stanbic ibtc annual report 2008
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�
08
Annual Report
RC 125097
� �
Being part of a bigger picture is exactly how we see our purpose in the financial services environment.
In such a diverse world, finances are not just about money. They define how communities grow, work together and help connect solid ideas and practical innovations through improved networks.
Our aim is to ensure that our customers are at the centre of our business and reap the reward of our combined strengths. This kind of cause and effect is no puzzle to us at Stanbic IBTC Bank PLC.
We will continue to elevate the bar in real service delivery to all our customers. It is our connections and interlocking abilities that allow us to find the correct solution that really fits. From customers to shareholders to the capability of our people; every piece is essential for our vision.
Overview
Our vision & values 4
Highlights 6
Stanbic IBTC - the group in brief 7
Recognition �0
Standard Bank Group at a glance ��
Business review �4
Chairman’s statement �6
Chief executive’s review �0
Economic review ��
Financial review �5
Executive committee �4
Personal and Business Banking �6
Corporate and Investment Banking 40
- Case study: The Lagos State Bond 44
- Case study: Lekki Concession Company (“LCC”) 46
- Case study: Lafarge Cement WAPCO Nigeria Limited 48
- Case study: MTN Nigeria Communications Limited (MTN Nigeria) 50
Wealth 5�
Corporate governance & risk management 54
Board of directors 56
Corporate governance report 58
Risk management 70
Annual financial statements 84
Directors’ report 86
Audit committee report 9�
Consolidated financial statements 9�
Report of the independent auditor 94
Statement of directors’ responsibilities 95
Statement of significant accounting policies 96
Balance sheet �00
Profit and loss account �0�
Statement of consolidated cash flows �0�
Notes to the consolidated financial statements �04
Statement of value added ���
Five year consolidated financial summary ��4
Other information ��6
Management team ��8
Branch network �4�
www.stanbicibtcbank.com
Contents
4 5
Respecting each other
We have the highest regard
for the dignity of all people.
We respect each other and
what Stanbic IBTC stands for.
We recognise that there are
corresponding obligations
associated with our
individual rights.
Our vision& values
One vision
To be the best financial solutions team - the customer’s choice.
We will deploy our local knowledge and global emerging market expertise to deliver superior value to all our stakeholders,
We will only succeed if we are able to attract, retain, develop and deploy teams of people with energy, passion and skills.
Eight values
Growing our people
We encourage and help our people
to develop to their full potential and
measure our leaders on how well
they grow and challenge the people
they lead.
We, and all aspects of our
work, are interdependent.
We appreciate that, as
teams, we can achieve
much greater things than
as individuals. We value
teams within and across
business units, divisions and
countries.
Working in teamsServing our customers
We do everything in our power
to ensure that we provide our
customers with the products,
services and solutions to suit their
needs, provided that everything
we do for them is based on sound
business principles.
We strive to stay ahead by
anticipating rather than reacting,
but our actions are always
carefully considered.
Delivering to our shareholders
We understand that we earn
the right to exist by providing
appropriate long-term returns
to our shareholders. We try
extremely hard to meet our
various targets and deliver on
our commitments.
Guarding against arrogance
We have confidence in our ability
to achieve ambitious goals and we
celebrate success, but we never
allow ourselves to become arrogant.
Upholding the highest levels of integrity
Our entire business model is
based on trust and integrity as
perceived by our stakeholders,
especially our customers.
Being proactive
Overview
6 7
Stanbic IBTC the group in brief
Stanbic IBTC highlights
Stanbic IBTC bank’s results reflect the resilience of the group amidst continued global financial market turmoil. The strong capital position and healthy liquidity profile has positioned the bank to take advantage of business opportunities in its chosen growth markets.
Subsidiaries
Stanbic IBTC Asset Management Ltd.
Stanbic IBTC Ventures Ltd.
Stanbic IBTC Pension Managers Ltd.
R.B. Resources Ltd.
Stanbic Equities Ltd.
Stanbic Nominees (Nigeria) Ltd.
Overseas correspondent banks
Australia and New Zealand Banking Group
Citibank
Commerzbank
Credit Suisse
Den Norske
Deutsche Bank
HSBC
ING Financial Institutions
Nordea Bank
Standard Bank Group
Standard Chartered
Registered address & head office
Stanbic IBTC Bank PLC
I.B.T.C. Place
Walter Carrington Crescent
P. O. Box 7�707
Victoria Island
Lagos, Nigeria
Telephone: +��4 (�) �7��400
Swift: SBICNGLX
Facsmile: +��4 (�) �6�654�/�
E-Mail: [email protected]
Web: www.stanbicibtcbank.com
114%
Gross revenue growth 32%
Total loan growth
33%Deposit growth
52%
Profit after tax
growth
15%Return on equity
Stanbic IBTC Bank PLC, a member of the Standard Bank Group is a full service universal bank with a clear focus on three main business pillars - Corporate & Investment Banking, Personal & Business Banking and Wealth Management.
The Standard Bank Group, which has a controlling stake of 50.7% in Stanbic IBTC, has been in business for �46 years and is Africa’s largest banking group ranked by assets and earnings.The Stanbic IBTC Bank launch was announced in Lagos on �� March �008, signaling the successful conclusion of the merger.
The launch of the merged entity was a significant step in the evolution of a new era of banking in Nigeria; assuming a leadership role in the transformation of the industry.
Overview
N61.2 billion
Grossrevenue Profit before
tax
Shareholders funds
AAA
Fitch rating
N14.6 billion
N80.7billion
8 9
OverviewA broad-based financial services business
Stanbic IBTC has consolidated its position in Nigeria over the past �8 months as a diversified business with a strong capital position and proven track record. Through focusing on the three key business segments – Corporate & Investment Banking, Personal & Business Banking and Wealth, we have continued to leverage the skills, economies of scale and synergies that come from being part of an international group and our excellent Nigerian pedigree.
Personal & Business Banking (PBB)
Gross revenue
N�4.4 billion
Banking and other financial services
to individual customers and small to
medium sized enterprises.
Wealth
Gross revenue
N9.0 billion
Investment management, pension
fund administration and pension
asset management
Corporate & Investment Banking (CIB)
Gross revenue
N�9.8 billion
Corporate and investment banking
services to larger corporates, financial
institutions and international counter-
parties in Nigeria.
�4%
��%
6�%
CIB
PBB
Wealth
CIB
PBB
Wealth
�%
�4%
7�%
CIB
PBB
Wealth
5�%
�7%
�0%
Gross revenue contribution Total Assets Profit before tax contribution
�0 ��
Recognition
4. Euromoney, African PPP Deal of the year 2008
– Standard Bank Group and Stanbic IBTC Bank PLC served as international arranger and biggest lender for the Lekki – Epe express way project. The project and structured finance team received this award for this groundbreaking project.
Overview
2. This Day Awards 2009, Pension Fund Managers of the Year
– Stanbic IBTC Pensions Managers Ltd has been awarded ‘Pension Fund Managers’ of the year �009. SIPML remains Nigeria’s largest PFA (Pensions Fund Administrator), with over 600,000 retirement savings accounts and retirement assets in excess of N�00 billion under management. SIPML currently pays over N550 million to over ��,000 retirees monthly.
5. Project Finance International, Africa Infrastructure Deal of the year
- the project and structured finance team received this award for the Lekki – Epe express way deal
3. Bank of the Year, ACQ Finance Magazine Global Awards 2009
– The ACQ Finance Magazine Global Awards is an annual event that celebrates the top mergers and acquisitions dealmakers and their transactions. Stanbic IBTC Bank has been awarded ‘Bank of the Year, Africa, �009. Getting an accolade of this value amidst several other notable competitors is a very important nod for Stanbic IBTC.
1. Ai Analyst of the Year, 2009
– Stanbic IBTC was awarded Analyst of the Year �009, for raising awareness about African Capital Market opportunities. The Ai Financial Reporting Awards are the only African Awards that recognise the crucial importance professional financial reporting plays in informing investors and decision makers contemplating investments in Africa. This inaugural, but highly contested Analyst of the Year Award for the Banking Sector, was won by Yemi Kale and Muyiwa Oni of the research department in Stanbic IBTC.
6. 2009 Global Finance Magazine Award for the Best Investment Bank in Nigeria
– this award was in recognition of Stanbic IBTC’s market share, number of deals as well as innovation in the Investment Banking Industry.
7. 2008 Nigeria Investment Banking League Award for Best Private Equity Deal in Nigeria
– this award was in respect of the $550 million Private Placement by Starcomms Plc. Stanbic IBTC Bank PLC acted as a Joint Issuing House to the Placement.
�� ��
Standard Bank Group at a glance
�� ��
Overview
* MarketcapitalisationR127billion(US$14billion)
* TotalassetsR1.5trillion(US$162billion)
* Operatingin17Africancountriesand16countriesoutsideAfrica
* 50,321employees(1941inNigeria)
* 1,106branches(62inNigeria)
* 5,174ATMs(68inNigeria)
Branches in Nigeria
Lagos Island - �4 South South - 8
Lagos Mainland - �� North West - 6
South West - 7 FCT Abuja - 5
South East - 5 North East - 5
ATM
Lagos Island - �0 South South - 7
Lagos Mainland - �� North West - 6
South West - 9 FCT Abuja - 6
South East - 4 North East - 5
�4 �5
Business review
�5
• Chairman’s statement
• Chief executive’s review
• Economic review
• Financial review
• Executive committee
• Personal and Business Banking
• Corporate and Investment Banking
• Case studies:
* The Lagos State Bond
* Lekki Concession Company
* Lafarge Cement WAPCO Nigeria Limited
* MTN Nigeria Communications Limited
• Wealth
Business review
�6 �7
It gives me great pleasure to preside over this 20th Annual General Meeting of our bank
(AGM), which is coming shortly after we marked our 20th anniversary as a legal entity on
2 February 2009. It is particularly pleasing for me to be able to stand before you today to
confirm unequivocally that, unlike many other financial institutions around the globe, Stanbic
IBTC Bank remains in very sound financial shape. This is in spite of the twin effects of the global
financial crisis which has ravaged several leading financial institutions and the economic recession,
which is eroding income per capita in several leading economies. Stanbic IBTC Bank has retained its
triple A (AAA) rating from Fitch.
Our parent, the Standard Bank Group (“SBG”) achieved satisfactory results in 2008, reflecting the
diversification and resilience of their businesses amidst continued global financial market turmoil.
The capital injection from Industrial and Commercial Bank of China (ICBC) in March 2008 helped
to ensure that SBG’s capital position remained strong. SBG’s liquidity profile remains healthy with
liquidity management practices rigorously applied within a liquidity management framework. SBG’s
vision of growing a full service, emerging markets financial organisation is unchanged and SBG
continues to seek organic and acquisitive growth opportunities in Africa and other chosen markets
which would enhance our own opportunities to service our customers wherever they operate. SBG
remains committed to Nigeria.
It is perhaps pertinent to emphasise that at Stanbic IBTC Bank we learnt several important
lessons along the way in 2008. In my opinion, the single most important lesson is that we
must continually uphold all those good habits, discipline and rigour that enabled us to
speedily put up our “defences” even at the risk of being branded alarmists. Our board
and management team were unanimous in recognising, relatively early, that what we were
facing in 2008 was a global financial crisis of epic proportions.
The accompanying credit crunch and de-leveraging led to falling asset values across
several asset classes around the globe, including equities quoted on The Nigerian Stock
Exchange (NSE). Commodity prices also collapsed very rapidly in some cases. Indeed,
the severe and rapid fall in crude oil prices (a key determinant of Nigeria’s total export
earnings) in the second half of 2008, from $147 a barrel to close to $40 a barrel, took
Nigeria from an unprecedented boom into a period of severe belt-tightening in the space
of a few months.
The financial markets in Nigeria experienced significant volatility. In the first half of the year,
on the back of an exceptional stock market performance in 2007 (The Nigerian Stock Exchange
All Share Index gained 74% in 2007) and supported by a strong naira and growing foreign
exchange reserves, the market was down by only 4% at 30th June 2008, an excellent return
compared to the turmoil that was being experienced in other developed and emerging markets. With
the benefit of hindsight it is easy to see that the high oil prices (surging towards $150 per barrel)
and the ‘intervention’ of sovereign wealth funds in the financial crisis in the more developed markets
helped mask the underlying weakness of the Nigerian market, especially the slower growth and high
valuations, and encouraged the feeling of insulation from the world financial crises.
The reality was that Nigeria was in fact not immune to the global financial problems as shown in the
second half of the year. The market slowdown of the second quarter turned to a full scale crash as
oil prices reversed sharply; foreign investors scrambled to exit the markets as their domestic liquidity
crises deepened and the local financial markets witnessed their own share of liquidity squeeze. The
impact was significant as the first half performance turned to second half blues and the market lost
over 61% of its value from its all time high during the year and was down 45% for the year.
Chairman’s statement
“Stanbic IBTC Bank PLC remains in very sound financial shape. This is in spite of the twin effects of the global financial crisis which has ravaged several leading financial institutions and the economic recession, which is eroding income per capita in several leading economies. Stanbic IBTC Bank has retained its triple A (AAA) rating from Fitch”
�6
Business review
�8 �9
Chairman’s statement
Our bank participated in providing margin lending facilities to
clients who were purchasing equities on the NSE. However, internal
concentration guidelines, and a reduced risk appetite for this type of
product stemming from the falling equity markets across the globe,
resulted in a gradual reduction in our exposure to margin facilities
from the first quarter of �008. Unfortunately, due to the sharp
decline in the stock prices during the last quarter of �008, a number
of borrowers were unable to keep up with the contractual margin
requirements and thus, as a result of the strict application of the terms
of these facilities, forced sales of these equities became necessary.
Not withstanding our meticulous monitoring of these facilities, we
sustained some losses, largely as a result of the NSE’s unexpected
rule change via the sudden introduction of a more severe “circuit
breaker”, which operated for a few months in the second half of �008
and did not allow share prices to fall by more than �% a day.
In this atmosphere, several equities became unsaleable because
the market felt they were overpriced but the stock prices were not
allowed to speedily adjust downwards. We therefore witnessed a
sustained erosion of the agreed margins, whilst being unable to trade
significant volumes of equities. The circuit breaker was reinstated
to the historical 5% level by the NSE in late �008 which resulted
in an increase in volumes to allow for the execution of a number of
outstanding trades. Given the severity of the downturn by year end,
a portion of our loan book reflected collateral shortfalls. To ensure
that we complied with our historical accounting policies, which
remain unaltered, it necessitated a N�.6 billion loan loss provision
linked specifically to margin lending facilities. Our gross outstanding
balance as at �� December �008 for margin lending was down to
N8.�0 billion.
Accordingly, the financial statements which are being put before
shareholders today for approval, have been prepared on the same
conservative basis that our bank group has always utilised and after
adjusting for the full impact of all known loan losses. The results are
pleasing because they were achieved against a backdrop of severe
financial turmoil.
Income statement
Gross earnings increased from N�8.65 billion in the 9-month period
ended �� December �007 to N6�.�4 billion for the year ended
�� December �008. The ��4% increase in Stanbic IBTC and its
subsidiaries (“the group”) gross income is extremely pleasing and also
demonstrates some of the immediate benefits of the merger with the
Standard Bank Group. As part of gross income, non-interest revenue
recorded an impressive increase of 57% from N��.88 billion in the
9-month period ended �� December �007 to N�0.�7 billion for the
year ended �� December �008, stemming mainly from significant
capital market transactions and activities during the first half of the
year. The group’s net interest income increased correspondingly
by ���% from N9.60 billion to N��.�7 billion. The net interest
increases are a result of transactional volume increases and an
expanding customer base.
The group’s operating expenses similarly increased by �4�% from
N9.44 billion to N��.98 billion in the corresponding period. The
significant cost increase is a result of the groups continued investment
in infrastructure and skills in order to build a base for sustainable
future growth, and this is expected to continue in �009 as we
prepare a scalable platform. In addition cognisance must be taken of
the fact that the previous financial year had nine months.
A provision of N5.0� billion for loan and other asset impairments
resulted in the group profit before tax amounting to N�4.6� billion,
which is a ��% increase over the N�0.99 billion profit before tax for
the nine months ended �� December �007. Group profit after tax
and minority interest increased by 5�% from N7.58 billion in the nine
month period ended �� December �007 to N��.56 billion for the
year ended �� December �008.
Balance Sheet
The Group’s total assets grew by ��% from N��5.�� billion as at
�� December �007 to N�5�.�5 billion as at �� December �008; while
the total liabilities grew by ��% in the same period from N��9.09
billion to N�69.88 billion. Shareholders’ funds grew by 7% from
N75.57 billion to N80.67 billion. The change in shareholders’ funds
merely represents the undistributed portion of the current year’s
profits.
The loans and advances portfolio has been conservatively and well
provided against. At �� December �008 the total non - performing
loan (NPL) book amounted to N�5.54 billion representing �4% of the
total loans and advances. Against this book are specific provisions of
N9.4� billion representing 6�% of the NPL’s.
Your directors have recommended a dividend payout of 40 kobo per
ordinary share of 50 kobo, amounting to N7.50 billion which is 60%
higher than the dividend of �5 kobo paid last year for the nine month
period ended �� December �007.
Shareholders will recall that at an extra-ordinary general meeting
held on �4 February �009 they approved, subject to the approval
of the Federal High Court, the write off of the losses that arose
from the reinstatement and impairment of the goodwill attributable
to our �005 and �007 mergers, which was previously written off
directly against shareholders funds (capital) and is now required to
be impaired through the profit and loss account. The reinstatement
and impairment was done in accordance with the Nigerian Accounting
Standard on Business Combinations (SAS �6). It should be noted that
this change did not impact total shareholders funds.
During the course of �008, two new directors were appointed to
the board of directors. The directors in question are Dr Alewyn
Burger and Mr Rahtan Mahtani. Their appointments will be tabled
for approval at this meeting. Mr Bond resigned from the board on
account of his redeployment to China by the Standard Bank Group.
We thank Mr Craig Bond for his immense contribution to our bank
while he served on the board.
In accordance with Article 8� of the Bank’s Memorandum and
Articles of Association, six directors – Mr Ahmed Dasuki, Mrs Sola
David-Borha, Mrs Ifeoma Esiri, Mr Ben Kruger, Mr Bhagwan Mahtani
and Ms Marna Roets are retiring today as directors and, being
eligible, are offering themselves for re-election.
Later in the meeting, we will also be required to vote on nominations
received in relation to our audit committee.
As a group we are committed to upholding the highest levels of
corporate governance and have implemented a comprehensive
governance framework. Full details of this framework are provided
elsewhere in this annual report.
We are making significant investments in recruiting, retaining and
managing highly talented people as this is a critical success factor
in maintaining a competitive advantage. We believe that to be an
employer of choice, a total value proposition to our staff needs to
be considered. In this regard training, and in particular leadership
development, has become a key differentiating factor for your
bank. Amongst other forms of exposure and learning, the Standard
Bank Group’s Global Leadership Centre (GLC) situated in South
Africa plays an important role in developing excellence among our
executive and senior management. The GLC offers internationally
designed management development programmes aligned to global
best practice and the group’s values and strategy.
We also launched the Stanbic IBTC Bank training centre situated in
Ikeja, which opened on �� August �008. The training centre can
accommodate 90 learners across four classrooms. A total of 646
staff, participating in �,��8 learning interventions, have passed
through the centre since inauguration.
During �008 we continued to donate funds towards various
organisations. For �009, as part of our corporate social responsibilities,
we will be focusing particularly on the health and education sectors.
The outlook for global economic growth has deteriorated significantly
in the past six months. Dislocations in developed financial markets
have inevitably had a knock-on effect in developing markets and
Nigeria has not been immune. Growth rates are expected to slow
in �009.
In this regard a number of temporary measures were put in place
by the Central Bank of Nigeria (“CBN”) to stabilise and protect
the Nigerian economy. To stem the rapid decline in the naira from
N��7:�US$ to a high of N�50 in the first quarter of �009, tighter
controls over foreign currency trading were instituted. These primarily
made the CBN the primary buyer and seller of foreign currency
effectively closing down the interbank currency market, significantly
reducing the allowed net open position held by banks and limiting the
spread/margin allowed on foreign currency transactions. In addition,
in an effort to limit upward pressure on interest rate stemming from
tighter liquidity in the market, maximum deposit and lending rates of
�5% and ��% respectively were also introduced in the first quarter
of �009. We are pleased to note that all of these “extreme” measures
have subsequently been relaxed.
The outlook for global economic growth deteriorated significantly
in the latter part of �008 and early part of �009. Dislocations in
developed financial markets have inevitably had a knock-on effect
in developing markets and Nigeria has not been immune thereto,
particularly given the importance of oil revenues. Growth rates are
expected to slow in �009. Trading conditions will continue to be
tough, largely impacting our businesses that are directly or indirectly
dependent on the capital market, at the same time the market
is expected to remain extremely competitive. These operating
conditions will create both risks and opportunities across the group’s
diverse financial services operations. The board is confident that with
our skilled and passionate people and highly disciplined approach to
risk management, the group is well positioned. Our focus will however
remain on prudent risk management and the preservation of liquidity
and capital.
Finally, I would like to thank all the clients, shareholders and staff
who have continued to stand with our institution during a very trying
period of considerable financial turmoil.
ATEDO N.A. PETERSIDE OON
CHAIRMAN
Business review
�0 ��
It is a pleasure to report on the first full trading year as a merged entity.
2008 for Nigeria was a year characterized by mixed fortunes. The early part of the year saw
a continuation of the growth trend of 2007 across most sectors of the economy, while the
second half of the year saw the impacts of a sharply lower capital market and the global financial
crisis taking hold. Stanbic IBTCs’ performance for 2008 in many ways mirrors that of the macro
environment. However, overall we are pleased with the banks financial performance for 2008.
You will find included herein a number of reports outlining individual business unit performances.
As one might expect certain of the businesses found the environment considerably tougher in the
second half, while others continued to make great strides. Notable contributions were made by Global
Markets, Investment Banking, Stock Broking and Pension Managers businesses. We set ourselves
ambitious targets for the banking businesses which in general were not fully achieved. However to
describe this as a failure would not be doing justice to the many individuals who have built a great
platform from which we would hope to see notable returns from in 2009.The launch of our new
Business Online platform in December 2008 is an example thereof.
The Bank made considerable and necessary investments in building capacity and improving the
integrity of systems for today and the future, as well as in People and Infrastructure in general.
While endeavouring to maximize returns from our existing and potential market leading
businesses to compensate therefore, such investments have had a negative impact on
certain efficiency ratios. Such ratios however were broadly in line with expectations.
We are grateful that as an indicator of some key successes, 2008 saw Stanbic IBTC
receiving a number of accolades and awards, including:
• Best Issuing House in Africa-African Bankers Award
• Award of Excellence as Global Custodian in Nigeria
• African PPP Deal of the Year-Lekki-Epe Expressway-Euromoney
• African Infrastructure Deal of the Year-Lekki-Epe Expressway-Project
Finance International
• Best Bond House-Euromoney
• This Day Awards 2009, Pension Fund Managers of the Year
• 2009 Global Finance Magazine Award for the Best Investment Bank in Nigeria
• 2008 Nigeria Investment Banking League Award for Best Private Equity Deal in Nigeria
A big thank you to all our customers and staff without whom none of the above would have
been possible.
�0
Chief executive’s review
2008 for Nigeria was a year characterised by mixed fortunes. The early part of the year saw a continuation of the growth trend of 2007 across most sectors of the economy, while the second half of the year saw the impacts of a sharply lower capital market and the global financial crisis taking hold. Stanbic IBTCs’ performance for 2008 in many ways mirrors that of the macro environment. However, overall we are pleased with the banks financial performance for 2008.
Business review
�� ��
Chief executive’s review
Globally, �008 has demonstrated the value and importance of
a universal banking model, alongside the need for the skills and
disciplines required for effective risk management. The value of
the universal banking model is now far better understood. We are
already such an institution, however continue to strive to achieve a
more balanced contribution from our three core franchises. On the
risk side we have implemented and continuously endeavour to refine
an Enterprisewide Risk Management Framework which we adopted in
line with global and Standard Bank Group best practices.
To all our stakeholders who have assisted in making �008 a reality
– thank you. I particularly would like to thank our Customers, the
executive committee team, my deputy – Sola David-Borha, the
chairman – Atedo Peterside and the board for their commitment,
contribution and invaluable support.
Given that global and domestic markets have contrived to present
a very challenging landscape for �009, we will continue to adopt a
measured approach to short term gains versus long term sustainability.
We however enter the year with a quiet optimism and sense of
anticipation of what could be achieved.
CHRIS NEWSON
CHIEF EXECUTIVE
Stanbic IBTC continues to believe and invest in its People. The
launching of the new brand in March �008, incorporating our core
values, was an important step in ensuring all staff feel part of a new
beginning, understand what it is we stand for and act appropriately
with each other, customers and all stakeholders. Our training and
development drive has received a considerable boost with the
opening of our own training centre in Ikeja - The Blue Academy.
Already we have seen the number of training interventions with our
staff increase dramatically. We also firmly believe that our ability to
develop true leaders will sustain and grow our organisation into the
future. In this regard the ability to leverage off the Standard Banks’
Global Leadership Centre is fantastic. A number of our senior staff
members have already attended courses in Johannesburg.
Critical to our future success will be the ability to ensure that
an appropriate performance based culture prevails in the bank.
Significant effort has gone into designing processes, educating staff
and defining key measures aligned to each function and individual.
Equally part of building the right performance culture is also the
ability to attract and retain great talent – something which is a key
responsibility of all management.
As mentioned in my report last year, we have organized ourselves
around three core business units being Corporate & Investment
Banking, Personal & Business Banking and Wealth. Such a structure
is designed around customer needs and to facilitate our ability to
cross sell and work in teams. We believe that customers and the bank
are starting to extract the benefits there from but a continued focus
thereon remains a priority.
A key aspect of teamwork is the ability to leverage off our parentage,
that being the Standard Bank Group. We continue to strive to ensure
that customers and staff benefit from the value that this relationship
brings. �008 has seen the launching of new localised products, the
building of new business initiatives, the execution of significant
transactions, the building of infrastructure and the acquisition of new
customers as a direct consequence thereof. The recent affirmation by
Fitch of Stanbic IBTCs’ AAA local rating (the only bank in Nigeria to
attain this) is a further tangible benefit of being part of the Standard
Bank Group.
Business reviewEconomic review
Global economic environment
The first half of �008 saw a gradual but managed unwinding of
excess leverage by the international financial system, combined with
a slowdown in developed economies. Financial and real economy
asset prices started to fall sharply, but growth continued to be robust
across all emerging markets.
The strong outlook for growth in these newly established economies,
combined with a lack of alternative asset classes to absorb excessive
global liquidity, led to a rapid rise in commodity prices. In particular,
oil prices rose rapidly to over US$ �00/bbl, and this put further
downward pressure on growth in developed markets.
However, in August �008, a series of correlated shocks hit OECD
financial markets, as underlying problems with mortgage backed
securities caused instability in financial institutions. This in turn led
to the collapse of Lehman Brothers and government intervention to
rescue key financial players such as AIG, with later equity injections
into most large financial institutions. The bankruptcy of Lehman led
to the effective closure of key credit and commercial paper markets.
These financial shocks helped to significantly enhance the slowdown
in OECD growth, and a fall in export demand combined with a freeze
in international lending and a rapid decline in commodity prices have
placed significant downward pressure on growth across all emerging
markets. �009 will see one of the sharpest periods of global slowdown
in the last century.
Impact on commodity prices
In the first half of �008, global commodity prices rose very rapidly due
to a combination of short-term supply constraints and a perception in
the financial markets of continued demand from emerging markets.
Commodity prices became extremely overbought due to a rapid
increase in financial flows into commodity indexes.
The rapid slowdown in the global growth outlook since August
�008, combined with enormous wealth destruction in the financial
markets, led to a swift reversal of this final leg of the commodity
cycle. The price of oil fell from US$ �47/bbl in July �008 to around
US$45/bbl in December. Whilst financial de-leveraging continues and
more negative news on global growth emerges, the price of oil may
fall further, although supply constraints will provide more support to
commodities in general in the second half of �009.
Impact of international capital flows
In the second half of �008, international capital flows dropped
sharply. At the same time, many asset classes around the world sold
off heavily, pushing up yields on investment grade credits to over
�0%. At the same time, banks efforts to delever their balance sheets
led to a contraction in trade financing.
Nigeria felt the effects of these global shifts, with international
credit lines squeezed in the fourth quarter of �008. With relative
yields in the international markets much higher going into �009,
Nigerian banks and corporates will face greater challenges in raising
international financing.
Official foreign exchange assets: CBN reserves and sovereign savings
0
10000
20000
30000
40000
50000
60000
H2:08fH1:08H2:07H1:07H2:06H1:06
US$ m
CBN foreign exchange Reserves
Sovereign Savings
�4 �5
Financial review
Nigerian policy environment
Nigeria’s policy environment continued to reflect the benefits derived
from the last five years of reform in a range of economic policy areas.
Government continued to employ a benchmark budget oil price to
insulate spending from the high levels of volatility in oil price, while oil
savings are being earmarked for key power infrastructure spending.
The local debt markets continued to evolve, with the yield curve
lengthened to twenty years and local government debt also being
developed. The ongoing growth of the Nigerian private pension
industry continues to add investor funds in the market, supporting
liquidity.
The Central Bank of Nigeria (CBN) continued to develop its
frameworks on monetary policy management, moving towards an
interest rate framework based around a single lending (repo) rate,
with open market operations increasingly important for managing
liquidity. Interest rates trended marginally up during the first half of
the year as the CBN tightened rates to fight inflation, but have fallen
sharply since September as the CBN allowed more liquidity in part to
offset the impact of the global crisis.
Credit growth and core inflation
-20
0
20
40
60
80
100
Oct’08Apr’08Oct’07Apr’07Oct’06Apr’06Oct’05Apr’05Oct’04Apr’04Oct’03Apr’03Oct’02Mar-02
Broadway Y/Y%CPI EXC FOOD Y/Y%
In the dynamic environment of Nigeria’s growing economy, inflation
management continued to be challenging, with inflation rates rising in
the second half of �008 due to rapid increases in bank lending to the
private sector. This will continue to be a challenge in �009.
Crucially, towards the end of �008, the CBN has also chosen to
reflect the changing macroeconomic fundamentals of lower oil prices
by allowing the naira to depreciate against the US dollar, to ensure
Nigeria remains in external equilibrium. This trend will continue into
the early part of �009 until oil prices recover later in the year.
Real economy developments
The real economy continued to grow rapidly at around 8.5% year-on-
year in �008, as increased government spending helped to support
continued rapid expansion of banking and other service sectors. This
momentum showed in strong corporate earnings across a range of
sectors, in turn ensuring that increased employment continues to
expand the size and potential of the domestic market.
In �009, with prudent fiscal spending based on a US$ 45/bbl oil
price limiting the role of government spending in further expansion,
we expect GDP growth to cool. Still, with strong domestic demand
particularly for services, we expect 5% non-oil economic growth,
which will be above average for emerging markets.
Summary
The first half of �008 saw Nigeria sustain strong economic
performance alongside a strong naira. However, testing global
conditions have since begun to feed through to the local economy
through tighter international credit and a softer oil price, which has
caused the naira to weaken and will lead to lower fiscal spending in
�009. Nonetheless, with very low external debt levels and strong
domestic demand, the economy will remain well positioned to
strengthen again as oil prices rise in the second half of next year.
Business reviewEconomic review
Overview of financial results
The Group posted strong results in the first half of the year, contrasted
by a tougher second half which was characterised by more challenging
local and international markets. Profit after tax grew by 5�% and the
group achieved an after tax return on average equity of �5%. The
relatively high return on equity reflects a continued philosophy to
maximise shareholder returns by engaging in profitable business
relationships (quality) without an undue focus on volumes or short
term gains while still investing for the future.
The tougher trading conditions and decreased liquidity in the second
half of the year adversely affected the business segments that derive
their revenue primarily from capital market activities. The impacted
business segments are:
• Asset management
• Stockbroking
• Corporate finance due to limited capital raising opportunities
• Custody services
Despite the tougher trading conditions, the group continued to grow
transactional banking and foreign exchange volumes in the second
half of the year.
Return on equity
Return on equity (profit before tax) �9% �9%
Return on equity (profit after tax) �5% �4%
�007
During the year the bank made considerable and necessary investments
in people and infrastructure. As part of our focus on talent, we
invested in recruiting skilled people. Furthermore, we concentrated
on building the capacity and integrity of our platforms, risk systems
and businesses for today and for future growth. Such investment has
had a negative impact on certain of the banks’ efficiency ratios and is
set to continue during the coming year.
Economic factors impacting the results
Globally, the systemic credit and liquidity crisis deepened as
interbank and wholesale funding markets stalled in the wake of fading
confidence amongst financial institutions. Significant deleveraging
followed as financial institutions realised assets to cover liquidity
shortfalls, resulting in dramatic repricing. The lack of liquidity and the
dramatically reduced risk appetite severely limited both the ability and
willingness of global financial institutions to finance normal corporate
requirements, bringing about a slowdown in market activity and a
collapse in commodity prices. This market turmoil and consequent loss
of confidence resulted in investors withdrawing funds from emerging
markets and currencies devalued significantly.
On the back of rising inflation in the second half of �008 and reduced
liquidity, lending rates increased. The bank’s prime lending rate had
increased to �0.5% at the end of the December �008.
December’08December’07March’07March’06
Shareholders’ fund (average) ROE (PAT)
Funds
0
10,000
20,000
30,000
40,000
50,000
60,000
70000
80,000
90,000
0%
5%
10%
15%
20%
25%
30%
ROE
�008
Oct’0� Oct’0� Oct’04 Oct’05 Oct’06 Oct’07 Oct’08
�6 �7
Profit and loss analysis
0
10
20
30
40
50
60
70
80
Dec’08Dec’07Mar’07Mar’06
Earnings per share (Kobo)
Net interest income
Interest income 40,97�,�7� �5,77�,0�8 �60%
Interest expense (�8,6��,�00) (6,�70,948) �0�%
Net interest income ��,�6�,07� 9,60�,070 ���%
Growth in net interest income of ���% was supported by strong
growth in all asset classes coupled with wider interest margins due to
rising interest rates. Significant growth areas were commercial paper,
medium term advances and infrastructure financing to corporate
customers. Net interest margin (“NIM”) was 6.04% compared to
the prior year of 5.79%. The improvement in NIM was largely due
to the endowment impact of higher interest rates on shareholder‘s
funds and the growth in transactional deposits in Personal & Business
Banking coupled with higher lending rates.
Financial review
Net interest income and net interest margin
CAGR (�006-�008) 66%
Non-interest revenue
Net fees and commission increased significantly by 65%. Strong
growth in fee income was experienced in all major product categories
supported by strong investment banking flows, significant volume
increases within our asset management and stockbroking businesses
and growth in transactional banking volumes.
