FBN Holdings Plc. Consolidated Financial …

1 FBN Holdings Financial Statementsfor the year ended 31 December 2017 FBN Holdings to the Consolidated Financial statementsfor the year ended 31 December 2017 Note Page Note Page Directors and advisors17 Interest income 90 Corporate Governance Report28 Interest expense90 Director's report149 Impairment charge for credit losses90 Responsibility for annual Financial statements1710 Insurance premium revenue90 Statement of compliance with NSE listing rule on Securities Trading Policy1811 Fee and commission 90 Report of the Audit Committee 1912 Net gains on foreign exchange91 Report of the Independent Auditors2013 Net gains/(losses) on investment securities91 Income statement 2614 Net (losses)/gains from Financial instruments at fair value through profit or loss91 Statement of total comprehensive income2715 Dividend income91 Statement of Financial position2816 Other operating income91 Consolidated statement of changes in equity2917 Personnel expenses92 Company statement of changes in equity 3018 Operating expenses92 Statement of cash flows3119 Taxation - income tax expense and liability93 Notes to the Consolidated Financial statements20 Cash and balances with central banks941 General information3221 Cash and cash equivalents942 Summary of significant accounting policies3222 Loans and advances to of preparation3223 Loans and advances to in accounting policy and dislosures3224 Financial assets and liabilities at fair value through profit or reporting3526 Asset pledged as control transactions3527 Other currency translation3529 Investment taxation3630 Investment in in assets and liabilities3632

2 Asset Held for Sale: Discontinued Financial instruments3934 Property, plant and recognition3935 Intangible of Financial assets4036 Deferred tax assets and of non- Financial assets4037 Deposits from from operations4139 Other on investment properties4241 Liability on insurance , plant and assets4343 Retirement benefit contracts4344 Share and cash equivalents4345 Share premium and benefits4446 Reconcilliation of profit before tax to cash generated from and contracts4448 Offsetting Financial assets and Financial activities4649 Related party debt and equity securities4650 Directors' capital4651 Compliance with guarantees4752 Events after statement of Financial position date1203 Financial risk management53 Dividends per and overview4854 Earnings per risk48 Other National risk62 Statement of value risk66 Five year Financial of insurance value of Financial assets and liabilities794 Capital management845 Significant accounting judgements, estimates and assumptions866 Segment information88 FBN Holdings AND ADVISORSDIRECTORSDr.

3 Oba A. Otudeko, CFR Non-Executive Director (Group Chairman)U. K. Eke, MFRG roup Managing DirectorOye Hassan-Odukale, MFRNon-Executive DirectorChidi AnyaNon-Executive DirectorDr. Sule Hamza Wuro BokkiNon-Executive DirectorDebola OsibogunNon-Executive DirectorOmatseyin AyidaNon-Executive DirectorDr. Adesola AdeduntanNon-Executive DirectorCecilia Akintomide, OONNon-Executive DirectorOluwande MuoyoNon-Executive Director COMPANY SECRETARY:REGISTERED OFFICE: Samuel Asabia House 35 Marina LagosAUDITOR:REGISTRAR:LagosBANKERS:Firs t Bank of Nigeria Limited35 MarinaLagosFBNQ uest Merchant Bank Limited10 Keffi Street, IkoyiLagosIganmuFirst Registrars & Investor Services LimitedPlot 2 Abebe Village RoadOniru, LagosOluseye KosokoPricewaterhouseCoopers(Chartered Accountants)Landmark Towers, Plot 5B, Water Corporation Road1 FBN Holdings Plc. 2 CORPORATE GOVERNANCE Introduction This section gives a summary of the Board s approach to governance for the 2017 Financial year.

4 As with recent years, 2017 was intensely challenging for all businesses in the country, as the economy had to deal with recession arising from low oil prices globally. The negative trends witnessed in 2016 abated in 2017. Notwithstanding macroeconomic volatility, the Board and Management of FBN Holdings Plc remain steadfast in the unified belief that good corporate governance practice remains the best tool to deliver increased shareholder value. In the preceding year s report, we had discussed the peculiar challenges faced by the Group beyond the general macroeconomic difficulties relating to the significant drop in oil prices and its effect on the macroeconomic indices of Nigeria and other emerging economies were acknowledged. The high impairment charges on the loan book in the Commercial Banking business, which had sustained negative impact on performance, as well as efforts being made to address these challenges, have been extensively addressed.

5 Positively, the structures put in place to ensure reduced impairment charges and strengthen the Group s Risk Management practices have started yielding results as may be gleaned in the Financial results and the rising share price of the Company. The focus of the Board in the incoming year is to further deepen these practices to ensure an effective credit risk management system. The Board, as well as Management, are committed to continually raise the bar on best governance practices and ethical dealings which will ultimately increase shareholder value in the institution. The Group s oversight function has also been intensified in ensuring the extraction of synergy inherent in our diversified operations across markets and geographies, with over 13million active customers accounts and within its extensive banking infrastructure. Considerable successes have been achieved in strengthening the structures of other non-banking operating entities, thereby diversifying our earnings base to minimise our reliance on the commercial banking business.

