 2,194,859 3,667,146 4,286,880 373,973 - 10,639,877
Reportable segment
profit before income tax
1,220,816 1,682,656 12,285,659 4,089,255 856,915 3,807,592 23,942,893
Reportable segment
assets
34,075,945 147,842,067 331,503,364 140,739,320 83,813,165 235,228,588 973,202,449
Reportable segment
liabilities
11,580,378 211,500,605 176,181,835 223,745,387 207,548,261 169,728,615 1,000,285,081
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Nigeria
N
’000
Europe
N’000
Total
N’000
External revenues
88,567,769 1,128,830 89,696,599
Non-current assets (see Note 5 (v) below)
47,105,518 109,506 47,215,024
Nigeria
N
’000
Europe
N’000
Total
N’000
External revenues
99,987,686 831,017 100,818,703
Non-current assets (see Note 5 (v))
43,778,576 126,573 43,905,149
(ii) Reconciliations of reportable segments revenues, profit or loss and assets and liabilities
GROUP
2015
N
’000
2014
N’000
Revenues
Total revenue for reportable segments
89,696,599 100,818,703
Unallocated amounts
- -
Elimination of inter-segment revenue
- -
Total revenue
89,696,599 100,818,703
Profit or loss
Total profit or loss for reportable segments
7,768,664 23,942,893
Unallocated amounts
- -
Profit before income tax
7,768,664 23,942,893
Assets
Total assets for reportable segments
984,664,616 973,202,449
Other unallocated amounts
174,869,560 196,162,335
Total assets
1,159,534,176 1,169,364,784
Liabilities
Total liabilities for reportable segments
992,208,682 1,000,285,081
Other unallocated amounts
4,934,207 8,714,272
Total liabilities
997,142,889 1,008,999,353
Geographical areas
In presenting information on the basis of geographical areas, revenue is based on the customers’
country of domicile and assets are based on the geographical location of the assets.
(iii) The geographical information result for 31 December 2015 is as follows:
(iv) The geographical information result for 31 December 2014 is as follows:
(v) Non-current assets includes property and equipment and intangible assets.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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2015
Note
Trading
N’000
Designated
at fair value
N’000
Held to
maturity
N’000
Loans and
receivables
N’000
Available
for sale
N’000
Other
amortised
cost
N
’000
Total
carrying
amount
N
’000
Fair value
N’000
Cash and cash
equivalents 20 - - - 180,921,698 - - 180,921,698 180,921,698
Non-pledged
trading assets 23 1,994,350 - - - - - 1,994,350 1,994,350
Derivative assets
held 23 - 1,479,760 - - - - 1,479,760 1,479,760
Loans and
advances to
customers 24 - - - 592,957,417 - - 592,957,417 635,420,659
Assets pledged
as collateral 26 - - 51,777,589 - - - 51,777,589 47,188,357
Investment
securities 25 - 86,518,754 - 48,791,393 - 135,310,147 133,653,816
1,994,350 1,479,760 138,296,343 773,879,115 48,791,393 - 964,440,961 1,000,658,640
Derivative
liabilities held 23 - 1,317,271 - - - - 1,317,271 1,317,271
Deposits from
banks 33 - - - - - 5,461,038 5,461,038 5,461,038
Deposits from
customers 34 - - - - - 700,216,706 700,216,706 700,216,706
Borrowings
35 - - - - - 113,700,194 113,700,194 113,371,317
On-lending
facilities 36 - - - - - 33,846,116 33,846,116 30,788,571
Debt securities
issued 37 - - - - 49,309,394 49,309,394 49,112,859
- 1,317,271 - - - 902,533,448 903,850,719 900,267,762
6 Financial Assets and Liabilities
Accounting classification measurement basis and fair values
The table below sets out the carrying amounts and fair values of the Group’s financial assets and
liabilities:
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2014
Note
Trading
N’000
Designated
at fair value
N’000
Held to
maturity
N’000
Loans and
receivables
N’000
Available
for sale
N’000
Other
amortised
cost
N
’000
Total
carrying
amount
N
’000
Fair value
N’000
Cash and cash
equivalents 20 - - - 126,293,809 - - 126,293,809 126,293,809
Non-pledged
trading assets 23 741,917 - - - - - 741,917 741,917
Derivative assets
held 23 - 4,503,005 - - - - 4,503,005 4,503,005
Loans and
advances to
customers 24 - - - 617,979,790 - - 617,979,790 614,687,852
Assets pledged
as collateral 26 - - 53,812,420 - - - 53,812,420 40,942,629
Investment
securities 25 - - 68,079,431 - 80,207,399 - 148,286,830 144,150,589
741,917 4,503,005 121,891,851 744,273,599 80,207,399 - 951,617,771 931,319,801
Derivative
liabilities held 23 - 4,194,185 - - - - 4,194,185 4,194,185
Deposits from
banks 33 - - - - - 4,796,752 4,796,752 4,796,752
Deposits from
customers 34 - - - - - 733,796,796 733,796,796 733,796,796
Borrowings
35 - - - - - 99,540,346 99,540,346 99,540,346
On-lending
facilities 36 - - - - - 14,913,521 14,913,521 14,913,521
Debt securities
issued 37 - - - - - 26,174,186 26,174,186 26,174,186
- 4,194,185 - - - 879,221,601 883,415,786 883,415,786
Financial instruments at fair value (including those held for trading, designated at fair value, available
for sale) are either priced with reference to a quoted market price for that instrument or by using a
valuation model. Where the fair value is calculated using a valuation model, the methodology is to
calculate the expected cash flows under the terms of each specific contract and then discount these
values back to a present value. The expected cash flows for each contract are determined either
directly by reference to actual cash flows implicit in observable market prices or through modelling
cash flows using appropriate financial markets pricing models. Wherever possible these models use
as their basis observable market prices and rates including, for example, interest rate, yield curves,
equities and prices.
Investment securities – unquoted equity securities at cost
The above table includes N5.54 billion (31 December 2014: N7.83 billion) of equity investment
securities in both the carrying amount and fair value columns that are measured at cost and for which
disclosure of fair value is equal to the cost because their fair value cannot be reliably measured.
The investments are neither redeemable nor transferable and there is no market for them.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP COMPANY
7 Interest Income
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Cash and cash equivalents
1,257,496 4,468,887 513,515 375,604
Loans and advances to customers
99,646,910 89,923,116 - -
Investments in government and corporate
securities
22,679,159 23,592,045 22,911 62,425
123,583,565 117,984,048 536,426 438,029
(a)
Included in the interest income on loans and advances to customers is N2.16 billion
(2014: N400.37 million) interest income accrued on impaired loans and advances to customers.
(b)
Included in the total interest income calculated using the eective interest method reported
above that relates to financial assets not carried at fair value through profit or loss is
N121.28 billion (2014: N107.09 billion).
GROUP COMPANY
8 Interest Expense
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Deposits from banks
626,980 342,103 - -
Deposits from customers
45,331,824 38,030,311 - -
45,958,804 38,372,414 - -
Borrowings
8,701,129 6,414,770 - -
Debt securities
4,159,858 563,337 - -
On-lending facilities
826,942 - - -
59,646,733 45,350,521 - -
There were no financial liabilities carried at Fair value through profit or loss.
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GROUP COMPANY
9 Net Impairment Loss on
Financial Assets
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Loans and advances to customers
Specific impairment charge (see Note 24
(c (i)))
6,993,587 7,473,045 - -
Collective impairment charge (see Note
24 (c (ii)))
2,881,651 3,705,493 - -
Reversal of specific impairment (see
Note 24 (c (i)))
- (247,723) - -
Recoveries on loans previously written
off
(1,670,592) (1,022,116) - -
8,204,646 9,908,699 - -
(b) Other assets
Impairment charge (see Note 32 (b))
5,494,359 478,445 - -
5,494,359 478,445 - -
(c) Investment securities available for
sale
Impairment for investment securities
available for sale
720,110 275,537 - -
Reversal of impairment (see Note 25 (e))
(75,398) (22,804) - -
644,712 252,733 - -
(d) Investment in subsidiary/Goodwill
Impairment charge (see Note 30 (c) and
27 (a))
689,742 - 689,742 -
689,742 - 689,742 -
15,033,459 10,639,877 689,742 -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015134
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GROUP COMPANY
10 Net Fee and Commission Income
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Credit related fees
669,386 - - -
Commission on turnover
2,359,010 4,082,431 - -
Letters of credit commission
430,571 890,533 - -
Commission on off-balance sheet transactions
595,502 675,363 - -
Cards and service fees and commissions
14,944,500 11,257,760 - -
Gross fee and commission income
18,998,969 16,906,087 - -
Card and cheque books recoverable expenses
(2,752,738) (1,682,118) - -
Other bank charges
(411,877) (786,067) - -
Fee and commission expense
(3,164,615) (2,468,185) - -
Net fee and commission income
15,834,354 14,437,902 - -
The fees and commission income reported above excludes amount included in determining eective
interest rates on assets or liabilities that are not carried at fair value through profit or loss.
GROUP COMPANY
11 Net Trading Income
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Bonds trading income
198,971 179,478 - -
Treasury bills trading income
955,168 553,979 - -
Options and equity trading (loss)/income
(213,854) 32,362 - -
940,285 765,819 - -
GROUP COMPANY
12 Net Income from Other Financial
Instruments at Fair Value Through
Profit or Loss
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Net income arising on:
Fair value gain on derivative financial
instruments held for risk management
149,846 131,428 - -
149,846 131,428 - -
FCMB Group Plc Annual Report and Accounts 2015 135
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GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Rental income
46,676 365,633 - -
Recoveries
8,275 737,635 8,275 -
54,951 1,103,268 8,275 -
(a)
The amount of N1.32 billion represents accrual for final dividend in respect of the year ended 31
December 2014 declared and approved by the Annual General Meeting of First City Monument
Bank Limited. The amount of N5.45 billion comprises dividend received from the subsidiaries in
2014: First City Monument Bank Limited of N5 billion and FCMB Capital Markets Limited of N450
million.
(b) The amount of N532.55 million (2014: N467.42 million) represents dividend income received from
unquoted equity investments held by the Group.
(c) Included in this amount is N1.9 billion, which represents a gain on disposal of the Group’s stake in
Equity Bank Kenya under the Private Equity Fund, see Note 25 (f) below, and N582.81 million
represents a gain on disposal of investment in Central Securities Clearing System (CSCS) by the
banking subsidiary, see Note 25 (d) below.
(d) This amount represents a loss on disposal of Arab Gambian Islamic Bank Limited (AGIB).
(e) Other income comprises:
GROUP COMPANY
13 Other Income
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Dividends on equity investment securities
in the subsidiaries (see Note (a) below) - - 1,320,000 5,450,000
Dividends on unquoted equity securities
at cost (see Note (b) below)
532,552 467,415 218,510 70,102
Foreign exchange gains
5,431,496 9,769,431 201,710 320,163
Gain on disposal of investment securities
(see Note (c) below)
2,584,955 1,270,409 1,915,875 354,431
Loss on disposal of subsidiaries (see Note
(d) below) - (132,846) - -
Gain on sale of property and equipment
231,328 332,350 108 165
Gain on transfer of subsidiary
- 40,000 - 40,000
Other income (see Note (e) below)
54,951 1,103,268 8,275 -
8,835,282 12,850,027 3,664,478 6,234,861
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015136
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GROUP COMPANY
14 Personnel Expenses
2015
N
’000
2014 Restated
N’000
2015
N’000
2014 Restated
N’000
Short-term employee benefits
(see Note 44 (b)) 22,060,210 23,427,447 204,023 242,602
Contributions to defined contribution
plans (see Note 38)
683,196 515,351 8,640 5,739
Non-payroll staff cost
2,744,275 3,861,105 25,697 58,326
25,487,681 27,803,903 238,360 306,667
GROUP COMPANY
15 Depreciation and Amortisation
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Amortisation of Intangibles
(see Note 30 (a)) 530,897 316,720 963 963
Depreciation of property and equipment
(see Note 29) 3,832,119 3,274,042 22,297 19,262
4,363,016 3,590,762 23,260 20,225
GROUP COMPANY
16 General and Administrative Expenses
2015
N
’000
2014 Restated
N’000
2015
N’000
2014 Restated
N’000
Communication, stationery and postage
2,158,580 1,926,123 5,050 51,240
Business travel expenses
1,086,143 1,247,786 10,420 7,907
Advert, promotion and corporate gifts
2,535,098 2,102,478 27,698 10,646
Business premises and equipment costs
3,907,142 3,869,431 16,625 10,336
Directors' emoluments and expenses
886,320 881,403 196,344 184,120
IT expenses
2,995,891 2,583,586 2,565 1,385
Contract services and training expenses
5,555,755 5,197,223 1,429 830
Vehicles maintenance expenses
1,340,287 1,186,406 1,015 1,932
Security expenses
2,047,753 2,018,058 - -
Auditors' remuneration (this includes interim
audit fees) 287,061 253,970 30,000 30,000
Professional charges
2,045,609 2,341,932 109,939 90,364
24,845,639 23,608,396 401,085 388,760
GROUP COMPANY
17 Other Expenses
2015
N
’000
2014 Restated
N’000
2015
N’000
2014
N’000
NDIC insurance premium and other
insurances
3,999,259 4,391,799 2,987 -
AMCON expenses
5,655,943 4,929,575 - -
Others (see Note (a) below)
2,627,503 1,979,608 297,184 506,361
12,282,705 11,300,982 300,171 506,361
FCMB Group Plc Annual Report and Accounts 2015 137
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GROUP COMPANY
18 Earnings Per Share
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Basic and diluted earnings per share
Profit attributable to equity holders
4,760,666 22,133,257 2,523,055 5,396,908
Weighted average number of ordinary
shares in issue (in '000s)
19,802,710 19,802,710 19,802,710 19,802,710
0.24 1.12 0.13 0.27
Group does not have dilutive potential ordinary shares as at 31 December 2015 (December 2014: nil).
(a) Others comprises:
GROUP COMPANY
19 Tax Expense
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(i) Current tax expense:
Minimum tax
900,532 - - -
National Information Technology
Development Agency (NITDA) levy 110,263 286,516 25,231 53,969
Tertiary education tax (see note 19 (v))
124,292 107,709 - -
Corporate income tax
1,882,491 3,490,822 - -
(ii) Deferred tax expense:
Origination of temporary differences (see
note 31 (b))
(9,580) (2,075,411) - -
Income tax expense
2,107,466 1,809,636 25,231 53,969
Total tax expense
3,007,998 1,809,636 25,231 53,969
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
AGM, meetings and shareholders’ expenses
262,754 395,916 140,194 220,760
Donation and sponsorship expenses
202,562 358,710 - -
Entertainment expenses
286,175 376,607 5,452 604
Fraud and forgery loss
13,246 24,000 - -
Rental expenses
398,871 116,774 54,420 5,859
Regulatory charges
13,314 17,737 13,314 13,268
Other accounts written off
234,869 208,260 58 226
Provision for litigation
1,035,654 475,604 83,746 265,644
Penalty (see Note 45)
180,058 6,000 - -
2,627,503 1,979,608 297,184 506,361
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015138
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GROUP COMPANY
%
2015
N’000 %
2015
N’000
(iii) Reconciliation of effective tax rate
Profit before tax
7,684,099 2,548,286
Income tax using the domestic corporation
tax rate 30.0 2,305,230 30.0 764,486
National Information Technology Development
Agency (NITDA) levy 1.0 76,080 1.0 25,231
Non-deductible expenses
46.0 3,533,488 0.0 -
Tax exempt income
(23.6) (1,813,717) 0.0 -
Minimum tax
11.7 900,532 0.0 -
Unrecognised tax losses
(27.4) (2,101,324) (30.0) (764,486)
Tertiary education tax
1.4 107,709 0.0 -
Total tax expense
39.1 3,007,998 1.0 25,231
GROUP COMPANY
%
2014
N’000 %
2014
N’000
Profit before tax
23,874,783 5,450,877
Income tax using the domestic corporation
tax rate 30.0 7,162,435 30.0 1,635,263
National Information Technology Development
Agency (NITDA) levy 1.2 286,516 1.0 53,969
Non-deductible expenses
14.8 3,533,488 0.0 -
Unrecognised tax losses
(8.7) (2,075,411) (30.0) (1,635,263)
Tax exempt income
(36.5) (8,705,101) 0.0 -
Tertiary education tax
0.5 107,709 0.0 -
Impact of excess dividend tax
6.3 1,500,000 0.0 -
Total tax expense
7.6 1,809,636 1.0 53,969
(iv) A significant portion of the Company’s
income derives from dividends from the
subsidiary and associate companies which
are not subject to tax in the hands of the
Company and, as a result, the current income
tax assessment for the year under review
yields a tax credit in its favour. Consequently,
the Company should be subject to the
provisions of the Companies Income Tax
Act, which mandates a minimum tax
assessment, where a tax payer does not
have any tax liability arising from its tax
assessment.
However, the Company was exempted from
the minimum tax for both current and prior
years because it qualified for tax exemption.
This tax exempted was granted due to the
company meeting the 25% minimum capital
importation rule.
The banking subsidiary was assessed based
on the minimum tax legislation for the year
ended 31 December 2015 because of a tax
exemption granted via Companies Income
FCMB Group Plc Annual Report and Accounts 2015 139
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GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(v) Current income tax liability
Beginning of the year
4,363,544 4,333,353 114,246 60,277
Tax paid
(3,883,168) (3,854,856) (114,246) -
Minimum tax (see Note 19 (i))
900,532 - - -
National Information Technology
Development Agency (Nitda) levy (see
Note 19 (i)) 110,263 286,516 25,231 53,969
Tertiary education tax (see Note 19 (i))
124,292 107,709 - -
Income tax expense (see Note 19 (i))
1,882,491 3,490,822 - -
3,497,954 4,363,544 25,231 114,246
Current 3,497,954 4,363,544 25,231 114,246
Non-current
- - - -
3,497,954 4,363,544 25,231 114,246
Tax (Exemption of Bonds and Short Term
Government Securities) Order, 2011, as
contained in a gazette issued by the
President of the Federal Republic of Nigeria,
which took eect from 2 January 2012.
The Order exempts all interests earned on
bonds (Federal, state, local and corporate
bodies including supra-nationals) and other
short-term securities such as treasury bills
and promissory notes from being subjected
to tax imposed under the Companies Income
Tax Act. The Order is valid for a period of 10
years from the eective date of the Order,
except for bonds issued by the Federal
Government, which will continue to enjoy
the exemption.
A significant portion of the banking
subsidiary’s income derives from short-term
securities and government bonds and, as a
result, the banking subsidiary’s current
income tax assessment for the year under
review yields a tax credit in its favour.
Consequently, the banking subsidiary has
applied the provisions of the Companies
Income Tax Act which mandates a minimum
tax assessment, where a tax payer does not
have any tax liability arising from its tax
assessment.
Excess dividend tax in line with Section 15A
of Companies Income Tax Act, which
stipulates that where a company pays
dividend in a year where no tax is payable
due to no total profit or total profit that is
less than the amount of dividend paid,
whether or not the recipient of the dividend
is a Nigerian company, the company paying
the dividend shall be charged to a tax at the
rate of 30% of the amount of dividend paid
as if that is the total profit of the company.
