Union Bank of Nigeria Plc CONSOLIDATED AND ... - Nairametrics

Union Bank of Nigeria Plc CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED 30 September 2016

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016

Separate and Consolidated Statements of Profit or Loss and Other Comprehensive Income For the period ended 30 September 2016 Group Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

93,429

83,715

91,359

85,404

9 9

70,960 (22,890)

66,907 (26,634)

69,219 (22,832)

65,333 (26,529)

14(a)

48,070 (12,870) 35,200

40,273 (4,454) 35,819

46,387 (12,845) 33,542

38,804 (4,421) 34,383

8,289 5,148 923 318 7,791

6,042 3,598 1,224 (511) 6,313

7,805 4,998 923 752 7,662

5,582 3,526 1,224 3,412 6,327

22,140 55,682

20,071 54,454

Notes Gross earnings Continuing Operations: Interest income Interest expense Net interest income (NRFF) Net impairment charge for credit losses Net interest income after impairment charge for credit losses Net fee and commission income Net trading income Cash recoveries Gain on sale of subsidiaries/investments Other operating income

10 11 12 12

Non interest income (NII) Operating income Net impairment write-back/(loss) on other financial assets Net operating income after net impairment writeback/(loss) on other financial assets Personnel expenses Depreciation and amortisation Other operating expenses

Bank

22,469 57,669 14(b)

165

16,666 52,485 -

165

-

57,834 (22,587) (3,816) (18,156)

52,485 (22,598) (3,108) (17,329)

55,847 (21,381) (3,670) (17,612)

54,454 (21,612) (2,990) (16,685)

(44,559)

(43,035)

(42,663)

(41,287)

13,275

9,450

13,184

13,168

16

(263) 13,012

(210) 9,240

(131) 13,053

(86) 13,082

Discontinued operations Gross income from discontinued operations Gross expense from discontinued operations Profit/Loss before tax from discontinued operations Income tax expense from discontinued operations

38 38 38 38

-

142 (36) 106 (9)

-

-

Profit/Loss for the period from discontinued operations

38

-

97

-

-

13,184 (131) 13,053

13,168 (86) 13,082

(7,065) (7,065) 5,988

887 887 13,969

14 15

Total expenses Profit before income tax from continuing operations Income tax expense from continuing operations Profit for the period from continuing operations

Continuing and discontinued operations: Profit before tax Income tax Profit after tax

13,275 (263) 13,012

9,556 (219) 9,337

Other comprehensive income, net of income tax Items that are or may be reclassified to profit or loss Foreign currency translation differences for foreign operations Fair value gains/(losses) on available-for-sale investments Other comprehensive income for the period Total comprehensive income for the period

8,356 (6,757) 1,599 14,611

2

959 589 1,548 10,885


Notes Sep.2016 N million

Profit attributable to: Equity holders of the Bank Non-controlling interest Profit for the period

Group Sep.2015 N million

Sep.2016 N million

Bank Sep.2015 N million

12,929 83 13,012

9,353 (16) 9,337

13,053 13,053

13,082 13,082

14,528 83 14,611

10,901 (16) 10,885

5,988 5,988

13,969 13,969

Total comprehensive income attributable to: Equity holders of the Bank Non-controlling interest Total comprehensive income for the period

Earnings per share for profit from total operations attributable to equity holders of Bank Basic and diluted (Kobo)

17

76

55

77

77

Earnings per share for profit from continuing operations attributable to equity holders of bank Basic and diluted (Kobo)

17

77

54

77

77

3


Consolidated and Separate Statements of Changes in Equity For the period ended 30 September 2016 Group Share capital N million Balance at 1 January 2016 Total comprehensive income for the period Profit for the period Other comprehensive income, net of tax Foreign currency translation diferrence Fair value gains/(loss) on available-for-sale investment Appropriation: Transfer from regulatory reserves Transfer from other reserves Total comprehensive income for the period Balance at 30 September 2016

8,468

Share premium N million

Statutory reserve N million

Treasury shares N million

Fair value Regulatory risk reserve reserve N million N million

391,641

22,062

-

33,050

23,876

Other reserves N million

Noncontrolling interest N million

Retained deficit N million

Total N million

Total equity N million

4,389

(244,902)

238,584

5,337

243,921

83

13,012

-

-

1,958

-

-

-

-

10,971

12,929

-

-

-

-

-

-

8,356

-

8,356

-

8,356

-

-

-

-

(6,757)

-

-

-

(6,757)

-

(6,757)

-

-

-

-

(126)

9,273 -

(9,273) 226

-

-

-

-

-

1,958

-

(6,883)

9,273

8,256

1,924

14,528

83

14,611

391,641

24,020

-

26,167

33,149

12,645

(242,978)

253,112

5,420

258,532





Total N million

391,641 391,641

19,404 19,404

8,468

(100)

December 2015 Share capital N million Balance at 1 January 2015 Prior year adjustment Opening restated Total comprehensive income for the year Profit for the year Other comprehensive income, net of tax Foreign currency translation diferrence Fair value gains/(loss) on available-for-sale investment Appropriation: Transfer from regulatory reserves Total comprehensive income for the period Total contribution and distributions to owners Balance at 31 December 2015

8,468 8,468


Fair value Regulatory risk reserve reserve N million N million

(35) (35)

28,313 28,313

8,667 8,667

3,407 3,407

(242,969) (706) (243,675)

216,896 (706) 216,190

11,330

13,988

Noncontrolling interest N million 5,338 5,338

222,234 (706) 221,528

-

-

2,658

-

-

-

-

-

-

-

-

-

-

982

-

982

-

982

-

-

-

-

7,400

-

-

-

7,400

-

7,400

(2,652) 4,748 (11) 33,050

15,209 15,209 23,876

982 4,389

8,468

391,641

2,658 22,062

35 5

(12,557) (1,227) (244,902)

22,370 24 238,584

(1)

Total equity N million

(1) 5,337

13,987

22,369 24 243,921

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 Consolidated and Separate Statements of Changes in Equity For the period ended 30 September 2016 Bank Share capital N million

Balance at 1 January 2016 Total comprehensive income for the period Profit or loss Other comprehensive income Fair value gains/(loss) on available-for-sale investment Transfer between reserves Total comprehensive income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Total contribution and distributions to owners Balance at 30 September 2016

8,468




Fair value Regulatory risk reserves reserves N million N million

391,641

22,062

-

32,240

23,876


Total N million

1,753

(249,372)

