First bank of nigeria group result 2010

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First Bank annual report 2010

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First bank of nigeria group result 2010

  1. 1. First Bank Group Results9 Months ended 31 December 2009 & Quarter ended 31 March 2010 Presentation to Analysts and InvestorsPresentation to Analysts and InvestorsApril 30, 2010 
  2. 2. Cautionary Note Regarding Forward Looking StatementsThis presentation is based on the financial results of FirstBank’s audited results for the period ended December 31 2009and unaudited results for the period ended March 21, 2010, consistent with Nigerian GAAP. FirstBank of Nigeria Plc(‘‘FirstBank’’ or the ‘‘Bank’’) has obtained some information from sources it believes to be credible. Although FirstBank hastaken all reasonable care to ensure that all information herein is accurate and correct, FirstBank makes no representationor warranty express or implied as to the accuracy correctness or completeness of the information In addition some of warranty, implied, accuracy, information. addition,the information in this presentation may be condensed or incomplete, and this presentation may not contain all materialinformation in respect of FirstBank.This presentation contains forward‐looking statements which reflect managements expectations regarding the group’sfuture growth results of operations performance business prospects and opportunities Wherever possible words such growth, operations, performance, opportunities. possible,as "anticipate", "believe", "expects", "intend" "estimate", "project", "target", "risks", "goals" and similar terms and phraseshave been used to identify the forward‐looking statements. These statements reflect managements current beliefs andare based on information currently available to the Banks management. Certain material factors or assumptions havebeen applied in drawing the conclusions contained in the forward‐looking statements. These factors or assumptions aresubject to inherent risks and uncertainties surrounding future expectations generally generally.FirstBank cautions readers that a number of factors could cause actual results, performance or achievements to differmaterially from the results discussed or implied in the forward‐looking statements. These factors should be consideredcarefully and undue reliance should not be placed on the forward‐looking statements. For additional information withrespect to certain of these risks or factors reference should be made to the Banks continuous disclosure materials filed factors, Bank sfrom time to time with the Nigerian banking regulatory authorities. The Bank disclaims any intention or obligation toupdate or revise any forward‐looking statements, whether as a result of new information, future events or otherwise. 1
  3. 3. Agenda 1 FirstBank Overview  2 Financial Review  3 Asset Quality and Risk Management 4 Strategy and Transformation Overview  5 Summary 6 Appendix 2
  4. 4. FirstBank is Nigeria’s largest financial services institution offering an array of banking and related non-bank servicesLines of BusinessLines of Business Commercial Banking Corporate and Institutional Banking Retail Banking Public Sector Banking Other Financial Services Subsidiaries Investment Banking , Asset Management (FBN Capital/FBN Securities) Venture Capital/Private Equity (First Funds) Venture Capital/Private Equity (First Funds) Trust Services (First Trustees) Pension Fund Custody (First Pension Custodians) Mortgages/Real Estate (FBN Mortgages) Insurance Brokerage (FBN Insurance Brokers) I B k (FBN I B k ) Registrar Services (First Registrars) Bureau de Change (FBN Bureau de Change) Microfinance (FBN Microfinance) International Subsidiaries and Rep Offices FBN Bank UK London Paris Foreign Rep Offices Beijing Johannesburg 3
