the Rigths Circular - Africa Prudential Registrars Plc

Transcription

This document is important and should be read carefully. If you are in any doubt about its contents or the action to take, kindly
consult your Stockbroker, Fund/Portfolio Managers, Accountant, Banker, Solicitor or any other professional adviser for guidance
immediately.
FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, PLEASE
SEE “RISKS & MITIGATING FACTORS” ON PAGES 16 – 20
United Bank for Africa
RC:2457
RIGHTS ISSUE
Of
3,298,138,756
Ordinary shares of 50 kobo each
at
N4.00k per share
On the basis of One (1) new Ordinary share for every Ten (10) Ordinary shares held as
at Wednesday, October 15, 2014
The Rights being offered in this Circular are tradable on the floor of the Nigerian Stock Exchange for the
duration of the Issue.
Payable in full on Acceptance
ACCEPTANCE LIST OPENS: Monday, December 29, 2014
ACCEPTANCE LIST CLOSES: Thursday, February 5, 2015
Lead Issuing House
Co- Issuing House
RC444999
This Rights Circular and the securities which it offers have been cleared and registered by the Securities &
Exchange Commission. It is a civil wrong and a criminal offence under the Investments and Securities Act
No 29 of 2007 to issue a Rights Circular which contains false or misleading information. Clearance and
registration of this Rights Circular and the securities which it offers do not relieve the parties from any liability
arising under the Act for false and misleading statements contained herein or for any omission of a material
fact in this Rights Circular.
T h i s R i g h t s Ci r c u l a r i s d a te d F r i d a y , D e c e m b e r 1 2 , 2 0 1 4
TABLE OF CONTENTS
DEFINITION OF TERMS
3
ABRIDGED TIMETABLE
5
SUMMARY OF THE ISSUE
6
DIRECTORS AND OTHER PARTIES TO THE ISSUE
9
1.
2.
Directors and Company Secretary ............................................................................................................ 9
Professional Parties ......................................................................................................................................10
THE CHAIRMAN’S LETTER
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11
Introduction ..................................................................................................................................................11
Purpose of the Issue and Use of Issue Proceeds ....................................................................................11
Profile of the Bank‟s Board of Directors ....................................................................................................12
History and Business of the Bank ...............................................................................................................14
General Risk Disclosure ...............................................................................................................................15
Compliance with Code of Corporate Governance ............................................................................15
Future Plans ...................................................................................................................................................15
Participation in the Rights Issue .................................................................................................................15
Risks and Mitigating Factors .......................................................................................................................16
Conclusion ....................................................................................................................................................20
GOING CONCERN STATUS
1.
2.
21
Letter from the Directors on the Going Concern Status .......................................................................21
Letter from the Auditors on the Going Concern Status ........................................................................22
FIVE YEAR FINANCIAL INFORMATION
1.
2.
3.
4.
23
Statement of Comprehensive Income ....................................................................................................23
Statement of Financial Position .................................................................................................................24
Statement of Cash Flows ............................................................................................................................25
Notes to the Financial Statements ............................................................................................................26
UNAUDITED MANAGEMENT ACCOUNTS FOR 2014
1.
2.
3.
4.
Statement of Comprehensive Income ....................................................................................................99
Statement of Financial Position ...............................................................................................................100
Statement of Cash Flow ...........................................................................................................................101
Notes to the Management Account .....................................................................................................102
STATUTORY AND GENERAL INFORMATION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
99
113
Letter from Issuing Houses on Financial Statements ............................................................................113
Incorporation and Share Capital History ...............................................................................................114
Shareholding Structure (5% and above) ...............................................................................................114
Directors‟ Beneficial Interests ...................................................................................................................114
Statement of Compliance with Corporate Governance ..................................................................115
Indebtedness ..............................................................................................................................................117
Claims and Litigation ................................................................................................................................117
Relationship between the Issuer and the Issuing Houses/Other Advisers ........................................118
Cost and Expenses ....................................................................................................................................118
Material Contracts.....................................................................................................................................118
Declarations ...............................................................................................................................................118
Mergers and Acquisition...........................................................................................................................119
Research and Development ...................................................................................................................119
Consents ......................................................................................................................................................119
Documents Available for Inspection......................................................................................................121
PROVISIONAL ALLOTMENT LETTER
123
INSTRUCTIONS FOR COMPLETING THE ACCEPTANCE / RENUNCIATION FORM
125
ACCEPTANCE/RENUNCIATION FORM
126
RECEIVING AGENTS
127
UBA PLC - Rights Circular
2
DEFINITION OF TERMS
DEFINITION OF TERMS
“Bank” or “UBA” or “the Company”
United Bank for Africa Plc
“Business Day”
Any day other than a Saturday, Sunday or Official Public holiday in
Nigeria
“CAC”
Corporate Affairs Commission
“CAMA”
Companies and Allied Matters Act Cap C20 LFN 2004
“The Council”
The Council of the Nigerian Stock Exchange
“CSCS”
Central Securities Clearing System Plc
“Daily Official List”
Daily Official List
“Directors”
The members of the Board of Directors of UBA who as at the date
this Right Circular are those persons whose names are set out on
page 9 of this Right Circular
“ISA” or “Act”
Investments & Securities Act No. 29 of 2007
“Issue Price”
The price at which the shares under the Rights Issue will be issued to
all existing shareholders
“Issuing Houses”
UBA Capital Plc and BGL Capital Limited
“Joint Issuing House”
BGL Capital Limited
“Lead Issuing House”
UBA Capital Plc
“LFN”
Laws of the Federation of Nigeria
“NSE” or “The Exchange”
The Nigerian Stock Exchange
“Parties”
Professionals engaged, whose roles will ensure the success of the
Rights Issue
“Qualification Date”
Wednesday, October 15, 2014 which is the date the application for
the Rights Issue is filed with the Exchange
“Receiving Agents”
Any of the institutions listed on pages 127 & 128 of this Rights Circular
to whom shareholders listed on the share register of the Bank as at
the Qualification Date may return their duly completed
Acceptance/Renunciation Forms together with payment instrument.
“Registrars”
Africa Prudential Registrars Plc
“Rights Circular”
This document which is issued in accordance with the Rules and
Regulations of the Commission in respect of this Right Issue exercise.
“Rights”
The number of 50 kobo ordinary share provisionally allotted to each
Shareholder on the basis of 1 new share for every 10 shares held as
at the Qualification Date
“Rights Issue”
Rights Issue of 3,298,138,756 ordinary shares of 50 kobo each at
N4.00k per share to the existing shareholders in the Ratio of One(1)
new ordinary shares for every Ten (10) ordinary shares held as at the
Qualification Date
3
DEFINITION OF TERMS
“SEC” or “The Commission”
Securities and Exchange Commission
“Shareholders”
Means shareholders of the Bank whose name appears on the
shareholders register as at the Qualification Date
4
ABRIDGED TIME TABLE
ABRIDGED TIMETABLE
The dates given below are indicative only. The timetable has been prepared on the assumption that certain
key events for the Rights Issue will be achieved as stated. If not, then the dates surrounding key events in the
timetable may be subject to adjustments .
DATE
ACTIVITY
RESPONSIBILITY
D e c e mb e r 2 9 , 2 0 1 4
Acceptance List opens
Issuing Houses
February 5, 2015
Acceptance List closes
Issuing Houses
February 19, 2015
Receiving Agents make returns
Issuing Houses/Receiving
Agents
February 19, 2015
Forward allotment proposal and draft newspaper
announcement to SEC
Issuing Houses
February 23, 2015
Receive SEC clearance of Allotment
Issuing Houses
February 23, 2015
Pay net issue proceeds to UBA
Receiving Bank
February 23, 2015
Allotment announcement
Issuing Houses
March 2, 2015
Return excess/rejected Application monies
Issuing Houses /Registrars
March 2, 2015
Dispatch
Share
Certificates/Commence
arrangements to credit CSCS accounts
Registrars
March 2, 2015
Forward Declaration of Compliance to The
Exchange
Stockbrokers
March 2, 2015
List the new shares of UBA on the floor of The
Exchange
Stockbrokers
March 23, 2015
Forward summary report to SEC
Issuing Houses
5
SUMMARY TIME
OF THE
ISSUE
ABRIDGED
TABLE
The summary draws attention to information contained elsewhere in this document and should
be read in conjunction with the full text of this Rights Circular from which it was derived:
SUMMARY OF THE ISSUE
ISSUER:
LEAD ISSUING HOUSE:
UBA Capital Plc
JOINT ISSUING HOUSE:
BGL Capital Limited
SHARE CAPITAL:
Authorized:
N22,500,000,000.00 divided into 45,000,000,000 Ordinary shares of 50k each
Issued and Fully Paid:
N16,490,693,782.50 divided into 32,981,387,565 Ordinary shares of 50k
Now being issued:
3,298,138,756 ordinary shares of 50kobo each by way of Rights Issue on the basis
of One (1) new share for every Ten (10) existing shares at N4.00 per share
METHOD OF OFFER:
By way of Rights Issue to the existing Shareholders
USE OF PROCEEDS2:
The estimated net proceeds of N12,731,855,169.00 after the deduction of the
estimated total offer cost of N360,699,857 (which excludes N100,000,000 for
printing and advertisement costs) representing approximately 2.73% of the total
offer size shall be applied as follows:
Utilization
N
Expansion of E-banking
channels and related
security systems
Strengthening and
upgrading technology
platform and software
Refurbishment of the
Bank‟s Head Office and
100 business offices
Risk assets growth
Total
%
Period
1,750,630,085.74
13.75%
2015
1,438,699,634.10
11.30%
2015
1,680,604,882.30
13.20%
2016
7,861,920,566.86
61.75%
2015
12,731,855,169.00
100%
ISSUE PRICE:
N4.00k per share
PROVISIONAL ALLOTMENT:
One (1) new ordinary share for every Ten (10) ordinary shares held as at the
Qualification Date
QUALIFICATION DATE:
Wednesday, October 15, 2014, being the date the application for the Rights
Issue is filed with The Exchange
In full on Acceptance
PAYMENT:
MARKET CAPITALIZATION
At Issue Price:
Pre Issue:
N 131,925,550,260
Post Issue:
N 145,118,105,286
ACCEPTANCE LISTS OPENS:
Monday, December 29, 2014
ACCEPTANCE LISTS CLOSES:
Thursday, February 5, 2015
2
See page 11 for detailed use of proceeds
6
SUMMARYTIME
OF THE
ISSUE
ABRIDGED
TABLE
QUOTATION:
Application has been made to The Council for the admission to its Daily Official
List, the Rights Issue of 3,298,138,756 ordinary shares of 50 kobo each now being
offered.
STATUS:
The ordinary shares being issued will rank pari-passu with the existing issued
ordinary shares of the Bank.
INDEBTEDNESS:
As at 30 June 2014, UBA had borrowings, in the ordinary course of business
amounting to N76.745 billion and subordinated liabilities amounting to N55.752
billion. Save as disclosed, UBA has no outstanding loans, charges or
indebtedness
FINANCIAL SUMMARY:
For
the
Ending
Year
31 Dec
2013
31 Dec
2012
31 Dec
2011
31 Dec
2010
31 Dec
2009
N’mm
176,993
N’mm
159,216
N’mm
118,969
N’mm
154,074
N’mm
187,066
Profit/(Loss)
before Taxation
56,058
58,133
(26,600)
(2,925)
13,662
Profit/(loss) after
Taxation
46,601
51,477
(8,665)
(1,944)
2,375
Share Capital
124,423
124
423
124
423
Net Assets
235,036
192,467
150,940
153,025
186,829
Net
Operating
Income
Earnings
share (N)
per
1.52
1.66
(0.32)
0.30
0.10
Dividend
share (N)
per
0.50
0.50
-
0.50
0.10
E-ALLOTMENT/SHARE
CERTIFICATE:
The CSCS accounts of Shareholders will be credited not later than 15 Business
Days from the date of allotment. Shareholders are thereby advised to state the
name of their respective stockbrokers and their Clearing House Number as well
as their CSCS Account Numbers in the relevant spaces on the Acceptance
Form. Certificates will be issued and dispatched by registered post to
Shareholders who do not provide CSCS account numbers within 15 working
days of allotment.
CLAIMS AND LITIGATION:
UBA is, in the ordinary course of business, involved in 106 cases within the
identified category of claims in excess of N50,000,000 (Fifty Million Naira only).
The total value of claims against UBA in these cases is approximately
N70,382,363,398 (Seventy Billion, Three Hundred and Eighty-Two Million, Three
Hundred and Sixty-Three Thousand, Three Hundred and Ninety-Eighty Naira
only).
In the professional judgment of the Solicitors to the Issue, much less than an
aggregate sum of N7,038,236,339.80 (Seven Billion, Thirty-Eight Million, Two
Hundred and Thirty-Six Thousand, Three Hundred and Thirty-Nine Naira and Eight
Kobo) of these claims can possibly be substantiated. The rest of the claims are
clearly exaggerated, frivolous and not likely to succeed.
The Solicitors to the Issue are of the professional view that UBA‟s liability in the
event of an unfavorable resolution of the disputes against UBA would have no
material adverse effect on the Issue.
