Facts Behind The Figures Nigerian Stock Exchange

Transcription

1 Facts Behind The Figures Nigerian Stock Exchange May 6, 2015

2 Disclaimer FBNHoldings has obtained some information from sources it believes to be credible. Although FBNHoldings has taken all reasonable care to ensure that all information herein is accurate and correct, FBNHoldings makes no representation or warranty, express or implied, as to the accuracy, correctness or completeness of the information. In addition, some of the information in this presentation may be condensed or incomplete, and this presentation may not contain all material information in respect of FBNHoldings. This presentation contains forward-looking statements which reflect management's expectations regarding the Group s future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as anticipate, believe, expects, intend, estimate, project, target, risks, goals and similar terms and phrases have been used to identify the forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to the Group s management. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally. FBNHoldings cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain risks or factors, reference should be made to the Group s continuous disclosure materials filed from time to time with the Nigerian Stock Exchange and other relevant regulatory authorities. The Group disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 Outline About FBNHoldings Pg 5-6 Financial profile Pg strategic agenda Pg Summary Pg

4 About FBNHoldings 4

5 Diversified Financial Holding Company FBN Holdings PLC First Bank of Nigeria Limited FBN Capital Limited FBN Insurance Limited FBN Microfinance Bank Limited First Pension Custodian Limited FBN Mortgages Limited FBN Bank (UK) Limited First Trustees Nigeria Limited FBN Capital Asset Management Limited FBN Insurance Brokers Limited Kakawa Discount House Limited FBN Bank DRC First Funds Limited FBN Bank Ghana FBN Securities Limited FBN Bank The Gambia FBN Bank Guinea FBN Bank Sierra Leone FBN Bank Senegal Commercial Banking IBAM Insurance Other Financial Services FBN Insurance Limited completed the acquisition of 100% equity interest in Oasis Insurance Plc 5

6 One Group, Multiple Solutions with strong focus on increasing Subco contribution Commercial Banking Investment Banking & Asset Management Insurance Other Financial Services 1 Current and Savings Accounts Deposits Mobile Banking Working Capital Financing Trade Financing Cash Management Foreign Facility Remittance Services Wealth Management Financing and Collection Services Cross Boarder Trade Finance Financial Advisory Equity Capital Markets Debt Capital Markets Debt Solutions Equity Brokerage Fixed Income Sales & Trading Research Asset Management Trustee and Agency services Alternative Investments Life Assurance Products Group Life Assurance General Insurance Mortgage Plans Bancassurance Individual Policies Brokerage Loan and Deposit Products to the Unbanked and Underbanked Deposit Mobilisation Risk Assets / Credit Creation Electronic Banking Business Advisory Services 1 Includes FBN Microfinance among others 6

7 Financial Profile 7

8 The Largest Financial Services Group in Nigeria Figures as at 31 December 2014 Ranking among Nigerian Banks 1 #1 Total Assets N4,342.7 bn Net Interest Income N243.8 bn Net Interest Margin 2 7.6% NPL Ratio 3 2.9% Loans/Deposits % CAR % RoAE % Business locations 892 ATMs in Nigeria 2,597 Active Customer 7 Accounts 9.7 million+ Employees 10,464 Source: Company data and IFRS financial statements 1 FBNHoldings vs. other listed Nigerian banks; by total assets, total customer loans, total deposits, and number of branches as at latest published IFRS financial statements 2 Net interest margin calculated net interest income divided by the average balance of interest bearing assets during the period, in accordance with IFRS 3 Calculated as FBNHoldings NPLs divided by its gross loans to customers 4 Calculated as FBNHoldings gross loans to customers divided by customer deposits 5 For Commercial Banking Group Basel II 6 Return on average equity computed as profit after tax attributable to shareholders divided by the average opening and closing balances attributable to equity holders 7 For First Bank of Nigeria only 8