230,668


-

-

1,958

-

-

-

-

11,095

13,053

-

-

-

-

(7,065) (126)

9,273

-

(9,147)

(7,065) -

-

-

1,958

-

(7,191)

9,273

-

1,948

5,988

391,641

24,020

-

25,049

33,149

1,753



391,641 391,641

19,404 19,404

-

27,213 27,213

8,667 8,667

8,468

(247,424)

236,656

Retained earnings N million

Total N million

1,753 1,753

(251,172) (706) (251,878)

205,974 (463) 205,268

December 2015 Share capital N million Balance at 1 January 2015 Prior year adjustment Opening restated

8,468 8,468


Fair value Regulatory risk reserves reserves N million N million


Total comprehensive income for the year Profit or loss

-

-

2,658

-

-

-

-

15,063

17,721

Other comprehensive income Fair value reserve (available-for-sale) financial assets Transfer between reserves

-

-

-

-

7,679 (2,652)

15,209

-

(12,557)

7,679 -

Total other comprehensive income for the year Total comprehensive income for the year

-

-

2,658

-

5,027 5,027

15,209 15,209

-

(12,557) 2,506

7,679 25,400

22,062

-

32,240

23,876

1,753

(249,372)

230,668

Balance at 31 December 2015

8,468

391,641

6


Consolidated Separate Statements of Cash Flows For the period ended 30 September 2016

Notes Cash flows from operating activities Profit for the year Income tax expense Profit before tax Adjustments for: Impairment losses on loans and advances Recoveries on loans and advances Impairment on property and equipment Allowances on other assets Gain on sale of property and equipment Gain on disposal of available for sale - unquoted equity Gain on sale of trading properties Gain on sale of subsidiaries Depreciation of property and equipment Amortisation of intangible assets Dividend income from equity investment Interest paid on borrowings Contributions to defined contribution plans Increase/ (decrease) in liability for defined benefit plans

Change in non-pledged trading assets Change in pledged assets Change in derivative financial instruments-assets Change in loans and advances to customers Change in other assets Change in derivative financial instruments-liabilities Change in deposits from banks Change in deposits from customers Change in other liabilities Income tax paid Payment from defined contribution plan Payment from defined benefit plan Retirement benefit provisions Net cash provided/(used in) by operating activities Cash flows from investing activities Purchase of investment properties Acquisition of trading properties Proceeds from sale of unquoted equities Proceeds from sale of trading properties Proceeds from sale of property and equipment Proceed from disposal of subsidiaries Acquisition of property and equipment Acquisition of intangible assets Investment securities Dividend income received Net cash used in investing activities

16

13(a) 13(a) 13(b) 12 25 12 12

12 9


Group Dec.2015 N million


Bank Dec.2015 N million

13,012 263 13,275

13,987 561 14,548

13,053 131 13,184

17,721 420 18,141

15,261 (2,391) (2,452)

15,072 (5,124) 200 2,097 (1,660)

15,236 (2,391) (2,452)

15,005 (5,124) 200 2,097 (1,660)

2,995 757 (410) 6,091 467 72

(193) (728) 332 3,509 772 (686) 8,683 644 4,347

2,990 616 (410) 6,091 467 72

(193) (728) (3,591) 3,480 666 (686) 8,683 644 4,310

33,665

41,813

33,403

41,244

(14,374) 33,854 1,575 (147,719) (31,524) 90 45,674 61,211 33,295 15,747 (324) (469) (1,018) 72 14,008

745 (793) (7) (63,872) (18,236) (1,813) (17,799) 43,022 3,953 (12,987) (1,004) (623) (7,626) (22,240)

(14,374) 33,854 1,575 (146,494) (31,387) 90 (8,404) 49,181 32,302 (50,254) (220) (469) (1,010) 72 (51,882)

745 (793) (56,493) (18,317) (1,820) (6,255) 61,685 2,854 22,850 (826) (623) (7,626) 13,776

(11) 715 3,732 (4,112) (248) 30,145 410 30,631

(4,546) (2,053) 212 1,536 3,438 12,350 (6,677) (2,078) (10,532) 686 (7,664)

3,952 (4,071) (371) 35,000 410 34,920

212 1,534 3,438 3,596 (6,669) (1,913) (7,907) 686 (7,022)

7

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 Cash flows from financing activities Repayment of borrowings Interest paid on borrowings Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate fluctuations on cash held Cash and cash equivalents at end of period

19,074 (6,091) 12,983 57,621 82,252 8,022 147,895

8

(2,076) (8,683) (10,759)

19,074 (6,091) 12,983

(2,076) (8,683) (10,759)

(40,663) 121,960 955 82,252

(3,979) 54,451 50,472

(4,006) 58,457 54,451


9

Net interest income Group

Group

Bank

Bank

Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

Interest income Cash and cash equivalents Loans and advances to customers Investment securities Total interest income

2,743 49,928 18,289 70,960

921 45,049 20,937 66,907

2,248 48,955 18,016 69,219

921 43,848 20,564 65,333

Interest expense Deposits from customers Other borrowed funds Total interest expense

16,799 6,091 22,890

19,690 6,944 26,634

16,741 6,091 22,832

19,585 6,944 26,529

48,070

40,273

46,387

38,804

Group

Group

Bank

Bank

Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

Net interest income

10 Net Fees and commission income

Credit Related fees and commissions income Commission on turnover Account Maintenance Fee E-business fee income (See note (a) ) Commission on LCs, Invisible Trades and Guarantees Other fees and commission

4,496 901 1,791 689 412 8,289

3,210 906 607 859 460 6,042

4,424 901 1,791 689 7,805

3,210 906 607 859 5,582

Group

Group

Bank

Bank

Sep.2016 N million 598 (19) (275) 1,486 1,791

Sep.2015 N million 237 60 (315) 626 607

Sep.2016 N million 598 (19) (275) 1,486 1,791

Sep.2015 N million 237 60 (315) 626 607

Group

Group

Bank

Bank

(a) E-business fee income/charge

ATM on-us POS E-card maintenance Card FX gain/(loss)

11 Net trading income/(loss)

Sep.2016 Sep.2015 Sep.2016 Sep.2015 N million N million N million N million Gain on disposal of fixed income securities 4,145 1,042 4,145 1,042 Mark to market gains on fixed income securities 55 445 55 445 Foreign exchange gain on trading 948 2,111 798 2,039 5,148 3,598 4,998 3,526 Net trading (loss)/income includes the gains and losses arising both on the purchase and sale of trading instruments and from changes in fair value.