  5. 5. FirstBank is Nigeria’s leading bank across multiple dimensions #1 bank by total assets ($15.3bn or 14% market share) # 1 bank by total loans and advances ($8.4bn)Financial # 1 bank by total deposits ($9.4bn) Solid liquidity and capital positions (17 7% CAR) with shareholder’s equity of $2.1bn (17.7% shareholder s $2 1bn Extensive network with 610 branches and outlets International locations in London, Paris, Johannesburg, and BeijingNetwork Over 1300 ATMs Large customer base, with over 5 million customers High retail investor confidence and interest (2007 equity offer massively oversubscribed)Relationships Partner to government and regarded as a national icon Unparalleled reputation for leadership, strength, and stability Consistently ranked as #1 most trusted bank in independent consumer surveysReputation Oldest existing financial institution in Nigeria (established 1894) with record of surviving and even thriving through banking and national crises Leader in corporate governanceCorporate Underpinned by strong institutional processes, systems, and controlsGovernance History of seamless leadership successions 4
  6. 6. Group Financial Highlights: 9 Months to December 2009 & Q1 2010 Dec 09/08  Dec 09/08 Q1  10/Q1  09  Q1 ’10/Q1 ’09 Dec 2009 Q1 2010 Change  Change  Gross earnings  N196.4 bn +28.80% N62.4 bn ‐10.65%Group Net revenue  N130.5 bn +15.27% N40.1 bn ‐23.61%Performance Profit before taxes  Profit before taxes N11.6 bn N11 6 bn ‐72.6% 72 6% N15.4 bn N15 4 bn N/M Dec 2009 Q1 2010 Capital adequacy ratio  15.80% 17.67%Capital and Capital and Tier 1 ratio  i i 13.88% 14.58%balancesheet Leverage ratio  7.02x 7.40xLiquidity and  Total loans to deposit ratio  81.3% 89.7%funding Liquidity ratio  53.0% 45.6% x Provision for credit & other losses  N40.6 bn ‐ N1.5 bnKey  NPL  8.2% 6.9%Performance Indicators di ROE  ROE 1.4% 1 4% 15.9% 15 9% ROAA 0.2% 2.4% 5
  7. 7. December 2009 & Q1 2010 Group Results 9 Mths Mar 2010 Mar 2010 9 Mths 12 Mths 9 Mths Dec ‘09 vs Qtr to Mar Qtr to Dec Qtr to Mar vs Mar vs DecKey Financials, Nm 31-Dec-08 31-Mar-09 31-Dec-09 Dec ‘08 2009 2009 2010 2009 2009Balance SheetTotal Advances and Loans to Customers 927,691 752,166 1,089,287 17% 752,166 1,089,287 1,261,291 68% 16%Total Assets 1,801,526 2,009,914 2,172,346 21% 2,009,914 2,172,346 2,292,019 14% 6%Deposits and Current Accounts 1,110,311 1,194,455 1,339,142 21% 1,194,455 1,339,142 1,406,802 18% 5%Shareholders’ Funds 330,728 337,405 309,558 -6% 337,405 309,558 309,558 -8% 0%Profit and Loss AccountGross Earnings 152,491 217,630 196,408 29% 69,839 68,891 62,339 -11% -10%Profit Before Taxation and ExceptionalItems 42,405 53,799 11,585 -73% (9,846) 9,508 15,420 N/M 62%Exceptional Item - (26,113) - - - -Profit After Taxation 33,924 12,569 3,189 -91% (12,800) 7,606 12,336 N/M 62% Figures may not add up due to rounding 6
  8. 8. Agenda 1 FirstBank Overview  2 Financial Review  3 Asset Quality and Risk Management 4 Strategy and Transformation Overview 5 Summary 6 Appendix 7
  9. 9. Gross earnings continues to grow at a healthy pace Gross Earnings N’bn i ’b Gross Earnings Mix by Business Lines Gross Earnings Mix by Business Lines 262 Annualized 0.7% 1.1% 0.8% 0.4% 0.9% 0.3% Other  218 65 Mortgage Banking  41  41 4.5% 156 34  5.0% Asset Management  55  Investment & Capital  91 68 Markets  176  162  29  93.7% Retail & Corporate Banking  27  101  92.6% 63  63 41  Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Dec‐09 Mar‐10 Non Interest Income Gross Earnings N’bn Comments 70 • Long term steady growth in gross earnings, benefiting from  62 growth in average earning assets 19  • Q1 gross earnings negatively impacted by declining yields   12  • Strong deposit growth – focused on cheaper demand and  savings deposits  • Stable funding to exploit market opportunities 51  50  • Diversified group of businesses • We expect significant improvement in the contribution of  non interest income in coming periods as the recovery in the  capital markets and economy continues Mar‐09 Mar‐10 Interest Income Non Interest Income 8
