A Radiant Outlook 2012 Annual Report and Accounts

Description
A Radiant Outlook 2012 Annual Report and Accounts

VISION
To be a leading financial institution, with
the best people, providing unequalled
customer experience and delivering
superior shareholder value.

MISSION
We will consistently exceed customer
expectation by providing value-adding
solutions through professional and highly
motivated people, delivering excellent
financial performance in all markets
where we operate.

2012 | ANNUAL REPORT & ACCOUNTS

7

OUR CORE
VALUES
Integrity: We are honest and truthful. This explains our moral obligations as a
Bank to our customers, stakeholders and employees.
Competence: We are equipped with clusters of related abilities, commitments,
knowledge and skills that enable us effectively exceed our customer's
expectations.
Leadership: We are leading financial institution and takes leadership role in the
industry that involves providing the information, knowledge and methods that
enable us serve our customers better.
Accountability: We account for our activities, deliver our promises, accept our
responsibilities and are transparent in all our dealing in line with global best
practices.
Passion: We are professionals, dedicated and relentlessly devoted to the pursuit
of excellence by providing value-adding solutions.

cont
-ents

FINANCIALS
64

Directors’ Report

73

Responsibility for Annual Financial
Statement

74

Report of the Audit Committee

75

Report of the External Consultants

76

Report of the Independent Auditor

78

Consolidated Income Statement

79

Consolidated Statement of Other

06

Mission and Vision

07

Our Core Values

09

Key Milestones

82

Consolidated Statement of Financial Position

10

Result at a Glance

84

Statement of Changes in Equity

11

Corporate Profile

86

Consolidated Cash Flow Statement

16

Sustainability Report

88

Notes to the Consolidated Financial

22

Notice of Annual General Meeting

275

24

Chairman’s Statement

277

Five Year Financial Summary

31

CEO’s Letter to Shareholders

281

Our Branch Network

47

Board of Directors

288

Proxy Form

48

Management Team

289

E-Mandate Form

49

Corporate Governance Report 2012

290

Corporate Information

Comprehensive Income

Statements

-Delivering Sustainable Wealth

Statement of Value Added

2012 | ANNUAL REPORT & ACCOUNTS

9

KEY MILESTONES
1991

Diamond Bank founded as Private Limited Liability Company

2001

Diamond Bank becomes a Universal Bank

2005

Diamond Bank PLC becomes a Public Limited Company

2005

Diamond Bank PLC listed on the Nigerian Stock Exchange

2005

Diamond Bank PLC acquires the former Lion Bank of Nigeria PLC

2007

Voted Most Improved Bank of the Year in the Thisday Annual Awards

2008

1st African company / Bank quoted on the Professional Securities Market of the London Stock Exchange

2009

Rated A- by Fitch, A+ by Agusto and A by GCR reflecting the Bank's sustainable liquidity, sound and
professional practices and good standing as a high Investment grade institution.

2010

Appointed as primary lending institution for the disbursement of NIMASA Cabotage Vessel Finance Fund (CVFF)

2011

Appointed as a partner bank by the Nigeria Content Development Monitoring Board (NCDMB)

2011

Named Best Credit Card Bank in the 11th Card, ATM & Mobile Expo Africa 2011

2012

Named Best Credit Card Bank in the 12th Card, ATM & Mobile Expo Africa 2012

2012

Named Best Online Bank in Nigeria

2012

Named Best Oil and Gas Investment Company 2012, Africa awarded by London-based World Finance Magazine

(17,964,929)

Dec 2011

Dec 2012

Dec 2011

Dec 2010

910,234,444

603,003,229

412,992,754

482,056,310
Dec 2009

Total Assets

466,889,851

1,178,103,754

(27,132,209)

Dec 2011

542,098,490
Dec 2010

Dec 2012

Dec 2011

Dec 2010

Dec 2009

Apr 2009

Dec 2012

823,090,787

545,161,145

379,344,019

449,020,259

444,815,118

1,059,137,257

714,063,959

604,361,884

Dec 2009

Dec 2011

650,891,836

Apr 2009

Total Assets

Apr 2009

Dec 2012

796,231,792

592,851,763

Dec 2010
Dec 2011

650,395,601

Dec 2009

Profit Before Tax

682,077,914

9,468,016

Dec 2010

28,364,965

(9,055,793)

Dec 2009

Dec 2012

8,343,738

Apr 2009

131,166,141

98,163,095

Dec 2012

85,723,090

Dec 2011

64,667,401

101,659,260

Dec 2010

Dec 2009

Apr 2009

Profit Before Tax

Apr 2009

27,481,541

4,772,863

Dec 2010

Dec 2012

(12,374,154)

Dec 2009

Gross Earnings

5,901,951

138,848,669

102,722,007

91,022,288

67,735,694

108,979,476

Gross Earnings

Apr 2009

Dec 2012

Dec 2011

Dec 2010

Dec 2009

Apr 2009

10
2012 | ANNUAL REPORT & ACCOUNTS

RESULT AT
A GLANCE
BANK

Total Deposits

GROUP

Total Deposits

2012 | ANNUAL REPORT & ACCOUNTS

11

CORPORATE
PROFILE

D

iamond Bank Plc was incorporated in December 1990 and began
operation as a private limited liability company on March 21, 1991. Today,
Diamond Bank is one of Nigeria's leading commercial banks with strong
offerings in Retail and Corporate Banking.

We are in a strategic partnership with the International Finance
Corporation (IFC) who in June 2012 availed the bank a $70 million
facility. Also, Actis invested N17 billion in equity in Diamond Bank
in 2007, a transaction adjudged as the largest single private equity
investment made in Nigeria by foreign investors.

The first Nigerian bank to operate in the Francophone West Africa
with strong presence in the Republic of Benin and branches in
Senegal, Togo and Ivory Coast. As at December 2012, the Bank
had over 222 branches located in various cities and commercial
centres in Nigeria.
Diamond Bank PLC is a leading financial institution respected for
its excellent innovation in providing value-adding solutions to
customers' business needs. Over the years, the Bank has
leveraged on its underlying resilience to grow its asset base, and
to successfully retain its key business relationships. Diamond
bank strives to provide an exceptional customer experience using
technology and people to exceed customers' expectation.
The Bank is strategically focused to grow the retail segment of the

market by providing a wide range of unmatched convenience in
its retail products and services. The Bank equally has strong focus
on corporate banking. The Bank is therefore structured to
operate in four strategic business units; The Retail Banking, this
provides innovative products and solutions for the retail mass
market, mass affluent customers and MSME - small and medium
scale entrepreneurs. The Business Banking caters for the banking
needs of the middle market customers. The Corporate Banking
provides services to multi- nationals and large corporations in
such sectors as Oil and Gas, Power, Maritime, Manufacturing,
Aviation, Telecommunication and the Public Sector structured to
do business with the Federal Government, its agencies and
parastatals.
In providing unequalled customer experience, our approach is a
holistic mix of propositions comprising a growing network of
strategically located “brick and mortar” outlets, efficient
electronic banking platforms and well structured financing
models that address the needs of the entire value chains of
customers business.

CORPORATE PROFILE

2012 | ANNUAL REPORT & ACCOUNTS

12

Overall, our people remain our key differentiating factor in
providing this unique customer experience across all markets
where we operate and we are fully committed to consistently
attracting only the best people to maintain our competitive edge.

u

Diamond SavingsXtra Account: This is an interest-yielding
savings account, which allows the deposit of both cash and
third party cheques with a minimum opening balance of
N5,000

MSME BUSINESS DEVELOPMENT

u

Diamond Kiddies Account: This is an account is for children
under 18 years with a minimum opening balance of N 5,000.

u

Diamond High Interest Deposit Account (HIDA): This is
designed for individuals interested in saving for a longer term
and maximising interest. The account is opened with a
minimum balance of N 100,000

u

Diamond Term Deposit: This is a long-term capital growth
account designed for individuals interested in saving for a set
period of time. The minimum investment amount is
N5,000,000

Diamond Bank is a pacesetter in providing financial services to
Micro, Small, Medium scale Enterprises in Nigeria. We recognised
this sector as the base on which the future growth and
development of the nation depends and that informed our initial
partnership with the IFC in 2008 to build a sustainable framework
for MSME financing which has stood the test of time.
In 2011, we launched the “Borrow For Free” promo through
which we granted interest free loans to Micro, Small and Medium
Enterprises (MSMEs), providing them a platform for easy access to
capital and entrepreneurial capacity building. The facility allows
MSMEs easy access to credit with a very short turnaround time
and non-stringent conditions. Overall, Diamond Bank has
effectively awarded loans exceeding N65bn to over 30,000
MSMEs in Nigeria since 2009, making it the single most active
lender to this sector in Nigeria.

Diamond Current Accounts
Diamond Current Accounts is your key to real time banking. Our
online facility ensures that you can transact using your Diamond
Current Account from any Diamond branch. The Diamond
current accounts consists of; Diamond PERSONAL CURRENT,
Diamond ASPIRE, Diamond XCLUSIVE and Diamond PRIVILEGE.

OUR PRODUCTS & SERVICES
Diamond Savings Account
Diamond Saving Accounts is an account designed to help our
customers meet their personal needs and lifestyle. The Diamond
Savings account consists of; Diamond Savings Account,
Diamond SavingsXtra, Diamond Kiddies, Diamond HIDA and
Diamond Term Deposit
u

Diamond Savings Account: With this account you can start
saving today with as little as N 1,000

u

Diamond Personal Current: This is a personal current
account designed to make your banking as easy and efficient
as possible. It offers you all the benefits of a current account
packaged with a range of free added-value.

u

Diamond Aspire: This is designed to respond to your need
for a flexible current account that caters for your everyday
transactional needs. No monthly fee if a minimum of
N250,000 is maintained.

CORPORATE PROFILE

2012 | ANNUAL REPORT & ACCOUNTS

13

u

Diamond Xclusive: This is a current account that promises
exclusive services and high level preferential treatment. As an
exclusive client you have access to our dedicated Xclusive
lounges and a dedicated Xclusive Banker.

u

Diamond Privilege: This is an account that offers a wide
range of services specially designed to cater for financial and
lifestyle needs of the very top of our customers. Clients enjoy
financial and investment advisory services ranging from
financial planning to global investment advisory services;
wealth management; and other lifestyle benefits like a special
Visa credit card “Diamond Card”. The card is embedded with
a real diamond and featuring a high credit limit.

Diamond BusinessXpress Account
Diamond BusinessXpress is an account designed for customers
in the micro, small or medium scale enterprise (MSME). The
account aims to help you grow your MSME business till it
graduates to the upper level market. We understand the need of a
flexible account that allows you to transact at a minimal rate.
That's why Diamond BusinessXpress has zero COT and the
modest fixed monthly service fee. The account in 3 categories;
u

Diamond Businessxpress Basic for Micro Business with
maximum monthly turnover of N4 Million

u

Diamond Businessxpress Growing for Small Business with
maximum monthly turnover of N12 Million.

u

24 million merchant locations and ATMs across the world, and
pay in Naira when you get home. Each time you use your
Diamond Visa Credit Card you earn Diamond Gem Points that
you can redeem at a variety of loyalty partners for goods and
services including free flights. The Bank offers the following cards
to customers;
u Classic Visa Credit Card
u Gold Visa Credit Card
u Platinum Visa Credit Card
u Diamond Savingsxtra Credit Card
u Diamond Park n Shop Credit Card
u DiamondXclusive Credit Card
u Diamond Corporate Charge Credit Card
u Diamond Card (this card is specially crafted with Platinum
lettering and a real Diamond to suit your payment needs and
meet your life aspirations as a high-achiever)
Diamond Channel Services
With our e-banking channels, you can bank with us anytime, any
day and anywhere. Choose from many options of our electronic
banking channels designed for your convenience to access your
account.
u

Diamond Online: This gives you real-time access to your
account 24/7. That means you can handle the day-to-day
intricacies of managing your finances conveniently from
anywhere on the globe.

u

Diamond Mobile: Diamond Mobile is our banking service
that allows you access to basic banking transactions through
your mobile phone. Diamond mobile is basically putting your
bank in your hands.

u

Diamond ATM: Our ATM service gives you access to you
money 24/7.Diamond Care: Diamond Care is our interactive
contact centre that allows you access to your account 24/7

Diamond Businessxpress Established for Medium
Businesses with maximum monthly turnover of N40 Million.

Diamond Visa Credit Cards
The Diamond Visa Card is the only NAIRA denominated card on
the market. The Visa Credit Cards are safe, secure and offer you
superb value and benefits. You can use your diamond visa at over

CORPORATE PROFILE

2012 | ANNUAL REPORT & ACCOUNTS

14

from anywhere in the world by telephone. With Diamond
Care, you can carry out basic banking transactions on your
own through our self-service platform or you can speak to
an agent, who provides assistance. The service is available in
English, Pidgin English, Yoruba, Igbo, Hausa and French.

to information on their trade transactions via a web service
and a transaction notification service which provides them
with e-mail and SMS alerts at every stage of their trade
transaction.
CASH MANAGEMENT SERVICES

TRADE SERVICES
u

u

u

u

DL Support: This is an innovative import service which
manages your entire import business from inception (at the
point of opening form M) through to the end (at the point of
delivery of goods to the customer's warehouse or factory). It
handles the trade processing, clearing and local
transportation requirements of import transactions, enabling
us handle your imports while you focus on your core
business
Diamond Trade Centre: This is positioned to assist
customers (internal and external) in achieving their business
objectives by deploying the knowledge, experience and
resources of the bank to provide all the advice on all areas of
trade products, supply chain management covering
logistical and financial concerns at each stage of the
international trade transaction.
Diamond Trade Customer Service Centre: This is a one stop
hub for the best source of trade information and service in
the industry. The centre is manned by a team of trade experts
who are dedicated to providing quick and courteous
responses to trade related responses to trade related
enquiries from internal and external customers.
Diamond Trade Tracker: Diamond trade tracker is a trade
document and transaction monitoring service which enables
customer monitor their trade transactions from anywhere in
the world. This service provides them with real-time access

Diamond Cash Management Services provides organisations
with value added services to reduce the transactional costs of
everyday business and increase revenue collection and payment
facilitation efficiency. Our services include;
u

Diamond Pay Services: This is a web-based payment
solution that offers organisations a secure, simple and cost
effective alternative to cash and cheque payments across
multiple banks.

u

Diamond Instant Payments: This allows individuals and
organisations to easily and conveniently transfer or receive
funds from any bank account In Nigeria and the beneficiary
will receive the value within seconds.

u

Diamond RTGS: This allows the transfer of single and large
payments to any bank account in Nigeria with beneficiaries
receiving the value within 2 hours.

u

Diamond NEFT: This is an electronic payments service that
allows single or multiple payments to any bank account in
Nigeria.Diamond Collect: The bank offers specialised
internet based sales collection solutions to large corporates
aimed at providing payment convenience to their customers.
This service has a robust transaction database that facilitates
seamless transactions Including: Dealer collections,
dealer/distribution payments, school fees and ticket sales.

u

Diamond Money Transfer: This is a domestic money transfer

CORPORATE PROFILE

2012 | ANNUAL REPORT & ACCOUNTS

15

service that allows customers and non-customers of the
bank to send and receive money from any of our locations in
Nigeria.

Trade and Commodity Conference held in Accra. In
sponsoring the event, the Bank provided a central meeting
point for the regional and international trade finance
community to explore key issues affecting trade flows; the
extensive opportunities and challenges the market faces.

SPONSORSHIPS AND DONATIONS
As a corporate citizen, Diamond Bank PLC supports the cultural,
social and economic life of Nigeria through donations &
sponsorships of programmes and events. We have made
significant contributions to the following initiatives and events;
u

u

The Vision of the Child: The Bank partnered with Black
Heritage Festival in conjunction with the Lagos State
Government to sponsor the Vision of the Child. The VISION
OF THE CHILD is a painting competition targeted at children
between the ages of 9 – 12 years from various schools in the
Lagos environs. The event is aimed at nurturing young talents
to express through painting their own understanding of the
world they live in, their vision of what it should be, and their
dreams and fantasies.
Last Flight to Abuja: Diamond Bank identified with the
Nollywood movie industry by sponsoring the premiere of
the “Last Flight to Abuja”. The movie which raised the bar in
movie production in Nigeria is based on true life events
surrounding the two air crashes that occurred in Nigeria in
2006. The movie was a fantastic storyline and painstaking
production with out-of-this world special effects and was
aimed at putting spotlight on the issue and the need for
reforms in the aviation industry in Nigeria. In addition to the
sponsorship, the Bank donated 50% of the Box Office sales
on the movie to support the families of the June 3, 2012
plane crash.

u

1st Annual Greensprings/Kanu Football Camp: Diamond
Bank in conjunction with Greensprings School sponsored
the 1st Annual Greensprings/Kanu Football Camp. The event
is aimed at developing sporting talent among young children
between the ages of 5 – 17 years.

u

Card, ATM And Mobile Expo Africa: The Card ATM and
Mobile Expo is the biggest card and Payment exhibition in
Africa where the biggest and best converge yearly. Diamond
Bank has continued to partner with Intermac Consulting
Limited over the years in sponsoring this event.

.We have also made significant contributions to the following
initiatives and events:
u
u
u
u

u

u
u
u
u
u
u

u

4th Annual West Africa Trade
and Commodity
Conference: The Bank sponsored the 4thAnnual West Africa

u
u

Nigeria Oil & Gas Conference 2012
St. Saviour's School Fun Day
International Federation of Women Lawyers Conference
African Business Roundtable and Global Investment Initiative
for Nigeria
The Bridge Leadership Foundation 2012 Career and
Foundation's Day
The African and Caribbean 2012 Business Expo
The 2012 Nigeria Cup
World Corporate Golf Challenge (WCGC)
World Golfers Championship (WGC)
The 6th Lagos State Economic Summit “EHINGBETI 2012”
The Nigeria South Africa Week 2012 – The Tales of Two Cities
Hair dressers Conference & Exhibition 2012
Life in my City Art Festival

2012 | ANNUAL REPORT & ACCOUNTS

16

DELIVERING
SUSTAINABLE
WEALTH
…the obligations of businessmen to pursue those policies, to make those decisions, or to follow
those lines of action which are desirable in terms of the objectives and value of our society.” (Bowen 1953)

At Diamond Bank, Corporate Social Responsibility is embedded in our long-standing
commitment to conducting our business operations. Our commitment to building
sustainable value for shareholders and stakeholders within the communities in
which we operate, is demonstrated in what we have achieved and how we have
achieved it in 2012.
In the financial year of 2012, we were involved in a host of
initiatives with expert partners through programs/project
sponsorships, donations, and social investments outlined under
the following key areas:
1.
2.
3.
4.

Entrepreneurship
Arts and Culture
Youth Development
Women Economic Empowerment.

(1) ENTREPRENUERSHIP/SME DEVELOPMENT
The bright ideas campaign was a platform used to launch
the old Diamond bank brand. This campaign threw up a
basket of viable business ideas. Over 5,000 ideas were

received. In partnership with EDS and Fate Foundation, 25
people were short listed and went through six weeks
training programme after which 10 of the candidates
eventually received funding for their business ideas.
From 2010 the Bank has partnered with EDS (now EDC) in
the training of entrepreneurs under the BET program.
Currently in its 3rd year, the BET (Building Entrepreneurs
Today) involves the training of over 50 entrepreneurs for a
period of one year in which 5 of them will be awarded N3m
grant each to take their business to the next level.
The Bank also engages in entrepreneurship training under
the Diamond Business Express Account (DBXA) platform
because we realized that there is need to support

DELIVERING SUSTAINABLE WEALTH

2012 | ANNUAL REPORT & ACCOUNTS

17

innovation and enterprising ideas in Nigeria. MSMEs are
increasingly seen as the drivers of economic growth in
Africa; Diamond Bank has contributed immensely to this
area by creating more impact by:
1.
2.

3.

Promoting a culture of entrepreneurship and building
the capacity of entrepreneurship education providers
Developing new entrepreneurs, and supporting
existing entrepreneurs, to move their businesses from
small to medium or large enterprises
Enabling the start-up of innovative businesses

BUSINESSXPRESS SEMINARS/NETWORKS/CLINICS
Offering practical solutions and training to small and medium
size business entrepreneurs is vital to their survival and growth.
Our Business Xpress Seminars, Clinics and Networks are
designed specifically to grow and enable Micro, Small and
Medium Scale Enterprise (MSMEs). Collaborating with the best
Consultants, and leveraging both National and International
expertise, small businesses get expert advice on how to manage
and grow their business as well as how to access finance. Till
date, Diamond has contributed over N30billion to providing
loans to over 17,000 SMEs across the country.
This initiative is a direct response to the gaps in entrepreneurship
development, and brings together a comprehensive set of
services targeted at high potential entrepreneurs and offered at
convenient locations. These services include:
1.
2.
3.

High calibre business advisory services e.g. business
strategy, legal advice
Access to diverse and appropriately structured sources
of finance
Close mentorship by the Bank or successful business
leaders

4.

Access to lessons learned from other successful
business incubation ecosystems

DIAMOND MOBILE TRUCK
Aimed at providing access to financial services for the unbanked
population, the Diamond Mobile Truck was developed and put
into full operation in November 2012. Equipped as a mobile
bank with state of the art facilities, the truck is able to reach
members of the public in less accessible areas as well as provide
a number of services such as account opening, cash/cheque
deposits and withdrawals within the convenience of their
neighborhoods.
(2) ARTS & CULTURE
Our commitment to fostering education and creativity in
the Nigerian child is evident in our flagship initiative “Vision
of the Child.” In partnership with the Nobel Laureate Wole
Soyinka and the Lagos State Black Heritage Festival this
initiative is now in its second year.
Vision of the Child is a painting competition organized for
children between the ages of 8 and 12 and is open to over
3000 primary and secondary schools pupils in and around
Lagos State. In a bid to foster financial inclusion and
promote equality, children outside the formal school
environment are also encouraged to participate. By
fostering creativity in children, we hope to help grow a new
generation of citizens who can contribute positively to the
country's development.
(3) YOUTH DEVELOPMENT
Diamond Bank also supported initiatives that promote
productivity among youths in Nigeria through educational

DELIVERING SUSTAINABLE WEALTH

2012 | ANNUAL REPORT & ACCOUNTS

18

S/N

PROJECT (ORGANISATION)

IMPACT

REGION

1

Cross River State Youth
Development Programme (Cross
River State Government)

A career guidance and personal
development programme by Cross River
State Government targeted at youths
between ages 16-25. This initiative featured
seminars focused on developing business
and entrepreneurial skills in young people in
Calabar and environs.

South East

2

Community Development &
Empowerment Centre (CDEC)

Building of a Multi Skills Acquisition centre in
Abia State.

South East

3

The Bridge Leadership Foundation

Funding of the 2012 Career Day Initiative
which provided personal Development
Support to over 2000 youths across all LGAs
of the Cross River state.

South South

4

Save Child Initiative

Campaign against Child Labour

Nationwide

and leadership building activities. Our underlying objective
is the need to engage youths positively to enhance their
personal and career development. In this regard, we
supported the following programmes.
(4) HEALTH CARE
It is our belief that we remain productive as a financial
institution when our stakeholders have access to primary
health care facilities and emergency services. Accident
relief and the availability of emergency services form an
integral part of our corporate social investments in health
care.
u

u

To mitigate the spate of deaths arising from road accidents
and also to provide prompt medical intervention to the
community and road users, Diamond Bank constructed an
Accident & Emergency Centre in Mowe, Ogun State.
Renovation of Primary Health Care Centre in the

Obafemi/Owode Local Government Area, Mowe, Ogun
State.
u

Support for 'Run for a Cure', a breast cancer awareness
drive organized by the Child survival and Development
Organization of Nigeria (CS-DON) in Lagos State.

OTHER AREAS/INITIATIVES
Employment Standards
The Bank encourages both personal and professional
development amongst staff through the provision of in-house
and offshore training for all levels of staff. We recognise that our
people are critical to the success and sustainability of our
business and this informs our commitment to providing a safe,
rewarding yet challenging environment that helps each
employee reach full potential.
The Bank also recently commenced the enrolment of staff for
various e-learning programmes, which are conducted quarterly,

DELIVERING SUSTAINABLE WEALTH

2012 | ANNUAL REPORT & ACCOUNTS

19

in order to facilitate further self development in a convenient
manner. This ultimately helps the bank to meet its short and long
term goals.
Diamond remains an equal opportunity employer and does not
discriminate against any category of employee.
2013 STRATEGIC OUTLOOK
In 2012, Diamond Bank joined other leading financial institutions
to sign a joint commitment on Sustainable Finance in Nigeria. In
so doing, the Bank agrees to implement the Nigerian Sustainable
Banking Principles by adhering and integrating the nine (9)
sustainable banking principles which make up the foundation of
a sustainable financial institution.
Our strategy for 2013 stems from our drive to build a sustainable
business. Our Sustainability initiatives will remain focused in the
areas of Entrepreneurship, wealth creation and promoting
Nigeria's Arts and Culture. In addition, we will also support other
initiatives such as agribusiness as well as women economic
empowerment.

Nigeria, agriculture is the slowest growing sector with an annual
growth rate of approximately 5.1%. Our commitment to
contribute significantly to wealth creation positions us to play an
important role in Agriculture development. The Bank is keen to
provide financial solutions to the many challenges that face
small scale farmers and other agricultural value chain players.
This can be done through strategic partnership with
organizations that support farmers both in private and public
sector as well as Development Agencies.
WOMEN ECONOMIC EMPOWERMENT (WEE)
According to the International Centre for Research on Women,
ICRW; a woman is economically empowered when she has both
the ability to succeed and to advance economically. This has also
been validated by the Nigerian Sustainable Banking Principle
which aims at providing more opportunities for women. In 2013
we aim to work closely with expert partners to provide skills
training and capacity building for women in under-served parts
of the country.
2013 promises to be a much more fulfilling year as we intend to
scale up our commitment to social responsibility by mitigating
Nigeria's risks to social, environment and governance impact.

AGRIBUSINESS
Accordingly, we have already commenced work to develop and
implement the following key milestones:

NSBP

ESRM

CSR

Agriculture contributes between 40-42% to GDP and provides
over 60% of employment in Nigeria. In spite of its importance in

DELIVERING SUSTAINABLE WEALTH

2012 | ANNUAL REPORT & ACCOUNTS

20

Increasingly, sustainable businesses in emerging markets such as
ours, recognize Corporate Community Involvement (CCI),
Corporate Sustainability & Responsibility (CSR) and tangible
contributions to Sustainable Development as core components
of standard business functions and operating practices.

u

Demonstrate Thought Leadership in emerging sustainability
and social responsibility trends on the future of banking in
Africa;

u

Ensure our Social Responsibility strategy constantly delivers
initiatives that align with our operations for more tangible
impact through a sound policy and framework subject to
reviews and needed improvement;

To become a leading bank in implementation of Nigerian
Sustainable Banking Principles & practice of Sustainability in
Banking operations;

u

Scale up socially responsible investments to enhance our
contributions to sustainable development in all our
operations and activities;

Socially relevant products, services and operational
strategies that influence our bottom line as well as those of
our esteemed clients and entire value chain;

u

Constantly communicate with our stakeholders in order to
provide more robust support for & sustainability-oriented
products, services and value-adds.

Consequently, we look forward to the following outcomes:
u

u

u

u

Drastically reduce our environmental footprints across all
operations and extended areas of influence;
Adherence and compliance to all relevant local and
international conventions, standards and principles that
enhance our sustainability outlook and those of our
numerous stakeholders;

Why don't you take this journey with us?
Contact:
Web:
http://www.diamondbank.com/investor-relations/csr
Tel:
0700-300-0000

DELIVERING SUSTAINABLE WEALTH

2012 | ANNUAL REPORT & ACCOUNTS

21

22

NOTICE OF
ANNUAL GENERAL
MEETING
NOTICE IS HEREBY GIVEN that the 22nd Annual General Meeting of
DIAMOND BANK PLC will be held on Tuesday, the 30th day of April, 2013
at the Civic Center, Ozumba Mbadiwe Road, Victoria Island, Lagos, at
10:00 a.m. prompt to transact the following business:
AGENDA

N10,000,000,000 (Ten Billion
Naira) to
N15,000,000,000 (Fifteen Billion Naira) by the
creation of additional 10,000,000,000
ordinary shares of 50 Kobo each, ranking pari
passu in all respects with the existing ordinary
shares of the Company”

Ordinary Business
1.

To receive the Audited Financial Statements
for the period ended December 31, 2012, and
the Reports of the Directors, Auditors and
Audit Committee thereon.

2.

To elect/re-elect Directors

That the Memorandum and Articles of
Association of the Company be and is hereby
amended as follows:

3.

To appoint Auditors

(a)

4.

To authorize the Directors to fix the
remuneration of the Auditors

5.

To elect members of the Audit Committee

Special Business
To consider and if thought fit, pass the following as
special resolutions:
6.

“That the authorized share capital of the
Company be and is hereby increased from

7.

8.

by deleting clause 7(a) of the
Memorandum and substituting it with:
“The share capital of the Company is
N15,000,000,000 (Fifteen Billion Naira)
divided into 30,000,000,000 (Thirty
Billion) ordinary shares of 50 Kobo each”

That subject to the approval of regulatory
authorities, the Directors be and are hereby
authorized to raise additional capital of up to
$750,000,000 (Seven Hundred and Fifty
Million United States Dollars) or its Naira
equivalent through the issuance of any form
of debt and/or equity and/or any other

NOTICE OF ANNUAL GENERAL MEETING

2012 | ANNUAL REPORT & ACCOUNTS

23
instrument which may be appropriate to meet the Bank's capital
requirements, to be undertaken by way of a rights issue and/or an
Offer for Subscription with or without a preferential allotment,
either locally or internationally and upon such terms and
conditions as the Directors may deem fit in the interest of the Bank
for the purposes of enhancing the Bank's working capital and
financing business development initiatives”
9.

the Directors authorised by the Directors in that behalf and every
instrument to which the seal shall be affixed shall be signed by a
Director and shall be counter-signed by the Secretary, or by a
second Director or signed by two other persons appointed by the
Directors from time to time for the purpose”
12. That Clause 85 of the Articles of Association be amended by
deleting and substituting it with:

”That subject to the approval of the regulatory authorities, the
Directors be and are hereby authorized that in the event of over
subscription, excess monies arising from the Offer be absorbed to
the extent required by the Bank”

10. That the Directors' fees shall until reviewed by the Company in
Annual General Meeting be fixed at N124,000,000.00 (One
Hundred and Twenty-four Million Naira) for each financial year.

“However, a Director shall abstain from discussions and voting on
any matter in which the Director has or may have conflict of
interest”
Dated this 29th day of March 2013
BY ORDER OF THE BOARD

11. That Clause 104 of the Articles of Association be amended by
deleting and substituting it with:
“The Directors shall provide for the safe keeping of the seal, which
shall be used by the authority of the Directors or of a Committee of

Nkechi Nwosu
Company Secretary
FRC/2013/NBA/00000001571

NOTES
1.

2.

Proxy
A member of the Company entitled to attend and vote at any Annual General
Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need
not be a member of the Company. For the appointment to be valid, a completed
and duly stamped proxy form must be deposited at the office of the Registrar of
the Company, Centurion Registrars Limited, 59, Ogunlana Drive, Surulere, Lagos
State, not less than 48 hours before the time fixed for the meeting.

(ii)

The appointment of Mrs Ifueko Omoigui Okauru as Independent Director is
also being tabled for your ratification.

(iii)

The appointment of a non-executive Director (Mr. Allan Christopher
Michael Low) for your ratification.

5.

Closure of Register of Members
The Register of Members will be closed from April 16th 2013 to April 17th, 2013
(both days inclusive) to enable the Registrars to update the register.

Appointment of Auditors
That the appointment of KPMG Professional Services as the new Auditors to the
Bank, be and is hereby approved.

6.

3.

Re-election of Director over 70 years
Special Notice is hereby given that HRM Igwe Nnaemeka Alfred Ugochukwu
Achebe who is over 70years will be proposed for re-election as a Director
pursuant to Section 256 of the Companies and Allied Matters Act, 1990:

Audit Committee
In accordance with Section 359 (5) of the Companies and Allied Matters Act,
1990, any shareholder may nominate another shareholder for appointment to the
Audit Committee. Such nomination should be in writing and must reach the
Company Secretary not less than twenty one (21) days before the Annual General
Meeting.

4.

Election of Directors/Appointment of Independent Director
(I)
In accordance with the provisions of the Articles of Association of the
Company, Mr. Chris Ogbechie, Mr. Ian Greenstreet and Ms. Ngozi Edozien
retire by rotation and being eligible, offer themselves for re-election.

The Central Bank of Nigeria's Code of Corporate Governance has indicated that
some members of the Audit Committee should be knowledgeable in internal
control processes. We therefore request that nominations be accompanied by a
copy of the nominee's curriculum vitae.

2012 | ANNUAL REPORT & ACCOUNTS

24

CHAIRMAN’S
STATEMENT
Distinguished Shareholders,

O

n behalf of the Board of Directors, I welcome you all to the 22nd Annual
General Meeting (AGM) of our great institution. It is my pleasure to present
the Audited Accounts and Annual Report of our Bank for the year ended
December 31st 2012 to you.
2012 was a year of significant achievements and turnaround for
our Bank as it marked the first year of our New Strategic Focus:
Project: Reclaiming the Diamond. The project saw us adopting a
new vision and mission statements including new core values,
and was anchored on a tripod of excellent people, unique
customer experience and financial performance (value to
stakeholders).
Broadly, the Project: Reclaiming the Diamond is a change
process designed to reposition the Bank as the top bank in the
industry by December 2016, using the progress made on some
select metrics as yardsticks. Excitedly, the year under review saw
the Bank thrive under the strategic leadership of the
management team led by Dr Alex Otti, who joined the Bank in
March 2011. Our financial performance in 2012 shows that the
Bank not only returned to profitability but also showed very
strong performance indices. The remarkable turnaround of the

Institution is a clear testament that the steps we took in 2011 to
reposition the Bank was well thought out.
Fellow shareholders, permit me to quickly review the economic
conditions and the environment under which our Bank operated
during the year, and their impact on the performance of the
Bank. That would put the financial performance of the Bank in
proper context.
International Business Environment
In 2012, the International business environment remained
largely unpredictable as we witnessed a large amount of political
and economic turmoil. This includes disturbances in the Middle
East and North Africa (MENA) and the sovereign debt crisis in the
euro zone, resulting to volatility in commodity prices, and
disruption in supply chains; and slow recovery in both emerging

Having one of the
strongest teams of
professionals, driven by a
collaborative work culture
and accountability is an
important feature that will
continue to drive our
Bank's success in the
years ahead.
HRM, NNAEMEKA ALFRED UGOCHUKWU ACHEBE,
Obi of Onitsha
Chairman

CHAIRMAN’S STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

26

and advanced markets. There was decreased economic
performance in oil importing countries, with an estimated
growth of 2% in 2012 while the oil exporting countries grew at an
average rate of 6.6%.
In the Euro area, economic and financial conditions remained
severely weak, caused by the sovereign debt crisis in the Euro
zone. Emerging economies, which had shown signs of strong
rebound from the credit crisis, was hit by the slow export growth
which slowed down real GDP growth. The troubled PIIGS
(Portugal, Ireland, Italy, Greece and Spain) economies remained
largely weak. Greece and Spain were worst hit with high
unemployment. Economic conditions in sub-Saharan Africa was
however robust despite the slow growth in the global economy.
Prudent policies and improved fundamentals in most countries
enhanced increased economic activities in the region.
According to International Monetary Fund's World Economic
Outlook (WEO) Update of January 2013, the world economy
grew by 3.2% in 2012, and is projected to grow by 3.5% in 2013.
The advanced economies grew lower by 1.3% in 2012 and are
projected to grow at 1.5% in 2013, while emerging markets grew
by 5.1% in 2012 and are projected to grow by 5.5% in 2013;
growth in Sub-Saharan Africa was 4.8% in 2012 and is projected
to close 2013 at 5.8%.
Domestic Business Environment
The performance of the domestic economy in 2012 was not as
robust as that of 2011. This was largely a reflection of the
developments in the global economy following global
economic downturn in 2012. According to the National Bureau
of Statistics (NBS), the economy slowed down to an estimated
6.58% in 2012, which is lower than 7.5% achieved in 2011. The
non-oil sector (notably Agriculture, Wholesale & Retail Trade,
Telecoms and Hotels & Restaurants) remained the major drivers

of growth, recording 8.23% increase in contrast to the oil sector,
which contracted by 0.17% during the period. Also, on the
sectoral level, the contributions of the agricultural sector
maintained the highest, followed by the wholesale and retail
trade, and the crude oil and natural gas sector.
The subdued performance of the economy in 2012 was largely
attributed to the following:
The impact of the global crises on trade flows
u
Escalating state of insecurity in the country
u
The contagious effect of the partial removal of fuel subsidy
u
on inflation
The high incidence of flooding across the country and its
u
devastating impact on food production
Higher food inflation rates and unimpressive growth of
u
credit to the private sector
However, the external sector recorded a fairly stable trend during
the year. The exchange rate was fairly stable throughout the year
as it remained sticky around N155/1US$, maintaining a target
margin of +/-3%. The fairly stable exchange rate was driven by
rising external reserves, favourable oil price and good
macroeconomic policies. The external reserves grew by 34.2% in
2012 to stand at US$44.18billion as at December 31st, 2012 up
from US$32.92billion as at end December 2011. The accretion to
reserves was due to the monetary policy stance of the Monetary
Policy Committee (MPC), the fall in demand by oil importers,
increase in foreign inflow, favourable price of oil in the
international market and fiscal prudence. The headline inflation
however remained relatively high throughout 2012 closing at
12.0% down from 12.6% at the start of the year, and had an
average rate of 12.2%.
From the standpoint of monetary policy, the CBN elected to
keep the bench mark interest rate at 12% throughout 2012 in a
bid to prevent inflation hike and achieve single digit inflation, in

CHAIRMAN’S STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

27

addition to various liquidity management techniques. The high
Monetary Policy Rate (MPR) led to liquidity tightening, credit
contraction and high lending rates by banks which adversely
affected the development of the real sector.
In contrast, the capital market generally performed well
compared to other capital markets globally, recording 30% gain
on index in 2012 and it is expected to continue in 2013. The key
reforms carried out in the sector a few years ago are now paying
off. The good performance is largely due to sustained interest in
foreign investment. The market capitalization rose to
N8.97trillion on the last day of 2012 up from N6.53 trillion
recorded in the beginning of the year.
THE BANKING ENVIRONMENT
Notwithstanding the fairly difficult operating environment
occasioned by the on-going reforms in the industry and the less
than salutary development in the global economy, Banks as early
as first quarter of 2012, commenced a sustained return to
profitability across board. This was sustained throughout the
remaining quarters like Diamond Bank Plc did. Some of the key
developments and reforms that shaped the industry 2012
include the implementation of the International Financial
Reporting Standards (IFRS); improvement in Banks' rating, with
Fitch rating assigning a 'B' range viability rating on Nigerian
Banks. There was improvement in the banks' asset quality in
2012, following more sales of bad loans to the Asset
Management Corporation of Nigeria (AMCON).
In 2012, the Central Bank of Nigeria initiated a pilot cashless
policy program for 'cash-lite' Lagos, which was launched on
January 1, 2012. The policy was basically designed to reduce the
physical cash involved in business transactions and encourage
the use of alternative distribution channels, like ATMs, Point of
Sales Terminals and Online Banking etc. Ultimately, the policy is

expected to help reduce the high cost of cash and the risk of
using cash. The changes to the cashless policy commenced on
April 1, 2012 and extended until December 31, 2012. The
programme is expected to be initiated in other states of the
country in 2013.
In addition, during the year, there was successful
implementation of Risk based approach to combating money
laundering and terrorist related activities financing. The financial
support from the Asset Management Corporation of Nigeria
(AMCON) also helped to reduce credit risk. As the year
progressed, we saw better performance from the industry in the
areas of service delivery and productivity, product innovation,
credit disbursement to the real sector but more investment in
fixed income as interest rate remained relatively high and tax
free. There was also a strong appetite across the industry for
both organic and inorganic growth as banks moved to capture
additional market share in their target segments.
FINANCIAL RESULTS
Distinguished Shareholders, I am very delighted to announce to
you that your Bank has bounced back to profitability following
the significant write-offs we had to do in 2011 to clean up our
books and reposition the Bank. Today, the result before us
confirms that the steps we took in 2011 were in order.
The Group's total asset base hit the one trillion mark for the first
time in our history as Total Asset stood at N1.2trillion, up by over
47% from 2011 position of N796.2billion. Similarly, customer
deposits inched towards the trillion naira mark, increasing by 51%
to N910.2billion compared to N603billion in the previous year.
Our commitment to the development of the real sector
remained unabated as we increased our loans and advances by
over 51% from 2011 position of N388.1billion to N585.2billion at a
time most peers were slowing down on lending. This growth rate

CHAIRMAN’S STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

28

remained one of the most bullish in the industry in 2012. Profit
Before Tax (PBT) and Profit After Tax (PAT) increased
astronomically by over 250% to N27.5billion and N22.1billion
respectively from loss position of N18.0billion and N13.7billion in
2011.
Clearly, this is a commendable performance by all standards and
it is down to the hard work, dedication and visionary leadership
of the Board, Management and staff of our great institution.

N4.94 in the last trading day in 2012
u

While the NSE All share index recorded a 35.45% year on
year growth, Diamond Bank's share price appreciated by
157% from the N1.92 in December 2011 to N4.94 in the last
trading day of 2012

The growth was on the back of management restructuring, and
strategic reformation which led to strong balance sheet
performance and profit growth.

RETAINED EARNINGS AND SHARE PRICE PERFORMANCE
Following the impressive performance of the Bank and the need
to ensure sustainable performance going forward, the Bank is
planning to raise additional capital by increasing its authorised
share capital from N10billion to N15billion by the creation of
additional 10billion ordinary shares of 50kobo each. Part of the
special resolution we are seeking the approval of the
shareholders during this AGM is the approval to allow the Board
and Management of the Bank to raise $750million through
private placement, public offer or debt issuance.
As a first step towards increasing the capacity of the Bank to do
business, support future expansion plans towards the realization
of the leadership aspirations of the Bank and generally address
the capital adequacy issues; it is expedient therefore to write the
2012 profit into retained earnings before approaching the
shareholders for additional investments. It is interesting to note
that the Bank is on track to deliver its performance targets in the
years ahead and it is pleasing to note that the market is rewarding
the Bank's strong fundamentals as reflected in the share price
performance of the Bank during the year under review.
Diamond Bank's share price recorded the highest year on year
growth when compared to other banks:
u
It appreciated by 157% from the last trading day in 2011 to

While thanking all shareholders for their understanding and
continuous efforts, overall, we will continue to adopt policies
and practices that will allow the market to positively reward all
our stakeholders.
OUR PEOPLE – THE BEST PEOPLE
In 2012, our work force lived up to expectations as the most
important asset of the Bank. The Bank is now blessed with
exceptional, experienced and cohesive management team and
staff with a clear strategic objective to deliver profitable growth
to stakeholders. I am pleased that 2012 financial performance of
the Bank gives me the opportunity to express my appreciation.
On behalf of the board and shareholders, I would like to thank all
of them for their contribution towards the outstanding progress
that the Bank has made during the year. Having one of the
strongest teams of professionals, driven by a collaborative work
culture and accountability is an important feature that will
continue to drive our Bank's success in the years ahead. The
development of tomorrow's management talent, and indeed the
development of all the Bank's employees to enable them to
perform at their full potential, which is vital to Bank's future, will
continue to be a top priority for the Board.

CHAIRMAN’S STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

29

TRAINING AND RECRUITMENT
2012 financial year saw us improving significantly in our training
activities, which remained a top priority for the Board. To us,
equipping our workforce with the right training and exposure is
very important for the Bank's competitiveness in the market
place. Accordingly, 2012 financial year saw over three thousand,
eight hundred (3,800) staff going through our class room based
programmes compared to two thousand, two hundred and forty
eight (2,248) participants in 2011. Over three thousand, three
hundred and fifty (3, 350) staff members took our e-learning
training programmes cutting across different segments of the
Bank.
Our training activities was not limited to local training as forty
seven (47) staff members took relevant business courses in some
of the best business schools in the world to hone their skills and
strengthen their capacity for the challenges ahead. This number
was more than the thirty five (35) staff who went through similar
programmes in 2011. In response to the developments in the
global financial system, we have positioned ourselves to
maximize emerging opportunities in financial derivatives by
deploying intensive capital market and derivatives products
trainings to the executive management team, senior
management and the relevant operations level teams.
In pursuit of the Bank's branch expansion project, six hundred
and eleven (611) Graduate Trainees were trained in our intensive
10 week orientation programme while over one hundred and
twenty (120) experienced hires were made to undergo our one
week induction programme. The total man hour invested in
human capacity development initiatives in 2012 was 312,343
compared to 105,500 man hours in 2011.
Overall, the Bank has overhauled its Talent and Career
Management framework which is now properly aligned to the

Balance Scorecard. We will continue to develop management
and staff talents and skills by investing in their future through
training and some development initiatives to properly position
them to leverage the opportunities in the market place and
ultimately deliver on our Project: Reclaiming the Diamond. .
BOARD OF DIRECTORS
During the period under review, Mazi Clement Owunna retired
from the Board in July 2012 in line with the Central Bank of
Nigeria's directive regarding the tenure of directors. Mazi
Owunna was a great asset to the Board. His well thought out
insights and unwavering commitments throughout his tenure as
a director helped to propel the Bank to enviable heights in the
Banking industry. The entire Board and management of the Bank
will greatly miss his invaluable contributions.
On behalf of
everybody, I wish Mazi Clement Owunna the very best in his
future engagements and remain confident that he will continue
to identify with the Bank.
Within the 2012 financial year, Mrs Ifueko Marina Omoigui
Okauru joined us as an independent director. The CBN approved
her appointment in October 2012. Mrs Okauru holds a first class
degree in Accounting from the University of Lagos and a Master
of Science degree in Management Science as well as Diploma of
Imperial College University of London. She is a fellow of the
Institute of Chartered Accountants of Nigeria and Chartered
Institute of Taxation of Nigeria and former Executive Chairman of
the Federal Revenue Service and Federal Inland Revenue Service,
FIRS. Her career spans over 31 years. She is currently the
Managing Partner of Compliance Professionals Plc, the
company she founded in 1996.
Finally, let me also use this opportunity to acknowledge the
important contributions of my other colleagues on the Board
throughout 2012. I have no doubt in my mind that we will

CHAIRMAN’S STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

30

collectively continue to give our very best in the years to come.
FUTURE OUTLOOK
The global economic outlook is not too benign as the IMF has
shaved its 2013 forecast for global growth to 3.8% from the 4.1%
it earlier projected. Emerging countries are not spared in the
downgrade. Policy makers have been adjudged to be ready to
cope with trade declines and the high volatility of capital flows.
In the domestic economy, robust rate of growth is expected in
2013 (7.24%) as investor sentiment continues to rise despite the
challenges of doing business in Nigeria. The FGN Budget 2013
based on 2013 -2015 Medium Term Economic Framework, with
the theme: Fiscal Consolidation with Inclusive Growth, is
expected to place emphasis on completing the stock of ongoing
projects as well as investment in critical projects, particularly in
the badly lagging power sector, Nigeria's ports, and human
development sectors. The expected growth in the economy in
2013 and government continued implementation of its reform
program will continue to offer Bank's more business
opportunities.
As a Bank, we have developed a strong internal framework to tap
these opportunities in the market place. We remain firmly
committed to surpassing all performance benchmarks for the
year and we are confident that we shall achieve this.
CONCLUSION
On behalf of the Board, I thank all our Shareholders for their
confidence in Diamond Bank Group. I am really grateful for the
support and encouragement we have continued to receive from
all of you especially during the trying time. I am confident that we
can continue to count on this support to move the Bank
forward.

My sincere gratitude also goes to all our regulators including
CBN, NDIC, NSE, SEC and EFCC for their support. Again let me
appreciate the contribution of the Management and staff of the
Bank for returning the Bank to profitability within 12months.
Indeed it was no mean achievement. It is clear that they have
worked tirelessly and relentlessly to keep our business afloat and
on a sound footing. As the Board and Management enter into
year two of Project: Reclaiming the Diamond, I want to assure all
stakeholders that your Bank is primed to reclaim its leadership
position in the industry and deliver superior shareholder value to
all our stakeholders.
Distinguished Shareholders, Ladies and Gentlemen, I thank you
all for your kind attention.

HRM, Nnaemeka Alfred Ugochukwu Achebe,
Obi of Onitsha
Chairman

2012 | ANNUAL REPORT & ACCOUNTS

31

CEO’s LETTER TO
SHAREHOLDERS
Distinguished Stakeholders,

I

thank you for supporting Diamond Bank Plc, and it is with great pleasure
that I present to you, the financial results and major activities of your Bank
during 2012 financial year.

Your bank earned a record profit before tax of N27.5 billion for
2012, a remarkable improvement over the loss of N18.0 billion
declared in 2011. Our return on average equity (ROAE) was
22.7%, again an improvement over the negative ROAE for 2011,
and we believe that as other banks release their results, you will
find that your bank's ROAE will rank amongst the best in the
industry. Cost to Income Ratio (CIR) went up marginally from
60.1% in 2011 to 60.6% in 2012, while Net interest Margin (NIM)
was 9.9% in 2012. On an absolute basis, profit before tax ought
to have been about N44 billion, but the main reason for the
variance were the additional loans written off after further
assessment of our loan book, and the financial condition of
some obligors showed that it was the most prudent thing to do.
These write-offs have ensured a healthier Non Performing loan
ratio of 4.7% in 2012, compared to the 9.3% we grappled with in
2011.
2012 presented an interesting operating landscape. The global
economy slowed down, reflecting the continuing adjustment to

dislocations in economic structures, which peaked before the
financial crisis of 2008-2009 and in some ways contributed to
the crises. Going from reports in World Economic Outlook
(Publication of IMF), global growth reduced to 3.3 % in 2012 from
3.8% in 2011. The euro zone saw a marked decline in economic
activities driven mainly by financial difficulties.
Despite the global slowdown, West African regional economic
growth remained robust with an estimated growth rate of 6.9%
in 2012 which was higher than 5.9% recorded in 2011. Sierra
Leone recorded the highest economic growth rate in 2012
among the 15-member countries in the sub-region, growing at
18.3% compared to average rate of 8% for Burkina Faso, Ivory
Coast, Ghana, Liberia and Niger. These growth rates were driven
mainly by favourable terms of trade and rise in commodity
prices as these countries run mostly commodity based
economies.

Our focus is to optimize
balance sheet efficiency
while increasing returns
and minimizing risks, all
within the context of
financial intermediation
which is our primary
mandate.
DR. ALEX OTTI
Group Managing Director/CEO

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

33

Data released from the National Bureau of Statistics indicates
that the Nigeria economy grew by 6.5% in 2012. The non-oil
sector was the main driver of growth with agriculture, wholesale
& retail trade, and telecommunication as the leading sectors. The
oil sector accounted for the high export and federal government
revenue.

the impact will be significant in the short or long term.
u

The impact of decaying public infrastructure especially in
education, health, transportation and power sectors
affected not just your bank but other operators as well. As
Government ramps up its remodelling and rebuilding of
aviation infrastructure, and concludes the disposal of power
assets nationwide, improvements may become noticeable
in some of the national services. The last quarter of the year
proved more positive in this regard with more financial
investments being pumped into road construction and rail
lines rehabilitation. The 2013 budget renews hope that more
sectors are receiving attention from the right government
agencies;

u

The regulation of Deposit Money Banks, (DMBs), has
remained dynamic though in some cases putting additional
burden and costs on the banks. However, judging from
events of the recent past, it is important to focus on the
intended purpose of the tightened regulations which is to
guarantee that the DMBs remain healthy and safe for
depositors and investors. As shareholders, it will interest you
to note that a new capital adequacy ratio of 15% for
international banks, which affects your bank, came into
effect in 2012.

u

As mentioned earlier, available statistics indicate that GDP
grew by 6.5% in 2012. This is healthy. However, as a core
retail bank, we expect there will be a lag before it starts to
translate to improved disposable income in the hands of our
customers. We remain committed to helping our customers
to engage in activities that will boost macro and micro
economies of the country.

On the domestic scene, there were socio-economic
developments which presented your bank and indeed the
industry with significant challenges during 2012 and I will talk
about these briefly:
u

u

The various acts of violence in some parts of the country
affected us directly. Early in 2012, we lost 3 members of staff
in a brutal attack on our branch in Mubi, Adamawa State,
suspected to have been launched by the group “Boko
Haram”. One other member of staff who received serious
head and facial injuries is still undergoing treatment abroad.
We had to shut the branch temporarily. This was also the
case in many other locations where we had to suspend
operations due to an intemperate operating environment.
While this affected business negatively, our action reflects
the premium we place on the lives of our staff over short
term profits;
The floods witnessed in the country from August to October
2012 displaced whole communities and hampered
movements of goods and people across geographic
locations. It didn't stop at that as it destroyed farmlands,
personal property and stock of goods held for business. The
implications for your bank is that we remained shut in some
locations for long periods of time and had to deal with
customers who lost goods and property financed by us. The
effects of the flood on your bank will be more manifest in the
months ahead as we start taking stock of loans that have
become challenged as a result. I do not however expect that

Despite all these, I am delighted to report that our 2012 financial
year was a huge success and our quest to become a leading bank

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

34

N'Bn

N'Bn

1,400

TOTAL ASSETS

RISK ASSETS
700

1,200

600

1,000

500

800

400

600

1,178

400
200

796

300

585

200

593

100
-

2010

2011

2010

2012

18,000

N'Bn

DEPOSITS

1,000

16,000

800

2011

400

603

8,000
6,000

15,100

11,805
9,187

10,000

910

16,997

Cards Activated

12,000

600

2012

Card Sales

14,000

200

388

307

6,234
5,601

4,000

413

2,000
-

2010

2011

2012

in the industry and one of Africa's leading financial institutions is
on course.
In the face of many difficult challenges, your Bank is doing its
best to exceed the expectations of its stakeholders. We owe a lot
to our dedicated employees who have displayed exemplary
commitment to the bank and its ideals. Together, we have made
positive impacts on the fortunes of people, businesses and

2010

2011

2012

communities we interact with.
In 2012, your Bank raised about $200 million in Tier 2 capital to
support growth in different business segments and also to
comply with the minimum capital adequacy ratio of 15% for
international banks as required by regulation. Prior to this, we
recapitalized our West African subsidiary to put them in a
position to leverage on the opportunities in that market. The

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

35

additional loan write-offs this year means that we have less profit
that can be retained to support operations and will need to
consider other options to shore up our capital base.

i.
ii.
iii.
iv.
v.
vi.
vii.
viii.

Our Mission
Group financial performance
Review of business segments
Review of subsidiaries
On-going initiatives
Priorities for 2013
Comments on the future
Conclusion

The last few years have been trying for our shareholders, partly
because of the general economic downturn and partly because
of the internal issues that needed to be fixed. I am however
convinced that we have gone past the worst period and are
firmly back on track in creating value for our shareholders. The
best way to do this is to build a great bank, offering unequalled
customer experience day after day and ensuring this experience
is available on a sustainable basis. Rise in shareholder value as
reflected in stock prices will naturally track how well we have
done in achieving this. Normally I do not comment on price of
the bank's stock but will want to note in this instance how it
performed in the last nine months.

“We will consistently exceed customer expectation by providing
value-adding solutions through professional and highly
motivated people, delivering excellent financial performance in
all markets where we operate.”
- Diamond Bank Mission Statement - February 2012

We believe you own a great company. As we continue to
restructure and unlock value from many areas of our business
operations, our latent strengths will become more evident. In
2012, we saw phenomenal growth in some of our business
segments and will examine these more closely in this letter.
Importantly, we have an outstanding crop of people and
business leaders who are now excelling in the market.

The practice of banking has evolved through time but our
mission as a bank remains to ensure that relevant banking
services are offered to all who need it, all the time, and through
channels that are easy and convenient to use. Our ability to fulfil
this mission has been made possible through 4 core
stakeholders; customers, shareholders, employees, and our
communities.

Embedded in this bank is a DNA for excellence and success and
this has provided us with a platform to engage in meaningful
ways with our people, customers, regulators, investors and other
stakeholders.

Our Customers: We owe a lot to our customers. Without our
customers, be they individuals, small businesses or large
corporates, there would be no Diamond Bank. Period. Over the
past 22 years that we have operated in the country, our
customers have kept faith and remained committed to us more
so in the last few years when there was a level of uncertainty in
the economy and the industry. Our mission in the years ahead is
to retain their loyalty and we realize we can only do this by
treating our customers the way we would want them to treat us
– as indispensable partners in the quest for success.

In the rest of this letter, I will focus briefly on the results we have
presented in the annual reports and accounts, which has been
made public and explained exhaustively in the investors
conference call on Wednesday, April 17, 2012, and then on to
other issues that will impact our operations in the year ahead. For
ease of reading, they will be in the following sections:

i.

OUR MISSION

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

36

At Diamond Bank, we know our customers' expectations of us
and we are focused on looking for ways to exceed these
expectations by delivering products and services at the right
price using the right systems and people. We pay attention when
our customers speak.
Our Shareholders: The demands of our shareholders to have a
great company that is socially responsible drives our corporate
strategy as well as day to day actions. At Diamond Bank we have
accepted that shareholder value is defined by financial networth
as well as how effectively we implement sustainable banking
principles. The two are intertwined. That is why we have signed
on to Sustainable Banking Principles and Initiatives and have
indeed started taking steps to implement them. To note, we are
the lead agent of the Federal Government's “Access to Finance”
initiatives, signatory to, and participant in the Agricultural Finance
Program amongst others. Our belief is that these are projects we
should be involved in to create enhanced shareholder value in
the long run.
I will also like to thank all our shareholders who have kept faith
with us in recent years when we did not pay dividends; years in
which the share prices dropped and underperformed the
Banking sector index at the Nigerian Stock Exchange. Again, this
year, despite making a healthy profit, we will be unable to pay any
dividend because we are constrained by statute to plug the hole
in our retained earnings reserve. We are also in the market to look
for additional capital to run our business and see retention of all
we earned in 2012 as the most prudent thing to do. In any case,
your bank has turned the corner and the years ahead should be
more interesting times.
Our employees: It is only great employees that can build a great
company. We are painstaking in recruiting and retaining high
quality employees with great potentials. During the course of
their careers at the bank, starting from day one, we train and

equip them to do a great job in serving our customers. They do
this in teams that are symbiotic so that a customer can benefit
from expertise in different areas of the bank.
Our employees are committed to innovation and seeking out
new methods that make banking with us more convenient and at
the right price. They are knowledge leaders and experts in their
various fields, so regardless of if you are a small business, a large
corporate, multinational or an individual, we can match you with
an employee that understands your needs and is equipped to
provide creative solutions.
We are proud of our employees!
Our Communities – Being Diamond Bank: Being a bank comes
with a lot of responsibilities. Being Diamond Bank comes with
magnified responsibilities. We have offices in all 36 states in
Nigeria, four additional West African countries, and the United
Kingdom, and we are still growing. Because of the diverse nature
of our customers and markets, we need to see things from the
local perspective while maintaining a global view. We bank small
businesses in Senegal, advice Government in Republic of Benin,
and are involved in multimillion dollar finance for projects across
countries. We also see ourselves as involved in building the
future: so be it sponsoring an art competition for primary school
students, promoting entrepreneurial business plan competitions,
or supporting the domestic movie industry, Diamond Bank is
interwoven with its communities beyond banking.
Going “Beyond Banking” compels us as an institution to support
causes that increase income levels and help communities out of
poverty. Take our Small and Medium Enterprises (SMEs) Banking
for instance, we have programs that help small business owners
build and increase capacities for more business through bank
organized seminars, networking events and a host of other
initiatives.

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

37

We have also built partnerships with multilateral financial
developmental institutions, which use the bank as a platform to
reach SMEs and other institutions that are focused on maternal
healthcare etc.
We are proud of the way we engage our communities and as we
put the right framework in place and go on full throttle with
sustainable banking initiatives, we envisage engagements on an
even wider scale.
ii.

risk management process, restructure of the loan book, and
prudent cost management across the bank. This is reflected in
the cost to income ratio that remained stable at 60.6% in 2012.
Other ratios that will interest you with regards to our final results
include Return on Average Equity (ROAE) which grew from
negative returns of 14.3% in 2011 to 22.7% in 2012 and revenue
per staff that climbed to N47.6 million in 2012 from N38.3 million
in 2011.

FY 2012

GROUP FINANCIAL PERFORMANCE

N' billion

As I mentioned at the beginning of this letter, our group financial
performance for 2012 financial year shows what is possible if all
stakeholders apply themselves to build a great institution. In

FY 2012
N' billion

Gross Earnings

FY 2011
N' billion

YoY
%?