The Board of UBA is also of the opinion that the aforementioned cases are not
likely to have any material adverse effect on UBA and/or the Issue, and is not
aware of any other pending and or threatened claims or litigation involving UBA
which would have any material adverse effect on the Issue.
7
SUMMARY TIME
OF THE
ISSUE
ABRIDGED
TABLE
Copies of this Rights Circular and the documents specified herein have been delivered to the Securities and
Exchange Commission for clearance and registration.
This Rights Circular is being issued in compliance with the provisions of ISA, the Rules and Regulations of the
Commission and the Listing Requirements of the NSE and contains particulars in compliance with the
requirements of the Commission and The Exchange, for the purpose of giving information to shareholders
and the public with regard to the Rights Issue of 3,298,138,756 Ordinary Shares of 50 kobo each in UBA by
UBA Capital Plc and BGL Capital Limited. An application has been made to The Council of The Nigerian
Stock Exchange for the admission to the Daily Official Lists of the 3,298,138,756 Ordinary Shares of 50 kobo
each being issued via the Rights Issue.
The Directors of UBA individually and collectively accept full responsibility for the accuracy of the
information contained in this Rights Circular. The Directors have taken reasonable care to ensure that the
facts contained herein are true and accurate in all respects and confirm, having made all reasonable
enquiries that to the best of their knowledge and belief there are no material facts, the omission of which
make any statement herein misleading or untrue.
Leading Issuing House
Co- Issuing House
On behalf of
RC:2457
Are authorized to receive acceptances for the
Rights Issue of 3,298,138,756 Ordinary Shares of 50 kobo each at N4.00kper share
On the basis of One (1) new ordinary share for every Ten (10) ordinary shares of 50 kobo each held as at the
close of business on Wednesday, October 15, 2014 for those shareholders whose names appear on the
Register of Members.
The Acceptance List for the shares now being issued will open on Monday, December 29, 2014 and close on
SHARE CAPITAL AND RESERVE OF THE BANK AS AT 31 DECEMBER, 2013
(Extract from the 2013 audited accounts)
N
Authorized Share Capital 45,000,000,000 Ordinary Shares of 50 Kobo each
22,000,000,000.00
Issued and Fully Paid
16,490,693,782.50
32,981,387,565 Ordinary Shares of 50 Kobo each
Equity and Reserves (N‟mm)
Share Capital
16,491
Share Premium
107,932
Revenue Reserve
70,480
Other Reserves
32,746
Non-Controlling Interest
7,387
TOTAL EQUITY(N‟mm)
235,036
8
1. Directors and Company Secretary
CHAIRMAN
Tony O. Elumelu, CON
57, Marina, Lagos
VICE CHAIRMAN
Amb. Joseph Keshi, OON
57, Marina, Lagos
GMD/CEO
Phillips Oduoza
57, Marina, Lagos
DEPUTY MANAGING DIRECTOR
Kennedy Uzoka
57, Marina, Lagos
DEPUTY MANAGING DIRECTOR
Apollos Ikpobe
57, Marina, Lagos
EXECUTIVE DIRECTOR
Femi Olaloku
57, Marina, Lagos
EXECUTIVE DIRECTOR
Dan Okeke
57, Marina, Lagos
EXECUTIVE DIRECTOR
Emeke Iweriebor
57, Marina, Lagos
EXECUTIVE DIRECTOR
Obi Ibekwe
57, Marina, Lagos
NON-EXECUTIVE DIRECTOR
Ja’afaru Paki
57, Marina, Lagos
Foluke Abdulrazaq
57, Marina, Lagos
Yahaya Zekeri
57, Marina, Lagos
Kola Jamodu, OFR
57, Marina, Lagos
Adekunle Olumide, OON
57, Marina, Lagos
Rose A. Okwechime
57, Marina, Lagos
Owanari Duke
57, Marina, Lagos
COMPANY SECRETARY
Bili Odum
57, Marina, Lagos
9
2. Professional Parties
Lead Issuing House
UBA Capital Plc
UBA House (12th Floor)
57, Marina
Lagos
Co- Issuing House
BGL Capital Limited
12A, Catholic Mission Street
Lagos
Lead Stockbroker
UBA Securities Limited
57, Marina
Lagos
Joint Stockbrokers
Futureview Securities Limited
Futureview Plaza
22 Oju Olobun Street
Victoria Island
Lagos
Greenwich Securities Limited
Plot 1698A Oyin Jolayemi Street
Victoria Island
Lagos
Solicitors To The Issuer
G. Elias & Co. (Solicitors and Advocates)
6 Broad Street
Lagos
Solicitors To The Issue
M.E Esonanjor &Co
27 Oyewole Street Palmgrove
Ilupeju Lagos
Registrars To The Issue
220B, Ikorodu Road, Palmgrove
Lagos
Receiving Bank
Fidelity Bank Plc
2 Kofo Abayomi Street
Victoria Island
Lagos
Auditor
PricewaterHouse Coopers
252E Muri Okunola Street
Victoria Island
Lagos
Nigeria
10
CHAIRMAN’S LETTER
THE CHAIRMAN’S LETTER
RC 2457
30 December 2014
To:
All Shareholders
Dear Shareholders,
RIGHTS ISSUE OF 3,298,138,756 ORDINARY SHARES OF 50 KOBO EACH ATN4.00k PER SHARE
1. Introduction
You will recall that at the last Extra-ordinary General Meetings of the Bank held on October 2, 2009 and
November 18, 2011, the shareholders of the Bank authorized the Directors amongst many other things to
raise further capital of up to Five Hundred Billion Naira (N500,000,000,000.00) by way of the issuance of
shares, convertible loans, stock, medium term notes, bonds or other securities subject to regulatory
approval. This resolution was passed in recognition of the need to reposition the Bank for future
challenges and business opportunities.
I am pleased to inform you that the Board of Directors in line with the strategic focus of the Bank and in
consonance with the above-mentioned shareholders resolution has now decided to issue by way of
Rights, 3,298,138,756 Ordinary shares of 50k each to the existing shareholders on the basis of One(1) new
ordinary share for every Ten (10) ordinary shares already held as at the close of business on Wednesday,
October 15, 2014. The new shares, which will be issued at a price of N4.00k, will rank pari-passu in all
respects, with the existing ordinary shares of the Bank. The shares will qualify as dividend in the current
year as long as the share is in the share register as at December 31, 2014. Regulatory approvals for the
registration of the Issue with the Commission has been obtained.
2.
Purpose of the Issue and Use of Issue Proceeds
The estimated net proceeds of N12,731,855,169.00 after the deduction of the estimated total offer cost
of N360,699,857 (which excludes N100,000,000 for printing and advertisement costs) representing
approximately 2.73% of the total offer size shall be applied as follows:
Utilisation of Offer Proceeds
N
%
Period
1,750,630,085.74
13.75%
2015
1,438,699,634.10
11.30%
2015
Refurbishment of the Bank‟s Head Office and 100
business offices
1,680,604,882.30
13.20%
2016
Risk assets growth
7,861,920,566.86
61.75%
2015
12,731,855,169.00
100%
Expansion of E-banking channels and related security
systems:
 Purchase of ATMs
 Purchase of POS systems
 Fortification of electronic channel security
Strengthening and upgrading technology platform and
software:
 Upgrading core banking application
 IT infrastructure upgrade (server, storage, network) to
support business growth
 Implement of customer relationship management
solution
Total
11
CHAIRMAN’S LETTER
3.
Profile of the Bank’s Board of Directors
Tony Elumelu, CON –Chairman
Tony O. Elumelu is the Chairman of UBA, Heirs Holdings Limited and Transnational Corporation of Nigeria Plc,
which is one of Nigeria‟s largest listed conglomerate. He is also the Founder of The Tony Elumelu Foundation,
an African based and funded philanthropy, whose mission is to identify and assist entrepreneurs and the
leaders of Africa‟s increasingly confident private sector, serve as a source of policy development, and work
to ensure that the private sector drives economic growth across Africa. His corporate reputation as a
leading African business leader was founded on his role in re-shaping the African financial services industry.
He was the driving force behind the rise of UBA transforming it from a single country bank, to a Pan-African
institution serving over 7 million customers in 20 African countries and operating in three continents.
He earned a Bachelor of Science degree in Economics from Bendel State University in 1985 and a Master of
Science degree in Economics from the University of Lagos in 1988. He has attended Harvard Business School,
where he completed the Advanced Management Program. He has also completed management
programs at the Institute of Management Development in Lausanne, Switzerland, and the Singapore
Institute of Management. He holds an honorary doctor of science degree from Benue State University and
an honorary doctor of business administration from the University of Nigeria, Nsukka.
Amb Joseph Keshi, OON – Vice Chairman
Ambassador Joseph Keshi is the Vice Chairman of UBA. He has over 35 years working experience in the
highest level of Government serving as Permanent Secretary – Ministry of Foreign Affairs, Permanent
Secretary – Cabinet Secretariat, The Presidency, Charge d‟Affaires, Embassy of Nigeria, The Hague, The
Netherlands, as well as Consular-General of Nigeria, Atlanta, Georgia.
Amb. Keshi has a B.Sc (Political Science) degree from University of Ibadan Nigeria in 1974 and M.A.
Administration and Development from Institute of Social Studies in 1988, The Hague, Netherlands; Post
Graduate Diploma – (International Relations and Diplomacy) Nigerian Institute of International Affairs, Lagos,
Nigeria and Executive Course on Leadership in the 21st Century from Kennedy School of Government,
Harvard University, Boston.
Phillips Oduoza – Group Managing Director / CEO
Mr. Oduoza holds an MBA(Finance) from the University of Lagos in 1988. He also holds a first class Bachelors
degree in Civil Engineering from the same University in1983. He has managed several areas of banking
including Credit and Marketing, Treasury Relationship Management, IT, Business Development, Internal
Control and International Operations. He is a graduate of Harvard Business School‟s Advanced
Management Programme. He was at various times, Executive Director, Diamond Bank Plc and Deputy
Managing Director, Reliance Bank before joining UBA.
Kennedy Uzoka – Deputy Managing Director
Kennedy Uzoka has over two decades experience covering core banking, corporate marketing, strategic
business advisory services and resources management. He currently manages the Group‟s operations across
18 countries in Africa. In addition to UBA Africa, he also supervises two key strategic support areas in eBanking and Information Technology.
He is an award winning graduate of Mechanical Engineering (BSc) of the University of Benin (1988) and an
alumnus of IMD, Switzerland in 1992 and Harvard Business School, Boston Massachusetts, USA.
Apollos Ikpobe – Deputy Managing Director
He holds a Masters degree in Banking and Finance from University of Lagos in 2002 and a Higher National
Diploma in Accounting from Yaba College of Technology in 1987. A fellow of the institute of Chartered
Accountants of Nigeria (ICAN), he has attended several courses including the Advanced Management
Programme (AMP) at INSEAD, France.
He has more than 21 years banking experience, covering Internal Control and Audit, Treasury and Financial
Institutions, Corporate Banking and Retail banking.
12
CHAIRMAN’S LETTER
Femi Olaloku – Executive Director
Femi Olaloku has over two decades of banking and financial services experience. Formerly Vice President,
Operations, Controls and Information Security, Citigroup Sub Saharan Division; he joined UBA in 2006 as
General Manager, Information Technology. He is Executive Director and Group Chief Operations Officer
with responsibility for information technology, Operations, Global Shared Services and Customer Service. He
holds a Bachelors degree in Civil Engineering in 1981 and a Masters in Business Administration from the
University of Lagos in 1986.
Emeke E. Iweriebor – Executive Director
Emeke Iweriebor has about two decades experience in banking and financial services and is currently
Directorate Head, Lagos and West. Prior to this role, he was the Deputy CEO, UBA Africa, with responsibility
for building the Bank‟s business and governance in UBA country subsidiaries in Africa. He was also CEO, UBA
CES Africa, the Bank‟s country subsidiaries in Central, East and Southern Africa, and before then, the pioneer
MD/CEO of UBA Cameroun
He holds B.Sc, and M.Sc. degrees in Political Science (International Relations) in 1990 and 1992 respectively
as well as an MBA from the University of Lagos. He is also an alumnus of the Wharton Business School‟s
Executive Development Program.
Dan Okeke – Executive Director
Dan Okeke acquired varied work experience in the Manufacturing industry before moving to the financial
services sector. He has over 17 years banking experience, garnering capabilities in Domestic and
International Operations, Credit and Marketing. He is currently responsible for the Bank‟s business in Eastern
Nigeria and Abuja
He holds a B.Sc. degree in Geography and Planning from the University of Nigeria Nsukka in 1985 and an
MBA (Finance) from the ESUT Business School Enugu in 1999. He is also an associate of the Nigerian Institute
of Management (NIM) and has attended various local and international programmes, including the
Competition and Strategy program at the Harvard Business School.
Obi Ibekwe – Executive Director
Obi Ibekwe has worked in consulting, banking, customer service and credit risk management. She is
responsible for Human Resources and Customer Service.She has a Bachelor of Arts Degree in International
Relations from Tufts University in 1980, an LLB degree with Honours from the University of Lagos in 1985 and an
MBA degree from Ross School of Business, University of Michigan, Ann Arbor, U.S.A.
