npf microfinance bank plc - Nigerian Stock Exchange

NPF MICROFINANCE BANK PLC UNAUDITED MANAGEMENT ACCOUNT AS AT 30 SEPTEMBER 2016

NPF Microfinance Bank PLC Annual Report - 30 September 2016

Contents

Page

Corporate information

1

Directors' Report

2

Corporate Governance Report

7

Statement of Directors' Responsibilities

14

Report of the Audit Committee

15

Independent Auditor's Report

16

Statement of Financial Position

18

Statement of Comprehensive Income

19

Statement of Changes in Equity

20

Statement of Cash Flows

21

Notes to the Financial Statements

22

Other National Disclosures: Value Added Statement Financial Summary

62 63

NPF Microfinance Bank PLC Annual Report - 30 September 2016

Corporate Information Directors:

Mr. Azubuko Joel Udah (Esq.) Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi Mr. E.C. Wabali Prince Jude Ifeanyi Eke Mr. Audu Abubakar Mr. Mohammed D. Saeed Mrs. Dorothy Gimba Mr. Joseph Daramola

Company Secretary:

Mrs. Osaro J. Idemudia Aliyu Atta House 1, Ikoyi Road, Obalende Kagos

Registered Office:

Aliyu Atta House 1,Ikoyi Road, Obalende Lagos

Auditors:

KPMG Professional Services KPMG Tower, Bishop Aboyade Cole Street, Victoria Island, Lagos

Bankers:

Sterling Bank PLC First Bank of Nigeria PLC United Bank for Africa PLC

Registrars:

CardinalStone Registrars Limited 358, Herbert Macaulay Way Yaba Lagos.

1

Chairman Managing Director Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director

NPF Microfinance Bank PLC Annual Report - 30 SEPTEMBER 2016

DIRECTORS' REPORT The directors are pleased to submit their report together with the financial statements for theperiod ended 30 September 2016. 1)

LEGAL FORM

The Bank was incorporated in Nigeria as a Private Limited Liability Company on 19 May 1993 under the provision of the Companies and Allied Matters Act CAP C20 LFN 2004 with RC No. 220824. It obtained a provisional license as a Community Bank from the Central Bank of Nigeria on 12 July 1993 with License No. FC 00200 and commenced operations on 20 August 1993. It obtained its final license from the Central Bank of Nigeria on 24 January 2002. It was registered as a Public Limited Company on 13 July 2006. The Bank was given approvalin-principle as a Microfinance Bank on 10 May 2007 and obtained the final license on 4 December 2007. The shares of the Bank became listed on the Nigerian Stock Exchange on 1 December 2010. 2) PRINCIPAL ACTIVITIES The principal activity of the Bank is the provision of banking and other permissible financial services to poor and low income households and micro enterprises with emphasis on members of the Nigerian Police Community. Such services include retail banking, granting of loans, advances and other allied services. The Bank currently has 18 branches nationwide from which it operates. 3) OPERATING RESULTS The profit before tax recorded by the Bank for the period ended 30 June 2016 was ₦454 million (31 December 2015: ₦689 million). Highlights of the Bank’s operating results for the period ended 30 June 2016 are as follows: September

December

2016

2015

Profit before tax Tax expense Profit after tax

687,040 687,040

688,899 (174,301) 514,598

Total comprehensive income

687,040

428,447

30

21

In thousands of naira

Basic and diluted earnings per share (kobo) 4) DIVIDENDS The Board of Directors, subsequent to the reporting date did not propose/ approve of any dividend. 5) DIRECTORS The following Directors served during the year under review:NAME Mr. Azubuko Joel Udah (Esq.)* Mr. E.C. Wabali Prince Jude Ifeanyi Eke Mr. Audu Abubakar** Mr. Mohammed D. Saeed Mrs. Dorothy Gimba Mr. Joseph Daramola Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi

DESIGNATION Chairman (Appointed on 23 July 2015) Non-Executive Director Non-Executive Director Non-Executive Director (Appointed on 10 March 2015) Non - Executive Director (Independent Director) Non - Executive Director (Appointed on 23 July 2015) Non - Executive Director (Appointed on 23 July 2015) Managing Director Executive Director, Operations

2


6)

DIRECTORS' INTEREST IN SHARES

The interest of Directors in the issued share capital of the Bank as recorded in the Register of members were as follows:-

NAME OF DIRECTOR Mr. Azubuko Joel Udah (Esq.) Mr. E.C. Wabali Prince Jude Ifeanyi Eke Mr. Audu Abubakar Mr. Mohammed D. Saeed Mr. Usman I. Baba (Resigned) Mr. M.G. Mukaddas (Resigned) Mrs. Dorothy Gimba Mr. Joseph Daramola Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi

September 2016 December 2015 DIRECT INDIRECT DIRECT INDIRECT (units) (units) (units) (units) 2,080,000 2,080,000 2,252,000 2,252,000 1,580,000 1,580,000 1,727,000 1,480,718,606 1,727,000 1,480,718,606 2,000,000 2,000,000 5,025,861 5,025,861 3,870,456 3,870,456 -

*Mrs. Dorothy Gimba and Mr. Joseph Daramola currently represent the interest of the Nigerian Police Cooperative Society Limited, which owns 1,480,718,606 ordinary shares of 50 kobo each in the issued share capital of the Bank. Save as disclosed above, none of the directors has notified the Bank of any disclosable interest in the Bank’s share capital as at 30 June 2016. 7)

DIRECTOR’S INTEREST IN CONTRACTS

None of the Directors has notified the Bank for the purpose of section 277 of the Companies and Allied Matters Act of Nigeria (CAMA) of any direct or indirect interest in contracts in which the Bank was involved during the year under consideration. 8)

RETIREMENT OF DIRECTORS

In accordance with S.259 (1) & (2) of the Companies and Allied Matters Act, Mr. Emmanuel C. Wabali, Prince Ifeanyi Eke and Mr. Mohammed D. Saeed retire by rotation and being eligible, offer themselves for re-election. The profile of each Director to be re-elected is contained in the Annual Report. 10)

SUBSTANTIAL INTEREST IN SHARES

According to the register of Members as at 30 September 2016, no shareholder held more than 5% of the issued share capital of the Bank except the following:

Shareholder Nigerian Police Co-operative Society Limited NPF Welfare Insurance Scheme

01-Sep-16 December 2015 Shareholding Shareholding No. of Shares No. of Shares (%) (%) 1,480,718,606

64.75

1,480,718,606

64.75

234,305,460

10.25

234,305,460

10.25

3


11)

ANALYSIS OF SHAREHOLDING

The shareholding structure of the Bank as at 30 September ,2016 is as stated below. 2016 Range From 1 5001 10001 50001 100001 500001 1000001 50000001

Holders To 5000 10000 50000 100000 500000 1000000 50000000 2286657766

3,739 986 1,252 258 473 74 84 3 6,869

4

%

Units

54.40 14.35 18.23 3.76 6.89 1.08 1.22 0.07 100

6,417,369 7,684,191 28,801,211 19,524,251 106,918,238 54,280,599 279,189,868 1,783,842,039 2,286,657,766


12) SHARE CAPITAL HISTORY The following changes have taken place in the Bank’s authorized and issued capital since incorporation.

DATE ISSUED

AUTHORISED FROM TO ₦'000 ₦'000

ISSUED & FULLY PAID FROM TO ₦'000 ₦'000

NOMINAL REMARKS VALUE ₦'000

1993

500

500

-

-

1.00

1996 1999 2000 2001 2002 2003

500 30,000 80,000 -

30,000 30,000 80,000 80,000 250,000 250,000

17,996 21,571 40,186 -

17,976 21,571 40,186 58,624 58,624 58,624

1.00 1.00 1.00 1.00 1.00 1.00

2004

-

250,000

58,624

239,958

1.00

2005 2006 2007 2008 2009

250,000 500,000 1,000,000 -

500,000 1,000,000 2,000,000 2,000,000 2,000,000

239,958 239,958 259,955 417,192

239,958 259,955 417,192 417,192 1,143,328

1.00 1.00 1.00 1.00 1.00

2010

-

2,000,000

1,143,328

-

2,000,000

1,143,328

2,000,000 2,000,000 3,000,000 3,000,000 3,000,000

1,143,328 1,143,328 1,143,328 1,143,328 1,143,328

2011 2012 2013 2014 2015 2016

2,000,000.00 -

50K 50K

-

50K 50K 50K 50K 50k

₦'000 CASH & KIND CASH BONUS 1:4 CASH CASH CASH CASH BONUS 1:10 & CASH BONUS 1:12 CASH CASH SHARESPLIT 1:2 SHARESPLIT 1:2

-

13) PROPERTY AND EQUIPMENT Information relating to changes in property and equipment is given in Note 19 of the financial statements. 13)

DONATIONS

The Bank made contributions to charitable and non-political organizations amounting to ₦4,379,000 (2015: ₦2,420,000) during the period as listed below: ₦ NPF Scholarship Foundation 1,000,000 Alhaji Attah's son's wedding 300,000 Police games 2016 1,500,000 Pacelli school for the blind 175,000 St Monica's Orphanage 150,000 Philip Gloria Ngozi 200,000 Police College 103,000 Police cooperative 455,000 Police Children school 270,000 DEPSS 20,000 NPF Education Unit 10,000 Book Launch for Chairman 120,000 Photo Coverage fro Microfinance Banks 76,000 4,379,000

5


6


CORPORATE GOVERNANCE REPORT INTRODUCTION At NPF Microfinance Bank Plc (“the Bank”), we remain committed to institutionalising Corporate Governance principles. The Bank continues to adhere to the implementation of Corporate Governance rules of the Central Bank of Nigeria (CBN), the Nigerian Stock Exchange and the Securities and Exchange Commission. As a Bank publicly quoted on the Nigerian Stock Exchange, we remain dedicated to our duties and pledge to safeguard and increase investors value through transparent Corporate Governance practices. The Bank complies with the requirement of the Central Bank of Nigeria for the internal review of its compliance status with defined Corporate Governance practices and submits reports on the Bank’s compliance status to the Audit Committee quarterly. The Board operates in line with its responsibilities as contained in regulatory codes of Corporate Governance, the Bank’s Articles of Association and the Companies and Allied Matters Act. Its oversight of the operations and activities of the Bank are carried out transparently without undue influence. An annual board appraisal is conducted by an independent consultant appointed by the Bank whose report is submitted to the CBN and presented to the Shareholders at the Annual General Meeting of the Bank in compliance with the provision of the CBN Code of Corporate Governance. The Bank has an entrenched culture of openness in which healthy interaction is promoted and employees are encouraged to report improper activities. The Bank continues to serve customers, its communities and create returns for stakeholders. Our belief is that success is achieved through a process supported and sustained with the right values and this is the key to keeping public trust and confidence in our Bank resulting in our continued long term success. GOVERNANCE STRUCTURES THE BOARD The Board of Directors is responsible for the governance of the Bank and is accountable to shareholders. Having the right people with an appropriate balance of skills, knowledge and experience is an important consideration in having an effective Board and the Bank continues to ensure this in order to drive it in the desired direction. The Board plays a central role in conjunction with Management in ensuring that the Bank is financially strong. This synergy between the Board and Management fosters interactive dialogue in setting broad policy guidelines in the running of the Bank to enhance optimal performance and ensure that associated risk are well managed. The Board of Directors currently consists of nine (9) members, seven (7) non-executive directors and two (2) executive directors. One of the non-executive directors chairs the Board. The Board has delegated the day to day management of the Bank to the Managing Director/Chief Executive Officer who is assisted by the Management Team. The Management led by the Managing Director executes the powers delegated to them without undue interference and are accountable to the Board for the development and implementation of strategies and policies.

7


ROLE OF THE BOARD The traditional role of the Bank’s Board is to provide the Bank with leadership within a framework of prudent and effective controls which enables risk to be assessed and managed while deploying the Bank’s resources to profitable use. The Bank’s Board outlines the Bank’s strategic and corporate aims, ensures that the necessary financial and human resources are in place for the Bank to meet its objectives and reviews management performance on a continuous basis. The Bank’s Board also sets the Bank’s values and standards and ensures that its obligations to its shareholders and others are understood and met. The Board meets quarterly and additional meetings are convened as the need arises. In furtherance of the above roles, the Board met three (3) times in the period under review on 26/1, 8/3, and 21/4. Attendance at the Board meetings during the year were as follows:

No. 1 3 4 5 7 8 9 10 11

Members Mr. Azubuko Joel Udah (Esq.)* Mr. E.C. Wabali Mr. Mohammed D. Saeed Prince Jude Ifeanyi Eke Mr. Audu Abubakar Mrs. Dorothy Gimba*** Mr. Joseph Daramola**** Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi

Designation Chairman Non-Executive Director Indep.Non - Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Managing Director Executive Director

No. of Meetings 3 3 3 3 3 3 3 3 3

Attendance 3 3 3 2 3 2 3 3 3

BOARD APPRAISAL An effective Board of Directors is a critical factor in ensuring a well governed, well directed and successful Bank. A periodic evaluation of the effectiveness and performance of the Board of Directors and its committees, is consistent with good corporate governance. In furtherance of the best Corporate Governance practice, the Board commissioned DCSL Coporate Services Limited to carry out Board evaluation for the financial period ended 30 June 2016. Their report is communicated to the shareholders at the Annual General Meeting. TENURE OF DIRECTORS In pursuance of the Bank’s drive to continually imbibe best Corporate Governance practices, the tenure of the Non-Executive Directors is limited to a maximum of three (3) terms of three (3) years each. INDUCTION AND CONTINOUS TRAINING On appointment to the Board, all Directors receive an induction tailored to meet the requirement of their position as Directors. This induction which is arranged by the Company Secretary includes presentation by Senior Management staff to assist Directors in building a detailed understanding of the Bank’s operations, it’s strategic plan, business environment and key issues faced by the Bank and to introduce directors to their fiduciary duties and responsibilities. Training and Education of Directors on issues pertaining to their oversight function is a continuous process in order to update their knowledge and skills and keep them informed of new developments in the Bank’s business and operating environment. These trainings are carried out through external, local and international courses.

8


BOARD COMMITTEES In the discharge of its roles and responsibilities, the Board is assisted by four (4) standing committees. These committees have their clearly defined terms of reference setting out their roles, responsibilities, functions and reporting procedures to the Board. The Board committees in operation during the period under review were: -

Board Finance and General Purpose Committee Board Risk Management Committee Board Audit Committee Board Governance and Remuneration Committee

The roles and responsibilities of these committees are discussed below. Finance and General Purpose Committee This Committee has the responsibility for monitoring all financial aspects of the Bank. Its responsibilities also include:· · · ·

To formulate and shape the strategy of the Bank and make recommendations to the Board Review the budget of the Bank and make recommendations to Board for approvals Monitor performance of the Bank against the budget Consider and approve expenses above the limits of Management and make recommendations to the board for approval above its limits · Consider and approve significant IT investments and expenditure to be made by the Bank · Review the Assets and Liability Committee report · Review the Bank’s investment portfolio annually · Approve all policies relating to finance for the Bank · Oversee the development and maintenance of IT Strategic Plan · Review and approve within its approved limits the annual manpower plan for the Bank · Approve compensation policy and review compensation for all officers of the Bank (excluding Executive and Non - Executive Directors)

The Committee meets at least once in each quarter during the period which were as follows:

No. 1 2 4 5 6 7

Members Mr. E. C. Wabali Prince Jude Ifeanyi Eke Mr. Audu Abubakar Mrs. Dorothy Gimba Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi

Designation Chairman Member Member Member Member Member

No. of Meetings 1 1 1 1 1 1

9

Attendance 1 1 1 1 1 1


Board Risk Management Committee The responsibilities of this Committee are:· · ·

Review and recommend risk management policies including risk appetite and risk strategy to the full Board for approval Review the adequacy and effectiveness of risk management and controls Monitor the Bank’s compliance level with applicable laws and regulatory requirements · Periodic review of changes in the economic and business environment, including trends and other factors relevant for the Bank’s risk profile ·

Review and recommend for approval of the Board risk management procedures and controls for new products and services

· ·

Approve lending, investment decisions credit products and new processes Oversight of management's process for the identification of significant risks across the Bank and the adequacy of prevention, detection and reporting mechanism

· Review and approve the framework for the management of credit risk, market risk, liquidity risk, operational risk, reputation risk and other risk types as appropriate · Review and oversee the development of loan loss provision policy and annually assess the appropriateness and application of such policy in the light of the credit risk imbedded in the overall loan portfolio · Review and monitor the effectiveness and application of credit risk management policies, related standards and procedures, and control environment with respect to credit decisions and review internal audit reports with respect thereto; and ·

Review and approve or decline credit applications submitted by the Management’s Credit Committee for loans to new individual borrowers or additional requests for existing borrowers

The Board Risk Management Committee meets quarterly and Membership of the Committee and attendance at its meetings during the period were as follows:No. 1 2 5 6 7 8

Members Prince Jude Ifeanyi Eke Mr. E. C. Wabali Mr. Akinwunmi Lawal Mr. Joseph Daramola * Mrs. Dorothy Gimba * Mr. Jude C. Ohanehi *

Designation Chairman Member Member Member Member Member

No. of Meetings 1 1 1 1 1 1

Attendance 1 1 1 1 1 1

Board Audit Committee The Audit Committee is responsible for maintaining oversight regarding the integrity of the Bank’s financial statements, ensuring compliance with legal and other regulatory requirements, assessment of qualification and independence of the external auditor, and assessment of performance of the Bank’s internal audit function as well as that of the external auditors. Its responsibilities also includes; · Establish an internal audit function and ensure that there are other means of obtaining sufficient assurance of regular review or appraisal of the system of internal control in the Bank · Ensure the development of a comprehensive internal control framework for the Bank, obtain assurance and report the operating effectiveness of the Bank’s internal control framework to the Board · Review and ensure that adequate whistle-blowing procedures are in place and that a summary of issues reported are highlighted to the Board ·

Preserve auditor independence, and set clear hiring policies for employees and /or former employees of independent auditors

·

Consider any related-party transactions that may arise within the Bank or any of its related companies

10


· Invoke its authority to investigate any matter within its terms reference for which purpose the Bank must make available the resources to the internal auditors with which to carry out this functions including access to external advice when necessary This committee consist of only Non-Executive Directors and is required to meet at least once every quarter. Members of the Committee and attendance at its meetings during the period were are as follows :-

No. 1 2 3 4 5

Members Mr. Mohammed D. Saeed Prince Jude Ifeanyi Eke Mr. Audu Abubakar Mrs. Dorothy Gimba Mr. Joseph Daramola

Designation Chairman Member Member Member Member

No. of Meetings 3 3 3 3 3

Attendance 3 3 3 2 3

Board Governance and Remuneration Committee The responsibilities of the Committee are: · Make recommendations on the appropriate compensation structure for the Managing Director and other senior executives · Make recommendations to the Board on the Bank’s policy framework of executive remuneration and its cost · Review and report to the Board on the succession planning process for the positions of chairman, Chief Executive Officer/Managing Director, Executive Directors and any other key managerial position · Periodically evaluate the skills, knowledge and experience required on the Board · Establish the criteria for Board and Board committee membership, review candidates qualifications and any potential conflict of interest, assess the contributions of current Directors in connection with their re-connection and make recommendation to the Board · Monitor the development, alignment, satisfaction and productivity of the Bank’s employees with a view to competitive excellence · Develop and constantly review and make recommendation to the Board on policies and procedures to maintain high standard of management by the Bank ·

Monitor on a continuous basis and make recommendations to the Board concerning the corporate governance of the Bank

· Perform other oversight functions as may from time to time be expressly requested by the Board The Board Governance and Remuneration Committee meets at least once in each quarter. Statutory Audit Committee In compiance with section 359(6) of the Companies and Allied Matters Act (CAMA) CAP C 20 LFN 2004, an audit committee comprising two (2) representatives of shareholders elected annually at the Annual General Meetings (AGM) and two (2) NonExecutive Directors is in place.

