ANNUAL REPORT & ACCOUNTS - Abbey Mortgage Bank · STATEMENT ANNUAL REPORT & ACCOUNTS 2016 012...
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ANNUAL REPORT & ACCOUNTS
2016
INTRODUCTIONAbbey Mortgage Bank's financial statements comply with the applicable legal requirements of the Nigerian Securities and Exchange commission regarding financial statements for the year ended 31 December 2016. These financial statements contain extracts of the audited financial statements prepared in accordance with 'Financial Reporting' its interpretation issued by the International Accounting Standards and adopted by the Financial Report ing Counci l of Nigeria. For better understanding, certain disclosures and some prior period figures have been presented along with the reporting periods' figures. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
ANNUAL REPORT & ACCOUNTS
2016
RC 172093
MORTGAGE BANK PLC
STRATEGY &BUSINESS REVIEW
012 CHAIRMAN'S STATEMENT
014 MANAGING DIRECTOR'S REPORT
GOVERNANCE
017 REPORT OF THE DIRECTORS
024 STATEMENT OF DRECTORS' RESPONSIBILITY
025 CERTIFICATION PURSUANT TO SECTION 60(2)
OF THE ISA 2007
026 CORPORATE GOVERNANCE REPORT
035 ENTERPRISE RISK MANAGEMENT POLICY
040 REPORT OF THE AUDIT COMMITTEE
041 INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS
047 STATEMENT OF COMPREHENSIVE INCOME/
SIGNIFICANT ACCOUNTING POLICIES
048 STATEMENT OF FINANCIAL POSITION
049 STATEMENT OF CHANGES IN EQUITY
050 STATEMENT OF CASH FLOWS
051 STATEMENT OF REGULATORY RISK RESERVE
052 NOTES TO THE FINANCIAL STATEMENTS
113 STATEMENT OF VALUE ADDED
114 FIVE YEAR FINANCIAL SUMMARY
003 COMPANY PROFILE
005 FINANCIAL HIGHLIGHTS
006 CORPORATE INFORMATION
008 BOARD OF DIRECTORS
009 EXECUTIVE MANAGEMENT
ABOUT ABBEY
INVESTOR INFORMATION
117 SHAREHOLDERS PROXY FORM
118 ADMISSION FORM
119 NOTICE OF MEETING
121 E-DIVIDEND/MANDATE FORM
123 E-SHARE ALLOTMENT MANDATE FORM
125 E-SHARE REGISTRATION FORM
127 E-SERVICE/DATA UPDATE FORM
129 E-DIVIDEND MANDATE ACTIVATION FORM
131 LIST OF UNCLAIMED DIVIDENDS
CONTENTS
ANNUAL REPORT & ACCOUNTS
2016
To be the leading Nigerian Mortgage Bank
COMPANY PROFILE
OURVISION
To provide affordable housing finance to enable people own their houses and to deliver superior returnsto our shareholders.
TEAM WORK
NTEGRITY I
USTOMER SERVICEC
UMILITYH
OURMISSION
OURCORE
VALUES
OURBRAND
Our new brand design represents our renewed promise from the foundation of a dream to the top of the game. We are always here for you!
We remain ABBEY…We make homes happen
ANNUAL REPORT & ACCOUNTS
2016003
ANNUAL REPORT & ACCOUNTS
2016004
COMPANY PROFILE Cont’d
ABOUT ABBEYAbbey Mortgage Bank Plc (formerly Abbey Building Society Plc) was incorporated in Nigeria as a private limited company on 26th August, 1991 and obtained its license to operate as a mortgage bank on 20th January, 1992. On 11th March, 1992 it commenced business and later converted to a public liability company in September 2007. The company was listed on the Nigerian Stock Exchange on 21st October, 2008.
OUR PRODUCTS & SERVICES INCLUDE:
ABBEY POPULAR SAVING S ACCOUNT
ABBEY EASYSAVE
PLUS
ABBEY HOME
ACCOUNT
KIDSAVE CHILDREN SAVINGS ACCOUNT
TARGETSAVINGSACCOUNT
FIXED DEPOSIT
CALL DEPOSIT
ABBEY CERTIFICATE OF DEPOSIT
ABBEY HOUSING
INVESTMENT FUND (HI FUND)
SALARY SAVINGS
ABBEY CASH
MANAGEMENT ACCOUNT
LENDING AND
MORTGAGES (RETAIL)
LENDING AND
MORTGAGES (WHOLESALE)
OUR BUSINESSThe principal business of the company continues to be the provision of mortgages and banking services to individuals and corporate organizations. Specifically, Abbey provides services such as:
Savings and loans schemes;Conventional savings, current and other retail banking services;Deposit and funds management;Personal loans;
Real estate and mortgage services;Children and school account services;Syndicated project development and financing; andCollaborative business ventures that bring convenience to our stakeholders..
Abbey is also an accredited primary mortgage bank (PMB) for the National Housing Fund (NHF) and a subscriber to the recently created Nigeria Mortgage Refinance Company Plc (NMRC).
ESTATEDEVELOPER
LOAN
HOMEOWNERSHIP
ACCOUNT
REAL ESTATEFINANCING
COOPERATIVEHOME
OWNERSHIPPLAN
RENTADVANCEACCOUNT
NATIONALHOUSING
FUND LOANS
LOSS BEFORE TAX
N1.314billion
GROSS EARNINGS PROFIT AFTER TAX
N-227.2million N55.49million
INCREASED/(DECREASED)%N'000 N'000
20142015AS ATDECEMBER
Major Balance-Sheet Items
1,409,431
5,361,392
7,103,478
12,779,316
6,606,264
1,873,128
5,180,089
6,819,979
13,344,907
6,550,770
Cash and bank balances
Deposit from customers
Loans and advances to customers
Total assets
Total equity
Major profit and loss items
1,314,830
824,142
(227,272)
55,494
1,342,051
832,275
(182,892)
(163,206)
Gross earnings
Net operating income
Loss before tax
Profit/ (loss) after tax
Per 50k Share Data
(-24.76)
3.50
4.16
(-4.24)
0.85
(-2.03)
(-0.98)
24.27
134.00
133.93
133.93
1.32
1.32
(3.89)
(3.89)
Earnings/(loss) per share
Basic (Kobo)
Dilute (Kobo)
ANNUAL REPORT & ACCOUNTS
2016005
FINANCIAL HIGHLIGHTS
N'00020152016
N'000
Major Balance-Sheet Items
Cash and bank balancesDeposit from customersLoans and advances to customersTotal assetsTotal equity
Major profit or loss items
Gross earningsNet operating incomeLoss before taxProfit/(loss) after tax
Per 50k Share Data
Earnings/(loss) per shareBasic (kobo)Diluted (kobo)
1,008,0925,328,6496,900,080
12,452,7746,438,267
1,184,256772,730
(134,443) (167,997)
(4.00) (4.00)
1,409,4315,361,3937,103,478
12,779,3166,606,264
1,314,830824,142
(227,272)55,494
1.321.32
AS AT 31ST DECEMBER
FINANCIAL HIGHLIGHTS
CORPORATE INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2016
COMPANY SECRETARY
Geoff O. Amaghereonu, Esq.
REGISTERED NUMBER
RC 172093
LICENSE NUMBER
000026
REGISTERED OFFICE
23, Karimu Kotun Street,
Victoria Island,
Lagos.
AUDITOR
Ernst and Young
(Chartered Accountants)
10th Floor, UBA House,
57, Marina, Lagos.
REGISTRARS
Africa Prudential Registrars Plc
220B, Ikorodu Road,
Palmgrove,
Lagos.
DIRECTORS
Chief Ifeanyichukwu Ochonogor
Mrs. Rose Ada Okwechime
Mr. Madu Hamman
Mazi Emmanuel Kanu Ivi
Air Vice Marshal Olufemi Soewu (rtd.)
Mr. Bernard Okumagba
High Chief Samuel Oni
Mr. Uzochukwu Odunukwe
Chairman, Board of Directors
Managing Director/CEO
Executive Director
Director
Director
Director
Independent Director
Independent Director
ANNUAL REPORT & ACCOUNTS
2016006
BRANCHNETWORK
23, Karimu Kotun Street, Victoria Island, Lagos
Tel: 01-9035725Email:
www.abbeymortgagebank.com
HEAD OFFICE
Plot 266, Cadastral Avenue, FMBN House, Cental Business District,
Abuja, FCT. Tel: 09-2913397
[email protected] www.abbeymortgagebank.com
ABUJA BRANCH 1
1, Ayangba Close, Area II, Garki, Abuja
Tel: 09-2915597 [email protected]
www.abbeymortgagebank.com
ABUJA REGIONAL OFFICE/BRANCH 2
Ilaro Road, Agbara Industrial Estate, Off Lagos-Badagry Expressway,
Ogun State.Tel: 01-2955176
[email protected] www.abbeymortgagebank.com
AGBARA BRANCH
23, karimu Kotun Street, Victoria Island, Lagos
Tel: 01-9035730 [email protected]
www.abbeymortgagebank.com
VICTORIA ISLAND BRANCH
51, Okota Road, Isolo, Lagos
Tel: [email protected]
www.abbeymortgagebank.com
OKOTA BRANCH
19, Warehouse Road, Lagos
Tel: [email protected]
www.abbeymortgagebank.com
APAPA BRANCH
Km 5, Lasu-isheri Road, By Agboroko Bus stop, Iba, Lagos
Tel: 01-7944892 [email protected]
www.abbeymortgagebank.com
LASU/IBA BRANCH
House 18, 2nd Avenue, Festac Town, Lagos
Tel: [email protected]
www.abbeymortgagebank.com
FESTAC BRANCH
Baze University, Plot 686, Cadastral Zone C 00, Kuchingoro,
Behind National Judicial institute Abuja,Tel: 09-2912586
[email protected] www.abbeymortgagebank.com
BAZE UNIVERSITY
BRANCH
375, Nnebisi Road, Asaba, Delta State.
Tel: [email protected]
www.abbeymortgagebank.com
ASABA BRANCH
ANNUAL REPORT & ACCOUNTS
2016007
BOARD OFDIRECTORS ANNUAL REPORT
& ACCOUNTS
2016008
6. MR. BERNARD OKUMAGBA Non-Executive Director
5. AIR VICE MARSHAL OLUFEMI SOEWU (rtd) Non-Executive Director
2. MRS. ROSE ADA OKWECHIME Managing Director/Chief Executive Officer
3. MR. MADU HAMMAN Executive Director
7. HIGH CHIEF SAMUEL ONI Independent Director
4. MAZI EMMANUEL KANU IVI Non-Executive Director
1. CHIEF IFEANYICHUKWU B. OCHONOGOR Chairman Board of Directors
8. MR. UZOCHUKWU ODUNUKWE Independent Director
1 2 3 444
6 75 8
MANAGEMENTTEAM ANNUAL REPORT
& ACCOUNTS
2016009
5. MR. ONEYOGOR IGWALA 6. MS. OLABISI AJEIGBE 7. MR. EMMANUEL ALAGBE
2. MR. MADU HAMMAN 3. MR. ANDREW NWOSISI 4. GEOFF AMAGHEREONU ESQ.
1. MRS. ROSE ADA OKWECHIME
8. MRS. HENRIETTA OKAFOR 9. MR. ABIODUN LASISI 10. MRS. LOLITA EJIOFOR
1
6 10987
52 3 4
ANNUAL REPORT & ACCOUNTS
2016
STRATEGY ANDBUSINESS REVIEW
CHAIRMAN’S STATEMENT ANNUAL REPORT
& ACCOUNTS
2016012
agricultural sector, which went down to 4.03%. Headline inflation declined to 17.78% from 18.55% in December, 2016 thereby reversing from the monthly upward recorded since January, 2016.
Money market interest rates moved in tandem with the level of liquidity in the banking system. Rates were relatively stable during the review period. Relative to end-December 2016, the capital market indices, fell by 3.12 and 3.03%, respectively, reflecting the challenges still confronting the economy. The average naira exchange rate remained stable at the inter-bank segment of the foreign exchange market in the review period.
The global economy witnessed improved momentum in 2016. This came about by gains in both developed, emerging markets and developing economies which propelled global GDP growth to 2.7 per cent year-on-year in Q4, 2016. Despite this improvement, the external environment continued to be determined by political, economic and financial market uncertainties, with the defining issues being: Brexit , growing protectionist and anti-globalization sentiments, divergent monetary policies of the advanced economies' central banks and volatile commodity price movements.
I welcome you to the 25th Annual General Meeting of our company, Abbey Mortgage Bank Plc (The
Bank).
I would rev iew the bus iness env i ronment and s ign i f i cant developments that impacted on the performance of the Bank within the operating period as well as the future outlook for our company before presenting our Financial Statements to you.
INTRODUCTIONDear stakeholders,
GLOBAL ECONOMY
DOMESTIC ECONOMIC & BUSINESS DEVELOPMENT
The economy contracted by 1.51% in 2016, with the contraction in the fourth quarter being the least in the year. The non-oil sector grew by 0.33%, largely reflecting the reduction in the
OUR FINANCIAL RESULTS
A snapshot of the financial performance of the Bank indicates that our Loans and Advances dropped by N0.2 billion (2.86%) over N7.7billion in 2015 due to improvement in our debt recovery
CHAIRMAN’S STATEMENT Cont’d013
prices. The IMF predicts that the economy of emerging and developing countries would grow by 4.5% in 2017 and 4.8% in 2018 and that Nigerian GDP shall improve by 0.7 in 2017 and rebound by 2.3 in 2018.
The Federal Government $1.3 billion take-off grant for the Nigeria Development Bank is likely to boost development of SME businesses in the economy. The increase in NHF contribution to N43 billion by 2016 year end from N13 billion early in same year would result in increasing demand for housing in 2017. It is expected that this would boost mortgage lending.
We hope to take advantage of the Federal Government interventions in the housing sector to grow our business. These interventions include the Federal Integrated Staff Housing Scheme (FISH) and the Family Home Fund Nigeria.
drive in the year under review. Loss before Tax dropped by 40.84%. Our 2016 cost reduction schemes saw us through savings of over N0.14 billion (13.72%) in our operating expenses compared with 2015.
It is worthy to also note that the Bank has fully repaid her foreign loans, while still remaining liquid to meet her regulatory and financial obligations as a national primary mortgage bank in the country. We are presently one of the beneficiaries of the Nigeria Mortgage Refinance Company (NMRC) mortgage refinance scheme.
These strategies provided us with the impetus that made us maintain our position as one of the top five better managed Primary Mortgage Banks in Nigeria during the year ended December 31, 2016.
CHANGES IN DIRECTORATE CONCLUSION
I would like to thank our esteemed customers, shareholders and other stakeholders for their continued support, whilst appreciating all staff and members of the Executive Management for t h e i r d e m o n s t r a t e d p r o f e s s i o n a l i s m , commitment and zeal towards building an enduring institution. To my colleagues on the Board, I want to say a big thank you for the confidence reposed in the business. I would implore you all to lend your support as we look forward to a better performance in this financial year.
God bless you all.
Mr. Emile Groot resigned from the Board with effect from 15th September, 2016. I wish to use this opportunity to thank him for his service to the Bank. High Chief Samuel Oni and Mr. Uzochukwu Odunukwe joined the Board on the 19th August, 2016. Their appointments will be presented to you for approval at this meeting.
FUTURE OUTLOOKAvailable data and forecasts of key economic var iables, the newly released Federal Government's Economic Recovery and Growth Plan (ERGP), and positive revision of Nigerian economic growth forecast by the IMF, indicate prospects of output recovery in 2017. It is expected that the implementation of this plan, the new foreign exchange policy as well as the current effort by the Federal Government to restore peace in the Niger Delta region, would help revive economic growth and stabilize
CHIEF I. B. OCHONOGOR Chairman, Board of Directors
MANAGING DIRECTOR'S STATEMENT ANNUAL REPORT
& ACCOUNTS
2016014
The operating environment in the reporting year was very challenging. Issues that featured prominently were volatility in the foreign exchange market, ever increasing headline inflation leading to high operating costs, lower d isposable income to sa lary earners , deterioration of credit mainly arising from increasing job losses, increasing vacancies of dwellings in choice and middle class areas and oil and gas sector worries. The rising non-performing loans in the banking sector led to the need for impairment allowance and thus a reduction in revenues. The inability of Government and its agencies to meet their staff salary obligations as and when due and strict compliance with the Treasury Single Account rule did not provide succour to banks in the year either. Our Bank therefore had to tighten her credit risk acceptance criteria, improve her debt recovery strategies and institute relevant cost reduction measures to remain relevant in business during the year.
am honoured to provide details
Iof how we operated in the 2016 financial year and our outlook
for the ensuing year.
ECONOMIC AND BUSINESS OVERVIEW IN 2016
Though the macro-economic and business environment was challenging in 2016, the financial performance of our Bank reflects sound fundamentals of its evolving business model as we continued with the disciplined execution of our medium-term strategy which positions the business for improved and sustainable performance.
OUR FINANCIAL PERFORMANCE IN 2016
Distinguished ladies and gentlemen,
MANAGING DIRECTOR'S STATEMENT Cont’d015
Our outlook for 2017 is a bit more positive, as we expect that the country will begin to experience recovery in the economy and in business. Economic act iv i t ies wi l l be shaped by government's determination to lift the country out of recession. Just recently, the Federal Government released the Economic Recovery and Growth Plan (ERGP), which detailed its efforts to drive macroeconomic stability, economic diversification, social inclusion and governance from 2017 to 2020. Therefore, we remain solidly aware of opportunity areas in 2017 and will work towards optimizing these in our best interest.
We will not relent on our efforts to redesign our systems and processes to boost service delivery, intensify strategic efforts to reduce operating expenses, as well as improve our overall risk monitoring capacities to ensure that both internal and external risks are promptly recognized and swiftly purged.
CONCLUSIONIn conclusion, we are highly optimistic that 2017 financial year will mark a huge improvement in our operating environment and we look forward to delivering better results at the end of the financial year.
On behalf of the Board of Directors, Management and Staff of our Bank, I would like to thank our esteemed customers for their patronage, love and loyalty. I also salute our shareholders for their undiluted trust in our stewardship.
God bless.
ROSE ADA OKWECHIME (MRS.)Managing Director/Chief Executive Officer
OUTLOOK FOR 2017
ANNUAL REPORT & ACCOUNTS
2016
GOVERNANCE
REPORT OF THE DIRECTORS ANNUAL REPORT
& ACCOUNTS
2016017
The Directors present their report together with the audited financial statements of Abbey Mortgage Bank Plc (the “Bank”) for the year ended 31 December 2016.
The Bank has applied International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) in preparing these Financial Statements and the comparative financial information.
1) RESULTS
Highlights of the Bank's operating results for the year under review are as follows:
2) PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The principal activity of the Bank continues to be the provision of mortgage and banking services to the general public.
3) LEGAL FORM The Bank, which was incorporated in Nigeria as a private limited liability company on 26 August
1991, obtained its license to operate as a mortgage bank on 20 January 1992, commenced business on 11 March 1992 and later converted to a public limited liability company in September 2007. On 21 October 2008, the Bank became officially listed on the Nigerian Stock Exchange. Following the approval of the Central Bank of Nigeria (CBN) on 17 September 2013, and the approval of the Corporate Affairs Commission of Nigeria on 16 January 2014, the Bank changed its name from Abbey Building Society Plc to Abbey Mortgage Bank Plc.
Loss before income tax Income tax (expense) / benefit (Loss) / profit after income tax
Other comprehensive income (Loss) / profit for the year
Less: appropriations:Transfer from regulatory risk reserve Net effect of operations on retained earnings
(134,443) (33,554)
--------------(167,997)
- --------------
(167,997)
(164,953) --------------
(332,950)============
(227,272) 282,766
-------------- 55,494
- --------------
55,494
(81,554) --------------
(26,060)============
2016 N'000
2015N'000
REPORT OF THE DIRECTORS Cont’d ANNUAL REPORT
& ACCOUNTS
2016018
4) DIRECTORS' INTERESTS IN SHARES AND CONTRACTS
The interests of the Directors in the issued share capital of the Bank as recorded in the Register of Directors' Shareholding as at 31 December 2016 are as follows:
Chief Ifeanyichukwu
Boniface Ochonogor
Mrs. Rose Ada Okwechime
Mr. Madu Hamman
Mazi Emmanuel Kanu O. Ivi
AVM Olufemi Soewu Retired)
Mr. Bernard Okumagba
High Chief Samuel Oni
Mr. Uzochukwu Odunukwe
Percentage Holding [%]
As at 31 December 2015 (Shares)
Percentage Holding [%]
1.
2.
3.
4.
5.
6.
7.
8.
As at 31 December 2016 (Shares)
275,198,488
204,356,780
839,170
86,642,341
50,717,076
8,723,720
NIL
NIL
6.55
4.87
0.02
2.06
1.21
0.21
NIL
NIL
275,198,488
204,356,780
839,170
86,442,341
50,717,076
8,723,720
NIL
NIL
-
6.55
4.87
0.02
2.06
1.21
0.21
NIL
NIL
-
DIRECT HOLDING
S/NNAME OF DIRECTORS
INDIRECT HOLDINGS
Chief Ifeanyichukwu Boniface Ochonogor has an indirect holding in the Bank through Forte Properties & Investment Ltd, a company in which he is a majority equity holder.Mrs. Rose Ada Okwechime has an indirect holding in the Bank through Madonna Ashib Commercial Enterprises Ltd, a company in which she is the majority equity holder.Mr. Bernard Okumagba has an indirect holding in the Bank through Eruaye Investment Ltd, a company in which he is a shareholder.
5) ELECTION/RE-ELECTION OF DIRECTORS
In accordance with Article 106 of the Company's Articles of Association, the Directors listed below retire by rotation and being eligible, offer themselves for re-election:
(a) Avm. Olufemi Soewu(b) High Chief Samuel Oni(c) Mr. Uzochukwu Odunukwe
None of the Directors has direct or indirect interest in the Bank's contracts as at 31 December 2016 and 2015.
*
*
*
*
*
*
REPORT OF THE DIRECTORS Cont’d ANNUAL REPORT
& ACCOUNTS
2016019
6) RECORD OF DIRECTORS' ATTENDANCE
In accordance with Section 258 (2) of the Companies and Allied Matters Act CAP C20 LFN 2004, the Record of Directors' attendance at Directors' meetings during the financial year under review is available for inspection at the Annual General Meeting. It is also disclosed in the Corporate Governance Section of this Annual Report.
7) CHANGES IN THE DIRECTORATE
Mr. Emile E.H. Groot resigned from the Board as an Independent Non-Executive Director on 15 September 2016.
High Chief Samuel Oni's appointment as an Independent Non-Executive Director was approved by the CBN on 19 August 2016.
Mr. Uzochukwu Odunukwe's appointment as an Independent Non-Executive Director was approved by the CBN on 19 August 2016.
8) SUBSTANTIAL INTEREST IN SHARES
Nigerian citizens and associations held all the ordinary shares of the Bank as at 31 December 2016 and 2015. No individual shareholder directly held more than 5% of the issued and paid up share capital of the Bank except the following:
Madonna Ashib Comm. Enterprise Ltd
Forte Properties & Investment Ltd
Abbey Staff Share Trust Scheme
Chief Ifeanyichukwu Boniface Ochonogor
Percentage ofshareholding %No. of shares held
1,068,622,674
1,021,611,013
308,200,087
275,198,488
25.44
24.32
7.34
6.55
As at 31 December 2016
Madonna Ashib Comm. Enterprise Ltd
Forte Properties & Investment Ltd
Abbey Staff Share Trust Scheme
Chief Ifeanyichukwu Boniface Ochonogor
Percentage ofshareholding %No. of shares held
1,068,622,674
1,021,611,013
308,200,087
275,198,488
25.44
24.32
7.34
6.55
As at 31 December 2015
Shareholder
Shareholder
i.
ii.
iii.
REPORT OF THE DIRECTORS Cont’d ANNUAL REPORT
& ACCOUNTS
2016020
9) HISTORY OF CAPITALIZATION
The authorised, issued and fully paid up share capital are as follows:
1991
1992
1992
1994
1996
1997
1999
1999
2000
2001
2001
2002
2003
2004
2005
2005
2006
2006
2006
2007
2007
10,000,000
15,000,000
20,000,000
50,000,000
100,000,000
300,000,000
300,000,000
200,000,000
500,000,000
2,000,000,000
5,000,000
15,000,000
30,000,000
50,000,000
50,000,000
100,000,000
100,000,000
100,000,000
200,000,000
200,000,000
200,000,000
500,000,000
500,000,000
800,000,000
1,000,000,000
1,500,000,000
3,500,000,000
10,000,000
15,000,000
20,000,000
20,000,000
8,000,000
22,000,000
85,000,000
15,000,000
40,000,000
25,000,000
50,000,000
25,000,000
160,000,000
18,000,000
224,500,000
277,435,000
1,080,065,000
5,000,000
15,000,000
15,000,000
30,000,000
50,000,000
50,000,000
70,000,000
78,000,000
100,000,000
185,000,000
200,000,000
240,000,000
265,000,000
315,000,000
340,000,000
500,000,000
500,000,000
518,000,000
742,500,000
1,019,935,000
2,100,000,000
CASH
CASH
CASH
CASH
CASH
BONUS
BONUS
CASH
BONUS
BONUS
BONUS
CASH
BONUS
CASH
BONUS
CASH
CASH
CASH
DATE AUTHORISED ISSUED AND FULLY PAID CONSIDERATION
INCREASE (N) CUMMULATIVE (N) INCREASE (N) CUMMULATIVE (N)
REPORT OF THE DIRECTORS Cont’d ANNUAL REPORT
& ACCOUNTS
2016021
10.1) ANALYSIS OF SHAREHOLDERS AS AT 31 DECEMBER 2016
10.2) ANALYSIS OF SHAREHOLDERS AS AT 31 DECEMBER 2015
NO. OF SHAREHOLDERSRANGE
PERCENTAGE OF SHAREHOLDING %SHARES HELD
1 - 100,000
100,001 - 500,000
500,001 - 1,000,000
1,000,001 - 50,000,000
50,000,001 - 500,000,000
500,000,001 - 2,000,000,000
618
123
20
33
14
2
810
23,133,249
30,366,465
18,257,148
270,540,179
1,767,469,272
2,090,233,687
4,200,000,000
0.55
0.72
0.44
6.44
42.08
49.77
100.00
NO. OF SHAREHOLDERSRANGE
PERCENTAGE OF SHAREHOLDING %SHARES HELD
1 - 100,000
100,001 - 500,000
500,001 - 1,000,000
1,000,001 - 50,000,000
50,000,001 - 500,000,000
500,000,001 - 2,000,000,000
472
128
18
32
16
2
668
23,175,978
30,573,029
19,257,148
307,897,974
1,734,362,184
2,084,733,687
4,200,000,000
0.55
0.73
0.46
7.33
41.29
49.64
100.0
REPORT OF THE DIRECTORS Cont’d ANNUAL REPORT
& ACCOUNTS
2016022
11) DONATIONS
Donations made during the year amounted to N0.430 million (2015: N2.401 million). No donation was made to any political organization. The beneficiaries were:
12) PROPERTY AND EQUIPMENT
Movements in property and equipment during the year are shown in Note 19 to the financial statements.