138.8

102.7

35.2

Net Interest Income

89.3

70.9

26.0

Impairment Charge

(1 7.0)

(55.4)

69.3

96.0

38.5

149.4

(68.5)

(56.5 )

(20.8)

27. 5

(1 8.0)

252.6

Operating Income
Operating Expenses
Profit Before Tax

some ways, it is a rebirth for us as it reflects the results of the first
year of operations under our change and growth initiative tagged
“Reclaiming the Diamond".
During the year we witnessed top line and bottom line growth
which should excite shareholders. While the top line grew by
35.2%, the bottom line grew by 253% to showcase efficiencies in

FY 2011
N' billion

YoY
%?

Aggregate Loans &
Advances to Customers

585

388

50.8

Aggregate Deposits

910

603

50.9

1,178

796

48.0

109

86

26.7

Total Assets
Equity

At the beginning of 2012, we did not envisage that we would take
additional charges due to impairment of risk assets. However,
operational realities have compelled us to write down the value
of some assets and the total charge for 2012 is N17.0 billion. This
has made us to take a new look at our books to be sure that
assets that are retained are only those that meet our minimum
risk criteria.
Your bank also grew in size during 2012. Loan and advances grew
by 50.8%, aggregate deposits grew by 50.9% while our total
assets crossed the one trillion naira mark. Growing the size of the
bank is useful but more important is the efficiency of that size,
and the ability to create value for you by leveraging on the bigger
size. This we are doing as evidenced by our return on average
equity. Our five year plan has outlined efficiency targets that we

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

38

500
400
300

250

Business Banking (N'bn)

200

RISK ASSETS
DEPOSITS

150

200

Corporate Banking (N'bn)
RISK ASSETS
DEPOSITS

100

100

50

-

2010

2011

-

2012

2010

are aggressive about achieving, and as we tick off the
achievement column in each of these targets, it will be as a result
of having created additional value for you.

2011

2012

commercial financing to companies and projects in their
domains.
b.

Corporate Banking

iii. REVIEW OF BUSINESS SEGMENTS
a.

Business Banking

Your bank's business banking segment includes all our
commercial banking businesses as well as the public sector
banking in all the states and Abuja.
In 2012 the business growth was remarkable. Risk assets
increased from N150 billion in 2011 to over N200 billion in 2012.
Similarly, deposits jumped from N260 billion in 2011 to about
N415 billion in 2012. In all, Business banking contributed over
46% of the group deposit liability.
We are happy with these results because it reflects the continued
growth of our mid-tier business. As we open new locations
across the country and West African region this year, we expect
to sign on additional businesses. Our activities in the upper
echelon of this segment have continued to gain traction, as well
as our partnerships with some state governments to provide

Our Corporate Banking business continues to grow following
the appointment of a staff to run this directorate separately.
In this business segment your bank has gained new
competencies over the last 24 months and has become a market
model through information leadership. Our scope of
involvement spans commercial lending, project finance and
advisory services, and sectors we are very active in includes Oil &
Gas, Power, Infrastructure and Manufacturing.
As the power sector is privatized and infrastructure is upgraded
across the country in 2013 and beyond, we envisage significant
growth for your bank in these sectors. Corporate Banking
accounted for most of the 51% growth in loans and advances
during 2012.
c.

Retail Banking

We witnessed growth in our Retail Banking business in 2012. This

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

39

400

300

subsidiaries, we took a step forward to recapitalize our banking
subsidiary in West Africa known as DB Benin. We have a second
subsidiary in the pension fund industry.

Retail Banking (N'bn)
RISK ASSETS
DEPOSITS

120

200

100

100

WAMU Zone (N'bn)
RISK ASSETS
DEPOSITS

80
60

2010

2011

2012

40
20

is a segment where we are paying lots of attention to out of our
conviction that the demography of the country as well as that of
the West African sub region points to it as growth markets.
Already we are positioning in different ways to be part of this
growth. Part of this is the recent reconfiguration of our branch
architecture which is evident as new branches come on board,
and also our aggressive deployment of alternative channels for
you to transact banking business, some of these enabling you to
do this from the comfort of your homes.
We are also at the stage of testing many products which are
designed to make banking convenient and accessible to all who
desire it and these will gradually enter the market as from the
second quarter of 2013.
Our intention is that by 2017, Retail Banking segment will be the
largest part of the bank in assets, deposits and profitability and we
believe we are on track to achieve this.
iv. REVIEW OF SUBSIDIARIES
In 2012, following the completion of disposal of non-banking

-

Owning the West African subsidiary provides us leverage across
French speaking West Africa for now, and English speaking, we
believe, in the not too distant future.
a.

DB WAMU Zone

After a loss in 2011, DB Wamu Zone bounced back to profitability
in 2012 and contributed about N570 million to Group
profitability. However, following IFRS accounting methodology
for the parent which involved more stringent impairment
process than BCEAO requirements, the PBT for the zone was a
loss of N1.1 billion. Growth was however witnessed in customers'
deposits as well as risk assets.
In 2013, we shall continue to collaborate with this important
subsidiary to ensure that their business continues to grow. I also
expect that this year, there will be new branches in Benin and
Cote d'Ivoire markets as they continue to track the opportunities
in the markets and expand their businesses. The relative political

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

40

stability across our primary markets in West Africa has been very
helpful.
b.

financial services in Nigeria and the sub region has improved
tremendously (we are lead agents of this change) and your bank
will continue to position to take advantage of this.

Diamond Pension Fund Custodian

Our initial decision to dispose this subsidiary affected its business
severely and it is only just gaining some stability in the past
couple of years. Nevertheless it continues to make positive
contribution to group profitability. The group recorded a PBT of
N255 million in 2012 from N152 million in 2011

80

In pursuit of our domestic growth, we are scheduled to open
many new locations this year especially in under-represented
markets with strong economic fundamentals and where our
services will be a strong agent for growth. Already, we have
received approval for 30 of these locations and expect more will
follow shortly.

DBPFC (N'bn)

70
ASSETS UNDER CUSTODY

60
50
40
30
20
10
-

2010

2011

In recent investor conference calls, I have been asked repeatedly
what the bank's growth strategy will be; through organic growth
or by acquisition? My response has always been that we are
focused on growing organically, at least in the domestic market,
but will be open to evaluate any acquisition opportunities that
emerge only if there is a compelling business reason for this.

2012

-

A new CEO was installed in late 2011, and he continues to make
the necessary changes to grow the business. We are convinced
this is paying off and your bank is committed to providing all the
support needed to make it gain a respectful position in its
industry.

Internationally, on March 26, 2013, we concluded the acquisition
and took over control of a niche bank in the UK. This underscores
our intention for a two pronged approach, acquisition and
organic growth, to expansion. This new member of the group
will facilitate our Trade finance and treasury services. We
continue to search the West African market and indeed rest of
Africa for opportunities that will add value to your wealth in the
bank. In these markets, we have seen significant opportunities to
create access to finance and scale our expertise in SME and
Retail banking.
Alternative Delivery Channels

v.

ONGOING INITIATIVES

Branch Expansion
The opportunities for Diamond Bank in the next decade will be
greater than those of the last ten years. The adoption rate of

Beyond expanding our networks through physical buildings in
our quest to capture the growing retail wave in the country, we
are also leveraging on our robust technology to further deploy
new e-banking solutions to reach out to more customers in line
with Central Bank's financial inclusion strategy and cashless

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

41

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

42

economy. Thus, we have increased considerably all our
alternative delivery channels both in numbers and quality. The
Bank's ATM has grown from 240 in 2011 to 408 in 2012. To
underscore our ambitions here, your bank pioneered the waiver
of ATM fees for withdrawals using other banks ATMs. This has
now become standard industry practice after the Central Bank
compelled other banks to follow suit. In addition, we are a
member of the ATM Consortium that has ATMs in strategic
locations outside bank premises. Our POS deployment grew
astronomically in one year from just 126 in 2011 to 8,354 in 2012.
We had a total of 16,997 active credit cards and 522,908 active
debit cards as at the end of 2012. The Bank had 35,727 active
diamond online users with transactions valued at over
N4.5billion in 2012. To reach the “Unbanked” in a cost effective
manner, we are at the final stages of developing a plan for
Agency Banking that enables small volume savers access to our
banking services through a savings account with an opening
balance as little as N1,000.

Corporate Banking from the erstwhile Lagos Directorate.
We hired an experienced Banker from outside to lead the
business in the West directorate while corporate banking
directorate was filled from within;
u

Excision of financial Institutions Group from Corporate
Banking and merging it with Treasury to form a new Treasury
and Financial Institutions Division;

u

Creation of 6 new regions; 3 in Lagos Directorate, 1 in North
Directorate and 2 in West Directorate. In keeping faith with
our home grown talent, we filled all but one of these new
senior roles from inside;

u

Introduction of a Corporate Planning Division to oversee
group strategic planning, performance management and
group co-ordination.

Brand Refresh
The phenomenal growth in our card and alternative channel
services have resulted in queues disappearing from our banking
halls, thereby contributing to our customers overall satisfaction.
We intend to continue in this path by growing our ATMs, POS and
Cards. We will continue to create the required awareness,
highlighting the convenience of the service, and introduce
loyalty schemes that would drive adoption and usage. Overall,
we will continue to improve and expand our e-channels without
compromising the high level of security we have built into them.
Restructure of our Business

Starting from the last quarter of 2012, you would have noticed
that the colours of our logo changed and the facade of most, if
not all of our branches, reflect this change. I have been asked to
explain the reason for this change several times. We refreshed
our brand primarily to send a message about what the priorities
of the Bank are – determination to continue to lead with a range
of innovative products, develop deeper relationships with our
customers and support whatever their goals are, be it saving for a
future project or looking for capital to start or grow their
business.

Several changes took place inside your bank during 2012 and
these changes will be a constant feature as we continue to
experiment towards building a model that is most responsive to
our target market.
Creation and manning of two new directorates, West and
u

In many ways the refreshed logo, which has the full colour
spectrum of a diamond, also gives us the visibility we desire in the
market. But the important changes go beyond the logo and its
colours. I invite you to visit our locations to get a glimpse of what
financial services of the future will look like. These are business

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

43

offices designed to support retail banking and financial inclusion,
and reduce drastically the time spent on transacting banking
services.
I hope that in addition to being shareholders of the bank, you'll
also let us be your banker of first choice.
Risk Management
As we continue to expand to new domestic and international
markets, we must pay attention to the full spectrum of risks that
we are exposed to. Inability to correctly assess and plan for these
risks can expose us to losses through two major sources:
operational risks from frauds, forgeries and incidental hazards,
and credit risks from impairment of assets. We are mindful of our
recent history where in about two years we had written off over
N96 billion due to impaired risk assets. We have been more
circumspect in keeping our operational related losses to
negligible amounts not warranting any mention.
Banking is a dynamic business and the channels of delivery are
constantly evolving. We recognize the need to constantly
manage our risks and that is why we will continue to invest in our
risk management systems. As I pointed out in my letter to you last
year, we had upgraded the function to a directorate. In 2012, we
recognized the need to keep track of the retail banking risk
especially as the retail portfolio was growing. We therefore hired
a specialist in retail risk management.
This year, as we upgrade our banking software, we have carefully
chosen one that enables us add-on enterprise risk management
solutions and special fraud management softwares. These are in
addition to other in-house initiatives like a review and
modification of the credit process.

Human Capital Management
As at the end of 2012, the Bank had over 2,900 full time
employees and 4,856 associates with women accounting for an
average of 38.8% of all employees. Our revamped DB Academy
produced over 450 trainees in 2012 through the Entry Level
Traineeship Program while over 260 experienced staff joined the
Bank in various capacities nationwide.
It is clear that we can only fulfil our strategic objectives with the
“Best People”, equipped with the necessary skills and having the
right attitude, and commitment to go the extra mile for our
clients. Thus, in order to attract and retain some of the best
talents in the industry, your Bank initiated a number of Human
Resources measures like competitive wage structure,
introducing a balanced scorecard based performance
management framework, instituting a performance linked bonus
system and employee development programs among others.
In addition, we made real progress on employee engagement.
Listening to our staff through various feedback mechanisms like
the bi-annual staff satisfaction surveys and the quarterly online
interactive session with me. In all we have built an open
organization where communication flow is encouraged.
Because we realize the great advantage that can be gained in
Banking by having a pool of talent to draw from, we are taking a
second look at how we build knowledge capital within the
institution. We are committed to having a functional Academy by
the second half of 2013 which will serve many roles for the bank
amongst which are Leadership development and acculturation
of new and existing staff.

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

44

vi. PRIORITIES FOR 2013
Growth and Profitability
In 2013, we intend to continue our pursuit of growth in size and
at the same time ensure that growth profits our customers and
shareholders. I have often been asked which should take priority
and my response to that is that they are both important. One
drives the other. Your bank is mindful of these and that is why our
5 year strategic plan encapsulated in “Reclaiming the Diamond”
outlines the industry positioning, financial ratios and perception
indices that are most important to us. From the results of 2012
operations, I will say that we are well on our way to meeting the
internally set targets within the stipulated time frame. Visit our
branches, ATMs or virtual channels for business and you'll
understand my reason for being optimistic.
Capital
The growth and profitability I wrote about in the previous
paragraph are possible if you have a bank with adequate capital
to do business. At the last annual general meeting in 2012, you
gave approval for the bank to raise a total of US$750 million of
Tier 2 capital. Since that approval we have raised about $200
million.
We are in a situation where we must raise additional capital to
move forward and are considering additional options like rights
issues and public offer as we continue to look at Tier II market.
Concerns have been expressed on if this is the right time to raise
equity capital in view of the equity market that is just recovering
and the general notion that many companies, especially your
bank is trading below its intrinsic value. These are legitimate
concerns and I have spent considerable time evaluating the
opportunity cost of deferring the capital raise. There are many
opportunities on the table we would like to take advantage of.

Some of these became available due to government policies and
general shift in the economy but many were created by the bank
in the course of its normal business arising from our information
leadership, and depth of knowledge capital we have built
carefully in the last 24 months. In a zero sum world, forgoing
these opportunities means that someone else takes them.
We believe that as we seize such opportunities, we will ultimately
turn them into tangible value for you, and the incremental value
will eventually outstrip whatever value we give up by a share sale
this year, should that become the clear choice.
Access to Finance
We are taking our commitments to sustainable banking and
access to finance seriously. We have just become a signatory to
the sustainable banking principles and have started to embed this
in our decision making. This is because at Diamond Bank we
believe that along with our clients, we should do business in a
responsible way that assures that future generations are not put
at a disadvantage. We are committed to this and more
communication will be released as we go along.
We also believe that in the markets we serve, every qualified
person that desires it should have access to financial services.
Already, a lot of innovative offerings by the bank to ensure this
access are in pilot phases and will reach the market soon. Our
commitment to promote access to finance also goes to support
our retail banking growth.
Integrating our Value Chain
Recently we concluded the acquisition of a United Kingdom
Bank. The intent of this acquisition is to support our desire to
have a closely integrated value chain. While the UK acquisition
goes to support our trade finance and treasury business, we

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

45

know that overall, such an integrated system will increase our
capacity for business, enable us assume greater control over the
speed and quality of service we offer our existing customers, and
those that come on board as we continue our regional
expansion across West Africa. In the months and years ahead,
this goal will drive future acquisitions and investments in partner
institutions.

The demand for modern transportation, health and education
infrastructure is expected to escalate. New airport terminals are
expected in five locations, construction of the second Niger
bridge will commence and the network of interstate roads is
expected to be upgraded. Already a lot of work continues on
modernizing the rail lines with tangible results now seen in the
narrow gauge lines. These are in addition to anticipated changes
in educational and health care delivery systems.

vii. COMMENTS ON THE FUTURE
The global economy is projected to grow in 2013 as some
adverse factors underlying current economic activities are
expected to subside. In addition, the global economy is forecast
to grow by 3.5% in real terms, a slight improvement on the 2012
growth rate of 3.3%, but still far from the pre-crisis record of 5.4%
reached in 2007.
The outlook of the Nigerian economy is bright despite the global
uncertainty. The improved macroeconomic indices present an
optimistic scenario: Inflation dropped to single digit of 8.6% in
March 2013 compared to 12.6% a year ago; the exchange rate
remained fairly stable at the official and parallel markets; budget
deficit is less than 2% of Gross Domestic Product (GDP); and
national debt is about 19.4% of GDP and considered sustainable.
Capital Inflows are expected into the domestic economy and will
help sustain the gains of 2012 with a likelihood of a reduction in
the Monetary Policy Rate at some stage during the year, if the
recent drop in headline inflation is sustained.
We also expect the reforms in the power sector to gain
momentum. Your bank has years of experience in financing
power projects and we are leveraging on these experiences to
continue to be the bank of choice in energy financing. During the
year we intend to unwind some of our investments in earlier
power projects as these projects reach completion and become
operational.

With the renewed efforts by the Federal Government, supported
by the Central Bank of Nigeria, the agriculture sector is expected
to receive a boost as banks finally start lending under the
agricultural input support program. This will go a long way to
improve agricultural yield.
With our strong head start in 2013 and continued
implementation of our strategic framework, Diamond Bank is
primed to consolidate its position as a major player. That is our
goal and we are determined to achieve it. As an institution, we
have collectively resolved to re-establish strong competitive
presence in the marketplace. We will ensure we invest
responsibly to deliver excellent service and unequalled customer
experience and ultimately deliver superior shareholder value to
you. Above all, we will continue to play an active part in helping
our communities to thrive in all the markets where we operate.
viii. CONCLUSION
If you have read this letter up to this stage, I want to thank you for
your patience. It is a good sign that you are keenly interested in
what goes on at the bank and what our future plans are.
I also want to thank the over 100,000 shareholders who are part
owners of the bank as well as our close to 10,000 member work
force who apply themselves on a daily basis all year round to
ensure we build a bank you will be proud to own.

CEO’s LETTER TO SHAREHOLDERS

2012 | ANNUAL REPORT & ACCOUNTS

46

My profound thanks go to the Board of Directors led by the
Chairman, His Royal Highness, Igwe Nnaemeka Alfred Achebe,
Obi of Onitsha. During 2012, Mazi Clement Owunna retired from
the board after 12 years of exemplary service. We miss the
erudition and deep knowledge of the Bank which Mazi Clement
Owunna brought to the board. During the year also, we
welcomed Mrs. Ifueko Omogui-Okauru as an independent
director of the bank. Her solid background and pedigree is a
good addition to the quality of the board.
The annual general meeting of shareholders is scheduled to hold
on April 30, 2013 at the Civic Center in Victoria Island, Lagos. I
encourage as many as can make it to attend the meeting and be
part of our deliberations. Seeing that we have a large shareholder
base with members resident in all continents of the world, it will
be impossible for all to attend. For the first time, we will provide
an email address to enable you send in your questions in
advance and we will try to answer as many as possible during the
meeting. Those that cannot be answered will be addressed in a
Frequently Asked Questions (FAQ) to be sent out to shareholders
who we have their email addresses on file not later than 30 days
after the annual general meetings.

The questions should be sent to
[email protected]. The subject of the mail
should be “AGM Questions” to ensure it is not missed in the
pile of mails that will be received.
Additionally, with effect from this year, we intend to start
distributing soft copies of the annual report in pursuit of our
commitment to help preserve the environment. We also believe
this will reach you faster than if sent by surface mail. If you elect
to receive the soft copies of the full annual report, please
complete the form which is attached to the annual report.
Otherwise, do nothing and you will continue to receive an
abridged hard copy of the report.
Once again thank you for your support.

Dr. Alex Otti
Group Managing Director/CEO

BOARD OF
DIRECTORS

STANDING (FROM LEFT TO RIGHT)
u
u
u
u
u
u
u
u

Mr. Oladele Akinyemi - Executive Directors, Regional Business, North
Mr. Victor Ezenkwo - Executive Director, Regional Business, South
Dr. Olubola Adekunle Hassan - Non-Executive Director
Mr. Uzoma Dozie - Executive Director, Lagos Business
Mr. Thomas Barry - Non-Executive Director
Mrs. Caroline Anyanwu -Executive Director, Risk Management & Control
Mr. Chris Ogbechie - Non-Executive Director
Mr. Ian Greenstreet - Independent Director

SITTING (FROM LEFT TO RIGHT)
u
u
u
u
u
u
u

Mrs. Ifueko Omoigui Okauru - Independent Director
HRM Igwe Nnaemeka Alfred Achebe - Chairman
Dr. Alex Otti - Group Managing Director/Chief Executive Officer
Ms. Ngozi Edozien - Non-Executive Director
Lt. General Jeremiah Timbut Useni (Rtd) - Non-Executive Director
Chief John D. Edozien - Non-Executive Director
Mr. Abdulrahman Yinusa - Executive Director/Chief Financial Officer

MANAGEMENT TEAM

2012 | ANNUAL REPORT & ACCOUNTS

48

MANAGEMENT TEAM
ALEX OTTI, GROUP, MANAGING DIRECTOR/CEO UZOMA DOZIE, EXECUTIVE DIRECTOR, LAGOS BUSINESSES OLADELE AKINYEMI, EXECUTIVE DIRECTOR,
REGIONAL BUSINESSES, NORTH VICTOR EZENWOKO, EXECUTIVE DIRECTOR, REGIONAL BUSINESSES, SOUTH CAROLINE ANYANWU, EXECUTIVE
DIRECTOR, RISK MANAGEMENT & CONTROL ABDULRAHMAN YINUSA, EXECUTIVE DIRECTOR, CHIEF FINANCIAL OFFICER NKECHI NWOSU, COMPANY
SECRETARY/LEGAL ADVISER BENEDICT IHEKIRE, MD, DIAMOND BANK DU-BENIN PREMIER OIWOH, DIRECTOR, OPERATIONS & TECHNOLOGY SAMUEL

EGUBE, DIRECTOR, CORPORATE BANKING SOLA AJAYI, REGIONAL DIRECTOR, WEST CHRIS OFIKULU, REGIONAL MANAGER, BENIN CHIZOMA OKOLI,
DIVISIONAL HEAD, INSTITUTIONAL BANKING BENSON ORAELOSI, REGIONAL MANAGER, IKEJA ANYA DUROHA, REGIONAL MANAGER, VICTORIA ISLAND

ABIYE KOKO, HEAD, IT SERVICES AWELE AJIBOLA, HEAD, INTERNAL CONTROL JOHN OGWO, REGIONAL MANAGER, PORT HARCOURT CHIUGO
NDUBISI, HEAD, FINANCIAL MANAGEMENT CHIDINMA LAWANSON, HEAD, HUMAN CAPITAL MANAGEMENT MAUREEN OFFOR, REGIONAL MANAGER,
APAPA JUDE ANELE, HEAD, RETAIL BANKING ANGELA OKONMAH, GROUP HEAD, PRIVILEGE BANKING SAMPSON ANEKE HEAD, PUBLIC SECTOR
COLLECTION, LAGOS ADEGBOYEGA ADEBAJO, HEAD, STRUCTURED FINANCE & ADVISORY CHINEDU EKEOCHA, ACTING MANAGING DIRECTOR,
DIAMOND PENSION FUND CUSTODIAN PAUL OKOROAFOR, HEAD, CREDIT ANALYSIS AND PROCESSING LANRE SHOWUNMI, HEAD, CORPORATE PLANNING
ABUBAKAR SULEIMAN, REGIONAL MANAGER, ABUJA - GARKI AKINLEYE OGUNLEYE, REGIONAL MANAGER, WEST OGECHI ALTRAIDE, REGIONAL
MANAGER, LAGOS ISLAND KINGSLEY NWAGBO, HEAD, GENERAL INTERNAL SERVICES EMEKA UZOMBA, HEAD, TREASURY & FINANCIAL INSTITUTIONS
EHIANETA EBHOHIMHEN, HEAD, INFRASTRUCTURE & TRANSPORT ALEXANDER OLISE HEAD, CORPORATE AUDIT SUFIYANU GARBA, DIVISIONAL HEAD,
PUBLIC SECTOR CHARLES ONYENSO, HEAD, CREDIT RISK MANAGEMENT AYONA AGUELE-TRIMNELL, HEAD, CORPORATE COMMUNICATIONS.

VICTOR

ABDULRAHMAN

UZOMA
CAROLINE
ALEX

OLADELE

2012 | ANNUAL REPORT & ACCOUNTS

49

CORPORATE
GOVERNANCE
REPORT 2012
...Over the years, as our vision has been fulfilled we have not lost sight of our
core values of integrity, excellence, customer and stakeholder satisfaction.

D

iamond Bank Plc was conceived with the vision of creating a “strong
financial services institution with effective presence in Nigeria, Africa and
indeed all the key financial centers of the world.” We are pleased to state that
over the years, as our vision has been fulfilled we have not lost sight of our core
values of integrity, excellence, customer and stakeholder satisfaction.
Diamond Bank is managed in compliance with the relevant
Codes of Corporate Governance and International Best
Practices. Compliance is the joint responsibility of the Board,
Management and the entire staff of the Bank, and there is an
established system of controls to ensure strict adherence with
these principles.
THE BOARD
The primary mission of the Board is to effectively represent and
promote the interest of shareholders and relevant stakeholders,
by adding value to the Company's performance. To achieve this
and other objectives, we have brought together these highly
accomplished individuals who comprise the Board of Directors
of Diamond Bank Plc:

HRM Igwe Nnaemeka Alfred Ugochukwu Achebe, CFR, MNI,
The Obi of Onitsha - Chairman

HRM Nnaemeka Achebe is a Chemistry graduate of the Stanford
University, California, USA. He holds Masters in Business
Administration (MBA) from Columbia University, New York,
amongst others. He is the traditional ruler (Obi) of Onitsha,
Anambra State. During the extensive period of his career in the
Royal Dutch Shell companies (both local and international), he
held several top level managerial positions before he was
appointed Executive Director at Shell Petroleum Development
Company in 1981, a position he held till 1996 when he was
appointed Senior Corporate Adviser, Shell International Co.
Limited, London. He has held directorship positions in many
multinationals and reputable organizations and is a patron of the

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

50

MTN Foundation. In 2004, Igwe Achebe was honoured by the
Federal Government of Nigeria with a national merit award,
Commander of the Order of the Federal Republic (CFR). He
belongs to a number of professional bodies such as the Nigeria
Economic Society, Nigerian Institute of Management and the
Nigerian Institute of Public Relations. He is Chancellor of Kogi
State University and Chairman, Anambra State Traditional Rulers
Council. HRM Nnaemeka Achebe joined the Board in 2005.

Deputy General Manager. In September 2005, Alex Otti was
appointed Executive Director in First Bank Nigeria Plc. As
Executive Director, he started as Head of Commercial Banking
and subsequently, Head of the Regional Businesses in the SouthSouthern and South-Eastern Geo-Political Zones comprising
over 180 branches. He joined the Board in 2011.
Mr. Uzoma Dozie
Executive Director, Lagos Regional Businesses

Dr. Alex Otti
Group Managing Director/Chief Executive Officer

Alex Otti graduated from the University of Port Harcourt with a
First Class Honours Degree in Economics in 1988. He
subsequently received an MBA from the University of Lagos in
1994. At the University of Port Harcourt, he was the best
graduating student in the Department of Economics and won
the subject prize. He was also the best graduating student in the
Faculty of Social Sciences and won the Dean's Prize, as well as
the overall Best Graduating Student for the Year and
Valedictorian. He started his banking career with Nigeria
International Bank Limited, a subsidiary of Citibank N.Y. in 1989
where he worked in the Operations Department. He
subsequently moved on to Nigerian Intercontinental Merchant
Bank Ltd (renamed Intercontinental Bank Plc). At
Intercontinental, he was at various times in the Treasury and
Financial Services and Corporate Banking Divisions. In 1992, he
joined the then Societe Bancaire Nigeria Ltd (Merchant Bankers),
a subsidiary of Banque SBA Paris. He left as Senior Manager in
1996. Towards the end of 1996, he moved to United Bank for
Africa Plc as Principal Manager, heading Corporate Banking
Sector, South. His major responsibility was the development of
the Oil and Gas businesses for the Bank. In the year 2000, he was
promoted Assistant General Manager. In May 2001, he joined
First Bank of Nigeria Plc as an Assistant General Manager with
responsibility for Energy Group. In April 2004, he was promoted

Uzoma Dozie graduated in 1991 with a Bachelor of Science
degree in Chemistry from the University of Reading, Berkshire
England. He obtained a Master of Science degree in Chemical
Research from University College, London in 1992 and an MBA
from Imperial College Management School, London in 1998. Mr.
Dozie started his banking career in the Commercial Banking Unit
at Guaranty Trust Bank Plc where he worked for some years and
later moved to Citizens International Bank Limited where he
worked in the Oil and Gas Division. Thereafter, he joined
Diamond Bank Limited as an Assistant Manager and Head of the
Bank's Oil and Gas Unit. He was at a time Head, Financial Control,
then Retail banking (where he spear-headed the introduction of
lifestyle-changing retail products in the bank) and also headed
two distinctive strategic business units in the Bank before his
appointment as Executive Director in 2005. He has attended
various specialist and executive development courses in Nigeria
and overseas.
Mr. Oladele Akinyemi
Executive Director, Regional Businesses, North

Oladele Akinyemi holds a B.Sc. in Computer Science and an MBA
from International Graduate School of Management, IESE
University of Navarra, Madrid, Spain. He first joined Diamond
Bank from erstwhile Lead Merchant Bank in 1991 as Head of
Systems Unit. He later headed the Commercial & Consumer

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

51

Banking and the Retail Banking Units of the Bank before leaving
for UBA in 1997. He left UBA to become an Executive Director of
One-to-One Nigeria Limited and whilst there, he built the first
database marketing service company in Nigeria and pioneered
List Rental business in Nigeria. He then joined Citibank Nigeria in
1999 as Head of Cards, Cash Management and e-Solutions
Group. He rejoined Diamond Bank in 2002 as Head of the
Information Technology Group and was appointed an Executive
Director in 2006.
Mr. Victor Ezenwoko
Executive Director, Regional Businesses, South

Victor Ezenwoko was Head, Regional Businesses Upcountry, a
position he attained in 2008 with the Bank. Since he joined
Diamond Bank Plc, Victor has worked across virtually every part
of the country and his performance over the years underscores
the aptness of his elevation to the Board. Victor is a 1986
Accountancy Graduate and qualified as a Chartered Accountant
in 1991. He is an Alumnus of the prestigious Wharton Business
School and an Honorary Senior Member of the Chartered
Institute of Bankers of Nigeria. He has attended several business,
professional and manpower development courses both within
and outside Nigeria. He has altogether over 25 years working
experience as an accountant and a banker from manufacturing,
information technology and banking sectors with over 18 of
those years in the banking sector. His banking career started at
Ecobank Nigeria Plc in 1992 where he worked in the Financial
Controls Department and later moved into a branch
management position. He joined Diamond Bank in July 1997 as a
start-up Branch Manager for Onitsha Bridgehead Branch and
subsequently Branch Manager of Onitsha New Market Road
Branch and for Abuja Branch. Having made his mark in Branch
Management, Victor was promoted to Regional Manager East.
Between 2002 and 2003, he functioned as Group Head, Large
Commercial Businesses (Head Office) and Group Head,

Commercial Banking Lagos Island. He was appointed an
Executive Director in 2010.
Mr. Abdulrahman Yinusa
Executive Director/Chief Financial Officer

Yinusa Abdulrahman joined Diamond Bank in 2011 as Chief
Financial Officer from his CBN appointment in Finbank as
Executive Director, Finance and Strategy. Prior to the CBN
appointment, he was Managing Director/CEO of United Bank for
Africa subsidiary in Sierra Leone. And prior to that, he was the
Managing Director/CEO of UBA Asset Management Limited,
where he launched four Mutual Funds within the two years of his
tenor. He has over two decades of quality banking experience,
since joining Nigeria International Bank (Citibank Group) for
NYSC in 1989 and rose to the position of Senior Financial Analyst
before he left in 1993 to join FSB International Bank (now part of
Fidelity Bank) as the Financial Controller, a position he combined
with being Head of Strategy till he left in 1996 to join UBA Plc. He
held various senior level positions within U. B. A., including
Treasurer and Chief Finance Officer, before being posted to head
two subsidiaries at various times, prior to his appointment to
Finbank by CBN.
Mrs. Caroline Anyanwu
Executive Director/Chief Risk Officer

Caroline Anyanwu returned to Diamond Bank in April, 2011 as
the Executive Director, Risk Management & Control, from her
Central Bank of Nigeria's (CBN) appointment as Executive
Director Risk Management in Finbank Plc. Until her appointment
by the CBN, Caroline was the Head, Risk Management & Control
Division in Diamond Bank Plc having joined the Bank in February,
2006 from UBA Plc where she was Head, Credit Risk
Management. She commenced her professional career in
PriceWaterhouseCoopers (Chartered Accountants) where she

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

52

trained and qualified as a Chartered Accountant and
subsequently held the position of an Auditor Senior/Consultant.
Her Banking career started with the then African Continental
Bank Plc where she served as the Head, Strategic Planning. She
subsequently worked in Oceanic Bank Plc. Caroline's exposure
in the banking Industry spanned through a number of job
functions including: Strategic Planning, Financial control, Credit
and Marketing, Banking Operations, Business Process Reengineering and Risk Management. Caroline is a first class
graduate of Statistics and a Fellow of the Institute of Chartered
Accountants of Nigeria (ICAN) where she obtained a Second
Place Overall Merit Award for ICAN Professional Examination II in
May 1988. She is also an Honorary Fellow of the Institute of
Bankers of Nigeria.
Mazi Clement I. Owunna, MFR
Non-Executive Director

An accomplished pharmacist and businessman, Mazi Owunna is
a graduate of the Drake College of Pharmacy, Iowa, United
States. He is a director of Diamond Bank. Mazi Owunna is the
Chairman of several successful companies spanning
pharmaceuticals, manufacturing, commerce, real estate, food
and chemicals. He is also a Fellow of the Nigerian Institute of
Management. Mazi Owunna retired from the Board in July 2012.
Dr. Olubola Adekunle Hassan, M.B, B.S, D.O, FRCS, FRCOPH, FWACS
Non-Executive Director

Dr. Hassan holds a Bachelor of Medicine, Bachelor of Surgery,
M.BB.S and Diploma in Ophthalmology amongst other
qualifications. He is the Chief Consultant Ophthalmic Surgeon
and Medical Director, Eye Foundation Hospital, Lagos and also
acts as a consultant ophthalmologist to a number of local and
foreign hospitals. He has sixteen academic distinctions and
awards and belongs to a host of professional and academic

bodies locally and internationally. Dr. Hassan joined the Board of
Diamond Bank Plc in 2005.
Lieutenant General Jeremiah Timbut Useni (Rtd) DSS, PSC, MNI
Non-Executive Director

Lt. General Useni (Rtd) is a graduate of the Indian Military
Academy and holds a Diploma in Advance Military
Transportation from the US Army. He passed through notable
institutions including the British Army Apprentices College
Chepstow, and Command and Staff College, Jaji. He is a fellow
of the following institutions: the Nigerian Institute of
Management (FNIM), the Chartered Institute of Transport (UK
and Nigeria) and the National War College (FNWC). During his
many years of meritorious service in the Nigerian Army, Lt. Gen
Useni held various top military and political appointments
including Director of Supply and Transport, Director of
Ordinance Services and Quartermaster General of the Nigerian
Army. He was Chairman of the Nigerian Railway Corporation,
Military Governor of the former Bendel State, and Minister of the
Federal Capital Territory. He received many Military decorations
including Forces Service Star, Long Service Medal, Defence
Medal, and Independence Medal. As a nationalist, Lt Gen Useni
has been bestowed with twelve (12) chieftaincy/traditional titles
from various states of the Federation most notably the Sardauna
of Plateau and Nasarawa States. He is currently the Chairman of
the Arewa Consultative Forum. He joined the Board of Diamond
Bank in 2005.
Mr. Chris Ike Ogbechie
Non-Executive Director

Chris Ogbechie has a First Class Honours degree in Mechanical
Engineering from Manchester University and an MBA from
Manchester Business School. He has wide experience in
marketing and strategy derived from his work as head of

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

53

marketing/sales at Nestle Nigeria, Xerox and from his consulting
work with Nigerian firms over the years. While in Nestle he had
wide international exposure in Malaysia, Singapore and
Switzerland. He has been involved with several start-ups and is
on the Board of several companies. Mr. Ogbechie is a faculty staff
of the Lagos Business School, where he teaches Strategy and
Corporate Governance. He joined the Board of Diamond Bank in
2005.
Mr. Simon Harford
Non-Executive Director

Simon Harford represents Actis on the Board of Diamond Bank.
He is a Partner of Actis based in the Johannesburg office, and
was previously based in Lagos as the Head of Actis West Africa
from 2006 to 2009. Prior to Actis, Simon was founder and CEO
of Virgin Nigeria, with his earlier career encompassing S.G
Warburg, Boston Consulting Group, British Airways and various
entrepreneurial ventures. Simon holds an MBA from INSEAD,
France and a BA (Hons) in Philosophy, Politics and Economics
from Oxford University, UK. He has been a Director of Diamond
Bank from 2007.
Chief John D. Edozien
Non-Executive Director

John Edozien holds a B.Sc. (Hons) (Econs.) from the University of
Ibadan and an M.A. Economics from the University of Wisconsin.
As a Civil Servant, he rose to the position of Permanent Secretary
of the Cabinet Office in 1987 and National Planning, Office of
Planning and Budget both in the Presidency. Chief Edozien
served as Deputy Governor of Bendel state and later Delta State.
He was the Group Managing Director/CEO of Afribank Nigeria
Plc as well as Chairman of Afribank International Limited
(Merchant Bankers) from 1993 to 1999. He is the Chairman of a
number of Nigerian companies such as Jenkyns Consult Nigeria

Limited and Mercedes Benz Automobile Services Limited. He
also holds other directorate positions in several companies.
John Edozien joined the Board of Diamond Bank in 2008.
Mr Ian Greenstreet
Independent Director

Ian Greenstreet is considered by many as one of the world's
leading Risk Management professionals. Greenstreet, a
Chartered Accountant (Institute of Chartered Accountants of
England and Wales) holds a B.Sc (Hons) in Computer Science &
Accounting from the University of Manchester. His career spans
over 25 years in the financial sector, specialising in risk
management and credit analysis. In 1996 Greenstreet was
appointed Regional Country Risk Officer (Managing Director)
ABN AMBRO Bank- London. For ten years he was responsible for
the bank's credit approval, credit monitoring and credit risk
quantification of exposures working closely with client coverage
and trading floors providing structuring advice on transactions to
ensure that risks are mitigated and comply with the bank's risk
appetite. This enabled him to gain indepth understanding of all
wholesale bank's products and project finance. In 2006, he
joined the Medicapital Bank as the head of risk where he set up
enterprise risk management for the Bank covering market risk,
credit risk and operational risk including systems, procedures
and policy manuals which gained FSA approval. Earlier in his
career, he had worked as the Head of Credit Yamaichi
International (Europe) Ltd, Lloyds Bank, Luxembourg (Private
Bank), Stoy Hayward, Luxembourg, Henderson Fund
Management, Luxembourg, Midland Bank and +Touche Ross &
Co London. Greenstreet joined the Board of Diamond Bank in
2011.

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

54

Ms. Ngozi Edozien
Non-Executive Director

Ngozi Edozien is the Chief Executive Officer of Actis West Africa.
Ms. Edozien is responsible for all aspects of Actis's Private Equity
Business in West Africa, including Diamond Bank. Ms Edozien
started her professional career in investment banking with training
in financial markets and corporate finance first at Solomon
Brothers and then at JP Morgan (JPM), both in New York City. She
subsequently left JPM returning to Harvard University to conclude
her academic training by pursuing an MBA. Post MBA, Ms Edozien
worked for McKinsey & Co. in London and Paris where she
became an Associate Principal. At McKinsey she gained
experience in strategy and business development. Ngozi joined
the Board of Diamond Bank in 2010.
Mr. Thomas Barry
Non-Executive Director

Thomas Barry is the Chief Executive Officer and founder of Zephyr
Management Company (Zephyr), an investment company, which
he founded in 1994. In Africa, Mr. Barry is Chairman of Kingdom
Zephyr Africa Management Company, which has offices in
Johannesburg, Accra, Lagos, London and New York. Prior to
founding Zephyr, Mr. Barry was President and Chief Executive
Officer of Rockefeller & Co, the investment management arm of
the Rockefeller family from 1983 to 1993. Previously, Mr. Barry was
employed by T. Rowe Price Associates, Inc. from 1969 to 1982,
where among having other responsibilities, he was President of T.
Rowe Price New Horizons Fund and Director of Research. Mr.
Barry received an MBA from Yale University in 1966 where he
majored in Latin American Studies. He is a Chartered Financial
Analyst (CFA). He is active in numerous not-for- profits in Africa
focused on economic development. Currently, he serves as a
Director or Trustee of TechnoServe, Trikle Up, Kucetekela
Foundation, and ACCION International. Mr. Barry was a Founder

of Emerging Markets Private Equity Association (EMPEA) of which
he is a Director and Chairman of the Finance Committee. Barry
joined the Board of Diamond Bank in 2011.
Mrs. Ifueko Marina Omoigui Okauru
Independent Director

Mrs. Okauru is a Chartered Accountant. She graduated with a First
Class degree in Accounting from the University of Lagos. Her
career spans over 30 years. She joined Akintola Williams & Co,
Chartered Accountants in 1981. Between 1983 to 1996 she
worked with Arthur Andersen (now KPMG Professional Services),
Andersen Consulting (now Accenture). She founded the ReStral
Limited in 1996 and was Chief Responsibility Officer of the
company till 2004 when she was appointed the Chairman of the
Federal Inland Revenue Service of Nigeria, a position she held till
April 2012. Mrs. Okauru is presently a Managing Partner with
Compliance Professionals Plc. She was recently appointed to the
Board of Women in Management, Business and Public Services, a
Non-Governmental Organization. She joined the Board of
Diamond Bank in 2012.
Mr. Chris Cole
(Alternate to Ms. Ngozi Edozien)

Chris Cole is the Partner responsible for Business Development at
Actis LLP. Prior to joining Actis, Mr. Cole was formerly, Managing
Director and Head of EMEA & Asian Leveraged Finance at Barclays
Capital in London where he initiated and executed start-up plan to
establish a leveraged finance business in the United Kingdom and
Europe. He was also Director, Advisory & Financing Division of SG
Warburg & Co. Ltd in charge of corporate advisory, restructuring
and acquisition finance transactions in the United Kingdom,
Europe and North America. Mr. Coles holds a Masters degree in
International Development from University of Bath, England.

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

55

TRAINING AND EVALUATION

u

In order to further develop the skill level of the Board, members
attend courses and training programmes suited to enhancing
their functions. If the situation necessitates it, the Directors are
entitled to seek independent professional advice on matters for
which they require clarification. Diamond Bank has always
placed emphasis on the performance of the Board as a whole as
well as on the performance of individual members in relation to
their contributions to the Board and the Bank. Evaluation of the
Executive Directors is carried out by the Governance and
Personnel Committee which is comprised entirely of NonExecutive Directors while the evaluation of the Non Executive
Directors is done by external consultants.

u

FUNCTIONS OF THE BOARD
The Board meets regularly (at least once every quarter) to
perform its stewardship and oversight functions, primary among
which are:
u

u

u

u
u

u

u
u

Review of the Bank's goals as well as the strategy for
achieving these goals.
Evaluation of present and future strengths, weaknesses and
opportunities of the Bank. Comparisons with competitors,
locally and internationally, and best practice.
Review and approval of the Bank's financial objectives, plans
and actions and significant allocation and expenditure.
Approval of the annual budget;
Approval of the annual and half-yearly financial statements,
annual report and reports to shareholders;
Consideration and where appropriate, declaration or
recommendation of the payment of dividends.
Reviewing the Bank's audit requirements.
Reviewing the performance of, necessity for, and
composition of Board Committees.

u
u

Approval of the remuneration of the Chairman, NonExecutive Directors and Management.
Reviewing risk management policies and controls, including
compliance with legal and regulatory requirements.
Reviewing the Bank's code of conduct and ethical standards.
Reviewing shareholder and client relationships.

The Board also performs certain of its functions through Board
Committees and Management Committees. The delegation of
these functions does not in any way derogate from the discharge
by members of their duties and responsibilities.
BOARD COMMITTEES
The Board Governance and Personnel Committee: The
Governance and Personnel Committee is made up of four NonExecutive Directors. As the name suggests, this Committee is
responsible for the overall governance and personnel function
of the Bank. Some functions of the Committee are as follows: To
consider and make recommendations to the Board on its
composition and that of the Committees and Subsidiaries;
Review and recommend nomination of Directors to the Board
based on a proper selection process; Ensure adequate
succession planning for Board of Directors and the Chief
Executive Officer; Ensure the orientation and continuous
education of Directors; Monitor the procedures established for
compliance with regulatory requirements for related party
transactions; Monitor staff compliance with the Code of Ethics
and Business Conduct of the Bank; Ensure compliance with
regulatory standards of Corporate Governance and regularly
identify international Best Practices of Corporate Governance
and close any identified gaps; Recruitment or promotion of staff
to Assistant General Manager level and above and to approve the
remuneration, benefits and other terms and conditions of the
service contracts of such officers; Recommend to the Board the
terms and conditions of the service contract, including

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

56

remuneration packages of the Executive Directors with a view to
ensuring that these officers are fairly rewarded for their effort;
Review cases of infractions of the Bank's policies committed by
staff of Assistant General Manager level and above and apply
appropriate sanctions where necessary; Review and approval of
policies on staff welfare and fringe benefits; Annual review of the
Board Charter; and Ensuring the annual review of the Board and
Board Committees' performance.
Members of the Board Governance and Personnel Committee
are: Dr. Olubola Hassan (Chairman), Chief John D. Edozien, Ms.
Ngozi Edozien, Mrs. Ifueko Omoigui Okauru.
The Board Audit and Risk Management Committee: The Board
Audit and Risk Management Committee is comprised of 4 (Four)
Non-Executive Directors and 3 (Three) Executive Directors. The
functions of this Committee include: Understanding the
principal risks to achieving the Group's strategy; Establishing the
Bank's risk appetite and ensuring that the business profile and
plans are consistent with the risk appetite; Establish and
communicate the risk management framework including
responsibilities, authorities and key controls; Establishing key
control processes and practices, including limit structures,
impairment, allowance criteria and reporting requirements;
Monitoring the operation of the controls and adherence to risk
direction and limits; Interpret and report on risk exposures,
concentrations and risk- taking outcomes as well as on
sensitivities and key risk indicators; Reviewing and challenging all
aspects of the Group's risk profile; Review the financial reporting
process with a view to ensuring the company's compliance with
accounting and reporting standards, other financial matters and
the applicable laws and regulations; and reviewing and
challenging risk management processes.
Members of the Board Audit and Risk Management Committee
are: Mr lan Greenstreet (Chairman), Mrs. Ifueko Omoigui Okauru,

Mr. Thomas Barry, Ms. Ngozi Edozien, Dr. Alex Otti, Mr.
Abdulrahman Yinusa and Mrs. Caroline Anyanwu.
The Board Credit Committee: The Credit Committee is made
up of 7 (Seven) members, 4 (Four) Non-Executive Directors and 3
(Three) Executive Directors. The primary function of this
Committee is to consider all matters pertaining to the granting of
credits by the Bank in accordance with approved policies and
approval of credits in excess of the limits delegated to the
Management Credit Committee, significant revisions to credit
policies, and establish portfolio distribution guidelines in
conformity with government regulations. In achieving this
objective, the Committee ensures that the overall credit policies
are aligned with the Bank's Risk Tolerance level. In addition, the
Committee performs the following functions: Reviewing the
policies and methodologies for assessing the Bank's credit risks
and recommending appropriate exposure limits; and reviewing
large exposures and impaired assets.
Members of the Board Credit Committee are: Mr. Chris
Ogbechie (Chairman), Chief John D. Edozien, Mr. lan
Greenstreet, Lt. Gen. Jeremiah Useni (rtd), Dr. Alex Otti, Mr.
Uzoma Dozie, Mrs. Caroline Anyanwu.
The Audit Committee: This Committee is established in
accordance with the provisions of section 359(3) to (6) of the
Companies and Allied Matters Act and in compliance with the
provisions of the CBN Code of Corporate Governance for Banks
Post Consolidation. The Committee consists of 3 (Three)
Shareholder Representatives and 3 (Three) Non-Executive
Directors. The Chairman of the Committee is a Shareholder and
a Chartered Accountant. All members of the Committee are
independent of the Bank's management. The Committee's
primary functions are, to review and ensure the effectiveness of
accounting systems and internal controls; review the scope and
planning of audit requirements; make recommendations to the

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

57

Board regarding the appointment, removal and remuneration of
the external auditors; and to ensure that the accounting policies
of the Bank are in accordance with legal requirements and
agreed ethical principles.
Members of the statutory Audit Committee are Mr. Kabir Alkali
Mohammed (mni) (Chairman) - Shareholder, Sir Enoch Iwueze Shareholder, Mr. Abayomi Olaofe – Shareholder, Lt. Gen.
Jeremiah T. Useni (rtd) (mni), Mr. Chris Ogbechie and Dr. Olubola
Hassan.

Personnel Management Committee (PMC): The Personnel
Management Committee
reviews and makes
recommendations on policies regarding Manpower Planning
and Career Development; recruitment, selection and training of
staff; performance management and staff appraisal;
compensation, staff welfare and benefits schemes; Staff
Movement and Audit; moderation of staff appraisal exercises and
the implementation of the existing staff personnel policies and
guidelines. The PMC reviews cases of infraction on the Bank's
policies and procedures and applies adequate sanctions where
necessary.

MANAGEMENT COMMITTEES
Assets and Liabilities Committee (ALCO): The primary functions
of this Committee are the creation of a balance sheet structure
to allocate sources and utilization of funds in a manner that
would improve the Bank's financial performance; maximizing
the value of capital overtime whilst controlling risk exposures;
and managing the Bank's liquidity with respect to the
composition of portfolio of liquid assets, control of cash flow,
control of short-term borrowing capacity, monitoring of
undrawn commitments, and contingency funding plans.
Management Credit Committee (MCC): Primarily, the
Management Credit Committee approves credits in line with the
Bank's credit policy. All credits exceeding the approval limit of the
MCC are recommended to the Board Credit Committee for
approval. The MCC also regularly assesses the Bank's risk asset
portfolio to determine the optimum mix; the amount of
exposures per customer and related group of customers; and
approves the limits of interbank placements. The MCC meets
regularly to review watch-listed/non-performing accounts and
approve specific provisions to be made on non-performing
accounts.

IT Steering Committee: The Committee serves as a Think Tank
for all Information Technology (IT) matters and determines IT
strategy and policies and coordinates the implementation of
these policies.
Members include: Executive Director Regional Businesses Lagos
as Chairman, Executive Director Regional Businesses North,
Executive Director/Chief Financial Officer, Senior Advisor Retail
Banking, Executive Director Risk Management & Control, Head
Operations & Technology, Regional Manager Lagos Island, Head
IT Services and Head Business Transformation.
Budget and Revenue Sharing Committee: This Committee
prepares budget outlines for all the units of the Bank; carries out
a half yearly review of the budget in order to prepare an updated
budget for the remaining months of the year; evaluates and
approves extra budgetary expenditure.
New Product Committee: Serves as a clearing house for new
product proposals and in the process, determines and makes
appropriate recommendations to Executive Management
concerning product name and features; co-ordinates activities
for the introduction of new products; and reviews existing
products where necessary.

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

58

Cost Management Committee: The Committee periodically
reviews the costs/expenses of the Bank and recommends
appropriate cost reduction/control measures; reviews and
streamlines the acquisition of capital expenditure and bulk
purchases of consumables with a view to reducing cost without
compromising quality; and generally reviews the procurement
procedures of the Bank.
Group Risk Management Committee: This Committee provides
central oversight of risk management across the Group,
formulates policies and standards for the management of risk
within the Group, monitors implementation of risk policies and
implements Board decisions across the Group.
SHAREHOLDER RELATIONS
Diamond Bank believes in strengthening shareholder relations
and has a dedicated Investor Relations Unit to cater to
shareholders' needs. In addition to this, the entire staff of the
Bank are always available to resolve any issues which our highly
esteemed shareholders may bring forward. The establishment of
Shareholders' Associations has further improved the lines of
communication between shareholders and the Bank such that
the duly appointed representatives are able to table the concerns
of the shareholders to the Management of the Bank.
Shareholders are also encouraged to express their opinions at
General Meetings.

relevant Codes of Corporate Governance in Nigeria with a view
to ensuring adherence to the highest standards of Corporate
Governance.
Remuneration Principles
1.

Appropriately compensate directors for the services they
provide to the Group;

2.

Align director remuneration with shareholders' interest;

3.

Attract and retain the right skills required to efficiently
manage the operations and growth of our business;

4.

Implement performance based incentive program to
motivate directors to perform in the best interest of the
Group; and

5.

Ensure transparency, equity and consistency in
remuneration matters across the Group.

Objectives of Remuneration Policy
The primary objectives of the Group's remuneration policy and
practices are to:
a)

Motivate directors to pursue and promote balance between
the short term and long term growth of the Group while
maximising shareholders' return;

b)

c)

Enable the Group to attract and retain people of proven
ability, experience and skills in the market in which it
competes for talent;
Link rewards to the creation of value for shareholders;

d)

Ensure an appropriate balance between fixed and variable

Directors' Remuneration Policy
The remuneration policy of Diamond Bank Plc and its subsidiary
companies (“the Group”) is designed to establish a framework for
defining and structuring the remuneration of executive and nonexecutive directors noting the Group's scope of operations,
productivity and performance as well as shareholder value
creation. The remuneration policy also takes cognisance of the

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

59

remuneration while reflecting the short and long term
objectives of the Group;
e)

Encourage fairness and demonstrate a clear relationship
between remuneration and performance based on set
targets on individual and corporate performance;

f)

Encourage behaviour consistent with Diamond Bank's
values, principles and Code of Business Conduct. This will
lead to an appropriate balance in performance, governance,
controls, risk management, customer service, people
management, brand and reputation management;

g)

Ensure that remuneration arrangements are equitable,
transparent, well communicated and easily understood,
aligned with the interest of shareholders and adequately
disclosed;

h)

Limit severance payments on termination to pre-approved
contractual arrangements which does not commit the
Group to paying for non- performance; and

Composition of Remuneration
u

The remuneration packages of the Group Managing
Director (GMD), Executive Directors and other executives in
the subsidiary companies will be determined by the
Governance and Personnel Committee and are subject to
the Board' approval.

u

The compensation of the GMD and the Executive Directors'
shall include incentive schemes to encourage continued
improvement in performance against the criteria set and
agreed by the Board.

u

The Governance and Personnel Committee will set
operational targets consisting of a number of key
performance indicators (KPI's) covering both financial and
non-financial measures of performance for the executives
at the beginning of each year.

Typical KPI's and assessment criteria include:
u

i)

Comply with the relevant legal and regulatory requirements.
u

Achieving pre-determined growth in the Group's turnover,
profit after tax, return on asset etc;
Meeting Strategic and operational objectives; and
Assessment of personal effort and contribution.

Executive Directors' Remuneration

u

The remuneration of Executive Directors is designed to:

Remuneration of the GMD and other Executive Directors consist
of both fixed and variable remuneration components. The
components of remuneration for Executive Directors comprise
base salary (a fixed sum payable monthly which is reviewed
annually), benefits (including car allowances, medical allowance
etc.), an annual bonus, long term incentives (comprising share
options where applicable) and pension contributions.

u
u
u

u

Attract and retain directors;
Align their interests with those of shareholders;
Link rewards to set targets on individual and corporate
performance; and
Ensure total remuneration is competitive by market
standards.

The performance of the executives directors are measured
against these criteria at the end of the financial year and their

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

60

evaluation result is used to determine the variable element of
their remuneration.
CORPORATE GOVERNANCE PRINCIPLES
Diamond Bank ensures compliance with the Corporate
Governance Principles established by the Code of Corporate
Governance for Banks in Nigeria, Post Consolidation, issued by
the Central Bank of Nigeria (CBN) and the Securities and
Exchange Code of Corporate Governance for Public
Companies in Nigeria. In the quest to adopt best practices in
the industry, the Bank established its own Corporate
Governance Framework Manual which sets out a top-level
framework for corporate governance in the Bank.

with the constantly evolving nature of Information Technology
has made substantial investments in Information Technology
to provide the best services for its customers while ensuring
the safety of information. To further strengthen its Corporate
Governance structure, the Bank implemented a Compliance
Risk Management framework, which highlights the strategies
required to effectively manage the risk of non-compliance.
This includes the following:
u

Development of a regulatory universe comprising a rule
book of all the laws, rules and regulations governing the
banking industry with inbuilt controls to ensure
transactions and relationships are conducted in
consonance with the laws of the land.

u

Establishment of a full-fledged compliance unit and
ensuring its independence by appointing a senior
management staff who reports to the Board through the
Board Audit Committee as the Bank's Chief Compliance
Officer. Adequate human and financial resources are
made available to Compliance Support Unit to ensure
effective management of Compliance Risk.

u

To effectively identify and assess Compliance Risks
presented by customers, products and services, the Bank,
through the Compliance function developed a risk
measurement and monitoring information system that
will provide management with timely and meaningful
reports related to compliance with laws and regulations at
the business unit and transaction levels.

u

The Compliance Support Unit through risk management
process analyses rules, regulations and laws in order to
ensure that these are incorporated into the Bank's
processes and procedures on day-to-day relationship

FINANCIAL REPORTING AND ACCOUNTING
The audit for the period under review was conducted by the
firm of PricewaterhouseCoopers (PwC) which is independent
of the Bank. In keeping with the provisions of section 359
subsections (3) & (4) of the Companies and Allied Matters Act,
the report of the Auditors is submitted to the Audit Committee
which examines the report and makes recommendations to
the shareholders at each Annual General Meeting.
COMPLIANCE
The Compliance Division is vested with compliance risk
management, security and loss prevention functions. This
division is divided into two units, namely: Compliance Support
and Security. The Compliance Support unit is responsible for
promoting compliance with statutory and regulatory
requirements and the anti- money laundering program of the
Bank among other things. The Security unit of the Bank is
responsible for developing, implementing and monitoring the
Bank's Security and Loss Prevention policies. The Bank in line

CORPORATE GOVERNANCE REPORT

2012 | ANNUAL REPORT & ACCOUNTS

61

management and transactions.
u

Establishment of a well-defined and clearly communicated
process for ensuring that identified compliance risks and
breaches are escalated to the appropriate level and
corrective actions taken promptly.

u

Implementation of a robust whistle-blowing procedure that
encourages reporting of financial improprieties through
confidential channels. The Board of Directors has full
ownership of the procedure and encourages all
stakeholders to utilize the facility.

u

Deployment of world-acclaimed Anti-Money Laundering
(AML) software, OMNI Enterprise, by Infrasoft Technologies
Ltd (India) to ease identifying, tracking and reporting of
suspicious transactions in line with the Money Laundering
(Prohibition) Act, 2011.

CORPORATE GOVERNANCE REPORT

62

DIRECTORS’ ATTENDANCE AT MEETINGS 2012

Notes:

2012 | ANNUAL REPORT & ACCOUNTS

FINANCIAL
STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

64

DIRECTORS’ REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2012

The directors present their annual report on the affairs of Diamond Bank Plc (“the Bank”) and its subsidiaries ("the Group"), together
with the financial statements and auditors' report for the period ended 31 December, 2012.
a.

Legal Form
The Bank was incorporated in Nigeria under the Companies and Allied Matters Act 1990 as a private limited liability company on
15 March 1991. It was granted license on the 20 December 1990 to carry on the business of commercial banking and
commenced business on 21 March 1991. The Bank converted to a Public Limited Liability Company on 28 February 2005. The
Bank's shares were listed on the 27 May 2005 on the floor of the Nigerian Stock Exchange by way of introduction.

b.

Principal Activity and Business Review
The principal activity of the Group continues to be the provision of banking and other financial services to corporate and
individual customers. Such services include granting of loans and advances, corporate finance and money market activities.
The Bank has two operating subsidiaries including Diamond Bank S.A (97.07%) and Diamond Pension Fund Custodian Limited
(100%). The Bank's consolidated financial statements include the results of all operating subsidiaries.
The indirectly wholly owned subsidiaries (via Diamond Bank S.A) are Diamond Bank Togo, Diamond Bank Senegal, and
Diamond Bank Cote d'ivoire. These are consolidated with the results of Diamond Bank du Benin and the consolidated group is
consequently consolidated with the Bank.

c.

Operating Results
Gross earnings of the Group increased by N30 billion from N107 billion to N137 billion.

DIRECTORS’ REPORT
2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Highlights of the Group's operating results for the period under review are as follows:

Gross earnings

Dec.' 2012
N'000
Group

Dec.' 2011
N'000
Group

Dec.' 2012
N'000
Bank

Dec.' 2011
N'000
Bank

138,848,669

102,722,007

131,166,141

98,163,095

Profit before taxation

27,481,541

(17,964,929)

28,364,965

(27,132,209)

Taxation

(5,373,457)

4,023,944

(5,291,538)

4,263,955

Profit after taxation

22,108,084

(13,940,985)

23,073,427

(22,868,254)

-

217,198

-

-

22,108,084

(13,723,787)

23,073,427

(22,868,254)

(33,294)

6,319

-

-

22,141,378

(13,730,106)

23,073,427

(22,868,254)

Transfer to statutory reserves

3,504,228

-

3,461,014

-

Transfer to small scale industries reserves

1,153,670

-

1,153,670

-

-

-

-

-

17,483,480

(13,730,106)

18,458,743

(22,868,254)

22,141,378

(13,730,106)

23,073,427

(22,868,254)

Profit - discontinued operations
Profit/(Loss) For The Period
Non-controlling interest
Profit attributable to group shareholders
Appropriations:

Transfer to contingency reserve
Transfer to retained earnings reserve

d.