9


12 Other operating income

Dividends Gains ondisposal disposalofofinvestment property and equipment Gain on property Foreign exchange revaluation gain Rental income Sundry income

Group

Group

Bank

Bank

Sep.2016 N million 410 2,452 4,306 97 526 7,791

Sep.2015 N million 665 1,753 1,397 304 2,194 6,313

Sep.2016 N million 410 2,452 4,306 97 397 7,662

Sep.2015 N million 665 1,753 1,397 304 2,208 6,327

Group

Group

Bank

Bank

Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

13 Net Impairment loss on financial assets (a) Net impairment charge for credit losses

Net impairment charge for credit losses: -specific impairment -portfolio impairment Total impairment charge on loans and advances Reversal of impairment

(b) Net impairment loss on other financial assets: Allowance no longer required on other assets Total net impairment loss on financial assets

11,650 3,611

3,546 908

11,625 3,611

3,513 908

15,261 (2,391) 12,870

4,454 4,454

15,236 (2,391) 12,845

4,421 4,421

(165) (165) 12,705

4,454

(165) (165) 12,680

4,421

Group

Group

Bank

Bank

Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

22,048 467 72 22,587

22,051 487 60 22,598

20,842 467 72 21,381

21,065 487 60 21,612

14 Personnel expenses

Wages and salaries Contributions to defined contribution plans Increase in liability for defined benefit plans

10


15 Other operating expenses

Auditors' remuneration NDIC Premium Rents and Rates Accomodation and travels Fleet management and vehicle related expenses Repair and Maintenance Transformation Expense Professional fees Advertising and Promotion expenses Security expense Expenses on software Donations and Subscriptions General administrative expenses (see note (a) below) Insurance AMCON surcharge

Group

Group

Bank

Bank

Sep.2016 N million 98 2,002 771 578 491 668 1,001 727 766 2,227 198 4,666 224 3,739 18,156

Sep.2015 N million 90 1,783 716 566 531 604 485 943 638 835 1,545 231 4,661 247 3,454 17,329

Sep.2016 N million 98 2,002 771 531 491 523 881 727 766 2,227 198 4,434 224 3,739 17,612

Sep.2015 N million 90 1,783 716 542 531 493 485 894 638 835 1,545 231 4,201 247 3,454 16,685

Group

Group

Bank

Bank

Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

196 786 24 291 1,197 323 39 37 390 437 946 4,666

203 837 37 330 1,092 467 41 40 212 1,402 4,661

196 786 24 291 1,197 323 39 37 390 437 714 4,434

203 837 37 330 1,092 467 41 40 212 942 4,201

(a) General administrative expenses

Office cleaning Cash movement expense Entertainment Directors fees and allowances Diesel and power Stationery, printing, postage and telephone Sports promotion Penalties Restitution and other charges Group restructuring expenses Other expenses

11

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 16

Income tax expense

(a)

Recognised in the profit or loss

Current tax expense Capital Gains tax NITDA Levy

Group

Group

Bank

Bank

Sep.2016 N million

Sep.2015 N million

Sep.2016 N million

Sep.2015 N million

41 158 263

Total income tax expense

210

41 90

210

131

86 86

In line with the Company Income Tax Act, 1990, as amended, the Bank is not liable to pay income tax as the Bank recorded a tax loss for the year. The Bank is exempted from paying minimum tax under the Act, as it has imported share capital of over 25%. No education tax was charged because the Bank has no assessable profit for the year. 17

Earnings per share

(a)

Basic earnings per share Earnings/(loss) per share has been computed based on profit after taxation attributable to the Group ordinary shareholders and the weighted average number of shares in issue during the period is as follows. Weighted average number of ordinary shares

Issued ordinary shares at beginning of the period Weighted effect of shares issued during the period

(b)

Group

Bank

Bank

Sep.2016 16,936 16,936

Sep.2015 16,936 16,936

Sep.2016 16,936 16,936

Sep.2015 16,936 16,936

Group

Group

Bank

Bank

Sep.2016

Sep.2015

Sep.2016

Sep.2015

13,053 77 13,053 77

13,082 77 13,082 77

Profit attributable to ordinary shareholders

In millions of Nigerian Naira

Profit/(Loss) for the period attributable to equity holders Basic earnings/(loss) per share (in kobo) Profit from continuing operations attributable to equity holders of bank Basic earnings/(loss) per share (in kobo) (c)

Group

12,929 76 13,012 77

9,353 55 9,240 55

Diluted earnings per share The Group does not have any dilutive potential ordinary shares, therefore, Basic EPS and Diluted EPS are the same for the Group.

12


18

Cash and cash equivalents


Cash and balances with banks Unrestricted balances with central bank Money market placements

19



46,103 3,220 98,572 147,895

34,189 14,185 33,878 82,252

43,391 3,220 3,861 50,472

32,762 14,185 7,504 54,451

Group Sep.2016 N million 482 13,892

Group Dec.2015 N million -

Bank Sep.2016 N million 482 13,892

Bank Dec.2015 N million -

Non-pledged Assets (Held for trading)

Government bonds Treasury bills

14,374 20


-

14,374

-

Pledged assets Financial assets that may be repledged or resold by counterparties

Treasury bills Bonds Placement

Group

Group

Bank

Bank

Sep.2016 N million 11,847 38,914 113 50,874

Dec.2015 N million 14,620 65,913 4,195 84,728

Sep.2016 N million 11,847 38,914 113 50,874

Dec.2015 N million 14,620 65,913 4,195 84,728

Financial assets are pledged as collateral as part of securitized borrowing under terms that are usual and customary for such activities. 21

Derivative financial instruments Group

Instrument Type: Foreign exchange swaps FX forwards Non-deliverable futures

Bank

Instrument Type: Foreign exchange swaps FX forwards Non-deliverable futures

Sep.2016 Assets N million

Liabilities N million

Dec.2015 Assets N million


200 45 245

90 90

1,820 1,820

-

Sep.2016 Assets N million


Dec.2015 Assets N million


200 45 245

90 90

1,820 1,820

-

The Group uses derivatives not designated in a qualifying hedge relationship, to manage its exposure to foreign currency risks. The instruments used include forward contracts and cross currency linked forward contracts. 22