11


The responsibilities of the Committee are as contained in the Companies and Allied Matters Act (CAMA) of Nigeria. The Statutory Audit Committee meets at least once in each quarter. However, additional meetings are conveyed as required. Membership of the Committee and attendance at its meetings during the period were as follows: No. 1 2 3 5

Members Mr. Lazarus Nnadozie Onwuka Alhaji Abdulquadri Sanni Mr. E.C.Wabali Mr. Audu Abubakar

Designation Chairman Member Member Member

No. of Meeting 2 2 2 2

Attendance 2 2 2 2

MANAGEMENT COMMITTEES The committees comprise senior management staff of the Bank. These committees provide inputs for the respective Board committees of the Bank and ensure that recommendations of the Board committees are effectively and efficiently implemented. They meet as frequently as necessary to take action and decisions within the confines of their powers. The standing management committees are:- Assets and Liabilities Committee -Management Credit Committee -Finance and Expenditure Committee -IT Steering and Business Development Committee -Staff Committee WHISTLE-BLOWING PROCESS The Bank is committed to the highest standards of openness, probity and accountability hence the need for an effective and efficient whistle blowing process as a key element of good corporate governance and risk management. Whistle blowing process is a mechanism by which suspected breaches of the Bank’s internal policies, processes, procedure and unethical activities by any stakeholder (staff, customers, suppliers and applicants) are reported for necessary actions. It ensures a sound, clean and high degree of integrity and transparency in order to achieve efficiency and effectiveness in our operations. The reputation of the Bank is of utmost importance and every staff of the Bank has a responsibility to protect the Bank from any person or act that might jeopardize its reputation. Staff are encouraged to speak up when faced with information that would help protect the Bank’s reputation. An essential attribute of the process is the guarantee of confidentiality and protection of the whistle blower’s identity and rights. It should be noted that the ultimate aim of this policy is to ensure efficient service to the customer, good corporate image and business continuity in an atmosphere compliant to best industry practice. The Bank has a Whistle Blowing channel via its website, dedicated telephone hotlines and e-mail address in compliance with Section 6.1.12 of the Central Bank of Nigeria (CBN) post-consolidation Code of Corporate Governance for Banks in Nigeria. The Bank’s Head of Internal Audit is responsible for monitoring and reporting on whistle blowing. SECURITIES TRADING BY INTERESTED PARTIES The Bank has adopted a code of conduct regarding securities transactions by its Directors on terms no less exacting than the required standard set out in the Nigeria Stock Exchange Listing Rules. The Bank’s code of Conduct stipulates that it is not only unethical but also illegal for all those to whom the code applies including Directors to use non-public information for personal financial benefits or to ‘tip’ others who might make investment decisions on the basis of this information.

12


13


Statement of Directors’ responsibilities in relation to the financial statements for the year ended 30 September 2016

The Directors accept responsibility for the preparation of the annual financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act of Nigeria and relevant Central Bank of Nigeria circulars. The Directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of Nigeria, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. The Directors have made assessment of the Bank’s ability to continue as a going concern and have no reason to believe that the Bank will not remain a going concern in the year ahead. SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

Mr. Akinwunmi Lawal Managing Director/Chief Executive Officer FRC/2014/CIBN/00000006345 10 October 2016

Mr. Azubuko Joel Udah (Esq.) Chairman FRC/2016/NBA/00000013775 10 October 2016

14

NPF Microfinance Bank PLC Monthly Report - 30 SEPTEMBER 2016

STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2016 SEPTEMBER 2016 In thousands of naira ASSETS Cash and cash equivalents Pledged assets Loans and advances to customers Investment securities Prepayments and other assets Property and equipment Deferred tax assets

Note 14 15 16 17 18 19 21(c)

TOTAL ASSETS

DECEMBER 2015 AUDITED

3,392,529 575,525 8,867,045 37,024 963,488 423,533 -

4,388,448 583,038 7,881,519 38,154 346,969 394,070 35,411

14,259,146

13,667,609

LIABILITIES Deposits from customers Current tax liabilities Retirement benefit obligations Deferred tax Liabilities Other liabilities Borrowings Funding Deposit for Shares TOTAL LIABILITIES CAPITAL AND RESERVES Share capital Share premium Retained earnings Other reserves

20 21(b) 22 23 24

25 26(a) 26(b) 26(c) - (d)

TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

F.C. Nelson FRC/2014/ICAN/00000006856

18

6,213,223 65,727 (35,412) 2,293,383 451,643 718,911 9,707,475

6,610,113 188,983 1,986,225 630,795 -

1,143,328 1,517,485 801,859 1,088,999

1,143,328 1,517,485 476,216 1,114,464

4,551,671

4,251,493

14,259,146

13,667,609

9,416,116


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR PERIOD 30 SEPTEMBER 2016

Balance at 1 January 2016 Profit for the period Other comprehensive income, net of tax Total comprehensive income

Share Capital

Share Premium

Retained Earnings

Statutory Reserve

1,143,328

1,517,485

109,260

1,006,398

1,143,328

Contributions by and distributions to equity holders Dividend paid Transfer to regulatory risk reserve Transfer from actuarial reserve Balance at 30 SEPTEMBER 2016

687,040 (19,906) 667,134

1,517,485

776,394

-

Actuarial Reserve

-

1,006,398

Regulatory Risk Reserve

Total

108,066

3,884,537 687,040 (19,906) 667,134

-

108,066

4,551,671

(38,217)

12,752 -

1,143,328

1,517,485

801,859

1,006,398

(38,217)

120,818

4,551,671

Share

Share

Retained

Statutory

Actuarial

Regulatory Risk

Total

Capital 1,143,328

Premium 1,517,485

Earnings 407,801

Reserve 877,748

Reserve 38,217

Reserve 95,314

4,079,893

-

-

385,948 385,948

128,650 128,650

-

-

514,598 514,598

1,143,328

1,517,485

793,749

1,006,398

38,217

95,314

4,594,491

-

-

(342,998)

-

-

-

(342,998)

-

-

(12,752) 38,217

-

(38,217)

12,752 -

-

1,143,328

1,517,485

476,216

1,006,398

-

108,066

4,251,493

-

-

(12,752) 38,217

-

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015

Balance at 1 January 2015 Profit for the year Other comprehensive income, net of tax Total comprehensive income

Contributions by and distributions to equity holders Dividend paid Transfer to regulatory risk reserve Transfer from actuarial reserve

20


REPORT OF THE AUDIT COMMITTEE TO THE MEMBERS OF NPF MICROFINANCE BANK PLC In compliance with section 359(6) of the Companies and Allied Matters Act CAP C20 LFN 2004, we the members of the Audit Committee of NPF Microfinance Bank Plc report as follows: • We have reviewed the scope and planning of the audit requirements and we found them adequate. • We have reviewed the financial statements for the period ended 30 September 2016 and are satisfied with the explanations obtained. • We reviewed the external auditors’ Management Letter for the period ended 30 September 2016 and management responses thereto and are satisfied that management is taking appropriate steps to address the issues raised. • We ascertained that the accounting and reporting policies of the Bank for the year ended 30 September 2016 are in accordance with legal requirements and agreed ethical practices. • The external auditors confirmed having received full cooperation from management in the course of their statutory audit.

Mr. Lazarus Nnadozie Onwuka Chairman, Audit Committee FRC/2014/ICSAN/00000006961 10 October 2016

Other members of the Audit Committee: Alhaji Abdulquadri Sanni Mr. E.C. Wabali Mr. Audu Abubakar Mrs. O.J. Idemudia (Company Secretary) acted as Secretary to the Committee

15


STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 SEPTEMBER 2016 SEPTEMBER 2016 In thousands of naira Interest income Interest expense

Note 7 8

Net interest income


1,446,220 (165,838)

1,795,895 (263,360)

1,280,382

1,532,535

Fee and commission income

9

503,068

585,443

Other revenue

10

149,981

211,356

1,933,431

2,329,334

Net operating income Net impairment (loss)/write-back on financial and other assets Personnel expenses Depreciation Administration and general expenses

11 12 19 13

Total operating expenses

(83,505) (661,526) (68,898) (432,463)

(68,005) (978,277) (75,851) (518,302)

(1,246,392)

(1,640,435)

Profit before tax Tax expense

687,040 21(a)

(174,301)

.

Profit for the year

687,040

Other comprehensive income Items that will never be reclassified to profit or loss Remeasurement gains on net defined benefit liability Related tax

688,899

-

514,598

(123,073) 36,922 (86,151)

Items that are or may be reclassified to profit or loss

-

-

Other comprehensive income for the year, net of tax

-

(86,151)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Basic and diluted earnings per share (kobo)

687,040 33

30

The accompanying notes are an integral part of these financial statements.

19

428,447 23


STATEMENT OF CASH FLOWS FOR THE MONTH ENDED 30 SEPTEMBER 2016 SEPTEMBER 2016 In thousands of naira Cash flows from operating activities Profit for the year Adjustments for: Depreciation of property and equipment Net impairment loss/(write-back) on loans and advances to customers Net impairment loss/(write-back) on investment securities Net impairment loss/(write-back) on other assets Net interest income Dividend income Net charge on retirement benefit obligations Loss/(profit) on sale of property and equipment Tax expense Total Cashflow for Operating Activity

Note

687,040 19 11 11 11 7, 8 10 22 13, 10 21(a)

Change in pledged assets Change in loans and advances Change in prepayments and other assets Change in deposits from customers Borrowing Current tax liability Changes in retirement benefit obligations Change in other liabilities

Interest received Interest paid Tax paid Retirement benefit obligations paid Net cash from operating activities

75,851 50,225 9,109 8,671 (1,532,535) (1,472) 5,893 174,301 (695,359)

15 16 18 20

(515,576) 144,940 341,674 82,268

52,052 (1,368,905) (160,867) 1,806,739

22 23

(116,304) 608,559 (258,713)

(89,448) 1,172,727 716,939

1,446,220 (111,083) (176,002) (308,866) 609,797

1,760,266 (305,541) (199,432) (192,562) 1,779,670

(92,242) 106 (92,136)

(105,509) 1,026 1,472 (103,011)

(118,176) (118,176)

(342,998) (342,998)

19

Cash flows from financing activities borrowings repayment Dividend paid Net cash used in financing activities

Net increase in cash and cash equivalents Cash and Cash equivalents as at Cash and Cash equivalents as at 30 SEPTEMBER

14

The accompanying notes are an integral part of these financial statements.

21

514,598

37,117 82,374 1,131 (1,280,382) (106) (472,826)

21(b) 22

Cash flows from investing activities Proceeds from disposal of investment securities Acquisition of property and equipment Proceeds from disposal of property and equipment Dividends received Net cash used in investing activities


399,485 3,540,991 3,940,486

1,333,661 3,054,787 4,388,448


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 1 Reporting entity NPF Microfinance Bank Plc ("the Bank") is a public limited liability company domiciled in Nigeria. The Bank's registered office is at Aliyu Atta House, 1 Ikoyi Road, Obalende, Lagos. The Bank is engaged in the provision of banking services to members of the police community, to poor and low income households and micro-enterprises of the public at large. Such services include retail banking, granting of loans, advances and allied services. The Bank currently operates from its registered office and has eighteen (18) branches located at Obalende, Ikeja, Garki-Abuja, WuseAbuja, Port-Harcourt, Kano, Osogbo, Benin, Akure, Onitsha, Sokoto, Lokoja, Lafia, Bauchi, Yola, Enugu, Kaduna, Oji River.

2

Changes in accounting policies The Bank has consistently applied the accounting policies as set out in note 3 to all periods presented in these financial statements. There were new standards and amendments to standards that affect annual periods beginning 1 January 2016 as follows: IAS 19 Employee Benefits: Amendment to employee contributions for defined benefit plans The amendment further explains that professional judgement should be used in determining where and in what order information should be presented in the financial statements. The amendment did not have any impact on the Bank's financial statements. Annual improvements 2010 - 2012 cycle and 2011 - 2013 cycle The IASB issued various amendments and clarifications to existing IFRS, non of which had a material impact on the Bank's financial statements.

3

Significant Accounting Policies The Bank has consistently applied the following accounting policies to all periods presented in these financial statements, unless otherwise stated. The principal accounting policies adopted in the preparation of these financial statements are set out below.

(a) Basis of preparation (i) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by International Accounting Standards Board (IASB) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act of Nigeria and relevant Central Bank of Nigeria circulars. The IFRS accounting policies have been consistently applied to all periods presented. The financial statements were approved by the directors on 10 September 2016. (ii) Basis of measurement These financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: ▪ Investment securities (available-for-sale financial assets) measured at fair value ▪ Loans and receivables from customers measured at amortised cost ▪ Borrowings measured at amortised cost (iii) Functional and presentation currency These financial statements are presented in Naira, which is the Bank’s functional currency. Except where indicated, financial information presented in Naira has been rounded to the nearest thousand.

22


(iv) Use of estimates and judgments The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 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. Information about significant areas of estimation uncertainties and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in note 5. (b) Interest Interest income and expense on financial instruments 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, the next repricing date) 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 instruments but not future credit losses. The calculation of the effective interest rate includes contractual fees and points paid or received, transaction costs, and discounts or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability. Interest income and expense presented in the statement of comprehensive income include: - Interest income on financial assets measured at amortised cost calculated on an effective interest rate basis - Interest income on available-for-sale investment securities calculated on an effective interest rate basis - Interest expense on deposits and borrowings on an effective interest rate basis (c) Fees and commission Fees and commission income that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate which is used in the computation of interest income. Other fees and commission income, including loan account servicing fees, investment management fees, etc. are recognised as the related services are performed. (d) Other revenue The total sum includes reenue from income on salary administration, service fees and charges, profit on disposal of property and equipment and dividend income.They are recognised as the related services are performed. (e) Tax expense Tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to items recognised directly in equity or in other comprehensive income. (i) Current income tax Income tax payable is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognised as an expense for the period and adjustments to past years except to the extent that current tax relates to items that are charged or credited in other comprehensive income or directly to equity. In these circumstances, current tax is charged or credited to other comprehensive income or to equity (for example, current tax on available‐for‐sale investment). Where the Bank has tax losses that can be relieved only by carry‐forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the statement of financial position. The Bank evaluates positions stated in tax returns; ensuring information disclosed are in agreement with the underlying tax liability, which has been adequately provided for in the financial statements.

23


(ii) Deferred tax Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using tax rates enacted or substantively enacted at the reporting date and are expected to apply when the related deferred tax liability is settled. Deferred tax is not recognised for the following temporary differences: - temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or - loss; temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and - taxable temporary differences arising on the initial recognition of goodwill. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Bank expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset them, and they relate to taxes levied by the same tax authority on the same taxable entity or on different tax entities, but they intend to settle deferred tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which it can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(iii) Tax exposures In determining the amount of current and deferred tax, the Bank takes into account the impact of uncertain tax position and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Bank to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

(f) Financial assets and financial liabilities (i) Classification Financial assets The classification of financial instruments depends on the purpose and management’s intention for which the financial instruments were acquired and their characteristics. The Bank classifies its financial assets into one of the following categories: - loans and receivables - held to maturity investments - available-for-sale financial assets - at fair value through profit or loss and within the category as: - held for trading; or - designated at fair value through profit or loss. Financial liabilities The Bank classifies its financial liabilities, other than financial guarantees and loan commitments, as either financial liabilities at fair value through profit or loss or other financial liabilities measured at amortised cost. (ii) Recognition Initial recognition The Bank initially recognises its financial instruments on the trade date at which the Bank becomes a party to the contractual provisions of the instrument. All financial assets or financial liabilities are measured initially at their fair value plus transaction costs, except in the case of financial assets and financial liabilities recorded at fair value through profit or loss. Subsequent recognition of financial assets and liabilities is at amortised cost or fair value, depending on the classification.

24


Subsequent measurement See accounting policies (g) - (k) for the Bank's accounting policies on subsequent measurement of financial assets. See accounting policy (n) for the Bank's accounting policies on subsequent measurement of financial liabilities. (iii) De‐recognition 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 rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Bank is recognised as a separate asset or liability. 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 the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. The Bank enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognised. Transfers of assets with retention of all or substantially all risks and rewards include, for example, securities lending and repurchase transactions. In transactions in which the Bank neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset, the Bank continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. Financial liabilities The Bank derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. (iv) Offsetting Financial assets and liabilities are set off and the net amount presented in the statement of financial position when, and only when, the Bank has a legal right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising from the group of similar transactions such as in the Bank's trading activity. (v) Amortised cost measurement The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. (vi) Fair value ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Bank has access at that date. The fair value of a liability reflects its non-performance risk. When available, the Bank measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Bank uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

25


The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price – i.e. the fair value of the consideration given or received. If the Bank determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are managed by the Bank on the basis of the net exposure to either market or credit risk are measured on the basis of a price that would be received to sell a net long position (or paid to transfer a net short position) for a particular risk exposure. Those portfolio level adjustments are allocated to the individual assets and liabilities on the basis of the relative risk adjustment of each of the individual instruments in the portfolio. The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on which the amount could be required to be paid. The Bank recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. (vii) Identification and measurement of impairment At each reporting date, the Bank assesses whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. A financial asset or a group of financial assets is impaired when objective 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; (a) a breach of contract, such as a default or delinquency in interest or principal payments; (b) significant financial difficulty of the issuer or obligor; (c) 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; (d) it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; (e) the disappearance of an active market for that financial asset because of financial difficulties; or (f) observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: (i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national economic conditions that correlate with defaults on the assets in the portfolio. (g) In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The estimated period between a loss occurring and its identification is determined by management for each identified portfolio. In general, the periods used vary between one month and three months; in exceptional cases, longer periods are warranted.

Assets classified as loans and receivables and held-to-maturity investment securities 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.

26


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. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. If a loan or held‐to‐maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Bank may measure impairment on the basis of an instrument’s fair value using an observable market price. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (that is, on the basis of the Bank’s grading process that considers asset type, industry, geographical location, collateral type, past‐due status and other relevant factors).Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist. Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other factors indicative of changes in the probability of losses in the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Bank to reduce any differences between loss estimates and actual loss experience. When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Impairment charges are classified in ‘Net impairment loss on financial and other assets’. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the statement of comprehensive income. Assets classified as available-for-sale The Bank assesses at each date of the statement of financial position whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. If any such evidence exists for available‐for‐sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the statement of comprehensive income.

(g) Cash and cash equivalents Cash and cash equivalents include bank notes and coins on hand, unrestricted balances held with central groups and highly liquid financial assets with original maturities of less than three months, which are subject to insignificant risk of changes in their fair value, and are used by the Bank in the management of its short‐term commitments. Cash and cash equivalents are carried at amortised cost in the statement of financial position. The reconciliation of the opening cash and cash equivalents to the closing cash and cash equivalents in the statement of cash flows is done using the indirect method.