13) DIVIDEND
No dividends were declared and paid in 2016 (2015: nil).
14) EMPLOYEMENT AND EMPLOYEES
Employment of disabled persons It is the policy of the Bank that there should be no discrimination in considering applications for
employment including those from physically challenged persons. All employees, whether or not disabled, are given equal opportunities to develop. As at 31 December 2016 one physically challenged person was employed by the Bank.
Employee's involvement and training The Bank is committed to keeping employees as fully informed as possible regarding its
performance and progress and seeking their views whenever practicable on matters which particularly affect them as employees.
The Bank places a high premium on the development of its manpower. The Bank's expanding skill base has been extended by a range of training programs provided for its employees whose opportunities for career development with the Bank have been enhanced.
2016 N'000
2015N'000
Sacred Heart School, LagosRadiance School, LagosNazareth School St Judes School, Lagos Down syndrome Foundation of NigeriaNational Handicap Association, LagosBaze University, AbujaCedec School Loral International SchoolOthers Total
150 8050505030
---
20-------
430======
400 100
---
- 1,500
250 60 91
-------2,401
======
REPORT OF THE DIRECTORS Cont’d ANNUAL REPORT
& ACCOUNTS
2016023
Health, safety at work and welfare of employeesHealth and safety regulations are in force within the Bank's premises and employees are aware of the existing regulations. The Bank provides subsidy to all levels of employees for medical treatment, transportation, housing, etc.
15) ACQUISITION OF OWN SHARES
The Bank did not purchase its own shares during the year (2015: Nil).
16) EVENTS AFTER REPORTING DATE
There are no events after the reporting date which could have had a material effect on the state of affairs of the Bank as at 31 December 2016 and loss for the year ended on that date, that have not been adequately adjusted for, or which require specific disclosures.
17) AUDIT COMMITTEE
Pursuant to Section 359(3) of the Companies and Allied Matters Act CAP C20 LFN 2004, the Bank has an Audit Committee comprising of three Directors and three Shareholders as follows:
1. Mathias M. Adaba - Chairman 2. Prince (Engr.) MOT. O. Tobun - Member 3. Mr. Gbadebo Ajeigbe - Member 4. Mazi Emmanuel Kanu O. Ivi - Member 5. AVM Olufemi Soewu (Rtd) - Member 6. Mr. Bernard Okumagba - Member
The functions of the Audit Committee are as laid down in Section 359(6) of the Companies and Allied Matters Act CAP C20 LFN 2004.
18) AUDITORS
In accordance with Section 357(2) of the Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria 2004, Messrs. Ernst and Young have indicated their willingness to continue in office as Auditors of the Bank. A resolution will be proposed at the Annual General Meeting authorizing the Directors to determine their remuneration.
BY ORDER OF THE BOARD OF DIRECTORS
GEOFF O. AMAGHEREONU ESQFRC/2013/NBA/00000002815Company Secretary/Legal Adviser23 Karimu Kotun Street, Victoria Island, Lagos.Date: 23 March 2017
STATEMENT OF DIRECTOR’S RESPONSIBILITYIN RELATION TO THE FINANCIAL STATEMENTS ANNUAL REPORT
& ACCOUNTS
2016024
ROSE ADA OKWECHIME (MRS.) FRC/2013/CIBN/00000003444Managing Director/CEO
CHIEF IFEANYICHUKWU BONIFACE OCHONOGOR FRC/2013/ICAN/00000003485 Chairman, Board of Directors
23 March 2017
In accordance with the provisions of the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004, the Banks and Other Financial Institutions Act 2004 and the Financial Reporting Council of Nigeria Act No.6, 2011, the Directors are responsible for the preparation of annual financial statements, which give a true and fair view of the financial position of the Bank at the end of the financial year and of the financial results for the year then ended.
The responsibilities include ensuring that:
i. The Bank keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Bank and comply with the requirements of the Companies and Allied Matters Act of Nigeria;
ii. Appropriate and adequate internal controls are established to safeguard its assets and to prevent and detect fraud and other irregularities;
iii. The Bank prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates that are consistently applied; and
iv. It is appropriate for the financial statements to be prepared on a going concern basis.
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates in conformity with International Financial Reporting Standards, the requirements of the provisions of the Companies and Allied Matters Act of Nigeria 2004, the Banks and Other Financial Institution Act 2004, and the Financial Reporting Council of Nigeria Act No.6, 2011.
The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial position of the Bank and of its financial results.
The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal control.
Nothing has come to the attention of the Directors to indicate that the Bank will not remain as a going concern for at least twelve months from the date of this statement.
CERTIFICATION PURSUANTANNUAL REPORT
& ACCOUNTS
2016025
FOR THE YEAR ENDED 31 DECEMBER 2016TO SECTION 60(2) OF THE INVESTMENTS AND SECURITIES ACT NO. 29 OF 2007
We the undersigned hereby certify the following with regard to the audited financial statements for the year ended 31 December 2016:
a. We have reviewed the report;
b. To the best of our knowledge, the report does not contain: i. Any untrue statement of a material fact, or ii. Omit to state a material fact, which would make the statements, misleading in the light
of the circumstances under which such financial statements were made;
c. To the best of our knowledge, the financial statements and other financial information included in the report fairly present in all material respects the financial condition and results of operation of the Bank as of, and for the years presented in the report.
d. We: i. Are responsible for establishing and maintaining internal controls. ii. Have designed such internal controls to ensure that material information relating to the
Bank is made known to officers within the Bank particularly during the period in which the periodic reports are being prepared;
iii. Have evaluated the effectiveness of the Bank's internal controls as of date within 90 days prior to the report;
iv. Have presented in the report of the audit committee our conclusions about the effectiveness of the Bank's internal controls based on our evaluation as of that date;
e. We have disclosed to the auditors of the Bank and Audit Committee:
i. All significant deficiencies in the design or operation of internal controls which would adversely affect the Bank's ability to record, process, summarise and report financial data and have identified for the Bank's auditors any material weakness in internal controls, and
ii. Any fraud, whether or not material, that involves management or other employees who have significant role in the Bank's internal controls;
f. We have identified in the report whether or not there were significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of our evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
ROSE ADA OKWECHIME (MRS.) FRC/2013/CIBN/00000003444Managing Director/CEO
23 March 2017
OLABISI AJEIGBE FRC/2013/ICAN/00000002814
Financial Controller
CORPORATE GOVERNANCE REPORT ANNUAL REPORT
& ACCOUNTS
2016026
INTRODUCTIONAbbey Mortgage Bank Plc recognizes the fact that effective governance system is essential to retaining public trust and confidence in the way and manner we do our business. Our governance policies are structured to ensure maximum compliance with the provisions of the various laws and codes on the subject. These include the Central Bank of Nigeria Code of Corporate Governance of May 2014, the SEC Code of Corporate Governance dated 1 April 2011, the Post Listing requirements of Nigerian Stock Exchange together with the amendments thereto, our internal Code of Corporate Governance and international best practices.
The Bank's Code of Corporate Governance is targeted at achieving the highest standards of transparency, accountability and good corporate behavior in line with international best practices. The governance structures and processes are primed for the satisfaction of the various stakeholders including employees, shareholders, creditors, host communities and regulatory authorities.
The Bank's corporate ethos include accountability, transparency, integrity, fairness, discipline, communication, social and environmental responsibility, service excellence, responsible lending and stakeholder-rights' recognition. Directors and employees are expected to act honestly, in good faith and in the best interest of the Bank in all transactions.
The governance structure of the Bank is driven principally by the Board of Directors (the “Board”), whose members are equipped with the requisite academic qualifications and relevant industry experience and tools to discharge their roles in the Bank. The governance policies adopted by the Board are designed to ensure long-term shareholder value. It is the primary responsibility of the Board to deliver sustainable shareholders' wealth through its oversight functions.
In compliance with the provisions of the Securities and Exchange Commission Code of Corporate Governance for quoted companies and the operational guidelines provided by the CBN, the Directors are of the opinion that the Bank has to the best of its ability abided with the provisions of the CBN and SEC Codes of Corporate Governance.
MEETINGS OF SHAREHOLDERSThe general meeting of the Bank remains the highest decision making organ and the primary avenue for interaction between the shareholders, Management and the Board. Annual General Meetings are conducted in an open manner allowing for free discussions on all issues on the agenda and in accordance with the provisions of the Companies and Allied Matters Act and the Articles of Association of the Bank. Venues for such meetings are always easily accessible.
AUDIT COMMITTEEThe Statutory Audit Committee is established in line with Section 359 (6) of the Companies and Allied Matters Act Cap C20 Laws of the Federation 2004. The Committee during the year comprised six members – three members representing the shareholders and elected at the Annual General Meeting and three Non-Executive Directors. The Committee meets at least four times a year but could also meet at any other time should the need arise to enable it discharge its statutory duties as provided under the Act.
The membership of the Committee is as follows:ShareholdersMr. Matthias Menyelum Adaba Prince (Engr.) MOT O. Tobun Mr. Gbadebo Ajeigbe
DirectorsMazi Emmanuel Kanu O. Ivi AVM Olufemi Soewu (Rtd) Mr. Bernard Okumagba
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BOARD OF DIRECTORSThe Board is made up of a Non-Executive Chairman, three (3) Non-Executive Directors, Two (2) Independent Non-Executive Directors and two(2) Executive Directors. Appointment to the Board is made by the shareholders at the Annual General Meeting upon recommendation by the Board of Directors.
The Board is accountable and responsible for the affairs of the Bank by ensuring that its operations at all times are carried out within the legal and regulatory framework. The Board's responsibilities and duties include, but are not limited to, defining the Bank's business strategic goals, formulating effective risk management policies, leadership, enterprise, integrity and judgment in directing the Bank so as to achieve continuing prosperity and to act in its best interest in a manner based on transparency, accountability, good corporate governance and equity.
The Board meets at least once every quarter but may hold other sessions to address urgent matters requiring its attention. Its oversight functions are performed through the following Committees: Board Credit and Risk Management Committee Board Audit and Compliance Committee Board Strategy and Financial Analysis Committee Board Governance and Remuneration Committee
The Committees of the Board are constituted as follows:
Board Credit and Risk Management CommitteeHigh Chief Samuel Oni ChairmanMazi Emmanuel Kanu O. Ivi MemberAVM Olufemi Soewu (Rtd) MemberMr. Bernard Okumagba MemberMr. Madu Hamman Member
Board Strategy and Financial Analysis Committee Mr. Bernard Okumagba ChairmanAVM Olufemi Soewu (rtd) MemberHigh Chief Samuel Oni MemberMr. Uzochukwu Odunukwe Member Mr. Madu Hamman Member Board Governance and Remuneration CommitteeAVM Olufemi Soewu (Rtd) ChairmanMazi Emmanuel Kanu O. Ivi Member Mr. Bernard Okumagba Member Mr. Uzochukwu Odunukwe Member
Board Audit & Compliance CommitteeMazi Emmanuel Kanu O. Ivi ChairmanHigh Chief Samuel Oni MemberMr. Uzochukwu Odunukwe MemberMr. Madu Hamman Member
I.ii.iii.iv.
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Frequency of MeetingsThe Board and its Committees meet at least four times every year.
Records of Directors' Attendance of Board and Committee MeetingsThe table below shows the frequency of meetings of the Board of Directors and Board Committees, and Members' attendance at these meetings during the year under review:
BOARD OF DIRECTORS
NUMBER OF MEETINGS HELD
NAME NUMBER OF MEETINGS ATTENDED
Chief Ifeanyichukwu B. Ochonogor
Mrs. Rose Ada Okwechime
Mazi Emmanuel Kanu O. Ivi
AVM Olufemi Soewu (Rtd)
Mr. Madu Hamman
Mr. Bernard Okumagba
*Mr. Emile Hubert Groot
*High Chief Samuel Oni
*Mr. Uzochukwu Odunukwe
7
7
7
7
7
7
7
7
7
7
7
7
7
7
7
*3
*2
*2
CREDIT AND RISK MANAGEMENT COMMITTEE
NUMBER OF MEETINGS HELD
NAME NUMBER OF MEETINGS ATTENDED
*High Chief Samuel Oni
Mazi Emmanuel Kanu O. Ivi
AVM Olufemi Soewu (Rtd)
Mr. Bernard Okumagba
Mr. Madu Hamman
4
4
4
4
4
*1
4
4
3
4
*Mr. Emile E.H Groot Resigned on 15 September 2016.*High Chief Samuel Oni Appointment as Independent Non-Executive Director
approved by CBN on 19 August 2016.*Mr. Uzochukwu Odunukwe Appointment as Independent Non-Executive Director
approved by CBN on 19 August 2016.
* High Chief Samuel Oni Appointed a member of the Committee on 14 October 2016.
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*Mazi Emmanuel Kanu O. Ivi Ceased being a member of the Committee on 14 October2016.*High Chief Samuel Oni Appointed a member of the Committee on 14 October 2016.*Mr. Uzochukwu Odunukwe Appointed a member of the Committee on 14 October 2016.
STRATEGY AND FINANCIAL ANALYSIS COMMITTEE
NUMBER OF MEETINGS HELDNAME
NUMBER OF MEETINGS ATTENDED
Mr. Bernard Okumagba
*Mazi Emmanuel Kanu O. Ivi
AVM Olufemi Soewu (Rtd)
*High Chief Samuel Oni
*Mr. Uzochukwu Odunukwe
Mr. Madu Hamman
4
4
4
4
4
4
3
3
4
*1
*1
4
GOVERNANCE AND REMUNERATION COMMITTEE
NUMBER OF MEETINGS HELDNAME
NUMBER OF MEETINGS ATTENDED
AVM Olufemi Soewu (Rtd)
Mazi Emmanuel Kanu O. Ivi
Mr. Bernard Okumagba
*Mr. Uzochukwu Odunukwe
4
4
4
4
4
3
4
*1
AUDIT AND COMPLIANCE COMMITTEE
NUMBER OF MEETINGS HELD
NAME NUMBER OF MEETINGS ATTENDED
Mazi Emmanuel Kanu O. Ivi
AVM Olufemi Soewu (Rtd)
Mr. Bernard Okumagba
*High Chief Samuel Oni
*Mr. Uzochukwu Odunukwe
Mr. Madu Hamman
4
4
4
4
4
4
4
3
3
*1
*1
4
*Mr. Uzochukwu Odunukwe Appointed a member of the Committee on 14 October 2016 .
*High Chief Samuel Oni Appointed a member of the Committee on 14 October 2016. *Mr. Uzochukwu Odunukwe Appointed a member of the Committee on 14 October 2016
CORPORATE GOVERNANCE REPORT Cont’d ANNUAL REPORT
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2016030
RESIGNATION OF DIRECTORSMr. Emile E.H Groot resigned his appointment on 15 September, 2016.
ELECTION/RE-ELECTION OF DIRECTORSIn accordance with the provisions of the Companies & Allied Matters Act and the Articles of Association:
(a) Air Vice Marshal Olufemi Soewu (Retired) shall retire by rotation at this Annual General Meeting. Being eligible, he has offered himself for re-election.
(b) Since the last Annual General Meeting, High Chief Samuel Oni and Mr. Uzochukwu Odunukwe were appointed Directors. In accordance with section 249 of CAMA, they will retire at this meeting and being eligible offer themselves for re-election.
Biographical Notes on Persons for Election/Re-election as Directors
Air Vice Marshal Olufemi Soewu (Retired)AVM Soewu (Rtd) graduated from the Nigerian Defence Academy and the Royal Air Force College, UK in 1973 and 1976 respectively. He also attended the Administrative Staff College (ASCON), Badagry and University of Ibadan where he graduated with a Certificate in Personnel Management and Masters in Strategic Studies in 1982 and 2001 respectively.
He had a distinguished working career in the Nigerian Air Force. He occupied very prominent military positions including Instructor at the Nigerian Defence Academy, Military Assistant to the Lagos State Military Governor (1984 – 1986), Project Coordinator, Nigerian Air Force Computerization Project (1989-1990), Commander Nigerian Air Force Base, Makurdi (2001-2003) amongst others.
A Fellow of the National War College, Abuja and the Command and Staff College, Jaji, Kaduna State, AVM Soewu (Rtd) retired as Air Secretary, Nigerian Air Force. A versatile administrator per excellence, AVM Soewu (Rtd) sits on the Board of many other companies.
High Chief Samuel OniHigh Chief Oni is a Fellow of both the Association of Certified and Chartered Accountants London and the Institute of Chartered Accountants of Nigeria. He holds an MBA degree from the University of Ilorin.
He started his professional career as Principal Accountant at Defence Industries Corporation of Nigeria in 1979. In 1982, he joined Kwara Breweries as Chief Accountant, from where he joined a World Bank
NUMBER OF MEETINGS HELDNAME
NUMBER OF MEETINGS ATTENDED
Mr. Matthias Menyelum Adaba
Prince (Engr.) MOT O. Tobun
Mr. Gbadebo Ajeigbe
Mazi Emmanuel Kanu O. Ivi
AVM Olufemi Soewu (Rtd)
Mr. Bernard Okumagba
4
4
4
4
4
4
4
3
4
3
3
3
The table below shows the frequency of meetings of the Statutory Audit Committee and members' attendance at these meetings during the year under review:
CORPORATE GOVERNANCE REPORT Cont’d ANNUAL REPORT
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Project-Kwara State Agricultural Programme as Financial Controller. He transferred his services to the Central Bank of Nigeria in 1993 as Assistant Director. Upon the completion of several on- the -job training sessions in and outside Nigeria, he was given the role of Team Leader for on-site examination of both commercial and merchant banks. He successfully led many teams to various banks for routine, maiden and special examinations. His reports received several commendations from the Management of CBN. In recognition of his hard work and diligence he was promoted to Deputy Director in 1998. In April 2004 he was appointed Director of Bank Examination a position he held till 2009 when he was appointed Director of Banking Supervision. He was also Chairman of the Committee set up by the CBN to midwife the establishment of Asset Management Corporation of Nigeria (AMCON).
High Chief Oni retired from CBN in 2011. Since then he has been engaged in private business and consultancy services. He also sits on the Board of United Bank for Africa Plc.
His core competences include risk management, audit, regulatory compliance and corporate governance.
Mr. Uzochukwu OdunukweMr. Odunukwe is an accomplished leader with wide multidisciplinary exposures and successful track record in governance and strategic levels of management with over 20 years cognate experience. He is a Fellow of the Institute of Chartered Accountants of Nigeria and holds an MBA from Manchester Business School UK. He held various offices in Akintola Williams Deloitte from 1980 to 2010 including Managing Partner South East, Coporate Services Partner, Technology Partner and Functional Risk Leader Audit & Assurance, West and Central Africa. His last role was Regional Chief Finance Officer, West and Central Africa. His core competences include risk management, information technology, credit and r isk information systems, taxat ion, consult ing and business strategy formulation/implementation.
He is a Board member of various bodies of the accounting profession including ICAN'S Faculty of Consulting & Information Technology. He also serves as Chief Examiner of some certification exams of ICAN and the Information and Branding Systems & Audit Control Association. He is currently the Chairman of UGN Consulting Services Ltd.
EXECUTIVE MANAGEMENT COMMITTEEThe Executive Management Committee comprises all senior executives from the rank of Assistant General Manager and above and is chaired by the MD/CEO. The Committee meets every two weeks or such other times as the business exigencies of the Bank may require. It has the primary responsibility of implementing the strategies approved by the Board, providing leadership to the Management Team and ensuring efficient deployment and management of the Bank's resources
Its membership comprises the following:
1. Mrs. Rose Ada Okwechime Managing Director/CEO and Chairman2. Mr. Madu Hamman Executive Director, Finance and Administration3. Mr. Andrew O. Nwosisi General Manager (Operations)4. Geoff O. Amaghereonu, Esq. Company Secretary/Legal Adviser
CORPORATE GOVERNANCE REPORT Cont’d ANNUAL REPORT
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2016032
5. Mr. Oneyogor S. Igwala Head of Treasury6. Ms. Olabisi Ajeigbe Financial Controller7. Mrs. Lolita Ejiofor Head, Compliance & Business System Review8. Mr. Emmanuel Alagbe Head, Enterprise Risk Management/ALM9. Mrs. Henrietta Okafor Head, Festac Branch10. Mr. Abiodun Lasisi Head, Debt Recovery & Remidial Action
HUMAN RESOURCESThe Bank strives to be an employer of choice. The Bank operates the “equal opportunity” principle. There is no gender or religious bias. There is no discrimination against physically-challenged persons or persons living with HIV/AIDS. Staff training and development have been our watchword and a number of senior staff have participated in international and national workshops and seminars, whilst there are regular in-house training sessions tailored to our specific needs covering all levels of staff.
The Bank strives hard to provide a safe and secure atmosphere for all its stakeholders. Various measures are in place to ensure a peaceful, friendly and conducive environment for all to transact business. All employees are adequately insured against health and occupational hazards, whilst medical facilities or alternatives are offered to all staff.
CORPORATE SOCIAL RESPONSIBILITYThe Bank has always maintained a high level of social responsibility, with a strong desire to positively impact the host community. Our mission, to provide affordable housing finance to enable people to own their own homes, stems from our dream to fulfil this social responsibility. We continuously engage in charitable acts to help the less privileged, such as sponsoring events of those afflicted with Down syndrome.
SUSTAINABLE AND ENVIRONMENTAL ISSUESThe Bank conducts its business in a manner that protects the health and safety of all stakeholders. The Board and Management pay particular attention to ensuring that we continually strive to improve occupational health and safety performance, through close cooperation between management, employees and developers/customers, where applicable. We are therefore very delighted to report that last year there were no recorded cases of incidents in our operations.
We will always strive to ensure safe working conditions, equipment and work sites where applicable. We will continue to promote employee involvement and accountability in identifying, preventing and eliminating hazards and risks of injury.
We are committed to:
1. Incorporating Organizational Health and Safety (OH&S) considerations into all aspects of our management practices;
2. Managing operations to meet all applicable OH&S laws and regulations and Bank policies;3. Identifying and assessing potential injury risks and implementing appropriate measures to
eliminate or control those risks if any;4. Establishing, communicating and enforcing, through employee involvement, work site-specific
rules and safe work methods;
CORPORATE GOVERNANCE REPORT Cont’d ANNUAL REPORT
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5. Promoting and developing safe behaviours, awareness, leadership and accountability of our employees in health and safety through their involvement in continual improvement processes;
6. Measuring our health and safety performance in accordance with established standards;7. Ensure that all our financed projects meet legal and environmental, health and safety
requirements;8. Ensure that management systems are effective in maintaining standards and fulfilling the
challenge of securing continuous improvements in environmental, health and safety performance;
9. Ensure accountability by holding corporate management and senior executives responsible for Environmental, Health and Safety (EHS) performance;
10. Provide financial and human resources to allow EHS to be given an appropriate level of priority in our financed projects;
11. Ensure that all our financed projects incorporate best practice and promote innovation through the operation of our financed customers to eliminate or minimize risks to health, safety and the environment;
Our employees share in this responsibility and are accountable for the successful implementation of this policy. Management is empowered to curtail operations, as necessary, to prevent serious adverse impacts on health, safety and environmental issues.
EMPLOYMENT AND LABOUR RELATIONSAbbey continues to strive to entrench fair labour practices. Workers are given adequate training to assist them in the performance of their duties. Abbey complies with extant labour laws.There is no discrimination against women in any form. Men and women on the same level enjoy equal remuneration. The Bank applies the acceptable rules governing the treatment of female workers during pregnancy and maternity leave.
HUMAN RIGHTSIn consonance with the provisions of the Nigerian Constitution and the Universal Declaration of Human Rights, Abbey respects the fundamental human rights of its workers. Fair work practices and policies have been entrenched.
FORCED OR COMPULSORY LABOURIn its engagement with developers, contractors and service providers, the Bank ensures that there is no forced or compulsory labour in any form. Child abuse is not tolerated.
WHISTLE BLOWING POLICYAn important aspect of accountability and transparency is a mechanism to enable individuals to voice concerns in a responsible and effective manner. In furtherance of this Abbey has a policy detailing the mechanisms for whistle blowing.
Disclosures may be made through:Email: [email protected] Telephone line: 019035717
CORPORATE GOVERNANCE REPORT Cont’d ANNUAL REPORT
& ACCOUNTS
2016034
BRIBERY AND CORRUPTION POLICYAbbey is committed to conducting her business fairly, honestly, and lawfully. The Bank has a zero tolerance approach to bribery and corruption and insists on the same standard for those with whom it does business. The anti-corruption procedures are encapsulated in the Bribery and Corruption policy. The whistle blowing mechanisms are available for any person who wishes to lodge a report on bribery and corruption.
SECURITY TRADING POLICYIn compliance with Rule 17-15 on Disclosure of Dealings on Issuer's Shares, Rulebook of the Nigerian Stock Exchange, the Bank has a Security Trading Policy (STP) which governs the trading of the company's securities by related parties. This policy is being adhered to.