Fee and commissions �4,995,807 9,088,6�4 65%
Trading revenue 4,��5,4�� �,990,�70 �07%
Other revenue �,�55,90� �,800,0�4 (�6%)
Non interest income �0,�67,�4� ��,879,0�8 57%
Trading revenue grew significantly by �07%. An excellent trading
performance was achieved in foreign exchange and debt capital
markets. Foreign exchange trading revenue improved significantly on
the back of increased customer flows, the repatriation of investments
by foreign investors in response to the global financial crisis and
increased volatility. Debt capital market trading posted strong results
in the first half of the year but this was not sustained in the second
half due to the reduced liquidity and investment flows in the market,
both locally and offshore.
Decline in other income by �6% resulted mainly from the non-
recurrence of substantial gains from the sale of property and equity
investments in the prior period.
Business review
Year ended�� Dec �008
9 months ended �� Dec �007 Change
N 000’s
Mar’06 Mar’07 Dec’07 Dec’08
0
5,000
10,000
15,000
20,000
25,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Net Interest income Margin before impairment charges
Margin after impairment charges
N’mn
Year ended�� Dec �008
9 months ended �� Dec �007
ChangeN 000’s
Composition of non interest revenue
CAGR (�006-�008) 7�%
Non interest revenue
Mar’06 Mar’07 Dec’07 Dec’08
Fees & Commission Trading income Other income
N’mn
0
5,000
10,000
15,000
20,000
25,000
Mar’06 Mar’07 Dec’07 Dec’08
Non-interest revenue Percentage of total revenue
0
5,000
10,000
15,000
20,000
25,000
0%
10%
20%
30%
40%
50%
60%
70%
N’mn
Credit impairment charges
Specific provisions 4,540,86� �,68�,9�� �70%
General provisions 478,974 �6�,770 ��%
Total 5,0�9,8�5 �,04�,68� �46%
The �46% increase in credit impairment charges is due to our continued
prudent provisioning policy in light of deteriorating economic
conditions. As a function of the depreciating currency, rapid fall in
oil prices and general predictions for slow growth in Nigeria, we have
taken a prudent stance in classifying potential exposures in sectors
that are likely to be affected; coupled with additional provisioning in
respect of margin facilities as a consequence of declining share prices.
A N�.6 billion loan loss provision specifically for margin facilities was
raised during the year. Consequently the credit loss ratio deteriorated
from �.5% to 5.�% The group has not modified its provisioning policy
and continues to impair assets using the same principles it used in the
previous years.
The group’s gross exposure to margin loans continues to be prudently
managed, and as at �� December �008 the gross margin lending
book at N8.� billion represents 8% of the gross loan book.
Credit impairment charges
�� months ended�� Dec �008
9 months ended �� Dec �007
ChangeN 000’s
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Mar’06 Mar’07 Dec’07 Dec’08
Credit impairment charges on NPLs Credit loss ratio
Credit impairment charges on PLs
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
N millions
Earnings per share (Kobo)
�8 �9
Non-performing loans (NPL) increased by �9% to N�5.5billion which
represents �4% of the gross loan book an increase from ��% in �007.
The marginal increase is a reflection of the increased inherent risk
partly offset by our comprehensive risk management framework and
prudent provisioning policies. The group continues to hold adequate
credit provision. Provision adequacy after taking into account the net
present value (NPV) of security held stands at �88%. The group has
not modified its provision policy and continues to impair assets using
the same principles it used in previous years.
Total deposits and current accounts increased by ��% to N95 billion.
Customer liabilities increased following the growth in our demand
deposit customer base and increased term funding as we continued
to structure products and facilities to attract term funding from a very
competitive market.
Liquidity
Liquidity conditions in international money markets and debt capital
markets tightened considerably during �008, and ongoing risk
aversion of investors remains evident. In response to the adverse
market conditions, heightened focus was placed on the frequency
and rigour of the application of prudent practices within the bank’s
liquidity management framework. Surplus liquidity buffers, comprising
unencumbered and readily available marketable assets, amounted to
N�04 billion as at �� December �008. Further information on the
group’s liquidity management is contained in the risk management
section starting on page 70.
Operating expense
Operating expenses increased significantly by �4�%, comprising
��4% growth in staff costs and �64% in other operating expenses
respectively. On an annualised basis operating expenses increased by
68%. The cost-to-income ratio deteriorated from 4�% to 54%. This
was a year in which the two legacy banks integrated their systems,
operations and brands and therefore incurred significant one-off
expenses. Excluding the effect of non-recurring integration costs
incurred in �008, operating expenses grew by �06% and the cost to
income ratio was 48%.
Staff costs �0,8�4,8�0 4,84�,��0 ��4%
Auditor’s remuneration ��0,000 88,870 46%
Communication �59,89� �5�,648 ��6%
Depreciation �,4��,��� 77�,��6 86%
Information technology 8�4,60� �54,009 ���%
Marketing expenses 460,765 46�,�88 0%
Premises 756,�00 8��,50� -8%
Training, travel
& accomodation �,�4�,794 �00,�44 �47%
Other 4,�58,7�4 �,65�,060 �5�%
Total other operating
Expenses 9,467,09� 4,60�,057 �06%
Integration costs �,680,56� – n/a
Total operating expeses ��,98�,484 9,444,�77 �4�%
Variable remuneration as
a % of fixed remuneration 4�% ��% –
Variable remuneration as
a % of total staff costs �8% ��% –
Cost-to-income ratio 54% 4�% –
The significant cost increases are as a result of the group continuing
its investment and growth strategy, and as such, is investing in
infrastructure that is designed to ensure scalability and sustainable
growth in the future. There has been significant investment in the
following:
• IT infrastructure
• IT systems
• Branch network
In addition, in order to improve our service offering and delivery
especially in the personal and business banking market, the staff
headcount increased by 6�% to �94�. The investment is starting to
bear fruit as customer numbers, transactional volumes and service
levels are all increasing.
Balance sheet analysis
Key balance sheet indicators
Loans & advances
to banks ���,59�,�59 79,578,685 40%
Net loans and
advance to customers 98,�98,�7� 79,464,605 �4%
Total loans & advances �09,990.5�� �59,04�,�90 ��%
Deposits & current acc. 95,�40,�75 7�,�90,744 ��%
Shareholders funds 80,665,04� 75,56�,��5 7%
The loans and advances book grew by ��% to N��0 billion, comprising
a 40% growth in loans and advance to banks and a �4% increase
in net loans and advances to customers from N79 billion to N98
billion despite a significant decrease in margin facilities during the
year under review. The increase in customer loans and advances is
primarily attributable to increased utilisation by corporate clients and
sign-on of new clients. Corporate loans and advances grew by 54%
on the back of increased overdrafts, term lending and commercial
paper. Significant projects financed in �008 include the Lekki-Epe
Expressway.
Personal & business banking loans and advances declined by �0%
largely due to a deliberate slow down of margin lending from March
�008, coupled with a further reduction from July �008 in light of the
declining capital market. The decision to restrict this type of facility
was informed by internal concentration guidelines, and a reduced risk
appetite for this type of product stemming partly as a function of the
falling equity markets across the globe and in Nigeria, resulted in a
gradual reduction in our exposure to margin facilities from the first
quarter of �008. Mortgage lending and overdraft balances increased
significantly but were fully offset by the reduction of margin facilities.
N 000s �� Dec �008 �� Dec �007 Change
�� Dec �008 �� Dec �007 Change
Gross loans and advances to customers
Composition of gross loans and advances
Mar’06 Mar’07 Dec’07 Dec’08
Gross loan & advances NPLs
0
20
40
60
80
100
120
N billions
Commercial paper
Medium Term Finance
Margin facilities
Overdrafts
Home Loans
Instalment Sales (VAF)
Commercial paper
Medium Term Finance
Margin facilities
Overdrafts
Home Loans
Instalment Sales (VAF)
33%
28%
4% 2%
25%
8%
Financial review Business review
Year ended 9 months ended
Year ended 9 month ended N’000s
N 000s �008 �007
Marketeable assets 58,�54 8�,657
Short-term foreign currency placements 40,546 �0,657
Total unencumbered marketable assets 98,700 �04,��4
Other readily accessible liquidity 5,500 –
Total unencumbered surplus liquidity �04,�00 �04,��4
Provision adequacy
N’000s balance suspense value (NPV) NPL adequacy
Margin lending �,995 6 �,�89 700 �,67� ��9%
Other balances ��,54� �,�55 6,968 4,��0 7,759 �80%
Total �5,5�8 �,�6� 9,�57 5,0�0 9,4�� �88%
Gross NPL Interest in Security Net Provision Provision
�0 ��
Capital
Total shareholder funds grew by 7% to N8� billion on the back of a
solid financial performance in �008. The bank continues to be well
capitalised. Regulatory capital increased by 4% from N7� billion to
N76 billion during the period under review. Capital adequacy at ��
December �008 was �6% against a regulatory requirement of �0%.
N 000s �008 �007 Growth
Tier I capital 74,797,845 7�,609,�97 �%
Tier II capital �,00�,7�� 5��,85� 96%
Total qualifying capital 75,80�,578 7�,���,050 4%
Risk weighted assets ��0,56�,98� �80,67�,670 �7%
Capital adequacy
Tier I �6% 40%
Total �6% 40%
Proposed dividend
The board of directors has proposed a dividend of 40kobo per
share, amounting to N7,500,000,000 for the �� months ended ��
December �008 on the issued share capital of �8.75billion ordinary
shares, subject to the approval by the shareholders at the next
annual general meeting. This represents an increase of 60% over the
dividend paid for the period ended �� December �007 of �5kobo
per share on the issued share capital of �8.75billion ordinary shares
amounting to N4,687,500,000.
Accounting policies
Basis of preparation
The balance sheet and profit and loss account and specific disclosures
are published in compliance with section �7 (�) of BOFIA Cap B� Laws
of the Federation of Nigeria �004. The information disclosed has been
extracted from the full financial statements of the bank and the group
and cannot be expected to provide as full an understanding of the
financial performance, financial position and financing and investing
activities of the bank and the group as the full financial statements.
Year ended �� Dec �008 Year ended �� Dec �007 Change (%)
Net operating income 4�,6�9,��4 �9,696,�69 44%
Operating expenses (��,98�,484) (��,7��,7�7) 68%
Provision for losses (5,0�9,8�5) (4,098,705) ��%
Profit before tax �4,6�6,895 ��,88�,747 ��%
Taxation (�,6��,465) (�,�79,�04) -�7%
Profit after tax ��,994,4�0 8,704,54� �8%
Minority interest (4�0,�79) (�65,0�4) 6�%
Profit after tax and minority interest ��,564,�5� 8,4�9,5�9 �7%
Key Ratios
Earnings per share (kobo) 64 46 �8%
Cost to income ratio 5�.9% 46.�%
Net interest margin 6.04% 5.56%
Return on equity �5.�% �5.6%
Credit loss ratio 5.�% 5.�%
Financial review
Annualised results
Business review
Changes in accounting policies
The accounting policies are consistent with those adopted in the
previous year except for:
• The adoption of SAS �6 Business Combinations with an effective
date of � January �008 and retrospective application for all
transactions subsequent to � January �005. This new standard
requires that goodwill arising from an acquisition is not amortised but
instead tested for impairment at least annually. The goodwill arising
from the acquisition of Chartered Bank and Stanbic Bank Nigeria has
been reinstated and tested for impairment in accordance with the new
standard. The goodwill arising from the purchase of both Chartered
Bank and Stanbic Bank Nigeria has been found to fully impaired.
Annualised results (unaudited)
The group’s consolidated financial statements are prepared in
accordance with, and comply with generally accepted accounting
practice (GAAP) as issued by the Nigerian Accounting Standards
Board (NASB). However to allow for effective comparison annualised
results have been prepared to take into account the changes the
company has undergone in the recent past.
Following the successful completion of the merger arrangement
between IBTC Chartered Bank and Stanbic Bank Nigeria in September
�007, the group changed its accounting year to �� December with
effect from the �007 year end. This resulted in financial statements
for �007 being prepared for a nine month period. To allow for
effective comparison the �007 financial results shown below have
been annualised. The annualised results were arrived at by summing
the published results for the 9 month period ended �� December
�007 with the group’s published results for the quarter ended ��st
March �007.
�� ��
Financial review Business review
IFRS Results
The Standard Bank Group (‘SBG’) reports its results in accordance with International Financial Reporting Standards (IFRS). Accordingly the
group prepares IFRS results for inclusion in SBG’s results. Below are extracts of the income statement and balance sheet for the year ended ��
December �008 prepared in accordance with IFRS.
The fundamental differences between Nigerian GAAP (NGAAP) and IFRS are:
• NGAAP employs a historical cost convention whereas IFRS employs fair value.
• Credit impairments are calculated based on expected losses (a set percentage based on prudential guidelines) instead of the IFRS
incurred loss methodology with fair value calculations for security
• Under NGAAP revenue on yield instruments is recognised purely on an accrual basis with no mark to market adjustments
Assets
Cash and balances with central banks 9,604,745
Pledged assets �6,876,4�8
Derivative assets 5�8,��4
Trading securities 59,8��,04�
Financial investments �8,4�7,474
Loans and advances ��9,�90,96�
Loans and advances to customers ���,0�4,�0�
Loans and advances to banks �08,�56,86�
Other assets �9,4��,978
Equity investment �,�00
Other intangible assets ���,60�
Property and equipment 8,��9,8��
Total assets �9�,��9,508
Equity and liabilities
Equity 8�,959,�7�
Equity attributable to ordinary shareholders 8�,�59,��7
Ordinary share capital 9,�75,000
Ordinary share premium 84,�0�,797
Reserves (�0,4�9,660)
Minority interest 700,��5
Liabilities �08,�60,��6
Trading liabilities 6�,698,�4�
Deposit and current accounts �47,9��,566
Deposits and current accounts with Customers 90,885,4�4
Deposits and current accounts with Banks 57,048,���
Other liabilities 90,540,067
Current and deferred tax liabilities 7,�88,�6�
Total equity and liabilities �9�,��9,508
Year ended
�� December �008
N 000
Balance Sheet
Income Statement Year ended
�� December �008
N 000
Interest income �8,586,��6
Interest expense (��,698,�69)
Net interest income �5,887,847
Non-interest revenue �7,764,495
Net Fees and commissions revenue �4,4��,���
Fees and commission revenue �4,554,755
Fees and commission expense (���,444)
Trading revenue ��,�50,4��
Other revenue �,�9�,77�
Total income 4�,65�,�4�
Credit impairment charges (�,96�,649)
Credit Impairment charges on non-performing loans (�,���,78�)
Credit Impairment charges on performing loans (7�9,866)
Income after credit impairment charges 40,690,69�
Operating expenses (��,786,9��)
Staff costs (�0,606,86�)
Other operating expenses (��,�80,05�)
Profit before tax �6,90�,780
�4 �5
Executive committee
Kayode SololaDr Demola Sogunle
Obinnia Abajue
�5
Chris Newson (44)Chief executive officer
B.Com CA (SA), CSEP
Oversees all business activities of Stanbic IBTC Bank
South African institute of Chartered Accontants, CIBN
Kandolo Kasongo (53)Head of credit
MBA
Oversees the credit function, application of best practice underwriting principles and subsequent credit management practices to minimise credit losses.
Marna Roets (42)Executive director, Business support
B.Com (Hons) CA (SA)
Oversees and co-ordinated the activites of business support unit heads
South Afrian Institute of Chartered Accountants
Angela Omo-Dare (49)Company secretary and head, legal
LLB, BL, LLM
Oversees and coordinates the company secretariat and legal functions of the bank
CIBN, NBA
Sola David-Borha (48)Deputy managing director; Executive director, Corporate & Investment Banking
B.Sc, MBA
Oversees and co-ordinates the activities of all Business unit heads under CIB
CIBN, NESG, FITC
Isioma Ogodazi (5�)Head of human resources
BA, Post Graduate Diploma
Responsible for setting the strategic people agenda for the bank and providing consulting support for executive management.
Institute of Personel Developmemt UK & Nigeria
Sola David-BorhaChris Newson Marna Roets Jacques Troost Yinka Sanni
Angela Omo-DareIsioma OgodaziKandolo Kasongo
Yinka Sanni (4�)Executive director, Corporate & Investment Banking
BA (Hons), MBA ACS
Co-Head of CIB, responsible for providing oversight for Transactional Products & Services. This includes Institutional and Corporate Banking, Private Client Services, Investor services, Corporate Affairs and Research
CIS, CIBN
Ronald Pfende (37)Chief financial officer (West Africa)
B.Com (Hons), MBL, CA (SA), CA(Z)
Responsible for finance in the West Africa region (Nigeria and Ghana) which encompasses financial control, reporting, planning and management. Also oversees the bank’s tax administration.
South African Institute of Chartered Accountants, Institute of Chartered Accountants of Zimbabwe
Obinnia Abajue (33)Head - wealth group
B.Sc, MBA, FCA
Head of wealth division which includes Stanbic IBTC Pension Managers Limited and Stanbic IBTC Asset Management Limited
ACIB, ACS, – Institute of Chartered Accountants of Nigeria
Kayode Solola (4�)Head of global markets
MBA, ACA
Oversees treasury activities which include foreign currency, money and fixed income trading and asset and liability management
Institute of Chartered Accountants of Nigeria
Jacques Troost (45)Executive director, Personal & Business Banking
B.Com (Hons)
Oversees and coordinates the activities of all business unit heads under PBB
Dr. Demola Sogunle (44)Head, group risk
B.Sc, M.Sc, PhD, MBA
Overseeing the development and implementation of a risk management framework that is consistent with the complexity of the group.
CIBN, MMAN
Business review
Ronald Pfende
�6 �7
0
20000
40000
60000
80000
100000
DecNovOctSepAugJulJunMayAprMarFebJan
Us-on-us Them-on-us Us-on-them
0
30000
60000
90000
120000
150000
DecNovOctSepAugJulJunMayAprMarFebJan
0
10000
20000
30000
40000
50000
60000
70000
80000
DecemberNovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary
Monthly SMS notifications
Monthly email notifications
ATM withdrawal transactional volumes per usage type
ATM volumes of all transaction types per month
0
100000
200000
300000
400000
500000
DecemberNovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary
Overview
The Personal & Business Banking (“PBB”) division focuses on
personal customers of all income levels and business clients excluding
large corporations, government and institutions. The division provides
products and services to clients through the following channels:
• suites
• branch network
• self service channels (ATM and internet banking).
Products offered include vehicle and assets finance, unsecured
personal loans, bancassurance, mortgage loans, a range of trade
finance products. current accounts, savings accounts and various
investment products.
For PBB �008 was about establishing the necessary base to become
a competitive personal and business banking entity.
Resources were utilised to introduce a proven branch operating
model, determine the strategy for upgrading and expanding the
footprint of both direct and indirect channel, while also ensuring that
branches are correctly positioned from a foot flow, customer reach
and customer experience perspective.
The other key focus was to ensure that basic lending products were
made available while upgrading the current range of liability products
with a view to reactivating the existing client base, penetrating the
mid and upper end of the formal market while improving the service
experience of our clients. As a catalyst to achieving the above,
significant emphasis was placed on the training and development of
our staff and introducing world class people management practices.
During �008 significant investment was made towards upgrading the
communication and information technology infrastructure to ensure
continued availability of services to customers. Dual communications
links were introduced to 5� branches, with the remaining branches
being scheduled for completion during the first half of �009. Uptimes
of branches and ATMs are closely monitored to ensure continued
improvement to the availability.
A detailed review of the PBB concentration in the asset book in the
early part of �008 highlighted an unacceptably high exposure to
margin facilities and in light of global trends a decision was quickly
taken to reduce the bank’s exposure to this product.
Although this decision had a negative impact on the asset book, it
ensured that the bank was not exposed to an undue level of risk. By
December �008 the gross margin lending balance had been reduced
to N8.� billion.
In addition the bank continues to follow its conservative credit
provisioning policy, and an additional N�.6 billion provision was raised
in respect of margin facilities.
In summary, �008 year was about getting the basics right and building
a sound foundation for future growth.
Strategy
Our strategy is to serve both the personal as well as the business
banking client requirements, from the most basic to the most
sophisticated financial service needs, to maintain high standards of
customer service by utilising cost efficient delivery channels while
significantly growing the transactional volumes.
A new branch operating model was introduced, which focuses on an
improved customer service experience and at the same time, providing
a more effective sales platform for our sales and relationship teams.
Where appropriate, processing and back office functions have been
centralised.
At the same time, alternative service channels are also in the process
of being upgraded and rolled out. This will ensure that our clients have
a choice of channel for the delivery of their financial needs including
ATM and internet banking solutions.
The bank continued to invest in its branch and ATM networks
through revamping, relocating, and opening branches, replacing and
introducing additional ATMs.
New products were launched, which include Vehicle and Asset
Finance (VAF), mortgage loans and unsecured personal loans while
transactional, savings and investment products were upgraded.
Business reviewPersonal and
Business Banking
�8 �9
Financial performance
Despite the fact that operating costs grew in absolute terms
due to headcount increases in the distribution network, product
development, VAF fulfilment, customer strategy and direct channels.
This investment in new talent had a positive effect on new customer
acquisitions, customer service experience and increased product take
up by the customers. The investment in the upgrade of our branch and
ATM network also added to the growth in overall operational costs.
Notwithstanding all of this transaction volumes grew at an acceptable
level during �008 which had a positive impact on gross revenues
which increased to N�4.4 billion.
Financial highlights N millions
Gross revenue �4,�78
Total cost �0,0�4
Tax provision 6�8
Profit after tax �,7�5
Net asset ��,486
Looking ahead
In �009 we foresee a more challenging environment due to rising
interest rates, the devaluation of the Naira and reduced government
revenue. These factors will impact consumers and could reduce the
demand for certain banking products.
We want to continue to grow our market share by investing in new
branches and ATMs, while also continuing to upgrade and relocate
existing branches to ensure that they are all well positioned for
increased client activity.
More focus will also be placed on cross sell opportunities to the
current PBB account base and leveraging off corporate relationships
within a framework of operational efficiency.
Further to this, additional channels and products will be introduced
to the current client base while customers in segments previously not
focused on will be catered for by introducing segment specific service
and product types. This will be underpinned by continuous investment
in our staff through training and development opportunities and in
infrastructure.
Personal and Business Banking
Monthly internet banking transaction volumes
Sales volumes
DecemberNovemberOctoberSeptemberAugustJulyJune
0
30000
60000
90000
120000
150000
DecNovOctSepAugJulJunMayAprMarFebJan
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
6591
Business review
40 4�
Corporate and Investment Banking
Overview
Stanbic IBTC’s Corporate & Investment Banking (CIB) division serves
a wide range of local and international corporate and institutional
clients. The services offered include debt and equity advisory,
structured and project finance, trades services, transactional banking
and lending, global markets, custody, private clients services and
private equity funding.
We have built up a strong track record in the past and have further
enhanced our offering with a structure that facilitates client focus.
This will position the bank to participate effectively in growing
Nigerian capital markets and financing infrastructure projects.
Our CIB franchise has evolved in line with the growing sophistication
of clients transactional and financing requirements in Nigeria and
continues to enhance its reputation as one of Nigeria’s leading
investment banks with a number of landmark transactions in �008.
These include:
• The arrangement and co-financing of a N�0 billion senior �5-year
facility for the construction of additional lanes, rehabilitation,
tolling and modernization of the existing 46km Lekki-Epe
expressway by Lekki Concession Company being the first successful
Public Private Partnership (PPP) project in Nigeria.
• Sole issuing house to the private placement of a 9.45% stake
up to US$944.7m by MTN Nigeria Communications Limited.
This is reputed to be one of the largest successful private
placements in the history of the Nigerian Capital Market.
• Joint issuing house to the hybrid offerings of N�98 billion done by
Zenith Bank Plc which was oversubscribed as over N400 billion
was raised.
• US$550 million (N64.�5 billion) private placement of new and
existing shares by Starcomms Plc, the first telecommunications
company to be listed on the Nigerian Stock Exchange.
• Mandated as one of the joint financial advisers / issuing house
to the on-going N�75 billion debt issuance programme by the
Lagos State Government.
Stanbic IBTC remains Nigeria’s pre-eminent investment banking
institution and leading issuing house by transaction value. At the
�008 African Banker Awards, the bank retained the Best Issuing
House award for the second year running. We also won the Best Bond
House in Nigeria at the �008 Euromoney Awards and received a
“Commended” rating for �007/�008 at the Global Custodian Award
for Excellence. In addition, the Lekki-Epe expressway PPP project
earned the bank the African PPP and African Infrastructure Deal of
the Year Awards from Euromoney and Project Finance International
respectively.
Strategy
The year was characterised by taking advantage of the positive
synergies arising from the merger of the Stanbic and IBTC brands.
Given IBTC’s excellent local pedigree as a leading investment bank and
wealth manager in the country and riding upon the strong international
experience and reputation of the Standard Bank Group, we were able
to strengthen our CIB franchise within the local market.
In positioning the bank for a better transactional banking pedigree, we
launched new Business Online (nBOL), an electronic banking solution
which provides access to electronic statements, electronic transaction
initiation, levels of authorisation and enhanced reconciliation of
accounts through an internet-based solution. With this, we are
well placed to partner with the public and private sectors to deploy
electronic payment solutions. This capability will help strengthen our
annuity businesses by improving on deposit collections and Web Pay
transactions.
Our strategy is to consolidate our existing CIB franchise by building
expertise in debt capital markets, infrastructural financing, derivatives,
private equity funding and private client services. Subject to receiving
regulatory approvals, a private equity fund of US$�00 million is being
launched in conjunction with Standard Bank for investment in selected
private companies.
Business review
4� 4�
Corporate and Investment Banking
Looking ahead
We plan to take full advantage of all opportunities offered us by the
current global financial turmoil by strengthening our risk management
capabilities. One of the things the global financial crisis has highlighted
is the importance of an annuity business to a universal banking
franchise. Our primary focus in �009 will be to grow our deposit base
by driving collections and generating more sectoral focused quality
loan assets, ensuring that all risks are priced correctly.
Although revenue will increasingly be under pressure, we intend to
focus on cost management to reduce the strain to the bank’s bottom
line.
Given the unprecedented collapse of the global financial markets,
more focus is aimed at sourcing US dollar funding, capital, liquidity
and credit risk management.
Our strategy is to move to a product neutral operating model before
the end of �009. This will make us customer-centric with relationship
managers who have a sound knowledge of the bank’s products and
services, supported by product specialists to ensure we can service all
the financial needs of our customers.
Business review
CIB is also well placed to maximize our cross border capabilities by
linking potential investors in South Africa, China, Russia and other
emerging markets with Nigerian businesses. We will work with ICBC
China, Standard Bank London and Standard Bank South Africa in
promoting our custodial and trade businesses. We are also at the
forefront of working with key regulators in shaping the regulatory
framework to align with global best practices.
Our Global Markets expertise remains strong, providing a full range of
risk management products, services and structured solutions to our
clients. Our presence in the market is evident in the areas of foreign
exchange and currency risk, fixed income, interest rate management,
money market and securities trading. With this, and our strong
international network, we aim to continue to maximise business
opportunities and minimise risk in such a way that adds value to our
corporate and institutional clientele, most especially in this volatile
global economic situation.
Investments have been made in recruiting highly skilled people, and
we have focused on new products, risk systems to develope scalable
infrastructure. This investment is set to continue during the coming
year.
Financial performance
The events in the global financial market and the Nigerian capital
markets notwithstanding, the combination of our knowledge of the
local market and strong international network and support contributed
positively to our financial performance.
Financial Highlights N millions
Gross revenue �9,7�4
Total cost ��,�4�
Tax provision 6�8
Profit after tax 7,�60
Net asset 56,9�8
44 45
Case study: Lagos State Bond
Stanbic IBTC has worked closely with the Lagos State
Government (“the State ”) over the years to structure
innovative solutions to the State’s long term financing
needs. In 2002, Stanbic IBTC acted as lead issuing and
underwriter to a N15 billion, 7 year redeemable bond
issue, which was the largest public debt issue in the
history of the Nigerian capital markets at that time.
The proceeds of that bond issue, which was recently
completely redeemed by the State, were utilised to
finance various developmental projects embarked
upon by the State at that time.
The Programme
Stanbic IBTC is currently acting as joint issuing house/arranger
and primary dealer to the Lagos State N�75 billion debt issuance
programme (“the programme”), under which the State expects
to issue a series of bonds of varying maturity up to an aggregate
amount of N�75 billion. The programme, which was approved by
the Lagos State Executive Council in January �009, was created to
give the State access to the capital markets as the need arises to
finance various infrastructure initiatives through the issuance of long
term investment vehicles such as bonds, notes and other securities.
These infrastructure initiatives include the construction/upgrade of
roads and bridges, water transportation projects, a rail transportation
systems, environmental projects, housing sector initiatives, health
care initiatives and improvement in the educational system.
Financing
The first issuance under the programme was a N50 billion 5 year
fixed rate bond (Series �) issued by way of a public offering in
January �009. The bond was issued at a fixed rate coupon of ��%
per annum and is the largest state government debt offering ever
undertaken in Nigeria. The proceeds of the bond issue, which was
oversubscribed, will be utilised to finance ongoing infrastructure
projects and refinance loans obtained to make down payments
on these infrastructure projects. The distribution of the issue was
diverse with the majority being placed with financial institutions,
pension funds and asset managers. The issue received an A+ rating
from Agusto & Co, while Lagos State was assigned an AA (national)
and BB- (long term international) rating by Fitch Ratings.
Lagos State
Lagos State was created in May �967 and is Nigeria’s financial,
commercial and industrial nerve centre. At its current growth rate
it is forecast to be the third largest mega city in the world by
�0�5 and is the only state in Nigeria that generates a significant
majority of its revenues internally: the State’s internally generated
revenue currently exceeds �00% of its statutory allocation from
the Federation Account. The State has developed a medium-term
strategy intended to address the issues of accelerated economic
growth and sustainable urban development through both government
initiatives and public-private partnerships. This should result in a
marked increase in productivity, growth and overall development of
the State’s economy, and prepare Lagos State for its emergence as a
internationally-recognised mega city.
Stanbic IBTC will be there to assist the State to achieve its
objectives.
45
Business review
46 47
Case study: Lekki Concession Company (“LCC”)
Lekki Concession Company (“LCC”) – a special
purpose company, has partnered with the
Lagos State Government for construction of the
Lekki-Epe expressway on a build, operate and maintain
agreement. The agreement is for 30 years, after
which the asset will be handed over to the State
Government.
The Programme
Phase � of the project is the upgrading of the first 49.4km of the
Lekki-Epe road. Phase � of the project involves the development
of the first �0km of the coastal road with an option to develop the
southern bypass. Benefits of the project to the population of Lagos
State will be traffic decongestion and a number of services that will be
available on the road such as street lighting, break-down assistance,
an ambulance service and a customer call centre.
The expressway will also have much improved security, and the project
will have spillover effects such as employment creation and increased
real estate values.
Financing
Standard Bank Group alongside the Lekki Concession Company closed
financing for the US$4�6 million (N50.�bn) Lekki-Epe Expressway
PPP on �7th October �008. Standard Bank, South Africa, acted as
co-financial advisor while Standard Bank London and Stanbic IBTC
acted as arranger, underwriter and largest lender to the project.
Funding for the project, which should take three years to complete,
comes from the Lagos State Government which invested US$4�
million (N5 billion) in a twenty year mezzanine debt tranche. The
African Development Bank provided US$85 million (N�0 billion)
senior debt over �5 years. Local lenders, including First Bank of
Nigeria and United Bank for Africa, provided a ��-year note issuance
facility of US$80 million (N9.4 billion). Other banks that partcipated
in this tranche were Zenith Bank, First Inland Bank, Diamond Bank
and Fidelity Bank. The remaining term funding was provided by
Standard Bank London which became the sole arranger of the US$9�
million (N�� billion) �5-year international tranche – underwritten by
Standard Bank London and Stanbic IBTC Bank PLC.
The project represents a milestone as it is the largest PPP deal closed
in Nigeria to date and is the first �5-year tenured financing and
longest tenured cross-currency swap.
Total equity for the deal is US$58.9 million (N6.9� billion) and was
provided by:
• Asset & Resource Management Co Ltd (“ARM”);
• Africa Infrastructure Investment Fund (“AIIF);
• Larue Projects; and
• Hi-Tech Construction.
The debt to equity ratio is 68:��, and the total project value of N50
billion comprises of the senior debt tranche of N30.4 billion, equity
of N6.9 billion, mezzanine debt of N5 billion, and the balance from
other sources including pre-completion revenues.
Business review
48 49
Lafarge Cement WAPCO Nigeria Plc, one of the
largest cement producing companies in Nigeria plans
to increase its production capacity over the next few
years.
To achieve this, the company is embarking upon an
expansion plan which will increase its production by
2.2 million metric tonnes per annum and will also
construct a 70MW captive power plant operated by
natural gas and / or low pour fuel Oil (“LPFO”) which
will replace its existing power source.
The programme
Since conceptualisation of the project in December �007, a
feasibility study on the expansion project has been undertaken and
an environmental impact assessment (EIA) study, which is mandatory
in Nigeria for a project of this size was completed. The construction
phase commenced in mid �008, and is expected to be completed by
Q� / Q� of �0�0. It is expected that the expanded plant will become
fully operational by the first half of �0�� following installation of
electricity supply and plant commissioning.
Stanbic IBTC Bank PLC has been appointed by the company as the
global coordinator for the expansion project funding and as co-lead
arranger on both the Naira and US$ tranches with two other banks.
Financial closure on the transaction was achieved in May �009.
Financing
The estimated project cost (including power station investments of
€55 million), will be financed through a mix of internal cash flows and
external debt financing. The debt portion of the project amounting
to €��5 million is to be financed on the balance sheet of Lafarge
WAPCO.
Total estimated capital expenditure of €�54 million will be incurred
equally over a three year period commencing in �008: ��% in �008,
��% in �009 and ��% in �0�0.
Debt tranches - The expansion project funding will comprise of three
tranches (each with a tenor of four years):
• Facility A - The US Dollar equivalent of €85 million, in the form of
a foreign currency term loan.
• Facility B - The Naira equivalent of €�40 million, in the form of
a syndicated medium term discounted note issuance facility.
• Facility C - The Naira equivalent of €85 million, in the form of
a syndicated medium term discounted note issuance facility.
Facility C is, a stand-by facility which may be called or drawn at the
option of the company exclusively, to refinance the total amount
outstanding under Facility A, on the date when the option is being
exercised.
49
Business reviewCase study:
Lafarge Cement WAPCO Nigeria Limited
50 5�
MTN Nigeria is the largest mobile network operator in
Nigeria, the second largest in Africa and is one of the
most recognised brands in Nigeria. As at 31 December
2008, MTN Nigeria had over 23 million subscribers
and a 36% market share of the entire Nigerian
telecommunications market. MTN and Stanbic IBTC
have a relationship spanning over a decade. From
underwriting and co-arranging a US$ 450 million
facility for the MTN Group in 2001 in anticipation
of the Nigerian GSM licence auction, to arranging a
US$ 2 billion loan syndication for MTN Nigeria in
2007, Stanbic IBTC has been intimately involved in
MTN Nigeria’s expansion from inception.