27


(h) Financial assets and liabilities at fair value through profit or loss This category comprises two sub‐categories: financial instruments classified as held for trading, and financial assets designated by the Bank at fair value through profit or loss upon initial recognition. (i) Trading assets and liabilities Trading assets and liabilities are those assets and liabilities that the Bank acquires or incurs principally for the purpose of selling or repurchasing in the near term, or holds as part of a portfolio that is managed together for short‐term profit. Trading assets and liabilities are initially recognised and subsequently measured at fair value in the statement of financial position with transaction costs recognised in profit or loss. All changes in fair value are recognised as part of net trading income in the statement of comprehensive income. (ii) Designation at fair value through profit or loss The Bank designates certain financial assets upon initial recognition at fair value through profit or loss (fair value option). This designation cannot subsequently be changed. According to IAS 39, the fair value option is only applied when the following conditions are met: - the application of the fair value option reduces or eliminates an accounting mismatch that would otherwise arise or - the financial assets are part of a portfolio of financial instruments which is risk managed and reported to management on a fair value basis (iii) Reclassification of financial assets and liabilities The Bank may choose to reclassify a non‐derivative financial asset held for trading out of the held‐for-trading category if the financial asset is no longer held for the purpose of selling it in the near‐term. Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near‐term. In addition, the Bank may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held‐for‐trading or available‐for‐sale categories if the Bank has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held‐to‐maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively. (i) Pledged assets Financial assets transferred to external parties that do not qualify for de‐recognition are reclassified in the statement of financial position from their original class held-for-trading to assets pledged as collateral, if the transferee has received the right to sell or re‐pledge them in the event of default from agreed terms. Initial and subsequent measurement of assets pledged as collateral is at fair value. (j) Loans and receivables Loans and advances are non‐derivative financial assets with fixed or determinable payments that are not quoted in an active market and that the Bank does not intend to sell immediately or in the near term. Loan and receivables are initially measured at fair value plus incremental direct transaction costs, and subsequently measured at their amortised cost using the effective interest method. When the Bank is the lessor in a lease agreement that transfer substantially all of the risks and rewards incidental to ownership of the asset to the lessee, the arrangement is classified as a finance lease and a receivable equal to the net investment in the lease is recognised and presented within loans and advances. When the Bank purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially similar asset) at a fixed price on a future date (“reverse repo or borrowing”), the arrangement is accounted for as a loan or advance, and the underlying asset is not recognised in the Bank’s financial statements.

28


(k) Investment securities Investment securities are initially measured at fair value plus, in case of investment securities not at fair value through profit or loss, incremental direct transaction costs and subsequently accounted for depending on their classification as either held‐to‐maturity, fair value through profit or loss or available‐for‐sale. (i) Held‐to‐maturity Held‐to‐maturity investments are non‐derivative assets with fixed or determinable payments and fixed maturity that the Bank has the positive intent and ability to hold to maturity, and which are not designated at fair value through profit or loss or available‐for‐sale. Held‐to‐maturity investments are carried at amortised cost using the effective interest method. A sale or reclassification of a significant amount of held‐to‐maturity investments would result in the reclassification of all held‐to‐maturity investments as available‐for‐sale, and prevent the Bank from classifying investment securities as held‐to‐maturity for the current and the following two financial years. However, sales and reclassifications in any of the following circumstances would not trigger a reclassification to available-for-sale: - Sales or reclassifications that are so close to maturity that changes in the market rate of interest would not have a significant effect on the financial asset’s fair value - Sales or reclassifications after the Bank has collected substantially all the asset’s original principal. - Sales or reclassification attributable to non‐recurring isolated events beyond the Bank’s control that could not have been reasonably anticipated. (ii) Fair value through profit or loss The Bank does not currently have any investment securities (or other financial assets) as at fair value through profit or loss. (iii) Available‐for‐sale Available‐for‐sale investments are non‐derivative investments that are not designated as another category of financial assets. Unquoted equity securities whose fair value cannot be reliably measured are carried at cost. All other available‐for‐sale investments are carried at fair value. Interest income is recognised in profit or loss using the effective interest method. Dividend income is recognised in profit or loss when the Bank becomes entitled to the dividend. Other fair value changes are recognised directly in other comprehensive income until the investment is sold or impaired whereupon the cumulative gains and losses previously recognised in other comprehensive income are recognised to profit or loss as a reclassification adjustment. A non‐derivative financial asset may be reclassified from the available‐for‐sale category to the loans and receivable category if it otherwise would have met the definition of loans and receivables and if the Bank has the intention and ability to hold that financial asset for the foreseeable future or until maturity. (l) Property and equipment (i) Recognition and measurement Items of property and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. The gain or loss on disposal of an item of property and equipment is determined by comparing the proceeds from disposal with the carrying amount of the item of property and equipment and are recognized net within other income in profit or loss. The assets’ carrying values and useful lives are reviewed, and written down if appropriate, at each date of the statement of financial position. Assets are impaired whenever events or changes in circumstances indicate that the carrying amount is less than the recoverable amount; see note (n) on impairment of non‐financial assets.

29


(ii) Subsequent costs The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day‐to‐ day servicing of property and equipment are recognised in profit or loss as incurred. (iii) Depreciation Depreciation is recognised in profit or loss on a straight‐line basis to write down the cost of each asset, to their residual values over the estimated useful lives of each part of an item of property and equipment. Depreciation begins when an asset is available for use and ceases at the earlier of the date that the asset is derecognised or classified as held for sale in accordance with IFRS 5. A non‐current asset or disposal group is not depreciated while it is classified as held for sale. Freehold land is not depreciated. The estimated useful lives for the current and comparative periods of significant items of property and equipment are as follows: Leasehold land Buildings Computer hardware Furniture, fittings and Motor vehicles

Over the shorter of the useful life of the item or lease term 50 years 3 years 5 years 4 years

Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted if appropriate. (iv) De‐recognition An item of property and equipment is derecognised on disposal or when no future economic benefits are expected from its use or (m) Impairment of non‐financial assets The Bank’s non‐financial assets with carrying amounts other than investment property and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its cash‐generating unit exceeds its recoverable amount. A cash‐generating unit is the smallest identifiable asset Bank that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash‐generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cash‐generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‐tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (n) Deposits and borrowings Deposits and borrowings are the Bank’s sources of funding. When the Bank sells a financial asset and simultaneously enters into a “repo” or “lending” agreement to repurchase the asset (or a similar asset) at a fixed price on a future date, the arrangement is accounted for as a deposit, and the underlying asset continues to be recognised in the Bank’s financial statements. Deposits and borrowings are initially measured at fair value plus transaction costs, and subsequently measured at their amortised cost using the effective interest method, except where the Bank chooses to carry the liabilities at fair value through profit or loss.

30


(o) Prepayments and other assets Prepayments include costs paid in relation to subsequent financial periods and are measured at cost less amortization for the period. The Bank recognises prepaid expense in the accounting period in which it is paid. Other assets comprise other recoverables. (p) Provisions Provisions for restructuring costs and legal claims are recognised when: the Bank has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. The Bank recognises no provisions for future operating losses. (q) Expenditure Expenses are recognised in the profit or loss as they are incurred unless they create an asset from which future economic benefits will flow to the Bank. An expected loss on a contract is recognised immediately in profit or loss. (r) Employee benefits (i) Defined contribution plan A defined contribution plan is a post-employment benefits plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as personnel expenses in profit or loss in the period during which related services are rendered. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(ii) Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Bank has a present legal or constructive obligation to pay this amount as a result of past service provided by the employees and the obligation can be estimated reliably. (s) Share capital and reserves (i) Share issue costs Incremental costs directly attributable to the issue of an equity instrument are deducted from the initial measurement of the equity instrument. (ii) Dividend on the Bank’s ordinary shares Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Bank’s shareholders. Dividends for the year that are declared after the date of the statement of financial position are dealt with in the subsequent events note. Dividends proposed by the Directors but not yet approved by members are disclosed in the financial statements in accordance with the requirements of the Companies and Allied Matters Act of Nigeria. (t) Earnings per share The Bank presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

(u) Segment reporting Segment information is provided on the basis of operating and reportable segments in the manner the Bank manages its business. The financial statements of the Bank reflect the management structure of the Bank and the way in which the Bank's management reviews business performance. Invariably, management considers its retail banking operations, whose results are shown in the statement of financial position and statement of comprehensive income, as its only operating segment.

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(v) New standards and interpretations not yet adopted A number of new Standards, Amendments to Standards, and Interpretations are effective for annual periods beginning after 1 January 2015 and early application is permitted; however, the Bank has not applied the new or amended standards in preparing these financial statements. Those Standards, Amendments to Standards, and Interpretations which may be relevant to the Bank are set out below: Standard not yet effective IFRS 9 Financial instruments

Summary of the requirements and impact assessment

Effective date

On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, 1 January 2018 which replaces earlier versions of IFRS 9 and completes the IASB’s project to replace Early adoption is IAS 39 Financial Instruments: Recognition and Measurement . permitted IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Bank is yet to carry-out an assessment to determine the impact that the initial application of IFRS 9 could have on its business; however, the Bank will adopt the standard for the year ending 31 December 2018.

IFRS 15 Revenue from Contracts with Customers

This standard replaces IAS 11 Construction Contracts , IAS 18 Revenue , IFRIC 13 Customer Loyalty Programmes , IFRIC 15 Agreements for the Construction of Real Estate , IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue – Barter of Transactions Involving Advertising Services .

1 January 2018 Early adoption is permitted

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. This new standard will most likely have a significant impact on the Bank, which will include a possible change in the timing of when revenue is recognised and the amount of revenue recognised. The Bank is yet to carry-out an assessment to determine the impact that the initial application of IFRS 15 could have on its business; however, the Bank will adopt the standard for the year ending 31 December 2018. The following new or amended standards are not expected to have a significant impact on the Bank's financial statements: • IFRS 14 Regulatory Deferral Accounts - Effective application date: 1 January 2016 • Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) - Effective application date: 1 January 2016 • Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) - Effective application date: 1 January 2016 • Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) - Effective application date: 1 January 2016 • Equity Method in Separate Financial Statements (Amendments to IAS 27) - Effective application date: 1 January 2016 • Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Effective application date: 1 January 2016 • Disclosure Initiative (Amendments to IAS 1) - Effective application date: 1 January 2016 • Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) - Effective application date: 1 January 2016 • Annual Improvements to IFRSs 2012–2014 Cycle – various standards - Effective application date: 1 January 2016 IFRS 16 Leases - Effective application date: 1 January 2019

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NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 4 Financial risk management (a) Introduction and overview The Board of Directors has overall responsibility for the establishment and oversight of the Bank's risk management framework. The Bank's risk management policies are established to identify and analyze the risks faced by the Bank, to set appropriate limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect the changes in market conditions and the Bank's activities. The Bank, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Board also oversees how management monitors compliance with the risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Bank. The Board is assisted in its oversight role by the Board Risk Management Committee, which undertakes both regular and ad-hoc reviews of risk management controls and procedures. The risk management framework of the Bank identifies risk culture as the foundation upon which the pillars of risk and control processes and extreme events management lie. The general organisational structure can be seen below:

Head of ERM Market Risk and ALM

Credit and Investment Risk Management

Operational Risk Management

The Bank's risk management governance structure is as shown below:

Board Audit Committee

Board Risk Management Committee

Board

Managing Director

Internal Audit (Risk Based)

Credit and Investment Risk Management

Enterprise Risk Management Committee

ERM Unit

Operational

ALCO

Marketing and ALM Risk Management

Risk

The Board of Directors are responsible for developing and monitoring the Bank's risk management policies. (i) The Bank's approach to risk The Bank addresses the challenge of risks comprehensively through an enterprise-wide risk management framework by applying leading practices that is supported by a robust governance structure consisting of the board and executive management committees. The Board drives the risk governance and compliance process through management. The audit committee provides oversight on the systems of internal control, financial reporting and compliance. The Board also sets the risk philosophy, policies and strategies as well as provides guidance on the various risk elements and their management. Executive management drives the management of the financial risks (market, liquidity and credit risk), operational risks as well as strategic and reputational risks.

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The key features of the Bank’s risk management framework are: • The Board of Directors provide overall risk management direction and oversight. • The Bank’s risk appetite is approved by the Board of Directors. • Risk management is embedded in the Bank as an intrinsic process and is a core competency of all its employees. • The Bank manages its credit, market, operational and liquidity risks in a co-ordinated manner within the organization. • The Bank’s risk management function is independent of the business divisions. • The Bank’s internal audit function reports to the Board; providing independent validation of the business units’ compliance with risk policies and procedures and the adequacy and effectiveness of the risk management framework on an enterprise-wide basis. The Board of Directors is committed to managing compliance with a robust compliance framework to enforce compliance with applicable laws, rules and standards issued by the industry regulators and other law enforcement agencies, market conventions, codes of practices promoted by industry associations and internal policies. The compliance function, under the leadership of the Head of Internal audit of the Bank has put in place a robust compliance framework, which includes: • Comprehensive compliance manual, the manual details the roles and responsibilities of all stakeholders in the compliance process, • Review and analysis of all relevant laws and regulations, which are adopted into policy statements to ensure business is conducted professionally.

(ii) Risk Appetite The Bank's risk appetite is reviewed by the Board of Directors annually, at a level that minimizes erosion of earnings or capital due to avoidable losses or from frauds and operational inefficiencies. This reflects the conservative nature of the Bank as far as risk taking is concerned. (iii) Risk Management Philosophy, Culture and Objectives The Bank considers sound risk management to be the foundation of a long lasting 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 management is a shared responsibility. Therefore the Bank aims to build a shared perspective on risks that is grounded in consensus. •There is clear segregation of duties between market facing business units and risk management functions. •Risk Management is governed by well defined policies which are clearly communicated within the Bank. •Risk related issues are taken into consideration in all business decisions. The Bank shall continually strive to maintain a conservative balance between risk and revenue consideration.

The Bank has exposure to the following risks from its financial instruments: - Credit risk - Liquidity risk - Market risk - Operational risk (b) Credit risk Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Bank's loans and receivables from customers. The Bank has exposure to credit risk as it routinely executes transactions with counterparties which comprise mainly of public service employers and employees as well as private sector employees. (i) Credit risk limits The Bank applies credit risk limits, among other techniques in managing credit risk. This is the practice of stipulating a maximum amount that the individual or counterparty can obtain as loan. Internal and regulatory limits are strictly adhered to. Through this, the Bank not only protects itself, but also in a sense, protects the counterparty from borrowing more than they are capable of paying. The Bank continues to focus on its concentration and intrinsic risks and further manage them to a more comfortable level. This is very important due to the serious risk implications that intrinsic and concentration risk pose to the Bank. A thorough analysis of economic factors, market forecasting and prediction based on historical evidence is used to mitigate the crystallization of these risks. The Bank has in place various portfolio concentration limits (which is subject to periodic review). These limits are closely monitored and reported on from time to time.

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The Bank’s internal credit approval limits for the various authority levels are as indicated below. RANK Officer 1 Assistant Manager Deputy Manager Manager Senior ManagerAssistant General RegionalHead/ Manager Executive Director Managing Director (MD) Management Risk Committee/ Managing Director. Board Risk Management Committee Full Board

Approval Limit MICRO MACRO ₦100,000 ₦200,000 ₦200,000 ₦300,000 ₦200,000 ₦400,000 ₦200,000 ₦500,000 ₦200,000 ₦650,000 ₦500,000 ₦1,500,000 ₦500,000 ₦1,800,000 ₦500,000 ₦2,000,000 ₦500,000 & Above ₦2,000,000 Above ₦2 NIL million to ₦10 Above ₦10 NIL million

These internal approval limits are set and approved by the Bank's Board and are reviewed regularly as the state of affairs of the Bank and the wider financial environment demands. (ii) Exposure to credit risk The Bank's exposure to credit risk is influenced mainly by the characteristics of the counterparties. Management considers the default risk of the industry in which the counterparty operates based on economic factors as this may have an influence on credit risk. The Bank is exposed to credit risk on its loans and receivables balances due from its its customers in the public and private sectors . The Bank has dedicated credit standards, policies and procedures to control and monitor intrinsic and concentration risks through all credit levels of selection, underwriting, administration and control. •Utilization of the services of portfolio managers whom are educated on the risk appetite of the Bank and thus ensure that all investments are in low risk grade securities. •Ensuring that all investments entered are of a low to medium duration and thus minimising the risk of default. •All treasury investments undergo a formal credit analysis process that would ensure the proper appraisal of the facility. • The consequences for non-compliance with the credit policy and credit indiscipline are communicated to all staff and implemented. • All conflict of interest situations must be avoided. (ii) Held to maturity investments (HTM) The Bank via its portfolio managers limits its exposure to credit risk by investing only in highly liquid money market instruments with counterparties that have a good credit rating. The portfolio managers actively monitors credit ratings and ensures that the Bank has only made investment in line with the Bank's investment policy as approved by Board which approves investment in short term fixed deposit, placement with local banks and Federal Government Treasury Bills.

The Bank did not have any held to maturity investments that were impaired as at 31 December 2012. (iii) Cash and cash equivalents The Bank held cash and cash equivalents with maturity profile of less than 3 months, held with local banks and assessed to have good credit ratings based on the Bank's policy. (iv) Loans and receivables from customers and other receivables The Bank has classified loans to customers, staff loans and other receivables warehoused in other assets as loans and receivables and other receivables. These are evaluated periodically for impairment in line with its accounting policy as disclosed in note 3(f)(vii). Impairment losses have been recognized in profit or loss and reflected in an allowance account against receivables. The total impairment allowance during the year was approximately N198 million (31 December 2014: N139 million). These figures are inclusive of impairment allownace on other receivables.

(iv) Collateral security All financial assets held by the Bank are normally unsecured. Our comfort on the treasury bills is the issuer's credit rating, which is the Federal Government of Nigeria, while for the loans and advances, we obtain comfort from the fact that the loans are backed by the salary accounts of serving officers domiciled with the Bank. Staff loans are also recovered through salary deductions and staff mortgage loans are secured against the property purchased.

(v) Write-off policy

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The Bank writes off a loan balance when the Bank's Credit Department determines that the loan is uncollectible and had been declared delinquent and subsequently classified as lost. The write-off process is a critical component of the Bank's credit management activities. The policy requires a periodic review and identification of classified loans deemed to be uncollectible with long outstanding balances of principal and interest. The determination is made after considering information such as the continous deterioration in the customer's financial position, such that the customer can no longer pay the obligation, or that the proceeds from the collateral will not be sufficient to pay back the entire exposure. Board approval is required for such write-off. The loan recovery department continues with its recovery efforts and any loan subsequently recovered is treated as other income.

(vi) Maximum exposure to credit risk The carrying amount of the Bank's financial assets, which represents the maximum exposure to credit risk at the reporting date was as follows: In thousands of naira Cash and cash equivalents Pledged assets Loans and advances to customers Investment securities Prepayments and other assets

30-Sept-16

Note

3,392,529 575,525 8,867,045 37,024 794,999 13,667,122

14 15 16 17 18

36

31-Dec-15 2,763,122 635,090 6,527,210 47,265 38,708 10,011,395


(vii) Geographical Sectors The following table breaks down the Bank’s main credit exposure at their gross amounts (Loans and advances to customers and due from banks) as categorised by geographical region. ''Due from banks'' here represents current account balances with other banks, money market placements and investments in treasury bills through Kakawa Discount House. For this table, the Bank has allocated exposures to regions based on the region of domicile of the Bank's counterparties.

In thousands of naira Cash Southand South cash equivalents South West South East North Central North West North East

Due from Banks

30-Sep-16 Loans and advances to customers

Total

234,669 2,946,328 56,712 805,629 221,805 64,928

704,664 3,292,652 429,062 2,164,095 1,079,243 373,636

939,333 6,238,980 485,774 2,969,724 1,301,048 438,564

4,330,071

8,043,353

12,373,423

31 December 2014 Loans and Due from advances to Banks customers 32,532 2,193,287 66,311 457,925 218,953 22,521 2,991,529

Total

734,679 3,169,869 359,328 1,438,829 772,441 163,643

767,211 5,363,156 425,639 1,896,754 991,394 186,164

6,638,789

9,630,318

(viii) Credit Quality The following table breaks down the Bank’s main credit exposure at their gross amounts ("Due from banks" at carrying amount), as categorised by performance as at 31 December 2015 and 2014 respectively.