COMPLAINTS MANAGEMENT POLICYIn compliance with the requirement of the Securities and Exchange Commission Rule circulated on the 16th February, 2015, the Bank has in place Complaints Management Framework of the Nigerian Capital. This policy has been put in place and is being adhered to.
BOARD EVALUATIONDuring the year under review, a Board Performance Evaluation was carried out. The performance of the Board, its committees and individual members was adjudged satisfactory.
ENTERPRISE RISKMANAGEMENT POLICY ANNUAL REPORT
& ACCOUNTS
2016035
1. ENTERPRISE RISK REVIEWAbbey Mortgage Bank Plc (the “Bank”) has clear risk management objectives and a well-established strategy to deliver them, through core risk management processes and procedures.
The evolving nature of risk management practices and the dynamic character of the mortgage banking industry necessitate regular review of the effectiveness of each enterprise risk management component.
The Bank operates an “Enterprise-wide” Risk Management Framework with the objective of managing all aspects of risk within the organisation. The Bank's operations require identification, measurement, aggregation and effective management of risks and efficient utilisation of capital to derive an optimal risk and return ratio. Risk management is at the core of the operating structure of the Bank. The most important risk categories the Bank is exposed to are credit, liquidity, operational, regulatory, reputational, legal and strategic risks.
The Bank has developed an effective enterprise risk management framework that allows us to balance the level of risk taken with our business objectives to achieve sustainable and consistent performance over the long term.
The Board of Directors (the “Board”) determine the Bank's set objectives in terms of risk by issuing risk policies which guides the Bank's daily operation in terms of assuming risks against expected rewards. These risk policies are detailed in the Enterprise Risk Management Framework. This framework is a structured approach to identifying opportunities, assessing the risk inherent in these opportunities and actively managing these risks in a cost-effective and efficient manner.
2. RISK MANAGEMENT STRATEGYi The Bank believes that risk management is the basis of a long lasting financial institutionii The Bank will continue to adopt an enterprise-wide and integrated approach to risk
management The Bank's risk profile will be managed to ensure that specific financial deliverables remain
possible under a range of adverse business conditions Risk management is governed by well-defined policies and shared responsibilities which are
clearly communicated across the Bank There is clear segregation of duties between market facing business units and risk
management functions The Bank will optimise risk/return decisions by taking them as closely as possible to the
business, while establishing strong and independent review and challenge structures;
The Bank's approach is to provide direction on: Understanding the principal risks to achieving organisation strategy; Establishing risk appetite; and Establishing and communicating the risk management framework.
The process is then broken down into five steps: identify, assess/measure, control, report and manage/challenge.
In addition to supporting transaction decisions, the measurement and control of credit, market, operational and other risks have considerable influence on the Bank's strategy.
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3. RISK APPETITE Risk appetite is defined as the level of risk that the Bank is prepared to sustain whilst pursuing its business strategy, recognising a range of possible outcomes as business plans are implemented. It sets the quantum and types of risk that the Bank is prepared to take on the basis of its risk management competencies, strategy and core values by relating the level of risk the Bank decides to take to the level of capital required to support it. The risk appetite of the Bank is ultimately approved by the Board.Taken as a whole, risk appetite provides a basis for the allocation of risk capacity across the Bank's business lines.
4. THE BANK RISKS SCOPEThe risks that are managed by the Bank are as follows: Credit Risk Capital Risk Operational Risk Liquidity and Funding Risk Regulatory Compliance Risk Legal Risk Reputational Risk Strategic Risk
5. RISK MANAGEMENT APPROACHThe Bank addresses the challenges and opportunities of risk through an enterprise-wide risk management framework by applying practices that is supported by a governance structure consisting of the Board and executive management committees. The Board drives the risk governance and compliance process through its committees. The Audit and Risk committee provides oversight on the systems of internal control, financial reporting, risk management and compliance. The Credit Committee reviews the credit policies and approves all loans above the defined limits for executive Management.
RISK MANAGEMENT CONTROL STRUCTURE
BUSINESS UNITS
BOARD OF DIRECTORS
ENTERPRISE RISKMANAGEMENT COMMITTEE
BOARD CREDIT & RISK MANAGEMENT COMMITTEE AND BOARD AUDIT &
COMPLIANCE COMMITTEEMANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER
ASSET & LIABILITYMANAGEMENT DEPARTMENT
ENTERPRISE RISKMANAGEMENT DEPARTMENT
COMPLIANCEDEPARTMENT
INTERNALAUDIT
I.ii.iii.iv.v.vi.vii.viii.
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Responsibility for risk management resides at all levels within the Bank, from the Board of Directors and the Executive Management Committee down through the Bank to each business manager.
The Bank distributes these responsibilities so that risk/return decisions are taken at the most appropriate level; as close as possible to the business, and subject to robust and effective review and challenge. The responsibilities for effective review and challenges reside with senior managers, risk oversight committees, internal audit, the independent risk function, the Board Audit & Risk Committee and, ultimately, the Board of Directors. The Board is responsible for approving risk appetite, which is the level of risk it has chosen to take in pursuit of its business objectives. The Head of Risk regularly presents a report to the Board Audit & Risk Committee summarising developments in the risk environment and performance trends in the key portfolios. The Board is also responsible for the Internal Control and Assurance Framework (Control Framework). It oversees the management of the most significant risks through the regular review of risk exposures and related key controls. Executive management responsibilities relating to this are set via the Risk Policy.
RESPONSIBILITIES OF BOARD COMMITTEES INVOLVED WITH RISK GOVERNANCE INCLUDE: Monitor the organisation's risk profile against the agreed appetite. Where actual performance
differs from expectations. The actions being taken by the management are reviewed. Review the system in place for monitoring risk, internal controls and compliance with
applicable regulations and also review the integrity, reliability and accuracy of accounting and financial reporting systems in the Bank.
Develop specific strategies that will help the Bank achieve its vision of being the number one Primary Mortgage Bank in Nigeria.
Ensure that governance principles are well communicated and internalised by all in the Bank.
A number of the Board committees have delegated specific responsibilities to management committees.
RISK MANAGEMENT COMMITTEE (RMC)The Risk Management Committee (RMC) has oversight responsibility for all risk categories in the Bank.
Responsibilities: Review risk limits, policies and management framework and recommend amendments (where
appropriate) to the Board Risk Management Committee. Recommend that the Board approve the methodology of calculating the level of risk and
allocation of limits based on recommendations Risk Management To review and approve the Risk Framework on an annual basis. Receive and review monthly reports on the Bank's Risk Profile, including the Top 20 Inherent
Risks, the Top 20 Residual Risk after Controls, and the associated management actions resulting from the review.
Receive and review half yearly reports on Business Continuity Management and Disaster Recovery Planning, including internal and external benchmarking, and test preparation results.
Receive and review monthly Risk Reports covering losses, near misses, abnormal gains/profits, reputation risk, quantification of operational risk and capital.
Act as a coordinating body for capturing and controlling organisational risks and making recommendations to the Board Risk Committee for the allocation of resources (financial or otherwise).
I.
ii.
iii.
iv.
I.
ii.
iii.iv.
v.
vi.
vii.
ENTERPRISE RISKMANAGEMENT POLICY Cont’d ANNUAL REPORT
& ACCOUNTS
2016038
ASSET AND LIABILITY MANAGEMENT COMMITTEE (ALCO)
Responsibilities:1. Monitor and control all market, liquidity risk and interest rate risk across the Bank in
accordance with the risk appetite set by the Board of Directors;2. Review limit, guideline or trigger breaches and agree remedial actions in order to align
exposures with agreed appetite;3. Approve Market Risk, Liquidity Risk and Interest Rate Risk Policies for the Bank;4. Review and note the impact of internal and external factors on the net interest margin; and5. Recommend to the Board, policies and guidelines under which the Bank will manage matters
listed below, and in so doing protect the Bank's capital base and reputation:6. Balance Sheet growth:
Deposits, Advances and Investments; Non-earning assets Market and Liquidity Management. Capital Management
COMPLIANCE
Responsibilities:
Develop and review anti-money laundering (“AML”)compliance policy/manual Regular review and approval of customers' accounts opening/reactivation to ensure it meets
Know Your Client (“KYC”) requirements. Monitoring of regulations, laws, circulars and policies issued by regulators for banks and other
financial institutions to ensure compliance. Rendition of money laundering reports such as Currency Transaction Report (CTR), Suspicious
Transaction Report (STR) and Politically Exposed Persons Transaction Report (PEP) to CBN and Nigerian Financial Intelligence Unit (“NFIU”) monitoring the Bank's activities to ensure compliance to prudential requirements stipulated in CBN prudential guidelines.
Conducting investigation into customer complaints on service issues, transaction errors and other irregularities and prompt resolution of these complaints.
Monthly rendition of customers' complaints report to Central Bank of Nigeria. Ensuring that the Bank's regulatory returns are sent promptly to CBN, NDIC, CAC, SEC,
1.2.3.4.
5.
6.
7.8.
i.ii.iii.iv.
ENTERPRISE RISKMANAGEMENT POLICY Cont’d ANNUAL REPORT
& ACCOUNTS
2016039
BUSINESS UNITS
ResponsibilitiesBusiness Units and their staff, as primary risk owners/managers, are responsible for the day-to-day identification, mitigation, management and monitoring of risks within their respective functions.
Business Units and their staff are also responsible for the following: Implementing the Bank's risk management strategies; Managing day-to-day risk exposures by using appropriate procedures and controls in line with
the Bank's risk management framework; Identifying risk issues and implementing remedial action to address these issues; and Reporting and escalating material risks and associated issues to appropriate authorities.
INTERNAL AUDIT Responsibilities
Internal Audit is responsible for the independent review of risk management and the control environment. Its objective is to provide reliable, valued and timely assurance to the Board of Directors and Executive Management over the effectiveness of controls, mitigating current and evolving high risks and in so doing enhancing the controls culture within the Bank. The Board Audit Committee reviews and approves Internal Audit's plans and resources, and evaluates the effectiveness of Internal Audit. An assessment by external advisers is also carried out periodically.
The Bank approaches and views risk not only as an uncertainty, but also as a potential opportunity to develop new frontiers in the Mortgage Banking Industry.
I.ii.
iii.iv.
REPORT OF THE AUDIT COMMITTEE ANNUAL REPORT
& ACCOUNTS
2016040
In accordance with the provisions of Section 359 (6) of the Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria 2004, we have reviewed the financial statements for the year ended 31 December 2016 as follows:
We have exercised our statutory functions and powers as provided by the Articles of Association of the Bank and the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004 and acknowledge the co-operation of management staff in the conduct of our responsibilities.
We are of the opinion that the accounting and reporting policies of the Bank are in accordance with legal requirements and agreed ethical practices and that the scope of planning of both the external and internal audits for the year ended 31 December 2016 were satisfactory and complied with the Bank's system and internal control.
We have reviewed the findings on management matters in conjunction with the external auditors and departmental responses thereon;
As required by the provisions of the Central Bank of Nigeria Circular 851D/2004 dated 18 February 2004 on “Disclosures of Insider-Related Credits in Financial Statements” we reviewed the insider-related credits of the Bank and found them to be as analysed on in the financial statements as at 31 December 2016.
23 March 2017
Mazi Emmanuel Kanu O. Ivi for Chairman, Audit CommitteeFRC/2014/ICAN/00000008160
Members of the Audit CommitteeMathias M. Adaba Prince (Engr.) MOT. O. TobunMr. Gbadebo AjeigbeMazi Emmanuel Kanu O. IviAVM Olufemi Soewu (Rtd)Mr. Bernard Okumagba
1.
2.
3.
4.
INDEPENDENT AUDITORS’ REPORT ANNUAL REPORT
& ACCOUNTS
2016041
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion We have audited the financial statements of Abbey Mortgage Bank Plc (the “Bank”) which comprise the statement of financial position as at 31 December 2016, and the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as at 31 December 2016, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the relevant provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, the Banks and Other Financial Institutions Act, CAP B3, Laws of the Federation of Nigeria 2004, the Financial Reporting Council of Nigeria (“FRCN”) Act No. 6, 2011 and Central Bank of Nigeria circulars.
Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and other independence requirements applicable to performing audits in Nigeria. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing the audit in Nigeria. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditors' responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements.
INDEPENDENT AUDITORS’ REPORT Cont’d ANNUAL REPORT
& ACCOUNTS
2016042
The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
OTHER INFORMATIONThe Directors are responsible for the other information. The other information comprises the Report of the Directors, Corporate Governance Report, Enterprise Risk Management Policy, Report of the Audit Committee and the Certificate in Pursuant of Section 60(2) of the Investment and Securities Act No. 29 of 2007, which we obtained prior to the date of this report. Other information does not include the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Impairment of loans and advances to customers Loans and advances to customers make up a significant portion of the total assets of the Bank. The impairment thereof is a key area of j u d g e m e n t f o r m a n a g e m e n t . T h e identif ication of impairment and the determination of the recoverable amount are an inherently uncertain process involving various assumptions including the financial condition of the counterparty, expected future cash flows, and collateral valuation, particularly on individually significant exposures that either continued to be, have become, or were at risk of being impaired.
Due to the significance of loans and advances which represent 53% (2015: 42%) of total assets of the Bank and the related estimation process, this is considered a key audit matter.
Impairment of loans and advances to customers are disclosed in Note 16 to the financial statements.
The policies, credit risks and details relating to impairment of loans and advances to customers are provided in Notes 2.1, 3.3 and 16 to the financial statements.
We assessed the effectiveness of key controls over the impairment calculation process.
We evaluated the accuracy of underlying data that was drawn from the Bank's systems.
For loan loss provisions calculated on an individual basis we tested the assumptions underlying the impairment identification and quantification, including the financial condition of the borrower, expected future cash flows, and valuation of underlying collateral.
For loan loss provisions calculated on a collective basis we tested the underlying model for appropriateness of the model approval and validation process. We also cons idered the reasonabi l i ty o f the assumptions included in these models such as recovery and default rates.
We further focused on the adequacy of the Bank's disclosure regarding the loan provisions and the related risks such as credit risk, liquidity risk and the aging of the loans to bank customers
INDEPENDENT AUDITORS’ REPORT Cont’d ANNUAL REPORT
& ACCOUNTS
2016043
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditors' report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTSThe Directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and the relevant requirements of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, the Banks and Other Financial Institutions Act, CAP B3, Laws of the Federation of Nigeria 2004, the Financial Reporting Council of Nigeria (“FRCN”) Act No. 6, 2011 and Central Bank of Nigeria circulars, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Bank or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Bank's financial reporting processes.
AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTSOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
INDEPENDENT AUDITORS’ REPORT Cont’d ANNUAL REPORT
& ACCOUNTS
2016044
Obtain an understanding of internal control relevant to the audit 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 Bank's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Bank to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Bank audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
INDEPENDENT AUDITORS’ REPORT Cont’d ANNUAL REPORT
& ACCOUNTS
2016045
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirement of Schedule 6 of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, 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 purpose of our audit;
ii. In our opinion, proper books of account have been kept by the Bank, in so far as it appears from our examination of those books;
iii. The Bank's statement of financial position and statement of profit or loss and other comprehensive income are in agreement with the books of account.
In compliance with the Banks and Other Financial Institutions Act, CAP B3 Laws of the Federation of Nigeria 2004 and circulars issued by Central Bank of Nigeria: i. Related party transactions and balances are disclosed in Note 35 to the financial statements in
compliance with the Central Bank of Nigeria circular BSD/1/2004.
ii. As disclosed in Note 38 to the financial statements, no contravention of the provisions of the Bank and Other Financial Institutions Act, CAP B3 Laws of the Federation of Nigeria 2004 and CBN circulars was brought to our attention during the audit of the financial statements for the year ended 31 December 2016.
Kayode Famutimi, FCA FRC/2012/ICAN/00000000155For: Ernst & YoungLagos, Nigeria
March 24, 2017
ANNUAL REPORT & ACCOUNTS
2016
FINANCIAL STATEMENTS
ANNUAL REPORT & ACCOUNTS
2016047
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2016
Interest and similar incomeInterest and similar expense
Net Interest Income
Fees and commission income Profit / (loss) on disposals of non-current assets held for saleOther operating income
Total operating income
Impairment charge on loans and advancesOther impairment charges
Net operating income
Personnel expensesDepreciation Amortisation Other operating expenses
Total operating expenses
Loss before income tax
Income tax benefit
Profit / (loss) for the year
Other comprehensive Income
Total comprehensive (loss) / income for the year, net of tax
(Loss) / profit attributable to ordinary equity holders of the Bank
Total comprehensive (loss) / income attributable to equity holders of the Bank
(Loss) / earnings per share attributable to ordinary equity holders (Kobo) - Basic and Diluted
The accompanying notes form an integral part of these financial statements.
56
7
8
99.1
10192011
12
13
960,867 (344,405)
616,462
213,148 13,494 31,412
874,516
(67,121)(34,665)
772,730
(387,431)(61,693)(22,096)
(435,953)
(907,173)
(134,443)
(33,554)
(167,997)
-
(167,997)
(167,997)
(167,997)
(4.00)
1,099,676 (436,519)
663,157
160,185
24,507 30,462
878,311
(48,411) (5,758)
824,142
(412,461)
(65,900) (18,956)
(554,097)
(1,051,414)
(227,272)
282,766
55,494
-
55,494
55,494
55,494
1.32
2016 N'000
2015N'000
Note
ANNUAL REPORT & ACCOUNTS
2016048
STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2016
2016 N'000
2015N'000
Note
AssetsCash on handDue from banksLoans and advancesFinancial investments - available-for saleFinancial investments - held-to-maturityOther assetsCash balances with central bankProperty and equipmentIntangible assetsNon-current assets held for sale
Total assets
LiabilitiesDue to customersCurrent income tax payableOther liabilitiesBorrowingsDue to the National Housing Fund
Total liabilities
Equity
Share capitalShare premiumRetained earningsStatutory reserve
Regulatory risk reserve
Total equity
Total liabilities and equity
The financial statements were approved by the Board of Directors on 15 March 2017, and signed on its behalf by:
The accompanying notes form part of these financial statements.
14151617
17.318
14.1192021
2212.3232425
27.2282930
3,671
1,304,714 7,103,478
202,500 -
285,573 101,046
1,178,750 59,823
2,539,761
12,779,316
5,361,393
87,326 188,020 112,049
424,264
6,173,052
2,100,000 2,877,126
526,626 298,440 804,072
6,606,264
12,779,316
Mrs. Rose Ada OkwechimeManaging Director/Chief Executive OfficerFRC/2013/CIBN/00000003444
Chief I. B. Ochonogor ChairmanFRC/2013/ICAN/00000003485
11,037
896,009 6,900,080
207,500 336,163 417,906 101,046
1,133,787 45,583
2,403,663
12,452,774
5,328,649
57,720 205,352 24,245
398,541
6,014,507
2,100,000 2,877,126
193,676 298,440 969,025
6,438,267
12,452,774
OLABISI AJEIGBE FRC/2013/ICAN/00000002814Financial Controller
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ANNUAL REPORT & ACCOUNTS
2016050
STATEMENT OF CASH FLOWFOR THE YEAR ENDED 31 DECEMBER 2016
2016 N'000
2015N'000
Note
Cash flows from operating activitiesLoss before income tax
Change in operating assetsChange in operating liabilitiesOther non-cash items included in loss before income taxGain from investing activitiesIncome tax paid
Net cash flows used in operating activities
Cash flows from investing activitiesPurchase of intangible assetsProceeds on disposal of non-current asset held for saleProceeds on disposal of property and equipmentPurchase of property and equipmentProceeds on disposal of equity sharesPurchase of non-current assetsPurchase of held to maturity investments
Net cash flows (used in) / from investing activities
Cash flows from financing activitiesRepayments of borrowings Proceeds from additional borrowings
Net cash flows used in financing activities
Net (decrease)/increase in cash and cash equivalents Net foreign exchange differenceCash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
32.132.232.332.412.3
20
19
17.3
32
(134,443)
(16,056)(41,135)136,931
(14,094)(49,659)
(118,456)
(7,855)151,091
600(16,733)
(322,368)
(195,265)
(109,576)21,774
(87,802)
(401,523)184
1,308,135
906,796
The accompanying notes form part of these financial statements.
(227,272)
(626,832)
175,195 133,217
(24,507) (37,163)
(607,362)
(11,766)
547,900
-
(8,849)
-
-
527,285
(468,967)
-
(468,967)
(549,044) 49 1,857,130
1,308,135
(109,576)21,774
ANNUAL REPORT & ACCOUNTS
2016051
STATEMENT OF REGULATORY RISK RESERVEFOR THE YEAR ENDED 31 DECEMBER 2016
2016 N'000
2015N'000
The Regulatory Body Central Bank of Nigeria (CBN) /National Deposit Insurance Commission (NDIC), stipulates that provisions for loans recognized in the profit or loss account shall be determined based on the requirements of IFRS. The IFRS provisions should be compared with provisions determined under prudential guidelines and the expected impact/changes in general reserve should be treated as follows:
(I) Prudential Provisions is greater than IFRS provisions; transfer the difference from the retained earnings to a non-distributable regulatory reserve.
(ii) Prudential Provisions is less than IFRS provisions; the excess charges resulting should be transferred from the regulatory risk reserve account to the retained earnings to the extent of the non-distributable reserve previously recognized.
Regulatory risk reserve:Balance at beginning of the yearTransfer from retained earnings
804,072164,953
969,025
722,51881,554
804,072
The Regulatory Risk Reserve accounts for the difference between the allowance for impairment on loans and advances computed based on the Central Bank of Nigeria Prudential Guidelines compared with the incurred loss model used in calculating the impairment under IFRS.
STATEMENT OF PRUDENTIAL ADJUSTMENTS
PRUDENTIAL GUIDELINES PROVISION:GeneralSpecific
Total
38,4731,766,596
1,805,069
48,5601,526,579
1,575,139
IFRS PROVISIONS:Specific ImpairmentCollective Impairment
IFRS impairment allowance lower than prudential provision
563,750272,294
836,044
969,025
527,616 243,451
771,067
804,072
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016052
NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2016
1. GENERAL INFORMATION
These financial statements are the financial statements of Abbey Mortgage Bank Plc. (the “Bank”), a public limited liability company incorporated and domiciled in Nigeria on 26 August 1991. The Bank obtained its licence to operate as a mortgage bank on 20 January 1992 and commenced business on 11 March 1992. It was later converted to a public limited liability company in September 2007. On 21 October 2008, the Bank became officially listed on the Nigerian Stock Exchange.
The principal activities of the Bank are the provision of mortgage services, financial advisory, and real estate construction finance.
For the earlier years of its operations, the Bank specialized in funding small and medium size businesses. In the last few years, the Bank has started to implement a mortgage financing strategy in line with its strategic vision to become “the number one mortgage service provider in Nigeria”. The Bank currently has 117 (2015: 128) staff in ten (10) branches and the Head Office.
The financial statements for the year ended 31 December 2016 were authorised for issue in accordance with a resolution of the Directors on 15 March 2017.
2.1 BASIS OF PREPARATION
A. Statement of Compliance These financial statements of the Bank are general purpose financial statements which have been
prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). Additional information required by provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, the Banks and Other Financial Institutions Act, CAP B3, Laws of the Federation of Nigeria 2004, the Financial Reporting Council of Nigeria (“FRCN”) Act No. 6, 2011 and relevant Central Bank of Nigeria circulars, is included where appropriate.
B. Basis of Measurement The financial statements have been prepared on the historical cost basis except for quoted available for
sale financial instruments which are carried at fair value.
C. Functional and Presentation Currency These financial statements are presented in Naira which is the Bank's functional and presentational
currency. Except as otherwise indicated, financial information presented in Naira has been rounded to the nearest thousand.
D. Use of Estimates and Judgments The preparation of the financial statements in conformity with IFRSs requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
ANNUAL REPORT & ACCOUNTS
2016053
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.
Key sources of estimation uncertainty
(i) Allowances for loan impairment Assets accounted for at amortised cost are evaluated for impairment on a basis described in accounting
policy 2.2 (F) (ix). The specific component of the total allowances for impairment applies to financial assets evaluated
individually for impairment and is based upon management’s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgments about a debtor’s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and estimate of cash flows considered recoverable are independently reviewed by the Credit and Risk Management Committee.
A collective component of the total allowance is established for: Groups of homogeneous loans that are not considered individually significant and Groups of assets that are individually significant but were not found to be individually impaired
(IBNR).
Collective allowance for groups of homogeneous loans is established using statistical modelling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical modelling. Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure that they remain appropriate.
Collective allowance for group of assets that are individually significant but that were not found to be individually impaired cover credit losses inherent in portfolios of loans and advances and held to maturity investment securities with similar credit characteristics when there is objective evidence to suggest that they contain impaired loans and advances and held to maturity investment securities, but the individual impaired items cannot yet be identified. In assessing the need for collective loan loss allowances, management considers factors such as credit quality, portfolio size, concentrations, and economic factors. In order to estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to determine the required input parameters, based on historical experience and current economic conditions. The accuracy of the allowances depends on estimates of future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective allowances are estimated.
(ii) Determining fair values
For disclosure purpose, the determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
(iii) Useful lives and carrying value of property and equipment and intangible assets
The estimation of the useful lives of assets is based on management’s judgment. Any material adjustment to the estimated useful lives of items of property and equipment and intangibles will have an impact on the carrying value of these items.
(iv) Determination of impairment of property and equipment, and intangible assets
Management is required to make judgments concerning the cause, timing and amount of impairment. In the identification of impairment indicators, management considers the impact of changes in current competitive conditions, cost of capital, availability of funding, technological obsolescence, discontinuance of services and other circumstances that could indicate that impairment exists. The Bank applies the impairment assessment to its separate cash generating units. This requires management to make significant judgments and estimates concerning the existence of impairment indicators, separate cash generating units, remaining useful lives of assets, projected cash flows and net realisable values. Management’s judgment is also required when assessing whether a previously recognised impairment loss should be reversed. No property and equipment, and intangible asset was impaired at the year end.