The programme
In �008, Stanbic IBTC acted as sole issuing house to a private placement
of a 9.45% equity stake in MTN Nigeria which was undertaken to
broaden the Nigerian shareholder base of MTN Nigeria. MTN Group
and some of the founding shareholders of MTN Nigeria provided the
shares on offer and participation in the placement was restricted
to Nigerian individual and institutional investors who met stringent
Know Your Cusomer requirements as specified by MTN Nigeria.
All prospective investors were specifically invited to participate in
compliance with regulatory restrictions.
The private placement
A total of �8 465 �8� linked units comprising �8 465 �8� ordinary
shares and �8 465 �8� preference shares were sold at a price of
US$�4.46 per linked unit, yielding proceeds of close to
US$� billion. The minimum subscription was US$�0 million for financial
institutions and US$5 million for other investors, and investors
were given an option to pay in either US$ or Naira. Given the high
minimum subscription and the limited universe of possible investors,
the placement had to be uniquely structured and marketed to ensure
success. The placement generated unprecedented domestic demand
from Nigerian institutional and individual investors and the securities
on offer were placed with less than 80 investors, with an average
subscription amount of US$�� million per investor. The placement is
currently the largest concluded private placement in the history of
the Nigerian capital markets.
The market
The Nigerian mobile telecommunications market is currently the
largest and fastest growing market in Africa. Significant growth is
expected in this market given the relatively low penetration levels
and the increasing demand for access to communication. MTN Nigeria
is well placed to participate in the expected growth in the mobile
market, due to its extensive established network infrastructure,
market prominence, knowledge and experience of the Nigerian
market. Stanbic IBTC will continue to assist MTN Nigeria to maintain
its leadership position in the Nigerian telecommunications market.
5�
Business reviewCase study:
MTN Nigeria Communications Limited (MTN Nigeria)
5� 5�
Wealth
Overview
In �008, the Group’s wealth business comprised four separate but
related companies and business:
• private non-pension asset management and stock broking (asset
management)) through Stanbic IBTC Asset Management•
pension fund administration (PFA) and management through
Stanbic IBTC Pension Managers
• proprietary investments (Ventures) through Stanbic IBTC Ventures
• stock broking through Stanbic Equities Limited.
The wealth businesses form an integral part of the investment banking
franchise of Stanbic IBTC upon which the bank’s reputation has been
built.
These businesses have remained as separate companies due to the
local regulatory requirements for participation in each of the sectors.
As a result of the merger of Stanbic Bank Nigeria and IBTC Chartered
Bank PLC, the Stanbic IBTC Group held two stock broking licences as
both banks had stock broking subsidiaries. To comply with regulatory
requirements the two stock broking businesses will be consolidated
under one licence in �009. In addition, effective �009, the stock
broking businesses and Ventures will be moved to CIB leaving only
the investment management businesses (pension and non-pension
management) in Wealth.
Over the years, the asset management and PFA businesses have
become the largest players in their various business areas in Nigeria.
In �008, despite the significant fall in equities values, our asset
management operations remained the largest in Nigeria, measured by
assets under management and we continued to manage the largest
mutual fund in Nigeria, the Stanbic IBTC Nigerian Equity Fund. We
were also the largest stock broking house in Nigeria by transaction
value, out of over �50 stockbrokers, trading close to ��% of the
market turnover in �008.
Our pension fund administration business on its part remained
the largest pension fund administrator in Nigeria by assets under
management and number of clients. The PFA won the prestigious
Pension Fund Manager of the Year �008 award from This Day
newspapers, one of Nigeria’s leading newspapers, whilst the asset
management business had previously won the Fund Manager of the
Year award from This Day for its success in the asset management
business.
During the year, we increased out shareholding in the PFA from 65%
to 70.59%. Our shareholding in Stanbic Equities Limited remained at
9�.57%. All other businesses are fully owned by the group.
An important factor to understanding the wealth business is the
management of the regulatory environment in Nigeria. Each of
the businesses is subject to a different regulator with different
preferences and each with a strong requirement for independence
of the business.
This is however most pronounced in the PFA business where the
regulator, the National Pension Commission, requires a completely
independent business and restricts group cooperation with a
particular focus on the investment transaction side. Similar tendencies
are exhibited by the Securities & Exchange Commission in regulating
the asset management business and to a more limited extent, The
Nigerian Stock Exchange, for the stock broking business.
Needless to say, regulatory compliance is a major activity within the
wealth business, ensuring that the business structures and activities
are completely compliant with regulatory demands.
Following the recapitalisation and consolidation of the Nigerian
banking sector and the strong market performance that followed,
most banks gradually transformed into financial services groups and
acquired or established their own wealth management subsidiaries
and businesses. In addition, the more forward looking boutiques have
seized the opportunity to grow their balance sheets while a number
of foreign players also entered the market actively.
The year �008 was therefore focused on restructuring and
consolidating the wealth businesses to position them for what is
expected to be fierce competition in the market place in the face of
increasing globalisation of the Nigerian financial sector. For the PFA
business, we are also playing a leading role in the development of
self regulatory capacity in line with the requirements of the National
Pension Commission.
Business review
Strategy
The wealth business model has been focused essentially on
building its fee generation capability while minimising the capital
requirements. The businesses were traditionally designed to operate
in a ‘hub and spoke’ arrangement from the financial tripod in Nigeria
– Lagos, Abuja and Port Harcourt – and provide access to the capital
markets for individual and institutional investors on an agency basis.
Consequently, the companies held little or no positions in the markets
in which they traded, merely acting as agents and providing (and
managing) vehicles for investment access to the markets. All of the
group’s proprietary investments were therefore made through the
Ventures to eliminate potential conflicts with clients.
In �008, the main focus was to consolidate on the strengths of
the businesses while repositioning them to extend their lead in
the market place. The challenge was therefore to position both
businesses for extensive retail expansion and penetration. In the
pension space, significant mileage has been achieved with close to
700,000 individual clients and over 7,000 employers representing
an estimated �0% of the registered individual pension market now
being managed by the PFAs. The asset management and mutual fund
business grew its client base across its funds to just over �0,000,
while the stockbroking business enjoyed a market share of close to
��% by transaction value.
The strategic focus on consolidation paid off handsomely as the
businesses successfully seized the opportunity of a buoyant first
half to restructure and reposition for the future. Operating platform
changes and investments were carried out to position the wealth
group as a knowledge business on a sales-and-service platform. The
wealth businesses essentially provide our clients with the know-how
to grow and preserve their wealth through managed vehicles that are
available on a retail (versus wholesale) basis. Appropriate emphasis
is now being placed on customer segmentation and on driving
group and institutional schemes without neglecting the high net
worth individuals.
A key result of this consolidation is the focus on integration and cross
selling with the bank – on the buy side by providing access to clients
for CIB products and on the sell side by providing investment products
for the retail platform. This not only creates a formidable distribution
platform for the wealth business but also positions the businesses as
major counterparties in the Nigerian financial market with significant
leverage in the market place.
Financial performance
Despite the market difficulties, revenues and net earnings grew by
over �6% and 8% respectively over the �007 results for the wealth
group. The key driver for �008 was the PFA business where revenue
and earnings growth over �007 exceeded �00%, reflecting the
strength of its underlying business. Total assets under management
grew by �9% to N�87 billion (ie over US$� billion).
Incentive fees virtually disappeared with the poor equities market
performance while stockbroking revenues showed a solid performance
largely based on the high market activity of the early part of the year.
The �008 market performance certainly tested the resilience of the
wealth business model which was based on helping clients invest
predominantly in the equities and fixed income markets in Nigeria.
The model has proved to be successful. The gains of the first three
quarters could not be reversed by the weakness of the last quarter
while the pain was well distributed through the business units with
the volatility experienced by the asset management and stockbroking
businesses significantly offset by the stability of the PFA’s revenues.
Although operating costs grew in absolute terms with headcount
increases and depreciation of increasing capital expenditure, significant
operating efficiencies were extracted leading to improvements in key
operating metrics and in our growth and scaling capabilities.
Looking ahead
Without doubt, the volatility and challenges of �008 will ensure
that most clients will consider a different approach to investments in
�009 and beyond. With an increasing and more diversified pipeline of
mutual funds, we expect that the accumulation of investment assets
in �009 will remain a key driver to income growth.
The ongoing and continued flight to safety by local investors provides
an excellent opportunity to leverage the heritage of the Standard
Bank Group in the local market and provide secure investment options
for our clients. We anticipate that opportunities to access, pool and
diversify investments conveniently on our wealth platform will provide
the necessary attraction to current and potential clients.
Recognising the need to provide clients with increased convenience in
handling and discussing their personal finances, in �009, the wealth
businesses will be relocating to new premises in Lagos and Abuja as
well as expanding the number of hubs throughout the country. The
investment in distribution infrastructure, as well as the attendant
increase and upskilling of the staff, is expected to yield significant
results quickly and ensure that we remain the wealth manager of
choice in Nigeria.
54 5555
• Board of directors
• Corporate governance
• Risk management
Corporate governanceCorporate
governance & risk management
56 57
Atedo N.A. Peterside OON (5�)BSc, MBAAppointed: Director �989 Chairman �007
Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Ventures Limited, Stanbic IBTC Asset Management Limited, Nigerian Breweries Plc, Presco Plc
Committee member: None
Chris Newson (44)B. Com, CA (SA) CSEPAppointed: �008
Directorships: Stanbic IBTC Bank PLC, Stanbic Equities Nigeria Limited, Stanbic Nominees Nigeria Limited, Stanbic IBTC Asset Management Limited
Committee member: Board credit committee, Board risk management committee
Yinka Sanni (43)BA, MBA, ACSAppointed: �005
Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Asset Management Limited, Stanbic IBTC Pension Managers Limited
Committee member: Board risk management committee
Jacques Troost (45)B.Comm (Hons)Appointed: �007
Directorships: Stanbic IBTC Bank PLC
Committee member: Board credit committee, Board risk management committee
Moses Adedoyin (60)Appointed: �005
Directorships: Stanbic IBTC Bank PLC
Committee member: Board credit committee, Statutory audit committee
Ben Kruger (49)B. Com (Hons) CA (SA)Appointed: �007
Directorships: Stanbic IBTC, Standard Bank Plc, SSA Trading (Pty) Ltd
Committee member: Chairman. Board credit committee, Board risk management committee, Board remuneration committee
Bhagwan Mahtani (55)Appointed: �005
Directorships: Stanbic IBTC Bank PLC, Aegean Investments Limited, Churchgate Nigeria Limited, First Century International Limited, Foco International Investments Limited, T F Kuboye & Co, International Seafoods Limited, International Glass Limited.
Committee member: None
Atedo N.A. Peterside OON, Chairman
Moses Adedoyin, Non-Executive DirectorJacques Troost, Executive DirectorYinka Sanni, Executive DirectorMarna Roets, Executive Director
Dr Christopher Kolade CON,Non-Executive Director
Ben Kruger, Non-Executive Director Bhagwan Mahtani, Non-Executive Director
Chris Newson, Chief Executive Officer
Board of directors
Sola David-Borha (48)BSc, MBAAppointed: �994
Directorships: Stanbic IBTC Bank PLC, Stanbic Nominees Nigeria Limited, Stanbic Equities Nigeria Limited, Stanbic IBTC Asset Management Limited, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Ventures Limited, Board Member-Financial Institutions TrainingCentre (FITC)
Committee member: Board credit committee, Board risk managementcommittee
Marna Roets (4�)B.Com (Hons) CA (SA) Appointed: �007
Directorships: Stanbic IBTC Bank PLC, Stanbic Equities Nigeria Limted, Stanbic Nominees Limted
Committee member: Board risk management committee
Dr Alewyn Burger (57)Msc, Ph.D, AEP UNISA SPL, AMP
Appointed: November �008
Directorships: Stanbic IBTC Bank PLC, SAP Banking Advisory Board, CIO advisory Board of Accenture Europe, Integrated Process Solutions, MTN Banking
Committee member: None
Mallam Ahmed Dasuki (50)BSc, MSCAppointed: �989
Directorships: Stanbic IBTC Bank PLC, MTN Nigeria Communications Limited, Phillips Project Centre Limited, Tinapa Business Resorts Limited, SASpv Limited, Islama Financial and Investment Trust, Interglobal Limited, Celtelcom Investment Limited
Committee member: Board remuneration committee
Ifeoma Esiri (56)LL, BL, LLMAppointed: �004
Directorships: Stanbic IBTC Bank PLC, Stanbic IBTC Asset Management Limited, Podini International Limited, Veritas Geophysical Nigeria Limited, Ashburt Leisures Limited, Ashburt Beverages Limited, Ashburt Oil and Gas Limited
Committee member: Chairperson. Board risk management committee, Statutory audit committee
Dr Christopher Kolade CON (76)BA, Dip.EdAppointed: �008
Directorships: Stanbic IBTC Bank PLC, Acorn Petroleum PLC, System Specs Nigeria Limited, Cornerstone Insurance PLC
Committee member: Board credit committee, Board remuneration committee
Ratan Mahtani (5�)Appointed: November �008
Directorships: Stanbic IBTC Bank PLC, Aegean Investments Limited, Churchgate Nigeria Limited, First Century International Limited, Foco International Investments Limited, T F Kuboye & Co, International Seafoods Limited
Committee member: None
Jacko Maree (5�)B. Com, MA, PMD Appointed: �007
Directorships: Stanbic IBTC Bank PLC, Standard Bank Group, The Standard Bank of South Africa, Standard Bank Plc,Liberty Group, Liberty Holdings, Standard International Holding SA
Committee member: Chairman. Board remuneration committee
Sam Unuigbe (66)BSc Econs, FCA (Eng & Wales) FCA (Nig) FCTIAppointed: �99�
Directorships: Stanbic IBTC Bank PLC, Philips Project Centre Limited, Delta Afrik Limited, Delta Tek Engineering Limited, Delta Terra Tek Limited
Committee member: Board credit committee, Statutory audit committee
Lt Gen (rtd) Mohammed Inuwa Wushishi CFR GCON (69)PSIAppointed: �005
Directorships: Stanbic IBTC Bank PLC, UAC of Nigeria Plc, UACN Property Development Company PLC Automotive Components Industries Limited, Acorn Petroleum Limited, Umfat Holdings Limited
Committee member: Board risk management committee
Ifeoma Esiri, Non-Executive DirectorDr Alewyn Burger, Non-Executive Director
Ratan Mahtani, Non-Executive Director Lt Gen (rtd) Mohammed Inuwa Wushishi CFR GCON,Non-Executive Director
Sam Unuigbe, Non-Executive Director Jacko Maree, Non-Executive Director
Mallam Ahmed Dasuki, Non-Executive Director
Sola David-Borha, Deputy Chief Executive Officer
57
Corporate governance
58 59
Corporate governance report
Introduction
The bank is a member of the Standard Bank Group, which holds
a 50.7% equity holding in the bank.
Standard Bank Group (“SBG”) is committed to implementing
initiatives that improve corporate governance for the benefit of
all stakeholders. SBG’s board of directors remains steadfast in
implementing governance practices that comply with international
best practice, where substance prevails over form.
Subsidiary entities within SBG are guided by these principles in
establishing their respective governance frameworks, which are
aligned to SBG’s standards in addition to meeting the relevant
jurisdictional requirements in their areas of operation.
Stanbic IBTC Bank Plc (“Stanbic IBTC or the bank”), and its
subsidiaries (“the group”), as a member of SBG, operates under a
governance framework which enables the board to balance its role
of providing oversight and strategic counsel with its responsibility to
ensure conformance with regulatory requirements, group standards
and acceptable risk tolerance parameters.
The major subsidiaries of the bank; Stanbic IBTC Asset Management
Limited and Stanbic IBTC Pension Managers Limited have their
own distinct boards and take account of the particular statutory
and regulatory requirements of the businesses they operate. These
subsidiaries are currently implementing a governance framework
that will enable their boards to balance their roles in providing
oversight and strategic counsel with their responsibility for ensuring
compliance with the regulatory requirements that apply in their
areas of operation and the standards and acceptable risk tolerance
parameters adopted by the group. In doing so, they are committed to
aligning their respective governance frameworks to that of the group.
As the bank is the holding company for the subsidiaries in the group,
the bank’s board also acts as the group board, with oversight of the
full activities of the group.
A number of committees have been established by the group’s
board that assist the board in fulfilling its stated objectives. The
committees’ roles and responsibilities are set out in their mandates,
which are reviewed annually to ensure they remain relevant. The
mandates set out their roles, responsibilities, scope of authority,
composition and procedures for reporting to the board.
Codes and regulations
The group operates in highly regulated industries and compliance with
applicable legislation, regulations, standards and codes, including
transparency and accountability, remain an essential characteristic of
its culture. The board monitors compliance with these by means of
management reports, which include information on the outcome of
any significant interaction with key stakeholders such as the group’s
various regulators.
The group complies with all applicable legislation, regulations,
standards and codes.
Shareholders’ Responsibilities
The shareholders’ role is to approve the appointments of the board of
directors and the external auditors. This role is extended to holding
the board accountable and responsible for efficient and effective
corporate governance.
Developments during 2008
During �008, the following developments in the group’s corporate
governance practices occurred:
• integration of the two legacy banks, requiring ongoing efforts to
align governance practices with SBG standards;
• established and implemented the mandates of a number of board
and management committees;
• ensured all the requirements of the Investment and Securities Act
�008, whether they apply to the bank, its directors or employees
as capital market operators and/or as a public liability company
quoted on the Nigerian Stock Exchange, were communicated to all
directors and staff;
• ongoing focus on directors’ training with particular emphasis on
attending a directors conference for all Standard Bank Africa
directors where experiences across the continent could be
shared;
• our Code of Ethics was rolled out to all staff across the
organisation:
• implemented new governance committees and reporting
structures; and
• implemented a personal account trading policy, which regulates
the trading in group securities during sensitive periods where
access to privileged information could occur.
Focus areas for 2009
The Bank intends during �009 to:
• fully comply with CBN requirements on independent directors;
• develop its own Code of Corporate Governance which it will
operate alongside the CBN Code of Corporate Governance;
• finalise the governance framework for subsidiaries;
• continue the focus on directors’ training via formal training
sessions and information bulletins on issues that are relevant;
• develop sustainability reporting; and
• enhance the level of information provided to and interaction with
shareholders.
Board and directors
Board structure and composition
Ultimate responsibility for governance rests with the board of directors
of the group, who ensure that appropriate controls, systems and
practices are in place. The group has a unitary board structure and the
roles of chairman and chief executive are separate and distinct. The
group’s chairman is a non-executive director. The number and stature
of non-executive directors ensures that sufficient consideration and
debate are brought to bear on decision making, thereby contributing
to the efficient running of the board.
One of the features of the manner in which the board operates is the
role played by board committees, which facilitate the discharge of
board responsibilities. The committees each have a board approved
mandate that is regularly reviewed. Details on how these committees
operate are provided elsewhere in this report.
Strategy
The board considers and approves the group’s strategy. Once the
financial and governance objectives for the following year have been
agreed, the board monitors performance against financial objectives
and detailed budgets on an on-going basis, through quarterly
reporting.
Regular interaction between the board and the executive is encouraged.
Management is invited, as required, to make presentations to the
board on material issues under consideration.
Directors are provided with unrestricted access to the group’s
management and company information, as well as the resources
required to carry out their responsibilities, including external legal
advice, at the group’s expense.
It is the board’s responsibility to ensure that effective management
is in place to implement the agreed strategy, and to consider issues
relating to succession planning. The board is satisfied that the current
pool of talent available within the bank and the group, and the ongoing
work to deepen the talent pool, provides adequate succession depth
in both the short and long term.
Skills, knowledge, experience and attributes of directors
The board ensures that directors possess the skills, knowledge and
experience necessary to fulfil their obligations. The directors bring a
balanced mix of attributes to the board, including:
• international and domestic experience;
• operational experience;
• knowledge and understanding of both the macroeconomic and the
microeconomic factors affecting the group;
• local knowledge and networks; and
• financial, legal, entrepreneurial and banking skills.
The credentials and demographic profile of the board are regularly
reviewed to ensure the board’s composition remains both operationally
and strategically appropriate.
Appointments philosophy
The appointments philosophy ensures alignment with all necessary
legislation and regulations which include, but are not limited to the
requirements of the Companies & Allied Matters Act Cap C�0 Laws
of the Federation of Nigeria �004 and the Banks & Other Financial
Institutions Act Cap B� Laws of the Federation of Nigeria �004 as
well as the Companies and Banks Act of SBG’s home country.
Consideration for the appointment of directors and key executives
take into account compliance with legal and regulatory requirements
and appointments to external boards to monitor potential for
conflicts of interest and ensure directors can dedicate sufficient
focus to the group’s business. The board takes cognisance of the
skills, knowledge and experience of the candidate, as well as other
attributes considered necessary to the prospective role.
The board, on �� July �008 appointed two new directors, while
one director resigned his appointment. The new appointments took
effect when the required regulatory approvals were obtained to
same. In terms of the articles of association, the appointments are
only effective until the next annual general meeting, at which time
the shareholders will be asked to approve each appointment.
As at �� December �008, the board had appointed four executive
directors and �� non-executive directors. On 7 April �009, Central
Bank of Nigeria approval was obtained to the appointment of an
additional executive director, whom had formerly been a member of
the board in a non – executive capacity. Regulatory approvals are also
being sought for an additional non – executive director, who is to be
designated an independent director
The board has the right mix of competencies and experience.
Corporate governance
60 6�
Board responsibilities
The key terms of reference in the board’s mandate, which forms the
basis for its responsibilities, are to:
• agree the group’s objectives, strategies and plans for achieving
those objectives;
• annually review the corporate governance process and assess
achievement against objectives;
• review its mandate at least annually and approve recommended
changes;
• delegate to the chief executive or any director holding any
executive office or any senior executive any of the powers,
authorities and discretions vested in the board’s directors, including
the power of sub-delegation; and to delegate similarly such
powers, authorities and discretions to any committee and subsidiary
company boards as may exist or be created from time to time;
• determine the terms of reference and procedures of all board
committees and review their reports and minutes;
• consider and evaluate reports submitted by members of
the executive;
• ensure that an effective risk management process exists and
is maintained throughout the bank and its subsidiaries to ensure
financial integrity and safeguarding of the group’s assets
• review and monitor the performance of the chief executive and
the executive team;
• ensure consideration is given to succession planning for the chief
executive and executive management;
• establish and review annually, and approve major changes to,
relevant group policies;
• approve the remuneration of non-executive directors on the
board and board committees, based on recommendations made by
the remuneration committee, and recommended to shareholders
for approval;
• approve capital funding for the group, and the terms and conditions
of rights or other issues and any prospectus in connection
therewith;
• ensure that an adequate budget and planning process exists,
performance is measured against budgets and plans, and approve
annual budgets for the group;
• approve significant acquisitions, mergers, take-overs, divestments
of operating companies, equity investments and new strategic
alliances by the group;
• consider and approve capital expenditure recommended by the
executive committee;
• consider and approve any significant changes proposed in
accounting policy or practice, and consider the recommendations
of the statutory audit committee;
Corporate governance report
• consider and approve the annual financial statements, quarterly
results and dividend announcements and notices to shareholders,
and consider the basis for determining that the group will be a
going concern as per the recommendation of the statutory audit
committee;
• assume ultimate responsibility for financial, operational and
internal systems of control, and ensure adequate reporting on
these by committees to which they are delegated;
• take ultimate responsibility for regulatory compliance and ensure
that reporting to the board is comprehensive;
• ensure a balanced and understandable assessment of the group’s
position in reporting to stakeholders;
• review non financial matters that have not been specifically
delegated to a management committee; and
• specifically agree, from time to time, matters that are reserved for
its decision, retaining the right to delegate any of these matters
to any committee from time to time in accordance with the articles
of association.
Delegation of authority
The ultimate responsibility for the bank’s and group’s operations
rests with the board. The board retains effective control through a
well-developed governance structure of board committees. These
committees provide in-depth focus on specific areas of board
responsibility.
The board delegates authority to the chief executive to manage the
business and affairs of the group. The executive committee assists the
chief executive when the board is not in session, subject to specified
parameters and any limits on the board’s delegation of authority to
the chief executive.
Membership of the executive committee is set out on pages �4
and �5.
In addition, a governance framework for executive management
assists the chief executive in his task. Board-delegated authorities
are regularly monitored by the company secretary’s office.
The corporate governance framework adopted by the board on
�5 October �007 and formalised with mandate approvals on
�9 January �008 is set out opposite:
The corporate governance framework adopted by the board on �5 October �007 and formalised with mandate approvals on �9 January �008
is set out below:
Stanbic IBTC board Shareholders
Credit committee Remuneration commitee (REMCO)
Risk managementcommitee
Audit commitee
Creditcommittee
Country risk commitee
Executive committee
Personal & Business Banking exco
Corporate &investment banking exco
Business Supportexco
Wealth exco
Board commitees
Statutory
Management
IT & programme of works
Operational risk & compliance committee
Investment committee
Career Management commitee
Corporate governance
Asset & liabilitycommittee (ALCO)
6� 6�
Members’ attendance at credit committee meetings during the
financial year ended �� December �008 are stated below:
Name Jan April July Oct
Ben Kruger (Chairman) P P P P
Chris Newson P P P P
Sola David-Borha P P P P
Jacques Troost P P P P
Sam Unuigbe P P P P
Moses Adedoyin P P P P
Dr Christopher Kolade CON P P A P
P = Attendance A = Apology
Risk management committee
The board is ultimately responsible for risk management. The main
purpose of the risk management committee, as specified in its
mandate, is the provision of independent and objective oversight
of risk management within the group. The committee is assisted in
fulfilling its mandate by a number of management committees.
To achieve effective oversight, the committee reviews and assesses
the integrity of risk control systems and ensures that risk policies
and strategies are effectively managed and contribute to a culture of
discipline and control that reduces the opportunity for fraud.
The risk management committee was vested, among others, with the
following responsibilities:
• to oversee management’s activities in managing credit, market,
liquidity, operational, legal and other risks of the bank;
• to periodically review the group’s risk management systems and
report thereon to the board;
• to ensure that the group’s material business risks are being
effectively identified, quantified, monitored and controlled and
that the systems in place to achieve this are operating effectively
at all times; and
• such other matters relating to the group’s risk assets as may be
specifically delegated to the committee by the board.
The committee’s mandate is in line with SBG’s standards, while taking
account of local circumstances.
A more in-depth risk management section, which provides details of
the overall framework for risk management in the group commences
on page 70 of this report.
The committee consisted of the eight directors, four of whom, including
the chairman were non – executives.
Corporate governance report
Induction and training
An induction programme designed to meet the needs of each new
director is being implemented. One-on-one meetings are scheduled
with management to introduce new directors to the group and
its operations. The company secretary manages the induction
programme.
The CBN’s code of conduct is provided to new directors on their
appointment.
Directors are kept abreast of all relevant legislation and regulations
as well as sector developments leading to changing risks to the
organisation on an on - going basis. This is achieved by way of
management reporting and quarterly board meetings, which are
structured to form part of ongoing training.
A number of non-executive directors attended a group workshop
and conference in October �008, while some directors attended
a workshop for directors conducted by the Financial Institutions
Training Centre in December �008. These workshops were aimed at
enhancing the skills of bank directors.
Board meetings
The board meets, at a minimum, once every quarter with ad-hoc
meetings being held whenever deemed necessary. One ad - hoc
meeting was held during the period under review. Directors, in
accordance with the Articles of Association of the bank, attend
meetings either in person or via tele conferencing.
Directors are provided with comprehensive board documentation at
least four days prior to each of the scheduled meetings.
Board effectiveness and evaluation
The board is focused on continued improvements in its corporate
governance performance and in its effectiveness.
During the year the board of directors underwent an evaluation
conducted by an independent consultant. The aim of this evaluation
was to assist the board and committees to constantly improve their
effectiveness. The assessment conducted in �008 focused on
structure, process and effectiveness.
The report on this evaluation was discussed at a board meeting and
relevant action points have been noted for implementation to further
improve board functioning.
The performance of the chairman and chief executive are assessed
annually, providing a basis to set their remuneration.
Board committees
Some of the functions of the board have been delegated to board
committees, consisting of board members appointed by the board,
which operate under mandates established on �9 January �008.
Credit committee
The credit committee during the period under review was vested with
the following responsibilities:
• recommend for the board’s approval the bank’s credit policies and
guidelines;
• review and approve credit facilities to be granted by the bank that
are within such monetary amounts as may from time to time be set
by the board;
• approval of credit granted to insiders and staff in the cadres AGM and
above; and
• such other matters relating to the credit operations of the bank
as may be specifically delegated to the committee by the board.
The committee’s mandate is in line with SBG’s standards, while taking
account of local circumstances.
The mandate ensures that effective frameworks for credit governance
are in place across the bank. This involves ensuring that the
committees within the structure operate according to clearly defined
mandates and delegated authority, and providing for the adequate
management, measurement, monitoring and control of credit risk,
including country risk. The committee reports on credit portfolios,
adequacy of provisions and status of non-performing loans.
The credit committee met its objectives in the year under review.
Attendance at board meetings from � January to �� December �008 is set out in the following table:
Name Jan Feb Apr July Oct
Atedo N.A.Peterside OON (Chariman) P P P P P
Chris Newson P P P P P
Sola David-Borha P P P P P
Marna Roets P P P P P
Jacques Troost P P P P P
Moses Adedoyin P P P P P
Craig Bond � A P A A –
Mallam Ahmed Dasuki P P P A P
Ifeoma Esiri P P P P P
Dr Christopher Kolade CON P P P P P
Ben Kruger P P P P P
Bhagwan Mahtani P P P P –
Jacko Maree P P P P A
Yinka Sanni P P P P P
Sam Unuigbe P P P P P
Lft. Gen. (rtd) M.I. Wushishi CFR GCON A A P A A
Dr Alewyn Burger � – – – – –
Ratan Mahtani � – – – – –
P = Attendance
A = Apology
- = Not applicable� Resigned from Board on �� July �008� Regulatory approvals to appointments were fully obtained after October �008 Board Meeting
Corporate governance
64 65
criteria set in advance. This incentivises the commitment and focus
required to achieve targets.
Long-term incentives seek to ensure that the objectives of
management and shareholders are broadly aligned over longer time
periods.
Remuneration policy
The group has always had a clear policy on the remuneration of staff,
executive and non-executive directors which sets such remuneration
at levels that are fair and reasonable in a competitive market for the
skills, knowledge, experience required.
REMCO assists the group’s board in monitoring the implementation of
the group remuneration policy, which ensures that:
• salary structures and policies, as well as cash and share-based
incentives, motivate sustained high performance and are linked to
corporate performance objectives;
• stakeholders are able to make a reasonable assessment of reward
practices and the governance process; and
• the group complies with all applicable laws and codes.
Remuneration structure
Non-executive directors
Terms of service
Directors are appointed by the shareholders at the AGM, although
board appointments may be made between AGMs. These appointments
are made in terms of the group’s policy. Shareholder approvals for
such interim appointments are sought at the annual general meeting
that holds immediately after such appointments are made.
Non-executive directors are required to retire after three years and
may offer themselves for re-election. If recommended by the board,
their re-election is proposed to shareholders at the AGM.
In terms of regulations, a non-executive director can not hold office
for more than �� consecutive years. If a director over the age of 70
is seeking re-election to the board, his age must be disclosed to
shareholders at the meeting at which such re-election is to occur.
REMCO utilises the services of a number of suppliers and advisors
to assist it in tracking market trends relating to all levels of staff,
including fees for non-executive directors. In �008 the following
suppliers were used:
• KPMG
• PricewaterhouseCoopers
• Hay Group;
• IRRC
The board reviews REMCO’s proposals and, where relevant, will submit
them to shareholders for approval at the Annual General Meeting. The
board remains ultimately responsible for the remuneration policy.
At � January �008 the committee consisted of four directors, all of
whom were non –executives.
Craig Bond, who resigned from the board on �� July �008, was
replaced on the committee by Ben Kruger.
Members’ attendance at REMCO meetings during the financial year
ended �� December �008 is stated below:
Name Jan Apr July Oct
Jacko Maree (Chairman) P P P A
Craig Bond � A P P –
Mallam Ahmed Dasuki P P A P
Dr Christopher Kolade CON P P P P
Ben Kruger � – – – P
P = Attendance
A = Apology
- = Not applicable � Resigned from committee on �� July �008. � Appointed to committee on �� July �008
Remuneration
Introduction
The purpose of this section is to provide stakeholders with an
understanding of the remuneration philosophy and policy applied
across the group for executive management, employees, and directors
(executive and non-executive).
Members’ attendance at risk management committee meetings
during the financial year ended �� December �008 is stated below:
Name Jan April July Oct
Ifeoma Esiri (Chairman) P P P P
Lt. Gen M.I. Wushishi CFR GCON P P P P
Ben Kruger P P P P
Yinka Sanni � – P P P
Chris Newson P P P P
Sola David-Borha P P P P
Marna Roets P P P P
Jacques Troost P P P P
P = Attendance A = Apology - = Not applicable � Yinka Sanni was appointed to the committee at the January �008
board meeting and attended committee meetings from April �008.
Remuneration committee
The remuneration committee (REMCO) was vested with responsibilities
during the year under review that included:
• reviewing remuneration philosophy and policy;
• considering the guaranteed remuneration, annual performance
bonus and pension incentives of the group’s highest-paid executive
directors and managers;
• reviewing the performance measures and criteria to be used for
annual incentive payments for all employees;
• determining the remuneration of executive directors;
• determining the remuneration of the chairman and non-executive
directors, which are subject to board and shareholder approval;
• considering the average percentage increases of the guaranteed
remuneration of executive management across the group,
as well as long-term and short-term incentives; and
• agreeing incentive schemes across the group.
The chief executive and deputy chief executive attend meetings by
invitation. Other members of executive management are invited to
attend when appropriate. No individual, irrespective of position, is
expected to be present when his or her remuneration is discussed.
When determining the remuneration of executive and non-executive
directors as well as senior management, REMCO is expected to
review market and competitive data, taking into account the group’s
performance using indicators such as earnings.
Remuneration philosophy
The group’s board and remuneration committee set a remuneration
philosophy which is guided by SBG’s philosophy and policy as well as
the specific social, regulatory, legal and economic context of Nigeria.
In this regard, the group employs a cost to company structure, where
all benefits are included in the listed salary and appropriately taxed.
The following key factors have informed the implementation of
reward policies and procedures that support the achievement of
business goals:
• the provision of rewards that enable the attraction, retention and
motivation of employees and the development of a high
performance culture;
• maintaining competitive remuneration in line with the market,
trends and required statutory obligations;
• rewarding people according to their contribution;
• allowing a reasonable degree of flexibility in remuneration
processes and choice of benefits by employees;
• moving to a cost-to-company remuneration structure; and
• educating employees on the full employee value proposition.
The group’s remuneration philosophy aligns with its core values,
including growing our people, upholding the highest levels of integrity
and delivering value to our shareholders. The philosophy emphasises
the fundamental value of our people and their role in ensuring
sustainable growth. This approach is crucial in an environment where
skills remain scarce.