In thousands of naira Neither past due nor impaired Impaired Individually impaired Collectively impaired Gross Impairment allowance Specific impairment Collective impairment

Due from Banks

30-Sep-16 Loans and advances to customers

Total

31 December 2014 Loans and advances to customers

Due from Banks

Total

3,356,835

7,806,238

11,163,073

2,991,529

6,259,350

9,250,879

3,356,835

162,723 74,392 8,043,353

162,723 74,392 11,400,188

2,991,529

358,782 20,657 6,638,789

358,782 20,657 9,630,318

3,356,835

(165,418) (75,502) 7,802,433

(165,418) (75,502) 11,159,268

2,991,529

(83,618) (27,961) 6,527,210

(83,618) (27,961) 9,518,739

(c) Liquidity risk Liquidity risk is the potential loss arising from the Bank’s inability to meet its obligations as they fall due or to fund increases in assets without incurring unacceptable cost or losses. Liquidity risk is not viewed in isolation, because financial risks are not mutually exclusive and liquidity risk is often triggered by consequences of other Bank's risks such as credit, market and operational risks. (i) Liquidity risk management process The Bank has a sound and robust liquidity risk management framework that ensures that sufficient liquidity, including a cushion of unencumbered and high quality liquid assets, are maintained at all times to enable the Bank withstand a range of stress events, including those that might involve loss or impairment of funding sources. The Bank’s liquidity risk exposure is monitored and managed by senior management on a regular basis. This process includes: - Projecting cash flows and considering the level of liquid assets necessary in relation thereto - Monitoring balance sheet liquidity ratios against internal and regulatory requirements; - Managing the concentration and profile of debt maturities; - Maintaining liquidity and funding contingency plans. These plans identify early indicators of stress conditions and describe actions to be taken in the event of difficulties arising from systemic or other crises while minimizing any adverse long-term implications for the business. - Regular conduct of stress testing, coupled with testing of contingency funding plans from time to time. The Bank maintains adequate liquid assets sufficient to manage any liquidity stress situation. The liquidity ratio remains one of the best among its peer companies. (ii) Maturity analysis for financial liabilities The following are the remainig maturities of financial liabilities at the reporting date. These are the carrying amounts which includes interest payments and exclude the impact of netting agreements.

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31 30 December September2013 2016

In thousands of naira Non-derivative financial liabilities Cash Deposits and from cash equivalents customers Other liabilities Investment Borrowingssecurities

Note 20 23 24

Carrying amount 6,213,223 2,266,455 451,643 8,931,322

Expected cash flows 6 months - 1 3 - 6 months year

Total

Up to 3 months

(6,627,930) (1,887,796) (660,411) (9,176,137)

(6,585,311) (1,573,104) (518,882) (8,677,297)

Total

Up to 3 months

(4,933,199) (1,839,793) (733,415) (7,506,407)

(3,290,365) (1,839,793) (505,908) (5,636,066)

(17,667) (69,339) (1,501) (88,507)

(24,952) (64,005) (6,329) (95,286)

Over 1 year (181,348) (133,699) (315,047)

31 December 2014 Expected cash flows In thousands of naira Non-derivative financial liabilities Deposits from customers Other liabilities Borrowings

Note 20 23 24

Carrying amount 6,610,113 1,839,793 630,795 9,080,701

3 - 6 months (258,755) (2,521) (261,276)

6 months - 1 year (413,208) (44,959) (458,167)

Over 1 year (970,871) (180,027) (1,150,898)

The above analysis is based on the Bank's expected cash flows on the financial liabilities, which do not vary significantly from the contractual cash flows. As part of the management of its liquidity risk, the Bank holds liquid assets comprising cash and cash equivalents and other financial assets to meet its liquidity requirements. (iii) Maturity Exposureanalysis to liquidity for financial risk assets and financial liabilities The key measure used by the Bank for managing liquidity risk is the ratio of net liquid assets to deposits from customers. For this purpose, 'net liquid assets' includes cash and cash equivalents and investment-grade debt securities for which there is an active and liquid market less any deposits from banks, debt securities issued, other borrowings and commitments maturing within the next month.


2016

2014

At 31 December

55%

65%

Average for the period

#DIV/0!

71%

Maximum for the period

251%

79%

Minimum for the period

42%

65%

(d) Market risk Market risk is the risk that changes in market prices such as foreign exchange rates and interest rate will affect the Bank's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing returns.

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The Bank's portfolio managers assess, monitor, manage and report on market risk taking activities within the Bank. The Bank has continued to enhance its market risk management framework. The operations of the fund managers in connection with the management of market risk is guided by the Bank's culture of reducing the risk of losses associated with market risk-taking activities, and optimizing risk-reward trade-off.” The Bank's market risk objectives, policies and processes are aimed at instituting a model that objectively identifies, measures and manages market risks in the Bank and ensure that: 1 2 3 4 5

The individuals who take or manage risk clearly understand it. The Bank's risk exposure is within established limits. Risk taking decisions are in line with business strategy and objectives set by the Board of Directors. The expected payoffs compensate for the risks taken. Sufficient capital, as a buffer, is available to take risk. Our market risks exposures are broadly categorised into: (i) Trading market risks - These are risks that arise primarily through trading activities and market making activities. These include position taking in fixed income securities (Bonds and Treasury Bills). (ii) Non trading market risks - These are risks that arise from assets and liabilities that are usually on our books for a longer period of time, but where the intrinsic value is a function of the movement of financial market parameters.

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(i) Measurement of Market market risk Risk The Bank currently adopts non-VAR (Value At Risk) approach for quantitative measurement and control of market risks in both trading and non trading books. The measurements includes: Duration and Stress Testing. The measured risks using these two methods are monitored against the pre-set limits on a monthly and weekly basis respectively. All exceptions are investigated and reported in line withthe Bank's internal policies and guidelines.

Limits are sets to reflect the risk appetite that is approved by the Board of Directors. These limits are reviewed at least annually or at a more frequent intervals. Some of the limits include: Aggregate Control Limits (for Securities); Management Action Trigger (MAT) and Duration. (ii) Exposure to foreign exchange risk Foreign Exchange risk is the exposure of the Bank’s financial condition to adverse movements in exchange rates. The Bank is exposed to foreign exchange risk through any asset, investment and bank balance domiciled in foreign currency. Currently, the Bank does not have transactions in any other currency except the Bank's reporting currency i.e. Naira. Hence, it is not exposed to foreign exchange risk. (iii) Exposure to interest risk rate risk The Bank is exposed to a considerable level of interest rate risk (i.e. the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates). Similar to the last financial year, interest rate was fairly volatile. These changes could have a negative impact on the net interest income, if not properly managed. The Bank however, has a significant portion of its loans and advances to customers in non-rate sensitive assets. This greatly assists it in managing its exposure to interest rate risks. Sensitivity analyses are carried out from time to time to evaluate the impact of rate changes on the net interest income. The assessed impact has not been significant on the capital or earnings of the Bank. The table below summarizes the Bank's interest rate gap position: Contractual cash flows Up to 3 6 months - 1 months 3 - 6 months year

31 30 December September2013 2016 In thousands of naira Assets

Note

Carrying amount

Total

Over 1 year

Cash and cash equivalents Pledged assets Loans and advances to customers Investment securities

14 15 16 17

3,392,529 575,525 8,867,045 37,024 12,872,123

4,389,920 584,563 9,190,265 37,024 14,201,772

4,389,920 584,563 1,561,243 37,024 6,572,750

1,205,868 1,205,868

2,172,300 2,172,300

4,250,854 4,250,854

Liabilities Deposits from customers Other liabilities Borrowings

20 23 24

(6,213,223) (2,266,455) 451,643 (8,028,035)

(6,627,930) (1,887,796) (660,411) (9,176,137)

(6,585,311) (1,573,104) (518,882) (8,677,297)

(17,667) (69,339) (1,501) (88,507)

(24,952) (64,005) (6,329) (95,286)

(181,348) (133,699) (315,047)

4,844,088

5,025,635

(2,104,547)

1,117,361

2,077,014

3,935,807

31 December December 2012 2014

In thousands of naira Assets Cash and cash equivalents Pledged assets Loans and advances to customers Investment securities Liabilities Deposits from customers Other liabilities Borrowings

Carrying amount

Total

Contractual cash flows Up to 3 6 months - 1 months 3 - 6 months year

14 15 16 17

3,054,787 583,038 7,881,519 47,265 11,566,609

3,060,679 636,442 7,860,850 47,265 11,605,236

3,060,679 636,442 421,852 47,265 4,166,238

378,479 378,479

1,496,840 1,496,840

5,563,679 5,563,679

20 23 24

(6,610,113) (1,839,793) (672,976) (9,122,882)

(4,933,199) (665,927) (733,415) (6,332,541)

(3,290,365) (505,908) (3,796,273)

(258,755) (665,927) (2,521) (927,203)

(413,208) (44,959) (458,167)

(970,871) (180,027) (1,150,898)

2,443,727

5,272,695

369,965

(548,724)

1,038,673

4,412,781

Note

40

Over 1 year


The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Bank’s financial assets and liabilities to various standard and non standard interest rate scenarios. Standard scenarios that are considered on a monthly basis include a 200 basis point (BP) parallel fall or rise in all yield curves.

The Bank's sensitivity to an increase or decrease in interest rates by 200 basis points: 31-Dec-15 In thousands of naira Increase in interest rate by 200 basis points (+2%) Decrease in interest rate by 200 basis point (-2%)

24,599 (24,599)

31-Dec-14 39,192 (39,192)

Interest rate movement affects reported income by causing an increase or decrease in net interest income and fair value changes.

(e) Operational risk Operational risk is the risk of loss resulting from inadequate and /or failed internal processes, people and systems or from external events, including legal risk and any other risks that is deemed fit on an ongoing basis but exclude reputation & strategic risk. Operational risk exists in all products and business activities. Operational risk is considered as a critical risk faced by the Bank. The Bank proactively identifies, assesses and manages all operational risks by aligning the people, technology and processes with best risk management practices towards enhancing stake holder's value and sustaining industry leadership. Operational risk objectives includes the following: - To provide clear and consistent direction in all operations of the Bank - To provide a standardized framework and appropriate guidelines for creating and managing all operational risk exposures - To enable the Bank identify and analyse events (both internal and external) that impact on its business. The basic principles that guide the operational risk activities include: Operational risks are identified by the assessments covering risks facing each business unit and risks inherent in processes, activities and products. Risk assessment incorporates a regular review of risks identified to monitor significant changes. Risk mitigation, including insurance, is considered where this is cost-effective. The Operational Risk Unit constantly identifies and assesses the operational risk inherent in all material products, activities, processes and systems. It also ensures that before new products, activities, processes and systems are introduced or undertaken, the operational risk inherent in them is identified clearly and subjected to adequate assessment procedures. The techniques employed by the Bank in its measurements include the following: Risk Control Self Assessment (RCSA): Key Risk Indicators (KRIs) and the Risk Register. These tools have been quite useful in the identification, measurement and analyses of operational risk in the Bank. These are subject to review from time to time. There was no significant operational risk incidence during the financial year. (i) Strategic risk Strategic risk examines the impact of design and implementation of business models and decisions, on earnings and capital as well as the responsiveness to industry changes. This responsibility is taken quite seriously by the Board and Executive management of the Bank and deliberate steps are taken to ensure that the right models are employed and appropriately communicated to all decision makers in the Bank. The execution, processes and constant reviews ensures that strategic objectives are achieved. This has essentially driven the Bank’s sound capital management culture and performance record to date.

(ii) Legal risk Legal risk is defined as the risk of loss due to defective contractual arrangements, legal liability (both criminal and civil) incurred during operations by the inability of the organization to enforce its rights, or by failure to address identified concerns to the appropriate authorities where changes in the law are proposed. The Bank manages this risk by monitoring new legislation, creation of awareness of legislation amongst employees, identification of significant legal risks as well as assessing the potential impact of these. Legal risks management in the Bank is also being enhanced by appropriate product risk review and management of contractual obligations via well documented Service Level Agreements and other contractual documents. The Bank's legal matters are handled by the Company Secretariat. (iii) Reputational risk It is recognized that the Bank’s reputation may suffer adversely due to bad publicity, non-compliance with regulatory rules and legislation, which may lead to a significant drop in new business and/or a significant increase in the number of lapses and/or withdrawals. The Bank promotes sound business ethics among its employees.

41


The Bank also strives to maintain quality customer services and procedures, and business operations that enable compliance with regulatory rules and legislation in order to minimize the risk of a drop in the reputation of the Bank. The Bank did not record any issue with major reputational effect in the financial year. (iv) Taxation risk Taxation risk refers to the risk that new taxation laws will adversely affect the Bank and/or the loss of non-compliance with tax laws. The taxation risk is managed by monitoring applicable tax laws, maintaining operational policies that enable the Bank to comply with taxation laws and, where required, seeking the advice of tax specialists. This risk is well managed within the Bank. (v) Regulatory risk The Bank manages the regulatory risk it is potentially exposed to by monitoring new regulatory rules and applicable laws, and the identification of significant regulatory risks. The Bank strives to maintain appropriate procedures, processes and policies that enable it to comply with applicable regulation. The Bank has continued to maintain zero tolerance posture for any regulatory breaches in all its area of operations. (vi) IT and technological risks The Bank is exposed to IT and technological risks; these risks could stem mainly from failure to implement effective information and cyber security policies and procedures. This could disrupt operations and cause financial losses that could result in a decrease in earnings. An externally caused information security incident, such as a hacker attack or virus could materially interrupt business operations or cause disclosure or modification of sensitive or confidential client or competitive information and could result in material financial loss, loss of competitive position, regulatory actions, breach of client contracts, reputational harm or legal liability, which, in turn, could cause a decline in the Bank’s earnings. Appropriate policies and IT controls are however in place to check any form of information risk and or disruption to operations.

Capital management The strategy for assessing and managing the impact of our business plans on present and future regulatory capital forms an integral part of the Bank’s strategic plan. Specifically, the Bank considers how the present and future capital requirements will be managed and met against projected capital requirements. This is based on the Bank's assessment and against the supervisory/regulatory capital requirements taking account of the Bank business strategy and value creation to all its stakeholders. Capital adequacy The Capital Adequacy Ratio is the quotient of the capital base of the Bank and the Bank's risk weighted asset base. In accordance with Central Bank of Nigeria regulations, the regulatory capital of a national Microfinance Bank is ₦2 billion, while a minimum ratio of 10% is to be maintained. (i) The Bank prides itself in maintaining very healthy capital adequacy ratio in all its areas of operations. Capital levels are determined either based on internal assessments or regulatory requirements. (ii) The capital adequacy of the Bank is reviewed regularly to meet regulatory requirements and standard of international best practices in order to adopt and implement the decisions necessary to maintain the capital at a level that ensures the realization of the business plan with a certain safety margin. (iii) The Bank undertakes a regular monitoring of capital adequacy. The Bank has consistently met and surpassed the minimum capital adequacy requirements applicable in all areas of operations. (iv) The Bank’s capital plan is linked to its business expansion strategy which anticipates the need for growth and expansion in its branch network and IT infrastructure. The capital plan sufficiently meets regulatory requirements as well as providing adequate cover for the Bank’s risk profile. The Bank's capital adequacy remains strong and the capacity to generate and retain reserves continues to grow.

In thousands of naira Tier 1 capital Ordinary share capital Share premium Retained earnings Regulatory risk reserves Statutory reserves Other reserves Less: Deferred tax assets Total regulatory capital (Tier 1) Tier 2 capital Collective impaiment Total tier 2 capital

Note

30-Sept-16

31-Dec-14

25 26 26 26 26 26

1,143,328 1,517,485 801,859 120,818 1,006,398 -

1,143,328 1,517,485 407,801 95,314 877,748 38,217

21(c)

4,589,888

(34,734) 4,045,159

16(c)

75,502 75,502

42

27,961 27,961


Total regulatory capital (Tier 2)

4,665,390

4,073,121

Risk-weighted assets

6,744,660

7,729,970

Capital ratios Total regulatory capital expressed as a percentage of total risk-weighted assets Total tier 1 capital as a percentage of total risk-weighted assets

67% 66%

53% 52%

FOCUS 2016 In 2016, the Enterprise Risk Management (ERM) Unit will be focused on ensuring the efficient management of the Bank's risk exposure.

The following targets have been set for 2016: 1 Detailed review of the ERM framework 2 Detailed review of all risk policies 3 Automation of the risk monitoring and reporting process 4 Continuous bank-wide risk acculturation to increase staff risk awareness 5 Continuous risk profiling and risk mapping 6 Continuous review of the Bank’s AML/CFT and KYC policies to meet the new micro finance CBN policy guidelines 7 Constant enhancement of the Bank’s credit standard, practices, and systems with a focus on improving risk asset quality and reducing loan loss 8 Development and adoption of an enhanced integrated risk types – relationship between risk types and to support business planning and decisions in the Bank 9 Timely identification of risk elements inherent in the operations and processes of the Bank in order to minimise their negative impact on the assets of the Bank

43


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 5 Use of estimates and judgments The preparation of the financial statements in conformity with IFRS 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. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Management discusses the development, selection and disclosure of the Bank’s critical accounting policies and their application and assumptions made relating to major estimation uncertainties with the Bank Audit Committee. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year and about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is disclosed below. These disclosures supplement the commentary on financial risk management (see note 4). Key sources of estimation uncertainty (a) Impairment Financial assets accounted for at amortised cost are evaluated for impairment on a basis described in the significant accounting policy. The specific component of the total allowances for impairment applies to financial assets evaluated individually for impairment and is based upon management’s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgements about a debtor’s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and estimate of cash flows considered recoverable are independently approved by the credit risk function. The collective component of the total impairment allowable is established for: - groups of homogeneous loans that are not considered individually significant; and - groups of assets that are individually significant but that were not found to be individually impaired (incurred but not reported - IBNR). Collective allowance for groups of homogeneous loans is established using statistical methods such as roll rate methodology or, for small portfolios with insufficient information, a formula approach based on historic loss rate experience. The roll rate methodology uses statistical analysis of historical data on delinquency to estimate the amount of loss. The estimate of loss arrived at on the basis of historical information is then reviewed to ensure that it appropriately reflects the economic conditions and product mix at the reporting date. Roll rates and loss rates are regularly benchmarked against actual loss experience. Collective allowance for groups of assets that are individually significant but that were not found to be individually impaired (IBNR) cover credit losses inherent in portfolios of loans and advances with similar credit risk characteristics when there is objective evidence to suggest that they contain impaired loans and advances, but the individually impaired items cannot yet be identified. In assessing the need for collective loss allowances, management considers factors such as credit quality, portfolio size, concentrations and economic factors. In order to estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to determine the required input parameters, based on historical experience and current economic conditions. The accuracy of the allowances depends on the estimates of future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective allowances. Investments in equity securities are evaluated for impairment on the basis described in note 3. For an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence (f)(vii) of impairment. In this respect, the Bank regards a decline in fair value in excess of 40 percent to be significant and a decline in a quoted market price that persists for 12 months or longer to be prolonged.

40


An assessment as to whether an investment in debt securities is impaired may be complex. In making such an assessment, the Bank considers the following factors: - The market’s assessment of credit worthiness as reflected in the instrument yields. - The rating agencies’ assessments of the creditworthiness. - The ability of the country to access the capital market for new debt issuance. - The probability of debt being restructured resulting in holders suffering losses through voluntary or mandatory debt forgiveness. (b) Fair value The determination of fair value for financial assets and financial liabilities for which there is no observable market price requires the use of valuation techniques. 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. The Bank's accounting policy on fair value measurement is discussed in Note 3 (f)(vi). The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the requirements. - Level 1: Quoted market price in an active market for an identical instrument. - Level 2: Valuation techniques based on observable inputs. This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. - Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instruments valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Bank determines fair value using valuation techniques. Valuation techniques include net present value and discounted cash flow models, comparison to similar instruments for which market observable prices exist, Black-Scholes and polynomial option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and other premia used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date, that would have been determined by market participants acting at arm's length. Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets. Valuation models that employ significant unobservable inputs require a higher degree of management judgment and estimation in the determination of fair value. Management judgment and estimation are usually required for selection of the appropriate valuation of model to be used, determination of expected future cash flows on the financial instrument being valued, determination of probability of counterparty default and prepayments and selection of appropriate discount rates. The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorised: In thousands of naira

Note

Level 1

Level 2

Level 3

Total

2016 ASSETS Investment securities

17

25,624 25,624

11,400 11,400

-

37,024 37,024

41


2015 ASSETS Investment securities

17

35,865

11,400

-

47,265

35,865

11,400

-

47,265

There was no financial instrument measured in Level 3 of the fair value hierarchy, hence there is no table to show a reconciliation from the beginning balance to the ending balances for fair value measurements in level 3 of the fair value hierarchy. Financial instruments not measured at fair value The table below sets out the fair value of financial instruments not measured at fair value and analyses them by level in the fair value hierarchy into which each fair value measurement is categorised.