Directors and their Interests
The direct and indirect interests of directors in the issued share capital of the Bank as recorded in the register of directors
shareholding and/or as notified by the directors for the purposes of sections 275 and 276 of the Companies and Allied
Matters Act and the listing requirements of the Nigerian Stock Exchange is noted:

65

DIRECTORS’ REPORT
66

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Direct Shareholding

Indirect Shareholding

Number of
50k Ordinary
Shares Held
Dec 2012

Number of
50k Ordinary
Shares Held
Dec 2011

Number of
50k Ordinary
Shares Held
Dec 2012

Number of
50k Ordinary
Shares Held
Dec 2011

3,547,637

3,547,637

_

_

Dr. Alex Otti (Managing Director)

16,000,000

10,000,000

_

_

Mr. Uzoma Dozie (Executive)

20,630,610

20,630,610

848,872,310

848,872,310

8,503,293,

8,503,293

_

_

12,499,000

4,000,000

_

_

7,044,157

7,044,157

_

_

2,550,000

1,650,000

_

_

33,000

33,000

262,396,498

264,901,398

HRM Igwe Nnaemeka Alfred Achebe (Chairman)

Mr. Oladele Akinyemi (Executive)
Mr. Abdulrahman Yinusa (Executive/CFO)
Mr. Victor Ezenwoko (Executive)
Mrs. Caroline Anyanwu (Executive)
Mazi Clement Owunna MFR
(Retired with effect from July 2012)

Mr. Chris Ogbechie

9,279,453

10,845,000

_

_

Lt. General Jeremiah Timbut Useni (Rtd)

6,672,306

6,672,306

176,865,355

184,690,219

Dr. Olubola Adekunle Hassan

6,101,500

6,101,500

_

_

Mr. Simon Harford

_

_

2,141,349,189

2,141,349,189

Ms. Ngozi Edozien

_

_

_

_
_

7,614,700

5,842,400

_

Mr. lan Greenstreet

Chief John D. Edozien

_

_

_

_

Mr. Thomas Barry

_

_

_

_

Mrs. Ifueko Omoigui Okauru (Appointed with effect from October 2012)

In line with the provisions of the Articles of Association the Directors to retire by rotation are Ian Greenstreet, Chris
Ogbechie and Ms. Ngozi Edozien who being eligible for re-election offer themselves for re-election. Also HRM Igwe
Nnaemeka Alfred Ugochukwu Achebe who is over 70 years of age will be proposed as Director for re-election pursuant to
Section 256 of the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 1990.
e.

Directors interests in contracts
For the purpose of section 277 of the Companies and Allied Matters Act 1990, none of the Directors had direct or indirect
interest in contracts or proposed contracts with the company during the year.

DIRECTORS’ REPORT
2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

f.

Property, Plant and Equipment
Information relating to changes in property, plant and equipment is given in Note 30 to the financial statements.

g.

(i) Shareholding Analysis
The shareholding pattern of the Bank as at 31 December 2012 is as stated below:
Share Range

No. of

Percentage of

No. of Holdings

Shareholders

Shareholders

1 - 10,000

92,832

77.43

201,130,203

10,001 - 50,000

Percentage

Holdings
1.39

17,463

14.56

342,946,922

2.37

50,001 - 100,000

5,145

4.29

329,939,756

2.28

100,001 - 500,000

3,517

2.93

661,156,113

4.57

500,001 - 1,000,000

382

0.32

267,984,548

1.85

1,000,001 - 5,000,000

373

0.31

781,844,108

5.40

5,000,001 - 10,000,000

69

0.06

502,950,430

3.47
12.46

10,000,001 - 50,000,000

81

0.07

1,803,535,058

50,000,001 - 100,000,000

13

0.01

884,084,944

6.11

100,000,001 - 500,000,000

17

0.01

3,292,702,764

22.75

5

0.00

3,431,032,470

23.70

1
119,898

0.00
100

1,975,935,789
14,475,243,105

13.65
100

500,000,001 - 1,000,000,000
1000,000,001 - 10,000,000,000
TOTAL

(ii) Share Capital History
YEAR

INCREASE

CUMULATIVE

INCREASE

CUMULATIVE

CONSIDERATION

1991
1992
1993
1994

25,000,000
25,000,000
50,000,000
100,000,000

25,000,000
50,000,000
100,000,000
200,000,000

25,000,000
25,000,000

Cash
Cash

45,000,000

25,000,000
50,000,000
50,000,000
95,000,000

200,000,000

19,000,000

114,000,000

1995

Bonus issue of N20m
and Cash deposit
of N25m for share
Bonus issue of
N19,000,000

67

DIRECTORS’ REPORT
68

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

YEAR

INCREASE

CUMULATIVE

INCREASE

CUMULATIVE

CONSIDERATION

200,000,000

38,000,000

152,000,000

1,000,000,000

412,300,000

564,300,000

1998

1,000,000,000

156,750,000

721,050,000

Bonus issue of
N38,000,000
Bonus issue of
N412,300,000
Rights issue of
N156,750,000

1999
2000
2001
2002

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

360,525,000

721,050,000
721,050,000
721,050,000
1,081,575,000

2,000,000,000
2,000,000,000

458,230,033

1,081,575,000
1,539,805,033

3,500,000,000

513,268,327

2,053,073,360

2004

3,500,000,000

3,159,809

2,056,233,169

2005

3,500,000,000

981,373,342

3,037,606,511

5,000,000,000

420,000,000

3,457,606,511

5,000,000,000

344,197,564

3,801,804,075

7,000,000,000

898,152,632

4,699,956,707

7,000,000,000

1,879,699,250

6,579,655,957

10,000,000,000

657,965,596

7,237,621,553

1996
1997

800,000,000

1,000,000,000

2003
2004
2004

2005

1,500,000,000

1,500,000,000

2005
2006

2,000,000,000

2007
2008
2009
2010
2011
2012

3,000,000,000

10,000,000,000
10,000,000,000
10,000,000,000
10,000,000,000

7,237,621,553
7,237,621,553
7,237,621,553
7,237,621,553

Bonus issue of
N360,525,000
Rights issue of
N458,230,033
Bonus issue of
N513,268,327
Rights issue of
N3,159,809
Private placement
proceed of
N12,365,304,109
Share exchange
btw DB & LB
IPO proceed of
N4,681,086,875
Private placement
proceed of
N17,064,900,000
(Actis Holding Limited)
GDR proceeds of
N59,050,000,000.00
Bonus issue of
N657,965,596

DIRECTORS’ REPORT
2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

h.

Substantial interest in shares
According to the register of members as at 31 December 2012, no shareholder held more than 5% of the issued share
capital of the Bank except the following:
Shareholder
Actis DB Holdings Limited
*Stanbic Nominees Nigeria Limited
Kunoch Limited

Number of shares held
2,141,349,189
1,309,988,772
848,872,310

Percentage Of
Shareholding (%)
14.79
9.05
5.86

*Exclusive of Actis DB's GDR holding of 165,413,400 units and Kunoch’s GDR holding of 41,394,600 units.

i.

Charitable Contributions
The Bank made contributions to charitable and non-political organizations amounting to N214 million (December 2011:
N550 million) during the period. The schedule of charitable donations is shown below.
DONATION
Contribution to HYPREP project
Education and youth development
Sports and cultural development
Contribution to IFRS academy
Donation to security trust fund
Sponsorship of annual bankers retreat
Sponsorship of golf tournament
Sponsorship of 4th west African trade and commodity finance conference
Sponsorship of international womens conference
Sponsorship of Sam Ohabunwa foundation
Contribution to annual financial reporting summit
Others
Total

AMOUNT N'000
50,000
45,878
40,382
21,000
10,185
12,312
6,500
6,320
3,000
1,000
3,150
14,625
214,352

69

DIRECTORS’ REPORT
70

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

j.

Human Resources
Employment of Disabled Persons
The Bank operates a non-discriminatory policy on recruitment. Applications by disabled persons are always fully
considered, bearing in mind the respective aptitudes and abilities of the applicants concerned. In the event of members of
staff becoming disabled, every effort is made to ensure that their employment with the Bank continues and that
appropriate training is provided. It is the policy of the Bank that the training, career development and promotion of
disabled persons should as far as possible, be identical with those of other employees.
The bank has one disabled person in its employment as at 31st December 2012.
Analysis of women employed during the year
DESCRIPTION
Female new hire
Male new hire
Total new hire
Total Staff
Female as at December 2012
Male as at December 2012

NUMBER
261
319
580
2912
1,116
1,796

PERCENTAGE
TO TOTAL STAFF
9.0
11.0
19.9
100
38.3
61.7

% TO TOTAL
NEW HIRE
45
55
100

MALE
4
6
14
24
75

NUMBER
5
9
18
32
100

Analysis of top management positions by gender as at December 31, 2012:
GRADE
General Manager
Deputy General Manager
Assistant General Manager
Total
Percentage

FEMALE
1
3
4
8
25

DIRECTORS’ REPORT
2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Analysis of executive and non-executive positions by gender as at December 31, 2012:
GRADE
Executive Director
Managing Director
Non-Executive Director
TOTAL
Percentage (%)
k.

FEMALE
1
0
2
3
19

MALE
4
1
8
13
81

NUMBER
5
1
10
16
100

Health, Safety and Welfare at Work
The Bank's employees are adequately insured against occupational hazards. In addition, medical facilities to specified
limits are provided to employees and their immediate families at the Bank's expense

l.

Employee Involvement and Training
The Bank places considerable value on the involvement of its employees and has continued its practice of keeping them
informed on matters affecting them as employees and the various factors affecting the performance of the Bank. This is
achieved through regular meetings between management and staff.
The Bank has in-house facilities for staff training supplemented by facilities of local and foreign educational institutions

m. Complaints
Total Number of Complaints Received
Number Resolved
Number Unresolved
Referred to CBN for intervention

19,936
18,940
996
0

71

DIRECTORS’ REPORT
72

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The schedule of total amount in dispute is shown below:
Currency
NGN
USD
EUR
GBP
DKK
UN
CAD
CFA
RM
n.

Amount
8,976,816,176
17,346,724
58,795
62,633
10,000
5,460
77
698,691
8,300

Auditors
The Auditors, PricewaterhouseCoopers have resigned their appointment pursuant to the provisions of Articles 8.2.3 of the
Central Bank of Nigeria Code of Corporate Governance for Banks in Nigeria, Post consolidation, effective after 2012
financial audit. Messrs KPMG would be proposed to the members for approval of their appointment as replacement
commencing from the audit of the 2013 financial statements. A resolution of the members will be required to determine
their remuneration.

BY THE ORDER OF THE BOARD

Nkechi Nwosu
Company Secretary
FRC/2013/NBA/00000001571

PGD’s Place
Plot 4, Block V, BIS Way,
Oniru Estate
Victoria Island,
Lagos
22 March 2013

RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENTS

T

he Companies and Allied Matters Act and the Banks and Other Financial Institutions Act 1991, require the Directors to prepare
financial statements for each financial period that give a true and fair view of the state of financial affairs of the Bank at the end
of the period and of its profit or loss. The responsibilities include ensuring that the Bank:

i.

keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Bank and comply
with the requirements of the Companies and Allied Matters Act and the Banks and Other Financial Institutions Act 1991;

ii.

establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and

iii.

prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements and
estimates, that are consistently applied.

The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting
policies supported by reasonable and prudent judgements and estimates, in conformity with,
u

International Financial Reporting Standards;

u

Nigerian Accounting Standards;

u

Prudential Guidelines for Licensed Bank;

u

Relevant circulars issued by the Central Bank of Nigeria;

u

The requirements of the Banks and Other Financial Institutions Act of 1991; and

u

The requirements of the Companies and Allied Matters Act.

The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Bank
and its subsidiary operations and of their profit for the period. The Directors further accept responsibility for the maintenance of
accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal
financial control.
Nothing has come to the attention of the Directors to indicate that the Bank will not remain a going concern for at least twelve
months from the date of approval of the financial statements.

HRM Igwe Nnaemeka Alfred Achebe
Chairman

Dr. Alex Otti
Group Managing Director/CEO

Abdulrahman Yinusa
Executive Director/CFO

FRC/2013/NIM/00000001568

FRC/2013/CIBN/00000001567

FRC/2013/ICAN/00000001564

73

74

AUDIT COMMITTEE REPORT

I

n accordance with the provisions of section 359(6) of the Companies and Allied Matters Act. Cap. C20 Laws of the Federation of
Nigeria, 2004, we, the Members of the Audit Committee of the Board of Directors of Diamond Bank Plc, having carried out our
statutory functions under the Act with the co-operation of management and staff, hereby report that:
1.

the accounting and reporting policies of the Bank and Group are in accordance with the legal requirements and agreed
ethical practices;

2.

the scope and planning of both the external and internal audit programmes for the year ended December 31, 2012 were
satisfactory and reinforce the Group's internal control system;

3.

having reviewed the external auditor's findings and recommendations on the management matters, we are satisfied with
the management responses thereon;

In addition to the foregoing, we have complied with the provisions of Central Bank of Nigeria Circular BSD/1/2004 dated February
18, 2004 on “Disclosure of insider related credits in the financial statements of banks”, and hereby confirm that an aggregate
amount of N33.4 billion was outstanding as at December 31, 2012.

Mr. Kabir Alkali Mohammed (mni)
Chairman, Audit Committee
FRC/2013/ICAN/00000002021
21 March 2013
Members of the Audit Committee:
Mr. Kabir Alkali Mohammed (mni)
Sir Enoch Iwueze
Mr. Abayomi Olaofe
Lt. Gen. Jeremiah T. Useni (rtd) (mni)
Mr. Chris Ogbechie
Dr. Olubola Hassan

Chairman
Member
Member
Member
Member
Member

In attendance
Nkechi Nwosu

Secretary

2012 | ANNUAL REPORT & ACCOUNTS

REPORT OF THE EXTERNAL CONSULTANTS
ON THE APPRAISAL OF THE BOARD OF DIRECTORS
In compliance with the Central Bank of Nigeria (CBN) Code of Corporate Governance for Banks in Nigeria Post Consolidation (“the
CBN Code”), Diamond Bank Plc (“Diamond Bank” or “the Bank”) engaged KPMG Advisory Services to carry out an appraisal of the
Board of Directors (“the Board”) for the year ended 31 December 2012. The CBN Codes mandates an annual appraisal of the Board
with specific focus on the Board's structure and composition, responsibilities, processes and relationships, individual director
competencies and respective roles in the performance of the Board.
Corporate governance is the system by which business corporations are directed and controlled to enhance performance and
shareholder value. It is a system of checks and balances among the Board, management, and investors to produce a sustainable
corporation geared towards delivering long –term value.
Our approach to the appraisal of the Board involved a review of the Bank's key corporate governance structures, policies and
practices. This included the review of the corporate governance framework and representations obtained during one –on-one
interviews with the members of the Board and management.
On the basis of our review, except as noted below, the Bank's corporate governance practices are largely in compliance with the
key provisions of the CBN Code. Specific recommendations for further improving the Bank's governance practices have been
articulated and included in our detailed report to the Board. These include: training and continuous education for Directors and
timeliness of receipt of board papers by board members.

Tomi Adepoju
Partner, KPMG Advisory Services
7 March 2013
FRC/2013/ICAN/00000001185

75

2012 | ANNUAL REPORT & ACCOUNTS

76

REPORT OF THE INDEPENDENT AUDITOR
TO THE MEMBERS OF DIAMOND BANK PLC
Report on the financial statements
We have audited the accompanying separate and consolidated financial statements of Diamond Bank Plc (“the bank”) and its
subsidiaries (together “the group”). These financial statements comprise the statement of financial position as at 31 December 2012
and the income statement, statement of other comprehensive income, changes in equity and cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory notes.
Directors' responsibility for the financial statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and with the requirements of the Companies and Allied Matters Act and the Banks and
Other Financial Institutions Act and for such internal control, as the directors determine necessary to enable the preparation of
financial statements that are free from material misstatements, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an independent opinion on the financial statements bases on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the bank's internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the financial affairs of the bank and the
group at 31 December 2012 and of the financial performance and cash flows of the group for the year then ended in accordance

REPORT OF THE INDEPENDENT AUDITOR
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act, the Banks and
Other Financial Institutions Act and the Financial Reporting Council Act.
Report on other legal requirements
The Companies and Allied Matters Act and the Banks and Other Financial Institutions Act require that in carrying out our audit we
consider and report to you on the following matters. We confirm that:
i.

we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for
the purposes of our audit;

ii.

the bank has kept proper books of account, so far as appears from our examination of those books and returns adequate
for our audit have been received from branches not visited by us;

iii.

the bank's balance sheet and profit and loss account are in agreement with the books of account;

iv.

related party transactions and balances are disclosed in Note 48 to the financial statements in accordance with the Central
Bank of Nigeria Circular BSD/1/2004;

v.

except for the contravention disclosed in Note 51 to the financial statements, the bank has complied with the
requirements of the relevant circulars issued by the Central Bank of Nigeria.

Chartered Accountants
Lagos, Nigeria
FRC/2013/ICAN/00000000980

31 March 2013

77

78

CONSOLIDATED INCOME STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012
(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December

31 December

Note

2012

2011

5
6

112,351,955
(23,030,433)

83,360,462
(12,502,541)

89,321,522

70,857,921

8
8

(17,028,290)
72,293,232
26,496,714
(1,311,710)

(55,408,691)
(15,499,230)
19,361,545
(350,228)

Net fee and commission income
Net gains from financial assets classified as held for trading
Net gains/(losses) on available for sale investment securities
Fair value loss on Investment property
Fair value loss on derivative liability
Foreign exchange income
Dividend income
Other income

9
10
29
36
11
12
13

25,185,004
1,025,151
(996,493)
(63,031)
(5,639,247)
3,069,473
281,253
876,442

19,011,317
1,232,906
(514,766)
2,020,274
508,704
804,735

Total operating income
Employee benefit expenses
Operating expenses

14
15

96,031,784
(25,963,200)
(42,584,744)

38,512,400
(16,730,642)
(39,741,491)

Operating profit/(loss)
Share of loss of associates

29

27,483,840
(2,299)

(17,959,733)
(5,196)

27,481,541
(5,373,457)
22,108,084
-

(17,964,929)
4,023,944
(13,940,985)
217,198

22,108,084

(13,723,787)

22,141,378
22,141,378
(33,294)
(33,294)
22,108,084

(13,730,106)
(13,954,261)
224,155
6,319
13,275
(6,956)
(13,723,787)

GROUP
Interest and similar income
Interest expense
Net interest income
Impairment charge for credit losses
Net interest income after impairment charge for credit losses
Fee and commission income
Fee and commission expense

Profit/ (loss) before tax
Income tax
Profit/ (loss) from continuing operations
Profit from discontinued operations
PROFIT/(LOSS) FOR THE PERIOD
Attributable to:
Equity holders of the parent entity (total)
- Profit/ (loss) for the period from continuing operations
- Profit for the period from discontinued operation
Non-controlling interests (total)
- (Loss)/profit for the period from continuing operations
- Loss for the period from discontinued operations

7

16
17

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

79

FOR THE YEAR ENDED 31 DECEMBER 2012
31 December

31 December

2012

2011

22,108,084

(13,723,787)

636,614

(77,008)

(866,304)

(3,107,942)

-

-

Other comprehensive income for the year, net of tax

(229,690)

(3,184,950)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

21,878,394

(16,908,737)

Equity holders of the parent entity (total)

21,816,754

(16,927,648)

- Total comprehensive income for the period from continuing operations

21,816,754

(17,151,802)

-

224,154

Non-controlling interests (total)

61,640

18,912

- Total comprehensive income for the period from continuing operations

61,640

25,868

-

(6,956)

21,878,394

(16,908,737)

(All amounts in thousands of Nigeria Naira unless otherwise stated)

Note
GROUP
PROFIT FOR THE PERIOD
Other comprehensive income:
Exchange difference on translation of foreign operations
Net gains on available-for-sale financial assets
-Unrealised net gains arising during the period, before tax
Income tax relating to components of other comprehensive income

Total comprehensive income attributable to:

- Total comprehensive income for the period from discontinued operations

- Total comprehensive income for the period from discontinued operations

80

INCOME STATEMENT

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012

Note

31 December
2012

31 December
2011

5
6

105,511,587
(20,710,729)

79,888,531
(10,685,517)

84,800,858

69,203,014

(14,944,275)
69,856,583
25,654,554
(1,311,710)

(52,949,031)
16,253,983
18,274,564
(348,223)

24,342,844

17,926,341

1,025,151
(996,312)
(76,031)
(5,639,247)
2,774,584
281,253
558,704

1,166,719
(513,539)
(11,582,011)
2,006,686
51,462
116,981

92,127, 529

25,426,622

(All amounts in thousands of Nigeria Naira unless otherwise stated)

BANK
Interest and similar income
Interest expense
Net interest income
Impairment charge for credit losses
Net interest income after impairment charge for credit losses
Fee and commission income
Fee and commission expense

7
8
8

Net fee and commission income
Net gains from financial assets classified as held for trading
Net gains/(losses) on available for sale investment securities
Fair value loss on Investment property
Fair value loss on derivative liability
Loss on disposal and absorption of Subsidiaries
Foreign exchange income
Dividend income
Other income

9
10
29
36
17b
11
12
13

Total operating income
Employee benefit expenses
Operating expenses

14
15

(24,213,430)
(39,549,134)

(17,693,097)
(34,865,734)

Profit/(loss) before tax
Income tax

16

28,364,965
(5,291,538)

(27,132,209)
4,263,955

23,073,427

(22,868,254)

159.40
159.40
-

(157.98)
(157.98)
-

PROFIT/(LOSS) FOR THE PERIOD
Earnings per share from continuing and discontinued operations
attributable to the equity holders of the parent during the period
Basic
From continuing operations (Kobo)
From discontinued operations (Kobo)

18

STATEMENT OF OTHER COMPREHENSIVE INCOME

81

FOR THE YEAR ENDED 31 DECEMBER 2012
31 December
2012

31 December
2011

23,073,427

(22,868,254)

Net gains on available-for-sale financial assets
-Unrealised net gains arising during the period

(889,759)

(3,107,943)

Other comprehensive income for the year

(889,759)

(3,107,943)

22,183,668

(25,976,197)

(All amounts in thousands of Nigeria Naira unless otherwise stated)

Note
BANK
PROFIT FOR THE PERIOD
Other comprehensive income:

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
82

AS AT 31 DECEMBER 2012
Note

31 December
2012

31 December
2011

1 January
2011

(All amounts in thousands of Nigeria Naira unless otherwise stated)

GROUP
ASSETS
Cash and balances with central banks
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
-Available-for-sale investments
-Held to maturity investments
Asset pledged as collateral
Insurance receivables
Other assets
Investments in associates
Investment property
Property, plant and equipment
Intangible assets
Deferred tax

19
21
22
23

132,196,061
139,803,281
585,200,158
90,111,236

55,784,079
90,648,011
388,136,486
8,041,618

27,606,200
72,155,340
307,212,457
1,345,552

24
24
25
26
27
29
30
31
32
33

Asset classified as held for sale

34

10,601,609
65,762,681
79,302,531
13,793,105
3,182,250
4,070,340
44,980,333
834,815
8,265,354
1,178,103,754
-

85,990,731
61,712,761
34,940,000
10,663,445
3,184,549
3,833,335
39,664,459
819,076
12,363,242
795,781,792
450,000

19,891,359
56,977,064
37,820,000
705,659
16,649,442
3,502,339
3,755,064
36,954,186
596,025
7,681,076
592,851,763
-

1,178,103,754

796,231,792

592,851,763

31,207,298
910,234,444
13,248,585
42,095,096
99,574
1,056,378
1,972,540
49,966,360
19,367,757

20,982,788
603,003,229
29,988,365
51,607
1,346,904
54,877,883
-

15,347,216
412,992,754
26,691,492
29,366
1,995,250
2,219,578
28,265,428
-

1,069,248,032

710,250,776

487,541,084

7,237,622
89,629,324
(6,629,221)

7,237,622
89,629,324
(24,112,701)

7,237,622
89,629,324
(8,387,489)

14,898,751
3,966,628
(1,292,728)
792,068
108,602,444
253,278

11,394,523
2,812,957
(1,422,736)
217,094
85,756,083
224,932

11,214,864
2,812,957
1,686,305
354,741
306,694
104,855,018
455,661

108,855,722

85,981,016

105,310,679

1,178,103,754

796,231,792

592,851,763

Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Derivative Liability
Other liabilities
Retirement benefit obligations
Provision
Current income tax liability
Provision for insurance contracts
Borrowings
Long term debt

35
36
37
38
39
40
16
41
42
43

Total liabilities
EQUITY
Share capital
Share premium
Retained earnings
Other reserves
- Statutory reserve
- Small scale industries (SSI) reserve
- Fair value reserve
- Contingency reserve
- Foreign currency translation reserve (FCTR)

44
45
45

45
45
45
45

Non-controlling interest
Total equity

Total equity and liabilities

The notes on pages 84 to 280 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 7 March 2013 and signed on its behalf by

HRM Igwe Nnaemeka Alfred Achebe
Chairman
FRC/2013/NIM/00000001568

Dr. Alex Otti
Group Managing Director/CEO
FRC/2013/CIBN/00000001567

Abdulrahman Yinusa
Executive Director/CFO
FRC/2013/ICAN/00000001564

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2012

83

(All amounts in thousands of Nigeria Naira unless otherwise stated)
Note

31 December
2012

31 December
2011

1 January
2011

BANK
ASSETS
Cash and balances with central banks
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
-Available-for-sale investments
-Held to maturity investments
Asset pledged as collateral
Other assets
Investment in Subsidiaries
Investments in associates
Investment property
Property, plant and equipment
Intangible assets
Deferred tax

19
21
22
23

123,224,590
113,384,200
523,374,608
90,111,236

54,396,524
72,098,846
344,397,331
8,041,618

17,871,129
61,620,185
299,534,692
1,109,080

24
24
25
27
28
29
30
31
32
33

Asset classified as held for sale

34

10,555,061
64,751,769
57,438,896
10,240,209
7,865,622
3,205,140
3,910,340
41,879,449
740,370
8,455,767
1,059,137,257
-

76,762,309
52,253,105
34,940,000
6,529,297
7,865,622
3,205,140
3,686,335
36,276,819
624,139
12,536,874
713,613,959
450,000

11,095,806
43,978,424
37,820,000
8,664,365
17,442,980
34,645,547
596,025
7,720,257
542,098,490
-

1,059,137,257

714,063,959

542,098,490

8,173,286
823,090,787
13,248,585
34,939,235
99,574
1,056,378
1,878,880
49,966,360
19,367,757

3,939,956
545,161,145
24,678,784
20,141
1,249,616
54,877,883
-

4,104,098
379,344,019
17,682,674
21,948
1,649,557
28,031,831
-

951,820,842

629,927,525

430,834,127

44
45
45

7,237,622
89,629,324
(6,851,491)

7,237,622
89,629,324
(25,310,234)

7,237,622
89,629,324
(270,693)

45
45
45

14,650,515
3,966,628
(1,316,183)
107,316,415

11,189,501
2,812,957
(1,422,736)
84,136,434

11,189,501
2,812,957
665,652
111,264,363

1,059,137,257

714,063,959

542,098,490

Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Derivative Liability
Other liabilities
Retirement benefit obligations
Provision
Current income tax liability
Borrowings
Long term debt

35
36
37
38
39
40
16
42
43

Total liabilities
EQUITY
Share capital
Share premium
Retained earnings
Other reserves
- Statutory reserve
- Small scale industries (SSI) reserve
- Fair value reserve
Total equity
Total equity and liabilities

The notes on pages 84to 280 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 7 March 2013 and signed on its behalf by

HRM Igwe Nnaemeka Alfred Achebe
Chairman
FRC/2013/NIM/00000001568

Dr. Alex Otti
Group Managing Director/CEO
FRC/2013/CIBN/00000001567

Abdulrahman Yinusa
Executive Director/CFO
FRC/2013/ICAN/00000001564

84

STATEMENT OF CHANGES IN EQUITY

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012
GROUP
(All amounts in thousands of Nigeria Naira unless otherwise stated
Attributable to equity holders of the parent

Balance at 1 January 2011

Share
capital

Share
premium

Retained
earnings

Statutory
reverse

SSI
reserve

7,237,622

89,629,324

(8,387,489)

11,214,864

2,812,957

Fair value Contingency
reserve
reserve
1,686,305

354,741

Foreign
Currency
Translation
reserve

Total

306,694

104,855,018

NonControlling
Interest

Total
equity

455,661

105,310,679

Profit

-

-

(13,730,106)

-

-

-

-

-

(13,730,106)

6,319

(13,723,786)

Foreign currency translation differences

-

-

-

-

-

-

-

(89,600)

(89,600)

12,592

(77,008)

-

-

-

-

-

(3,107,942)

-

-

(3,107,942)

-

(3,107,942)

Fair value movement on available-for-sale
financial assets
Total comprehensive income

-

- (13,730,106)

-

-

(3,107,942)

-

Dividends

-

-

(2,171,287)

-

-

-

-

-

(2,171,287)

-

Transfer from/ (to) retained earnings

-

-

176,181

179,659

-

(1,099)

(354,741)

-

-

-

-

Non controlling interest of subsidiary disposed

-

-

-

-

-

-

-

-

-

(249,640)

(249,640)

89,629,324 (24,112,701)

11,394,523

2,812,957

(1,422,736)

-

217,094

85,756,083

224,932

85,981,016

At 1 January 2012 / 31 December 2011

7,237,622

(89,600) (16,927,648)

18,911 (16,908,736)
(2,171,287)

Profit

-

-

22,141,378

-

-

-

-

-

22,141,378

(33,294)

22,108,084

Foreign currency translation differences

-

-

-

-

-

-

-

574,974

574,974

61,640

636,614

-

-

-

-

-

(866,304)

-

-

(866,304)

-

(866,304)

AFS investments

-

-

Transfer from/ (to) retained earnings

-

Total comprehensive income

7,237,622

Fair value movement on available-for-sale
financial assets
Fair value movement on disposed

At 31 December 2012

-

-

-

996,312

-

-

996,312

-

996,312

(4,657,898)

3,504,228

1,153,671

-

-

-

-

-

-

-

(4,657,898)

3,504,228

1,153,671

130,008

-

574,974

704,982

61,640

766,622

89,629,324

(6,629,221)

14,898,751

3,966,628

(1,292,728)

-

792,068 108,602,443

253,278 108,855,722

STATEMENT OF CHANGES IN EQUITY

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012

85

BANK
(All amounts in thousands of Nigeria Naira unless otherwise stated

Balance at 1 January 2012

Share
capital

Share
premium

Retained
earnings

Statutory
reverse

SSI
reserve

Fair value
reserve

Total

7,237,622

89,629,324

(270,693)

11,189,501

2,812,957

665,652

111,264,363

-

-

(22,868,254)

-

-

Profit
Fair value reserve of subsidiaries

-

(22,868,254)

1,019,555

1,019,555

Fair value movement on available-for-sale
financial assets, net of tax

-

-

-

-

-

(3,107,943)

(3,107,943)

-

-

-

-

-

-

-

Total comprehensive income

-

-

(22,868,254)

-

-

(2,088,388)

(24,956,642)

Dividends

-

-

(2,171,287)

-

-

-

(2,171,287)

7,237,622

89,629,324

(25,310,234)

11,189,501

2,812,957

(1,422,736)

84,136,434

-

-

23,073,427

-

-

-

23,073,427
(889,759)

At 1 January 2012 / 31 December 2011
Profit
Fair value movement on available-for-sale
financial assets

-

-

-

-

-

(889,759)

Fair value movement on disposed AFS investments

-

-

-

-

-

996,312

996,312

Total comprehensive income

-

-

23,073,427

-

-

106,553

23,179,980

Transfer from retained earnings

-

-

(4,614,684)

3,461,014

1,153,671

-

-

7,237,622

89,629,324

(6,851,491)

14,650,515

3,966,628

(1,316,183)

107,316,414

At 31 December 2012

86

CONSOLIDATED STATEMENT OF CASHFLOWS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012
31 December
2012

31 December
2011

(23,702,429)
75,853,628
(21,974,644)
(649,933)

27,260,773
63,234,363
(13,596,146)
(1,106,844)

29,526,622

75,792,146

482,939,008
(410,572,370)
(237,005)
(11,304,765)
133,856
281,253
-

405,260,320
(481,821,820)
(309,402)
(10,157,624)
1,221,530
231,131
312,594
508,704
-

Net cash generated from/ (used in) investing activities

61,239,977

(84,754,567)

Financing activities
Dividend paid
Proceeds from new borrowings
Repayment of borrowings
Proceeds from long term borrowing (Tier 2 Capital)

7,103,460
(12,279,525)
26,741,809

(2,180,042)
34,132,833
(7,480,384)
-

Net cash generated from/ (used in) financing activities

21,565,744

24,472,407

112,332,342

15,509,987

114,052,389
1,763,279
228,148,010

98,384,772
157,630
114,052,389

112,332,342

15,509,987

(All amounts in thousands of Nigeria Naira unless otherwise stated)

Note

GROUP
Operating activities
Cash flow (used in)/generated from operations
Interest received
Interest paid
Tax paid

46

Net cash flow (used in)/generated from operations
Investing activities
Proceeds of investment securities
Purchase of investment securities
Additions to investment property
Purchase of fixed and intangible assets
Proceed from sale of fixed and intangible assets
Proceed from sale of investment property
Proceed from sale of subsidiaries
Dividends received
Proceeds from sale and redemption of investments

Increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange gains/losses on cash & cash equivalents
Cash and cash equivalents at end of year
Increase in cash and cash equivalents

20

CONSOLIDATED STATEMENT OF CASHFLOWS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

(15,211,028)
70,499,130
(19,181,779)
(581,167)

28,268,268
58,731,734
(10,146,763)
(2,434,843)

35,525,155

74,418,396

325,014,475
(270,374,582)
(224,005)
(10,428,678)
156,221
281,253

342,396,350
(411,451,540)
(6,918,136)
(8,139,582)
925,085
51,462

Net cash generated from/ (used in) investing activities

44,424,684

(83,136,361)

Financing activities
Dividend paid
Proceeds from new borrowings
Repayment of borrowings
Proceeds from long term borrowing (Tier 2 Capital)

7,038,770
(12,090,730)
26,741,809

(2,171,287)
34,370,759
(7,480,384)
-

Net cash generated from/ (used in) financing activities

21,689,849

24,719,088

101,639,688

16,001,123

Cash and cash equivalents at start of year
Exchange gains/losses on cash & cash equivalents
Cash and cash equivalents at end of year

94,115,669
235,286
195,990,643

78,114,546
94,115,669

Increase in cash and cash equivalents

101,639,688

16,001,123

(All amounts in thousands of Nigeria Naira unless otherwise stated)

Note

BANK
Operating activities
Cash flow (used in)/generated from operations
Interest received
Interest paid
Tax paid

46

Net cash flow (used in)/generated from operations
Investing activities
Proceeds of investment securities
Purchase of investment securities
Additions to investment property
Purchase of fixed and intangible assets
Proceed from sale of fixed and intangible assets
Dividends received

Increase in cash and cash equivalents

20

87

88

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

1. General information
Diamond Bank Plc and its subsidiaries (together, 'the group') provide banking and other financial services including investment,
commercial and retail banking and custodian services to corporate and individual customers. Diamond Bank Nigeria Plc operates
through subsidiaries, including Diamond Pension Fund Custodians, Diamond Bank du Benin SA, Diamond Bank Cote D'Ivoire,
Diamond Bank Senegal and Diamond Bank Togo. In 2011, the Bank divested from or liquidated the following subsidiaries:
Diamond Capital and Financial Markets, Diamond Securities Limited, Diamond Registrars Limited, Diamond Mortgages Limited
and ADIC Insurance Limited.
The Bank is a public limited company, which is listed on the Nigerian Stock Exchange and incorporated and domiciled in Nigeria.
The address of its registered office is: Plot 1261, Adeola Hopewell Street, Victoria Island, and Lagos.
The consolidated financial statement were authorised for issue on 7 March 2013 by the board of directors. Neither the entity's
owners nor others have the power to amend the financial statements after issue.

2. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
An explanation of how the transition to International Financial Reporting Standards (IFRS) has affected the reported financial
position, financial performance and cash flows of the Group is provided in note 48. This note includes reconciliations of equity
and statement of comprehensive income for the comparative periods reported under Nigerian GAAP (Previous GAAP) to those
reported for this period under IFRS.
2.1 Basis of preparation
These financial statements are the consolidated financial statements of the Bank, and its subsidiaries (together, "the Group").
The Group's consolidated financial statements for the period ended 31 December 2012 have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board ("IASB").
Additional information required by national regulations is included where appropriate. These are the first financial statements of
the Group prepared in accordance with IFRS 1 (First-time Adoption of IFRS).
The consolidated financial statements comprise the consolidated statement of comprehensive income, the statement of
financial position, the statement of changes in equity, the cash flow statement and the notes.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

The consolidated financial statements have been prepared in accordance with the going concern principle under the historical
cost convention, except for financial assets and financial liabilities and investment properties.
The consolidated financial statements are presented in Naira, which is the Group's functional currency. The figures shown in the
consolidated financial statements are stated in Naira thousands (N'000).
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires directors to exercise their judgment in the process of applying the group's accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed in Note 3.6c.
2.2 Changes in accounting policies and disclosures
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1
January 2012 and have not been applied in preparing these consolidated financial statements. None of these is expected to have a
significant effect on the consolidated financial statements of the group, except the following set out below:
IFRS 9: Financial instruments: Classification and measurement (effective for periods beginning on or after 1 January 2015)
IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial
liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and
measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those
measured at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification
depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the
instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where
the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in
Other Comprehensive Income rather than the Income Statement, unless this creates an accounting mismatch. The group is yet
to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015.
The group will also consider the impact of the remaining phases of IFRS 9 when completed by the Board.
IFRS 10: Consolidated financial statements (effective for periods beginning on or after 1 January 2013)
IFRS 10, Consolidated financial statements’ builds on existing principles by identifying the concept of control as the determining
factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard
provides additional guidance to assist in the determination of control where this is difficult to ascertain. The group is yet to assess
IFRS 10's full impact and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 January 2013.

89

NOTES TO THE FINANCIAL STATEMENTS
90

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

IFRS 12: Disclosures of interests in other entities (effective for periods beginning on or after 1 January 2013)
This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements,
associates, special purpose vehicles and other off balance sheet vehicles. The group is yet to assess IFRS 12's full impact and
intends to adopt IFRS 12 no later than the accounting period beginning on or after 1 January 2013.
IFRS 13: Fair value measurement (effective for periods beginning on or after 1 January 2013)
This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single
source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not extend the use of fair
value accounting but provide guidance on how it should be applied where its use is already required or permitted by other
standards within IFRS.
IAS 1 (Amended): Presentation of financial statements (effective for periods beginning on or after 1 July 2012)
The standard includes a requirement for entities to group items presented in "other comprehensive income” (OCI) on the basis of
whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not
address which items in OCI.
2.3 Consolidation
The financial statements of the consolidated subsidiaries used to prepare the consolidated financial statements were prepared as
at the parent company's reporting date.
(a) Subsidiaries
The consolidated financial statement of the group, comprises of the financial statement of the parent entity and all consolidated
subsidiaries as of 31 December
2012.
Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether the group controls another entity. The group also
assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and
operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the group's voting
rights relative to the size and dispersion of holdings of other shareholders give the group the power to govern the financial and

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

operating policies, etc.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the
date that control ceases.
The group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred by the former owners of the acquiree
and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date. The group recognises any non- controlling
interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate
share of the recognised amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in
the acquiree is re-measured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance
with IAS 39 either in profit or loss or as a change to Other Comprehensive Income. Contingent consideration that is classified as
equity is not re-measured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net
assets of the subsidiary acquired, the difference is recognised in Profit or Loss.
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits
and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Subsidiaries are measured at cost in the separate financial statement
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is,

91

NOTES TO THE FINANCIAL STATEMENTS
92

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the group ceases to have control or any retained interest in the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had
directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in Other Comprehensive
Income are reclassified to Profit or Loss.
(d) Associates
Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding
of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting.
Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to
recognise the investor's share of the profit or loss of the investee after the date of acquisition. The group's investment in associates
includes goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts
previously recognised in Other Comprehensive Income is reclassified to Profit or Loss where appropriate.
The group's share of post-acquisition profit or loss is recognised in the Income Statement, and its share of post acquisition
movements in Other Comprehensive Income is recognised in Other Comprehensive Income with a corresponding adjustment
to the carrying amount of the investment. When the group's share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the associate.
The group determines at each reporting date whether there is any objective evidence that the investment in the associate is
impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value and recognises the amount adjacent to 'share of profit/ (loss) of an associate' in the income
statement.
Profits and losses resulting from upstream and downstream transactions between the group and its associate are recognised

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

in the group's financial statements only to the extent of unrelated investor's interests in the associates. Unrealised losses are
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates
have been changed where necessary to ensure consistency with the policies adopted by the group.
Investment in associate is carried at cost less impairment in the separate financial statement. For summarised financial
information on the Group's associates accounted for using the equity method, see Note 28.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional currency").
The consolidated financial statements are presented in Naira thousands.
(b) Transactions and balances
Foreign currency transactions (i.e. transactions denominated, or that require settlement, in a currency other than the functional
currency) are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured.
Monetary items denominated in foreign currency are translated with the closing rate as at the reporting date. Non-monetary
items measured at historical cost denominated in a foreign currency are translated with the exchange rate as at the date of initial
recognition; non-monetary items in a foreign currency that are measured at fair value are translated using the exchange rates at
the date when the fair value was determined.
Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised as foreign
exchange income in the consolidated income statement.
In the case of changes in the fair value of monetary assets denominated in foreign currency classified as available-for-sale, a
distinction is made between translation differences resulting from changes in amortised cost of the security and other changes in
the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profit or
loss, and other changes in the carrying amount, except impairment, are recognised in Other Comprehensive Income.

93

NOTES TO THE FINANCIAL STATEMENTS
94

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Translation differences on non-monetary financial instruments, such as equities held at fair value through profit or loss, are
reported as gain or loss from financial assets classified as held for trading in the consolidated income statement. Translation
differences on non-monetary financial instruments, such as equities classified as available-for-sale financial assets, are included
in other comprehensive income and cumulated in the foreign currency translation.
(c) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
u

assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date
of that Statement of Financial Position;

u

income and expenses for each income statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions); and

u

all resulting exchange differences are recognised in Other Comprehensive Income and cumulated in Foreign Currency
Translation Reserve Income.

On the disposal of a foreign operation, the Group recognises in Profit or Loss the cumulative amount of exchange differences
relating to that foreign operation. When a subsidiary that includes a foreign operation is partially disposed of or sold, the Group reattributes the proportionate share of the cumulative amount of the exchange differences recognised in other comprehensive
income to the non-controlling interests in that foreign operation. In the case of any other partial disposal of a foreign operation,
the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of exchange differences
recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
2.5: Financial assets and liabilities
All financial assets and liabilities - which include derivative financial instruments are recognised in the Consolidated Statement of
Financial Position and measured in accordance with their assigned category.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

A)

2012 | ANNUAL REPORT & ACCOUNTS

Initial recognition and measurement

Financial instruments are initially recognised at fair value while the treatment of directly attributable transaction cost depends on
the classification accorded the instrument. Derivatives are initially recognised at fair value on the date a derivative contract is
entered into.
The Group does not currently apply hedge accounting.
B)

Subsequent measurement

Subsequent to initial measurement, financial instruments are measured either at fair value or amortised cost depending on their
classification. Derivatives are subsequently re-measured at their fair value.
C) Classification and related measurement
The Directors determines the classification of its financial instruments at initial recognition. Reclassification of financial assets are
permitted in certain instances as discussed below.
i)

Financial assets

The Group classifies its financial assets in terms of the following IAS 39 categories: financial assets at fair value through profit
or loss; loans and receivables; held-to-maturity financial assets; and available-for-sale financial assets.
a)

Financial assets at fair value through profit or loss

This category comprises two sub-categories: financial assets classified as held for trading, and financial assets designated by
the Group as fair value through profit or loss upon initial recognition. At the reporting dates covered by these financial
statements, financial assets at fair value through profit or loss comprise financial assets classified as held for trading only.
A financial asset is classified as Held for Trading if it is acquired or incurred principally for the purpose of selling or
repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and
for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as Held for
Trading unless they are designated and effective as hedging instruments.
Financial instruments included in this category are recognised initially at fair value; transaction cost are taken directly to the
Consolidated Income Statement. Gains and losses arising from changes in fair value are included directly in the Consolidated

95

NOTES TO THE FINANCIAL STATEMENTS
96

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Income Statement and are reported as “Net Gains/(losses)” on financial instruments classified as held for trading. Interest
income and expenses and dividend income and expenses on financial assets held for trading are included in “Net Interest
Income'” or "Dividend Income”, respectively. The instruments are derecognised when the rights to receive cash flows have
expired or the Group has transferred substantially all the risk and rewards of ownership and the transfer qualifies for
derecognising.
b)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market, other than:
u

those that the Group intends to sell immediately or in the short term, which are classified as held for trading, and those
that the entity upon initial recognition designates as fair value through profit or loss;

u

those that the Group upon initial recognition designates as available-for-sale; or

u

those for which the holder may not recover substantially all of its initial investment, other than because of credit
deterioration.

Loans and receivable are initially recognised at fair value - which is the cash consideration to originate or purchase the loan
including any transaction cost - are subsequently measured at amortised cost using the effective interest rate method. Loans
and receivables are reported in the consolidated statement of financial position as Loans to banks or customers or as
investment securities. Interest income is included in 'Interest and similar income' in the consolidated income statement. In
the case of impairment, the impairment loss is reported as a deduction from the carrying value of the loan and recognised
in the consolidated income statement as 'Loan impairment charges'.
c)

Held-to-maturity financial assets

Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the Group's management has the positive intention and ability to hold to maturity, other than:
u

those that the Group upon initial recognition designates as fair value through profit or loss;

u

those that the Group upon initial recognition designates as available-for-sale; or

u

those that meet the definition of loans and receivables.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

These financial assets are subsequently measured at amortised cost using the effective interest rate method. Interest
income is included in 'Interest and Similar Income' in the Statement of Comprehensive Income. Refer to accounting policy
2.8 for the impairment of financial assets.
d)

Available-for-sale financial assets

Available-for-Sale financial assets are financial assets that are intended to be held for an indefinite period of time, which may
be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified
as loans and receivables, held-to-maturity financial assets or financial assets at fair value through profit or loss.
Available-for-sale financial assets are initial recognised at fair value, which is the cash consideration including any
transaction costs, and measured subsequently at fair value with gains and losses being recognised in the consolidated
statement of Other Comprehensive Income and cumulated in the fair value reserve, except for impairment losses and
foreign exchange gains and losses, until the financial asset is derecognised. If the Available-for-Sale financial asset is
determined to be impaired, the cumulative gain or loss previously recognised in the Consolidated Statement of Other
Comprehensive Income is recognised in the Consolidated Income Statement. However, interest is calculated using the
effective interest method, and the foreign currency gains and losses on monetary assets classified as Available for Sale are
recognised in the consolidated Income Statement. Dividends on available-for-sale equity instruments are recognised in the
Consolidated Income Statement in “Dividend Income”when the group's right to receive payment is established.
ii)

Financial liabilities

Financial liabilities are classified as at fair value through profit or loss and financial liabilities at amortised cost.
a)

Financial liabilities at amortised cost

Financial liabilities that are not classified as at fair value through profit or loss are measured at amortised cost using the
effective interest method. Interest expense is included in 'Interest Expense' in the Statement of Comprehensive Income.
b)

Financial liabilities at fair value

The Bank has a hybrid contract that contains both a derivative and a non-derivative component. The derivative is the
embedded derivative and the non- derivative represents the host contract. The derivative is fair valued with gains and losses
recognised in the Income Statement and the host contract will be accounted for in accordance with (a) above.

97

NOTES TO THE FINANCIAL STATEMENTS
98

FOR THE PERIOD ENDED 31 DECEMBER 2012

c)

2012 | ANNUAL REPORT & ACCOUNTS

Reclassification of financial assets

The Group may choose to reclassify a non-derivative financial asset held for trading out of the held for trading category if the
financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables
are permitted to be reclassified out of the Held for Trading category only in rare circumstances arising from a single event that
is unusual and highly unlikely to recur in the near-term. In addition, the Group may choose to reclassify financial assets that
would meet the definition of loans and receivables out of the Held for Trading or Available-for-Sale categories if the Group
has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of
reclassification.
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as
applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made.
Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are
determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates
prospectively.
On reclassification of a financial asset out of the fair value through profit or loss category, all embedded derivatives are reassessed and, if necessary, separately accounted for.
d)

Determination of fair value

At initial recognition, the best evidence of the fair value of a financial instrument is the transaction price (i.e. the fair value of
the consideration paid or received), unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument, without modification or repackaging, or based on valuation techniques
such as discounted cash flow models and option pricing models whose variables include only data from observable markets.
Subsequent to initial recognition, for financial instruments traded in active markets, the determination of fair values of
financial assets and financial liabilities is based on quoted market prices or dealer price quotations. This includes listed equity
securities and quoted debt instruments on major exchanges and broker quotes.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm's length basis. If the above criteria are not met, the market is regarded as being
inactive. An indication that a market is inactive is when there is a wide bid-offer spread or significant increase in the bid-offer
spread or there are few recent transactions.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

For all other financial instruments, fair value is determined using valuation techniques. In these techniques, fair values are
estimated from observable data in respect of similar financial instruments, using models to estimate the present value of
expected future cash flows or other valuation techniques, using inputs (for example, LIBOR yield curve, foreign exchange
rates, volatilities and counterparty spreads) existing at the reporting dates.
The Group uses widely recognised valuation models for determining fair values of non-standardized financial instruments of
lower complexity, such as options or interest rate and currency swaps. For these financial instruments, inputs into models are
generally market-observable.
For more complex instruments, the Group uses internally developed models, which are usually based on valuation methods
and techniques generally recognised as standard within the industry. Valuation models are used primarily to value derivatives
transacted in the over-the-counter market, unlisted debt securities (including those with embedded derivatives) and other
debt instruments for which markets were or have become illiquid. Some of the inputs to these models may not be market
observable and are therefore estimated based on assumptions.
The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and
valuation techniques employed may not fully reflect all factors relevant to the positions the Group holds. Valuations may
therefore be adjusted, where appropriate, to allow for additional factors including model risks, liquidity risk and counterparty
credit risk. Based on the established fair value model governance policies, and related controls and procedures applied,
management believes that these valuation adjustments are necessary and appropriate to fairly state the values of financial
instruments carried at fair value in the consolidated statement of financial position. Price data and parameters used in the
measurement procedures applied are generally reviewed carefully and adjusted, if necessary.
e)

Derecognition

Financial assets are derecognised when the contractual rights to receive the cash flows from these assets have ceased to
exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets are also
transferred (that is, if substantially all the risks and rewards have not been transferred, the Group tests control to ensure that
continuing involvement on the basis of any retained powers of control does not prevent derecognition). Financial liabilities
are derecognised when they have been redeemed or otherwise extinguished.
Collateral (shares and bonds) furnished by the Group under standard repurchase agreements and securities lending and
borrowing transactions is not derecognised because the Group retains substantially all the risks and rewards on the basis of
the predetermined repurchase price, and the criteria for derecognition are therefore not met.
Financial assets that are transferred to a third party but do not qualify for derecognition are presented in the Statement of
financial position as 'Assets Pledged as Collateral'.

99

NOTES TO THE FINANCIAL STATEMENTS
100

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

2.6 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the
asset and settle the liability simultaneously.
2.7 Revenue recognition
Interest income and expense
Interest income and expense for all interest-bearing financial instruments are recognised within 'Interest Income' and 'Interest
Expense' in the Statement of Comprehensive Income using the effective interest rate method.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate,
a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate,
the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options)
but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the
contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Where the
estimated cash flows on financial assets are subsequently revised, other than impairment losses, the carrying amount of the
financial assets is adjusted to reflect actual and revised estimated cash flows.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest
income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss.
Fees and commission income
Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment fees
for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an adjustment to the
effective interest rate on the loan. Loan syndication fees are recognised as revenue when the syndication has been completed
and the Group has retained no part of the loan package for itself or has retained a part at the same effective interest rate as the
other participants. Commission and fees arising from negotiating, or participating in the negotiation of, a transaction for a third
party, are recognised on completion of the underlying transaction.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Income from bonds or guarantees and letters of credit
Income from bonds or guarantees and letters of credit are recognised on an amortised cost basis.
Dividend income
Dividends are recognised' when the entity's right to receive payment is established.
2.8 Impairment of financial assets
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial
year. Estimates and judgments are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
(a) Impairment of available-for-sale equity financial assets
The Group determines that available-for-sale equity financial assets are impaired when there has been a significant or
prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In
making this judgment, the Group evaluates among other factors, the normal volatility in share price, the financial health of the
investee, industry and sector performance, changes in technology, and operational and financing cash flow. Impairment
may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector
performance, changes in technology, and financing and operational cash flows.
(b) Fair value of financial instruments
The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available are
determined by using valuation techniques. In these cases the fair values are estimated from observable data in respect of
similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on
appropriate assumptions. Where valuation techniques (for example, models)are used to determine fair values, they are
validated and periodically reviewed by qualified personnel independent of those that sourced them. All models are certified
before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To
the extent practical, models use only observable data; however, areas such as credit risk (both own credit risk and
counterparty risk), volatilities and correlations require management to make estimates. Changes in assumptions about these
factors could affect the reported fair value of financial instruments.
(c) Loans and receivables and held to maturity financial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of
financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if
there is objective evidence of impairment, as a result of one or more events that occurred after the initial recognition of the

101

NOTES TO THE FINANCIAL STATEMENTS
102

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
Delinquency in contractual payments of principal or interest;
u
Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales);
u
Breach of loan covenants or conditions;
u
Initiation of bankruptcy proceedings;
u
Deterioration of the borrower's competitive position;
u
Deterioration in the value of collateral;
u
Downgrading below investment grade level;
u
Significant financial difficulty of the issuer or obligor;
u
A breach of contract, such as a default or delinquency in interest or principal payments;
u
The lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a
u
concession that the lender would not otherwise consider;
It becomes probable that the borrower will enter bankruptcy or other financial reorganization;
u
The disappearance of an active market for that financial asset because of financial difficulties; and
u
Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of
u
financial assets since the initial recognition of those assets although the decrease cannot yet be identified with the
individual financial assets in the portfolio, including: adverse changes in the payment status of borrowers in the portfolio;
and national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually
significant, and individually or collectively for financial assets that are not individually significant. If the Group determines that no
objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a
collective assessment of impairment.
The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective
interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is
recognised in profit or loss. If a financial instrument has a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate determined under the contract.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows
that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk
characteristics (i.e. on the basis of the Group's grading process that considers asset type, industry, geographical location,
collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash
flows for groups of such assets by being indicative of the debtors' ability to pay all amounts due according to the contractual
terms of the assets being evaluated.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the
contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristics similar to
those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current
conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in
the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of assets are reflected and directionally consistent with changes in related
observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other
factors indicative of changes in the probability of losses in the group and their magnitude). The methodology and assumptions
used for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and
actual loss experience.
When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written off after all
the necessary procedures have been completed and the amount of the loss has been determined.
Impairment charges on financial assets are included in profit or loss within 'Impairment charges for credit losses'.
2.9 Impairment of non-financial assets
Other receivables included in other assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Impairment charges on such balances are included in profit and loss within
"other operating expenses". Additionally, assets that have an indefinite useful life and are not subject to amortisation are tested
annually for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the
purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
(cash-generating units). The impairment test may also be performed on a single asset when the fair value less cost to sell or the
value in use can be determined reliably. Non-financial assets other than goodwill that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable

103

NOTES TO THE FINANCIAL STATEMENTS
104

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. An impairment
loss in respect of goodwill is not reversed.
2.10

Statement of cash flows

The Statement of cash flows shows the changes in cash and cash equivalents arising during the period from operating activities,
investing activities and financing activities. Cash and cash equivalents include highly liquid investments.
The cash flows from operating activities are determined by using the indirect method. Net income is therefore adjusted by noncash items, such as measurement gains or losses, changes in provisions, as well as changes from receivables and liabilities. In
addition, all income and expenses from cash transactions that are attributable to investing or financing activities are eliminated.
The Group's assignment of the cash flows to operating, investing and financing category depends on the Group's business model
(management approach). Interest and dividends received and interest paid are classified as operating cash flows, while dividends
paid are included in financing activities.
2.11

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

2.12

Leases
Leases are divided into finance leases and operating leases.
(a) A group company is the lessee
(i)

Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are
classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received
from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. When an operating

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is
recognised as an expense in the period in which termination takes place.
(ii) Finance lease
Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and the
present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so
as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance
charges, are included in 'Deposits from banks' or 'Deposits from customers' depending on the counter party. The interest
element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each period. The properties acquired under finance leases are
measured subsequently at their fair value.
(b) A group company is the lessor
(i)

Operating lease

When assets are subject to an operating lease, the assets continue to be recognised as property and equipment based on the
nature of the asset. Lease income is recognised on a straight line basis over the lease term.
Lease incentives are recognised as a reduction of rental income on a straight-line basis over the lease term.
(ii) Finance lease
When assets are held subject to a finance lease, the related asset is derecognised and the present value of the lease payments
(discounted at the interest rate implicit in the lease) is recognised as a receivable. The difference between the gross receivable
and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term
of the lease using the net investment method (before tax), which reflects a constant periodic rate of return. The recognised
receivable is included within "Loans and Advance to Customers" or "Loans to banks" depending on the counter party.
2.13

Investment properties
Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the entities in
the Group, are classified as investment properties.

105

NOTES TO THE FINANCIAL STATEMENTS
106

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Recognition of investment properties takes place only when it is probable that the future economic benefits that are associated
with the investment property will flow to the entity and the cost can be measured reliably. This is usually the day when all risks are
transferred.
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of
replacing parts of an existing investment property at the time the cost was incurred if the recognition criteria are met; and
excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are
stated at fair value, which reflects market conditions at the end of the reporting date. Gains or losses arising from changes in the
fair value of investment properties are included in the consolidated profit or loss in the year in which they arise. Subsequent
expenditure is included in the asset's carrying amount only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged
to profit or loss during the financial period in which they are incurred.
The fair value of investment properties is based on the nature, location and condition of the specific asset. The fair value is
obtained from professional third party valuers contracted to perform valuations on behalf of the Group. The fair value of
investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect the
related future benefits from this future expenditure. These valuations are performed annually by external appraisers.
2.14

Property and equipment

All property and equipment used by the Group is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent expenditures are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised. All other repair and maintenance costs are
charged to 'Other operating expenses' during the financial period in which they are incurred.
The assets' residual values and useful lives are reviewed annually, and adjusted if appropriate.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in 'Other
operating expenses' in profit or loss.
Construction cost and improvements in respect of offices is carried at cost as capital work in progress. On completion of
construction or improvements, the related amounts are transferred to the appropriate category of property and equipment.
Payments in advance for items of property and equipment are included as Prepayments in “Other Assets” and upon delivery are
reclassified as additions in the appropriate category of property and equipment.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost less residual
values over their estimated useful lives, as follows:
u
u
u
u
u
u
u

Land is not depreciated
Motor Vehicles
Furniture and fittings
Office Equipment
Computer Equipment
Building
Leasehold Improvement

-

4 years
4 years
5 years
3 years
25 years
Over the unexpired lease term

Leasehold improvement relates to capital expenditures incurred in modifying properties acquired by the group for the purpose of
establishing new branches. Such expenses include structural and civil engineering works, beautification, landscaping, and
electrical works. Leasehold improvement applies only to rented properties. Improvements made to property owned by the group
are additions to building and are depreciated in line with the depreciation policy on building.
2.15

Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration
transferred over IFRS GAAP Plc's interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the
acquiree and the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of
CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.
Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to the recoverable amount, and impairment is booked where
the carrying value is higher. Impairment losses on goodwill are not subsequently reversed.
(b) Software licenses
Intangible assets comprise of acquired software licenses. These are capitalised on the basis of the cost incurred to acquire and
bring to use the specific software. These cost are amortised using the straight-line method over their estimated useful economic

107

NOTES TO THE FINANCIAL STATEMENTS
108

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

life (3 years). At each reporting date of the consolidated statement of financial position, intangible assets are reviewed for
indications of impairment or changes in estimated future economic benefits. If such indications exist, the intangible assets are
analyzed to assess whether their carrying amount if fully recoverable. An impairment loss is recognised if the carrying amount
exceeds the recoverable amount.
2.16

Non-current assets classified as held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale when their carrying amount is to be recovered principally
through a sale transaction and a sale is considered highly probable. They are stated at the lower of the carrying amount and fair
value less costs to sell.