9 The Largest Financial Services Group in Nigeria Figures as at 31 March 2015 Ranking among Nigerian Banks 1 #1 Total Assets N4,511.4 bn Net Interest Income 2 N238.4 bn Net Interest Margin 3 6.9% NPL Ratio 4 3.9% Loans/Deposits % CAR % RoAE % Business locations 892 ATMs in Nigeria 2,605 Active Customer 8 Accounts 10.1 million+ Employees 10,546 Source: Company data and IFRS financial statements 1 FBNHoldings vs. other listed Nigerian banks; by total assets, total customer loans, total deposits, and number of branches as at latest published IFRS financial statements 2 Annualised Net Interest income 3 Net interest margin calculated net interest income divided by the average balance of interest bearing assets during the period, in accordance with IFRS 4 Calculated as FBNHoldings NPLs divided by its gross loans to customers 5 Calculated as FBNHoldings gross loans to customers divided by customer deposits 6 For Commercial Banking Group Basel II 7 Return on average equity computed as profit after tax attributable to shareholders divided by the average opening and closing balances attributable to equity holders 8 For First Bank of Nigeria only 9

10 Challenging regulatory backdrop The CBN, following the Monetary Policy Committee (MPC) meeting in November, moved the midpoint of the official window of the foreign exchange (FX) market from N155/US$ to N168/US$ Increase in cash reserve requirement (CRR) for both public and private sector to 75% and 20% respectively Enforcement of Treasury Single Account with 25% of qualified public sector (Federal Government) funds withdrawn monthly Implementation of Basel 2 requirement in October 2014; significantly important bank requirement to take effect on July 1, 2016 Banks not meeting the Basel 2 CAR requirements are required to send recapitalisation plans by June 2015 with full recapitalisation required by June 30, 2016 Monetary policy tightening through FX sales restrictions and closure of RDAS 1 window Increase in Monetary Policy Rate (MPR) to 13%; first time in 2 years Timeline of key events January MPC Increases CRR on Public sector from 50% to 75% Reduced capital inflows due to US Fed tapering March MPC raises CRR on private sector from 12% to 15% May MPC maintains status quo June Godwin Emefiele resumes office and releases vision paper DMBs commence Bank verification number (BVN) project September Re-introduction of the remote-on-us ATM cash withdrawal fees after third withdrawal October Banks to commence reporting in compliance with Basel 2 Accord CBN establishes collateral registry regulation for MSME 2 December Banks net open position reduced from 1% to 0% Banks mandated to effect the TSA initiative January February March April May June July August September October November December February CBN Governor Mallam Lamido Sanusi is placed on suspension Godwin Emefiele appointed to take over in June April Nigeria s rebased GDP at $510bn makes it the largest economy in Africa and 26th in the world July MPC maintains status quo New Pension reform act signed into Law CBN cashless policy effective nationwide November CBN limits importers of select products from accessing FX from the CBN official auction window Operational Live test run of the Revenue Collection under the TSA initiative MPC meets and implements the following: Increased benchmark MPR by 100bps to 13% Increased CRR on private sector funds from 15% to 20% Moved the midpoint of the exchange rate at the official window to N168/USD from N155/USD 1 Retail Dutch Auction System 2 Micro Small Medium Enterprises 10

11 Key themes impacting our business Capital Requirements Oil Price Decline Commencement of Basel 2 No immediate plans by FBNHoldings to raise Tier 1 capital within the next 12 months given: low market liquidity depressed valuation levels significant dilution risk for existing shareholders Capital position is being enhanced through increased profit retention interim capitalisation of profits more efficient balance sheet management more conservative loan growth Sensitised credit facility structures for upstream customers to protect against oil price shocks Hedge contracts in place to provide secondary protection Likely extension of loan tenors to align with reduced crude oil receipts Continuous performance monitoring of upstream transactions and proactive remediation strategies in place Exposures in downstream sub-sector mainly short term/self-liquidating trade transactions to major players with wide distribution outlets and strong operating cashflows Oil companies slowing down on capital expenditure, reducing opex and increasing production to improve cashflows Currency Devaluation Foreign currency (FCY) loans backed by FCY cashflows providing natural hedge Exposures to manufacturing and general commerce sector mainly to top end players with capacity to absorb incremental operating costs arising from currency devaluation or pass through to customers Targeted slow down in exposure to the oil & gas sector Slow down on the creation of FCY assets to reduce the impact of naira devaluation on CAR Efficiency Rationalising unprofitable branches and minimal branch expansion Restructuring the procurement processes and streamlining operations as well as cutting back on costs Centralising processes across the Group to reduce transaction costs and processing cycles; Realigning and rationalising the workforce in order to enhance overall manpower efficiency and productivity Further penetration of the retail segment and optimally utilising low-cost funding as well as using branches as sales and service centres to optimise retail infrastructure Optimising IT solutions in head office middle and back offices to improve efficiency and effectiveness, but ultimately to reduce the Full-Time Equivalent (FTE) deployed to those sections of the Bank Leveraging transaction banking to increase share of wallet thereby optimising revenue 11