Loans and advances to customers at amortised cost Group

Group

Bank

Bank

Sep.2016 N million

Dec.2015 N million

Sep.2016 N million

Dec.2015 N million

Gross amount

534,392

388,794

515,366

370,949

Specific impairment Portfolio impairment

(18,093) (14,729)

(11,565) (10,508)

(18,076) (14,657)

(11,565) (10,400)

Total impairment

(32,822)

(22,073)

(32,733)

(21,965)

Carrying amount

501,570

366,721

482,633

348,984

(a)

13


23

Investment in equity accounted investee

Cost Balance, beginning of the period

Group

Bank

Bank

Dec.2015 N million

Sep.2016 N million

Dec.2015 N million

115 115

115 115

91 91

91 91

(91) 24

(91) 24

(91) -

(91) -





46,967 2,122 21,528 14,380 1,014 86,011 (5,256) 80,755

57,257 2,195 21,371 41,480 122,303 (4,058) 118,245

38,576 2,122 21,528 11,694 1,014 74,934 (5,256) 69,678

52,843 2,195 21,371 39,980 116,389 (4,058) 112,331

Group Sep.2016 N million 2,122

Group Dec.2015 N million 2,195

Bank Sep.2016 N million 2,122

Bank Dec.2015 N million 2,195

15,812 126 42 2 50 494 10 1152 122 3,718 21,528

15,844 126 42 2 50 305 10 1,152 122 3,718 21,371

15,812 126 42 2 50 494 10 1,152 122 3,718 21,528

15,844 126 42 2 50 305 10 1,152 122 3,718 21,371

Total

23,650

23,566

23,650

23,566

Less: specific impairment allowance

(5,256)

(4,058)

(5,256)

(4,058)

18,394

19,508

18,394

19,508

51,595 29,397 16,488

48,273 31,702 16,917

51,595 29,397 16,488

48,273 31,702 16,917

97,480

96,892

97,480

96,892

178,235

215,137

167,158

209,223

(Impairments) /increase in value Balance, end of the period 24


Investment securities

Available-for-sale investment securities comprise: Treasury bills Equity: Quoted Unquoted FGN Bonds Corporate Bonds

see Note 24a see Note 24b

Less: specific impairment allowance

Quoted 24a Investment in REIT 24b Unquoted AFC Smartcard Nigeria Auto Clearing System (NAC) Interswitch Credit Reference Company (CRC) Afrexim Bank Nig Superswitch Infrastructure Banque de Benin AIB Cotonu Investment in SMEEs

Held to maturity investment securities comprise: Federal Government of Nigeria -Bonds State Government of Nigeria -Bonds Corporate Bonds

Investment securities

14


25

Trading properties This represents the cost of real estate properties held by the Group which are designated for resale. The movement on the trading properties account during the period was as follows:

Balance, beginning of year Disposal Reclassification from discontinued operations Balance, end of period

26

Group

Group

Bank

Bank

Sep.2016 N million

Dec.2015 N million

Sep.2016 N million

Dec.2015 N million

3,177 (715) 2,462

1,930 (806) 2,053 3,177

1,124 1,124

1,930 (806) 1,124

Investment Properties These investment properties were last revalued during the year ended 31 December 2013 by Messrs. Bode Adediji Partnership, a firm of estate surveyors and valuers, using the open market basis of valuation, and their reports were dated 16 December 2013 for UBN Property Company Limited respectively. As at 30 September 2016, the Directors are of the opinion that there were no material fluctuations in the value of the Bank's investment properties since the last valuation. Group Sep.2016 N million 4,546 11 4,557

Balance, beginning of the year Additions Reclassification from assets held for sale Balance, end of the period

27

Bank Sep.2016 N million -


Bank Sep.2016 N million 2,195 8,372 10,567

Bank Dec.2015 N million 2,195 8,372 10,567

-

Investment in subsidiaries Cost

UBN Property Company Limited Union Bank UK Plc

(a)

Group Dec.2015 N million 4,546 4,546

The subsidiary companies, country of incorporation, nature of business and percentage equity holding are detailed below:

Company Name

Country Incorporation Nature of business

UBN Property Company Limited (ii) Union Bank UK Plc (iii) Atlantic Nominees Limited (iv)

Nigeria Nigeria Nigeria

15

Property Development Licensed UK Bank Real Estate

Sep.2016 Status/% 39 100 100

Direct ownership interest Dec.2015 Status/% 39 100 100

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 (i)

UBN Property Company Limited (Registered office at 36, Marina, Lagos) The Company has 5,626,416,051 ordinary shares of N1.00 each of which 39.01% (December 2014 - 39.01%) is held by the Bank. In line with IFRS 10- Consolidated Financial Statement, Union Bank of Nigeria Plc has control over this entity as it has the power, exposure to variability of returns and a strong link between power and variability of returns. The Bank also governs the financial and operating policies of UBN Property Company Limited.

(ii)

Union Bank UK Plc (Registered office at 14-18 Copthal Avenue, London EC2R7BN) The Bank directly holds 100% holding of Union Bank UK's 60,000,000 ordinary shares and 99% of its 50,000 deferred shares of GBP1 each and 1% indirect holding through Williams Street Trustees Limited, the nominee company for Union Bank of Nigeria Plc . Union Bank UK Plc was incorporated in December, 2004 as an authorised United Kingdom subsidiary to carry out the business formerly conducted by the London Branch of Union Bank of Nigeria Plc.

(iii)

Atlantic Nominees Limited The Bank holds 49,990 (approx. 100%) out of 50,000 ordinary shares of N1 each. The balance of 10 is held by Union Trustees Limited. The Company is a Special Purpose Vehicle of former Universal Trust Bank Plc, one of the banks acquired by Union Bank in 2005. The Company was incorporated to hold interests in landed properties. The carrying value of the investment in Union Property Company Limited is included in 'assets classified as held for sale' (see Note 38(b)).