The group board sets the principles for the group‘s remuneration
philosophy in line with the approved business strategy and objectives.
The philosophy aims to maintain an appropriate balance between
employee and shareholder interests. The deliberations of REMCO
inform the philosophy, taking into account reviews of performance
at a number of absolute and relative levels – from a business, an
individual and a competitive point of view.
A key success factor for the group is its ability to attract, retain and
motivate the talent it requires to achieve its strategic and operational
objectives. The group’s remuneration philosophy includes short-term
and long-term incentives to support this ability.
Short-term incentives, which are delivery specific, are viewed as strong
drivers of competitiveness and performance. A significant portion of
top management’s reward is therefore variable, being determined
by financial performance and personal contribution against specific
Corporate governanceCorporate
governance report
66 67
Fees
Non-executive directors receive fixed annual fees and sitting
allowances for service on boards and board committees in line
with the Central Bank of Nigeria’s guidelines on the remuneration
payable to such directors. There are no contractual arrangements
for compensation for loss of office. Non-executive directors do not
receive short-term incentives, nor do they participate in any long-
term incentive schemes.
REMCO reviews the non-executive directors’ fees annually and make
recommendations on same to the board for consideration.
Fees are payable for the reporting period � January to �� December
of each year.
Category �009� �008
Chairman ��,�00 000 �8,747 000
Director 8,950 000 7,990 �50
Board committees �05,000 90,000
Ad hoc meeting attendance� �05,000 90,000
�Proposed for approval by shareholders at the �009 AGM. � Fees quoted for meetings other than board meetings represent per diem
sitting allowance as no annual fees are payable to committee members.
Retirement benefits
Non-executive directors do not participate in the pension scheme.
Executive directors
Executive directors receive a remuneration package and qualify for
long-term incentives on the same basis as other employees.
Executive directors’ bonuses and pension incentives are subject to
an assessment by REMCO of performance against various criteria.
The criteria include the financial performance of the group, based on
key financial measures and qualitative aspects of performance, such
as effective implementation of group strategy and human resource
leadership.
The employment contracts of executive directors have a termination
clause of three months.
Group Bank
Fees & Sitting Allowance �4�,64� �4�,4��
Executive Compensation 409,�40 �64,065
Total 550,86� 505,508
Remuneration for 2009
The group will continue to ensure its remuneration policies and
practices remain competitive, incentivise performance and are aligned
across the group and with its values.
Statutory audit committee
The role of the audit committee is defined by the Companies & Allied
Matters Act Cap C�0 Laws of the Federation of Nigeria �004 and
includes making recommendations to the board on financial matters.
These matters include assessing the integrity and effectiveness of
accounting, financial, compliance and other control systems. The
committee also ensures effective communication between internal
auditors, external auditors, the board and management.
The committee’s key terms of reference comprise various categories
of responsibilities and include the following:
• review the audit plan with the external auditors with specific
reference to the proposed audit scope, and approach to risk
activities and the audit fee;
• meet with external auditors to discuss the audit findings and
consider detailed internal audit reports with the internal auditors;
• annually evaluate the role, independence and effectiveness of the
internal audit function in the overall context of the risk management
systems;
• review the accounting policies adopted by the group and all
proposed changes in accounting policies and practices;
• consider the adequacy of disclosures;
• review the significant differences of opinion between management
and internal audit;
• review the independence and objectivity of the external auditors;
and
• all such other matters as are reserved to the audit committee by
the Companies & Allied Matters Act Cap C�0 Laws of the Federation
of Nigeria �004 and the bank’s Articles of Association.
As specified in the Central Bank of Nigeria (CBN) Code of Corporate
Governance (“the CBN code”), the audit committee members have
recent and relevant financial experience.
Executive directors, other than the CEO, are required to retire from
the board by rotation in the same manner as non-executive directors
and may offer themselves for re-election. If recommended by the
board, their re-election is proposed to shareholders at the AGM.
Management and general
Total remuneration package for employees comprises the following:
• guaranteed remuneration – based on market value and the role
played;
• annual bonus and pension incentive – used to incentivise the
achievement of group objectives;
• share-based incentives – rewards the sustainable creation of
shareholder value and aligns behaviour to this goal;
• pension – provides a competitive post-retirement benefit in line
with other employees; and
• where applicable, expatriate benefits in line with other expatriates
in Nigeria.
Terms of service
The minimum terms and conditions for managers are governed by
relevant legislation and the notice period is one month.
Employees on international assignments both into Nigeria and
redeployment to other parts of the group, have notice periods of
three months.
Fixed remuneration
Managerial remuneration is based on a total cost-to-company
structure. Cost-to-company comprises a fixed cash portion,
compulsory benefits (medical aid and retirement fund membership)
and optional benefits. Market data is used to benchmark salary levels
and benefits. Salaries are normally reviewed annually in March.
For all employees, performance-related payments have formed an
increasing proportion of total remuneration over time to achieve
business objectives and reward individual contribution.
All employees (executives, managers and general staff) are rated on
the basis of performance and potential and this is used to influence
performance-related remuneration.
Rating and the consequent pay decision is done on an individual
basis. There is therefore a link between rating, measuring individual
performance and reward.
Short-term incentives
All staff participate in a performance bonus scheme. Individual
awards are based on a combination of business unit performance, job
level and individual performance. In keeping with the remuneration
philosophy, the bonus scheme seeks to attract and retain high-
performing managers.
As well as taking performance factors into account, the size of the
award is assessed in terms of market-related issues and pay levels for
each skill set, which may for instance be influenced by the scarcity of
skills in that area.
Long-term incentives
It is essential for the group to retain key skills over the longer term.
The group is establishing an equity growth scheme for qualifying
managers and is in the process of obtaining the relevant consent to
same from Central Bank of Nigeria. Participation rights in such scheme
will be granted to qualifying managers in accordance with the rules of
the scheme approved by the board.
The scheme is designed to align the interests of the group, its
subsidiaries and key employees, as well as to attract and retain skilled,
competent people.
Retention agreements
As part of the group’s strategy to retain highly mobile and talented
employees, the group has selectively entered into agreements in
terms of which retention payments are made. Retention payments
have to be repaid should the individual concerned leave within a
stipulated period.
Post-retirement benefits - Pension
Retirement benefits are typically provided on the same basis for
employees of all levels and are defined contribution benefits.
Remuneration for 2008
The amounts specified below represent the total remuneration paid to
executive and non-executive directors for the period under review:
Corporate governanceCorporate
governance report
68 69
Composition
The committee is made up of six members, three of whom are
non - executive directors while the remaining three members are
shareholders elected at the Annual General Meeting (AGM). The
committee, as required by the CBN code, chaired by a shareholder
representative.
At the AGM held on 5 September �008, Sam Cookey, who did not
stand for re-election to the committee was replaced as a shareholder
representative by Waheed Adegbite.
Members’ attendance at audit committee meetings during the
financial year ended �� December �008 is stated below
Name Feb April July Oct
Oluyomi Adeyemi – Wilson SR P P P P
(Chairman)
Sam UnuigbeNE P P P P
Ifeoma EsiriNE P P P P
Moses AdedoyinNE P P P P
Oshuwa Gbadebo – Smith SR P A P P
Sam Cookey SR A A P –
Waheed Adegbite – – – P
SR = Shareholders representative NE = Non Executive Director
P = Attendance
A = Apology
- = Not applicable
� Resigned from committee on 5 September �008
� Appointed to the committee on 5 September �008
Management committees
The group has the following management committees:
Stanbic IBTC Group executive committee (exco)
• CIB exco
• PBB exco
• Wealth exco
• Business support exco
• Credit committee
• Asset and liability committee (ALCO)
• IT steering committee (“program of works”)
• Investment committee
• Operational risk and compliance committee
• Career management committee
Company secretary
It is the role of the company secretary to ensure the board remains
cognisant of its duties and responsibilities. In addition to providing
the board with guidance on its responsibilities, the company
secretary keeps the board abreast of relevant changes in legislation
and governance best practices. The company secretary oversees the
induction of new directors, including subsidiary directors, as well as
the ongoing training of directors. All directors have access to the
services of the company secretary.
Going concern
On the recommendation of the statutory audit committee, the board
annually considers and assesses the going concern basis for the
preparation of the financial statements at the year end.
The board continues to view the company as a going concern for the
foreseeable future.
Relationship with shareholders
As an indication of its fundamental responsibility to create shareholder
value, effective and ongoing communication with shareholders is seen
as essential. In addition to the ongoing engagement facilitated by the
company secretary, the group encourages shareholders to attend the
AGM and other shareholder meetings where interaction is welcomed.
The chairman of the group’s statutory audit committee is available at
the meeting to respond to questions from shareholders.
Voting at general meetings is conducted by way of poll rather than
a show of hands to give full effect to the provisions of Section �0 of
the Banks & Other Financial Institutions Act Cap B� LFN �004 and
separate resolutions are proposed on each significant issue.
Dealing in securities
In line with its commitment to conduct business professionally and
ethically, the group has introduced policies to restrict the dealing
in securities by directors, shareholder representatives on the audit
committee and employees. A personal account trading policy is
in place to prohibit employees and directors from trading in group
securities during closed periods, which period commences from
� December to publication of final results. Compliance with this policy
is monitored on an ongoing basis.
Sustainability
Social and environmental responsibility remains an important part of
the group’s culture. The monitoring and reporting of sustainability
issues is still an evolving discipline within our organisation. Based on
input received from all members of SBG (including Nigeria) the SBG
board of directors identified and approved the following sustainability
issues as material to the group as a whole:
• Liquidity and capital
• Customer satisfaction
• Regulation
• Infrastructure
• People practice
• HIV/AIDS
• Supply change management
• Supporting communities
• Environment
Social responsibility
As an Nigerian business, the group understands the challenges and
benefits of doing business in Africa, and owes its existence to the
people and societies within which it operates.
The group is committed therefore not only to the promotion of
economic development but also to the strengthening of civil society
and human well being.
The group intends to concentrate its social investment expenditure
in defined focus areas in order to make the greatest impact. These
areas of focus will be subject to annual revision as the country’s
socio-economic needs change. The group has established a CSR unit
that will handle this issue. Our focus in �009 will be on health and
education.
Ethics and organisational integrity
A Code of Ethics was rolled out in the bank during the year.
Breaches of the Code
Although Section 5.�.6 of the CBN Code provides that at least two
non – executive directors of the bank should be independent directors,
the bank currently has only one independent non – executive director.
The bank however recently identified a second independent
non – executive director and is in the process of obtaining the required
regulatory approvals to his appointment.
The bank on a number of occasions breached the requirement that
anticipatory approvals granted by board committees should be ratified
at a committee meeting held within �0 days of the grant of such
approval. However, all such anticipatory approvals were subsequently
ratified by the relevant committee, albeit outside of the specified
time line.
Corporate governanceCorporate
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70 7�
Risk management
Overview
Introduction
The effective management of risk is fundamental to the business
activities of Stanbic IBTC, as the group remains committed to the
objective of increasing shareholders’ value by developing and growing
business that is consistent with agreed risk appetite. The group seeks
to achieve an appropriate balance between risk and reward in its
businesses, and continues to build and enhance the risk management
capabilities that will assist in delivering its growth plans in a controlled
environment.
Risk management is at the core of the operating and management
structures of the group. The group seeks to limit adverse variations in
earnings and equity by managing the balance sheet and capital within
specified levels of risk appetite. Managing and controlling risks, and
in particular avoiding undue concentrations of exposure and limiting
potential losses from stress events are essential elements of the
group’s risk management and control framework, which ultimately
leads to the protection of the group’s reputation.
Responsibility and accountability for risk management resides
at all levels within the group, from the executive down through
the organisation to each business manager and independent risk
officer. Internal audit provides an independent assessment of the
adequacy and effectiveness of controls and procedures and reports
independently to the statutory audit committee, whilst external audit
reports independently on the group annual financial statements.
Subsidiary entities within the group are guided by the group enterprise
risk management (ERM) framework in establishing their respective
risk management frameworks.
The major subsidiaries of the bank; Stanbic IBTC Asset Management
Limited, Stanbic Equities Limited and Stanbic IBTC Pension Managers
Limited are committed to aligning their respective risk management
practices to that of the group and adopting acceptable risk tolerance
parameters in line with the group.
Key aspects of risk management are the risk governance and the
organisational structures established by the group to manage
risk according to a set of risk governance standards, which are
implemented across the group and are supported by appropriate risk
policies and procedures.
Risks are controlled at the level of individual exposure, at a portfolio
level, and in aggregate across all business and risk types. The bank and
its subsidiaries has an independent control process which provides an
objective view of risk taking activities where required. All exposures
are independently monitored and reviewed.
Key achievements in �008
The past year has been very challenging and, at the same time, very
enriching in terms of key lessons learnt. Some of the challenges
included the integration of the legacy banks, implementation and roll-
out of all risk governance standards, mandates, policies and procedures
approved by the board early in the year and the development of a
risk culture in a rapidly expanding group. Simultaneously, the group
had to cope with extreme degrees of volatility in world markets. The
group’s existing control framework and procedures performed well
in the midst of rising levels of risk while monitoring and reporting
lines were strengthened through the implementation of an escalation
matrix. The executive continually communicated to all levels of staff
to enhance awareness and vigilance.
Highlights were:
• The group developed and started monitoring key risk indicators for
the whole bank and a number of key business units;
• The risk self assessment (RSA) of some business units as well as
the bank’s risk control self assessment (RCSA) were conducted and
concluded;
• In spite of market volatility, the bank’s value at risk (VaR) models
performed well with no breaches and conservative VaR utilisation;
• The automated anti-money laundering monitoring and detection
system was implemented. With this system, alerts were generated
for suspicious transactions and hot listed names;
• The know your customer (KYC) compliance project completed;
• The group developed its business continuity management (BCM)
plan and conducted a desktop walkthrough test.
Focus areas for �009
Given the continued turmoil in the world financial markets, risk
management will continue to receive significant focus with particular
attention paid to enhancing the systems capability surrounding all
levels of risk management. In particular, we will focus on:
• Implementation of automated scoring, collections management,
intuitive credit and treasury systems;
• Localisation of a robust system to enhance monitoring and
management capability of market and liquidity risks;
• Continued enhancement of the group’s management standards,
practices and systems with a focus on employing, training and
retaining talented staff;
• On-going embedding of an operational risk management framework
within the group by conducting RSAs for other key business units;
• Facilitating an enhanced control environment and direct risk
oversight by deploying designated independent risk officers to
more business units and implementing a risk assurance functions;
• Enhancing the quality and depth of the operational risk database for
the bank;
• Enhancement of the anti-money laundering system to provide
for monitoring of transactions above specific value and frequency
thresholds
• Continued maintenance of a conservative structural liquidity
mismatch profile, supported by adequate levels of marketable
assets; and
• Conduct a BCM simulation exercise
Risk management framework
Governance structure
The group’s activities are complex, diverse and expanding rapidly into
market segments and regions with different challenges. Hence, it is
imperative that there is strong and independent oversight at all levels
across the group.
The risk governance structure (see diagram overleaf) provides
executive management and the board, through the various committees,
with the forums to evaluate, consider and debate key risks faced by
the group and assess the effectiveness of the management of these
risks through a number of reports received from the chief risk officers
across Stanbic IBTC. The board committees comprise the statutory
audit committee, credit board committee, risk management board
committee, while executive management oversight at a bank and
group level is achieved through management committees focusing
on specific risks. Each of these committees has a mandate which
describes the membership and responsibilities of such committees.
Approach and structure
The group’s approach to risk management is based on well established
governance processes and relies both on individual responsibility and
collective oversight, supported by comprehensive reporting. This
approach balances strong corporate oversight at senior management
level with independent risk management structures in the business.
Business unit heads are specifically responsible for the management
of risk within their business. As such, they are responsible for ensuring
that they have appropriate risk management frameworks that are
adequate in design, effective in operation and meet minimum group
standards.
This responsibility is achieved either through the establishment
of dedicated business unit risk management functions in some
subsidiary companies or through centralised risk functions servicing a
number of business units. In the former case, adequate provision for
the independence of the business unit risk management structures is
essential in recognition of different regulatory requirements.
An important element that underpins the group’s approach to the
management of all risk is independence and appropriate segregation
of responsibilities between business and risk. Risk officers report
separately through to the head of group risk who reports to the chief
executive officer of Stanbic IBTC and also through a matrix reporting
line to the Standard Bank Group (SBG). All key risks are supported by
the risk department.
Corporate governance
7� 7�
Risk managementStanbic IBTC Bank PLC Board
Exco Risk CreditAudit
Management committees Board sub-committees
ALCOOperational risk& compliance
Risk governance standards, policies and procedures
The group has developed a set of risk governance standards for each
major risk type. The standards set out and ensure alignment and
consistency in the manner in which the risk types across the group are
governed, identified, measured, managed, controlled and reported.
All standards are applied consistently across the group and are
approved by the board. It is the responsibility of business unit
executive management to ensure that the requirements of the risk
governance standards, policies and procedures are implemented
within the business units.
Each standard is supported by group policies and business unit
policies and procedural documents as required. Business units and
group risk functions are required to self assess, at least annually, their
compliance with group risk standards and policies. Risk governance
standards set out the framework for managing each major risk type
and policies are developed where required on specific items as stated
within the standards. Details with regards to the implementation of
these policies within each particular business unit are set out in the
processes and procedures documentation.
Risk appetite
Risk appetite is an expression of the maximum level of residual risk
that the group is prepared to accept in order to deliver its business
objectives. It is the balance of return and risk determined by the board
through the board and executive risk committees in consultation
with the business units as the group implements business plans,
recognising a range of possible outcomes.
The board establishes the group’s parameters for risk appetite by:
• providing strategic leadership and guidance;
• reviewing and approving annual budgets and forecasts for the
group and each business unit; and
• regularly reviewing and monitoring the group’s performance in
relation to risk through quarterly board reports.
Risk appetite is expressed by balancing:
• budgetary provisions for expected losses that are consistent with
the risk appetite implied by the business plans;
• an agreed tolerance for profit and loss volatility – an acceptable
scenario that is lower than budget by an amount that is consistent
with the risk appetite implied by the business plans;
• the risk adjusted returns generated from risk-taking being
acceptable; and
• in the context of stress tests, portfolio analyses and concentration
limits, risk assessments, risk indicators and other measures
devised by the business unit risk functions which serve to identify
and constrain threats to earnings and capital.
Risk appetite is determined with reference to measures such as:
• budgeted loss write-offs and provisions;
• limits on exposures to individual counterparties, sectors, industries
or geographies
• limits on trading exposures; and
• Interest rate movements.
Stress testing
Stress testing serves as a diagnostic and forward looking tool to
improve the group’s understanding of its market and liquidity risks
profile under event based scenarios.
Management reviews the outcome of stress tests and selects
appropriate mitigating actions to minimise and manage the risks to
the group. Residual risk is then evaluated against the risk appetite.
Examples of potential action to take are:
• reviewing and changing limits;
• limiting exposures in selected sectors or products; and
• re-balancing of portfolio’s to reduce risk sensitivity.
Risk categories
The bank’s enterprise risk management framework is designed to
govern, identify, measure, manage, control and report on the principal
risks to which the group is exposed. These risks, with applicability as
appropriate, are defined as follows:
Credit risk
Credit risk arises primarily in the bank operations where an obligor
fails to perform obligations, in accordance with agreed terms or
the counterparty’s ability to meet such contractual obligation is
impaired.
Credit risk comprises counterparty risk, settlement risk, country risk
and concentration risk.
Counterparty risk is the risk of loss to Stanbic IBTC as a result of
failure by a counterparty to meet its financial and/or contractual
obligations to the bank. It has three components:
• primary credit risk which is the exposure at default (EAD) arising
from lending and related banking product activities, including their
underwriting;
• pre-settlement credit risk which is the EAD arising from unsettled
forward and derivative transactions, arising from the default of the
counterparty to the transaction and measured as the cost of
replacing the transaction at current market rates; and
• issuer risk which is the EAD arising from traded credit and equity
products, and including their underwriting.
Settlement risk is the risk of loss to Stanbic IBTC from a transaction
settlement, where value is exchanged, failing such that the counter
value is not received in whole or part.
Country and cross border risk is the risk of loss arising from political
or economical conditions or events in a particular country which
reduce the ability of counterparties (including the relevant sovereign
and other members of the Standard Bank Group internationally) in
that particular country to fulfil their obligations to Stanbic IBTC. Cross
border risks is the risk of restriction on the transfer and convertibility
of local currency funds, into foreign currency funds thereby limiting
payment by offshore counterparties to the bank.
Concentration risk refers to any single exposure or group of
exposures large enough to cause credit losses which threaten Stanbic
IBTC’s capital adequacy or ability to maintain its core operations. It
is the risk that a common factor within a risk type or across risk types
causes credit losses or an event occurs within a risk type which results
in credit losses.
Market risk
Market risk is defined as the risk of a decrease in the actual or
effective market value of a portfolio of financial instruments caused
by adverse moves in market variables such as equity and bond prices,
currency exchange and interest rates, credit spreads, and correlations
and implied volatilities in all of the above. Market risk covers both
the impact of these risk factors on the market value of traded
instrument as well as the impact on the bank’s net interest margin as
a consequence of interest rate risk on banking assets and liabilities.
Liquidity risk
Liquidity risk arises when a bank is unable to meet its payment
obligations as and when they fall due. This may be caused by the
bank’s inability to liquidate assets or to obtain funding to meet its
liquidity needs.
Credit
Shareholders
Statutory committees
SubsidiariesPricingCountry riskInvestment
Corporate governance
74 75
The bank’s capital adequacy ratio is shown in the table below
December 08 December 07
Capital Adequacy (actual in %) �6 40
Regulatory capital
The bank complied with minimum capital requirements imposed by
the regulators during the period under review. Apart from the local
requirements, the group is also required to comply with the capital
adequacy requirement in terms of South African banking regulations
measured on Basel II principles. This act of compliance coupled with
the risk governance structure and implementation of ERM framework
as well as collation of loss data, amongst others, have continued to
bolster the group’s readiness for a regulatory regime that is anchored
on Basel II principles in the near future.
Credit risk
Framework and governance
By the very nature of its business, credit risk remains a key
component of financial risks faced by any bank. As such, Stanbic IBTC
has established sound governance principles to ensure that credit
risk is managed within a comprehensive risk management control
framework.
The principles guiding the assumption of credit risk and the overall
framework for its application, governance, and reporting is defined in
the Stanbic IBTC credit risk standard.
The standard covers all forms of credit risk, intentional or otherwise,
and is supported by credit risk policies and procedures to the
extent required to further define the credit risk framework and its
implementation across the bank.
In reaching credit decisions and taking credit risk, both the credit and
business functions must consistently and responsibly balance risk and
return, as return is not the sole prerogative of business neither is risk
the sole prerogative of credit. Credit (and the other risk functions,
as applicable) and business must work in partnership to understand
the risk and apply appropriate risk pricing, with the overall aim of
optimising the bank’s risk adjusted performance.
The standard, policies and procedures and compliance therewith are
not substitutes for common sense and good business judgment.
Risk management
Credit risk management
In Stanbic IBTC, the reporting lines, responsibilities and authority for
managing credit risk are clear and independent. Ultimate responsibility
for credit risk rests with the board and which has delegated this to the
following organs:
Board credit committee
The purpose of the board credit committee is to ensure that effective
credit governance is in place in order to provide for the adequate
management, measurement, monitoring and control of credit
risk including country risk. In addition to its pre-existing role, the
committee has also been vested with the following responsibilities as
may be set by the board:
• setting overall risk appetite;
• review and approve credit facilities that are within monetary
amounts as determined by the board from time to time
• ensuring committees within the structure operate according to
defined mandates and delegated authorities;
• maintain overall accountability and authority for the adequacy and
appropriateness of all aspects of the bank credit risk management
process;
• utilise appropriate tools to measure, monitor and control credit
risk in line with the SBG policies whist taking into account local
circumstances;
• recommend the bank’s credit policies and guidelines for board
approval; and
• any other matters relating to credit as may be delegated to the
committee by the board.
Credit risk management committee
The credit risk management committee (CRMC) is the management
credit decision-making function and it operates within defined
authority as determined by the board credit committee.
The CRMC effectively enhances credit discipline within the bank
and is responsible for controlling, inter alia, delegated authorities,
concentration risk, distressed debt and regulatory issues pertaining
to credit, credit audits, policy and governance.
In addition to the above, the credit committee provides oversight of
governance; recommends to the board credit committee the level of
the bank’s risk appetite; monitors model performance, development
and validation; determine counterparty and portfolio risk limits and
approval, country, industry, market, product, customer segment and
maturity concentration risk; risk mitigation; impairments and risk
usage.
Head of credit
The head of credit has functional responsibility for credit risk
management across the bank and is positioned at a sufficiently senior
level in order to ensure the necessary experience and independence
of judgment.
The head of credit is responsible for providing an independent and
objective check on credit risk taking activities to safeguard the
integrity of the entire credit risk process.
Credit risk mitigation
Guarantees, collateral and the transaction structure are used by the
bank to mitigate credit risks both identified and inherent though
the amount and type of credit risk is determined on a case by case
basis. The bank’s credit policy and guidelines are used in a consistent
manner, security is valued appropriately and reviewed regularly for
enforceability and to meet changing business needs.
Credit risk measurement
A key element in the measurement of credit risk is the assignment
of credit ratings. All customers including corporate, individuals and
institutions and special purpose vehicles (SPVs) are awarded risk
gradings to determine expected defaults across asset portfolios and
risk bands. The risk ratings attributed to counterparties are based on
a combination of factors which cover business and financial risks:
• all counterparties for which the bank has facility limits in place are
assigned a credit rating. The rating is forward looking (i.e.
predictive in nature) and discriminatory (i.e. ability to rank order).
However, all local ratings are capped by the country rating;
• a foreign currency rating and associated probability of default (PD)
must be used for all exposures to counterparties in a currency
other than naira;
• facility risk arising from exposure and/or facility specific factors
such as collateral and seniority must be measured and addressed
as part of the credit risk mitigation analysis and should not affect
or impact on the counterparty rating;
• external support, as distinct from mitigants, can be recognised
in the rating process on a defined basis, provided it is consistently
applied;
• the process and methodology to assign a rating to each counterparty
and a PD to each rating must be the responsibility of, and signed
off by, the credit committee; and
• pricing must be based on the risk grades assigned to the
counterparty.
The bank currently uses an international comparable �5 point master
rating scale for all performing counterparties.
Operational risk
Operational risk is defined as the risk of loss resulting from inadequate
or failed processes, people and systems (including information
technology and infrastructure) or from external events.
The definition of operational risk also includes:
• information risk – the risk of unauthorised use, modification of
disclosure of information resources;
• fraud risk – the risk of losses resulting from fraudulent activities
• environmental risk – the risk of inadvertently participating in the
destruction of the environment
• legal risk - the risk that the bank will be exposed to litigation;
• taxation risk – the risk that the bank will incur a financial loss due
to incorrect interpretation and application of taxation legislation
or due to the impact of new taxation legislation on existing
business.
• compliance risk - the risk that the bank does not comply with
applicable laws and regulations or supervisory requirements.
Business risk
Business risk is the risk of loss due to adverse local and global operating
conditions such as decrease in demand, increased competition,
increased cost, or by entity specific causes such as inefficient cost
structures, poor choice of strategy and reputation damage.
Capital management - Basel 1
Capital adequacy
The bank manages its capital base to achieve a prudent balance
between maintaining capital ratios to support business growth
and depositors’ confidence, and providing competitive returns to
shareholders. Stanbic IBTC ensures that its actions do not compromise
sound governance and appropriate business practices and it eliminates
any negative effect on payment capacity, liquidity and profitability.
Capital adequacy ratios, which reflect the capital strength of an entity
compared to the minimum regulatory requirement, is calculated by
dividing the capital held by the bank by its risk weighted assets. Risk
weighted assets are determined by applying prescribed risk weighting
to on- and off- balance sheet exposures according to the relative
credit risk of the counterparty.
Corporate governance
76 77
Risk management
Liquidity risk
Framework and governance
The nature of banking and trading activities results in a continuous
exposure to liquidity risk. The bank’s liquidity risk management
framework is designed to measure and manage the liquidity position
at various levels of consolidation such that payment obligations can
be met at all times, under both normal and considerably stressed
conditions. Under the delegated authority of the board of directors,
ALCO sets liquidity risk policies in accordance with regulatory
requirements and international best practice.
Limits and guidelines are prudently set and reflect the bank’s
conservative appetite for liquidity risk. ALCO is charged with ensuring
compliance with liquidity risk standards and policies.
Liquidity and funding management
The bank has incorporated the following elements as part of
a cohesive liquidity management process:
• short-term and long-term cash flow management;
• maintaining a structurally sound balance sheet;
• expanding a diversified funding base;
• undertaking regular liquidity stress testing; and
• maintaining adequate liquidity contingency plans.
The cumulative impact of the above elements is monitored, at least
monthly by ALCO and the process is underpinned by a system of
extensive controls. The latter includes the application of purpose built
technology, documented processes and procedures, independent
oversight and regular independent reviews and evaluations of the
effectiveness of the system.
Cash flow management
Active liquidity and funding management is an integrated effort
across a number of functional areas. Short-term cash flow projections
are used to plan for and meet the day-to-day requirements of the
business, including adherence to prudential and ALCO requirements.
Long-term funding needs are derived from projected balance sheet
structures and positions are regularly updated.
An active presence is maintained in professional markets, supported
by efforts in relationship management with corporate and institutional
clients.
Structural requirements
The maturity analysis for financial liabilities represents the basis
for effective management of exposure to structural liquidity risk.
Behavioural profiling is applied to assets, liabilities and off-balance
sheet commitments with an indeterminable maturity or draw-down
period, as well as to certain liquid assets. This process is used to
identify significant additional sources of structural liquidity in the
form of liquid assets and core deposits such as current and savings
accounts that although repayable on demand or at short notice,
exhibit stable behaviour.
Limits and guidelines are set to restrict the mismatch between the
expected inflows and outflows of funds in different time buckets. One
of the mechanisms employed to ensure adherence to these limits and
guidelines is the active management of the long-term funding ratio.
This ratio is defined as those funding-related liabilities to the public
with a remaining maturity of greater than six months, as a percentage
of total funding-related liabilities to the public.
The table - Static anticipated liquidity gap above - indicates that the
bank is well poised to adequately withstand any expected outflows in
all time buckets.
Diversified funding base
Concentration risk limits are used to ensure that funding diversification
is maintained across products, sectors, and counterparties. Primary
sources of funding are in the form of deposits across a spectrum
of retail and wholesale clients. As mitigants, the bank maintains
marketable securities in excess of regulatory requirement in order to
condone occasional breaches of concentration limits.
Liquidity stress testing
Anticipated on- and off-balance sheet cash flows are subjected to
a variety of bank specific and systemic stress scenarios in order to
evaluate the impact of unlikely but plausible events on liquidity
positions. Scenarios are based on both historical events, such as
past emerging markets crises, and hypothetical events, such as a
bank specific crisis. The results obtained from stress testing provide
meaningful input when defining target liquidity risk positions.
Liquidity contingency plans
Liquidity contingency plans are designed to, as far as possible, protect
stakeholder interests and maintain market confidence in order
to ensure a positive outcome in the event of a liquidity crisis. The
plans incorporate an extensive early warning indicator methodology
supported by a clear and decisive crisis response strategy. Early
warning indicators span both bank specific and systemic crises and
are monitored based on assigned frequencies and tolerance levels.
The crisis response strategy is formulated around the relevant
crisis management structures and addresses internal and external
communications, liquidity generation, operations, as well as
heightened and supplementary information requirements.
Market risk
The identification, management, control, measurement and reporting
of market risk is categorised as follows:
Trading market risk
These risks arise in trading activities where the bank acts as a principal
with clients in the market. The group policy is that all trading activities
are contained within the group’s Corporate & Investment Banking
trading operations.
Banking book interest rate risk
These risks arise from the structural interest rate risk caused by the
differing repricing characteristics of banking assets and liabilities.
Foreign currency risk
These risks arise as a result of changes in the fair value or future cash
flows of financial exposures as a result of changes in foreign exchange
rates other than those included in the Value at Risk (VaR) analysis for
Corporate & Investment Banking’s trading positions.
Equity investment risk
These risks arise from equity price changes caused by listed and unlisted
investments. This risk is managed through the equity investment
committee, which is a sub-committee of the executive committee.
Static anticipated liquidity gap
Cum. Gap
as a % of total deposit Overnight � month �-� months 4-6 months 7-�� months ��-�4 months
Local currency mismatches 69.4 94.5 �07.5 �06.6 ��5 �0�.�
Foreign currency mismatches 85.� ��6 9�.9 ��4.� 76.4 �5�.4
Non performing loans
N’000s CIB PBB Total
NPL net of IIS Specific provision NPL Net of IIS Specific provision NPL Net of IIS Specific provision
Substandard 90 9 �,�86 ��9 �,�76 ��8
Doubtful 7,98� �,95� �,70� 850 9,60� 4,80�
Lost �,098 �,�9� �,�00 �,�00 �,�98 4,49�
Total 9,090 6,�5� 5,�87 �,�79 �4,�77 9,4��
Non performing loan analysis
The tables below show analyses of non performing loans as at December �008.
The bank’s margin facilities which comprise 8% of the bank’s risk assets are soundly managed and within acceptable concentration limits.
Provisioning against these balances have been made on a basis consistent with prior years.
Provision adequacy
N’000s balance suspense value (NPV) NPL adequacy
Margin lending �,995 6 �,�89 700 �,67� ��9%
Other balances ��,54� �,�55 6,968 4,��0 7,759 �80%
Total �5,5�8 �,�6� 9,�57 5,0�0 9,4�� �88%
Gross NPL Interest in Security Net Provision Provision
Corporate governance
78 79
Distribution of trading income in �008
The histogram above shows the distribution of daily income and
losses during �008. It captures trading income volatility and shows
the number of days in which the bank’s trading related revenues fell
within particular ranges. The distribution is skewed to the profit side.
The graph below shows the VaR analysis and actual income of the
foreign currency trading unit throughout the year.
Analysis of trading book market risk exposures
The table below shows the historical VaR utilisation for the bank’s
foreign currency trading positions. The maximum (and minimum) VaR
amounts show the bands in which the values at risk fluctuated.
Risk management
Framework and governance
The board approves the market risk appetite and standards for all
types of market risk. The board grants general authority to take on
market risk exposure to ALCO. ALCO sets market risk policies to ensure
that the measurement, reporting, monitoring and management of
market risk associated with operations of the bank follow a common
governance framework. The bank’s ALCO reports to exco and also
to board risk committee. In-country risk management is subject to
SBG oversight for compliance with group standards and minimum
requirements.
The market risk management unit, which is independent of trading
operations and accountable to ALCO, monitors market risk exposures
due to trading and banking activities. This unit monitors exposures
and respective excesses daily, report monthly to ALCO and quarterly
to the board risk committee.