12 Income Statement Balance Sheet FBNHoldings remains resilient across key financial metrics despite the ongoing challenges faced Business Growth, Deposits (N tn) CAGR +22% Loans (N tn) % Total Assets (N tn) Gross Earnings (N bn) % +20% Significant revenue loss due to CBN policy changes (tariff / charges, CRR, etc.) PBT (N bn) % ROE 10% 13% 19% 16% 17% % 12

13 Strategic Agenda 13

14 Strategic initiatives support a concerted focus to manage our business groups to enhance profitability FBN Holdings Plc Drive greater group coordination Institutionalise cross-sell and synergy extraction across the Group Implement structured shared services HR, IT, Risk Management, Corporate Communication and General Services Commercial Banking IBAM Insurance Strengthen the pre-eminence of our Commercial Banking Group Enhance the competitiveness of IBAM Increase our share of the insurance market Minimise country-specific risks through diversification Acquisition of 5 banks in West African Countries Enhancing contribution of subsidiaries Refocus the public sector business of the Bank and drive actualisation of value chain banking Extract maximum value from the Trade Finance capabilities of FBN Bank UK Improve workforce productivity and implement cost containment measures Obtain a merchant banking licence Enhance our project finance capabilities/ underwriting Recently acquired Kakawa Discount House Limited resulting in access to the fixed income and FX trading segment of the investment banking market Leverage the retail banking platform of FirstBank for sale of Asset Management products Gained access to the general insurance segment of the market Drive Bancassurance products through the retail platform of the FirstBank Group Leverage on-going collaboration with Telcos to drive deeper penetration of the insurance market through mobile insurance products 14

15 ..driven by a focus on synergy realisation, innovation and improving efficiency Increased Collaboration across our Business Groups is yielding improved performance Commercial Banking Investment Banking and Asset Management Insurance Under-writing and Brokerage Profile Largest balance sheet in Nigeria - No. 1 in Assets, Deposits 7 banking subsidiaries across Africa and presence in 12 countries globally New customer focus Targeted investments in growth segments, SME banking, e-banking/ transaction banking No. 1 or No. 2 in Debt and Equity Financing Top 5 player across all key aspects of investment banking New merchant banking licence underway in 2015 Acquisition of Oasis Insurance positions us as No. 9 in composite insurance, with target to be Top 5 in 3 years Fastest growth in retail life segment (2014: 4.6%; 2013: 2.3%) Modernised distribution platform and mobile sales of insurance Group Targets for % Revenues from non-bank SubCos in % Net revenue growth rate CROSS-SELL 12bn + NGN in

16 Valuation & Summary 16

17 Currently trading at 0.55x P/B, FBNH offers a 37.1% premium representing a compelling investment opportunity P/B Multiples FY 2015E P/E 2.50 Guaranty Zenith FBNH Access Bank UBA x 6.9x [0.94] 1.25 [0.99] 1.16 [0.97]] 3.5x 5.0x 4.2x UBA Access bank 2014 Q FY 2015 E Upside from Q Levels FBNH 37.1% Zenith TP:{22.78} 8.6% TP:{26.50} TP:{9.28} TP:{11.93} TP:{6.48} 59.6% 52.1% Guaranty 0.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% GUARANTY NL Equity Access bank UBA FBNH Zenith Guaranty ZENITHBA NL Equity TP:{29.54} 17.3% ACCESS NL Equity Upside from FY 2014 Levels TP:{26.28} FBNH NL Equity UBA NL Equity 42.8% TP:{14.96} TP:{11.54} TP:{7.41} 72.3% 70.1% 74.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Numbers in [ ] represent the average for the period; The TP{target price} is the consensus from Bloomberg as of 31 December 2014 and 31 March Source: Bloomberg 17