16

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 (c) Condensed results of consolidated entities (i) The condensed financial data of the continuing operations as at 30 September 2016, are as follows Condensed statement of comprehensive income

Statement of Comprehensive income Operating income Net operating income after net impairment loss Operating Expenses Net impairment loss on financial assets Share of proit of equity accounted investees Profit before income tax Taxation Profit after income tax

Group balances N million 70,539 57,834 (44,559) (12,870)

Consolidation entries N million (43) (43) 43 (165)

13,110

(165)

(263) 12,847

(1) (166)

Total N million 70,582 57,877 (44,602) (12,705) -

Bank N million 68,528 55,848

13,275

13,183

(262) 13,014

(42,665) (12,680)

Union Properties Union Pension N million N million 328 (434) 328 (434) (115) -

-

Atlantic Nominees N million -

Union Bank UK N million 2,160 2,135 (1,822) (25)

-

(130) 13,053

213 (68) 145

(434) (434)

-

314

-

(64)

-

250

(i) In the course of the year, the Group realised its receivable in respect of Union Pension ltd which was previously derecognised as a subsidiary due to the liquidation of the entity and loss of control by the Group. Condended Statement of financial position Group balances N million Cash and cash equivalents Non-pledged trading assets Pledged assets Derivative financial instrument Loans and advances to customers Investments in equity-accounted investee Investment securities Assets held for sale Trading properties Investment properties Investment in subsidiaries Property and equipment Intangible assets Deferred tax assets Other assets Total assets Financed by: Derivative financial instruments Deposits from banks Deposits from customers Current tax liabilities Other liabilities Retirement benefit obligations Other borrowed funds Equity and reserves Total liabilities

Consolidation entries N million

Total N million

Bank N million

147,895 14,374 50,874 245 501,570 24 178,235 397 2,462 4,557 49,609 3,417 95,783 170,210

(15,313) 24 (325) (10,567) (0) (6) (21)

163,208 14,374 50,874 245 501,570 178,235 722 2,462 4,557 10,567 49,609 3,417 95,789 170,231

50,472 14,374 50,874 245 482,633 167,158 325 1,124 10,567 49,490 2,856 95,875 169,417

1,219,652

(26,209)

1,245,860

1,095,410

-

Union Properties Union Pension N million N million 4,463 1,338 4,557 21 (99) 78

Atlantic Nominees N million

Union Bank UK N million

-

397 -

108,273 18,937 11,077 99 561 13 736

10,358

-

397

139,695

90 89,765 631,850 465 140,426 3,391 95,133 258,532

0 (15,312) (2) (13) (10,882)

90 89,765 647,162 467 140,439 3,391 95,133 269,414

90 3,396 618,297 140 138,336 3,362 95,133 236,656

216 1,240 29 8,873

-

397

86,369 28,865 111 863 23,487

1,219,652

(26,209)

1,245,860

1,095,410

10,358

-

397

139,695

17

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 (b) Condensed results of consolidated entities (i) The condensed financial data of the continuing operations as at 31 December 2015, are as follows Condensed statement of comprehensive income

Statement of Comprehensive income Operating income Net operating income after net impairment loss Operating Expenses Net impairment loss on financial assets Share of profit of equity accounted investees Profit before income tax Taxation Profit after income tax

Group Consolidation balances entries N million N million 81,850 (3,946) 72,606 (4,013) (58,164) 23 (9,244) (67) 14,442

(3,990)

(552) 13,890

(1) (3,990)

Total N million 85,796 76,619 (58,187) (9,177)

Bank N million 83,269 74,092

UBN Property Company Ltd N million 448 448

(55,952) (9,177)

(343) -

-

105

-

187

(107)

-

(25)

(2)

-

162

-

-

18,432

18,140

(551)

(420)

Union Pension N million -

Union Bank UK N million 2,079 2,079 (1,892) -

17,880

17,720

Group Consolidation balances entries N million N million

Total N million

Bank N million

82,252 84,728 1,820 366,721 24 215,137 397 3,177 4,546 49,772 3,749 95,883 138,686

(10,917) 24 72 (10,567) (94)

93,169 84,728 1,820 366,721 215,137 325 3,177 4,546 10,567 49,772 3,749 95,883 138,780

54,451 84,728 1,820 348,984 209,223 325 1,124 10,567 49,692 3,318 95,875 138,030

3,264 2,053 4,546 11 28

434

35,454 17,737 5,914 69 431 8 289

1,046,892

(21,483)

1,068,375

998,137

9,902

434

59,902

44,091 570,639 382 107,533 4,267 76,059 243,921

(10,919) (80) (10,484)

44,091 581,558 382 107,613 4,267 76,059 254,405

11,800 569,116 229 106,035 4,230 76,059 230,668

163 972 37 8,730

434

32,291 12,442 (10) 605 14,574

1,046,892

(21,483)

1,068,375

998,137

9,902

434

59,902

Condensed Statement of financial position

Cash and cash equivalents Pledged assets Derivative financial instrument Loans and advances to customers Investments in equity-accounted investee Investment securities Assets held for sale Trading properties Investment properties Investment in subsidiaries Property and equipment Intangible assets Deferred tax assets Other assets Total assets Financed by: Derivative financial instruments Deposits from banks Deposits from customers Current tax liabilities Other liabilities Retirement benefit obligations Other borrowed funds Liabilities classified as held for sale Equity and reserves Total liabilities

18

UBN Property Company Ltd N million

Union Pension N million

Union Bank UK N million

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 28 (a)

Property and equipment Group: The movement in these accounts during the period was as follows: Leasehold land and buildings N million

Fixtures and fittings N million

Furniture & equipment N million

Motor vehicles N million

Capital work in progress N million

48,647 118 2,114 (1,944) 223 49,158

3,052 22 (27) (18) 3,029

15,665 121 1,819 (494) 14 17,125

3,230 11 19 (24) 3,236

2,181 138 2,319

72,775 250 4,112 (2,489) 219 74,867

48,834 14 2,032 (2,233)

2,613 508 (69)

3,755 1 45 (596) 25 3,230

1,361 820 2,181

70,708 28 6,677 (4,688) 50 72,775

Total N million

Cost Balance at 1st January, 2016 Exchange difference Additions Disposals Reclassification to other assets

Balance as at 30 September 2016 Balance at 1st January, 2015 Exchange difference Additions Disposals Reclassification from discontinued operations Balance as at 31 December 2015

-

-

48,647

3,052

14,145 13 3,272 (1,790) 25 15,665

10,211 117 691 (484) 200 156 10,891

1,167 209 (14) 1,362

8,379 60 2,019 (425) (185) 9,848

3,087 12 76 (24) 6 3,157

159 (159) -

23,003 189 2,995 (947) 200 (182) 25,258

9,554 10 955 (508) 200 10,211

965 261 (59) 1,167

7,904 8 2,200 (1,752) 19 8,379

3,552 1 103 (591) 21 3,087

159 159

22,134 19 3,519 (2,910) 200 40 23,003

Balance as at 30 September 2016

38,267

1,667

7,277

79

2,319

49,609

Balance as at 31 December 2015

38,436

1,885

7,286

143

2,022

49,772

Depreciation and impairment losses Balance at 1st January 2016 Exchange difference Charge for the period Disposals Write-off/Adj Reclassifications