  10. 10. … driven by interest from loans & advances, as well as income from other earning assets Net Revenue Split li Interest Income Split li 4.5% 4.8% 2.4% 4.0% 0.7% 0.0% 4.9% 13.3% 8.2% 8.2% 16.1% 21.1% 21.5% 28.4% 31.9% 22.9% 26.0% 30.4% 60.9% 64.9% 68.3% 56.1% 56 1% 77.7% 45.5% 69.0% 74.3% 73.7% 69.1% 60.7% 10.6% 12.0% 53.5% 11.3% 33.2% 15.1% 24.5% 10.4% 22.4% 20.4% 2.5% 7.5% 7.0% Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Net Interest Income Other Fees and Commissions Other Income Placements  Treasury Bills Loans and Advances Other Non Interest Income Split Breakdown of Fees and Commissions March ‘10 9.0% 2.8% 22.5% 17.5% 34.7% 33.8% Commission on turnover  40% Exchange gain 8% Exchange gain 8% 91.0% 97.2% 82.5% Commission on western union  77.5% transfers 3% 65.3% 66.2% N11.4bn Loss/(Profit) on disposal of  property and equipment 4% Credit related fees  2% Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Other fees and commissions   42% Fees and Commission Other incomeOther income includes foreign exchange income, recoveries, trusteeship income and income from investments 9
  11. 11. Improving deposit mix in the face of recent pressure from rising cost offunds Comments Yield on Interest Earning Assets i ld i 10.9% 11.2% 10.9% 11.2%• Improving yield on earning assets• Recent decline in net interest margin driven by high  9.2% 9.3% funding costs • Benefiting from reduction in cost of interest bearing  liabilities:    – Improving deposit mix – Excess liquidity driving down interest rates• Continued focus on improving pricing efficiencies to Continued focus on improving pricing efficiencies to  protect margins• Further decline expected in cost of funds Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Cost of Interest Bearing Liabilities Net Interest Margin 7.2% 7.3% 6.5% 6.6% 6.4% 5.9% 5.3% 5 3% 4.8% 4.4% 3.6% 2.7% 2.0%Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 10
  12. 12. Operating expenses growing in line with gross earnings, with further costefficiencies expected over time Operating Expense i Comments • Operating expenses continued to be impacted by  104 – High maintenance costs for decaying national infrastructure  Annualized – Controlled growth in staff costs 26 – Rising inflation impacting administrative and general expenses Rising inflation impacting administrative and general expenses – Cost of workforce restructuring – Quick wins coming through from earlier cost  optimisation 88  initiatives 78  70  • Significant focus on controlling costs through: 45  – Centralised processing/shared services 35  – Fleet management – Manning structure realignment Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 9 months to December ‘09 3 months to March ‘10 Staff Cost 51.8% Staff Cost 46.5% Depreciation 7.1% Depreciation 7.5% N78.3 bn N26.2 bn Premium on Deposits 4.7% Premium on Deposits 7.1% Admin and General Expenses  Ad i dG lE Admin and General Expenses  Ad i dG lE 36.4% 38.9% 11
  13. 13. Steep increase in loan loss provision driven by deterioration in asset qualityfollowing the economic slowdown and downturn in equity markets... Provision for Credit & Other Losses N’bn i i f di & h ’b Comment Provision for credit losses accounts for  • Net write backs in the first quarter of 2010 99.4% of total provisions. Other losses  8 Other*  • Within the Bank,  write backs  were credit related, as  include provision for diminution in value  of investments, cash/short term funds and  accounts reverted to performing status due from other banks and financial  5 Oil & Gas  institutions 3 Distributive Trade  • S b idi i Subsidiaries reported investment related writebacks of     t di t t l t d it b k f 5 Retail Others  N3.8 bn 7 Personal & Professional  • Increased focus on recoveries, with remedial strategy being     to recover past due obligations on non‐performing accounts,  19.4  restructure performing exposures against realistic cashflows,  14 Asset Management  4.0  6.4  and pursue gradual work‐out 2.0  (1.5) Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Movement (December’09) N’bn Movement (March ’10) N’bn 52.4 3.0 57.4 (7.2) 55.1 (0.7) 55.1 (4.9) (5.3) 20.3 31‐Mar‐09 Additional  General  Provision no  Amounts  31‐Dec‐09 31‐Dec‐09 Additional Provision:  Provision no longer  31‐Mar‐10 Provision: Non  Provision: No  longer  w/off Non Performing required Performing Longer  required Required*Other include manufacturing, commercial, construction, utility, education, owner occupier and agric      12