Market risk measurement
The techniques used to measure and control market risk include:
• daily VaR;
• VaR back-testing;
• stress tests;
• PV0�;
• other market risk measures; and
• annual net interest income at risk.
Daily value-at-risk (VaR)
VaR is a statistical measurement of the potential loss of value resulting
from market movements over a period of time given a predetermined
probability (95% confidence level).
VaR limits and exposure measurements are in place for foreign
currency risks. The bank generally uses the historical VaR approach
to derive quantitative measures, specifically for market risk under
normal market conditions. Normal VaR is based on a holding period
of one day and a confidence level of 95%. Daily losses exceeding the
VaR are likely to occur, on average, �� times in every �50 days.
The use of historic VaR has limitations as it is based on historical
correlations and volatilities in market prices and assumes that future
prices will follow the observed historical distribution. Hence, there is
a need to back-test the VaR model regularly.
-400
-200
0
200
400
600
800
1000
1200
Jan 2008
FX P&L Norm al VaR
Dec
VaR back-testing
The bank back-tests its foreign currency exposure VaR model to
verify the predictive ability of the VaR calculations thereby ensuring
the appropriateness of the model. Back-testing compares the
daily hypothetical profit and loss under the one-day buy and hold
assumption to the prior day VaR. Profit or loss for back-testing is
based on the theoretical profits or losses derived purely from foreign
currency spot moves and it is calculated over �50 cumulative trading-
days at 95% confidence level.
Stress tests
Stress testing provides an indication of the potential losses that
could occur in extreme market conditions. The stress tests carried
out include individual market risk factor testing and combinations
of market factors per trading desk and for combinations of trading
desks. Stress tests include a combination of historical, hypothetical
and Monte Carlo type simulations.
PV01
PV0� is a risk measure used to assess the effect of a change in interest
rate of one basis point on the price of an asset. A limit is set for the
fixed income and money market trading portfolios.
Other market risk measures
Other market risk measures specific to individual business units include
permissible instruments, concentration of exposures, gap limits,
maximum tenor and stop loss triggers. In addition, only approved
products that can be independently priced and properly processed
are permitted to be traded.
The market risk unit independently validates and documents new pricing
models and perform an annual review of existing models to ensure
models are still relevant and behaving within expectations. In addition,
the market risk department assesses the daily liquid closing price inputs
used to value instruments and performs a review of less liquid prices
from a reasonableness perspective at least monthly. Where differences
are significant, mark-to-market adjustments are made.
Annual net interest income at risk
A dynamic forward-looking annual net interest income forecast is
used to quantify the banks’ anticipated interest rate exposure. This
approach involves the forecasting of both changing balance sheet
structures and interest rate scenarios, to determine the effect these
changes may have on future earnings. The analysis is completed under
both normal market conditions as well as stressed market conditions.
> 120> 105 =120
> 90 = 105
> 75 =90
> 60 =75
> 45 = 60
> 30 =45
> 15 =30
= 15= -15> -15 =-30
> -30
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160 Loss Profit
N’millions
FX VaR (US$)
Minimum Average Maximum �� Dec �008
Normal VaR 964 �5,�08 ��4,008 60,478
Stress VaR 8,90� 9�7,0�9 �,4��,500 �,0�4,���
Analysis of banking book market risk exposures
Banking-related market risk exposure principally involves the
management of the potential adverse effect of interest rate movement
on net interest income.
This risk is transferred to and managed within the bank’s treasury
operations under supervision of ALCO. The main analytical techniques
used to quantify banking book interest rate risk are earnings and
valuation-based measures. In doing so, cognisance is taken of
embedded options, such as loan prepayments and accounts where
the behaviour differs from the contractual position.
In analysing the re-pricing gaps for the bank’s non-trading portfolios,
all assets and liabilities are sited in gap intervals based on their repricing
characteristics. Assets and liabilities for which no specific contractual
repricing or maturity dates exist are placed in gap intervals based on
management’s judgment and statistical analysis, as determined by the
most likely repricing behaviour.
Market risk on equity investments
The equity committee has governance and oversight of all investment
decisions. The committee is tasked with the formulation of risk
appetite and oversight of investment performance. Periodic reviews
and reassessments are undertaken on the performance of the
investments.
Operational risk
Approach to operational risk
The Stanbic IBTC approach to managing operational risk is to adopt
practices that are “fit for purpose”, in order to increase the efficiency
and effectiveness of the group’s resources, minimise losses and
utilise opportunities. This approach is aligned to Stanbic IBTC’s and
SGB’s enterprise risk management frameworks and adopts the sound
practices recommended by various sources, including the Basel II
Accord’s “Sound Practices for the Management and Supervision of
Operational Risk” and the regulators. The group continues to embed
operational risk practices into its day-to-day business activities.
Corporate governance
80 8�
Risk management
Governance
The board risk management committee, as the delegated risk
oversight body on behalf of the board, has the ultimate responsibility
for operational risk. It ensures quality, integrity and reliability of
operational risk management across the group.
The operational risk and compliance committee (ORCC) serves as
the oversight body in the application of the group’s risk management
framework. This is achieved through enforcing standards for
identification, assessing, controlling, monitoring and reporting. ORCC
reviews and recommends operational risk appetite and tolerance to the
executive committee and the board risk management committee.
Management and measurement of operational risk
The operational risk management framework serves to ensure that
risk owners are clearly accountable for the risk inherent within the
business activities of the group. The key element in the framework
includes methodologies and tools to identify, measure, and manage
operational risks, a governance model, processes to ensure internal
training and awareness, communication, and change management.
Risk and control self assessments are designed to be forward-looking.
Management is required to identify risks that could threaten the
achievement of business objectives and together with the required
set of controls and actions, mitigate the risks. Risk assessment also
incorporates a regular review of identified risks.
The loss data collection process ensures that all operational risk loss
events and near misses are captured into a centralised database.
The flow of information into the loss event database is a bottom-up
approach. The capture process identifies and classifies all incidents
in terms of an incident classification list. This information is used to
monitor the state of operational efficiency, address trends, implement
corrective action and manage recovery where possible.
The group uses key risk indicators (KRIs) to monitor the risks
highlighted in the risk and control self-assessment process. The
implementation of the KRIs is an integral element of the framework
and is therefore compulsory throughout the group. Business units are
required to report on a regular and event-driven basis. The reports
include a profile of the key risk to the achievement of their business
objectives, control issues of bank-level significance, and operational
risk events.
The bank developed its business continuity management plan and
conducted a desktop walkthrough test. A desktop walkthrough is a
facilitated paper walkthrough of the recovery plan and any associated
processes and procedures that would be used in a real disaster. A
scenario is defined, and each team member has specific responsibilities
as defined in checklists in the recovery plan.
The group maintains adequate insurance to cover key operational and
other risks.
Information risk management
Information risk is defined as the risk of accidental or intentional
unauthorised use, modification, disclosure or destruction of
information resources, which compromises their confidentiality,
integrity or availability.
From a strategic perspective, information risk management is treated
as a particular discipline within the operational risk framework. In
essence, information risk management not only protects the group’s
information resources from a wide range of threats, but also enhances
business operations, ensures business continuity, maximises return
on investments and supports the implementation of various services.
The approach to the management of information risk in the group
is in accordance with global best practice, applicable laws and
regulations.
The group has embarked on an enterprise-wide comprehensive
awareness/education campaign to ensure that the culture of
information protection is entrenched and the risks associated with
handling information are mitigated.
Fraud risk management
Stanbic IBTC has a set of values that embraces honesty, integrity and
ethics and, in this regard, has a “Zero Tolerance” approach to fraud
and corruption. Where necessary, disciplinary, civil and criminal actions
are taken against staff and third parties who perpetrate fraud. Staff
found guilty of dishonesty through the group’s disciplinary processes
will be listed on appropriate industry databases for dismissed staff.
The group’s forensic unit, which is responsible for fraud risk
management practices, in conjunction with law enforcement agencies,
investigates all losses incurred as a result of criminal activity from
staff and third parties with the end result being a criminal conviction
and recovery of the crime proceeds.
There are anti-fraud mechanisms and regular campaigns in place to
mitigate fraud risk. These measures include constant review and re-
engineering of the group’s internal processes, engagement of law
enforcement agencies, industry forums and collaborative workshops
to discuss best practices to combat fraud and a group-wide fraud
prevention incentive programme.
Environmental risk management
Stanbic IBTC acknowledges that the development of a corporate
culture whereby environmental protection and the sound management
of natural resources in both its own operating environment and with
all the parties with which it has a business association is crucial to
sustainable development. The bank adopts a precautionary approach
to environmental management, striving to anticipate and prevent
environmental risk degradation. The group’s approach is in line with
the guidelines set out in the Equitor Principles and the provisions of
the environmental laws of the country.
Legal risk management
Legal risk is defined as the potential loss that may be suffered by the
group as a result of the imposition of a court judgment against the
group. Legal risk can also arise as a result of the loss from a contract
that cannot be legally enforced or the group may be liable for damages
to third parties.
The legal risk unit carries out, amongst others, the following functions
as part of its legal risk management process:
• signing-off of all contacts entered into by the group;
• ensuring that service level agreements (SLAs) are executed
between the group and service providers;
• drafting of standard product documentation;
• reviewing and monitoring legal claims made against the group;
and
• obtaining legal opinion in respect of all the litigations that the
group is involved in, to ascertain if there is a need for provision to
be made in cases where the likelihood of success against the bank
is high.
Provision is made in all instances where the group is of the opinion
that there is a likelihood that the claims against it may succeed.
Occupational health and safety
The health and safety of employees, clients and other stakeholders
continues to be a priority and the group aims to effectively identify
and reduce the potential for accidents or injuries. To this end, an
occupational health and safety policy for the group has been approved
by the ORCC and exco respectively. This policy was approved by the
board in April �009.
Compliance risk management
Compliance is an independent core risk management activity overseen
by the group’s compliance unit, which is overseen by the chief
compliance officer. The unit provides independent reports to the
ORCC, exco and the board risk management committee. The group
chief compliance officer has unrestricted access to the chief executive
officer and the chairperson of the board risk management committee.
The group’s approach to managing legislative risk exposures is
proactive and premised on internationally accepted principles of risk
management. The group fosters a culture of compliance which is seen
not only as a requirement of law but also a good business practice.
Compliance risk
Compliance risk refers to the risk of failing to comply with applicable
laws, regulators, codes of conduct and standards of good practice,
which may result in regulatory sanctions, financial or reputation
loss. It focuses on ensuring that the group complies with laid down
regulations that are applicable to its business and operations.
The compliance risk function of the group carries out, amongst others,
the following functions as part of its compliance risk management
process:
• maintain compliance risk management plans for at least five
regulatory
requirements that are rated highest in terms of their impact of the
group’s business;
• maintain an appropriate and relevant schedule of all the laws that
are applicable to the group and circulate this to all the business
units within the group;
• liaise with regulators to co-ordinate inspections and examinations
and ensure that findings contained in the inspection or examination
reports are satisfactorily closed out; and
• respond to regulatory requests for information and documents.
Corporate governance
8� 8�
Risk management
In line with the above responsibility, the compliance unit ensures
that recently enacted laws, regulations and circulars are obtained
and circulated to all the relevant departments of the group to guide
them appropriately.
Furthermore, newly enacted laws are reviewed and included in the
group’s regulatory schedule which contains the provisions of all the
laws that are applicable to the group in its day to day activities. The
regulatory schedule is circulated amongst business units accordingly
for their guidance.
The compliance unit serves as the interface between the bank and
its primary regulators during spot checks and routine examinations
carried out by the regulators with the aim of ensuring that all issues
raised by the regulators are properly addressed.
In this regards, the compliance unit regularly interacts with different
regulators and law enforcement agencies, such as Nigerian Police;
Nigerian Financial Intelligence Unit (NFIU); Economic and Financial
Crimes Commission (EFCC); and the National Drug Law Enforcement
Agency (NDLEA).
The accounts under regulatory investigation are placed on internal
monitoring and a recommendation may be made for those accounts
to be closed where there is evidence that the account is being used
for fraudulent activities.
Money laundering control
The bank attaches utmost importance to ensuring that know your
customer (KYC), anti-money laundering and terrorist financing control
legislations are strictly adhered to. These legislations impose certain
obligations on the bank such as ensuring that all customers of the
bank have passed through a KYC scrutiny; that records of customers
and their transactions are kept for a five year period; and that certain
threshold transactions are reported on a weekly basis.
Key legislations and regulations that govern anti-money laundering
are the Money Laundering (Prohibition) Act �004; Central Bank of
Nigeria (CBN) KYC Manual; various CBN circulars, and the Economic
and Financial Crimes Commission (EFCC) Act of �004.
In accordance with the relevant provisions of the Money Laundering
(Prohibition) Act of �004, training programmes are also organised
for the group’s employees and over 950 employees of the group
have been trained already in this regard. Training is carried out in an
easy to understand manner that allows members of staff to have a
good understanding of key issues such as KYC, money laundering,
suspicious transactions and terrorist financing.
Early in the year, the bank had categorised all its active accounts
into categories A, B, and C for high, medium and low risk accounts
respectively to allow for a risk based monitoring of customer
accounts.
As part of the bank’s commitment and resolve to combat the
scourge of money laundering an automated anti-money laundering
(AML) solution was recently installed to ensure that the process of
identifying and capturing suspicious transactions is more effective.
This process enables the bank to monitor transactions of customers
that are viewed to be unusual on a continuous basis.
Reputational risk
Reputational risk is the risk caused by damage to an organisation’s
reputation, name or brand. Such damage may result from a breakdown
of trust, confidence or business relationships. Safeguarding the
group’s reputation is of paramount importance to its continued
success and is the responsibility of every member of staff.
As a group, Stanbic IBTC places a high premium on its reputation and
all its members of staff are constantly reminded of the need to ensure
that the bank’s name is protected at all times and in all situations. As a
banking group, Stanbic IBTC’s good reputation depends on the way in
which it conducts business, but it is also affected by the way in which
clients, to whom it provides financial services, conducts themselves.
Corporate governance
84 8585
• Directors’ report
• Audit committee report
• Consolidated financial statements
* Statements of directors’ responsibilities
* Report of the independent auditor
* Statement of significant accounting policies
* Balance sheet
* Profit and loss account
* Statement of consolidated cash flows
* Notes to theconsolidated financial statements
* Statement of value added
* Five year consolidated financial summary
Annual financial statementsAnnual financial
statements
86 87
Directors’ shareholding:
The directors specified below held shares either directly or indirectly on � April �008 and continued to hold direct or indirect shareholdings in
the bank throughout the year under review.
Ordinary Shares
As at �.�.08 As at ��.��.08
Direct Indirect Direct Indirect
Atedo N. A. Peterside OON �00,000,000 – ��0,000,000 –
Chris Newson – – – –
Sola David - Borha �6,���,57� – �6,���,57� –
Marna Roets – – – –
Jacques Troost – – – –
Moses Adedoyin 44,��,000 – 44,��0,000 –
Mallam Ahmed Dasuki ��5,005,��� – �09,000,7�� –
Dr Alewyn Burger – – – –
Ifeoma Esiri ��9 844 �94 – ���,844,�94 –
Dr Christopher Kolade CON – – – –
Ben Kruger – – – –
Bhagwan Mahtani * 5�,�7�,��� �,007,�0�,958 5�,�7�,��� �,007,�0�,958
Ratan Mahtani** 5�,�7�,��� �,007,�0�,958 5�,�7�,��� �,007,�0�,958
Jacko Maree – – – –
Yinka Sanni �,�4�,0�0 – �,450,000 –
Sam Unuigbe ���,605,600 – ���,605,600 –
Lt Gen (rtd) M.I. Wushishi CFR GCON*** – ��4,000,000 – ��4,000,000
* Bhagwan Mahtani has an indirect holding in the bank through a number of companies that include Aegean Investments Limited, Churchgate
Nigeria Limited, First Century International Limited, Foco International Investments Limited, T F Kuboye & Co and International Seafoods
Limited, in which companies he has either a direct or indirect interest.
** Ratan Mahtani has a direct shareholding in the bank of 5�,�7�,��� Ordinary Shares of 50 kobo each and also has a similar indirect holding
in the same companies as Bhagwan Mahtani.
*** Lt Gen (rtd) M.I. Wushishi CFR GCON, has an indirect holding in the bank through Umfat Holdings Ltd, a company in which he is the
majority shareholder.
Directors’ report
In compliance with the Companies & Allied Matters Act Cap C�0 Laws
of the Federation of Nigeria �004 (“CAMA”) the directors present
the directors’ report for Stanbic IBTC Bank PLC. The report also makes
reference to issues relating to the bank’s wholly - owned subsidiaries:
Stanbic IBTC Asset Management Limited, Stanbic IBTC Ventures
Limited and Stanbic Nominees Limited; the subsidiaries in which it
has a majority equity stake; Stanbic Equities Limited, RB Resources
Limited; Stanbic IBTC Ventures’ and Stanbic IBTC Pension Managers
Limited. Where reference is made to the bank and its subsidiaries
such reference is classified as a reference to the Stanbic IBTC Bank
Group (the group).
During the year under review, the bank provided corporate and
investment banking, asset management, private banking and retail
banking services from a total of 6� branches and private banking
suites. The bank’s subsidiaries in turn provided a range of services
that included asset management, stock broking, custodial services,
pension fund administration and property development.
Asset Values:
As at �� December �008 the group’s total assets amounted to N�5�
billion, of which net fixed assets were in the sum of N�5 billion. The
group’s capital and reserves exceeded N8� billion (including minority
interest of N7�� million).
Board of Directors
As at �� December �008, the board was comprised of the following �7 persons:
Atedo N. A. Peterside OON Chairman
Chris Newson CEO
Sola David – Borha Deputy CEO
Marna Roets Executive director
Jacques Troost Executive director
Moses Adedoyin Non – executive director
Mallam Ahmed Dasuki Non – executive director
Dr Alewyn Burger Non – executive director
Ifeoma Esiri Non – executive director
Dr Christopher Kolade CON Non - executive director
Ben Kruger Non – executive director
Bhagwan Mahtani Non – executive director
Ratan Mahtani Non – executive director
Jacko Maree Non – executive director
Yinka Sanni Non – executive director
Sam Unuigbe Non – executive director
Lt Gen (rtd) M.I. Wushishi CFR GCON Non – executive director
On the ��nd of July �008, Craig Bond, who was appointed to the board on �5 October �007 voluntarily resigned from the board. Dr Alewyn
Burger and Ratan Mahtani were appointed to the board on �� July �008, subject to the bank obtaining all regulatory approvals for their
appointments, which approvals were fully obtained by December �008.
In accordance with Article 8� of the bank’s Articles of Association, Sola David Borha, Marna Roets, Mallam Ahmed Dasuki, Ifeoma Esiri, Ben
Kruger and Bhagwan Mahtani retire by rotation and being eligible, offer themselves for re – election. The appointments of Dr Alewyn Burger
and Ratan Mahtani, which took effect after the September �008 annual general meeting will be tabled for shareholders’ approval at the
annual general meeting (AGM) that will, amongst other items, discuss and where appropriate approve the bank’s financial statements for the
year ended �� December �008.
Annual financial statements
88 89
Auditors
In accordance with Section �57(�) of the Companies & Allied Matters Act Cap C�0 Laws of the Federation of Nigeria �004, PricewaterhouseCoopers
have indicated their willingness to continue in office as external auditors to the company. A resolution will be proposed, and if considered
appropriate passed, by shareholders, at the AGM, to authorise the directors to fix the remuneration of the auditors.
Charitable & other donations
During the year under review and in conformity with its laid down policy on donations, the group donated the amounts indicated below to
finance specified activities of the recipient organisations:
Nigeria Chamber of Commerce �00,000.00
Nigeria Police College �86,000.00
Society of Petroleum Engineers �50,000.00
National Youth Service Corps ��5,000.00
Minna Golf Club �00,000.00
�008 Annual Small World Event �00,000.00
Ivory Club of Nigeria 50,000.00
Military Hospital Ikoyi �0,000.00
Sacred Heart Hospital �0,000.00
Rayfield Club �0,000.00
Ibadan South West lga �0,000.00
Nig Inst. of Estate Surv. & Valuer �0,000.00
Ministry of Environment’s Office �0,000.00
Lagos State Security Trust Fund �0,000,000.00
Directors’ responsibilities
The directors’ responsibilities are specified in the corporate governance section of this Annual Report.
Record of directors’ attendance
The record of directors’ attendance at board and shareholders’ meetings during the financial year under review is disclosed in the corporate
governance section of the Annual Report.
Equity and range analysis
As at �� December �007 the bank had a total of ��7,�45 shareholder accounts and the range analysis of their holdings is specified below:
Equity and Range Analysis.
Range Holders Units
No. % Cum No % Cum.
� -�,000 �7,704 ��.65 �7,704 ��,�57,8�� 0.�� ��,�57,8��
�,00� -5,000 49,54� 4�.�9 77,�45 ��7,984,5�4 0.74 �6�,�46,��6
5,00� -�0,000 �5,4�4 ��.�7 9�,669 ���,���,��5 0.70 �9�,469,65�
�0,00� -50,000 �7,84� �5.�� ��0,5�0 4��,64�,66� �.�� 7�6,���,���
50,00� -�00,000 �,��5 �.66 ���,6�5 �50,94�,678 �.�4 977,056,99�
�00,00� -500,000 �,75� �.�5 ��6,�77 6�4,4�5,585 �.�� �,60�,47�,576
500,00� -�,000,000 �79 0.�� ��6,756 �95,78�,��6 �.58 �,897,�54,79�
�,000,00� -�,000,000 �59 0.�4 ��6,9�5 ���,�55,0�9 �.�� �,��8,409,8��
�,000,00� -5,000,000 �0� 0.09 ��7,0�8 ��5,9��,995 �.74 �,454,���,806
5,000,00� -�0,000,000 50 0.04 ��7,068 �59,054,��9 �.9� �,8��,�85,9�5
�0,000,00� -50,000,000 4� 0.04 ��7,��� 947,040,5�8 5.05 �,760,4�6,45�
50,000,00� -�00,000,000 �0 0.0� ��7,��� 754,90�,��� 4.0� 4,5�5,��7,576
�00,000,00� -999,999,999,999 �4 0.0� ��7,�45 �4,��4,67�,4�4 75.9� �8,750,000,000
Grand Total ��7,�45 �00% �8,750,000,000 �00%
Results and Dividends
The Group The Bank
N’000 N’000
Profit after Tax ��,994,4�0 9,��4,80�
Dividend Proposed 7,500,000 7,500,000
Transfer to Reserves �,9�8,67� �,764,44�
Directors’ report
Naira
Annual financial statements
90 9�
Directors’ report
Miscellaneous
Subsidiaries
The names of IBTC Asset Management Limited, IBTC Pension
Managers Limited and IBTC Ventures Limited were changed to Stanbic
IBTC Asset Management Limited, Stanbic IBTC Pension Managers
Limited and Stanbic IBTC Ventures Limited respectively, which new
names reflect their association with Stanbic IBTC.
The group’s equity holding in Stanbic IBTC Pension Managers Limited,
which was formerly held by IBTC Ventures Limited, was transferred to
the bank during the year and the percentage shareholding of that
company now held by the bank increased to 70.59%. Accordingly,
Stanbic IBTC Pension Managers Limited is now a direct subsidiary of
the bank.
The issued and authorised share capital of Stanbic IBTC Asset
Management increased from N�00 million to N� billion.
The bank disposed of the totality of its equity holding in Britex Nigeria
Limited, which it had acquired as a SMEIS investment which ceased to
be a subsidiary of the bank in July �008. R B Resources in which the
bank has a 90% equity holding is currently being wound up.
Stanbic IBTC Asset Management Limited (“SIAML”) combined with
Stanbic Equities was the largest Stock-broking firm by transaction
value on The Nigerian Stock Exchange (“The NSE”) for the third year
running. Stanbic IBTC Pension Managers Limited is the largest pension
administrator by number of accounts and assets under management.
Employment of disabled persons:
The group does not currently employ any disabled person. However,
its recruitment policy, which is based solely on merit, does not
discriminate against any person on the grounds of physical disability
or because he /she has HIV/AIDS.
Health, safety and welfare at work:
The group provides comprehensive medical, dental and optical
cover for all employees and their dependants under a group health
insurance scheme. Where an employee acting within the scope of
his/her employment accidentally injures a third party the group
will, within acceptable limits, defray such party’s medical expenses.
Employees can also receive independent counselling and advise at the
group’s expense in relation to work and life problems, as the group
has subscribed to an independent counselling advisory service utilised
throughout the Standard Bank Group and known as ICAS.
Employee involvement and training:
To ensure that it appropriately addressed employees’ welfare and
concerns throughout the year under review, the group:
- kept staff informed of all matters affecting them and the group in
general and encouraged their contributions towards the
development of staff policies.
- held a number of staff meetings that discussed the group’s day-to-
day operations, business focus and staff welfare issues.
- ensured that staff received continuous on - the - job training and also
attended relevant programmes conducted by reputable third party
facilitators both within and outside Nigeria, as well as the Standard
Bank Global Leadership Centre (GLC) in South Africa.
The Committee reviewed Management’s Response to the Auditors
findings in respect of management matters and we and the Auditors
are satisfied with management’s response thereto.
On a review of insider / related party transactions the Committee was
satisfied with their status.
The Committee therefore recommended that the Audited Financial
Statements of the group for the year ended �� December �008
and the Auditors’ Report thereon, be presented for adoption by the
company at the Annual General Meeting.
The Committee also approved the provision made in the Financial
Statements in relation to the remuneration of the auditors.
ENG. OLUYOMI ADEYEMI WILSON
CHAIRMAN, AUDIT COMMITTEE
� February �009
Audit committee report
In compliance with the provisions of Section �59(�) to (6) of the
Companies & Allied Matters Act Cap C�0 Laws of the Federation
of Nigeria �004 the Committee considered the Audited Financial
Statements for year ended �� December �008 together with the
Management Control Report from the Auditors and the bank’s
response to this report at its meeting held on � February �008.
In our opinion, the scope and planning of the audit for the year ended
�� December �008 was adequate.
After due consideration, the Committee accepted the Report of the
Auditors that the financial statements were in accordance with ethical
practices and in accordance with generally accepted accounting
practices and gives a true and fair view of the state of the bank’s
financial affairs.
Annual financial statements
9� 9�
Consolidated financial statements �� December �008• Report of the Independent auditor
• Statement of directors’ responsibilities
• Statement of significant accounting policies
• Balance sheet
• Profit and loss account
• Statement of consolidated cash flows
• Notes to the consolidated financial statements
• Statement of value added
• Five year consolidated financial summary
9�
Annual financial statements
94 95
Annual financial statementsReport of the
independent auditor
Report on consolidated financial statements
We have audited the accompanying consolidated financial statements
of Stanbic IBTC Bank PLC (“the bank”) and its subsidiaries (together
“the group”) which comprise the consolidated balance sheet as of
�� December �008 and the consolidated profit and loss account and
consolidated statement of cash flows for the year then ended and
a summary of significant accounting policies and other explanatory
notes.
Directors’ responsibility for the financial statements
The directors are responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with Nigerian
Statements of Accounting Standards and with the requirements of the
Companies and Allied Matters Act and the Banks and Other Financial
Institutions Act. This responsibility includes: designing, implementing
and maintaining internal control relevant to the preparation and
fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an independent opinion on the
consolidated 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 our audit to obtain reasonable assurance that
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the company’s internal control. An audit
also includes evaluating 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 sufficient and
appropriate to provide a basis for our opinion.
Opinion
In our opinion, the accompanying consolidated financial statements
give a true and fair view of the state of the financial affairs of the bank
and the group as of �� December �008 and of their profits and cash
flows for the year then ended in accordance with Nigerian Statements
of Accounting Standards, the Companies and Allied Matters Act and
the Banks and Other Financial Institutions Act.
Report on other legal and regulatory requirements
The Companies and Allied Matters Act and the Banks and Other
Financial Institutions Act require that in carrying out our audit we
consider and report to you on the following matters.
We confirm that:
i) we have obtained all the information and explanations which to
the best of our knowledge and belief were necessary for
the purposes of our audit;
ii) in our opinion proper books of account have been kept,
so far as appears from our examination of those books;
iii) the bank’s balance sheet and profit and loss account are in
agreement with the books of account;
iv) our examination of loans and advances was carried out in
accordance with the Prudential Guidelines for licensed banks
issued by the Central Bank of Nigeria;
v) related party transactions and balances are disclosed in Note �0
to the financial statements in accordance with the Central Bank of
Nigeria circular BSD/�/�004;
vi) the bank contravened certain sections of the Banks and
Other Financial Institutions Act during the year as explained
in Note �� to the consolidated financial statements.
vii) except for the contraventions disclosed in Note �� to the
consolidated financial statements, the bank has complied with the
requirements of the relevant circulars issued by the Central Bank
of Nigeria during the year.
Chartered Accountants
�� May �009
Lagos, Nigeria
Report of the independent auditor to the members of Stanbic IBTC Bank PLC
• Nigerian Accounting Standards;
• Prudential guidelines for licensed banks;
• relevant circulars issued by the Central Bank of Nigeria;
• the requirements of the Banks and Other Financial Institutions
Act; and
• the requirements of the Companies and Allied Matters Act.
The directors are of the opinion that the consolidated financial
statements give a true and fair view of the state of the financial
affairs of the group and of its profit or loss. The directors further
accept responsibility for the maintenance of accounting records that
may be relied upon in the preparation of the consolidated financial
statements, as well as adequate systems of internal financial control.
Nothing has come to the attention of the directors to indicate that
the bank and its subsidiaries will not remain a going concern for at
least twelve months from the date of this statement.
Statement of directors’ responsibilities
The Companies and Allied Matters Act and the Banks and Other
Financial Institutions Act, require the directors to prepare financial
statements for each financial year that give a true and fair view of the
state of financial affairs of the bank at the end of the year and of its
profit or loss. The responsibilities include ensuring that the bank:
a) keeps proper accounting records that disclose, with reasonable
accuracy, the financial position of the company and comply with
the requirements of the Companies and Allied Matters Act, and
the Banks and Other Financial Institutions Act;
b) establishes adequate internal controls to safeguard its assets and
to prevent and detect fraud and other irregularities; and
c) prepares its financial statements using suitable accounting policies
supported by reasonable and prudent judgements and estimates,
and are consistently applied.
The directors accept responsibility for the annual financial statements,
which have been prepared using appropriate accounting policies
supported by reasonable and prudent judgements and estimates,
in conformity with:
ATEDO N.A. PETERSIDE O O N CHRIS NEWSON
(CHAIRMAN) (CHIEF EXECUTIVE OFFICER)
�9 APRIL �009
�� May �009
96 97
Annual financial statements
Segments whose total revenue (internal and external), absolute profit
or loss or total assets are �0% or more of the group total, are reported
separately. Transactions between segments are priced at market-
related rates.
H. Provision against credit risk
Provision is made in accordance with the Statement of Accounting
Standard for Banks and Non-Bank Financial Institutions, (SAS �0)
issued by the Nigerian Accounting Standards Board, and Prudential
Guidelines issued by the Central Bank of Nigeria. For each account
that is not performing in accordance with the terms of the related
facility, provision is made as follows:
Interest and/or principal outstanding for over:
Classification Minimum
Provision
90 days but less than �80 days Substandard �0%
�80 days but less than �60 days Doubtful 50%
Over �60 days Lost �00%
When a loan is deemed uncollectible, it is written off against the
related provision for impairments. Subsequent recoveries are credited
to the provision for loan losses in the profit and loss account. If the
amount of the impairment subsequently decreases due to an event
occuring after the write-down, the release of the provision is credited
as a reduction of the provision for impairment in the profit and loss
account.
A minimum of �% general provision is made in accordance with
prudential guidelines.
Statement of significant accounting policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented, unless
otherwise stated.
A. Basis of preparation
The consolidated financial statements are prepared in compliance
with Nigerian Statements of Accounting Standards (SAS) issued by
the Nigerian Accounting Standards Board (NASB). The consolidated
financial statements are presented in the functional currency, Nigerian
Naira (N), rounded to the nearest thousand, and prepared under the
historical cost convention as modified by the revaluation of certain
investment securities, property, plant and equipment.
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles in Nigeria requires the use of
estimates and assumptions that affect the reported amounts of assets
and liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on the directors’ best knowledge of current
events and actions, actual results may differ from those estimates.
B. Basis of consolidation
Subsidiary undertakings, which are those companies in which the
group, directly or indirectly, has interest of more than half the voting
rights or otherwise has power to control, have been consolidated.
All intercompany transactions, balances and unrealised surpluses
and deficits on transactions between group companies have been
eliminated. Where necessary, accounting policies for subsidiaries have
been adjusted to ensure consistency with the policies adopted by the
group.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries and other entities by the group. Identifiable
assets acquired, liabilities and contigent liabilities assumed in
a business combination are measured at their fair values at the
acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the group’s
share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets
of the entities acquired, the difference is recognised directly in the
profit and loss account.
C. Goodwill
Goodwill represents the excess of the cost of an acquisition over the
group’s interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities of the acquired entity, associate or joint
venture at the date of acquisition. Goodwill arising on the acquisition
of an entity is reported in the balance sheet as an intangible asset.
Goodwill arising on acquisitions is allocated to cash generating units
and tested annually for impairment. Negative goodwill is recognised
as income in the period in which it arises. Gains or losses on the
disposal of an entity include the carrying amount of goodwill relating
to the entity sold. Where there has been impairment in the value of
goodwill, the loss is identified in the year in which the impairment
was made.
D. Recognition of interest income and expense
i) Interest income and expense are recognised in the profit and
loss account for all interest bearing instruments on an accrual
basis using the effective yield method based on the outstanding
principal, except for interest income overdue for more than 90
days, which is suspended and recognised only to the extent that
cash is received.
ii) Income accruing on advances under finance lease is amortised
over the lease period to achieve a constant rate of return on the
outstanding net investment. Rental income on equipment leased
to customers is recognised on a straight line basis over the
lease term.
iii) Income earned on bonds and guarantees are recorded
as commissions in the period in which they occur.
E. Fees and commission
Fees and commission are generally recognised on an accrual basis
when the service has been provided. Commitment fees for loans that
are likely to be drawn down are deferred (together with related direct
costs) and recognised as an adjustment to the effective interest
on loans.
Commissions and fees arising from negotiating, or participating in
the negotiation of a transaction for a third party, such as establishing
letters of credit, arrangement of the acquisition of shares or other
securities or the purchase or sale of businesses are recognised on
completion of the underlying transaction. Portfolio and other
management advisory and services fees are recognised based on the
applicable service contracts, usually on a time - apportionment basis.
Asset management fees related to investment funds are recognised
rateably over the period the service is provided.
F. Foreign currency transactions
Transactions denominated in foreign currency are converted into
Naira at the rate of exchange ruling at the date of the transaction.
Foreign currency balances are translated at the rate of exchange
prevailing at the balance sheet date or, where appropriate, at the
related forward exchange rate. Exchange differences are included in
the profit and loss account in the period in which they arise.