18 International Peers Domestic Peers FY15E valuation metrics confirm FBNH to be one of the cheapest names internationally and locally FY 2015E valuation Price/Book (PB) Ratio 2015E Price/Earnings (PE) ratio 2015E GT Bank Access FBN Holdings Zenith UBA Tier 1 Peers Skyebank Diamond Average domestic peers Commercial Bank of Egypt Cal Bank Equity Bank Ghana Bank Kenya Commercial Bank Sberbank Average international peers Ø 1.31 Ø 6.56 FBNHoldings remains an attractive and compelling investment proposition (PE ratio 5.0X, PB ratio 0.6X) Source: Bloomberg as at 24 April Ø = Average across the entire basket. 18

19 Outlook remains cautiously optimistic; Group operates in attractive markets and segments 1 Revenue generation 2 Cost strategy - efficiency Portfolio rebalancing to reallocate assets to higher yielding segments Enhance and maximise the revenue generating opportunities of treasury activities from favourable monetary backdrop Acquisition of Kakawa Discount House Limited as an in-road to securing a merchant banking license; Enhance product sales and revenue Significantly increase non-bank subsidiaries' contribution to the Group through synergy extraction and promotion of cross sell Enhance revenue generation by optimally leveraging the retail banking opportunities from the Bank s infrastructure Continue to grow our Naira credit card scheme for stable interest and fee income while also increasing visibility and revenue generation capabilities of our international cards and service touch points Continue to leverage Firstmonie in the provision of seamless, safe and secure financial services to the under banked and unbanked population in Nigeria Leverage the credit card business and replicate the Nigeria e-banking success in the DRC, Ghana and the other commercial banking subsidiaries to extract increased value Deepening transaction banking services to improve collections Cost synergies through key corporate centre consolidation Growing low-cost deposits Reorganising the procurement process for greater focus and monitoring Optimising IT solutions in head office middle and back offices to improve efficiency and effectiveness Implementing the robust learning framework to enhance workforce productivity 3 Capital plan 4 Portfolio strategy Capital management strategy increased retention Decrease term loans to short tern self-liquidating trade transactions Asset/RWA 1 -light business model attempting to serve more customers through alternative channels as opposed to brick and mortar Focusing on having tighter risk acceptance criteria and more proactive document administration, collateral management, credit monitoring and collection support Portfolio tracking for prompt identification of early warning signs of deterioration in the portfolio that will trigger appropriate remedial action Increased senior management involvement in the recovery process Deeper focus on sectors with strong and sustainable business cases An Exposure draft of the revised investment guidelines has been made public to the market and PFAs. This will imminently pave the way for PFAs to invest in ordinary shares of holding companies listed on a Stock Exchange registered under the Investments and Securities Act 1 RWA Risk Weighted Asset 19

20 2015 financial targets FY 2014 Results Q Results 2015 Targets Deposit growth 4.2% 5.1% 10% Net loan growth 23.2% -2.6% ~5% Net interest margin 7.6% 6.9% 7% 7.5% Cost to income ratio 66.6% 65.1% 63% Cost of risk 1.3% 0.7% 1.5% NPL Ratio 2.9% 3.9% 3% - 5% ROAE 16.7% 17.0% 16% - 17% ROAA 2.0% 2.0% 1.5% - 2% Cost of funds 3.5% 3.8% ~ 3.5% Effective tax rate 10.8% 16.1% 18% - 20% 20

21 Contact Details Head, Investor Relations Oluyemisi Lanre-Phillips Phone: +234 (1) Investor Relations Team Phone: +234 (1) (1) (1)