Rose Okwechime – Non-Executive Director
Rose Okwechime is the Managing Director of Abbey Building Society Plc. She has served as bank director for
over 20 years and has cognate experience in strategic planning and systems development, gained with
top-notch institutions including the Bank of England. Mrs. Okwechime was formerly a Non-Executive Director
on the Boards of erstwhile Standard Trust Bank Plc (2 years). She graduated from London City College
(Chartered Institute of Bankers, London) in 1976 and holds a Masters degree in Business Administration
(Banking and Finance) in 2001 from Ogun State University.
Chief Kola Jamodu, OFR – Non-Executive Director
Chief Jamodu is an industrialist, chartered accountant and first Nigerian Chairman/Chief Executive
Officer of Paterson Zochonis Group of Companies, („PZ‟). He was also the Chairman of Universal Trust Bank
Plc until February 2001, when he was appointed Minister of Industry. He is an alumnus of the Harvard
Business School, USA and a fellow of several professional institutes including Chartered Institute of
Secretaries, Chartered Institute of Taxation of Nigeria and Institute of Chartered Accountant of Nigeria. He is
a recipient of the national honour of Commander of the Federal Republic (CFR).He attended London
School of Accountancy/Metropolitan College in 1963 and holds a Masters degree in Management
Accounting 1965 from same university.
Yahaya Zekeri – Non-Executive Director
Mr. Zekeri obtained an A.C.I.B and F.C.C.A from Southwest London College in 1981 and Northeast London
Polytechnic respectively (1979). He is also an associate member of the Institute of Chartered Accountants
of Nigeria (A.C.A.) in 1985. He has over 30 years experience in the banking sector having held several senior
management positions. He was an Executive Director in the erstwhile Allstates Trust Bank Plc.
13
CHAIRMAN’S LETTER
Foluke Abdul-Razaq – Non –Executive Director
Mrs. Foluke Abdulrasaq holds an HND in Accountancy (1979) from the Kwara State College of Technology,
and an MSc in Banking and Finance (1991) from the University of Ibadan. She was formerly the CEO, Credit
Bank and a two-time Commissioner in Lagos State, firstly in charge of Finance and later Women Affairs and
Social Development. She is the proprietress of Bridge House College, Ikoyi.
Adekunle Olumide, OON – Non-Executive Director
Mr. Olumide is a quintessential diplomat, distinguished career public servant and accomplished technocrat
of the organized private sector. Mr. Olumide is a former Federal Permanent Secretary and holds a Bachelors
of Art Degree in History from the University College of Ibadan (1964). He has represented Nigeria in many
global fora including the United Nations, where he served on the Board of the International Atomic Energy
Agency (IAEA). He reopened the Nigerian Embassy in Gabon in 1974 after the Nigerian civil war as the
Charge‟d‟ Affairs. He retired as the Director General of Lagos Chambers of Commerce and Industry in 2005.
He is a recipient of the national honour of Officer of the Order of the Niger (OON).
Ja’afaru Paki – Non-Executive Director
Mr Ja‟afaru is currently Chairman of Nymex Investment Limited (since June 2007), Chairman, Kaduna State
Inter-Ministerial Committee on Industrial Parks (since October 2007) and has been a member, National
Stakeholders Working Group (NSWG) of the Nigerian Extractive Industries Transparency Initiative, NEITI (since
December 2007). He has close to 50 years experience in both the public and private sector. Mr. Ja‟afaru has
a B.Sc degree in Business Administration from Bradley University, U.S.A in 1988.
Owanari Duke – Non-Executive Director
She holds an LLB degree from Ahmadu Bello University, Zaria (1983).She was former First Lady of Cross River
State of Nigeria. She is a Legal Practitioner, an entrepreneur, a certified Mediation/Dispute Resolution
Consultant and philanthropist. She is the Managing Partner of the Law Firm of Duke & Bobmanuel and serves
as the Executive Chairman of Allied Merchants & Brokers Limited – a merchandising and brokerage firm. Mrs.
Duke also serves as Country Director of EMPRETEC Nigeria Foundation; a United Nations Centre for Trade &
Development (UNCTAD) private Sector Support Initiative to help Nigerians achieve higher levels of
productivity and competitiveness among Small and Medium-Scale Enterprises (SMEs).
4.
History and Business of the Bank
UBA has more than 65 years of providing uninterrupted banking operations dating back to 1948 when the
British and French Bank Limited (“BFB”) commenced business in Nigeria. BFB was a subsidiary of Banque
Nationale de Crédit (BNCI), Paris, which transformed its London branch into a separate subsidiary called the
British and French Bank, with shares held by Banque Nationale de Crédit and two British investment firms,
S.G. Warburg and Bank and Robert Benson and Bank. A year later, BFB opened its offices in Nigeria to break
the monopoly of the two existing British owned banks in Nigeria then.
Following Nigeria‟s independence from Britain, UBA was incorporated on 23, February 1961 to take over the
business of BFB. UBA eventually listed its shares on the NSE, in 1970 and became the first Nigerian bank to
subsequently undertake an Initial Public Offering (IPO). UBA became the first sub-Saharan bank to take its
banking business to North America when it opened its New York Office (USA) in 1984 to offer banking
services to Africans in Diaspora.
Today‟s UBA emerged from the merger of then dynamic and fast growing Standard Trust Bank Plc,
incorporated in 1990 and UBA, one of the biggest and oldest banks in Nigeria. The merger was
consummated on August 1, 2005, one of the biggest mergers done on the Nigerian Stock Exchange (NSE).
Following the merger, UBA subsequently went ahead to acquire Continental Trust Bank in the same year,
further expanding the UBA brand. UBA subsequently acquired Trade Bank in 2006, which was under
liquidation by the Central Bank of Nigeria (CBN).
UBA had another successful combined public offering and rights issue in 2007 and made further banking
acquisitions of three liquidated banks namely: City Express Bank, Metropolitan Bank, and African Express
Bank. The Bank also acquired Afrinvest UK, rebranding it UBA Capital, UK.
The quest to build a strong domestic and African brand intensified in 2008 when UBA made further
acquisitions of two liquidated banks, Gulf Bank and Liberty Bank while at the same time intensifying its
African footprint with the establishment of UBA Cameroon, UBA Cote d‟Ivoire, UBA Uganda, UBA Sierra
Leone, and UBA Liberia as well as the acquisition of a 51% interest in Banque Internationale du Burkina Faso,
which was the largest bank in the country with 40% market share. Currently, UBA has 18 African subsidiaries
contributing about 20% of the Group‟s balance sheet with a target of contributing 50%.
14
CHAIRMAN’S LETTER
On 13 December 2012, the shareholders of UBA unanimously voted for the bank to adopt a mono line
commercial banking model”. In order for it to fully comply with the new CBN guidelines for commercial
banks in Nigeria (Regulation of the Scope of Banking Services and Ancillary Matters, No. 3, 2010), which
repealed the erstwhile universal banking regime.
With the restructuring, the Group‟s non-commercial banking subsidiaries with the exception of Africa
Prudential Registrars Plc and Afriland Properties Plc were consolidated under UBA Capital Plc and spun-off to
shareholders of the Bank. The Bank‟s excess real estate assets were used to capitalise Afriland Properties Plc,
which was then spun-off, along with Africa Prudential Registrars Plc, to be held directly by the Bank‟s
shareholders.
Along with UBA, the result of the restructuring is three stand-alone entities held directly by the Bank‟s
shareholders – UBA Capital Plc and Africa Prudential Registrars Plc, which are already listed on the Nigerian
Stock Exchange, as well as Afriland Properties Plc, now controlled by independent shareholders.
Under the Monoline business structure, UBA remains the parent Bank for all of the Group‟s commercial
banking activities in Nigeria, Africa and the rest of the world. UBA Plc is also the parent Bank for UBA Pension
Custodian Limited, UBA Capital (UK) and UBA FX Mart Limited.
Now fully positioned as a pan-African bank, the UBA Group is firmly in the forefront of driving the renaissance
of the African economy and is well positioned as a one-stop financial services institution, with growing
reputation as the face of banking on the continent. As at June 2014, the Bank‟s capital adequacy ratio was
21%, making it one of the most capitalised banks in Nigeria.
5.
General Risk Disclosure
Shareholders should consult their advisers if in any doubt as to the nature of this investment and its suitability
in the light of their specific circumstances. The value of any securities traded (whether listed or not) are
subject to investment risks, can and do fluctuate, and any individual security may experience upward or
downward movements. There is an inherent risk that losses may be incurred rather than a profit made as a
result of buying and selling securities. Past performance is not a guide to future performance. Certain types
of investments may not be suitable for all investors. UBA has however taken all these risks into consideration
and has therefore put in place strategic and operational plans that will aid in adequately responding to the
outlook of the market environment in a timely manner in order to mitigate these risks as much as possible.
6.
Compliance with Code of Corporate Governance
UBA is fully committed to implementing the best practice standards of Corporate Governance. The Bank
recognizes that Corporate Governance and Practices must balance two goals of protecting the interest of
shareholders and providing for the duty of the Board and Management to direct and manage the affairs of
the Bank.
Members of the Board of Directors attend regular trainings on Corporate Governance and related issues
both at local and international levels. In addition, the Bank‟s Secretary provides advice to the Board on
Corporate Governance best practices from time to time.
7.
Future Plans
The Bank‟s vision is to create sustainable value for our stakeholders in our chosen markets. In order to realise
this long term objectives, the Bank is making every effort to identify and take advantage of every investment
opportunities that will complement its long term strategic objectives. We will continue to look out for these
investment opportunities that will help in creating value for our stakeholders.
8.
Participation in the Rights Issue
This Rights Circular contains a summary of the financial and general information relating to the Bank. It also
contains a Provisional Allotment Letter detailing full instructions for acceptance, payment and renunciation
of your Rights. It is recommended that shareholders take up their rights in full to ensure that they continue to
enjoy the full benefits of their investment in the Bank.
As you may be aware, the shares being issued are tradable by shareholders on the floor of The Exchange
during the offer period. Shareholders who wish to trade their Rights should seek proper advice from their
stockbrokers who will be able to guide them through the entire process.
15
CHAIRMAN’S LETTER
9.
Risks and Mitigating Factors
CREDIT RISK
Credit risk can be defined as the failure by corporate borrowers or counterparties to perform their payment,
guarantee and/or other obligations. It also includes the risk of suffering financial loss, should any of the
Group‟s consumer borrowers or counterparty fail to endeavour their contractual obligation to perform on
their payment, guarantee and/or other obligations.
Mitigating Factors
 Enhanced existing credit risk management framework for new and existing credits
 Constantly reviewing credit policy to improve quality of credit decisions
 Alignment of credit portfolio management with customer segmentation
 Automated credit decision support tools
 Enhanced monitoring process for existing credits by:
a. Decentralized monitoring personnel
b. Enhanced Management Information System (MIS)
 Enhanced debt recovery framework by:
a. Early stage delinquency focus/detection
b. Reviewing collateral policy
c. Improving MIS by adopting the risk-based approach
d. Improving awareness of all debt recovered; timely dissemination of recoveries to all necessary
departments
MARKET RISK
Market risk is the risk of losses in on and off balance sheet positions arising from movements or volatility in
market prices that could adversely affect business objectives. In addition, it is the risk that the value of a
portfolio or a trading portfolio, will decrease due to the change in value of market risk factors. The four
standard market risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices.
Mitigating Factors
 Acquisition of a robust and efficient Trading Platforms
 Improved business model to address middle office functions as well as emerging market trends
 Recruitment of competent hands (dealers)
 Strengthening market risk management oversight function via recruitment of competent personnel
 Development of a volatility-based portfolio limits framework
 Enhanced Market Risk management process
LIQUIDITY RISK
Liquidity Risk is the risk to the Group‟s earnings and capital arising from its inability to fund increases in assets
or to meet its payment obligations to its customers as they fall due or to replace funds when they are
withdrawn. The ability of an institution to transact business effectively can be hampered by liquidity
challenges. Liquidity risk has the tendency to compound other risks such as market and credit; as such
needs to be properly managed.
Mitigating Factors
 Refinement of Liquidity Risk Management Framework
a. Development of dynamic liquidity measures for cash flow forecasting and ratio analysis
b. Speedy identification of the impact of non-performing loans
c. Daily and periodic monitoring of Group ALCO set limits and ratios.
d. Enhanced Contingency Funding Plan across the Group which is based on realistic assumptions.
INVESTMENT RISK
Investment risk is the risk of a decline in the net realizable value of investment assets arising from adverse
movements in market prices or factors specific to an investment itself (e.g. reputation and quality of
management). Investments vary and every investment type has its inherent risks, which have the potential to
reduce the value of such investments.
Mitigating Factors
 Robust investment policy which provides guidance for all investment decisions
 Investment committee provides required oversight functions
 Investment risk assessment methodology/framework, covering:
a. Scenario analysis
b. Assumption sensitivity analysis
16
CHAIRMAN’S LETTER


Framework for investment underwriting risk acceptance
Investment performance monitoring process is instituted
INTEREST RATE RISK
Interest rate risk in the banking book is the risk that a bank‟s earnings or economic value will decline as a
result of changes in interest rates.