During the year ended 31 December 2015,
the Group was not liable to excess dividend
tax (31 December 2014: N1.5 billion).
The Company’s tax computation was carried
out by Albert Folorunsho (FRC/2013/ICAN/
00000000908) of Pedabo Associates
Limited.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015140
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GROUP COMPANY
20 Cash and Cash Equivalents
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Cash
37,662,017 26,448,441 - -
Current balances within Nigeria
383,933 6,568,501 4,354,446 54,830
Current balances outside Nigeria (see
Note (b) below) 78,548,093 62,625,209 - -
Placements with local banks (see Note (c)
below) 11,780,077 8,623,965 2,876,750 4,001,335
Placements with foreign banks
7,086,313 13,262,413 - -
Unrestricted balances with Central bank
45,461,265 8,765,280 - -
180,921,698 126,293,809 7,231,196 4,056,165
Current 180,921,698 126,293,809 7,231,196 4,056,165
Non-current
- - - -
180,921,698 126,293,809 7,231,196 4,056,165
(a)
Cash and cash equivalents comprise balances
with less than three months’ maturity from
the date of acquisition, including cash in hand,
deposits held at call with other banks and
other short-term highly liquid investments
with original maturities less than three
months.
(b)
Balance with banks outside Nigeria include
N12.87 billion (2014: N6.66 billion), which
represents the naira value of foreign currency
amounts held by the Banking Subsidiary on
behalf of customers in respect of letters of
credit transactions. The corresponding
liability is included in other liabilities (see
Note 39).
(c)
Placements with local banks includes
N7.5 billion (31 December 2014: N7.5 billion)
which represents overnight placements with
the Central Bank of Nigeria (CBN ).
GROUP COMPANY
21 Restricted Reserve Deposits
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Restricted mandatory reserve deposits
with Central bank (see Note (a) below)
125,552,318 146,105,573 - -
125,552,318 146,105,573 - -
Current
125,552,318 146,105,573 - -
Non-current
- - - -
125,552,318 146,105,573 - -
(a)
Restricted mandatory reserve deposits are not available for use in the banking subsidiary’s day-
to-day operations. Mandatory reserve deposits and escrow balances are non-interest bearing and
are computed at dierent percentages (as directed by the CBN from time to time) of the banking
subsidiary’s deposit liabilities for private sector and public sector deposits respectively. Eective
9 April 2014, the percentage of the private sector deposit was changed from 12% to 15% and was
further changed to 20% eective 25 November 2014. The percentage of public sector deposit was
changed from 50% to 75% eective 4 February 2014. The rate was harmonised at 31% in May 2015
for both private and public sector deposits and dropped to 25% eective September 2015.
FCMB Group Plc Annual Report and Accounts 2015 141
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GROUP COMPANY
22 Non-Pledged Trading Assets
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Federal Government of Nigeria bonds –
listed
591,882 - - -
Treasury bills – listed
1,247,395 110,961 - -
Equity securities
155,073 630,956 - -
1,994,350 741,917 - -
Current
1,994,350 741,917 - -
Non-current
- - - -
1,994,350 741,917 - -
GROUP COMPANY
23 Derivative Assets and Liabilities Held for
Risk Management
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Instrument type
Assets
– options
1,391,892 4,421,201 - -
– interest rate swap
87,868 81,804 - -
1,479,760 4,503,005 - -
Current
- - - -
Non-current
1,479,760 4,503,005 - -
1,479,760 4,503,005 - -
Liabilities
– options
1,214,104 4,104,808 - -
– interest rate swap
103,167 89,377 - -
1,317,271 4,194,185 - -
Current
- - - -
Non-current
1,317,271 4,194,185 - -
1,317,271 4,194,185 - -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015142
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GROUP COMPANY
24 Loans and Advances to Customers
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Loans and advances to customers
at amortised cost 595,948,369 621,704,427 - -
Finance leases at amortised cost
15,111,332 11,670,770 - -
Gross loans
611,059,701 633,375,197 - -
Less allowance for impairment:
On loans and advances to customers
(17,851,341) (15,023,255) - -
On finance leases (see Note (b) below)
(250,943) (372,152) - -
Total allowance for impairment
(18,102,284) (15,395,407) - -
592,957,417 617,979,790 - -
Current
267,685,541 201,960,998 - -
Non-current
325,271,876 416,018,792 - -
592,957,417 617,979,790 - -
Customer transactions: The banking subsidiary has entered into options on Dated Brent with
customers to allow those customers to hedge their exposure to the oil price.
Market transactions: The banking subsidiary has entered into back-to-back options on Dated Brent
with regards to the customer transactions with market counterparties to mitigate the market risk
exposure on the customer transactions.
The banking subsidiary has not applied hedge accounting.
The fair value gains and losses have been presented in the profit or loss (see Note 12).
GROUP
2015 2014
Gross
amount
Impairment
allowance
Carrying
amount
Gross
amount
Impairment
allowance
Carrying
amount
Retail customers:
Mortgage lending
2,154,538 (12,950) 2,141,588 4,282,907 (120,440) 4,162,467
Personal loans
128,795,993 (4,306,392) 124,489,601 118,898,106 (2,723,145) 116,174,961
Credit cards
2,249,009 (26,993) 2,222,016 379,890 (8,248) 371,642
Corporate customers:
Other secured lending
462,748,829 (13,505,006) 449,243,823 498,143,524 (12,171,422) 485,972,102
595,948,369 (17,851,341) 578,097,028 621,704,427 (15,023,255) 606,681,172
Retail customers represent loans availed to individuals, unregistered small and medium scale
businesses and all other unstructured business ventures; while corporate customers represent loans
availed to corporate bodies and government agencies.
FCMB Group Plc Annual Report and Accounts 2015 143
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GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(b) Finance lease
Loan and advances to customers at
amortised cost include the following
finance lease:
Gross investment:
Less than one year
6,379,837 4,982,310 - -
Between one and five years
14,160,372 13,860,424 - -
More than five years
1,554,776 1,756,584 - -
22,094,985 20,599,318 - -
Unearned finance income
(6,983,653) (8,928,548) - -
Net investment in finance leases
15,111,332 11,670,770 - -
Less impairment allowance
(250,943) (372,152) - -
14,860,389 11,298,618 - -
Net investment in finance leases
Net investment in finance leases,
receivables:
Less than one year
3,023,616 2,698,989 - -
Between one and five years
11,063,356 8,340,232 - -
More than five years
1,024,360 631,549 - -
15,111,332 11,670,770 - -
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(c) Movement in allowances
for impairment
(i) Specific allowances for impairment
Balance at 1 January
6,574,749 3,206,245 - -
Impairment loss for the year:
Charge for the year (see Note 9 (a))
6,993,587 7,473,045 - -
Impairment reversals
- (247,723) - -
Write-offs
(2,079,345) (3,856,818) - -
11,488,991 6,574,749 - -
(ii) Collective allowances for
impairment
Balance at 1 January
8,820,658 8,631,674 - -
Impairment loss for the year:
Charge for the year (see Note 9 (a))
2,881,651 3,705,493 - -
Write-offs
(5,089,016) (3,516,509) - -
6,613,293 8,820,658 - -
18,102,284 15,395,407 - -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015144
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GROUP COMPANY
25 Investment Securities
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Held-to-maturity (see Note (a) below)
86,518,754 68,079,431 169,466 -
Available-for-sale (see Note (b) below)
48,791,393 80,207,399 1,844,155 2,828,220
135,310,147 148,286,830 2,013,621 2,828,220
Current
- 93,902,997 - -
Non-current
135,310,147 54,383,833 2,013,621 2,828,220
135,310,147 148,286,830 2,013,621 2,828,220
(a) Held-to-maturity investment
securities
Federal Government of Nigeria (FGN)
bonds – listed
56,088,570 46,151,852 - -
State Government bonds – unlisted
15,118,111 10,559,552 - -
Treasury bills
229,367 1,530,202 - -
Corporate bonds – unlisted
15,082,706 9,837,825 169,466 -
86,518,754 68,079,431 169,466 -
(b) Available-for-sale investment
securities
Federal Government of Nigeria (FGN)
bonds – listed
1,148,445 445,342 - -
Treasury bills – listed
38,878,936 68,711,397 - -
Equity securities measured at fair value
(see Note (c) below) – listed/unlisted
2,954,076 3,219,096 - -
Unquoted equity securities measured at
cost (see Note (d)) – unlisted
5,538,704 7,831,564 1,572,923 2,828,220
Unclaimed dividend investment fund
(see Note (g))
271,232 - 271,232 -
48,791,393 80,207,399 1,844,155 2,828,220
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(d) Classification of loans by
security type
Secured against real estate
100,519,015 97,287,082 - -
Secured by shares of quoted companies
2,099,461 1,104,522 - -
Cash collateral, lien over fixed and
floating assets
282,659,034 237,109,675 - -
Otherwise secured
78,410,455 199,763,165 - -
Unsecured
147,371,736 98,110,753 - -
611,059,701 633,375,197 - -
(e) Impaired loans that are not individually significant are included in the collective impairment. Therefore,
when such loans are written o, the cumulative impairment on them is taken from the collective
impairment allowance. The loans written o during the year had been fully provisioned in the books.
(f) None of the related party loans was impaired as at year end and as such no impairment was taken
on related party loans (2014: nil).
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GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(c) Equity securities measured at fair
value under available-for-sale
investments
Helios Towers Mauritius (HTM) Private
Placement Underwriting
1,729,924 2,231,806 - -
DAAR Communications Underwriting
37,277 37,277 - -
Environmental Remediation Holding
Company Plc
10,450 127,088 - -
Unity Bank Plc
1,253 560 - -
UTC Nigeria Plc
11 11 - -
Central Securities Clearing System
19,215 12,600 - -
WAMCO
5,495 - - -
Financial Derivative Ltd
10,000 10,000 - -
Industrial and General Insurance Plc
5,990 24,503 - -
Food Concepts Limited
2,310 1,800 - -
Zenith Bank Plc
342,551 - - -
Hygeia Nigeria Limited
- 601 - -
Legacy Short Maturity Fund
30,250 - - -
Legacy Equity Fund
45,000 58,500 - -
Standard Alliance Co Plc
714,350 714,350 - -
2,954,076 3,219,096 - -
(d) Unquoted equity securities at cost
under available-for-sale investments
Credit Reference Company Limited
61,111 61,111 - -
Nigeria Inter-bank Settlement System Plc
102,970 102,970 - -
Africa Finance Corporation
2,558,388 2,558,388 - -
Rivers State Microfinance Agency
1,000,000 1,000,000 - -
Private Equity Funds (see Note (f) below)
1,572,923 2,828,220 1,572,923 2,828,220
SME Investments
1,087,967 1,091,848 - -
First Concepts & Properties Limited
- 1,040,175 -
Africa Export-Import Bank, Cairo
144,805 144,805 - -
Central Securities Clearing System
- 87,500 - -
Express Discount House
64,415 64,415 - -
Smartcard Nigeria Plc
22,804 22,804 - -
ATSC Investment
50,000 50,000 - -
Currency Sorting Co
24,640 24,640 - -
IMB Energy Master Fund
100,000 100,000 - -
FMDQ (OTC) Plc
30,000 30,000 - -
Society for Worldwide Interbank
Financial Telecommunication (SWIFT)
18,595 - - -
6,838,618 9,206,876 1,572,923 2,828,220
Specific impairment for equities
(see Note (e) below)
(1,299,914) (1,375,312) - -
Carrying amount
5,538,704 7,831,564 1,572,923 2,828,220
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP COMPANY
26 Assets Pledged as Collateral
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
The nature and carrying amounts of the
non-tradable financial assets pledged as
collaterals are as follows:
Treasury bills – listed
7,934,482 8,450,218 - -
Federal Government of Nigeria (FGN)
bonds – listed
43,843,107 45,362,202 - -
51,777,589 53,812,420 - -
Current
15,607,982 20,588,198 -
Non-current
36,169,607 33,224,222 - -
51,777,589 53,812,420 - -
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(e) Specific allowances for impairment
against unquoted equity securities at
cost under available-for-sale
investments
Balance at 1 January
1,375,312 1,122,578 - -
Reversal of impairment (see Note 9 (c))
(75,398) (22,804) - -
Charge for the year (see Note 9 (c))
- 275,538 - -
Balance at end of the year
1,299,914 1,375,312 - -
(f) During the year, the Group under the Private Equity Fund disposed o its stake in Equity Bank,
Kenya. This resulted in a gain of N1.9 billion on disposal (see Note 13 (c)).
(g) In line with the Security and Exchange Commission (SEC) recent rule, CardinalStone Registrars
Limited (Registrars to the Company) during the year transferred 90% of the total unclaimed
dividend under their custody to the Company. The amount transferred was N255.04 million. The
company earned an income of N16.19 million within the year from the investment of the unclaimed
dividend.
(h)The cost of AFS investments was disclosed because its fair value could not be reliably measured.
(i) All debt securities have fixed coupons.
As at the year ended, the Group held no collateral that it was permitted to sell or re-pledge in the
absence of default by the owner of the collateral (31 December 2014: Nil).
This represents pledged assets to these parties:
FCMB Group Plc Annual Report and Accounts 2015 147
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GROUP COMPANY
Counterparties
Reasons for
pledged securities
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Nigeria Inter-bank
Settlement Plc (NIBSS)
cards, POS
transactions
settlements
1,184,482 1,184,482 - -
Interswitch Nigeria
Limited
cards, POS
transactions
settlements
250,000 250,000 - -
Federal Inland Revenue
Service (FIRS)
Third parties
collection
transactions
1,500,000 2,600,000 - -
Central Bank of Nigeria
(CBN)
Third parties
clearing
instruments
15,000,000 15,000,000 - -
Bank of Industry (BOI)
On-lending facilities
to customers
14,980,800 17,534,516 - -
Standard Bank London
Borrowed funds
repo transactions
12,013,422 17,243,422 - -
Stanbic IBTC
Borrowed funds
repo transactions
6,848,885 - - -
51,777,589 53,812,420 - -
GROUP COMPANY
27 Investment in Subsidiaries
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Investment in subsidiaries
comprises:
First City Monument Bank Limited (see
Note (c) below)
- - 115,422,326 115,422,326
FCMB Capital Markets Limited (see Note
(d) below)
- - 240,000 240,000
CSL Stockbrokers Limited (CSLS) (see
Note (e) below)
- - 3,053,777 3,053,777
CSL Trustees Limited (see Note (f)
below)
- - 220,000 40,000
- 118,936,103 118,756,103
Specific allowances for impairment
- - (689,742) -
Carrying amount
- - 118,246,361 118,756,103
Current
- - - -
Non-current
- - 118,246,361 118,756,103
- - 118,246,361 118,756,103
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015148
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GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Specific allowances for impairment
Balance at 1 January
- - - -
Charge for the year (see Note 9 (d))
- - 689,742 -
Balance at 31 December
- - 689,742 -
Company name
Country of
incorporation
Nature of
business
Percentage
of equity
capital
held (direct
holdings)
Financial year
end
(1) First City Monument Bank Limited
(see Note (c) below)
Nigeria Banking 100% 31 December
(2) FCMB Capital Markets Limited
(see Note (d) below)
Nigeria Capital
Market
100% 31 December
(3) CSL Stockbrokers Limited (CSLS)
(see Note (e) below)
Nigeria Stockbroking 100% 31 December
(4) CSL Trustees Limited (see Note (f) below)
Nigeria Trusteeship 100% 31 December
(b) Group entities
The subsidiary companies, country of incorporation, nature of business, percentage equity holding
and year consolidated with the parent company is as detailed below:
(c) This represents the cost of the Company’s 100% equity holding in First City Monument Bank
Limited. The Company was incorporated under the Companies and Allied Matters Act as a Private
Limited Liability Company on 20 April 1982. It was licensed on 11 August 1983 to carry on the
business of commercial banking and commercial business on 1 September 1983. The Bank was
converted into a Public Limited Liability Company and its shares listed on the Nigerian Stock
Exchange on 21 December, 2004. The Bank was, however, delisted from the Nigerian Stock
Exchange on 21 June 2013 and registered as a Limited Liability Company on 4 September 2013
following the group restructuring.
(d) This represents the cost of the Company’s 100% equity holding in FCMB Capital Markets Limited.
The Company was incorporated on 4 April 2002.
(e) This represents the cost of the Company’s 100% equity holding in CSL Stockbrokers Limited.
The Company was incorporated on 24 January1979 and commenced operations in May 1979.
The Bank acquired the total holding in the company in May 2009.
(f) This represents the cost of the Company’s 100% equity holding in CSL Trustees Limited. The
Company was incorporated on 24 November 2010. The company invested additional
N180 million in CSL Trustees Limited in September 2015 in order to recapitalise the business in line
with the new SEC minimum capitalisation policy of N300 million for trustee business in Nigeria.
(g) There are no significant restrictions on the ability of subsidiaries to transfer funds to the Group
in the form of cash dividends or repayment of loans and advances.
(h) The investments are carried at cost less impairment.