  14. 14. ... with significant negative impact on pre-tax profits Before provisions and exceptional items N’bn f i i d i li ’b After provisions and exceptional items N’bn f i i d i li ’b 70 Annualized 17 73  48  54  52  16 Annualized 26  28  4 28  22  22  12  Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 28  15  Loss driven by  exceptional item from  exceptional item from First Trustees taken in  March 2009 14  Mar‐09 Mar‐10 Mar‐09 Mar‐10 (10) 13
  15. 15. Significant improvement in contribution of retail and corporate bank togroup profits December ‘09 PBT Split b ‘ li By Business lines i li March ‘10 PBT Split Retail & Corporate  Retail & Corporate Banking  Banking 57.3% 69.9% Investment & Capital Mkts  Investment & Capital Mkts  10.5% 9.7% N11.6 bn Asset Mgt 26.2% N15.4 bn Asset Mgt 18.1% Mortgage Mgt 0.5% Mortgage Mgt 0.4% Other 5.4% Other 1.8% PBT Split by Geography PBT Split by Geography FBN  UK FBN UK • Global trade volumes remain slightly soft 1.4% • Interest rates remain low and there continues to be a slight  4.8% shortage of quality assets, as a result, liquidity remains high • Progress being made on loans that were provisioned in  2009 and some write backs are expected in Q2  UK  • FBN UK voted the ‘Best Trade Bank in West Africa’ by GTR  98.6% 95.2% Nigeria  magazine • Debit cards have now been launched and Wealth  Management business soon to be launched Dec‐09 Mar‐10 14
  16. 16. Rebounding profitability matrices, driven by lower levels of provisioningas well as focus on controlling costs Cost/Income Ratio / i Branch Productivity (N’bn) h d i i ( ’b ) 91.1% 570 582 536 68.4% 66.6% 64.5% 61.4% 61.6% 469 399 414 13761.5% 61.7% 65.3% 116 56.2% 54.5% 60.0% 92 96 67 55 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Pre Provisioning Post Provisioning Pre Provision Profitability per branch Number of Branches ROE, ROAA & EPS ROE ROAA & EPS Comments C t 27.0% 24.7% • Over 30% reduction in post provision cost‐to‐ income ratio • Increasing returns on asset and equity 15.9% 10.4% • Key initiatives are ongoing to ensure major improvement in  income side of cost‐to‐income equation 3.7% 2.8% 1.4% 2.4% • Sustained improvement in profitability expected 2.3% 2.4% 0.6% 0.2% • Improving profitability per branch network; benefits  expected from manning structure realignment and branch  optimisation 332 197 184 51 11 170 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 EPS (Kobo) ROE  ROAA  15
  17. 17. Well diversified deposit base providing stable funding; concerted efforts toreduce mix of expensive term deposits bearing fruits Deposits N’bn i ’b Deposits Mix i i Current deposits  Savings deposits  Term deposits  Domiciliary deposit  1,407  1,339  8.8% 8.8% 1,194  31.4% 31 4% 24.9% 700  600  19.9% 27.5% 449  39.9% 38.8%Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Dec‐09 Mar‐10 By Maturity B M i By Customer Segmentation  9.7% 8.4% 9.5% 15.0% 48.5% 45.6% 25.2% 13.9% 13 9% Over 12 months  6‐12 months   25.4% 19.7% 3‐6 months   40.1% 1‐3 months   40.5% 0 ‐ 30 days  36.0% 37.4% 10.4% 14.0% 0.6% 0.4% Dec‐09 Mar‐10 Dec‐09 Mar‐10 Finance Companies Government Coprorates Individuals 16
  18. 18. Steady growth in loan book ..... Loans & Advances N’bn & d ’b Off balance Sheet Engagements* N’bn ff b l h * ’b FBN Capital 1071 46 First Pension Custodian Bank 552 1,261  973 1,089  696 752  545 473 476  344 179  221  116Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 By Maturity  Composition of off balance sheet engagements   Composition of off balance sheet engagements ‘March 10 (Bank Only) Repo/Swap transactions 2.7% 22.4% 34.7% FX Purchases/Sales 3.8% 3.4% 11.8% Over 12 months Bills of Lading Indemnity 0.1% 7.0% 10.7% 4.6% 6 ‐ 12 months   Bonds and Guarantees 23.4% 7.9% 3 ‐ 6 months   N473 bn Bonds and Guarantees ‐ FCY 12.6% 1 ‐ 3 months   51.8% 51 8% 0 ‐ 30 days  Confirmed Documentary Credits  C fi dD t C dit 45.9% 22.0% Unconfirmed Documentary Credits  30.7% FX Loan Intermediation 4.7% Dec‐09 Mar‐10 17