Mitigating Factors
 Interest rate monitoring framework to identify trends in interest rates and predict potential shifts in
interest rates
 Regular duration and gap analysis and its impact on earnings
ENVIRONMENTAL AND POLITICAL RISKS
Environmental risks are those risks inherent in environmental events which most of the time are out of the
control of anyone, usually referred to as “act of God” e.g. global warming and its associated hazards.
Political risks are risks inherent in the political culture or terrain of a country e.g. Electoral violence, Riots e.t.c.
Mitigating Factors
 Initiation of necessary research to unearth the environmental dynamics and the political trends in
countries where UBA operates
 Categorizing countries that UBA business Offices are situated in, as
a. High, Medium, and Low Environmental Risk Areas
b. High, Medium, and Low Political Risk Areas
This helps to elucidate the risk profile of the assessed locations
 Developing and managing the implementation of plausible plans aimed at protecting the Group
assets (people/lives and property) in countries with environmental and political risk exposures.
Priority is given to high risk profile locations
 Developing a monitoring process to monitor the trend in changes of environmental and political
indices, to enable a proactive approach in managing environmental and political risk exposures
 Banking or other activities of Politically Exposed Persons, in relationship with the group, is tracked
and monitored closely as they pose potential reputational risk to the Group. Detected suspicious
activities are promptly reported to the compliance unit for relevant action
LEGAL RISK
Legal risk is the risk arising from the type and nature of the group‟s contractual agreements. It also involves
the risk that contract may render UBA particularly vulnerable to litigation. If these risks are not addressed,
they may result in unspecified erosion of value.
Mitigating Factors
 General Counsel works with departments and subsidiaries of the Group in identifying potential risk
exposures with all third party and vendor transactions. SLAs (service level agreements) are
developed to protect the interest of the group.
 General Counsel ensures all new SLAs are developed to ensure “a win-win” situation is met
between the Group and its business partners
 General Counsel disseminates learning point from major appeal and Supreme Court judgments.
REGULATORY RISK
This is the risk of non-compliance with applicable financial service regulations, thereby exposing the Group
to penalties and reputational damage. It may include the risk that a change in law and regulation or
increased complexity in local and international regulatory environment will materially impact the group.
Mitigating Factors
 Risk management supports Group Finance in identifying all new/emerging rules, regulations and
laws from CBN through secondary and primary research.
 Risk management supports group compliance in ensuring that group regulatory and statutory rule
book is maintained and periodically updated in line with changes in the statutory and regulatory
environment.
FINANCIAL REPORTING RISKS
Financial Reporting risk is the risk of failure to monitor and report on statutory financial requirements in line
with regulatory requirements leading to penalties. In addition, it is the risk that internal controls over financial
reporting fail to detect a material misstatement or omission within the Group‟s external reporting.
17
CHAIRMAN’S LETTER
Mitigating Factors
 Group Finance continuously empowers its staff through trainings (and certification courses) to
guarantee the group remains up-to-date on all changing accounting and reporting standards.
 Group Finance applies and abide with all existing and new accounting standards
 Group Finance ensures entries from entities and subsidiaries are correct by authenticating all entries
sent, using reputable audit forms
BUSINESS STRATEGY RISKS
Business Strategy Risks are risks inherent in the implementation of well thought out decisions aimed at
achieving the organisation‟s objectives. It is also a possible source of loss that might arise from the pursuit of
an unsuccessful plan. For example, strategic risk might arise from making poor business decisions, from the
substandard execution of decisions, from inadequate resource allocation, or from a failure to respond well
to changes in the business environment.
Mitigating Factors
 Ensuring all possible alternatives for every critical business decision is thoroughly assessed
 Employ in-depth scenario analysis in making strategic business decisions
 Consistently monitoring changes in factors and indices that inform business decisions. Changes in
these factors would require a tweaking of business strategies appropriately
 Ensuring there is a back-up plan for every strategic plan. This may serve as a damage control plan
CURRENCY TRANSLATION RISK
This is defined as the risk to earnings or capital arising from the conversion of the group‟s offshore banking
book assets or liabilities or commitments or earnings from foreign currency to local or functional currency.
Mitigating Factors
 Managing spot currency risk on matched maturity basis
 Assessment of impact of currency volatility on group P&L;
a.
Review open position limit
b.
Review foreign currency investment strategy
 Assessment of currency translation risk of international operations with requisite limits placed on
these
 Development and deployment of currency risk hedging strategies
CREDIT CONCENTRATION RISK
Credit concentration risk arises on a portfolio basis where the bank has significant aggregated exposures to
particular credit segments, sectors of industry, portfolios or products. Credit concentration risk includes High
Loan Concentration and High Country Concentration.
Mitigating Factor
 Administration of the credit concentration Risk Management policy which provides a framework
within which lending decisions can be made so as to ensure an adequate level of diversification of
the group‟s credit portfolio. The policy provides risk-based limits that restrict lending activities to
within the Group‟s desired risk appetite and tolerance.
BRAND AND REPUTATION RISK
The risk of brand erosion and reputational loss as well as a change in the ability to deliver on brand promise.
It includes failure to understand, identify or subsequently manage development that could negatively
impact on UBA group brand and its value.
Mitigating Factors


Building reputation through effective stakeholder management which includes individuals that can
influence or is influenced by a company‟s practice.
The GMD and the CEO sets the tone, define direction, attract talent and be the human face of the
group. The GMD and the CEO builds the UBA brand on credibility and not celebrity.
18
CHAIRMAN’S LETTER
PEOPLE RISK
The risk that possible inadequacies in human capital and inadequate management of human resource
practices, policies and processes will result in the ability of the group to attract, manage, develop and
retain competent resources.
Mitigating Factors





Group Human Resource Director conducts primary and secondary researches to identify best
practice staff development and motivation techniques aimed at bringing out the best in staff and
high performance.
GHRD works with all stakeholders-senior management, UBA academy, SBGS and SSG Heads to
identify training needs and skill gaps of staff and develop cost effective strategies to address these
lapses.
GHRD continuously monitors and manages staff turnover trends in the group and suggest mitigants
to loss of key staff
GHRD continuously monitor trend in identified critical people risk areas in the group which include:
a.
Staff appraisal system
b.
Inconsistent promotion and reward
c.
Diversity and inclusion
d.
Leadership changes
e.
Unethical work culture
f.
Internally induced fraud and syndicate
g.
Undefined career path
h.
Absence of succession planning
i.
Defective job rotation
j.
Unstructured retirement plan
k.
Undocumented job description
l.
Non provision of equal opportunities
m.
Various types of harassment
GHRD develops people management framework
PROCESS RISK
It is defined as the logical flow of activities of organizations, which culminate in the delivery of specific
services or production and delivery of specific products. It defines how an organization implements its
strategic plan for the purpose of achieving its overarching goals.
Mitigating Factors
 Departmental and Business heads identify their key risk exposures from the list of identified risks using
frequency, impact, and control effectiveness grids.
 Departmental and Business heads (with the assistance of the group operational risk management)
set risk tolerance limit for identified key risk
 The group chief operating officer, with process owners, monitors key risks.
 The group chief operating officer takes necessary mitigating action steps for all key risk that
overshoot set tolerance limits
 The Group Chief Operating Officer transmits learning points from all key risk that overshoot tolerance
limits to the specific process owners and the group operational Risk Management to improve risk
management strategies.
TECHNOLOGY RISK (IT & E-BUSINESS)
The risk includes technology framework components such as design, alignment, architecture, deployment,
security, change management and data integrity. The emergence of newer, faster, more efficient
technology infrastructure has drastically changed the way business is transacted all across the world;
however this has also led to the creation of more intelligent and sophisticated fraudsters and thieves. It is
therefore imperative for UBA group to take technology based risks as a top burner exposure. The major
technology based risk exposure the group faces includes:
 Network downtime
 External fraud via the internet
 Internal fraud
 ATM/ E-channel downtime
 Card Cloning
 Password theft/comprise
19
CHAIRMAN’S LETTER
Mitigating Factors





The Group Chief Operating Officer works with the head of IT and Group IT risk Management to set
tolerance limits for each of the critical technology based risks.
The GCOO works with the Head of IT Risk Management in monitoring the trends of technology and E
business risks.
The GCOO takes necessary mitigating action steps for all key risk that overshoot set tolerance limits.
The GCOO transmits learning points from all key risk that overshoot tolerance limits to the head of IT
Risk Management and the Group operational Risk management.
Implementation of a 24/7 Security Operations Centre to monitor the Bank‟s database, system
network and e-Channels.
PROJECT RISK
A Project consists of a temporary endeavour undertaken to create a unique product, service or result. It is
the risk that specific time-bound activities, structured to attain specific business goals fail to meet such goals.
Mitigating Factors
 Group Strategy ensures that every project is backed up with a valid business case.
 The Business case is examined to ensure it clearly articulates the business need and benefit of
implementing such project.
 Group strategy ascertains the cost and benefit of such project.
 Milestones are set for project implementation. This acts as a monitoring strategy, as delayed projects
shall be reviewed.
 Knowledge transfer, succession plan and intellectual property, transfer provision is ensured on all
projects.
 Projects that are critical and cost efficient are approved for implementation following all necessary
project approval stages.
Financial Crimes & AML
The risk of failure to monitor, report and act on financial crime and money laundering thereby exposing UBA
to losses, penalties or reputation damage. These crimes include offences involving money laundering, fraud
or dishonesty, or market abuse.
Mitigating Factors
 Compliance management team continuously conducts secondary and primary research to remain
up-to-date on “innovative” methodologies being developed to facilitate money laundering.
 Compliance management team ensures that the Group anti money laundering processes meet all
requirements at every point in time.
 Compliance management team sets up a platform for cross border sharing of information for CFT
purposes.
 Compliance management team monitors transaction originating from FATF blacklisted countries
and educates relevant staff on the potential money laundering and terrorist financing risk involved.
10. Conclusion
The future of the Bank is full of interesting opportunities and the Bank will continue to achieve progressive
levels of success in all areas of its business. I therefore encourage you to take up your rights in full to ensure
that you continue to enjoy the benefits of your investment in the Bank and as a mark of your belief in the
prospects that lie ahead of it.
Thank you.
Yours faithfully,
CHAIRMAN
20
1.
Letter from the Directors on the Going Concern Status
21
2.
Letter from the Auditors on the Going Concern Status
22
1.
Statement of Comprehensive Income
IFRS
Comprehensive Income
In millions of Nigerian Naira
Notes
7,8,9
10,15,16,17
14
27c
31 December
2013
31 December
2012
31 December
2011
31 December
2010
NGAAP
31 December
2009
176,993
(107,851)
(13,078)
(6)
56,058
(9,457)
46,601
46,601
159,216
(102,592)
1,563
(54)
58,133
(533)
51,477
3,289
54,766
118,969
(125,998)
(19,603)
32
(26,600)
17,935
(8,665)
1,864
(6,801)
154,074
(126,037)
(30,824)
(138)
(2,925)
981
(1,944)
(1,944)
187,066
(135,228)
(38,176)
13,662
(7,025)
(4,262)
2,375
2,375
- Non-controlling interest
- Equity holders of the parent
684
45,917
102
54,664
850
(7,651)
70
(2,014)
262
2,113
Other comprehensive income for the period
Total comprehensive income for the period
7,101
53,701
764
55,530
5,680
(1,121)
8,088
6,144
2,375
Net operating income
Operating expenses
Write-back/(Provision) for losses
Share of loss of equity-accounted investee
Profit/(loss) before taxation and exceptional items
Exceptional items
Taxation
Profit/(loss) after taxation and exceptional items
Profit from discontinued operations
Profit/(loss) for the period
18
31 December 2009 financial statements are based on Generally Accepted Accounting Principles (GAAP) which were previously applicable in Nigeria
23
2.
Statement of Financial Position
Five - Year Financial Summary
31 December
2013
31 December
2012
IFRS
31 December
2011
31 December
2010
NGAAP
31 December
2009
716,803
784
26,251
937,620
-
714,115
457
28,513
658,922
-
434,218
1,303
41,564
605,627
-
385,397
2,594
11,226
590,797
-
68,225
42,035
470,195
606,616
188,407
253,834
557,372
2,977
5,673
75,409
30,189
30,436
3,265
-
128,665
552,152
70,746
7,568
29,624
18,598
63,563
96,744
625,564
10,356
55,618
5,930
26,998
16,513
-
124,144
368,935
10,118
62,009
6,626
7,049
30,290
-
9,506
2,983
269
73,042
87,003
-
2,640,613
2,272,923
1,920,435
1,599,185
1,548,281
31
60,582
2,161,182
2,861
14
55,653
48,866
78,071
-
124
57,780
1,720,008
1,274
59
53,719
114,520
81,438
51,534
817
19,510
1,445,822
51,943
2,627
26
53,500
137,040
58,210
-
9,310
7,456
1,270,409
32,753
2,869
30
18,335
63,327
41,671
-
15,807
1,245,650
22,138
3,385
20
2
14,760
58,187
1,503
-
2,407,260
2,080,456
1,769,495
1,446,160
1,361,452
124,423
103,226
124,423
64,683
124,423
22,922
124,423
25,705
124,423
57,090
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK
Non-controlling interest
227,649
189,106
147,345
150,128
181,513
7,387
3,361
3,595
2,897
5,316
TOTAL EQUITY
235,036
192,467
150,940
153,025
186,829
2,642,296
2,272,923
1,920,435
1,599,185
1,548,281
Notes
ASSETS
cash and bank balancess
Treasury bills and other eligible bills
Financial assets held for trading
Due from other banks
Loans and advances to banks
Loans and advances to customers
Investment securities
- Available-for-sale investments
- Held to maturity investments
Investments in equity-accounted investee
Goodwill
Investment property
Property and equipment
Intangible assets
Deferred tax assets
Other assets
Derivative assets
Non-current assets held for distribution
21
22
23
24
25
25
27
29
31
TOTAL ASSETS
LIABILITIES
Derivative liabilities
Deposits from banks
Deposits from customers
Managed funds
Current tax liabilities
Dividend payable
Deferred tax liabilities
Subordinated liabilities
Borrowings
Other liabilities
Retirement benefit obligations
Liabilities held for distribution
32b
33
34
18
31
37
36
35
TOTAL LIABILITIES
EQUITY
Share capital and share premium
Reserves
TOTAL LIABILITIES AND EQUITY
38
38
24
3.