Balance as at 30 September 2016 Balance at 1st January, 2015 Exchange difference Charge for the period Disposals Write-off/Adj Reclassification from discontinued operations Balance as at 31 December 2015

(iii) Net Book Value

(iv) In the opinion of the directors, the market value of the Group's properties is not less than the value shown in the financial statements. (v) Exchange difference relates to the conversion of property and equipments acquired in the overseas office at the rate of exchange ruling at the end of the period. (v) Capital work in progress represents construction costs in respect of new offices. On completion of construction, the related amounts are transferred to appropriate categories of property and equipment. (vi) There were no capitalised borrowing costs related to the acquisition of property and equipment during the period (December 2015: nil)

19

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 (b)

Bank: The movement in these accounts during the period was as follows:

Leasehold land and buildings N million

Fixtures and fittings N million



Reclassifications

48,437 2,114 (1,742) 223

3,052 22 (27) (18)

15,426 1,797 (353) 11

3,186 (24) 0

2,181 138 -

72,282 4,071 (2,146) 216


49,032

3,029

16,881

3,162

2,319

74,423

Balance at 1st January, 2015 Additions Disposals Balance as at 31 December 2015

48,638 2,032 (2,233) 48,437

2,613 508 (69) 3,052

13,952 3,264 (1,790) 15,426

3,737 45 (596) 3,186

1,361 820

70,301 6,669 (4,688) 72,282

(i) Cost Balance at 1st January 2016

Additions Disposals


Total N million

2,181 .

(ii) Accumulated depreciation

Leasehold land and buildings N million

Leasehold improvements N million



Balance at 1st January 2016 Charge for the period Disposals Reclassifications Write-off/Adj

10,352 691 (282) (193) 200

1,167 209 (14) -

8,022 2,017 (342) 5 -

3,049 73 (24) 2 -


10,768

1,362

9,703

3,099

-

24,932

7,594 2,180 (1,752)

3,536 103 (591) -

-

21,819 3,480 (1,158) (1,552)

-

22,590

Balance as at 1 January 2015 Charge for the period Disposals Impairment loss (See (iv) below) Balance as at 31 December 2015

9,724 936 (508) 200

965 261 (59)


-

Total N million

22,590 2,990 (661) (186) 200

10,352

1,167

8,022

3,049


38,264

1,667

7,178

62

2,319

49,490

Balance as at 31 December 2015

38,085

1,885

7,404

137

2,181

49,692

(iii) Net Book Value

(iv) In the opinion of the directors, the market value of the Bank's properties is not less than the value shown in the financial statements.

(v) Capital work in progress represents construction costs in respect of new offices. On completion of construction, the related amounts are transferred to appropriate categories of property and equipment. (vi) There were no capitalised borrowing costs related to the acquisition of property and equipment during the period (December 2015: nil)

20


Intangible assets Group Sep.2016 N million




Cost Balance, beginning of the year Additions Reclassification

6,395 379 (130)

4,263 2,078 -

5,314 371 (157)

3,401 1,913 -

Disposal Exchange translation difference Balance, end of period

(769) 610 6,485

54 6,395

5,528

5,314

1,841 1,841 772 33 2,646

1,996 1,996 616 60 2,672

1,330

Balance, beginning of the year Amortisation for the period Reclassification Disposal Exchange translation difference Balance, end of period

2,646 2,646 757 65 (638) 239 3,069

Carrying amounts as at period end Balance as at 1 January

3,417 3,749

3,749 2,422

2,856 3,318

3,318 2,071

Amortization and impairment losses Balance, beginning of year

(i)

In the opinion of the directors, the market value of the Group's software is not less than the value shown in the financial statements.

(ii)

There were no capitalised borrowing costs related to the acquisition of software during the period (December 2015 : nil)

30

Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following:

1,330 666 1,996

Group 30 September 2016

Property, equipment, and software Allowances for loan losses Foreign exchange gains Tax loss carry forward Others Net tax assets (liabilities)

Assets N million 573 100,638 1,711 102,922

Liabilities N million 6,847 192 7,039

Net N million (6,847) (192) 573 100,638 1,711 95,883

Assets N million


Net N million

31 December 2015

Property, equipment, and software Allowances for loan losses Foreign exchange gains Tax loss carry forward Others Net tax assets (liabilities)

(1) 573 100,638 1,711 102,921

21

6,847 192 7,039

(6,848) (192) 573 100,638 1,711 95,882

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 Bank 30 September 2016 Assets N million Property, equipment, and software Allowances for loan losses Foreign exchange gains Tax loss carry forward Others Net tax assets (liabilities)

573 100,630 1,711 102,914


Net N million (6,847) (192) 573 100,630 1,711 95,875

31 December 2015 Assets N million 573 100,630 1,711 102,914


Net N million (6,847) (192) 573 100,630 1,711 95,875

Group Sep.2016 N million 95,883 (100)

Group Dec.2015 N million 95,883 -

Bank Sep.2016 N million 95,875 -

Bank Dec.2015 N million 95,875 -

95,783

95,883

95,875

95,875

102,922 (7,039)

102,921 (7,039)

102,914 (7,039)

102,914 (7,039)

Property, equipment, and software Allowances for loan losses Foreign exchange gains Tax loss carry forward Others Net tax assets (liabilities) Deferred tax assets and liabilities Movement on the net deferred tax assets/(liabilities) account during the period:

Balance, beginning of the year Credit for the period Net assets/(liabilities) of discontinued operations Net deferred tax assets/(liabilities) Made up of Deferred tax assets Deferred tax liabilities Recognised and unrecognised deferred tax assets

Recognition of deferred tax assets of N95,883 (December 2015: 95,883) is based on management's profit forecasts (which are based on the available evidence, including historical levels of profitability), which indicate that it is probable that the Group's enities will have taxable profits against which these assets can be utilized. Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits.