(v) Valuation of financial instruments
The Bank’s accounting policy on fair value measurements is discussed under note 2.2(F) (ix)The Bank measures fair values using the following hierarchy of methods.
Level 1: Quoted market price in an active market for an identical instrument.
Level 2: Valuation techniques based on observable inputs either directly- i.e. as prices or indirectly- i.e. derived from prices. This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Level 3: This includes financial instruments, the valuation of which incorporate significant inputs for the asset or liability that is not based on observable market data (unobservable inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product.
These inputs are generally determined based on inputs of a similar nature, historic observations on the level of the input or analytical techniques. This category includes investment securities.
(vi) Deferred tax assets
Deferred tax assets are recognised in respect of tax losses to the extent that it is probable that future taxable profit will be available against which the losses can be utilised. Judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits, together with future tax-planning strategies (See Note 12). Unrelieved tax losses can be used indefinitely.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
(vii) Owner-occupied properties The bank classifies owner-occupied properties as property and equipment where the Bank occupies
significant portion of the property for its operations.
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The bank classifies owner-occupied properties as property and equipment where the Bank occupies significant portion of the property for its operations.
A. Foreign currency transactions Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions.
Monetary assets and liabilities resulting from foreign currency transactions are subsequently translated at the spot rate at reporting date.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different to those at which they were initially recognized or included in a previous financial report, are recognized in the profit or loss in the period in which they arise.
Non–monetary items that are measured in terms of historical cost in a foreign currency are translated using the spot exchange rates as at the date of recognition.
Translation differences on non-monetary items measured at fair value through equity, such as equities classified as available-for-sale financial assets, are included in the available-for-sale reserve in equity.
B. Interest Interest income and expense are recognised in profit or loss using the effective interest method. The
effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability ( or where appropriate, a shorter period) to the carrying amount of the financial asset or liability. When calculating the effective interest rate, the Bank estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses.
The calculation of the effective interest rate includes all fees paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or liability.
Interest income and expense presented in the profit or loss include:- interest on financial assets and financial liabilities measured at amortised cost calculated on an effective
interest basis.
- interest on available-for-sale investment securities calculated on an effective interest basis.
Interest income and expense on all trading assets and liabilities are considered to be incidental to the Bank's trading operations and are presented together with all other changes in the fair value of trading assets and liabilities in the net trading income.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
C. Fees and commission
Fees and commission income and expense that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate.
Other fees and commission income including account servicing fees, investment management fees, sales commission, placement fees and syndication fees are recognised as the related services are performed. When a loan commitment is not expected to result in the draw down of a loan, the related loan commitment fees are recognised on a straight line basis over the commitment period.
Other fees and commission expense relate mainly to transaction and service fees, which are expensed as the services are received.
D. Other operating income
Rental income Rental income arising from operating leases on properties is accounted for on a straight-line basis over
the lease terms and is included in revenue in the statement of profit or loss due to its operating nature.
E. Income Tax Expense
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
F. Financial assets and Financial Liabilities A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity. I. Recognition of financial assets All financial assets and liabilities are initially recognised on the trade date at which the Bank becomes a
party to the contractual provisions of the instrument.
A financial asset or financial liability is measured initially at fair value plus, transaction costs that are directly attributable to its acquisition or issue.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
ii. Classification and initial recognition of financial assets The Bank classifies its financial assets in the following categories: loans and receivables and available-
for-sale financial assets. Management determines the classification of financial assets and liabilities at the time of initial recognition and the classification is dependent on the nature and purpose of the financial assets.
Loans and advances Loans and advances include loans and advances to banks and customers originated by the Bank which are
not classified as either held for trading or designated at fair value. Loans and advances are recognized when cash is advanced to a borrower. Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recorded at fair value plus any directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method less any impairment losses. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of EIR. The EIR amortization is included in finance income in the profit or loss. The losses arises from impairment are recognized in the profit or loss on a separate line.
Available-for-sale investments Available-for-sale assets are non-derivative financial assets that are classified as available for sale and
are not categorized into the other category described above. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss. AFS financial assets are initially measured at fair value plus direct and incremental transaction costs and subsequently measured at fair value with unrealised gains or losses recognised in Other Comprehensive Income (OCI) and credited in the AFS reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the AFS reserve to the statement of profit or loss in finance costs.
Dividend on available for sale equity instruments are recognized in profit or loss when the Bank’s right to receive the dividend is established.
A financial asset classified as available for sale that would have met the definition of loans and receivables on initial recognition may only be transferred from the available for sale classification where the Bank has the intention and the ability to hold the asset for the foreseeable future or until maturity. The fair value carrying amount at the date of reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the maturity amount is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of profit or loss.
Financial investments - held-to-maturity Held-to-maturity financial investments are non–derivative financial assets with fixed or determinable
payments and fixed maturities that the Bank has the intention and ability to hold to maturity. After initial measurement, held-to-maturity financial investments are subsequently measured at amortised cost using the EIR less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the EIR. The amortisation is included in interest and similar income in the profit or loss. The losses arising from impairment of such investments are recognised in the profit or loss within credit loss expense.
If the Bank were to sell or reclassify more than an insignificant amount of held-to-maturity investments before maturity (other than in certain specific circumstances), the entire category would be tainted and would have to be reclassified as available-for-sale. Furthermore, the Bank would be prohibited from classifying any financial asset as held-to-maturity during the following two years.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
iii. De-recognition of financial assets The Bank derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire, or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Bank neither transfers nor retains substantially all the risks and rewards of ownership and it does not retain control of the financial asset. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Bank is recognised as a separate asset or liability in the statement of financial position. On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset transferred), and consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Bank could be required to repay.
iv. Classification and initial recognition of financial liabilities Financial liabilities are initially measured at fair value, plus transaction costs. All financial liabilities are
measured at amortised cost using the EIR method. Gains or losses on liabilities are recognised in profit or loss.
After initial recognition, interest -bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are recognised as well as through the EIR amortised process .
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as interest expense in the profit or loss.
v. De-recognition of financial liabilities The Bank derecognises financial liabilities when, and only when its obligations are discharged, cancelled
or expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
vi. Identification and measurement of impairment for loans and advances At each reporting date the Bank assesses whether there is objective evidence that financial assets carried
at amortised cost are impaired. A financial asset or a group of financial assets is impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset(s), and that the loss event has an impact on the future cash flows of the asset(s) that can be estimated reliably.
Objective evidence that financial assets are impaired can include: Significant financial difficulty of the issuer or obligor; A breach of contract, such as a default or delinquency in interest or principal payments; The lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; It becomes probable that the borrower will enter bankruptcy or other financial reorganisation; The disappearance of an active market for that financial asset because of financial difficulties; Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets,
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: adverse changes in the payment status of borrowers in the portfolio;
National or local economic conditions that correlate with defaults on the assets in the portfolio
If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of the loss shall be recognised in profit or loss.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss shall be reversed either directly or by adjusting an allowance account. The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal shall be recognised in profit or loss.
vii. Measurement of impairment loss for available for sale securities
At each reporting date, an assessment is made of whether there is any objective evidence of impairment in the value of a financial asset. Impairment losses are recognised if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the financial asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. In the case of equity investments classified as available-for-sale, objective evidence would include a ‘significant’ or ‘prolonged’ decline in the fair value of the investment below its cost. The Bank treats ‘significant’ generally as 25% and ‘prolonged’ generally as greater than six months.
Where such evidence exists, the difference between the financial asset’s acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any previous impairment loss recognised in the profit or loss, is removed from equity and recycled through other comprehensive income in profit or loss. Impairment losses for available-for-sale equity securities are recognised within ‘Net operating income' in the profit or loss.
Reversals of impairment of equity shares are not recognised in the statement of comprehensive income, increases in the fair value of equity shares after impairment are recognised in other comprehensive income.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
viii. Collateral and Netting
The Bank obtains collateral where appropriate, from customers to manage its credit risk exposure to the customer. The collateral normally takes the form of a lien over the customer’s assets and gives the Bank a claim on these assets in the event that the customer defaults.
Collateral received in the form of securities is not recorded on the statement of financial position. Collateral received in the form of cash is recorded on the statement of financial position with a corresponding liability. These items are assigned to deposits received from bank or other counterparties. Any interest payable or receivable arising is recorded as interest expense or interest income respectively.
The Bank’s policy is to determine whether a repossessed asset is best used for its internal operations or should be sold. Assets determined to be useful for the internal operations are transferred to its relevant asset category at the lower of their repossessed value or the carrying value of the original secured asset. Assets that are determined better to be sold are immediately recognised as non-current assets held for sale at the lower of carrying amount and fair value less costs to sell at the date of repossession.
The loan agreement provides that, if an event of default occurs, all outstanding transactions with the counterparty will fall due and all amounts outstanding will be settled on a net basis.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise an asset and settle the liability simultaneously. In many cases, even though netting agreements are in place, the lack of an intention to settle on a net basis results in the related assets and liabilities being presented gross in the statement of financial position.
ix. Valuation of financial Instruments
The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial instrument is not active, a valuation technique is used. The majority of valuation techniques employ only observable market data and so the reliability of the fair value measurement is high. However, certain financial instruments are valued on the basis of valuation techniques that feature one or more significant market inputs that are unobservable. Valuation techniques that rely to a greater extent on unobservable inputs require a higher level of management judgment to calculate a fair value than those based wholly on observable inputs.
The main assumptions and estimates which management consider when applying a model with valuation techniques are:
The likelihood and expected timing of future cash flows on the instrument. These cash flows are usually governed by the terms of the instrument, although judgment may be required when the ability of the counterparty to service the instrument in accordance with the contractual terms is in doubt. Future cash flows may be sensitive to changes in market rates;
Selecting an appropriate discount rate for the instrument. The determination of this is based on the assessment of what a market participant would regard as the appropriate spread of the rate for the instrument over the appropriate rate; and
Judgment to determine what model to use to calculate fair value in areas where the choice of
valuation model is particularly subjective, for example, when valuing complex derivative products.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
When applying a model with unobservable inputs, estimates are made to reflect uncertainties in fair values resulting from a lack of market data inputs, for example, as a result of illiquidity in the market. For these instruments, the fair value measurement is less reliable. Inputs into valuations based on unobservable data are inherently uncertain because there is little or no current market data available from which to determine the level at which an arm‘s length transaction would occur under normal business conditions. However, in most cases there is some market data available on which to base a determination of fair value, for example historical data, and the fair values of most financial instruments are based on some market observable inputs even when unobservable inputs are significant.
Given the uncertainty and subjective nature of valuing financial instruments at fair value, it is possible that the outcomes in the next financial year could differ from the assumptions used, and this could result in a material adjustment to the carrying amount of financial instruments measured at fair value.
Fair value measurement The Bank measures financial instruments, such as, quoted equities, at fair value at each reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to the Bank. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Bank uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
G. Cash and cash equivalents For the statement of cash flows presentation purposes, cash and cash equivalents includes cash on
hand, deposits held at call with other financial institutions, other short-term, highly liquid investments with original terms to maturity of three months or less that are readily convertible to cash and which are subject to an insignificant risk of changes in value. Restricted cash are not part of cash and cash equivalents.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
H. Property, plant and equipment
i. Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses.
The cost of the relevant property, plant and equipment includes and is made up of expenditures that are directly attributable to the acquisition of the assets. Additions and subsequent expenditures are capitalised only to the extent that they enhance the future economic benefits expected to be derived from the assets and the cost of the asset can be measured reliably. All other repairs and maintenance are charged to the profit and loss statement during the period in which they were incurred.
Construction cost in respect of offices is carried at cost as work in progress. On completion of construction, the related amounts are transferred to the appropriate category of property, plant and equipment. Payments in advance for items of property, plant and equipment are included as prepayments in other assets and upon delivery are reclassified as additions in the appropriate category of property, plant and equipment. No depreciation is charged until the assets are available for use.
ii. Subsequent costs The cost of replacing a part of an item of property or equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within the part will flow to the bank and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The cost of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.
iii. Depreciation Depreciation is provided on the depreciable amount of items of property, plant and equipment on a
straight-line basis over their estimated useful economic lives. The depreciable amount is the gross carrying amount, less the estimated residual value at the end of its useful economic life. Work in progress is not depreciated.
The estimated useful lives for the current and comparative periods are as follows: Motor vehicles 4 years Office and residential equipment 10 years Office furniture 10 years Land and buildings 50 years Computer equipment 5 years
Depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment are kept under review to take account of any change in circumstances.When deciding on depreciation rates and methods, the principal factors the Bank takes into account are the expected rate of technological developments and expected market requirements for, and the expected pattern of usage of, the assets. When reviewing residual values, the Bank estimates the amount that it would currently obtain for the disposal of the asset after deducting the estimated cost of disposal if the asset were already of the age and condition expected at the end of its useful economic life.Property, plant and equipment is subject to an impairment review if there are events or changes in circumstances which indicate that the carrying amount may not be recoverable.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
iv. De-recognition An item of property and equipment and any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal.
v. Gain or loss on sale of property, plant and equipment The gain or loss on the disposal of premises and equipment is determined as the difference between the
carrying amount of the assets at the time of disposal and the proceeds of disposal, and is recognized as an item of other income in the year in which the significant risks and rewards of ownership are transferred to the buyer.
I. Intangible assets Intangible assets consist of computer software and costs associated with the development of software for
internal use. Computer software is stated at cost, less amortisation and accumulated impairment losses, if any. Costs that are directly associated with the production of identifiable and unique software products, which are controlled by the Bank and which will probably generate economic benefits exceeding costs are recognized as intangible assets. These costs are amortised on the basis of expected useful lives of the software which range from three to five years. Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Costs associated with maintaining software programs are recognized as expenses when incurred.
J. Impairment of tangible and intangible assets excluding goodwill At each reporting date, or more frequently where events or changes in circumstances dictate, tangible
and intangible assets excluding goodwill, are assessed for indications of impairment. If indications are present, these assets are subject to an impairment review. For the purpose of conducting impairment reviews, cash-generating units are the lowest level at which management monitors the return on investment on assets. The impairment review includes the comparison of the carrying amount of the asset with its recoverable amount.
The recoverable amount of the asset is the higher of the assets or the cash-generating unit’s fair value less cost to sell and its value in use. Fair value less cost to sell is calculated by reference to the amount at which the asset could be disposed of in a binding sale agreement in an arm’s length transaction evidenced by an active market or recent transactions for similar assets.
The carrying values of tangible and intangible assets, excluding goodwill, are written down by the amount
of any impairment and this loss is recognised in the profit or loss in the period in which it occurs. In subsequent years, the Bank assesses whether indications exist that impairment losses previously recognized for tangible and intangible assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amount of that asset is recalculated and, if required, its carrying amount is increased to the revised recoverable amount. The increase is recognized in other operating income as an impairment reversal. An impairment reversal is recognized only if it arises from a change in the assumptions that were used to calculate the recoverable amount. The increase in an asset's carrying amount due to an impairment reversal is limited to the depreciated amount that would have been recognized had the original impairment not occurred.
K. Contingent liabilities Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral
security, are possible obligations that arise from past events whose existence will be confirmed only by the occurrence, or non-occurrence, of one or more uncertain future events not wholly within the control of the Bank; or present obligations that have arisen from past events but are not recognised because it is not probable that settlement will require the outflow of economic benefits, or because the amount of the obligations cannot be reliably measured. Contingent liabilities are not recognised in the financial statements but are disclosed unless the probability of settlement is remote.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
L. Financial guarantees Financial guarantee contracts are contracts that require the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantees are initially recognised in the financial statements at fair value on the date that the guarantee was given. Other than where the fair value option is applied, subsequent to initial recognition, the Bank’s liabilities under such guarantees are measured at the higher of the initial measurement, less amortisation recognised in the profit or loss, and the best estimate of the expenditures required to settle the obligations. Commission and fees charged to customers for services rendered in respect of financial guarantees are recognised at the t ime the services or transact ions are effected.
Any increase in the liability relating to financial guarantees is recorded in the profit or loss.
M. Employee benefits
i. Post employment benefits The Bank operates a defined contribution pension plan. A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an personnel expense in profit or loss in the periods during which services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the reporting period in which the employees render the service are discounted to their present value at the reporting date.
For defined contribution schemes, the Bank recognises contributions due in respect of the accounting period in the profit or loss. Any contributions unpaid at the reporting date are included as a liability.
ii. Short term employee benefits Short-term employee benefits, such as salaries, paid absences, and other benefits, are accounted for on
an accruals basis over the period which employees have provided services in the year. Bonuses are recognised to the extent that the Bank has a present obligation to its employees that can be measured reliably.
All expenses related to employee benefits are recognised in the profit or loss in the personnel expenses.
N. Share Capital
Share issue costs Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net
of tax, from the proceeds.
Share premium Premiums from the issue of shares are reported in share premium
Dividends on ordinary shares Dividends on ordinary shares are recognised in equity in the period in which they are approved by the
Bank’s shareholders. Dividends declared after the reporting date are dealt with in the subsequent period.
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NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
O. Equity reserve The reserves recorded in equity on the Bank’s statement of financial position include: Available-for-sale reserve comprises changes in fair value of available-for-sale investments. Regulatory risk reserve details the difference between the impairment on loans and advances computed
based on the Central Bank of Nigeria Prudential Guidelines compared with the incurred loss model used in calculating the impairment under IFRS.
Statutory reserve details un-distributable earnings required to be kept by the nation's central bank in accordance with the national law.
P. Earnings per share Basic earnings per share is calculated by dividing net profit after tax applicable to equity holders of the
Bank, excluding any costs of servicing other equity instruments, by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effective interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
Q. Leasing The determination of whether an arrangement is a lease, or contains a lease, is based on the substance of
the arrangement at the inception date and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
Bank as a lessee Leases that do not transfer to the Bank substantially all the risks and benefits incidental to ownership of
the leased items are operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term. Contingent rentals are recognised as an expense in the period in which they are incurred.
Bank as a lessor Leases where the Bank does not transfer substantially all of the risk and benefits of ownership of the
asset are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
R. Non-current assets held for sale Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair
value less costs to sell. Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition, management has committed to the sale, and the sale is expected to have been completed within one year from the date of classification.
The Bank makes use of valuation experts to determine the fair value less cost to sell of these properties.
ANNUAL REPORT & ACCOUNTS
2016066
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
2.3. ADOPTION OF NEW AND REVISED STANDARDS
I. New and amended standards adopted by the Bank Below are the IFRSs and IFRIC interpretations that are effective for the first time for the financial year
beginning on or after 1 January 2016 that would be expected to have an impact on the Bank.
IAS 1 Disclosure Initiative – Amendments to IAS 1 – effective on or after 1 January 2016 The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change,
existing IAS 1 requirements. The amendments clarify:
The materiality requirements in IAS 1 That specific line items in the statement(s) of profit or loss and OCI and the statement of financial
position may be disaggregated That entities have flexibility as to the order in which they present the notes to financial statements That the share of OCI of associates and joint ventures accounted for using the equity method must
be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss
Furthermore, the amendments clarify the requirements that apply when additional subtotals are
presented in the statement of financial position and the statement(s) of profit or loss and OCI. This does not have a significant impact on the Bank.
Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation - effective on or after 1 January 2016.
The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic
benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.
These amendments does not have any impact to the Bank given that the Bank has not used a revenue-based method to depreciate its non-current assets.
IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations - effective 1 January 2016
IChanges in methods of disposal Assets (or disposal groups) are generally disposed of either through sale or distribution to owners. The
amendment clarifies that changing from one of these disposal methods to the other would not be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. This amendment had no impact on the Bank during the year.
IFRS 7 Financial Instruments - effective on or after 1 January 2016 The amendment clarifies that a servicing contract that includes a fee can constitute continuing
involvement in a financial asset. An entity must assess the nature of the fee and the arrangement against the guidance for continuing involvement in IFRS 7.B30 and IFRS 7.42C in order to assess whether the disclosures are required.
The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures would not need to be provided for any period beginning before the annual period in which the entity first applies the amendments.
ANNUAL REPORT & ACCOUNTS
2016067
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the information reported in the most recent annual report. The Bank is still assessing the impact of this amendment.
ii. Standards and interpretations issued/amended but not yet effective
Amendments to IAS 7 Statement of Cash Flows - effective on or after 1 January 2017
The intention is to improve disclosures of financing activities and help users better understand changes in an entity’s liquidity positions.
Under the new requirements, entities will need to disclose changes in their financial liabilities arising from financing activities, including both changes arising from cash flows and non-cash items (e.g., gains and losses due to foreign currency movements).
The standard is not expected to have a significant impact on the Bank as it already makes these
disclosures.
Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses - effective on or after 1 January 2017
The IASB clarified the accounting treatment of deferred tax assets of debt instruments measured at fair value for accounting, but measured at cost for tax purposes.
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
The standard is not expected to have a significant impact on the Bank as it currently does not have any recognised deferred tax assets.
Clarifications to IFRS 15 - effective on or after 1 January 2018
The amendments is to address several implementation issues discussed by the Joint Transition Resource Group for Revenue Recognition. The amendments are intended to clarify the requirements in IFRS 15, not to change the standard.
Entities are required to apply these amendments retrospectively. Entities can choose to apply the standard using either a full retrospective approach or a modified retrospective approach, with some limited relief provided under either approach.
This new standard is not expected to have a significant impact on the Bank.
ANNUAL REPORT & ACCOUNTS
2016068
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions - effective on or after 1 January 2018
The amendments is in relation to the classification and measurement of share-based payment transactions.The amendments address three main areas:
- The effects of vesting conditions on the measurement of a cash-settled share-based payment transaction;
- The classification of a share-based payment transaction with net settlement features for withholding tax obligations; and
- The accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash-settled to equity-settled.On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The standard is not expected to have a significant impact on the Bank as it currently does not have any share-based payment transactions.
IFRS 9 Financial instruments - effective on or after 1 January 2018. Classification and measurement of financial assets All financial assets are measured at fair value on initial recognition, adjusted for transaction costs, if the
instrument is not accounted for at fair value through profit or loss (FVTPL).
There is a fair value option (FVO) that allows financial assets on initial recognition to be designated as FVTPL if that eliminates or significantly reduces an accounting mismatch.
Equity instruments are generally measured at FVTPL. However, entities have an irrevocable option on an instrument-by instrument basis to present changes in the fair value of non-trading instruments in other comprehensive income (OCI) without subsequent reclassification to profit or loss.
Classification and measurement of financial liabilities For financial liabilities designated as FVTPL using the FVO, the amount of change in the fair value of such
financial liabilities that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation in OCI of the fair value change in respect of the liability’s credit risk would create or enlarge an accounting mismatch in profit or loss.
All other IAS 39 Financial Instruments: Recognition and Measurement classification and measurement requirements for financial liabilities have been carried forward into IFRS 9, including the embedded derivative separation rules and the criteria for using the FVO.
Impairment The impairment requirements are based on an expected credit loss (ECL) model that replaces the IAS 39
incurred loss model. The ECL model applies to debt instruments accounted for at amortised cost or at FVOCI, most loan commitments, financial guarantee contracts, contract assets under IFRS 15 and lease receivables under IAS 17 Leases.
Entities are generally required to recognise 12-month ECL on initial recognition (or when the commitment
or guarantee was entered into) and thereafter as long as there is no significant deterioration in credit risk. However, if there has been a significant increase in credit risk on an individual or collective basis, then entities are required to recognise lifetime ECL. For trade receivables, a simplified approach may be applied whereby the lifetime ECL are always recognised.
The application of IFRS 9 may change the measurement and presentation of many financial instruments, depending on their contractual cash flows and the business model under which they are held. The impairment requirements will generally result in earlier recognition of credit losses.
ANNUAL REPORT & ACCOUNTS
2016069
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
IFRS 15 Revenue from Contracts with Customers - effective on or after 1 January 2018 IFRS 15 replaces all existing revenue requirements in IFRS (IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue – Barter Transactions Involving Advertising Services) and applies to all revenue arising from contracts with customers, unless the contracts are in the scope of other standards, such as IAS 17. Its requirements also provide a model for the recognition and measurement of gains and losses on disposal of certain non-financial assets, including property, equipment and intangible assets.
IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers. The five steps in the model are Identification of the contract with the customer, identification of the performance obligations in the contract, determination of the transaction price, allocation of the transaction price to the performance obligations in the contracts, and recognition of revenue when (or as) the entity satisfies a performance obligation. The adoption of IFRS 15 may have impact on processing and commission fees. The Bank is assessing the potential impact on its financial statements resulting from the application of IFRS 15.
IFRS 16 Leases - effective on or after 1 January 2019 IFRS 16 eliminates the current dual accounting model for lessees, which distinguishes between on-
balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. Lessor accounting remains similar to current practice – i.e. lessors continue to classify leases as finance and operating leases. The Bank is currently assessing the impact of the standard.
The Bank is currently assessing the impact of the standard.
IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration - effective on or after 1 January 2018
The interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration.
First-time adopters of IFRS are also permitted to apply the interpretation prospectively to all assets, expenses and income initially recognised on or after the date of transition to IFRS.
This new standard is not expected to have a significant impact on the Bank.
Other amendments to standards, which currently do not apply to the Bank are listed below; • Amendments to IAS 16: Property, Plant and Equipment and IAS 41: Agriculture - Bearer Plants • Amendments to IAS 27: Equity Method in Separate Financial Statements • Amendments to IAS 40: Transfers of Investment Property • Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts • Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception • Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture • Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations • Amendments to IFRSs Annual Improvements to IFRSs 2012-2014 Cycle: - IAS 19: Employee Benefits - IAS 34: Interim Financial Reporting • Amendments to IFRSs Annual Improvements to IFRSs 2014-2016 Cycle: - IFRS 1 First-time Adoption of International Financial Reporting Standards - IAS 28 Investments in Associates and Joint Ventures - IFRS 12 Disclosure of Interests in Other Entities
ANNUAL REPORT & ACCOUNTS
2016070
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3. Financial risk management
3.1. Introduction and overview The Bank defines risk as the possibility of losses or profits foregone, which may be caused by internal or
external factors.