22 Appendix 22

23 FY 2014: Overview statement of financial position Nbn FY 13 FY 14 y-t-d Total Assets 3, , % Investment Securities % Interbank Placements % Cash and Balances with Central Bank % Net Loans & Advances 1, , % Other assets 5 2.4% [2.5%] Property&Equipment 2.0% [2.1%] Investments % [23.2%] Structure - December 2014 (Nbn) N4,343 [N3,869] N4,343 [N3,869] Capital & Reserves 12.0% [12.2%] Short Term Liabilities 2.2% [2.9%] Customer Deposits 2, , % Total Equity % Tier 1 Capital % Tier 2 Capital % Risk Weighted Assets 3, , % Net Loans and Advances 50.2% [45.7%] 2, ,050.9 Deposits 70.3% [75.7%] Key Ratios FY 13 FY 14 CAR (Basel 2) 13.6% 16.7% Tier 1 (Basel 2) 11.6% 12.5% Loans to Deposits % 72.8% NPL 3.0% 2.9% NPL Coverage % 137.9% Interbank Placements 10.6% [11.1%] Cash & Reserves 16.1% [15.4%] Due to other banks 3.9% [2.1%] Other Borrowings 8.5% [3.3%] Other Liabilities 3.1% [3.9%] Assets Liabilities [ ]FY Tier 1 & Tier 2 capital for commercial banking group under Basel 2, Tier 2 capital comprises foreign exchange revaluation reserves, hybrid capital instrument and minority interest for the commercial banking group; 2 Loans to deposits ratio computed as gross loans divided by total customer deposits; 3 Includes statutory credit reserves. Excluding statutory credit reserves, NPL coverage would be 65.8% for FY 2014 (FY 2013: 83.0%); NPL coverage computed as loan loss provisions + statutory credit reserves divided by non-performing loans; 4 Investments include Government securities, listed and unlisted equities, assets pledged as collateral, investments in associates, subsidiaries and properties; 5 Other assets also includes inventory, intangible assets, deferred tax and assets held for sale 23

24 Q1 2015: Overview statement of financial position Nbn FY 14 Q1 15 y-t-d Total Assets 4, , % Investment Securities % Interbank Placements % Cash and Balances with Central Bank % Net Loans & Advances 2, , % Other assets 5 2.8% [2.4%] Property&Equipment 2.0% [2.0%] Investments % [18.7%] Structure March 2015 (Nbn) N4,511 [N4,343] N4,511 [N4,343] Capital & Reserves 12.0% [12.0%] Short Term Liabilities 2.4% [2.2%] Customer Deposits 3, , % Total Equity % Tier 1 Capital % Tier 2 Capital % Risk Weighted Assets 3, , % Net Loans and Advances 47.1% [50.2%] 2, ,207.2 Deposits 71.1% [70.3%] Key Ratios FY 14 Q1 15 CAR (Basel 2) 16.7% 19.1% Tier 1 (Basel 2) 12.5% 14.3% Loans to Deposits % 67.7% NPL 2.9% 3.9% NPL Coverage % 111.6% Interbank Placements 13.2% [10.6%] Cash & Reserves 14.4% [16.1%] Due to other banks 3.7% [3.9%] Other Borrowings 7.4% [8.5%] Other Liabilities 3.4% [3.1%] Assets Liabilities [ ]FY Tier 1 & Tier 2 capital for commercial banking group under Basel 2, Tier 2 capital comprises foreign exchange revaluation reserves, hybrid capital instrument and minority interest for the commercial banking group; 2 Loans to deposits ratio computed as gross loans divided by total customer deposits; 3 Includes statutory credit reserves. Excluding statutory credit reserves, NPL coverage would be 65.8% for FY 2014 (FY 2013: 83.0%); NPL coverage computed as loan loss provisions + statutory credit reserves divided by non-performing loans; 4 Investments include Government securities, listed and unlisted equities, assets pledged as collateral, investments in associates, subsidiaries and properties; 5 Other assets also includes inventory, intangible assets, deferred tax and assets held for sale 24