The Group presents discontinued operations in a separate line in the consolidated statement of comprehensive income if an
entity or a component of an entity has been disposed of or is classified as held for sale and:
(a) Represents a separate major line of business or geographical area of operations;
(b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
(c) Is a subsidiary acquired exclusively with a view to resale (for example, certain private equity investments).
Net profit from discontinued operations includes the net total of operating profit or loss before tax from operations, including net
gain or loss on sale before tax or measurement to fair value less costs to sell and discontinued operations tax expense. A
component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial
reporting purposes, from the rest of the Group's operations and cash flows. If an entity or a component of an entity is classified
as a discontinued operation, the Group restates prior periods in the consolidated statement of comprehensive income.
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. This
measurement provisions do not apply to deferred tax assets and liabilities (IAS 12), financial assets in the scope of IAS 39,
investment properties that are accounted for in accordance with the fair value model in IAS 40. Non-current assets are classified
as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This
condition is regarded as met only when subject to terms that are usual and customary for sales of such assets. The Directors must
ensure that the sale is highly probable and the asset is available for immediate sale in its present condition, be committed to the
sale and must actively market the property for sale at a price that is reasonable in relation to the current fair value. The sale should
be expected to qualify for recognition as a completed sale within one year from the date of classification.
2.17

Income taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in arriving at profit or loss, except to the
extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case, the tax is also

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

recognised in Other Comprehensive Income or directly in equity, respectively.
(a) Current income tax
The current income tax charge is calculated on the basis of the applicable tax laws enacted or substantively enacted at the
reporting date in the respective jurisdiction.
(b) Deferred income tax
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred Income Tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred Income Tax assets are recognised only to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred Income Tax is provided on temporary differences arising from investments in subsidiaries and associates, except
where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference
will not reverse in the foreseeable future.
Deferred Income Tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to Income Taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balance on a net basis.
2.18

Retirement benefit obligation

Defined contribution scheme
The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund
does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For
defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a
contractual basis. The Group contributes 7.5% of basic salary, rent and transport allowances, with the employee contributing a
further 7.5%. The Group has no further payment obligations once the contributions have been paid. The contributions are
recognised as employee benefit expense when they are due.

109

NOTES TO THE FINANCIAL STATEMENTS
110

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Gratuity scheme
The Group had a non contributory defined gratuity scheme whereby on separation, staff who have spent a minimum number of
periods are paid a sum based on their qualifying emoluments and the number of periods spent in service of the Company. With
effect from October 2008, this scheme was discontinued and payments to staff made over a three year period.
2.19

Provisions
Provisions for restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation
as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the
amount has been reliably estimated. The Group recognises no provisions for future operating losses.

2.20

Financial guarantee contracts

A financial guarantee contract is a contract that requires the Group (issuer) to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms
of a debt instrument. Such financial guarantees are given to banks, financial institutions and other bodies on behalf of customers
to secure loans, overdrafts and other banking facilities.
Financial guarantee liabilities are initially recognised at fair value, which is generally equal to the premium received, and then
amortised over the life of the financial guarantee. Subsequent to initial recognition, the financial guarantee liability is measured at
the higher of the present value of any expected payment, when a payment under the guarantee has become probable, and the
unamortised premium. Financial guarantee contracts entered into by the Group include advance payment bonds, loan
guarantees, performance bonds, confirmed and unfunded letters of credit commitment and guaranteed pension assets.
2.21

Share capital
(a) Share issue costs
Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in Equity
as a deduction, net of tax, from the proceeds.
(b) Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in which they are approved by the bank's shareholders.
Dividends for the year that are declared after the date of the Statement of Financial Position are dealt with in the subsequent
events note.
Dividends proposed by the Directors but not yet approved by members are disclosed in the financial statements in accordance
with the requirements of the Company and Allied Matters Act.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

(c) Treasury shares
Where the Company or other members of the Group purchase the bank's equity share capital, the consideration paid is deducted
from total shareholders' equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued,
any consideration received is included in shareholders' equity.
(d) Statutory reserve
Central Bank of Nigeria (CBN) regulation requires the Company to make an annual appropriation to a statutory reserve. As
stipulated by Paragraph G(1) of the Revised Guidelines for Discount Houses, an appropriation of 15% of profit after tax is made if
the statutory reserve is less than the paid-up share capital and 10% of profit after tax if the statutory reserve is greater than the paid
up share capital. For purposes of this appropriation, 'Profit for the Year' as reported in the Statement of Comprehensive Income is
used. This appropriation is reported in the statement of changes in equity.
(e) Credit risk reserve
In compliance with the Prudential Guidelines for Licensed Banks, the Group assesses qualifying financial assets using the
guidance under the Prudential Guidelines. These apply objective and subjective criteria towards providing for losses in risk assets.
Assets are classed as performing or non-performing. Non- performing assets are further classed as Substandard, Doubtful or Lost
with attendant provisions as shown below based on objective criteria.
(a) substandard assets with arrears period between 90 and 180 days
(b) doubtful assets with arrears period between 180 days and 360 days
(c) loss assets with arrears period over 360 days

- 10%
- 50%
- 100%; and

A more accelerated provision may be done using the subjective criteria. A 1% provision is taken on all risk assets not specifically
provisioned.
The results of the application of Prudential Guidelines and the impairment determined for these assets under IAS 39 are
compared. The IAS 39 determined impairment charge is always included in the Income Statement. Where the Prudential
Guidelines provision is greater, the difference is appropriated from Retained Earnings and included in a non-distributable reserve
called "Credit Risk Reserve". Where the IAS 39 impairment is greater, no appropriation is made and the amount of the IAS 39
impairment is recognised in the Statement of Comprehensive Income.
In subsequent periods, reversals or additional appropriations between the "Credit Risk Reserve" and Retained Earnings to maintain
total provisions at the levels expected by the Regulator.

111

NOTES TO THE FINANCIAL STATEMENTS
112

FOR THE PERIOD ENDED 31 DECEMBER 2012

2.22

2012 | ANNUAL REPORT & ACCOUNTS

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of
the operating segments of an entity. The Group has determined the Executive Committee as its chief operating decision maker.
All transactions between business segments are conducted on an arm's length basis, with intra-segment revenue and costs
being eliminated in head office. Income and expenses directly associated with each segment are included in determining
business segment performance. Refer to note 49 for the Group segment report.
2.23

Fiduciary activities

The Group acts as trustees and in other fiduciary capacities through Diamond Pension Fund Custodian Limited that result in the
holding or placing of assets on behalf of trusts, retirement benefit plans and other institutions. These assets and income arising
thereon are excluded from these financial statements, as they are not assets of the Group.
2.24

Insurance contracts

IFRS 4 requires contracts written by insurers to be classified as either 'insurance contracts' or 'investment contracts' depending on
the level of insurance risk transferred.
The company issues contracts that transfer insurance risk or financial risk or both.
Insurance contracts are those contracts where a party (the policy holder) transfers significant insurance risk to another party
(insurer) and the latter agrees to compensate the policy holder or other beneficiary if a specified uncertain future event (the
insured event) adversely affects the policyholder, or other beneficiary. Such contracts may also transfer financial risk when the
insurer issues financial instruments with a discretionary participation feature.
A number of insurance and investment contracts contain a discretionary feature. This feature entitles the holder to receive, as a
supplement to guaranteed benefits, additional benefits or bonuses
u
u
u

That is likely to be a significant portion of the total contractual benefits.
Whose amount or timing is contractually at the discretion of the company; and
That are contractually based on:
the performance of a specified pool of contracts or a specified type of contract
realised and /or unrealized investment returns on a specified pool of assets held by the company
the profit or loss of the company, fund or other entity that issues the contract.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

General Insurance Business
General Insurance Business means insurance business of any class or classes not being long term insurance business. Classes of
General Insurance include:
Fire insurance business
u
General accident insurance business;
u
Motor vehicle insurance business;
u
Marine and aviation insurance business;
u
Oil and gas insurance business;
u
Engineering insurance business;
u
Bonds credit guarantee and surety-ship insurance business; and
u
Miscellaneous insurance business
u
For all these contracts, premiums are recognized as revenue proportionally over the period of coverage. The portion of
premium received on in-force contracts that relates to unexpired risk at the end of reporting date is reported as the unearned
premium liability.
Premiums are shown before deductions of commissions and are gross of any taxes or duties levied on premiums.
Claims and loss adjustment expenses are charged to income as incurred based on the estimated liability for compensation owed
to contract holders or third parties damaged by the contract holders.
Recognition and Measurement of Insurance Contracts
a)

Insurance contracts
In terms of IFRS 4, insurance liabilities are measured under the existing local practice at the date of adoption of IFRS 4.
The Group had prior to the adoption of IFRS 4 valued insurance liabilities using certain actuarial techniques as described
below. The Group has continued to value insurance liabilities in accordance with these.
Insurance contracts are classified into two broad categories, depending on the duration of the risk and the type of risk
insured, namely Life Insurance (Individual Life and Group Life) and General Insurance.
(i)

Life insurance
At the end of each reporting period, Liability Adequacy Tests are performed to ensure that material and reasonably
foreseeable losses arising from existing contractual obligations are recognised. In performing these tests, current best

113

NOTES TO THE FINANCIAL STATEMENTS
114

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

estimates of future contractual cash flows, claims handling and administration expenses, investment income backing such
liabilities are considered. Long-term insurance contracts are measured based on assumptions set out at the inception of the
contract. Any deficiency is charged to income statement by increasing the carrying amount of the related insurance liabilities.
Group Life contracts insure against death on a group basis. These contracts are short term in nature and are typically renewed
annually. For these contracts, gross premiums are recognised as revenue when due. Where the same policy includes both
insurance and investment components and where the policy is classified as insurance, the insurance and investment
benefits are valued separately.
i.a) Individual life
These contract mainly insure against death. For the published accounts, the contracts are value based on a gross premium
valuation taking into account the present value of expected future premium, claim and associated expense cash flow. The
premium is recognised and credited to the fund when due for payment. Premiums written relate to risks assumed during the
period, and include estimates of premiums due but not yet received, less an allowance for estimated lapses.
Any resultant negative policyholder liabilities, measured on an individual policy level are set to zero ("zerorised") so as not to
recognise profits prematurely.
Where the same policy includes both insurance and investment components and where the policy is classified as insurance, the
insurance and investment benefits are valued separately.
Claims arising on maturity are recognised when the claim becomes due for payment. Death claims are accounted for on
notification. Surrenders are accounted for on payment. The expense is determined in the same way as for general insurance.
Claims handling expenses are charged to revenue when incurred.
Expenses and commissions are allocated to the life fund as incurred in the management of the life business. No deferred
acquisition costs exist.
i.b) Group life
These contracts insure against death on a group basis. These contracts are short term in nature and typically renewed annually.
For these contracts, gross premiums are recognised as revenue when due.
(ii) General Insurance
Gross premiums are recognised as revenue when due. Premiums written relate to risks assumed during the period, and include
estimates of premium due but not yet received, less an allowance for cancellations. Unearned premiums represent the
proportion of the premiums written in periods up to the accounting date which relate to the unexpired terms of policies in force

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

at the balance sheet date, and are calculated on time apportionment basis.
Claims paid represent all payments made during the period, whether arising from events during that or earlier periods.
Outstanding claims represent the estimated ultimate cost of settling all claims arising from incidents occurring prior to the
balance sheet date, but not settled at that date. Outstanding claims are computed on the basis of the best information
available at the time the records for the period are closed, and include provisions for claims incurred but not reported
(“IBNR”) until after the statement of financial position date. Similarly provisions are made for "unallocated claims expenses"
being the estimated administrative expenses that will be incurred after the balance sheet date in settling all claims
outstanding as at that date, including IBNR. Differences between the provisions for outstanding claims at a balance sheet
date and the subsequent settlement are included in the Revenue Account of the following period.
Expenses are allocated to the relevant revenue accounts as incurred in the management of each class of business. Prepaid
expenses include deferred acquisition expenses and deferred maintenance expenses. These expenses are incurred as a
result of direct business earned from brokers. The deferred portion is calculated based on the percentage of unexpired risk
to premium income.
(b) Insurance contracts with Discretionary Participation Features
The Group issues single and regular premium endowment contracts that provide primarily savings benefits to policyholders but
also transfer insurance risk. The benefit payable under each contract increases each year by a revisionary bonus. 40% of the
surplus arising is allocated to shareholders each period. Bonus distribution to policyholders out of the remaining surplus is at
the discretion of the Group. These contracts are valued on a gross premium valuation basis.
(c) Outstanding claims provisions
A full provision is made for the estimated cost of all claims notified but not settled at the date of the balance sheet, using the best
information available at that time. Provision is also made for the cost of claims incurred but not reported (IBNR) until after the
balance sheet date.
Similarly, provision is made for "unallocated claims expenses" being the estimated administrative expenses that will be incurred
after the balance sheet date in settling all claims outstanding as at the date, including IBNR. Differences between the provision
for outstanding claims at a balance sheet date and the subsequent settlement are included in income of the following year.
(d) Guaranteed Annuity Options
Guaranteed options are offered on deferred annuity products. This feature provided an option to the policyholder and is
analyzed and valued separately where significant to the total liability, taking into account expected take-up rates, morality

115

NOTES TO THE FINANCIAL STATEMENTS
116

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

variation and investment variation.
(e) Insurance Receivables
Receivables are recognized when due, these include amounts due from agents, brokers and insurance contract holders. The
group assesses at each reporting date whether there is objective evidence that an insurance receivable is impaired. If there is
objective evidence that the insurance receivable is impaired, the carrying amount of the insurance receivable is reduced
accordingly through an allowance account and recognized as impairment loss in income statement. The assessment process
for loans and receivables is articulated in 2.8.
(f)

Provision for insurance contracts
This amount is made up of unearned premium, outstanding claims and a valuation of liabilities in force in respect of life
insurance business.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

3. Financial Risk Management
3.1 Introduction and overview
Enterprise risk review
The underlying premise of Enterprise Risk Management is that every entity exists to provide value for its stakeholders. All
organizations face uncertainty, uncertainty presents both risks and opportunities, with the potential to erode or enhance value. In
recent years, managing an enterprises' risk in a consistent, efficient and sustainable manner has become a critical priority, as the
business environment faces unprecedented levels of complexity changing geopolitical threats, new regulations and increasing
shareholders demand.
The Diamond Bank Group seeks to achieve an appropriate balance between risk and reward in its business and strategy, and
continues to build and enhance the risk management capabilities that will assist it in delivering its growth plans in a controlled
environment.
The Group has made significant progress in its vision to become world-class at managing risk. Recently an International firm of
management consultants updated the Group's Enterprise Risk Management (ERM) framework and frameworks for specific risk
areas such as credit, market, liquidity, operational, strategic and reputational risks.
Full implementation of the requirements of the ERM Framework is on-going under the oversight of the Board Audit & Risk
Committee (BARC), which is tasked with monitoring the implementation on behalf of the Board.
The Group's Enterprise Risk Management (ERM) Framework ensures risks are managed using a structured and disciplined
approach that aligns strategy, processes, people, technology and knowledge with the purpose of evaluating and managing the
opportunities and threats faced. The Group's “Enterprise-wide” Risk Management methodology ensures the removal of
functional, divisional, departmental or cultural barriers to managing risks.
The main benefits and objectives to the Group of the ERM implementation include the following:
It provides a platform for the Board and Management to confidently make informed decisions regarding the trade-off
between risk and reward;
u It aligns business decisions at the operating level to the Group's appetite for risk;
u It balances operational control with the achievement of strategic objectives;
u It enables Executives to systematically identify and manage significant risks on an aggregate basis;
u It enables the evaluation of new and existing investments on both a standalone and portfolio basis; and
u It minimizes operational surprises and related costs or losses.
u

117

NOTES TO THE FINANCIAL STATEMENTS
118

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Enterprise Risk Management (ERM) Vision
Diamond Bank's ERM Vision is:
“To build a world-class risk management culture”
Risk Management governance structure
The following management committees, comprising of senior management staff, support the Executive Committee in
performing its risk management roles:
I.

Asset & Liability Management Committee (ALCO)
The Asset & Liability Committee (ALCO) is responsible for market and liquidity risk management.

II.

Management Credit Committee (MCC)
The Management Credit Committee (MCC) is responsible for managing credit risks in the Group. The committee focuses on
management of the Group's credit risk exposures.

III. Group Risk Management Committee (RMC)
The Group Risk Management Committee (RMC) has oversight responsibilities for all other risk categories except credit,
market and liquidity risks. Risk categories within the purview of the committee include, but are not limited to, the following:
Operational Risk; Strategic Risk; Legal Risk; Compliance Risk; Reputational Risk; Accounting & Taxation Risk; Human Capital
Risk; and Information Security Risk.
Business units
Business Units and their staff, as primary risk owners/managers, are responsible for the day-to-day identification, mitigation,
management and monitoring of risks within their respective functions.
Business Units and their staff are also responsible for the following:
Implementing the Group's risk management strategies;
u Managing day-to-day risk exposures by using appropriate procedures and controls in line with the Group's risk management
framework;
u Identifying risk issues and implementing remedial action to address these issues; and
u Reporting and escalating material risks and associated issues to appropriate authorities.
u

Units and functions with primary responsibility for independent risk oversight and monitoring.
These units and functions include the following:
u Risk Management & Control Division;
u Legal Unit;

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

u
u
u
u
u

119

Corporate Communications Unit;
Strategic Planning & Research Unit;
Financial Control Unit.
Human Capital Management Unit
Compliance Unit

Units and functions with primary responsibility for evaluating and providing independent assurance
Ÿ This is made of the following:
Ÿ Internal Auditors (i.e. Corporate Audit function); and
Ÿ The External Auditors.
3.2 Financial instruments
Financial Instruments are categorised as follows:
GROUP
31 December 2012

Financial
assets held FV through
to maturity Profit or loss

Financial liabilities
Loans and
FV through
receivables Profit or loss
(designated)

Held for
trading

Available
for sale

Amortised
cost

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
90,111,236
Investment securities
Assets pledged as collateral
26,277,305
Other assets
-

10,601,609
475,607
-

65,762,681
52,549,620
-

-

132,196,061
139,803,281
585,200,158
6,576,257

-

-

Total financial assets

116,388,541

11,077,216

118,312,301

-

863,775,757

-

-

Financial liabilities
Deposits from banks
Deposit from Customers
Derivative Liability
Borrowings
Other liabilities
Long Term Debt

-

-

-

-

-

13,248,585
-

31,207,298
910,234,444
49,966,360
25,794,788
19,367,757

Total financial liabilities

-

-

-

-

-

13,248,585

1,036,570,647

NOTES TO THE FINANCIAL STATEMENTS
120

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Financial
assets held FV through
to maturity Profit or loss

Financial liabilities
Loans and
FV through
receivables Profit or loss
(designated)

85,990,731
2,200,000
88,190,731

61,712,761
32,740,000
94,452,761

-

55,784,079
90,648,011
388,136,486
5,995,262
540,563,838

-

-

-

-

-

-

-

-

20,982,788
603,003,229
54,877,883
21,460,730
700,324,630

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
1,345,552
Investment securities
Assets pledged as collateral
Insurance receivables
Other assets
Total financial assets
1,345,552

19,891,359
5,050,000
24,941,359

56,977,064
32,770,000
89,747,064

-

27,606,200
72,155,340
307,212,457
705,659
14,153,230
421,832,886

-

-

-

-

-

-

-

15,347,216
412,992,754
28,265,428
15,584,368
472,189,766

31 December 2011

Held for
trading

Available
for sale

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
8,041,618
Investment securities
Assets pledged as collateral
Other assets
Total financial assets
8,041,618
Financial liabilities
Deposits from banks
Deposit from Customers
Borrowings
Other liabilities
Total financial liabilities

Amortised
cost

1 January 2011

Financial liabilities
Deposits from banks
Deposit from customers
Borrowings
Other liabilities
Total financial liabilities

-

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

121

BANK
31 December 2012

Financial
assets held FV through
to maturity Profit or loss

Available
for sale

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
90,111,236
Investment securities
Assets pledged as collateral
26,277,305
Other assets
Total financial assets
116,388,541

10,555,061
475,607
11,030,668

64,751,769
30,685,985
95,437,754

-

123,224,590
113,384,200
523,374,608
5,163,883
765,147,281

-

-

-

-

-

-

-

8,173,286
823,090,787
49,966,360

-

-

-

-

-

13,248,585
13,248,585

22,970,520
19,367,757
923,568,710

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
8,041,618
Investment securities
Assets pledged as collateral
Other assets
Total financial assets
8,041,618

76,762,309
2,200,000
78,962,309

52,253,105
32,740,000
84,993,105

-

54,396,524
72,098,846
344,397,331
4,217,338
475,110,039

-

-

-

-

-

-

-

8,173,286
823,090,787
49,966,360
10,553,034
891,783,467

Financial liabilities
Deposits from banks
Deposit from Customers
Borrowings
Derivative liability
Other liabilities
Long Term Debt
Total financial liabilities

Loans and
receivables
(designated)

Financial liabilities
FV through
Profit or loss

Held for
trading

Amortised
cost

31 December 2011

Financial liabilities
Deposits from banks
Deposit from Customers
Borrowings
Other liabilities
Total financial liabilities

-

NOTES TO THE FINANCIAL STATEMENTS
122

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1 January 2011

Held for
trading

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
1,109,080
Investment securities
Assets pledged as collateral
Other assets
Total financial assets
1,109,080
Financial liabilities
Deposits from banks
Deposit from customers
Borrowings
Other liabilities
Total financial liabilities

-

Financial assets
Available
Held to FV through
for sale
maturity Profit or loss

Loans and
receivables
(designated)

Financial liabilities
FV through
Profit or loss

Amortised
cost

11,095,806
5,050,000
16,145,806

43,978,424
32,770,000
76,748,424

-

17,871,129
61,620,185
299,534,692
9,736,908
388,762,914

-

-

-

-

-

-

-

4,104,098
379,344,019
28,031,831
15,589,411
427,069,359

3.3 Credit risk
The Group takes on exposure to credit risk, which is the risk that a counter party will cause a financial loss for the Group by failing
to discharge an obligation. Credit risk is the most important risk for the Group's business; management therefore carefully
manages it's exposure to credit risk. Credit exposures arise principally in lending activities that lead to loans and advances, and
investment activities that bring debt securities and other bills into the Group's asset portfolio. There is also credit risk in the offbalance sheet financial instruments. The credit risk management is centralized in Risk Management and Control at the group
level, interacts with the head of each business segment regularly and reports to the board of directors.
Diamond Bank has a Credit Risk Management framework approved by its Board. The Credit Risk Management Objectives are:
1) To provide a clear and consistent direction for the Bank for creating and managing credit exposures;
2) To maintain a high quality risk assets portfolio and minimize credit losses arising from errors of judgement;
3) To achieve the lowest level of non-performing loans in the industry while maximizing returns on assets created;
4) To maximize stakeholder value;
5) To develop a strong credit risk culture where all staff actively participate in the bank's risk management process and respond
to them with cost effective action.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

The Credit Risk Appetite of the bank is defined by it's expression or willingness to accept risk up to a level that minimizes erosion of
earnings or capital due to avoidable losses from credit activities. The Bank's Credit Risk Management Strategy is driven by its
objectives and includes adoption of the following strategies for the management of credit risk;
a)
b)
c)
d)
f)
g)

A selective and disciplined approach to credit origination and focus on customers that will create attractive value for the
Bank;
Adherence by all lending and approval individuals to the bank's credit risk policies, developed to enable staff identify, measure
and manage credit risk exposures;
The Board and Senior Management set the tone for the right risk culture in the Bank;
Adequate pricing for the risks taken by the Bank;
Establishment and enforcement of the bank's exposure and provisioning policies in accordance with the Prudential
Guidelines and other regulatory requirements; and
Broadening of the knowledge and skills of all credit personnel through training and capacity building programmes.

Credit risk measurement
(a) Loans and advances
In measuring credit risk of loan and advances to customers and to banks at a counterparty level, the Group reflects the following
components:
(I) the client or counterparty's character and capacity to pay off its contractual obligations;
(ii) current exposures to the counterparty and it's likely future development;
(iii) credit history of the counterparty and (iv) the likely recovery ratio in case of default obligations - value of collateral and other
ways out.
The Group's rating scale, the Diamond Master Rating (DMR), reflects the range of default probabilities defined for each rating
class. This means that, in principle, exposures migrate between classes as the assessment of their probability of default changes.
The rating tools are kept under review and upgraded as necessary. The Group regularly validates the performance of the rating
and their predictive power with regard to default events.

123

NOTES TO THE FINANCIAL STATEMENTS
124

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Diamond Master Rating Table
DIAMOND

CBN MID

CBN MID

BANK

CBN

WEIGHT

DB REMARK

WEIGHT

D01

AAA

1.5

Investment

Extremely low risk

D02

AA

2.5

Investment

Very low risk

D03

A

3.5

Investment

Low risk

D04

BBB

4.5

Investment

Acceptable risk
Moderately High risk

D05

BB

5.5

Sub investment

D06

B

6.5

Sub investment

High risk

D07

CCC

7.5

Sub investment

Very high risk

D08

CC

8.5

Sub investment

Extremely high risk

D09

C

9.5

Watchlist

High likelihood of default

D10

D

Default

Default

(b) Debt securities and other bills
For debt securities and other bills, external rating such as Standard & Poor's rating or its equivalent used by Treasury to primarily
manage their liquidity risk exposures.
Risk limit control and mitigation policies
The Group manages limits and control concentrations of credit risk wherever they are identified - in particular, to individual
counterparties and groups, and to industries and countries in general.
The Group structures the level of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one
borrower, or groups of borrowers (single obligor limits), and to geographical and industry segments. Such risks are monitored on
a revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk
by product, industry sector and by country are approved quarterly by the Board of Directors
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and off-balance
sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts. Actual
exposures against limits are monitored daily.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

The Group also sets internal credit approval limits for various levels in the credit process and are shown in the table below.
Authorizing level
Board
Board Credit Committee
MCC*
Mini-MCC
Managing Director
Executive Directors
Regional Managers

Approval limit
N1.5BN to legal lending limit
N500MM to N1.5BN
N250MM to N500MM
N100MM to N250MM
N75MM to N250MM
N50MM to N75MM
N25MM to N50MM (Categorised)

*Management Credit Committee

Approval limits are set by the Board of Directors and reviewed from time to time as the circumstances of the Group demand.
Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to meet
interest and capital repayment obligations and by changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below:
(a) Collateral
The Group employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security
for funds advances, which is common practice. The Group implements guidelines on the acceptability of specific classes of
collateral or credit risk mitigation. The principal collateral types for loans and advances are:
a.
b.
c.

Mortgages over residential properties;
Charges over business assets such as premises, inventory and accounts receivable;
Charges over financial instruments such as debt securities and equities.

Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are generally
unsecured. In addition, in order to minimise the credit loss, the Group will seek additional collateral from the counterparty as soon
as loss indicators are noticed for the relevant individual loans and advances.
Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt
securities, treasury and other eligible bills are generally unsecured, with the exception of asset-backed securities and similar

125

NOTES TO THE FINANCIAL STATEMENTS
126

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

instruments, which are secured by portfolios of financial instruments.
(b) Master netting arrangements
The Group further restricts its exposure to credit losses by entering into master netting arrangements with counterparties with
which it undertakes a significant volume of transactions. Master netting arrangement do not generally result in an offset of
balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit risk associated with
favourable contracts is reduced by a master netting arrangement to the extent that if a default occurs, all amounts with the
counterparty are terminated and settled on a net basis.
(c) Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby
letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit - which are written
undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated
amount under specific terms and conditions - are collaterised by the underlying shipments of goods to which they relate and
therefore carrry less risk than a direct loan.
Methodology for risk rating
Diamond Bank Plc. uses the Moody's rating tool as the core rating for all its corporate credits. In addition to the core rating, the
bank has recently developed a new rating framework for rating all corporate exposure in its credit portfolio. Through the new
corporate framework, each corporate borrowers will be given a rating on the 10-grade Diamond Master Rating Scale, which
signifies the borrower's creditworthiness and risk of default. These ratings will be used to determine pricing, availability of credit,
required collateral and other important decisions such as in relation to the extension of loans.
The new rating framework takes the core rating (i.e. Moody's) as a foundation and uses other factors such as the Group/country
rating, early warning signals and any relevant new information to arrive at a more realistic rating for the borrower.
3.3.1

Maximum exposure to credit risk before collateral held or other credit enhancements

The Group's maximum exposure to credit risk at 1 Jan 2011, 31 Dec 2011 and 30 December 2012 respectively, is represented by
the net carrying amounts of the financial assets set out in note 3.2 above, with the exception of financial guarantees issued by the
Group for which the maximum exposure to credit risk is represented by the maximum amount the Group would have to pay if the
guarantees are called on (refer to note 26 Contingent liabilities and commitments).

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Risk Asset (Loans and Advances, Advances under Finance Leases, on-balance sheet direct credit substitutes, etc.)
Risk assets are summarised as follows:
GROUP

Dec 2012

Dec 2011

Jan 2011

Neither probable nor impaired
Past due but not impaired
Individually impaired

575,342,221
6,695,173
28,682,909

381,086,234
2,097,591
39,390,837

295,057,845
1,886,867
51,121,674

Gross
Specific impairment
Collective impairment

610,720,303
(13,709,907)
(11,810,238)

422,574,662
(28,750,929)
(5,687,247)

348,066,386
(37,421,044)
(3,432,885)

585,200,158

388,136,486

307,212,457

Dec 2012

Dec 2011

Jan 2011

Neither probable nor impaired
Past due but not impaired
Individually impaired

515,864,883
5,546,427
25,734,646

339,656,736
1,233,105
36,878,356

291,505,198
1,108,637
46,605,507

Gross
Specific impairment
Collective impairment

547,145,956
(13,187,211)
(10,584,137)

377,768,197
(28,696,715)
(4,674,151)

339,219,342
(36,570,496)
(3,114,154)

523,374,608

344,397,331

299,534,692

Net

BANK

Net

3.3.2 Credit concentrations
(a) Geographical sectors
The following table breaks down the Group's main credit exposure at their carrying amounts, as categorised by geographical
region as of 1 January 2011, 31 December 2011 and 31 December 2012. For this table, the Group has allocated exposures to
regions based on the region of domicile of the counterparties.

127

NOTES TO THE FINANCIAL STATEMENTS
128

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

GROUP
Loans &

Loans &

Cash & balances

assets held

Financial
Investment

pledged as

Assets
Other

Advances

Advances to

with Central Bank

for trading

securities

collateral

assets

to Banks

Customers

Total

31 December 2012
In Nigeria:
North East

-

-

-

-

-

-

2,402,200

2,402,200

North Central

-

-

-

-

-

-

25,467,215

25,467,215
20,575,002

North West

-

-

-

-

-

-

20,575,002

South East

-

-

-

-

-

-

51,872,449

51,872,449

South South

-

-

-

-

-

-

64,858,608

64,858,608

South West

123,224,590

90,111,236

67,179,403

57,438,896

5,178,864

29,289,045

358,199,133

730,621,167

Outside Nigeria

8,971,471.00

-

1,010,912

21,863,635

1,397,392

110,514,236

61,825,551

205,583,197

Total

132,196,061

90,111,236

68,190,315

79,302,531

6,576,256

139,803,281

585,200,159 1,101,379,839

BANK
31 December 2012
In Nigeria:
North East

-

-

-

-

-

-

2,402,201

2,402,201

North Central

-

-

-

-

-

-

25,467,215

25,467,215
20,575,002

North West

-

-

-

-

-

-

20,575,002

South East

-

-

-

-

-

-

51,872,449

51,872,449

South South

-

-

-

-

-

-

64,858,608

64,858,608

123,224,590

90,111,236

67,179,403

57,438,896

5,163,883

29,289,045

358,199,133

730,606,186

-

-

-

-

-

84,095,155

-

84,095,155

123,224,590

90,111,236

67,179,403

57,438,896

5,163,883

113,384,200

523,374,608

979,876, 816

South West
Outside Nigeria
Total

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

129

GROUP
Loans &

Loans &

Cash & balances

assets held

Financial
Investment

pledged as

Assets
Other

Advances

Advances to

with Central Bank

for trading

securities

collateral

assets

to Banks

Customers

Total

31 December 2011
In Nigeria:
North East

-

-

-

-

-

-

2,871,934

2,871,934

North Central

-

-

-

-

-

-

27,349,920

27,349,920

North West

-

-

-

-

-

-

11,642,440

11,642,440

South East

-

-

-

-

-

-

44,806,035

44,806,035

South South
South West
Outside Nigeria
Total

-

-

-

-

-

-

35,570,688

35,570,688

54,396,524

8,041,618

120,064,854

34,940,000

5,648,897

25,163,928

222,156,314

470,412,135

1,387,555

-

18,664,985

-

346,365

65,484,083

43,739,155

129,622,143

55,784,079

8,041,618

138,729,839

34,940,000

5,995,262

90,648,011

388,136,486

722,275,295

BANK
31 December 2011
In Nigeria:
North East

-

-

-

-

-

-

2,871,934

2,871,934

North Central

-

-

-

-

-

-

27,349,920

27,349,920

North West

-

-

-

-

-

-

11,642,440

11,642,440

South East

-

-

-

-

-

-

44,806,035

44,806,035

South South
South West
Outside Nigeria
Total

-

-

-

-

-

-

35,570,688

35,570,688

54,396,524

8,041,618

120,064,854

34,940,000

4,217,338

25,163,928

222,156,314

468,980,576

-

-

-

-

-

46,934,918

0

46,934,918

54,396,524

8,041,618

120,064,854

34,940,000

4,217,338

72,098,846

344,397,331

638,156,511

NOTES TO THE FINANCIAL STATEMENTS
130

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

GROUP
Loans &

Loans &

Cash & balances

assets held

Financial
Investment

pledged as

Assets
Other

Advances

Advances to

with Central Bank

for trading

securities

collateral

assets

to Banks

Customers

Total

1 January 2011
In Nigeria:
North East

-

-

-

-

-

-

2,091,119

2,091,119

North Central

-

-

-

-

-

-

22,294,301

22,294,301

North West

-

-

-

-

-

-

17,957,305

17,957,305

South East

-

-

-

-

-

-

23,490,495

23,490,495

South South
South West
Outside Nigeria
Total

-

-

-

-

-

-

27,288,367

27,288,367

18,268,338

1,345,552

51,736,254

37,820,000

13,227,383

47,713,473

206,413,105

376,524,104

9,337,862

-

12,946,425

-

925,847

24,441,867

7,677,765

55,329,766

27,606,200

1,345,552

64,682,679

37,820,000

14,153,230

72,155,340

307,212,457

524,975,457

BANK
1 January 2011
In Nigeria:
North East

-

-

-

-

-

-

2,091,119

2,091,119

North Central

-

-

-

-

-

-

22,294,301

22,294,301

North West

-

-

-

-

-

-

17,957,305

17,957,305

South East

-

-

-

-

-

-

23,490,495

23,490,495

South South
South West

-

-

-

-

-

-

27,288,367

27,288,367

17,871,129

1,109,080

51,223,713

37,820,000

9,736,908

42,242,896

206,413,105

366,416,831

-

-

-

-

-

19,377,289

-

19,377,289

1,109,080

51,223,713

37,820,000

9,736,908

61,620,185

299,534,692

478, 915,707

Outside Nigeria
Total

17,871,129

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

131

(b) Industry sectors
Financial
assets held
for trading

Investment
securities

Assets
pledged as
collateral

Other
assets

Loans &
Advances
to Banks

Loans &
Advances to
Customers

Total

90,111,236
-

68,190,315
-

79,302,531
-

6,576,256
-

139,803,281
-

11,772,454
1,003,235
22,467,926
19,075,598
5,552,492
4,075,847
118,881,615
33,333,879
76,958,601
39,686
9,891,742
148,476,267
38,608,455
35,386,280
43,608,353
16,067,729

11,772,454
1,003,235
22,467,926
19,075,598
5,552,492
513,679,271
118,881,615
33,333,879
76,958,601
39,686
9,891,742
148,476,267
45,184,711
35,386,280
43,608,353
16,067,729

132,196,061

90,111,236

68,190,315

79,302,531

6,576,256

139,803,281

Agriculture
Capital markets
Communication
Consumer credit
Education
Finance and insurance
123,224,590
General commerce
Government
Manufacturing
Mining & Quarrying
Mortgage
Oil and gas
Other
Power
Real estate and construction
Transportation
-

90,111,236
-

67,179,403
-

57,438,896
-

5,163,883
-

113,384,200
-

10,269,749
1,003,235
19,244,232
15,510,758
5,552,492
2,443,894
107,070,772
26,982,286
65,505,729
39,686
9,891,742
143,474,503
30,273,029
35,386,280
43,589,361
7,136,861

10,269,749
1,003,235
19,244,232
15,510,758
5,552,492
453,782,219
107,070,772
26,982,286
65,505,729
39,686
9,891,742
143,474,503
35,436,912
35,386,280
43,589,361
7,136,861

90,111,236

67,179,403

57,438,896

5,163,883

113,384,200

523,374,608

979,876,816

Cash & balances
with Central Bank

GROUP
31 December 2012
Agriculture
Capital markets
Communication
Consumer credit
Education
Finance and insurance
132,196,061
General commerce
Government
Manufacturing
Mining & Quarrying
Mortgage
Oil and gas
Other
Power
Real estate and construction
Transportation
Total

585,200,158 1,101,379,839

BANK
31 December 2012

Total

123,224,590

NOTES TO THE FINANCIAL STATEMENTS
132

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Financial
assets held
for trading

Investment
securities

Assets
pledged as
collateral

Other
assets

Loans &
Advances
to Banks

Loans &
Advances to
Customers

Total

8,041,618
-

138,729,839
-

34,940,000
-

5,995,262
-

90,648,011
-

7,265,698
1,692,581
16,572,767
25,376,294
872,687
3,589,816
101,857,993
18,966,279
44,585,496
24,496
11,107,361
64,206,218
23,175,116
23,901,386
30,809,700
14,132,596

7,265,698
1,692,581
16,572,767
25,376,294
872,687
331,733,363
101,857,993
18,966,279
44,585,496
24,496
11,107,361
64,206,218
29,170,378
23,901,386
30,809,700
14,132,596

55,784,079

8,041,618

138,729,839

34,940,000

5,995,262

90,648,011

388,136,484

722,275,295

Agriculture
Capital markets
Communication
Consumer credit
Education
Finance and insurance
54,396,524
General commerce
Government
Manufacturing
Mining & Quarrying
Mortgage
Oil and gas
Other
Power
Real estate and construction
Transportation
-

8,041,618
-

120,064,854
-

34,940,000
-

4,217,338
-

72,098,846
-

5,781,448
1,692,581
16,572,767
21,735,455
872,687
2,119,735
83,518,106
17,727,677
42,824,248
24,496
11,107,361
64,186,303
16,243,582
23,901,386
30,383,828
5,705,668

5,781,448
1,692,581
16,572,767
21,735,455
872,687
291,661,577
83,518,106
17,727,677
42,824,248
24,496
11,107,361
64,186,303
20,460,920
23,901,386
30,383,828
5,705,668

8,041,618

120,064,854

34,940,000

4,217,338

72,098,846

344,397,328

638,156,511

Cash & balances
with Central Bank

GROUP
31 December 2011
Agriculture
Capital markets
Communication
Consumer credit
Education
Finance and insurance
55,784,079
General commerce
Government
Manufacturing
Mining & Quarrying
Mortgage
Oil and gas
Other
Power
Real estate and construction
Transportation
Total

BANK
31 December 2011

Total

54,396,524

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

133

Financial
assets held
for trading

Investment
securities

Assets
pledged as
collateral

Other
assets

Loans &
Advances
to Banks

Loans &
Advances to
Customers

Total

Agriculture
Capital markets
Communication
Consumer credit
Education
Finance and insurance
27,606,200
General commerce
Government
Manufacturing
Mining & Quarrying
Mortgage
Oil and gas
Other
Power
Real estate and construction
Transportation
-

1,345,552
-

64,682,679
-

37,820,000
-

14,153,230
-

72,155,340
-

4,686,736
7,438,089
18,637,322
21,671,410
1,166,894
4,675,385
62,108,286
49,119
47,047,317
14,882
3,259,425
48,332,581
19,584,329
28,366,236
35,646,001
4,528,446

4,686,736
7,438,089
18,637,322
21,671,410
1,166,894
208,285,156
62,108,286
49,119
47,047,317
14,882
3,259,425
48,332,581
33,737,559
28,366,236
35,646,001
4,528,446

Total

27,606,200

1,345,552

64,682,679

37,820,000

14,153,230

72,155,340

307,212,457

524,975,457

Agriculture
Capital markets
Communication
Consumer credit
Education
Finance and insurance
17,871,129
General commerce
Government
Manufacturing
Mining & Quarrying
Mortgage
Oil and gas
Other
Power
Real estate and construction
Transportation
-

1,109,080
-

51,223,713
-

37,820,000
-

9,736,908
-

61,620,185
-

4,581,700
7,259,378
18,200,025
21,177,214
1,141,487
4,573,490
60,498,520
48,034
45,884,748
14,558
3,188,457
46,909,635
19,099,263
27,748,615
34,864,419
4,345,150

4,581,700
7,259,378
18,200,025
21,177,214
1,141,487
174,217,597
60,498,520
48,034
45,884,748
14,558
3,188,457
46,909,635
28,836,171
27,748,615
34,864,419
4,345,150

1,109,080

51,223,713

37,820,000

9,736,908

61,620,185

299,534,692

478,915,707

Cash & balances
with Central Bank

GROUP
1 January 2011

BANK
1 January 2011

Total

17,871,129

NOTES TO THE FINANCIAL STATEMENTS
134

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

3.3.3

Credit quality

(a) Financial assets neither past due nor impaired
The credit quality of the portfolio of loans and advances that were neither past due nor impaired can be assessed by
reference to the internal rating system adopted by the Group.

GROUP
31 December 2012

Overdrafts

Term loans

CP

Finance lease

Other

Total

Grades:
[Investment grade] (D1-D4)

78,613,345

484,111,917

1,390,894

11,226,064

-

575,342,220

78,613,345

484,111,917

1,390,894

11,226,064

-

575,342,220

31 December 2012

Overdrafts

Term loans

CP

Finance lease

Other

Total

Grades:
[Investment grade] (D1-D4)

77,057,582

386,874,591

-

11,510,229

-

475,442,402

77,057,582

386,874,591

-

11,510,229

-

475,442,402

Total

BANK

Total

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

GROUP
31-Dec-11

Overdrafts

Term loans

CP

Finance lease

Other

Total

65,377,175

305,113,397

1,288,493

9,307,166

-

381,086,231

65,377,175

305,113,397

1,288,493

9,307,166

-

381,086,231

31-Dec-11

Overdrafts

Term loans

CP

Finance lease

Other

Total

Grades:
[Investment grade] (D1-D4)

62,634,455

266,667,912

-

9,307,164

-

338,609,531

62,634,455

266,667,912

-

9,307,164

-

338,609,531

31-Dec-10

Overdrafts

Term loans

CP

Finance lease

Other

Total

Grades:
[Investment grade] (D1-D4)

62,844,097

226,961,290

393,511

4,858,949

-

295,057,847

62,844,097

226,961,290

393,511

4,858,949

-

295,057,847

Overdrafts

Term loans

CP

Finance lease

Other

Total

67,543,421

218,709,319

393,511

4,858,949

-

291,505,200

67,543,421

218,709,319

393,511

4,858,949

-

291,505,200

Grades:
[Investment grade] (D1-D4)
Total
BANK

Total

GROUP

Total
BANK
31-Dec-10
Grades:
[Investment grade] (D1-D4)
Total

135

NOTES TO THE FINANCIAL STATEMENTS
136

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The credit quality of investments in debt securities that were neither past due nor impaired can be assessed by reference to
Standard & Poor's rating at 31 December 2012, 31 December 2011 and 1 January 2011:

GROUP
Investments in debt securities
Rating
31 December 2012
Financial assets Held for Trading
Investment Securities - Held to Maturity
Investment Securities - Available for sale
Assets pledged as collateral
B+
31 December 2011
Financial assets Held for Trading
Investment Securities - Held to Maturity
Investment Securities - Available for sale
Assets pledged as collateral
B+
1 January 2011
Financial assets Held for Trading
Investment Securities - Held to Maturity
Investment Securities - Available for sale
Assets pledged as collateral
B+

Treasury bills

Bonds

Total

87,927,723
35,782,015

2,183,513
65,762,681
2,427,634
43,520,51

90,111,236
65,762,681
2,427,634
79,302,5327

123,709,738

113,894,345

237,604,083

6,784,543
74,182,342
13,520,000

1,257,075
61,712,762
2,834,738
21,420,000

8,041,618
61,712,762
77,017,080
34,940,000

80,966,885

65,804,575

146,771,460

30,152,986
21,150,000

1,109,080
26,824,077
7,705,614
16,670,000

1,109,080
56,977,063
7,705,614
37,820,000

51,302,986

51,199,691

102,502,677

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK
Investments in debt securities
Rating
31 December 2012
Financial assets Held for Trading
Investment Securities - Held to Maturity
Investment Securities - Available for sale
Assets pledged as collateral
B+
31 December 2011
Financial assets Held for Trading
Investment Securities - Held to Maturity
Investment Securities - Available for sale
Assets pledged as collateral
B+
1 January 2011
Financial assets Held for Trading
Investment Securities - Held to Maturity
Investment Securities - Available for sale
Assets pledged as collateral
B+

Treasury bills

Bonds

Total

87,927,723
26,277,305

2,183,513
64,751,769
2,427,634
31,161,591

90,111,236
64,751,769
2,427,634
57,438,896

114,205,028

100,524,507

214,729,535

6,784,543
2,834,738
13,520,000

1,257,075
52,252,105
64,977,011
21,420,000

8,041,618
52,252,105
67,811,749
34,940,000

23,139,281

139,906,191

163,045,472

21,913,637
21,150,000

1,109,079
22,064,787
7,245,289
16,670,000

1,109,079
43,978,424
7,245,289
37,820,000

43,063,637

47,089,155

90,152,792

137

NOTES TO THE FINANCIAL STATEMENTS
138

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

(b) Financial assets past due but not impaired
Loans and advances less than 90 days due are considered performing, unless other information is available to indicate the
contrary. Gross amount of loans and advances by class to customers that were past due but performing were as follows:

GROUP
31 December 2012

Commercial Paper

Overdrafts

Term Loans Finance Lease

Total

Past due up to 30 days
Past due 30 - 60 days
Past due 60 -90 days

-

930,502
599,249
353,921

3,653,998
273,722
466,300

319,818
75,807
21,856

4,904,318
948,778
842,077

Total

-

1,883,672

4,394,020

417,481

6,695,173

1,073,031
-

291,949
36,379
60,769

232,592
137,795
265,078

29,850
-

1,627,422
174,174
325,847

1,073,031

389,097

635,465

29,850

2,127,442

Past due up to 30 days
Past due 30 - 60 days
Past due 60 -90 days

-

263,233
46,823
27,701

1,134,383
155,592
166,878

70,853
21,403
-

1,468,469
223,818
194,579

Total

-

337,757

1,456,853

92,256

1,886,866

31 December 2011
Past due up to 30 days
Past due 30 - 60 days
Past due 60 -90 days
Total
1 January 2011

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK
31 December 2012
Past due up to 30 days
Past due 30 - 60 days
Past due 60 -90 days

Overdrafts

Term Loans Finance Lease

Total

610,731
599,205
353,703

3,186,752
112,557
265,998

319,818
75,807
21,856

4,117,301
787,569
641,557

1,563,639

3,565,307

417,481

5,546,427

Past due up to 30 days
Past due 30 - 60 days
Past due 60 -90 days

300,447
19,363
35,245

712,813
19,108
116,279

29,850
-

1,043,110
38,471
151,524

Total

355,055

848,200

29,850

1,233,105

114,917
31,211
4,283

788,919
46,696
30,355

70,853
21,403
-

974,689
99,310
34,638

150,411

865,970

92,256

1,108,637

Total
31 December 2011

1 January 2011
Past due up to 30 days
Past due 30 - 60 days
Past due 60 -90 days
Total

139

NOTES TO THE FINANCIAL STATEMENTS
140

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

(c) Financial assets individually impaired
31 December 2012

31 December 2011

1 January2011

27,996,805
678,974
7,130
28,682,909

30,767,071
8,615,389
8,377
39,390,837

13,548,238
37,573,435
51,121,673

337,301
1,894,715
589,187
2,939,273
7,165,099
12,809,071
2,948,263
28,682,909

462,531
1,292,016
163,784
1,186,628
1,031,746
32,741,650
2,512,482
39,390,837

21,810
1,864,342
4,679,013
1,086,652
1,352,329
39,817,873
2,299,654
51,121,673

25,048,542
678,974
7,130
25,734,646

28,254,590
8,615,389
8,377
36,878,356

9,032,071
37,573,435
46,605,506

337,301
1,894,715
589,187
2,939,273
7,165,098
12,809,072
25,734,646

462,531
1,292,016
163,784
1,186,628
1,031,747
32,741,650
36,878,356

21,810
1,842,320
4,679,013
1,086,652
1,313,512
37,662,199
46,605,506

GROUP
Non-performing loans by Classification
Overdraft
Term Loans
Finance Lease
Total
Non-performing loans by Geography
Nigeria:
North East
North Central
North West
South East
South-South
South West
Rest of West Africa
Total

BANK
Non-performing loans by Classification
Overdraft
Term Loans
Finance Lease
Total
Non-performing loans by Geography
Nigeria:
North East
North Central
North West
South East
South-South
South West
Total

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

3.4 Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall
due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors
and fulfill commitments to lend.
Liquidity risk management process
The Group's liquidity management process is primarily the responsibility of the Assets and Liabilities Committee (ALCO). Treasury
is the executory arm of ALCO and it's functions include:
a.

b.
c.
d.

Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes
replenishment of funds as they mature or are borrowed by customers. The Group maintains an active presence in money
markets to enable this to happen;
Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen
interruption to cash flows
Monitoring balance sheet liquidity ratio's against internal and regulatory requirements (in conjunction with financial control
unit); and
Managing the concentration and profile of debt maturities.

Funding approach
Sources of liquidity are regularly reviewed by Treasury to maintain a wide diversification by currency, geography, provider, product
and term.
3.4.1

Management of liquidity risk

Liquidity risk is the potential for loss to the bank arising from either its inability to meet its obligations or to fund increases in assets
as they fall due without incurring unacceptable cost or losses. Liquidity risk arises when the cushion provided by liquid assets is not
sufficient to meet outstanding obligations.
Liquidity risk management processes
Liquidity Gap analysis
Liquidity gap analysis is used to monitor the current liquidity position of the Bank. It quantifies the cumulative gap in the bank's
business as usual environment. The gap for any given tenor bucket represents the borrowings from or placements to the
markets required to replace maturing liabilities or assets. The underlying assumptions are documented and used consistently.

141

NOTES TO THE FINANCIAL STATEMENTS
142

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Concentration in sources and application of funds
The Bank monitors concentration in the sources and application of funds to ensure that the funding bases are stable and
diversified. A well diversified funding base makes the Bank less vulnerable to adverse changes in the perception of a group of
depositors/investors, whose actions or inactions could significantly affect the Bank.
Liquidity Ratios
Liquidity ratios are used to monitor changes in bank's liquidity in business as usual environment. The ratios are designed to
indicate the Bank's ability to meet short-term obligations with liquid assets; reveal mismatches between tenured funding sources
and uses; measure the concentration of the bank's funding sources to an individual or sector; and review the ability of the Bank to
fund loans through customer deposits.
Liquidity risk monitoring
Trigger points in the form of targets and limits on liquidity positions are monitored and deviations from "normal" ranges of
operation reported to management. Trigger points and early warning indicators are based on industry standards. The Bank's
liquidity management policies and procedures highlight and escalate exceptions promptly.
Liquidity Risk Reporting
Liquidity risks are communicated to the applicable business units, Senior Management and the Board. The Market Risk Group
maintains an independent liquidity risk reporting which effectively and consistently communicate liquidity risk information to
ALCO for appropriate decision making.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

3.4.2

Maturity analysis

The table below analyses financial assets and liabilities into relevant maturity groupings based on the remaining period at balance sheet
date to the contractual maturity date. The table includes both principal and interest cash flows.
GROUP

31 December 2012

Over 1 year
but less
than 5 years

Over 5 years

Total

106,325,877
1,850,000
27,891,272
12,377,742
-

132,196,061
139,803,281
610,720,302
92,632,934
91,534,503
79,978,932
6,576,257

0-30 days

31-90 days

91-180 days

181-365 days

132,196,061
132,733,972
79,751,510
17,902,394
1,903,870
6,576,257

5,973,820
121,116,251
40,711,061
163,553
24,541,750

1,095,489
22,444,535
27,919,479
11,874,500

60,771,308
4,250,000
13,268,899
5,714,272

220,310,821
48,306,909
25,470,668
-

371,064,064

192,506,435

63,334,003

84,004,479

294,088,398

Financial liabilities
Deposit from Banks
Deposit from Customers
Borrowings
Other liabilities
Long Term Debt

29,118,198
282,001,580
184,076
34,451,808
-

2,089,100
234,160,179
-

10,470,507
5,521,298
25,288

13,915,522
702,960
-

34,406,633
11,198,953
-

Total financial liabilities

345,755,662

236,249,279

16,017,093

14,618,482

45,605,586

5,073,191

19,869,856

22,327,876

31,171,007

14,590,095

184,800

93,216,826

3,399,621
453,411
8,926,223

24,272,923
328,957
44,471,736

14,392,963
1,142,928
37,863,767

33,362,578
410,492
64,944,077

24,575,617
66,440
39,232,152

45,718,491
184,800

100,003,702
2,402,228
195,622,756

354,681,885

280,721,016

53,880,861

79,562,560

84,837,737

Financial assets
Cash and balances with central banks
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investments securities
Assets pledged as collateral
Other assets
Total financial assets

Off balance-sheet
Performance bonds and financial
guarantees
Unconfirmed and unfunded
Letters of Credit
Guaranteed Pension Assets
Capital commitments

Total

148,444,891 1,153,442,270

335,280,022
32,359,073
26,741,809

31,207,298
910,234,443
49,966,360
34,451,808
26,767,097

394,380,904 1,052,627,006

394,565,705 1,248,249,763

143

NOTES TO THE FINANCIAL STATEMENTS
144

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Over 1 year
but less than
31 - 90 days 91 - 180 days 181 - 365 days
5 years

31 December 2011

0 - 30 days

Financial assets
Cash and balances with CBN
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investments Securities
Assets pledged as collateral
Other assets

55,784,079
88,783,452
71,929,467
11,197,928
5,995,262

18,186
84,279,139
3,238,114
11,452,553
-

645,742
34,953,880
3,589,633
48,520,137
6,270,000
-

233,690,188

98,987,992

Financial liabilities
Deposits from banks
Deposits from customers
Borrowings
Other liabilities

19,268,798
237,433,193
6,120,000
23,668,590

Total financial liabilities

Total financial assets

Off balance-sheet
Performance bonds and
financial guarantees
Contingent letters of credit
Capital commitments

Total

Over 5 years

Total

49,178,968
250,000
20,034,247
16,470,000
-

1,200,631
115,739,378
540,377
65,550,847
9,650,000
-

64,376,014
1,100,000
26,072,700
2,550,000
-

55,784,079
90,648,011
420,456,846
8,718,124
182,828,412
34,940,000
5,995,262

93,979,392

85,933,215

192,681,233

94,098,714

799,370,734

109,881,634
-

210,490
14,986,443
2,736,003
-

8,519,612
3,960,000
-

1,503,500
108,729,862
-

123,452,485
42,061,880
-

20,982,788
603,003,229
54,877,883
23,668,590

286,490,581

109,881,634

17,932,936

12,479,612

110,233,362

165,514,365

702,532,490

1,631,624
631,603
129,392
2,392,619

9,916,120
4,382,049
80,870
14,379,039

17,718,825
6,654,128
113,218
24,486,171

19,208,097
28,380,111
47,588,207

10,359,862
15,601,169
25,961,031

24,664,133
24,664,133

83,498,661
55,649,059
323,480
139,471,200

288,883,200

124,260,673

42,419,106

60,067,819

136,194,393

-

190,178,499 842,003,690

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

0 - 30 days

Over 1 year
but less than
31 - 90 days 91 - 180 days 181 - 365 days
5 years

Over 5 years

Total

55,850,049
200,000
18,511,869
9,400,000
-

27,606,200
72,155,340
348,254,542
1,150,000
81,506,496
37,820,000
14,153,230

1 January 2011
Financial assets
Cash and balances with CBN
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Asset pledged as collateral
Other assets
Total financial assets
Financial liabilities
Deposit from Banks
Deposit from Customers
Borrowings
Other liabilities
Total financial liabilities
Off-balance sheet
Performance bonds and
financial guarantees
Contingent letters of credit

Total

27,606,200
70,460,669
64,786,367
1,371,649
4,750,000
14,153,230

503,305
58,404,117
7,233,333
5,150,000
-

29,086,338
9,532,521
10,250,000
-

1,191,366
34,111,910
18,422,787
3,250,000
-

106,015,761
950,000
26,434,337
5,020,000
-

183,128,115

71,290,755

48,868,859

15,347,216
213,289,511
4,620,960
25,800,887

50,497,740
3,750,917
-

16,084,352
5,158,351
-

31,760,731
6,688,937
-

101,136,523
8,046,263
-

259,058,574

54,248,657

21,242,703

38,449,668

109,182,786

1,610,128
10,646,746
12,256,874

12,238,160
22,155,576
34,393,736

20,820,989
10,928,063
31,749,052

19,400,711
6,877,947
26,278,658

18,267,343
6,727,566
24,994,909

696,854
696,854

73,034,185
57,335,898
130,370,083

271,315,448

88,642,393

52,991,755

64,728,326

134,177,695

920,751

612,776,368

56,976,063 138,420,098

83,961,918 582,645,808

223,897
-

15,347,216
412,992,754
28,265,428
25,800,887

223,897 482,406,285

145

NOTES TO THE FINANCIAL STATEMENTS
146

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Bank
0-30 days

31-90 days 91-180 days 181-365 days

Over 1 year
but less
than 5 years Over 5 years

Total

31 December 2012
Financial assets
Cash and balances with
central banks
123,224,590
Loans to banks
106,314,891
Loans and advances to customers 82,021,665
Financial assets held for trading
17,902,394
Investments securities
785,477
Assets pledged as collateral
Other assets
5,163,883

5,973,820
106,736,228
40,711,061
163,553
24,390,000
-

1,095,489
17,953,983
27,919,479
9,750,000
-

51,718,109
4,250,000
13,268,899
800,000
-

335,412,900

177,974,662

56,718,951

70,037,008

Financial liabilities
Deposit from Banks
Deposit from Customers
Borrowings
Other liabilities
Long Term Debts

6,084,186
268,704,960
184,076
27,828,789
-

2,089,100
214,626,992
-

4,068,454
5,521,298
25,288

6,076,033
702,960
-

Total financial liabilities

302,802,011

216,716,092

9,615,040

6,778,993

5,319,696
1,223,038

18,315,782
23,235,001

19,883,829
14,126,604

29,474,023
33,101,912

14,270,040
24,585,247

180,941
-

6,542,734

41,550,783

34,010,433

62,575,935

38,856,287

180,941

309,344,746 258,266,874

43,625,473

69,354,929

68,090,369 370,861,043 1,121,945,662

Total financial assets

Off-balance sheet
Performance bonds and
financial guarantees
Contingent letters of credit
Capital commitments

Total

182,627,050
47,412,748
14,800,000
-

106,088,922
1,850,000
28,813,708
8,052,867
-

123,224,590
113,384,200
547,145,956
92,632,934
90,444,385
57,792,867
5,163,883

244,839,798 144,805,497 1,029,788,814

18,035,130
11,198,953
-

311,579,219
32,359,073
26,741,809

8,173,286
823,090,788
49,966,360
27,828,789
26,767,097

29,234,083 370,680,101

935,826,320

87,445,311
96,271,802
2,402,228
186,119,341

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Over 1 year
but less
than 5 years

Over 5 years

Total

107,415,621
540,377
56,777,245
17,370,000
-

65,320,381
1,100,000
27,154,540
2,550,000
-

54,396,524
72,098,846
377,768,196
8,718,125
156,440,718
34,940,000
4,217,338

81,855,479 182,103,243

96,115,921

708,579,747

110,418,603
42,064,485
-

3,939,956
545,161,145
54,877,883
19,129,194

9,092,204 109,864,668 152,483,088

623,108,178

0-30 days

31-90 days

91-180 days 181-365 days

54,396,524
71,453,104
61,345,958
652,862
200,000
4,217,338

69,526,220
2,585,253
10,283,097
1,750,000
-

645,742
19,773,025
3,589,633
43,566,348
4,520,000
-

192,265,786

84,144,571

72,094,748

Financial liabilities
Deposits from banks
Deposits from customers
Borrowings
Other liabilities