  19. 19. ….. Leading to more efficient balance sheet utilization, whilstmaintaining liquidity Loan to Deposit Ratio i i Composition of Liquid Assets ii f i id N444 m N575 m 89.7% 81.3% FGN bonds 68.0% 68 0% 52.1% 52 1% 55.6% 55 6% 63.0% Net placement with discount  houses Net interbank placements 39.9% 2.3% 36.9% 11.7% Nigerian treasury bills 35.4% 35 4% Cash 24.7% 3.2% 3.0% 7.0% 5.0%Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Dec‐09 Mar‐10 Leverage Ratio (Times) Comments 10.9 • Liquidity ratio of 45.6%, well  in excess of 25%  9.6 regulatory requirement. 7.4 • N t l Net placer of funds in Interbank Market ff d i I t b kM k t 7.0 6.0 • Group treasury function improving efficiency of our  4.3 balance sheet • Improving capital adequacy ratio, with strong tier 1  capital ratio of 14.58% as at March 2010Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 18
  20. 20. We have successfully navigated turbulence within the banking sector andour capital ratios remain strong X X 24.30  X 15.80  17.67  20.22  13.88  14.58  10% CAR regulatory  requirement x 1,755  1,674  1,523  Mar‐09 Dec‐09 Mar‐10 total RWA (Nm) Tier 1 capital adequacy ratio % total capital adequacy ratio % 19
  21. 21. Development of Tier 1 Capital and Risk-Weighted Assets Tier 1 Capital N’bn Risk‐Weighted Assets N’bn 174 17 1755 2.1 0.2355.1 225 1523 (39) (22) (121) (32.5) 317.5 (2.1) (1.2)31‐Mar‐09 Ordinary share  Statutory  Retained  Bonus issue  Reserve for  31‐Mar‐10 31‐Mar‐09 Due From  Due From  Off Balance  Net Loans &  Investments Fixed &  31‐Mar‐10 capital  reserve earnings reserve small/medium  OECD  Other Banks Sheet  Advances Other Assets scale  Countries Commitment industries 20
  22. 22. Current Funding Situation – Asset and Liabilities as at December 2009 N2,172bn N2,172bn Other 5% 110  310  Capital and Reserves 14% Treasury Bills & Trading  236  236 Comments C t Assets 11% Investments 3% 68  148  Managed Funds 7% Some of our foreign loans and lines of credit are: 202  Short Term Liabilities & Other  • $175 million 10 year facility from Subordinated  9% Debt Capital for general balance sheet  D bt C it l f lb l h t management and growth 1,089  • European Investment Bank Loans & Advances 50% – Euro 35 million 5 year loan – Euro 15 million 8 year loan  y – Euro 55 million 10 year senior loan  • $100 million US Eximbank facility to support US  1,512  Deposits & Other Accounts 70%   exporters Managed Funds 4% g 85  85 • $350 million Standard Chartered Bank facility $350 million Standard Chartered Bank facility  for strategic fundingCash & Short Term Deposits  585 with Banks 27%  Assets Liabilities 21
  23. 23. Agenda 1 FirstBank Overview  2 Financial Review  3 Asset Quality and Risk Management 4 Strategy and Transformation Overview 5 Summary 6 Appendix 22
  24. 24. Our loan portfolio cuts across a diverse customer base, with no significantconcentration risk...... Type Comments N1,108 bn N1,056 bn • Continued growth in loan book at group level  14.6% 16.6% • 4.5% Decline in Bank loan portfolio between December  2009 and March 2010 driven mainly by maturing  y y g 26.5% 24.1% obligations being paid down Overdrafts  1.0% 0.8% Money market lines 9.8% 6.8% • Stable sector exposures across board Leases Commercial papers • Targeted growth of 10% in loan book for 2010 Term loans  T l 46.6% 50.2% Investments 1.4% 1.5% Dec‐09 Mar‐10 Business Lines ‘December 09  Business Lines ‘March 10  Corporates 26.7% Corporates 28.5% Corporates 28.5% Consumer 10.2% Consumer 10.4% Retail 25.5% N1,108  Retail 26.3% N1,056  bn Financial Institutions &  bn Financial Institutions &  Treasury 30.5% y Treasury 27.7% Agric/Misc 0.6% Agric/Misc 0.8% Public Sector 6.4% Public Sector 6.4% 23