Statement of Cash Flows
Consolidated and Separate Statements of Cash Flows
Group
Notes
For the year ended 31 December
2013
2012
Cash flows from operating activities
Profit/(loss) before income tax, including discontinued operations
Adjustments for:
Depreciation of property and equipment
Amortisation of intangible assets
Net impairment loss on investment securities
Net impairment loss on loans and advances
Write-off of loans and advances
Net impairment charge on other assets
Foreign exchange (gains)/losses
Fair value (gain)/loss on derivative financial instruments
Fair value gain on previously held interest in equity-accounted investee
Gain on non-current assets held for distribution
Dividend income
Gain on disposal of property and equipment
Gain on disposal of investment securities
Net interest income
Share of loss/(profit) of equity-accounted investee
56,058
55,874
5,255
914
181
11,093
1,471
514
64
(3,358)
(2,422)
(950)
(1,101)
(821)
20
(103,231)
6
9,775
1,113
673
5,093
7,859
1,055
(5,979)
(693)
(31)
(3,104)
(34)
(91,617)
(196)
(36,306)
(20,212)
(118)
(126,565)
2,262
(291,262)
(12,352)
2,802
441,174
(139,007)
185,700
26,328
600
(37,908)
5,992
(71,435)
(20,228)
40,792
235,178
(14,481)
(3,243)
150,427
265,482
(78,794)
(3,367)
(8,368)
(64,201)
(49,295)
9,040
(4,479)
220,748
39
(105,552)
(10,772)
1,101
1,406
(702)
(114,480)
14,075
(8,979)
(652)
3,104
2,513
(558)
9,503
3,529
(69,183)
(1,741)
(15,470)
(268)
(165)
(83,298)
28,436
(18,736)
(10,950)
(458)
(638)
(2,346)
21
(261,979)
(239)
579,937
227,905
(397)
352,429
21
317,719
579,937
16
12
14
14
14
11
7
Change in financial assets held for trading
Change in cash reserve balance
Change in loans and advances to banks
Change in loans and advances to customers
Change in other assets
Change in deposits from banks
Change in deposits from customers
Change in placement with banks
Change in managed fund
Interest received
Interest paid
Change in other liabilities and provisions
Income tax paid
Net cash from operating activities
18(c)
Cash flows from investing activities
Proceeds of investment securities
Acquisition of investment securities
Acquisition of property and equipment
Acquistion of interest in a subsidiary
Dividend received
Proceeds from the sale of property and equipment
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Interest paid on long term borrowings
Dividend paid to owners of the parent
Dividend paid to non-controlling interests
Acquisition of treasury shares
Net cash from financing activities
30
39
Net increase/(decrease) in cash and cash equivalents
Effects of exchange rate changes on cash and cash equivalents
Cash and
cash equivalents
at beginning
of year
Effect
of exchange
rate fluctuations
on cash
held
Cash and cash equivalents at end of year
25
4.
Notes to the Financial Statements
SIGNIFICANT ACCOUNTING POLICIES
1 Reporting entity
United Bank for Africa Plc (the "Bank") is a Nigerian registered company with address at 57 Marina, Lagos,
Nigeria. The consolidated financial statements of the Bank for the year ended December 31, 2013 comprise
the Bank (Parent) and its subsidiaries (together referred to as the "Group" and individually referred to as
Group entities"). The Bank and its subsidiaries are primarily involved in corporate, commercial and retail
banking, trade services, cash management, treasury and custodial services.
2 Basis of preparation
(a) Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting
Standard and IFRIC interpretations applicable to companies reporting under IFRS.
(b) 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 financial
statements are presented in Nigerian Naira (N) which is the bank's functional currency and the Group's
presentation currency.
(c) The preparation of financial statements requires the directors to make judgments, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, incomes
and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of which form the
basis of making the judgments about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised, if the revision affects only that
period, or in the period of the revision and future periods, if the revision affects both current and future
periods. The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in note 5.
3
Significant accounting policies
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries (including structured entities) are entities controlled by the Group. Control exists when the
Group is exposed, or has rights, to variable returns from its involvement with an entity and has the ability to
affect those returns through its power over the entity. In assessing control, potential voting rights that
presently are exercisable are taken into account. 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. Subsidiaries are fully consolidated from the date in which control is transferred
to the Group. They are deconsolidated from the date control ceases.
The accounting policies of subsidiaries have been changed, where necessary, to align with the policies
adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the
non-controlling interests, even if doing so causes the non-controlling interests to have a deficit balance.
In the separate financial statements, investments in subsidiaries are carried at cost less impairment.
(ii) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is
the date on which control is transferred to the Group.
The Group measures goodwill at the acquisition date as the total of:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interest in the acquiree; plus if the business combination is
achieved in stages, the fair value of the existing equity interest in the acquiree;
· less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed.
When this total is negative, a bargain purchase gain is recognised immediately in profit or loss.
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 interests' proportionate share of the recognised amounts of the
identifiable net assets for components that are present ownership interests and entitle their holders to
proportionate share of the net assets in the event of liquidation. All other components of non-controlling
interests are measured at fair value.
26
(a) Basis of consolidation - continued
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other
than those associated with the issue of debt or equity securities that the Group incurs in connection with a
business combination are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer‟s
previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains
or losses arising from such re-measurement are recognised in profit or loss.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or
loss.
(iii) Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, and noncontrolling interests and the other components of equity related to the subsidiary. Any surplus or deficit
arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous
subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is
accounted for as an equity-accounted investee or in accordance with the Group's accounting policy for
financial instruments depending on the level of influence retained.
(iv) Acquisitions under common control
Business combinations between entities that are under common control are accounted for at book values.
The assets and liabilities acquired or transferred are recognised or derecognised at the carrying amounts
previously recognised in the Group controlling shareholder's consolidated financial statements. The
components of equity of the acquired entities are added to the same components within the Group equity
and any gain/loss arising is recognised directly in equity.
(v) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains or losses or incomes and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising
from transactions with associates are eliminated to the extent of the Group‟s interest in the entity. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
(b) Foreign currency
(i) Foreign currency transactions
Foreign currency transactions are recorded at the rate of exchange on the date of the transaction. At the
reporting date, monetary assets and liabilities denominated in foreign currencies are reported using the
closing exchange rate. Exchange differences arising on the settlement of transactions at rates different
from those at the date of the transaction, as well as unrealized foreign exchange differences on unsettled
foreign currency monetary assets and liabilities, are recognized in profit or loss.
Unrealized exchange differences on non-monetary financial assets are a component of the change in their
entire fair value. For a non-monetary financial asset held for trading and for non-monetary financial assets
designated at fair value through profit or loss, unrealized exchange differences are recognized in profit or
loss. For non-monetary financial investments available-for-sale, unrealized exchange differences are
recorded in other comprehensive income until the asset is sold or becomes impaired.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated to Nigerian Naira at exchange rates at each reporting date. The incomes and
expenses of foreign operations are translated to Nigerian Naira at average rates.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign
currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the
relevant proportionate share of the translation difference is allocated to the non-controlling interest. When
a foreign operation is disposed of such that control, significant influence or joint control is lost, the
cumulative amount in the translation reserve related to that foreign operation is re-classified to profit or loss
as part of the gain or loss on disposal.
27
(c) Interest
Interest income and expense for all interest bearing financial instruments, except for those classified at fair
value through profit or loss, are recognised within „interest income‟ and „interest expense‟ in the statement
of comprehensive income using the effective interest method. The effective interest rate is the rate that
exactly discounts the estimated future cash payments and receipts through the expected life of the
financial asset or liability (or, where appropriate, a shorter period) to the net carrying amount of the
financial asset or liability.
(c) Interest- continued
The calculation of the effective interest rate includes all transaction costs and fees paid or received that
are an integral part of the effective interest rate. Transaction costs include incremental costs that are
directly attributable to the acquisition or issue of a financial asset or liability.
Interest income and expense on all trading assets and liabilities are considered to be incidental to the
Group‟s trading operations and are presented together with all other changes in the fair value of trading
assets and liabilities in net trading income.
(d) Fees and commissions
Fees and commission income and expenses that are integral to the effective interest rate on a financial
asset or liability are included in the measurement of the effective interest rate. Other fees and commission
income, including account servicing fees, investment management and other fiduciary activity fees, sales
commission, placement fees and syndication fees, are recognised as the related services are performed.
When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are
recognised on a straight-line basis over the commitment period.
Other fees and commission expenses relate mainly to transaction and service fees, which are expensed as
the services
are received.
(e) Net
trading income
Net trading income comprises gains less losses related to trading assets and liabilities, and includes all
realised and unrealised fair value changes, interest and foreign exchange differences.
(f) Dividends
Dividend income is recognised when the right to receive income is established. Dividends are reflected as a
component of other operating income.
(h) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition
of assets or liabilities in a transaction that is not a business combination and that affects neither accounting
nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will
not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based on laws that have been enacted or
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in
subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of
the reversal of the temporary difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the forseeable future.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in
subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary
difference will reverse in the future and there is sufficient taxable profit available against which the
temporary difference can be utilised.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
against current tax assets, and they relate to taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realised simultaneously.
28
(i) Financial instruments
Initial recognition and measurement
The Group initially recognises loans and advances, deposits, debt securities issued and subordinated
liabilities on the settlement date. All other financial assets and liabilities are initially recognised on the
settlement date at which the Group becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is measured initially at fair value plus, for an item not at fair value
through profit or loss, direct and incremental transaction costs that are directly attributable to its acquisition
or issue.
Subsequent measurement
Subsequent to initial measurement, financial instruments are measured either at fair value or amortised cost,
depending on their classification:
(i) Held-to-maturity
Held-to-maturity investments are non-derivative financial assets with fixed determinable payments and
fixed maturities that management has both the positive intent and ability to hold to maturity, and which are
not designated as fair value through profit or loss or as available for sale or as loans and receivables. Where
the Group sells more than an insignificant amount of held-to-maturity assets, the entire category would be
tainted and reclassified as available-for-sale assets and the difference between amortised cost and fair
value will be accounted for in other comprehensive income.
Held-to-maturity investments are carried at amortised cost, using the effective interest method, less any
provisions for impairment.
(ii)
Interest on held-to-maturity investments is included in the consolidated income statement and reported as
„Interest and similar income‟. In the case of an impairment, the impairment loss is reported as a deduction
from the carrying value of the investment and recognised in the consolidated income statement as „Net
gains/ (losses) on investment securities‟.
(ii) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value
through profit or loss upon initial recognition. A financial asset is classified as held-for-trading if acquired or
incurred principally for the purpose of selling in the short term or it is part of a portfolio of identified financial
instruments that are managed together and for which there is evidence of a recent pattern of short term
profit making. Derivatives are also categorised as held-for-trading unless they are designated as hedges
and effective as hedging instruments. All derivatives are carried as assets when fair value is positive and as
liabilities when fair value is negative.
Financial assets may be designated at fair value through profit or loss when:
· The designation eliminates or significantly reduces measurement or recognition inconsistency that would
otherwise arise from measuring assets or liabilities on different basis; or
· A group of financial assets is managed and its performance evaluated on a fair value basis.
· The financial assets consist of debt host and an embedded derivatives that must be separated.
Subsequent to initial recognition, the fair values are remeasured at each reporting date. All gains and losses
arising from changes therein are recognised in profit or loss in „net trading income‟ for trading assets.
(iii) Available-for-sale
Financial assets classified by the Group as available-for-sale financial assets are generally those that are not
designated as another category of financial assets, or investments 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.
Available-for-sale financial assets are subsequently carried at fair value. Unrealised gains and losses arising
from changes in the fair value of available-for-sale financial assets are recognised directly in fair value
reserve in other comprehensive income until the financial asset is derecognised or impaired. When
available-for-sale financial assets are disposed of, the fair value adjustments accumulated in other
comprehensive income are recognised in profit or loss.
Interest income, calculated using the effective interest method, foreign currency gains and losses on
monetary assets classified as available-for-sale is recognised in profit or loss. Dividends received on
available-for-sale instruments are recognised in profit or loss when the Group‟s right to receive payment has
been
established.