22


Other assets

Cash Reserve Requirement (see (i)) Excess CRR balance to be refunded (see (ii)) Total Cash Reserve Requirement

Group Sep.2016 N million 125,321 25,523 150,844

Group Dec.2015 N million 102,090 25,523 127,613

Bank Sep.2016 N million 125,321 25,523 150,844

Bank Dec.2015 N million 102,090 25,523 127,613

957 2,865 5,751 16,107 25,680 (6,314) 19,366

758 2,430 2,780 11,302 17,270 (6,197) 11,073

957 2,293 5,530 16,107 24,887 (6,314) 18,573

758 2,370 2,618 10,868 16,614 (6,197) 10,417

Other assets: Clearing Accounts receivable and prepayments Prepayments Sundry assets Impairment on other assets(see (iii)) Net other assets

170,210

138,686

169,417

138,030

(i)

The Bank had restricted balances of N125.321 billion (Dec. 2015: N102.090 billion) with the Central Bank of Nigeria (CBN) as at 30 September 2016, representing the cash reserve requirement (CRR). The CRR is a mandatory cash deposit which should be held with the Central Bank of Nigeria as a regulatory requirement.The CRR is non interest bearing and is not available for use in the Group’s day-to-day operations. As at the end of September 2016, the CRRs in force were Public Sector Deposits 22.5% (Dec 2015: 20%) and Private Sector Deposits 22.5% (Dec 2015: 20%).

(ii)

The MPC meeting held on September 19 - 20, 2016 maintained the harmonised CRR at 22.5% for both Public and Private Sector Deposits. The excess CRR funds are only released to banks to fund approved eligible real sector projects. The amount refundable to the Bank is N25.523 billion (Dec. 2015: N25.523 billion).

32

Deposits from banks

Money market deposits (See note (i) below) Other deposits from banks

(i)

33

Money market deposits LCY inter bank takings FCY inter bank takings

3,396 3,396

Group Dec.2015 N million 11,800 32,291 44,091

11,800 11,800

Bank Sep.2016 N million 3,396 3,396

3,396 3,396

Bank Dec.2015 N million 11,800 11,800

11,800 11,800

Deposits from customers

Term deposits Current deposits Savings

34

Group Sep.2016 N million 3,396 86,369 89,765





229,533 239,307 163,010

210,006 214,200 146,433

214,695 240,592 163,010

208,205 214,478 146,433

631,850

570,639

618,297

569,116

Group Sep.2016 N million 382 37 108 262 (324) 465

Group Dec.2015 N million 822 3 445 (1,051) 163 382

Bank Sep.2016 N million 229 131 (220) 140

Bank Dec.2015 N million 635 420 (826) 229

Current tax liabilities

Balance, beginning of year Foreign exchange translation difference Reclassification Charge for the period Payments during the period Transfer to assets held for sale Balance, end of period

23


Other liabilities

Deposits for foreign currency Due to foreign correspondent banks PAYE and other statutory deductions Draft and Bills payable

Sundry creditors Creditors and accruals Unearned income Provision for claims and contingencies Accounts payable Provisions for Ex-staff claims Insurance premium payable Electronic collections and other e-payment liabilities Other credit balances

Group Sep.2016 N million 41,832 23,848 1,737 8,630 222 29,105 302 2,409 4,693 4,629 466 9,002 13,550 140,426

24


20,560 30,096 1,121 8,279 719 23,979 327 2,236 3,488 4,629 654 4,221 7,225 107,534

Bank Sep.2016 N million 41,832 23,848 1,737 8,630 222 29,105 302 2,409 4,693 4,629 466 9,002 11,460 138,336

Bank Dec.2015 N million 20,560 30,096 1,121 8,279 720 23,979 327 2,236 3,486 4,629 654 4,221 5,727 106,035


36 Employee benefit obligations Group Group Bank Bank Sep.2016 Dec.2015 Sep.2016 Dec.2015 N million N million N million N million 2,618 773 3,391

Post employment benefit obligation (see (a) below) Other long-term employee benefits (see (b) below)

3,566 701 4,267

2,589 773 3,362

3,529 701 4,230

(a) Post employment benefit obligation Group Group Bank Bank Sep.2016 Dec.2015 Sep.2016 Dec.2015 N million N million N million N million 150 2,468 2,618

Defined contribution scheme (see (a) below) Defined benefit obligation (See (ii) below)

152 3,414 3,566

150 2,439 2,589

152 3,377 3,529

(i) Defined Contribution Scheme Group Group Bank Bank Sep.2016 Dec.2015 Sep.2016 Dec.2015 N million N million N million N million 152 467 (469) 150

Balance, beginning of year Charge during the period Contribution remitted during the period Balance, end of period

131 644 (623) 152

152 467 (469) 150

131 644 (623) 152

The Group and its employees make respective contributions of 10% and 8% of basic salary, housing and transport allowance to each employee's retirement savings account maintained with employees' nominated Pension Fund Administrators.

(b) Other long-term employee benefits Other long-term employee benefit represents liability in respect of long The basis of determining the benefit due to an employee is as stated below: (i) Less than 5 years of service: 12 weeks total emolument for each completed year of service. (ii) 5 years but less than 15 years of service: 14 weeks total emolument for each completed year of service. (iii) 15 years of service and above: 16 weeks total emolument for each completed year of service. The total emolument is defined as basic salary, housing and transport allowance and lunch subsidy. (i) The amounts recognised in the statement of financial position are as follows: Group Group Bank Bank Sep.2016 Jun.2016 Dec.2015 Sep.2016 Dec.2015 N million N million N million N million Present value of unfunded obligation Present value of funded obligation Total present value of the obligation Fair value of plan assets Present value of net obligation Recognized liability for defined benefit obligations

25

773 773 773

701 701 701

773 773 773

701 701 701

773

701

773

701

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 37 Other borrowed funds

Due to CAC ( see (a)) BOI on-lending facilities (see note (b) below) Other borrowings ( see (c))





10,014 6,806 78,313 95,133

10,938 7,840 57,281 76,059

10,014 6,806 78,313 95,133

10,938 7,840 57,281 76,059

(a)

This represents the outstanding balance on an unsecured facility of N18,167,000,000 disbursed by the Central Bank of Nigeria (CBN), as part of its developmental role, in collaboration with the Federal Government of Nigeria represented by the Federal Ministry of Agriculture and Water Resources which established the Commercial Agriculture Credit Scheme for promoting agricultural enterprises in Nigeria. The funds are made available to participating banks at zero cost, for on lending to commercial agricultural enterprises at a maximum rate of 9.00% p.a.