  25. 25. ......and remains well diversified across different sectors of the economy ‘ b Gross Sector Exposure ‘December 09 ‘ h Gross Sector Exposure ‘March 10 Agriculture , 1% 2.6% Public Sector, 6% Public Sector, 6% Agriculture , 1% Downstream 3.3% Downstream 0.1% Upstream 0.4% Retail Services, 8% Retail Services, 10% Upstream 13.6% Services 13.8% Oil and gas  Oil and gas  Services Utilities, 0% Utilities, 1% Utilities 1% , 15% , 17% 17% General  Consumer Credit  General  Commerce, 6% Consumer Credit  , 6% Commerce, 5% , 7% Communication  , 5% Communication , 5%Transportation , 1% Manufacturing  Transportation , 1% , 10% Manufacturing , 8% Finance and  Finance and  Insurance , 31% Insurance , 28% Real estate, 10% Real estate, 10% Construction , 1% Construction , 1% Collateral Comments • Reduced exposure to finance and insurance sectors from  29.1% 27.0% December 2009 to March 2010 • Exposure to share backed loans down to 4.61% from 5.7%  as at March 2009 Unsecured  • Margin loans represent 1.33% of total loans , down from  57.4% Otherwise secured * 57.4% 2.7% in March 2009  Secured against real  estate  estate 13.5% 15.6% Dec‐09 Mar‐10 * Includes cash, lien on marketable securities, Guarantees, receivable of investment grade banks/ corporate lien on fast moving  inventory in bonded warehouse, deposits e.t.c. 24
  26. 26. We have taken significant provisions against our non performing loanportfolio, with overall improvement in quality of assets NPL Portfolio N’bn f li ’b NPL & Coverage Ratios & i 94.0 90.7 134.8% 105.5% % 82.8% 77.2% 36.5 64.1% 67.1% 17.3 9.0% 8.2% 6.9% 6.7 7.1 4.8% 4 8% 2.6% 1.5%Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Dec‐09 Mar‐10 NPL/TL TL LP/NPL Time Past Due ‘December 09 (Bank Only) Time Past Due ‘March 10 (Bank Only) 90 ‐ 179 days 34.9% 90 ‐ 179 days 21.0% N81.5 bn 180 ‐ 359 days 13.8% N82.3 bn 180 ‐ 359 days 20.8% > 360 days 41.9% > 360 days 44.8% Interest in suspense 9.4% p Interest in suspense 13.4% Interest in suspense 13.4% 25
  27. 27. Major sectors represented in the NPL driven largely by systemic issues but we are beginning to see reversals Sector Exposure ‘December 09 Sector Exposure ‘March 10 General  Commerce, 6% Owner  Agric, 0% Others, 4% Occupier, 2% Education, 1% Asset  Retail Others, 11% Oil &  Manufacturing, 3% Management, 18% , Gas, 9% Utility, 6% Commercial  Construction, 3% Construction 3% Residential, 3% Commercial  Manufacturing, 3% Residential, 3% Construction, 3% Utility, 6%Commercial Non  Owner Residential, 16% Occupier, 1% Personal &  Oil & Gas, 12% Professional, 13% Education, 1% Education, 1% Other Financial  Institutions, 0% General  Others, 4% Commerce, 6% Personal &  Asset  Management, 21% Commercial Non  Professional, 17% Retail Others, 11% Residential, 17% Performing but past due loans ‘December 09 Performing but past due loans ‘March 10 0 ‐ 30 days 37.7% 0 ‐ 30 days 50.6% 30 ‐ 60 days 13.4% 30 ‐ 60 days 18.9% 60 ‐ 90 days 48.9% 60 90 d 48 9% 60 ‐ 90 days 30.5% N172.6  N125.9  bn bn 26
  28. 28. Various sectors continue to exhibit vulnerabilities to ongoing stresses within theeconomy , but we expect improving performance as the economic backdroppicks up NPL’s as a % of loans by sector ‘March 10 97.4% 50.0% 44.6% 40.5% 34.9% 29.9% 25.1% 21.0% 20.2% 20.2% 18.0% 16.0% 13.5% 13.2% 12.5% 10.7% 10.4% 9.0% 9.0% 8.8% 8.3% 8.3% 6.7% 5.5% 5.5% 27
  29. 29. Increasingly reduced exposure to share-backed loans, with portfolio benefitting from improved performance of the equity market Mar – 09 Dec – 09 Mar - 10 1 Facility Against Shares (FAS)1 N58.2b N53.05b N48.72b 2 Collateral value FAS1 N46.4b N49.18b N51.06b 3 Portfolio Coverage of FAS1 79.7% 92.72% 104.81% 4 FAS/Total Loans 5.7% 4.79% 4.61% 5 Non‐Performing FAS1 Loans N16.2b N30.07b N23.13b 6 Non‐Performing FAS1 Loans (%) 33.84% 56.70% 47.48% 7 Provisions held against FAS1 N12.6b N23.51b N19.16 8 FAS NPL Coverage 77.78% 78.18% 82.84% 9 % FAS1 backed by shares in private placement 27.59% 35.02% 35.28% 10 Margin Loan Exposure N16.4b N11.79b N13.85b 11 Percentage of margin loans to total LAD 2.7% 1.17% 1.33% 12 Collateral value of total margin loans Collateral value of total margin loans N6.59b N6 59b N6.93b N6 93b N8.92b N8 92b 13 Collateral value of non‐performing margin loans N7.5b N4.96b N8.84b 14 % of loan book renegotiated/restructured* 2.2% 2.79% 5.88% p g Provisions have been made in line with prudential guidelines Portfolio is marked to market only for the purpose of considering open positions. Classified accounts are based on total balance outstanding and not the value at risk.  On recovery of the value at risk, the security value will be taken in to recover the entire sum outstanding1FAS –Includes margin loans and other loans secured by shares*Largely margin loan accounts  Figures may not add up due to rounding 28