25 FY 2014: Overview statement of income statement Nbn FY 13 FY 14 y-o-y Gross Earnings % Net Interest Income % Non Interest Revenue % Operating Income % Operating Expenses % Pre-Provision Operating Profit % Credit Impairments % Profit Before Tax % Income Tax % Profit After Tax % Key Metrics FY 13 FY 14 Net Interest Margin 3 8.0% 7.6% Non Int. Rev/Operating Income 22.7% 31.5% PPoP/Credit Impairments 5.4x 4.6x Cost to Income % 66.7% Cost of Risk 1.2% 1.3% ROaE % 16.7% 21.3% y-o-y growth in gross earnings to N480.6bn (FY 2013 N396.2bn); largely attributable to growth in interest income from loans and advances to customers (+14.2%), banks (+10.3%) and strong NIR growth (+66.1%) Strong NIR growth of 66.1% to N111.8bn (FY 2013: N67.3bn) as a result of enhanced treasury activities, increased trade business as well as revaluation gains that saw foreign exchange income grow to N44.9bn (FY 2013: N6.9bn). NIR growth stripped of FX income is 10.4% Growth in fee and commission income to N66.9bn (+12.8%) attributable to fees from bonds and guarantees (+85.8%), electronic banking fees (+49.9%), letters of credit commission (+21.3%) and remittance fees (+50.1%) 13.2% decline in commission on turnover (COT) to N15.3bn reflects the 33.3% decline in COT on current account balances to N2/mille Operating income grew by 19.8% y-o-y to N355.1bn driven by an increase in non-interest revenue (66.1%) Interest expense rose 27.0% y-o-y to N118.7bn due to growth in term deposits (+46.4%) and the increase in the savings account rate from 3.6% to 3.9%; 24% of the deposit book is in savings account Cost of risk marginally up y-o-y to 1.3% (FY 2013: 1.2%) underscored by effective and robust risk management structures 27.5% y-o-y increase in operating expenses to N236.8bn (FY 2013: N185.8bn) driven primarily by staff cost +21.3% to N79.8bn and regulatory cost (+21.0%) to N30.2bn Upward pressure on cost-to-income ratio to 66.7% given the regulatory-induced pressure on top and bottom line; N560bn in sterilised CBN deposits with estimated N64bn loss in income Effective tax rate improved to 10.8% (FY 2013: 22.7%); primarily driven by an increase in the tax exempt income and utilisation of available capital allowances EPS 7 of N2.55 (FY 2013: N2.16) ROaA 6 2.0% 2.0% 1 Operating income is defined as gross earnings less interest expense, fee and commission expense, insurance claims and share of profit/loss from associates; 2 Pre-provision operating profit computed as operating profit plus impairment charge 3 Net interest margin annualised and defined as net interest income (annualised) divided by average earning assets 4 Cost-to-income ratio computed as operating expenses divided by operating income; 5 Return on average equity computed as profit after tax divided by the average opening and closing balances attributable to its equity holders 6 Return on average assets computed as profit after tax (annualised) divided by the average opening and closing balances of total assets; 7 EPS computed as profit attributable to owners divided by the number of outstanding shares 25

26 Q1 2015: Overview statement of income statement Nbn Q1 14 Q1 15 y-o-y Gross Earnings % Net Interest Income % Non Interest Revenue % Operating Income % Operating Expenses % Pre-Provision Operating Profit % Credit Impairments % Profit Before Tax % Income Tax % Profit After Tax % Key Metrics Q1 14 Q1 15 Net Interest Margin 3 7.7% 6.9% Non Int. Rev/Operating Income 24.6% 32.3% PPoP/Credit Impairments 0.5x 0.7x Cost to Income % 65.1% Cost of Risk 0.4% 0.7% ROaE % 17.0% ROaA 6 2.2% 2.0% 23.5% y-o-y growth in gross earnings to N126.8bn (Q1 2014: N102.6bn); largely attributable to growth in interest income from loans and advances to customers (+16.9%), banks (+47.1%) and investment securities (12.3%) Strong NIR growth of 51.2% to N29.3bn (Q1 2014: N19.3bn) as a result of enhanced treasury activities, increased trade business as well as foreign exchange income growth to N9.7bn (Q1 2014: N4.2bn). NIR growth stripped of FX income is 29.3% Decline in fee and commission income to N15.0bn (-7.8%) attributable to reduction in commission on turnover (COT) to N2.8bn (Q1 2014: N4.0bn) reflecting the 100% decline in COT fees on current account balances to N1/mille from N2/mille Electronic banking fees was the major contributor (23.3%) to fee and commission income demonstrating a strong y-o-y growth of 82.8% to N3.5bn (Q1 2014: N1.9bn) Operating income grew 13.9% y-o-y to N88.8bn driven by the increase in noninterest revenue (51.2%) Interest expense rose 57.4% y-o-y to N35.7bn mainly due to the 45.9% increase in deposit costs to N30.4bn (Q1 2014: N20.8bn) 11.9% y-o-y increase in operating expenses to N57.8bn (Q1 2014: N51.6bn) as a result of increased staff (+9.7%) and regulatory costs (+3.6%). The reduced opex growth rate was driven primarily by the reduction in maintenance costs (- 19.3%) and the fairly stable regulatory cost that increased 3.6% y-o-y Cost-to-income ratio declined to 65.1% benefitting from faster growth in operating income relative to expenses Cost of risk accelerated y-o-y to 0.7% (Q1 2014: 0.4%) driven by the increased impairments taken for the period as a result of the impact of macroeconomic conditions on some small to medium sized exposures Profit before tax increased 8.7% y-o-y to N26.9bn, translating to a pre-tax return on equity of 20.2% and a post tax return on equity of 17.0% EPS 7 of N2.74 (Q1 2014: N2.62) 1 Operating income is defined as gross earnings less interest expense, fee and commission expense, insurance claims and share of profit/loss from associates; 2 Pre-provision operating profit computed as operating profit plus impairment charge 3 Net interest margin defined as net interest income (annualised) divided by average earning assets 4 Cost-to-income ratio computed as operating expenses divided by operating income; 5 Rturn on average equity computed as profit after tax (annualised) divided by the average opening and closing balances attributable to its equity holders 6 Return on average assets computed as profit after tax (annualised) divided by the average opening and closing balances of total assets; 7 EPS computed as profit attributable to owners divided by the number of outstanding shares 26