Forward contracts
Losses arising from forward contracts are recognised as soon as
they appear to be likely, while gains are not recognised until they
are realised. However for a perfectly matched or hedged transaction,
gains are recognised or losses deferred to the extent that the loss or
gain has been recognised on the matching or hedging investment.
G. Segment reporting
An operating segment is a component of the group engaged in
business activities, whose operating results are regularly reviewed
by management in order to make decisions about resources to be
allocated to segments and assessing segment performance. The
group’s identification of segments and the measurement of segment
results are based on the group’s internal reporting to management.
It represents the classification of the group’s activities in segments
that reflect the risk and return of the group’s product offerings in
different product markets. Additional information relating to products
and services, geographic areas and major customers is provided.
98 99
Annual financial statements
I. Finance leases
Investments under finance lease arrangements to customers are
recorded as receivables at an amount equal to the net investment in
the lease i.e. the present value of the lease payments. The difference
between the gross receivable and the present value of the receivable
is recognised as unearned income. Income accruing on the lease
is amortised over the lease period on a basis reflecting a constant
periodic rate of return on the outstanding net investment.
J. Investment securities
Investment securities are classified as short term and long term
securities. Debt and equity securities intended to be held for a period
not exceeding one year are classified as short term investments.
Investment securities intended to be held for an indefinite period of
time, or until maturity, and which may be sold in response to needs
for liquidity or change in market rates, exchange rates or equity prices
are classified as long term investments.
Short term investments
Short term investments held by the bank are stated at net realisable
value. Unrealised gains are included in the revaluation reserve account.
Unrealised losses are taken to the revaluation reserve account to the
extent that a previous gain is offset. Otherwise, unrealised losses are
charged to the profit and loss account.
Short term investments held by subsidiaries engaged in stockbroking
activities are held at market value. Unrealised gains are included in
the revaluation reserve account. Unrealised losses are taken to the
revaluation reserve account to the extent that a previous gain is
offset. Otherwise, unrealised losses are charged to the profit and loss
account.
Short term investments held by subsidiaries engaged in pension fund
administration are stated at lower of cost and net realisable value.
Short term investments held by other subsidiaries are stated at lower
of cost and market value. Unrealised losses are charged to the profit
and loss account.
Long term investments
Long term investment securities held by the bank are stated at lower
of cost and market value. Unrealised losses are charged to the profit
and loss account.
Long term securities held by subsidiaries that are engaged in stock
broking activities and pension fund administration are stated at cost.
Long term securities held by other subsidiaries are stated at revalued
amount. Unrealised gains are included in the revaluation reserve
account. Unrealised losses are taken to the revaluation reserve
account to the extent that a previous gain is offset. Otherwise,
unrealised losses are charged to the profit and loss account.
Interest
Interest earned whilst holding investment securities is reported
as interest income, while dividend received is reported as dividend
income. Realised gains and losses on disposal of investments are
charged to the profit and loss account for the period of disposal.
K. Investment properties
Investment in real estate is stated at market value and revalued
every three years. Revaluation losses are charged to the profit and
loss account, while revaluation gains are taken to the profit and
loss account to the extent that a previous loss is offset. Otherwise,
revaluation gains are included in the revaluation reserve.
L. Dealing securities
Dealing securities are stated at their market prices. All gains and
losses realised and unrealised from trading in dealing securities are
reported in trading income. Interest earned whilst holding dealing
securities is reported as trading income.
M. Investments in subsidiaries
Investments in subsidiaries are carried in the bank’s balance sheet at
cost less provisions for impairment losses. Where, in the opinion of the
directors, there has been impairment in the value of an investment, the
loss is recognised as an expense in the period in which the impairment
is identified. On disposal of an investment, the difference between
the net disposal proceeeds and the carrying amount is charged to the
profit and loss account.
N. Operating leases
Leases to customers in which a significant portion of the risks and
rewards of ownership are retained by the bank are classified as
operating leases, and accounted for by the bank as an item of fixed
asset. The depreciation of these assets is on the basis of the bank’s
normal depreciation policy for the various classes of assets leased out.
The periodic lease rentals receivable are treated as rental income in
the income statement during the period they occur; while initial direct
costs incurred are written off to the income statement in the period
incurred.
O. Dividend
Proposed diviends on ordinary shares are disclosed as a note to the
financial statements in the period in which they are proposed by the
directors, amounts ratified for dividend payment by the shareholders
are recognised as charge against the distributable reserve in the
period in which the payment become obligatory.
P. Fixed assets
All categories of fixed assets are initially recorded at historical cost
less depreciation. Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated
with the item flow to the company and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to
the profit and loss account during the financial period in which they
are incurred.
Fixed assets are periodically reviewed for impairment. Where the
carrying amount of an asset is greater than its estimated recoverable
amount, it is written down immediately to its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. Gains and losses on disposal of fixed assets are
determined by reference to their carrying amounts and are taken into
account in determining operating profit.
Q. Depreciation
Depreciation is calculated on a straight line basis to write-off fixed
assets and equipment on lease over their estimated useful life. The
basis of calculation for each class of asset are set out below:
Leasehold land Over the life of the lease
Building �5 years
Motor vehicles 4 years
Furniture, fittings and equipment 4 years
Computer equipment & software � years
Leasehold assets, machinery & equipment Over the life of the lease
R. Income taxation
Income tax expense is the aggregate of the charges to the profit
and loss account in respect of current income tax, education tax,
information technology development tax and deferred income tax.
Current income tax is the amount of income tax payable on the
taxable profit for the period determined in accordance with the
Company Income Tax Act (CITA). Education tax is assessed at �% of
the chargeable profits whilst information technology development
tax is assessed at �% of profit before tax.
Deferred income tax is provided in full using the liability method on
all temporary differences arising between the tax bases of assets and
liabilities and their carrying values for financial reporting purposes.
Deferred income tax is determined using tax rates enacted or
substantively enacted at the balance sheet date and are expected
to apply when the deferred income tax liability is settled. Deferred
income tax assets are recognised only to the extent that it is probable
that future taxable profits will be available against which the
temporary difference can be utilised.
S. Retirement benefits
The group operates a defined contribution pension scheme in line
with the provisions of the Pension Reform Act, with contributions
based on the sum that consists of employees basic salary, housing
and transport allowance in the ratio 7.5% by the employee and 7.5%
by the employer.
The group’s contributions to the scheme are charged to the profit
and loss account in the period to which they relate, and the scheme’s
assets are held by pension fund administrators on behalf of the
beneficiary staff.
T. Off-balance sheet engagements
Off-balance sheet engagements comprise direct credit substitutes and
transaction related contingencies such as guarantees, acceptances,
bid bonds and performance guarantees which the bank is a party to in
its normal course of business. Income earned on bonds and guaratees
are amortised over the life of the guarantee, while other fees are
recognised as commissions in the period in which they occur.
U. Fiduciary activities
Where the group acts in a fiduciary capacity such as a nominee,
assets and liabilities arising there from, together with the related
undertakings to return such assets to the customers, are excluded
from the financial statements.
Statement of significant accounting policies
�00 �0�
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Note
Gross earnings 6�,�40,5�4 5�,87�,4�8 �8,65�,0�6 �4,7��,949
Interest income � 40,97�,�7� 40,60�,907 �5,77�,0�8 �5,497,5�7
Interest expense � (�8,6��,�00) (�8,65�,�58) (6,�70,948) (5,998,06�)
Net interest margin ��,�6�,07� ��,949,549 9,60�,070 9,499,455
Other income 4 �0,�67,�4� ��,�70,5�� ��,879,0�8 9,��4,4��
Total income 4�,6�9,��4 �5,��0,060 ��,480,088 �8,7��,887
Provision for risk and other assets �6 (5,0�9,8�5) (5,�04,786) (�,04�,68�) (�,04�,68�)
Income after provision for losses charged �7,609,�79 �0,0�5,�74 �0,4�6,405 �6,690,�04
Operating expenses 5 (��,98�,484) (�9,47�,59�) (9,444,�77) (7,89�,800)
Net profit before tax �4,6�6,895 �0,54�,68� �0,99�,��8 8,796,404
Tax 6 (�,6��,465) (�,��7,879) (�,�4�,�80) (�,854,6�9)
Profit after tax ��,994,4�0 9,��4,80� 7,849,848 6,94�,765
Minority interest �6 (4�0,�79) – (�65,0�4) –
Profit after tax and minority interest ��,564,�5� 9,��4,80� 7,584,8�4 6,94�,765
APPROPRIATIONS:
Transfer to statutory reserve �5 �,9�8,67� �,764,44� �,�6�,�99 �,08�,5�0
Transfer to retained earnings �5 8,6�5,478 6,450,�6� 5,4��,4�5 4,859,��5
��,564,�50 9,��4,80� 7,584,8�4 6,94�,765
Earnings per share (basic) 9 64 k 49 k 7� k 6� k
Earnings per share (diluted) 9 64 k 49 k 4� k �7 k
The board of directors has proposed a dividend of 40kobo per share (�� December �007: �5kobo per share) on the issued share capital of
�8.75 billion ordinary shares of 50kobo each, subject to the approval by the shareholders at the next annual general meeting.
The accounting policies on pages 96 to 99 and the notes on pages 106 to 135 form an integral part of these financial statements.
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Note
ASSETS
Cash and short term funds �0 ��,586,6�7 ��,440,68� ��,0�7,8�� ��,0�5,85�
Due from other banks �� ���,59�,�59 ��0,�58,50� 79,578,685 7�,800,�74
Short term investments �� �4,548,809 ��,540,99� 5�,467,959 5�,467,959
Loans and advances �4 98,�98,�7� 99,0�0,�88 79,464,605 79,6�5,690
Advances under finance leases �7 4,�6�,548 4,�6�,548 �,989,477 �,989,477
Other assets �8 �9,455,�4� �9,�89,��6 ��,76�,80� ��,4��,7�8
Long term investments �� 75,977,6�4 7�,��4,7�� 68,�45,09� 6�,8��,968
Fixed assets �9 �5,4��,906 �4,905,000 8,66�,669 8,�45,046
�5�,�5�,�98 �45,7��,07� ��5,�07,�0� �04,5�9,994
LIABILITIES
Deposits, current and other accounts �0 95,�40,�75 98,89�,5�� 7�,�90,744 7�,455,���
Due to other banks �� 8�,�0�,6�7 8�,�0�,6�7 67,�98,��� 66,85�,9�7
Tax payable 6 5,8��,4�9 �,�40,�9� 5,640,50� �,6��,948
Other liabilities �� 74,0��,687 7�,�4�,775 66,784,44� 6�,59�,8�4
Deferred tax 7 �78,467 ��6,7�7 44�,654 5�,�07
Long term loans �� ��,�0�,�58 ��,�0�,�58 �7,5��,��� �7,5��,���
�69,876,95� �69,��4,4�0 ��9,088,677 ���,098,�6�
EQUITY
Share capital �4 9,�75,000 9,�75,000 9,�75,000 9,�75,000
Reserves �5 7�,�90,04� 67,�4�,65� 66,�88,��5 6�,046,7��
Shareholders’ funds 80,665,04� 76,6�6,65� 75,56�,��5 7�,4��,7��
MINORITY INTEREST �6 7��,404 – 455,�09 –
LIABILITIES, EQUITY AND MINORITY INTEREST �5�,�5�,�98 �45,7��,07� ��5,�07,�0� �04,5�9,994
ACCEPTANCES AND GUARANTEES �7 50,860,640 50,860,640 56,�59,�7� 56,�59,�7�
The consolidated financial statements and notes on pages 95 to ��5 were approved by the board of directors on �9 April �009 and signed on
its behalf by:
The accounting policies on pages 96 to 99 and the notes on pages 106 to 135 form an integral part of these financial statements.
Balance sheet
ATEDO N.A. PETERSIDE OON CHRIS NEWSON
(Chairman) (Chief Executive Officer)
Profit and loss account
Annual financial statements
�0� �0�
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities (note vi) (9,470,�7�) (8,�46,�55) (�9,�66,995) (�8,��6,�4�)
Investment in subsidiaries – (�,�64,706) – –
Net cash inflow from acquisition of subsidiary (note viii) - – – 9�,4�0,�09 9�,4�0,�09
Increase of investment in existing subsidiary (�64,706) – – –
Purchase of other investments (�,007,8�8) – – –
Investment in SMEEIS (��4,�77) (��4,�77) (7�9,��8) (7�9,��8)
Proceeds from sale /(realisation) of underwriting
commitments and other investments (note vii) 4,87�,098 4,5��,7�7 (�,960,694) (4,�9�,6�6)
Purchase of tangible fixed assets (8,795,756) (8,�77,949) (�,�58,494) (�,�00,�45)
Proceeds from sale of tangible fixed assets (note v) 7�,8�� 57,5�4 �8,76� �0,5�7
Net cash (used in)/ generated from investing activities (�4,8�6,909) (��,5��,8�6) 66,���,57� 66,00�,405
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease)/ increase in long term loans (�5,���,854) (�5,���,854) ��,9�4,�60 ��,9�4,�60
Dividend paid (4,767,500) (4,687,500) (�,750,000) (�,750,000)
Net cash (used in)/generated from financing activities (�0,099,�54) (�0,0�9,�54) �8,�74,�60 �8,�74,�60
Net (decrease)/increase in cash and cash equivalents (�,899,��5) �,�0�,445 68,5�8,�99 6�,5��,55�
Balance at 1 January �40,�79,�8� ���,�98,8�� 7�,660,784 70,877,�60
Balance at 31 December ��6,�79,968 ��4,700,�58 �40,�79,�8� ���,�98,8��
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating profit excluding non cash items (note ii) ��,480,094 7,748,979 ��,66�,076 ��,�66,705
- Taxes paid (�,945,6�9) (�,���,558) (707,�97) (6�0,464)
Operating profit before changes in operating 9,5�4,465 6,5�6,4�� ��,95�,679 ��,656,�4�
assets & liabilities
(Increase) / decrease in operating assets:
Loans to customers (�7,759,�54) (�8,�00,�8�) (��,0��,6��) (��,�99,�04)
Finance leases (�,778,067) (�,778,067) (��4,487) (��4,487)
Accrued interest and fees receivable (4,�85,���) (4,�80,�78) �,74�,��9 �,566,6�7
Prepaid interest (�,�8�,�59) (�,0�0,796) 579,85� 45�,5�0
Prepaid expenses (�,774,4�0) (�,798,869) ��9,648 �56,8��
Uninvested SMEEIS commitments (��7,66�) ��,564 �87,0�� ��9,5��
Due from subsidiary companies – 8�4,8�6 – –
Due from Standard Bank Group (SBG) �98,906 �98,906 (669,869) (�,��6,486)
Deposit for underwriting commitments 7,500,000 7,500,000 (7,500,000) (7,500,000)
WHT recoverable (���,4�6) (��8,047) 40,590 (�4�,878)
Deposit for shares 6�6,�95 – (6�6,�95) –
Open buy back treasury bills holdings with banks (�,500,000) (�,500,000) – –
Due from asset management and custody clients 574,79� – (574,79�) –
Sundry receivables (878,40�) (�46,7�0) 59,��� �48,�98
(�4,5�9,807) (��,��7,754) (�8,458,50�) (�9,448,�67)
Increase / (decrease) in operating liabilities:
Deposits current and other accounts ��,849,6�� �6,4�6,�09 (6,7�6,�75) (�0,5�6,7��)
Due to other banks �4,90�,5�4 �5,�49,700 �95,5�� (�50,6��)
Liability on refinanced letters of credit (968,49�) (968,49�) �,�0�,70� �,�0�,70�
Liability on cash-backed letters of credit 5,69�,404 5,69�,40� 8�0,7�� 8�0,7��
Interest payable �,98�,794 �,98�,796 6�9,�80 6�9,�79
Accrued expenses �,94�,�70 �,974,��5 900,6�� �,095,685
Unearned income �,66�,7�� �,6�4,560 95�,��4 �,057,67�
Application monies received 9,�97,897 9,785,�67 8,�40,946 7,9�4,400
Due to asset management clients (�5,80�,7�9) (��,6�9,���) �,05�,859 899,5�7
Drafts/bankers’ cheques payable (4��,576) (�57,�56) 7�8,0�7 7�8,0�7
Collections/remittances payable 55�,089 946,�96 6�4,855 ��8,697
Other payables �,��0,767 477,55� (94,40�) ��8,4�5
46,00�,�90 5�,5�4,948 9,6�5,�9� 5,��7,8�4
Net cash generated from/(used in) operating activities ��,0�7,048 �5,84�,6�5 (�5,889,5��) (��,654,���)
Statement of consolidated cash flows
Annual financial statements
�04 �05
vi. Purchase of investment securities
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Purchase of quoted securities (608,��7) – (���,706) –
Purchase of unquoted securities – – (�00) –
Purchase of investment in government securities (8,86�,9�4) (8,�46,�55) (�8,844,990) (�8,��6,�4�)
(9,470,�7�) (8,�46,�55) (�9,�66,995) (�8,��6,�4�)
vii. Sale /(realisation ) of underwriting commitment
Realisation of underwriting commitments 4,87�,098 4,5��,7�7 (4,807,580) (4,807,580)
Sale of other investments – – �,846,886 6��,944
4,87�,098 4,5��,7�7 (�,960,694) (4,�9�,6�6)
viii. Net cash flows resulting from acquisition of subsidiary
During the year ended December �007, the bank acquired the net asset of Stanbic Bank Nigeria Limited (SBN) at a purchase consideration of
N66.87billion. The net cash inflow resulting from acquisition of SBN is as detailed below:
Cash and short term funds – – 6,588,974 6,588,974
Due from other banks – – 8�,�9�,667 8�,�9�,667
Treasury bills – – �,448,569 �,448,569
Investments – – �5,4�6,64� �5,4�6,64�
Loans and advances – – ��,70�,085 ��,70�,085
Advances under finance leases – – �,��4,954 �,��4,954
Other assets – – �,��8,8�7 �,��8,8�7
Fixed assets – – 864,696 864,696
Total asset acquired: – – ��5,896,4�4 ��5,896,4�4
Deposits, current and other accounts – – (�0,085,889) (�0,085,889)
Due to other banks – – (6�,�6�,5�4) (6�,�6�,5�4)
Tax payable – – (�,�7�,�64) (�,�7�,�64)
Other liabilities – – (��,�00,�74) (��,�00,�74)
Deferred tax – – (�4,54�) (�4,54�)
Net asset acquired: – – �0,040,��� �0,040,���
Goodwill on acquisition – – �6,8�4,878 �6,8�4,878
Purchase consideration - shares allotted – – 66,875,000 66,875,000
Cash paid on acquisition of subsidiary – – – –
Cash and cash equivalent acquired:
- Cash and short term funds – – 6,588,974 6,588,974
- Due from other banks – – 8�,�9�,667 8�,�9�,667
- Treasury bills – – �,448,569 �,448,569
Net cash inflow resulting from – – 9�,4�0,�09 9�,4�0,�09
acquisition of subsidiary
i. Analysis of cash and cash equivalent balances as at 31 December
For the purpose of the cash flow statement, cash and cash equivalents comprises coins, bank notes, balances with Central Bank of Nigeria,
amounts due from local and foreign banks, net of outstanding bank overdrafts, money at call and short notice, and investment in short term
liquid instruments. Cash and cash equivalent at the end of the financial year, is reconciled to the related items in the balance sheet as follows:
Notes to the consolidated financial statements
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Cash and short term funds ��,586,6�7 ��,440,68� ��,0�7,8�� ��,0�5,85�
Due from other banks ���,59�,�59 ��0,�58,50� 79,578,685 7�,800,�74
Treasury bills ��,�0�,07� ��,�0�,07� 47,56�,687 47,56�,687
��6,�79,968 ��4,700,�58 �40,�79,�8� ���,�98,8��
ii. Operating profit excluding non cash items
Operating profit /(loss) excluding interest (7,7�5,�77) (��,406,869) �,�9�,058 (70�,05�)
Add: Interest received 40,97�,�7� 40,60�,907 �5,77�,0�8 �5,497,5�7
Less: Interest paid (�8,6��,�00) (�8,65�,�58) (6,�70,948) (5,998,06�)
Operating profit before tax �4,6�6,894 �0,54�,680 �0,99�,��8 8,796,404
Adjustment for non-cash and other items:
- Depreciation �,4��,��� �,�56,05� 77�,��6 669,5�9
- Withholding tax provisions (���,�8�) (�9�,�58) – –
- Profit on disposal of investments (406,745) (67,�84) (�,��9,0�0) (4��,466)
- Loss / (gain) on sale of assets (note v) 5�7,477 504,4�0 (5,0��) (�,��0)
- Loan loss provisions/suspended interest (note iii) (668,��9) (668,���) �,87�,678 �,87�,678
- Forward cover gain (4,�88,�86) (4,�88,�86) – –
- Other known losses (write back)/provisions (note iv) 477,0�� 66�,984 �58,976 �6�,770
Operating profit excluding non cash items ��,480,094 7,748,979 ��,66�,076 ��,�66,705
iii. Reconciliation of increase / (decrease) in loan loss provisions and suspended interest
Provision for loans and advances (Note �6) 4,540,86� 4,540,86� �,68�,9�� �,68�,9��
Provision for finance leases (Note �6) �,94� �,94� – –
Movement on unearned income on finance leases 504,055 504,055 ��6,75� ��6,75�
Interest charged and suspended for the year (Note �5) �,�74,�50 �,�74,�50 �,878,67� �,878,67�
Write-back/charge-off/reclassification (6,989,4�6) (6,989,4�6) (�,0�4,659) (�,0�4,659)
(668,��9) (668,���) �,87�,678 �,87�,678
iv. Reconciliation of increase / (decrease) in other known loss provisions
Provision for other known losses 477,0�� 66�,984 �6�,770 �6�,770
Amounts written off – – (�,794) –
477,0�� 66�,984 �58,976 �6�,770
v. Reconciliation of (profit) / loss on disposal of fixed assets
Cost 985,9�8 95�,904 5�,579 �8,�70
Depreciation (�94,6��) (�89,960) (�8,8�8) (�9,95�)
Net book value 59�,�97 56�,944 ��,75� 8,��7
Sales proceed (7�,8��) (57,5�4) (�8,76�) (�0,5�7)
Loss/(gain) on disposal 5�7,476 504,4�0 (5,0��) (�,��0)
Annual financial statements
�06 �07
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
3. INTEREST EXPENSE
Analysis by type:
Current accounts 4�7,085 4�9,045 ��8,69� ��9,8�8
Deposit accounts 7,508,696 7,547,794 4,749,�80 4,686,976
Interbank takings 4,555,�94 4,555,�94 6�0,�84 6�0,�84
Rediscounted instruments 6,��0,��5 6,��0,��5 59�,59� 480,984
�8,6��,�00 �8,65�,�58 6,�70,948 5,998,06�
Analysis by source:
Bank 4,555,�94 4,555,�94 6�0,�84 6�0,�84
Non bank �4,056,�06 �4,097,�64 5,560,664 5,�87,778
�8,6��,�00 �8,65�,�58 6,�70,948 5,998,06�
Analysis by geographical location:
Paid in Nigeria �7,7�7,0�� �7,758,070 4,457,87� 4,�84,985
Paid outside Nigeria 894,�89 894,�88 �,7��,077 �,7��,077
�8,6��,�00 �8,65�,�58 6,�70,948 5,998,06�
4. OTHER INCOME
Fees 6,�8�,�94 4,55�,6�� 8,�84,570 �,��6,�08
Foreign exchange earnings 4,��5,4�� 4,��5,4�� �,990,�70 �,990,06�
Commissions 8,7��,4�� �,966,047 804,044 804,044
Rental income �40,46� �40,46� �4�,866 �4�,866
Dividend from subsidiaries – – – �,��0,000
Dividend income �0�,9�5 �7,��0 7�,974 ��,79�
Other investment income – – 8�,9�� 4�,5��
Profit from disposal of investments 406,745 67,�84 �,��9,0�0 4��,466
Profit from disposal of assets – – 5,0�� �,��0
Other income 405,758 400,�4� �69,��9 �5�,�4�
�0,�67,�4� ��,�70,5�� ��,879,0�8 9,��4,4��
1. CONSOLIDATED FINANCIAL STATEMENTS
The group comprises Stanbic IBTC Bank PLC (“the bank”) and its subsidiary undertakings. The group provides corporate and investment
banking, asset management, pension fund administration and personal and business banking services.
The bank was incorporated as a private limited liability company on � February �989, granted a merchant banking license on
� February �989, and commenced operations on � March �989. Its merchant banking license was converted into universal banking license in
January �00�, pursuant to the universal banking scheme of the Central Bank of Nigeria. The bank’s shares are quoted on The Nigerian Stock
Exchange and held by both foreign and Nigerian individual and corporate investors.
The bank, which was incorporated as Investment Banking & Trust Company Plc (“IBTC”), merged with Chartered Bank Plc and Regent Bank Plc
on �9 December �005, and changed its name to IBTC Chartered Bank Plc. On �4 September �007, the bank merged with Stanbic Bank Nigeria
Limited (“SBN”), a wholly owned subsidiary of Stanbic Africa Holdings Limited (‘’SAHL’’), SAHL, a subsidiary of Standard Bank Group (“SBG”)
of South Africa, in accordance with the scheme of merger, acquired majority shareholding (50.�%) in the bank whose name was subsequently
changed to Stanbic IBTC Bank Plc.
In �996, the bank acquired majority shareholdings (99.99%) in two companies incorporated in Nigeria, namely IBTC Ventures Limited (“IVL”)
and IBTC Asset Management Limited (“IAML”). As at December �008, IVL had a 70.59% equity holding in IBTC Pension Managers Limited
(“IPML”) which is a licenced Pension Fund Administrator, up from an initial holding of 60%. This happened by virture of additional acquisition
of �0.59% of IPML’s shares from other shareholders, which took place during the year. In December �008, the shareholding of IVL in IPML was
acquired by the bank.
RB Resources Ltd (subsidiary of Regent Bank Plc) and Britex Nigeria Ltd (an SMEEIS Investment by Chartered Bank Plc and Regent Bank Plc
with 55% combined holding) became subsidiaries of the bank through the merger with Regent Bank Plc and Chartered Bank Plc. Stanbic
Equities Limited (‘’SEL’’) and Stanbic Nominees Limited (‘’SNL’’), subsidiaries of SBN, also became subsidiaries of the bank through the merger
with SBN.
In October �008, the subsidiaries changed their names to Stanbic IBTC Ventures Limited (“SIVL”), Stanbic IBTC Asset Management Limited
(“SIAML”) and Stanbic IBTC Pension Managers Limited (“SIPML”) respectively in line with the bank’s new corporate identity.
The financial statements of SIVL, SIAML, SIPML, SEL and SNL whose businesses were considered significant have been consolidated in the
group financial statements. However, the bank disposed off its investment in Britex Nigeria Ltd during the year under review, while the financial
records of RB Resources Ltd have not been consolidated in the group financial statements as it is the opinion of the directors that the balances
are immaterial to the group.
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
2. INTEREST INCOME
Analysis by type:
Loans and advances ��,9��,��4 ��,604,�88 8,784,07� 8,64�,��7
Treasury bills �,7��,�80 �,7��,�80 �,68�,85� �,68�,85�
Foreign accounts �,�07,00� �,�07,00� 505,8�8 505,8�8
Interbank placements 5,�0�,044 5,�0�,044 �,��7,890 �,044,6�9
Government stocks and bonds 7,040,7�4 6,976,�94 �,67�,�67 �,6��,97�
40,97�,�7� 40,60�,907 �5,77�,0�8 �5,497,5�7
Analysis by source:
Bank 8,96�,805 8,96�,805 �,9�4,8�7 �,85�,576
Non bank ��,009,568 ��,6�8,�0� ��,8�7,�9� ��,645,94�
40,97�,�7� 40,60�,907 �5,77�,0�8 �5,497,5�7
Analysis by geographical location:
Domestic �9,766,�7� �9,�94,906 �5,�66,�80 �4,99�,679
External �,�07,00� �,�07,00� 505,8�8 505,8�8
40,97�,�7� 40,60�,907 �5,77�,0�8 �5,497,5�7
Notes to the consolidated financial statements
Annual financial statements
�08 �09
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
6. TAX
Payable
At � January 5,640,50� �,6��,948 �,���,558 �,��4,98�
Income tax charge �,098,898 850,00� �,885,945 �,65�,656
Tax paid (�,945,6�9) (�,���,558) (675,55�) (54�,6�8)
Transfers arising from merger – – 979,4�8 979,4�8
Prior years’ under provision �7,658 – ��8,��4 �87,50�
At 31 December 5,8��,4�9 �,�40,�9� 5,640,50� �,6��,948
Charge
Current tax �,778,�80 649,0�� �,7��,705 �,540,9�5
Information technology levy �46,�69 �05,4�7 – –
Education tax �74,�49 95,56� �7�,�40 ���,7��
Income tax charge �,098,898 850,00� �,885,945 �,65�,656
Prior years’ under provisions �7,658 – ��8,��4 �87,50�
Deferred tax charge / (write-back) - (Note 7) �94,6�6 �85,6�0 (�49,�47) (�5�,076)
Charge for the year �,���,�8� �,0�5,6�� �,774,7�� �,487,08�
Withholding tax charge ���,�8� �9�,�58 �67,558 �67,558
Effective tax charge for the year �,6��,465 �,��7,879 �,�4�,�80 �,854,6�9
7. DEFERRED TAX
At � January 44�,654 5�,�07 780,�6� �8�,�4�
Transfer arising from merger – – ��,04� ��,04�
(Write-back)/charge for the year - (Note 6) �94,6�6 �85,6�0 (�49,�47) (�5�,076)
Prior year adjustment on revaluation of securities �6,58� – – –
Write-back on revaluation of securities (�84,�94) – (��,�0�) –
At 31 December �78,467 ��6,7�7 44�,654 5�,�07
The net deferred tax liability is attributable to:
Excess on depreciation charge over capital allowances �64,08� ��6,7�7 �44,684 5�,�07
Revaluation surplus on securities ��4,�85 – �96,970 –
�78,467 ��6,7�7 44�,654 5�,�07
8. DIVIDEND
In line with the provisions of Statement of Accounting Standard No. �� (SAS ��) issued by the Nigerian Accounting Standards Board and
effective � June �006, a proposed dividend is accounted for after it has been approved by the shareholders at the annual general meeting.
Consequently, it is recorded as a charge against the distributable reserve in the year of payment as shown in note �5.
The board of directors has proposed a dividend of 40kobo per share, amounting to N7.5 billion for the year ended �� December �008 on the
issued share capital of �8.75 billion ordinary shares of 50kobo each subject to the approval by the shareholders at the next annual general
meeting. Dividend paid for the nine months ended �� December �007 was �5kobo per share on the issued share capital of �8.75 billion
ordinary shares of 50kobo each, amounting to N4.7 billion.
Notes to the consolidated financial statements
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
5. OPERATING EXPENSES
Staff costs - (Note �9a) �0,4�5,590 8,90�,�6� 4,660,�59 �,967,�74
Directors’ emoluments - (Note �9b ) 55�,0�0 507,655 �59,748 ���,�69
Auditor’s remuneration ��0,000 94,600 88,870 6�,870
Other operating expenses �0,440,66� 8,7��,��� �,664,�64 �,97�,748
Payment to employees and suppliers ��,549,�6� �8,��6,54� 8,67�,94� 7,��4,�6�
Depreciation on fixed assets - (Note �9) �,4��,��� �,�56,05� 77�,��6 669,5�9
Total operating expenses ��,98�,484 �9,47�,59� 9,444,�77 7,89�,800
Analysis by geographical location:
Paid in Nigeria ��,�76,��5 �8,866,4�4 9,�4�,4�� 7,790,9�6
Paid outside Nigeria 606,�59 606,�59 �0�,864 �0�,864
��,98�,484 �9,47�,59� 9,444,�77 7,89�,800
Other operating expenses:
Training, travel & accomodation �,�4�,794 �,�8�,�04 �00,�44 �60,�79
Rent, rates, lights & power ��8,904 �8�,544 �66,90� �4�,���
Insurance 9�6,009 899,9�7 4�5,�78 4�8,5�8
Repairs & maintenance 4�7,�96 �59,�00 554,60� 5�6,4�0
Stationery, postages & communication 67�,��� 578,890 ��4,�54 �58,90�
Advertisements & business promotions �,7�0,096 �,597,5�8 46�,�88 ��0,686
Security, legal & other professional fees �,857,646 �,�0�,�8� 5�6,00� �07,9��
Corporate expenses 466,874 4��,�45 �4�,47� �4�,47�
Local tax and levies �4�,�89 �4�,�89 �96,879 �87,904
Loss on sale of fixed assets 5�7,476 504,4�0 – –
Bank charges ���,�70 ���,�70 ��,66� �5,888
Other administrative expenses 9�5,686 �08,9�5 �45,�8� 8�,5�7
�0,440,66� 8,7��,��� �,664,�64 �,97�,748
Annual financial statements
��0 ���
Annual financial statements
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
12. SHORT TERM INVESTMENTS
Treasury bills ��,�0�,07� ��,�0�,07� 47,56�,687 47,56�,687
Underwriting commitments:
- Cornerstone Insurance Plc – – 97,69� 97,69�
- GTBank GDR – – 77�,49� 77�,49�
- Diamond Bank GDR 4�9,9�9 4�9,9�9 4,0�5,087 4,0�5,087
Commercial papers �,007,8�8 – – –
Total - short term investments �4,548,809 ��,540,99� 5�,467,959 5�,467,959
13 LONG TERM INVESTMENTS
i Quoted securities:
Portfolio of listed securities
- Cost: N4.2billion (31 December 2007:N4.11 billion) �,765,979 – �,687,�75 –
ii Equity investments in unquoted securities:
Virgin Nigeria Airways Limited
- 850,000 ordinary class B shares of N1 each
- (Bank: 250,000; IVL: 600,000) �97,500 87,500 �97,500 87,500
Smartcard Nigeria Plc
- 12,299,442 ordinary shares of N1 each. ��,0�9 ��,0�9 ��,0�9 ��,0�9
First Securities Discount House Limited
- 77,378,670 ordinary shares of N1 each. �4,48� �4,48� �4,48� �4,48�
Nigeria Interbank Settlement System Plc
- 105,400,582 ordinary shares of N1 each. �05,40� �05,�0� �05,40� �05,�0�
450,40� �40,�0� 450,40� �40,�0�
iii Investment in government securities:
Federal Government of Nigeria (FGN) bonds 7�,�59,769 69,565,�40 6�,5��,49� 6�,55�,84�
�nd Lagos State Government bond - �005/�009 �0�,000 �0�,000
Nigerian promissory note �4,5�8 �4,5�8 ��,�45 ��,�45
7�,�84,�87 69,589,858 6�,654,7�6 6�,676,087
iv Investment in subsidiary companies:
Stanbic IBTC Ventures Ltd (�00%) – 500,000 – 500,000
Stanbic IBTC Asset Management Ltd (�00%) – 7�0,000 – �0,000
Stanbic IBTC Pension Managers Ltd (70.59%) – 564,706 – –
Stanbic Equities Ltd (9�.6%) – 4�,000 – 4�,000
Stanbic Nominees Ltd (�00%) – �00 – �00
RB Resources Ltd (�00%) �,000 �,000 �,000 �,000
�,000 �,8�8,806 �,000 554,�00
v Investment in small & medium scale industries:
Direct investments:
- Britex Nigeria Ltd – – �07,000 �07,000
- Frezone Plant Fabrication Int’l Ltd ��0,000 ��0,000 ��0,000 ��0,000
- Tinapa Business Resort Ltd 500,000 500,000 500,000 500,000
- Credit Reference Company 50,000 50,000 ���,000 ���,000
- Onward Paper Mills Ltd �85,487 �85,487 �58,000 �58,000
- CR Services Ltd 86,988 86,988
�,�4�,475 �,�4�,475 �,097,000 �,097,000
9 EARNINGS PER SHARE
Earnings per share (actual) is calculated by dividing the profit after tax by the number of shares in issue during the period, while earnings per
share (basic) is calculated by using the weighted average number of shares in issue during the period as the denominator. Earnings per share
(adjusted) is calculated by using the number of shares outstanding as at the balance sheet date as a common denominator for all years, while
earnings per share (diluted) is calculated by adjusting the number of shares in issue during the period with the effects of all potential ordinary
shares.