FCMB Group Plc Annual Report and Accounts 2015 149
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(c) This represents the Company’s 28.30% (2014: 28.30%) equity interest holding in Legacy Pension
Fund Limited, a pension fund manager licensed to carry on the business of fund and pension
management. The company was incorporated in April 2005 and commenced operations in May
2005. The Group acquired its initial 25% equity holding in February 2008.
GROUP COMPANY
28 Investment in Associates
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Investment in associate company:
Balance at 1 January 2015
647,399 568,512 418,577 407,800
Share of profit transfer out of reserve
84,565 68,110 - -
Additions during the year
- 10,777 - 10,777
Balance at year end
731,964 647,399 418,577 418,577
(b) Summarised financial information
of the Group's principal associate
company:
Assets
3,166,075 2,767,505 3,166,075 2,767,505
Liabilities
579,628 479,876 579,628 479,876
Net assets
2,586,448 2,287,630 2,586,448 2,287,630
Revenues
2,278,438 2,070,682 2,278,438 2,070,682
Profit
970,469 950,767 970,469 950,767
GROUP
29 Property and
Equipment
Leasehold
improvement
and buildings
N
’000
Motor
vehicles
N’000
Furniture,
fittings and
equipment
N
’000
Computer
equipment
N’000
Capital
work in
progress
N
’000
Total
N’000
Cost
Balance at 1 January 2015
24,709,746 6,112,726 15,093,250 9,534,961 3,887,506 59,338,189
Additions during the year
1,656,885 621,678 3,465,217 270,191 435,816 6,449,787
Transfer to other assets
(1,624,373) - - - - (1,624,373)
Disposal during the year
(32,888) (1,773,405) (257,539) (56,542) - (2,120,374)
Translation difference
563 971 1,796 966 - 4,296
Balance at 31 December 2015
24,709,933 4,961,970 18,302,724 9,749,576 4,323,322 62,047,525
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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COMPANY
Leasehold
improvement
and buildings
N
’000
Motor
vehicles
N’000
Furniture,
fittings and
equipment
N
’000
Computer
equipment
N’000
Capital
work in
progress
N
’000
Total
N’000
Cost
Balance at 1 January 2015
5,181 58,987 7,575 2,942 - 74,685
Additions during the year
- 6,900 59 263 - 7,222
Disposal during the year
- (4,661) - - - (4,661)
Balance at 31 December 2015
5,181 61,226 7,634 3,205 - 77,246
Accumulated depreciation
and impairment losses
Balance at 1 January 2015
641 14,928 2,139 639 - 18,347
Charge for the year (see
Note 15)
518 19,175 1,823 781 - 22,297
Eliminated on disposal
- (4,661) - - - (4,661)
Balance at 31 December 2015
1,159 29,442 3,962 1,420 - 35,983
Carrying amounts:
Balance at 31 December 2015
4,022 31,784 3,672 1,785 - 41,263
Balance at 31 December 2014
4,540 44,059 5,436 2,302 - 56,337
GROUP
Leasehold
improvement
and buildings
N
’000
Motor
vehicles
N’000
Furniture,
fittings and
equipment
N
’000
Computer
equipment
N’000
Capital
work in
progress
N
’000
Total
N’000
Accumulated depreciation
and impairment losses
Balance at 1 January 2015
5,760,967 4,740,581 10,567,259 7,776,075 2,101,500 30,946,382
Transfer to other assets
(441,760) - - - - (441,760)
Charge for the year
(see Note 15)
859,487 631,634 1,601,014 739,984 - 3,832,119
Eliminated on disposal
(32,788) (1,773,195) (257,449) (56,332) (142,934) (2,262,698)
Translation difference
255 490 1,166 833 - 2,744
Balance at 31 December 2015
6,146,161 3,599,510 11,911,990 8,460,560 1,958,566 32,076,787
Carrying amounts:
Balance at 31 December 2015
18,563,772 1,362,460 6,390,734 1,289,016 2,364,756 29,970,738
Balance at 31 December 2014
18,948,779 1,372,145 4,525,991 1,758,886 1,786,006 28,391,807
FCMB Group Plc Annual Report and Accounts 2015 151
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GROUP COMPANY
30 Intangible Assets
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Software
Cost
Beginning of the year
3,645,396 2,611,527 3,851 3,851
Derecognised balance due to divested
subsidiary
- (5,638) - -
Additions during the year
542,269 949,426 - -
Work-in-progress
1,297,032 75,679 - -
Translation difference
7,195 14,402 - -
End of the year
5,491,892 3,645,396 3,851 3,851
Amortisation
Beginning of the year
2,292,156 2,026,069 1,043 80
Derecognised balance due to divested
subsidiary
- (1,813) - -
Reclassification
- (58,529) - -
Charge for the year (see Note 15)
530,897 316,720 963 963
Translation difference
5,628 9,709 - -
End of the year
2,828,681 2,292,156 2,006 1,043
Carrying amount
2,663,211 1,353,240 1,845 2,808
(b) Goodwill
Beginning of the year
6,995,070 6,995,070 - -
Impairment charge (see Note (c) below)
(689,742) - - -
At end of the year
6,305,328 6,995,070 - -
8,968,539 8,348,310 1,845 2,808
Current
- - - -
Non-current
8,968,539 8,348,310 1,845 2,808
8,968,539 8,348,310 1,845 2,808
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Current
- - - -
Non-current
29,970,738 28,391,807 41,263 56,337
29,970,738 28,391,807 41,263 56,337
There were no capitalised borrowing costs related to the acquisition of property and equipment
during the year ended (31 December 2014: nil). There were no restrictions on title of any property and
equipment. There were no property and equipment pledged as security for liabilities. There were no
contractual commitments for the acquisition of property and equipment.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(c) Goodwill is reviewed annually or more frequently for impairment when there are objective
indicators that impairment may have occurred by comparing the carrying value to its recoverable
amount. The Directors of the Company are of the opinion that there is objective indication that
the goodwill recognised on the acquisition of CSL Stockbrokers Limited has been impaired due to
the downturn in the stockbroking business. Impairment charge of N689.74 million was taken in
2015 (2014: nil).
(d) There were no capitalised borrowing costs related to the acquisition of any internal development
of software during the year (31 December 2014: nil).
GROUP
31 December 2015 31 December 2014
Assets
N
’000
Liabilities
N’000
Net
N’000
Assets
N’000
Liabilities
N’000
Net
N’000
Property and equipment
1,147,797 (56,155) 1,091,642 1,123,549 (41,487) 1,082,062
Defined benefits
157,779 - 157,779 194,310 - 194,310
Allowances for loan losses
2,339,356 (12,283) 2,327,073 2,327,073 - 2,327,073
Unrelieved loss carried
forward
4,521,309 - 4,521,309 4,521,309 - 4,521,309
Net tax assets/(liabilities)
8,166,241 (68,438) 8,097,803 8,166,241 (41,487) 8,124,754
Deferred tax assets
Current
- -
Non-current
8,166,241 8,166,241
8,166,241 8,166,241
Deferred tax liabilities
Current
- -
Non-current
68,438 41,487
68,438 41,487
31 Deferred Tax Assets and Liabilities
(a) Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
(b) Movements in temporary dierences during the year ended 31 December 2015:
GROUP 2015
Balance at
1 January
Recognised in
profit or loss
Recognised
in other
comprehensive
income
Balance at
31 December
Property and equipment
1,082,062 9,580 - 1,091,642
Defined benefits
157,779 - - 157,779
Allowances for loan losses
2,327,073 - - 2,327,073
Unrelieved loss carried forward
4,521,309 - - 4,521,309
8,088,223 9,580 - 8,097,803
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GROUP 2014
Balance at
1 January
Recognised in
profit or loss
Recognised
in other
comprehensive
income
Balance at
31 December
Property and equipment
894,552 187,510 - 1,082,062
Defined benefits
220,057 199,122 (261,400) 157,779
Allowances for loan losses
1,662,717 664,356 - 2,327,073
Unrelieved loss carried forward
3,496,886 1,024,423 - 4,521,309
6,274,212 2,075,411 (261,400) 8,088,223
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(c) Unrecognised deferred tax assets
Deferred tax assets have not been
recognised in respect of the following
items:
Unrelieved losses
4,812,271 1,195,882 623,607 5,955
Provision for terminated gratuity not yet
paid
(221,402) - - -
Allowance for loan losses
(544,943) - - -
Property and equipment (utilised capital
allowance)
1,911,818 696,367 43,621 280,278
5,957,744 1,892,249 667,228 286,233
Deferred tax assets have not been recognised in respect of these items because it is not presently
probable that future taxable profit will be available against which the Group can utilise the benefits.
Movements in temporary dierences during the year ended 31 December 2014:
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP COMPANY
32 Other Assets
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Other financial assets
Accounts receivable
34,198,432 33,293,055 1,420,000 5,450,000
Other non-financial assets:
Prepayments
4,469,162 3,431,587 5,398 2,080
Consumables
578,609 731,564 - -
39,246,203 37,456,206 1,425,398 5,452,080
Less specific allowances for impairment
(see Note (b) below)
(17,542,788) (11,368,523) - -
21,703,415 26,087,683 1,425,398 5,452,080
Current
6,821,257 13,298,749 1,425,398 5,452,080
Non-current
14,882,158 12,788,934 - -
21,703,415 26,087,683 1,425,398 5,452,080
(b) Movement in impairment on other
assets
At start of the year
11,368,523 11,909,052 - -
Increase in impairment (see Note 9 (b))
5,494,359 478,445 - -
Amounts written back
750,000 -
Amounts written off
(70,094) (1,018,974) - -
At end
17,542,788 11,368,523 - -
GROUP COMPANY
33 Deposits from Banks
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Other deposits from banks
5,461,038 4,796,752 - -
5,461,038 4,796,752 - -
Current
5,461,038 4,796,752 - -
Non-current
- - - -
5,461,038 4,796,752 - -
Other deposits from banks comprise:
FBNBank UK Limited (see Note (a) below)
5,083,993 - - -
United Bank for Africa (UBA), New York
- 3,739,566 - -
Other foreign banks
377,045 1,057,186 - -
5,461,038 4,796,752 - -
(a) The amount of N5,083,993,000 (USD 25,509,247) (December 2014: nil) represents interbank
takings from FBNBank UK Limited repayable after a tenor of 170 days with an interest rate of
six months’ LIBOR + 1.75%.
(b) Deposits from banks only include financial instruments classified as liabilities at amortised cost.
FCMB Group Plc Annual Report and Accounts 2015 155
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Corporate customers represents deposits from corporate bodies and government agencies, while
retail customers represents deposits from individuals, unregistered small and medium scale
businesses, and all other unstructured business ventures.
GROUP COMPANY
34 Deposits from Customers
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Retail customers:
Term deposits
142,859,562 124,417,973 - -
Current deposits
213,835,277 210,851,945 - -
Savings
112,728,490 87,034,844 - -
469,423,329 422,304,762 - -
Corporate customers:
Term deposits
109,786,822 110,733,909 - -
Current deposits
121,006,555 200,758,125 - -
230,793,377 311,492,034 - -
700,216,706 733,796,796 - -
Current
693,858,527 733,693,839 - -
Non-current
6,358,179 102,957 - -
700,216,706 733,796,796 - -
GROUP COMPANY
35 Borrowings
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Standard Bank, London (see Note (a) (i) below)
9,981,231 9,290,151 - -
Standard Bank, London (see Note (a) (ii) below)
- 1,267,371 - -
Standard Bank, London (see Note (a) (iii) below)
- 4,680,312 - -
Standard Chartered Bank, London (see Note (a)
(iv) below)
- 27,875,239 - -
International Finance Corporation (IFC)
(see Note (a) (v) below)
1,668,644 2,183,672 - -
International Finance Corporation (IFC)
(see Note (a) (vi) below)
4,171,610 5,460,880 - -
International Finance Corporation (IFC)
(see Note (a) (vii) below)
10,009,976 9,159,368 - -
International Finance Corporation (IFC)
(see Note (a) (viii) below)
7,507,482 7,028,983 - -
International Finance Corporation (IFC)
(see Note (a) (ix) below)
6,306,771 - - -
Citibank, N.A (OPIC) (see Note (a) (x) below)
- 545,545 - -
Citibank, Nigeria (OPIC)
(see Note (a) (xi) below)
- 174,163 - -
Bank of Industry (BOI), Nigeria
(see Note (a) (xii) below)
- 164,822 - -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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GROUP COMPANY
35 Borrowings
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Netherlands Development Finance Company
(FMO) (see Note (a) (xiii) below)
4,993,001 4,559,315 - -
Netherlands Development Finance Company
(FMO) (see Note (a) (xiv) below)
4,993,001 4,651,758 - -
Netherlands Development Finance Company
(FMO) (see Note (a) (xv) below)
1,996,302 1,859,555 - -
European Investment Bank (EIB)
(see Note (a) (xvi) below)
6,585,303 6,116,060 - -
Standard Bank, S.A (see Note (a) (xvii) below)
5,016,923 - - -
Mashreq Bank, New York
(see Note (a) (xviii) below)
- 2,779,041 - -
Mashreq Bank, New York
(see Note (a) (xix) below)
- 4,631,336 - -
Mashreq Bank, New York
(see Note (a) (xx) below)
- 1,851,414 - -
Standard Bank, London
(see Note (a) (xxi) below)
1,284,167 - - -
Citibank, Nigeria (see Note (a) (xxii) below)
4,989,806 - - -
Citibank, N.A (OPIC) (see Note (a) (xxiii) below)
14,947,402 - - -
Commerzbank Led Syndicated Facility
(see Note (a) (xxiv) below)
15,424,233 - - -
Engr. Tajudeen Amoo
(see Note (a) (xxv) below)
1,833,302 259,949 - -
Financial Derivatives Company Limited
(see Note (a) (xxvi) below)
268,980 277,017 - -
First City Asset Management (FCAM)
(see Note (a) (xxvii) below)
8,236,220 3,831,794 - -
Supra Finance Limited
(see Note (a) (xxviii) below)
- 81,036 - -
Udodong Grace (see Note (a) (xxix) below)
- 103,207 - -
Temitope Popoola (see Note (a) (xxx) below)
29,000 - - -
Living Faith (see Note (a) (xxxi) below)
3,456,840 -
UBS AG, United Kingdom
(see Note (a) (xxxii) below)
- 708,358
113,700,194 99,540,346 - -
Current
39,477,030 26,793,500 - -
Non-current
74,223,164 72,746,846 - -
113,700,194 99,540,346 - -
FCMB Group Plc Annual Report and Accounts 2015 157
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(a) (i) The amount of N9,981,231,402
(USD 50,000,000) (31 December
2014: N9,290,151,000) represents a
secured renewed facility granted by
Standard Bank, London repayable
after a tenor of five years, maturing
30 June 2018 with an interest rate of
three months’ LIBOR + 3.0% payable
quarterly. The facility is secured by
Federal Government of Nigeria bonds.
ii) This represents a facility that has
been repaid as at 31 December 2015:
Nil (31 December 2014: 1,267,371,000
(USD 6,702,500)) granted by
Standard Bank, London repayable
after a tenor of 365 days, matured 19
June 2015 with an interest rate of
2.6%. The facility was secured by
Federal Government of Nigeria
bonds.
iii) This represents a facility that has been
repaid as at 31 December 2015: Nil
(31 December 2014: N4,680,312,000
(USD 25,000,000)) granted by
Standard Bank, London repayable
after a tenor of two years, matured 25
July 2015 with an interest rate of
three months’ LIBOR + 2.0% payable
quarterly. The facility is secured by
Federal Government of Nigeria bonds.
iv) This represents a facility that has been
repaid as at 31 December 2015: Nil,
(31 December 2014: N27,875,239,000
(USD 150,000,000)) granted by
Standard Chartered Bank, London
repayable after a tenor of two years,
matured 23 December 2015 with an
interest rate of 3.65% above LIBOR
payable quarterly. This is a syndicated
facility where the lead arrangers and
bookrunners are Standard Chartered
Bank, London and Commerzbank,
Germany respectively.
v) The amount of N1,668,643,768
(USD 20,000,000) (31 December
2014: N2,183,672,000) represents
the outstanding balance of the
unsecured convertible facility
granted by International Finance
Corporation (IFC) repayable after a
tenor of seven years, maturing 29
November 2017 with an interest rate
of six months’ LIBOR plus spread of
400–450 basis points payable semi-
annually.
vi) The amount of N4,171,610,364 (USD
50,000,000) (31 December 2014:
N5,460,880,000) represents the
outstanding balance of the unsecured
facility granted by International
Finance Corporation (IFC) repayable
after a tenor of seven years maturing
29 November 2017 with an interest
rate of six months’ LIBOR plus spread
of 400–450 basis points payable
semi-annually.
vii) The amount of N10,009,976,291 (USD
50,000,000) (December 2014:
N9,159,368,000) represents an
unsecured facility granted by
International Finance Corporation
(IFC) repayable after a tenor of five
years maturing 9 October 2019 with
an interest rate of three months’
LIBOR + 3.65%.
viii) The amount of N7,507,482,219 (USD
37,500,000) (31 December 2014:
N7,028,983,000) represents an
unsecured facility granted by
International Finance Corporation
(IFC) repayable after a tenor of five
years maturing 9 October 2019 with
an interest rate of six months’ LIBOR
+ 4.75%.
ix) The amount of N6,306,770,699 (USD
31,500,000) (31 December 2014: Nil)
represents an unsecured facility
granted by International Finance
Corporation (IFC) repayable after a
tenor of three years maturing 19
February 2017 with an interest rate of
six months’ LIBOR + 4.0%.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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x) This represent a facility that has been
repaid as at 31 December 2015: Nil
(31 December 2014: N545,545,000
(USD 15,000,000)) granted by
Citibank NA repayable after a tenor of
three years matured 25 June 2015 with
an interest rate of six months’ LIBOR
plus spread of 400–450 basis points
payable quarterly.
xi) This represent a facility that has been
repaid as at 31 December 2015: Nil
(31 December 2014: N174,163,000
(USD 5,000,000)) granted by
Citibank Nigeria repayable after a
tenor of three years matured 25 June
2015 with an interest rate of six
months’ LIBOR plus spread of 400–
450 basis points payable quarterly.
xii) This represents a facility that has
been repaid as at 31 December 2015
Nil (31 December 2014:
N164,822,000) relates to Bank of
Industry (BOI) related loans for
manufacturing/SME funds for 10- to
15-year term.
xiii) The amount of N4,993,000,935
(USD 25,000,000) (31 December
2014: N4,559,315,000) represents an
unsecured facility granted by
Netherlands Development Finance
Company (FMO) repayable after a
tenor of six years, maturing 30 June
2020 with an interest rate of six
months’ LIBOR + 4.5%.
xiv) The amount of N4,993,000,935 (USD
25,000,000) (31 December 2014:
N4,651,758,000) represents an
unsecured facility granted by
Netherlands Development Finance
Company (FMO) repayable after a
tenor of six years, maturing 30 June
2020 with an interest rate of six
months’ LIBOR + 4.5%.
xv) The amount of N1,996,301,659 (USD
10,000,000) (December 2014:
N1,859,555,000) represents an
unsecured facility granted by
Netherlands Development Finance
Company (FMO) repayable after a
tenor of three years maturing 30
June 2017 with an interest rate of six
months’ LIBOR + 3.5%.
xvi) The amount of N6,585,303,441 (USD
32,877,500) (31 December 2014:
N6,116,060,000) represents an
unsecured facility granted by
European Investment (EIB) repayable
after a tenor of eight years maturing
22 September 2022 with an interest
rate of six months’ LIBOR plus 4%.
xvii) The amount of N 5,016,923,114 (USD
25,000,000) (31 December 2014: Nil)
represents an unsecured facility
granted by Standard Bank S.A
repayable after a tenor of one year
maturing 15 August 2016 with an
interest rate of three months’ LIBOR
+ 5.1% payable quarterly.
xviii) This represents an unsecured facility
that has been repaid as at 31 December
2015: Nil (December 2014:
N2,779,041,000 (USD 14,771,537))
granted by Mashreq Bank, New York
repayable after a tenor of 178 days
matured 16 March 2015 with an interest
rate of six months’ LIBOR + 2.75%.
xix) This represents an unsecured facility
that has been repaid as at 31 December
2015: Nil (December 2014:
N4,631,336,000 (USD 24,617,089))
granted by Mashreq Bank, New York
repayable after a tenor of 179 days
matured 17 March 2015 with an interest
rate of six months’ LIBOR + 2.75%.
xx) This represents an unsecured facility
that has been repaid as at 31 December
2015: Nil (December 2014:
N1,851,414,000 (USD 9,846,785))
granted by Mashreq Bank, New York
repayable after a tenor of 179 days
matured 26 March 2015 with an interest
rate of six months’ LIBOR + 2.75%.
FCMB Group Plc Annual Report and Accounts 2015 159
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xxi) The amount of N1,284,166,852 (USD
6,353,472) (31 December 2014: Nil)
represents an unsecured facility
granted by Standard Bank, London
repayable after a tenor of one year
maturing 20 June 2016 with an
interest rate of 2.6%.
xxii) The amount of N4,989,806,119 (USD
25,000,000) (31 December 2014: Nil)
represents an unsecured facility
granted by Citi Bank, repayable after
a tenor of one year maturing 26
September 2016 with an interest rate
of three months’ LIBOR + 3.10%
payable quarterly.