(d) Determination of impairment of property and equipment, and other non-financial assets Management is required to make judgements concerning the cause, timing and amount of impairment. In the identification of impairment indicators, management considers the impact of changes in current competitive conditions, cost of capital, availability of funding, technological obsolescence, discontinuance of services and other circumstances that could indicate that impairment exists. The Bank applies the impairment assessment to its separate cash generating units. This requires management to make significant judgements and estimates concerning the existence of impairment indicators, separate cash generating units, remaining useful lives of assets, projected cash flows and net realisable values. Management’s judgement is also required when assessing whether a previously recognised impairment loss should be reversed.

42


(e) Income taxes The Bank is subject to income taxes in numerous jurisdictions. Significant estimates are required in determining the Bank wide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Bank recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. For recognition of deferred tax assets, judgment is exercised to assess the availability of future taxable profit against which tax losses carried forward can be used. (f) Determination of regulatory risk reserves Provisions under prudential guidelines are determined using the time based provisioning regime prescribed by Central Bank of Nigeria's (CBN) Amended Regulatory and Supervisory Guidelines for Microfinance Banks. This is at variance with the incurred loss model required by IFRS under IAS 39. As a result of the differences in the methodology/provision regime, there will be variances in the impairments allowances required under the two methodologies. Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would be required to make provisions for loans as prescribed in the relevant IFRS Standards when IFRS is adopted. However, Banks would be required to comply with the following: (i) Provisions for loans recognised in the profit and loss account should be determined based on the requirements of IFRS. However, the IFRS provision should be compared with provisions determined under prudential guidelines and the expected impact/changes in general reserves should be treated as follows: • Prudential provisions is greater than IFRS provisions: the excess provision resulting should be transferred from the retained reserve account to a "regulatory risk reserve". • Prudential provisions is less than IFRS provisions: IFRS determined provision is charged to the statement of comprehensive income. The cumulative balance in the regulatory risk reserve is thereafter reversed to the retained reserve account. (ii) The non-distributable reserve should be classified under Tier 1 as part of the core capital.

43


Prudential adjustments for the year ended 30 June 2016 In thousands of naira Loans & advances: Specific impairment allowances on loans to customers Collective impairment allowances on loans to customers Total impairment allowances on loans (a)

Note 16 (c) 16 (c)

83,618 27,961 111,579

Total regulatory impairment based on prudential guidelines (b)

206,893

Required balance in regulatory risk reserves (c = b - a)

95,314

Balance, 1 January 2014

72,281

Addition during the year

23,033

Balance, 31 December 2014

95,314

44


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 6 Financial assets and liabilities Accounting classification measurement basis and fair values The table below sets out the carrying amounts and fair values of the Bank’s financial assets and liabilities: 30 SEPT 2016


Note

Fair value through Held‐to‐ maturity profit or loss investments


14 15 16 17

-

-

Deposits from customers Other liabilities Borrowings

20 23 24

-

-

Loans and receivables 3,392,529 575,525 8,867,045 12,835,099 -

Available‐ for‐sale financial assets 37,024 37,024 -

Other financial Total carrying liabilities amount 6,213,223 2,266,455 451,643 6,664,866

Fair value

3,392,529 575,525 8,867,045 37,024 12,872,123

3,352,248 576,594 7,471,254 37,024 11,437,120

6,213,223 2,266,455 451,643 6,664,866

6,213,223 2,266,455 631,700 6,844,923

31 December 2015


Note

Fair value through Held‐to‐ maturity profit or loss investments

Loans and receivables


14 15 16 17

-

-

Deposits from customers Other liabilities Borrowings

20 23 24

-

-

-

-

-

-

-

-

-

4,388,448 635,090 7,881,519 12,905,057

Available‐ for‐sale financial assets 38,154 38,154

Other financial Total carrying liabilities amount -

Fair value

4,388,448 635,090 7,881,519 38,154 12,943,211

3,058,679 630,563 7,260,077 38,154 10,987,473

6,610,113 1,839,793 630,795

6,610,113 1,839,793 630,795

6,610,113 1,839,793 676,945

7,240,908

7,240,908

7,287,058

Financial instruments at fair value (including those held for trading, designated at fair value, available‐for‐sale) are either priced with reference to a quoted market price for that instrument or by using a valuation model. Where the fair value is calculated using a valuation model, the methodology is to calculate the expected cash flows under the terms of each specific contract and then discount these values back to a present value. The expected cash flows for each contract are determined either directly by reference to actual cash flows implicit in observable market prices or through modelling cash flows using appropriate financial markets pricing models. Wherever possible, these models are used as the basis of observable market prices and rates including, for example, interest rate, yield curves, equities and prices.

45


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016

SEPTEMBER 2016

In thousands of naira 7

Interest income Loans and advances Bankers acceptances Placements with local banks

1,389,530 10,403 46,287 1,446,220


1,631,945 71,001 92,949 1,795,895

Included in the above interest income for the year ended 31 December 2015 is a total of ₦11.4 million (2014: ₦4.7 million) relating to impaired financial assets. 8

9

Interest expense Term deposits Current accounts Savings Borrowings

Fees and commission income Credit-related fees and commission Deposit-related fees and commission

10 Other revenue Income on salary administration Service fees and charges Profit on disposal of property and equipment Dividend income

11 Net impairment loss/(write-back) on financial and other assets Loans and advances to customers: Charge/(write-back) on specific impairment (see 16(c)) Write-back on collective impairment (see 16(c)) Impairment loss on investments (see note 17(b)) Impairment loss on other assets (see note 18(a))

12 Personnel expenses Short term employee benefits Post-employment benefits: Defined benefit plan - gratuity (see note 22) Defined contribution plan - pension cost Other staff cost

46

138,112 5,968 7,333 14,425 165,838

186,643 6,131 8,268 62,318 263,360

416,281 86,787 503,068

497,523 87,920 585,443

125,334 22,684 1,857 106 149,981

153,059 56,825 0 1,472 211,356

82,374 82,374 1,131 83,505

56,097 (5,872) 50,225 9,109 8,671 68,005

548,783

761,839

17,377 26,238 69,128 661,526

95,226 32,543 88,670 978,278


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 In thousands of naira 13 Administration and general expenses Repairs and maintenance cost Vehicle and generator running cost Office expenses Computer expenses Travel expenses AGM and year-end expenses Directors' expenses Bank charges Publicity expenses Professional fees Subscription fees Charges and levies Insurance cost NDIC premium Rent and rates Corporate social responsibility Auditor's remuneration Income tax Other expenses (see note a) (a) Other expenses includes the following Donations Electricity expenses Recruitment expenses ATM damaged cards Loan recovery expenses Fines Stamp duties Legal expenses SMS alerts Amortizn. Of pre-operatrional exp Fraud and forgery expense Share listing expenses WHT expense

14 Cash and cash equivalents Cash-in-hand Current account balances with other banks Money market placements Treasury Bills

SEPTEMBER 2016

DECEMBER 2015

47,677 42,017 49,959 31,097 25,657 22,418 55,196 17,979 36,038 12,019 2,414 2,278 16,012 22,086 15,611 500 11,289 22,216

65,041 45,684 49,604 21,025 22,661 24,029 103,683 30,487 33,218 19,607 5,668 1,043 16,834 21,137 13,998 12,000 5,893.00 26,690

432,463

518,302

4,379 6,987 47 14 102 2,445 50 987 5,481 1,725 22,216

2,410 8,886 33 82 242 250 516 4,397 7,299 2,010 565 26,690

35,694 2,126,884 890,303 339,648

58,377 2,863,067 1,168,830 298,174

3,392,529

4,388,448

Cash and cash equivalents comprise balances with less than three months' maturity from the date of acquisition, including cash in hand, deposits held at call with other banks and other short-term highly liquid investments with original maturities less than three months.

47


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 SEPTEMBER 2016


DECEMBER 2015

15 Pledged assets represent placements and Treasury Bills with banks that serve as collateral for the Bank's borrowings, use of NIBSS platform and ATM transactions as analysed below: Underlying transaction BOI concessionary loan CBN concessionary loan CBN concessionary loan CBN concessionary loan CBN concessionary loan NIBSS Platform ATM Transactions

Counterparty Asset description Sterling Bank Plc Treasury Bills Zenith Bank Plc Fixed placement Firct City Monument Bank Plc Fixed placement First Bank of Nigeria Plc Fixed placement United Bank for Africa Plc Fixed placement First Bank of Nigeria Plc Fixed placement Sterling Bank Plc Call placement

238,503 148,790 99,804 74,942 20,000

239,502 148,790 99,804 74,942 20,000

582,039

583,038

8,867,045

7,881,519

8,867,045

7,881,519

3,172,882 5,694,163 8,867,045

1,624,636 6,256,883 7,881,519

16 Loans and advances to customers (a) Loans and advances to customers comprise: Loan and advances to customers at amortised cost

Current Non-current

(b) Loans and advances to customers at amortised cost: 2016

Term loans Overdrafts

2015

Gross Impairmen Amount t Allowance 8,553,431 (97,667) 554,534 (143,253) 9,107,965

(240,920)

(c ) Movement in allowances for impairment Specific allowances for impairment Balance at 1 January Impairment loss for the year: Charge/ (write-back) during the year (see note 11)

Collective allowances for impairment Balance at 1 January Impairment loss for the year: Write-back during the year (see note 11) Balance at 30 June 2016

48

Carrying Amount 8,455,764 411,281 8,867,045

Gross Impairment Amount Allowance 7,044,592 (51,373) 983,471 (81,721) 8,028,063

Carrying Amount 6,993,219 901,750

(133,094)

7,894,970

2016

2015

90,324

90,324

75,094

-

165,418

90,324

42,770

-

32,702 75,502

42,770 42,770

240,920

133,094


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 In thousands of naira

SEPTEMBER 2016

DECEMBER 2015

354,523 22,499 377,022 -339,998 37,024

354,523 22,499 377,022 -338,868 38,154

37,024 37,024

38,154 38,154

338,868

329,759

17 Investment securities (a) Investment securities comprise: Available-for-sale equities: Listed equities Unlisted equities Specific impairment allowance (see note (b) below)

Current Non-current

(b) Movement in specific allowances for impairment: Balance at 1 January Impairment loss for the year: Charge during the year (see note 11) Balance at 30 June 18

1,131 339,999

9,109 338,868

160,113 46,272 794,999 1,001,384 (37,897)

125,222 28,748 229,654 383,624 (36,655)

963,487

346,969

869,513 93,974 963,487

241,565 105,404 346,969

Prepayments and other assets Prepayments Other assets (see note (a) below) Other receivables (see note (b) below) Impairment allowance on other receivables (see note (c ) below)

Current Non-current

(a) Other asset comprise dividend receivables,stock of atm cards, stock of credit cards and inventories which includes stock of cheques, books/journals/cds, stock of office stationeries,stock of micr cheques and non micr cheques. (b) Other receivables includes staff cash advance,sundry debtors,head office control ledger, discount instrument maturity suspense, consumer loan suspense, fraud-forgery account and customer salary suspense. (c) Movement in specific allowances for impairment 36,655

Balance, beginning of year Charge during the year (see note 11) Balance, end of period

37,897

49

27,984 8,671 36,655



In thousands of naira 19 Property and Equipment Land and Building

Furniture and Fittings

Motor Vehicles

Computer and office Equipment

Total

Cost: Balance as at 1 January 2015 Additions during the year Disposals

234,609 -

67,474 6,354 (1,669)

126,311 69,649 (8,100)

144,225 35,065 -

572,620 111,068 (9,769)

Balance at 31 December 2015

234,609

72,159

187,860

179,290

673,913

Balance as at 1 January 2016 Additions during the year Disposals

234,609 -

72,159 7,946 (2,999)

187,860 47,283 -

179,290 53,045 (15,414)

673,913 108,274 (18,413)

Balance at 30 SEPTEMBER 2016

234,609

77,106

235,143

216,921

763,774

Accumulated Depreciation: Balance at 1 January 2015 Charge for the year Disposals

20,415 4,692 -

45,885 9,491 (1,669)

64,832 29,564 (1,181)

85,153 32,356 -

216,285 76,103 (2,850)

Balance at 31 December 2015

25,107

53,707

93,215

117,509

289,538

Balance at 1 January 2016 Charge for the year Disposals

25,107 3,519 -

53,707 7,429 (2,999)

93,215 30,897 -

117,509 27,054 (15,197)

289,538 68,899 (18,196)

Balance at 30 SEPTEMBER 2016

28,626

58,137

124,112

129,366

340,241

209,502 205,983

18,450 18,969

94,645 111,031

61,781 87,555

384,375 423,533

Net Book Value: 31 December 2015 Net Book Value: 30 SEPTEMBER 2016

There were no capitalised borrowing cost related to the acquisition of property and equipment during the year (2014: Nil) There were no impairment losses on any class of property and equipment during the year (2014: Nil) DECEMBER SEPTEMBER 2015 2016 AUDITED Current Non-current 423,533 394,070 423,533 394,070

50



In thousands of naira 20 Deposits from customers Current Savings Term

Current Non-current

SEPTEMBER 2016


2,134,972 1,912,163 2,166,090 6,213,225

2,613,129 1,685,963 2,311,021 6,610,113

6,213,225 6,213,225

6,610,113 6,610,113

21 Income taxes (a) Amounts recognized in profit or loss Current tax expense Company income tax Education tax National Information Technology Development Agency (NITDA) levy

-

Deferred tax expense Origination and reversal of temporary differences - (Credit)/Charge

-

Tax expense

-

155,537 12,621 6,821 174,979

(678) (678) 174,301

The Bank believes that its accrual for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax laws and prior experience. (b) Movement in current tax liabilities Beginning of the year Income tax expense (see note (a) above) Tax paid End of the year

188,983 (176,002) 12,981

51

213,434 174,979 (199,432) 188,983



In thousands of naira (c) Movement in deferred tax balances 2016 Recognized in Net balance at profit or loss Recognized in 1 January (see (a)) OCI Property and equipment Loans and advances Employee benefits Other items Deferred tax liabilities/(assets)

56,689 (6,820) (84,602) (34,733)

10,543 184 (11,405) (678)

Balance as at 31 December

-

67,232 (6,636) (96,007) (35,411)

2015 Recognized in Net balance at profit or loss Recognized in 1 January (see (a)) OCI Property and equipment Loans and advances Employee benefits Deferred tax liabilities/(assets)

49,442 (9,030) 21,784 62,196

(d) Reconciliation of effective tax rate In thousands of naira

7,247 2,210 (69,464) (60,007)

2016

Profit before tax Tax using the Company's domestic tax rate Non-deductible expenses Tax-exempt income Tax incentives Tertiary education tax NITDA Tax

30.00% 7.76% -10.20% -5.21% 0.00% 0.00% 22.34%

52

Balance as at 31 December

(36,922) (36,922)

56,689 (6,820) (84,602) (34,733)

2015 687,040 206,112 54,103 -70,088 -35,826 0 0 154,301

30.00% -3.26% -2.26% -5.30% 2.27% 0.99% 22.62%

688,899 185,252 40,978 -74,052 -32,699 14,028 6,114 139,691


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 SEPTEMBER 2016 SEPTEMBER 2016


2015

22 Retirement benefit obligations Defined contribution plan The Bank operates a defined contribution pension plan based on the Pension Reform Act, 2014. The Bank had no outstanding obligations in respect of the plan as at year-end. Defined benefit plan The Bank had a defined benefit (gratuity) scheme for its staff which it discontinued effective 30 June 2015. The defined benefit obligations under the scheme was actuarially determined upon the termination of the scheme in 2015 by HR Nigeria Limited, a firm of certified actuaries and consultants with Financial Reporting Council number, FRC/NAS/00000000738. The related actuarial losses held in reserves were transferred to retained earnings after the discontinuation of the benefit plan. The outstanding liability under the scheme was partially settled in 2015 using the existing plan assets of ₦192.56 million as at the discontinuance date. Additional ₦116.3m has been paid in 2016.The outstanding balance, payable to the staff over a period of 3 years at an annual interest rate of 10%, was reclassified to other liabilities as staff benefits payable. Movement in the account 2016: Defined benefit obligation Balance at 1 January 2016 Included in profit or loss (see note 12) Included in OCI Revaluation Difference Benefits paid Reclassification to staff benefits payable in other liabilities (see note 23) Balance at 30 June 2016

527,348 17,377 95,224 (308,866) -331,083 -

Defined benefit obligation Balance at 1 January 2016

227,753

Included in profit or loss Current service cost Interest cost (income) Included in OCI Remeasurement (gains)/losses Actuarial gain arising from: - assumptions - experience adjustment Return on plan assets excluding interest income Other Benefits paid Balance at 30 June 2016

53

Fair value of Net defined plan assets benefit liability -122,695

105,058

35,531 31,695 67,226

(13,347) (13,347)

35,531 18,348 53,879

56,250 176,119 232,369

(173,513) 689 -172,824

56,250 2,606 689 233,088

-

-

-

527,348

-308,666

218,482



In thousands of naira 23 Other liabilities ATM Suspense (see note (a) below) Accounts payable Productivity bonus (see note (b) below) Deferred income Stale cheques Sundry creditors Staff benefits payable (see note 22 and note (c ) below) Other liabilities (see note (d) below)

Current Non-current

SEPTEMBER 2016


1,794,241 256,907 26,928 16,157 199,150 2,293,383

1,333,588 24,820 120,297 26,135 16,531 320,027.00 144,827 1,986,225

2,322,639 279,631 2,293,383

1,772,874 213,351.00 1,986,225

(a) ATM Suspense represents suspense accounts used to manage settlement of ATM transactions with Sterling Bank to be refunded to the Head Office by branches. It is the amount withdrawn by branch customers, accumulated over time. It also includes balance pf NIBSS outflow account of ₦875million (b) This amounts represents provision made at the end of the year for payment of productivity bonus to employees of the Bank. It is linked to the performance of the Bank. A constructive obligation exists for the payment of this amount. (c) Staff benefits payable comprise the outstanding liabilities on the staff defined benefits plan discontinued during the year and reclassified from retirement benefit obligations. (d) Other liabilities comprises : Accruals Other payables Deferred income on fees Unearned income

24 Borrowings BOI concessionary loan (see note (a) below) CBN concessionary loan (see note (b) below)

Current Non-current

103,681 15,982 94,563 (15,076) 199,150

33,550 42,536 68,518 223 144,827

50,517 401,127

112,393 518,402

451,643

630,795

451,643 451,643

630,795 630,795

(a) The Bank of Industry (BOI) loan was availed the Bank on 14 May 2014. The amount availed was ₦200 million at a rate of 5 percent per annum for a duration of 3 years. This loan is for on-lending to the Bank's customers. It is for the benefit of small and medium sized enterprises to grow their businesses and to become financially independent. (b) The Central Bank of Nigeria (CBN), Micro Small and Medium sized Enterprises Development Fund (MSMEDF) loan of ₦500 million was also availed the Bank on 9 October 2014 at a rate of 3 percent and is due on demand. The loan is also for on-lending to the Bank's customers for the benefit of small and medium sized enterprises to help grow their businesses and become financially independent.