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Profit after tax (N’000) ��,994,4�0 9,��4,80� 7,849,848 6,94�,765
Number of shares (in thousands) �8,750,000 �8,750,000 �8,750,000 �8,750,000
Weighted average number of shares (in thousands) �8,750,000 �8,750,000 ��,048,497 ��,048,497
Diluted number of shares (in thousands) �8,750,000 �8,750,000 �8,750,000 �8,750,000
Earnings per share (EPS) - basic 64 k 49 k 7� k 6� k
Earnings per share (EPS) - diluted 64 k 49 k 4� k �7 k
There was no change in the number of shares in issue during the year. Consequently, the weighted average number of shares is the same as
absolute number of shares in issue, and outstanding at year end.
10. CASH AND SHORT TERM FUNDS
Coins and bank notes �,���,7�9 �,976,775 �,�05,8�� �,�0�,87�
Settlement / Clearing accounts �,�09,5�� �,�09,5�� �,9�6,895 �,9�6,895
Balances with Central Bank of Nigeria 6,�54,�75 6,�54,�75 8,895,085 8,895,085
��,586,6�7 ��,440,68� ��,0�7,8�� ��,0�5,85�
Cash and balances with Central Bank include N�.89 billion (�� December �007 : N�.0� billion) that is not available for use by the group. These
balances comprises cash reserve requirements held with Central Bank of Nigeria (CBN). The settlement/clearing account balances represent
cheques/funds awaiting payment through the settlement system. The correponding liability is included in deposit liabilities (Note �0) and other
liabilities (Note ��) as applicable.
11. DUE FROM OTHER BANKS
Balances due from banks in Nigeria ��,���,699 ��,�59,��5 8,�5�,�8� 57�,770
Balances due from banks outside Nigeria ��,�04,554 ��,�04,554 �4,448,900 �4,448,900
Interbank - commercial papers (CPs) 6,555,940 6,56�,758 �4,58�,000 �4,58�,000
Interbank - placements 50,5�9,066 49,0��,066 ��,�95,604 ��,�95,604
���,59�,�59 ��0,�58,50� 79,578,685 7�,800,�74
Interbank CPs are reported net of CPs sold amounting to N670.�9 million (�� December �007: N�7.55 billion), which is disclosed in Note
�7c. Also included in balances held with banks outside Nigeria is an amount of N��.�� billion (�� December �007: N5.4� billion) representing
customer deposits on account of letters of credit transactions. The corresponding liability is included in other liabilities (Note ��).
Notes to the consolidated financial statements
��� ���
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
14. LOANS AND ADVANCES
Overdrafts �8,�45,�86 �8,�45,�86 �7,508,559 �7,679,644
Commercial papers & bankers acceptances �0,676,77� �0,676,77� ��,55�,046 ��,55�,046
Term loans 48,777,964 49,�89,979 48,667,5�0 48,667,5�0
Other loans �,�89,�5� �,�89,�5� �,�0�,697 �,�0�,697
�08,789,�75 �09,40�,�90 9�,0�9,8�� 9�,�00,907
Loan loss provision - (Note 15) (�0,�90,90�) (�0,�90,90�) (��,565,��7) (��,565,��7)
98,�98,�7� 99,0�0,�88 79,464,605 79,6�5,690
Analysis by maturity:
Maturing under � month 4�,896,877 4�,896,877 ��,487,0�� ��,487,0��
Maturing between � to � months �7,069,479 �7,069,479 5,5�8,078 5,5�8,078
Maturing between � to 6 months �0,008,059 �0,008,059 8,�86,984 8,�86,984
Maturing between 6 to �� months 6,686,�5� 6,686,�5� �0,076,660 �0,076,660
Maturing after �� months ��,��8,408 ��,740,4�� �5,75�,067 �5,9��,�5�
�08,789,�75 �09,40�,�90 9�,0�9,8�� 9�,�00,907
Analysis by security:
Secured against real estate 6,65�,068 6,65�,068 5,9�5,��� 5,9�5,���
Otherwise secured 7�,654,�8� 7�,654,�8� 84,77�,40� 84,944,486
Unsecured �0,48�,8�4 ��,095,8�9 ���,�00 ���,�00
�08,789,�75 �09,40�,�90 9�,0�9,8�� 9�,�00,907
Analysis by performance:
Performing 9�,�5�,460 9�,86�,475 79,867,678 80,0�8,76�
Non-performing - substandard �,4�0,4�5 �,4�0,4�5 �6�,�5� �6�,�5�
Non-performing - doubtful 9,6�9,07� 9,6�9,07� �,�97,689 �,�97,689
Non-performing - lost 4,468,��9 4,468,��9 9,80�,�04 9,80�,�04
�08,789,�75 �09,40�,�90 9�,0�9,8�� 9�,�00,907
Commercial papers (CPs)/bankers acceptances (BAs) are reported net of CPs sold amounting to N�5.704 billion (�� December �007: N�.94
billion), which is disclosed in note �7c. Other loans relate to various categories of staff loans.
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Through: African Capital Alliance - (SME Partnership):
- Vic Lawrence Associates �,49� �,49� �,49� �,49�
- Oakwood Park Ltd – – ��,68� ��,68�
- ACCAT Nig Ltd ��,050 ��,050 ��,050 ��,050
- De Haastrup Communications 5,786 5,786 5,786 5,786
- Alvac Co Ltd 64,885 64,885 4,�77 4,�77
- Medicare Investment Services Ltd 7,�66 7,�66 7,�66 7,�66
- Midi Holdings 6,�96 6,�96 6,�96 6,�96
- S & B Ince Ltd 4,65� 4,65� 4,65� 4,65�
- Accion International Ltd �5,�50 �5,�50 �4,545 �4,545
- Frezone Plant Fabrication Int’l Ltd �5,696 �5,696 �5,696 �5,696
- Nigerian Starch Mills �8,�0� �8,�0� �8,�0� �8,�0�
- Falcongaz Ltd �48,�58 �48,�58 �6,988 �6,988
- Obital Track and Fleet Ltd 9,740 9,740 9,740 9,740
- Impex World Wide Ltd �,4�9 �,4�9 �,4�9 �,4�9
- Weltex Ltd �9,488 �9,488 �9,488 �9,488
�7�,080 �7�,080 �9�,�78 �9�,�78
Through: First SMI Investment Company Ltd:
- Emel VGC Hospital �9,600 �9,600 �9,600 �9,600
- Charnel House Ltd ��,800 ��,800 ��,800 ��,800
6�,400 6�,400 6�,400 6�,400
�,575,955 �,575,955 �,�5�,678 �,�5�,678
Total long term investments 75,977,6�4 7�,��4,7�� 68,�45,09� 6�,8��,968
Quoted securities are quoted on the Nigerian Stock Exchange and have been valued at the market prices on the exchange as at �� December
�008. Market value of same securities as at �0th April �009 was N�.�0 billion.
Until December �008, SIVL had a 70.59% equity holding in Stanbic IBTC Pension Managers Limited (“SIPML”). In December �008, the
shareholding of SIVL in SIPML which reflect a net asset value of N�.6� billion was acquired by the bank for a total purchase consideration of
N564.7 million. In the consolidated financial statement, the resulting negative goodwill of N�.05 billion for Stanbic IBTC group had been offset
by a corresponding loss amount on disposal by SIVL as disclosed in Note �6.
During the year under review, the authorised share capital of SIAML was increased to � billion units from �00 million units. Consequently, 700
million units of shares valued at N700 million were issued, fully subscribed and paid for by the bank.
Investment in Federal Government bonds included N�0.8 billion bonds pledged by the bank with Standard Bank Plc (‘SBL’) under a repurchase
agreement. The liability to SBL is included under ‘Due to other banks’ (Note ��).
The financial records of RB Resources limited have not been consolidated in the group financial statements as it is the opinion of the directors
that the balances are immaterial to the group.
Notes to the consolidated financial statements
Annual financial statements
��4 ��5
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
15. LOAN LOSS PROVISIONS & IIS
a) General provision
At 1 January �,0�4,�67 �,0�4,�67 558,486 558,486
Additional provision – – ���,�04 ���,�04
Charge-offs – – (�5,877) (�5,877)
Transfer arising from merger – – �50,�54 �50,�54
Provision no longer required (64,06�) (64,06�) – –
At 31 December 960,�06 960,�06 �,0�4,�67 �,0�4,�67
b) Specific provision
At 1 January 7,��4,0�� 7,��4,0�� 5,6�6,�57 5,6�6,�57
Additional provision 5,899,��� 5,899,��� �,099,��0 �,099,��0
Recoveries / provision no longer required (�,�94,�90) (�,�94,�90) (648,5��) (648,5��)
Charge-offs (�,8�5,795) (�,8�5,795) (�59,�74) (�59,�74)
Reclassifications – – �45,�87 �45,�87
Transfer arising from merger – – 6�,�54 6�,�54
At 31 December 8,�0�,�60 8,�0�,�60 7,��4,0�� 7,��4,0��
c) Interest in suspense
At 1 January �,��7,0�7 �,��7,0�7 �,�66,056 �,�66,056
Recognised during the year �,�74,�50 �,�74,�50 �,878,67� �,878,67�
Reclassification - specific provision – – (�45,�87) (�45,�87)
Write-back arising from recoveries (�00,���) (�00,���) (�44,04�) (�44,04�)
Charge-offs (�,97�,409) (�,97�,409) (�60,�8�) (�60,�8�)
Transfers arising from merger – – ��,899 ��,899
At 31 December �,��7,6�6 �,��7,6�6 �,��7,0�7 �,��7,0�7
Summary
- General provision 960,�06 960,�06 �,0�4,�67 �,0�4,�67
- Specific provision 8,�0�,�60 8,�0�,�60 7,��4,0�� 7,��4,0��
- Interest in suspense �,��7,6�6 �,��7,6�6 �,��7,0�7 �,��7,0�7
Total provision �0,�90,90� �0,�90,90� ��,565,��7 ��,565,��7
16. PROVISION FOR LOSSES
Analysed as follows:
Additional provision on loan losses:
- Specific provision 5,899,��� 5,899,��� �,099,��0 �,099,��0
- General provision – – ���,�04 ���,�04
Recoveries /provision no longer required:
- Specific provision (�,�94,�90) (�,�94,�90) (648,5��) (648,5��)
- General provision (64,06�) (64,06�) - -
Net charge on loans and advances 4,540,86� 4,540,86� �,68�,9�� �,68�,9��
Additional provision on finance lease:
- General provision �4,7�� �4,7�� – –
Recoveries / provision no longer required:
- Specific provision (��,78�) (��,78�) – –
Net charge on finance leases �,94� �,94� – –
(Writeback)/provision for other asset losses 477,0�� 66�,984 �6�,770 �6�,770
Total provisions made for losses 5,0�9,8�5 5,�04,786 �,04�,68� �,04�,68�
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
17. ADVANCES UNDER FINANCE LEASES
Gross investment 5,�46,000 5,�46,000 �,�67,9�� �,�67,9��
Unearned income (840,8�5) (840,8�5) (��6,770) (��6,770)
4,�05,�75 4,�05,�75 �,0��,�6� �,0��,�6�
Loan loss provision (4�,6�7) (4�,6�7) (4�,686) (4�,686)
4,�6�,548 4,�6�,548 �,989,477 �,989,477
Analysis by performance:
- Performing 4,�05,�75 4,�05,�75 �,947,�68 �,947,�68
- Non-performing – – 8�,795 8�,795
4,�05,�75 4,�05,�75 �,0��,�6� �,0��,�6�
Analysis by maturity:
Current 897,��8 897,��8 690,��� 690,���
Non-current �,407,947 �,407,947 �,�4�,040 �,�4�,040
Net finance leases 4,�05,�75 4,�05,�75 �,0��,�6� �,0��,�6�
Movement in lease provision:
At 1 January
- Performing �8,904 �8,904 �0,45� �0,45�
- Non-performing ��,78� ��,78� – –
4�,686 4�,686 �0,45� �0,45�
Transfer arising from merger:
- Performing – – 8,45� 8,45�
- Non-performing – – ��,78� ��,78�
Additional provision / (writeback) :
- Performing �4,7�� �4,7�� – –
- Non-performing (��,78�) (��,78�) – –
At 31 December
- Performing 4�,6�7 4�,6�7 �8,904 �8,904
- Non-performing – – ��,78� ��,78�
4�,6�7 4�,6�7 4�,686 4�,686
The finance lease balance as at �� December �007 includes a prior year adjustment of N�45.�8 million, which relates to lease facilities that
have previously been disclosed as operating leases. Consequently, the prior year balance have been restated.
Notes to the consolidated financial statements
Annual financial statements
��6 ��7
BANK
Cost:
At � January �008 5,468,746 �,�70,6�� �,8�4,6�� �,056,990 �,4�9,5�4 �0,950,4�
Additions �0�,048 9�0,�09 �90,444 659,7�5 6,��4,4�� 8,�77,949
Transfers ��,�7� �48,�65 �0,960 �04,�04 (�95,700) –
Disposals (4��,6��) (��0,��8) (�5�,957) (�66,077) – (95�,904)
At �� December �008 5,�8�,4�� �,��8,957 �,97�,058 �,554,8�� 7,448,�57 �8,�76,5�7
Depreciation:
At � January �008 8�7,0�8 �6�,��8 78�,�79 6�4,0�0 – �,605,445
Charge for the year �07,748 �6�,8�8 4�7,445 �47,04� – �,�56,05�
Eliminated on disposals (�44,��9) (��,56�) (44,649) (88,5�0) – (�89,960)
At �� December �008 790,557 7��,�74 �,�76,075 79�,5�� – �,47�,5�7
Net book amount:
At �� December �008 4,49�,876 �,406,58� 795,98� 76�,�0� 7,448,�57 �4,905,000
Net book amount:
At �� December �007 4,64�,7�8 809,50� �,04�,��� 4��,970 �,4�9,5�4 8,�45,046
The bank carried out physical verification of asset during the year under review. Consequently, assets with a cost of N4��.�5 million were
written off on account of damage and obsolescence. The related depreciation provision amounted to N�6�.74 million, thus resulting in a net
write off of N�49.5�million. This has been included in the loss on disposal of assets.
Work in progress represents construction costs in respect of new branches and offices. On completion of construction, the related amounts are
transferred to other categories of property and equipment.
GROUP
Land & Motor fittings & Computer Work-in
Building vehicles equipment equipment progress Total
N’000 N’000 N’000 N’000 N’000 N’000
Cost:
At � January �008 5,468,746 �,�49,96� �,899,949 �,��6,46� �,4�9,5�4 ��,484,64�
Additions �0�,048 �,0��,89� ���,�08 799,47� 6,447,��5 8,795,756
Transfers ��,�7� �48,�65 �0,960 �04,�04 (�95,700) –
Disposals (4��,6��) (�4�,949) (�54,58�) (�67,765) – (985,9�8)
At �� December �008 5,�8�,4�� �,�90,�70 �,068,4�5 �,97�,�74 7,58�,059 �9,�94,47�
Depreciation:
At � January �008 8�7,0�8 4�4,0�0 8��,57� 769,�5� – �,8��,974
Charge for the year �07,748 4��,484 454,49� �48,497 – �,4��,���
Eliminated on disposals (�44,��9) (�0,��0) (�5,89�) (84,�89) – (�94,6��)
At �� December �008 790,557 806,�74 �,���,�7� �,0��,46� – �,86�,565
Net book amount:
At �� December �008 4,49�,876 �,58�,796 8�7,�6� 9�8,9�� 7,58�,059 �5,4��,906
Net book amount:
At �� December �007 4,64�,7�8 9�5,94� �,087,�76 567,�09 �,4�9,5�4 8,66�,669
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
18. OTHER ASSETS
Accrued interest and fees receivable 5,�47,�75 5,�4�,44� 96�,�64 96�,�64
Prepaid interest �,54�,694 �,�79,��0 �58,��4 �58,��4
Prepaid expenses 4,50�,478 �,464,879 7�7,059 666,009
Uninvested SMEEIS commitments ��9,�65 44�,��� ���,70� 454,874
Due from subsidiary companies – �,64�,8�9 – �,476,645
Due from Standard Bank Group (SBG) �70,96� �70,96� 669,869 669,869
Deposit for underwriting commitment – – 7,500,000 7,500,000
WHT recoverable 808,�4� 808,�4� 584,7�7 570,096
Deposit for shares – – 6�6,�95 –
Open buy back treasury bills holdings with banks �,500,000 �,500,000 – –
Due from custody clients – – 574,79� –
Deposit with failed banks �8�,77� �8�,77� �8�,77� �8�,77�
Sundry receivables �,75�,896 �,045,��� 874,494 798,5��
Gain on hedged forward exchange contracts 4,�88,�86 4,�88,�86 – –
��,���,87� ��,065,867 ��,�6�,�0� �4,6�8,�75
Provision for other known losses (�,876,5��) (�,876,5��) (�,�99,498) (�,��4,547)
�9,455,�4� �9,�89,��6 ��,76�,80� ��,4��,7�8
The deposit with failed banks relate to the principal and accrued interest on placements made by legacy Regent Bank Plc with three distressed
banks, namely; Societe Generale Bank (N���.77 million), AFEX Bank (N�0.85 million) and Gulf Bank (N��7.�6 million). Full provision for these
balances is included in provision for other assets. The uninvested SMEEIS commitments relate to amounts invested through fund managers
which are yet to be disbursed. These include SIVL - N�0�.94 million (�� December �007: N�4�.07 million), SME Partnership - N�8�.5� million
(�� December �007: N98.04 million), and First SMI - N��.75 million (�� December �007: N��.75 million).
Furniture,
19. FIXED ASSETS
Notes to the consolidated financial statements
Annual financial statements
��8 ��9
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
��. LONG TERM LOANS
On-lending facilities:
Standard Bank Group – – �5,058,554 �5,058,554
International Finance Corporation (IFC) �,44�,0�6 �,44�,0�6 �,56�,04� �,56�,04�
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbh �68,��7 �68,��7 �54,�5� �54,�5�
European Investment Bank 49�,869 49�,869 557,�64 557,�64
FMO - Nederland Development Finance Company �0,098,��6 �0,098,��6 – –
��,�0�,�58 ��,�0�,�58 �7,5��,��� �7,5��,���
The bank’s dollar denominated on-lending credit obtained from the IFC expires on or after �5 December �0�� and has a rate of �% above
� month LIBOR; the euro/dollar denominated facility from DEG expires on or after �5 October �009 and has rate of �.�5% above 6 month
Euribor, while the dollar denominated facility from European Investment Bank expires on or after �� March �0�� and has a rate of �.5% above
� month LIBOR. The on-lending dollar denominated loan obtained from Nederland Development Finance Company (FMO) expires on or after
�5 January �0�5, and has a rate of �.5% above 6 month LIBOR.
�4. SHARE CAPITAL
Authorised:
�0 billion ordinary shares of 50k each
(�� December �007: �0 billion ordinary shares of 50k each) �0,000,000 �0,000,000 �0,000,000 �0,000,000
Issued and fully paid - ordinary shares of 50k each:
At � January �008 9,�75,000 9,�75,000 6,�50,000 6,�50,000
Share exchange arising from merger – – �,��5,000 �,��5,000
At 31 December 2008 9,�75,000 9,�75,000 9,�75,000 9,�75,000
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
�0. DEPOSITS, CURRENT AND OTHER ACCOUNTS
Demand 69,6�6,987 7�,�88,�44 50,0��,79� 5�,076,�7�
Term �5,60�,400 �5,60�,400 �0,547,069 �0,547,069
Negotiable certificates of deposit 988 988 8��,88� 8��,88�
95,�40,�75 98,89�,5�� 7�,�90,744 7�,455,���
Analysis by maturity:
Maturing within � month �7,888,664 ��,5�9,8�� �7,459,409 �8,5��,888
Maturing between � to � months 5,597,��4 5,597,��4 9,579,559 9,579,559
Maturing between � to 6 months 7,7�9,65� 7,7�9,65� 4,5�6,�95 4,5�6,�95
Maturing between 6 to �� months 8,�7�,856 8,�7�,856 5,��5,�55 5,��5,�55
Maturing over �� months 45,75�,870 45,75�,870 �4,690,��6 �4,690,��6
95,�40,�75 98,89�,5�� 7�,�90,744 7�,455,���
��. DUE TO OTHER BANKS
Standard Bank Group 65,��0,065 65,��0,065 65,97�,89� 65,97�,89�
Interbank takings �6,7�4,66� �6,7�4,66� – –
Balances due to banks in Nigeria - current accounts 5� 5� 48�,675 �7,489
Balances due to banks outside Nigeria - current accounts �46,858 �46,858 84�,556 84�,556
8�,�0�,6�7 8�,�0�,6�7 67,�98,��� 66,85�,9�7
��. OTHER LIABILITIES
Liability on refinanced letters of credit �,87�,�06 �,87�,�06 �,8�9,598 �,8�9,598
Liability on cash-backed letters of credit ��,���,705 ��,���,705 5,4��,�0� 5,4��,�0�
Interest payable �,650,465 �,650,465 �,666,67� �,666,669
Accrued expenses 5,599,�97 5,599,�97 �,656,9�6 �,6�5,�6�
Unearned income �,498,455 �,440,774 �,8�4,7�4 �,806,��4
Application monies received �0,888,6�7 �0,888,6�7 ��,590,7�0 ��,�0�,�60
Due to asset management clients 8,�0�,965 8,�0�,965 ��,905,694 �9,7��,�87
Drafts/bankers’ cheques payable �,�5�,600 �,6�5,9�� �,77�,�77 �,77�,�77
Collections/remittances payable �,�57,997 �,�57,997 �,705,908 �,���,70�
Other payables �,690,469 �,79�,9�8 �,�79,70� �,��5,�64
74,0��,686 7�,�4�,775 66,784,44� 6�,59�,8�4
Notes to the consolidated financial statements
Annual financial statements
��0 ���
Investment Share
Statutory Retained in SMEEIS premium Capital Revaluation Special Reserves
reserve earnings reserve reserve reserve reserve reserve total
N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000
GROUP
At � January �008 7,480,�09 8,0�4,�0� �,0�8,690 47,468,9�8 �4�,000 �,8�5,�87 – 66,�88,��5
Increase in subsidiary shareholding – – – – (���,�56) – – (���,�56)
On revaluation of securities – – – – – (�,56�,668) – (�,56�,668)
Dividend paid – (4,687,500) – – – – – (4,687,500)
From profit and loss account �,9�8,67� 8,6�5,478 – – – – – ��,564,�50
At �� December �008 �0,4�8,78� ��,96�,079 �,0�8,690 47,468,9�8 ��8,844 �7�,7�9 – 7�,�90,04�
At � April �007 5,�06,886 6,�6�,5�6 �,0�8,690 �0,55�,806 �90,000 �,�94,��� 9,750,�90 44,695,6�0
Reinstatement of special reserve – – – – – – �6,8�4,878 �6,8�4,878
Impairment of goodwill – (46,585,�68) – – – – – (46,585,�68)
Losses written off – 46,585,�68 – – – – (46,585,�68) –
On revaluation of securities – – – – – 45�,�67 – 45�,�67
From share exchange (merger) – – – �6,9�5,��� – – – �6,9�5,���
Transfer arising from merger �0,8�4 (9,840) – – 5�,000 – – 5�,984
Transfer from deferred tax – – – – – (��,�0�) – (��,�0�)
Dividend paid – (�,750,000) – – – – – (�,750,000)
From profit and loss account �,�6�,�99 5,4��,4�5 – – – – – 7,584,8�4
At �� December �007 7,480,�09 8,0�4,�0� �,0�8,690 47,468,9�8 �4�,000 �,8�5,�87 - 66,�88,��5
BANK
At � January �008 7,�7�,�75 6,8�5,�56 �,0�8,690 47,468,9�8 – ���,�84 – 6�,046,7��
On revaluation of securities – – – – – (���,�84) – (���,�84)
Dividend paid – (4,687,500) – – – – – (4,687,500)
From profit and loss account �,764,44� 6,450,�6� – – – – – 9,��4,80�
At �� December �008 �0,��5,8�6 8,598,��7 �,0�8,690 47,468,9�8 – – – 67,�4�,65�
At � April �007 5,�88,845 5,7�6,��� �,0�8,690 �0,55�,806 – – 9,750,�90 4�,�57,85�
Reinstatement of special reserve – – – – – – �6,8�4,878 �6,8�4,878
Impairment of goodwill – (46,585,�68) – – – – (46,585,�68)
Losses written off – 46,585,�68 – – – (46,585,�68) –
On revaluation of securities – – – – – ���,�84 – ���,�84
From share exchange (merger) – – – �6,9�5,��� – – – �6,9�5,���
Dividend paid – (�,750,000) – – – – – (�,750,000)
From profit and loss account �,08�,5�0 4,859,��5 – – – – – 6,94�,765
At �� December �007 7,�7�,�75 6,8�5,�56 �,0�8,690 47,468,9�8 – ���,�84 - 6�,046,7��
In �006, the bank obtained the approval of shareholders at an extraordinary general meeting and the sanction of the Federal High Court, in
pursuant to Part V of the Companies and Allied Matters Act, to create a special reserve from the balance of its share premium account for the
purpose of writing off the goodwill of N9.75 billion that arose from its acquisition of Chartered Bank and Regent Bank during the year ended
�� March �006. Accordingly, the goodwill of N9.75 billion was set off against the special reserve account.
Similarly, in �007, the bank obtained the approval of shareholders at an extraordinary general meeting to create a special reserve from the
balance of its share premium account for the purpose of writing off the goodwill of N�6.8� billion that arose from its acquisition of Stanbic
Bank during the nine month’s ended �� December �007. The sanction of the Federal High Court was subsequently obtained and, accordingly,
the goodwill of N�6.8� billion was set off against the special reserve account.
In line with a directive from Nigerian Accounting Standards Board (NASB), the bank has reinstated the goodwill and tested same for impairment
in compliance with the provisions of Statement of Accounting Standard No. �6 on Accounting for Business Combinations. With effect from �
January �008, the Nigerian Accounting Standard Board introduced the Statement of Accounting Standard No. �6 on Accounting for Business
Combinations and was respectively applied to all business combinations entered into on or after � January �005. The effect of this Standard
on the bank is that the goodwill which arose from the business combinations in �006 and �007 and which had been written off against a
special reserve is now required to be reinstated and tested for impairment. In compliance with this standard, goodwill arising from the business
combinations has been reinstated and tested for impairment. Consequently, the amounts previously written off against the special reserve
accounts totalling N46.58 billion were reinstated.
Goodwill is allocated to cash generating units for the purpose of impairment testing.
The goodwill amount of N46.58 billion was tested for impairment, found to be fully impaired as at �� December �007 and written off against
the revenue reserve account.
The bank’s shareholders, based on recommendation of the Board of Directors at its extra ordinary general meeting held on the �4 February
�009, approved a write off of the resultant loss via the capital reduction process specified in Companies and Allied Matters Act. This capital
reduction was sanctioned by the Federal High Court on �9th March �009.
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
26. MINORITY INTEREST
At � January 455,�09 – �84,��� –
Dividend paid (80,000) – – –
Increase in shareholding in subsidiary company (94,084) – – –
Transfer arising from merger – – 6,06� –
Share of current year profit of subsidiary company 4�0,�79 – �65,0�4 –
At �� December 7��,404 – 455,�09 –
Notes to the consolidated financial statements
25. RESERVES
Annual financial statements
��� ���
29. EMPLOYEES AND DIRECTORS
a) Employees
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
The average number of persons employed by the bank are: Number Number Number Number
Executive directors 4 4 4 �
Management �05 �76 �99 �69
Non-management �,�50 �,06� 999 899
�,659 �,�4� �,�0� �,07�
Staff costs for the above persons
(excluding executive directors): N’000 N’000 N’000 N’000
Salaries and wages �0,00�,�7� 8,57�,�96 4,468,596 �,80�,�84
Retirement benefit - Pension (Note 28) �58,059 �00,�4� ��4,8�5 99,780
Retirement benefit - ESBS (Note 28) 64,�59 �0,4�4 76,748 66,4�0
�0,4�5,590 8,90�,�6� 4,660,�59 �,967,�74
The number of employees of the bank, including executive directors, who received emoluments in the following ranges were:
Number Number Number Number
Below N�,000,00� 70 58 ��6 ��0
N�,000,00� - N�,000,000 �09 60 4�7 �5�
N�,000,00� - N�,000,000 798 67� ��� ���
N�,000,00� - N4,000,000 ��8 �8� ��� �09
N4,000,00� - N5,000,000 74 4� 6� 5�
N5,000,00� - N6,000,000 48 �7 48 44
N6,000,00� and above ��� �9� �86 �60
�,659 �,�4� �,�0� �,07�
b) Directors
The remuneration paid to the directors of the bank was: N’000 N’000 N’000 N’000
Fees and sitting allowances �4�,6�� �4�,44� 7�,557 7�,�55
Executive compensation 409,�40 �64,065 �8�,06� �48,984
550,86� 505,508 �56,6�8 ��0,��9
Directors’ other expenses �,�47 �,�47 �,��0 �,��0
55�,0�0 507,655 �59,748 ���,�69
Fees and other emoluments disclosed
above include amounts paid to:
(i) the chairman �0,68� �0,68� 5,77� 5,77�
(ii) the highest paid director �06,�4� �06,�4� 50,668 50,668
Notes to the consolidated financial statements
27. CONTINGENT LIABILITIES AND COMMITMENTS
a) Legal proceedings
As at �� December �008, there were ��6 outstanding legal external proceedings with claims amounting to N807 million (�� December �007:
N4.�5 billion). Appropriate provisions have been made based on the probability of losses arising from these proceedings. The credit related
pieces have been provided for in line with prudential guidelines.
b) Capital commitments
As at the balance sheet date, the group had a capital commitment of N�.�7 billion in respect of various construction work being undertaken
on branch extension, and revamping project (�� December �007: N�0.�0 million).
c) Credit related commitments
In the normal course of business the bank is a party to financial instruments with off-balance sheet risk. These instruments are issued to meet
the credit and other financial requirements of customers. The contractual amounts of the off-balance sheet financial instruments are:
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
Guaranteed commercial papers - interbank 670,�89 670,�89 �7,55�,��8 �7,55�,��8
Guaranteed commercial papers - own clients �5,70�,50� �5,70�,50� �,9�8,509 �,9�8,509
Performance bonds, guarantees and indemnities 7,59�,660 7,59�,660 �,948,�65 �,948,�65
Fiduciary deposits/Letters of credit �6,895,�88 �6,895,�88 ��,8�0,�60 ��,8�0,�60
50,860,640 50,860,640 56,�59,�7� 56,�59,�7�
As at balance sheet date, there were no outstanding related party off-balance sheet transactions
28. RETIREMENT BENEFITS
The group operates a defined contribution pension scheme in line with the provisions of the Pension Reform Act. Contributions are based on
the sum that consists of employees’ basic salary, housing and transport allowance in the ratio 7.5% by the employee and 7.5% by the
employer. The amount contributed by the employer and remitted to the Pension Fund Administrators during the period was N�58.06 million
(�� December �007: N��4.8� million).
The group also contributed 5% of the sum that consisted of employees’ basic, housing and transport allowance towards an end of service
benefit scheme (ESBS). This contribution, which was applicable to the staff of legacy IBTC Chartered Bank PLC, only, was discontinued during
the year, after due consultations with the National Pension Commission. The amount contributed by the employer during the period was
N64.�6 million (�� December �007: N76.75 million).
The group’s contributions to these schemes are charged to the profit and loss account in the period to which they relate. Contributions to the
ESBS are managed by SIPML on behalf of the beneficiary staff as “voluntary pension contributions” in line with the provisions of the Pension
Reform Act.
Consequently, the group has no legal or constructive obligations to pay further contributions if the funds do not hold sufficient assets to meet
the related obligations to employees.
Annual financial statements
��4 ��5
Related party items Standard Bank Group SIAML SIVL SIPML SEL
Relationship to the bank Fellow susidiaries Subsidiary Subsidiary Subsidiary Subsidiary
N’000 N’000 N’000 N’000 N’000
Deposit balances 65,��0,065 4,00�,578 40�,�7� �8�,��7 60,0�0
Account receivables �70,96� 944,�40 7�8,�5� 7,500 –
Account Payables – – �,559 9,��� –
Intern Glass Industries Limited 000�675 �60�8 Director B.I. Mahtani Overdraft �8-Nov-08 �9-Dec-08 �5,000 �8,�56 Performing �9.50% Warehouse stock and
debenture on assets
(upstamping and TWA
in progress) �,7�9,000
Automotive Component
Industries Limited 000�6�7 40�46 Director Lt. Gen. Wushishi (Rtd) Overdraft �0-May-06 �9-Apr-08 �0,000 �9,884 Performing �9.50% Debenture on fixed and �44,000
floating assets but stamped at 88,000
UAC of Nigeria Plc 000075� ���58� Director Lt. Gen. Wushishi (Rtd) Overdraft 7-Oct-08 ��-Mar-09 �00,000 �84,6�� Performing �9.50% Clean lending (negative pledge) N/A
Presco Plc 4474 �74�70 Chairman A.N.A Peterside OON Term loan �-Oct-08 ��-Dec-�� 49�,869 454,0�� Performing 9.�5% Fixed and floating asset N/A
Presco Plc 4474 �74�70 Chairman A.N.A Peterside OON Overdraft �6-Jul-08 �0-Jun-�� 68�,050 49,�50 Performing 9.�5% Letter of comfort N/A
Various Staff – Staff Staff Loans – – – – �,6�8,585 Performing Various Various N/A
(b) OTHER RELATED PARTY ITEMS
Significant transaction balances involving the bank and related parties are as detailed below:
Total - Insider related credits �,4�7,9�9 �,�74,6�9
30. RELATED PARTY TRANSACTIONS
The bank is controlled by Stanbic Africa Holding Limited which is incorporated in the United kingdom. The ultimate parent of the group is Standard Bank Group
Limited incorporated in South Africa.