(xxiii) The amount of N14,947,402,152 (USD
75,000,000) (31 December 2014: Nil)
represents a facility granted by OPIC,
repayable after a tenor of four years
maturing 15 August 2019 based on
weekly certificate interest rate (CIR)
payable quarterly.
xxiv) The amount of N15,424,233,304 (USD
77,000,000) (31 December 2014: Nil)
represents a facility granted by
Commerz Bank, repayable after a
tenor of one year maturing 11
November 2016 with an interest rate
of six months’ LIBOR + 4.25%.
xxv) The amount of N1,833,302,000 (31
December 2014: N259,949,000)
represents the outstanding balance
of the unsecured facilities granted by
Engr. Tajudeen Amoo at average
nominal interest of 16.67% maturing
in 2016.
xxvi) The amount of N268,980,000
(December 2014: N277,017,000)
represents the outstanding balance
of the unsecured facilities granted by
Financial Derivatives Company
Limited at average nominal interest
of 16.67% maturing in 2016.
xvii) The amount of N8,236,220,000 (31
December 2014: N3,831,794,000)
represents an unsecured facility granted
by Credit Linked Investment Plan
(CLIP), an investment plan managed by
First City Asset Management Limited
(FCAM), repayable after a tenor of one
year maturing 2016 with an interest rate
of 16.67%.
xxviii) This represents an unsecured facility
that has been repaid as at 31
December 2015: Nil (December 2014:
N81,036,000) granted by Supra
Finance Limited at nominal interest
of 15.56%.
xxix) This represents an unsecured facility
that has been repaid as at 31
December 2015: Nil (December 2014:
N103,207,000) granted by Udodong
Grace at average nominal interest of
14.50%.
xxx) The amount of N29,000,000 (31
December 2014: Nil) represents an
unsecured facility granted by
Temitope Popoola, repayable after a
tenor of one year maturing 26 August
2016 with an interest rate of 16.67%.
xxxi) The amount of N3,456,840,000 (31
December 2014: Nil) represents the
outstanding balance of the unsecured
facilities granted by Living Faith at
average nominal interest of 15.67%
maturing in 2016.
xxxii) This represents an unsecured facility
that has been repaid as at 31
December 2015: Nil (31 December
2014: N708,358,000) granted by UBS
AG, United Kingdom to FCMB Capital
Markets Limited at an interest rate of
1.15% + LIBOR.
(b) The banking subsidiary has not had any
defaults of principal, interest or other
breaches with respect to their liabilities
during the year.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(a) On-lending facilities represents government intervention funds granted by Nigeria government
financial institutions, Bank of Industry (BOI) and Central Bank of Nigeria under manufacturing,
agriculture, power, small and medium scale companies sectors and Commercial Agriculture Credit
Scheme (CACS) respectively for on-lending to the banking subsidiary’s qualified customers. These
facilities are given to the banking subsidiary at low interest rates, between 0% and 10%, for on-lending
at a very low rate specified under the schemes. However, the banking subsidiary bears the credit risk
for these facilities.
The on-lending facilities granted at below the market rate were measured at fair value on initial
recognition and subsequently at amortised cost. The fair value gain on initial recognition was
recognised in the profit or loss.
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(b) Movement in borrowings account
during the year was as follows:
Balance, beginning of the year
99,540,346 59,244,230 - -
Additions during the year 28,781,222 45,066,628 - -
Repayments during the year (14,742,847) (13,674,302) - -
Translation difference 121,473 8,903,790 - -
113,700,194 99,540,346 - -
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(b) Movement in on-lending facilities during
the year was as follows:
Balance, beginning of the year
14,913,521 - - -
Additions during the year 19,969,442 14,913,521 - -
Repayments during the year (1,036,847) - - -
Balance, end of the year 33,846,116 14,913,521 - -
GROUP COMPANY
36 On-Lending Facilities
(see Note (a) Below)
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Bank of industry (BOI) 21,452,038 10,817,358 - -
Commercial Agriculture Credit Scheme (CACS) 10,529,310 4,096,163 - -
Micro, Small and Medium Enterprises
Development Fund (MSMEDF) 1,864,768 - - -
33,846,116 14,913,521 - -
Current 3,062,378 - - -
Non-current 30,783,738 14,913,521 - -
33,846,116 14,913,521 - -
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(a) The amount of N49.31 billion (2014: N26.17 billion) represents the amortised cost of additional
N23.19 billon and N26 billion, five-year 15% and seven-year 14.25% unsecured corporate bond issued
at par in November 2015 and November 2014 respectively. The principal amount is repayable in
November 2021 and November 2020 respectively, while the coupon is paid semi-annually. The amount
represents the first and second tranches of a N100 billion debt issuance programme. The Group has
not had any defaults of principal or interest or other breaches with respect to its debt securities
during the year ended 31 December 2015 (2014: nil).
GROUP COMPANY
37 Debt Securities Issued
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Debt securities at amortised cost:
Bond issued (see Note (a) below)
49,309,394 26,174,186 - -
49,309,394 26,174,186 - -
Current - 174,186 - -
Non-current 49,309,394 26,000,000 - -
49,309,394 26,174,186 - -
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(b) Movement in debt securities issued during
the year was as follows:
Balance, beginning of the year
26,174,186 - - -
Additions during the year 23,135,208 26,174,186 - -
Repayments during the year - - - -
Balance, end of the year 49,309,394 26,174,186 - -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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38 Retirement Benefit Obligations
Defined contribution scheme
The Group and its employees make a joint contribution of 18% basic salary, housing and transport
allowance to each employee’s retirement savings account maintained with their nominated pension
fund administrators. Prior to 1 July 2014, the Group and its employees contributed 7.5% each. However,
eective 1 July 2014, the Group complied with the new Pension Reform Act 2014 and up-to-date
payment of the new employer contribution of 10% and employees 8% have been remitted.
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Total contributions to the scheme
for the year were as follows:
Balance at start of year
115,056 124,674 - -
Charged to profit or loss (see Note 14) 683,196 515,351 8,640 5,739
Employee contribution 958,440 527,951 6,912 4,591
Total amounts remitted (1,706,148) (1,052,920) (15,552) (10,330)
At end of year 50,544 115,056 - -
Current 50,544 115,056 - -
Non-current - - - -
50,544 115,056 - -
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GROUP COMPANY
39 Other Liabilities
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Other financial liabilities:
Customers’ deposit for letters of credit
12,868,864 6,662,093 - -
Bank cheques/drafts 3,464,642 2,957,720 - -
Proceeds from public offers 73,268 81,976 - -
Accounts payable – negotiated letters of credit 26,500,628 54,830,354 - -
Accounts payable – others 42,113,943 50,550,642 104,304 85,456
Accounts payable – unclaimed dividend (see
Note (25g) above) 255,039 - 255,039 -
85,276,384 115,082,785 359,343 85,456
(b) Other non-financial liabilities:
Deferred income (see Note (d) below)
147,354 148,265 - -
Accrued expenses 1,372,513 3,993,271 216,377 219,597
Provision (see Note (c) below) 2,878,983 1,839,159 427,317 373,375
4,398,850 5,980,695 643,694 592,972
89,675,234 121,063,480 1,003,037 678,428
Current 85,203,116 113,405,076 1,003,037 678,428
Non-current 4,472,118 7,658,404 - -
89,675,234 121,063,480 1,003,037 678,428
GROUP
Claims
N
’000
Redundancy
N’000
Sta Benefits
N’000
Totals
N’000
(c) Movement in provision – Group
Balance as at start of year
2,018,452 38,921 60,000 2,117,373
Additional provisions made during the year
766,485 4,212 97,841 868,538
Provisions utilised during the year
(45,815) - (61,113) (106,928)
Balance as at end of year
2,739,122 43,133 96,728 2,878,983
COMPANY
Claims
N
’000
Redundancy
N’000
Sta Benefits
N’000
Totals
N’000
(c) Movement in provision – Company
Balance as at start of year
274,454 38,921 60,000 373,375
Additional provisions made during the year
84,247 4,212 72,411 160,870
Provisions utilised during the year
(45,815) - (61,113) (106,928)
Balance as at end of year
312,886 43,133 71,298 427,317
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Claims: The Group issued a warranty upon the disposal of a former subsidiary Fin Securities Limited
(FinSec); and also have pending probable legal cases that may crystallise. The claims provision is
reserved for these.
Redundancy: The Group carried out a restructuring exercise that resulted in the redundancy of
some sta. The redundancy provision is expected to be utilised in 2016.
Sta Benefits: The Group makes provision for sta productivity and medical expenses.
(d) Included in deferred income are amounts for financial guarantee contracts, which represent the
amount initially recognised less cumulative amortisation.
GROUP COMPANY
40 Share Capital
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) Authorised
30 billion ordinary shares of 50 kobo each
(2014: 30 billion)
15,000,000 15,000,000 15,000,000 15,000,000
(b) Issued and fully paid
19.8 billion ordinary shares of 50 kobo each
(2014: 19.8 billion)
9,901,355 9,901,355 9,901,355 9,901,355
GROUP COMPANY
41 Share Premium, Retained Earnings and
Other Reserves
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
(a) There was no movement in the share
premium during the current and prior year
Share premium
115,392,414 115,392,414 115,392,414 115,392,414
(b) Other reserves comprises:
Statutory reserve (see Note (d) below)
6,014,583 5,352,591 - -
Translation reserve (see Note (j) below)
1,576,155 1,077,661 - -
Available for sale reserve (see Note (f) below)
1,389,402 (327,972) - -
Regulatory risk reserve (see Note (g) below)
10,935,941 2,730,705 - -
19,916,081 8,832,985 - -
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The nature and purpose of the reserves in equity
are as follows:
(c) Share Premium:
This is the excess paid by shareholders over the
nominal value for their shares. Premiums from
the issue of shares are reported in share
premium.
(d) Statutory Reserve:
Nigerian banking regulations require the Banking
subsidiary to make an annual appropriation to a
statutory reserve. As stipulated by S.16(1) of the
Banks and Other Financial Institution Act of 1991
(amended), an appropriation of 30% of profit
after tax is made if the statutory reserve is less
than paid-up share capital and 15% of profit after
tax if the statutory reserve is greater than the
paid up share capital. However, the banking
subsidiary transferred 15% of its profit after tax to
statutory reserves as at year end (31 December
2014: 30%).
(e) SSI Reserve:
The SSI reserve is maintained to comply with the
Central Bank of Nigeria (CBN) requirement that
all licensed banks set aside a portion of the profit
after tax in a fund to be used to finance equity
investment in qualifying small and medium-scale
enterprises. Under the terms of the guideline
(amended by CBN letter dated 11 July 2006), the
contributions will be 10% of profit after tax and
shall continue after the first five years but banks’
contributions shall thereafter reduce to 5% of
profit after tax. However, this is no longer
mandatory. The small and medium-scale
industries equity investment scheme reserves are
non-distributable.
(f) Available for Sale Reserve
(Fair Value Reserve):
The fair value reserve includes the net cumulative
change in the fair value of available-for-sale
investments until the investment is derecognised
or impaired.
(g) Regulatory Risk Reserve:
The regulatory risk reserve warehouses the
dierence between the impairment of loans and
advances under the Nigeria GAAP and CBN
prudential guidelines and the loss incurred model
used in calculating the impairment balance under
IFRS.
(h) Retained Earnings:
Retained earnings comprise the undistributed
profits from previous years, which have not been
reclassified to the other reserves noted below.
(i) Revaluation Reserve:
The revaluation reserve shows the eects from
the fair value measurement of equity instruments
elected to be presented in other comprehensive
income on initial recognition after deduction of
deferred taxes. No gains or losses are recognised
in the consolidated income statement.
(j) Foreign Currency Translation Reserve
(FCTR):
Records exchange movements on the Group’s
net investment in foreign subsidiaries.
(k) Actuarial Gains and Losses Reserve:
This reserve shows the changes in the present
value of defined benefits obligation resulting
from experiences adjustments and changes in
actuarial assumptions.
42 Contingencies, Claims and Litigation
(a) Legal Proceedings
The Group in its ordinary course of business is
presently involved in 296 cases as a defendant
(31 December 2014: 270) and 103 cases as a
plainti (31 December 2014: 33). The total
amount claimed in the 296 cases against the
banking subsidiary is estimated at N99.13 billion
(31 December 2014: N68.57 billion), while the
total amount claimed in the 103 cases instituted
by the banking subsidiary is N17.10 billion (31
December 2014: N36.28 billion). The Directors of
the Group are of the opinion that none of the
aforementioned cases is likely to have material
adverse eect on the Group and are not aware of
any other pending and or threatened claims or
litigation that may be material to the financial
statements.
(b) Contingent Liabilities and Commitments
In common with other banks, the Group conducts
business involving acceptances and issuance of
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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performance bonds and indemnities. The majority
of these facilities are oset by corresponding
obligations of third parties. Contingent liabilities
and commitments comprise acceptances,
guarantees and letters of credit.
(c) Nature of Instruments
An acceptance is an undertaking by a bank to
pay a bill of exchange drawn on a customer. The
Group expects most acceptances to be
presented, but reimbursement by the customer is
normally immediate. Guarantees and letters of
credit are given as security to support the
performance of a customer to third parties. As
the Group will only be required to meet these
obligations in the event of the customer’s default,
the cash requirements of these instruments are
expected to be considerably below their nominal
amounts. Other contingent liabilities include
transaction-related customs and performances
bonds and are, generally, short-term
commitments to third parties that are not directly
dependent on the customer’s creditworthiness.
Commitments to lend are agreements to lend to
a customer in the future, subject to certain
conditions. Such commitments are either made
for a fixed year, or have no specific maturity dates
but are cancellable by the lender subject to
notice requirements. Documentary credits
commit the Group to make payments to third
parties, on production of documents, which are
usually reimbursed immediately by customers.
The following tables summarise the nominal
principal amount of contingent liabilities and
commitments with contingent risk.
Acceptances, bonds, guarantees and other obligations for the account of customers:
GROUP COMPANY
2015
N
’000
2014
N’000
2015
N’000
2014
N’000
Performance bonds and guarantees 82,687,009 96,788,515 - -
Clean line letters of credit 58,344,519 114,258,615 - -
141,031,528 211,047,130 - -
Other commitments 1,030,672 879,313 - -
142,062,200 211,926,443 - -
Current 74,238,953 163,532,186 - -
Non-current 67,823,247 48,394,257 - -
142,062,200 211,926,443 - -
Clean line letters of credit, which represent irrevocable assurances that the banking subsidiary will make
payments in the event that a customer cannot meet its obligations, carry the same credit risk as loans.
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43 Group Subsidiaries and Related Party Transactions
(a) Parent and Ultimate Controlling Party
FCMB Group Plc is the ultimate parent company and its subsidiaries are as listed in note 43 (b) below.
(b) Subsidiaries
Transactions between FCMB Group Plc and its subsidiaries that are eliminated on consolidation are
not separately disclosed in the consolidated financial statements. The Group’s eective interests and
investments in subsidiaries as at 31 December 2015 are shown below.
Entity
Form of
holding
Eective
holding
Nominal share
capital held
N'000
Country of
incorporation
Nature of
business
(1) First City Monument Bank Limited
Direct 100% 115,422,326 Nigeria Banking
(2) FCMB Capital Markets Limited
Direct 100% 240,000 Nigeria Capital
market
(3) CSL Stockbrokers Limited (CSLS)
Direct 100% 3,053,777 Nigeria Stockbroking
(4) CSL Trustees Limited (CSLT)
Direct 100% 220,000 Nigeria Trusteeship
(5) Credit Direct Limited (CDL)
Indirect 100% 366,210 Nigeria Micro-lending
(6) FCMB (UK) Limited (FCMB UK)
Indirect 100% 7,791,147 United
Kingdom
Banking
(7) First City Asset Management
Limited (FCAM)
Indirect 100% 50,000 Nigeria Asset
management
(8) FCMB Financing SPV Plc
Indirect 100% 250 Nigeria Capital raising
(c) Significant Restrictions
The Group does not have significant restrictions on its ability to access or use its assets and settle its
liabilities other than those resulting from the supervisory frameworks within which banking
subsidiaries operate. The carrying amounts of Group subsidiaries’ assets and liabilities are
N1,167.03 billion and N1,015.15 billion respectively (31 December 2014: N1,168.10 billion and N1,020.99
billion respectively).
The Group does not have any subsidiary that has material non-controlling interest.