The Bank’s aim is to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Bank’s financial performance
Risk management is carried out by a central risk department (Bank chief risk officer) under policies approved by the Board of Directors. Chief Risk Officer identifies, evaluates financial risks in close co-operation with the Bank’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, and credit risk. In addition, internal audit is responsible for the independent review of risk management and the control environment. There has been no significant change in the risk policy of the Bank during the year.
The risks arising from financial instruments to which the Bank is exposed are financial risks, which includes credit risk, liquidity risk and market risk (discussed in subsequent sections)
3.2 The key elements of the Bank’s risk management philosophy are the following:
The Bank considers sound risk management to be the foundation of a long-lasting financial institution.
The Bank continues to adopt a holistic and integrated approach to risk management and, therefore, brings all risks together under one or a limited number of oversight functions.
Risk officers are empowered to perform their duties professionally and independently without undue interference.
Risk management is governed by well-defined policies that are clearly communicated across the Bank.
Risk management is a shared responsibility. Therefore, the Bank aims to build a shared perspective on risks that is grounded in consensus.
The Bank’s risk management governance structure is clearly defined.
There is a clear segregation of duties between market-facing business units and risk management functions.
Risks are reported openly and fully to the appropriate levels once they are identified.
Risk-related issues are taken into consideration in all business decisions. The Bank shall continue to strive to maintain a conservative balance between risk and revenue considerations
Risk officers work as allies and thought partners to other stakeholders within and outside the Bank, and are guided in the exercise of their powers by a deep sense of responsibility, professionalism and respect for other parties
ANNUAL REPORT & ACCOUNTS
2016071
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.3 Credit risk Credit risk is the risk of suffering financial loss, should any of the Bank customers, clients or market
counterparties fail to fulfil their contractual obligations to the Bank. Credit risk arises mainly from commercial and consumer loans and advances and loan commitments arising from such lending activities, but can also arise from credit enhancement provided, such as financial guarantees, letters of credit, endorsements and acceptances.
Credit risk is the single largest risk for the Bank business; management therefore carefully manages its exposure to credit risk. The credit risk management and control are centralised in a credit risk management team, which reports to the Board of Directors and head of each business unit regularly.
3.3.1 In measuring credit risk of loans and advances to customers and to Bank’s at a counterparty level, the
Bank reflects the following components:
The character and capacity to pay of the client or counterparty on its contractual obligations;
Credit history of the counterparty; and
The likely recovery ratio in case of default obligations – value of collateral and other ways out. The Bank’s rating scale reflects the range of default probabilities defined for each rating class. This means that, in principle, exposures migrate between classes as the assessment of their probability of default changes. The rating tools are reviewed and upgraded when necessary. The Bank regularly validates the performance of the rating and their predictive power with regard to default events.
Collateral Risk Rating (CRR)/Facility Risk Rating (FRR) The Bank does not lend to speculative grade obligors, on an unsecured basis. The Facility Risk
Rating (FRR) is different from the Obligor Risk Rating (ORR) to the extent of the perceived value of enhancement provided.
The Collateral Risk Rating grid indicates the acceptable collateral types rated 1–7 from best to worst in order of liquidity.
Collateral risk rating Collateral type
1. Cash/Treasury bills
2. Marketable securities, guarantee/receivables of investment grade banks and corporates
3. Enforceable lien on fast-moving inventory in bonded warehouses
4. Legal mortgage on residential business real estate in prime locations A and B
5. Legal mortgage or debenture on business premises, factory assets or commercial real estates in locations A and B
6. Equitable mortgages on real estates in any location
7. Letters of comfort or awareness, guarantee of non-investments grade banks and corporates
ANNUAL REPORT & ACCOUNTS
2016072
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.3.2 Risk limit control and mitigation policies The Bank manages, limits and controls concentrations of credit risk wherever they are identified � in
particular, to individual counterparties and Bank’s, and to industries.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower or group of borrowers, and to regional and industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by product, industry sector and country are approved quarterly by the Board of Directors.
Portfolio limits The process of setting the limits is as follows: • The Bank engages in a detailed portfolio plan annually. In drawing up the plan, the Bank reviews
the macro-economic factors, identifies the growth sectors of the economy and conducts a risk rating of the sectors to determine its acceptable target market industries and exception. The Bank’s target loan portfolio is then distributed across acceptable target market industries, strategic business units and approved product programmes.
Presently, the Bank does not have any exposure to counterparties domiciled outside Nigeria. However, the Bank has a fully developed country risk rating system that could be employed, should the need arise. In such eventuality, limits will be graduated on country risk rating.
Single obligor limits Limits are imposed on loans to individual borrowers. The Bank as a matter of policy does not lend
above its regulatory lending limit, which is 20% of its shareholders’ funds unimpaired by losses. The internal guidance limit is, however, set at 20% for corporate customers and 5% for individual customers of its shareholders funds unimpaired by losses to a single borrower.
Product programmes contain guidelines on single obligor limits. Except with the approval of the Board of Directors, the Bank shall not lend more than: - 20% of the Bank’s shareholders’ funds to any Bank. Only companies rated ‘A’ or better may
qualify for this level of exposure. - The Bank also sets internal credit approval limits for various levels in the credit process. - Approval limits are set by the Board of Directors and reviewed from time to time as the
circumstances of the Bank demand. Exposure to credit risk is also managed through regular analysis of borrowers and potential borrowers to meet interest and capital repayment obligations and by changing these lending limits where appropriate.
The Bank also controls and mitigates risk through collateral.
Collateral The Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is
the taking of security for funds advances, which is common practice. The Bank implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:
Mortgages over residential properties. Charges over business assets such as premises, inventory and cash deposits. Charges over financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured, in addition, in order to minimise the credit loss, the Bank will seek additional collateral from the counterparty as soon as impairment indicators are identified for the relevant individual loans and advances.
ANNUAL REPORT & ACCOUNTS
2016073
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Collateral held as security for financial assets other than loans and advances depends on the nature of the instrument. Debt securities, treasury and other eligible bills are generally unsecured, with the exception of asset-backed securities and similar instruments, which are secured by portfolios of financial instruments.
Estimate of the value of collateral and other security enhancements held against loans and advances to customers and banks is shown below :
3.3.3 Impairment and provisioning policies Impairment allowances are recognised for financial reporting purposes only for losses that have been
incurred at the reporting date based on objective evidence of impairment.
3.3.4 Maximum exposure to credit risk before collateral held or credit enhancements
The Bank’s maximum exposure to credit risk at 31 December 2016 and 31 December 2015 respectively is represented by the net carrying amounts of the financial assets in the Statement of Financial Position excluding cash in hand.
Against individually impaired Against neither past due nor impaired Against past due but not impaired
Total Against individually impaired Property Equities
Total
Against neither past due nor impaired Property Cash Equities
Against past due but not impaired Property Cash
509,520
15,155,686 6,056,210
21,721,416
508,000
1,520
509,520
14,521,036
249,400 385,250
15,155,686
6,056,210
-
6,056,210
1, 229,98918,226,7114,136,793
23,593,493
1,226,589
3,400
1,229,989
17,512,441
214,300 500,000
18,226,741
4,126,793
10,000
4,136,793
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016074
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.3.5 Concentration of risks of financial assets with credit risk exposure
(a) Geographical sectors
The following table breaks down the Bank credit exposure at their carrying amounts (without taking into account any collateral held or other credit support), as categorised by geographical region. For this table, the Bank has allocated exposures to regions based on the state of domicile of its counterparties:
Cash with central bank Due from banks Loans and advances
101,046 896,009
6,900,080
7,897,135
101,0461,304,7147,103,478
8,509,238
2016 N'000
2015N'000
(b) Industry sectors
The following table breaks down the Bank credit exposure at carrying amounts (without taking into account any collateral held or other credit support), as categorised by the industry sectors of the Bank counterparties.
2016 N'000
2015N'000
Cash with central bank – Head office Due from banks – Head office Loans and advances: Head Office Apapa Festac Okota LasuOjo Asaba Agbara Abuja 1 Abuja 2 Victoria Island
Total loans and advances Impairment allowances for uncollectibility Net loans and advances
Total financial assets
101,046 896,009
5,395,231
205,216 38,538 95,221 47,713 49,346 14,618
501,422 913,282 475,537
7,736,124
(836,044)
6,900,080
7,897,135
101,046 1,304,714
4,828,136233,502102,413131,04053,22892,22526,636
510,8641,213,808682,693
7,874,545
(771,067)
7,103,478
8,509,238
ANNUAL REPORT & ACCOUNTS
2016075
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.3.6 Credit quality of financial assets
A primary element of our credit approval process is a detailed risk assessment of every credit associated with counter-party. Our risk assessment procedures consider both the credit worthiness of the counter-party and the risks related to the specific type of credit facility or exposure. This risk assessment not only affects the structuring of the transaction and the outcome of the credit decision, but also influences the level of decision-making authority required to extend or materially change the credit and the monitoring procedures we apply to the on-going exposure.
The Bank has its own in-house assessment methodologies and rating scale for evaluating the creditworthiness of its counter-parties. The programmed 6-grade rating model was developed in line with foremost rating agencies in Nigeria, to enables the Bank to compare its internal ratings with common market practice and ensures comparability between different portfolios of our institution. The Bank generally rate all its credit exposures individually. The rating scale is as follows:
Rating Grades: Descriptions / Characteristics AAA Exceptional Credit with unquestionable quality ,Good track
record, Strong cash flow, Fully cash coverage.
AA Very High credit quality, Good payment record, High Asset coverage, Very Good management structure.
2016 N'000
2015N'000
Government: Cash with Central BankFinancial Services:Due from banksLoans and advancesConstruction LoansLoan and AdvancesMortgage FMBN bondsMortgage Home LoansNHF LoansSchool LoansStaff Mortgage LoansStaff Personal LoansStaff Share Loan
Total loans and advances
Impairment allowances for uncollectibility
Net loans and advances
Total financial assets
101,046
896,009
717,036221,385
5,2545,497,308
408,473301,33278,168
590506,578
7,736,124
(836,044)
6,900,080
7,897,135
101,046
1,304,714
801,136374,258
10,3615,286,618
462,604315,98585,895
6,805530,883
7,874,545
(771,067)
7,103,478
8,509,238
ANNUAL REPORT & ACCOUNTS
2016076
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
A Good credit quality with strong cash flow, debt payment capacity, good asset coverage, Good management structure.
BBB Satisfactory asset quality, Good debt capacity but very low margin for debt servicing, Satisfactory Character.
BB Satisfactory asset quality, Good debt capacity but low margin for debt servicing, Satisfactory Character ,Employee public servants, Stable industrial sectors. Temporary repayment difficulties.
B Limited debt capacity, Modest debt service coverage, declining collateral quality. Few months repayments arrears, Satisfactory character of borrower, Employee public servants
a. Financial assets neither past due nor impaired
The credit quality of the portfolio of loans and advances, cash and balances with central banks and debt securities that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Bank (See below for an explanation of the internal rating system)
2016 N'000
2015N'000
Loans and advances AAA AA A BBB BB B
3,84212,100
337,3842,545,257
205,612715,024
3,819,219
112,605
793,831 218,984
1,644,851 1,592,855
632,200
4,995,326
2016 N'000
2015N'000
Grades:
b. Financial assets past due but not impaired Past due up to 90 days Past due by 91- 180 days Past due 181-360 days Past due 361 days - beyond
923,4382,073
326,2301,580,819
2,832,560
967,77525,30341,546
843,675
1,878,299
c. Financial assets individually impaired Impaired
Total Loans and advances
1,084,345
7,736,124
1,000,920
7,874,545
ANNUAL REPORT & ACCOUNTS
2016077
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.3.7 Credit enhancement
In the ordinary course of business, the Bank is exposed to the risk of having financial instruments that are not recognised in the financial position. The instruments are used mainly as interim Securities for National Housing Funds Loans (“NHFL”). The guarantees are expected to be discharged as soon as legal mortgages are perfected. The contractual amounts of the off- statement of financial position of financial instruments are:
3.4 Liquidity risk
3.4.1 Liquidity risk
Liquidity risk is the risk that the Bank is unable to meet its obligations when they fall due as a result of customer deposits being withdrawn, cash requirements from contractual commitments, or other cash outflows, such as debt maturities or margin calls for derivatives. Such outflows would deplete available cash resources for client lending, trading activities and investments. In extreme circumstances, lack of liquidity could result in reductions in the statement of financial position and sales of assets, or potentially an inability to fulfil lending commitments. The risk that the Bank will be unable to do so is inherent in all Bank operations and can be affected by a range of institution-specific and market-wide events including, but not limited to, credit events, merger and acquisition activity, systemic shocks and natural disasters.
Management of liquidity risk The Bank liquidity management process, as carried out within the Bank and monitored by a separate team
in the Bank known as the asset and liability management committee (ALCO), its functions include:
Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes replenishment of funds as they mature or borrowed by customers.
Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow;
Monitoring the liquidity ratios of the statement of financial position against internal and regulatory requirements; and
Managing the concentration and profile of debt maturities. Managing the concentration and profile of monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets.
Bank Treasury also monitors unmatched medium-term assets, the level and type of undrawn lending commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of credit and guarantees.
2016 N'000
2015N'000
84,651 419,233 Guaranteed facilities (NHFL)
The value of the guarantees are equal to the value of the loans they have been obtained for,
ANNUAL REPORT & ACCOUNTS
2016078
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.4.2 Maturity analysis
The table below analyses financial assets and liabilities of the Bank into relevant maturity based on the remaining period at reporting date to the contractual maturity date. The table includes both principal and interest earned as at year end.
As at 31 December 2016Cash on handDue from banksLoans and advancesFinancial investments - available for saleFinancial investments - held-to-maturityOther assetsCash balances with central bank
Total financial assets
Due to customersBorrowingsOther liabilitiesDue to the National Housing Fund
Total financial liabilities
Net financial (liabilities)/assets
As at 31 December 2015Cash balances Due from banksLoans and advancesFinancial investments - available for saleOther assetsCash balances with central bank#REF!
Total financial assets
Due to CustomersBorrowingsOther liabilitiesDue to the National Housing Fund
Total financial liabilities
Net financial (liabilities)/assets
11,037
895,759 1,433,601
- 336,163
290,315 -
2,966,875
3,629,825 2,301
200,021 -
3,832,147
(865,272)
-
- 223,970
- - - -
223,970
631,593 -
5,331 -
636,924
(412,954)
-
- 451,063
- - - -
451,063
439,579 - - -
439,579
11,484
-
- 451,063
- - - -
451,063
439,579 - - -
439,579
11,484
-
250 4,791,446
- - - -
4,791,696
167,987 21,944
- 398,541
588,472
4,203,224
-
- -
207,500 - -
101,046
308,546
459,665 - - -
459,665
(151,119)
11,037 896,009
6,900,080 207,500 336,163 290,315 101,046
8,742,150
5,328,649
24,245 205,352 398,541
5,956,787
2,785,363
Non-interestbearing
N’000
TotalN’000
Up to 3 months
N’000
3-6 months
N’000
7-12 months
N’000
After 12months
N’000
3,671
1,304,464 2,060,096
- 145,786
- -
3,514,017
1,962,757
185,728 -
2,148,485
1,365,532
- -
344,453 - - - -
344,453
1,437,539 -
2,292 -
1,439,831
(1,095,378)
- -
1,118,441 - - - -
1,118,441
1,083,715 112,049
- 3,132
1,198,896
(80,455)
-
250 3,580,488
--
101,046 419,233
4,101,017
342,121 - -
421,132
763,253
3,337,764
---
202,500 ---
202,500
535,261 ---
535,261
(332,761)
3,671
1,304,714 7,103,478
202,500 145,786 101,046 419,233
9,280,428
5,361,393
112,049 188,020 424,264
6,085,726
3,194,702
ANNUAL REPORT & ACCOUNTS
2016079
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.4.2 Maturity analysis - Continued
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled.
As at 31 December 2016 Cash on hand Due from banks Loans and advances Financial investments - available for sale Financial investments - held-to-maturity Other assets Cash balances with central bank Property and equipment Intangible assets Non-current assets held for sale
Total assets
Due to customers Current income tax liability Borrowings Other liabilities Due to the National Housing Fund
Total liabilities
Net assets As at 31 December 2015 Cash on hand Due from banks Loans and advances Financial investments - available for sale Other assets Cash balances with central bank Property and equipment Intangible assets Non-current assets held for sale
Total assets
Due to customers Current income tax liability Borrowings Other liabilities Due to the National Housing Fund
Total liabilities
Net assets
11,037
895,759 2,108,634
- 336,163 417,906
- - -
2,403,663
6,173,162
5,160,662 57,720 6,047
205,352 39,976
5,469,757
703,405
3,671 1,304,464 3,522,990 - 285,573 - -
- 2,539,761
7,656,459
4,925,943
87,326
112,049
188,020
35,169
5,348,507
2,307,952
-
250 4,791,446
207,500 - -
101,046 1,133,787
45,583 -
6,279,612
167,987 -
18,198 -
358,565
544,750 5,734,862
250
3,580,488 202,500
- 101,046
1,178,750 59,823
-
5,122,857 435,450
-
-
-
389,095
824,545
4,298,312
11,037
896,009 6,900,080
207,500 336,163 417,906 101,046
1,133,787 45,583
2,403,663
12,452,774
5,328,649 57,720 24,245
205,352 398,541
6,014,507
6,438,267
3,671
1,304,714
7,103,478
202,500
285,573
101,046
1,178,750
59,823
2,539,761
12,779,316
5,361,393 87,326
112,049 188,020 424,264
6,173,052
6,606,264
TotalN’000
Non-currentN’000
CurrentN’000
ANNUAL REPORT & ACCOUNTS
2016080
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
The Bank holds a diversified portfolio of cash and high-quality, highly-liquid securities to support payment obligations and contingent funding in a stressed market environment. The Bank assets held for managing liquidity risk comprise:
• Cash and balances with central banks; • Certificates of deposit; While there is a negative cumulative liquidity gap for within 12 months, it does not reflect the actual
liquidity position of the Bank as most of the term deposits from customers maturing within one year are historically being rolled.
3.5 Market risk Market risk is the exposure to an adverse change in the market value of our trading and investment
positions caused by a change in prices and rates.
Such positions result from market making, proprietary trading, underwriting and investing activities. The market risk factors are foreign exchange rates, commodity price, interest rates, and equity prices. Each market risk category the Bank is exposed to daily is described below: • Foreign exchange risks arise from exposures to changes in spot and forward rates and volatilities
of the exchange rates. • Interest rate risks result from exposures to changes in the level and shape of the yield curve, the
volatility of interest rates and credit spreads. • Equity price risks result from exposures to the changes in prices and volatilities of individual
equities.
3.5.1 Management of market risk The Bank has put in place a clearly defined market risk management framework that provides the Board
of Directors and Management with guidance on market risk management processes. The Bank has also prescribed tolerable market related losses, vis-a-vis the quantum of available capital and level of other risk exposures.
The Bank’s market risk policy and strategy are anchored on the following: i. Product diversification which involves trading, application and investment in a wide range and
class of products such as corporate securities and government securities; ii. Risk taking within well-defined limits with the sole purpose of creating and enhancing
shareholder value and competitive advantage; iii. Effective utilisation of risk capital; iv. Continuous re-evaluation of risk appetite and communication of same through market risk
limits; v. Independent market risk management function that reports directly to Management; vi. Robust market risk management infrastructure reinforced by a strong automated system for
controlling, monitoring and reporting market risk vii. Deployment of a variety of tools to monitor and restrict market risk exposures such as position
limits, sensitivity analysis, ratio analysis and management action triggers; viii. Setting the internal Open Position Limit (OPL) lower than the CBN prescribed limit (currently 5%
of shareholders’ funds). The Bank has put in place an approval process for exceeding the internal OPL limit. However, any trading above the CBN regulated OPL limit must be approved by the Central Bank; and
ix. Enforcement of market risk operating limits and other risk management guidelines that will ensure consistent compliance with OPL limit.
ANNUAL REPORT & ACCOUNTS
2016081
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.5.2 Market risk measurement techniques
(a) Value at risk (VAR) The Bank applies a ‘value at risk’ (VAR) methodology to its trading portfolios (including assets and
liabilities designated at fair value) and at a Bank level to estimate the market risk of positions held and the maximum losses expected, based upon a number of assumptions for various changes in market conditions. The Board sets limits on the value of risk that may be accepted by the Bank, which are monitored on a daily basis by Bank Treasury. Interest rate risk in the non-trading book is measured through the use of interest rate repricing gap analysis.
VAR, in general, is a quantitative measure of market risk which applies recent historic market conditions to estimate the potential future loss in market value that will not be exceeded in a set time period at a set statistical confidence level. VAR is calculated for expected movements over a minimum of one business day and to a confidence level of 99% and a 10-day holding period. The confidence level suggests that potential daily losses, in excess of the VAR measure, are likely to be experienced three times per year in every 250 days.
The Bank uses parametric method as its VAR methodology with an observation period of two years obtained from published data from preapproved sources. VAR is calculated on the Bank’s positions at close of business.
The Bank recently deployed a risk management system with capabilities for a more robust market risk analysis including VAR models based on Monte-Carlo simulation. The Bank did not actively trade in the period.
(b) Stress tests Stress tests provide an indication of the potential size of losses that could arise in extreme conditions.
In recognition of the volatile market environment and the frequency of regulations that have had a significant effect on market rates and prices, the Bank augments other risk measures with stress testing to evaluate the potential impact of possible extreme movements in financial variables on portfolio values that are rare but plausible.
Stress testing is an integral part of the market risk management framework and considers both historical market events and forward-looking scenarios. A consistent stress testing methodology is applied to trading and non-trading books.
Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The ALCO has responsibility for reviewing stress exposures and, where necessary, enforcing reductions in overall market risk exposure. The stress testing methodology assumes that scope for management action would be limited during a stress event, reflecting the decrease in market liquidity that often occurs. Regular stress test scenarios are applied to interest rates, exchange rates, and equity prices.
Non-trading book: Other sensitivity analyses The Bank is yet to adopt the use of VAR for its equity exposure as a result of low market liquidity. The Bank
does not trade in commodity and therefore is not exposed to commodity risk except in transactions where commodities have been used as collateral for credit transactions. The latter is covered under credit risk management.
ANNUAL REPORT & ACCOUNTS
2016082
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
The Bank’s exposure to foreign currency risk is largely concentrated in the US Dollar. Movement in exchange rate between the US Dollar and the Nigerian Naira affects reported earnings through revaluation gain or loss and the statement of financial position size through increase or decrease in the revalued amounts of assets and liabilities denominated in US Dollars.
As at 31 December 2016 Financial assets: Cash and balances with central banks / due
from banks Loans and advances Other assets Financial investments - available for sale Financial investments - held-to-maturity
Financial liabilities: Due to customers Borrowings Other liabilities Due to the National Housing fund
Net open currency position As at 31 December 2015 Financial assets: Cash and balances with central banks / due
from banks Loans and advances Other assets Financial Investments - Available for sale
Financial liabilities: Due to customers Due to the National Housing fund Borrowings Other liabilities
Net open currency position
1,007,6286,900,080
417,906 207,500 336,163
8,869,277
5,328,649 24,245
205,352 398,541
5,956,787
2,912,490
1,407,201 7,103,478
285,573 202,500
8,998,752
5,361,393
424,264
112,049
188,020
6,085,726
2,913,026
238 - - - -
238
- - - - -
238
1,561 - - -
1,561
- - - -
-
1,561
226 -
- -
-
226
- - -
- -
226
669 - - -
669
-
-
-
-
-
669
1,008,092 6,900,080
417,906 207,500 336,163
8,869,741
5,328,649
24,245
205,352
398,541
5,956,787
2,912,954
1,409,431 7,103,478 285,573 202,500
9,000,982
5,361,393 424,264 112,049 188,020
6,085,726
2,915,256
TotalN’000
USDN’000
EURON’000
NAIRAN’000
3.5.3. Foreign exchange risk
The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are monitored daily. The table below summarises the Bank exposure to foreign currency exchange rate risk at 31 December 2016 and 31 December 2015. Included in the table are the Bank financial instruments at carrying amounts, categorised by currency.
ANNUAL REPORT & ACCOUNTS
2016083
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Foreign exchange sensitivity analysis The Foreign exchange sensitivity analysis of the Bank is presented below.
For each foreign currency net exposure it is reasonable to assume a 5% appreciation/depreciation against the functional currency. If all other variables are held constant, the tables below present the impacts on profit or loss before tax if these currency movements had occurred.
As at 31 December 2016 Net foreign currency exposures
As at 31 December 2015 Net foreign currency exposures
238
1,561
226
669
Foreign exchange sensitivity analysis (31 December 2016)
Naira strengthens by 5% against the US Dollar Profit/ (loss) Naira weakens by 5% against the US Dollar Profit/(loss) Naira strengthens by 5% against the Euro Profit/(loss) Naira weakens by 5% against the Euro Profit/(loss)
Foreign exchange sensitivity analysis (31 December 2015)
Naira strengthens by 5% against the US Dollar Profit/ (loss) Naira weakens by 5% against the US Dollar Profit/(loss) Naira strengthens by 5% against the Euro Profit/(loss) Naira weakens by 5% against the Euro Profit/(loss)
N12,000
N(12,000)
N11,000
N(11,000)
N78,050
N(78,050)
N33,450
N(33,450)
The Bank is exposed to the US Dollar and Euro currencies. The following table details the sensitivity to a 5% increase and decrease in Naira against the US Dollar and
Euro. Management believe that a 5% movement in either direction is reasonably possible at the reporting date. The sensitivity analyses below include outstanding US Dollar and Euro denominated assets and liabilities. A positive number indicates an increase in profit where Naira strengthens by 5% against the US Dollar and Euro. For a 5% weakening of Naira against the US Dollar and Euro, there would be an equal and opposite impact on profit, and the balance below would be negative.