3,939,956
197,261,014
6,114,978
19,129,194

119,572,002
-

2,917,318
2,733,757
-

Total financial liabilities

226,445,142

119,572,002

5,651,075

4,544,294
1,891,787
6,436,081

17,798,357
13,507,153
31,305,510

20,000,121
8,009,252
28,009,373

27,921,326
18,565,273
46,486,599

165,534
165,534

83,498,661
55,649,058
139,147,719

232,881,223

150,877,512

33,660,447

55,578,803 136,609,289 152,648,622

762,255,897

31 December 2011
Financial assets
Cash and balances with CBN
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investments Securities
Assets pledged as collateral
Other assets
Total financial assets

Off-balance sheet
Performance bonds and
financial guarantees
Contingent letters of credit

Total

54,386,991
250,000
18,468,488
8,750,000
-

5,135,454
3,956,750
-

109,856,755
7,913
-

13,069,029
13,675,593
26,744,622

147

NOTES TO THE FINANCIAL STATEMENTS
148

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1 January 2011

Financial assets
Cash and balances with CBN
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Asset pledged as collateral
Other assets
Total financial assets
Financial liabilities
Deposit from Banks
Deposit from Customers
Borrowings
Other liabilities
Total financial liabilities
Off-balance sheet
Performance bonds and
financial guarantees
Contingent letters of credit
Capital commitments

Total

91 - 180 days 181 - 365 days

Over 1 year
but less than
5 years

Over 5 years

Total

0 - 30 days

31 - 90 days

17,871,129
61,620,185
58,845,935
965,800
4,750,000
9,736,908

48,643,100
5,093,105
5,150,000
-

28,375,242
6,712,000
9,000,000
-

27,049,989
13,071,779
4,500,000
-

86,838,401
950,000
20,492,487
11,870,000
-

98,947,625
200,000
13,284,504
2,550,000
-

17,871,129
61,620,185
348,700,292
1,150,000
59,619,675
37,820,000
9,736,908

153,789,957

58,886,205

44,087,242

44,621,768

120,150,888

114,982,129

536,518,189

4,104,098
183,876,464
4,595,691
16,335,259

49,693,070
3,717,868
-

15,168,345
5,112,901
-

29,008,981
6,630,002
-

44,725,147
7,975,369
-

56,872,012
-

4,104,098
379,344,019
28,031,831
16,335,259

208,911,512

53,410,938

20,281,246

35,638,983

52,700,516

56,872,012

427,815,207

1,610,128
10,646,746
319,377
12,576,251

12,238,160
22,155,576
159,688
34,553,425

20,820,989
10,928,063
239,533
31,988,585

19,400,711
6,877,947
79,844
26,358,502

18,267,343
6,727,566
24,994,909

696,854
696,854

73,034,185
57,335,898
798,442
131,168,525

221,487,763

87,964,363

52,269,831

61,997,485

77,695,425

57,568,866

558,983,732

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

3.5 Market risk
The Group takes on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices such as interest rates, foreign exchange rates, equity prices and commodity prices.
3.5.1

Management of market risk

Market risk is the risk that movements in market factors, including foreign exchange rates and interest rates, credit spreads and
equity prices, will reduce the bank's income or the value of its portfolios. Diamond Bank classifies its market risk into asset & liability
management (ALM) risk, investment risk and trading risk.
The bank has robust methodology and procedures for the identification, assessment, measurement, control, monitoring and
reporting of market risks within the Bank's trading portfolio and the rest of the Bank's balance sheet. The Market Risk Management
Group is responsible for measuring market risk exposures in accordance with the policies defined by the Board, monitoring and
reporting the exposures against the prescribed limits.
The Bank manages the impact of interest rate changes within self-imposed parameters set after careful consideration of a range
of possible rate environments and business scenarios. These parameters in combination define the Bank's market risk tolerance.
Limits are used to control the Bank's interest rate risk exposure within its risk tolerance. Risk limits are set by product and risk types.
They are usually approved by ALCO and endorsed by the Board. Limits are sets for position taken, value at risk, stop loss and profit
take as well as counter party risks. The overall risk appetite of the Bank, size, complexity, capital adequacy, profitability of
business/product areas, complexity of products, liquidity of specific markets and volatility of markets are considered while setting
the limits.
Duration Gap Analysis
It compares the price sensitivity of the bank's total assets with the price sensitivity of its total liabilities to assess whether the market
value of assets or liabilities changes more when rates change. Diamond Bank uses Duration Gap (DGAP) for managing its value of
equity, recognizing the timing of all cash flows for every security on the balance sheet.
Economic Value of Equity (EVE) sensitivity analysis
It indicates how much the bank's economic value of equity will change in different rates environments. The Bank's exposure to
changes in net economic value of equity is evaluated for six alternative interest rate shock scenarios and monitored.
Monitoring exposure limits and triggers
The Bank manages the impact of changes in market factors – equity prices, interest rates and currency rates within self-imposed

149

NOTES TO THE FINANCIAL STATEMENTS
150

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

limits and triggers set after careful consideration of a range of possible rate environments and business scenarios. These limits are
used to control the Bank's market risk exposures within its risk tolerance.
Risk Reporting
Market Risk Management Group ensures that the Bank maintains an accurate risk reporting framework that effectively and
consistently communicate market risk information across the Bank. Market Risk Management use independently sourced
data to generate reports, which provides the Board and senior management with clear, concise and timely recommendations
and supporting information needed to make decisions.
3.5.2 Measurement of market risk
The Group's major measurement technique used to measure and control market risk is outlined below.
Value at Risk (VAR)
One of the major tools used by the Group to monitor and limit market risk exposure is Value at Risk. Value-at-Risk estimates the
potential maximum decline in the value of a position or portfolio, under normal market conditions, over a one-day holding period,
at 99% confidence level. The Diamond Bank Value-at-Risk method incorporates the factor sensitivities of the trading portfolio,
the volatilities and correlations of the market risk factors. The Group uses the variance covariance method which derives likely
future changes in market value from historical market volatility. Value at risks is estimated on the basis of exposures outstanding at
the close of business and therefore might not factor in the intra-day exposures. However, the Bank does not only based its risk
estimates on Value at Risk, it uses sensitivity and what-if analysis to further complement it.
Trading
The Group trades on bonds, treasury bills and foreign exchange while Subsidiaries trade on foreign currencies only. Market risk in
trading portfolios is monitored and controlled using tools such as position limits, value at risk and present value of an assumed
basis points change in yields or exchange rates coupled with concentration limits.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

One Day VAR summary
Low

Actual

8,979,736
250,438,592
259,418,328

High
December 2012
33,078,182
481,420,399
514,498,581

952,319
65,323,134
66,275,453

3,645,431
181,731,045
185,376,476

Bank
Foreign exchange risk
Interest rate risk
Equity risk
Total

8,922,350
250,438,592
259,360,942

December 2012
32,980,389
481,420,399
514,400,788

917,949
65,323,134
66,241,083

3,547,638
181,731,045
185,278,683

Group
Foreign exchange risk
Interest rate risk
Equity risk
Total

7,806,966
85,819,249
93,626,215

December 2011
33,972,853
246,789,830
280,762,683

2,937,859
6,978,208
9,916,067

3,738,611
68,057,271
71,795,882

Bank
Foreign exchange risk
Interest rate risk
Equity risk
Total

7,806,966
85,819,249
93,626,215

December 2011
33,972,853
246,789,830
280,762,683

2,937,859
6,978,208
9,916,067

3,738,611
68,057,271
71,795,882

Group
Foreign exchange risk
Interest rate risk
Equity risk
Total

16,689,024
67,355,290
84,044,314

December 2010
52,588,755
167,173,309
219,762,064

641,916
23,902,514
24,544,430

9,891,837
109,866,259
119,758,096

Bank
Foreign exchange risk
Interest rate risk
Equity risk
Total

16,689,024
67,355,290
84,044,314

December 2010
52,588,755
167,173,309
219,762,064

641,916
23,902,514
24,544,430

9,891,837
109,866,259
119,758,096

Average
Group
Foreign exchange risk
Interest rate risk
Equity risk
Total

Highest and Lowest VaR for each risk factor are independent and usually occur in different days

151

NOTES TO THE FINANCIAL STATEMENTS
152

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Non-trading book: Other sensitivity analyses
Market risk in the Non trading book emanates mainly from adverse movement in future net interest income, resulting from
changes in interest rates. Analysis of this risk involves the breaking down of demand and saving deposits as well as overdraft into
different maturity time bands based on past observed trends with the use of a constructive model. Interest rate risk in nontrading portfolios is measured with maturity gap analysis, interest rate sensitivity and ratios analysis. The sensitivity of earnings
to specified upward and downward instantaneous parallel 100 basis point shift in the yield curve, over one-year horizons under
business-as-usual conditions assuming static portfolio indicates the potential risk.
3.5.3

Foreign exchange risk

Structural FX exposures arise because of balance sheet mismatches between foreign currency assets and foreign currency
liabilities. These are mainly foreign currency loans and deposits, balances with foreign banks, customers' FX transactions, and
borrowings in foreign currencies. FX trading exposures are discretionary (intentional) and typically short term FX exposures
resulting from treasury trades to profit from currency movements. They contribute to the Bank's overall trading risk and are
managed under the trading risk management framework.
The group structural foreign currency exposure is managed by the group ALCO. The primary objectives of the Banks foreign
exchange risk management are to protect the Bank's capital base and earnings from fluctuations caused by currency rates
movements in excess of approved limits, and to ensure that our open position limit is managed within existing regulatory
guidelines. This is done by setting exposure limits, Gap Analysis, sensitivity and what if analysis and Value at Risk
The following shows the Group and the Bank's structural foreign currency exposures for the period.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

GROUP
31 December 2012

Naira '000

Dollar '000

GBP '000

Euro'000

Others'000

Total '000

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Assets pledged as collateral
Other assets
Total

119,086,051
22,004,191
418,251,252
90,111,236
73,797,377
58,633,859
6,379,601
788,263,567

2,870,447
84,937,497
103,111,397
196,495
191,115,836

463,988
1,041,260
161
1,505,409

925,497
23,369,165
2,011,959
26,306,621

8,850,078
8,451,168
61,825,551
2,566,913
20,668,672
102,362,382

132,196,061
139,803,281
585,200,159
90,111,236
76,364,290
79,302,531
6,576,257
1,109,553,815

Financial liabilities
Deposits from banks
Deposit from Customers
Derivative Liability
Borrowings
Other liabilities
Long Term Debt
Total

27,143,058
660,362,438
27,000,613
18,824,576
733,330,685

132,336
154,392,676
13,248,585
5,132,652
11,991,624
19,367,757
204,265,631

1,684
2,125,631
80
86,373
2,213,768

2,897,781
12,165,304
6
3,501,506
18,564,596

1,032,439
81,188,395
17,833,009
47,729
100,101,572

31,207,298
910,234,444
13,248,585
49,966,360
34,451,808
19,367,757
1,058,476,252

Naira '000

Dollar '000

GBP '000

Euro'000

Others'000

Total '000

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Assets pledged as collateral
Other assets
Total

45,623,877
31,373,150
346,342,616
8,041,618
146,572,495
17,397,988
5,811,582
601,163,326

951,983
36,611,099
517
183,520
37,747,119

170,862
2,095,381
6
161
2,266,410

199,991
12,282,738
12,482,729

8,837,366
8,285,643
41,793,345
1,130,997
17,542,012
77,589,362

55,784,079
90,648,011
388,136,485
8,041,618
147,703,492
34,940,000
5,995,262
731,248,947

Financial liabilities
Deposit from Customers
Deposits from banks
Borrowings
Other liabilities
Total

470,970,270
17,319,154
24,672,729
6,064,457
519,026,610

63,680,815
350,662
12,805,484
9,849,817
86,686,779

1,613,332
2,592
558,490
2,174,414

6,810,645
775,555
3,533,232
11,119,432

59,928,167
2,534,825
17,399,670
3,662,593
83,525,255

603,003,229
20,982,788
54,877,883
23,668,590
702,532,490

31 December 2011

153

NOTES TO THE FINANCIAL STATEMENTS
154

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1 January 2011

Naira '000

Dollar '000

GBP '000

Euro'000

Others'000

Total '000

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Assets pledged as collateral
Other assets
Total

16,216,922
46,135,699
278,355,940
1,345,552
76,842,892
24,010,738
14,153,230
457,060,974

1,172,864
15,761,101
492
16,934,458

219,466
2,460,302
2,679,768

217,547
3,350,748
3,568,295

9,779,400
4,447,490
28,856,024
25,531
13,809,262
56,917,708

27,606,200
72,155,340
307,212,457
1,345,552
76,868,423
37,820,000
14,153,230
537,161,202

Financial liabilities
Deposit from Customers
Deposits from banks
Borrowings
Other liabilities
Total

14,889,696
334,763,441
2,177,600
11,351,230
363,181,967

249,456
31,067,789
14,285,309
9,621,984
55,224,538

4,341
1,239,145
1,411,810
2,655,297

92,666
1,183,051
1,278,540
2,554,257

111,056
44,739,328
11,802,518
103,213
56,756,115

15,347,216
412,992,754
28,265,428
23,766,777
480,372,175

Naira '000

Dollar '000

GBP '000

Euro'000

Others'000

Total '000

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Assets pledged as collateral
Other assets
Total

119,086,055
21,838,716
521,208,628
90,111,236
75,306,830
57,438,896
4,967,227
889,957,588

2,861,523
84,676,539
112,955
196,495
87,847,512

463,969
1,040,332
6
161
1,540,467

812,043
5,729,562
2,053,019
8,594,623

1,000
99,052
100,052

123,224,590
113,384,200
523,374,608
90,111,236
75,306,830
57,438,896
5,163,883
988,004,243

Financial liabilities
Deposits from banks
Deposit from Customers
Derivative Liability
Borrowings
Other liabilities
Long Term Debt
Total

8,027,295
664,694,026
13,248,585
44,833,622
12,201,557
743,005,085

132,336
154,201,509
5,132,652
11,991,624
19,367,757
190,825,879

1,684
2,125,630
80
86,373
2,213,767

11,971
2,068,934
6
3,501,506
5,582,416

688
47,729
48,417

8,173,286
823,090,788
13,248,585
49,966,360
27,828,789
19,367,757
941,675,565

BANK
31 December 2012

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December 2011

Naira '000

Dollar '000

GBP '000

Euro'000

Others'000

Total '000

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Assets pledged as collateral
Other assets
Total

53,117,382
24,049,976
344,396,807
8,041,618
129,015,414
34,940,000
4,033,658
597,594,855

920,839
36,017,793
517
183,520
37,122,668

170,676
2,090,948
6
161
2,261,791

187,243
9,759,577
9,946,820

385
180,552
180,936

54,396,524
72,098,846
344,397,331
8,041,618
129,015,414
34,940,000
4,217,338
647,107,071

Financial liabilities
Deposit from Customers
Deposits from banks
Borrowings
Other liabilities
Total

3,859,644
473,919,543
42,072,399
13,658,140
533,509,725

50,659
63,286,020
12,805,484
9,849,817
85,991,980

2,592
1,613,332
558,490
2,174,414

27,061
6,342,095
3,533,232
9,902,388

155
229,110
229,265

3,939,956
545,161,145
54,877,883
27,828,789
631,807,773

Naira '000

Dollar '000

GBP '000

Euro'000

Others'000

Total '000

Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities
Assets pledged as collateral
Other assets
Total

16,324,294
41,132,175
299,534,200
1,109,080
55,074,230
37,820,000
9,736,908
460,730,887

1,168,160
15,692,242
492
16,860,895

218,675
2,450,263
2,668,938

159,587
2,326,449
2,486,036

413
19,055
19,468

17,871,129
61,620,185
299,534,692
1,109,080
55,074,230
37,820,000
- 9,736,908
482,766,224

Financial liabilities
Deposit from Customers
Deposits from banks
Borrowings
Other liabilities
Total

3,997,678
346,526,524
13,746,522
3,919,712
368,190,435

102,027
30,395,206
14,285,309
9,621,984
54,404,527

4,341
1,239,145
1,411,810
2,655,297

52
1,182,950
1,278,540
2,461,541

194
103,213
103,406

4,104,098
379,344,019
28,031,831
16,335,259
427,815,207

1 January 2011

155

NOTES TO THE FINANCIAL STATEMENTS
156

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

3.5.4

Interest rate risk

The tables below summarise the Bank’s non-trading book fair value exposure to interest rate risks. It includes the Bank’s financial
instruments at carrying amounts (non-derivatives), categorised by the earlier of contractual repricing.
GROUP
1-3 months
N'000

3-12 months
N'000

1-5 years
N'000

Over 5 years
N'000

Non-interest
bearing
N'000

Total
N'000

10,000,000
132,733,912
87,409,115
17,420,335

5,973,871
111,916,293
39,599,924

1,095,498
90,373,896
31,291,470

188,542,305
-

106,958,551
1,799,508

122,196,061
-

132,196,061
139,803,281
585,200,159
90,111,236

5,188,891
-

114,312
24,487,280
-

9,274,048
17,549,734
-

2,343,922
41,837,194
25,414,137
-

83,712
9,348,235
11,851,380
-

8,173,975
-

10,601,609
65,762,681
79,302,531
6,576,257

252,752,253

182,091,680

149,584,646

258,137,558

130,041,384

29,118,198
147,891,314
184,076
-

2,089,100
100,398,286
0
-

24,208,455
6,224,258
-

34,156,090
11,198,953
-

68,725,01-0
13,248,585
32,359,073
19,367,757

177,193,588

102,487,386

30,432,713

45,355,043

133,700,425

75,558,665

79,604,294

119,151,933

212,782,516

Up to 1 month
N'000
31 December 2012
Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Loans and receivables
– Held-to-maturity
Assets pledged as collateral
Other assets
Total
Financial liabilities
Deposits from banks
Deposits from customers
Derivative Liability
Borrowing
Other liabilities
Long term debt
Total
Total interest repricing gap

6,576,257

136,946,293 1,109,553,815

534,855,289

34,451,808
-

31,207,298
910,234,444
13,248,585
49,966,360
34,451,808
19,367,757

569,307,097 1,058,476,252

(3,659,041) (432,360,804)

51,077,563

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1-3 months
N'000

3-12 months
N'000

1-5 years
N'000

Over 5 years
N'000

Non-interest
bearing
N'000

Total
N'000

88,783,452
66,400,276
602,201

18,186
77,800,633
2,384,643

645,742
77,665,588
3,541,686

1,200,631
106,842,535
498,445

59,427,453
1,014,642

55,784,079
-

55,784,079
90,648,011
388,136,485
8,041,618

144,727
-

10,277,425
1,482,800
-

63,167,671
9,740,047
22,740,000
-

3,057,287
42,744,481
9,650,000
-

514,695
7,600,706
2,550,000
-

8,973,653
5,995,262

85,990,731
61,712,761
34,940,000
5,995,262

155,930,656

91,963,687

177,500,734

163,993,380

71,107,497

70,752,994

731,248,947

19,268,798
115,336,024
6,114,978
-

63,501,133
0
-

210,490
9,033,926
6,690,507
-

70,262,072
7,913
-

1,503,500
273,556
42,064,485
-

344,596,517
23,668,590

20,982,788
603,003,229
54,877,883
23,668,590

140,719,800

63,501,133

15,934,923

70,269,985

43,841,541

368,265,107

702,532,490

14,006,454

29,666,956

161,565,811

93,723,394

27,265,956

(297,512,113)

28,716,457

Up to 1 month
N'000
31 December 2011
Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
Other assets
Total
Financial liabilities
Deposits from banks
Deposits from customers
Borrowings
Other liabilities
Total
Total interest repricing gap

157

NOTES TO THE FINANCIAL STATEMENTS
158

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1-3 months
N'000

3-12 months
N'000

1-5 years
N'000

Over 5 years
N'000

Non- interest
bearing
N'000

Total
N'000

70,460,669
57,151,240
-

503,305
51,521,144
-

55,750,282
-

1,191,366
93,521,716
926,383

49,268,074
195,028

27,606,200
224,142

27,606,200
72,155,340
307,212,457
1,345,552

4,069,850
4,750,000
-

7,293,450
5,150,000
-

23,628,015
13,500,000
-

5,154,962
16,984,771
5,020,000
-

2,550,653
5,000,978
9,400,000
-

12,185,744
14,153,230

19,891,359
56,977,064
37,820,000
14,153,230

136,431,759

64,467,899

92,878,298

122,799,198

66,414,733

54,169,316

537,161,202

15,347,216
98,175,413
4,620,960
-

50,585,510
3,750,917
-

11,076,739
11,847,288
-

49,286,349
8,046,263
-

-

203,868,743
23,766,777

15,347,216
412,992,754
28,265,428
23,766,777

118,143,589

54,336,427

22,924,027

57,332,612

-

227,635,520

480,372,175

18,288,170

10,131,472

69,954,270

65,466,586

66,414,733 (173,466,204)

56,789,027

Up to 1 month
N'000
1 January 2011
Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
Other assets
Total
Financial liabilities
Deposits from banks
Deposits from customers
Borrowings
Other liabilities
Total
Total interest repricing gap

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK
1-3 months
N'000

3-12 months
N'000

1-5 years
N'000

Over 5 years
N'000

Non- interest
bearing
N'000

Total
N'000

10,000,000
106,314,891
78,458,145
17,420,335

5,973,820
102,098,957
39,599,924

1,095,489
66,645,112
31,291,470

174,692,620
-

101,479,774
1,799,508

113,224,590
-

123,224,590
113,384,200
523,374,608
90,111,237

393,029
-

12,285,855
24,240,616
-

11,918,257
10,485,383
-

1,938,172
29,720,167
14,709,353
-

489,462
10,434,461
8,003,545
-

8,127,427
5,163,883

10,555,061
64,751,769
57,438,897
5,163,883

212,586,400

184,199,172

121,435,711

221,060,312

122,206,750

126,515,900

988,004,245

6,084,186
145,567,874

10,144,487

18,035,130

184,076
-

2,089,100
91,489,905
-

6,224,258
-

11,198,953
-

65,305,046
13,248,585
32,359,073
19,367,757

492,548,346
27,828,789
-

8,173,286
823,090,788
13,248,585
49,966,360
27,828,789
19,367,757

151,836,136

93,579,005

16,368,745

29,234,083

130,280,461

520,377,135

941,675,565

60,750,264

90,620,167

105,066,966

191,826,229

(8,073,711) (393,861,235)

46,328,680

Up to 1 month
N'000
31 December 2012
Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
Other assets
Total
Financial liabilities
Deposits from banks
Deposits from customers
Derivative Liability
Borrowings
Other liabilities
Long term debt
Total
Total interest repricing gap

159

NOTES TO THE FINANCIAL STATEMENTS
160

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1-3 months
N'000

3-12 months
N'000

1-5 years
N'000

Over 5 years
N'000

Non- interest
bearing
N'000

Total
N'000

71,453,104
55,926,847
-

63,384,491
3,355,764

645,742
67,608,952
3,283,199

97,926,860
462,066

59,550,182
940,589

54,396,524
-

54,396,524
72,098,846
344,397,332
8,041,618

122,543
-

9,049,034
1,255,508
1,750,000
-

55,617,667
8,247,041
13,270,000
-

2,691,870
36,192,383
17,370,000
-

453,177
6,435,630
2,550,000
-

8,950,561
4,217,338

76,762,309
52,253,105
34,940,000
4,217,338

127,502,494

78,794,797

148,672,601

154,643,179

69,929,578

67,564,423

647,107,072

Financial liabilities
Deposits from banks
Deposits from customers
Borrowings
Other liabilities

3,939,956
102,809,639
6,114,978
-

56,604,418
-

8,052,772
6,690,507
-

62,631,067
7,913
-

243,846
42,064,485
-

314,819,403
27,828,789

3,939,956
545,161,145
54,877,883
27,828,789

Total

112,864,573

56,604,418

14,743,279

62,638,980

42,308,331

342,648,192

631,807,773

14,637,921

22,190,379

133,929,322

92,004,199

27,621,247 (275,083,769)

15,299,299

Up to 1 month
N'000
31 December 2011
Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
Other assets
Total

Total interest repricing gap

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

1-3 months
N'000

3-12 months
N'000

1-5 years
N'000

Over 5 years
N'000

Non- interest
bearing
N'000

Total
N'000

61,620,185
50,548,851
-

41,784,582
-

47,610,455
-

74,594,471
916,197

84,996,333
192,883

17,871,129
-

17,871,129
61,620,185
299,534,692
1,109,080

4,738,792
4,750,000
-

8,492,239
5,150,000
-

24,493,144
13,500,000
-

4,847,010
3,852,244
11,870,000
-

2,398,279
2,402,005
2,550,000
-

3,850,517
9,736,908

11,095,806
43,978,424
37,820,000
9,736,908

121,657,828

55,426,821

85,603,599

96,079,922

92,539,500

31,458,554

482,766,224

4,104,098
89,120,283
4,595,691
-

40,228,172
3,717,868
-

15,746,710
5,112,901
-

44,740,462
6,630,002
-

7,975,369
-

189,508,392
16,335,259

4,104,098
379,344,019
28,031,831
16,335,259

Total

97,820,072

43,946,040

20,859,611

51,370,464

7,975,369

205,843,651

427,815,207

Total interest repricing gap

23,837,756

11,480,781

64,743,988

44,709,458

84,564,131 (174,385,097)

54,951,017

Up to 1 month
N'000
1 January 2011
Financial assets
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
Other assets
Total
Financial liabilities
Deposits from banks
Deposits from customers
Borrowings
Other liabilities

161

NOTES TO THE FINANCIAL STATEMENTS
162

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The table below sets out the impact on net interest income of a 100 basis points parallel fall or rise in all yields. A parallel
increase in yields by 100 basis points would lead to an increase in net interest income while a parallel falls in yields by 100 basis
points would lead to a decline in net interest income. The interest rate sensitivities are based on simplified scenarios and
assumptions, including that all positions will be retained and rolled over upon maturity. The figures represent the effect of
movements in net interest income based on the 100 basis point shift in interest rate and subject to the current interest rate
exposures. However, the effect has not taken into account the possible risk management measures undertaken by the Bank to
mitigate interest rate risk. In practice, ALCO seeks proactively to change the interest rate risk profile to minimize losses and
optimise net revenues. The projections also assume that interest rates on various maturities will move within similar ranges, and
therefore do not reflect any potential effect on net interest income in the event that some interest rates may change and others
remain unchanged.
GROUP
Interest sensitivity analysis - 31 December 2012
Impact of 100 basis points changes in rates over a one year period (N'000)
Time Band
< 1 Month
1 – 3 Months
3– 12 Months

Size of Gap
75,558,665
79,604,294
119,151,933

100 basis points
decline in rates
31,483
132,674
744,700

100 basis points
increase in rates
(31,483)
(132,674)
(744,700)

274,314,892

908,856

(908,856)

Size of Gap
14,006,454
29,666,956
161,565,811

100 basis points
decline in rates
5,836
44,945
1,009,786

100 basis points
increase in rates
(5,836)
(49,445)
(1,009,786)

205,239,220

1,065,067

(1,065,067)

Size of Gap
18,288,170
10,131,472
69,954,270

100 basis points
decline in rates
7,620
16,886
437,214

100 basis points
increase in rates
(7,620)
(16,886)
(437,214)

98,373,913

461,720

(461,720)

Interest sensitivity analysis - 31 December 2011
Impact of 100 basis points changes in rates over a one year period (N'000)
Time Band
< 1 Month
1 – 3 Months
3– 12 Months

Interest sensitivity analysis - 31 December 2010
Impact of 100 basis points changes in rates over a one year period (N'000)
Time Band
< 1 Month
1 – 3 Months
3– 12 Months

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK
Interest sensitivity analysis - 31 December 2012
Impact of 100 basis points changes in rates over a one year period (N'000)
Time Band
< 1 Month
1 – 3 Months
3– 12 Months

Size of Gap
60,750,264
90, 620, 167
105,066,965

100 basis points
decline in rates
25,313
151,034
656,669

100 basis points
increase in rates
(25,313)
(151,034)
(655,669)

256,437,396

833,015

(833,015)

Size of Gap
14,637,921
22,190,378
133,929,321)

100 basis points
decline in rates
6,099
36,984
837,058

100 basis points
increase in rates
(6,099)
(36,984)
(837,058)

170,757,621

880,141

(880,141)

Size of Gap
23,837,755
11,480,782
64,743,988)

100 basis points
decline in rates
9,932
19,135
404,650

100 basis points
increase in rates
69,932
(19,135)
(404,650)

100,062,525

433,717

(433,717)

Interest sensitivity analysis - 31 December 2011
Impact of 100 basis points changes in rates over a one year period (N'000)
Time Band
< 1 Month
1 – 3 Months
3- 12 Months

Interest sensitivity analysis - 31 December 2010
Impact of 100 basis points changes in rates over a one year period (N'000)
Time Band
< 1 Month
1 – 3 Months
3- 12 Months

163

NOTES TO THE FINANCIAL STATEMENTS
164

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The table below sets out information on the exposure to fixed and variable interest instruments.

Exposure to fixed and variable interest rate risk
FIXED
N'000

FLOATING
N'000

TOTAL
N'000

10,000,000
139,803,281
579,968,471
90,111,236

5,231,688
-

10,000,000
139,803,281
585,200,159
90,111,236

2,427,634
65,762,681
79,302,531

-

2,427,634
65,762,681
79,302,531

967,375,834

5,231,688

972,607,522

31,207,298
375,379,155
13,248,585
44,888,892

5,077,468
19,367,757

31,207,298
375,379,155
13,248,585
49,966,360
19,367,757

24,445,225

489,169,155

GROUP
31 December 2012
ASSETS
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
TOTAL

LIABILITIES
Deposits from banks
Deposits from customers
Derivative Liability
Borrowing
Long term debt
TOTAL

464,723,930

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Exposure to fixed and variable interest rate risk (cont’d)
FIXED
N'000

FLOATING
N'000

TOTAL
N'000

90,648,011
387,664,438
8,041,618

472,047
-

90,648,011
388,136,485
8,041,618

77,017,078
61,712,761
34,940,000

-

77,017,078
61,712,761
34,940,000

660,023,906

472,047

660,495,953

20,982,788
258,406,712
42,072,399

12,805,484

20,982,788
258,406,712
54,877,883

321,461,899

12,805,484

334,267,383

31 December 2011
ASSETS
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
TOTAL
31 December 2011
LIABILITIES
Deposits from banks
Deposits from customers
Borrowing
TOTAL

165

NOTES TO THE FINANCIAL STATEMENTS
166

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Exposure to fixed and variable interest rate risk (cont’d)
FIXED
N'000

FLOATING
N'000

TOTAL
N'000

72,155,340
307,212,457
1,121,410

-

72,155,340
307,212,457
1,121,410

7,705,615
56,977,064
37,820,000

-

7,705,615
56,977,064
37,820,000

482,991,887

-

482,991,887

15,347,216
209,124,011
13,980,119

14,285,309

15,347,216
209,124,011
28,265,428

238,451,346

14,285,309

252,736,655

31 December 2010
ASSETS
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
TOTAL
LIABILITIES
Deposits from banks
Deposits from customers
Borrowing
TOTAL

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Exposure to fixed and variable interest rate risk (cont’d)
FIXED
N'000

FLOATING
N'000

TOTAL
N'000

10,000,000
113,384,200
518,142,920
90,111,236

5,231,688
-

10,000,000
113,384,200
523,374,608
90,111,236

2,427,634
64,751,769
57,438,896

-

2,427,63445
64,751,769
57,438,896

856,256,655

5,231,688

861,488,343

8,173,286
330,542,442
13,248,585
44,888,892
19,367,757

5,077,468
19,367,757

8,173,286
330,542,442
13,248,585
49,966,360

396,853,205

24,445,225

BANK
31 December 2012
ASSETS
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
TOTAL
LIABILITIES
Deposits from banks
Deposits from customers
Derivative Liability
Borrowing
Long term debt
TOTAL

421,298,430

167

NOTES TO THE FINANCIAL STATEMENTS
168

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Exposure to fixed and variable interest rate risk (cont’d)
FIXED
N'000

FLOATING
N'000

TOTAL
N'000

72,098,846
343,925,284
8,041,618

472,047
-

72,098,846
344,397,331
8,041,618

67,811,748
52,253,105
34,940,000

-

67,811,748
52,253,105
34,940,000

579,070,601

472,047

579,542,648

3,939,956
230,341,742
42,072,399

12,805,484

3,939,956
230,341,742
54,877,883

276,354,097

12,805,484

289,159,581

31 December 2011
ASSETS
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
TOTAL
LIABILITIES
Deposits from banks
Deposits from customers
Borrowing
TOTAL

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Exposure to fixed and variable interest rate risk (cont’d)
FIXED
N'000

FLOATING
N'000

TOTAL
N'000

61,620,185
299,534,692
1,109,080

-

61,620,185
299,534,692
1,109,080

7,245,289
43,978,424
37,820,000

-

7,245,289
43,978,424
37,820,000

451,307,670

-

451,307,670

4,104,098
189,835,627
13,746,522

14,285,309

4,104,098
189,835,627
28,031,831

207,686,247

14,285,309

221,971,556

31 December 2010
ASSETS
Cash and balances with Central Bank
Loans to banks
Loans and advances to customers
Financial assets held for trading
Investment securities:
– Available-for-sale
– Held-to-maturity
Assets pledged as collateral
TOTAL
LIABILITIES
Deposits from banks
Deposits from customers
Borrowing
TOTAL

169

NOTES TO THE FINANCIAL STATEMENTS
170

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

3.5.5

Sensitivity analysis on bonds and treasury bills

The table below shows the impact of likely movement in yields on the value of bonds and treasury bills. This relates to the
positions held for trade and available for sales. Since an increase in yields would lead to decline in market values of bonds and
treasury bills, the analysis was carried out to show the likely impact of 50 and 100 basis points increase in market yields. The
impact of held for trading investments is on the income statement while the impact of available for sale instruments is on the
statement of other comprehensive income.

Carrying Value

Impact of 50
basis points
increase in yields

Impact of 100
basis points
increase in yield

90,111,236
2,427,634

(144,017)
(24,369)

(289,789)
(50,734)

92,538,870

(168,386)

(340,522)

8,041,618
67,811,749

(18,923)
(182,584)

(36,421)
(358,921)

75,853,367

(201,507)

(395,341)

1,109,079
7,245,289

(16,207)
(68,098)

(33,234)
(139,251)

8,354,368

(84,305)

(172,485)

GROUP
31 December 2012
Held for trading
Available for sale investments
TOTAL
31 December 2011
Held for trading
Available for sale investments
TOTAL
31 December 2010
Held for trading
Available for sale investments
TOTAL

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

3.5.5

Sensitivity analysis on bonds and treasury bills (cont’d)

Carrying Value

Impact of 50
basis points
increase in yields

Impact of 100
basis points
increase in yield

90,111,236
2,427,634

(144,017)
(24,369)

(289,789)
(50,734)

92,538,870

(168,386)

(340,522)

8,041,618
67,811,749

(18,923)
(182,584)

(36,421)
(358,921)

75,853,367

(201,507)

(395,341)

1,109,079
7,245,289

(16,207)
(68,098)

(33,234)
(139,251)

8,354,368

(84,305)

(172,485)

BANK
31 December 2012
Held for trading
Available for sale investments
TOTAL
31 December 2011
Held for trading
Available for sale investments
TOTAL
31 December 2010
Held for trading
Available for sale investments
TOTAL

171

NOTES TO THE FINANCIAL STATEMENTS
172

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

3.6 Fair value of financial assets and liabilities
(a) Financial instruments not measured at fair value
The following table summarises the carrying amounts and fair values of those financial assets and liabilities not presented
on the Group’s statement of financial position at their fair value:
GROUP

Financial assets
Cash and balances with Central banks
- Cash
- Balances with central banks other
than mandatory reserve deposits
- Mandatory reserve deposits
with central banks
Loans to banks
- Current balances with banks
within Nigeria
- Currrent balances with banks
outside Nigeria
- Placements with banks and
discount houses
Loans and advances to customers
- Overdrafts
- Term loans
- Staff loans
- Commercial papers
- Advances under finance lease
Asset pledged as collateral
Other assets
Investment securities
- Held to maturity
Insurance receivables
Total financial assets

31 December 2012
Carrying
Fair
value
value

31 December 2011
Carrying
Fair
value
value

1 January 2011
Carrying
Fair
value
value

132,196,061
16,380,761

132,196,061
16,380,761

55,784,079
11,878,439

55,784,079
11,878,439

27,606,200
9,433,800

27,606,200
9,433,800

42,463,968

42,463,968

11,525,939

11,525,939

14,795,632

14,795,632

73,351,332
139,803,281

73,351,332
139,803,281

32,379,701
90,648,011

32,379,701
90,648,011

3,376,768
72,155,340

3,376,768
72,155,340

-

-

-

-

18,647

18,647

103,242,076

103,242,076

57,816,233

57,816,233

24,441,867

24,441,867

36,561,205
585,200,159
99,836,276
467,780,931
4,665,811
1,390,894
11,526,247
52,549,620
6,576,257
65,762,681
65,762,681
-

36,561,205
578,073,442
103,527,951
457,190,845
4,594,137
1,390,894
11,369,615
49,504,819
6,576,257
73,265,592
73,265,592
-

32,831,778
388,136,484
74,482,979
300,903,001
3,934,452
1,273,031
7,543,021
32,740,000
5,995,262
61,712,761
61,712,761
-

32,831,778
332,435,825
67,141,536
254,231,611
3,350,946
1,273,031
6,438,701
28,071,180
5,995,262
48,988,032
48,988,032
-

47,694,826
307,212,457
51,651,416
245,089,400
5,838,058
393,511
4,240,072
32,770,000
14,153,230
56,977,064
56,977,064
705,659

47,694,826
267,612,679
62,323,748
196,129,273
5,078,053
393,511
3,688,094
30,394,364
14,153,230
54,597,190
54,597,190
705,659

982,088,058

979,419,452

635,016,597

561,922,389

511,579,950

467,224,662

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

GROUP

Financial liabilities
Deposits from banks
- Items in the course of collection
- Interbank takings within Nigeria
Deposits from customers
- Current
- Savings
- Term
Other liabilities
Long term debt
Borrowings
Total financial liabilities
Off-balance sheet financial
instruments
Performance bonds and guarantees
Unconfirmed and unfunded
Letters of Credit

31 December 2012
Carrying
Fair
value
value

31,207,298
7,207,067
24,000,231
910,234,444
534,855,289
153,755,865
221,623,290
25,794,788
19,367,757
49,966,360

31,207,298
7,207,067
24,000,231
910,234,444
534,855,289
153,755,865
221,623,290
25,794,788
19,353,778
49,966,360

31 December 2011
Carrying
Fair
value
value

20,982,788
4,468,893
16,513,895
603,003,229
344,596,517
125,002,987
133,403,725
21,460,730
54,877,883

1 January 2011
Carrying
Fair
value
value

20,982,788
4,468,893
16,513,895
603,003,229
344,596,517
125,002,987
133,403,725
21,460,730
54,877,883

15,347,216
14,158,684
1,188,532
412,992,754
203,868,743
97,692,352
111,431,659
15,584,368
28,265,428

15,347,216
14,158,684
1,188,532
412,992,754
203,868,743
97,692,352
111,431,659
15,584,368
28,265,428

1,036,570,647 1,036,556,668 700,324,630 700,324,630

472,189,766

472,189,766

193,684,399

193,684,399

139,147,719

139,147,719 155,424,498 155,424,498

93,680,697

93,680,697

83,498,661

83,498,661

129,809,177

129,809,177

100,003,702

100,003,702

55,649,058

55,649,058

25,615,321

25,615,321

173

NOTES TO THE FINANCIAL STATEMENTS
174

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Fair value of financial assets and liabilities (cont’d)

BANK

Financial assets
Cash and balances with Central banks
- Cash
- Balances with central banks other
than mandatory reserve deposits
- Mandatory reserve deposits
with central banks
Loans to banks
- Current balances with banks
within Nigeria
- Currrent balances with banks
outside Nigeria
- Placements with banks and
discount houses
Loans and advances to customers
- Overdrafts
- Term loans
- Staff loans
- Commercial papers
- Advances under finance lease
Asset pledged as collateral
Other assets
Investment securities
- Held to maturity
Total financial assets

31 December 2012
Carrying
Fair
value
value

31 December 2011
Carrying
Fair
value
value

1 January 2011
Carrying
Fair
value
value

123,224,590
13,671,268

123,224,590
13,671,268

54,396,524
10,490,884

54,396,524
10,490,884

17,871,129
6,528,485

17,871,129
6,528,485

39,435,175

39,435,175

11,525,939

11,525,939

7,965,876

7,965,876

70,118,147
113,384,200

70,118,147
113,384,200

32,379,701
72,098,846

32,379,701
72,098,846

3,376,768
61,620,185

3,376,768
61,620,185

-

-

-

-

-

-

84,095,155

84,095,155

46,934,918

46,934,918

19,377,289

19,377,289

29,289,045
523,374,608
88,835,313
418,823,005
4,370,624
11,345,665
30,685,985
5,163,883
64,751,769
64,751,769

29,289,045
516,109,378
91,823,145
408,795,008
4,303,049
11,188,176
27,641,184
5,163,883
72,254,679
72,254,679

25,163,928
344,397,330
68,969,257
263,950,602
3,934,952
7,543,019
32,740,000
4,217,338
52,253,105
52,253,105

25,163,928
335,700,748
71,399,957
253,119,972
3,828,273
7,352,546
28,071,180
4,217,338
48,979,437
48,979,437

42,242,896
299,534,692
51,830,044
237,233,006
5,838,058
393,511
4,240,072
32,770,000
9,736,908
43,978,424
43,978,424

42,242,896
294,859,429
70,708,861
214,229,740
5,746,936
4,173,892
30,394,364
9,736,908
41,598,549
41,598,549

855,421,152

852,614,031

626,223,201

619,139,678

493,284,057

489,524,506

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK

31 December 2012
Carrying
Fair
value
value

31 December 2011
Carrying
Fair
value
value

1 January 2011
Carrying
Fair
value
value

Financial liabilities
Deposits from banks
- Items in the course of collection
- Interbank takings within Nigeria
Deposits from customers
- Current
- Savings
- Term
Other liabilities
Long term debt
Borrowings

8,173,286
6,077,279
2,096,007
823,090,787
492,548,344
144,587,642
185,954,801
22,970,520
19,367,757
49,966,360

8,173,286
6,077,279
2,096,007
823,090,787
492,548,344
144,587,642
185,954,801
22,970,520
19,353,778
49,966,360

3,939,956
3,939,956
545,161,145
314,819,403
117,935,071
112,406,671
10,553,034
54,877,883

3,939,956
3,939,956
545,161,145
314,819,403
117,935,071
112,406,671
10,553,034
54,877,883

4,104,098
2,916,163
1,187,935
379,344,019
189,508,392
91,564,270
98,271,357
15,589,411
28,031,831

4,104,098
2,916,163
1,187,935
379,344,019
189,508,392
91,564,270
98,271,357
15,589,411
28,031,831

Total financial liabilities

923,568,710

923,554,731

614,532,018

614,532,018

427,069,359

427,069,359

Off-balance sheet financial
instruments

184,180,984

180,568,984

130,370,083

130,370,083

155,424,498

155,424,498

87,909,182

87,909,182

73,034,185

73,034,185

129,809,177

129,809,177

96,271,802

96,271,802

57,335,898

57,335,898

25,615,321

25,615,321

Performance bonds and guarantees
Unconfirmed and unfunded
Letters of Credit

3.6 Fair value of financial assets and liabilities (cont'd)
(i)

Cash and balances with CBN include cash and restricted and non - restricted deposits with Central Bank of Nigeria.
The carrying amount of balances with other banks is a reasonable approximation of fair value which is the amount receivable
on demand.

(ii) Loans to banks
Loans to banks include balances with other banks within and outside Nigeria and short term placements. The carrying
amount of balances with other banks is a reasonable approximation of fair value which is the amount receivable on demand.
The estimated fair value of fixed interest bearing placement is based on discounted cash flows using prevailing moneymarket interest rates for the debts. The carrying amount represents the fair value which is receivable on maturity.

175

NOTES TO THE FINANCIAL STATEMENTS
176

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(iii) Loans and advances to customers
Loans and advances are net of charges for impairment. The estimated fair value of loans and advances represents the market
vaue of the loans, arrived at by recalculating the carrying amount of the loans using the estimated market rate for the various
loan types
(iv) Deposits from banks and customers
The estimated fair value of deposits, with no stated maturity, is the amount repayable on demand.
The estimated fair value of fixed interest-bearing deposits not quoted in an active market is based on discounted cash flows
using interest rates for new debts with similar remaining maturity.
(v) Carrying amounts of all other financial liabilities are reasonable approximation of their fair values which are payable on
demand.
(vi) Off-balance sheet financial instruments
The estimated fair values of the off-balance sheet financial instruments are based on markets prices for similar facilities.
When this information is not available, fair value is estimated using discounted cash flow analysis.
3.6 (b)

Financial instruments measured at fair value

IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable input reflect market data obtained from independent sources; unobservable inputs reflect the Group's
market assumptions. These two types of inputs have created the following fair value hierarchy:
u

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity
securities and debt instruments on exchanges

u

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices)

u

Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs), This level includes
equity investments and debt instruments with significant unobservable components.

This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market
prices in its valuations where possible.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The table below analyses financial instruments measured at fair value at the end of each reporting period, by the level in the fair
value hierachy into which the fair value measurement is categorised:
GROUP
31 December 2012
Financial assets
Financial assets held for trading
- Debt securities
Available for sale financial assets
- Investment securities - debt
- Investment securities - listed
- Investment securities - unlisted
Assets pledged as collateral
Total assets
Financial liabilities
Derivative liability
Total liabilities
31 December 2011
Financial assets
Financial assets held for trading
- Debt securities
Available for sale financial assets
- Investment securities - debt
Investment securities - listed
Investment securities - unlisted
Assets pledged as collateral
Total assets
1 January 2011
Financial assets
Financial assets held for trading
- Debt securities
-Listed equity
Available for sale financial assets
– Investment securities - debt
- Investment securities - listed
- Investment securities - unlisted
Assets pledged as collateral
Total assets

Level 1

Level 2

Level 3

Total

90,111,236

-

-

90,111,236

2,427,634
251,653
79,302,531
172,093,054

1,230,880
1,230,880

6,691,442
6,691,442

2,427,634
251,653
7,922,322
79,302,531
180,015,376

-

13,248,585

-

13,248,585

8,041,618

-

-

8,041,618

77,017,07891,138
34,940,000
120,089,834

1,231,425
1,231,425

7,651,089
7,651,089

77,017,078
91,138
8,882,154
34,940,000
128,972,348

1,121,410
224,142
7,705,615
605,904
37,820,000
47,477,071

3,692,787
3,692,787

7,887,053
7,887,053

1,121,410
224,142
7,705,615
605,904
11,579,840
37,820,000
59,056,911

177

NOTES TO THE FINANCIAL STATEMENTS
178

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK
31 December 2012
Financial assets
Financial assets held for trading
- Debt securities
Available for sale financial assets
- Investment securities - debt
- Investment securities - listed
- Investment securities - unlisted
Assets pledged as collateral
Total assets
Financial liabilities
Derivative liability
Total liabilities

Level 1

Level 2

Level 3

Total

90,111,236

-

-

90,111,236

2,427,634
205,105
57,438,896
150,182,871

1,230,880
1,230,880

6,691,442
6,691,442

2,427,634
205,105
7,922,322
57,438,896
158,105,193

-

13,248,585

-

13,248,585

8,041,618

-

-

8,041,618

67,811,749
68,045
34,940,000
110,861,412

1,231,425
1,231,425

7,651,089
7,651,089

67,811,749
68,045
8,882,514
34,940,000
119,743,926

-

-

-

-

1,109,080
224,142
7,245,289
112,134
37,820,000
46,286,503

-

-

1,109,080
224,142

-

3,738,383
3,738,383

7,245,289
112,134
3,738,383
37,820,000
50,026,886

31 December 2011
Financial assets
Financial assets held for trading
- Debt securities
Available for sale financial assets
- Investment securities - debt
- Investment securities - listed
- Investment securities - unlisted
Assets pledged as collateral
Total assets
Financial liabilities
Derivative liability
Total liabilities
1 January 2011
Financial assets
Financial assets held for trading
- Debt securities
- Equity securities
- Available for sale financial assets
- Investment securities - debt
- Investment securities - listed
- Investment securities - unlisted
Assets pledged as collateral
Total assets

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Level 3 Investments
N'000
Available for sale financial assets
Investment securities equity

GROUP
At 1 January
Gain or loss in profit
Gain or loss in OCI
Disposals
At 31 December
BANK
At 1 January
Gain or loss in profit
Gain or loss in OCI
Purchases
Disposals
At 31 December

2012

2011

2010

7,651,090
(959,647)
-

7,887,053
261,486
(497,449)

7,779,876
1,084,841
1,192,018
-

6,691,443

7,651,090

7,887,053

7,651,089
(959,647)
-

3,738,383
261,485
3,684,221
(33,000)

4,000,932
(1,084,841)
822,292
-

6,691,442

7,651,089

3,738,383

The following table shows the sensitivity of level 3 measurements to reasonably possible alternative assumptions:
Reflected in profit or loss

At 31 December 2012
Available for sale

Reflected in equity

Favourable
changes
N '000

Unfavourable
changes
N '000

Favourable
changes
N '000

Unfavourable
changes
N '000

-

-

286,446

262,619

For available for sale investments which were fair valued using Discounted cashflow method, the effect of a change in input was
assessed using a 5% upward and downward movement in the assumptions made on revenue growth. The effect is not considered to
have a significant impact on the fair value reflected in equity as seen in the table above.
The above favourable and unfavourable changes are calculated independently from each other. Correlations and diversification
effects are not taken into account.

179

NOTES TO THE FINANCIAL STATEMENTS
180

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

(c) Fair valuation methods and assumptions
METHODOLOGY

KEY ASSUMPTIONS

Other underlisted equity investments relate to Tinapa Resorts Limited and ATM Consortium which have nil carrying amounts.
These investments have measured at cost less impairment because there is no available financial operational information hence
their fair value cannot be reliably measured. The instruments were fully impaired based on the evidence that there is no estimated
future cash flow from these instruments and also because the cost of the investment in the equity instrument may not be
recovered. In 2011, some financial instruments whose fair value could not be reliably measured were derecognized. They had nil
carrying amounts therefore there were no gains or losses upon derecognition. Management has started putting plans in place to
dispose of its equity investments in the near future.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

3.7. Capital management
The Group's objectives when managing capital, which is a broader concept than the 'equity' on the face of balance sheets, are:
a.
b.
c.

To comply with the capital requirements set by the regulators of the banking markets where the entities within the Group
operate;
To safeguard the Group's ability to continue as a going concern so that it can continue to provide returns for shareholders and
benefits for other stakeholders and;
To maintain a strong capital base to support the development of its business.

Capital adequacy and the use of regulatory capital are monitored daily by the group's management, employing techniques based on
the guidelines developed by the Central Bank of Nigeria (CBN), for supervisory purposes. The required information is filed with the
CBN on a monthly basis. Auditors to the Group are also required to render an annual certificate to the Nigerian Deposit Insurance
Corporation (NDIC) that includes the computed capital adequacy ratio of the Group.
The CBN requires each bank to: (a) hold the minimum level of the regulatory capital of N25 billion and (b) maintain a ratio of total
regulatory capital to the risk- weighted asset at or above the minimum of 15%. In addition, those individual banking subsidiaries or
similar financial institutions not incorporated in Nigeria are directly regulated and supervised by their local banking supervisor, which
may differ from country to country.
The group's regulatory capital as managed by its Financial Control and Treasury Units is divided into two tiers:
d.

Tier 1 capital: share capital, retained earnings and reserves created by appropriations of retained earnings. The book value of
goodwill is deducted in arriving at Tier 1 capital; and

e.

Tier 2 capital: preference shares, non-controlling interests arising on consolidation, qualifying debt stock, fixed assets
revaluation reserves, foreign currency revaluation reserves, general provisions subject to maximum of 1.25% of risk assets and
hybrid instruments – convertible bonds.

Investments in unconsolidated subsidiaries and associates are deducted from Tier 1 and Tier 2 capital to arrive at the regulatory
capital.
The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature of – and
reflecting an estimate of credit, market and other risks associated with – each asset and counterparty, taking into account any eligible
collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some adjustments to reflect the more
contingent nature of the potential losses.
The following table summarises the composition of regulatory capital and the ratios of the Group for the periods ended 1 January
2011, 31 December 2011 and 31 December 2012. During those three periods, the individual entities within the Group and the Group
complied with all of the externally imposed capital requirements to which they are subject.

181

NOTES TO THE FINANCIAL STATEMENTS
182

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

1 January
2011

7,237,622
89,629,324
14,898,751
3,966,628
(6,629,221)

7,237,622
89,629,324
11,394,523
2,812,957
(24,112,701)

7,237,622
89,629,324
11,214,864
354,741
2,812,957
(8,387,489)

109,103,104

86,961,725

102,862,019

253,278
(1,292,728)
792,068
11,810,238
19,367,757
13,248,585
(9,100,169)

224,932
(1,422,736)
217,094
5,687,247
(13,182,318)

455,661
1,686,305
306,694
3,432,885
(8,277,101)

35,079,029

(8,475,781)

(2,395,556)

144,182,133

78,485,944

100,466,463

696,795,075
135,783,240

483,949,858
98,886,040

401,294,862
124,335,440

832,578,315

582,835,899

525,630,303

17.3%

13.5%

19.1%

GROUP
Tier 1 capital
Share capital
Share premium
Statutory reserves
Contingency reserve
SMEIS reserve
Retained earnings
Total qualifying Tier 1 capital
Tier 2 capital
Minority interest
Fair value Reserve
Foreign currency translation reserve
General provision
Long Term Debt
Derivative Liability
Less: Deferred tax and Intangible Assets
Total qualifying Tier 2 capital
Total regulatory capital
Risk-weighted assets:
On-balance sheet
Off-balance sheet
Total risk-weighted assets
Risk-weighted Capital Adequacy Ratio (CAR)

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

1 January
2011

7,237,622
89,629,324
14,650,515
3,966,628
(6,851,491)

7,237,622
89,629,324
11,189,501
2,812,957
(25,310,234)

7,237,622
89,629,324
11,189,501
2,812,957
(270,693)

108,632,598

85,559,170

110,598,711

Tier 2 capital
Fair value Reserve
General provision
Long Term debt
Derivative Liability
Less: Investment in subsidiary, deferred tax and intangible assets

(1,316,183)
10,584,137
19,367,757
13,248,585
(17,061,759)

(1,422,736)
4,674,151
(21,026,635)

665,652
3,114,154
(25,759,262)

Total qualifying Tier 2 capital

24,822,537

(17,775,220)

(21,979,456)

133,455,775

67,783,950

88,619,255

633,992,112
128,145,775

439,858,449
89,264,985

385,619,894
124,335,440

762,137,887

529,123,434

510,013,861

17.5%

12.8%

17.4%

BANK
Tier 1 capital
Share capital
Share premium
Statutory reserves
SMEIS reserve
Retained earnings
Total qualifying Tier 1 capital

Total regulatory capital
Risk-weighted assets:
On-balance sheet
Off-balance sheet
Total risk-weighted assets
Risk-weighted Capital Adequacy Ratio (CAR)

The decrease in the regulatory capital in 2011 is mainly due to the contribution of the current-period loss arising from significant
provisions for loans losses.
The Group strategic risk management focus is to proactively identify, understand, promptly analyse and appropriately manage

183

NOTES TO THE FINANCIAL STATEMENTS
184

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

strategic risks that could affect the achievement of the group's strategic intent. In the process, the Group:
a)

Ensures that exposures reflect strategic goals that are not overly aggressive and are also compatible with developed business
strategies.

b)

Avoids products, markets and business for which it cannot objectively measure and manage their associated risk; and

c)

Strives to maintain a balance between risk/opportunities and revenue consideration with the group's risk appetite. Thus, riskrelated issues are considered in all business decisions.

The Board of Directors has the ultimate responsibility for establishing and approving the Group's strategy in an integrated manner
that aligns strategies, goals, tactics and resources. The Board members participate in the bank's Annual Strategy Session towards
the review of the Strategic Plan. When approved, such plans are cascaded to the various business units/subsidiaries for creating
business unit/subsidiary plans and budgets. It is the responsibilities of the Executive Management Committee to assist the board in
developing and formulating strategies to meet the group's strategic goals and objectives, and ensuring adequate implementation
of the Group's strategic plan as approved by the Board.
The Group Risk Management Committee is responsible for establishing a suitable reporting system which will ensure timely
monitoring of strategic risk exposures, and undertaking measures for the elimination of any possible problems pertaining to
internal and external factors. The strategic planning group has the primary responsibility for supporting the board and senior
management in managing the group's strategic risk and facilitating change in corporate strategic plan that contribute to the
group's organizational development and continuous improvement.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

4. Critical accounting judgements in applying the Bank's accounting policies
The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial
year. All estimates and assumptions required in conformity with IFRS are best estimates undertaken in accordance with the
applicable standard. Estimates and judgements are evaluated on a continuous basis, and are based on past experience and
other factors, including expectations with regard to future events.
Accounting policies and directors' judgements for certain items are especially critical for the bank's results and financial
situation due to their materiality.
(a) Impairment losses on loans and advances
The Bank reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an impairment
loss should be recorded in profit or loss, the Bank makes judgements as to whether there is any observable data indicating an
impairment trigger. The trigger may include observable data indicating that the borrower is unable to fulfil the repayment
obligations as per contractual terms e.g significant financial difficulty being experienced by the borrower, occurrence of
default/delays in interest or principal repayments, restructuring of the credit facilities by giving extraordinary concessions to
borrower or national or local economic conditions that correlate with defaults on assets in the Bank. The Bank uses estimates
based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to
those in the portfolio when scheduling future cash flows. The methodology and assumptions used for estimating both the
amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual
loss experience.
(b) Impairment of available-for-sale equity investments
The Bank determines that available-for-sale equity investments are impaired when there has been a significant or prolonged
decline in the fair value below its cost. This determination of what is significant or prolonged requires judgement relating to the
period over which the losses occur. Significant loses occurring in three or more consecutive years is considered significant. In
making this judgement, the Bank evaluates among other factors, the volatility in share price. In addition, objective evidence of
impairment may be deterioration in the financial health of the investee, industry and sector performance, changes in
technology, and operational and financing cash flows.

Had all the declines in fair value below cost been considered insignificant or prolonged, the Bank would have recognised an
additional N1,98b loss in its 2012 financial statements.

185

NOTES TO THE FINANCIAL STATEMENTS
186

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(c) Fair value of financial instruments
Fair values are subject to a control framework that aims to ensure that they are either determined, or validated, by a function
independent of the risk taker.To this end, ultimate responsibility for the determination of fair values lies within the Market Risk
function, which reports functionally to the CRO. Financial Control establishes the accounting policies and procedures
governing valuation, and is responsible for ensuring that these comply with all relevant accounting standards. Fair value
activities/processes are carried out by Market Risk Management. The revaluation processes are carried out independent of
Treasury or other risk-takers in the front office. The pricing factors used for revaluation are also obtained from a source which is
independently verifiable. Market Risk Management revalues all exposures categorized under the trading and available for sale
portfolio. The revaluation gain or loss are communicated to management at every ALCO meeting.
The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available are
determined by using valuation techniques. In these cases, the fair values are estimated from observable data in respect of
similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on
appropriate assumptions. Where valuation techniques (for example, models) are used to determine fair values, they are
validated and periodically reviewed by qualified personnel independent of those that sourced them. All models are certified
before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To
the extent practical, models use only observable data; however, areas such as credit risk (both own credit risk and counterparty
risk), volatilities and correlations require management to make estimates.
Changes in assumptions about these factors could affect the reported fair value of financial instruments. For example, to the
extent that the directors used a tightening of 100 basis points in the credit spread, the fair values would be estimated at
N4.94bn as compared to their reported fair value of N4.97bn at 31 December 2012.
(d) Held-to-maturity investments
In accordance with IAS 39 guidance, the Bank classifies some non-derivative financial assets with fixed or determinable
payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this judgement,
the Bank evaluates its intention and ability to hold such investments to maturity. If the Bank were to fail to keep these
investments to maturity other than for the specific circumstances – for example, selling an insignificant amount close to
maturity – the Bank is required to reclassify the entire category as available- for-sale. Accordingly, the investments would be
measured at fair value instead of amortised cost. If all held-to-maturity investments were to be so reclassified, the carrying
value would decrease by N1.76bn with a corresponding entry in the fair value reserve in shareholders' equity.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

(All amounts in thousands of Nigeria Naira unless otherwise stated)

5.