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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FCMB Group
Plc
FCMB Limited
Group
FCMB CM
Limited
CSL
Stockbrokers
Limited Group
CSL Trustees
Limited Total
Consolidation
Journal Entries Group
Results of
operations
Operating income 4,200,904 84,900,404 1,036,396 738,156 193,847 91,069,707 (1,373,108) 89,696,599
Operating
expenses (962,876) (64,344,004) (657,103) (992,235) (75,930) (67,032,148) 53,107 (66,979,041)
Net impairment of
financial assets (689,742) (14,102,062) (169,575) (72,080) - (15,033,459) - (15,033,459)
Share of post tax
result of associate - - - - - 84,565 84,565
Profit/(loss)
before tax 2,548,286 6,454,338 209,718 (326,159) 117,917 9,004,100 (1,235,436) 7,768,664
Ta x (25,231) (2,912,113) (7,600) (29,679) (33,375) (3,007,998) - (3,007,998)
Profit after tax 2,523,055 3,542,225 202,118 (355,838) 84,542 5,996,102 (1,235,436) 4,760,666
Other
comprehensive
income - 2,328,244 - (112,376) - 2,215,868 - 2,215,868
Total
comprehensive
income for the
year 2,523,055 5,870,469 202,118 (468,214) 84,542 8,211,970 (1,235,436) 6,976,534
(d) Condensed Financial Information
(i) The condensed financial data of the consolidated entities as at 31 December 2015 were as follows:
FCMB Group Plc Annual Report and Accounts 2015 169
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FCMB Group
Plc
FCMB Limited
Group
FCMB CM
Limited
CSL
Stockbrokers
Limited Group
CSL Trustees
Limited Total
Consolidation
Journal Entries Group
Financial position
Assets
Cash and cash
equivalents 7,231,196 177,771,439 1,387,506 2,178,664 3,160,825 191,729,630 (10,807,932) 180,921,698
Restricted reserve
deposits - 125,552,318 - - - 125,552,318 - 125,552,318
Non-pledged
trading assets - 1,839,277 65 155,008 - 1,994,350 - 1,994,350
Derivative assets
held for risk
management - 1,479,760 - - - 1,479,760 - 1,479,760
Loans and
advances to
customers - 592,671,607 154,994 111,474 19,342 592,957,417 - 592,957,417
Assets pledged as
collateral - 51,777,589 - - - 51,777,589 - 51,777,589
Investment
securities 2,013,621 124,464,886 - 8,104,452 727,188 135,310,147 - 135,310,147
Investment in
subsidiaries 118,246,361 - - - - 118,246,361 (118,246,361) -
Investment in
associates 418,577 - - - - 418,577 313,387 731,964
Property and
equipment 41,263 29,807,468 64,923 47,453 9,631 29,970,738 - 29,970,738
Intangible assets 1,845 8,608,845 - 46,384 - 8,657,074 311,465 8,968,539
Deferred tax
assets - 8,166,241 - - - 8,166,241 - 8,166,241
Other assets 1,425,398 28,004,875 113,671 572,391 33,587 30,149,922 (8,446,507) 21,703,415
129,378,261 1,150,144,305 1,721,159 11,215,826 3,950,573 1,296,410,124 (136,875,948) 1,159,534,176
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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FCMB Group
Plc
FCMB Limited
Group
FCMB CM
Limited
CSL
Stockbrokers
Limited Group
CSL Trustees
Limited Total
Consolidation
Journal Entries Group
Financed by:
Trading liabilities - - - - - - - -
Derivative
liabilities held for
risk management - 1,317,271 - - - 1,317,271 - 1,317,271
Deposits from
banks - 5,461,038 - - - 5,461,038 - 5,461,038
Deposits from
customers - 711,024,639 - - - 711,024,639 (10,807,933) 700,216,706
Borrowings - 113,700,194 - - - 113,700,194 - 113,700,194
On-lending
facilities - 33,846,116 - - - 33,846,116 - 33,846,116
Debt securities
issued - 49,309,394 - - - 49,309,394 - 49,309,394
Retirement
benefit
obligations - 48,471 2,073 - - 50,544 - 50,544
Current income
tax liabilities 25,231 3,307,694 122,616 12,887 29,526 3,497,954 - 3,497,954
Deferred tax
liabilities - 26,874 5,033 34,986 1,545 68,438 - 68,438
Other liabilities 1,003,037 83,698,922 325,653 9,306,207 3,573,180 97,906,999 (8,231,765) 89,675,234
Share capital 9,901,355 2,000,000 500,000 943,577 50,000 13,394,932 (3,493,577) 9,901,355
Share premium 115,392,414 100,846,691 - 1,733,250 170,000 218,142,355 (102,749,941) 115,392,414
Retained earnings 3,056,224 13,411,730 765,784 (584,929) 126,322 16,775,131 406,306 17,181,437
Other reserves - 32,145,271 - (230,152) - 31,915,119 (11,999,038) 19,916,081
129,378,261 1,150,144,305 1,721,159 11,215,826 3,950,573 1,296,410,124 (136,875,948) 1,159,534,176
Acceptances and
guarantees - 142,062,200 - - 142,062,200 - 142,062,200
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(ii) The condensed financial data of the consolidated entities as at 31 December 2014 were as follows:
FCMB Group
Plc
FCMB Limited
Group
FCMB CM
Limited
CSL
Stockbrokers
Limited Group
CSL Trustees
Limited Total
Consolidation
Journal Entries Group
Results of
operations
Operating income 6,672,890 96,078,751 1,912,270 1,501,074 103,718 106,268,703 (5,450,000) 100,818,703
Operating
expenses (1,222,012) (63,076,446) (847,407) (1,108,644) (49,534) (66,304,043) - (66,304,043)
Net impairment of
financial assets - (10,522,858) (32,240) (84,779) - (10,639,877) - (10,639,877)
Share of post-tax
result of associate - - - - - - 68,110 68,110
Profit/(loss)
before tax 5,450,877 22,479,447 1,032,623 307,651 54,184 29,324,783 (5,381,890) 23,942,893
Ta x (53,969) (1,372,377) (270,265) (96,561) (16,464) (1,809,636) - (1,809,636)
Profit/(loss)
after tax 5,396,908 21,107,070 762,358 211,090 37,720 27,515,147 (5,381,890) 22,133,257
Other
comprehensive
income - 287,364 - (43,925) - 243,439 210,133 453,572
Total
comprehensive
income for
the year 5,396,908 21,394,434 762,358 167,165 37,720 27,758,586 (5,171,757) 22,586,829
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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FCMB Group
Plc
FCMB Limited
Group
FCMB CM
Limited
CSL
Stockbrokers
Limited Group
CSL Trustees
Limited Total
Consolidation
Journal Entries Group
Financial position
Assets
Cash and cash
equivalents 4,056,165 119,671,843 834,609 5,269,671 1,903,563 131,735,851 (5,442,042) 126,293,809
Restricted reserve
deposits - 146,105,573 - - - 146,105,573 - 146,105,573
Non-pledged
trading assets - 110,961 - 630,956 - 741,917 - 741,917
Derivative assets
held for risk
management - 4,503,005 - - - 4,503,005 - 4,503,005
Loans and
advances to
customers - 617,523,204 328,226 126,391 1,969 617,979,790 - 617,979,790
Assets pledged as
collateral - 53,812,420 - - 53,812,420 - 53,812,420
Investment
securities 2,828,220 134,037,631 2,570,436 8,840,415 10,128 148,286,830 - 148,286,830
Investment in
subsidiaries 118,756,103 - - - - 118,756,103 (118,756,103) -
Investment in
associates 418,577 - - - - 418,577 228,822 647,399
Property and
equipment 56,337 28,211,656 36,670 84,676 2,468 28,391,807 - 28,391,807
Intangible assets 2,808 7,271,616 - 72,678 - 7,347,102 1,001,208 8,348,310
Deferred tax
assets - 8,166,241 - - - 8,166,241 - 8,166,241
Other assets 5,452,080 26,597,683 139,733 1,225,552 14,314 33,429,363 (7,341,680) 26,087,683
131,570,290 1,146,011,833 3,909,674 16,250,339 1,932,442 1,299,674,578 (130,309,794) 1,169,364,784
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FCMB Group
Plc
FCMB Limited
Group
FCMB CM
Limited
CSL
Stockbrokers
Limited Group
CSL Trustees
Limited Total
Consolidation
Journal Entries Group
Financed by:
Derivative
liabilities held for
risk management - 4,194,185 - - - 4,194,185 - 4,194,185
Deposits from
banks - 4,796,752 - - - 4,796,752 - 4,796,752
Deposits from
customers - 739,238,838 - - - 739,238,838 (5,442,042) 733,796,796
Borrowings - 99,900,684 1,381,180 - - 101,281,864 (1,741,518) 99,540,346
On-lending
facilities - 14,913,521 - - - 14,913,521 - 14,913,521
Debt securities
issued - 26,174,186 - - - 26,174,186 - 26,174,186
Retirement
benefit
obligations - 111,829 3,227 - - 115,056 - 115,056
Current income
tax liabilities 114,246 3,785,638 368,291 80,344 15,026 4,363,544 - 4,363,544
Deferred tax
liabilities - 34,453 7,034 - - 41,487 - 41,487
Other liabilities 678,428 109,008,523 1,086,261 14,054,796 1,835,634 126,663,642 (5,600,162) 121,063,480
Share capital 9,901,355 2,000,000 500,000 943,577 40,000 13,384,932 (3,483,577) 9,901,355
Share premium 115,392,414 100,846,691 - 1,733,250 - 217,972,355 (102,579,941) 115,392,414
Retained earnings 5,483,847 19,566,097 563,681 (556,225) 41,782 25,099,182 1,139,495 26,238,677
Other reserves - 21,440,436 - (5,402) - 21,435,034 (12,602,049) 8,832,985
131,570,290 1,146,011,833 3,909,674 16,250,340 1,932,442 1,299,674,578 (130,309,794) 1,169,364,784
Acceptances and
guarantees - 211,926,443 - - - 211,926,443 - 211,926,443
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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(e) Transactions with Key Management Personnel
In addition to their salaries, the Group also
provides non-cash benefits to directors and
executive ocers, and contributes to a post-
employment defined contribution plan on their
behalf. Loans to key management personnel
include mortgage loans and other personal loans,
which are given under terms that are no more
favourable than those given to other sta. No
impairment has been recognised in respect of
loans granted to key management (2014: nil).
Mortgage loans amounting to N528.92 million
(2014: N612.15 million) are secured by the
underlying assets. All personal loans are
unsecured and interest rates charged on the
related parties are at arm’s length transaction.
The mortgage and secured loans granted are
secured over property of the respective
borrowers. Other balances are not secured and no
guarantees have been obtained.
No impairment losses have been recorded against
balances outstanding during the year with key
management personnel, and no specific allowance
has been made for impairment losses on balances
with key management personnel and their
immediate relatives at the year end.
GROUP COMPANY
31 December
2015
N
’000
31 December
2014
N’000
31 December
2015
N’000
31 December
2014
N’000
Key management personnel compensation for
the year comprised:
Short-term employee benefits
609,033 525,036 149,777 140,354
Post-employment benefits 11,436 9,581 4,222 2,931
620,469 534,617 153,999 143,285
Loans and advances
At start of the year
9,972,620 11,562,679 - -
Granted during the year 410,354 933,452 - -
Repayment during the year (9,515,129) (2,523,511) - -
At end of the year 867,845 9,972,620 - -
Interest earned 629,879 3,967,110 -
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Name of company/
Individual Relationship
Name of Directors
related to the
companies
Facility
type
31
December
2015
N
’000
31
December
2014
N
’000 Status
Security
status
Dynamic Industries
Limited
Directors-
shareholders
Alhaji Mustapha
Damcida Overdraft
278,568 270,963 Performing Perfected
Dynamic Industries
Limited
Directors-
shareholders
Alhaji Mustapha
Damcida Term loan
845,645 741,810 Performing Perfected
Primrose Properties
Investment Ltd
Directors-
shareholders Otunba M O Balogun Overdraft
- 20,684 Performing Perfected
Primrose Properties
Investment Ltd
Directors-
shareholders Otunba M O Balogun Term loan
126,053 - Performing Perfected
Chellarams Plc
Directors-
shareholders
Alhaji Mustapha
Damcida Overdraft
66,870 73,491 Performing Perfected
Chellarams Plc
Directors-
shareholders
Alhaji Mustapha
Damcida Term loan
157,547 232,171 Performing Perfected
S & B City Printers
Limited
Directors-
shareholders Babajide Balogun Overdraft
- 38,441 Performing Perfected
S & B City Printers
Limited
Directors-
shareholders Babajide Balogun Term loan
10,000 24,533 Performing Perfected
Chapel Hill
Advisory Partners
Directors-
shareholders Mobolaji Balogun Term loan
374,552 574,552 Performing Perfected
Credit Direct
Limited Subsidiary - Overdraft - 7,830,487 Performing Perfected
Credit Direct
Limited Subsidiary - Term loan 17,025 51,337 Performing Perfected
Poly Products
Nigeria Plc
Directors-
shareholders Olusegun Odubogun Term loan
11,000 33,592 Performing Perfected
Toyset Venture
Limited
Directors-
shareholders Olusegun Odubogun Term loan
140,000 - Performing Perfected
2,027,260 9,892,061
Other receivables:
First City Asset
Management
Limited
Subsidiary 7,376,891 -
FCMB Capital
Markets Limited Subsidiary 24,377 -
Credit Direct
Limited Subsidiary 2,630,318 -
CSL Trustees
Limited Subsidiary 2,858 -
CSL Stockbrokers
Limited Subsidiary 48,095 -
10,082,539 -
Loans and advances outstanding:
Included in loans and advances is an amount of N2.03 billion (31 December 2014: N9.89 billion)
representing credit facilities to companies in which certain Directors have interests. The balances as
at 31 December 2015 and 31 December 2014 were as follows:
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Deposits outstanding
Included in deposits is an amount of N5.53 billion (31 December 2014: N4.58 billion) representing
deposits from companies in which certain Directors have interests. The balances as at 31 December
2015 and 31 December 2014 were as follows:
Current account Relationship Type of deposit
31 December
2015
N’000
31 December
2014
N’000
ATSC International Limited
Shareholder Current account 892 2,240
Bluechip Holding Limited
Shareholder Current account 6,339 1,245
Chapel Hill Advisory Partners
Shareholder Current account 14,442 447
Chellarams Plc
Directors-shareholders Term deposit - 14,905
City Securities Limited
Directors-shareholders Current account - 27,091
Credit Direct Limited
Subsidiary Current account 738,918 84,658
CSL Stockbrokers Limited
Subsidiary Current account 333,627 195,487
CSL Stockbrokers Limited
Subsidiary Term deposit 720,902 250,000
CSL Trustees Limited
Subsidiary Current account 143,974 147,658
CSL Trustees Limited
Subsidiary Term deposit 68,699 300,757
Dynamic Industries Limited
Directors-shareholders Current account 372,585 499,456
FCMB Capital Markets Limited
Subsidiary Current account 664,721 518,448
FCMB Capital Markets Limited
Subsidiary Term deposit 986,271 200,000
FCMB UK Limited
Subsidiary Current account 441 -
FDC Consulting Limited
Directors-shareholders Current account 2,667 2,412
Financial Derivatives Company
Directors-shareholders Current account 5 536,472
First City Asset Management Limited
Subsidiary Current account 80,440 227,630
First City Asset Management Limited
Subsidiary Term deposit 454,024 312,560
Gulvaris Capital Partners Limited
Directors-shareholders Current account 4,877 4,564
Helios Investment Partners
Directors-shareholders Current account - 712
Helios Towers Nigeria Limited
Directors-shareholders Current account - 478,720
Heroes Furniture Limited
Directors-shareholders Current account - 609
Lafarge Cement Wapco Nig Plc
Directors-shareholders Current account 27,576 2,846
Lana Securities Limited
Shareholder Current account 296 295
Poly Products Nigeria Limited
Directors-shareholders Current account 18,286 33,327
Primrose Development Company
Limited
Shareholder Current account 4,045 2,464
Primrose Development Company
Limited
Shareholder Term deposit - 2,032
Primrose Investments Limited
Shareholder Current account 17,605 317
Primrose Investments Limited
Shareholder Term deposit 819,278 615,531
Primrose Nigeria Limited
Shareholder Current account 77 21,965
Primrose Properties Investment
Limited
Shareholder Current account 28,799 90,225
S&B City Printers Limited
Directors-shareholders Current account 15,887 1,345
Toyset Venture Limited
Directors-shareholders Current account 181 -
5,525,854 4,576,418
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GROUP COMPANY
44 Employees and Directors
31 December
2015
Number
31 December
2014
Number
31 December
2015
Number
31 December
2014
Number
Employees
(a) The average number of persons employed
during the year by category:
Executive Directors
12 14 1 1
Management
719 800 9 9
Non-management
3,412 3,616 4 4
4,143 4,430 14 14
GROUP COMPANY
(b) Compensation for the above persons
(excluding executive directors):
31 December
2015
N
’000
31 December
2014
N’000
31 December
2015
N’000
31 December
2014
N’000
Short-term employee benefits (see Note 14)
22,346,869 22,060,210 204,023 242,602
Contributions to defined contribution plans
671,760 505,770 4,418 2,808
Non-payroll staff cost
2,744,275 3,861,105 25,697 58,326
25,762,904 25,476,245 234,138 303,736
GROUP COMPANY
(c) The number of employees of the Group,
including executive directors, who received
emoluments in the following ranges were:
31 December
2015
Number
31 December
2014
Number
31 December
2015
Number
31 December
2014
Number
Less than N1,800,000
849 1,231 - -
N1,800,001–N2,500,000
315 59 - -
N2,500,001–N3,500,000
1,428 1,435 - -
N3,500,001–N4,500,000
18 2 - 1
N4,500,001–N5,500,000
454 497 2 1
N5,500,001 and above
1,079 1,206 12 12
4,143 4,430 14 14
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
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Branches and Account
Opening Information
GROUP
Grade level
31 December 2015 31 December 2014
Male Female Total Male Female Total
Assistant General Manager (AGM) 23 6 29 23 7 30
Deputy General Manager (DGM) 15 6 21 19 8 27
General Manager (GM) 7 3 10 9 3 12
Total 45 15 60 51 18 69
Executive Directors (ED) 4 1 5 4 - 4
Deputy Managing Director (DMD) - - - 1 - 1
Managing Director/Chief Executive
Officer (MD/CEO) 6 - 6 5 - 5
Non-Executive Directors 18 2 20 20 3 23
Total 28 3 31 30 3 33
COMPANY
Grade level
31 December 2015 31 December 2014
Male Female Total Male Female Total
Assistant General Manager (AGM) 2 - 2 1 - 1
Deputy General Manager (DGM) - - - - - -
General Manager (GM) 1 - 1 1 - 1
Total 3 - 3 2 - 2
Executive Directors (ED) - - - - - -
Deputy Managing Director (DMD) - - - - - -
Managing Director/Chief Executive
Officer (MD/CEO) 1 - 1 1 - 1
Non-Executive Directors 9 - 9 9 - 9
Total 10 - 10 10 - 10
(d) Diversity in Employment
(i) A total of 1,598 women were in the employment of the Group during the financial year ended
31 December 2015 (2014: 1,678), which represents 39% of the total workforce (2014: 38%).
(ii) A total of 15 women were in the top management (AGM-GM) positions in the Group as at the year
ended 31 December 2015 (2014: 18), which represents 25% of the total workforce in this position
(2014: 26%). There was no woman on the Board of the Company.
(iii) The analysis by grade is as shown below:
(iv) The Group is committed to maintain a positive work environment and to conduct business in a
positive, professional manner and will ensure equal employment opportunity.
FCMB Group Plc Annual Report and Accounts 2015 179
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GROUP COMPANY
31 December
2015
N
’000
31 December
2014
N’000
31 December
2015
N’000
31 December
2014
N’000
Below N1,000,000
9 11 -
N1,000,001–N5,000,000
1 1 - -
N5,000,001–N10,000,000
4 6 - 2
N10,000,001 and above
17 15 10 8
31 33 10 10
(e) Directors
The remuneration paid to the directors of the Group (excluding pension and certain allowances) was:
The number of directors who received fees and other emoluments (excluding pension contributions
and reimbursable expenses) in the following ranges was:
Directors of the Company are not entitled to share options.