US DollarN’000
EURON’000
ANNUAL REPORT & ACCOUNTS
2016084
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
3.5.4 Equity and commodity price risk The Bank is exposed to equity price risk by holding investments quoted on the Nigerian Stock Exchange
(NSE) and other non-quoted investments. Equity securities quoted on the NSE is exposed to movement based on the general movement of the all share index and movement in prices of specific securities held by the Bank.
The Bank holds 5,000,000 quoted shares in Universal Insurance Bank Plc with a market value of N2.5 million and 50,000,000 unquoted shares in Nigeria Mortgage Refinance Bank with carrying value of N200million as at year end.
The Bank does not hedge against this risk, hence, these are the exposures to the risk
The Bank does not deal in commodities and is therefore not exposed to any commodity price risk.
The following table details the sensitivity to a 5% increase and decrease in equity prices. Management believe that a 5% movement in either direction is reasonably possible at the reporting date.
Equity price sensitivity analysis
Impact on total comprehensive income
5% increase with all other variables held constant 5% decrease with all other variables held constant
10,375
(10,375)
10,125
(10,125)
3.5.5 Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or
the fair values of financial instruments. The Bank manages this risk by ensuring significant portion of its loans are contracted on fixed interest rate.
2016 N'000
2015N'000
AN
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sit
ive
N'0
00
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
08
7
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
3.5
.7
Inte
res
t R
ate
Se
ns
itiv
ity
T
he
fo
llo
win
g t
ab
le d
em
on
stra
tes
the
se
nsi
tivi
ty t
o a
re
aso
na
ble
po
ssib
le c
ha
ng
e i
n i
nte
rest
ra
tes,
wit
h a
ll o
the
r va
ria
ble
s h
eld
co
nst
an
t, t
o
the
Ba
nk
's i
nco
me
sta
tem
en
ts a
nd
eq
uit
y
N'0
00
As
at
31
De
cem
be
r 2
016
Ra
te S
en
sit
ive
As
se
tsB
an
k p
lace
me
nts
Lo
an
s a
nd
ad
van
ces
5,7
06
41,
64
8
Se
ns
itiv
ity
of
pro
fit
or
los
s &
eq
uit
y
N'0
00
N'0
00
11,4
128
3,2
95
(5,7
06
)(4
1,6
48
)(1
1,4
12)
(83
,29
5)
Ra
te S
en
sit
ive
Lia
bil
itie
sD
ep
osi
tsB
orr
ow
ing
s16
,614
60
63
3,2
28
1,2
12(1
6,6
14)
(60
6)
(33
,22
8)
(1,2
12)
As
at
31
De
cem
be
r 2
015
Ra
te S
en
sit
ive
As
se
tsB
an
k p
lace
me
nts
Lo
an
s a
nd
ad
van
ces
11,0
86
43
,89
82
2,1
72
87
,79
6(1
1,0
86
)(4
3,8
98
)(2
2,1
72
)(8
7,7
96
)
Ra
te S
en
sit
ive
Lia
bil
itie
sD
ep
osi
tsB
orr
ow
ing
s18
,83
02
,99
63
7,6
60
5,9
92
(18
,83
0)
(2,9
96
)(3
7,6
60
)(5
,99
2)
Plu
s 5
Ba
sic
Po
ints
Plu
s 1
0
Ba
sic
Po
ints
Min
us
5
Ba
sic
Po
ints
Min
us
10
Ba
sic
Po
ints
N'0
00
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
08
8
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
3.6
F
air
va
lue
of f
ina
nci
al a
ss
ets
an
d li
ab
ilit
ies
(a)
Fin
an
cia
l in
str
um
en
ts m
ea
su
red
at f
air
va
lue
IF
RS
13
sp
eci
fie
s a
hie
rarc
hy
of
valu
ati
on
te
chn
iqu
es
ba
sed
on
wh
eth
er
the
inp
uts
to
th
ose
va
lua
tio
n t
ech
niq
ue
s a
re o
bse
rva
ble
or
un
ob
serv
ab
le.
O
bse
rva
ble
inp
uts
re
fle
ct m
ark
et
da
ta o
bta
ine
d f
rom
ind
ep
en
de
nt
sou
rce
s; u
no
bse
rva
ble
inp
uts
re
fle
ct t
he
Ba
nk
ma
rke
t a
ssu
mp
tio
ns.
T
he
se
two
typ
es
of i
np
uts
ha
ve c
rea
ted
the
foll
ow
ing
fair
va
lue
hie
rarc
hy:
L
eve
l 1:
Qu
ote
d p
rice
s (u
na
dju
ste
d) i
n a
ctiv
e m
ark
ets
for
ide
nti
cal a
sse
ts o
r li
ab
ilit
ies.
Le
vel
2:
In
pu
ts o
the
r th
an
qu
ote
d p
rice
s in
clu
de
d w
ith
in L
eve
l 1
tha
t a
re o
bse
rva
ble
fo
r th
e a
sse
t o
r li
ab
ilit
y, e
ith
er
dir
ect
ly (
i.e
. a
s p
rice
s) o
r in
dir
ect
ly (i
.e. d
eri
ved
fro
m p
rice
s)
Le
vel 3
: In
pu
ts fo
r th
e a
sse
t or
lia
bil
ity
tha
t are
no
t ba
sed
on
ob
serv
ab
le m
ark
et d
ata
(un
ob
serv
ab
le in
pu
ts)
T
his
hie
rarc
hy
req
uir
es
the
use
of
ob
serv
ab
le m
ark
et
da
ta w
he
n a
vail
ab
le.
Th
e B
an
k c
on
sid
ers
re
leva
nt
an
d o
bse
rva
ble
ma
rke
t p
rice
s in
its
va
lua
tio
ns
wh
ere
po
ssib
le.
Q
uo
ted
eq
uit
y in
str
um
en
t
Le
vel
2 e
qu
ity
secu
riti
es
rela
te t
o s
ecu
riti
es
wh
ich
ha
ve l
imit
ed
le
vel
of
tra
din
g i
n t
he
sto
ck m
ark
et.
U
nq
uo
ted
eq
uit
y in
str
um
en
ts
Le
vel
3 e
qu
ity
secu
riti
es
rela
tes
to in
vest
me
nt
in a
ne
wly
se
t-u
p u
nq
uo
ted
co
mp
an
y, N
ige
ria
n M
ort
ga
ge
Re
fin
an
cin
g C
om
pa
ny
(NM
RC
). T
he
fa
ir
valu
e is
de
term
ine
d t
o b
e e
qu
al t
o it
s co
st a
s th
e f
air
va
lue
ca
nn
ot
be
re
lia
bly
me
asu
red
as
the
re is
no
act
ive
ma
rke
t fo
r th
e in
vest
me
nt.
As
at
the
re
po
rtin
g d
ate
, th
e B
an
k d
oe
s n
ot h
ave
an
y p
lan
to d
isp
ose
the
inve
stm
en
ts a
nd
pla
ns
to h
old
the
inve
stm
en
t fo
r th
e fo
rese
ea
ble
futu
re.
T
he
fa
ir v
alu
e o
f th
e b
orr
ow
ing
s h
ave
be
en
de
term
ine
d u
sin
g t
he
dis
cou
nte
d c
ash
flo
w m
eth
od
(“D
CF
”) u
sin
g t
he
Ce
ntr
al
Ba
nk
of
Nig
eri
a p
rim
e
len
din
g r
ate
at t
he
ye
ar
en
d, t
he
sig
nif
ica
nt o
bse
rva
ble
inp
ut.
T
he
re h
ave
be
en
no
tra
nsf
er
be
twe
en
th
e l
eve
ls.
Le
vel
1N
'00
0L
eve
l 2
N'0
00
Le
vel
3N
'00
0T
ota
lN
'00
0
As
at
31
De
cem
be
r 2
016
As
se
ts m
ea
su
red
at
fair
va
lue
Inve
stm
en
t se
curi
tie
s -
qu
ote
d e
qu
ity
As
se
ts f
or
wh
ich
fa
ir v
alu
e i
s d
iscl
os
ed
Lo
an
s a
nd
ad
van
ces
Fin
an
cia
l in
vest
me
nts
- h
eld
-to
-ma
turi
ty
- - - -
2,5
00 - -
2,5
00
-
3,0
95,6
27
336,8
53
3,4
32,4
80
2,5
00
3,0
95,6
27
336,8
53
3,4
34,9
80
As
at
31
De
cem
be
r 2
015
As
se
ts m
ea
su
red
at
fair
va
lue
Inve
stm
en
t se
curi
tie
s -
qu
ote
d e
qu
ity
As
se
ts f
or
wh
ich
fa
ir v
alu
e i
s d
iscl
os
ed
Lo
an
s a
nd
ad
van
ces
- - -
2,5
00 -
2,5
00
-
4,6
79,0
21
4,6
79,0
21
2,5
00
4,6
79,0
21
4,6
81,5
21
Lia
bil
itie
s f
or
wh
ich
fa
ir v
alu
e i
s d
iscl
os
ed
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
08
9
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
(b)
S
et
ou
t b
elo
w i
s a
co
mp
ari
son
by
cla
ss o
f th
e c
arr
yin
g a
mo
un
ts a
nd
fa
ir v
alu
es
of
the
Co
mp
an
y’s
fin
an
cia
l in
stru
me
nts
th
at
are
ca
rrie
d i
n t
he
fi
na
nci
al
sta
tem
en
ts.
(i)
C
ash
an
d b
ala
nce
s w
ith
ce
ntr
al b
an
ks
C
ash
an
d b
ala
nce
s w
ith
ce
ntr
al b
an
k r
ep
rese
nt c
ash
he
ld w
ith
ce
ntr
al b
an
k o
f Nig
eri
a. T
he
fair
va
lue
of t
he
se b
ala
nce
s is
the
ir c
arr
yin
g a
mo
un
ts.
(ii)
Eq
uit
y se
curi
tie
s
Th
e fa
ir v
alu
e o
f qu
ote
d e
qu
ity
secu
riti
es
are
de
term
ine
d b
y re
fere
nce
to q
uo
ted
pri
ces
(un
ad
just
ed
) in
act
ive
ma
rke
ts fo
r th
e in
stru
me
nt.
(iii
)
Lo
an
s a
nd
ad
van
ces
L
oa
ns
an
d a
dva
nce
s a
re c
arr
ied
at
am
ort
ise
d c
ost
ne
t o
f pro
visi
on
for
imp
air
me
nt.
Th
e e
stim
ate
d fa
ir v
alu
e o
f lo
an
s a
nd
ad
van
ces
rep
rese
nts
th
e
dis
cou
nte
d a
mo
un
t o
f e
stim
ate
d f
utu
re c
ash
flo
ws
exp
ect
ed
to
be
re
ceiv
ed
. E
xpe
cte
d c
ash
flo
ws
are
dis
cou
nte
d a
t cu
rre
nt
ma
rke
t ra
tes
to
de
term
ine
fair
va
lue
. (i
v)
Oth
er
ass
ets
F
air
va
lue
of o
the
r a
sse
ts a
pp
roxi
ma
tes
to th
e c
arr
yin
g a
mo
un
t du
e to
the
ir s
ho
rt te
rm n
atu
re.
(v)
H
eld
-to
-ma
turi
ty fi
na
nci
al i
nve
stm
en
ts
Th
e fa
ir v
alu
e o
f th
e h
eld
-to
-ma
turi
ty fi
na
nci
al i
nve
stm
en
t ha
s b
ee
n d
ete
rmin
ed
usi
ng
the
yie
ld r
ate
as
qu
ote
d o
n th
e F
MD
Q.
(vi)
D
ue
to c
ust
om
ers
, oth
er
lia
bil
itie
s a
nd
bo
rro
win
gs
T
he
est
ima
ted
fa
ir v
alu
e o
f d
ep
osi
ts w
ith
no
sta
ted
ma
turi
ty, w
hic
h in
clu
de
s n
on
-in
tere
st b
ea
rin
g d
ep
osi
ts, i
s th
e a
mo
un
t re
pa
yab
le o
n d
em
an
d.
Th
e e
stim
ate
d f
air
va
lue
s o
f fi
xed
in
tere
st-b
ea
rin
g d
ep
osi
ts a
nd
bo
rro
win
gs
are
de
term
ine
d u
sin
g a
dis
cou
nte
d c
ash
flo
w m
od
el
ba
sed
on
a
curr
en
t yie
ld c
urv
e a
pp
rop
ria
te fo
r th
e r
em
ain
ing
term
to m
atu
rity
.
(c )
F
air
va
lua
tio
n m
eth
od
s a
nd
as
su
mp
tio
ns
Ca
rryi
ng
va
lue
Fa
ir v
alu
e
Du
e f
rom
ba
nk
sL
oa
ns
an
d a
dva
nce
sF
ina
nci
al
inve
stm
en
ts -
ava
ila
ble
-fo
r-sa
leF
ina
nci
al
inve
stm
en
ts -
he
ld-t
o-m
atu
rity
Oth
er
ass
ets
Ca
sh b
ala
nce
s w
ith
ce
ntr
al
ba
nk
1
,30
4,7
14
7
,10
3,4
78
2
02
,50
0
-
17
7,8
35
10
1,0
46
89
6,0
09
3,0
95
,62
7
20
7,5
00
3
36
,85
3
33
1,8
30
10
1,0
46
1,3
04
,714
4,6
79
,02
1
2
02
,50
0
-
17
7,8
35
10
1,0
46
8
,88
9,5
73
4,9
68
,86
5
6,4
65
,116
Du
e t
o c
ust
om
ers
Oth
er
lia
bil
itie
sB
orr
ow
ing
sD
ue
to
th
e N
ati
on
al
Ho
usi
ng
Fu
nd
5
,36
1,3
93
18
8,0
20
11
2,0
49
4
24
,26
4
5
,32
8,6
49
2
05
,35
2
2
4,2
45
3
98
,54
1
5,3
61,
39
3
188
,02
0
112
,04
9
42
4,2
64
89
6,0
09
6
,90
0,0
80
20
7,5
00
33
6,1
63
33
1,8
30
101,
04
6
8,7
72
,62
8
5,3
28
,64
9
2
05
,35
2
2
4,2
45
39
8,5
41
5,9
56
,78
7
6
,08
5,7
26
5,9
56
,78
7
6,0
85
,72
6
20
15N
'00
02
016
N'0
00
20
15N
'00
02
016
N'0
00
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
09
0
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
3.7
C
ap
ita
l ma
na
ge
me
nt
T
he
Ba
nk
ob
ject
ive
s w
he
n m
an
ag
ing
ca
pit
al,
wh
ich
is a
bro
ad
er
con
cep
t th
an
the
‘eq
uit
y’ o
n th
e fa
ce o
f th
e s
tate
me
nt o
f fin
an
cia
l po
siti
on
, are
:
•
T
o c
om
ply
wit
h th
e c
ap
ita
l re
qu
ire
me
nts
se
t by
the
re
gu
lato
rs o
f th
e b
an
kin
g m
ark
ets
wh
ere
the
Ba
nk
op
era
tes;
•
T
o s
afe
gu
ard
th
e B
an
k’s
ab
ilit
y to
co
nti
nu
e a
s a
go
ing
co
nce
rn s
o t
ha
t it
ca
n c
on
tin
ue
to
pro
vid
e r
etu
rns
for
sha
reh
old
ers
an
d b
en
efi
ts fo
r o
the
r st
ak
eh
old
ers
; an
d
•
T
o m
ain
tain
a s
tro
ng
ca
pit
al b
ase
to s
up
po
rt th
e d
eve
lop
me
nt o
f its
bu
sin
ess
.
C
ap
ita
l a
de
qu
acy
an
d t
he
use
of
Re
gu
lato
ry C
ap
ita
l a
re m
on
ito
red
da
ily
by
the
Ba
nk
’s m
an
ag
em
en
t, e
mp
loyi
ng
te
chn
iqu
es
ba
sed
on
th
e C
BN
g
uid
eli
ne
. Th
e r
eq
uir
ed
info
rma
tio
n is
file
d w
ith
the
CB
N o
n a
qu
art
erl
y b
asi
s.
T
he
Ba
nk
ma
inta
ins
a r
ati
o o
f T
ota
l R
eg
ula
tory
Ca
pit
al
to i
ts r
isk
-we
igh
ted
ass
ets
(th
e ‘
Ba
sel
rati
o’)
ab
ove
a m
inim
um
le
vel
req
uir
ed
by
the
re
gu
lato
ry a
uth
ori
ty w
hic
h ta
ke
s in
to a
cco
un
t th
e r
isk
pro
file
of t
he
Ba
nk
.
T
he
re
gu
lato
ry c
ap
ita
l re
qu
ire
me
nts
are
str
ictl
y o
bse
rve
d w
he
n m
an
ag
ing
eco
no
mic
ca
pit
al.
Th
e B
an
k’s
re
gu
lato
ry c
ap
ita
l, c
om
pri
sin
g o
f th
e
foll
ow
ing
two
tie
rs, i
s m
an
ag
ed
by
Ris
k M
an
ag
em
en
t, T
rea
sury
an
d S
tra
teg
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sh
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ua
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stru
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r sa
le.
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
09
1
NO
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S T
O T
HE
F
INA
NC
IAL
ST
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EM
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Co
nt’
d3
1 D
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R 2
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T
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ta
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the
co
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n o
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ap
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os
of
the
Ba
nk
fo
r th
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nd
ed
31
De
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r 2
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uri
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f th
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rna
lly
imp
ose
d c
ap
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qu
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to w
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.
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s w
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no
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in t
he
Ca
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de
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re
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20
16
N'0
00
20
15N
'00
0
ANNUAL REPORT & ACCOUNTS
2016092
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
4.0 Operating Segments
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit (or loss) before income taxes, as included in the internal management reports that are reviewed by the Bank’s CEO. The CEO is considered the chief operating decision maker in the Bank. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within this industry. Inter-segment pricing is determined on an arm’s length basis.
4.1 Services from which reportable segments derive their revenues
Information reported to the chief operating decision maker (the CEO) for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Bank's reportable segments under IFRS 8 are therefore as follows.
Mortgage banking Investing banking Retail banking
4.2 Segment revenues and results
The following is an analysis of the Bank’s revenue and results from continuing operations by reportable segment.
As at 31 December 2016Gross earningsDerived from external customers Interest and similar expenseProfit on disposals of non-current assets held for sale
1,045,283(12,122)
-
127,917(326,836)
-
29,324(5,447)
-
2,903 -
13,494
1,205,427(344,405)
13,494
Total operating income / (loss) 1,033,161 (198,919) 23,877 16,397 874,516
Expenses:Impairment chargesPersonal expensesDepreciationAmortisationOther operating expenses
67,121290,57346,27016,572
326,965
Total expenses 747,501 170,741 90,717 - 1,008,959
Segment profit / (loss) 285,660 (369,660) (66,840) 16,397 (134,443)
Income tax expense (33,554) (33,554)
Loss for the year (167,997)
Total assets 9,683,048 2,387,627 382,099 - 12,452,774
Total liabilities 639,704 4,271,216 1,045,867 57,720 6,014,507
34,66558,1159,2543,314
65,393
-
38,7436,1692,210
43,595
-
- -
- -
101,786387,431
61,69322,096
435,953
Mortgage banking
N'000
Investment banking
N'000
Retail banking
N'000Unallocated
N'000Total
N'000
ANNUAL REPORT & ACCOUNTS
2016093
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
For the purposes of monitoring segment performance and allocating resources between segments:
* All assets are allocated to reportable segments other than ‘other financial assets’, and current and deferred tax assets. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments; and
* All liabilities are allocated to reportable segments other than borrowings, ‘other financial liabilities’, current and deferred tax liabilities. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets.
4.3 Geographical information The Bank operates within Nigeria and does not have operations outside the country, therefore no
reporting has been done based on geographical segment.
As at 31 December 2015Gross earningsDerived from external customers Interest and similar expenseProfit on disposals of non-current assets held for sale
1,037,797(59,918)
-
221,721(369,751)
-
27,333(6,850)
-
3,472 -
24,507
1,290,323(436,519)
24,507
Total operating income / (loss) 977,879 (148,030) 20,483 27,979 878,311
Expenses:Impairement chargesPersonal expensesDepreciationAmortisationOther operating expenses
48,411309,346
49,42514,217
415,573
5,75861,8699,8852,84383,115
- 41,2466,5901,896
55,410
-
- -
- -
54,169412,46165,90018,956
554,097
Total expenses 836,972 163,470 105,141 - 1,105,583
Segment profit / (loss) 140,908 (311,500) (84,658) 27,979 (227,272)
Income tax benefit 282,766 282,766
Profit for the year 55,494
Total assets 10,042,069 2,341,764 395,483 - 12,779,316
Total liabilities 658,932 4,270,544 1,156,250 87,326 6,173,052
Mortgage banking
N'000
Investment banking
N'000
Retail banking
N'000Unallocated
N'000Total
N'000
ANNUAL REPORT & ACCOUNTS
2016094
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Loans and advancesCash and short term fundsFinancial investments - held-to-maturity
832,950 114,12213,795
877,955218,016
3,705
960,867 1,099,676
Due to customersBorrowings
332,283 12,122
376,601 59,918
344,405 436,519
Netherlands Development Finance Company (FMO)
5.0 Interest and similar income
Interest income on loans and advances to customers includes interest income on impaired financial assets, recognised using the rate of effective interest used to discount the future cash flows for the purpose of measuring the impairment charge. This amounted to N107,069,000 for 2016 (2015: N162,716,000 ).
6.0 Interest and similar expense
The interest on borrowings relates to loan obtained from Netherlands Development Finance Company (FMO) and Nigeria Mortgage Refinancing Company.
Mortgage fees Legal Fees
212,333 815
159,842 343
213,148 160,185
7.0 Fee and commission income
Rental income (Note 34)Foreign exchange gainOther incomeProfit on sale of property and equipment
1,304 184
29,324 600
3,129 49
27,284 -
31,412 30,462
8.0 Other Operating income
Other income consists of income from e-payments, commission on turnover (COT) and other operational income.
2016 N'000
2015N'000
2016 N'000
2015N'000
2016 N'000
2015N'000
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016095
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
9.0 Impairment charge on loans and advances
Wages, salaries and other staff costsRetirement contribution plan
363,385 24,046
386,916 25,545
387,431 412,461
10.0 Personnel Expenses
The provision no longer required relate to doubtful loans and advances which the Bank has been able to recover from the customers during the year and arising from the revaluation of the collateral assets for some of the loans and advances.
The net impairment charge for loans and advances comprises:Collective impairment (Note 16.1)Individual impairment (Note 16.1)Provision no longer required (Note 16.1)
28,843 56,177
(17,899)
84,915 232,380
(268,884)
67,121 48,411 At the end of the year
11.0 Other operating expenses Directors remuneration Subscriptions, publications, stationeries, and communications
Property and equipment repairs and maintenance Other assets written off Insurance expenses Electricity and gas Net foreign exchange loss Deposit insurance commission Auditors remuneration Lease payments recognised as an operating lease expense Security costs Advertising expenses Bank charges Bad debt written off Medical expenses Other expenses
78,354
65,755 38,547
- 32,555 27,715
- 21,906 12,000 7,808 8,775 7,345 4,476
681 24,401
105,635
435,953 554,097
77,821 57,155
42,621 37,068 32,882 32,232 23,549 21,007 12,000 7,808 7,194 6,525 7,857
- 24,620
163,758
Other expenses is made up of other operating expenses such as rates, staff training and travelling expenses.
Impairment on other assets (Note 18.1) 34,665 5,758
9.1 Impairment charge on other assets
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016096
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
12.1 Current income tax for the year Income tax Tax assessment of prior year
33,554
-
35,297
40,853
33,554 76,150 Total Current Income Tax Expense
12.2 Reconciliation of effective tax rate The effective income tax rate for 2016 is -25% (2015: -38%).
12. TAXATION
-
(358,916)
33,554 (282,766) Income tax (expense) / benefit
The Bank is assessed on minimum tax for 2016 in compliance with the provision of the Company Income Tax Act CAP 21 Cap C21 LFN 2004 as amended, while Education tax charge is based on the provisions of the
Education Tax Act CAP E4 LFN 2004 as amended. Where in any year of assessment the ascertainment of total assessable profits from all sources of a Bank
results in a loss or where a Bank’s ascertained total profits results in no tax payable or tax payable which is less than the minimum tax there shall be levied and paid by the Bank, the minimum tax as prescribed in the subsection (2) of this sections. The minimum tax was assessed as the 0.5 per cent of net assets and 0.125 per cent of turnover above 500,000 being the highest of the four options.
12.2 Reconciliation of effective tax rate - Continued Loss before income tax
Income tax using the domestic Corporation tax rate 30% (2015: 30%)
Income not subject to tax Non-deductible expenses Tax assessment of prior year Capital gains tax Reversal of temporary difference Effect of minimum tax floor
(134,443)
(40,333)
(53,011) 46,349
- --
80,549
33,554 (282,767)
(227,272)
(68,182)
(7,352)52,339 40,853
2,510 (358,916)
55,981
2016 N'000
2015N'000
2016 N'000
2015N'000
Deferred tax (net)Relating to origination and reversal of temporary differences
ANNUAL REPORT & ACCOUNTS
2016097
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
12.3 The movement in the current income tax payable is as follows:
87,32633,554
1,499(15,000)(49,659)
55,72376,150
- (7,384)
(37,163)
57,720 87,326 At end of the year
13.0 (Loss) / earnings per share attributable to ordinary equity holders (Kobo) - Basic and Diluted Basic
(167,997)
4,200,00055,494
4,200,000
(Loss) / profit after income tax attributable to the shareholders (N'000)
Weighted average number of shares ('000)
(4.00) 1.32 (in kobo)
Basic (loss) / earnings per share has been calculated based on (loss)/ profit after tax attributable to the shareholders during the year and the weighted average number of issued share capital of 4,200,000,000 at 31 December of every year.
Diluted There was no diluting instruments as at the reporting date, hence diluted (loss) / earnings per share is the
same as basic (loss) / earnings per share.