  30. 30. Seawolf Introduction d i FBN Exposure• Established on 17 April 2007 as a special purpose Vehicle, with the primary objective of achieving premier • N87.9bn – Direct exposure Nigerian status in the ownership and operation of major high value oilfield assets. g • 9 year medium term loan 9 year medium‐term loan• In July 2007, FirstBank availed SeaWolf a $260 million bridge facility • Percentage of loan book – 8.15%• Due to the global economic meltdown and declining oil prices Fi B k was constrained to convert i b id i FirstBank i d its bridge facility into a medium term loan Shareholding Sponsor Group 10% FBN Capital Partners  Limited 42% Pan African Infrastructure  Development Fund 18% $125 m Leadway Assurance 7.5% Haskal Holdings 7.5% Unallotted 15% 29
  31. 31. Risk Management Framework Risk Management Governance Framework Board of Directors Board Credit Committee Board Credit Committee Board Audit and Risk Assessment Committee Board Audit and Risk Assessment Committee ExCo Credit GMD/ExCo/ ALCO Internal Audit  ED/CRO 30
  32. 32. Risk Management• The Bank’s risk appetite is set by the Board of Directors annually, at a level that minimises erosion of earnings or capital due to  avoidable losses in the banking and trading books or from frauds and operational inefficiencies• The Bank  strives to maintain a conservative balance between risk and revenue considerations • The Bank’s appetite for risk is governed by the following  high‐quality risk assets measured by the following three key performance  indicators: – ratio of non‐performing loans to total loans – target (among the top three banks); – ratio of loan loss expenses to interest revenue – target (among the top three banks)   ( ) – ratio f loan loss provision to gross non performing loans – 2010 target (5%).• The Risk Management Directorate coordinates the monitoring and reporting of all risks across the Bank • Cl Clear segregation of duties between market facing business units and risk management functions ti f d ti b t k tf i b i it d ik t f ti – Ensures separation of policy, monitoring, reporting and control functions from credit processing functions• Group wide risk management as well as credit appraisals are also being strengthened • Adoption of SAS risk management module to develop models and test and validate different business scenarios Adoption of SAS risk management module to develop models and test and validate different business scenarios.• Implementation of Basel 2 framework, which will be used to determine economic capital adequacy in line with best practices• Creation of the specialised lending department• Automation of portfolio reports to aid early detection of problem loans Automation of portfolio reports to aid early detection of problem loans• Enhanced training of market facing personnel to improve quality of loan pipeline 31
  33. 33. Corporate Governance Corporate Governance Framework FirstBank Board Shareholders Establishment,  Audit and Risk  Governance  Disciplinary &  Credit  Tenders  Audit  ExCo Assessment  Committee Promotions Committee Committee Committee Committee Committee Asset &  Liability  Committee ExCo General  Statutory Committee Board Committee ExCo Credit Management Committee 32
  34. 34. Agenda 1 FirstBank Overview  2 Financial Review  3 Asset Quality and Risk Management 4 Strategy and Transformation Overview  5 Summary 6 Appendix 33