GROUP COMPANY
31 December
2015
N
’000
31 December
2014
N’000
31 December
2015
N’000
31 December
2014
N’000
Fees 197,800 169,225 89,775 72,725
Sitting allowances 63,160 85,700 22,410 20,650
Executive compensation 533,766 525,036 74,510 73,324
794,726 779,961 186,695 166,699
Directors’ other expenses 91,594 101,442 9,649 17,421
Directors’ emoluments (see Note 16) 886,320 881,403 196,344 184,120
The Directors’ remuneration shown
above includes:
The Chairman
10,500 10,500 10,500 10,500
Highest-paid director 80,433 95,043 74,510 73,324
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015180
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Section Nature
Number of
times
Penalties
N’000
Report On Spot Check On Public
Sector Deposits / CBN Circulars /
BSD/DIR/GEN/LAB/06/034 Dated
25.07.2013 and BSD/DIR/GEN/
LAB/06/039, Dated 05.09.2013 Misclassification of public sector deposits. 1 2,000
CBN infractions on foreign
exchange sales to BDC transactions FX sales infractions to BDC transactions. 2 25,000
Failure to submit regulatory returns
in respect of FX forward
transactions The Bank failed to render returns. 1 2,000
Failure to file currency transaction
report
The Bank failed to comply extant laws and
regulations 2 10,000
Contravention of Section 7 of the
MLPA 2011 (As Amended) and
Regulation 29 of the CBN AML/
CFT in Banks and Financial
Institutions in Nigeria Regulations,
2013
Failure to make available selected
customers’ mandate files. 1 2,000
Contravention of Section 45 of
CBN’s AML/CFT Regulations, 2013
Failure to provide Know Your Customer
(KYC) report of a customer. 1 2,000
CBN Circulars / BPS/DIR/GEN/
CIR/01/015 directing all Deposit
Money Banks (DMBs) to ensure all
new loans must have the Bank
Verification Number (BVN), as
condition precedent to drawdown,
with effect from 3 November 2014 Granting of new loans without the BVN. 1 2,047
Provisions of Regulation 107 (4) of
the CBN AML/CFT Regulation 2013
directing that the consent of the
Accountant General of the
Federation prior to the opening of
account for National Defence
College (a Government Account)
Failure to obtain Accountant General
(AG’s) authorisation on National Defence
College account. 1 2,000
45 Compliance with Banking Regulations
During the year ended 31 December 2015, the banking subsidiary contravened the following sections
of the provision of the Banks and Other Financial Institutions Act and relevant CBN circulars and was
penalised as follows:
FCMB Group Plc Annual Report and Accounts 2015 181
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During the year, the stockbroking subsidiary (CSL Stockbrokers Limited) paid N2.96 million as penalty
for late remittance of withholding tax.
The penalties, totalling N180.06 million, were paid during the year by the Group (2014: N6 million).
46 Events After the Reporting Period
There were no significant events after the balance sheet date that could have a material eect on the
financial position of the Group as at 31 December 2015 and profit attributable to equity holders on
that date that has not been adequately adjusted for or disclosed (2014: none).
Section Nature
Number of
times
Penalties
N’000
CBN Circular FPR/DIR/GEN/
ADM/01/010 directing that
Suspicious Transaction Reports
(STRs) And Currency Transaction
Reports (CTRs) be rendered
Failure to carry out due diligence and non-
rendition of suspicious transactions report
(STR) in respect of customer. 1 126,000
CBN Circular BSD/DIR/GEN/
LAB/07/011-The circular stipulates
the timelines for the submission of
daily, monthly, quarterly and semi-
annual returns concurrently via the
e-FASS and FinA Applications;
daily returns are to be submitted
on or before 10:00 a.m. of the
following working day
Failure to render daily returns in a timely
manner. 1 50
Government/CBN circular to
remmit all Government funds to the
Treasury Single Account
Unremitted TSA balances as at 14 october
2015. 1 4,000
Total 177,097
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015182
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GROUP COMPANY
2014
N
’000
2014
N’000
(i) General and administrative expenses (see Note 16)
Balance previously reported
23,966,276 387,930
Reclassified to other expenses (donation and sponsorship expenses) (see Note
(ii) below) (358,710) -
Reclassified from general and administrative expenses (training expenses) (see
Note (iii) below) 830 830
23,608,396 388,760
Included in prior year other expenses was general and administrative expenses
as shown above.
(ii) Other expenses (see Note 17)
Balance previously reported
10,942,272 506,362
Reclassified from general and administrative expenses (donation and
sponsorship expenses) (see Note (i) above) 358,710 -
11,300,982 506,362
Included in prior year other expenses was general and administrative
expenses as shown above.
(iii) Personnel expenses (see Note 15)
Balance previously reported
27,804,733 307,497
Reclassified to general and administrative expenses (training expenses) (see
Note (i) above) (830) (830)
27,803,903 306,667
47 Comparatives
Certain prior year balances have been reclassified in line with current year presentation format. The
reclassifications did not impact the Group results for 2015. The nature and reason for the
reclassifications are shown below:
Included in prior year personnel expenses is general and administrative expenses
as shown above.
FCMB Group Plc Annual Report and Accounts 2015 183
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48 Reconciliation Notes to Consolidated and Separate Statement of Cash Flows
GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
(i) Fair value gain on financial assets held
for trading
Gross trading income before fair value
adjustments
943,428 766,708 - -
Fair value gain on financial assets adjustments (3,143) (889) - -
Net trading income (see Note 11) 940,285 765,819 - -
(ii) Interest received
Balance at end of the year (interest receivables,
overdue interest and loan fees)
19,595,344 14,941,598 - -
Accrued interest income during the year
(see Note 7) 123,583,565 117,984,048 536,426 438,029
Non-cash related adjustments 573,181 4,716,306 (52,112) (1,335)
Balance at start of the year (interest receivables,
overdue interest and loan fees) (14,941,598) (12,917,235) - -
Interest received during the year 128,810,492 124,724,717 484,314 436,694
(iii) Interest paid
Balance at end of the year (interest payables,
interest prepaid and deferred FCY charges)
4,387,304 6,319,277 - -
Accrued Interest expense during the year
(see Note 8) 59,646,733 45,350,521 - -
Non-cash related adjustments 16,599,154 4,576,942 - -
Balance at start of the year (interest payables,
interest prepaid and deferred FCY charges) (6,319,277) (6,099,635) - -
74,313,914 50,147,105 - -
(iv) VAT paid
This relates to monthly remittances to the tax
authorities with respect to VATable services
770,249 1,474,442 - -
(v) Acquisition of investment securities and
proceeds from sale and redemption of
investment securities
Balance at start of the year
148,286,830 163,638,236 2,828,220 2,828,220
Add: Acquisition of investment securities during
the year 85,257,087 150,405,709 440,698 -
Less: Proceeds from sale and redemption of
investment securities (106,775,458) (140,043,610) (3,434,934) -
Non-cash related adjustments 8,541,688 (25,713,505) 2,179,637 -
Balance at end of the year (see Note 25) 135,310,147 148,286,830 2,013,621 2,828,220
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015184
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
(vi) Effect of exchange rate fluctuations on cash
and cash equivalents held
Balance at end of the year on net translated
foreign balances at closing exchange rates
(68,424,778) (66,434,610) (13,331) (7,719)
Balance at start of the year on net translated
foreign balances at opening exchange rates 66,434,610 57,730,027 7,719 -
(1,990,168) (8,704,583) (5,612) (7,719)
(vii) Net increase/(decrease) in other liabilities
and others
Movement in other liabilities
(31,388,246) 38,055,721 324,609 588,367
Movement in retirement benefit obligations (1,706,148) (1,017,037) (15,552) (10,330)
Movement in other long-term benefits - (3,203,189) - -
Non-cash related adjustments - 2,952,291 - -
(33,094,394) 36,787,786 309,057 578,037
(viii) Proceeds from sale of property and
equipment
Gain/(Loss) on sale of property and equipment
231,328 332,350 108 165
Cost – disposal during the year 2,120,374 4,467,265 4,661 1,374
Accumulated depreciation and impairment
losses – eliminated on disposal (2,262,698) (3,507,301) (4,661) (1,374)
89,004 1,292,314 108 165
(ix) Net interest income
Interest income (see Note 7)
123,583,565 117,984,048 536,426 438,029
Interest expense (see Note 8) (59,646,733) (45,350,521) - -
63,936,832 72,633,527 536,426 438,029
(x) Net (increase)/decrease in restricted reserve
deposits
Opening balance for the year
146,105,573 73,473,096 - -
Closing balance for the year (see Note 21) (125,552,318) (146,105,573) - -
20,553,255 (72,632,477) - -
(xi) Net (increase)/decrease in derivative assets
held
Opening balance for the year
4,503,005 1,697,606 - -
Non-cash related adjustments 397,152 - - -
Closing balance for the year (see Note 23) (1,479,760) (4,503,005) - -
3,420,397 (2,805,399) - -
FCMB Group Plc Annual Report and Accounts 2015 185
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GROUP COMPANY
Note
2015
N’000
2014
N’000
2015
N’000
2014
N’000
(xii) Net (increase)/decrease in non-pledged
trading assets
Opening balance for the year
741,917 2,921,358 - -
Non-cash related adjustments 14,740 - - -
Closing balance for the year (see Note 22) (1,994,350) (741,917) - -
(1,237,693) 2,179,441 - -
(xiii) Net (increase)/decrease in loans and
advances to customers
Opening balance for the year
617,979,790 450,532,965 - -
Closing balance for the year (see Note 24) (592,957,417) (617,979,790) - -
25,022,373 (167,446,825) - -
(xiv) Net (increase)/decrease in other assets
Opening balance for the year
26,087,683 24,492,358 5,452,080 7,679,886
Closing balance for the year (see Note 32) (21,703,415) (26,087,683) (1,425,398) (5,452,080)
4,384,268 (1,595,325) 4,026,682 2,227,806
(xv) Net increase/(decrease) in deposits from
banks
Closing balance for the year (see Note 33)
5,461,038 4,796,752 - -
Opening balance for the year (4,796,752) - - -
664,286 4,796,752 - -
(xvi) Net increase/(decrease) in deposits from
customers
Closing balance for the year (see Note 34)
700,216,706 733,796,796 - -
Opening balance for the year (733,796,796) (715,214,192) - -
(33,580,090) 18,582,604 - -
(xvii) Net increase/(decrease) in on-lending
facilities
Closing balance for the year (see Note 36)
33,846,116 14,913,521 - -
Non-cash related adjustments (573,181) - - -
Opening balance for the year (14,913,521) - - -
18,359,414 14,913,521 - -
(xviii) Net increase/(decrease) in derivative
liabilities held
Closing balance for the year (see Note 23)
1,317,271 4,194,185 - -
Non-cash related adjustments (401,541) - - -
Opening balance for the year (4,194,185) (1,355,634) - -
(3,278,455) 2,838,551 - -
Notes to the Consolidated and
Separate Financial Statements
for the year ended 31 December 2015 continued
FCMB Group Plc Annual Report and Accounts 2015186
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OTHER NATIONAL
DISCLOSURES
FCMB Group Plc Annual Report and Accounts 2015 187
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187
Value Added Statement
for the year ended 31 December 2015
GROUP COMPANY
2015
N
’000 %
2014
N’000 %
2015
N’000 %
2014
N’000 %
Gross income 152,507,947 148,637,409 4,200,904 6,672,890
Group’s share of associate’s
profit 84,565 68,110
Interest expense and charges (62,811,348) (47,818,706) - -
89,781,164 100,886,813 4,200,904 6,672,890
Impairment losses (15,033,459) (10,639,877) (689,742) -
Administrative overhead (37,128,344) (34,909,378) (701,256) (895,121)
Value added 37,619,361 100 55,337,558 100 2,809,906 100 5,777,769 100
Distribution
Employees
Wages, salaries, pensions,
gratuity and other employee
benefits
25,487,681 68 27,803,903 50 238,360 8 306,667 5
Government
Taxation
3,007,998 8 1,809,636 3 25,231 1 53,969 1
The future
Replacement of property
and equipment/intangible
assets
4,363,016 11 3,590,762 7 23,260 1 20,224 -
Profit for the year (including
statutory and regulatory risk
reserves) 4,760,666 13 22,133,257 40 2,523,055 90 5,396,909 94
Value added 37,619,361 100 55,337,558 100 2,809,906 100 5,777,769 100
This statement represents the distribution of the wealth created through the use of the Group’s assets
through its own and its employees’ eorts.
FCMB Group Plc Annual Report and Accounts 2015188
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Five-Year Financial Summary – Group
GROUP
31 December
2015
N
’000
31 December
2014
N’000
31 December
2013
N’000
31 December
2012
N’000
31 December
2011
N’000
ASSETS EMPLOYED
Cash and cash equivalents
180,921,698 126,293,809 199,700,305 123,451,740 48,416,681
Restricted reserve deposits 125,552,318 146,105,573 73,473,096 57,891,360 21,963,780
Non-pledged trading assets 1,994,350 741,917 2,921,358 1,169,708 3,119,799
Derivative assets held for
risk management 1,479,760 4,503,005 1,697,606 1,980,135 -
Loans and advances to
customers 592,957,417 617,979,790 450,532,965 357,798,798 323,353,706
Assets pledged as collateral 51,777,589 53,812,420 50,516,904 40,793,601 27,253,832
Investment securities 135,310,147 148,286,830 163,638,236 244,525,619 137,333,793
Assets classified as held for sale - - - 13,547,417 -
Investment in associates 731,964 647,399 568,512 467,456 230,656
Investment property - - - - 131,778
Property and equipment 29,970,738 28,391,807 26,812,277 26,331,166 18,785,380
Intangible assets 8,968,539 8,348,310 7,580,528 11,894,789 6,601,963
Deferred tax assets 8,166,241 8,166,241 6,346,025 4,937,656 3,578,836
Other assets 21,703,415 26,087,683 24,492,358 23,756,311 10,846,290
1,159,534,176 1,169,364,784 1,008,280,170 908,545,756 601,616,494
FINANCED BY
Share capital
9,901,355 9,901,355 9,901,355 9,520,534 8,135,596
Share premium 115,392,414 115,392,414 115,392,414 108,747,612 108,369,199
Treasury shares - - (8,625) (775,381) (851,234)
Retained earnings/
(accumulated loss) 17,181,437 26,238,677 13,109,779 765,475 (16,779,856)
Other reserves 19,916,081 8,832,985 5,311,806 13,757,163 18,519,823
Derivative liabilities held for risk
management 1,317,271 4,194,185 1,355,634 1,980,135 -
Deposits from banks 5,461,038 4,796,752 - 52,000 -
Deposits from customers 700,216,706 733,796,796 715,214,192 646,216,767 410,683,355
Liabilities classified as held
for sale - - - 9,038,589 -
Borrowings 113,700,194 99,540,346 59,244,230 26,933,018 19,264,434
On-lending facilities 33,846,116 14,913,521 - - -
Debt securities issued 49,309,394 26,174,186 - - -
Retirement benefit obligations 50,544 115,056 124,674 109,008 12,971
Other long-term benefits - - 1,258,317 335,397 1,668,104
Current income tax liabilities 3,497,954 4,363,544 4,333,353 2,850,275 1,783,422
Deferred tax liabilities 68,438 41,487 35,282 22,067 26,388
Other liabilities 89,675,234 121,063,480 83,007,759 88,993,097 50,784,292
1,159,534,176 1,169,364,784 1,008,280,170 908,545,756 601,616,494
Acceptances and guarantees 142,062,200 211,926,443 105,730,673 121,081,334 97,260,519
FCMB Group Plc Annual Report and Accounts 2015 189
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GROUP
12 months
December
2015
N
’000
12 months
December
2014
N
’000
12 months
December
2013
N
’000
12 months
December
2012
N
’000
12 months
December
2011
N
’000
PROFIT AND LOSS ACCOUNT
Gross earnings
152,507,947 148,637,409 130,995,439 116,832,323 74,761,462
Profit/(loss) before tax 7,684,099 23,874,783 18,116,143 16,248,019 (10,682,803)
Ta x (3,007,998) (1,809,636) (2,183,244) (1,126,315) 3,000,587
Profit/(loss) after tax 4,676,101 22,065,147 15,932,899 15,121,704 (7,682,216)
Transfer to reserves 4,760,666 22,133,257 16,001,155 15,292,372 (9,243,550)
Earnings per share – basic and
diluted (naira) 0.24 1.12 0.81 0.77 (0.57)
NB: FCMB Group Plc was incorporated in Nigeria as a financial holding company on 20 November
2012, under the Companies and Allied Matters Act, in response to the CBN’s Regulation on the Scope
of Banking Activities and Ancillary Matters (Regulation 3). Following the Group restructuring, FCMB
Group Plc emerged as a holding company, with First City Monument Bank Plc (‘the bank’) as subsidiary.
First City Monument Bank Plc was delisted from the Nigerian Stock Exchange on 21 June 2013, and
the shares of FCMB Group Plc listed on the same day. The bank was re-registered as a Private Limited
Liability company in September 2013, and is now known as First City Monument Bank Limited. The
financials stated above from year 2011 to 2012 were that of First City Monument Bank Plc and the
subsidiaries, while year 2013 to 2015 relates to FCMB Group Plc.
Five-Year Financial Summary – Group
continued
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COMPANY
31 December
2015
N
’000
31 December
2014
N’000
31 December
2013
N’000
31 December
2012
N’000
31 December
2011
N’000
ASSETS EMPLOYED
Cash and cash equivalents
7,231,196 4,056,165 2,150,389 - -
Restricted reserve deposits - - - - -
Non-pledged trading assets - - - - -
Derivative assets held for
risk management - - - - -
Loans and advances to
customers - - - - -
Assets pledged as collateral - - - - -
Investment securities 2,013,621 2,828,220 2,514,439 - -
Assets classified as held for sale - - - - -
Investment in subsidiaries 118,246,361 118,756,103 118,716,103 - -
Investment in associates 418,577 418,577 407,800 - -
Property and equipment 41,263 56,337 9,801 - -
Intangible assets 1,845 2,808 3,771 - -
Deferred tax assets - - - - -
Other assets 1,425,398 5,452,080 7,679,886 - -
129,378,261 131,570,290 131,482,189 - -
FINANCED BY
Share capital
9,901,355 9,901,355 9,901,355 - -
Share premium 115,392,414 115,392,414 115,392,414 - -
Treasury shares - - - - -
Retained earnings 3,056,224 5,483,847 6,027,752 - -
Other reserves - - - - -
Derivative liabilities held for risk
management - - - - -
Deposits from banks - - - - -
Deposits from customers - - - - -
Borrowings - - - - -
On-lending facilities - - - - -
Debt securities issued - - - - -
Retirement benefit obligations - - - - -
Other long term benefits - - - - -
Current income tax liabilities 25,231 114,246 60,277 - -
Other liabilities 1,003,037 678,428 100,391 - -
129,378,261 131,570,290 131,482,189 - -
Acceptances and guarantees – – – – –
Five-Year Financial Summary – Company
FCMB Group Plc Annual Report and Accounts 2015 191
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COMPANY
12 months
December
2015
N
’000
12 months
December
2014
N
’000
12 months
December
2013
N
’000
12 months
December
2012
N
’000
12 months
December
2011
N
’000
PROFIT AND LOSS ACCOUNT
Gross earnings
4,200,904 6,672,890 6,370,000 - -
Profit before tax 2,548,286 5,450,877 6,088,029 - -
Ta x (25,231) (53,969) (60,277) - -
Profit after tax 2,523,055 5,396,908 6,027,752 - -
Transfer to reserves 2,523,055 5,396,908 6,027,752 - -
Earnings per share – basic and
diluted (Naira) 0.13 0.27 0.30 - -
Five-Year Financial Summary – Company
continued
FCMB Group Plc Annual Report and Accounts 2015192
Introduction Operating
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Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
SHAREHOLDER
INFORMATION
FCMB Group Plc Annual Report and Accounts 2015 193
Introduction Operating
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
FCMB Group Plc Annual Report and Accounts 2015 193
Notice is hereby given that the 3rd Annual
General Meeting of FCMB Group Plc (FCMB) will
be held at the Shell Hall, MUSON Centre, Onikan,
Lagos on Friday 29 April 2016 at 11.00 am to
transact the following:
Ordinary Business
1. To receive and consider the Report of the
Directors and the Financial Statements
for the year ended 31 December 2015, the
Auditor’s Report thereon and the Audit
Committee Report.