2016 N'000
2015N'000
2016 N'000
2015N'000
At beginning of the yearIncome tax expenseCapital gains tax payableWithholding tax credit receivedPayments during the year
ANNUAL REPORT & ACCOUNTS
2016098
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
14. Cash on hand Cash
11,037
15. Due from banks
250 86,025
809,734
250 153,829
1,150,635
3,671
896,009 1,304,714
14.1 Cash balances with central bank Deposits with CBN
101,046
101,046
Rate range analysis: Balances with other banks Fixed placements with banks 3.5% to 17.5% 3.5% to 15%
The balance with FMBN is a mandatory specified deposit required for the National Housing Fund on-lending loan. Balance with other banks earns interest at floating rates based on daily bank deposit rates. Fixed placements with banks are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Bank, and earn interest at the respective fixed placement rates.
The Bank has restricted cash balances with the Central Bank of Nigeria and the FMBN. This balance is made up of CBN and FMBN cash reserve requirement. The cash reserve ratio represents a mandatory cash deposit which should be held with the Central Bank of Nigeria as a regulatory requirement. Restricted deposits with Central Bank and Federal Mortgage Bank are not available for use in the Bank's day-to-day operations.
16. Loans and advances
6,615,921 729,323 390,880
6,337,372 892,896 644,277
Mortgages Advances National Housing Fund
7,736,124 7,874,545
272,294 563,750
243,451 527,616
Collective impairment allowance Specific impairment allowance
836,044 Total impairment allowance for uncollectibility
6,900,080 7,103,478 Total
See Note 15 for nature of deposits with CBN.
2016 N'000
2015N'000
Balances with Federal Mortgage Bank of Nigeria ("FMBN")Balances with other banksFixed placements with banks
771,067
ANNUAL REPORT & ACCOUNTS
2016099
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
16.1 The movement of allowance for impairment: Collective impairment allowance
At beginning of the year Charge for the year (Note 9)
243,451 28,843
158,536 84,915
272,294 243,451 At end of the year
Specific impairment allowance
527,616 - 2,144 - 17,899
56,177
598,643 - 34,523 - 268,884
232,380
At the beginning of the year Write off Allowance no longer required (Note 9) Charge for the year (Note 9)
563,750 527,616 At the end of the year
836,044 771,067 Total impairment allowance
16.2 Analysis by Sector (gross) Construction loans Loans and advances Mortgage FMBN loan Mortgage loans NHF loans School loans Staff mortgage loans Staff personal loans Staff share loans
717,036
221,385 5,254
5,497,308 408,473 301,332 78,168
590 506,578
7,736,124 7,874,545
801,136
374,258 10,361
5,286,618 462,604 315,985 85,895
6,805 530,883
16.3 Analysis by security (gross) Secured against real estate Other security Unsecured
6,668,649
658,910 408,565
7,736,124 7,874,545
6,425,900
714,149 734,496
Total
Other security consists of assets with other securities such as equities and cash held in lien.
The rates are average rate of interests per annum for the loans and advances within the different tenor ranges.
Tenor 1 to 5 years 6 to 10 years 11 to 15 years > 15 years
7,736,124
141086
5,563,310
720,733 767,207 684,874
16 10 8 6
5,894,067
788,317 453,873 738,288
16.4 Loans and advances general terms and conditions
7,874,545
2016 N'000
2015N'000
2015
Rate N'000
2016
Rate N'000
ANNUAL REPORT & ACCOUNTS
2016100
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
207,500 202,500
Unquoted equities - (note 17.2) 205,000 200,000
Unquoted investments
Quoted investments are stated at fair value. The unquoted equity are measured at cost as their fair value cannot be measured reliably.
17.1 Specific allowances for impairment on AFS
Quoted equities 16,798
Balance at beginning of year Written off
16,798 -
22,102 (5,304)
16,798 16,798 Balance at end of year
17.2 Movements in available for sale investment (unquoted)
Balance at beginning of year Investment write-off Additions
200,000 -
5,000
205,304 (5,304)
-
205,000 200,000 Balance at end of year
The additions in prior year represents purchase of 2.85% of equity in Nigerian Mortgage Refinancing Company.
The Bank derecognised its investments in Abbey Real Estate Construct Limited amounting to N5,304,000 during the year. The Bank has written off this investment as it does not expect future economic benefit from it.
17. Financial investments - available-for-sale ("AFS") Quoted investments
Quoted equities Specific impairment allowance
19,298 (16,798)
19,298 (16,798)
2016 N'000
2015N'000
16,798
17.3 Financial investments - held-to-maturity
Treasury bills 336,163 -
17.4 Movements in held-to-maturity
Balance at beginning of year Additions Interest income
- 322,368
13,795
- -
336,163 -
ANNUAL REPORT & ACCOUNTS
2016101
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
18. Other assets
86,076 330,738
5,313 36,202
(40,423)
107,738 151,544
7,595 24,454 (5,758)
PrepaymentsBalance with other financial institutionsStationery and stocksSundry receivablesAllowance for impairment of other assets - (note 18.1)
417,906 285,573
As at 31 December 2016 and 2015, the impairment loss relates to the balance with other financial institutions. See note 18.1 below.
Sundry receivable is mainly made up of witholding tax receivable and fees receivable.
Other assets are mainly due within 3 months of the year end hence their carrying value approximate to their fair value.
18.1 Movement of allowance for impairment of other assets
Balance at the beginning of yearWritten offRecoveredProvision for the year (Note 9.1)
5,758 - -
34,665
19,503(17,123)(2,380)
5,758
40,423 5,758
2016 N'000
2015N'000
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
102
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AN
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AL
RE
PO
RT
&
AC
CO
UN
TS
2016
103
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
19
Pro
pe
rty
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er
20
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the
ne
t ca
rryi
ng
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nt
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et
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lio
n (
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illi
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n w
hic
h t
he
acc
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ula
ted
de
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cia
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n a
s a
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20
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as
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lio
n (
20
14:
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lio
n).
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31 D
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mb
er
2015
69
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20
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50
52
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6
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t b
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1
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
104
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
20
.0
Inta
ng
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as
se
ts
Th
e in
tan
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le a
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ts c
on
sist
wh
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an
k's
co
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ute
r so
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are
. Th
e a
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ts w
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re m
ate
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l in
clu
de
: Fin
no
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wit
h c
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il (
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-ba
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h c
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mo
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t o
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nt o
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6(8
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0)
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55
,413
ANNUAL REPORT & ACCOUNTS
2016105
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
2016 N'000
2015N'000
As at 1 January Repossessed assets Disposal
2,539,761 -
(136,098)
3,040,15023,004
(523,393)
2,403,663 2,539,761
The movement in the year relates to assets repossessed from customers that defaulted on loans and advances. The collateral properties repossessed are immediately put in the process of being disposed off as it is not the Bank's business to keep these properties.
The circumstance beyond management’s control is the liquidity crisis in the economy.
In the year ended 31 December 2013, the CBN stipulated that the Bank should commence disposal of all real estate developments in their books. Consequently, the Bank commenced plans to dispose off these assets. The criteria to classify the assets as non-current assets held for sale were first met as at 31 December 2013. Sale of all the assets have not been completed at the year end due to circumstances beyond the Bank's control. The Bank expects to sell the assets within the next 12 months.
21. Non-current assets held for sale
22 Due to customers Demand deposits Savings deposits Term deposits
539,686
1,001,087 3,787,876
361,819
1,025,399 3,974,175
5,328,649 5,361,393
Within one year More than one year
5,160,662 167,987
4,925,943 435,450
5,328,649 5,361,393
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016106
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
23.0 Other liabilities
Accounts payable Rent payable Information technology levy Other liabilities Staff pension contribution Rent received in advance (Note 34)
176,412 917
2,412 5,331
722 19,558
158,385 17,167 2,412 8,796
967 293
205,352 188,020
Terms and Conditions of other liabilities Accounts payable and other liabilities are made up of various expenses such as audit fee, rates, etc. which
have been incurred during the year but remained unpaid as at the year end. The Bank normally settles such expenses within one to three months from the day of receipt of service to which it relates.
The rent payable is due on demand.
Unclaimed dividend represents dividend yet to be claimed by investors in relation to dividend declared in the past. These are due on demand.
Information technology levy represents 1% of profit before tax in line with section 12(2) of the NITDA Act which became effective in 2007.
The Bank and its employees make a joint contribution of 10% and 8% respectively, on each of the qualifying employee’s salary, housing and transport allowance to each employee's retirement savings account maintained with their nominated pension fund administrators.
The Bank's liabilities in respect of the defined contribution scheme are charged against the profit of the year in which they become payable. Payments are made to pension fund administration companies who are financially independent of the Bank.
Nigeria Mortgage Refinancing Company Netherlands Development Finance Company
21,944 2,301
- 112,049
The Bank has not had any defaults of principal, interest or other breaches with respect to their borrowings during the year.
24.0 Borrowings
Current Non-current
2,301 21,944
112,049 -
24,245 112,049
Defined contribution scheme Pension liability
722
967
2016 N'000
2015N'000
2016 N'000
2015N'000
Netherlands Development Finance Company 24,245 112,049
ANNUAL REPORT & ACCOUNTS
2016107
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
On -lending funds 398,541 424,264
The funds are obtained from the Federal Mortgage Bank of Nigeria (“FMBN”) for the purpose of on-lending of this fund to qualifying members of the National Housing Fund loan scheme. The funds are obtained at 4% per annum from FMBN and issued to customers at 6% per annum.
25.0 Due to the National Housing Fund
At beginning of year Arising during the year (Note 12.1)
- -
358,916 (358,916)
- -
26.1 Deferred tax liabilities are attributable to the following:
Accelerated tax depreciation Investments propertiesAllowances for loan losses Other assetsUnutilised capitalised allowanceTax loss carried forwardUnrecognised deferred tax assets
152,747204,777(87,134)
12,127(137,638)(235,838)
90,959
137,750206,276(77,904)
9,150(89,359)
(237,687)51,774
- -
2016 N'000
2015N'000
The principal of N21,718,235 (2015: Nnil) relates to outstanding balance of refinancing loan granted by Nigerian Mortgage Refinancing Company (NMRC) in November 2016. The principal and interest are repayble over 15 years on monthly basis. The interest rate is 15.5% per annum.
The principal of Nnil (2015: N112,049,000) relates to outstanding balance on the two tranches of Naira & Dollar denominated facilities granted by Netherlands Development Finance Company (FMO) between March 2010 and April 2011. The principal amount is repayable quarterly in 20 equal instalments commencing from 15 December 2011 while the interest is payable quarterly on the 15th of March, June, September and December every year at 8.87% and 17.7% per annum, respectively. The naira denominated loan was fully settled in 2016 and the outstanding balance of N2,301,000 balance relates to interest payable.
Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 30% (2015: 30%).
26.0 Deferred tax liabilities
ANNUAL REPORT & ACCOUNTS
2016108
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
26.2 Movements in temporary differences during the year:
Accelerated depreciationInvestments propertiesAllowances for loan losses Other assetsUnutilised capitalised allowanceTax loss carried forwardUnrecognised Deferred tax asset
14,997(1,499)(9,230)
2,977(48,279)
1,84939,185
152,747204,777(87,134)
12,127(137,638)(235,838)
90,959
- -
Recognised in profit or loss
N'000
At beginning of year
N'000
137,750206,276(77,904)
9,150(89,359)
(237,687)51,774
-
At end of year
N'000
27.0 Share capital
7 billion ordinary shares of 50 kobo each 3,500,000 3,500,000
27.1 Authorised
4.2 billion ordinary shares of 50k each 2,100,000 2,100,000
27.2 Issued and fully paid
28.0 Share premium There was no movement in share premium during 2016 and 2015.
Balance at beginning of year (Loss)/profit for the year Transfer to regulatory risk reserve
526,626(167,997)(164,953)
552,68655,494
(81,554)
29.0 Retained earnings
193,676 526,626 Balance at end of year
30.0 Statutory reserve Undistributable earnings required to be kept by the nations central bank in accordance with national law.
At the beginning of the year Transfer from profit and loss account
298,440 -
298,440 -
298,440 298,440 At end of the year
2016 N'000
2015N'000
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016109
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
The available for sale reserve shows the movements regarding gains and losses on available for sale financial instruments. The fair value change has been reclassified to profit or loss in prior years, hence, the reserve is Nnil at 31 December 2016 (2015: Nnil).
31.0 Available for sale reserve
11,037
895,759
3,671
1,304,464
906,796 1,308,135
32.0 Additional cash flow information
The deposits with the Central Bank and FMBN (see Notes 14 and 15) are not available to finance the Bank’s day–to–day operations and, therefore, are not part of cash and cash equivalents.
Net change in investment properties Net change in loans and advances to customers Net change in other assets Net change in cash reserve with CBN Repossessed assets
- 136,277
(152,333) - -
- (331,909)(186,621)(85,298)(23,004)
(16,056) (626,832)
32.1 Change in operating assets
Net change in due to customers Net change in due to NHF Net change in other liabilities
(32,744)(25,723)
17,332
181,304(21,009)
14,900
(41,135) 175,195
32.2 Change in operating liabilities
Depreciation AmortisationFinancial investments - held-to-maturityImpairment charge on loans and advancesProvision on loans and advances no longer requiredForeign exchange gain
61,69322,096
(13,795)85,020
(17,899)(184)
65,90018,956
- 317,294
(268,884)(49)
136,931 133,217
32.3 Other non-cash items included in loss before tax
Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by section 16(1) of the Banks and Other Financial Institutions Act of Nigeria, an appropriation of 20% of profit after tax is made if the statutory reserve is less than paid-up share capital and 10% if the statutory reserve is greater than the paid-up capital.
In view of loss made during the year, no appropriation is made.
2016 N'000
2015N'000
Cash and cash equivalentsCash on hand (note 14)Due from banks (note 15)
ANNUAL REPORT & ACCOUNTS
2016110
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
Profit on sale of property and equipmentGain on sale of non-current assets held for sale
(600)(13,494)
- (24,507)
32.4 Gain from investing activities
(14,094) (24,507)
33.1 Guarantees and other commitments
33.0 Contingencies and commitments
33.2 Capital commitments
At the year end, the Bank had no capital commitment.
33.3 Claims and litigations
The Bank in the ordinary course of business is presently involved in four (2015: two) claims and litigations relating to customer disputes. Maximum exposure for the Bank is N216,400,000 (2015: N150,000,000). Management do not believe these claims and litigations will be successful.
Bank as lessee The Bank entered into commercial leases for premises. These leases have an average life of between
three and five years. There are no restrictions placed upon the lessee by entering into these leases.
34.0 Operating leases
There is no separate amount for minimum lease payment, contingent rents and sublease payment. None of the lease was sub-leased during the year. There is no restriction imposed by the lease arrangement.
Due within 1 year Due 2-5 years
2,3085,500
1,5385,500
7,808 7,038
The Bank has received rental income for properties which range between 1 and 2 years which have been capitalised in other liabilities as N19,558,000 (2015: N293,000) .
Bank as lessor
Guarantees and other commitments
There is a lien on cash collateral of N100m (2015: N100million) invested in fixed term deposit.
The Bank has an agreement with a consultant to strategically support the Bank's 5 year transformation agenda and initiatives. The value of the contract is N15,000,000 (2015: Nnil).
The Bank has settled the FMO loan. However, certain clauses within the contract are still being discussed. Based on management's assessment, no further liability will crystalize from this transaction.
2016 N'000
2015N'000
The total rent recognised as income during the year is N1,304,000 (2015: N3,129,000).
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
111
NO
TE
S T
O T
HE
F
INA
NC
IAL
ST
AT
EM
EN
TS
Co
nt’
d3
1 D
EC
EM
BE
R 2
016
35
. R
ela
ted
pa
rty
dis
clo
su
res
A
n a
na
lysi
s o
f in
sid
er
rela
ted
cre
dit
gra
nte
d t
o c
om
pa
nie
s a
nd
ind
ivid
ua
ls w
ith
wh
om
th
e k
ey
ma
na
ge
me
nt
of t
he
Ba
nk
are
re
late
d o
r in
wh
ich
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ke
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ave
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late
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tere
sts
are
as
sta
ted
be
low
. Cre
dit
fa
cili
tie
s w
ere
pro
vid
ed
by
the
Ba
nk
to
re
late
d p
art
ies
on
co
mm
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ial t
erm
s.
Lo
an
s a
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ad
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to r
ela
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pa
rtie
s a
t th
e s
tate
me
nt
of
fin
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osi
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n d
ate
, w
hic
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re a
ll p
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am
ou
nte
d t
o N
1,2
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illi
on
(2
015
: N
1,5
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illi
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).
Fa
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typ
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In
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Co
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me
of
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20
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N'0
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20
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00
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N'0
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In
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curi
tyR
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hip
to
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Ba
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irm
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ha
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ire
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ite
Oa
k R
ea
l E
sta
te L
imit
ed
So
me
dir
ect
ors
of
the
B
an
k o
wn
sh
are
s in
th
e
com
pa
ny
-
-
29
5,4
55
21,
22
7
101,
77
8
7,9
67
813
,62
8
1,2
40
,05
5
4,3
74
16,4
24
32
0,1
35
29
,09
0
43
8,1
64
13,5
97
74
6,1
28
1,5
67
,913
30
6
1,7
99
33
,77
1
4,6
39
79
,13
2
43
0
68
,00
0
188
,07
7
1,5
14
3,8
01
39
,39
2
6,6
49
93
,17
5
77
6
62
,99
8
20
8,3
06
Th
e B
an
k r
en
ts p
rop
ert
ies
fro
m t
he
Ch
air
ma
n f
or
two
of
its
bra
nch
es.
Th
e r
en
tal
cha
rge
fo
r th
e c
urr
en
t ye
ar
is N
5,5
00
,00
0 (
20
15:
N5
,50
0,0
00
) a
nd
th
e
am
ou
nt p
aya
ble
at t
he
ye
ar
en
d is
N9
16,6
68
(20
15: N
17,1
66
,66
6).
Te
rms
an
d c
on
dit
ion
s o
f tra
ns
act
ion
s w
ith
re
late
d p
art
ies
Th
e a
bo
ve-m
en
tio
ne
d o
uts
tan
din
g b
ala
nce
s a
rose
fro
m th
e o
rdin
ary
co
urs
e o
f bu
sin
ess
. Th
e in
tere
st r
ate
s ch
arg
ed
to a
nd
by
rela
ted
pa
rtie
s a
re a
t no
rma
l co
mm
erc
ial r
ate
s. O
uts
tan
din
g b
ala
nce
s a
t th
e y
ea
r-e
nd
are
fu
lly
secu
red
fo
r th
e y
ea
r e
nd
ed
31
De
cem
be
r 2
016
an
d 2
015
, all
re
late
d p
art
y fa
cili
tie
s w
ere
p
erf
orm
ing
at y
ea
r e
nd
an
d a
s su
ch th
ere
we
re n
o a
mo
un
ts p
rovi
de
d fo
r.
ANNUAL REPORT & ACCOUNTS
2016112
NOTES TO THE FINANCIAL STATEMENTS Cont’d31 DECEMBER 2016
35.1 Key management compensation
Salaries and other short term employee benefits Post -employment benefits Ex-gratia
57,4763,595
-
44,3613,8851,150
61,071 49,396
Fees and sitting allowances Executive compensation Defined contribution scheme Other directors expenses
13,34557,476
3,5954,538
10,25063,686
3,88527,899
78,954 105,720
35.2 Directors emoluments
There were no events after reporting date which could have a material effect on the financial position of the Bank as at 31 December 2016 and profit attributable to equity holders on that date which have not been adequately adjusted for or disclosed.
36.0 Events after reporting date
No dividend was paid or proposed for the year or prior year.
37.0 Dividend payable
We are not aware of any instances of non-compliance with CBN regulations during the year ended 31 December 2016 and no penalties were paid in the year (2015: None).
38.0 Compliance with banking regulations
2016 N'000
2015N'000
ANNUAL REPORT & ACCOUNTS
2016113
STATEMENT OF VALUE ADDEDFOR THE YEAR ENDED 31 DECEMBER 2016
Gross Income Interest Expense
Applied to pay:
Value added represents the additional wealth which the Bank has been able to create by its own and employees efforts. This statement shows the allocation of that wealth among the employees, shareholders, government and that retained for the future creation of more wealth.
Impairment charge Brought-in-materials and services-local
100 100 Value added
Employee as wages, salaries and pensions Government taxes
11510
15328
Retained in business:
Depreciation and amortisation Loss for the year Deferred taxation
1,218,921(344,405)
874,516
(101,786)(435,953)
336,777
387,43133,554
83,789(167,997)
0
336,777
1,314,830(436,519)
878,311
(54,169)(554,097)
270,045
412,46176,150
84,85655,494
(358,916)
270,045100 100
25-50
0
3121
-133
This information is presented for the purpose of the requirements of the Companies and Allied Matters Acts.
2016 N'000
2015N'000% %
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
114
FIV
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R F
INA
NC
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MM
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YS
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tal
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-
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uit
y
To
tal
lia
bil
itie
s
AS
AT
AN
NU
AL
RE
PO
RT
&
AC
CO
UN
TS
2016
115
FIV
E-Y
EA
R F
INA
NC
IAL
SU
MM
AR
YS
TA
TE
ME
NT
OF
PR
OF
IT O
R L
OS
S A
ND
OT
HE
R C
OM
PR
EH
EN
SIV
E I
NC
OM
E
31
DE
CE
MB
ER
FO
R T
HE
YE
AR
EN
DE
D
To
tal
op
era
tin
g i
nco
me
Op
era
tin
g e
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(Lo
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re i
nco
me
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x
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ss
) /
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for
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ye
ar
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er
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pre
he
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ive
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com
e
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t lo
ss o
n f
ina
nci
al
inve
stm
en
ts
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cla
ssif
ica
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et
loss
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com
e s
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nt
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tal
oth
er
com
pre
he
ns
ive
(lo
ss
) /
inco
me
fo
r th
e y
ea
r
87
4,5
16
(90
7,1
73
)
(13
4,4
43
)
(16
7,9
97
) - - -
(16
7,9
97
)
(4.0
0)
87
8,3
11
(1,0
51,
414
)
(22
7,2
72
)
55
,49
4 - - -
55
,49
4
1.3
2
3
05
,32
6
1,6
76
,44
8
(86
2,6
07
)
2
18,9
75
-
(4,0
40
)
4
,04
0
2
18,9
75
5
.21
(18
2,8
92
)
917
,33
1
(1
,015
,16
7)
(16
3,2
06
)
-- -
(16
3,2
06
)
(3.8
9)
(
47
2,5
77
)
94
2,6
77
(9
26
,23
6)
(
50
8,6
00
)
-- -
(5
08
,60
0)
(12
.11)
(Lo
ss
) /
ea
rnin
gs
pe
r s
ha
re (
Ko
bo
) -
Ba
sic
an
d d
ilu
ted
(L
oss
) /
ea
rnin
gs
pe
r sh
are
(b
asi
c) a
re b
ase
d o
n t
he
(lo
ss)
/ p
rofi
t a
fte
r ta
x a
nd
we
igh
ted
nu
mb
er
of
ord
ina
ry s
ha
res
in is
sue
an
d p
aid
up
at
the
en
d o
f e
very
acc
ou
nti
ng
ye
ar.
20
16N
'00
02
015
N'0
00
20
14N
'00
02
013
N'0
00
20
12N
'00
0
*
Th
is r
ep
rese
nts
div
ide
nd
de
cla
red
du
rin
g th
e y
ea
r 2
00
9 b
ut p
aid
in 2
010
.
Div
ide
nd
pe
r sh
are
are
ba
sed
on
the
nu
mb
er
of o
rdin
ary
sh
are
s in
issu
e a
nd
pa
id u
p a
t th
e e
nd
of e
very
acc
ou
nti
ng
ye
ar.
--
-
-
-
D
ecl
are
d d
ivid
en
d p
er
sh
are
*
ANNUAL REPORT & ACCOUNTS
2016
INVESTORINFORMATION
PROXY FORM ANNUAL REPORT
& ACCOUNTS
2016117
AT THE 25TH ANNUAL GENERAL MEETING to be held at the
Oakwood Park Hotel, Lekki Expressway by Chevron
Roundabout, Lekki, Lagos at 11:00 am on Wednesday the 26th
day of July , 2017.
I/We
of
being a member/members of Abbey Mortgage Bank Plc appoint
or failing him Chief I.B. Ochonogor or failing him Mrs. R. A.
Okwechime as my/our proxy to attend and vote for me/us and on
my/our behalf at the Annual General Meeting of the Company to
be held at 11:00am., and at any adjournment thereof:
Dated the …………..day of………………………… 2017
SHAREHOLDER'S SIGNATURE
(Name of Shareholder in Block Letters)
This Proxy Form should NOT be completed and sent to the
Registrars if the member will be attending the meeting
1. To receive and consider the Audited
Financial Statements for the year ended
31st December, 2016 together with the
Reports of the Directors, Auditors and
the Audit Committee thereon.
2. (a) To re-elect Avm. Olufemi Soewu
as a Director
(b) To re-elect High Chief Samuel Oni
as a Director
(C) To re-elect Mr. Uzochukwu Odunukwe
as a Director
3. To authorize the Directors to fix the
remuneration of the Auditors.
4. To elect members of the Audi t
Committee
Please indicate with “X” in the appropriate box how your vote is to be cast on the resolutions set out above. Unless otherwise instructed, the proxy will vote or abstain from voting at his/her discretion.
RESOLUTION FOR AGAINST
I/We desire this proxy to be used in favour of/or against the resolution as
indicated below
NUMBER OF SHARES
5. To approve the remuneration of
Directors.
Signature of Person attending
1. A member of the company is entitled to attend and vote at the Annual General Meeting of the company. He/she is also entitled to appoint a proxy to
attend and vote instead of him/her, and in this case, this Form may be used to appoint a proxy.
2. The above proxy form, duly completed, must be deposited at the office of the Africa Prudential Registrars Plc, No. 220B, Ikorodu Road, Palmgrove,
Lagos, not less than 48 hours before the time for holding the meeting.