54


25 Share capital Authorised: 6,000,000,000 units of ordinary shares of 50 kobo each

3,000,000

3,000,000

1,143,328

1,143,328

Issued and fully paid: 2,286,657,766 units of ordinary shares of 50 kobo each 26 Share premium and reserves The nature and purpose of the share premium and reserve accounts in equity are as follows: (a) Share premium The share premium warehouses the excess paid by shareholders over the nominal value for their shares. Premiums from the issue of shares are reported in share premium. (b) Retained earnings Retained earnings comprise the undistributed profits from previous years, which have not been reclassified to the other reserves noted below. (c) Statutory reserve The Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by S.8.1.7 of the Amended Regulatory and Supervisory Guidelines for Microfinance Banks issued by the Central Bank of Nigeria (CBN), an appropriation of 50% of profit after tax is made if the statutory reserve is less than 50% of its paid‐up share capital, 25% of profit after tax if the statutory reserve is greater than 50% but less than 100% of its paid-up share capital and 12.5% of profit after tax if the statutory reserve is greater than the paid up share capital. In line with the CBN requirement, the Bank transferred 25% of its profit after tax to statutory reserves as at year-end . (d) Regulatory risk reserve The regulatory risk reserve warehouses the excess of the impairment allowance on loans and advances computed based on the Central Bank of Nigeria prudential guidelines over that computed based on the incurred loss model under IFRS .

55

NPF Microfinance Bank PLC Annual Report - 31 March 2016

56

NPF Microfinance Bank PLC Annual Report - 31 March 2016

57


NOTES TO THE FINANCIAL STATEMENTS FOR THE MONTH ENDED 30 JUNE 2016 28 EMPLOYEES AND DIRECTORS EMPLOYEES (a) The average number of persons employed during the year by category: Executive directors Management Non-management

2016 Number 2

2015 Number 2

40

42

177

180

219

224

(b ) The number of employees of the Bank, including executive directors, who received emoluments in the following ranges were: Number 13 167 16 9 2 12 219

Less than N500,000 ₦500,001 - ₦1,000,000 ₦1,000,001 - ₦2,500,000 ₦2,500,001 - ₦3,500,000 ₦3,500,001 - ₦4,500,001 ₦4,500,0001 - ₦5,500,000 ₦5,500,001 and above

(d)

Number 0 13 167 19 11 2 12 224

Diversity in Employment i). A total of 87 women were employed by the Bank during the financial period ended 30 september 2016 which represents 40% of the total workforce. ii). A total of 3 women were in the top management position as at the period ended 30 September 2016, which represents 23% of the total top management workforce in this position. There was no woman on the Board of Directors as executive director (see note (iii) below). iii). The analysis by grade is as shown below: GRADE LEVEL Manager (M) Senior Manager (SM) Assistant General Manager (AGM) Deputy General Manager (DGM) General Manager (GM) TOTAL

September 2016 Male Female 6 3 2 1 1 13

1 1 2

Total

Male

6 3 3 1 2 15

2 3 3 1 0 9

December 2015 Female 2 1 2 5

Total 4 3 4 1 2 14

iv). The Bank is committed to maintaining a positive work environment and to conduct business in a positive, professional manner and will ensure equal employment opportunity. DIRECTORS Analysis of directors by gender: Managing Director Executive Director Non - Executive Directors TOTAL

September 2016 Male Female 1 1 6 1 8 1

58

Total 1 1 7 9

Male 1 1 5 7

December 2015 Female 1 1

Total 1 1 6 8


The remuneration paid to the directors of the Bank (excluding pension and certain allowances) was: 29 Compliance with banking and other regulations During the year, the Bank paid a penalty in respect of delay in submission of 2015 Audited Financial Statement by the Securities and Exchange Commission . 30 Events after reporting period There was no event which could have a material effect on the financial position of the Bank as at 30 September 2016 or the profit for the year then ended on that date, that have not been adequately provided for or disclosed in the financial statements . 31 Litigations and claims The Bank in its ordinary course of business is presently involved in 13 cases (December 2015:15) as a co-defendant. The directors of the Bank are of the opinion that none of the aforementioned cases is likely to have material adverse effect on the Bank and are not aware of any other pending and or threatened claims or litigations which may be material to the financial statements. 32 Operating segments Segment information is provided on the basis of operating and reportable segments in the manner the Bank manages its business. The financial statements of the Bank as presented above reflects the management structure of the Bank and the way in which the Bank's management reviews business performance. Invariably, management considers its retail banking operations, whose results are shown in the statement of financial position and statement of comprehensive income, as its only operating segment. 33 Earnings per share Basic earnings per share (EPS) is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year. September 2016 Net profit attributable to shareholders ( in thousands of naira) 2016(UNAUDITED)2015(AUDITED Number of shares in issue as at 30 June (in thousands) Weighted average number of shares in issue as at 30 June (in thousands) Basic earnings per share (kobo) The Bank did not have potential dilutive shares as at 30 June 2016.

59

687,040 2,286,656 2,286,656 30

2015 477,816 2,286,656 2,286,656 21

OTHER NATIONAL DISCLOSURES


OTHER NATIONAL DISCLOSURES: VALUE ADDED STATEMENT FOR THE MONTH ENDED 30 SEPTEMBER 2016 SEPTEMBER 2016 ₦'000 752,698 (159,151)

Gross earnings Bought-in-materials and services - local

%

DECEMBER 2015 AUDITED 2015 ₦'000 2,592,694 (586,307)

Value added

593,547

100

Distribution of value added: To employees - As salaries and other benefits

265,744

45

978,277

49

59,202

10

263,360

13

174,301

9

75,851 514,598

4 26

2,006,387

100

To providers of finance - As interests To the Government - As taxes

-

-

Retained in the business - Asset replacement (depreciation) - Profit for the year (including statutory reserves)

26,241 242,359

4 41

Value added

593,547

100

2,006,387

%

100

This statement represents the distribution of the wealth created with the Bank's assets through its own and its employees' efforts.

62


OTHER NATIONAL DISCLOSURES: FINANCIAL SUMMARY SEPTEMBER 2016 In thousands of naira


2014

2013

2012

STATEMENT OF FINANCIAL POSITION ASSETS Cash and cash equivalents Pledged assets Loans and advances to customers Investment securities Prepayments and other assets Property and equipment Deferred tax assets

3,392,529 575,525 8,867,045 37,024 963,488 423,533 -

4,388,448 583,038 7,881,519 38,154 346,969 394,070 35,411

3,054,787 635,090 6,527,210 47,265 194,773 371,331 34,733

2,477,012 20,000 5,559,453 61,268 207,530 355,375 -

2,235,258 20,000 4,780,336 113,577 175,509 366,306 -

TOTAL ASSETS

14,259,144

13,667,609

10,865,189

8,680,638

7,690,986

LIABILITIES Deposits from customers Current tax liabilities Retirement benefit obligations Deferred tax Liabilities Other liabilities Borrowings Deposit for shares

6,213,223 65,727 (35,412) 2,293,383 451,643 200000

6,610,113 630,795 188,983 1,986,225

4,803,374 213,434 282,010 813,502 672,976

3,858,052 135,024 106,449 62,196 602,023 -

3,271,585 154,704 137,109 46,932 389,815 -

TOTAL LIABILITIES

9,188,564

9,416,116

6,785,296

4,763,744

4,000,145

CAPITAL AND RESERVES Share capital Share premium Retained earnings Other reserves

1,143,328 1,517,485 801,859 1,088,999

1,143,328 1,517,485 476,216 1,114,464

1,143,328 1,517,485 407,801 1,011,279

1,143,328 1,517,485 301,138 954,943

1,143,328 1,517,485 280,986 749,042

TOTAL EQUITY

4,551,671

4,251,493

4,079,893

3,916,894

3,690,841

13,740,235

13,667,609

10,865,189

8,680,638

7,690,986

TOTAL LIABILITIES AND EQUITY

-

-

-

-

STATEMENT OF COMPREHENSIVE INCOME Gross income Profit before taxation Profit after taxation Dividend Basic and diluted earnings per share (kobo) Dividend per share (kobo) Net assets per share (kobo)

2,099,269 687,040

2,592,694 617,507

1,934,059 512,076

1,631,284 630,529

1,236,477 174,317

687,040

514,598

391,320

475,837

103,716

-

342,998

228,666

228,666

228,666

30 199

23 15 186

17 10 178

21 10 171

5 2 161

63

NPF MICROFINANCE BANK PLC Month End: SEPTEMBER 30, 2016 Trial balance - by mapping number

Account 1 Assets 1.1 Cash and cash equivalents 1.1.1 Cash in hand 101100 PETTY CASH 101201 CASHIER TELLER-1 101202 CASHIER TELLER-2 101203 CASHIER TELLER-3 101204 CASHIER TELLER-4 101205 CASHIER TELLER-5 101207 CASHIER TELLER-7 101208 CASHIER TELLER-8 101209 CASHIER TELLER-9 101210 CASHIER TELLER 10 101301 CASHIER DIFEERENCE TELLER-1 101302 CASHIER DIFEERENCE TELLER-2 101303 CASHIER DIFEERENCE TELLER-3 101304 CASHIER DIFEERENCE TELLER-4 101305 CASHIER DIFEERENCE TELLER-5 101306 CASHIER DIFEERENCE TELLER-6 101308 CASHIER DIFEERENCE TELLER-8 101400 CASH IN VAULT

Unadjusted

2016 Adjustments Adjusted (Absolute)Adjusted (Rounded)

14,259,145,820.51

0.00

14,259,145,820.51

14,259,146

3,392,531,419.44

0.00

3,392,531,419.44

3,392,531

35,695,291.16 14,250.00 -6,605,699.25

0.00

35,695,291.16 14,250.00 -6,605,699.25 0.00 5,096,180.00 13,199,405.66 -3,692,928.00 -34,678,854.00 -1,862,889.00 -11,165,243.00 -8,159,556.00 -194,017.42 -42,270.00 -24,941.83 135,999.00 59,855.00 8,000.00 0.00 83,608,000.00 0.00 339,648,214.14 339,648,214.14

35,694.00 14 -6,606 0 5,096 13,199 -3,693 -34,679 -1,863 -11,165 -8,160 -194 -42 -25 136 60 8 0 83,608 0 339,648 339,648

2,126,884,953.46 -11,865,855.92 1,415,330,805.59 32,550,448.40 62,325,022.76 249,960,730.67 7,872,337.39 23,913,167.88 1,223,889,355.03 -908,505,621.02 2,542,488.48 28,872,074.20

2,126,883 -11,866 1,415,331 32,550 62,325 249,961 7,872 23,913 1,223,889 -908,506 2,542 28,872

0.00

5,096,180.00 13,199,405.66 -3,692,928.00 -34,678,854.00 -1,862,889.00 -11,165,243.00 -8,159,556.00 -194,017.42 -42,270.00 -24,941.83 135,999.00 59,855.00 8,000.00 83,608,000.00

0.00

339,648,214.14 339,648,214.14

0.00 0.00

1.1.3 Current balances with other banks 2,126,884,953.46 102150 FBN GARKI MKT BRANCH -11,865,855.92 102200 FIRST BANK CURRENT ACCOUNT 1 1,415,330,805.59 102202 FBN CURRENT ACCOUNT OBALENDE BRANCH 32,550,448.40 102300 U.B.A PLC CURRENT A/C 62,325,022.76 102500 STERLING BANK 249,960,730.67 102502 STERLING BANKS ACCOUNT OBALENDE BRANCH 7,872,337.39 102901 FBN CLEARING A/C 23,913,167.88 102204 ATM WORKING CAPITAL -STERLING BANK (DEBIT CARD) 1,223,889,355.03 102206 ATM WORKING CAPITAL CREDIT CARD-BRANCH -908,505,621.02 102207 POS WORKING CAPITAL 2,542,488.48 102208 FBN NIP SETTLEMENT ACCOUNT 28,872,074.20

0.00

1.1.2 Held-to-Maturity Treasury Bills 103100 TREASURY BILL PURCHASE

0.00 0.00

64

1.1.6 Money market placements 102201 CALL ACCOUNT-FBN 102301 CALL ACCOUNT-UBA 102501 CALL ACCOUNT-STERLING 103200 FIXED DEPOSIT (PLACEMENT) 103300 CALL PLACEMENTS

0.00 0.00 0.00

890,302,960.68 590,465,654.13 0.00 70,512,007.53 202,071,636.16 27,253,662.86

890,303 590,466 0 70,512 202,072 27,254

0.00 0.00

0.00 0.00

0.00 0.00

0 0

575,524,697.12 20,000,000.00 323,939,549.17 231,585,147.95

0.00 0.00

575,524,697.12 20,000,000.00 323,939,549.17 231,585,147.95

575,525 20,000 323,940 231,585

1.5 Loans and advances to customers

8,867,045,111.89

0.00

8,867,045,111.89

8,867,045

1.5.1 Term loans

8,553,432,641.51

0.00

8,553,432,641.51

8,553,432

1.5.1.1 Term loans 104100 TERM-LOANS 104405 ADVANCES UNDER LEASES 104900 TERM LOAN MIGRATED FROM REALM 104901 Interest Receivable on term loans

3,914,634,883.73 3,876,236,426.63 1,992,164.81 12,198.00 36,394,094.29

0.00 0.00 0.00 0.00

3,914,634,883.73 3,876,236,426.63 1,992,164.81 12,198.00 36,394,094.29

3,914,634 3,876,236 1,992 12 36,394

1.5.1.2 Micro loans 104050 MICRO-LOANS 104051 MICRO LOANS- WEEKLY 104150 CONSUMER LOANS 104052 BOI MICRO LOANS 104053 CBN LOAN 104054 OTHER MICRO LOAN 104055 WE-WE LOANS 104056 BOI MICRO LOAN -(IFRS) 1041XX Interest receivable on micro loans

4,483,939,243.76 252,522,415.82 5,496,082.14 116,343,674.10 77,446,665.41 13,523,303.55 4,033,883,463.69 941,898.52 -16,218,259.47

0.00 0.00 0.00 0.00

4,483,939,243.76 252,522,415.82 5,496,082.14 116,343,674.10 77,446,665.41 13,523,303.55 4,033,883,463.69 941,898.52 -16,218,259.47 0.00

4,483,939.00 252,522 5,496 116,344 77,447 13,523 4,033,883 942 -16,218 0

1.5.1.4 Staff loans 104602 STAFF HOUSING LOANS 104603 STAFF SHARE LOAN 104604 STAFF MOTOR VEHICLE LOAN 104605 STAFF PERSONAL LOAN

154,858,514.02 32,827,921.43 1,432,922.24 85,550,836.72 35,046,833.63

0.00

154,858,514.02 32,827,921.43 1,432,922.24 85,550,836.72 35,046,833.63

154,859 32,828 1,433 85,551 35,047

1.5.2 Overdrafts 104030 OVERDRAWN CURRENT ACCOUNT 1040XX Interest receivable on Overdrafts

554,533,041.66 554,533,041.66

0.00

554,533,041.66 554,533,041.66 0.00

554,533 554,533 0

-240,920,571.28

0.00

-240,920,571.28

-240,920

1.1.6.1 Allowance for Impairment on Doubtful Placements 103302 PROVISION FOR DOUBTFUL BALANCE RECOVERABLE 1.1.4 Pledged Assets 102503 ATM COLLATERAL ACCOUNT 103201 Pledged asset- CBN Loan 103202 Pledged asset- BOI Loan

1.5.8 Allowance for impairment on loans and advances

890,302,960.68 590,465,654.13 70,512,007.53 202,071,636.16 27,253,662.86

0.00 0.00 0.00

65

1.5.8.1 Allowance for specific impairment

-165,418,912.14

0.00

-165,418,912.14

-165,418

1.5.8.1.1 Allowance for specific impairment - term loans 104652 INT. IN SUSP NON PERFORMING CONTRA 104700 COLLECTIVE IMPAIRMENT-1 201104 INTEREST IN SUSPENSE 201201 SPECIFIC IMPAIRMENT-LOANS

-47,703,700.74

0.00 0.00 0.00

-47,703,700.74

-416,385.51 -47,287,315.23

-47,703 0 0 -416 -47,287

1.5.8.1.2 Allowance for specific impairment - overdrafts 104704 SPECIFIC PROVISION ON OVERDRAFT

-117,715,211.40 -117,715,211.40

0.00

-117,715,211.40 -117,715,211.40

-117,715 -117,715

1.5.8.2 Allowance for collective impairment

-75,501,659.14

0.00

-75,501,659.14

-75,502

1.5.8.2.1 Allowance for collective impairment - term loans 104701 COLLECTIVE IMPAIRMENT-2 104700 COLLECTIVE IMPAIRMENT-1 104800 COLLECTIVE IMPAIRMENT-3

-49,963,551.00 2,973,970.41 46,660,267.60 -99,597,789.01

0.00

-49,963,551.00 2,973,970.41 46,660,267.60 -99,597,789.01

-49,964 2,974 46,660 -99,598

1.5.8.2.2 Allowance for collective impairment - overdrafts 104650 1% PROV. ON PERFORMING OVERDRAFT

-25,538,108.14 -25,538,108.14

0.00

-25,538,108.14 -25,538,108.14

-25,538 -25,538

1.6 Investment Securities

37,023,500.93

0.00

37,023,500.93

37,024

1.6.1 Available for Sale Investments

37,023,500.93

0.00

37,023,500.93

37,024

354,521,814.12 354,521,814.12

0.00 0.00

354,521,814.12 354,521,814.12

354,522 354,522

22,499,000.00 22,499,000.00

0.00 0.00

22,499,000.00 22,499,000.00

22,499 22,499

1.6.1.6 Impairment allowance on AFS assets -339,997,313.19 201206 PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMEN -339,997,313.19

0.00

-339,997,313.19 -339,997,313.19

-339,997 -339,997

1.J.10 Property and equipment

423,533,081.69

0.00

423,533,081.69

423,533.00

1.J.10.1 Property and Equipment - Cost

763,774,405.98

0.00

763,774,405.98

763,774

1.J.10.1.2 Land and buildings - Cost 107100 FREEHOLD ON LAND AND BUILDING 107200 CONSTRUCTION OF HEAD OFFICE

234,609,356.82 234,609,356.82

0.00 0.00 0.00

234,609,356.82 234,609,356.82 0.00

234,609 234,609 0

1.J.10.1.3 Office equipment - Cost 107500 OFFICE EQUIPMENT

108,980,804.45 108,980,804.45

0.00

108,980,804.45 108,980,804.45

108,981 108,981

1.J.10.1.4 Computer equipment - Cost 107600 COMPUTER EQUIPMENT

107,595,672.97 107,595,672.97

0.00

107,595,672.97 107,595,672.97

107,596 107,596

1.6.1.3 AFS: Listed equities 103500 DIRECT INVESTMENT 1.6.1.5 AFS Unlisted equities - cost 103501 UNQUOTED INVESTMENT

-416,385.51 -47,287,315.23

0.00

66

1.J.10.1.5 Furniture and fittings - Cost 107300 FURNITURE AND FIXTURES 107650 VAULT SAFE

77,445,571.74 77,332,404.75 113,166.99

77,445 77,332 113

0.00

235,143,000.00 235,143,000.00

235,143 235,143

-340,241,324.29

0.00

-340,241,324.29

-340,241

1.J.10.2.2 Land and buildings - Accum Dep 107705 CUMM. DEPRE. LEASEHOLD ON LAND AND BUILDING

-28,626,523.95 -28,626,523.95

0.00

-28,626,523.95 -28,626,523.95

-28,627 -28,627

1.J.10.2.3 Office equipment - Accum Dep 107870 CUMM. DEPRE. OFFICE EQUIPMENT

-68,801,840.73 -68,801,840.73

0.00

-68,801,840.73 -68,801,840.73

-68,802 -68,802

1.J.10.2.4 Computer equipment - Accum Dep 107880 CUMM. DEPRE. COMPUTER EQUIPMENT

-59,769,076.54 -59,769,076.54

0.00

-59,769,076.54 -59,769,076.54

-59,769 -59,769

1.J.10.2.5 Furniture and Fittings - Accum Dep 107850 CUMM. DEPRE. FURNITURE & FITTINGS 107890 CUMM. DEPRE. VAULT SAFE