2012 | ANNUAL REPORT & ACCOUNTS

31 December
2012

31 December
2011

8,487,160
88,197,538
15,667,257
112,351,955

4,914,522
69,303,566
9,142,374
83,360,462

8,219,025
82,899,107
14,393,455
105,511,587

4,768,242
67,300,708
7,819,581
79,888,531

Interest and Similar Income
GROUP
Loans to banks
Loans and advances to customers
Investment securities

BANK
Loans to banks
Loans and advances
Investment securities

Interest income loans and advances to customers includes interest income on impaired financial assets, recognised using the
rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss amounting to N4.7
billion (Dec 2011: N10.2 billion).
Interest income earned outside Nigeria amounted to Group: N7.0 billion Bank: N41.8 million (Dec 2011 Group: N7.3. billion
Bank: N49.1 million).
6.

Interest expense
GROUP
Deposits from banks
Deposits from customers
Borrowings
Long term debt

BANK
Deposits from banks
Deposits from customers
Borrowings
Long term debt

1,205,908
20,533,702
614,228
676,595
23,030,433

670,525
10,877,192
954,824
12,502,541

531,036
18,888,870
614,228
676,595
20,710,729

120,963
9,609,730
954,824
10,685,517

187

NOTES TO THE FINANCIAL STATEMENTS
188

FOR THE PERIOD ENDED 31 DECEMBER 2012

(All amounts in thousands of Nigeria Naira unless otherwise stated)

7.

2012 | ANNUAL REPORT & ACCOUNTS

31 December
2012

31 December
2011

7,991,581
10,346,793
219,667
(1,552,893)
-

38,355,656
1,043,639
18,117,198
(1,414,013)
(735,904)

23,142
17,028,290

42,115
55,408,691

5,886,844
10,367,515
219,667
(1,552,893)
-

48,859,567
1,231,705
4,177,005
(1,414,013)
-

23,142
14,944,275

94,767
52,949,031

Impairment charge for credit losses
GROUP
Loans and advances to customers (refer to note 22)
Increase in collective impairment
Increase in specific impairment
Amounts written off in the year as uncollectible
Income received on claims previously written off
Reversal of impairment
Advances under finance leases (refer to note 22.2)
Increase in impairment

BANK
Loans and advances to customers (refer to note 22)
Increase in collective impairment
Increase in specific impairment
Amounts written off in the year as uncollectible
Income received on loans previously written off
Reversal of impairment
Advances under finance leases (refer to note 22.2)
Increase in impairment

The high impairment charge in 2011 was due to the sale of non-performing loans (NPLs) to the Asset Management Company of
Nigeria (AMCON) at significant discounts to book values (carrying amounts). As part of the overall clean up strategy by the
Central Bank of Nigeria (CBN), a company called AMCON was established to buy up all bad assets (non-performing loans) in the
books of banks. The purchases by AMCON was based on the value of underlying collaterals of the loans. Where a loan collateral
is not perfected, such a loan will be bought at 5% of the book value or carrying amount. The balance of 95% will be provided for
by the Bank.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

4,869,693
2,471,324
9,578,146
102,068
5,354,241
1,332,151
276,432
2,512,659
26,496,714

3,960,910
1,359,660
7,521,231
74,962
457,613
840,877
17,313
5,128,979
19,361,545

(1,311,710)

(350,228)

Net fee and commission income

25,185,004

19,011,317

BANK
Commission on turnover
Letter of credit commission
Service fees & charges
Collection & agency charges
Bonds, guarantees issuance and OD fees
Funds transfer commission
Corporate finance fees
Others
Fee and commission income

4,826,753
2,291,331
9,578,146
102,068
5,354,241
637,663
480,889
2,383,463
25,654,554

3,966,417
1,253,722
7,351,069
74,962
3,771,689
436,808
1,419,897
18,274,564

(1,311,710)

(348,223)

24,342,844

17,926,341

8.

Net fee and commission income
GROUP
Commission on turnover
Letter of credit commission
Service fees & charges
Collection & agency charges
Bonds and guarantees issuance fees
Funds transfer commission
Corporate finance fees
Others
Fee and commission income
Fee and commission expense

Fee and commission expense
Net fee and commission income

Trust and other fiduciary fees relates to fees earned by the Bank and Group on trust and fiduciary activities where the Bank and
Group hold or invest assets on behalf of its customers. Of this , N129.2 million in Dec. 2012 (N107.2 million in Dec. 2011) relates
to fees earned from holding Pension Fund Assets.

189

NOTES TO THE FINANCIAL STATEMENTS
190

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

1,025,151
1,025,151

505,778
727,128
1,232,906

1,025,151
1,025,151

439,591
727,128
1,166,719

(996,493)
(996,493)

(514,766)
(514,766)

996,312)
(996,312)

(513,539)
(513,539)

2,371,175
698,308
3,069,483

1,688,829
331,445
2,020,274

2,371,175
403,409
2,774,584

1,688,829
317,857
2,006,686

9.

Net gains from financial instruments held for trading
GROUP
Equity securities
Debt securities
BANK
Equity securities
Debt securities

10 Net losses on available for sale investment securities
GROUP
Fair value movement on disposed AFS investment securities
Fair value loss on AFS investment securities
BANK
Fair value movement on disposed AFS investment securities
Fair value loss on AFS investment securities

11. Foreign exchange income
GROUP
Revaluation gain/loss
Other foreign exchange income

BANK
Revaluation gain/loss
Other foreign exchange income

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

GROUP
Dividend income

281,253

508,704

BANK
Dividend income

281,253

51,462

630,760
245,682
876,442

81,146
587,760
668,906

455,347
103,357
558,704

81,146
35,835
116,981

19,951,324

15,194,715

762,163
3,442,548
1,807,165
25,963,200

236,024
696,958
602,945
16,730,642

18,544,500

14,165,618

428,671
3,427,035
1,813,224
24,213,430

232,175
692,218
2,603,086
17,693,097

12. Dividend income

Dividend income represents income earned from holding unquoted securities.
13. Other income
GROUP
Recoveries
Others
BANK
Recoveries
Others
14. Employee benefit expenses
GROUP
Wages and salaries
Pension costs:
- Defined contribution plans
Productivity expense
Other benefits costs
BANK
Wages and salaries
Pension costs:
- Defined contribution plans
Productivity expense
Other benefits costs

191

NOTES TO THE FINANCIAL STATEMENTS
192

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

2,159,805
386,643
3,108,787
42,895
4,749,203
2,966,604
270,574
20,332,183
8,568,050

1,147,279
2,801,060
1,071,097
1,156,618
1,645,208
2,005,662
739,450
305,330
24,674,638
4,195,149

42,584,744

39,741,491

2,157,077
386,643
3,102,842
42,895
4,749,203
2,966,604
270,574
17,402,536
8,470,760

1,035,668
2,801,060
1,071,097
884,383
1,645,208
2,005,662
739,450
305,330
20,239,395
4,138,481

39,549,134

34,865,734

15. Other operating expenses
GROUP
Financial charges
Operation write-off
Outsourcing expenses
Product promotion
AMCON Resolution Fund
NDIC Premium
Donations and subscriptions
Net restructuring expense (note 15b)
General and administrative expenses (note 15a)
Others
Total

BANK
Financial charges
Operation write-off
Outsourcing expenses
Product promotion
AMCON Resolution Fund
NDIC Premium
Donations and subscriptions
Net restructuring expense (note 15b)
General and administrative expenses (note 15a)
Others
Total

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(Amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

2,709,789
383,412
835,139
1,683,047
2,271,629
1,458,511
1,065,354
986,436
1,348,463
960,898
4,513,960
426,212
1,689,333
20,332,183

777,897
410,265
1,667,845
4,017,038
1,863,318
1,228,090
3,213,172
747,259
1,310,178
1,151,119
4,684,571
431,376
3,172,510
24,674,638

15a.

General and administrative expenses

GROUP
Business travels
Communication
Computer/network maintenance
Contractor compensation
Marketing & business communication
Repairs & maintenance
Security
Transport
Power
Rent on property under lease
Depreciation
Amortisation
Others

Operating lease rentals:
The Group usually pays lease rentals in advance and amortizes the cost over the tenor of the lease. The unexpired portion of the
prepaid lease rentals are reported in the statement of Financial Position as other assets - prepayments. At 31 December 2012
N1.3 billion (December 2011 N2.0 billion) was unamortized lease rentals

Within one year
Between two and five years
More than five years

31 December
2012

31 December
2011

1 January
2011

334,157
573,310
2,274,905
3,182,372

138,485
1,306,925
2,452,968
3,898,378

114,672
1,809,479
2,247,299
4,171,450

193

NOTES TO THE FINANCIAL STATEMENTS
194

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

840,822
381,821
834,872
1,671,449
2,266,077
1,455,742
1,061,811
984,195
1,343,207
952,098
4,032,358
357,622
1,220,462
17,402,536

777,897
410,265
1,667,845
4,017,038
2,063,318
1,228,090
951,497
747,259
1,310,178
1,151,119
4,093,627
325,044
1,496,218
20,239,395

BANK
Business travels
Communication
Computer/network maintenance
Contractor compensation
Marketing & business communication
Repairs & maintenance
Security
Transport
Power
Rent on property under lease
Depreciation
Amortisation
Others
Operating lease rentals:

The Bank usually pays lease rentals in advance and amortizes the cost over the tenor of the lease. The unexpired portion of
the prepaid lease rentals are reported in the statement of Financial Position as other assets - prepayments. At 31 December
2012 N1.3 billion (December 2011 N2.0 billion) was unamortized lease rentals

Within one year
Between two and five years
More than five years

31 December
2012

31 December
2011

1 January
2011

215,467
459,032
613,041
1,287,540

55,886
1,210,608
740,202
2,006,696

99,865
1,786,039
820,243
2,706,147

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

15b.

2012 | ANNUAL REPORT & ACCOUNTS

Net restructuring expense

This represents the net restructuring expense from the absorption of the operations of non banking subsidiaries. In year 2011,
Diamond Mortgage Limited (DML) and Diamond Capital Markets Limited (DCL)were wound up during the period and their
operations were transferred to the Bank.
DML
DCL
Total
31 Dec 2011
31 Dec 2011
31 Dec 2011
GROUP AND BANK
Redundancy payments
(155,000)
(132,330)
(287,330)
Consultancy
(43,000)
(43,000)
Proceeds from license sold
25,000
25,000
Total
(155,000)
(150,330)
(305,330)
16. Taxation

31 December
2012

31 December
2011

GROUP
Corporate tax
Education tax
Capital gains tax
Over provision in prior years
Current income tax - current period

744,904
530,134
532
1,275,570

693,904
4,832
(40,514)
658,222

Origination and reversal of temporary deferred tax differences
Income tax expense

4,097,888
5,373,458

(4,682,166)
(4,023,944)

The movement in the current income tax liability is as follows:
At start of the period
Tax paid
Liabilities on Subsidiaries Disposed
Income tax charge
At 31 December

1,346,904
(649,934)
1,275,570
1,972,540

1,995,250
(1,106,844)
(199,724)
658,222
1,346,904

1,972,008
532
1,972,540

1,346,904
1,346,904

Current
Non-current

195

NOTES TO THE FINANCIAL STATEMENTS
196

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

16. Taxation (cont’d)

31 December
2012

31 December
2011

Reconciliation of effective tax rate
Profit before income tax
Tax calculated using the domestic corporation tax rate of 30% (2011: 30%, 2010: 30%)
Capital gains tax
Education tax levy
Minimum tax
Prior year provision
Disallowed permanent differences
Exempted permanent differences
Over provision in prior year
Total income tax expense in income statement

27,481,541
8,244,462
532
530,134
684,786
952,880
598,549
(5,637,887)
5,373,456

(17,964,929)
(5,389,479)
552,662
6,893,090
108,903
(6,148,606)
(40,514)
(4,023,944)

BANK
Corporate tax
Education tax
Capital gains tax
Current income tax - current period

684,786
525,113
532
1,210,431

552,662
552,662

Origination and reversal of temporary deferred tax differences
Income tax expense

4,081,107
5,291,538

(4,816,617)
(4,263,955)

31 December
2012
1,249,616
(581,167)
1,210,431
1,878,880

31 December
2011
1,649,557
(952,603)
552,662
1,249,616

1 January
2011
3,360,544
(2,727,611)
1,016,624
1,649,557

1,878,348
532
1,878,880

1,249,616
1,249,616

1,649,557
1,649,557

The movement in the current income tax liability is as follows:

At start of the period
Tax paid
Liabilities on Subsidiaries Disposed
Income tax charge
At 31 December
Current
Non-current

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

16. Taxation (cont’d)

31 December
2012

31 December
2011

28,364,965
8,509,490
532
525,113
684,786
1,070,664
219,974
(5,719,021)
5,291,538

(27,132,209)
(8,122,105)
552,662
9,355,847
(6,050,359)
(4,263,955)

Reconciliation of effective tax rate
Profit before income tax
Tax calculated using the domestic corporation tax rate of 30% (2011: 30%, 2010: 30%)
Capital gains tax
Education tax levy
Minimum tax
Prior year provision
Disallowed permanent differences
Exempted permanent differences
Total income tax expense in income statement

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations
is subject to interpretation. It establishes provisions where appropriate on the basis of the amounts expected to be paid to the
tax authorities.
17. Discontinued Operations
GROUP
17a.

(Loss)/ profit from discontinued operations
In line with the Central Bank of Nigeria's directive on disposal of non banking subsidiaries in year 2011, the Bank disposed
its equity investment in its non banking subsidiaries: ADIC Insurance Limited (ADIC), Diamond Registrars Limited (DRL) and
Diamond Securities Limited (DSL).
ADIC
31 Dec 2011
GROUP
Revenues
311,338
Expenses
(434,950)
(Loss)/ profit before tax of discontinued operations (123,612)
Tax
(57,053)
(Loss)/ profit from discontinued
operations after tax
(180,665)

DRL
31 Dec 2011

DSL
31 Dec 2011

Total
31 Dec 2011

118,226
(31,432)
86,794
-

24,689
(41,752)
(17,063)
-

454,253
(508,134)
(53,881)
(57,053)

86,794

(17,063)

(110,934)

197

NOTES TO THE FINANCIAL STATEMENTS
198

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

17b.

Gain/ (loss) on the disposal of non banking subsidiaries investment
ADIC
31 Dec 2011

DRL
31 Dec 2011

DSL
31 Dec 2011

Total
31 Dec 2011

Proceeds on disposal
Incidental expenses
Net proceeds on disposal

6,750,000
(162,780)
6,587,220

90,000
(1,000)
89,000

110,000
(23,000)
87,000

6,950,000
(186,780)
6,763,220

Group's share of net assets as at date of disposal
Gain/(loss) on disposal
Profit from discontinued operations

(6,138,156)
449,064

(28,933)
60,067

(267,999)
(180,999)

(6,435,088)
328,132
217,198

GROUP

The aggregate book values of the net assets for the three subsidiaries disposed at the respective dates of disposal were as follows:
ADIC
DRL
DSL
Total
Jun 2011
Jun 2011
Jun 2011
Jun 2011
Cash
Due from banks
Dealing securities
Loans and advances
Long term investment
Deferred tax asset
Other assets
Property plant and equipment
Premium receivable
Deferred acquisition cost
Statutory deposit
Total assets

106,234
6,542,422
335,405
698,411
746,872
175,649
125,802
500,000
9,230,795

1,992,243
3,393
148,049
11,886
2,155,571

247,594
69,463
11,455
2,080
1,059,199
499,550
3,654
1,892,995

106,234
2,239,837
69,463
11,455
6,544,502
1,397,997
1,346,010
762,412
175,649
125,802
500,000
13,279,361

Due to customers
Current income tax
Other liabilities
Retirement benefits
Deposit administered funds
Outstanding claims
Insurance funds
Total liabilities

182,857
400,839
3,066
12,099
2,247,996
2,846,857

7,043
2,118,529
1,066
2,126,638

547,274
9,824
1,067,286
612
1,624,996

547,274
199,724
3,586,654
1,678
3,066
12,099
2,247,996
6,598,491

Net asset
Group's share of net assets

6,383,938
6,138,156

28,933
28,933

267,999
267,999

6,680,870
6,435,088

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

ADIC
Jun 2011

DRL
Jun 2011

DSL
Jun 2011

Total
Jun 2011

6,750,000
(162,780)
6,587,220
(106,234)

90,000
(1,000)
89,000
(1,992,243)

110,000
(23,000)
87,000
(247,594)

6,950,000
(186,780)
6,763,220
(2,346,071)

6,480,986

(1,903,243)

(160,594)

4,417,149

6,750,000
(162,780)
6,587,220
(6,307,959)

90,000
(1,000)
89,000
(50,000)

110,000
(23,000)
87,000
(3,378,000)

6,950,000
(186,780)
6,763,220
(9,735,959)

279,261

39,000

(3,291,000)

(2,972,739)

DML

DCL

Total

(2,432,236)

(6,177,036)

(8,609,272)
(11,582,011)

(429,885)
(2,522)
(432,407)

(480,781)
1,281
418,478
(61,022)

(696,688)
254,728
1,418,478
976,518

Analysis of proceeds on sale of non banking subsidiaries
Cash consideration received
Cash paid to sell
Net proceeds on disposal (Bank)
Cash & cash equivalent disposed
Net sales proceeds on disposal (Group)

BANK
Loss on disposal of subsidiaries
Proceeds on disposal
Incidental expenses
Net proceeds on disposal
Cost of investments
Profit/(loss) on disposal
Write down/losses on restructuring of subsidiaries

Total loss on absorption
Loss on disposal and absorption of Subsidiaries
Cashflows attributable to discontinued operations
Net cash flow from Operating activities
Net cash flow from Investing activities
Net cash flow from Financing activities
Net cashflow inflow/outflow

213,978
255,969
1,000,000
1,469,947

199

NOTES TO THE FINANCIAL STATEMENTS
200

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

18. Earnings per share
a.

Basic

Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year, excluding the average number of ordinary shares purchased by the
Company and held as treasury shares.
31 December
2012

31 December
2011

22,141,378
22,141,378
14,475,243
152.96
152.96
-

(13,137,498)
(13,361,652)
224,154
14,475,243
(90.76)
(92.31)
1.55

23,073,427
14,475,243
159.40

(22,868,254)
14,475,243
(157.98)

GROUP
Profit attributable to equity holders of the Company
From continuing operations
From discontinued operations
Weighted average number of ordinary shares in issue (in million)
Basic earnings per share (expressed in Kobo per share)
From continuing operations
From discontinued operations
BANK
Profit for the period
Weighted average number of ordinary shares in issue (in million)
Basic earnings per share (expressed in Kobo per share)

The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent and the number of
basic weighted average number of shares excluding treasury shares. The effect of the conversion of the convertible borrowings to
shares has been assessed and it has been determined that it has a non-dilutive effect.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

19. Cash and balances with central banks

GROUP
Cash
Balances with central banks other than mandatory reserve deposits
Included in cash and cash equivalents
Mandatory reserve deposits with central banks

BANK
Cash
Balances with central banks other than mandatory reserve deposits
Included in cash and cash equivalents
Mandatory reserve deposits with central banks

31 December
2012

31 December
2011

01 January
2011

16,380,761
42,463,968
58,844,729
73,351,332
132,196,061

11,878,439
11,525,939
23,404,378
32,379,701
55,784,079

9,433,800
14,795,632
24,229,432
3,376,768
27,606,200

13,671,268
39,435,175
53,106,443
70,118,147
123,224,590

10,490,884
11,525,939
22,016,823
32,379,701
54,396,524

6,528,485
7,965,876
14,494,361
3,376,768
17,871,129

Mandatory reserve deposits are not available for use in the Group and Bank's day-to-day operations. The Group had
restricted cash balances of N73 billion with the Central Banks as at 31 December 2012 (December 2011: N32 billion).
20. Cash and cash equivalents
Cash and cash equivalents comprise balances with less than three months' maturity from the date of acquisition, including
cash in hand, deposits held at call with other banks and other short-term highly liquid investments with original maturities
less than three months. For the purpose of the statement of cash flows, cash and cash equivalents include:

GROUP
Cash and balances with central banks (Note 19)
Loans to banks (Note 21)
Treasury bills and eligible bills ( with original maturity
of 3 months or less)

31 December
2012

31 December
2011

01 January
2011

58,844,729
139,803,281

23,404,378
90,648,011

24,229,432
72,155,340

29,500,000
228,148,010

114,052,389

2,000,000
98,384,772

201

NOTES TO THE FINANCIAL STATEMENTS
202

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

(All amounts in thousands of Nigeria Naira unless otherwise stated)

31 December
2012

31 December
2011

01 January
2011

53,106,443
113,384,200

22,016,823
72,098,846

14,494,361
61,620,185

29,500,000
195,990,643

94,115,669

2,000,000
78,114,546

103,242,076
36,561,205
139,803,281
139,803,281
139,803,281

57,816,233
32,831,778
90,648,011
90,648,011
90,648,011

18,647
24,441,867
47,694,826
72,155,340
72,155,340
72,155,340

84,095,155
29,289,045
113,384,200

46,934,918
25,163,928
72,098,846

19,377,289
42,242,896
61,620,185

20. Cash and cash equivalents (cont’d)
BANK
Cash and balances with central banks (Note 19)
Loans to banks (Note 21)
Treasury bills and eligible bills ( with original maturity
of 3 months or less)

21. Loans to banks
GROUP
Current balances with banks within Nigeria
Currrent balances with banks outside Nigeria
Placements with banks and discount houses
Carrying amount
Current
Non-current
BANK
Current balances with banks within Nigeria
Current balances with banks outside Nigeria
Placements with banks and discount houses
Carrying amount

Balances with banks outside Nigeria include Group: N17.1 billion Bank: N15.2 billion (Dec 2011 Group: N15 billion Bank: N12.7
billion) which represents the naira value of foreign currency bank balance held on behalf of customers in respect of Letters of
Credit transactions. The corresponding liability is included in other liabilities (see note 39). The amount is not available for the
day-to-day operations of the Group.
Included in placements with banks and discount houses are placements with banks within Nigeria, N2 billion (Dec 2011:
N7.5b).
Current
113,384,200
72,098,846
61,620,185
Non-current
113,384,200
72,098,846
61,620,185

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

22. Loans and advances to customers
Gross
amount

Specific
impairment

Collective
impairment

Total
impairment

Carrying
amount

108,493,823
484,273,967
4,910,944
1,390,894
599,069,628

5,591,817
7,887,048
226,585
13,705,450

3,065,730
8,605,988
18,548
11,690,266

8,657,547
16,493,036
245,133
25,395,716

99,836,276
467,780,931
4,665,811
1,390,894
573,673,912

11,650,676
610,720,304

4,457
13,709,907

119,972
11,810,238

124,429
25,520,146

11,526,247
585,200,158

96,733,343
311,286,384
3,950,898
1,288,493
413,259,119

20,728,067
6,354,678
2,270
27,085,015

1,522,296
4,028,705
14,176
15,462
5,580,639

22,250,363
10,383,383
16,446
15,462
32,665,654

74,482,979
300,903,001
3,934,452
1,273,031
380,593,465

9,315,543
422,574,662

1,665,914
28,750,929

106,608
5,687,247

1,772,522
34,438,176

7,543,021
388,136,486

76,730,091
260,140,846
5,850,733
393,511
343,115,181

24,230,291
12,540,702
36,770,993

848,384
2,510,744
12,675
3,371,803

25,078,675
15,051,446
12,675
40,142,796

51,651,416
245,089,400
5,838,058
393,511
302,972,385

4,951,205
348,066,386

650,051
37,421,044

61,082
3,432,885

711,133
40,853,929

4,240,072
307,212,457

GROUP
31 December 2012
Overdrafts
Term loans
Staff loans
Commercial papers ('CP')

Advances under finance lease (Note 22.2)

31 December 2011
Overdrafts
Term loans
Staff loans
Commercial papers ('CP')

Advances under finance lease (Note 22.2)

1 January 2011
Overdrafts
Term loans
Staff loans
Commercial papers ('CP')

Advances under finance lease (Note 22.2)

Cash collateral against advances is N1.56 billion (31 December 2011: N2.63 billion)

203

NOTES TO THE FINANCIAL STATEMENTS
204

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

22. Loans and advances to customers (cont’d)

Current
Non-current

31 December
2012

31 December
2011

01 January
2011

312,218,355
272,981,803
585,200,158

210,669,171
177,467,315
388,136,486

170,245,966
136,966,491
307,212,457

Gross
amount

Specific
impairment

Collective
impairment

Total
impairment

Carrying
amount

96,311,023
434,752,491
4,615,759
535,679,273
11,466,683
547,145,956

5,331,000
7,625,168
226,586
13,182,754
4,457
13,187,211

2,144,710
8,304,318
18,548
10,467,576
116,561
10,584,137

7,475.710
15,929,486
245,134
23,650,330
121,018
23,771,348

88,835,313
418,823,005
4,370,624
512,028,942
11,345,665
523,374,608

91,244,100
273,257,657
3,950,898
368,452,655

21,524,400
5,504,131
2,270
27,030,801

750,443
3,805,926
14,176
4,567,543

17,994,473
13,580,420
23,451
31,598,344

73,249,627
259,677,237
3,927,447
336,854,311

9,315,541
377,768,196

1,665,914
28,696,715

106,608
4,674,151

1,772,522
33,370,866

7,543,019
344,397,331

76,725,903
251,297,990
5,850,733
393,511
334,268,137

24,230,291
11,690,154
35,920,445

665,568
2,374,829
12,675
3,053,072

24,895,859
14,064,984
12,675
38,973,517

51,830,044
237,233,006
5,838,058
393,511
295,294,620

4,951,205
339,219,342

650,051
36,570,496

61,082
3,114,154

711,133
39,684,650

4,240,072
299,534,692

BANK
31 December 2012
Overdrafts
Term loans
Staff loans
Advances under finance lease (Note 22.2)

31 December 2011
Overdrafts
Term loans
Staff loans

Advances under finance lease (Note 22.2)

1 January 2011
Overdrafts
Term loans
Staff loans
Commercial papers ('CP')

Advances under finance lease (Note 22.2)

Cash collateral against advances is N784 million (31 December 2011: N1.52 billion)

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Current
Non-current

22.1.

31 December
2012

31 December
2011

01 January
2011

243,701,468
279,673,140
523,374,608

185,852,962
158,544,369
344,397,331

162,568,201
136,966,491
299,534,692

Reconciliation of impairment allowance on loans and advances to customers:

GROUP

Balance at 1 January 2012
Specific impairment
Collective impairment
Additional provision
Specific impairment
Collective impairment
Provision no longer required
Amounts written off
Specific impairment
Collective impairment
Balance at 31 December 2012
Balance at 1 January 2011
Specific impairment
Collective impairment

Overdrafts

Term loans

CP

Advances
finance
lease

20,728,067
1,522,296
22,250,363

6,354,678
4,028,705
10,383,383

15,462
15,462

1,665,914
106,608
1,772,522

2,270
14,176
16,446

28,750,929
5,687,247
34,438,176

4,680,633
1,543,434
(114,819)
(19,702,064)
5,591,817
3,065,730
8,657,547

1,532,370
4,577,283

(15,462)

(1,661,457)
13,364

224,316
4,372

7,887,048
8,605,988
16,493,036

0
0

4,457
119,972
124,428

226,585
18,548
245,133

4,775,861
6,122,991
(114,819)
(19,702,064)
13,709,907
11,810,238
25,520,145

24,230,291
848,384
25,078,675

12,540,702
2,510,744
15,051,446

-

650,051
61,082
711,133

12,675
12,675

37,421,044
3,432,885
40,853,929

10,007
1,517,960

15,462

1,015,863
45,526

2,270
1,501

38,271,210
2,254,362

(6,196,031)
6,354,678
4,028,705
10,383,383

15,462
15,462

1,665,914
106,608
1,772,522

-

(46,205,421)
(735,904)
28,750,929
5,687,247
34,438,176

Additional provision
Specific impairment
37,243,071
Collective impairment
673,913
Loans written off during the
year as uncollectible
(40,009,390)
Amounts recovered during the year
(735,904)
Specific impairment
20,728,067
Collective impairment
1,522,296
Balance at 31 December 2011
22,250,363

Staff loans

Total

2,270
`14,176
16,446

205

NOTES TO THE FINANCIAL STATEMENTS
206

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

22.1. (cont’d)
Overdrafts

Term loans

CP

Advances
finance
lease

21,524,400
750,443
22,274,843

5,504,130
3,802,924
9,307,054

-

1,665,914
106,608
1,772,522

2,270
14,176
16,446

28,696,714
4,674,151
33,370,865

2,220,951
1,394,267
(114,819)
(18,299,532)
5,331,000
2,144,710

2,121,038
4,501,394
7,625,168
8,304,318

-

(1,661,457)
9,953
4457
116,561

224,316
4,372
226,585
18,548

2,904,848
5,909,986
(114,819)
(18,299,532)
13,187,211
10,584,137

7,475,710

15,929,486

-

121,018

245,134

23,771,348

24,230,291
665,568
24,895,859

11,690,154
2,374,829
14,064,984

-

650,051
61,082
711,133

12,675
12,675

36,570,496
3,114,154
39,684,650

Staff loans

Total

BANK
Balance at 1 January 2012
Specific impairment
Collective impairment
Additional provision
Specific impairment
Collective impairment
Provision no longer required
Amounts written off
Specific impairment
Collective impairment
Balance at 31 December 2012
Balance at 1 January 2011
Specific impairment
Collective impairment
Additional provision
Specific impairment
Collective impairment
Loans written off during the
year as uncollectible
Amounts recovered during the year
Specific impairment
Collective impairment

35,477,776
84,875

10,007
1,428,095

-

1,015,863
45,526

2,270
1,501

36,505,915
1,559,997

(37,447,762)
(735,904)
21,524,400
750,443

(6,196,031)
5,504,130
3,802,924

-

1,665,914
106,608

2,270
14,176

(43,643,794)
(735,904)
28,696,714
4,674,151

Balance at 31 December 2011

22,274,843

9,307,054

-

1,772,522

16,446

33,370,865

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

22.2.

31 December
2011

01 January
2011

9,554,636
4,065,407
13,620,043
(1,969,367)
11,650,676
(124,429)
11,526,247

3,431,919
7,418,964
10,850,883
(1,535,340)
9,315,543
(1,769,111)
7,546,432

2,828,762
2,788,668
5,617,430
(666,225)
4,951,205
(711,133)
4,240,072

9,340,749
3,974,400
13,315,149
(1,848,465)
11,466,684
(121,018)
11,345,665

3,431,919
7,418,962
10,850,881
(1,535,340)
9,315,541
(1,772,522)
7,543,019

2,828,762
2,788,668
5,617,430
(666,225)
4,951,205
(711,133)
4,240,072

8,796,722
2,853,954
11,650,676

2,314,312
7,001,229
9,315,541

2,288,825
2,662,380
4,951,205

8,612,729
2,853,954
11,466,683

2,314,312
7,001,229
9,315,541

2,288,825
2,662,380
4,951,205

Advances under finance lease may be analysed as follows:

GROUP
Gross investment
-No later than 1 year
-Later than 1 year and no later than 5 years
Unearned future finance income on finance leases
Net investment
Less provision

BANK
Gross investment
-No later than 1 year
-Later than 1 year and no later than 5 years
Unearned future finance income on finance leases
Net investment
Less provision
22.3.

31 December
2012

The net investment may be analysed as follows:

GROUP
- No later than 1 year
- Later than 1 year and no later than 5 years
- Later than 5 years
BANK
- No later than 1 year
- Later than 1 year and no later than 5 years
- Later than 5 years

207

NOTES TO THE FINANCIAL STATEMENTS
208

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
201122.4.

375,370,862
1,059,597
232,032,803
2,257,042
601,720,304

226,411,748
1,572,694
165,388,358
29,201,862
422,574,662

221,944,849
5,875,036
101,381,188
18,865,313
348,066,386

Nature of security in respect of loans and advances:
GROUP
Secured against real estate
Secured by shares of quoted companies
Otherwise secured
Unsecured

The Group is not permitted to sell or repledge the collateral in the absence of default by the owner of the collateral.
BANK
Secured against real estate
Secured by shares of quoted companies
Otherwise secured
Unsecured

361,114,663
1,059,597
182,714,654
2,257,042
547,145,956

226,267,081
1,572,694
149,913,974
14,447
377,768,196

221,348,071
5,875,036
109,995,269
2,000,966
339,219,342

GROUP AND BANK
During the period, the Group obtained assets by realising the following collateral held as security:
Nature of assets and carrying amount:
Real estate
Shares
Debentures

54,000
287,208
341,208

190,132
105,319
295,451

131,355
1,085,316
198,536
1,415,207

Repossessed properties are sold as soon as practicable, with the proceeds used to reduce the outstanding indebtedness.

NOTES TO THE FINANCIAL STATEMENTS
2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

2,183,513
87,927,723
90,111,236
90,111,236

1,257,075
6,784,543
8,041,618
8,041,618

1,121,410
1,121,410
224,142
224,142
1,345,552

87,927,723
2,183,513
90,111,236

6,784,543
1,257,075
8,041,618

1,345,552
1,345,552

2,183,513
87,927,723
90,111,236
90,111,236

1,257,075
6,784,543
8,041,618
8,041,618

1,109,079
1,109,079
1,109,079

87,927,723
2,183,513
90,111,236

6,784,543
1,257,075
8,041,618

1,109,079
1,109,079

23. Financial assets held for trading
GROUP
Government bonds
Treasury bills
Total debt securities
Listed equity securities
Total equity securities
Total assets held for trading
Current
Non Current

BANK
Government bonds
Treasury bills
Total debt securities
Listed equity securities
Total equity securities
Total assets held for trading
Current
Non Current

209

NOTES TO THE FINANCIAL STATEMENTS
210

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

2,427,634

77,017,078

7,705,615

5,584,464
7,806,800

5,561,212
7,856,975

5,559,629
9,680,898

Total securities available for sale

984,055
(6,201,344)
8,173,975
10,601,609

1,142,841
(5,587,375)
8,973,653
85,990,731

1,142,841
(4,197,624)
12,185,744
19,891,359

Held to maturity investments
Debt securities – at amortised cost:
– Listed

65,762,681

61,712,761

56,977,064

Total investment securities

76,364,290

147,703,492

76,868,423

Current
Non-current

14,617,928
61,746,362
76,364,290

75,836,209
71,867,283
147,703,492

32,102,987
44,765,436
76,868,423

24. Investment Securities
24.1.

GROUP

Available for sale investments
Debt securities – at fair value:
– Treasury bills and government bonds
Equity securities – at fair value:
– Listed
- Unlisted
Equity securities – at cost:
– Unlisted
Fair value movement/ allowance for impairment

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
201

2,427,634

67,811,749

7,245,289

5,520,167
7,806,800

5,520,167
7,856,975

1,280,073
2,916,090

984,055
(6,183,595)
8,127,427

1,142,841
(5,569,422)
8,950,561

1,084,841
(1,430,487)
3,850,517

Total securities available for sale

10,555,061

76,762,310

11,095,806

Held to maturity investments
Debt securities – at amortised cost:
– Listed

64,751,769

52,253,105

43,978,424

Total investment securities

75,306,830

129,015,415

55,074,230

Current
Non-current

5,771,227
69,535,603
75,306,830

63,980,699
65,034,716
129,015,415

23,863,637
31,210,593
55,074,230

24.2.

BANK

Debt securities – at fair value:
– Treasury bills and government bonds
Equity securities – at fair value:
– Listed
- Unlisted
Equity securities – at cost:
– Unlisted
Fair value movement/ allowance for impairment

All debt securities have fixed coupons. Listed debt securities available for sale at fair value of N0.5billion (December 2011:
N2.2 billion ) were pledged. These have been reclassified as assets pledged as collateral on the face of the consolidated
statement of financial position.

211

NOTES TO THE FINANCIAL STATEMENTS
212

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

24.3. The reconciliation of the allowance account for losses on securities classified as available for sale is as follows:
Specific allowance
for impairment
GROUP
Available for sale- unlisted equity securities
Balance at 1 January 2011
Write back on disposed investment
Fair value movement for the period
Increase in impairment allowance
At 31 December 2011

4,197,624
(3,231)
876,632
516,350
5,587,375

Balance at 1 January 2012
Write back of impairment
Fair value movement for the period
At 31 December 2012

5,587,375
(137,059)
960,192
6,201,344

BANK
Available for sale- unlisted equity securities
Balance at 1 January 2011
Fair value movement/impairment losses from subsidiaries absorbed
Increase in impairment allowance
Fair value movement for the period
At 31 December 2011

1,482,862
1,373,145
513,539
2,199,876
5,569,422

Balance at 1 January 2012
Write back of impairment
Fair value movement for the period
Provision no longer required
At 31 December 2012

5,569,422
(137,059)
960,192
(208,960)
6,183,595

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

25. Asset pledged as collateral
Treasury bills and bonds are pledged to the Nigerian Inter Bank Settlement System Company (NIBSS) and Federal Inland
Revenue Service (FIRS) in respect of the Bank's ongoing participation in the Nigerian settlement system and as an agent in
respect of tax collection for FIRS respectively. Treasury bills and bonds are also pledged as collateral to other financial
institutions on amounts borrowed.
The nature and carrying amounts of the assets pledged as collaterals are as follows:
31 December
2012
GROUP
Investments - Bonds
Investments - Treasury Bills

Current
Non-current

31 December
2011

01 January
2011

43,520,516
35,782,015
79,302,531

21,420,000
13,520,000
34,940,000

16,670,000
21,150,000
37,820,000

35,850,500
43,452,031
79,302,531

15,020,000
19,920,000
34,940,000

23,400,000
14,420,000
37,820,000

11,211,465
3,933,250
17,832,993
32,977,708

19,337,400
16,513,895
35,851,295

15,510,000
15,510,000

The related liability for assets pledged as collateral include:
Bank of Industry (BOI)
African Export Import Bank (AFREXIM)
Deposit from Banks
Central Bank

The Assets pledged as collateral were pledged to third parties under secured borrowing with the related liability disclosed
above. In addition, there were assets pledged as collateral for security deposit for clearing house and payment agencies of
N51.9bn (2011:N16 bn) for which there is no related liability.

213

NOTES TO THE FINANCIAL STATEMENTS
214

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

25. Asset pledged as collateral (cont’d)
31 December
2012
BANK
Investments - Bonds
Investments - Treasury Bills

Current
Non-current

The related liability for assets pledged as collateral include:
Bank of Industry (BOI)
African Export Import Bank (AFREXIM)
Deposit from Banks

31 December
2011

01 January
2011

31,161,591
26,277,305
57,438,896

21,420,000
13,520,000
34,940,000

16,670,000
21,150,000
37,820,000

35,688,697
21,750,199
57,438,896

15,020,000
19,920,000
34,940,000

23,400,000
14,420,000
37,820,000

11,211,465
3,933,250
15,144,715

19,337,400
16,513,895
35,851,295

15,510,000
15,510,000

The Assets pledged as collateral were pledged to third parties under secured borrowing with the related liability disclosed above.
In addition, there were assets pledged as collateral for security deposit for clearing house and payment agencies of N42.3bn
(2011:N16 bn) for which there is no related liability. The Bank cannot trade on these pledged assets during the period that such
assets are committed as pledged.
31 December 31 December
01 January
2012
2011
2011
26. Insurance receivables
GROUP
Due from Contract Holders
Due from Agents and Stock Brokers
Reinsurance Assets
Provision for Doubtful Receivables

-

-

105,373
742,271
518,083
1,365,727
(660,068)
705,659

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

8,475,445
6,576,257
102,060
15,153,762
(1,360,657)
13,793,105

6,206,531
5,995,262
172,600
12,374,393
(1,710,948)
10,663,445

11,882,873
14,153,230
146,404
26,182,507
(9,533,065)
16,649,442

1,710,948
(350,291)
1,360,657

9,533,065
1,084,164
(8,906,281)
1,710,948

9,050,029
3,691,746
(1,167,938)
(2,040,772)
9,533,065

11,328,153
2,464,952
13,793,105

9,539,357
1,124,087
10,663,444

12,140,161
4,509,281
16,649,442

6,334,923
5,163,883
102,060
11,600,866
(1,360,657)
10,240,209

3,841,604
4,217,338
172,600
8,231,542
(1,702,245)
6,529,297

6,907,388
9,736,908
146,404
16,790,700
(8,126,335)
8,664,365

1,702,245
(341,588)
1,360,657

8,126,335
1,051,735
(7,475,825)
1,702,245

8,484,880
2,819,792
(1,167,938)
(2,010,399)
8,126,335

7,861,239
2,378,970
10,240,209

5,860,742
668,555
6,529,297

6,123,454
2,540,911
8,664,365

27. Other assets
GROUP
Prepayments
Accounts receivable
Others
Less specific allowances for impairment
Reconciliation of impairment account
At start of period
Increase in impairment
Amount reclassified to Investments
Amounts written off
At end of period
Current
Non-current
BANK
Prepayments
Accounts receivable
Others
Less specific allowances for impairment
Reconciliation of impairment account
At start of period
Increase in impairment
Amount reclassified to Investments
Amounts written off
At end of period
Current
Non-current

215

NOTES TO THE FINANCIAL STATEMENTS
216

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

5,865,622
2,000,000
7,865,622

3,135,020
2,000,000
1,000,000
6,307,960
5,000,000
17,442,980

28. Investment in Subsidiaries
Diamond Bank du Benin (S.A)
Diamond Pension Fund Custodian Ltd (DPFC)
Diamond Mortgages Limited (DML)
Adic Insurance Limited (ADIC)
Diamond Capital and Financial Markets Limited (DCL)

5,865,622
2,000,000
7,865,622

The subsidiary companies comprise the following:
Ownership interest (%)
31 December 31 December
1 January
2012
2011
2011
Diamond Bank du Benin (S.A)
Diamond Pension Fund Custodian Ltd (DPFC)
Diamond Securities Limited (DSL)
Diamond Mortgages Limited (DML)
Adic Insurance Limited (ADIC)
Diamond Capital and Financial Markets Limited (DCL)
Diamond Registrars Limited (DRL)

97.07
100.00
-

97.07
100.00
-

95.38
100.00
100.00
100.00
96.15
100.00
100.00

All subsidiaries are incorporated in Nigeria with the exception of Diamond Bank du Benin S.A which is incorporated in the Republic
of Benin. Diamond Bank du Benin has 100% holding in Diamond Bank Togo, Diamond Bank Senegal, and Diamond Bank Cote
d'Ivoire. The transactions and financial performance of these subsidiaries are consolidated with the results of Diamond Bank du
Benin, and then consolidated with the bank.
The bank divested its interest in the non-banking subsidiaries with effect from July 31, 2011 following a directive by the CBN to the
effect that the universal banking model has been discontinued.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

3,184,549
(1,431)
(868)
-

3,502,339
(312,594)
(1,499)
(3,697)
(26,661)
26,661
-

3,502,339
-

At end of period

3,182,250

3,184,549

3,502,339

The group's gross investment in associates is shown below.

% Holding
50,000
52,500
35,000
45,000
34,000
96,661
426,587
112,753
2,491,413
153,796
3,497,710
(313,161)
3,184,549

50,000
52,500
35,000
45,000
34,000
70,000
426,587
107,464
312,595
2,491,413
164,280
3,788,839
(286,500)
3,502,339

29. Investment in associates
GROUP
Balance at beginning of period
Disposals
Share of profit before tax
Share of tax
(Impairment)/Write-back of excess loss of Associates
Acquisitions
Dividends paid

Flavours Foods Limited
PCI Resins Limited
PCI Paints Limited
Savannah Chum Chum & Fries Limited
Pek Industries Limited
Credit Ref. Company Nigeria Limited
APL Electric Limited
Health Partners Limited
ALVAC Company Limited
Geometrics - Power Aba Limited
Landmark Limited
Cummulative impairment

40.0%
7.6%
33.0%
41.3%
34.0%
7.6%
25.0%
17.8%
29.0%
25.0%
11.2%

50,000
52,500
35,000
45,000
34,000
96,661
426,587
114,777
2,491,413
149,473
3,495,411
(313,161)
3,182,250

217

NOTES TO THE FINANCIAL STATEMENTS
218

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

29. Investment in associates (cont’d)

BANK
The Bank's gross investment in associates is shown below.
Flavours Foods Limited
PCI Resins Limited
PCI Paints Limited
Savannah Chum Chum & Fries Limited
Pek Industries Limited
Credit Ref. Company Nigeria Limited
APL Electric Limited
Health Partners Limited
ALVAC Company Limited
Geometrics - Power Aba Limited
Landmark Limited

% Holding

31 December
2012

31 December
2011

01 January
2011

40.0%
7.6%
33.0%
41.3%
34.0%
7.6%
25.0%
17.8%
29.0%
25.0%
11.2%

50,000
52,500
35,000
45,000
34,000
96,661
426,587
60,000
2,491,413
227,140
3,518,301
(313,161)
3,205,140

50,000
52,500
35,000
45,000
34,000
96,661
426,587
60,000
2,491,413
227,140
3,518,301
(313,161)
3,205,140

50,000
52,500
35,000
45,000
34,000
70,000
286,500
(286,500)
-

Cummulative impairment

Summarised financial information of the Group's associate accounted for using equity method are as follows:

December 2012
December 2011
January 2011

Total Assets

Total
Liabilities

Revenues

Profit

612,334
13,533,295
11,260,624

178,987
4,658,501
4,631,218

762,352
599,666
421,025

(28,137)
(62,997)
(28,888)

There were no published price quotations for any associate. There are no significant restrictions on the ability of the associates to
transfer funds to the group in the form of cash dividends, or repayments of loans or advances.
The Bank exercises significant influence in PCI Resins Limited, Health Partners Limited, Landmark Limited and Credit Ref.
Company Nigeria Limited even though its shareholding is less than 20%. This is based on representation of at least one director on
the board of the companies and significant participation in the companies' operating and financial policies.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

31 December
2012

31 December
2011

01 January
2011

3,833,335

3,755,064

3,474,612

300,036
(63,031)

309,402
(231,131)
-

427,452
(147,000)
-

4,070,340

3,833,335

3,755,064

3,686,335

-

-

300,036
-

36,325
3,650,010

-

(76,031)
-

-

-

3,910,340

3,686,335

-

30. Investment property
GROUP
At beginning of the period
Additions arising from:
- Additional expenditure
Disposals during the year
Fair value loss on investment property
At the end of the period
BANK
At beginning of the period
Additions arising from:
- Additional expenditure
- Transfer from subsidiary
Fair value loss on investment property
Disposals during the year
At the end of the period

This represents the Bank and Group's investment in landed property held for the purpose of capital appreciation. Investment
property of N436.5 million (2011: N436.5 million) represents land acquired for the purpose of subsequent disposal.
Investment property located in Owerri was valued by Chris Ogbonna and Partners, while the Investment Property located at
Lagos and Abuja were valued by Jide Taiwo & Co both external accredited valuers. The Investment Property in Port Harcourt is
under construction and management has assessed that the cost incurred to date is a reflection of the value of the property. The
property being constructed is to be leased for income generation purposes. There is no rental income from investment property
during the year and no restrictions on the realiseability of the property. The method of valuation used is the market approach
where the valuer’s opinion of market value was derived from analysis of recent evidence of market transactions on comparable
properties within the neighbourhood.

219

NOTES TO THE FINANCIAL STATEMENTS
220

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31. Property, plant and equipment

Work In

Land

Leasehold

Motor

Office

Furniture,
Computer

fittings &

vehicles

equipment

equipment

equipment

Total

15,102,959
1,216,779
(2,486)

4,356,402
1,571,326
(4,305)

11,388,072
1,813,587
7,515

4,241,690
261,612
(6,702)

1,868,861
144,321
(11,496)

58,912,715
10,863,944
(10,683)
(8,490)
(3,079,467)

Building

Progress Improvement
GROUP
Cost
At 1 January 2012
Additions
Reclassifications
Write off
Disposals
Exchange difference
At 31 December 2012
Accumulated depreciation
At 1 January 2012
Charge for the year
Reclassifications
Write off

9,191,682
5,306,099
0

7,614,711
331,713
-

5,148,338
218,505
(1,698)

-

(4,400)

(95,842)

-

(809,688)

(1,280,381)

(636,115)

(253,041)

(972,181)

23,731

3,201

(21,976)

4,490

12,391

119,173

(55,825)

(886,996)

13,525,601

7,965,755

5,272,504

16,295,277

5,118,225

11,941,185

3,979,658

1,692,820

65,791,023

-

-

2,686,896
443,695
(690)

1,904,277
832,557
(472)

2,555,143
849,055
(89)

7,801,001
1,554,325
7,515
-

3,089,134
585,778
(6,620)
-

1,211,806
248,281
(11,139)
-

19,248,257
4,513,690
(10,244)
(1,251)
(2,933,681)

Disposals

-

-

(95,378)

-

(733,863)

(1,236,210)

(629,782)

(238,447)

Exchange differences

-

-

3,744

(43,598)

2,862

15,199

63,104

(47,391)

(6,081)

At 31 December 2012

-

-

3,038,266

2,692,763

2,673,108

8,141,829

3,101,614

1,163,109

20,810,690

Net book amount
At 31 December 2012

13,525,601

7,965,755

2,234,237

13,602,513

2,445,117

3,799,356

878,044

529,710

44,980,333

Cost
At 1 January 2011

8,401,949

6,517,668

3,380,776

13,599,113

4,873,192

11,723,122

4,015,960

1,628,266

54,140,046

Additions

3,883,287

1,097,043

787,928

222,664

1,339,639

858,559

1,088,549

324,203

9,601,872

(2,299,127)

-

195,282

1,777,761

23,480

259,432

4,707

38,465

Reclassifications
Write off
Disposals
Exchange difference
On disposal of subsidiaries
At 31 December 2011

(652,186)

(652,186)

-

-

(2,373)

-

(1,627,588)

(283,512)

(160,640)

(130,468)

(2,204,581)

(142,241)
9,191,682

7,614,711

872,253
(85,528)
5,148,338

3,885
(500,463)
15,102,959

(100,626)
(151,695)
4,356,402

(1,099,445)
(70,084)
11,388,072

(467,332)
(239,554)
4,241,690

68,036
(59,641)
1,868,861

(865,470)
(1,106,965)
58,912,716

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

221

31. Property, plant and equipment (cont’d)
Work In
Land
Progress Improvement

Leasehold

Building

Motor
vehicles

Office
equipment

Furniture,
Computer
equipment

fittings &
equipment

Total

17,185,860

Accumulated depreciation
At 1 January 2011

-

-

2,050,838

1,348,994

2,849,955

6,820,527

3,119,521

996,025

Charge for the year

-

-

498,598

558,772

1,134,987

1,655,969

517,005

319,240

4,684,571

Disposals
Exchange differences
On disposal of subsidiaries
At 31 December 2011

-

-

(1,937)
198,964
(59,567)
2,686,896

(107)
(3,382)
1,904,277

(1,279,354)
(30,213)
(120,232)
2,555,143

(270,076)
(361,899)
(43,520)
7,801,001

(163,375)
(310,125)
(73,892)
3,089,134

(103,352)
43,843
(43,950)
1,211,806

(1,818,094)
(459,537)
(344,543)
19,248,257

9,191,682

7,614,711

2,461,442

13,198,682

1,801,259

3,587,071

1,152,556

657,055

39,664,459

12,080,396
1,412,535
(5,079,295)
(11,687)

6,260,430
257,238
(18)
-

3,063,705
122,388
194,701
-

9,628,948
334,256
3,636,406
(497)

5,048,093
571,498
23,295
(756,321)
(13,373)

10,871,796
587,280
398,932
(128,336)
(6,550)

3,114,686
869,257
53,581
(10,712)
(10,852)

1,315,344
176,496
228,729
(47,829)
(44,474)

51,383,398
4,330,948
(543,651)
(943,216)
(87,433)

8,401,949

6,517,668

3,380,776

13,599,113

4,873,192

11,723,122

4,015,960

Net book amount
at 31 December 2011
Cost
At 1 January 2010
Additions
Reclassifications
Disposals
Exchange difference
At 1 January 2011

1,628,266 54,140,046

Accumulated depreciation
At 1 January 2010

-

-

1,636,822

1,567,270

2,427,357

5,273,637

2,366,430

771,255

14,042,771

Reclassifications
Exchange differences
Charge for the year
Disposals
At 1 January 2011

-

-

(11,570)
428,945
(3,359)
2,050,838

(589,687)
371,411
1,348,994

(75,180)
(11,494)
1,018,886
(509,614)
2,849,955

58,945
(5,507)
1,619,230
(125,778)
6,820,527

250,799
(10,208)
523,364
(10,864)
3,119,521

(-73,546 )
19,866)
348,005
(29,823)
996,025

(440,239)
(47,075)
4,309,841
(679,438)
17,185,860

8,401,949

6,517,668

1,329,938

12,250,119

2,023,237

4,902,595

896,439

632,241

36,954,186

At 31 December 2011

9,191,682

7,614,711

2,461,442

13,198,682

1,801,259

3,587,071

1,152,556

657,055

39,664,459

Net book amount
At 31 December 2012

13,525,601

7,965,755

2,234,237

13,602,513

2,445,117

3,799,356

878,044

529,710

44,980,333

Net book amount at 1 January 2011
Net book amount

NOTES TO THE FINANCIAL STATEMENTS
222

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31. Property, plant and equipment (cont’d)
Work In
Progress

Land
Leasehold
Improvement

Building

Motor
vehicles

Office
equipment

Furniture,
Computer
equipment

fittings &
equipment

Total

BANK
Cost
At 1 January 2012
Additions
Reclassifications
Write off
Disposals
At 31 December 2012

7,655,891
5,148,702
-

7,622,995
331,713
-

12,804,593

(4,400)
7,950,308

-

-

-

Net book amount at
31 December 2012
Cost
At 1 January 2011
Additions
Reclassifications
Write off
Disposals
At 31 December 2011

Accumulated depreciation
At 1 January 2012
Charge for the year
Reclassifications
Write off
Disposals
At 31 December 2012

Accumulated depreciation
At 1 January 2011
Charge for the year
Disposals
At 31 December 2011
Net book amount at
31 December 2011

3,700,412
32,012
1,698)
(95,158)
3,635,568

14,906,341
561,959
(2,486)
15,465,814

3,838,674
1,513,621
(4,305)
(740,192)
4,607,798

11,186,654
1,799,407
7,515
(1,274,512)
11,719,064

3,615,396
251,417
(6,620)
(626,931)
3,233,262

1,520,708
135,754
(8,639)
(249,614)
1,398,209

54,047,071
9,774,585
(7,744)
(8,490)
(2,990,807)
60,814,615

-

2,222,910
278,431
(690)
(94,882)
2,405,769

1,901,458
629,599
(472)
2,530,585

2,216,967
883,468
(89)
(670,883)
2,429,463

7,699,431
1,590,376
7,515
(1,233,563)
8,063,759

2,678,878
440,172
(6,620)
(622,340)
2,490,090

1,050,609
210,310
(8,639)
(236,780)
1,015,500

17,770,253
4,032,356
(7,744)
(1,251)
(2,858,448)
18,935,166

12,804,593

7,950,308

1,229,799

12,935,229

2,178,335

3,655,305

743,172

382,709

41,879,449

8,276,714
2,230,793
(2,299,127)
(552,489)
7,655,891

6,525,953
1,097,043
7,622,995

3,138,098
367,032
195,282
3,700,412

13,090,365
38,215
1,777,761
14,906,341

4,314,805
1,118,324
23,480
(1,617,935)
3,838,674

10,444,633
769,637
259,432
(287,048)
11,186,654

2,881,408
892,861
4,707
(163,580)
3,615,396

1,427,278
175,475
38,465
(120,510)
1,520,708

50,099,254
6,689,380
(552,489)
(2,189,073)
54,047,072

-

-

1,870,644
52,266
2,222,910

1,345,614
555,844
1,901,458

2,498,494
971,950
(1,253,477)
2,216,967

6,359,128
1,606,837
(266,534)
7,699,431

2,483,266
358,987
(163,375)
2,678,878

896,560
247,743
(93,694)
1,050,609

15,453,706
4,093,627
(1,777,080)
17,770,253

7,655,891

7,622,995

1,477,502

13,004,883

1,621,707

3,487,223

936,518

470,099

36,276,819

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

223

31. Property, plant and equipment (cont’d)
Work In Land
Progress
Cost
At 1 January 2010
Additions
Reclassifications
Disposals
At 1 January 2011

Leasehold
Building
Improvement

Motor

Office
vehicles

Computer
equipment

Furniture,
fittings &
equipment

equipment

Total

11,598,367
1,424,814
(4,746,467)
8,276,714

6,525,952
6,525,953

2,819,088
124,315
194,695
3,138,098

8,894,863
559,172
3,636,330
13,090,365

4,363,987
674,751
10,959
(734,892)
4,314,805

9,546,716
625,585
393,973
(121,641)
10,444,633

2,627,196
259,536
2,785
(8,109)
2,881,408

1,171,705
160,538
121,883
(26,848)
1,427,278

47,547,874
3,828,711
(385,842)
(891,490)
50,099,25

-

-

1,488,644
(799,353)
382,000
1,870,644

1,530,283
614,684
1,345,614

2,070,886
3,570
874,833
(443,655)
2,498,494

4,897,820
(6,975)
1,570,326
(102,043)
6,359,128

2,114,527
376,847
(8,108)
2,483,266

708,081
780
208,231
(20,532)
896,560

12,810,241
(809,118)
4,026,921
(574,338)
15,453,706

8,276,714

6,525,953

1,267,454

11,744,751

1,816,311

4,085,505

398,142

530,718

34,645,547

Net book amount at 31 December 2011 7,655,891

7,622,995

1,477,502

13,004,883

1,621,707

3,487,223

936,518

470,099

36,276,819

Net book amount at
31 December 2012

7,950,308

1,229,799

12,935,229

2,178,335

3,655,305

743,172

382,709

41,879,450

Accumulated depreciation
At 1 January 2010
Reclassifications
Charge for the year
Disposals
At 1 January 2011
Net book amount at 1 January 2011

12,804,593

The reclassification above relates to the movement of items of Property, Plant and equipment from work in progress to asset classes and other assets, computer
equipment to intangible assets. The amounts reclassified are as seen in the movement schedule above. The reclassification is in line with the accounting policy.

NOTES TO THE FINANCIAL STATEMENTS
224

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

32. Intangible assets
Computer
Software
GROUP
Year ended 31 December 2012
Opening net book value
Additions
Exchange differences
Reclassification
Amortisation charge
Closing net book amount

819,076
485,438
(43,487)
(426,212)
834,815

Year ended 31 December 2011
Opening net book value
Additions
Exchange differences
Disposals
Amortisation charge
Closing net book amount

596,025
555,752
171,296
(72,621)
(431,376)
819,076

At 1 January 2011
Opening net book value
Additions
Disposals
Reclassification
Exchange difference
Amortisation charge
Closing net book amount

226,764
337,434
-40,219
273,828
2,243
-204,025
596,025

BANK
Year ended 31 December 2012
Opening net book value
Additions
Amortisation charge
Closing net book amount

624,139
473,853
(357,622)
740,370

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

32. Intangible assets (cont’d)

Computer
Software

BANK
Year ended 31 December 2011
Opening net book value
Additions
Amortisation charge
Closing net book amount

596,024
353,159
(325,044)
624,139

At 1 January 2011
Opening net book value
Additions
Reclassification
Amortisation charge
Closing net book amount

211,645
337,434
239,439
(192,493)
596,025

33. Deferred tax
GROUP

31 December 31 December
2012
2011

01 January
2011

Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of
30% (2011: 30%, 2010: 30%).
Deferred income tax assets and liabilities are attributable to the following items:
Deferred tax assets
Allowance for loan losses
Tax losses carried forward
Depreciation of Property, Plant & Equipment
Other temporary difference
Derivative liability
Deferred tax liabilities
Unrealized Exchange Gain
Deferred tax (net) assets

3,175,241
1,991,212
1,939,101
372,809
1,691,774
9,170,137

3,556,571
4,581,919
4,646,671
84,730
12,869,891

2,835,718
3,693,066
1,715,164
17,592
8,261,540

904,783
904,783
8,265,354

506,649
506,649
12,363,242

580,464
580,464
7,681,076

225

NOTES TO THE FINANCIAL STATEMENTS
226

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

33. Deferred tax (cont’d)
December
2012

December
2011

(381,330)
(2,590,707)
(2,707,570)
1,691,774
(398,134)
288,079
(4,097,888)

720,853
888,853
2,931,507
73,815
67,138
4,682,166

GROUP
Amount recognised in income statement
Movements in temporary differences during the year:
Allowance for loan losses
Tax losses carried forward
Non current assets
Derivative liability
Unrealized exchange gain
Other temporary difference

Temporary difference relating to the Group's Investment in Subsidiaries is N3.7 billion (2011: N1.5 billion). As the Group exercises control
over the Subsidiaries, it has the power to control the timing of the reversals of the temporary difference arising from its investments in
them. The group has determined that the subsidiaries' profits and reserves will not be distributed in the foreseeable future and that the
subsidiaries will not be disposed of. Hence, the deferred tax arising from the temporary differences above will not be recognised.
Temporary difference relating to the Group's Investment in Associates is N22.9 million (2011: N20.6 million). The group does not exercise
control over the Investment in Associates and so, it does not control the timing of the reversal of the temporary differences. However, the
deferred tax arising has not been recognised as it is considered immaterial.