(iv) 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 those classified by the Group as fair value through profit or loss or
available-for-sale or those for which the holder may not recover substantially all of its initial investment, other
than because of credit deterioration.
29
(i) Financial instruments - continued
Loans and receivables are measured at amortised cost using the effective interest method, less any
impairment losses. Transaction costs that are integral to the effective rate are capitalised to the value of the
loan and amortised through interest income as part of the effective interest rate. All of the Group‟s
advances are included in the loans and receivables category.
(v) Financial liabilities
The Group classifies its financial liabilities as measured at amortised cost or fair value through profit or loss.
The financial liabilities at fair value through profit or loss are in two sub categories: financial liabilities
classified as held for trading and financial liabilities designated at fair value through profit or loss.
A financial liability 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. Financial liabilities held for trading also include obligations to deliver financial assets borrowed by a
short seller. Those financial instruments are recognised in the statement of financial position as 'Financial
liabilities held for trading'.Surbodinated liabilities are included as part of financial liabilities measured at
amortized cost.
The best evidence of the fair value of a financial instrument on initial recognition is the transaction price, i.e.
the fair value of the consideration paid or received, unless the fair value is evidenced by comparison with
other observable current market transactions in the same instrument, without modification or repackaging,
or based on discounted cash flow models and option pricing valuation techniques whose variables include
only data from observable markets.
Fair value measurement
Subsequent to initial recognition, the fair values of financial instruments are based on quoted market prices
or dealer price quotations for financial instruments traded in active markets. If the market for a financial
asset is not active or the instrument is unlisted, the fair value is determined by using applicable valuation
techniques. These include the use of recent arm‟s length transactions, discounted cash flow analyses,
pricing models and valuation techniques commonly used by market participants.
Where discounted cash flow analyses are used, estimated cash flows are based on management‟s best
estimates and the discount rate is a market-related rate at the reporting date from a financial asset with
similar terms and conditions. Where pricing models are used, inputs are based on observable market
indicators at the reporting date and profits or losses are only recognised to the extent that they relate to
changes in factors that market participants will consider in setting a price.
Impairment of financial assets
(i) Assets carried at amortised cost
The Group assesses at each reporting date whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or
more events that occurred after the initial recognition of the assets (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 following factors are considered in assessing objective evidence of impairment:
· whether a loan or other financial assets or any obligation is more than 90 days past due;
· the Group consents to a restructuring of the obligation, resulting in a diminished financial obligation,
demonstrated by a material forgiveness of debt or postponement of scheduled payments; or
· there is an observable data indicating that there is a measurable decrease in the estimated future cash
flows of a group of financial assets, although the decrease cannot yet be identified with specific individual
financial assets.
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.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of
similar credit risk characteristics (that is, on the basis of the Bank‟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.
30
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 reflect 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 Bank and their magnitude). The
methodology and assumptions used for estimating future cash flows are reviewed regularly by the Bank to
reduce any differences between loss estimates and actual loss experience.
Financial instruments - continued
When a loan is uncollectible, it is written off against the related allowance 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 relating to loans and advances to banks and customers are
classified in loan impairment charges whilst impairment charges relating to investment securities (held-tomaturity and loans and receivables categories) are classified in 'Net gains/(losses) on investment securities'.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the
debtor‟s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance
account. The amount of the reversal is recognised in profit or loss.
If there is objective evidence that an impairment loss on a loan and receivable or a held-to-maturity asset
has been incurred, 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 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.
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. 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 which considers asset type, industry, geographic location, collateral type, past-due status and
other relevant factors). These characteristics are relevant to the estimation of future cash flows for groups of
such assets being indicative of the debtors‟ ability to pay all amounts due according to the contractual
terms of the assets being evaluated.
If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined under the contract. As a practical
expedient, the Bank may measure impairment on the basis of an instrument‟s fair value using an observable
market price.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated
on the basis of the 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 exist currently.
To the extent that a loan is irrecoverable, it is written off against the related allowance 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. Subsequent recoveries of amounts previously written off decrease the amount of
the allowance for loan impairment in profit or loss. If, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognised (such as an improvement in the debtor‟s credit rating), the previously recognised
impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in
profit or loss.
31
(ii) Available-for-sale financial assets
Available-for-sale financial assets are impaired if there is objective evidence of impairment, resulting from
one or more loss events that occurred after initial recognition but before the reporting date, that have an
impact on the future cash flows of the asset. In addition, an available-for-sale equity instrument is generally
considered impaired if a significant or prolonged decline in the fair value of the instrument below its cost
has occurred. Where an available-for-sale asset, which has been remeasured to fair value directly through
equity, is impaired, the impairment loss is recognised in profit or loss. If any loss on the financial asset was
previously recognised directly in equity as a reduction in fair value, the cumulative net loss that had been
recognised in equity is transferred to profit or loss and is recognised as part of the impairment loss. The
amount of the loss recognised in profit or loss is the difference between the acquisition cost and the current
fair value, less any previously recognised impairment loss.
If, in a subsequent period, the amount relating to an impairment loss decreases and the decrease can be
linked objectively to an event occurring after the impairment loss was recognised, where the instrument is a
debt instrument, the impairment loss is reversed through profit or loss. An impairment loss in respect of an
equity instrument classified as available-for-sale is not reversed through profit or loss but accounted for
directly in equity.
Write-off policy
The Group writes off a financial asset (and any related allowances for impairment losses) when Group
Credit determines that the assets are uncollectible. This determination is reached after considering
information such as the occurrence of significant changes in the borrower / issuer‟s financial position such
that the borrower / issuer can no longer pay the obligation, or that proceeds from collateral will not be
sufficient to pay back the entire exposure. For smaller balance standardised loans, charge off decisions are
generally based on a product specific past due status.
Financial instruments - continued
Offsetting financial instruments
Financial assets and liabilities are set off and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to set off the amounts and intends either to settle
on a net basis or to realise the asset and settle the liability simultaneously.
Incomes and expenses are presented on a net basis only when permitted under IFRSs, or for gains and
losses arising from a group of similar transactions such as in the Group‟s trading activity.
Sale and repurchase agreements and lending of securities
Securities sold subject to linked repurchase agreements are disclosed in the financial statements as
pledged assets when the transferee has the right by contract or custom to sell or repledge the collateral.
The liability to the counterparty is included in deposit from banks, or other deposits, as appropriate.
Securities purchased under agreements to resell are recorded as loans granted under resale agreements
and included under loans and advances to other banks or customers as appropriate. The difference
between the sale and repurchase price is treated as interest and amortised over the life of the repurchase
agreement using the effective interest method.
De-recognition of financial instruments
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial asset are transferred, or has
assumed an obligation to pay those cash flows to one or more recipients, subject to certain criteria.
Any interest in transferred financial assets that is created or retained by the Group is recognised as a
separate
asset
liability.
The
Group
mayorenter
into transactions whereby it transfers assets recognised on its statement of financial
position, but retains either all risks and rewards of the transferred assets or a portion of them. If all or
substantially all risks and rewards are retained, then the transferred assets are not derecognised from the
statement of financial position. In transactions where the Group neither retains nor transfers substantially all
the risks and rewards of ownership of a financial asset, it derecognises the asset if control over the asset is
lost.
The rights and obligations retained in the transfer are recognised separately as assets and liabilities as
appropriate. In transfers where control over the asset is retained, the Group continues to recognise the
asset to the extent of its continuing involvement, determined by the extent to which it is exposed to
changes in the value of the transferred asset.
32
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or
expire.
Reclassification of financial assets
The Group may choose to reclassify a non-derivative financial asset held for trading out of the held-fortrading 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 nearterm. In addition, the Bank 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 Bank 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 „at fair value through profit or loss‟ category, all
embedded derivatives are re-assessed and, if necessary, separately accounted for.
The Group makes transfers between levels of fair value hierarchy when reliable market information
becomes available (such as an active market or observable market input) to the Group. This transfer is
done on the date in which the market information becomes available.
Cash and bank balances
Cash and bank balances include notes and coins on hand, unrestricted balances held with central banks
and highly liquid financial assets with original maturities of less than three months, which are subject to
insignificant risk of changes in their fair value, and are used by the Group in the management of its shortterm commitments.
Cash and bank balances are carried at amortised cost in the statement of financial position.
Trading assets
Trading assets are those assets that the Group acquires principally for the purpose of selling in the near term,
or holds as part of a portfolio that is managed together for short-term profit or position taking.
Trading assets are measured at fair value with changes in fair value recognised as part of net trading
income in profit or loss.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into
and are subsequently remeasured at their fair value. Fair values are obtained from quoted market prices in
active markets, including recent market transactions, and valuation techniques. All derivatives are carried
as assets when fair value is positive and as liabilities when fair value is negative.
Certain derivatives embedded in other financial instruments are treated as separate derivatives when their
economic characteristics and risks are not closely related to those of the host contract and the host
contract is not carried at fair value through profit or loss. These embedded derivatives are separately
accounted for at fair value with changes in fair value recognised in the income statement unless the Group
chooses to designate the hybrid contracts at fair value through profit or loss.
(i) Recognition and measurement
Items of property and equipment are carried at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an
item of property and equipment have different useful lives, they are accounted for as separate items
(major components) of property and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within the part will flow to the Group and
its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are
recognised in profit or loss as incurred.
33
(iii) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part
of an item of property and equipment since this most closely reflects the expected pattern of consumption
of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of
the lease term and their useful lives. Depreciation begins when an asset is available for use and ceases at
the earlier of the date that the asset is derecognised or classified as held for sale in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations .
The estimated useful lives for the current and comparative period are as follows:
Leasehold improvements
Over the shorter of the useful life of item or lease period
Buildings
50 years
Computer hardware
5 years
Furniture and fittings
5 years
Equipment
5 years
Motor vehicles
5 years
Other transportation equipment*
Over the useful life of the specific asset
Capital work in progress
Not depreciated
Land
Not depreciated
Computer hardware, equipments, furniture and fittings are disclosed as furniture and office equipment
while leasehold improvement and buildings have been aggregated in the notes.
* Other transportation equipment include major components with different useful lives. They are accounted
for as separate major components and are depreciated over the respective useful lives of twenty (20) and
sixteen
years.represents construction cost incurred on assets that are not available for use. On
Work
in (16)
progress
completion of construction, the related amounts are transferred to the appropriate category of property
and
equipment.
Depreciation
methods, useful lives and residual values are reassessed at each reporting date and adjusted
if
appropriate.
(iv)
De-recognition
An item of property and equipment is derecognised on disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or
in the year
the asset is derecognised.
(n) loss
Intangible
assets
(i) Goodwill
Goodwill represents the excess of consideration over the Group's interest in net fair value of net identifiable
assets, liabilities and contingent liabilities of the acquired subsidiaries at the date of acquisition. When the
excess is negative, it is recognised immediately in profit or loss. Goodwill is measured at cost less
impairment
losses.
(n) accumulated
Intangible assets
- continued
Goodwill is allocated to cash-generating units or groups of cash-generating units for the purpose of
impairment testing. The allocation is made to those cash-generating units or groups of cash-generating
units that are expected to benefit from the business combination in which the goodwill arose. Goodwill is
tested annually as well as whenever a trigger event has been observed for impairment by comparing the
present value of the expected future cashflows from a cash generating unit with the carrying value of its
net assets, including attributable goodwill. Impairment losses on goodwill are not reversed.
(ii) Software
Software acquired by the Group is stated at cost less accumulated amortisation and accumulated
impairment losses.
Expenditure on internally developed software is recognised as an asset when the Group is able to
demonstrate its intention and ability to complete the development and use the software in a manner that
will generate future economic benefits, and can reliably measure the costs to complete the development.
The capitalised costs of internally developed software include all costs directly attributable to developing
the software, and are amortised over its useful life. Internally developed software is stated at capitalised
cost less accumulated amortisation and impairment.
34
(iii) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part
of an item of property and equipment since this most closely reflects the expected pattern of consumption
of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of
the lease term and their useful lives. Depreciation begins when an asset is available for use and ceases at
the earlier of the date that the asset is derecognised or classified as held for sale in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations .
The estimated useful lives for the current and comparative period are as follows:
Leasehold improvements
Over the shorter of the useful life of item or lease period
Buildings
50 years
Computer hardware
5 years
Furniture and fittings
5 years
Equipment
5 years
Motor vehicles
5 years
Other transportation equipment*
Over the useful life of the specific asset
Capital work in progress
Not depreciated
Land
Not depreciated
Computer hardware, equipments, furniture and fittings are disclosed as furniture and office equipment
while leasehold improvement and buildings have been aggregated in the notes.
* Other transportation equipment include major components with different useful lives. They are accounted
for as separate major components and are depreciated over the respective useful lives of twenty (20) and
sixteen
years.represents construction cost incurred on assets that are not available for use. On
Work
in (16)
progress
completion of construction, the related amounts are transferred to the appropriate category of property
and
equipment.
Depreciation
methods, useful lives and residual values are reassessed at each reporting date and adjusted
if
appropriate.
(iv)
De-recognition
An item of property and equipment is derecognised on disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or
in the year
the asset is derecognised.