(b)

This represents the outstanding balance of an intervention credit granted to the Bank by the Bank of Industry (BOI), a company incorporated in Nigeria for the purpose of refinancing / or restructuring existing loans to Small and Medium Scale Enterprises (SMEs) and manufacturing companies. The total facility is secured by Federal Government of Nigeria securities worth N9.5 billion (Dec. 2015: N18.4 billion) and has a 15-year tenor and repayable quarterly. A management fee of 1% , deductible at source, is paid by the Bank to BOI under the on-lending agreement and the Bank is under obligation to on-lend to customers at an all-in interest rate of 7% per annum. Though the facility is meant for on-lending to borrowers in specified sectors, the Bank remains the primary obligor to the BOI and therefore assumes the risk of default of customers.

26

Union Bank of Nigeria Plc and Subsidiary Companies Consolidated financial statements for the period ended 30 September 2016 38 Discontinued operations (a) Profit for the period from discontinued operations

Profit for the period from discontinued operations represents the operating results of subsidiaries held for sale in line with the Bank's Regulation 3 compliance plan to divest from non-banking subsidiaries. Included in discontinued operations in 2015 are the results and balances of Union Trustees Limited, Atlantic Nominees Limited and Union Properties Limited. The profit for the period from discontinued operations comprises: Group Sep.2016 N million


Gross income Gross expense

-

142 (36)

Interest Income Interest Expense Net interest income Recoveries on credit losses Net interest income after impairment charge for credit losses

-

77 77 77

Net fee and commission income Net trading income Other operating income Underwriting profit Total operating income Total non-interest income

-

64 1

-

65 65

Operating Income

-

142

Net impairment loss on financial assets Net operating income after net impairment loss on other financial assets

-

(8) 134

Personnel expenses Depreciation and amortization Other operating expenses

-

(15) (13) (28) -

Loss before tax from discontinued operations

-

106

Income tax expense Loss from discontinued operations (net of tax)

-

Share of profit of equity accounted investee

(9) 97

(b) Assets classified as held for sale Group Sep.2016 N million 188 209

Cash and cash equivalents Investments in subsidiaries Investment properties Other assets

397

27

Group Dec.2015 N million 188 209 397

Bank Sep.2016 N million 325 325

Bank Dec.2015 N million 325 325


DISCONTINUED OPERATIONS Statements of Financial Position Condensed statement of financial position for discontinued operations

Union properties N million

Statement of financial position

Atlantic Intragroup Nominee adj N million N million

Total N million

ASSETS Investment properties Other assets

188 209

-

188 209

TOTAL ASSETS

-

397

-

397

LIABILITIES TOTAL LIABILITIES

-

-

-

-

28


39 Capital and reserves Share capital

(a)


Authorised : 19,023,125,000 Ordinary shares of 50 kobo each

9,512

Group Sep.2016 N million (b)

(c)

(d)

Issued and fully paid 16,935,806,472 Ordinary shares of 50kobo each

8,468


9,512


8,468


9,512


8,468


9,512


8,468

Share premium Share premium is the excess paid by shareholders over the nominal value for their shares.

Share premium

Group Sep.2016 N million 391,641

Group Dec.2015 N million 391,641

Bank Sep.2016 N million 391,641

Bank Dec.2015 N million 391,641

Share capital and share premium

400,109

400,109

400,109

400,109

Other reserves The other reserves includes Statutory reserves, Fair value reserve, Regulatory risk reserves, Small and Medium Scale Industries Reserve (SMEEIS) and Capital reserve. Group Group Bank Bank Sep.2016 Dec.2015 Sep.2016 Dec.2015 N million N million N million N million Statutory reserves 24,020 22,062 24,020 22,062 Fair value reserve

26,167

33,050

25,049

32,240

Regulatory risk reserve

33,149

23,876

33,149

23,876

Translation reserve

12,787

4,431

1,895

1,895

(14,918)

(14,918)

(14,918)

(14,918)

SMEEIES reserve

6,774

6,774

6,774

6,774

Capital reserve

5,489

5,589

5,489

5,489

Other reserves

2,513 95,981

2,513 83,377

2,513 83,971

2,513 79,931

Excess clawback reserves

29


(i)

Statutory reserves Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by S.16(1) of the Banks and Other Financial Institution Act of Nigeria, an appropriation of 30% of profit after tax is made if the statutory reserve is less than paid-up share capital and 15% of profit after tax if the statutory reserve is greater than the paid up share capital. The Bank made a transfer of N1.958bn to statutory reseves during the period ended 30 September 2016 (2015 N1.962bn).

(ii)

Fair value reserve The fair value reserve includes the net cumulative change in the fair value of available-for-sale investments securities recognised in other comprehensive income.

(iii) Regulatory risk reserve The regulatory risk reserve warehouses the difference between the impairment on loans and advances computed under Nigeria GAAP based on the Central Bank of Nigeria prudential guidelines and provisions specified by the central banks of foreign subsidiaries, compared with the incurred loss model used in calculating the impairment under IFRSs. (iv)

Other reserves The other reserves include Small and Medium Scale Industries Reserve (SMEEIS), Contingency reserve, Capital reserve, Translation reserve.

(v)

Small and Medium Scale Industries Reserve (SMEEIS): The SMEEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement that all licensed banks set aside a portion of the profit after tax in a fund to be used to finance equity investment in qualifying small and medium scale enterprises. Under the terms of the guideline (amended by CBN letter dated 11 July 2006), the contribution was 10% of profit after tax for the first 5 periods , and thereafter reduced to 5% of profit after tax. However, this is no longer mandatory and therefore no reserve was made during the period ended 31 Jan 2016. The reserve is non-distributable.

(vi)

Translation reserve Translation reserve comprises all foreign exchange differences arising from translation of the financial statements of foreign operations.

(vii) Excess Capital Clawback Under the recapitalisation plan of the Bank executed in 2011, the Asset Management Corporation of Nigeria (AMCON) provided Financial Accommodation to bring the Bank's Completion Net Assets Value (NAV) to zero. The Financial Accommodation provided by AMCON exceeded the Bank's Completion NAV of zero, calculated as at 31 December 2011, by N14.918 billion. This excess amount was refunded to AMCON during the year ended 31st December, 2012.

(e)

Retained deficit Retained deficit represents the carried forward income net of expenses plus current period profit attributable to Group's shareholders.

40

Non-controlling Interest Movement in the non controlling interest

Group Sep.2016 N million 5,337 83

Balance, beginning of year Profit/(loss) for the period Balance, end of period

5,420

30

Group Dec.2015 N million 5,338 (1) 5,337