BANK

31 December
2012

31 December
2011

01 January
2011

Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 30% (2011: 30%,
2010: 30%).
Deferred income tax assets and liabilities are attributable to the following items:
Deferred tax assets
Allowance for loan losses
Tax losses carried forward
Depreciation of Property, Plant & Equipment
Investment property
Derivative liability
Equity securities at fair value
Deferred tax liabilities
Unrealized Exchange Gain
Depreciation of property, plant and equipment

Deferred tax (net) assets

3,175,241
1,991,212
2,407,106
22,809
1,691,774
9,288,142

3,712,799
4,759,881
4,486,113
84,730
13,043,523

3,307,776
3,424,954
1,550,399
17,592
8,300,721

832,375
832,375

506,649
506,649

426,032
154,432
580,464

8,455,767

12,536,874

7,720,257

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

33. Deferred tax (cont’d)

BANK
Amount recognised in income statement
Movements in temporary differences during the year:
Allowance for loan losses
Tax losses carried forward
Non current assets
Derivative liability
Unrealized exchange gain
Other temporary difference

December
2012

December
2011

(537,558)
(2,768,669)
(2,079,007)
1,691,774
(325,726)
(61,921)
(4,081,107)

405,023
1,334,927
3,090,146
(80,617)
67,138
4,816,617

Deferred tax has not been computed in items in the comprehensive income as gains and losses in Treasury bills, government
bonds and equity investments are exempted from tax.
34. Asset held for sale

GROUP AND BANK
Sun born yacht hotel
Total

31 December 31 December
2012
2011

-

450,000
450,000

01 January
2011

-

The non current asset disclosed as held for sale is a mobile hotel "the sun born yacht" purchased in February 2008 by the Group's
former subsidiary, Diamond Capital Limited. Assets of Diamond Capital were transferred to the Bank in 2011 on sale of the
subsidiary. This asset was sold on 29 December 2012 for N885 million.
35. Deposits from banks
GROUP
Items in the course of collection
Interbank takings

7,207,067
24,000,231
31,207,298

4,468,893
16,513,895
20,982,788

14,158,684
1,188,532
15,347,216

Current
Non-current

31,207,298
31,207,298

20,982,788
20,982,788

15,347,216
15,347,216

227

NOTES TO THE FINANCIAL STATEMENTS
228

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

6,077,279
2,096,007
8,173,286
8,173,286
8,173,286

3,939,956
3,939,956
3,939,956
3,939,956

2,916,163
1,187,935
4,104,098
4,104,098
4,104,098

534,855,289
153,755,865
221,623,290
910,234,444

344,596,517
125,002,987
133,403,725
603,003,229

203,868,743
97,692,352
111,431,659
412,992,754

870,948,649
39,285,795
910,234,444

573,062,033
29,941,196
603,003,229

393,472,010
19,520,744
412,992,754

492,548,344
144,587,642
185,954,801
823,090,787

314,819,403
117,935,071
112,406,671
545,161,145

189,508,392
91,564,270
98,271,357
379,344,019

819,473,481
3,617,306
823,090,787

536,217,003
8,944,142
545,161,145

372,983,577
6,360,442
379,344,019

35. Deposits from banks (cont’d)
BANK
Items in the course of collection
Interbank takings within Nigeria
Current
Non-current

Deposits from banks only include financial instruments classified as liabilities at amortised cost.
36. Deposits from customers
GROUP
Current
Savings
Term

Current
Non-current
BANK
Current
Savings
Term

Current
Non-current

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

7,609,338
5,639,247
13,248,585

-

-

37. Derivative Liability
GROUP AND BANK
Opening balance
Fair value loss
Closing balance

This relates to the portion of the convertible borrowing granted to the bank by International Finance Corporation. See further details
in note 42.

38. Other Liabilities
GROUP
Customers deposit for letters of credit
Accounts payable
Accruals
Other payables
Current
Non current

17,343,021
2,346,906
7,643,288
14,761,881
42,095,096
42,095,096
42,095,096

15,055,283
2,574,753
6,319,775
6,038,554
29,988,365
29,988,365
29,988,365

13,649,471
4,491,410
2,924,715
5,625,896
26,691,492
26,691,492
26,691,492

15,181,972
1,683,687
7,110,446
10,963,130
34,939,235
34,939,235
34,939,235

12,747,735
1,604,087
5,549,590
4,777,372
24,678,784
24,678,784
24,678,784

11,570,467
875,985
1,347,415
3,888,807
17,682,674
17,682,674
17,682,674

99,574
99,574

51,607
51,607

12,286
17,080
29,366

99,574
99,574

20,141
20,141

4,868
17,080
21,948

BANK
Customers deposit for letters of credit
Accounts payable
Accruals
Other payables
Current
Non current

39. Retirement benefit obligations
GROUP
Defined contribution scheme
Gratuity scheme
BANK
Defined contribution scheme
Gratuity scheme

229

NOTES TO THE FINANCIAL STATEMENTS
230

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

a.

Defined contribution scheme

The group and its employees make a joint contribution of 15% basic salary, housing and transport allowance to each employee's
retirement savings account maintained with their nominated pension fund administrators.
Total contributions to the scheme for the period were as follows:
31 December
2012

31 December
2011

1 January
2011

GROUP
At start of the period
Charge / contributions for the period
Contributions remitted
At end of the period

51,607
331,788
(283,821)
99,574

12,286
524,220
(484,899)
51,607

8,192
460,789
(456,695)
12,286

BANK
Total contributions to the scheme for the period were as follows:
At start of the period
Charge / contributions for the period
Contributions remitted
At end of the period

20,141
428,671
(349,238)
99,574

`4,868
494,050
(478,777)
20,141

1,627
436,135
(432,894)
4,868

b. Gratuity scheme
The group had a non-contributory defined gratuity scheme whereby on separation, staff who have spent a minimum number of
periods are paid a sum based on their qualifying emoluments and the number of periods spent in service of the bank. With effect
from October 2008, this scheme has been discontinued and payment to staff vested over a three-year period. The bank has
discontinued its gratuity scheme and all outstanding entitlements have vested and fully paid as at date.
GROUP AND BANK

31 December
2012

31 December
2011

1 January
2011

Balance at start of period
Charged to profit or loss
Payments

-

17,080
-17,080

185,670
1,170,200
-1,338,790

At end of period

-

-

17,080

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

1 January
2011

AMCON resolution fund
Total

1,056,378
1,056,378

-

-

Current
Non Current

1,056,378
1,056,378

-

-

1,056,378

-

-

1,056,378

-

-

AMCON resolution fund
Total

1,056,378
1,056,378

-

-

Current
Non Current

1,056,378
1,056,378

-

-

40. Provisions
GROUP

Movement in provision
Opening balance as at 1 January 2012
Additional provisions
Closing balance as at 31 December 2012
BANK

Movement in provision
Opening balance as at 1 January 2012
Additional provisions
Closing balance as at 31 December 2012

1,056,378
1,056,378

This provision for AMCON resolution fund represents 0.1% of the total assets of the Bank as at 31 December 2012. This
provision was made in response to a recent AMCON guideline that the usual accrual would increase from the required 0.3%
of total assets. Payments are expected to be made by July 2013 and there are no expected re-inbursements.

231

NOTES TO THE FINANCIAL STATEMENTS
232

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

1 January
2011

-

-

1,073,947
1,145,631
2,219,578

10,010,596
39,955,764
49,966,360
4,903,587
45,062,773
49,966,360

12,805,484
42,072,399
54,877,883
12,842,977
42,034,906
54,877,883

12,907,261
15,358,167
28,265,428
26,481,282
1,784,146
28,265,428

10,010,596
39,955,764
49,966,360
4,903,587
45,062,773
49,966,360

12,805,484
42,072,399
54,877,883
12,842,977
42,034,906
54,877,883

12,907,261
15,124,570
28,031,831
26,247,685
1,784,146
28,031,831

41. Provision on Insurance Contracts
GROUP
Life Insurance Contracts
Non-Life Insurance Contracts

42. Borrowings
GROUP
Borrowings comprise:
Foreign financial Institutions
Local financial institutions
Current
Non-current
BANK
Borrowings comprise:
Foreign financial Institutions
Local financial institutions
Current
Non-current

Institutions

Amount

Tenor (Years)

Interest

Bank of Industry (CBN Intervention Fund)
37,234,128
CBN Commercial Agricultural Credit Scheme
2,709,050
Enhanced Financial Innovation and Access Grant (EFINA)
12,586
39,955,764

Varying for differing customers
1-7
Varying for differing customers

1% payable to BOI
Zero interest rate
Varying interest

Local Financial Institutions

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

42. Borrowings (cont’d)
Institutions
Foreign Financial Institutions
International Finance Corporation
African Export-Import Bank
Standard Chartered Bank
Total

Amount

Tenor (Years)

Interest

1,145,774
3,978,672
4,886,150
10,010,596
49,966,360

7
5
1

2.75% plus Libor
5% plus Libor
3.12%

The Bank has not had any defaults of principal, interest or other breaches with respect to their liabilities during the period (2011:
nil).
Borrowings from foreign financial institutions represent onlending facilities granted by multi-lateral and correspondence financial
institutions to finance various trade and other transactions. Facilities are priced at LIBOR + a margin ranging from 2% to 5%. The
foreign borrowing are disbursed by IFC, AFREXIM and FMO
Borrowings from local financial institutions are disbursements from banks within Nigeria of N39.96bn guaranteed by Diamond
Bank Plc for specific customers. These facilities include the BOI intervention funds.
43. Long term debt
GROUP AND BANK

African Export-Import Bank
International Finance Corporation
Current
Non-current

Company
African Export-Import Bank
International Finance Corporation

31 December
2012

31 December
2011

01 January
2011

15,620,190
3,747,567
19,367,757
19,367,757
19,367,757

-

-

Tenor (yrs)
7
7

Interest Rate
5.75% + LIBOR
5% + LIBOR

233

NOTES TO THE FINANCIAL STATEMENTS
234

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The borrowing from International Finance Corporation relates to the liability component of the convertible loan agreement stated
at its amortized cost. The loan ($69.97m) was obtained on 19 July 2012 at an interest rate of 5% plus 6M Libor for a duration of 7
years. The loan has a conversion option whereby the each of the IFC entities have the right to convert all or a portion of the
outstanding principal amount into the equivalent number of shares of the borrower. This option may be exercised 3 years from the
agreement date or in the event of a change in control or sale of a substantial part of the borrower's assets or business. The derivative
liability which is the other component of the convertible loan is as shown in note 36.
31 December
2012

31 December
2011

01 January
2011

10,000,000

10,000,000

10,000,000

7,237,622

7,237,622

7,237,622

44. Share capital
BANK
Authorised
20 billion ordinary shares of 50k each
Issued and fully paid
14.5 billion ordinary shares of 50k each
45. Share premium and reserves
The nature and purpose of the reserves in equity are as follows:
Share premium: Premiums from the issue of shares are reported in share premium.
Retained earnings: Retained earnings comprise the undistributed profits from previous years, which have not been reclassified
to the other reserves noted below.
Statutory reserve: Undistributable earnings required to be kept by the nations central bank in accordance with BOFIA Section
16(1). Appropriation of 15% of Profit After Tax is made.
SSI reserve: 5% of Profit After Tax is appropriated from retained earnings by regulation for investment in small scale industries.
Fair value reserve: The fair value reserve shows the effects from the fair value measurement of equity instruments elected to
be presented in other comprehensive income on initial recognition after deduction of deferred taxes. No gains or losses are
recognised in the consolidated income statement.
Foreign currency translation reserve: Records exchange movements on the Group's net investment in foreign subsidiaries.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

31 December
2012

31 December
2011

27,481,545

(17,906,403)

4,513,960
433,956
3,069,473
1,025,151
23,984,749
(60,065,697)
5,639,247
331,788
(283,821)
2,298
(281,253)
137,042

4,684,571
431,376
(2,020,274)
1,232,906
33,542,081
(45,243,763)
(226,478)
507,140
(484,899)
7,822,117
5,196
(508,704)
4,177,005

(40,971,631)
(213,834,656)
(56,664,242)
(44,362,531)
(3,129,660)
-

(29,002,933)
(123,835,225)
(5,908,698)
2,880,000
(1,183,934)
705,659

10,211,822
305,896,922
1,056,378
12,106,731
-

5,632,387
190,884,350
3,296,873
(2,219,578)

(23,702,429)

27,260,773

46. Reconciliation of profit before tax to cash generated from operations
GROUP
Profit/(loss) before tax including discontinued operations
Adjustments for:
– Depreciation
– Amortisation
– Foreign exchange losses / (gains) on operating activities
– Net gains/(losses) from financial assets classified as held for trading
– Impairment on loans and advances
– Net interest income
- Fair value loss on derivative
– Gain from disposal of subsidiaries
- Gratuity Charge and contribution to staff pension scheme
- Remittance to pension fund administrators
– Change in provision in other assets
– Share of loss/(profit) from associates
– Dividend income
- Loans Written Off
Increase/(decrease) in operating assets:
– Cash and balances with the Central Bank (restricted cash)
– Loans and advances to customers
– Financial assets held for trading
- Pledged Assets
– Other assets
– Insurance Receivable
Increase/(decrease) in operating liabilities:
- Deposit from Banks
- Deposit from Customers
- Provisions
– Other liabilities
- Provision for Insurance Contract
Cash generated from operations

235

NOTES TO THE FINANCIAL STATEMENTS
236

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

31 December
2012

31 December
2011

28,364,966

(27,073,682)

4,233,178
357,622
(37,204)
(1,025,151)
(20,787,324)
(57,578,778)
5,639,247
508,104
(428,671)
350,291
(281,253)
(219,667)

4,093,627
325,044
(2,006,686)
1,166,719
33,595,403
(43,030,892)
494,050
(495,857)
6,424,090
(51,462)
44,562,440

(37,738,446)
(150,724,672)
(51,544,467)
(22,498,896)
(4,061,203)

(29,002,933)
(126,649,332)
(6,092,571)
2,880,000
(3,152,582)

4,233,330
276,711,138
1,056,378
10,260,451

(164,142)
165,450,924
(890,605)
7,886,715

(15,211,028)

28,268,268

46. Reconciliation of profit before tax to cash generated from operations (cont’d)
BANK
Profit/(loss) before tax including discontinued operations
Adjustments for:
- Depreciation
– Amortisation
– Profit from disposal of property and equipment
– Foreign exchange losses / (gains) on operating activities
– Net gains/(losses) from financial assets classified as held for trading
– Impairment on loans and advances
– Net interest income
- Fair value loss on derivative
- Gratuity Charge and contribution to staff pension scheme
- Remittance to pension fund administrators
– Change in provision in other assets
– Dividend income
- Loans Written Off
Increase/(decrease) in operating assets:
– Cash and balances with the Central Bank (restricted cash)
– Loans and advances to customers
– Financial assets held for trading
- Pledged Assets
– Other assets
Increase/(decrease) in operating liabilities:
- Deposit from Banks
- Deposit from Customers
- Provisions
– Other liabilities
Cash generated from operations

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

47. Contingent liabilities and commitments
47.1.

Capital commitments

At the balance sheet date, the bank had capital commitments amounting to N2.4 billion (Dec. 2011: N323 million) in respect of
authorised and contracted capital projects.
47.2.

Litigation

The Group is a party to numerous legal actions arising out of its normal business operations.
The Directors believe that, based on currently available information and advice of counsel, none of the outcomes that result
from such proceedings will have a material adverse effect on the financial position of the Group, either individually or in the
aggregate. Consequently, no provision has been made in these financial statements.
47.3.

Credit related commitments

In the normal course of business, the Bank is party to financial instruments with off-balance sheet risk. The instruments are
used to meet the credit and other financial requirements of customers. The contractual amounts of the off-balance sheet
financial instruments are:
31 December
2012

31 December
2011

1 January
2011

93,680,697
100,003,702
193,684,399

83,498,661
55,649,058
139,147,719

129,809177
25,615,321
155,424,498

87,909,182
96,271,802
184,180,984

74,721,025
55,649,058
130,370,083

129,809,177
25,615,321
155,424,498

GROUP
Performance bonds and guarantees
Unconfirmed and unfunded Letters of Credit

BANK
Performance bonds and guarantees
Unconfirmed and unfunded Letters of Credit

237

NOTES TO THE FINANCIAL STATEMENTS
238

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

48. Related party transactions
The Group's key management personnel, and persons connected with them, are also considered to be related parties. The
definition of key management includes the close members of family of key personnel and any entity over which key management
exercise control. The key management personnel have been identified as the executive and non?executive directors of the Group.
Close members of family are those family members who may be expected to influence, or be influenced by that individual in their
dealings with Group. A number of banking transactions are entered into with related parties in the normal course of business. These
include loans and deposits.
The volumes of related-party transactions, outstanding balances at the year-end, and relating expense and income for the year are
as follows:
48.1.

Loans and advances to related parties

The bank granted various credit facilities to other companies which have common directors with the bank and those that are
members of the Group. The rates and terms agreed are comparable to other facilities being held in the bank's portfolio. Details of
these are described below:
Directors and
other key
management
personnel (and
close family members)
Subsidiaries
Associates
Total
Year ended December 2012
Loans and advances to customers
Loans outstanding at 1 January`
Loans issued during the year
Loan repayments during the year
Loans outstanding at 31 December
Interest income earned
Bad or doubtful debts due from
related parties expense

26,250,852
9,335,895
(1,144,591)
34,442,156
299,051
2,243,331

1,974,584
1,974,584
-

34,525
6,631
41,156
-

26,285,377
`11,317,110
(1,144,591)
36,457,896
299,051

-

-

2,243,331

The loans issued to directors and other key management personnel (and close family members) as at 31 December 2012 of
N34.4bn (December 2011: N26.2bn) are repayable in various cycles ranging from monthly to annually over the tenor, and have
average interest rates of 15.9% (December 2011: 17.3%). The loans advanced to the directors during the year are collateralised by a
combination of lien on shares of quoted companies, fixed and floating debentures, legal mortgages and cash.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The loan to subsidiaries relates to a foreign currency term loan facility of EUR9.45M granted to Diamond Bank du Benin during the
period. It is a non-collateralised loan advanced at an interest rate of 5%. This loan has been eliminated on consolidation and does
not form part of the reported Group loans and advances balance.
48.2.

Deposits from related parties
Directors and
other key
management
personnel (and
close family members)

Year ended 31 December 2012
Deposits at 1 January
Deposits received during the year
Deposits repaid during the year
Deposits at 31 December 2012
Interest expenses on deposits

2,670,619
3,176,080
(2,636,093)
3,210,606
9,747

Subsidiaries

Associates

Total

782,163
2778124
`(745,554)
2,814,733
58,083

-

3,452,782
5,954,204
(3,381,647)
6,025,339
67,830

There are no special considerations for the related party deposits. Deposits from related parties are taken at arms length. The
average rate on deposit from directors and other key management personnel which are majorly demand deposit was
approximately 6.04% while average rate on deposit from subsidiaries majorly term deposits was approximately 13%.
48.3.

Other transactions with related parties
Directors and
other key
management
personnel (and
close family members)

BANK
Year ended 31 December 2012
Fee and commission income

162,104

Subsidiaries

Associates

Total

268,564

-

430,668

239

NOTES TO THE FINANCIAL STATEMENTS
240

FOR THE PERIOD ENDED 31 DECEMBER 2012

48.4 Details of loans to related parties

2012 | ANNUAL REPORT & ACCOUNTS

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

49. Key management personnel compensation

GROUP
Remuneration paid to the Bank's directors was:
Fees and sitting allowances
Executive compensation
Pension cost
Other director expenses
Fees and other emoluments disclosed above include amounts paid to:
Chairman
Highest paid director

31 December
2012

31 December
2011

114,300
113,975
10,442
74,508
313,225

123,800
119,836
9,389
34,404
287,429

16,300
24,952

17,600
23,526

The number of directors who received fees and other emoluments (excluding pension contributions and certain benefit) in the
following ranges was:
Number
31 December
31 December
2012
2011
1
16
16
17
16

Below N1,600,000
N3,400,001 and above
50. Employees
The average number of persons employed during the period was as follows:

Executive directors
Management
Non-management

31 December
2012
6
144
3,174
3,324

See note 11.1 for compensation for the above staff

Group
31 December
2011
6
201
2,578
2,785

Bank
31 December
2012
6
137
2,769
2,912

31 December
2011
6
180
2,500
2,686

241

NOTES TO THE FINANCIAL STATEMENTS
242

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

The number of employees of the Group, other than directors, who received emoluments in the following ranges (excluding
pension contributions and certain benefits) were:
Group
31 December
31 December
2012
2011
N300,000 - N2,000,000
N2,000,001 - N2,800,000
N2,800,001 - N3,500,000
N3,500,001 - N4,000,000
N4,000,001 - N5,500,000
N5,500,001 - N6,500,000
N6,500,000 - N7,800,000
N7,800,001 - N9,000,000
N9,000,001 and above

`

260
75
592
16
1,210
10
440
304
411
3,318

218
314
390
32
851
405
258
120
191
2,779

Bank
31 December
2012

31 December
2011

14
573
1,195
433
297
394
2,906

4
308
6
9
1,259
691
4
125
202
2,620

51. Compliance with banking regulation
During the year, the Bank contravened the following provisions:
(i)

The CBN regulation on the scope of Banking Activities and Ancillary matters no. 3 2010. As a result of this, a fine of N2 million
was imposed on the Bank by the Central Bank of Nigeria (CBN) for failure to comply with the regulation which required the
Bank to dispose of its non-banking subsidiaries and their related investments.

(ii)

Section 15 (iv) of the Commercial Agriculture Credit Scheme (CACS) – a fine of N764,829 was imposed on the Bank by the
Central Bank of Nigeria (CBN) for delayed repatriation of funds beyond the 14 days windows allowed for participating banks.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

31 December
2012

31 December
2011

01 January
2011

GROUP
Total Impairment based on IFRS
Total Provisions based on Prudential Guidelines
Difference

33,395,306
29,041,058
4,354,248

42,049,659
31,116,029
10,933,630

54,871,118
47,327,101
7,544,017

BANK
Total Impairment based on IFRS
Total Provisions based on Prudential Guidelines
Difference

31,628,761
28,063,369
3,565,392

40,955,690
28,923,171
12,032,519

49,527,972
37,324,568
12,203,404

52. Statement of Prudential Adjustments

As the impairment based on IFRS was higher than the provisions based on prudential guidelines for all the years, no Credit risk
reserve is required.
53. Events after statement of financial position date
The Bank received final approval of the Financial Services Authority (FSA) on 4 March 2013 to operate a subsidiary – Diamond
Bank (UK) Plc, in the United Kingdom.

243

NOTES TO THE FINANCIAL STATEMENTS
244

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

54. Explanation of transition to IFRSs
As stated in note 2.1 on significant accounting policies, these are the Bank and Group's first consolidated financial statements
prepared in accordance with IFRS1 - First Time Adoption of IFRS.
As the Bank and Group publish comparative information for the year in its financial statements, the date of transition to IFRS, is
effectively, 1 January 2011, which represents the start of the earliest period of comparative information presented. The
opening balance sheet as at 1 January 2011 and comparative information have been restated accordingly. The accounting
policies as set out in note 2 have been applied consistently to all periods presented in these consolidated financial statements,
and have been applied consistently by the Bank and Group entities.
An explanation of how the transition from Nigerian GAAP to IFRSs has affected the Bank and Group's financial position,
financial performance and cash flows is set out in the accompanying notes and tables.
GROUP
Reconciliation of Equity as at:
Shareholders' equity under NGAAP
(a) Employee Benefit - staff Loans
(a)
I
Amortization of prepaid payroll cost over the life of the loan
ii
Increase in interest income due to application of market interest rate on staff loans
(b) Loan Loss Provision
I
Additional specific impairment on loans based on PV of discounted
recovery cash flows under incurred loss model
ii
Additional Collective impairment based on PD and LGD of segmented loans
iii Recognition of Interest in Suspense in interest Income

(b)

(c) Deferred Tax
i
Deferred tax impact arising from the impact IFRS adjustments
relating to specific and collective impairment as well as additional
interest income recognized in income statement.

(c)

(d)
I
ii
iii

(d)

Fair Value of Financial Instruments
Fair Value Loss on Held for Trading Instruments under IAS 39
Recognizing Equty Gains/(Losses) of Associates
Fair Value gains/ Loss on Equity Instruments (Available for Sale) under IAS 39

1 Jan. 2011

31 Dec. 2011

107,084,863

93,332,827

(423,179)
508,266

(458,675)
540,964

(13,900,610)
(3,432,885)
9,071,765

(16,708,553)
(999,877)
5,323,455

4,101,176

4,011,485

(2,183,587)
236,404
1,515,147

4,282,601
153,604
(2,781,914)

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Equity as at:

1 Jan. 2011

31 Dec. 2011

1,933,966

(1,770,333)
4,819

799,354

1,050,611

(1,774,184)

(7,351,813)

105,310,679

85,981,014

Nigerian GAAP

Adjustments

IFRS

27,606,200
51,302,987
66,815,068
307,135,161
5,071,279
73,491,632
187,577
3,755,064
36,750,856
4,176,678
17,922,171
594,214,673

(51,302,987)
5,340,272
77,296
(5,071,279)
(73,491,632)
1,345,552
19,891,359
56,977,064
37,820,000
3,502,339
518,082
203,330
596,025
3,504,398
(1,272,729)
(1,362,910)

27,606,200
72,155,340
307,212,457
1,345,552

(e) Application of Amortized cost and EIR on Loans and HTM Investments
(e)
i
Fees that are considered as integral part of the loans such as
processing, management and monitoring fees which are usually
taken upfront and recognized in income statement at the inception
of the loan under NGAAP, have been deferred and recognized over the life of the loans.
ii
Interest accrual on a corporate Bond which has been designated as HTM
(f)

Restatement of Landed Property
Reversal of Accumulated depreciation wrongly charged on Landed Property

(f)

Total IFRS Adjustment
Shareholders' equity under IFRS

Reconciliation of Statement of Financial Position as at 1 January 2011
Note
Assets
Cash and balances with central banks
Treasury Bills
a,a
Loans to banks
a,b
Loans and advances to customers
a,c
Advances under finance leases
a,d
Investment securities
a,e
Financial assets held for trading
a,f
Investment securities
a,g
-Available-for-sale investments
a,h
-Held to maturity investments
a,i
Pledged Assets
a,j
Investments in associates accounted for using the equity method a,k
Insurance receivables
a,l
Investment property
a,m
Property, plant and equipment
a,n
Intangible Assets
a,o
Deferred tax
a,p
Other assets
a,q
Assets Classified as Held for sale
a,r

19,891,359
56,977,064
37,820,000
3,502,339
705,659
3,755,064
36,954,186
596,025
7,681,076
16,649,442
592,851,763

245

NOTES TO THE FINANCIAL STATEMENTS
246

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Statement of Financial Position as at 1 January 2011 (cont’d)

Liabilities
Deposits from banks
Deposits from customers
Financial liabilities held for trading
Borrowings
Provision for Insurance Contracts
Retirement benefit obligations
Provision
Current income tax liability
Dividend Payable
Other liabilities

Note

Nigerian GAAP

Adjustments

IFRS

a,s
a,t

15,347,216
412,031,918
28,281,011
1,688,982
26,125
1,995,250
86,263
27,673,045

960,836
(15,583)
530,596
3,241
(86,263)
(981,553)

15,347,216
412,992,754
`28,265,428
2,219,578
29,366
0
1,995,250
26,691,492

487,129,810

411,274

487,541,084

b,c

7,237,622
89,629,324
(5,098,158)

(3,289,331)

7,237,622
89,629,324
(8,387,489)

b,d
b,e
b,f
b,g
b,h
b,i

11,214,864
2,812,957
354,741
171,158
306,694

1,686,305
(171,158)
-

11,214,864
2,812,957
354,741
1,686,305
306,694

106,629,202

(1,774,184)

104,855,018

455,661

-

455,661

594,214,673

(1,362,910)

592,851,763

a,u
a,w
a,x
a,y
b,a
b,b

Total liabilities
Share capital
Share premium
Retained earnings
Other reserves
Statutory reserve
SSI Reserve
Contingency Reserve
Fair value reserve
Revaluation reserve
Foreign currency translation reserve
Total equity
Non Controlling Interest
Total equity and liabilities

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Statement of Comprehensive Income

Note
Interest and similar income
Dividend Income

c,a

Interest and similar expense
Net interest income

c,b

Provision for losses
Impairment charge for losses
Net interest income after impairment charge for credit losses
Net fee and commission income
Net gains/(losses) on investment securities
Net gains/(losses) from financial assets classified as held for trading
Foreign exchange income
Other income
Other operating expenses
Operating profit
Share of profit / (loss) of associates
Exceptional item
Profit before tax

c,c
c,d
c,e
c,f

c,g

For the year ended 31 December 2011
IFRS
NGAAP
Adjustments
IFRS
67,935,924
67,935,924
(12,285,666)
55,650,258

15,424,538
508,704
15,933,242
(216,875)
15,716,367

83,360,462
508,704
83,869,166
(12,502,541)
71,366,625

(44,148,499)
11,501,759

44,148,499
(55,408,691)
4,456,175

(55,408,691)
15,957,934

24,097,756
2,020,274
1,676,007
(55,579,613)
(16,283,817)

(5,086,439)
(514,766)
1,232,906
(871,272)
(892,520)
(1,675,915)

19,011,317
(514,766)
1,232,906
2,020,274
804,735
(56,472,133)
(17,959,732)

22,802
(16,261,015)

(5,196)
(22,802)
(1,703,913)

(5,196)
(17,964,928)

(982,970)
(2,686,883)
217,198

4,023,944
(13,940,984)
217,198

Income tax expense
Profit/(Loss) from continuing Operation
Profit/(Loss) from discontinued Operation

c,h

5,006,914
(11,254,101)
-

Profit for the year

c,h

(11,254,101)

(2,469,685)

(13,723,786)

(11,214,508)
(39,593)

(2,515,598)
45,912

(13,730,106)
6,319

(11,254,101)

(2,469,685)

(13,723,786)

-

(77,008)
(3,107,942)

(77,008)
(3,107,942)

-

(3,184,950)

(3,184,950)

(11,254,101)

(5,654,635)

(16,908,736)

Profit attributable to:
Owners of the parent
Non-controlling interests
Total Comprehensive Income for the period
Other comprehensive income:
Foreign currency translation differences
Unrealised net gains arising during the period
Other comprehensive income for the period, net of tax
Total Comprehensive Income for the period

c,i
c,j

247

NOTES TO THE FINANCIAL STATEMENTS
248

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Statement of Financial Position as at 31 December 2011

(b) Assets
Cash and balances with central banks
Treasury Bills
Loans to banks
Loans and advances to customers
Advances under finance leases
Investment securities
Financial assets held for trading
Investment securities
-Available-for-sale investments
-Held to maturity investments
Pledged Assets
Investments in associates
Investment property
Property, plant and equipment
Intangible Assets
Deferred tax
Other assets
Assets Classified as Held for sale
Liabilities
Deposits from banks
Deposits from customers
Borrowings
Retirement benefit obligations
Provision
Current income tax liability
Dividend Payable
Other liabilities
Total liabilities
Share capital
Share premium
Retained earnings
Other reserves:
Statutory reserve
SSI Reserve
Fair value reserve
Foreign currency translation reserve
Total equity
Non Controlling Interest
Total equity and liabilities

Note

Nigerian GAAP

Adjustments

IFRS

a,a
a,b
a,c
a,d
a,e
a,f
a,g
a,h
a,i
a,j
a,k
a,m
a,n
a,o
a,p
a,q
a,r

55,784,079
94,588,452
90,629,825
387,979,228
9,381,908
103,170,397
3,833,335
38,613,848
819,076
8,351,757
10,048,097
803,200,002

(94,588,452)
18,186
157,258
(9,381,908)
(103,170,397)
8,041,618
85,990,731
61,712,761
34,940,000
3,184,549
1,050,611
4,011,485
615,348
450,000
(6,968,210)

55,784,079
90,648,011
388,136,486
8,041,618
85,990,731
61,712,761
34,940,000
3,184,549
3,833,335
39,664,459
819,076
12,363,242
10,663,445
450,000
796,231,792

20,982,788
601,695,732
54,840,757
33,093
1,346,904
94,145
30,873,756
709,867,175

1,307,497
37,126
18,514
(94,145)
(885,391)
383,601

20,982,788
603,003,229
54,877,883
51,607
1,346,904
29,988,365
710,250,776

7,237,622
89,629,324
(18,137,713)

(5,974,988)

7,237,622
89,629,324
(24,112,701)

11,394,523
2,812,957
217,094
93,153,807
179,020

1,422,736
(7,397,724)
45,912

11,394,523
2,812,957
(1,422,736)
217,094
85,756,084
224,932

803,200,002

(6,968,210)

796,231,793

a,s
a,t
a,u
a,w
a,x
a,z
b,a
b,b

b,c
b,d
b,g
b,h
b,i

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

BANK
Reconciliation of Equity as at:
Shareholders' equity under NGAAP

1 Jan. 2011

31 Dec. 2011

116,881,159

92,522,024

(423,179)
508,266

(457,901)
540,048

(16,821,408)
(3,114,154)
9,071,765

(18,409,927)
(1,293,507)
5,323,455

3,553,052

4,199,447

(930,462)
(286,500)

4,282,601
(55,996)

665,652

(2,804,784)

1,360,817

(759,638)

799,355

1,050,611

(5,616,797)

(8,385,589)

111,264,362

84,136,435

IFRS Adjustments
(a) Employee Benefit - staff Loans
(a)
i
Amortization of prepaid payroll cost over the life of the loan
ii
Increase in interest income due to application of Effective Interest Rate on staff loans
(b) Loan Loss Provision
i
Additional specific impairment on loans based on PV of
discounted recovery cash flows under incurred loss model
ii
Additional Collective impairment based on PD and LGD of segmented loans
iii Recognition of Interest in Suspense in interest Income

(b)

(c) Deferred Tax
i
Deferred tax on Income statement impact of the Employee
Benefits and Loan loss provisions calculated above

(c)

(d) Fair Value of Financial Instruments
i
Fair Value Loss on Held for Trading Instruments under IAS 39
ii
Recognizing Equty Gains/(Losses) of Associates

(d)

iii

Fair Value Loss on Equity Instruments (Available for Sale) under IAS 39

(e) Application of Amortized cost and EIR on Loans and HTM Investments
i
Fees that are considered as integral part of the loans such as processing,
management and monitoring fees which are usually taken upfront and
recognized in income statement at the inception of the loan under NGAAP,
have been deferred and recognized over the life of the loans.
ii
Interest accrual on a corporate Bond which has been designated as HTM

(e)

(f)

(f)

Restatement of Landed Property
Reversal of Accumulated depreciation wrongly charged on Landed Property

Total IFRS Adjustment
Shareholders' equity under IFRS

249

NOTES TO THE FINANCIAL STATEMENTS
250

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Statement of Financial Position as at 1 January 2011
Note
Assets
Cash and balances with central banks
Treasury Bills
Loans to banks
Loans and advances to customers
Advances under finance leases
Investment securities
Investment in subsidiaries
Financial assets held for trading
Investment securities
-Available-for-sale investments
-Held to maturity investments
Pledged Assets
Property, plant and equipment
Intangible Assets
Deferred tax
Other assets
Assets Classified as Held for sale

a,a
a,b
a,c
a,d
a,e

Adjustments

IFRS

17,764,318
43,063,637
61,609,150
307,828,170
5,071,279
49,528,513
17,442,980
-

106,811
(43,063,637)
11,035
(8,293,478)
(5,071,279)
(49,528,513)

17,871,129
61,620,185
299,534,692
17,442,980
1,109,080

547,822,096

1,109,080
(49,528,513)
11,095,806
43,978,424
37,820,000
799,355
5,035,291
277,499
(5,723,606)

4,104,098
378,733,006
28,281,011
18,707
1,649,557
86,263
18,068,295

611,013
(249,180)
3,241
(86,263)
(385,621)

4,104,098
379,344,019
28,031,831
21,948

430,940,937

(106,810)

430,834,127

b,c

7,237,622
89,629,324
6,011,755

(6,282,448)

7,237,622
89,629,324
(270,693)

b,d
b,e
b,g

11,189,501
2,812,957
-

665,652

11,189,501
2,812,957
665,652

Total equity

116,881,159

(5,616,796)

111,264,363

Total equity and liabilities

547,822,096

(5,723,606)

542,098,490

Liabilities
Deposits from banks
Deposits from customers
Borrowings
Retirement benefit obligations
Provision
Current income tax liability
Dividend Payable
Other liabilities

a,f
a,g
a,h
a,i
a,j
a,n
a,o
a,p
a,q
a,r

Nigerian GAAP

a,s
a,t
a,u
a,x
a,y
b,a
b,b

Total liabilities
Share capital
Share premium
Retained earnings
Other reserves:
Statutory reserve
SSI Reserve
Fair value reserve

33,846,192
596,025
2,684,966
8,386,866

11,095,806
43,978,424
37,820,000
34,645,547
596,025
7,720,257
8,664,365
542,098,490

1,649,557
17,682,674

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Statement of Comprehensive Income

For the year ended 31 December 2011

Note

NGAAP

IFRS
Adjustments

IFRS

Interest and similar income
Dividend Income

c,a

Interest and similar expense
Net interest income

c,b

63,537,024
63,537,024
(10,468,642)
53,068,382

16,351,507
51,462
16,402,969
(216,875)
16,186,094

79,888,531
51,462
79,939,993
(10,685,517)
69,254,476

(43,336,291)
-

43,336,291
(52,949,031)

(52,949,031)

9,732,091

6,573,354

16,305,445

c,c

22,744,229
-

(4,817,888)
(513,539)

17,926,341
(513,539)

c,d

(42,457)
2,006,686
500,868
(50,351,723)

1,209,176
(383,887)
(11,582,011)
(2,207,108)

1,166,719
2,006,686
116,981
-11,582,011
(52,558,831)

Operating profit

(15,410,306)

(11,721,903)

(27,132,209)

Exceptional item
Profit before tax

(11,887,341)
(27,297,647)

11,887,341
165,438

(27,132,209)

5,109,799

(845,844)

4,263,955

(22,187,848)

(680,406)

(22,868,254)

(22,187,848)

(680,406)

(22,868,254)

-

(3,107,943)

(3,107,943)

-

(3,107,943)

(3,107,943)

(22,187,848)

(3,788,349)

(25,976,197)

Provision for losses
Impairment charge for credit losses
Net interest income after impairment charge for credit losses
Net fee and commission income
Net gains/(losses) on available for sale investment securities
Net gains/(losses) from financial assets classified
as held for trading
Foreign exchange income
Other income
Loss on disposal and absorption of Subsidiaries
Other operating expenses

c,e
c,f

Income tax expense
Profit for the year

c,h

Total Comprehensive Income for the period
Other comprehensive income:
Unrealised net gains arising during the period
Other comprehensive income for the period, net of tax
Total Comprehensive Income for the period

c,j

251

NOTES TO THE FINANCIAL STATEMENTS
252

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of Statement of Financial Position as at 31 December 2011
Note
(b) Assets
Cash and balances with central banks
Treasury Bills
Loans to banks
Loans and advances to customers
Advances under finance leases
Investment securities
Investment in subsidiaries
Financial assets held for trading
Investment securities
-Available-for-sale investments
-Held to maturity investments
Pledged Assets
Investments in associates
Investment property
Property, plant and equipment
Intangible Assets
Deferred tax
Other assets
Assets Classified as Held for sale
Liabilities
Deposits from banks
Deposits from customers
Borrowings
Retirement benefit obligations
Provision
Current income tax liability
Dividend Payable
Other liabilities
Total liabilities
Share capital
Share premium
Retained earnings
Other reserves
Statutory reserve
SSI Reserve
Fair value reserve
Total equity
Total equity and liabilities

Nigerian GAAP

Adjustments

IFRS

54,396,524
85,383,123
72,080,660
346,569,970
9,381,908
93,875,005
7,865,622
3,686,335
35,226,207
624,139
8,347,427
5,022,408
722,459,328

(85,383,123)
18,186
(2,172,639)
(9,381,908)
(93,875,005)
8,041,618
76,762,309
52,253,105
34,940,000
3,205,140
1,050,612
4,189,447
1,506,889
450,000
(8,395,369)

54,396,524
72,098,846
344,397,331
7,865,622
8,041,618
76,762,309
52,253,105
34,940,000
3,205,140
3,686,335
36,276,819
624,139
12,536,874
6,529,297
450,000
714,063,959

3,939,956
544,282,581
54,840,757
1,626
1,249,616
94,146
25,528,623

878,564
37,126
18,515
(94,146)
(849,839)

3,939,956
545,161,145
54,877,883
20,141
1,249,616
24,678,784

b,b

629,937,305
7,237,622
89,629,324
(18,347,381)

(9,780)
(6,962,853)

629,927,525
7,237,622
89,629,324
(25,310,234)

b,c

11,189,501
2,812,957
92,522,023

(1,422,736)
(8,385,589)

11,189,501
2,812,957
(1,422,736)
84,136,434

722,459,328

(8,395,369)

714,063,959

a,a
a,b
a,c
a,d
a,e
a,f
a,g
a,h
a,i
a,j
a,k
a,m
a,n
a,o
a,p
a,q
a,r

a,s
a,t
a,u
a,w
a,x
a,z
b,a

b,d
b,h

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Significant changes to Statement of Cashflow
The significant changes made to the Cashflow for the year ended 31 Dec 2011 is as below:
u

Cash and cash equivalents: treasury bills with original maturities of 90 days or less were included in this balance under
IFRS, however under NGAAP, all treasury bills irrespective of the maturities were included.

u

Interest Paid and Interest Received: These two items have been reflected on the face of the Statement of cashflows
inline with IFRS. This was not required under NGAAP.

Notes to the reconciliation of equity
a.

Employees were granted loans at a below market interest rate. Under IFRS, the difference between the rate granted and a
market related rate is an employee benefit, which must be deferred and recognised as an emloyee expense over the
period of the loan. For the year ended 31 December 2011 N458.6m (1 January 2011 N423.2m) was adjusted in equity. As at
31 December 2011, additional interest income amounting to N541.0m (1 January 2011, N508.3m) has been adjusted in
retained earnings based on the market rate of interest.

b

Loan Loss Provision- Specific Impairment
Under NGAAP, provision on loans is determined using the prudential guidelines which prescribes the percentage to be
written down as soon as loan is designated as impaired, depending on whether the status of impairment is doubtfu,
substandard or lost. Under IFRS, a loan is assessed for impairment if there is objective evidence that an impairment has
occurred since initial recognition. The group assesses for impairment all loans that are due or impaired for 90 days or
more. Estimated revised cash flows from the loans including the collateral realization and timing are determined and
discounted to present value. Application of IFRS to specific impairment calculation depleted Retained Earnings by
N16,708.6m as at 31 December 2012 (1 January 2011 N13,900.6m).
Collective Impairment
Under NGAAP, general provision was calculated as 1% of all performing loans. Under IFRS, the reporting entity is required to
perform a collective impairment evaluation on all its insignificant loans as well as on its significant but non-impaired loans.
The reporting entity determines by available history the Probability of Defaults (PD) and Loss Giving Default (LGD) by
sectors and applies these ratios on the performing loans at each reporting date. The application of collective impairment
procedures on the groups performing loans gave rise to a negative adjustment of approximately N999.9m as on 31,
December 2011 (1 January 2011, N3,435.9m).

253

NOTES TO THE FINANCIAL STATEMENTS
254

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Recognition of Interest on impaired loans
Under NGAAP, interest is accrued on Non-performing loans and advances at a default or contractual rate, but such interest
is usually suspended and included as part of specific provision on the loans. Under IFRS, interest is accrued and recognized
on impaired loans using effective interest rate. The recognition of Interest on imapired loans was a positive adjustment in
retained earnings at 31 December 2011 of N5,323.5m, (1 January 2011, N9,071.8m)
c.

Deferred Tax
The implications of application of IFRS to loan losses provisioning and employee benefits increased Retained earnings by
N4,011.5m as on 31 December 2011 (1 Janaury 2011, N4,011.5m). Nominal tax rate of 30% was used in calculating the
deferred tax adjustments which also increased the balance sheet carrying amount of deterred tax assets by same
amounts.

d.

Fair Value of Financial Instruments
Under Nigerian GAAP, investment securities are either classified as short term or long term investments. Short-term
investments are investments that management intends to hold for less than one year. These investments are measured at
the lower of cost or net realisable value subsequent to initial recognition. Long term investments are investments other
than short term investments and are carried at cost less impairment. Under IAS 39, investments are classified as Fair Value
through profit or loss (Held for Trading), Fair Value through Other Comprehensive Income (Available for Sale), Held to
Maturity (at Amortized Cost) and Loans and Receivables (at Amortized Cost). The application of fair value changes and its
impact on the income statement or other comprehensive income resulted in an increase in equity of N1,654.3m at 31
December 2011 (1 January 2011, a write-down of N432.0m). Recognition of the groups share of comprehensive income
of an Associate (Health Partners Limited) also was adjusted in Retained Earnings as at 31 December 2011 amounted to
N153.6 (1 January 2011, N236.4m).

e

Application of Effective Interest Rate
Under NGAAP, loan fees are taken upfront and recognized as income immediately. Under IFRS, credit fees that are
considered an integral part of the loan are deferred and recognized over the life of the loan through the application of
effective interest rate. Effective interest rate is the rate that exactly discounts all estimated future cash payment/receipts
through the instruments expected life to the net carrying amount of the financial instrument. In addition, some
investments have been reclassified to loans and receivables in the opening balance sheet. The application of effective
interest rate on these instruments resulted in increase in retained earnings. At 31 Decemember 2011, Retained earnings
was written down by N1,770.3m (1 January 2011 increase of N1,934.0m)

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

f.

2012 | ANNUAL REPORT & ACCOUNTS

Restatement of Landed Property
The correction of accounting error relating to the wrong inclusion of landed property owned by the bank as part of
depreciable asset of the bank gave rise to a write-back of N1,050.6m to equity in 2011 (1 January 2011,N799.3m).

Notes to the reconciliation of Statement of Financial Position
a,a Under NGAAP, treasury bills (including the portion pledged to third parties), are reported as separate line from investments.
Under IFRS, Treasury bills forms part of investment securities and must be properly classified in line with IAS 39. The
treasury bill line has been reclassified to Investment securities and to assets pledged as collaterals. As at 31 December 2011,
treasury bills reclassified to Investment securities was N94.6bn (1 January 2011, N51.3bn).
a,b As at 1 January 2011, included in Investment Securities is a placement with other banks of N5.3bn. This has been
reclassified to Loans to banks under IFRS.
a,c Loan and Advances to Customers includes Loans and advances, Advances under Finance Leases and other facilities. Other
Facilities include foreign currency denominated loans and advances. The difference of N1.0bn at 31 December 2011 (1
January 2011, N0.5bn) between the NGAAP and IFRS balances for loans to customers is a result of the reclassifications, the
impact of additional impairment losses, and write-downs in respect of staff loans in order to reflect the correct amortized
cost based on market rate. IFRS requires financial assets carried at amortised cost to be measured using the effective
interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument, or where appropriate, a shorter period to the net carrying
amount of the financial asset or financial liability.
a,d Advances under finance lease are reported separately in the balance sheet under Nigerian GAAP. Given the size of this
portfolio, management has reclassified the total balance of N9.4bn as at 31 December 2011 (1 January 2011, N5.1 bn) from
Advances under finance lease to Loans and Advances to Customers. In addition, the sum of N12.9 billion reported under
Nigerian GAAP as other facilities, which are foriegn currency denominated term loans have been classified to Loans and
Advances to Customers.
a,e IAS 39 has four clearly defined categories of financial assets, namely (1) Financial assets ‘at fair value through profit or loss’
[measured at fair value with fair value gain or loss recognised in profit or loss] (2) Held-to-maturity investments [measured
at amortised cost] (3) Loans and receivables [measured at amortised cost]; and (4) Available-for-sale financial assets
[measured at fair value with fair value gain or loss recognised in other comprehensive income]. Furthermore there are two
defined categories of financial liabilities, namely: (1) Financial liabilities 'at fair value through profit or loss' and (2) Other
liabilities (measured at amortised cost). The application of IFRS classification and measurement increased investment

255

NOTES TO THE FINANCIAL STATEMENTS
256

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

securities by N7.4bn as at 1 January 2011. The increase came from reclassification of N51.3bn from Treasury bills, and
reclassifications from Investment securities to loan and advances to banks, Pledged Assets and fair value changes.
a,n Under NGAAP for period beginning before 1 January 2011, Intangible assets were usually reported as part of property plant
and equipment. The application of IFRS on 1 January 2011 required that these be separated. The sum of N0.6bn has been
reclassified to Intangible asset. The balance represents the net book value of computer softwares being used in the group.
There were no patents, trademarks or any other form of intangibles as of this date.
a,p The implications of application of IFRS to loan losses provisioning and employee benefits increased Retained earnings by
N4.0bn as on 31 December 2011 (1 January 2011, N4.1bn). Nominal tax rate of 30% was used in calculating the deferred tax
adjustments which also increased the balance sheet carrying amount of deterred tax assets by same amounts.
a,q The change in other assets on application of IFRS is accounted for by the reclassification of accrued interest receivable to
the underlying assets in line with IAS 39 definition of amortized cost of financial instruments, as well as the recognition of
additional staff benefit arising from restating staff loans carrying amount using the market rate. The recognized embeded
prepaid staff benefits are carried in other asset, and amortized over the remaining expected life of the loans.
a,t Under NGAAP, deposits are stated at exclusive of all accrued interest payable. Under IFRS, amortized cost of financial
laibility should include interest accrued on the basis of EIR that have not been settled by the customer. In order to apply IAS
39 to the financial liabilities at amortized cost, at 31 December 2011 the sum of N1.3bn (1 January 2011, N0.9bn) was
reclassified from other liabilities to deposit from customers.
a,u Borrowings were restated to include accrued interest in order to present the amortized cost of the financial liability
measured at amortized cost
b,a Dividend payable has been reclassified to other liabilities. Management believes that the amount is immaterial to remain a
separate line item.
b,b Other liabilities where affected by the reclassification to deposit from customers and borrowings, as well as the
reclassification from dividend payable
Notes to the reconciliation of Statement of Comprehensive Income
ca. The application of effective interest rate to loans and advances resulted in reclassification from fee income to interest
income. In addition, additional interest raised on staff loans on application of market rate, as well as recognition of interest
on impaired loans in line with IFRS gave rise to an increase in interest income.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

c,b, 1 Impairment charges increased due to the application of the incurred loss model and the collective impairment on
performing loans.
c,c Net fees and commission was adjusted to recognise fees that are integral part of the the loan in interest income. IFRS
requires that interest income on loans are accrued using Effective Interest Rate. Effective interest rate is the rate that
exactly discounts the contractual cashflows to zero. In other to comply with this requirement, credit fees are considered
as an integral part of the loans, and in line with IAS 18, they formed part of the EIR. Therefore, credit fees recognised under
NGAAP as fees, were reclassified to interest income.
c,d & c,e

Under NGAAP, changes in market prices of short term investments were recognised as part of trading income or
losses in the income statement. Under IFRS, financial instruments classified as held for trading , and those classified as
available for sale are treated differently. Fair Value gains and losses on held for trading investments are recognized
under net gains and losses on Financial Instruments. Adjustments were passed to reclassify mark-to-market losses on
available for sale bonds to other comprehensive income.

c,f Operating expense adjustments relate to amortization of staff benefits imbeded in staff loans granted at concessionary
rates. The prepaid staff benefits are usually held as other assets in the statement of financial position, but amortized
systematically to income as part of personnel expenses.
c,h The exceptional item adjustment consist of gain on disposal ( (N328.1M) of non banking subsidiaries ADIC insurance
Limited (ADIC), Diamond Registrars Limited (DRL) and Diamond Securities Limited (DSL) and net restructuring expenses (
(N305.3M) incurred on the absorption of the operations of other non banking subsidiaries Diamond Mortgage Limited
(DML) and Diamond Capital Marktets Limited (DCL). The gain on disposal of the subsidiaries have been disclosed as profit
from discontinued operations in line with IFRS while the restructuring expense is reclassed to other opearting expense.
c,i Under NGAAP, foreign currency translation difference is not shown on the face of the income statement. The difference
arising from the translation of income statement items using average rate, balance sheet items using closing rate and
share capital using historical rates is reflected in equity as translation difference. Under IFRS, the movement between the
opening and closing translation difference is shown as a component of other comprehensive income.
c,j Under IFRS, the fair value changes of available for sale financial instruments are recognized in other comprehensive
income and transferred to fair value reserve in the equity section of the statement of financial position.

257

NOTES TO THE FINANCIAL STATEMENTS
258

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

55. Segment Reporting
Following the management approach of IFRS 8, operating segments are reported in accordance with the internal reports
provided to the Group's Executive Committee (the chief operating decision maker), which is responsible for allocating resources
to the operating segments and assesses its performance.
The group has four main reportable segments on a worldwide basis.
The Group’s business is organized along the following business segments:
u

Retail Banking – This covers all banking activities relating to individuals (consumer banking) and MSME banking. Small
businesses with monthly turnover of not more than N40 million (or N480 million per annum) are also reported as Retail
Banking.

u

Corporate banking – incorporating all banking activities relating to Multinationals; other large/well-structured companies in
Oil & Gas, Power & Infrastructures, Maritime & Transportation, Telecom/General Services, Manufacturing/Trade and
Construction, having monthly business turnover of greater than N1.2 billion; Financial Institutions; Federal Government
ministries and agencies; Embassies and Foreign Missions; and Subsidiary activities in Mortgage and Pension Custody.

u

Business Banking - These are all banking activities relating to medium scale enterprises with monthly business turnover of
more than N40 million and up to N1 billion. It covers banking activities relating to the following entities: Tertiary Institution,
government accounts and large local companies. It includes companies that are not multinationals, and are not audited by
any of the top six international audit firms.

u

Treasury - The treasury department of the Group is responsible for the profitable management of the group's liquidity
ensuring a balance between liquidity and profitability.

Management monitors the operating results of the business units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is assessed based on operating profit or loss which in certain
respects is measured differently from operating profit or loss in the consolidated financial statements. Income taxes are managed
at individual company basis and are not allocated to operating segments.
Funds are ordinarily allocated between segments, resulting in funding cost transfers disclosed in operating income. Interest
charged for these funds is based on the Group’s cost of capital. There are no other material items of income or expense between
the business segments. Internal charges and transfer pricing adjustments have been reflected in the performance of each
business segment. Revenue sharing agreements are used to allocate external customer revenues to business segments on a
reasonable basis.
No revenue from transaction with a single external customer or a group of connected economic entities or counterparty
amounted to 10% or more of the group's total revenue in 2011 and for the period ended 30 June 2012.