27 FirstBank Nigeria only (Loan book breakdown) [N8.8bn] 7 Breakdown of gross loans by SBU(Nbn) Institutional banking Retail banking Public sector Corporate banking Commercial Banking Private banking N1,576bn N1,610bn N1,735bn N1,832bn N1,835bn % % 9 1% % 3% 3% % 5% 6% 120 7% % % 28% % % 139 9% 149 9% 8% 132 7% % % 17% % % % % 44% 45% % 704 Q1 14 H1 14 9M 14 FY14 Q115 Core consumer / Retail product portfolio 1 [N44.7bn] N38.7bn N11.2bn N221.6 bn N5.5bn N148.3bn [N5.9bn] N17.9bn [N18.4bn] [N160.8bn] 38% Consumer auto loan 2.5% [2.5%] Home loans 8.1% [7.7%] Personal loans 66.9% [67.4%] Asset acquisition 5.0% [3.7%] Retail overdrafts/term loans 17.5% [18.8%] 4 6% 7% Gross Loans - Breakdown by Sectors 9% 4% 20% [N 1,832bn] FY % 3% N1,835bn 11% 15% 6% 5% 4% 5% Manufacturing 11% [11%] Construction 6% [5%] General commerce 5% [5%] 5 Information and communication 4% [4%] Real estate - home developers & commercial 5% [5%] Oil & gas upstream 17% [15%] Oil & gas downstream 20% [20%] Oil & gas services 7% [7%] Government 6% [6%] 3 Consumer 9% [10%] Others 4% [3%] 6 2 General 3% [3%] Power and Energy 3% (3%) FirstBank s gross loan book closed at N1.8tn (+0.1% y-t-d); 46.8% (FY 2014: 45.7%) of the loan book is in foreign currency (FCY) In the Oil & Gas downstream sector, we deal with the top tier of the market and some margin companies; with risk in the sector moderated through guaranteed sovereign debt notes (SDN) We expect slowdown in the midstream basically due to margin compression Upstream oil & gas consists mainly the indigenous companies in the market a few of which were hedged Possibility of tenor elongation by ~1-2 years, for some upstream transactions due to the net impact of the declining oil price on operating cash flows Deepened coverage and growth of our retail business to ensure strategic realignment and optimal use of retail infrastructure [N238.6bn] FY Represents loans in our retail portfolio < N 50mn ; 2 General includes personal & professional, hotel & leisure, logistics and religious bodies; 3 Government loans are loans to the public sector (federal and state); 4 Personal loans are loans backed by salaries; 5 Telecoms comprise 93% of the loans in Information and communication sector; 6 Others includes finance and Insurance, capital market, residential mortgage; 7 SBUs:- Corporate banking; private organisations with annual revenue > N5bn but < N10bn and midsize and large corporate clients with annual revenue in > N5bn but with a key man risk. Commercial Banking comprising clients with annual turnover of N500mn and N5bn. Institutional banking; multinationals and corporate clients with revenue > N10bn. Private banking; High net worth individuals and families. Public sector banking; Federal and state governments. Retail banking; mass retail, affluent with annual income < N50mn as well as small business and Local governments with annual turnover < N500mn 27