(n) loss
Intangible
assets
(i) Goodwill
Goodwill represents the excess of consideration over the Group's interest in net fair value of net identifiable
assets, liabilities and contingent liabilities of the acquired subsidiaries at the date of acquisition. When the
excess is negative, it is recognised immediately in profit or loss. Goodwill is measured at cost less
impairment
losses.
(n) accumulated
Intangible assets
- continued
Goodwill is allocated to cash-generating units or groups of cash-generating units for the purpose of
impairment testing. The allocation is made to those cash-generating units or groups of cash-generating
units that are expected to benefit from the business combination in which the goodwill arose. Goodwill is
tested annually as well as whenever a trigger event has been observed for impairment by comparing the
present value of the expected future cashflows from a cash generating unit with the carrying value of its
net assets, including attributable goodwill. Impairment losses on goodwill are not reversed.
(ii) Software
Software acquired by the Group is stated at cost less accumulated amortisation and accumulated
impairment losses.
Expenditure on internally developed software is recognised as an asset when the Group is able to
demonstrate its intention and ability to complete the development and use the software in a manner that
will generate future economic benefits, and can reliably measure the costs to complete the development.
The capitalised costs of internally developed software include all costs directly attributable to developing
the software, and are amortised over its useful life. Internally developed software is stated at capitalised
cost less accumulated amortisation and impairment.
Subsequent expenditure on software assets is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life not exceeding
five years, from the date that it is available for use. The amortisation method and useful life of software are
reassessed at each financial year end and adjusted if appropriate.
35
(o) Repossessed collateral
Repossessed collateral represents financial and non-financial assets acquired by the Group in settlement of
overdue loans. The assets are initially recognised at fair value when acquired and included in the relevant
assets depending on the nature and the Group's intention in respect of recovery of these assets, and are
subsequently remeasured and accounted for in accordance with the accounting policies for these
categories of assets. Where repossessed collateral results in acquiring control over a business, the business
combination is accounted for using the acquisition method of accounting with fair value of the settled loan
representing the cost of acquisition (refer to the accounting policy for consolidation). Accounting policy for
associates is applied to repossessed shares where the Group obtains significant influence, but not control.
The cost of the associate is the fair value of the loan settled by repossessing the pledged shares.
(p) Deposits and debt securities issued
When the Group sells a financial asset and simultaneously enters into a “repo” or “stock lending”
agreement to repurchase the asset (or a similar asset) at a fixed price on a future date, the arrangement is
accounted for as a deposit, and the underlying asset continues to be recognised in the Group‟s financial
statements.
The Group classifies capital instruments as financial liabilities or equity instruments in accordance with the
substance of the contractual terms of the instrument.
Deposits are initially measured at fair value plus transaction costs, and subsequently measured at their
amortised cost using the effective interest method, except where the Group chooses to carry the liabilities
at fair value through profit or loss.
(q) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has been announced publicly. Future operating costs
are not provided for.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group
from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The
provision is measured at the present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with the contract. Before a provision is established, the Group
recognises any impairment loss on the assets associated with that contract.
(r) Financial guarantee contracts
Financial guarantee contracts are contracts that require 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.
Financial guarantee liabilities are initially recognised at their fair value, which is 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
guarantees are included within Other Liabilities.
(s) Employee benefits
Post-employment benefits
Defined contribution plans
The Group operates defined contribution pension scheme. A defined contribution plan is a pension plan
under which the Group makes fixed contributions on contractual basis. 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.
Obligations for contributions to defined contribution plans are recognised as an expense in profit or loss
areand
due.reserves
(t) when
Sharethey
capital
(i) Share issue costs
Incremental costs directly attributable to the issue of an equity instrument are deducted from the initial
measurement of the equity instruments.
(ii) Dividend on ordinary shares
Dividends on the Bank‟s ordinary shares are recognised in equity in the period in which they are paid or, if
earlier, approved by the Bank‟s shareholders.
36
(u) Earnings per share
The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number
of
ordinary
outstanding
the period.
Diluted
EPSshares
is determined
by during
adjusting
the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary
shares.
(v) Fiduciary activities
The Group commonly acts as trustees in other fiduciary capacities that result in the holding or placing of
assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and
incomes arising thereon are excluded from these financial statements, as they are not assets of the Group.
(w) Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of
the Group's other components, whose operating results are reviewed regularly by the Chief Executive
Officer of the Group, being the chief operating decision maker, to make decisions about resources
allocated to each segment and assess its performance, and for which discrete financial information is
available. All costs that are directly traceable to the operating segments are allocated to the segment
concerned, while indirect costs are allocated based on the benefits derived from such cost.
(x) Standards, amendments and interpretations effective on or after 1 January 2013
- The following standards, amendments and interpretations, which became effective in 2013 are relevant
to the Group:
i) Amendment to IAS 1, „Financial statement presentation‟
The main change resulting from these amendments is 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). Theamendments do not address which items are presented
in OCI.
ii) Amendment to IFRS 1, „First time adoption‟ on government loans
This amendment addresses how a first-time adopter would account for a government loan with a belowmarket rate of interest when transitioning to IFRS. It also adds an exception to the retrospective application
of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS financial
statements when the requirement was incorporated into IAS 20 in 2008.
iii) Amendment to IFRS 7, 'Financial Instruments: Disclosures' – Asset and Liability offsetting
This amendment includes new disclosures to facilitate comparison between those entities that prepare IFRS
financial statements to those that prepare financial statements in accordance with US GAAP.
(x) Standards, amendments and interpretations effective on or after 1 January 2013 - continued
iv) IAS 27 (revised 2011), 'Separate financial statements'
This standard includes the provisions on separate financial statements that are left after the control
provisions of IAS 27 have been included in the new IFRS 10.
v) IAS 28 (revised 2011), 'Associates and joint ventures'
This standard includes the requirements for joint ventures, as well as associates, to be equity accounted
following the issue of IFRS 11.
vi)IFRS 10, „Consolidated financial statements‟
IFRS 10 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
assess.
37
vii)IFRS 12, „Disclosures of interests in other entities‟
This standard includes the disclosure requirements for all forms of interests in other entities, including joint
arrangements, associates, structured entities and other off balance sheet vehicles.
viii) IFRS 13, „Fair value measurement‟
IFRS 13 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 IFRSs. The
requirements, which are largely aligned between IFRS and US GAAP, 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 or US GAAP.
ix) IAS 32, „Financial instruments: Presentation‟ - Amended
The amendment clarifies the treatment of income tax relating to distributions and transaction costs. The
amendment clarifies that the treatment is in accordance with IAS 12. So, income tax related to distributions
is recognised in the income statement, and income tax related to the costs of equity transactions is
recognised in equity.
Another amendment to IAS 32: Financial instrument seeks to clarify some of the requirements for offsetting
financial assets and financial liabilities on the Statement of Financial Position.
x) IAS 16, „Property, plant and equipment‟ - Amended
The amendment clarifies that spare parts and servicing equipment are classified as property, plant and
equipment rather than inventory when they meet the definition of property, plant and equipment.
xi) IAS 34, 'Interim financial reporting' - Amended
The amendment brings IAS 34 into line with the requirements of IFRS 8, „Operating segments‟. A measure of
total assets and liabilities is required for an operating segment in interim financial statements if such
information is regularly provided to the Chief Operating Decision Maker (CODM) and there has been a
material change in those measures since the last annual financial statements.
- The following standard and ammendment, which became effective in 2013 is not relevant to the Group:
xii) IFRS 11 Joint Arrangements (effective on or after 1 January 2013)
IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the
parties to the arrangement rather than its legal form. There are two types of joint arrangement: joint
operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and
obligations relating to the arrangement and therefore accounts for its share of assets, liabilities, revenue
and expenses. Joint ventures arise where the joint venture has rights to the net assets of the arrangement
and therefore equity accounts for its interest. Proportional consolidation of joint ventures is no longer
allowed.
xiii) IAS 19, „Employee benefits‟
The changes on the group‟s accounting policies has been as follows: to immediately recognise all past
service costs; and to replace interest cost and expected return on plan assets with a net interest amount
that is calculated by applying the discount rate to the net defined benefit liability (asset). The Group does
not have defined benefit plans.
38
(y) New standard and interpretations not yet adopted
The following standard and interpretation are effective for annual periods beginning after 1 January 2013.
These standard and interpretation have not been applied in preparing these financial statements.
The Group plans to adopt the standard and interpretation on the effective date. Management is in the
process of assessing the impact of the standard on the Group:
i) IFRS 9 Financial Instruments (effective on or after 1 January 2015)
IFRS 9 is 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 as 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
ii) Amendments to IAS 36, „Impairment of assets‟on the recoverable amount disclosures for non-financial
assets.
This amendment removed certain disclosures of the recoverable amount of CGUs which had been
included in IAS 36 by the issue of IFRS 13. The amendment is not mandatory for the group until 1 January
2014.
IFRIC 21 Levies (effective on or after 1 January 2014)
IFRIC 21, „Levies‟, sets out the accounting for an obligation to pay a levy that is not income tax. The
interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability
be recognised. No significant impact is expected as the Group's current practice complies with this
interpretation.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a
material impact on the Group.
(z) Non-Current assets held for distribution and discontinued operations
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered
primarily through sale or distribution rather than through continuing use, are classified as held for sale or
distribution. Before being classified as held for sale or distribution, the assets, or components of a disposal
group, are re-measured in accordance with the Group's accounting policies. Conditions to be met before
assets qualify as being held for sale/distribution include the following:
• management is committed to a plan to sell
• the asset is available for immediate sale
• an active programme to locate a buyer is initiated
• the sale is highly probable, within 12 months of classification as held for sale (subject to limited exceptions)
• the asset is being actively marketed for sale at a sales price reasonable in relation to its fair value
• actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or
withdrawn
Thereafter, the assets or disposal group, are measured at the lower of their carrying amount and fair value
less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to remaining
assets and liabilities on a pro rata basis, except that no loss is allocated to financial assets and deferred tax
assets, which continue to be measured in accordance with the Group's accounting policies.
Impairment losses on initial classification as held for sale or distribution and subsequent gains and losses on
re-measurement are recognized in profit or loss
Intangible assets and property and equipment once classified as held for sale or distribution are not
amortized or depreciated. In addition, equity accounting of equity-accounted investees ceases once
classified as held for sale or distribution. In line with IFRIC 17, the subsidiaries being spun off will be distributed
as dividend to the shareholders of the parent. The dividend payable will be at the fair value of the net
assets to be distributed.
For discontinued operations, the Group presents discontinued operations in a separate line in the Income
statement 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
39
Net profit from discontinued operations includes the net total of operating profit and 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 Income statement. Non-current assets classified as held for sale are
measured at the lower of carrying amount and fair value less costs to sell.
40
4.2 Risk management report
(a) Enterprise risk overview
Role and responsibilities
The key players in the risk management framework are as indicated in the above governance
structure and their responsibilities are as follows:
Board of Directors
The ultimate responsibility for risk management in UBA lies with the Board of Directors. The roles
and responsibilities of the Board with respect to risk management include, but are not limited
to:
·
Ensuring an appropriate corporate governance framework is developed and operated;
·
Providing guidelines regarding the management of risk elements in the Group;
·
Approving Group risk management policies;
the Group‟s risk
appetite;
·· Determination
Ensuring that of
management
controls
and reporting procedures are satisfactory and
reliable;
·
Approving large credit exposures beyond the limit of the Board Credit Committee;
·
Approving capital demand plans based on risk budgets.
The Board of Directors has established various Board-level risk committees, to support its risk
oversight roles and responsibilities. These committees review and advise on numerous risk
matters requiring Board approvals.
The Board Risk Management Committee has direct oversight for the Bank‟s overall risk
management framework. The Board Credit Committee considers and approves large
exposure underwriting decisions within its authority and recommends those above its limit to
the Board for consideration. The Board Audit Committee assists the Board with regard to
internal controls, audit assessments and compliance matters.
Management Committees
Key Management Committees include:
Executive Management Committee (EMC)
The EMC is responsible for the following, among others, and shall be accountable to the
·
Board:
Formulating and executing strategy once approved by the Board
·
Overall performance of the Group
· Managing the Group‟s risks
·
Day-to-day oversight for the Group
All non-credit product approvals must go to the EMC who shall review and approve or
recommend for approval to the appropriate Board Committees in line with the Bank‟s advised
Approval Limits. Above the EMC approval limits, Non-Credit products are approved by the
Board‟s Finance and General Purpose Committee (F&GPC).
All new business activity irrespective of capital commitment must be approved by the F &
Executive Credit Committee (ECC)
The Committee‟s main objective is to develop and maintain a sound credit risk portfolio for the
Group and to oversee the development and deployment of credit risk practices across the
Group.
Set
frameworks
and guidelines
creditrelated
risk management
theGroup
Group to the BCC for
·
Review
and recommend
all for
Credit
policies forforthe
approval
·
Monitor implementation and compliance with credit policy paying particular attention
to the following:
·
Credit concentration
·
Credit portfolio quality
·
Review credit requests and recommend those above its limit to BCC for approval
· Ensure the Group‟s Non Performing Loans portfolio is within the approved ratio
·
Review all major credit audit issues with a view to adopting learning points for
enhancement to the credit process
41
Group Asset and Liability Committee
The Group Asset and Liability Committee (GALCO), is a sub-committee of the EMC that has
responsibility for managing UBA Group‟s balance sheet. This committee manages traded and
non-traded market risks as well as steering the implementation of Basel II requirements for
market risk.