-58,931,655.21 -58,139,488.58 -792,166.63

0.00

-58,931,655.21 -58,139,488.58 -792,166.63

-58,931 -58,139 -792

-124,112,227.86 -124,112,227.86

0.00

-124,112,227.86 -124,112,227.86

-124,112 -124,112

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0 0 0

1.Y.13 Other assets

963,488,009.44

0.00

963,488,009.44

963,486

1.Y.13.1 Prepayments 105201 PREPAYMENTS105202 PREPAYMENTS OF UPFRONT 105204 PREPAYMENT -OTHER INSURANCE 105205 PREPAYMENT -COMPUTER 105206 PREPAYMENT RENT ABUJA 105208 PREPAYMENT -VEH. INSURANCE 105217 ONGOING PROJECTS 105222 PREPAYMENT (STAFF COST) 105218 NDIC PREMIUM 105xxx PREPAYMENT RENT ENUGU 105318 PREPAYMENT RENT ABA

160,114,262.39 23,486,387.19 30,588,346.17 3,503,546.15 0.09 11,416,036.95

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

160,114,262.39 23,486,387.19 30,588,346.17 3,503,546.15 0.09 11,416,036.95 0.00 1,199,440.34 82,558,470.61 7,362,034.89 0.00 0.00

160,113 23,486 30,588 3,504 0 11,416 0 1,199 82,558 7,362 0 0

0.00 0.00 0.00 0.00

46,271,047.34 188,510.95 0.00 4,872,118.43

46,272 189 0 4,872

1.J.10.1.6 Motor vehicles - Cost 107400 MOTOR VEHICLES 1.J.10.2 Property and Equipment - Accumulated Depreciation

1.J.10.2.6 Motor vehicles - Accum Dep 107860 CUMM. DEPRE. MOTOR VEHICLES 1.K.11 Intangible assets 109X1 Intangible Assets - Accum Ammort 109XX Intangible Assets - Cost

1.Y.13.2 Inventory 105209 STOCKS OF CHEQUES 105210 BKS/JNLS/CASSATES/CDS 105211 STOCK OF OFFICE STATIONARIES

77,445,571.74 77,332,404.75 113,166.99

0.00

235,143,000.00 235,143,000.00

1,199,440.34 82,558,470.61 7,362,034.89

46,271,047.34 188,510.95 4,872,118.43

0.00

0.00

67

105212 STOCK OF MICR CHEQUES 105215 STOCK OF NON MICR CHEQUES 105216 DIVIDEND RECEIVABLE 105221 STOCK OF ATM CARDS 105223 STOCK OF CREDIT CARD 1.Y.13.3 Other receivables 101101 STAFF CASH ADVANCE A/C 105213 SUNDRY DEBTORS 105401 HEAD OFFICE 105407 BENIN 105410 ONITSHA BRANCH 105502 Discount Instrument Maturity Suspense 129004 CONSUMER LOANS SUSPENSE 201133 FRAUD-FORGERY ACCOUNT 105311 PRE-OPERATIONAL EXPENSES BAUCHI 105312 PRE-OPERATIONALEXPENSES LAFIA 105313 PRE-OPERATIONALEXPENSES ENUGU 105226 PREPAYMENT RENT IBADAN 105227 - PEPAYMENT RENT ABEOKUTA

3,316,131.22 8,624,786.74 15,551,500.00 13,718,000.00 737,268,413.06 5,249,800.00 79,230,883.39 680,245.27

3,316,131.22 8,624,786.74 0.00 15,551,500.00 13,718,000.00

3,316 8,625 0 15,552 13,718

0.00 0.00

737,268,413.06 5,249,800.00 79,230,883.39 680,245.27 0.00 0.00 15,620,271.80

737,267.00 5,250 79,231 680 0 0 15,620

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

254,879.60 176,424.27 0.00 0.00 0.00 0.00 10,000.00 0.00 7,752,000.00 595,186,316.57 0.00 300.00 0.00 0.00 0.00 0.00 33,117,392.16 -10,100.00

255 176 0 0 0 0 10 0 7,752 595,186 0 0 0 0 0 0 33,117 -10

0.00

-37,896,507.52

-37,897

15,620,271.80 254,879.60 176,424.27

10,000.00

105228 - PREPAYMENT RENT IKORODU 7,752,000.00 102205 ATM WORKING CAPITAL-STERLING BANK-CREDIT CARD595,186,316.57 129001 TELLER SUSPENSE 129000 TAKE ON SUSPENSE 300.00 105224 STAFF TERMINAL BENEFIT - PLAN ASSET 105225 PREPAYMENT GRATUITY 102204 ATM WORKING CAPITAL - STERLING -DEBIT CARD 129009 NIBSS OUTFLOW SUSPENSE ACCOUNT 107990 FIXED ASSET SUSPENSE 33,117,392.16 129008 NIBSS INFLOW SUSPENSE ACCOUNT -10,100.00 1.Y.13.4 Allowance for impairment on other assets

0.00 0.00 0.00 0.00

-37,896,507.52

68

104703 SPECIFIC PROVISION-OTHER ASSETS 1.Y.13.5 Pre-Operational expenses 105314 PRE-OPERATIONALEXPENSES -ikj 2 105315 PRE-OPERATIONALEXPENSES -TEJUOSHO 105316 PRE-OPERATIONALEXPENSES -KADUNA 105317 PRE-OPERATIONALEXPENSES -ORJI RIVER 105318 PRE-OPERATIONALEXPENSES -ABA 105319 PRE-OPERATIONALEXPENSES -ASABA

-37,896,507.52

-37,896,507.52

-37,897

57,730,794.17 1,898,000.00 29,173,750.00 11,674,394.20 574,999.97 5,610,000.00 8,799,650.00

0.00 0.00 0.00 0.00 0.00

57,730,794.17 1,898,000.00 29,173,750.00 11,674,394.20 574,999.97 5,610,000.00 8,799,650.00

57,731.00 1,898 29,174 11,674 575 5,610 8,800

2 Liabilities

9,707,473,374.41

0.00

9,707,473,374.41

9,707,477.32

2.1 Deposits from Customers

6,213,222,198.20

0.00

6,213,222,198.20

6,213,225.20

2.1.1 Demand Deposits 102903 CLEARING NPF SAL MSS 102902 CLEARING OTHERS 102904 CLEARING CIVIL SERV. SAL 102905 MSS1 Senior OFCR Sal Clearing 102907 MSS3 OTHERS SAL CLEARING 200101 CURRENT ACCOUNT INDIVIDUAL 200102 STAFF CURRENT ACCOUNT 200103 CURRENT ACCOUNT CORPORATE 200104 CURRENT ACCOUNT MGT STAFF 200106 LOAN DISBURSEMENT A/C 200107 SALARY CURRENT ACCOUNT 200109 PAY ADVANCE ON CARD 201111 NPWIS CLEARING ACCOUNT 201112 NPWIS CLEARING CHEQUE 20111X Excess COT-Sundry Deposits

2,134,969,149.62 388,949.00

0.00

2,134,969,149.62 388,949.00 0.00 1,743,313.12 155,915.00 160,728.76 123,298,402.70 8,569,016.42 626,775,713.08 6,919,456.97 22,932,522.12 1,153,284,369.96 10,017,725.70 177,563,573.03 3,159,463.76 0.00

2,134,972.15 389 0 1,743 156 161 123,298 8,569 626,776 6,919 22,933 1,153,284 10,018 177,564 3,160 1

2.1.3 Term deposits 200050 NON BANK CALL DEPOSIT 200400 IGP MAT.ACCOUNT 200600 I.G.P PREMIUM BOND 200800 FIXED DEPOSIT

2,166,090,032.24 215,674,515.92 -57.47 1,950,314,423.11 101,150.68

0.00 0.00 0.00 0.00 0.00

2,166,090,032.24 215,674,515.92 -57.47 1,950,314,423.11 101,150.68

2,166,090 215,675 -0 1,950,314 101

0.00 0.00

0.00 0.00

0.00 0.00

0 0

1,912,163,016.34 240,775,545.48 61,468,830.67 22,948,982.45 11,322.54 4,016,251.37 20,068,713.41 3,080,526.31 62,275,647.30 11,036,835.51 1,436,026.38

0.00

1,912,163,016.34 240,775,545.48 61,468,830.67 22,948,982.45 11,322.54 4,016,251.37 20,068,713.41 3,080,526.31 62,275,647.30 11,036,835.51 1,436,026.38

1,912,163.02 240,776 61,469 22,949 11 4,016 20,069 3,081 62,276 11,037 1,436

2.1.3.1 Interest Payable on Term deposits 201101 INTEREST PAYABLE ON IGP DEPOSIT 2.1.4 Savings deposits 200201 REGULAR SAVINGS A/C 200202 PASA SAVINGS 200203 POFA SAVINGS 200204 SAVINGS A/C STAFF 200205 STAFF SAVINGS A/C 200206 SALARY SAVINGS 200207WE-WE ACCOUNT 200301 DAILY CONTRIBUTIONS SAVINGS 200302 LOAN GUARANTEE SAVINGS 200303 CARD SAVINGS

1,743,313.12 155,915.00 160,728.76 123,298,402.70 8,569,016.42 626,775,713.08 6,919,456.97 22,932,522.12 1,153,284,369.96 10,017,725.70 177,563,573.03 3,159,463.76

69

200304 MICRO LOANS GUARANTEE SAVINGS A/C 200305 TERM LOAN GUARANTY SAVINGS A/C 200308 OTSA SAVINGS 200700 MICRO SAVING 200701 FESTIVAL PROMO ACCOUNT 201149 UNCLARIFIED CREDITS IN BANK STATEMENTS 201114 CUSTOMER SAL. SUSPENSE

47,714,355.41 576,165,648.60 618,013,550.20 186,666,677.39 11,413,364.19 37,751,771.42 7,318,967.71

47,714,355.41 576,165,648.60 618,013,550.20 186,666,677.39 11,413,364.19 37,751,771.42 7,318,967.71

47,714 576,166 618,014 186,667 11,413 37,752 7,319

2.1.4 Borrowings 200951 BOI CONCESSIONARY LOAN 200952 CBN CONCESSIONARY LOAN 201223 PROVISION FOR BOI INTEREST 201224 PROVISION FOR MSMEDF INTEREST

467,527,247.98 50,516,605.98 401,126,563.63 1,168,511.69 14,715,566.68

0.00

467,527,247.98 50,516,605.98 401,126,563.63 1,168,511.69 14,715,566.68

467,527 50,517 401,127 1,169 14,716

2.4 Other liabilities

2,996,409,298.43

0.00

2,996,409,298.43

2,996,410

2.4.2 Accounts payable 201105 ACCOUNT PAYABLE 201115 PAYEE

1,018,902,669.80 4,468,515.79

0.00

1,018,902,669.80 4,468,515.79 0.00

1,018,902.72 4,469 0

0.00

0.00

70

201116 NHF 8,574,132.79 201118 STALED CHEQUE 26,927,590.38 201130 SUNDRY CREDITORS 16,156,843.16 201150 ATM EXCESS DEPOSIT 666,284.00 129003 TB DIFFERENCE 201144 STALED CHEQUE FBN 1,376,780.94 108101 DRAFT SUSPENSE 201151 INTEREST PAYABLE ON TERMINAL BENEFIT 11,642,289.78 201152 RETIREMENT BENEFIT OBLIGATION (CURRENT) 106,675,561.53 201153 RETIREMENT BENEFIT OBLIGATION (NON - CURRENT) 123,503,717.59 107990 FIXED ASSET SUSPENSE 201210 DEPOSIT FOR SHARES(POLICE COOPERATIVE) 718,910,953.84

0.00 0.00 0.00 0.00 0.00 0.00

8,574,132.79 26,927,590.38 16,156,843.16 666,284.00 0.00 1,376,780.94 0.00 11,642,289.78 106,675,561.53 123,503,717.59 0.00 718,910,953.84

8,574 26,928 16,157 666 0 1,377 0 11,642 106,676 123,504 0 718,911

2.4.4.5 Accruals 201202 PROVISION FOR WITHOLDING TAX INDIVIDUAL 201203 PROVISION FOR WITHOLDING TAX COY

103,680,310.30 852,343.71 6,171,653.43

0.00 0.00 0.00

103,680,310.30 852,343.71 6,171,653.43

103,681.00 852 6,172

201204 PROVISION FOR AUDIT FEES

9,887,340.00

0.00

9,887,340.00

9,888

201215 Provision for AGM Expenses

-1,764,932.28

0.00

-1,764,932.28

-1,765

201217 PROVISION YEAR END EXPENSES

12,349,999.97

0.00

12,349,999.97

12,350

201218 PROVISION FOR PROFIT SHARE 201219 PROVISION FOR VAT 201220 PROVISION FOR 13TH MONTH 201221 PROVISION FOR INSURANCE PREMIUM 201231 PROVISION FOR STAMP DUTY 201222 PROVISION FOR BOI LOAN INSURANCE 201225 PROVISION FOR ITF 201226 PROVISION FOR CBN LOAN INSURANCE 201227 PROVISION FOR STAFF TERMINAL BENEFITS Other Current Liabilities

25,182,812.63 9,238,096.89 35,041,020.91 7,431,755.78 141,800.00 420,177.13 -1,359,957.87 88,200.00

0.00 0.00 0.00 0.00

1,873,826,318.33

0.00

25,182,812.63 9,238,096.89 35,041,020.91 7,431,755.78 141,800.00 420,177.13 -1,359,957.87 88,200.00 0.00 1,873,826,318.33

25,183 9,238 35,041 7,432 142 420 -1,360 88 0 1,873,826

-15,076,265.00 -15,076,265.00

0.00 0.00

-15,076,265.00 -15,076,265.00

-15,076 -15,076

2.4.4.2 Other payables

97,700.00

0.00

97,700.00

98

201110 SEARCH FEE SUSPENSE 201114 CUSTOMER SAL. SUSPENSE

97,700.00

0.00

97,700.00

98

94,563,261.83 76,399,293.72 18,163,968.11

94,563 76,399 18,164

1,794,241,621.50 544,701,662.49 315,115,940.45 15,370,095.42 860,787,630.64 58,266,292.50

1,794,241 544,702 315,116 15,370 860,788 58,266

2.4.4.1 Unearned income 201211 DEFERRED INCOME ON ATM

2.4.4.3 Deferred Income on Fees 202301 DEFFERED INCOME ON MANAGEMENT FEE 202302 DEFFERED INCOME ON LEGAL FEE 2.4.4.4 ATM Suspense Account 102203 ATM SETTLEMENT ACCOUNT 129005 ATM SETTLEMENT ACCOUNY (DEBIT CARD) 129007 ATM SETTLEMENT ACCOUNT (CREDIT CARD) 129009 NIBSS OUTFLOW SUSPENSE ACCOUNT 129010 NIBSS OUTFLOW SUSPENSE ACCOUNT 2

94,563,261.83 76,399,293.72 18,163,968.11 1,794,241,621.50 544,701,662.49 315,115,940.45 15,370,095.42 860,787,630.64 58,266,292.50

0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00

71

2.4.4.5 Provisons 201216 PROVISION FOR PRODUCTIVITY BONUS

0.00

0.00

0.00 0.00

72

0 0

2.4.6 RBO LIABILITIES 2011YY RBO Liabilities (Current) 2011ZZ RBO Liabilities (Non-current)

0.00 0.00 0.00

0.00

0.00 0.00 0.00

0 0 0

-35,411,871.28 -35,411,871.28

0.00

-35,411,871.28 -35,411,871.28

-35,412 -35,412

65,726,501.08 65,726,501.08

0.00

65,726,501.08 65,726,501.08

65,727 65,727

0.00

0.00 0.00

0.00 0.00 0.00 0.00

0 0 0 0

3 Capital and reserves

-3,864,632,128.75

0.00

-3,864,632,128.75

-3,864,631

3.1 Share Capital 300101 ISSUED AND FULLY PAID-UP CAPITAL

-1,143,328,883.00 -1,143,328,883.00

0.00 0.00

-1,143,328,883.00 -1,143,328,883.00

-1,143,329 -1,143,329

3.2 Share premium 300206 SHARE PREMIUM A/C

-1,517,484,386.57 -1,517,484,386.57

0.00 0.00

-1,517,484,386.57 -1,517,484,386.57

-1,517,484 -1,517,484

-89,354,383.34 19,906,039.98 -109,260,423.32

0.00

-89,354,383.34 19,906,039.98 -109,260,423.32

-89,354 19,906 -109,260

0.00 0.00

0.00 0.00

0.00 0.00

0 0

3.5 Other reserves 300XX ACTUARIAL RESERVE 300201 STATUTORY RESERVES 300208 REGULATORY RESERVE 300209 REMEASUREMENT GAIN/(LOSS)

-1,114,464,475.84

0.00

-1,114,464,475.84 0.00 -1,006,398,266.29 -108,066,209.55 0.00

-1,114,464 0 -1,006,398 -108,066 0

4 Income

-2,099,270,424.22

0.00

-2,099,270,424.22

-2,099,269

4.1 Interest & similar income

-1,446,222,008.64

0.00

-1,446,222,008.64

-1,446,220

4.1.2 Interest income on loans & advances to customers 400101 INTEREST INCOME ON MICRO- LOANS 400102 INTEREST INCOME ON SME-LOANS 400105 INTEREST ON OVERDRAFT 400106 INTEREST ON STAFF PERSONAL LOANS 400107 INTEREST ON STAFF HOUSING LOANS 400108 INTEREST ON SHARE LOANS 400109 INTEREST ON STAFF VEHICLE LOANS

-1,389,531,323.08 -102,879,502.71 -50,061.33 -116,880,235.56 -567,967.00 -1,040,910.76

0.00

-1,389,531,323.08 -102,879,502.71 -50,061.33 -116,880,235.56 -567,967.00 -1,040,910.76 0.00 -3,540,384.50

-1,389,530 -102,880 -50 -116,880 -568 -1,041 0 -3,540

2.5 Deferred tax liabilities/(assets) 201214 PROVISION FOR DEFERRED TAX

2.8 Current Income tax liability 201205 PROVISION FOR TAXATION 2.9 Retirement benefit obligations 201117 PENSION 105224 Staff Terminal Benefits - Plan Assets 201128 Staff Terminal Benefits - liability

3.3 Retained earnings 300203 GENERAL RESERVE 300205 RETAINED PROFIT 3.4 Fair value reserve 300207 AVAILABLE FOR SALE RESERVES

-1,006,398,266.29 -108,066,209.55 0.00

-3,540,384.50

73

400110 INTEREST ON LOANS/ADVANCES 400115 INTEREST INCOME ON LEASES 400120 INTEREST ON CONSUMER LOANS 400131 INTEREST ON BOI LOAN 400132 INTEREST ON CBN LOAN 400141 INTEREST INCOME ON MICRO LOANS WEEKLY 400142 INTEREST ON DIRECTORS LOANS 400507 INCOME ON RECOVERED LOANS 400144 INTEREST INCOME ON OTHER MICRO- LOANS 400508 INCOME ON WRITTEN-OFF LOANS 400145 INTEREST INCOME ON WE-WELOAN 400126 INTEREST ON INVESTEMENT UNDER LIEN 400507 INCOME ON RECOVERED LOAN 4.1.3 Interest income on investment securities 400111 INTEREST INCOME ON I/B PLC CALL 400113 INTEREST INCOME ON BANK C/A 400114 INTEREST INCOME ON CALL A/C BANK C/A 400116 INTEREST INCOME ON T/BILLS 400117 INTEREST INCOME ON OTHER NON RD INVS. 400118 INTEREST INCOME ON C/P

-643,679,235.70 -416,442.88 -27,653,954.36 -5,772,026.31 -2,389,357.54 -1,672,049.06 -30,000.00 -463,011,024.82 -150,201.82 -220,820.00 -19,577,148.73