28 Healthy low-cost deposits provide stable funding Deposits by type Nbn Current accounts Savings accounts Term deposits Domiciliary accounts N2,855 N2,757 N2,910 N3,050 N3, % % % % % % % % % % % % % % % % % 31% 25% 26% Retail banking Private banking Corporate banking Commercial banking Public sector Treasury Institutional banking N2,447 N2,404 Deposits by SBU Nbn (FirstBank - Nigeria only) N2, % % % % % 18 1% 49 2% 75 3% % 23% % 22% % 2% % 167 1% % 38 8% 35 9% 7% 30 1% 2% 2% 1% 1,274 52% 1,301 54% 1,320 52% N2,551 N2,724 1,462 1,598 57% 11% 2% 19% 2% 6% 1% 59% Q1 14 H1 14 9M 14 FY 14 Q1 15 Q1 14 H1 14 9M 14 FY 14 Q1 15 Deposits by currency (FirstBank of Nigeria Only) N2, ,896 23% 77% N2, ,928 FCY LCY N2,551 N2,552 20% % % 80% 2,023 79% 2,038 80% 2, ,119 22% 78% Customer deposits increased 5.1% y-t-d across the Group CASA constitutes 69.4% of deposits up from 66% at the year end; retail business unit (+9.3% y-t-d), contributes 59% (FY 2014: 57%) to total deposits for FirstBank, providing a healthy and stable funding base Term deposits declined 6.5% y-t-d as we focus on growing low cost deposits and ensuring access to cheap and sustainable deposits to support the business Public sector deposits represent 19.0% of customer deposits (FY 2014: 16.6%) within FirstBank 20.5% (or N560.1bn) of customer deposits within FirstBank are impacted by CRR as at Q CRR represents 17.5% of total customer deposits across the Group Within the Nigerian business, the composition of foreign currency deposits to total deposits is 22.2% (FY 2014: 20.1%); representing 18.9% of total deposits across the Group Value chain of key multinationals and large corporates will be harnessed through transaction banking to continue to grow the deposit base Q114 H114 9M14 FY14 Q Treasury is not a strategic business unit but contributes to the percentage of deposits 28

29 Broad distribution platform providing excellent potential for growth in very attractive segments Banking, Advisory, Insurance and Asset Management 13 Kebbi Sokoto Zamfara Katsina Kano Jigawa Yobe Borno 14 c.2,600 ATMs across Nigeria Ekiti Osun Ogun 70 Oyo 165 Lagos Ondo 80 Anambra Kwara 30 Niger 57 Kogi 91 Edo 95 Delta 46 Kaduna Nassarawa Benue Bauchi Ebonyi Cross River Gombe Taraba 08 Enugu Adamawa 48 Plateau 127 Abuja (F.C.T) 9,700+ Points of Sale 892 business locations 61 Imo Location of Branches 11 Bayelsa 57 Rivers 127 Abia Akwa-Ibom mn cards; 40% verve card market share in Nigeria Number of Operational ATMs 29

30 anchored on cutting Edge Technology, Key Facts and Recent Innovations FirstMonie Key Figures* First-to-market in Nigeria with the multi-factor authentication technology, which enhanced the security of online transactions Cutting edge mobile and online platforms with advanced security and functionality FirstMobile (mobile banking service) and Firstmonie (mobile payment product) enabling customers and non-customers to conduct a growing variety of banking transactions through mobile phones Firstmonie received an award of Mobile Payment Product of the Year 2013 in Nigeria from Cards and epayment Africa Awards in March, 2014 EFInA Best mobile money operator based on customer impact, agent network usability, reliability and focus on customer protection c2.6 Million Subscribers N10.3 billion in transaction value in Q Secured $12mn grant from Bill & Melinda Gates Foundation FirstContact is a 24-hour, interactive, multilingual customer service centre offering support to the Bank s customers Implementation of Internal Control & Anti-Fraud Automated Solution ( ICAFAS ), a world-class enterprise fraud management system 13,350 Registered Agents in Q First institution in Nigeria to attain the ISO27001 Information Security Certification Best Life Insurance company in Nigeria awarded by the World Finance Awards First organisation in Nigeria to be awarded the ISO/IEC 27001:2005 Information Security Management Systems certification by the British Standards Institution *Nigeria Only 30

31 evidenced by our recent accolades FBNHoldings Adheres to the Highest Standards of Corporate Governance Recent Accolades Most Innovative Bank in Africa Best Private Bank in Nigeria 31