2. To declare a dividend.
3. To re-elect Directors that are retiring.
4. To approve the remuneration of Directors.
5. To authorise the Directors to fix the
remuneration of the Auditors.
6. To elect members of the Audit Committee.
Dated this 4th day of April 2016
By Order of the Board
Mrs Funmi Adedibu
Company Secretary
FRC/2014/NBA/00000005887
Notice of Annual General Meeting
NOTES:
Proxies
Only a member (shareholder) of the Company entitled to
attend and vote at the Annual General Meeting is allowed
to appoint a proxy in his/her stead. All valid instruments
of proxy should be completed, stamped and deposited
at the oce of the Company’s Registrars: CardinalStone
Registrars Limited, 358 Herbert Macaulay Way, Yaba,
Lagos, not later than 48 hours before the time fixed for
the Meeting.
Closure of Register
The Register of Members will be closed from 13 April 2016
to 19 April 2016 (both days inclusive).
Dividend
If the dividend recommended by the Directors is approved
by members at the Annual General Meeting, the dividend
warrants will be posted on 2 May 2016 to members so
entitled, whose names appear in the register of members
at the close of business on 12 April 2016.
Audit Committee
In accordance with Section 359 (5) of the Companies
and Allied Matters Act Cap C20, Laws of the Federation
of Nigeria 2004, any shareholder may nominate a
shareholder for appointment to the Audit Committee.
Such nomination should be in writing and reach the
Company Secretary not less than 21 days before the
Annual General Meeting.
Rights of Securities Holders to Ask Questions
Securities holders have a right to ask questions not only
at the meeting, but also in writing prior to the meeting,
and such questions must be submitted to the Company
on or before 22 April 2016.
FCMB Group Plc Annual Report and Accounts 2015194
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
#
FCMB Group Plc Annual Report and Accounts 2015 195
Introduction Operating
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Proxy Form and Resolutions
FCMB GROUP PLC (RC 1079631)
3RD ANNUAL GENERAL MEETING to be held at
the Shell Hall, MUSON Centre, Onikan, Lagos on
Friday 29 April 2016 at 11.00 am
I/We .........................................................................................................
being a member/members of FCMB Group Plc hereby
appoint
* ..................................................................................................................
.....................................................................................................................
(PLEASE USE BLOCK CAPITALS)
or failing him, the Chairman of the Meeting as my/our proxy
to act and vote for me/us and on my/our behalf at the
Annual General Meeting of FCMB Group Plc which will be
held at Shell Hall, MUSON Centre, Onikan, Lagos on Friday
29 April 2016 at 11.00 am or at any adjournment thereof.
Dated this ..............................................................................................
day of ........................................................................................... 2016.
Shareholder’s signature
.....................................................................................................................
NOTES:
1. A member (shareholder) who is unable to attend the
Annual General Meeting is allowed by law to vote by
proxy and the above proxy form has been prepared to
enable you to exercise your right to vote in case you
cannot personally attend the meeting.
2. Following the normal practice, the Chairman of the
meeting has been entered on the form to ensure that
someone will be at the meeting to act as your proxy but,
if you wish, you may insert in the blank space (marked*)
the name of any person, whether a member of the
Company or not, who will attend the meeting and vote
on your behalf.
3. Please sign and post the proxy form so as to reach The
Registrar, CardinalStone Registrars Limited, 358 Herbert
Macaulay Way, Yaba, Lagos, not later than 48 hours
before the time appointed for the meeting and ensure
that the proxy form is dated, signed and stamped by
the Commissioner for Stamp Duties.
4. If executed by a corporate body, the proxy form should
be sealed with the Common Seal or under the hand of
an ocer or attorney duly authorised in that behalf.
RESOLUTIONS For Against Abstain
1
To receive and consider the Report
of the Directors and the Financial
Statements for the year ended
31 December 2015, the Auditor’s
Report thereon and the Audit
Committee Report.
2
To declare a dividend
3
To re-elect Directors that are retiring:
i. Mr Olutola O Mobolurin;
ii. Prof Oluwatoyin Ashiru; and
iii. Dr (Engr) Gregory O Ero.
4
To approve the remuneration
of Directors.
5
To authorise the Directors to fix the
remuneration of the Auditors.
6
To elect members of the
Audit Committee.
#
Before posting this form, tear o this part and retain it.
ADMISSION CARD
FCMB GROUP PLC
3rd Annual General Meeting
PLEASE ADMIT ONLY THE SHAREHOLDER NAMED ON
THIS CARD OR HIS DULY APPOINTED PROXY TO THE
3RD ANNUAL GENERAL MEETING BEING HELD AT THE
SHELL HALL, MUSON CENTRE, ONIKAN, LAGOS ON
FRIDAY 29 APRIL 2016 AT 11.00 AM
NAME OF SHAREHOLDER/PROXY
...................................................................................................................
SIGNATURE ........................................................................................
ADDRESS ............................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
THIS CARD IS TO BE SIGNED AT THE VENUE IN THE
PRESENCE OF THE REGISTRARS.
#
FCMB Group Plc Annual Report and Accounts 2015196
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Governance
Financial
Statements
Shareholder
Information
Other National
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Branches and Account
Opening Information
#
FCMB Group Plc Annual Report and Accounts 2015 197
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Mandate for E-Dividend Payment
PLEASE RETURN TO: CardinalStone Registrars, 358 Herbert Macaulay Way, Yaba, Lagos, Nigeria
P.O. Box 9117, Marina, Lagos, Nigeria
It is our pleasure to inform you that you can henceforth have your dividend paid by DIRECT CREDIT
into your bank account. Consequently, we hereby request you provide the following information to
enable us to process the direct payment of your dividend (when declared) into your bank account.
(PLEASE COMPLETE ALL SECTIONS IN CAPITAL LETTERS)
Shareholder’s Account Number
Date of Birth (DD/MM/YYYY) / /
Surname/Company’s Name
Other Names (for Individual Shareholders)
Postal Address
City/Town
State
Email Address
Mobile (GSM) Phone
Bank Name
Account Name
Branch Address
Bank Account Number
Bank Sort Code
I/We hereby request that all dividend warrant(s) due to me/our holding(s) in FCMB be paid by direct
credit to my/our bank account given above.
Shareholder’s Signature or Thumbprint Company Seal/Incorporation Number
(for Corporate Shareholders)
Shareholder’s Signature or Thumbprint Authorised Signature & Stamp of Bankers
#
FCMB Group Plc Annual Report and Accounts 2015198
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
#
FCMB Group Plc Annual Report and Accounts 2015 199
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Electronic Delivery Mandate Form
Dear Sir/Madam,
To enable you to receive your shareholder
communications promptly, FCMB has introduced
the electronic delivery of its Annual Report
and Accounts, proxy forms and other statutory
documents to shareholders.
With this service, instead of receiving a hard
copy of our annual reports and other corporate
documents, you can elect to receive a soft copy
of the Annual Report, Proxy Form, etc, either as
a link to a downloadable version of the report
that will be sent to your email address or on a
compact disc (CD), which will be posted to you.
Please complete this form to register your
preference and return the completed form to:
The Registrar,
CardinalStone Registrars Limited,
358 Herbert Macaulay Way,
Yaba, Lagos
or any of the Registrar’s oces nationwide.
Mrs Funmi Adedibu
Company Secretary
Description of Service
By enrolling in the electronic delivery service, you
have agreed to receive all future announcements/
shareholder communications, as stated below,
by email. These communications can be made
available to you either semi-annually or annually.
Annual reports, proxy forms, prospectuses and
newsletters are examples of the shareholder
communications that can be made available to you
electronically. Enrolment to our electronic delivery
service will be eective for all your holdings in
FCMB Group Plc on an ongoing basis, unless you
change or cancel your enrolment.
This initiative is in line with our determination
to help protect and sustain our planet’s
environment and the consolidated SEC Rule
128 (6) of September 2011 which states that
“A Registrar of a public company may dispatch
Annual Reports and Notices of Meetings to
shareholders by electronic means”.
Name (surname first)
.....................................................................................................
.....................................................................................................
Signature
.....................................................................................................
Date ..........................................................................................
I
of
HEREBY AGREE TO THE ELECTRONIC DELIVERY
OF FCMB GROUP PLC'S ANNUAL REPORTS, PROXY
FORMS, PROSPECTUSES, NEWSLETTERS AND
STATUTORY DOCUMENTS TO ME THROUGH:
Please tick only one option
An electronic copy via compact disc (CD) sent to
my postal address, or
I will download from the web address forwarded to
my email address stated below
Continue receiving the report in hard copy to my
postal address
My email address:
How often would you like to receive them:
Annually
Semi-annually
+234(0) 1 279 8800/(0) 700 326 269 2265
www.fcmbgroupplc.com
#
FCMB Group Plc Annual Report and Accounts 2015200
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Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
BRANCHES
AND ACCOUNT OPENING
FCMB Group Plc Annual Report and Accounts 2015 201
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Branch Branch Address
Abia
1 Asa Road 1,
Aba
90 Asa Road, Aba, Abia
2 Faulks Road,
Aba
161 Faulks Road, Aba, Abia
3 Umuahia 1 5 Library Avenue, Umuahia, Abia
4 Umuahia 2 10 Akanu Ibiam Road,
Umuahia, Abia
5 Brass Road,
Aba
10 Brass Road Branch, Aba, Abia
6 Ogborhill, Aba 113 Ikot Ekpene Road, Ogbor Hill,
Aba, Abia
Abuja (FCT)
7 Abuja Nass 1 White House Basement, National
Assembly Complex, Three Arms
Zone, Abuja
8 Abuja Wuse 2 Plot 108, Adetokunbo Ademola
Cadastral Zone A08, Wuse 2
District, Abuja
9 Abuja Garki 2 Plot 1,640, Ladoke Akintola
Boulevard, Garki II, Abuja
10 Abuja Fed Sec
Phase 1
Federal Secretariat, Phase 1,
Ground Floor, Annex II, Abuja
11 Abuja Fed Sec
Phase 3
Federal Secretariat Complex Phase
3, Abuja
12 Abuja Zone 4 Plot 532, IBB Way Zone 4,
Wuse, Abuja
13 Abuja Area 7 1 Yola Street, Area 7, Garki, Abuja
14 Abuja Area 8 6 Ogbomosho Street, Area 8,
Garki, Abuja
15 Abuja Port
Harcourt
Crescent
14 Port Harcourt Crescent,
O Gimbiya Street, Area 11,
Garki, Abuja
16 Abuja Bwari 1 Council Secretariat Avenue,
Bwari, Abuja
17 Abuja Crest
Plaza
1st Avenue, Crest Plaza,
Gwarimpa, Abuja
18 Abuja Kubwa Plot 136B, Gado Nasko Road,
Kubwa, Abuja
19 Abuja First
City Plaza
Plot 252, Herbert Macauly Way,
Central Business District, Abuja
20 Maitama
Mediterranean
4 Mediterranean Street, Imani
Estate, Maitama, Abuja
21 Abuja Airport Domestic Wing, Nnamdi Azikiwe
Int'l Airport, Abuja
List of Branches
Branch Branch Address
22 Abuja Izon
Wari
1,038 Shehu Shagari Way,
Bayelsa State Guest House,
Maitama, Abuja
23 Gwagwalada 203A Phase One Specialist
Hospital Road, Gwagwalada, Abuja
24 Abuja Kuje Plot 33A, Sauka extension, Kuje
Town Centre, Abuja
25 Abuja Banex
Plaza
Plot 750, Aminu Kano Way,
Wuse, Abuja
26 Abuja Ap
Plaza
212F Adetokunbo Ademola
Crescent, Wuse 2, Abuja
27 Abuja Aminu
Kano Crescent
Plot 112, Aminu Kano Crescent,
Opposite Shaif Plaza,
Wuse 2, Abuja
28 Abuja Gana
Street
30 Gana Street, Maitama, Abuja
Adamawa
29 Yola 22 Atiku Abubakar Way, Jimeta,
Yola, Adamawa
Akwa Ibom
0 Uyo Abak
Road
143 Abak Road, Uyo,Akwa Ibom
31 Eket Branch Grace Bill, Marina Junction, Eket,
Akwa Ibom
32 Uyo, Oron 105 Oron Road, Uyo, Akwa Ibom
33 Ikot Ekpene 1 5 Harley Drive, Ikot Ekpene,
Akwa Ibom
34 Uyo Aka Road 23 Aka Road, Uyo, Akwa Ibom
35 Ikot-Abasi
Alscon Plant
Alscon Plant Complex, Ikot Abasi,
Akwa Ibom
Anambra
36 Awka 1 84 Nnamdi Azikiwe Avenue, Awka,
Anambra
37 Awka 2 38 Zik Avenue, Awka,
Anambra State
38 Nnewi 1 15 Oraifite Road, Nnewi, Anambra
39 Nnewi 2 Zone 19, New Machine Parts
Market, Nnewi, Anambra
40 Onitsha
Bridgehead
40 Ugah Street, Bridgehead,
Onitsha, Anambra
41 Onitsha New
Market Road 1
9A New Market Road,
Onitsha, Anambra
42 Onitsha New
Market Road 2
(Banex Plaza)
Banex Plaza, 36 New Market Road,
Onitsha, Anambra
FCMB Group Plc Annual Report and Accounts 2015202
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Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Branch Branch Address
43 Onitsha New
Market Road 3
53 New Market Road,
Onitsha, Anambra
44 Fegge, Onitsha 12 Port Harcourt Road, Fegge,
Onitsha, Anambra
45 Obosi Electrical Market, Obosi,
Onitsha, Anambra
46 Oko 4 Hospital Road, Along Ekwulobia-
Oko Road, Ekwulobia, Anambra
47 Ekwulobia 10 Awka Road, Ekwulobia,
Anambra
Bauchi
48 Commercial
Rd, Bauchi
Former Women Development
Center, G.R.A., Bauchi, Bauchi
49 Azare 4 Jamaare Road, Azare, Bauchi
50 Atbu Isa Yuguda House, 19/23 Jos Road,
Bauchi
Bayelsa
51 Yenagoa 1 181 Mbiama Road,
Yenagoa, Bayelsa
52 Yenagoa 2 76 Mbiama/Yenagoa Road, by
Chief Obele Street Junction,
Ovom-Yenagoa, Bayelsa
Benue
53 Makurdi 20B New Bridge Road,
Makurdi, Benue
Borno
54 Maiduguri 1 Baga Road, Maiduguri, Borno
Cross River
55 Calabar 14 Calabar Road, Calabar,
Cross River
56 Ikom 7 Calabar Road, Ikom, Cross River
57 New
Secretariat,
Calabar
New Secretariat Complex, Murtala
Mohammed Highway, Calabar,
Cross River
Delta
58 Warri 1 37 Okumagba Avenue, By Okere
Roundabout, Warri, Delta
59 Asaba 1 370 Nnebisi Road,Asaba, Delta
60 Eurun 68 Eurun/Sapele Road,
Warri, Delta
61 Warri (Airport
Rd)
52 Airport Road, Warri, Delta
62 Asaba Nnebisi
Road
461 Nnebisi Road, Asaba, Delta
Branch Branch Address
63 Ughelli 30 Ughelli/Warri road,
Ughelli, Delta
Ebonyi
64 Abakaliki 36B Sam Egwu Way,
Abakaliki, Ebonyi
65 Afikpo 10 Mgbom Unwana Road, Amuro,
Afikpo, Ebonyi
Edo
66 Mission Road 112 Mission Road, Benin City, Edo
67 Ugbowo 183 Uselu-Ugbowo Road, Benin
City, Edo
68 Sakponba 72 Sakponba Rd, Benin City, Edo
Ekiti
69 Ado-Ekiti NewSecretariat Road,
Ado Ekiti, Ekiti
Enugu
70 Enugu Market
Road
12A Market Road, Enugu, Enugu
71 Garden
Avenue Enugu
41 Garden Avenue, Enugu, Enugu
72 Agbani Road
Branch
117 Agbani Road, Enugu, Enugu
73 Nsukka 7B University Road, Nsukka, Enugu
74 Agbani Town 71 Enugu Road, Agbani Town,
Enugu
75 Presidential
Road
4 Presidential Avenue, Nkpokiti
Junction, Enugu, Enugu
Gombe
76 Gombe 1 11 Biu Link Road, Opposite Central
Market, Gombe
77 Ashaka Ashaka Cement Factory Complex,
Ashaka, Gombe
78 Bajoga Gombe/Potiskum Road,
Bajoga, Gombe
Imo
79 Wetheral
Road 1
81 Wetheral Road, Owerri, Imo
80 Wetheral
Road 2
40 Wetheral Road, Owerri, Imo
81 Orlu 5 L.N. Obioha Road, Orlu, Imo
82 Mbaise Road,
Owerri
5B Mbaise Road, Owerri, Imo
FCMB Group Plc Annual Report and Accounts 2015 203
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Branch Branch Address
Jigawa
83 Dutse 1 12A–13A Kiyawa Road, Dutse,
Jigawa
Kaduna
84 Ahmadu Bello
Way Kaduna
1A Ahmadu Bello Way, Kaduna
85 Kachia Road
Kaduna
1/2A Kachia Road, Kaduna
86 Zaria 1 Block F3, Kaduna-Gusau Road,
Zaria, Kaduna
87 Zaria 2 4B Main Street, Sabon-Gari,
Zaria, Kaduna
88 Kano Road
Kaduna
26/27 Constitution Road, Kaduna