3. It is a requirement of the law under the Stamp Duties Act, Cap 58, Laws of the Federation of Nigeria, 2004, that any instrument of proxy to be used for
the purpose of voting by any person entitled to vote at any meeting of Shareholders must bear a stamp duty.
4. The names of two Directors of the company have been entered into the form to ensure that someone will be at the meeting to act as your proxy but you
may insert in the blank space on the form the name of any person whether or not he/she is a shareholder of the company who will attend the meeting
and vote on your behalf.
5. If the form of proxy is executed by a Company, it should be sealed under its common seal or under the hand and seal of its attorney.
IMPORTANT
ADMISSIONCARD ANNUAL REPORT
& ACCOUNTS
2016118
Please admit the shareholder named on this Admission Card or his/her duly appointed
proxy to the 25th Annual General Meeting of Abbey Mortgage Bank Plc which will hold at
Oakwood Park Hotel, Lekki Expressway by Chevron Roundabout , Lekki, Lagos
on Wednesday the 26th of July, 2017 at 11:00 am.
Name of Shareholder Number of shares held
Address of Shareholder
Signature of Shareholder
PROXY
SHAREHOLDER
Please tick as appropriate
NOTES
This card must be produced by the Shareholder or his/her proxy in order to be admitted to
the meeting. Please tear off and retain this card.
GEOFF O. AMAGHEREONU ESQ.Company Secretary/Legal Adviser
NOTICE OF ANNUAL GENERAL MEETING ANNUAL REPORT
& ACCOUNTS
2016119
NOTICE IS HEREBY GIVEN that the 25th Annual General Meeting of Abbey Mortgage Bank Plc will be
held at the Oakwood Park Hotel, Lekki Expressway By Chevron Roundabout, Lekki, Lagos on
Wednesday, 26th July, 2017 at 11:00 am in the forenoon to transact the following business:
ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the year ended 31st December, 2016 together
with the Reports of the Directors, Auditors and Audit Committee thereon.
2. To elect/re-elect Directors
3. To authorize the Directors to fix the remuneration of the Auditors.
4. To elect members of the Audit Committee
SPECIAL BUSINESS
5. To approve the renumeration of Directors.
1. PROXY
A member of the company entitled to attend and vote at the Annual General Meeting is entitled to
appoint a proxy to attend and vote instead of him/her. A proxy form is attached to this notice and if it is
to be valid for the purpose of this meeting, it must be completed, stamped and deposited at the office
of the Company's Registrars – Africa Prudential Registrars Plc, 220B, Ikorodu Road, Palmgrove,
Lagos not later than 48 hours before the meeting.
2. CLOSURE OF REGISTER
The Register of Members and Transfer Books of the company will be closed from Tuesday 11th day of
July, 2017 to Wednesday 19th day of July, 2017 both dates inclusive.
3. AUDIT COMMITTEE
Any member may nominate a shareholder as a member of the Audit Committee by giving notice in
writing of such nomination to the Company Secretary at least 21 days before the Annual General
Meeting.
4. RIGHT OF SHAREHOLDERS TO ASK QUESTIONS
Shareholders have the right to ask questions not only at the meeting but also in writing prior to the
Meeting.
Dated this 10th day of June, 2017
BY ORDER OF THE BOARD
Geoff. O. Amaghereonu, Esq.
Company Secretary
FRC/2013/NBA/00000002815
NOTES
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016131
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
O. NWOKOLO ELIZABETH
AFOLAYAN OKANKIRI MICHAEL
AKINBOYE RAPHAEL
AKUNNA CHIKELUE& LIZZY
ALEXANDER ODUDU
ANTHONY EJIOFOR
AWUDU BRIMOH
AZUBUKWU MOSINDI CYPRIAN
CHIDI EMMANUEL ADIEMEREONWU
CHIEMEKE MAXWELL
CHIMA AGBELE CYPRIL
CHINYERE OBIAGELI EZEIRU
CHUKWUMA GODSWILL ELUEMUNOH ( JNR ) CHINEDU
DABO ISA DODO
DANJUMA LAAH
DAVID ATASIE CHIMERE
EBERNEZER OLUWUNMI
EJIKE OKONTA
ELUEMUNOH GODSWILL EDU
EMEKA OBIANIGWE DAMIAN
HALIMA ABBAS LARABA
IFEAKABE ONYEOGU
IKECHUKWU NWOSU ANTHONY
ILECHUKWU, SCHOLASTICA NWADILI
IMUZEI AKHIOJEMI STEPHEN
IWEKA ARC ANTHONY
KELVIN .J ATASIE CHINEDU
KINGSLEY CHIDI ALAOMA
LOLA ONAADIPO
MARVIS IDIAGE
MUKORO JOE
MUSHOOD OLATUNDE GBOLARUMI
NGOZICHI STEPHANIE ATASIE
NOMINEE EGO-OSUALA FUTUREVIEW
NOMINEE RNE INTEREST FUTUREVIEW
O. YEROKUN
OGHOZONE DANIEL
OLUKAYODE AWOKOYA
OLUREMI ANDREW FADAIRO
OLUSOLA OSHONIYI JOHN
ORITSEOGBEMI KIM HAMMOND
OSHIOGWUE ADAMS OSENI-ELAMAH
PAT ODOH
PAUL HENRY OBADA
PRECIOUS CHUKWUEMEKA
S UDO-AKAGHA
SAMUEL OKPECHI MR & MRS
SEWANU OLUSOLA CHARLES
SOMTO EZE OKAFOR
STELLA AARINOLA ADEJUWON
51
52
53
54
55
56
57
58
59
60
61
62
SULE MANA ALEX
SUZANNE O. IROCHE
TANKO YUSUF
TONY OGWU
TOSIN OLUWATOSIN
UKA EME & NGOZI UGWUADI ONWUKA
UMAR HAMBAGDA MISS HADIZA
UMAR MANSUR MOHAMMED
UNOMA LORRETTA ELUEMUNOH
VALENTINE EZEIRU
VENTURES LOLA-ADE
ZONKWA CHRISTOPHER WAZIRI
PAYMENT 1
S/N HOLDER NAME S/N NAME
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016132
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
MRS. OJIUGO NMADU SUNDAY O. NMADU
C. EBOKA MAUREEN
N.NWAENIE MRS BEATRICE
O. CHARLES AVWENAGHAGHA
ABOSEDE OLATUNDE AFUSAT
ADELEKE DAVID
ADEMOLA ALEXANDER ADIO
ADEOLA OYEGOKE
ADEOLUWALEKE .E. ELEGBEDE
ADEREMI ABRAHAM OYEPEJU
AKINBOYE RAPHAEL
AKUNNA CHIKELUE& LIZZY
AMAECHI NWAENIE
ANGULU ALHASSAN ADAMU
ANTHONY UYI
AYO VICTOR ABORISADE
AYODELE SARAT KUDAISI
BABALOLA FAJOBI
BASSEY FELICIA UMOH
BETTY CONFECTIONERIES LTD
BOB CHARLES
BOLANLE NORA OSEMWEGIE
CAROLINE IJEOMA AZURUOLEH
CATERING SERVICE LTD ENOSCO
CHARITY CHIOMA ANAYO
CHIEDU ANDREW ODUAH
CHIMA AGBELE CYPRIL
CHUKWUEMEKA NWABUOKE
CHUKWUEMEKA ORACHEBE ANENE
CHUKWUMA GODSWILL ELUEMUNOH ( JNR ) CHINEDU
D. ABANG LAURENCE
DANIEL AHAMEFULA OKEKE
DANJUMA LAAH
DAVID ATASIE CHIMERE
DAVID O IMAFIDON
DUPE TAIWO OLUSEYI
EBIKABOWEI DEREK EKPEDEKUMO
ELOKE OKWECHIME ANTHONY
ELUEMUNOH GODSWILL EDU
EMMANUEL IFEANYI MOK
EMMANUEL SEGUN & CHRISTIANAH OBAYORIADE
EMO UMARU ZORTO
ENAKPODIA MAGISTRATE
ESEOSA LLOYD ONAGHINON
ESTHER EKENE AGU
FIDELIS CHUKWUYENUM TILIJE
GABRIEL JACOB
GIDEON NEHEMIAH NAFINJI
GODSPOWER OBIOPHE
GODWIN W.O. OCHEME
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
HABBA ALSON JAMES
HALIMA ABBAS LARABA
HALL SEC. SCH MILLBANK
HON (DEAC) PAUL OKOGU
HON FRIDAY ONODJAE
HON. DR F.O AGUONIGHO
IFEANYICHUKWU KENNETH OPUTE
IHEOMA VERONICA NKEMNEME
ISAAC CHUKWUDI UDENCY
ITUEN ETIM ITUEN MAJOR
IWEKA ARC ANTHONY
JESSE MATUDI REV ADAMU
JIMOH ADIO GBOBANIYI
KAPITAL VENTURES LTD. UTILITY
KEFAS BITRUS
LAMIDI OLANIRAN JINADU
LOLA ONAADIPO
M & M FASTLINK LIMITED
MADUEGBUNA OKEY
MOFOLUWASE O ADESINA
MOLTEN TRUST LTD-TRADED-STOCK-A/C
MONDAY UKWEDUAN IKHILE
MOSES ADELU
MUKORO JOE
MUSHOOD OLATUNDE GBOLARUMI
NELSON ENWEMADU
NKOMAKONAM N. NWANGWU
NNENNA AGU
O. IVHURIE GILBERT
O. IZE-IYAMU GODWIN
O. MONYE ANDREW
OGHOZONE DANIEL
OHIO IFIABOR
OKOCHA CHIEDU
OKOROJI OKWARA ONOH
OKPOCHINI IWEGBUE SUNDAY
OLADAPO OLAYINKA OGUNNOWO
OLADIPUPO MUHRTALA TIJANI
OLUBISI ODEJIMI
OLUREMI ANDREW FADAIRO
OLUWAFEMI FARAYOLA
OMORUYI LARRY IKHUIWU
OMOTAYO FIJABI
OMOWUMI T. ADIGUN
ORE BISHOP & MRS SOLA
OYEWOLE FOLA PHILLIP JOLAOYE
PAT ODOH
PATRICIA LILIAN MMECHI NDIFON
PAUL HENRY OBADA
PHEBEAN OYENIKE AKINWALE
PAYMENT 2
S/N HOLDER NAME S/N NAME
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016133
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
PRECIOUS CHUKWUEMEKA
RASAQ AJAYI 2 ASUNMO
RICHARD CHUKWUMA IBE
RISFA THEOPHILUS MAGAJI
ROSE NKEM PATRICK
S UDO-AKAGHA
SAMUEL NGOZI JR. OKEKE
SAMUEL OKPECHI MR & MRS
SOMTO EZE OKAFOR
STELLA AARINOLA ADEJUWON
STELLA SONUGA MARIE
SULE MANA ALEX
SUNDAY OGHENOVO ADAMS
SUZANNE O. IROCHE
SYLVESTER O. MONYE
SYLVESTER SULLIVAN OYAMIENLEN
TANKO YUSUF
THOMPSON CHUKWUDI NWOSE
TUNDE SIMEON ABOYEJI
U. ODU-THOMAS YVONNE
UCHENDU KATE AKWUIWU
ULIEME OBINNA LIONEL
UMAR MANSUR MOHAMMED
UNOMA LORRETTA ELUEMUNOH
VENTURES LOLA-ADE
WILSON ALLI JOSEPHINE
WISDOM IWERIOKPURU
PAYMENT 2
S/N HOLDER NAME
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016134
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
MRS. OJIUGO NMADU SUNDAY O. NMADU
O. ASUQUO FRANCIS
ABOSEDE OLATUNDE AFUSAT
ADELEKE DAVID
ADEMOLA ALEXANDER ADIO
ADEOLA OYEGOKE
ADEOLUWALEKE .E. ELEGBEDE
AFOLAYAN OKANKIRI MICHAEL
AKINBOYE RAPHAEL
ALEXANDER IBEH
ALEXANDER OJI EKUBO
ALPHONSUS ELUWA
AMAECHI NWAENIE
ANDREW ANETOR OMHATA
ANNE IGBOEGBUNAM
ANTHONY ODUENYINBO
ANTHONY UYI
AYO VICTOR ABORISADE
AYODELE SARAT KUDAISI
BABA YAHAYA
BABALOLA FAJOBI
BEATRICE SORUNKE
BETTY .O. OKOROH
BETTY CONFECTIONERIES LTD
BOB CHARLES
BOLANLE NORA OSEMWEGIE
CAROLINE IJEOMA AZURUOLEH
CATERING SERVICE LTD ENOSCO
CHIEDU ANDREW ODUAH
CHIEMEKE MAXWELL
CHIMA AGBELE CYPRIL
CHUKWUMA GODSWILL ELUEMUNOH ( JNR ) CHINEDU
D. ABANG LAURENCE
DANJUMA LAAH
DAVID O IMAFIDON
EBIKABOWEI DEREK EKPEDEKUMO
EDIRIN EDWIN CHOVWEN
EKEZIE CHIDI
ELOKE OKWECHIME ANTHONY
ELUEMUNOH GODSWILL EDU
EMMANUEL SEGUN & CHRISTIANAH OBAYORIADE
EMO UMARU ZORTO
ESEOSA LLOYD ONAGHINON
ESTHER EKENE AGU
GABRIEL JACOB
GIDEON NEHEMIAH NAFINJI
GODSPOWER OBIOPHE
HABBA ALSON JAMES
HELEN PEPPLE
HON AFAM ANYASI
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
HON FRIDAY ONODJAE
HON.DR F.O AGUONIGHO
I. KACHIKWU EMMANUEL
IBIYEMI O. OLUFEMI-ADENAIKE
IFEANYICHUKWU KENNETH OPUTE
ISAAC CHUKWUDI UDENCY
ITUEN ETIM ITUEN MAJOR
JAMES OLUWADARE AJAYI
JOSEPH AKINRINMADE OLUWADARE
KINGSLEY EGWUH
KOSEMANI ZUBAIR AKANDE
KUDIRATU OLABISI ARIYO
KUNLE DONALD MAKINWA
M & M FASTLINK LIMITED
MADUEGBUNA OKEY
MATTHEW OLUROPO DADA
MOFOLUWASE O ADESINA
MOLTEN TRUST LTD-TRADED-STOCK-A/C
MONDAY UKWEDUAN IKHILE
MOSES ADELU
MUKORO JOE
NGOZICHI STEPHANIE ATASIE
NKOMAKONAM N. NWANGWU
NMESOMACHUKWU ONYEIBE
NNENNA AGU
NOMINEE EGO-OSUALA FUTUREVIEW
NOMINEE RNE INTEREST FUTUREVIEW
O. IVHURIE GILBERT
O. YEROKUN
OGHOZONE DANIEL
OHIO IFIABOR
OKOROJI OKWARA ONOH
OKPOCHINI IWEGBUE SUNDAY
OLADIPUPO MUHRTALA TIJANI
OLALEKAN SAMODU KASALI
OLAMIDE FOLUSHO AGBOOLA
OLATUNBOSUN ANIKE ODUSOTE
OLUREMI ANDREW FADAIRO
OLUSHOLA O. ADEPOJU
OLUWABUKOLA OMONIYI
OLUWAFEMI FARAYOLA
OLUWAFEMI TIMOTHY OYETUNDE
OMORUYI LARRY IKHUIWU
OMOTAYO FIJABI
OMOWUMI T. ADIGUN
ORE BISHOP & MRS SOLA
OSHIOGWUE ADAMS OSENI-ELAMAH
OSIOGBHE A. IKIODA
PATRICIA LILIAN MMECHI NDIFON
PAUL HENRY OBADA
PAYMENT 3
S/N HOLDER NAME S/N NAME
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016135
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
PETER ONOBRHIE JOHN EYANUKU
PHEBEAN OYENIKE AKINWALE
PLC/STP BGL
PRECIOUS CHUKWUEMEKA
RASAQ AJAYI 2 ASUNMO
REGINALD NJOKU
RICHARD ADEKUNLE JOSHUA
RICHARD CHUKWUMA IBE
ROBERTS OGUNNUBI
ROGER AFAM ILABOR
ROYALBELLS MODEL COLLEGE
S UDO-AKAGHA
SAMUEL NGOZI JR. OKEKE
SAMUEL OKPECHI MR & MRS
SANNI AGBONIFO MOMOH
SCODEX HEALTH FOUNDATION LTD.
SEWANU OLUSOLA CHARLES
SHERIFAT ADEBOLA ADENRELE
SOLOMON SUNDAY AKINSANYA
SOMTO EZE OKAFOR
STELLA SONUGA MARIE
SULAIMON BABATUNDE ADENRELE
SULE MANA ALEX
SUNDAY OGHENOVO ADAMS
SYLVESTER SULLIVAN OYAMIENLEN
TAIWO OSHINLEMO
TANKO YUSUF
THOMPSON CHUKWUDI NWOSE
TONY WILFRED ADEDE
TOSIN OLUWATOSIN
TUNDE ABRAHAM OYEDEJI
U. ODU-THOMAS YVONNE
UCHENDU KATE AKWUIWU
ULIEME OBINNA LIONEL
UMAR HAMBAGDA MISS HADIZA
UMAR MANSUR MOHAMMED
UNOMA LORRETTA ELUEMUNOH
VALENTINE EZEIRU
VENTURES LOLA-ADE
WILSON ALLI JOSEPHINE
WISDOM IWERIOKPURU
ZONKWA CHRISTOPHER WAZIRI
PAYMENT 3
S/N HOLDER NAME
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016136
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
MRS. OJIUGO NMADU SUNDAY O. NMADU
N.NWAENIE MRS BEATRICE
O. ASUQUO FRANCIS
A. MADUABUM IFEDIBA
ABIMBOLA AKINRODOYE
ABOSEDE OLATUNDE AFUSAT
ADAOBI ALOAMAKA
ADEKUNLE ALLI
ADEMOLA ALEXANDER ADIO
ADEOLA OYEGOKE
ADEOLUWALEKE .E. ELEGBEDE
ADEWALE ADEKEYE ALABI
AFOLAYAN OKANKIRI MICHAEL
AKINSOLA BEKUNMI
AKPAN EDET EDEDET
AKUNNA CHIKELUE& LIZZY
ALEXIS ONYEKA AMECHI-MODUM
AMAECHI NWAENIE
ANTHONY ODUENYINBO
ANTHONY OKORO COL EZE
ANTHONY UYI
ANUCHA OBINNA
ARC DE TRIUMPH LIMITED
ARCHIBONG NTUEN CELESTINE
AYO VICTOR ABORISADE
AZUBUKWU MOSINDI CYPRIAN
AZUKA CLEMENTINA OKAFOR
BABA O.I. SERRANO-YAHAYA
BABA YAHAYA
BABALOLA FAJOBI
BEATRICE SORUNKE
BEN ( JNR) CHUKWUDI AMECHI-MODUM
BETTY .O. OKOROH
BETTY CONFECTIONERIES LTD
BOB CHARLES
BOLANLE NORA OSEMWEGIE
BRIGHT IKHIUWU
BROADVIEW MICROFINANCE BANK LTD
CAROLINE IJEOMA AZURUOLEH
CHARITY CHIOMA ANAYO
CHIEDU ANDREW ODUAH
CHIMA AGBELE CYPRIL
CHINWUBA OGBUE CHIEF ISRAEL
CHRIS OKODUWA
CHRISTOCHI INVESTMENT LTD
CHUKWUEMEKA NWABUOKE
CHUKWUMA GODSWILL ELUEMUNOH ( JNR ) CHINEDU
CLEMENT NNAMDI AKOSA
COLLIINS OFIME
COSMAS T DARAMOLA
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
D. ABANG LAURENCE
DANIEL AHAMEFULA OKEKE
DANJUMA LAAH
DANLADI BALDINA
DAVID ATASIE CHIMERE
DAVID O IMAFIDON
EBIKABOWEI DEREK EKPEDEKUMO
EDMUND UZOMA NJOKU
EHIZOGIE AIGUOMUDU
EJIKE OKONTA
EKEZIE CHIDI
ELUEMUNOH GODSWILL EDU
EMEKA EJIOFOR AUGUSTINE
EMEKA MATTHEW IYOKEH
EMEKA OBIANIGWE DAMIAN
EMMANUEL IFEANYI MOK
EMMANUEL SEGUN & CHRISTIANAH OBAYORIADE
EMO DANLAMI ALI
EMO UMARU ZORTO
ENAKPODIA MAGISTRATE
ESTHER EKENE AGU
FAITH AIGUOMUDU
FOLORUNSHO ISMAILA TOHIR
GIDEON NEHEMIAH NAFINJI
GODSPOWER OBIOPHE
GODWIN SIMON-AJOKO
HALIMA ABBAS LARABA
HON FRIDAY ONODJAE
HON.DR F.O AGUONIGHO
HOPE OKO-OBOH
I. KACHIKWU EMMANUEL
IBIYEMI O. OLUFEMI-ADENAIKE
IFEANYICHUKWU KENNETH OPUTE
IHEOMA VERONICA NKEMNEME
INVESTMENT CENTRE LIMITED
INVESTMENTS [NIG] LTD. VALPS\ISAAC
CHUKWUDI UDENCY
ISIOMA NWAENIE EVELYN
ITUEN ETIM ITUEN MAJOR
IWEKA ARC ANTHONY
J.O. OKWECHIME
JENNIFER CHIKODILI AMECHI-MODUM
JESSE MATUDI REV ADAMU
JOHN HENRY CHINEDU ILOKA
JOHN OLUWAFEMI OBATAYO
JONAH OMOTAYO OMIPIDAN
JOSEPH AWOKOYA
JOVITA CHIZOBA AMECHI-MODUM
KELVIN .J ATASIE CHINEDU
KINGSLEY EGWUH
PAYMENT 4
S/N HOLDER NAME S/N NAME
LIST OF UNCLAIMED DIVIDENDS ANNUAL REPORT
& ACCOUNTS
2016137
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
KOSEMANI ZUBAIR AKANDE
KUDIRATU OLABISI ARIYO
LYDIA AMALA NWOBODO
M & M FASTLINK LIMITED
MADU ( CHIEF) NWAYORBUIJE
MADUEGBUNA OKEY
MARIA AIGUOMUDU
MARIOSE OBIAZI FORTUNE
MATTHEW OLUROPO DADA
MOFOLUWASE O ADESINA
MOLTEN TRUST LTD-TRADED-STOCK-A/C
MONDAY UKWEDUAN IKHILE
MOSES ADELU
MOSUDI AYINDE AJAO
MUKORO JOE
NELSON ENWEMADU
NGOZICHI STEPHANIE ATASIE
NKOMAKONAM N. NWANGWU
NNANYELUGO OKPARA
NNENNA AGU
NURENI AFOLABI FASHOLA
O. IZE-IYAMU GODWIN
O. MONYE ANDREW
O. YEROKUN
OAKCREST PRIVATE SCHOOL LTD.
OBIDI S. UGEH
OGHOZONE DANIEL
OHIO IFIABOR
OKHIRIA TOM AKHIGBE
OKOCHA CHIEDU
OKWECHIMA TRANSPORT SERVICE JOSEPH
OLADIPUPO MUHRTALA TIJANI
OLALEKAN MUMUNI RASAQ
OLAMIDE FOLUSHO AGBOOLA
OLUMIDE ADEYIGA OLUSANYA
OLUREMI ANDREW FADAIRO
OLUSHOLA O. ADEPOJU
OLUSOLA OSHONIYI JOHN
OLUWAFEMI FARAYOLA
OLUWAFEMI TIMOTHY OYETUNDE
OMOTAYO FIJABI
OMOTAYO RAFIU(MR) SANNI
OMOWUMI T. ADIGUN
ORE BISHOP & MRS SOLA
OSHIOGWUE ADAMS OSENI-ELAMAH
OSIOGBHE A. IKIODA
PAT ODOH
PATRICIA LILIAN MMECHI NDIFON
PAUL HENRY OBADA
PETER I. OKONJI
PAYMENT 4
S/N HOLDER NAME
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
PHEBEAN OYENIKE AKINWALE
PLC/STP BGL
PRECIOUS CHUKWUEMEKA
QUANTUM SECURITIES-DEPOSIT A/C
RASAQ AJAYI 2 ASUNMO
REGINALD NJOKU
RESEARCH SFS
RICHARD CHUKWUMA IBE
RISFA THEOPHILUS MAGAJI
ROBERTS OGUNNUBI
ROGER AFAM ILABOR
ROMANUS OGBU
ROSE NKEM PATRICK
S UDO-AKAGHA
SAMUEL NGOZI JR. OKEKE
SAMUEL OKPECHI MR & MRS
SANI MOHAMMED AUDU
SCODEX HEALTH FOUNDATION LTD
SEWANU OLUSOLA CHARLES
SHERIFAT ADEBOLA ADENRELE
SMART AGWUNOBI
SOMTO EZE OKAFOR
STELLA AARINOLA ADEJUWON
STELLA SONUGA MARIE
SULAIMON BABATUNDE ADENRELE
SULE MANA ALEX
SUNDAY ADAGAYI ENOGELA
SUNDAY SAMSON TAIWO
SUZANNE O. IROCHE
SYLVESTER O. MONYE
SYLVESTER SULLIVAN OYAMIENLEN
TAIWO OSHINLEMO
TANKO YUSUF
TONY WILFRED ADEDE
TUNDE KABIR SARUMI
TUNDE SIMEON ABOYEJI
U. ODU-THOMAS YVONNE
UCHENDU KATE AKWUIWU
UCHENNA EMMANUEL ONYEJEKWE
ULIEME OBINNA LIONEL
UMAR HAMBAGDA MISS HADIZA
UMAR MANSUR MOHAMMED
UNOMA LORRETTA ELUEMUNOH
VALENTINE EZEIRU
VENTURES LOLA-ADE
VICTORIA OZO AKWALI
WILSON ALLI JOSEPHINE
WISDOM IWERIOKPURU
YUNUSA AGBOOLA FAMUYON
S/N NAME
23, Karimu Kotun Street, Victoria Island, Lagos State, Nigeria.
Tel: +234 (1) 903 5700, +234 (1) 903 5725
E-mail: [email protected], [email protected]
www.abbeymortgagebank.com
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