0.00 0.00 0.00 0.00 0.00 0.00

-56,690,685.56 -2,929,961.07

0.00 0.00

-29,583,483.30 -13,774,076.10

0.00 0.00 0.00 0.00

-10,403,165.09

0.00 0.00

-643,679,235.70 -416,442.88 -27,653,954.36 -5,772,026.31 -2,389,357.54 -1,672,049.06 0.00 -30,000.00 -463,011,024.82 -150,201.82 -220,820.00 -19,577,148.73 0.00

-643,679 -416 -27,654 -5,772 -2,389 -1,672 0 -30 -463,011 -150 -221 -19,577 0

-56,690,685.56 -2,929,961.07 0.00 -29,583,483.30 -13,774,076.10 0.00 -10,403,165.09

-56,690 -2,930 0 -29,583 -13,774 0 -10,403

-416,280 0 -121,192 -91,998 -105,750 -26,953 -59,508 -10,383 -411 -85

4.3.1 Credit-related Fees and Commissions income 400302 LOAN AGREEMENT FORM FEE 400305 LOAN COMMITMENT FEE 400306 MANAGEMENT FEE ON OVERDRAFT 400307 LOAN PROCESSING FEE 400308 LOAN INSURANCE FEES 400309 LOAN LEGAL FEES 400310 INCOME CREDIT BUREAU FEE 400311 PASKBOOK FEES 400402 LOAN PENALTIES

-416,279,962.56 -121,191,840.29 -91,998,184.21 -105,750,311.03 -26,952,897.56 -59,507,850.59 -10,383,010.00 -410,900.00 -84,968.88

0.00 0.00

-416,279,962.56 0.00 -121,191,840.29 -91,998,184.21 -105,750,311.03 -26,952,897.56 -59,507,850.59 -10,383,010.00 -410,900.00 -84,968.88

4.3.2 Deposit-related Fees and Commissions income

-86,787,234.35

0.00

-86,787,234.35

-86,788

4.3.2.1 Commission on turnover 400202 ACCOUNT MAINTENANCE FEE

-25,597,563.18 -25,597,563.18

0.00

-25,597,563.18 -25,597,563.18

-25,598 -25,598

74

4.3.2.2 Admin. and management fees -61,189,671.17 400201 GENERAL COMMISSIONS -15,900.00 400204 COMMISSION ON ATM CARD -5,513,100.00 400205 INCOME ON ATM CREDIT CARDS -2,907,500.00 400301 ACCOUNT OPENING FORM FEES -14,300.00 400206 INCOME ON NIP TRANSFER -3,534,860.00 400303 LEDGER CARD FEE -800.00 400304 LEDGER FEES 400312 SAVINGS TRANSACTION FEE 400314 ATM ACCOUNT MAINTENANCE FEE -10,170,430.00 400315 INCOME ON VIOLATION OF CASHLESS POLICY - INDIVIDUAL -1,491,421.38 400316 INCOME ON VIOLATION OF CASHLESS POLICY - CORPORATE -702,557.50 400317 1-DAY INCOMEON WE-WE SAVINGS -219,800.00 400511 SMS INCOME -36,619,002.29 400512 ATM TRANSACTION FEE (NOU)

0.00 0.00 0.00 0.00 0.00

4.4 Other operating income 4.4.1 Dividend income on AFS securities 400510 DIVIDEND INCOME 4.4.2 (Profit)/loss on disposal of property & equipment 400503 INCOME/LOSS ASSET DISPOSAL 4.4.3 Other income 400203 BUSINESS ADVISORY SERVICES 400500 SUNDRY INCOME 400501 MISCE. INCOME OPS 400502 MISCE. INCOME ACCOUNTS 400505 INCOME ON SALARY ADMIN 400509 INT. INCOME ON CAPITAL MARKET 5 Expenses 5.2 Interest expense

0.00

-61,189,671.17 -15,900.00 -5,513,100.00 -2,907,500.00 -14,300.00 -3,534,860.00 -800.00 0.00 0.00 -10,170,430.00 -1,491,421.38 -702,557.50 -219,800.00 -36,619,002.29 0.00

-61,190 -16 -5,513 -2,908 -14 -3,535 -1 0 0 -10,170 -1,491 -703 -220 -36,619 0

-149,981,218.67

0.00

-149,981,218.67

-149,981

-105,540.62 -105,540.62

0.00 0.00

-105,540.62 -105,540.62

-106 -106

-1,857,472.30 -1,857,472.30

0.00 0.00

-1,857,472.30 -1,857,472.30

-1,857 -1,857

-148,018,205.75 -1,198,650.00

0.00 0.00 0.00 0.00

-148,018,205.75 -1,198,650.00 0.00 -15,908,254.90 -5,577,362.45 -125,333,938.40 0.00

-148,018 -1,199 0 -15,908 -5,577 -125,334 0

0.00 1,412,230,106.87

1,412,230,106.87

1,412,230.11

165,837,336.41

165,837,336.41

165,838

-15,908,254.90 -5,577,362.45 -125,333,938.40

0.00 0.00 0.00 0.00 0.00

0.00 0.00

75

5.2.2 Interest expense - current accounts 500104 INTEREST EXPENSE ON CURRENT A/C 500105 INTEREST EXPENSE ON MGT CURRENT A/C

5,968,126.85 5,926,662.52 41,464.33

0.00 0.00 0.00

5,968,126.85 5,926,662.52 41,464.33

5,968 5,927 41

5.2.3 Interest expense - time deposits 138,111,514.06 500101 INTEREST EXPENSE ON IGP DEPOSIT 103,534,857.38 500102 INTEREST EXPENSE ON CALL/FIXED DEPOSIT 3,820,741.44 500106 INTEREST EXPENSE ON POFA 547,957.65 500107 INTEREST EXPENSE ON PASA 1,360,524.64 500111 INTEREST EXPENSES ON TERM LOAN GUARANTEE SAVINGS 8,539,022.66 500112 INTEREST EXPENSES ON OTSA 20,308,410.29 500121 INTEREST EXPENSE IGP PREM. BOND 400113 INTEREST INCOMEON BANK C/A

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

138,111,514.06 103,534,857.38 3,820,741.44 547,957.65 1,360,524.64 8,539,022.66 20,308,410.29 0.00 0.00

138,112 103,535 3,821 548 1,361 8,539 20,308 0 0

5.2.4 Interest expense - borrowings 500910 INTEREST EXPENSE ON BORROWED FUNDS 500911 INTEREST EXPENSE CBN BORROWED FUNDS 501XX9 Interest on RBO

14,425,124.72 3,290,544.93 11,134,579.79

0.00

14,425,124.72 3,290,544.93 11,134,579.79 0.00

14,425 3,291 11,135 0

7,332,570.78 7,105,739.38 226,831.40

0.00 0.00

7,332,570.78 7,105,739.38 226,831.40

7,333 7,106 227

5.3 Depreciation and amortisation

68,898,062.13

0.00

68,898,062.13

68,898

5.3.1 Depreciation 501501 DEPRECIATION LAND & BUILDING 501503 DEPRECIATION FURNITURE AND FITTINGS 501504 DEPRECIATION MOTOR VEHICLES 501505 DEPRECIATION OFFICE EQUIPMENT 501506 DEPRECIATION COMPUTER EUIPMENT 501507 DEPRECIATION VAULT SAFE

68,898,062.13 3,519,140.31 7,428,971.85 30,896,937.68 15,321,826.21 11,731,186.08

0.00

68,898,062.13 3,519,140.31 7,428,971.85 30,896,937.68 15,321,826.21 11,731,186.08 0.00

68,898 3,519 7,429 30,897 15,322 11,731 0

432,464,942.27

0.00

432,464,942.27

432,463

5.5.1 Repairs and maintenance 501301 REPAIRS & MAINTENANCE BUSINESS PREMISES 501302 REPAIRS & MAINTENANCE (HARDWARE) 501307 REPAIRS & MTCE BUSINESS PREMISES 501308 MAINTENANCE SOFTWARE 501412 REPAIRS & MAINTENANCE OFFICE EQUIP. 501414 REPAIRS & MAINT. FURNITURE AND FITTINGS 501405 MOTOR VEHICLE EXPENSES

47,677,471.88 6,020,530.01 3,764,843.55

0.00

18,879,489.90 4,089,304.28 5,379,466.55 9,543,837.59

0.00 0.00 0.00 0.00 0.00 0.00

47,677,471.88 6,020,530.01 3,764,843.55 0.00 18,879,489.90 4,089,304.28 5,379,466.55 9,543,837.59

47,677 6,021 3,765 0 18,879 4,089 5,379 9,544

5.5.2 Vehicle and generator running cost 501407 GENERATOR RUNNING EXPENSES 501411 FUELING MOTOR VEHICLE

42,017,465.84 26,955,431.84 15,062,034.00

0.00 0.00 0.00

42,017,465.84 26,955,431.84 15,062,034.00

42,017 26,955 15,062

5.2.4 Interest expense - savings account 500103 INTEREST EXPENSE ON SAVINGS 500109 INTEREST EXPENSE ON FESTIVALPROMO ACCOUNT

5.5 Other operating expenses

76

49,958,479.82 3,578,065.13 11,474,880.00 1,259,340.00 0.00 3,357,615.00 127,175.00 317,656.00 12,364,842.48 1,462,897.48 2,627,790.00 3,541,941.53 9,846,277.20

0 49,959 3,578 11,475 1,259 0 3,358 127 318 12,365 1,463 2,628 3,542 9,846

31,097,127.37 2,258,255.00 28,838,872.37

31,097 2,258 28,839

0.00 0.00

25,657,081.82 13,156,452.98 8,316,732.34 4,183,896.50

25,657 13,156 8,317 4,184

22,417,699.97 10,405,000.00 12,012,699.97

0.00 0.00 0.00

22,417,699.97 10,405,000.00 12,012,699.97

22,418 10,405 12,013

5.5.7 Bank Charges 501702 BANK CHARGES

17,979,375.02 17,979,375.02

0.00 0.00

17,979,375.02 17,979,375.02

17,979 17,979

5.5.8 Publicity Expenses 501406 ADVERTISEMENT & POSTERS 501804 MARKETING EXPENSES 501805 P/R ACCOUNT

36,038,592.58 1,304,086.69 28,969,406.58 5,765,099.31

0.00

36,038,592.58 1,304,086.69 28,969,406.58 5,765,099.31

36,038 1,304 28,969 5,765

5.5.9 Professional Fees 501220 CONSULTANCY FEES

12,019,029.77 12,019,029.77

0.00

12,019,029.77 12,019,029.77

12,019 12,019

Insurance Costs 501418 INSURANCE VEHICLE INSURANCE 501419 INSURANCE OTHERS INSURANCE

16,011,865.66 7,665,351.60 8,346,514.06

0.00 0.00 0.00

16,011,865.66 7,665,351.60 8,346,514.06

16,012 7,665 8,347

NDIC Premium 501420 NDIC PREMIUM EXPENSES

22,086,104.85 22,086,104.85

0.00 0.00

22,086,104.85 22,086,104.85

22,086 22,086

Rents and Rates 501303 RENT

15,611,070.61 15,611,070.61

0.00

15,611,070.61 15,611,070.61

15,611 15,611

2,414,541.09 2,342,336.77

0.00 0.00

2,414,541.09 2,342,336.77

2,414 2,342

5.5.3 Office expenses 501202 COMMUNICATION TELEPHONE 501203 GENERAL OFFICE EXPENSES 501205 NEWSPAPERS, BOOKS & PERIODICALS 501206 OFFICE MAINTENANCE 501207 ENTERTAINMENT 501212 OFFICE STATIONERY 501213 GENERAL OFFICE SUPPLIES 501214 SPECIE AND SECURITY 501216 COMM. TELEX AND CABLE 501402 CLEANING EXPENSES 501403 COMMUNICATION/POSTAGE & STAMPS 501404 PRINTING & STATIONARY

49,958,479.82 3,578,065.13 11,474,880.00 1,259,340.00

0.00 0.00

3,357,615.00 127,175.00 317,656.00 12,364,842.48 1,462,897.48 2,627,790.00 3,541,941.53 9,846,277.20

0.00

5.5.4 Computer Expenses 501215 COMPUTER CONSUMABLES 501413 IT COMMUNICATION (WAN)

31,097,127.37 2,258,255.00 28,838,872.37

0.00

5.5.5 Travel expenses 501119 OUT OF STATION ALLOWANCE 501120 OUT OF STATION TRAVEL EXP 501201 LOCAL TRANSPORT FARES

25,657,081.82 13,156,452.98 8,316,732.34 4,183,896.50

0.00

5.5.6 AGM & Year end Expenses 501219 AGM EXPENSES 501221 YEAR END EXPENSES

Subscription fees 501210 PROF. ORG. SUBSCRIPTION FEES

0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00

0.00

77

501801 SUBSCRIPTION/SOCIAL CLUBS

72,204.32

0.00

72,204.32

72

Charges and levies 501XX1 ITF Levy Expense 500110 CHARGES ON TREASURY BILL 501811 NIBSS OPERATION

2,277,690.40

0.00 0.00 0.00 0.00

2,277,690.40 0.00 302,690.43 1,974,999.97

2,278 0 303 1,975

0.00 0.00

22,715,860.46 0.00 4,379,000.00 6,987,240.33 46,700.00 13,500.00 101,950.00 2,445,000.00 49,500.00 986,993.86 1,725,000.03 5,480,976.24 0.00 0.00 0.00

22,715.86 0 4,379 6,987 47 14 102 2,445 50 987 1,725 5,481 0 0 0 0 11,289 11,289

302,690.43 1,974,999.97

Other expenses 501602 BAD DEBTS WRITTEN OFF 501218 DONATION 501408 ELECTRICITY 501417 RECRUITMENT EXPENSES 501423 ATM DAMAGED CARDS 501603 LOAN RECOVERY EXPENSES 501701 FINES 501703 STAMP DUTIES-FILLING FEES 501705 LEGAL EXPENSES 501808 AMORTIZATION OF PRE-OPERATIONAL EXP. 501809 SMS ALERT 501810 FRAUD,FORGERY AND THEFT 501902 SHARE LISTING EXPENSES XXXX WHT

22,715,860.46

Auditors remuneration 501217 AUDIT EXPENSES

11,288,670.00 11,288,670.00

0.00

11,288,670.00 11,288,670.00

Directors emoluments 501415 DIRECTOR'S SITTING ALLOWANCE 501416 DIRECTORS EXPENSES 501421 SITTING ALLOWANCE OTHERS

55,196,815.13 21,273,200.00 33,300,415.13 623,200.00

0.00 0.00

55,196,815.13 21,273,200.00 33,300,415.13 623,200.00

4,379,000.00 6,987,240.33 46,700.00 13,500.00 101,950.00 2,445,000.00 49,500.00 986,993.86 1,725,000.03 5,480,976.24

0.00 0.00 0.00 0.00 0.00 0.00

0.00

78

55,196 21,273 33,300 623 0

5.6 Personnel expenses

661,524,740.34

0.00

661,524,740.34

661,525

5.6.1 Salaries and wages 501101 SALARY AND WAGES 501102 HOUSING ALLOWANCE 501103 TRANSPORT ALLOWANCE 501104 UTILITY ALLOWANCE 501105 LUNCH SUBSIDY 501106 DRESSING ALLOWANCE 501107 FURNITURE ALLOWANCE 501108 EDUCATION ALLOWANCE 501109 DOMESTIC SERVANT ALLOWANCE 501110 ENTERTAINMENT ALLOWANCE 501111 TRAINING EXPENSES 501112 OTHER ALLOWANCES 501114 ACCOUNTING ALLOWANCE 501116 STAFF MEDICAL EXPENSES 501117 STAFF WELFARE 501118 LEAVE ALLOWANCE 501121 PRODUCTIVITY BONUS 501122 ACTING ALLOWANCE 501123 TERMINAL BENEFITS 501124 STAFF TRANSFER EXPENSES 501222 PROFIT SHARE 501126 13TH MONTH 501409 SUPPORT SERVICE 501199 SALARY&WAGES SUSPENSE 501XX8 OTHER STAFF COST NEW

635,287,889.28 151,845,034.48 86,198,035.99 28,783,847.37 10,408,363.48 15,868,109.21 11,182,612.72 7,225,145.13 8,234,272.41 3,349,256.65 3,869,250.85 7,438,593.30 48,108,657.78

0.00

635,287,889.28 151,845,034.48 86,198,035.99 28,783,847.37 10,408,363.48 15,868,109.21 11,182,612.72 7,225,145.13 8,234,272.41 3,349,256.65 3,869,250.85 7,438,593.30 48,108,657.78 0.00 26,167,630.63 28,996,022.19 33,511,706.37 0.00 1,064,403.42 17,376,576.16 11,491,001.93 76,397,935.65 35,041,020.91 22,596,014.95 134,397.70 0.00

635,288 151,845 86,198 28,784 10,408 15,868 11,183 7,225 8,234 3,349 3,869 7,439 48,109 0 26,168 28,996 33,512 0 1,064 17,377 11,491 76,398 35,041 22,596 134 0

5.6.2 Retirement benefit costs 501113 COY CONTRIBUTION PENSION 501115 COY CONTRIBUTION NSITF 501XX7 COY GRATUITY 5.7 Income tax expense 501904 INCOME TAX BLANK (4530) Deferred taxation BLANK (4531) Education taxation BLANK (4427) Information Technology levy

26,167,630.63 28,996,022.19 33,511,706.37

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1,064,403.42 17,376,576.16 11,491,001.93 76,397,935.65 35,041,020.91 22,596,014.95 134,397.70

26,236,851.06 25,796,334.23 440,516.83

0.00 0.00 0.00 0.00

26,236,851.06 25,796,334.23 440,516.83 0.00

26,237 25,796 441 0

0.00

0.00

0.00 0.00 0.00 0.00 0.00

0 0 0 0 0

0.00 0.00 0.00

79

5.8 Allowance for impairment (p&l)

83,505,025.72

0.00

83,505,025.72

83,505

5.8.1 Allowance for impairment - loans (P/L) 501601 PROVISION FOR BAD DEBTS EXPENSES 501604 PROVISION FOR OVERDRAFT EXPENSES 501605 1% NCOLLECTIVE IMPAIRMENT BLANK (4961) Write back on impairment 5016XX PROV INDI IMPAIRMENT LOAN 5017XX PROV INDI IMPAIRMENT O/D

82,374,245.86 65,455,730.81 4,125,275.64 12,793,239.41

0.00

82,374,245.86 65,455,730.81 4,125,275.64 12,793,239.41 0.00 0.00 0.00

82,374 65,456 4,125 12,793 0 0 0

0.00 0.00

5.8.2 Allowance for impairment - Placements (P/L) 500XX ALLOWANCE ON DOUBTFUL PLACEMENTS

0.00 0.00

0.00 0.00

0.00 0.00

0 0

5.8.3 Allowance for impairment - Other assets (P/L) 501XX ALLOWANCE FOR DOUBTFUL OTHER ASSETS

0.00

0.00

0.00 0.00

0 0

1,130,779.86 1,130,779.86 0.00

0.00

1,130,779.86 1,130,779.86 0.00

1,131 1,131 0

500,000.00 500,000.00

0.00

500,000.00 500,000.00

500.00 500

PAT

-687,040,317.35

0.00

-687,040,317.35

-687,039

PBT

-687,040,317.35

0.00

-687,040,317.35

-687,040

Total assets

14,259,145,820.51

0.00

14,259,145,820.51

14,259,146

Total liabilities Total equity Total liabilities and equity

9,707,473,374.41 4,551,672,446.10 14,259,145,820.51

0.00 0.00 0.00

9,707,473,374.41 4,551,672,446.10 14,259,145,820.51

9,707,473 4,551,672 14,259,146

5.8.4 Allowance for impairment - Investments (P/L) 501807.1 DIMINUTION-CAPITAL MARKET INVESTMENT 501905 AFS EQUITY VALUE CHANGE (EXPENSE) 5.9 Corporate Social Responsibilty 501223 CORPOATE SOCIAL RESPONSIBILITY

Difference

0.00

-

80