89 Sabon Tasha,
Kaduna
26 Kachia Road, Sabon Tasha,
Kaduna
90 Ali Akilu Road
Kaduna
40 Ali Akilu Road, Kaduna
91 Kachia Police Beside Kachia Police Station,
Kachia, Kaduna
92 Yakubu Gowon
Way Kaduna
6 Yakubu Gowon Way, Kaduna
93 Sheik
Abubakar
Gumi Market
3 Broadcasting Road,
Sheik Abubakar Gumi Main
Market, Kaduna
94 Krpc Kaduna KM 16 Kachia Road, Kaduna
Refining and Petro-Chemical
complex, Kaduna South, Kaduna
Kano
95 Kano Main 145 Murtala Mohammed Way, Kano
96 Kano Bello
Road
17/18 Bello Road, Kano
97 Kano Ibrahim
Taiwo
58E Ibrahim Taiwo Road,
Fegge, Kano
98 Kano Murtala
Mohammed
Way 1
9c Murtala Mohammed Road,
Kano
99 Kano Murtala
Mohammed
Way 2
40 Murtala Mohammed Way, Kano
100 Kano Bompai
Road
7 Bompai Road, Kano
Branch Branch Address
Katsina
101 Katsina 132 IBB Way, Kano/Katsina Road,
By Yantomaki Road, Katsina
Kebbi
102 Kebbi Plot 20, Emir Haruna Road, Birnin
Kebbi, Kebbi
Kogi
103 Lokoja 16 Aliyu Obaje Road, Okene/
Kabba Road, Opposite Stella
Obasanjo Library, Lokoja, Kogi
104 Ayingba Along Idah-Ajaokuta Road,
Opposite General Post Oce,
Anyigba, Kogi
Kwara
105 Murtala
Mohammed
Way, Ilorin
33, Murtala Mohammed Way,
Ilorin, Kwara
106 Ibrahim Taiwo
Road, Ilorin
79B Ibrahim Taiwo Road,
Ilorin, Kwara
107 Abdulazeez
Attah, Ilorin
120 Abdulazeez Atta Road,
Surulere, Ilorin, Kwara
Lagos
108 Oyin Jolayemi Plot 1661, Oyin Jolayemi Street,
Victoria Island, Lagos
109 Apapa 1 28 Creek Road, Apapa, Lagos
110 Apapa 2 16 Warehouse Road, Apapa, Lagos
111 Iponri Shop 529–531, Iponri Shopping
Complex, Iponri, Surulere, Lagos
112 Orile Coker Block 11, Suite 3–8, Agric
Market, Odun Ade Bus Stop,
Orile Coker, Lagos
113 Wharf Road Eleganza Plaza, 1 Wharf Road,
Apapa, Lagos
114 Randle Road Slok House, 10 Randle Road,
Apapa, Lagos
115 Iddo Leventis Building, 2–4 Iddo Road,
Iddo, Lagos
116 Creek Road Nnewi Building, 1–3 Creek Road,
Apapa, Lagos
117 Allen Avenue 36 Allen Avenue, Ikeja, Lagos
118 Ikorodu 7 Lagos Road, Ikorodu, Lagos
119 Motorways M1 Point Motorways Complex,
Ikeja, Lagos
List of Branches
Continued
FCMB Group Plc Annual Report and Accounts 2015204
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Branch Branch Address
120 Ogba 23 Ogba Ijaiye Road, Opposite
WAEC oce, Ogba, Lagos
121 Ketu 545/547 Ketu, Ikorodu Road,
Lagos
122 Ikeja G.R.A. 48 Isaac John Street, Ikeja G.R.A.,
Lagos
123 Mobolaji Bank
Anthony
18/20 Mobolaji Bank Anthony Way,
Ikeja, Lagos
124 Oba Akran 1 29 Oba Akran Avenue, Ikeja, Lagos
125 Oba Akran 2 34 Oba Akran Road, Ikeja, Lagos
126 Akowonjo Primateck Plaza, Shasha
Roundabout, Akowonjo, Lagos
127 Agege Old Abeokuta Express Road, Oko-
Oba, Agege, Lagos
128 Idimu 218 Egbeda-Idimu Road,
Idimu, Lagos
129 Ikeja Local
Airport
MMA Zulu Terminal, Domestic
Airport, Ikeja, Lagos
130 Oregun 80 Kudirat Abiola Way, Oregun,
Ikeja, Lagos
131 Ogudu Plot 111 Ogudu G.R.A., Ojota Road,
Ogudu, Lagos
132 Head Oce Primrose Tower, 17A Tinubu Street,
Lagos
133 Idumagbo Daddy Doherty House,
34 Idumagbo Avenue, Lagos
134 Awolowo 1 68 Awolowo Road, Ikoyi, Lagos
135 Awolowo 2 154 Awolowo Road, Ikoyi, Lagos
136 Oke-Arin 11 Ijaiye Street, Oke Arin, Lagos
137 Idumota 22 Idoluwo Street, Idumota, Lagos
138 Broad Street Banuso House, 88/89 Broad
Street, Lagos
139 Macarthy 12 Macarthy Street, Onikan, Lagos
140 Marina 44 Marina Street, Lagos Island,
Lagos
141 Davies Street 1 Davies Street, UNTL Building O
Marina Street, Lagos Island, Lagos
142 Oroyinyin 12 Oroyinyin Street, Idumota,
Lagos Island, Lagos
143 Joseph Street 2 Joseph Street, O Marina Street,
Lagos Island, Lagos
144 Lekki
Admiralty Way
Plot B, Block E12E, Admiralty Way,
Lekki, Lagos
Branch Branch Address
145 Ajah KM 23, Berger Bus Stop, Lekki-Epe
Expressway, Ajah, Lagos
146 Palms Shop 36A, The Palms Shopping
Centre, Lekki-Epe Expressway,
Lagos
147 Lekki 63/64 Igbokushu Village, Opposite
Jakande Estate, Lekki, Lagos
148 Lekki Chevron Km 18, Lekki-Epe Expressway,
Before Chevron Roundabout,
Lekki, Lagos
149 Airport Road 23/25 Murtala Mohammed
International Airport Road,
Ikeja, Lagos
150 Mushin 253 Agege Motor Road,
Mushin, Lagos
151 Adeniran
Ogunsanya
33 Adeniran Ogunsanya Street,
Surulere, Lagos
152 Yaba 43 Ojuelegba Road,
Surulere, Lagos
153 Matori 91 Ladipo Street, Matori, Lagos
154 Okota 117 Okota Road, Okota,
Isolo, Lagos
155 Shomolu 3 Shipeolu Street, Mushin, Lagos
156 Onipanu 178 Ikorodu Road, Onipanu, Lagos
157 Ladipo 122/124 Ladipo Street, Beside AP
Filling Station, Ladipo,
Mushin, Lagos
158 Ilupeju 25B Ilupeju Bypass, o Coker
Junction, Ilupeju, Lagos
159 Aspamda Olusegun Obasanjo Hall, Aspamda,
Trade Fair Complex, Badagry
Expressway, Lagos
160 Amuwo-
Odofin
Plot 123, Amuwo Odofin Road,
Festac Link Bridge, Amuwo-
Odofin, Lagos
161 Alaba 1 Obosi Plaza, A-line, Alaba
International Market, Alaba, Lagos
162 Alaba 2 S Line, Old Garage, Alaba
Electrical Section, Alaba
International Market, Alaba, Lagos
163 Ojo 148A Olojo Drive, Ojo, Lagos
164 Trade Fair Above Plaza, BBA Trade Fair
Complex, Lagos
165 Osolo Way 33 Osolo Way, Ajao Estate, Lagos
166 Festac Plot 1,572, 4th Avenue, Festac
Town, Lagos
FCMB Group Plc Annual Report and Accounts 2015 205
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Branch Branch Address
167 Adeola Odeku 11B, Adeola Odeku Street, Victoria
Island, Lagos
168 Sanusi
Fafunwa
Founders Place, 2 Sanusi Fafunwa
Street, Victoria Island, Lagos
169 Adeola
Hopewell
38 Adeola Hopewell Street,
Victoria Island, Lagos
170 Adetokunbo
Ademola
Plot 719A, Adetokunbo Ademola
Street, Victoria Island, Lagos
171 Akin Adesola 1 Akin Adesola Street, Victoria
Island, Lagos
172 Ajose
Adeogun
Plot 273A, Ajose Adeogun Street,
Victoria Island, Lagos
Nasarawa
173 Lafia 43 Sani Abacha Way (Jos Road),
Lafia, Nasarawa
174 Sabon Tasha
Ke
75 Abdu Zanga Way, Tsohon
Tasha, Ke, Nasarawa
175 Doma 10 Wadata Lafia Road,
Doma, Nasarawa
Niger
176 Suleja 18 Suleiman Barau Road, Suleja,
Niger
177 Minna 1 3 Paiko Road, Opposite CBN,
Minna, Niger
Ogun
178 Akute 54 Ojodu-Akute Road, Alagbole
Bus Stop, Akute, Ogun
179 Alagbado 757 Lagos-Abeokuta Expressway,
Salolo Alagbole, Ogun
180 Otta 57 Idi-Iroko Road, Sango Ota,
Ogun
181 Agbara 1 Ilaro Street, Agbara Industrial
Estate, Agbara, Ogun
182 Ijebu-Ode 1 168 Folagbade Street,
Ijebu-Ode, Ogun
183 Ijebu-Ode 2 52 Ejirin Road, Impepe,
Ijebu-Ode, Ogun
184 Abeokuta 21 Lalubu Street, Oke-Ilewo
Abeokuta, Ogun
185 Sagamu 141 Akarigbo Street,
Sagamu, Ogun
186 Ago-Iwoye Permanent Site, Olabisi Onabanjo
University, Ago-Iwoye, Ogun
Branch Branch Address
Ondo
187 Ondo 1 Brigadier Ademulekun Road,
Ondo Town, Ondo
188 Igbokoda Plot 1E, 5B G.R.A Igbokoda,
Ilaje, Ondo
189 Akure 1 5 Bishop Fagun Road, Alagbaka,
Akure, Ondo
190 Akure 2 1 Olukayode House, Oshinle,
Akure, Ondo
Osun
191 Osogbo 1 KM 3, Gbongan/Ibadan Road,
Osogbo, Osun
192 Osogbo 2 4 Gbogan road, opposite Fakunle
Comprehensive high school,
Osogbo, Osun
193 Ilesha F16 Ereguru Street, Ilesha, Osun
Oyo
194 Dugbe 23/25 Lebanon Street, Dugbe,
Ibadan, Oyo
195 Bodija Plot 3, University of Ibadan/
Secretariat Road, Bodija Extension,
Bodija, Ibadan
196 Uch University College Hospital,
Opposite Total Filling Station,
Ibadan, Oyo
197 Ojoo 1C Sabo Garage, Ojoo/Ibadan
Express road, Ojoo, Ibadan, Oyo
198 Challenge
Ibadan
10 Moshood Abiola way, Challenge,
Ibadan, Oyo
199 Agbeni 57 Agbeni Market Road, Agbeni,
Ibadan, Oyo
200 Agbowo 30 Oyo Road, Opposite UI Post
Oce, Ibadan, Oyo
201 Iwo Road 55 Iwo Road, Ibadan, Oyo
Plateau
202 British
American
Junction Jos
British American Tobacco
Junction, Bukuru Bypass,
Jos, Plateau
203 Beach Road
Jos
4 Beach Road, Opposite Plateau
State Board of Internal Revenue
Oce, Jos, Plateau
204 Murtala
Mohammed
Way Jos
7 Murtala Mohammed Way,
Jos, Plateau
List of Branches
Continued
FCMB Group Plc Annual Report and Accounts 2015206
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Branch Branch Address
Rivers
205 Garrison, Port
Harcourt
85 Aba Road, By Garrison
Junction, Port Harcourt, Rivers
206 Port Harcourt,
Main
282A G.R.A. Bus Stop, Aba Road,
Port Harcourt, Rivers
207 Olu Obasanjo 80 Olu Obasanjo Road, Port
Harcourt, Rivers
208
Abuloma Road,
Port Harcourt
46A Abuloma Road,
Port Harcourt, Rivers
209 Aggrey Road,
Port Harcourt
81 Aggrey Road,
Port Harcourt, Rivers
210 Trans Amadi 2,
Port Harcourt
Plot 466/467, Trans Amadi
Industrial Layout,
Port Harcourt, Rivers
211 Trans Amadi 3,
Port Harcourt
117 Trans Amadi Industrial Layout,
Port Harcourt, Rivers
212 Aba Road 2,
Port Harcourt
9 Port Harcourt-Aba Expressway,
Port Harcourt, Rivers
213 Ikwerre Road 1,
Port Harcourt
19 Ikwerre Road, Mile 1, Diobu,
Port Harcourt, Rivers
214 Ikwerre
Road 2, Port
Harcourt
457 Ikwerre Road,
Port Harcourt, Rivers
215 Oyigbo 290 Old Aba Road, Oyigbo, Rivers
216 Azikiwe Road,
Port Harcourt
7B Azikwe Road,
Port Harcourt, Rivers
217
Rumuomasi,
Port Harcourt
2/3 Rumuokoro Street,
Rumuomasi, Port Harcourt, Rivers
218 Bori 26 Zaakpon/Poly Road, Bori,
Port Harcourt, Rivers
219 Uniport Choba 200 UNIPORT Road, Choba,
Port Harcourt, Rivers
220 Rumuokoro 642 Ikwerre Road, Rumuokoro,
Port Harcourt, Rivers
221 Omoku 226 Ahoada Road, Omoku, Rivers
Branch Branch Address
Sokoto
222 Sokoto 27 Sani Abacha Way (Old Kano
Road), Sokoto
Taraba
223 Jalingo 73 Hammaruwa Way,
Jalingo, Taraba
Yobe
224 Damaturu 29/32 Bukar Abba Ibrahim Way,
Damaturu, Yobe
Zamfara
225 Gusau Plot 103, Sani Abacha Way,
Gusau, Zamfara
FCMB Group Plc Annual Report and Accounts 2015 207
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
FCMB Group Plc Annual Report and Accounts 2015208
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Personal Account Application Form
This form should be completed in CAPITAL LETTERS.
Category of Account: (Please tick as appropriate)
Joint Account
Fixed Investment Account Savings Account
Account Type: (Please tick as appropriate)
Current Account
Fixed Deposit Account Savings Account
Domiciliary Account £
€ $ Others
BRANCH ACCOUNT NO. (For ocial use only)
BANK VERIFICATION ID NO.
1. PERSONAL INFORMATION
Title
First Name
Surname Other Names
Marital Status (Please tick) Single Married Other (Please specify)
Gender: Male Female
Date of Birth (DD/MM/YYYY) / / Country of Birth
Mother's Maiden Name
Nationality 2nd Nationality
Country of Residence
Permit Issue Date (DD/MM/YYYY) / / Permit Expiry Date (DD/MM/YYYY) / /
L.G.A. State of Origin
Tax Identification No. (TIN) Resident Permit No.
Purpose of Account Religion (Optional)
2. CHILD’S DETAILS
Full Name
Other Names
Surname
Date of Birth (DD/MM/YYYY) / /
Gender: Male
Female
3A. CONTACT DETAILS
House Number
Street Name
Nearest Bus Stop/Landmark
City/Town L.G.A.
State
Mailing Address
Phone Number (1)
+
Phone Number (2)
+
Country Code Country Code
Email Address
Ax
Passport
Photograph
Here
#
FCMB Group Plc Annual Report and Accounts 2015 209
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
3B. FOREIGN ADDRESS (IF ANY)
House Number
Street Name
City/Town Postcode
State
Country
Type of Visa Phone Number
+
Country Code Country Code
4. VALID MEANS OF IDENTIFICATION
National ID Card
National Driver's Licence International Passport INEC Voters Card
Others (Please specify)
ID No. ID Issue Date (DD/MM/YYYY) / /
ID Expiry Date (DD/MM/YYYY)
/ /
Country of Issuance
5. ACCOUNT SERVICE(S) REQUIRED (Please tick applicable option below)
Card Preferences: Verve Card
MasterCard Visa Card Others (Please specify)
Electronic Banking Preferences: FCMBOnline FCMBMobile ATM POS
Other Electronic Channels (Fees may apply) (Specify)
Transaction Alert Preferences: Email Alert (Free)
SMS Alert (Fee applies)
Statement Preferences: Email
Collection at Branch
Statement Frequency: Monthly
Quarterly Bi-Annually Annually
Cheque Book Requisition: (Fee applies) Open Cheque Crossed Cheque 25 Leaves 50 Leaves 100 Leaves
Cheque Confirmation: Would you like to pre-confirm your cheques? Yes
No
Cheque Confirmation Threshold: If yes, please specify the threshold
6. EMPLOYMENT DETAILS
Employed
Self Employed Unemployed Retired Student Other (Please specify)
Date of Employment (If employed) (DD/MM/YYYY) / /
Annual Salary/Expected Annual Income: (a) Less than N50,000
(b) N51,000 – N250,000
(c) N251,000 – N500,000
(d) N501,000 – Less than N1 million
(e) N1 million – Less than N5 million
(f) N5 million – Less than N10 million
(g) N10 million – Less than N20 million
(h) Above N20 million
Employer's Name
House Number Street Name
Nearest Bus Stop/Landmark
City/Town L.G.A.
State
Type of Business/Occupation
Oce Phone No. 1
+
Oce Phone No. 2
+
Country Code Country Code
Personal Account Application Form
Continued
#
FCMB Group Plc Annual Report and Accounts 2015210
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
7. DETAILS OF NEXT OF KIN
First Name
Other Names
Surname
Date of Birth (DD/MM/YYYY)
/ / Gender: Male Female Title (Specify)
Relationship
Phone Number (1)
+
Phone Number (2)
+
Country Code Country Code
Email Address
House Number Street Name
Nearest Bus Stop/Landmark
City/Town
State
8. ADDITIONAL DETAILS
I Name of Beneficial Owner(s) (if any)
II Spouse's Name (if applicable)
III Spouse's Date of Birth (DD/MM/YYYY) / /
Spouse's Occupation
IV Source of Funds to the Account 1.
2.
V Expected Annual Income from Other Sources
VI Name of Associated Business(es) (if any) 1.
2.
3.
VII Type of Business
VIII Business Address
IX How did you hear about us? TV
Radio
Press
Online
Word of Mouth
Other (please specify)
9. ACCOUNT(S) HELD WITH OTHER BANKS
S/N
NAME AND ADDRESS
OF BANK/BRANCH
ACCOUNT NAME ACCOUNT NUMBER
STATUS
ACTIVE/DORMANT
1.
2.
3.
4.
#
FCMB Group Plc Annual Report and Accounts 2015 211
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Personal Account Application Form
Continued
#
10. TERMS AND CONDITIONS
I/We hereby certify that the information given on this form is correct and that I/We have read, understood and agree
with the Account opening terms and conditions governing the selected account(s)
11. DECLARATION:
I hereby apply for the opening of account(s) with First City Monument Bank Limited. I understand that the information
given herein and the documents supplied are the basis for opening such account(s) and I therefore warrant that such
information is correct.
I further undertake to indemnify the bank of any loss suered as a result of any false information or error in the
information provided to the Bank.
12. JURAT
(this should be adopted where the applicant is not literate or is blind and the form is read to him/her by a third party)
I agree to abide by the content of the agreement and acknowledge that it has been truly and audibly read over and
explained to me by an interpreter.
Date
/ /
Name of Interpreter
Address of Interpreter
Tel: No.
Language of Interpretation
Principal Account Holder’s Signature
Joint Account
Holder’s Signature
JOINT ACCOUNT HOLDER (PLEASE COMPLETE ALL
SECTIONS IN CAPITAL LETTERS)
Name(s) _______________________________________
Contact Address _________________________________
_______________________________________________
Mobile __________________ Date of Birth ___________
Email Address ___________________________________
Gender: Male
Female
1. Name __________________________________ Signature _______________________ Date _________________
1. Name __________________________________ Signature _______________________ Date _________________
Mandate/Special Instructions
(Minimum Confirmation Amount/Signature Mandate)
Please Ax
your Passport
Photograph Here
Joint Account Holder
Mark of Customer/
Thumbprint
Magistrate/
Commissioner
for Oaths
FCMB Group Plc Annual Report and Accounts 2015212
Introduction Operating
Review
Corporate
Governance
Financial
Statements
Shareholder
Information
Other National
Disclosures
Branches and Account
Opening Information
Notes
FCMB Group Plc Annual Report and Accounts 2015 213
FCMB Group Plc Annual Report and Accounts 2015214
Notes
FCMB Group Plc
First City Plaza, 44 Marina, Lagos, Nigeria
Tel: +234 (0) 1 279 8800
+234 (0) 700 3262 69 2265
www.fcmbgroupplc.com
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