6 Additionally, the Group s cross-border Commercial Banking operations, led by FBNBank (UK) Limited, serves to substantially cushion against country-specific risks. The culmination of all these strategic objectives is the realisation of the Group s aspiration to become the foremost Financial institution in Middle Africa. Governance Structure The following governance bodies are in place; A. The Board of Directors The FBNH oldings Board is a considered blend of diversity, experience and knowledge. The Board continuously seeks to review and refresh its composition to ensure that new ideas and experience are added to its decision-making processes. Since the last Annual General Meeting of FBNH oldings, there have been no changes to the Board s composition. The Board is comprised of the following members: FBN Holdings Plc. 3 Dr. Oba Otudeko, CFR - Group Chairman UK Eke, MFR - Group Managing Director Oye Hassan-Odukale, MFR - Non-Executive Director Omatseyin Ayida - Non-Executive Director Chidi Anya - Non-Executive Director Dr.

7 Hamza Wuro Bokki - Non-Executive Director Debola Osibogun - Non-Executive Director Oluwande Muoyo - Independent Non-Executive Director Cecilia Akintomide, OON - Independent Non-Executive Director Dr. Adesola Adeduntan - Non-Executive Director Responsibilities of the Board of Directors The Board s principal responsibility is to promote the long-term success of the Group by creating and delivering sustainable shareholder value. The Board leads and provides direction for the Management by setting policy directions and strategy, and overseeing its implementation. The Board seeks to ensure that Management delivers on both its long-term growth and short-term objectives, striking the right balance between both goals. In setting and monitoring the execution of our strategy, consideration is given to the impact that those decisions will have on the Group s obligations to various stakeholders, such as shareholders, employees, suppliers and the community in which the Group operates.

8 The Board is also responsible for ensuring effective systems of internal controls are maintained and that the Management maintains an effective risk management and oversight process across the Group, to ensure that growth is delivered in a controlled and sustainable way. In addition, the Board is responsible for determining and promoting the collective vision of the Group s purpose, values, culture and behaviours. Specific key decisions and matters have been reserved for approval by the Board. These include decisions on the Group s strategy, approval of risk appetite, capital and liquidity matters, major acquisitions, mergers or disposals, Board membership, fi results and governance issues, including the approval of the corporate governance framework. More specifically, some of the Board s responsibilities as enumerated in the Board Charter are: building long-term shareholder value by ensuring that adequate systems, policies and procedures are in place to safeguard the assets of the Group; appointing and developing members and refreshing the overall competency of the Board as necessary from time to time; articulating and approving the Group s strategy and Financial objectives, and monitoring the implementation of those strategies and objectives; approving the appointment, retention and removal of the Group Managing Director (GMD) and any other Executive Directors (ED) in the Group; approving the criteria for assessing the performance of the GMD and the EDs.

9 Monitoring and evaluating the performance of the GMD against agreed key performance objectives and targets, and ratifying the evaluation of EDs as prepared by the GMD; reviewing, on a regular and continuing basis, the succession planning for the Board and Senior Management staff, and recommending changes where necessary; reviewing and approving the appointment, promotion and termination of Senior Management staff (Assistant General Manager (AGM) and above) on the recommendation of the relevant Board Committee; overseeing the implementation of corporate governance principles and guidelines; reviewing and approving the recommendations of the Governance Committee in relation to the remuneration of Directors; FBN Holdings Plc. 4 overseeing the establishment, implementation and monitoring of a Group-wide risk management framework to identify, assess and manage business risks facing the Group; articulating and approving the Group s risk management strategies, philosophy, risk appetite and initiatives; maintaining a sound system of internal controls to safeguard shareholders investment and the assets of the Group; and overseeing the Group s corporate sustainability practices with regards to its economic, social and environmental obligations.

10 The Board of FBNH oldings met eight (8) times in 2017. The record of attendance is presented below: Name Jan. 31 Apr. 6 Apr. 25 May 18 Aug. 1 Oct. 24 Nov. 2 Dec. 19 Dr. Oba Otudeko, CFR UK Eke, MFR Oye Hassan-Odukale, MFR Omatseyin Ayida Chidi Anya Dr. Hamza Wuro Bokki Debola Osibogun Oluwande Muoyo Cecilia Akintomide, OON Dr. Adesola Adeduntan B. Board Committees The Board carries out its oversight function through its standing committees, each of which has a charter that clearly defines its purpose, composition and structure, frequency of meetings, duties, tenure and reporting lines to the Board. The Board monitors these responsibilities to ensure effective coverage of, and control over, the operations of the Group. In line with best practice, the Chairman of the Board does not sit on any of the committees.