  35. 35. FirstBank aspires to be Sub-Saharan Africa’s* leading financial services group (and is already the largest in SSA excluding South Africa) FromKey Elements of FirstBank Group AspirationK El t f Fi tB k G A i ti First = “The Oldest, Largest” “Become Sub‐Saharan Africa’s* leading financial services group” 1894 First Bank founded as Bank of British West Africa (BBWA) 1. Be the undisputed leader in every business we choose to  1 Be the undisputed leader in every business we choose to 1957 BBWA rebranded Bank of West Africa (BWA) participate in 1966 BWA becomes Standard Bank of West Africa post-merger, then Standard Bank of Nigeria (’69) 2. Significantly grow our franchise within and beyond our  1979 Standard Bank of Nigeria borders becomes Fi t Bank of Ni b First B k f Nigeria i 2009 FirstBank is the largest bank in 3. Provide unparalleled and innovative service to our customers Nigeria and leader several non- bank financial services segments 4. Develop FirstBank into a hub for the best industry talent 5. Remain a bastion of ethical leadership and good corporate  To To… “First = = “Oldest, Largest” The Leader, The Best” From…“The Leader, The Best” governance First = First in total returns to 6. Deliver superior shareholder returns Deliver superior shareholder returns Shareholders shareholders in service levels & Customers value to customers “Our paramount goal is to ensure that our institution achieves  in desirability to Employees pre‐eminence in each of its businesses... and to ensure  work for in compliance and sterling performance in shareholder value growth”  Regulators good governance – Chairman The Public in positive impact on society* Excluding South Africa 34
  36. 36. While starting from a position of strength, we recognize current and potential challenges and have set a bold TRANSFORMATION agenda to address theseStrong assets & opportunities….Strong assets & opportunities• Largest and strongest balance  sheet of any SSA bank (ex‐SA) Some challenges…• Extensive distribution network  • Translating scale into  (610 branches/outlets) profits• Deep institutional, retail, and  p , , • O ercoming legac Overcoming legacy  government relationships and  service delivery  FirstBank is  client base of over 5 million issues aggressively • Consistently rated the most Consistently rated the most  TRANSFORMING  TRANSFORMING • Managing credit  trusted Nigerian financial  to meet present  quality in the present  services brand in independent  and future  macroeconomic  surveys challenges climate li t• Visionary, experienced  • Increased  leadership competition from • Operating in Africa’s most  foreign entrants promising financial services  marketplace 35
  37. 37. We are restructuring at a group level to enhance portfolio optimization, coordination and reduce risks and duplications across our businesses Operational  division and Operational division and Operational  division but  Operational division butFirstBank Group operating structureFi tB k G ti t t legal standalone entity not legal standaloneGroup  FirstBank GroupHoldco Corporate  Corporate Shared  Shared Centre Services Group Management CommitteeBusiness  Investment Banking Groups FirstBank FBN Bank International Insurance and Asset  Emerging Ventures ManagementBusiness  ▪ Institutional Banking ▪ FBN Bank UK* ▪ General life/non‐life  ▪ Financial advisory  ▪ Houses standalone Units ▪ Corporate Banking ‐ London underwriting ▪ Capital markets  subsidiaries ▪ Retail Banking ‐ Paris ▪ Insurance Brokerage ▪ Asset management ▪ Incubation and  – Affluent/High Net Affluent/High Net  • New countries… e.g.,  N i ▪ P i i li Principal investment  development of new  d l f worth (HNI) – Mass market ‐ Kenya and private equity  businesses – Enterprise ‐ Ghana etc ▪ Securities services – Local government ▪ Global custodianship ▪ Public sector ▪ Research – Federal government – State governmentMapping to ▪ FirstBank of Nigeria ▪ FBN Bank UK ▪ FBN Insurance Brokers ▪ FBN Capital  ▪ First Pension Custodian present ▪ FBN Bureau de  ▪ First Trustees  First Registrarsentities Change (BdC) ▪ First Funds ▪ FBN Mortgages ▪ Foreign rep offices Foreign rep offices ▪ FBN Securities FBN Securities  ▪ FBN Microfinance Bank FBN Microfinance Bank 36

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