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

GROUP
At 31 December 2012

Treasury

Business
Banking

Retail
Businesses

Corporate
Banking

Total

Interest income derived from external customers 26,505,169

32,636,591

17,859,675

28,295,435

105,296,870

20,382,876
53,019,467
(13,750,145)
(10,354,458)
(24,104,602)
11,554,809
40,469,673
(7,605,208)
(28,205,561)
4,658,903

25,461,719
43,321,394
(9,619,469)
(1,233,367)
(10,852,836)
18,090,132
50,558,690
(4,242,457)
(19,181,906)
27,134,327

2,130,181
30,425,615
(5,486,198)
(11,930,931)
(17,417,129)
8,524,103
21,532,589
(1,191,706)
(6,641,165)
13,699,718

48,420,116
153,716,986
(36,638,690)
(41,951,305)
(78,589,994)
42,402,120
117,529,111
(13,039,371)
(54,726,323)
49,763,416

Interest income derived from other segments
Total interest income
Interest paid to external customers
Interest paid to other segments
Total interest expenses
Other income
Operating income
Impairment charges for credit losses
Operating expenses
Operating profit before tax

445,340
26,950,510
(7,782,878)
(18,432,549)
(26,215,427)
4,233,076
4,968,159
(697,691)
4,270,468

Profit for the period

49,763,416

Segment assets - Loans to Customers
- Loans to banks/Investments in TBs & Bonds

306,912,123

242,836,637
-

70,114,328
-

273,176,187
-

586,127,149
306,912,123

Total Assets
Segment Liabilities- Deposit from Customers
Takings and Treasury bills sold - others

306,912,123
2,155
43,772,024

242,836,637
466,015,013
-

70,114,328
305,265,508
-

273,176,187
147,795,392
-

893,039,273
919,078,159
43,772,024

43,774,179

466,015,103

305,265,508

147,795,392

962,850,183

75,349
-

1,497,843
-

1,534,337
-

599,435
-

3,706,964
-

Total Liabilities
Other Segment Information
Depreciation
Amortization

259

NOTES TO THE FINANCIAL STATEMENTS
260

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

At 31 December 2011

Interest income derived from
external customers
Interest income derived from other segments
Total interest income
Interest paid to external customers
Interest paid to other segments
Total interest expenses
Other income
Operating income
Impairment charges for credit losses
Operating expenses
Operating profit before tax

Treasury

Business
Banking

Retail
Businesses

Corporate
Banking

Total

24,794,820

28,638,212

20,768,805

18,528,908

92,730,744

753
24,795,573

10,937,897
39,576,109

14,667,569
35,436,373

1,084,827
19,613,734

26,691,045
119,421,789

(8,129,567)
(11,484,782)
(19,614,349)

(4,750,623)
(9,893,045)
(14,643,667)

(5,547,212)
(572,308)
(6,119,520)

(1,987,831)
(7,719,984)
(9,707,815)

(20,415,233)
(29,670,119)
(50,085,351)

1,808,126
6,989,350
(544,140)
6,445,210

9,180,676
34,113,118
(33,367,716)
(17,178,084)
(16,432,682)

13,477,198
42,794,051
(6,259,940)
(13,482,258)
23,051,853

5,136,163
15,042,082
(2,175,928)
(1,733,217)
11,132,936

29,602,163
98,938,601
(41,803,584)
(32,937,699)
24,197,318

Profit for the period
Segment assets - Loans to Customers
- Loans to banks/Investments in Tbs &Bonds
Total Assets

Segment Liabilities - Deposit from Customers
Takings and Treasury bills sold - others
Total Liabilities
Other Segment Information
Depreciation
Amortization

24,197,318
341,894,048

188,265,074

65,835,315

141,851,610

395,951,999
341,894,048

341,894,048

188,265,074

65,835,315

141,851,610

737,846,047

216,850,507

317,155,017
-

229,649,128
-

54,891,587
-

601,695,732
216,850,507

216,850,507

252,055,163

294,748,982

54,891,587

818,546,239

-

1,671,911
-

2,299,435
-

56,454
-

4,027,799
-

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

At 1 January 2011

Loans to Customers
- Loans to banks/Investments
in TBs & Bonds
Total Assets
Deposit from Customers
Takings and Treasury bills
sold - others
Total Liabilities

Treasury

Business
Banking

Retail
Businesses

Corporate
Banking

Others
Segments

Group

183,461,397

157,349,817
-

40,969,285
-

113,802,009
-

85,329
-

312,206,440
183,461,397

183,461,397

157,349,817

40,969,285

113,802,009

85,329

495,667,837

77,069,394

178,439,403

180,817,152

52,775,363

-

412,031,918
77,069,394

77,069,394

178,439,403

180,817,152

52,775,363

-

489,101,312

Segment result of operations by Geography
The Group’s three business segments operate in two main geographical areas.
Nigeria is the home country of the parent bank, which is also the main operating company. The areas of operation include all the
primary business segments. Revenue from external customers is based on the country in which the customer is located. Assets are
shown by the geographical location of the assets.
At 31 December 2012

West
Africa

Total

99,320,986
48,420,116
147,741,102

5,975,884
5,975,884

105,296,870
48,420,116
153,716,986

Interest paid to external customers
Interest paid to other segments
Total interest expenses

(33,898,717)
41,951,305
(75,850,023)

(2,739,972)
(2,739,972)

(36,638,689)
(41,951,305)
(78,589,994)

Other income
Operating income
Impairment charges for credit losses
Operating expenses

38,396,528
110,287,607
(12,376,249)
(48,715,715)

4,005,592
7,241,505
(663,123)
(6,010,608)

42,402,120
117,529,112
(13,039,372)
(54,726,323)

49,195,643

567,774

49,763,416

Interest revenue derived from external customers
Interest revenue derived from other segments
Total interest revenue

Operating profit before tax
Profit for the period

Nigeria

49,763,416

261

NOTES TO THE FINANCIAL STATEMENTS
262

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Segment result of operations by Geography (con’d)
Nigeria
At 31 December 2012

West
Africa

Total

Segment assets
Unallocated Assets
Total Assets

790,112,902
790,112,902

102,926,371
102,926,371

893,039,273
893,039,273

Segment Liabilities
Unallocated Liabilities
Total Liabilities

841,912,323
841,912,323

120,937,861
120,937,861

962,850,183
962,850,183

2,703,144
-

1,003,819
-

3,706,964
-

88,028,083
26,691,045
114,719,128

4,702,661
4,702,661

92,730,744
26,691,045
119,421,789

Interest paid to External Customers
Interest paid to other Segments
Total Interest Expenses

(18,367,680)
(29,670,119)
(48,037,799)

(2,047,552)
(2,047,552)

(20,415,233)
(29,670,119)
(50,085,351)

Other Income
Operating Income
Impairment charges for credit losses
Operating Expenses
Operating profit before tax

28,297,778
94,979,107
(41,737,317)
(27,809,131)
25,432,660
-

1,304,385
3,959,494
(66,267)
(5,128,568)
(1,235,342)
-

29,602,163
98,938,601
(41,803,584)
(32,937,699)
24,197,318
24,197,318

Segment assets
Unallocated Assets
Total Assets

680,337,750
680,337,750

58,917,434
58,917,434

-

Segment Liabilities
Unallocated Liabilities
Total Liabilities

756,439,212
756,439,212

62,107,027
62,107,027

-

3,710,117
-

1,225,710.00
-

4,935,827
-

Other Segment Information
Depreciation
Amortization
At 31 December 2011
Interest income derived from external customers
Interest income derived from other segments
Total interest income

Profit for the period

Other Segment Information
Depreciation
Amortization

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

At 1 January 2011

Nigeria

West
Africa

Total

Segment assets
Unallocated Assets
Total Assets

536,076,885
536,076,885

58,718,250
58,718,250

594,795,135
594,795,135

Segment Liabilities
Unallocated Liabilities
Total Liabilities

433,640,834
433,640,834

54,069,440
54,069,440

487,710,274
487,710,274

BANK
At 31 December 2012

Treasury

Business
Banking

Retail
Businesses

Corporate
Banking

Total

26,505,169
445,340
26,950,510

32,636,591
20,382,876
53,019,467

15,125,920
25,461,719
40,587,639

24,707,664
2,130,181
26,837,845

98,975,344
48,420,116
147,395,460

(7,782,878)
(18,432,549)
(26,215,427)

(13,750,145)
(10,354,458)
(24,104,602)

(8,366,029)
(1,233,367)
(9,599,396)

(3,999,666)
(11,930,931)
(15,930,597)

(33,898,717)
(41,951,305)
(75,850,023)

Other income
Operating income
Impairment charges for credit losses
Operating expenses

4,233,076
4,968,159
(697,691)

11,554,809
40,469,673
(7,605,208)
(28,205,561)

16,257,716
47,245,959
(3,939,102)
(16,432,266)

6,223,123
17,130,370
(831,939)
(3,159,396)

38,268,723
109,814,161
(12,376,249)
(48,494,914)

Operating profit before tax

4,270,468

4,658,903

26,874,591

13,139,035

48,942,998

Interest income derived from external customers
Interest income derived from other segments
Total interest income
Interest paid to external customers
Interest paid to other segments
Total interest expenses

Profit for the period

48,942,998

Segment assets - Loans to Customers
- Loans to banks/Investments in TBs & Bonds
Total Assets

264,611,774
264,611,774

Segment Liabilities - Deposit from Customers
Takings and Treasury bills sold - others
Total Liabilities

2,155
34,789,425
34,791,580

75,349
-

Other Segment Information
Depreciation
Amortization

212,500,582

70,114,328

238,869,972

521,484,881
264,611,774
786,096,655

212,500,582

70,114,328

238,869,972

414,799,541

305,265,508

87,055,693

414,799,541

305,265,508

87,055,693

807,122,897
34,789,425
841,912,323

1,497,843
-

1,075,125
-

42,301
-

2,690,618
-

263

NOTES TO THE FINANCIAL STATEMENTS
264

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

At 31 December 2011

Treasury

Business
Banking

Retail
Businesses

Corporate
Banking

Total

24,794,820
753
24,795,573

24,411,551
10,937,897
35,349,448

12,999,650
14,667,569
27,667,218

15,613,637
1,084,827
16,698,464

77,819,658
26,691,046
104,510,703

(8,129,567)
(11,484,782)
(19,614,349)

(5,854,928)
(9,893,045)
(15,747,973)

(4,798,149)
(572,308)
(5,370,457)

(2,449,912)
(7,719,984)
(10,169,896)

(21,232,556)
(29,670,119)
(50,902,675)

Other income
Operating income
Impairment charges for credit losses
Operating expenses

1,808,126
6,989,350
(544,140)

9,145,098
28,746,573
(33,367,716)
(25,508,526)

11,821,735
34,118,496
(6,259,940)
(13,267,684)

3,104,344
9,632,912
(2,175,928)
(1,025,877)

25,879,304
79,487,331
(41,803,584)
(40,346,226)

Operating profit before tax

6,445,210

(30,129,668)

14,590,873

6,431,106

(2,662,479)

Interest income derived from external customers
Interest income derived from other segments
Total interest income
Interest paid to external customers
Interest paid to other segments
Total interest expenses

Profit for the period

(2,662,479

Segment assets - Loans to Customers
- Loans to banks/Investments in TBs & Bonds
Total Assets

341,894,048
341,894,048

154,991,373
154,991,373

65,835,315
65,835,315

144,382,468
144,382,468

365,209,156
341,894,048
707,103,203

Segment Liabilities - Deposit from Customers
Takings and Treasury bills sold - others
Total Liabilities

216,850,507
216,850,507

245,016,861
245,016,861

229,649,128
229,649,128

53,659,018
53,659,018

528,325,008
216,850,507
745,175,515

42,538
-

1,671,911
-

1,073,725
-

41,571
-

2,829,744
-

183,461,397
183,461,397

153,635,978
153,635,978

15,049,652
15,049,652

110,968,769
110,968,769

279,654,400
183,461,397
463,115,797

77,069,394
77,069,394

175,484,829
175,484,829

140,448,590
140,448,590

51,901,517
51,901,517

367,834,936
77,069,394
444,904,330

Other Segment Information
Depreciation
Amortization

At 1 January 2011
Loans to Customers
- Loans to banks/Investments in TBs & Bonds
Total Assets
Deposit from Customers
Takings and Treasury bills sold - others
Total Liabilities

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Segment result of operations by Geography
The Bank’s four business segments operate in two main geographical areas.
Nigeria is the home country of the parent bank, which is also the main operating company. The areas of operation include all the
primary business segments.
Revenue from external customers is based on the country in which the customer is located. Assets are shown by the geographical
location of the assets.

At 31 December 2012
Interest income derived from external customers
Interest income derived from other segments
Total interest income
Interest paid to external customers
Interest paid to other segments
Total interest expenses
Other income
Operating income
Impairment charges for credit losses
Operating expenses
Operating profit before tax
Income tax expense

Lagos

West

North

South

Total

73,822,336
14,464,349
88,286,685

2,547,992
1,100,868
3,648,860

8,352,104
17,180,788
25,532,892

14,252,912
15,674,111
29,927,023

98,975,344
48,420,116
147,395,460

(19,771,601)
(40,454,757)
(60,226,358)

(806,816)
(170,327)
(977,143)

(6,131,030)
(310,481)
(6,441,511)

(7,189,270)
(1,015,740)
(8,205,010)

(33,898,717)
(41,951,305)
(75,850,023)

21,101,713

1,473,049

6,875,002

8,818,959

38,268,723

49,162,040
(7,259,366)
(18,370,695)
23,531,979

5,121,909
(471,105)
(2,363,428)
2,287,376

32,407,895
(3,065,692)
(13,451,760)
15,890,443

38,745,981
(1,580,086)
(14,309,031)
22,856,864

125,437,825
(12,376,249)
(48,494,914)
64,566,662
-

Profit for the period
Segment assets
Unallocated Assets
Total Assets
Segment Liabilities
Unallocated Liabilities
Total Liabilities
Other Segment Information
Depreciation
Amortization

64,566,662
622,565,387

15,006,197

46,425,831
-

97,605,745
-

781,603,161
-

622,565,387

15,006,197

46,425,831

97,605,745

781,603,161

311,694,339
-

26,527,519
-

292,191,267
-

211,499,198
-

841,912,323
-

311,694,339

26,527,519

292,191,267

211,499,198

841,912,323

849,423
-

179,194
-

799,881
-

862,119.76
-

2,690,618
-

265

NOTES TO THE FINANCIAL STATEMENTS
266

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

At 31 December 2011

Lagos

West

North

South

Total

58,034,870
10,153,258
68,188,128

1,813,649
565,804
2,379,453

7,737,024
8,611,185
16,348,209

10,234,116
7,360,799
17,594,915

77,819,659
26,691,046
104,510,705

(15,960,448)
(27,475,233)
(43,435,681)

(367,784)
(14,066)
(381,850)

(2,554,326)
(1,466,089)
(4,020,415)

(2,350,001)
(714,731)
(3,064,732)

(21,232,559)
(29,670,119)
(50,902,678)

12,618,184

1,065,344

5,246,455

6,949,321

25,879,304

37,370,631
(30,522,936)
(13,495,277)

3,062,947
(1,034,084)
(1,882,576)

17,574,248
(4,411,401)
(12,202,489)

21,479,504
(5,835,163)
(12,765,884)

79,487,331
(41,803,584)
(40,346,226)

Operating profit before tax
Income tax expense

(6,647,581)

1,180,370

5,371,759

8,713,620

(2,662,480)

Profit for the period

(6,647,502)

146,287

960,358

2,878,457

(2,662,479)

Segment assets
Unallocated Assets
Total Assets

584,976,707
584,976,707

146,287
11,091,741

960,358
44,122,821

2,878,457
66,911,934

707,103,203
707,103,203

Segment Liabilities
Unallocated Liabilities
Total Liabilities

401,505,858
401,505,858

16,254,908
16,254,908

161,482,935
161,482,935

165,931,814
165,931,814

745,175,515
745,175,515

-

-

-

-

-

Segment assets
Unallocated Assets
Total Assets

385,268,960
57,940,560
443,209,520

6,051,860
6,051,860

37,119,978
37,119,978

34,674,999
34,674,999

463,115,797
57,940,560
521,056,357

Segment Liabilities
Unallocated Liabilities
Total Liabilities

237,355,676
12,055,865
249,411,541

11,771,063
11,771,063

106,783,911
106,783,911

88,993,680
88,993,680

444,904,329
12,055,865
456,960,194

Interest income derived from external customers
Interest income derived from other segments
Total interest income
Interest paid to External Customers
Interest paid to other Segments
Total Interest Expenses
Other Income
Operating Income
Impairment charges for credit losses
Operating Expenses

Other Segment Information
Depreciation
Amortization

At 1 January 2011

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Reconciliation of segment results of operations to consolidated results of operations
GROUP
Total
management
reporting

Differences

Total
consolidated

153,716,986
(78,589,994)
(13,039,372)
42,402,120
(54,726,323)

(41,365,031)
55,559,561
(3,988,918)
(19,688,719)
1,025,151
(13,821,621)

112,351,955
(23,030,433)
(17,028,290)
22,713,401
1,025,151
(68,547,944)

49,763,417
-

(22,279,573)
(5,373,457)

27,483,840
(5,373,457)

119,421,789
(50,085,351)
(41,803,584)
29,602,163
(32,937,699)

(36,061,327)
37,582,810
(13,605,107)
(7,771,899)
1,232,906
(23,534,434)

83,360,460
(12,502,541)
(55,408,691)
21,830,264
1,232,906
(56,472,133)

24,197,318

(42,157,054)

(17,959,733)

-

4,023,944

4,023,944

At 31 December 2012 (N' 000)
Interest income from external customers
Interest expense
Impairment charge for credit losses
Other Operating Income
Net gains/(losses) from financial assets held for trading
Operating Expenses
Operating profit
Taxation
At 31 December 2011 (N' 000)
Interest income from external customers
Interest expense
Impairment charge for credit losses
Other Operating Income
Net gains/(losses) from financial assets held for trading
Gains on disposal of discontinued operations
Operating Expenses
Operating profit
Taxation

267

NOTES TO THE FINANCIAL STATEMENTS
268

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

BANK
Total
management
reporting

Differences

Total
consolidated

Interest income from external customers
Interest expense
Impairment charge for credit losses
Other Operating Income
Net gains/(losses) from financial assets held for trading
Operating Expenses

147,395,460
(75,850,023)
(12,376,249)
38,268,723
(48,494,914)

(41,883,873)
55,139,294
(2,568,026)
(17,022,928)
1,025,151
(15,267,650)

105,511,587
(20,710,729)
(14,944,275)
21,245,795
1,025,151
(63,762,564)

Operating profit

48,942,997

(20,578,031)

28,364,966

-

(5,291,538)

(5,291,538)

Interest income from external customers
Interest expense
Impairment charge for credit losses
Other Operating Income
Net gains/(losses) from financial assets held for trading
Operating Expenses

104,510,703
(50,902,675)
(41,803,584)
25,879,304
(40,346,226)

(24,622,172)
40,217,158
(11,145,447)
(17,873,386)
1,166,719
(12,212,604)

79,888,531
(10,685,517)
(52,949,031)
8,005,918
1,166,719
(52,558,830)

Operating profit

(2,662,478)

(24,469,731)

(27,132,209)

4,263,955

4,263,955

At 31 December 2012 (N' 000)

Taxation

At 31 December 2011 (N' 000)

Taxation

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Reconciliation of segment Assets and Liabilities to consolidated statement of Financial Position
GROUP
31 Dec. 2012

31 Dec. 2011

1 Jan. 2011

Segment assets (N'000)
Total Consolidated Assets (N'000)
Difference

887,136,642
1,178,103,755
(290,967,113)

739,255,184
796,231,792
(56,976,608)

495,667,837
592,851,763
(97,183,926)

Segment Liabilities (N'000)
Total Consolidated Liabilities (N'000)
Difference

962,850,183
1,069,248,032
(106,397,849)

818,546,239
710,250,776
108,295,463

489,101,312
487,541,084
1,560,228

Segment assets (N'000)
Total Consolidated Assets (N'000)
Difference

781,603,161
1,059,137,257
(277,534,096)

707,103,203
714,063,959
(6,960,756)

463,115,797
542,098,490
(78,982,693)

Segment Liabilities (N'000)
Total Consolidated Liabilities (N'000)
Difference

841,912,323
951,820,842
(109,000,000)

745,175,515
629,927,525
115,247,990

444,904,330
430,834,127
14,070,203

BANK

The Group's management reporting is based on Nigerian GAAP which differs from IFRS in treatment and in presentation.
Therefore, these differences are as a result of the Group's conversion to IFRS. Please see below for an explanation of all
material differences.

269

NOTES TO THE FINANCIAL STATEMENTS
270

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

PROFIT AND LOSS
Interest Income
Under Nigerian GAAP, interest on loans is recognized using the contractual rate on the outstanding balance of the loan. When a loan
is classified as impaired, interest is usually accrued, but suspended. Under IFRS, interest is calculated on the amortized cost of the
loans using effective interest rate method. Effective interest rate is the rate that exactly discounts the expected future cash flows of a
loan to its carrying amount. When a loan is impaired, the carrying amount is reduced to the recoverable amount which is the future
cash flow discounted at the original effective interest rate of the instrument. Interest is recognized on the loan by unwinding the
discount. Interest on impaired loans is recognized using the original effective interest rate.
Reconciliation of Interest Income:
(N'000)
GROUP
Note

31 Dec 2012

31 Dec 2011

Total Interest income earned by Reportable Segment

153,716,986

119,421,789

Consolidation & Adjustments
- Due to differences in accounting policies
- Due to Consolidation

7,055,085
(48,420,116)

(9,370,282)
(26,691,045)

112,351,955

83,360,462

Total Interest income earned by Reportable Segment

147,395,460

104,510,703

Consolidation & Adjustments
- Due to differences in accounting policies
- Due to Consolidation

6,536,243
(48,420,116)

2,068,878
(26,691,046)

105,511,587

79,888,531

Total Consolidated Revenue

BANK

Total Consolidated Revenue

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Interest Expense
Under Nigerian GAAP, on lending fees relating to borrowings from foreign financial institutions are usually paid in advance,
warehoused in a receivable account and amortized to operating expenses on a straight line bases over the tenor of the borrowing.
Under IFRS, the amortized position of the upfront fees have been reclassified to interest expense since the liabilities are amortized
cost financial liabilities and measured and to apply the effective interest rate method.

Reconciliation of Interest Expense (N'000)
GROUP
Note

31 Dec 2012

31 Dec 2011

78,589,994

51,585,351

Consolidation & Adjustments
- Due to differences in accounting policies
- Due to Consolidation

170,000
(55,729,561)

216,875
(39,299,685)

Total Consolidated Revenue

23,030,433

12,502,541

75,850,023

50,902,675

170,000
(96,730,752)

216,875
(61,805,066)

(20,710,729)

(10,685,517)

Total Interest expense incurred by Reportable Segments

BANK
Reconciliation of Interest Expense (N'000)
Total Interest expense incurred by Reportable Segments
Consolidation & Adjustments
- Due to differences in accounting policies
- Due to Consolidation
Total Consolidated Revenue

271

NOTES TO THE FINANCIAL STATEMENTS
272

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Impairment charge for credit losses
Under Nigerian GAAP, impairment on loans and advances is determined using the Central Bank of Nigeria’s Prudential Guidelines
based on each customer’s account and the number of days’ interest/principal outstanding. IFRS requires the use of an incurred loss
model where the loss event must have an effect on the estimated future cash flows of the financial asset.

Reconciliation of Interest Impairment Charges (N'000)
GROUP
Note

31 Dec 2012

31 Dec 2011

Total impairment charges reported by Reportable Segments

13,039,372

41,803,584

Consolidation & Adjustments
- Due to differences in accounting policies
- Due to unallocated impairment charges Revenue

(3,703,816)
7,692,734

11,260,192
2,344,915

17,028,290

55,408,691

12,376,249

41,803,584

(4,887,282)
(22,433,242)

9,612,740
1,532,707

(14,944,275)

52,949,031

Total Consolidated Revenue

BANK
Total impairment charges reported by Reportable Segments
Consolidation & Adjustments
- Due to differences in accounting policies
- Due to unallocated impairment charges
Total Consolidated Revenue

NOTES TO THE FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2012

Fees and commission income
Under Nigeian GAAP, credit related fee income should be deferred and amortized over the life of the related credit in proportion to
the outstanding credit risk. IFRS requires that credit related fees form part of the effective interest rate calculation of the related
credit facility. Credited related fees reported under Nigerian GAAP as fees have been reclaasified to Interest income.
Net gains/(losses) from financial assets held for trading
Financial assets held for trading is not a financial instrument category under Nigerian GAAP and there is no authoritative guidance
available. Under IFRS, A financial asset is held for trading if acquired principally for the purpose of selling or repurchasing in the near
term or if it is part of a portfolio of identified instruments that are managed together and for which there is evidence of a recent
actual pattern of short-term profit-taking. A portion of the income reported as trading income or profit on sale of investments relate
to Held for Trading Financial Instruments, which have been reclassified under IFRS as Net gains/(losses) from financial assets held
for trading.
Operating expenses
Under Nigerian GAAP, staff loans are usually granted at a concessionary rate, without recognizing the embeded staff benefit and
amortizing it over the tenor of the loan. Under IFRS, such benefits are determined and amortized to staff expense over the life of the
loan. In some cases where impairment charges for unrecoverable portion of "other assets" have been included in provision for
losses, these were reclassified to operating expenses in IFRS.
Reconciliation of operating expenses (N'000)
Note

31 Dec 2012

31 Dec 2011

Total Operating expenses incurred by Reportable Segments

54,726,323

32,937,699

Consolidation & Adjustments
- Due to differences in accounting policies
- Due to unallocated impairment charges

313,127
13,508,494

892,520
22,641,914

68,547,944

56,472,133

48,494,914

40,346,226

1,381,494

979,217

13,886,156

11,233,387

63,762,564

52,558,830

GROUP

Total Consolidated Revenue
BANK

Total Operating expenses incurred by Reportable Segments
Consolidation & Adjustments
- Due to differences in accounting policies
- Due to unallocated impairment charges
Total Consolidated Revenue

273

NOTES TO THE FINANCIAL STATEMENTS
274

FOR THE PERIOD ENDED 31 DECEMBER 2012

2012 | ANNUAL REPORT & ACCOUNTS

Income tax expense
Under Nigerian GAAP, deferred tax is the expense or benefit that is attributable to the timing differences between accounting and
taxable profits (Income Statement approach). Under IFRS, deferred tax is provided for all temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts (Balance Sheet approach)
STATEMENT OF FINANCIAL POSITION
Assets
Short-term investments are measured at lower of cost and market value and long-term at cost or at a revalued amount under
Nigerian GAAP. Under IFRS, all financial instruments are measured initially at fair value. Subsequently, all financial instruments
remiain measured at fair value except for loans and receivables, held-to-maturity assets and unquoted equity instruments whose
fair values cannot be measured reliably. The application of fair value measurement and changes in accounting policy relating to
impairment of loans account for the difference between segment assets and the consolidated statement of financial position.
Liabilities
Under IFRS, financial laibilities at amortized cost (deposits from customers, deposit from banks and borrowings) have been restated
to meet the definition of amortized cost, by adjusting the carrying amounts to include unamortized upfront fees and transaction
costs. In addition, accrued interest payable has been reclassified to the underlying financial liability. The deferred income tax liability
is calculated using the Nigerian GAAP carrying amounts of assets and liabilities. The deferred tax liability in these IFRS financial
statements is calculated using the IFRS carrying amounts of assets and liabilities.

CONSOLIDATED FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

VALUE ADDED STATEMENT
GROUP
Dec 2012
N'000
Gross earnings
Interest expense
Administrative overheads and bought in costs
Value added

%

138,848,669
(23,030,433)
115,818,236
(340,405,033)

Dec 2011
N'000

%

102,722,007
(12,502,541)
90,219,466
(30,711,917)

75,413,203

100

59,507,549

100

25,963,200

34

16,730,642

28

5,373,457

7

(4,023,944)

(7)

4,513,960
426,212
17,028,290

6
1
23

4,684,571
431,376
55,408,691

8
1
93

22,108,084

29

(13,723,787)

(23)

75,413,203

100

59,507,549

100

Distribution of value added
To employees and directors:
Salaries and benefits
To government:
Government as taxes
The future:
For replacement of fixed assets (depreciation)
For replacement of intangible assets (amortisation)
Asset replacement (provision for credit losses)
Expansion (transfers to reserves and non-controlling
interest)

These statements shows the distribution of the wealth created by the Group during the period.

275

CONSOLIDATED FINANCIAL STATEMENTS
276

2012 | ANNUAL REPORT & ACCOUNTS

VALUE ADDED STATEMENT
BANK
Dec 2012
N'000
Gross earnings
Interest expense
Administrative overheads and bought in costs
Value added
To employees and directors:
Salaries and benefits
To government:
Government as taxes
The future:
For replacement of fixed assets (depreciation)
For replacement of intangible assets (amortisation)
Asset replacement (provision for credit losses)
Expansion (transfers to reserves)

Dec 2011
N'000

%

131,166,141
(20,710,729)
110,455,412
(38,542,762)

%

98,163,095
(10,685,517)
87,477,578
(39,548,988)

71,912,650

100

47,928,590

100

24,213,430

34

17,693,097

37

5,291,538

7

(4,263,955)

-9

4,032,358
357,622
14,944,275
23,073,427

6
21
32

4,093,627
325,044
52,949,031
(22,868,254)

9
1
110
(48)

71,912,650

100

47,928,590

100

These statements shows the distribution of the wealth created by the Company during the period.

CONSOLIDATED FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FIVE YEAR FINANCIAL SUMMARY
GROUP
31 December
2012

IFRS
31 December
2011

1 January
2011

NGAAP
31 December
2009

30 April
2009

132,196,061
139,803,281
585,200,158
90,111,236
-

55,784,079
90,648,011
388,136,486
8,041,618
-

27,606,200
72,155,340
307,212,457
1,345,552
-

70,428,505
9,090,252
101,663,746
322,820,515
6,962,870
68,415,479

54,766,850
11,502,437
137,638,292
308,815,972
6,150,488
66,457,805

10,601,609
65,762,681
79,302,531
13,793,105
3,182,250
4,070,340
44,980,333
834,815
8,265,354

85,990,731
61,712,761
34,940,000
10,663,445
3,184,549
3,833,335
39,664,459
819,076
12,363,242

19,891,359
56,977,064
37,820,000
705,659
16,649,442
3,502,339
3,755,064
36,954,186
596,025
7,681,076

265,730
21,848,223
3,474,612
37,567,390
5,896,151

819,142
54,704,932
2,650,587
34,155,878
890,107

1,178,103,754
-

795,781,792
450,000

592,851,763
-

648,433,473
-

678,552,490
-

1,178,103,754

796,231,792

592,851,763

648,433,473

678,552,490

31,207,298
910,234,444
49,966,360
99,574
1,056,378
42,095,096
1,972,540
13,248,585
19,367,757

20,982,788
603,003,229
54,877,883
51,607
29,988,365
1,346,904
-

15,347,216
412,992,754
28,265,428
2,219,578
29,366
26,691,492
1,995,250
-

14,659,352
482,056,310
19,050,996
1,238,238
39,085
193,862
177,635
21,271,403
3,653,521
-

8,557,718
466,889,851
23,708,110
902,947
87,809
827,473
163,563
59,150,901
3,826,585
-

1,069,248,032

710,250,776

487,541,084

542,340,402

564,114,957

ASSETS
Cash and balances with central banks
Treasury bills and other eligible bills
Loans to banks
Loans and advances to customers
Advances under finance leases
Financial assets held for trading
Investment securities
Investment securities
-Available-for-sale investments
-Held to maturity investments
Asset pledged as collateral
Insurance receivable
Other assets
Investments in associates
Investment property
Property, plant and equipment
Intangible assets
Deferred tax

Asset classified as held for sale
Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Borrowings
Provision for insurance contracts
Liability on insurance contract
Retirement benefit obligations
Provision
Dividend payable
Other liabilities
Current income tax liability
Derivative liability
Long term debt
Total liabilities

277

CONSOLIDATED FINANCIAL STATEMENTS

278

2012 | ANNUAL REPORT & ACCOUNTS

FIVE YEAR FINANCIAL SUMMARY

GROUP
31 December
2012

IFRS
31 December
2011

1 January
2011

NGAAP
31 December
2009

30 April
2009

7,237,622
89,629,324
(6,629,221)

7,237,622
89,629,324
(24,112,701)

7,237,622
89,629,324
(8,387,489)

7,237,622
89,629,324
(4,949,700)

7,237,622
89,629,324
4,565,446

14,898,751
3,966,628
(1,292,728)
792,068

11,394,523
2,812,957
(1,422,736)
217,094

11,214,864
2,812,957
1,686,305
354,741
306,694

10,224,848
2,486,834
170,059
176,802
671,194

10,224,848
2,486,834
106,437
(246,993)

108,602,444
253,278

85,756,084
224,932

104,855,018
455,661

105,646,983
446,088

114,003,518
434,015

108,855,723

85,981,017

105,310,679

106,093,071

114,437,533

1,178,103,754

796,231,792

592,851,763

648,433,473

678,552,490

113,057,775
(68,547,944)
(17,028,290)

93,915,895
(56,472,133)
(55,408,691)

74,199,886
(46,564,543)
(22,862,480)

42,457,850
(30,087,301)
(24,744,703)

71,874,237
(41,349,177)
(24,623,109)

Loss)/profit before tax
Taxation
(Loss)/profit after tax
Profit from discontinued operations
(Loss)/profit for the period

27,481,541
(5,373,457)
22,108,084
22,108,084

(17,964,928)
4,023,944
(13,940,985)
217,198
(13,723,787)

4,772,863
(3,444,208)
1,328,655
1,328,655

(12,374,154)
4,199,741
(8,174,413)
(8,174,413)

5,901,951
(730,195)
5,171,756
5,171,756

- Non controlling interest
- Equity holders of the parent
Other comprehensive income for the period

(33,294)
22,141,378
(229,690)

6,319
(13,730,106)
(3,184,950)

(40,241)
1,368,896
-

32,402
(8,206,815)
-

(27,637)
5,199,393
-

Total comprehensive income for the period

21,878,394

(16,908,737)

1,328,655

(8,174,413)

5,171,756

EQUITY
Share capital
Share premium
Retained earnings
Other reserves
Statutory reserve
Small scale industries (SSI) reserve
Fair value reserve
Contingency reserve
Foreign currency translation reserve (FCTR)

Non - controlling interest
Total equity
Total equity and liabilities
Net operating income
Operating expenses
Provision for losses

CONSOLIDATED FINANCIAL STATEMENTS

2012 | ANNUAL REPORT & ACCOUNTS

FIVE YEAR FINANCIAL SUMMARY
BANK
31 December
2012

IFRS
31 December
2011

1 January
2011

NGAAP
31 December
2009

30 April
2009

123,224,590
113,384,200
523,374,608
90,111,236
-

54,396,524
72,098,846
344,397,331
8,041,618
-

17,871,129
61,620,185
299,534,692
1,109,079
-

62,470,986
6,414,452
96,202,493
316,871,365
6,962,870
41,819,256

50,223,343
9,087,437
130,568,284
312,736,983
6,150,488
40,302,632

10,555,061
64,751,769
57,438,896
10,240,209
7,865,622
3,205,140
3,910,340
41,879,449
740,370
8,455,767

76,762,309
52,253,105
34,940,000
6,529,297
7,865,622
3,205,140
3,686,335
36,276,819
624,139
12,536,874

11,095,806
43,978,424
37,820,000
8,664,365
17,442,980
34,645,547
596,025
7,720,257

15,294,128
16,442,980
34,949,278
4,613,903

50,012,610
16,442,980
32,026,944
-

1,059,137,257
-

713,613,959
450,000

542,098,489
-

602,041,711
-

647,551,701
-

1,059,137,257

714,063,959

542,098,489

602,041,711

647,551,701

8,173,286
823,090,787
49,966,360
99,574
1,056,378
34,939,235
1,878,880
13,248,585
19,367,757
951,820,842

3,939,956
545,161,145
54,877,883
20,141
24,678,784
1,249,616
629,927,525

4,104,098
379,344,019
28,031,831
21,948
17,682,674
1,649,557
430,834,127

3,970,670
449,020,259
19,050,996
187,296
177,635
15,915,607
3,360,544
491,683,007

3,446,876
444,815,118
23,708,109
815,186
163,563
54,558,873
3,331,891
167,165
531,006,781

ASSETS
Cash and balances with central banks
Treasury bills and other eligible bills
Loans to banks
Loans and advances to customers
Advances under finance leases
Financial assets held for trading
Investment securities
Investment securities
-Available-for-sale investments
-Held to maturity investments
Asset pledged as collateral
Other assets
Investment in Subsidiaries
Investments in associates
Investment property
Property, plant and equipment
Intangible assets
Deferred tax

Asset classified as held for sale
Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Borrowings
Retirement benefit obligations
Provision
Dividend payable
Other liabilities
Current income tax liability
Deferred tax
Derivative liability
Long term debt
Total liabilities

279

CONSOLIDATED FINANCIAL STATEMENTS

280

2012 | ANNUAL REPORT & ACCOUNTS

FIVE YEAR FINANCIAL SUMMARY

BANK
31 December
2012

IFRS
31 December
2011

1 January
2011

NGAAP
31 December
2009

30 April
2009

7,237,622
89,629,324
(6,851,491))

7,237,622
89,629,324
(25,310,234)

7,237,622
89,629,324
(270,693)

7,237,622
89,629,324
793,791

7,237,622
89,629,324
6,980,007

14,650,515
3,966,628
(1,316,183)

11,189,501
2,812,957
(1,422,736)

11,189,501
2,812,957
665,652

10,211,133
2,486,834
-

10,211,133
2,486,834
-

107,316,415

84,136,434

111,264,363

110,358,704

116,544,920

1,059,137,257

714,063,959

542,098,490

602,041,711

647,551,701

EQUITY
Share capital
Share premium
Retained earnings
Other reserves
Statutory reserve
Small scale industries (SSI) reserve
Fair value reserve
Total equity
Total equity and liabilities

OUR BRANCH LOCATIONS

281

LOCATIONS

CODE

TELEPHONE NUMBERS

u
u
u
u
u
u
u
u

Abia
2, Eziukwu Road.
Umuahia, 10, Library Avenue
74, Asa Road
Ariaria Mkt Mini, Faulks Road, Aba
Osisioma, Umuakpara Osisioma, Ngwa Local Government
Ngwa Rd Mini, 20, Ngwa Road Aba.
Umuahia Mini, 2 Owerri Rd, Umuahia
Ogor Hill, Ikot Ekpene Road Aba

001
039
078
001
001
078
039
039

082-221209; 871644, 225302; 440021
088/224345, 486790
082-225358; 082-225496
082-871602
082502138
082- 233 176; 233 178
082-441247
08-38979093; 08037717250

u
u
u
u
u

Abuja (FCT)
Ahmadu Bello Way , Plot 1486
Dei-Dei, Building Material Market
N417, UAC Building, Plot 273, Central Business Area
Plot 792, Mohammed Buhari Way, Central Business District
Nyanya, Opposite Nyanya Shopping Complex

077
014
013
061
065
041

3146480-2; 3146483 DL
09-6700796/6712522
09-6282976, 6282970
09-2344200 – 3; 09-7805208
09-6700115; 09-7818022;
2909230; 2909231
09-4134248 D/l; 4134250-51

013
013
077
061

09-7804046
09-2341204
09-6702726
09- 6281218,6281219, 8701672

106

09- 780 7128; 780 7131; 780 7134

111
077
123
138
150
165
166
168

09-5236956 - 9
097808309
097820492; 098701559
07098203480, 09-07831099
09-8703441, 09- 8703437
098 704755, 08191353868
098 766698

049
097

075-627960; 627836
075-882907; 882908; 882909

048
112
134
146

085-204667 , 201210,200913
085-480161; 480140
082-441245; 082-441246
07-023044030, 087480203

u Wuse 2, Plot 21, Adetokunboh Ademola Crescent,
u
u
u
u
u
u
u
u
u
u
u
u
u
u

Cadastral Zone 8.
NASS, National Assembly Complex
Savannah Suite Hotel
Gudu Market, Shop R 144, Block 6, Gudu Market After Apo
Federal Secretariat, Phase 3, Federal Ministry of Education,
Ground Floor, Ahmadu Bello Way, Central Business District
Kubwa, Plot 27, Cadastral Zone 0705, Gado Nasco Road,
Kubwa (Phase IV)
Zone 4, Plot 2097, Herbert Macaulay Way, Zone 4, Abuja
Area 1, 1st Floor, Area 1 Shopping Complex, Abuja
Mararaba, New Karu, Keffi Road, Near Royal Dreams Hotel,Abuja
Gwagwalada, Plot 52 Park Lane FCT Abuja
Gwarinpa, 1st Avenue Gwarinpa, Abuja
Maitama, 21, Gana Street, FCT Abuja.
Zone 5 Abuja, Michael Okpara Street
Garki II Abuja,Plot 283, LadokeAkintola BLVD
Plot 283, LADOKE AKINTOLA BLVD, GARKI II, ABUJA

Adamawa
u Yola, 10, Galadima Aminu Way
u Mubi, Ahmadu Bello Way, Wuro Bulude 'B'
u
u
u
u
u

Akwa Ibom
74, Abak Rd, Uyo
Eket, No. 6/8 Grace Rd, Eket
Ikot Ekpene, Essienton Rd, Off Aba-Ikot Ekpene Rd
Banking Layout, Udo Idoma Avenue, Uyo

OUR BRANCH LOCATIONS

2012 | ANNUAL REPORT & ACCOUNTS

282

LOCATIONS

u
u
u
u

Anambra
Awka, 208, Azikiwe Street
Old Nkwo Mkt Road
1/3, Edo-Ezemewi Street
46, Iweka Road

u
u
u
u
u
u
u
u
u
u

Ogbaru Enamel Ware Mkt
63A, New Market
1, Sokoto Road, Main Market
36, Port Harcourt Road, Bridgehead
NAU, Nnamdi Azikiwe University, Awka
Awka, Enugu/Onitsha Expressway, Awka
Ogidi, Plot No. 37, Block 23, Phase 1, Nkwelle Ogidi
Nkpor, 1, Demude Street, By Nkpor Spare Parts Junction
Obosi, 8 City Biscuit Rd, Ugwuagba
67 Ret Shp - Nnamdi Azikiwe University

CODE

TELEPHONE NUMBERS

067
071
033
059

048-553350 048-553292
046-662860,300320
046-497378
046-218046, 218900,
046- 662866 , 218700
066
046-812007; 812008;313806
006
046-410407; 410189, 046-410189
053
046-413291; Dl: 046-662864
019
046-216411, 211098; 216971
067
046 -322589, 322587
116
046-325007
122
046-665794; 665793
125
046-665791; 66592
162 046 845956
046 -322589,322587

Bauchi
u Bauchi, Along Abdulkadir Ahmed Road, Commercial Area

045

077-543846,077-543774

082

089 504313

034
034

044-534164; 044-534161
0703 406 3120 ; 0703 406 3119

020
020
020

076-236460; 236428
076-940502
076-342231/ 342130/ 342136

032
147
149

087-237482 / 237484
08023333701,08051265829
08021070229

u Asaba, 252, Nnebisi Road
u Warri, 84, Warri-Sapele Road, Effurun

038
005

046-870580, 662868, 056-280010
053-254301-3; 255271

u Warri Refinery, Warri Refinery And Petroleum Company

005
151
164

07029547005
053-817100

Bayelsa
u Yenegoa, Plot A6B Central Buz District

Benue
u 7, New Bridge Road, Makurdi
u North Bank, N0.1, Udei Street, North Bank, Makurdi

Borno
u Maiduguri, NSITF Building, 20, Shehu Laminu Way
u UNIMAID, University of Maiduguri
u Maiduguri, 7 Baga Road,

Cross River
u Calabar, 7, Mary Slessor Street
u Ikom, 6 Okim Osabor, Ikom; Cross Rivers State.
u Ogoja, Hospital Rd., Cross River State

Delta
(WRPC) Uvwie

u Plot 49, Olodi Oki, Okumagba Avenue, Warri
u Agbor, No. 181 Old Lagos-Asaba Rd Boji Boji Owa

OUR BRANCH LOCATIONS

2012 | ANNUAL REPORT & ACCOUNTS

283

LOCATIONS

CODE

TELEPHONE NUMBERS

Ebonyi
u Abakaliki, 2d, Ogoja Road
u EBSU, Ebonyi State University, Abakiliki
u
u
u
u
u

Edo
Benin, 6, Akpakpava Street
Sapele Road, 81, Sapele Road, Benin City
Ugbowo, No. 170, Ugbowo - Lagos Road, Benin, Edo State
Mission Road, No. 109, Mission Road, Benin

035
035

043-220843, 043-220597
043 - 220069

036
108
109
115

052-258503; 052-258713
052-253750; 253783; 259068; 255 742
052-602143
052-876691, 052-880593

094

030-207058, 030-251872

052
018
113
113
145
139

042-250979; 252193
042-259625 D/l; 042-259624-6 S/b
042- 771903, 771919, 771935, 771982
042-770707; 771818
042-290571-2
042-290498, 042-290499

092

072-222464;221515

017
090
103
114
126
090
017
090
157
152

083-232789; 233568
083-232309, 083-232232
083-300012; 520643; 520533; 520084
083—233136,232231
083-234848,234909, 082-507201
083-483136
083-801255

104

(Fax/Dl:07034045314), 07034045313/5

012
064
133
096

062-236939,236867 (dl),236862
062-213 971-5
08054338867;0706418887
0703 4060759, 08051455144

Ekiti
u Ado-Ekiti, 146, Secretariat Road
u Ikpoba Hill, No. 123, Benin-Agbor Rd, Benin

u
u
u
u
u
u

Enugu
22, Okpara Avenue
Plot 40, Garden Avenue
Nsukka, No. 69B, Enugu / Oba Road, Nsukka
UNN, University of Nigeria, Nsukka
9th Mile Corner, Plot 87, Ifueke/Okwe Uwani, Ngwo, Udi, Enugu
100 Agbani Rd, Enugu State
Gombe

u Gombe, No 31, Biu Road

u
u
u
u
u
u
u
u
u
u

Imo
Plot 6, Waast Avenue, Ikenegbu Layout
89, Douglas Rd, Owerri
Orlu, Orlu International Market, Imo
Orlu Road, Amakohia, Owerri, Imo State
Wetheral Road, No. 4 MCC Road, Owerri
Imo State Secretariat, Port Harcourt Road, Owerri
FUTO Mini, Federal University Of Technology, Ihiagwa, Owerri
Building Materials Market, Naze, Owerri
Mbaise Branch, Ahiara Junction
157, Okigwe Rd Branch, Owerri

Jigawa
u Dutse, Plot C1 Sanni Abacha Way, Dutse

u
u
u
u

Kaduna
1, Kachia Rd
23, Ahmadu Bello Way
Kafanchan, Along Kagoro Rd
Aji, Command And Staff College

OUR BRANCH LOCATIONS

2012 | ANNUAL REPORT & ACCOUNTS

284

LOCATIONS

u
u
u
u

Zaria, F13, Kaduna Road
Kaduna Refinery, KRPC, Kaduna
60 Sokoto Rd. Samaru, Zaria
Plot AR 19/AR 20, Benin St, Kaduna Main Market, Kaduna

u
u
u
u
u

Kano
5b, Bank Rd
36/38, M/Mohmammed Way
Dawanau Mini, Dawanau Market, Along Kano- Katsina Rd
Bayero University Road, C31, Kofa Wuka Duya, Kano
2 France Rd., Sabon Gari

CODE

TELEPHONE NUMBERS

127
012
127

069-330522; 330606; 331671; 875685
07029060882
069-875749, 069-890524

058
007
058
007
148

064-645356; 644091
064-642482,640200; 064-963220
0703 406 3118
064-946190
064-925572, 064-0896152

044

065-430292; 230294; 431421; 431422

105

068 – 321 224; 07064864848

089
100

058-223041-3
07034050900

042

031-743043 Sb 031- 749456

068
024
069
010
083
040

01 – 8541095 ; 4710226
01 8791360; 01 4809694
01-8126490
01-5978606; 5804605; 5804608
01-7614536 / 7614537
01-3455550; 3455551; 3455549; 01-8712345

074

01-8963944; 01-8966753;

031
050
027
057
011
054
004
021
056
002

01-7743231; 8129081
01-5821253; 01- 7411423
01-2711814; 2798074; 2712772; 4602020
D/l:01-2798266 ,2703520,8122089
01-4976904 D/l; 4976902, 8977759
01-2696334-8; 2693706; 8753893
01-2719735/ 8522337; 7769866
01-2643027-30; 26430978; 2642926,40
01-2669543; 2667735 4710053
01-2641826; 2641005-6; 2660858

Katsina
u Katsina, 6, Nagode Road

Kebbi
u Birnin Kebbi, No. Nw614, Sultan Abubakar Road, Birnin Kebbi

Kogi
u Lokoja, Government House Junction, Murtala Mohammed Way
u Obajana, (B2, Bank Area, Obajana Cement Factory)

Kwara
u Ilorin, 199, Ibrahim Taiwo Rd

u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u

Lagos
Dobbil Plaza Avenue, Alaba International Market
Old Garage, Alaba International Market
16 Creek Road
Sagittarius Block, Eleganza Plaza, Wharf Road
30, Apapa – Oshodi Expressway, Coconut B/stop
Balogun Business Association (BBA 1), Atiku Abubakar Plaza,
Trade Fair Complex, Badagry Expressway
Balogun Business Association, (BBA 2), Bank Plaza, Trade Fair
Complex, Badagry Expressway
Coker, Km 19, Lagos/ Badagry Expressway, Coker Bus Stop Orile
Ebute Metta, 1, Market Street, Oyingbo, Opp. Bhojsons Limited
10, Opebi Road, Ikeja
60, Opebi Road, Ikeja
34, Ladipo Oluwole Street, Off Adeniyi Jones
80, Awolowo Road, Ikoyi
Isolo, 25, Asa-afariogun Street, Ajao Estate
Balogun, 136, Balogun Street, Lagos Island
Broad Street, 121, Broad Street, Lagos Island
Idumota, 118, Nnamdi Azikiwe Street, Lagos Island

OUR BRANCH LOCATIONS

2012 | ANNUAL REPORT & ACCOUNTS

285

LOCATIONS

u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u

CODE

TELEPHONE NUMBERS

Marina, 23a, ,mamman Kontagora House, Marina
Oke Arin, 1, Oke Arin Street
Matori, 129, Ladipo Street, Matori
Ogba, 36, Ijaiye Road
Surulere, 31 Bode Thomas Str.
Trade Fair Comlpex, 1, Hall 2 Aspamda Plaza, Trade Fair
Complex, Badagry Expressway
Trade Fair Complex 2, Aspamda Office Block 2, Trade Fair
Complex, Badagry Expressway
Plot 730, Adeola Hopewell Street
Plot 64, Adeola Odeku Street

008
085
029
080
051
028

01-2646639/2600225-9/2646732
01-8713017; 7614560
01- 2710167-9
01-4920049; 4920369; 7618687; 8752003
01-2793661; 8736761; 8736819
01-7919230; 8935887; 7919706

076

01-3455528; 3455545, 8190799.

026
025

238, Herbert Macaulay Street, Yaba
Head Office, Plot 1261, Adeola Hopewell Street
Tejuosho Retail, No. 6, Ojuelegba Road, Opp. Tejuosho Market
The Palms Retail Shop 41, The Palms Shopping Complex,
Victoria Island
Okota Retail, No. 116/118, Ago Palace Way, Okota
Ikota Retail Shop, C96 -101, Ikota Shopping Complex, VGC
Satellite Town Mini, Block 11, Plot 4, Old Ojo Road, Satellite Town
Festac Mini, Plot 1609, E Close, 4th Avenue, Festac Town
Ikorodu, 83, Lagos Road
Lekki, Plot 10, Block 117, Lekki Penisula
Mushin, No, 281, Agege Motor Road, Olorunsogo, Mushin
Mafoloku, No, 77/79, Old Ewu Road, Mafoloku
Daleko, Shops 661-670, Bank Rd, Daleko Mkt, Mushin
Aluminium Village, No. 17, Ogeretedo Street, Aluminium Village,
Dopemu
Bariga, Plot 103 & 105, St. Finbarrs Road, Akoka
Enu Owa, No. 71, Enu Owa Street, Lagos Island
Ketu, Plot 608, Lagos - Ikorodu Road, Ketu Mile 12
Festac, House 20, 2nd Avenue Festac Town
Coker Mini, Agric Market, Coker-orile
Ogunlana Drive, 33 Ogunlana Drive, Surulere
Iyana Ipaja, No. 166, Abeokuta Expressway, Iyana Ipaja
Kirikiri, Karimu Street, Kirikiri Town, Apapa
Ojuwoye Market, (190, Agege Motor Road, Ojuwoye)
Nahco Shed, (Nigeria Avaition Handling Compnay, Ikeja)
Seme Border, (Seme Border, Badagry, Lagos State)
Isheri Road, ( Plot 47, George Crescent, Ogba)
Lawanson (58, Lawanson Road)
King George V (11, King Georg V Road, Onikan)
Jankara Market (no. 7 Idumagbo Road, Lagos Island)
Iyana Ipaja (55/57 New Ipaja Road, Alimosho)

087
016
050
026

01-2626094-8; 4618732-5; 4618275;
01-2601902-6 Dl:4627245
4618736
01-8776148, 7647139
01-2701500,2620740-80
01-4063110; 2793331-2
01-2714506 - 8

004
095
028
107
088
095
099
099
099
011

01-7618690
01-4613328; 4613349; 4613350
01 - 8161972
01-5990415, 8919192
7642703; 7642746 ; 7324689
01-2793492; Dl: 01-2793490
01-7450244
01-7450248
7450246
01-7450245

087
102
088
107
031
051
110
083
099
027
118
080
119
120
002
110

01-7450151
01-2665319
01-7450154
01-5590414-7 Dl-01-5590417
N/A
01-7450153
01-7450152
01-7450155
01- 740 2240
01-7403161
07029738956
01- 870 1066
01-7402235
01-2806077
01-7403160
01-7349819

OUR BRANCH LOCATIONS

2012 | ANNUAL REPORT & ACCOUNTS

286

LOCATIONS

u Liverpool, (21, Liverpool, Apapa)
u Roro Port (Roro Port, Tin Can Island, Apapa)
u Alausa (Plot J, Asitabi Cole Street, Central Business District,

CODE

TELEPHONE NUMBERS

129
010
130

01-8736207
01-8133498
01-4482020; 4482021

u College Road, 71, College Road, Ogba

080

017369076

u Amuwo Odofin, Plot Nos 21, 22 & 23 Opposite Abc Transport

124

01 7403093

128
135
087
143
140
144
154
050
153
158

018929539, 019504876
01-7412166
01-736-9077
01-7360224
017360852
017360854
01-7359513; 01-8104818
01-7387489
07-8540101

062
073
060
075
073

047-52184 – 5
047-620526; 620525
047-221421; 047-220081
047-220720; 047-221319
0703 405 4060

043
079

066-223061/224297;224709
07035999408

u Abeokuta, UACN Complex, Ibara

030

039-240741; 039-2441190;
241389, 771264

u 35, Ibadan Rd, Ijebu Ode
u Otta, Abeokuta Exp Km 38, Abeokuta Expressway, Sango Otta

081

u Agbara, Plot C2/9A, Ilaro Road, Beside PHCN, Agbara Industrial

117

(039) 721826,721828721829,
DL 01-7638831
01-7389273

Estate, Agbara, Ogun State
u Ajilete (Ajilete International Market, Yewa, Ajilete)
u Sagamu, 145, Akarigbo Street, Sagamu
u Idi Roko, Opposite Mayowa Bus-stop, Idiroko Road

121
137
131

01-4533278
01-7369302
01-4536868

046

034-216148,02-2006172

093

035-207946; 035-207945

Agidingbi)

u
u
u
u
u
u
u
u
u
u
u
u
u
u
u

u
u

Terminal
Jibowu, 32, Ikorodu Road, Jibowu
Maza Maza, 37, Old Ojo Rd, Ojo
Gbagada/ifako, 20, Diya Street, Ifako, Gbagada
51, Mushin Rd, Isolo
Ilupeju, 26A & B Ilupeju Byepass, Ilupeju
11 Burma Rd, Apapa
Oregun Branch, Plot E Ziatech Rd, Oregun
Iddo Market Mini, Iddo Ultra modern Market
Ajah Branch, Lekki-epe Expressway, Opp. Oluwole Baker St
79/80 Awolowo Way, Ikeja
Nassarawa
Akwanga, Plot 1, Opposite Akwanga Police Division, Off Keffi Rd
Keffi, Plot 27, Abubakar Burga Road
20/21 Doma Road, Lafia
2, Jos Road, Lafia
Nassarawa State University, Keffi
Niger
Minna, 118, Paiko Road
Suleja, Opposite IBB Main Market, Along Minna Road

Ogun

Ondo
u Akure, 82, Oyemekun Street

Osun
u Osogbo, 73, Gbongan-Ibadan Road, Olosan Bus-stop, Adjacent

The Redeemed Christian Church of God

OUR BRANCH LOCATIONS

2012 | ANNUAL REPORT & ACCOUNTS

287

LOCATIONS

CODE

TELEPHONE NUMBERS

Oyo
u 11, Lebanon Street, Ibadan

022

u 53, Iwo Rd, Ibadan

084

u Bodija, UI, Secretariat Road, Near Pastoral Insitute, Bodija, Ibadan

022

02-2414506 D/l 02-2413063;
027522294
02- 8100123; 02- 8100130;
02-7525538
02-8731063

Ring Road, Moshood Abiola Way
u
u
u
u
u
u

Plateau
Old Jos Road, Bukuru
34, Ahmadu Bello Way
13, Commercial Area
1, Club Road
Katako Market, No. 68 & 70, Mallam Kure Street, Laranto
University of Jos, Jos

072
055
015
070
015
055

073-281721 – 2
073-457143 073-456275
073/460798(Dl); 460997; 461311
073-452331 – 3
073-612 992
073-613991

u
u
u
u
u
u
u
u
u
u
u

Rivers
Aba Road, 145, Aba Road, PH
222 Ikwerre Road, PH
48, Ikwerre Road, PH
Bonny Island, PH
FOT Onne, Federal Ocean Terminal (FOT), FOT Onne, ITT Base
Trans Amadi, Plot 71, Elekahia Industrial Estate Road, PH
1, Odual Rd, PH
PPMC, Eleme Refinery, PH
13, Old Aba Road, PH
316, Aba Road, PH
Oyigbo, No. 11, Location Road, Obigbo, PH

086
009
063
023
037
003
003
037
086
003
136

084-232285; 794352; 232270; 794351
084-237920(Sb); 231062, 796844(Dls)
Dl: 084-754296; 231641; Fax: 231647
084-270728; 270730; 270729;556926
084784675
084-239685;461069,239689
084768340
084-797680
084,236612; 799131
084-740076
084-894862

047

08082521075; 08036465013

098

079-224162;079-224174

u Damaturu, 596A, Njiwaji Layout, Opposite Central Mosque,

091

074-521738 Dl, 074-521739

Maiduguri Rd
u Potiskum, Plot 1140 &1141, Idris Muhammad Way

159

Sokoto
u Sokoto, No.541, Along Gusau Rd

Taraba
u 194 Jalingo, Hamman Ruwa Way, Jalingo

Yobe

Zamfara
u Gusau, 160, Sani Abacha Way, Gusau

101

08136100800

PROXY FORM
RESOLUTIONS

I/We*

being a member/members of DIAMOND BANK PLC
hereby appoint**

FOR

1.

That the Audited Financial Statements for the period ended December 31, 2012, and the reports of the Directors, Auditors and Audit
Committee thereon be and are hereby approved.

2. i.

That having offered themselves up for re-election, and being eligible, Mr. Chris Ogbechie, Mr. Ian Greenstreet and Ms. Ngozi Edozien be
and are hereby re-elected as Directors of Diamond Bank Plc.

AGAINST ABSTAIN

ii. That the appointment of Mrs. Ifueko Marina Omoigui Okauru as an Independent Director, be and is hereby ratified.

of

iii. That the appointment of Mr. Allan Christopher Michael Low as a Non-executive Director be and is hereby ratified.
or failing him/her the Chairman of the meeting as my/our
Proxy to act and vote for me/us and on my/our behalf at
the Annual General Meeting of the Company to be held on
30th April 2013 and at any adjournment thereof.

Dated this

day of

2013

iv. That the re-election of HRM Igwe Nnaemeka Alfred Ugochukwu Achebe, who is over 70 years of age as Director be and is hereby
approved.
3.

That the appointment of Messrs KPMG as the new Auditors of the Company be and is hereby ratified.

4.

That the Directors be and are hereby authorised to fix the remuneration of the Auditors.

5.

That the appointment of the members of the Audit Committee be and is hereby approved.

6.

That the authorized share capital of the Company be and is hereby increased from N10,000,000,000 (Ten Billion Naira) to
N15,000,000,000 (Fifteen Billion Naira) by the creation of additional 10,000,000,000 ordinary shares of 50 Kobo each, ranking pari passu in
all respects with the existing ordinary shares of the Company”

7.

That the Memorandum and Articles of Association of the Company be and is hereby amended as follows:
by deleting clause 7(a) of the Memorandum and substituting it with:

Signature

“The share capital of the Company is N15,000,000,000 (Fifteen Billion Naira) divided into 30,000,000,000 (Thirty Billion) ordinary shares of
50 Kobo each”
8.

That subject to the approval of regulatory authorities, the Directors be and are hereby authorized to raise additional capital of up to
$750,000,000 (Seven Hundred and Fifty Million United States Dollars) or its Naira equivalent through the issuance of any form of debt
and/or equity and/or any other instrument which may be appropriate to meet the Bank's capital requirements, to be undertaken by way of
a rights issue and/or an Offer for Subscription with or without a preferential allotment, either locally or internationally and upon such terms
and conditions as the Directors may deem fit in the interest of the Bank for the purposes of enhancing the Bank's working capital and
financing business development initiatives

9.

That subject to the approval of the regulatory authorities, the Directors be and are hereby authorized that in the event of over subscription,
excess monies arising from the Offer be absorbed to the extent required by the Bank

10.

That the remuneration of the Directors in the sum of N124,000,000.00 be and is hereby approved

11.

That Clause 104 of the Articles of Association be amended by deleting and substituting it with:
“The Directors shall provide for the safe keeping of the seal, which shall be used by the authority of the Directors or of a Committee of the
Directors authorised by the Directors in that behalf and every instrument to which the seal shall be affixed shall be signed by a Director and
shall be counter-signed by the Secretary, or by a second Director or signed by two other persons appointed by the Directors from time to
time for the purpose”

Note:
Please sign this form and return it to the Company
Secretary not later than 48 hours before the time fixed for
the meeting. If executed by a Corporation, this form
should be sealed under its common seal or under the hand
of some officer or an attorney duly authorized in writing.

12.

That Clause 85 of the Articles of Association be amended by deleting and substituting it with:
“However, a Director shall abstain from discussions and voting on any matter in which the Director has or may have conflict of interest”
Please indicate with ”X” in the appropriate space above how you wish your votes to be cast on the Resolutions set above. Unless otherwise
instructed the proxy will vote or abstain from voting at his discretion.

*Shareholder's name to be inserted in BLOCK CAPITALS in the blank space marked. In the case of joint shareholders, anyone of such may complete this form, but the names of all joint holders may be inserted.
**In keeping with the normal practice, the Chairman of the Meeting has been entered on the form to ensure that someone will be at the Meeting to act as your proxy, but you may insert the name and address of any person, whether
a member of the Company or not, who will attend the meeting and vote on your behalf.
Note: Any instrument appointing a proxy to vote at a meeting must be duly stamped in accordance with the provisions of the Stamp Duties Act.

DIAMOND BANK PLC
22ND ANNUAL GENERAL MEETING
PLEASE ADMIT THE SHAREHOLDER NAMED ON THIS FORM OR HIS DULY APPOINTED PROXY TO THE ANNUAL GENERAL MEETING
TO BE HELD ON 30TH APRIL 2013 AT THE CIVIC CENTER,OZUMBA MBADIWE ROAD, VICTORIA ISLAND, LAGOS, AT 10.00A.M PROMPT.

Name of Shareholder
Signature of Shareholder

Signature of Person Attending

E-DIVIDEND MANDATE
Please take this as authority to credit my under-mentioned account(s) with any dividend payment(s) due on my shareholdings, which are stated
below from the date hereof:

Names (in full)

Shareholder Account Number(s)

Contact address

City

Bank Name and Branch

State

Bank Account Number

Mobile phone number

E-mail address

Shareholders Signature

Date

Bank Authorised signatory
Name & Sign. Page Number

Bank stamp /seal

Bank Authorised Signatory
Name & Sign. Page Number

Completed forms and a copy of your valid identification material should be returned to

CENTURION REGISTRARS LIMITED,
59, Ogunlana Drive, Surulere, Lagos.
For further information call us on 01-2710574 or email [email protected].
To implement this for your holdings in other companies we manage, kindly tick as appropriate
C&Leasing Plc

Linkage Assurance Plc

Vital Products Plc

Nigeria Wire Industries Plc

For Administrative Use Only:

Date received
Action taken

Date

Action taken

Date

Centurion Registrars Limited | 59 Ogunlana Drive | Surulere | Lagos | Nigeria
Tel: 01-2710574, 8446896 e-mail:[email protected]

CORPORATE INFORMATION

2012 | ANNUAL REPORT & ACCOUNTS

290
Registered Offices
HEAD OFFICE

PGD’s Place,
Plot 4, Block V, BIS Way,
Oniru Estate,
Victoria Island,
Lagos
Tel:
Fax:
Website:
Email:

234 1 270 1500, 234 1 262 0740 - 9
234-1-261 9728
www.diamondbank.com
[email protected],
[email protected]

Follow us on

DIAMOND BANK BENIN

Rue 308 du Reverend Pere Colineau-Ganhi
01 BP 955 Cotonou, BENIN
Tel: +229 21 31 97 97, +22 21 31 98 98
Fax: +229 31 21 42

DIAMOND BANK SENEGAL

41, rue Carnot Dakar, Senegal
Tel: +221 33 829 69 00
Fax: +221 33 821 56 92

DIAMOND BANK TOGO

3519, Boulevard du 13 Javier
Tel: +228 253 1000, +228 253 1001, +228 253 1002

DIAMOND BANK COTE D’IVOIRE

Angle Avenue Terrasson de Fougeres st rue Courgas,
Immeuble Ivotel -Abidjan, Plateau 01 BP 11920 Abidjan 01
Tel: +225 20 30 95 96
Fax: +225 20 30 94 49

DIAMOND BANK UK

36 - 38, Leadenhall Street,
London,
EC3A 1AT UK

Diamond Bank PLC
PGD's Place,
Plot 4, Block V, BIS Way,
Oniru, Estate
Victoria Island,
Lagos
t: 234-01-2701500, 234-1-2620740 - 9,
f: 234-1-2619728
e: [email protected]

www.diamondbank.com



doc_560825533.pdf