The bank manages the operations of SIAML and SIPML under the terms of management and advisory services agreements for a fee.
Included in loans and advances is an amount of N�.�7billion (�� December �007 : N�.�6 billion) representing credit facilities to staff, shareholders and
companies in which some directors have interests. These facilities were granted at rates and terms comparable to other facilities in the bank’s portfolio. There
were no non-performing insider related credit as at balance sheet date.
The balances in the accounts as at �� December �008 are as stated below:
(a) SCHEDULE OF INSIDER RELATED CREDITS
Name of Borrower CRMS Borrowers’
Code Number
RC/S R/B
R/NID
Relationship Name
of related party
Loan type Date granted Expiry date Approved credit
limit N’000
Outstanding
N’000
Status Int.
Rate
Security nature Security value
N’000
Perfected security
Notes to the consolidated financial statements
Annual financial statements
��6 ��7
34. LIQUIDITY RISK
Maturities of assets and liabilities
- bank 31 December 2008 0 - 30 days 1 - 6 months 6 - 12 months 1 - 5 years Over 5 years Total
N’000 N’000 N’000 N’000 N’000 N’000
ASSETS
Cash and short term funds 5,�86,�09 6,�54,�74 – – – ��,440,68�
Due from other banks 4�,6��,�48 �4,657,��7 – ��,888,��8 – ��0,�58,50�
Short term investments 4,0�0,760 �,487,�04 �,�7�,649 4,649,478 – ��,540,99�
Loans and advances �6,797,�75 �4,�6�,805 9,���,58� 6,�6�,�45 ��,66�,�8� 99,0�0,�88
Advances under finance leases 5�6,798 �4,��5 ��9,��9 �08,004 �,�7�,�9� 4,�6�,548
Other assets 404,000 9,8��,768 8,�79,656 69�,9�� – �9,�89,��6
Long term investments – – – 7�,��4,7�� – 7�,��4,7��
Fixed assets – – – 5,96�,999 8,94�,00� �4,905,000
Total assets 88,558,�90 86,4�0,6�� �0,996,005 ��4,786,488 �4,979,675 �45,7��,07�
LIABILITIES
Deposits, current and other accounts ��,5�9,8�� ��,��6,985 8,�7�,856 45,75�,870 – 98,89�,5��
Due to other banks �8,879,�5� �7,�69,�97 �4,�6�,�87 ��,99�,700 – 8�,�0�,6�7
Tax payable – – – �,4�8,��0 – �,4�8,��0
Other liabilities ��,�95,��7 5,���,707 ��,���,705 �4,80�,�46 – 7�,�4�,775
Deferred taxation – – – ��6,7�7 – ��6,7�7
Long term loans – – – ��,�0�,�58 – ��,�0�,�58
Total liabilities 7�,6�4,�9� �5,7�8,989 ��,557,948 ��8,40�,��� – �69,�9�,�59
Net liquidity gap �6,944,099 50,69�,6�4 (��,56�,94�) (�,6�4,74�) �4,979,675 76,6�6,65�
31 December 2007
Total assets 9�,0��,096 8�,6�5,998 �04,7�0,�80 ��,5�9,90� 4,64�,7�8 �04,5�9,994
Total liabilities �8,��8,04� 9�,���,7�� 49,57�,95� 5�,�74,546 - ���,098,�6�
Net liquidity gap 5�,884,05� (�0,486,7��) 55,��7,��9 (�9,754,644) 4,64�,7�8 7�,4��,7��
Maturities of risk assets and deposit
liabilities - bank 31 December 2008 0 - 30 days 1 - 3 months 3 - 6 months 6-12 months Over 12 months Total
N’000 N’000 N’000 N’000 N’000 N’000
ASSETS
Investments 4,0�0,760 �9�,�6� �,�94,84� �,�7�,649 77,874,�00 86,765,7�4
Loans and advances �6,797,�75 �4,�6�,805 9,���,58� 6,�6�,�45 ��,66�,�8� 99,0�0,�88
Advances under finance leases 5�6,798 �4,��5 ��9,��9 �08,004 �,�7�,�9� 4,�6�,548
Other assets 404,000 �,64�,��6 6,�70,5�� 8,�79,656 69�,9�� �9,�89,��6
Total risk assets 4�,758,8�� �8,���,6�9 �6,708,074 �8,0��,554 94,60�,786 �09,��6,886
LIABILITIES
Deposits, current and other accounts ��,5�9,8�� 5,597,��4 7,7�9,65� 8,�7�,856 45,75�,870 98,89�,5��
Net liquidity gap - 31 December 2008 �0,��9,0�� ��,5�6,�05 8,978,4�� 9,750,698 48,850,9�5 ��0,��5,�55
Net liquidity gap - �� December �007 (�87,�54) ��,089,6�� �6,�54,0�5 68,0�8,08� (6,��9,0��) 90,975,5��
The tables above analyse assets and liabilities of the bank into relevant maturity groupings based on the remaining period at balance sheet
date to the contractual maturity date. The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is
fundamental to the management of the bank. It is unusual to be completely matched since business transacted is often of uncertain terms and
of different types. An unmatched position potentially enhances profitability, but can also increase the risk of losses.
31. CONTRAVENTION OF BANKS AND OTHER FINANCIAL INSTITUTIONS ACT (1991)
AND CENTRAL BANK OF NIGERIA CIRCULARS The bank was penalised by the Central Bank of Nigeria (CBN) during the year for the following infractions:
- Acquisition of landed property prior to obtaining CBN approval (fine: N� million)
- Non-inclusion of certain clients’ CRMS numbers in the bank’s CBN return (fine : N� million)
32. COMPARATIVES Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. In accordance with the
newly established accounting standards on businesss consolidation (SAS �6), there was a change in accounting policy on goodwill. This resulted
in the reinstatement of goodwill and share premium through special reserve account, as well as the impairment of goodwill through prior year
reserve is disclosed in Note �4.
33. POST BALANCE SHEET EVENTS The shareholders at an extra-ordinary general meeting of the bank held on �4 February �009 approved, subject to the sanction of the
Federal High Court, and with effect from �� December �007, the write off of N46.58 billion loss on the revenue reserve account via the
capital reduction process specified in Companies and Allied Matters Act. This capital reduction was sanctioned by the Federal High Court on
�9th March �009.
Notes to the consolidated financial statements
Annual financial statements
��8 ��9
35. STATEMENT ON SEGMENTAL REPORTING
The directors confirm that the consolidated financial statement complies with the information reported to the bank’s board of directors, and
top management for the purposes of evaluating units’ past performance as it relates to performance of the bank and its subsidiaries during the
period.
The group is structured on the basis of products and services, and the segments have been identified on this basis. The principal business units
in the group are as follows:
Business Units:
Personal & Business Banking (PBB)
Corporate & Investment Banking (CIB)
Wealth
SEGMENT REPORT
The group’s operations by major operating segment during the current financial year is contained below.
CIB PBB Wealth Eliminations Group
N’000 N’000 N’000 N’000 N’000
Revenue
- Derived from external customers �8,889,��� ��,4�0,�40 8,9��,05� – 6�,�40,5�4
- Derived from other business segments 845,60� 958,040 �9,099 (�,84�,74�) –
Total revenue �9,7�4,9�5 �4,�78,�80 8,970,�50 (�,84�,74�) 6�,�40,5�4
Total cost
- Interest expense �6,79�,�95 �,900,�6� (4�,059) (�9,099) �8,6��,�00
- Risk and other asset provisions 4,��9,455 885,��� (�84,95�) – 5,0�9,8�5
- Other operating expenses �0,8�5,�6� 7,��8,880 6,7��,084 (�,80�,64�) ��,98�,484
Total cost ��,9�5,8�� �0,0�4,474 6,496,07� (�,84�,74�) 46,6��,6�9
Profit before tax 7,799,��� 4,�5�,706 �,474,077 – �4,6�6,895
Tax (6�8,469) (6�8,096) (�,�75,899) – (�,6��,465)
Profit after tax 7,�60,64� �,7�5,6�0 �,098,�78 – ��,994,4�0
Segment asset �6�,9�8,46� 85,�69,��5 ��,88�,��7 (8,7�6,6�5) �5�,�5�,�98
Segment liabilities �05,0�0,044 6�,68�,78� 8,09�,0�� (6,9�8,909) �69,876,95�
Net asset 56,9�8,4�8 ��,486,54� 4,789,�95 (�,8�7,706) 8�,�76,445
All transactions between business units were conducted at an arms length basis. Internal charges and transfer pricing adjustments are reflected
in the performance of each segment.
The bank operates in a single geographical location, thus no segmentation based on geographical location is presented in these financial
statements.
12 months ended
31 December 2008
Banking and other financial services to individual customers and small-to-medium-sized
enterprises.
Mortgage lending – Provides residential accommodation loans to individual customers.
Installment sale and finance leases – Comprises two main areas, instalment finance in the consumer
market, mainly vehicles, and secondly, finance of vehicles and equipment in the business market.
Card products – Provides credit and debit card facilities for individuals and businesses.
Transactional and lending products – Transactions in products associated withthe various points
of contact channels such as ATMs, Internet, telephone banking and branches. This includes deposit
taking activities, electronic banking, cheque accounts and other lending products.
Commercial and investment banking services to larger corporates, financial institutions and
international counterparties in Nigeria and other emerging markets.
Global markets – Includes foreign exchange, fixed income, derivatives and equities, trading
businesses, securitisation and money market funding units.
Transactional products and services – Includes corporate lending and transactional banking
businesses, custodial services, trade finance business.
Investment Banking – Includes equity investment and advisory businesses, project finance,
structured lending, debt origination, resource banking and property related lending.
The wealth group is made up of the bank’s subsidiaries, whose activities involve investment
management, stockbroking activities, portfolio management, unit trust/ funds management, and
pension asset management and administration.
Notes to the consolidated financial statements
Annual financial statements
��0 ���
36. CONDENSED FINANCIAL STATEMENT FOR THE GROUP
Profit and loss acount
Bank SIAML SIVL SEL SIPML Consolidation entries Eliminations Group Total
N’000 N’000 N’000 N’000 N’000 N’000 N’000
Operating income �5,��0,060 �,895,74� 4,660,�89 57�,566 ���,�99 (�,84�,74�) 4�,6�9,��4
Operating expenses (�9,47�,59�) (�,80�,�58) (�,�54,686) (98,8�9) (�50,859) �,896,74� (��,98�,484)
Risk and other asset provisions (5,�04,786) �84,95� – – – – (5,0�9,8�5)
Profit before tax �0,54�,68� �,�78,4�6 �,�05,70� 47�,7�7 (�7,660) �,05�,999 �4,6�6,895
Tax (�,��7,879) (494,554) (68�,898) (�55,79�) �7,660 – (�,6��,465)
Profit after tax 9,��4,80� 78�,88� 6��,805 ��7,944 – �,05�,999 ��,994,4�0
Balance sheet
Assets:
Cash and short term funds ��,440,68� 4� 40�,��6 846,846 �,�08 (�,�04,�80) – ��,586,6�7
Due from banks ��0,�58,50� 4,�5�,579 – – �44,7�0 �,58�,445 (4,646,979) ���,59�,�59
Short term investments ��,540,99� – – – �,469,944 (46�,��7) – �4,548,809
Loans and advances to customers 99,0�0,�88 – – – – – (6��,0�5) 98,�98,�7�
Advances under finance lease 4,�6�,548 – – – – – – 4,�6�,548
Other assets �9,�89,��6 87�,6�� ��,570 ��,66� �,�69,��� (�4�,�66) (�,659,9�5) �9,455,�4�
Long term investments 7�,��4,7�� 7�0,5�4 �,965,464 �00 900,9�0 (6,590) (�,8�7,706) 75,977,6�4
Fixed assets �4,905,000 �54,��� - 4,455 ��5,600 ���,7�8 – �5,4��,906
�45,7��,07� 5,99�,890 �,�8�,�70 864,�64 4,0��,5�5 – (8,7�6,6�5) �5�,�5�,�98
Liabilities:
Customer deposits 98,89�,5�� �,�8�,54� – 66,564 – (�54,�86) (4,646,979) 95,�40,�75
Due to other banks 8�,�0�,6�7 – 6��,0�5 – – – (6��,0�5) 8�,�0�,6�7
Tax payable �,�40,�9� �,�0�,6�6 �7�,595 �59,040 9�9,50� 8,�85 – 5,8��,4�8
Other liabilities 7�,�4�,770 �,5�0,�80 7�6,596 59,685 788,906 ��5,�6� (�,659,9�5) 74,0��,686
Deferred tax ��6,7�7 ��,�97 – 854 – ��7,490 �78,467
Long term loans ��,�0�,�58 – – –- – – – ��,�0�,�58
Equity and reserves 76,6�6,65� �,05�,956 �,760,064 578,��� �,�9�,��� (�06,75�) (�,8�7,706) 8�,�76,447
�45,7��,07� 5,99�,89� �,�8�,�70 864,�64 4,0��,5�0 – (8,7�6,6�5) �5�,�5�,�98
Cash flows
Net cash flow from operating activities �5,84�,6�5 (�,�95,88�) �40,��5 5�0,�4� �,8�4,075 (4�6,�55) (4,679,�8�) ��,0�7,048
Net cash flow from investing activities (��,5��,8�6) 49�,570 (54,��7) – (�,6�4,498) (�48,874) �5�,0�6 (�4,8�6,909)
Net cash flow from financing activities (�0,0�9,�54) (900,045) 407,066 – (�00,000) 6��,979 – (�0,099,�54)
Net movement in cash and cash equivalents �,�0�,445 (�,804,�56) 69�,074 5�0,�4� (�0,4��) (�7�,050) (4,4�7,�46) (�,899,��5)
At start of year ���,�98,8�4 7,057,978 (�90,8�6) ��6,504 �56,�4� 4�0,48� – �40,�79,�8�
At end of year ��4,700,�58 4,�5�,6�� 40�,��8 846,846 �45,8�8 �58,4�� (4,4�7,�46) ��6,�79,968
�,�0�,444 (�,804,�56) 69�,074 5�0,�4� (�0,4��) (�7�,050) (4,4�7,�46) (�,899,��5)
Included in the elimination amount is the negative goodwill of N�.05 billion resulting from the purchase by the bank of 70.59% shareholding
of SIVL in SIPML in December �008.
Notes to the consolidated financial statements
Annual financial statements
��� ���
Statement of value added
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 % N’000 % N’000 % N’000 %
Gross earnings 6�,�40,5�4 5�,87�,4�8 �8,65�,0�6 �4,7��,949
Interest paid:
- local (�7,7�7,0��) (�7,758,070) (4,�9�,�78) (4,��8,49�)
- foreign (894,�88) (894,�88) (�,779,570) (�,779,570)
(�8,6��,�00) (�8,65�,�58) (6,�70,948) (5,998,06�)
Administrative overhead:
- local (9,964,50�) (8,�00,565) (�,650,�69) (�,9�0,75�)
- foreign (606,�59) (606,�59) (�0�,864) (�0�,864)
(�0,570,66�) (8,806,7�4) (�,75�,0��) (�,0��,6�6)
Provision for losses (5,0�9,8�5) (5,�04,786) (�,04�,68�) (�,04�,68�)
Value added �7,0�8,7�8 �00 ��,�08,550 �00 �6,68�,�7� �00 ��,656,588 �00
Distribution
Employees and Directors
Salaries and benefits �0,978,600 40 9,409,8�8 4� 4,9�9,907 �9 4,�90,64� ��
Government
Taxation �,6��,465 �0 �,��7,878 7 �,�4�,�80 �9 �,854,6�9 ��
The Future
Asset replacement (depreciation) �,4��,��� �,�56,05� 77�,��6 669,5�9
Expansion (retained in the business) ��,994,4�0 9,��4,80� 7,849,848 6,94�,766
��,4�7,65� 50 �0,470,854 50 8,6��,�85 5� 7,6��,�05 56
�7,0�8,7�8 �00 ��,�08,550 �00 �6,68�,�7� �00 ��,656,588 �00
Annual financial statements
��4 ��5
Five year consolidated financial summary
��-Mar-�007 ��-Mar-�006 ��-Mar-�005
Group Bank Group Bank Group Bank
N’000 N’000 N’000 N’000 N’000 N’000
�0,8��,864 �0,8��,�45 6,�56,8�� 6,�56,�64 90�,478 90�,478
46,87�,0�5 46,090,0�� ��,��7,077 ��,�65,5�5 9,��6,70� 7,948,�88
��,08�,�6� ��,07�,76� �8,���,�66 �7,996,�66 9,48�,�6� 9,48�,�6�
�6,606,845 �5,590,�58 48,�74,5�9 50,067,65� ��,49�,��6 ��,487,4�6
���,960 ���,960 85�,58� 85�,58� – –
�,0�4,009 4,876,5�4 �,976,000 �,545,��0 697,5�5 �,7�0,6�0
�4,865,9�9 ��,�8�,905 9,066,9�0 4,660,4�6 5,�88,987 ��0,000
484,06� 484,06� 75,8�� 75,8�� �0�,08� �0�,08�
9,750,�90 9,750,�90 9,750,�90 9,750,�90 – –
6,��7,470 5,958,06� 5,�74,7�6 5,�04,454 748,7�� 7�4,598
�6�,040,8�7 �57,�48,408 ���,976,��6 ��0,574,7�4 �9,�5�,0�6 �4,567,664
6,�50,000 6,�50,000 6,0�8,604 6,0�8,604 �,9�5,49� �,9�5,49�
44,695,6�0 4�,�57,85� �6,4�5,��0 �5,��7,�66 ��,7�8,7�4 ��,��9,7��
– – �,4��,44� �,4��,44� �,�74,�97 �,�74,�97
�84,��� – ��6,�90 – �08,000 –
68,0��,0�0 7�,896,047 55,49�,��� 57,07�,��� �0,�6�,��8 �0,885,8��
5,840,078 5,840,0�5 – – – –
�,���,558 �,��4,98� �,008,650 �,55�,�50 �,077,�48 800,6��
�7,4�8,��5 ��,478,5�9 �6,7�9,�6� �4,76�,��5 7,859,8�� 4,7�5,�7�
780,�6� �8�,�4� 4�6,70� �7�,�6� �57,�95 59,4�7
5,608,85� 5,608,85� �,��7,644 �,��7,644 �,657,000 �,657,000
�6�,040,8�7 �57,�48,408 ���,976,��6 ��0,574,7�4 �9,�5�,0�6 �4,567,664
5,687,7�5 5,687,7�5 �,900,�7� �,�67,860 �,�77,9�9 �,�77,9�9
�5,877,�04 ��,990,6�0 8,86�,585 8,�64,0�4 5,004,8�8 4,�50,440
(8,44�,4��) (6,805,878) (�,�95,848) (�,745,764) (�,68�,5��) (�,��7,890)
7,4�4,88� 6,�84,7�� 5,666,7�7 5,4�8,�50 �,���,�95 �,0��,550
(�,67�,74�) (8��,0��) (�,679,�54) (�,�94,��0) (876,66�) (654,�95)
5,76�,�4� 5,�6�,700 �,987,�8� 4,��4,0�0 �,444,6�� �,�58,�55
– – – – (�,�74,�97) (�,�74,�97)
5,76�,�4� 5,�6�,700 �,987,�8� 4,��4,0�0 �,�70,4�6 �,�8�,958
58 59 67 70 47 46
�7 �6 �� �� 40 4�
�4 �4 4� 45 �� �9
54 49 87 88 ��� ��4
�9 �9 �4 �4 � �
46 k 4� k �� k �4 k 4� k 40 k
47 k 44 k 56 k 57 k 55 k 54 k
�� k �9 k �� k �� k �0 k �9 k
46 k 4� k �� k �� k �9 k �7 k
�0 k �0 k �0 k �0 k �0 k �0 k
9�� 874 78� 7�9 �00 �00
12 months ended 9 months ended
31 December 2008 31 December 2007
Group Bank Group Bank
N’000 N’000 N’000 N’000
ASSETS EMPLOYED
Cash and short term funds ��,586,6�7 ��,440,68� ��,0�7,8�� ��,0�5,85�
Due from other banks ���,59�,�59 ��0,�58,50� 79,578,685 7�,800,�74
Short term investments �4,548,809 ��,540,99� 5�,467,959 5�,467,959
Loans and advances 98,�98,�7� 99,0�0,�88 79,464,605 79,6�5,690
Advances under finance leases 4,�6�,548 4,�6�,548 �,989,477 �,989,477
Other assets �9,455,�4� �9,�89,��6 ��,76�,80� ��,4��,7�8
Long term investments 75,977,6�4 7�,��4,7�� 68,�45,09� 6�,8��,968
Equipment on lease – – – –
Goodwill – – – –
Fixed assets �5,4��,906 �4,905,000 8,66�,669 8,�45,046
�5�,�5�,�98 �45,7��,07� ��5,�07,�0� �04,5�9,994
FINANCED BY
Share capital 9,�75,000 9,�75,000 9,�75,000 9,�75,000
Reserves 7�,�90,04� 67,�4�,65� 66,�88,��5 6�,046,7��
Proposed dividend – – – –
Minority interest 7��,404 – 455,�09 –
Deposits, current and other accounts 95,�40,�75 98,89�,5�� 7�,�90,744 7�,455,���
Due to other banks 8�,�0�,6�7 8�,�0�,6�7 67,�98,��� 66,85�,9�7
Tax payable 5,8��,4�9 �,�40,�9� 5,640,50� �,6��,948
Other liabilities 74,0��,686 7�,�4�,775 66,784,44� 6�,59�,8�4
Deferred tax �78,467 ��6,7�7 44�,654 5�,�07
Long term loans ��,�0�,�58 ��,�0�,�58 �7,5��,��� �7,5��,���
�5�,�5�,�98 �45,7��,07� ��5,�07,�0� �04,5�9,994
Acceptances and guarantees 50,860,640 50,860,640 56,259,272 56,259,272
PROFIT AND LOSS ACCOUNT
Net operating income 4�,6�9,��4 �5,��0,060 ��,480,088 �8,7��,887
Operating expenses and provisions (�8,00�,��9) (�4,677,�79) (��,487,960) (9,9�7,48�)
Profit before taxation �4,6�6,895 �0,54�,68� �0,99�,��8 8,796,404
Taxation (�,6��,465) (�,��7,879) (�,�4�,�80) (�,854,6�9)
Profit after taxation ��,994,4�0 9,��4,80� 7,849,848 6,94�,765
Proposed dividend – – – –
Transfer to reserves ��,994,4�0 9,��4,80� 7,849,848 6,94�,765
STATISTICAL INFORMATION
Gross interest margin % 55 54 6� 6�
Shareholders’ funds as a % of total assets �� �� �4 �4
% Loans and overdrafts/total assets �8 �9 �5 �6
% Loans and overdrafts/deposits �0� �00 ��� ��0
% Provision/Loans and overdrafts �0 9 �� ��
Earnings per share (EPS) - actual 64 k 49 k 4� k �7 k
Earnings per share (EPS) - basic 64 k 49 k 7� k 6� k
Earnings per share (EPS) - adjusted 64 k 49 k 4� k �7 k
Earnings per share (EPS) - diluted 64 k 49 k 4� k �7 k
Dividend per share (DPS) - actual – – �5 k �5 k
Average number of employees �,659 �,�4� �,�0� �,07�
Annual financial statements
��6 ��7
Other informationOther
information
• Management team
• Branch network
��7
��8 ��9
Management team Other information
Nimi AkinkugbePrivate client services
Ayo AdioOperations distribution
Abas AlhassanInternal audit
Abimbola AshiruCorporate affairs
Yinka Ayo - OsibogunCredit governance
Leye BabatundeInformation technology
Chukuka ChukumaProject & structured finance
Lateef DabiriOperations support
Steve ElusopeFinance
Eric FajemisinIBTC Pensions - business development
Yemi FaseunHuman resources
Bashir GidadoIT strategy & planning
Yemi KaleResearch
Izehi KuyeMarketing
Gbola LalaInformation technology
Nene LawaniManagement information credit
Louis LehmaIT & IT Integration
Sola MahoneyFinancial institutions
�40 �4�
Management team Other information
Babayo SaiduDistribution relationship banking
Olumide OyetanStanbic IBTC Asset Management Limited
Anne RinuPremises management
Andrew MashandaTransactional products and services
Binta Max - GbinijeBusiness banking
Mike McMullenProject management
Patrick MgbenweluProject Finance
Olawande MuoyoTransactional products and services
Tunde ObidareIBC & GMO back office
Biyi OlagbamiCIB credit
Lloyd OnaghinonPrivate equity
Benjamin OshoPBB credit
Akeem OyewaleStanbic IBTC Equities Limited
Yewande SadikuCorporate finance
Segun SanniInvestor services
Alubani SibandaCorporate banking
Warren SmithVehicle & asset finance
Jon SmitPBB distribution
Kunle SonolaCIB Coverage and distribution
Dele SotuboStanbic IBTC Equities Limited
Joyce UrediPrivate banking
Delein Van SchalkwykOperations
Jaco ViljoenPBB products
�4� �4�
ABIA STATE
�. Aba Main Branch
7 Aba-Owerri Road
PMB 7477, Aba
Tel: 08�-��7�44, ��6�69
Fax: 08�-���6��
�. Aba Market Branch
7 Duru Road
Off Cemetary Road, Aba
Tel: 08�- ��7868, ��5���
Fax: 08�-��0�69
ADAMAWA STATE
�. Yola Branch
� Muhammed Mustapha Way
Jimeta, Yola
Tel: 075-6�7008
Fax: 085-6�7564
AKWA IBOM STATE
4. Uyo Branch
65B Nwaniba Road, Uyo
Tel: 085-�04��9, �04006
Fax: 085-�04�78
ANAMBRA STATE
5. Onitsha Branch
�� Bright Street, Onitsha
Tel: 046-4�0���
Fax: 046-�708887
BAUCHI STATE
6. Bauchi Branch
�6 Yandoka Road, Bauchi
Tel: 077-546475
Fax: 077-546454
BORNO STATE
7. Maiduguri Branch
�8 Baga Road, Maiduguri
Tel: 076-��0560, ��6�05
Fax: 076-��056�
BENUE STATE
8. Makurdi Branch
�� Ali Akilu Road, Makurdi
Tel: 044-5�47��, 5�4709
Fax: 044-5�4707
CROSS RIVER STATE
9. Calabar Branch
7� Ndidem Usang Iso
Road,Calabar
Tel: 087-��9�7�
Fax: 087-��9��4
DELTA STATE
�0. Warri Branch
98 Effurun-Warri Road
Tel: 05�-�5448�, �5690�
Fax: 05�-�5690�
EDO STATE
��. Benin City Branch
7� Akpakpava Street, Benin
Tel: 05�-46707�, 467�7�
Fax: 05�-�5565�
ENUGU STATE
��. Enugu Branch
�5� Ogui Road
Ebeano Housing Estate, Enugu
Tel: 04�-�54806
Fax: 04�-�54�8�
FEDERAL CAPITAL
TERRITORY (ABUJA)
��. Garki Branch (Area �)
Plot 4�7 No. 8 Langtang Close
Off Tafawa Balewa Way
Tel: 09-��40667
Fax: 09-��4�0��
�4. Garki Branch (Area 7)
Plot 59� Ringim Close, Garki
P.M.B ��7, Abuja
Tel: 09-��46���, ��46��4
Fax: 09-��44456
�5. Maitama Branch
Plot �777 Cadastral Zone A6
Maitama District, Abuja
P.M.B. ��7, Abuja
Tel: 09-4��4487, 4��7406
Fax: 09-4��4485
�6. 75 Ralph Sodeinde Street,
Central Business District,
Abuja, FCT.
Tel: 09-46��75�, 09-46��75�
IMO STATE
�7. Owerri Branch
8 Wethedral Road, Owerri
Tel: 08�-����70
Fax: 08�-��4�4�
KADUNA STATE
�8. Kaduna Branch
�4 Ahmadu Bello Way
P.O.Box �0���, Kaduna
Tel: 06�-�4766�, �47658
Fax: 06�-�4766�
�9. Zaria Branch
9 Kaduna Road, Zaria
Tel: 069-����0�, ����0�
Fax: 069-��5�00
KANO STATE
�0. Kano Branch
��E Bello Road
P.O.Box �507, Kano
Tel: 064-6�9896, 6�9897
Fax: 064-6�4�06
��. �, Bank Road, Kano
Tel: 064 – 646984 – 9
Fax: �08��0
KASTINA STATE
��. Kastina Branch
�9� IBB Way, Kastina
Tel: 065-4��884, 4�0�55
Fax: 065-4���87
KWARA STATE
��. Ilorin Branch
�� Unity Road, Ilorin
Tel: 0��-74���8
Fax: 0��-��9564
LAGOS STATE
�4. Head Office Branch
I.B.T.C. Place
Walter Carrington Crescent
P.O. Box 7�707,
Victoria Island-Lagos
Tel: 0�-�6�65�0, �7��400
Fax: 0�-�6�654�, �6�654�
�5. Plot ���� Karimu Kotun Street,
Victoria Island, Lagos.
Tel: 0�-4488890
�6. 4� Opebi Road, Ikeja, Lagos.
Tel: 0�-448�0�4,0�-448�0�5
�7. Idejo Branch
Plot �7�� Idejo Street
Victoria Island, Lagos
Tel: 0�-�6�0�8�, �70�484
Fax: 0�-�70�480
�8. Adetokunbo Ademola Branch
76 Adetokunbo Ademola Street
Victoria Island, Lagos
Tel: 0�-�70��74, �70�096
Fax: 0�-�70�098
�9. Afribank Branch
Churchgate Building
PC �0 Afribank Street,
Victoria Island
Tel: 0�-�70�48�, �6�860�
Fax: 0�-�6�9455
�0. Muri Okunola Branch
Plot ��6A Muri Okunola Street
Victoria Island Annex
Tel: 0�-�70�4�5, �70�4�7
Fax: 0�-�70�597
Branch network
��. Awolowo Road Branch
85 Awolowo Road, Ikoyi
Tel: 0�-�70748�, �70748�
Fax: 0�-�707480
��. Martins Street Branch
�9 Martins Street, Lagos Island
Tel: 0�-�640���, �640��6
Fax: 0�-�640���
��. Nnamdi Azikiwe Street Branch
�06 Nnamdi Azikiwe Street
Lagos Island
Tel: 0�-8�5�647, �640�80
Fax: 0�-�640�8�
�4. Offin Road Branch
�5 Offin Road, Apongbon
Tel: 0�-�7��780, �7��78�
Fax: 0�-�7��78�
�5. Idumagbo Branch
6� Idumagbo Avenue
Tel: 0�-�640449, �646780
Fax: 0�-�640049
�6. Yinka Folawiyo Plaza Branch
�8 Warhouse Road, Apapa
Tel: 0�-�707784, �70778�
Fax: 0�-�707780
�7. Warehouse Road Branch, Apapa
�0/�� Warehouse Road, Apapa
Tel: 0�-�7�6���, 5458748
Fax: 0�-545�909
�8. Allen Avenue Branch
80 Allen Avenue, Ikeja
Tel: 0�-�707667, �707668
Fax: 0�-�707706
�9. Toyin Street Branch
�6A Toyin Street, Ikeja
Tel: 0�-�7�5458, �7�5459
Fax: 0�-4974�54
40. Oba Akran Avenue Branch
�0 Oba Akran Avenue, Ikeja
Tel: 0�-�70794�, �70794�
Fax: 0�-�7009�5
4�. Alausa Branch
Elephant House, Alausa - Ikeja
Tel: 0� �7087��, �7087�4
Fax: 0� �7087�5
4�. M/M Airport Road Branch
Muritala Mohammed Airport
Tel: 0�-�7��44�
Fax: 0�-�7��440
4�. Surulere Branch
�9 Adeniran Ogunsanya Street
Tel: 0�-�70����, �70���4
Fax: 0�-�70����
44. Alaba Branch
H48/H49
Alaba Int’l Market, Ojo
Tel: 0�-�8�4�0�
Fax: 0�-�8�4�0�
45. Trade Fair Branch
Obasanjo Hall/Hall �
ASPAMDA Plaza
International Trade Fair
Complex
Tel: 0�-77�996�, �4�6704
46. Balogun Business
Association Branch
Plaza �A Portion C
Opposite Sokoto Plaza
Trade Fair Complex
Tel: 0�-�4554�0, �4554��
47. NPA Branch
Account Block
Nigerian Port Authority
Wharf Road, Apapa
Tel: 0�-�708886, �708887
Fax:0�-�708885
48. Tincan Island Branch
Suite 7 & �7 Container
Complex Apapa
Tel: 0�-7747�94, 87���95
49. Block I �94, Road 5, Ikota
Shopping Mall, Ajah. Lagos.
50. ��0 Herbert Macaulay Road,
Yaba. Lagos
NIGER STATE
5�. Minna Branch
Paiko Road, Minna
Tel: 066-���5�8
Fax: 066-������
OGUN STATE
5�. Abeokuta Branch
�A Lantoro Road, Isale-Ake
Abeokuta
Tel: 0�9-�4475�
Fax: 0�9-�4�7�6
ONDO STATE
5�. Akure Branch
Great Nigeria Insurance House
Owo/Ado Ekiti Road, Akure
Tel: 0�4-��4�50, �4�5�5
Fax: 0�4-�4��5�
OSUN STATE
54. Ile-Ife Branch
5 Obalufon-Lagere Road
Beside Catholic Church
Lagere Junction, Ile-Ife
Tel: 0�6-����0�
Fax: 0�6-���560
OYO STATE
55. Gbagi Branch
�5 Jimoh Odutola Street
Ogunpa/Dugbe, Ibadan
Tel: 0�-�4���7�, �4��458
Fax: 0�-�4��9�0
56. Iwo Branch
Baloon House, Iwo Road
Ibadan
Tel: 0�-8�08�9�
Fax: 0�-8�08�9�
57. Ibadan Main Branch
UCH- Secretariat Road
By Total Garden, Ibadan
Tel: 0�-�4��90�, �4��9�0
Fax: 0�-�4���7�
PLATEAU STATE
58. Jos Branch
�4 Ahmadu Bello Way, Jos
Tel: 07�-458568, 458570
Fax: 07�- 458569
RIVERS STATE
59. ���A, Olu Obasanjo Road,
GRA
Port Harcourt
Tel: 084 – ������,
46�046, ��54��
Fax: 46�04750.
60. P/H Airport Branch
International Airport,
Port Harcourt
Tel: 084-���9�7, 785874
6�. Olu Obasanjo Branch
58 Olu Obasanjo Road
Port Harcourt
Tel: 084-��0�47
Fax: 080-��05�5
6�. Trans Amadi Branch
7 Trans Amadi Road
P.M.B ��5��, Port Harcourt
Tel: 084-��754�, ��754�
Fax: 084-�����6
SOKOTO STATE
6�. Sokoto Branch
8 Maiduguri Road
P.M.B. ��75, Sokoto
Tel: 060-��96�9
Fax: 060-��96�8
Other information
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