(a) Enterprise risk overview - continued
In playing this role, GALCO does the following:·
Recommend balance sheet management policies, frameworks and procedures to the
Board Risk Management
Committee
through
EMC
for approval
·
Recommend
Treasury
policies,
frameworks and procedures to the F & GPC through EMC
for approval
·
Manage the Group‟s balance sheet and ensure compliance with regulatory and
statutory ratios and requirements
·
Develop an optimal structure of the Group‟s balance sheet to optimize risk-reward
through a review of:
·
Liquidity Gap Analysis
•R
·
Maximum Cumulative Outflow (MCO)
e
·
Stress Test
v
i
·
Wholesale Borrowing Guidelines
e
·
Contingency Liquidity Plan
w
·
Set pricing strategies for the Group on assets and liabilities (pool rate, asset and/or
a
liability composition)
n
d
c
Criticized Assets Committee
h
The Criticized Assets Committee is a management committeee which reviews
a Past Due
ll
Obligations (PDOs) and
e
·
Develops the framework to reduce the Group‟s portfolio of credits on watch-list
as well
n
·as delinquent
Monitor implementation of strategies developed for recoveries and reduction
of
loan
g
e
delinquencies
a
·
Ratifies proposed classification of accounts and provisioning levels
ll
a
·
Recommends write-offs for approval through the EMC to the Board
s
p
e
Group Chief Risk Officer
c
t
s
The Group Chief Risk Officer has oversight for the effective and efficient governance
of all risk
o
functions in the Group. He is responsible for development and implementation of fGroup‟s risk
management frameworks, policies and processes across the entire risk spectrum. t
h
e
B
a
n
k
’
s
ri
s
k
p
r
o
fi
lM
ea
•A
n
d
42
4.2 Risk management report (continued)
(b) Credit Risk - continued
Exposure to credit risk
Maximum exposure to credit risk before collateral held or other credit enhancements
Credit risk exposure relating to On-Balance Sheet
Credit risk exposures relating to on-balance sheet assets are as follows:
Maximum exposure
Group
Dec. 2013
Dec. 2012
Loans and advances to banks:
Term Loan
Loans to individuals
Overdraft
Term loan
Loans to corporate entities and others
Overdraft
Term Loan
Others
Trading assets
Investment securities:
Treasury bills
Bonds
Promissory note
Account receivable
693,716
714,115
605,304
629,481
26,251
28,513
26,251
27,878
10,645
129,273
16,764
91,922
5,169
97,923
10,758
70,100
143,002
654,349
351
127,033
412,264
10,939
112,454
579,723
1,673
89,359
389,559
10,939
784
766,215.00
388,658
377,512
45
457
645,243.00
162,481
482,683
79
777
541,422.00
244,719
296,658
45
456
492,865.00
91,517
401,269
79
17,759
Total
Loans exposure to total exposure
Debt securities exposure to total exposure
Other exposures to total exposure
Maximum exposure
Bank
Dec. 2013
Dec. 2012
13,692
12,711
8,497
2,442,345
2,060,942
1,983,407
1,729,892
39%
31%
29%
33%
31%
35%
42%
27%
31%
35%
28%
37%
Credit risk exposures relating to off-balance sheet assets are as follows:
Group
Dec. 2013
Dec. 2012
In millions of Nigerian naira
Performance bonds and guarantees
Letters of credits
Bonds and guarantee exposure to total exposure
Letters of credit exposure to total exposure
Bank
Dec. 2013
Dec. 2012
281,176
202,806
483,982
305,492
95,820
401,312
240,830
99,765
340,595
284,359
78,543
362,902
58%
42%
76%
24%
71%
29%
78%
22%
Credit risk exposures relating to loan commitment are as follows:
Group
Dec. 2013
Dec. 2012
Loan commitment to corporate entities and others
Overdraft
Term Loan
2,695
37,051
39,746
6,766
6,766
Bank
Dec. 2013
2,695
37,051
39,746
Dec. 2012
6,766
6,766
There are no loan commitments to individuals
43
(b) Credit Risk - continued
Exposure to credit risk
Credit Collateral
The Group holds collateral against loans and advances to customers in the form of mortgage interests over property, other registered securities
over assets, and guarantees. Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are not
updated except when a loan is individually assessed as impaired. Collateral generally is not held over loans and advances to banks, except when
securities are held as part of reverse repurchase and securities borrowing activity. Collateral usually is not held against investment securities.
Irrespective of how well a credit proposal is structured, a second way out in form of adequate collateral coverage for all credits is a major
requirement in order to protect the bank from incurring credit losses due to unforeseen events resulting from deterioration of the quality of a
credit.
Consequently, the bank issues appropriate guidelines for acceptability of credit collateral from time to time. These articulate acceptable
collateral in respect of each credit product including description, required documentation for perfection of collateral and minimum realizable
value.
All items pledged, as security for credit facilities are insured with the Bank noted as the first loss payee. The Bank also keeps all documents required
for perfection of collateral title.
Some of the collaterals acceptable to the bank under appropriate documentations are briefly described as follows:
1. Cash
Cash is the most liquid and readily realizable form of security and, therefore, the most acceptable to the bank. Furthermore, cash pledged must
2. Treasury bills/Certificate
Treasury bills/certificates are acceptable as bank security provided the instruments are purchased through the bank and have been properly
assigned to the bank. Since payment are channeled through the bank on due dates, realization of the security is relatively easy.
3. Stock and shares
Stocks and shares of reputable quoted companies are acceptable collateral securities. Unquoted shares are usually not acceptable as
collaterals.
4. Legal Mortgage
The Bank takes and perfects her interest in acceptable landed property that are transferred by the obligor as collateral for loan, such that In case
of any default by the obligor, the Bank does not require a court order before realizing the security. Location restrictions are however specified in
respect of landed property.
5. Debenture
The bank accepts to take a charge on both current and non-current assets of a borrower by a debenture, which is a written acknowledgement
of indebtedness by a company usually given under its seal and also sets out the terms for repayment of interest and principal of the credit. A
debenture is executed by an obligor in favour of the Bank, and it gives a specific or general charge on the company‟s assets, both present and
future.
6. Life Insurance Policies
Generally, life policy with a reputable insurance company approved by the bank and free of restrictions adverse to the bank‟s interest is
acceptable security for loan. This could be an endowment policy or whole life policy, though the bank prefers the endowment policy.
7. Guarantees
The Banks accepts guarantees from well rated banks as well as acceptable parties (guarantors) as additional comfort and security for her credits.
A guarantee is a written promise by one person called the guarantor or surety to be answerable for the debt, default or miscarriage of another
person called principal debtor.
UBA also accepts unconditional insurance credit and performance bonds of first class Insurance companies and also the guarantee of the
Federal and State Governments. Other guarantees must however be supported by tangible assets for them to become valid for lending.
8. Negative Pledge
Lending on the basis of negative pledges are restricted to only clients with an investment grade or “A” risk rating. A negative pledge is a mere
commitment given by the borrower to the bank not to charge its assets in favour of a third party for as long as the loan remains outstanding.
44
4
Risk management report (continued)
(b) Credit risk (continued)
Credit Collateral - continued
An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below:
Repossessed collateral
As at reporting date - 31 December 2013, the Group took possession of property amounting to N354 million (2012 - N235 million) held as collateral
against certain loans. Management evaluates such property from time to time to determine the most appropriate use to which they can be put.
The Group obtained assets by taking possession of collateral held as security as follows:
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
312
224
42
1
9
1
41
2
41
354
235
84
Property
Equities
Others
Dec. 2012
177
9
2
188
The Group holds collateral against loans and advances to customers in the form of mortgage interests over property, other registered securities
over assets, and guarantees. Collateral usually is not held against investment securities.
An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below:
Group
Dec. 2013
Dec. 2012
Against individually impaired
Property
(ii)
Others
2,086
2,169
4,255
1,525
300
664
2,489
Group
Dec. 2013
Dec. 2012
Against neither past due nor impaired
Property
Equities
Others
Dec. 2012
25,977
94,358
120,335
25,246
1,033
102,017
128,296
162,121
150,633
122,797
130,760
5,300
5,833
11,133
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
1,500
300
664
2,464
25,247
1,032
121,865
148,144
42,485
42,485
Against neither past due nor impaired
Property
Equities
Others
2,086
376
2,462
Dec. 2012
25,977
131,889
157,866
Group
Dec. 2013
Dec. 2012
Against individually impaired
Property
Equities
Others
Bank
Dec. 2013
Bank
Dec. 2013
518
518
Bank
Dec. 2013
Dec. 2012
5,300
1,636
6,936
Dec. 2012
272,111
31,769
433,283
737,163
247,490
34,752
299,285
581,527
271,297
31,768
320,501
623,566
245,774
29,151
203,414
478,339
779,648
592,660
624,084
485,275
45
Credit concentration
The Group monitors concentrations of credit risk by sector, geographic location and industry. Concentration by location for loans and advances is measured based on
the location of the Group entity holding the asset, which has a high correlation with the location of the borrower. Concentration by location for investment securities is
measured based on the location of the issuer of the security.
An analysis of concentrations of credit risk at the reporting date is shown below:
Group
Dec. 2013
Dec. 2012
Carrying amount (net)
937,620
658,922
796,942
570,714
26,251
28,513
26,251
27,878
Concentration by market segment (net)
Corporate
Individual
797,702
139,918
550,236
108,686
693,850
103,092
489,857
80,857
26,251
-
28,513
-
26,251
-
27,878
-
937,620
658,922
796,942
570,714
26,251
28,513
26,251
27,878
825,433
112,187
937,620
554,586
104,336
658,922
796,942
796,942
570,714
570,714
26251
26,251
28,513
28,513
26251
26,251
27,878
27,878
Concentration by nature (net) - Loans to individuals
Term loans
129,274
Overdrafts
10,644
139,918
91,922
16,764
108,686
97,923
5,169
103,092
70,100
10,757
80,857
108,291
19,528
85,965
64,668
108,291
14,505
62,578
68,182
34,301
162,121
150,633
122,797
130,760
22,203
41,947
19,705
49,903
Concentration by nature (net)-Loans to corporate entities and others
Term loans
654,350
412,264
Overdrafts
143,003
127,033
Others
350
10,939
797,702
550,236
579,724
112,454
1,672
693,850
389,559
89,359
10,939
489,857
26,251
26,251
28,513
28,513
26,251
26,251
27,878
27,878
Collateral value-Loans to corporate entities and others
Term loans
601,646
Overdrafts
172,784
Others
5,217
779,648
373,915
157,950
60,795
592,660
508,308
110,559
5,217
624,084
319,910
104,571
60,795
485,276
42,424
(69,766)
Concentration by location (net)
Nigeria
Rest of Africa
Rest of the World
Collateral value - Loans to individuals
Term loans
Overdrafts
Others
Over/(under) collaterisation
Over/(under) collaterisation
(18,054)
Bank
Dec. 2013
Dec. 2012
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
(4,581)
46
Nigeria
Rest of Africa
Rest of the World
Concentration by nature (net)
Available-for-sale investment securities
Treasury bills
Held-to-maturity investment securities
Treasury bills
Bonds
Other eligible bills
Credit concentration - continued
Available-for-sale investment securities
Nigeria
Rest of Africa
Rest of the World
Held-to-maturity investment securities
Nigeria
(b) Others
Rest of the World
Group
Dec. 2013
766,215
Dec. 2012
645,243
Bank
Dec. 2013
Dec. 2012
541,422
492,865
529,523
231,988
4,704
766,215
476,192
164,397
4,654
645,243
529,523
7,195
4,704
541,422
476,192
12,019
4,654
492,865
208,843
93,091
200,444
91,517
179,815
377,512
45
766,215
69,390
482,683
79
645,243
44,275
296,658
45
541,422
401,269
79
492,865
Group
Dec. 2013
Dec. 2012
Group
Dec. 2013
784
777
7
784
Dec. 2012
457
Bank
Dec. 2013
Dec. 2012
777
456
457
457
777
777
456
456
Bank
Dec. 2013
Dec. 2012
200,444
8,399
208,843
91,517
1,574
93,091
200,444
200,444
91,517
91,517
329,130
223,589
4,654
557,372
532,966
11,650
7,536
552,152
329,130
7,195
4,654
340,978
387,402
8,468
5,478
401,348
Concentration by nature (net)
Treasury bills
Government Bonds
Nigeria
Rest of Africa
Rest of the World
Nigeria
Rest of Africa
Rest of the World
49
735
784
173
284
457
42
735
777
172
284
456
777
7
784
456
1
457
777
777
456
456
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
Dec. 2012
693,716
714,115
605,304
629,481
579,596
81,817
32,303
693,716
629,481
84,634
714,115
579,393
25,911
605,304
629,481
629,481
Account receivable
Group
Dec. 2013
17,759
13,290
4,469
17,759
(ii)
Dec. 2012
13,710
8,497
5,213
13,710
Bank
Dec. 2013
Dec. 2012
12,711
8,497
12,711
12,711
8,497
8,497
Off Balance sheet
Group
Dec. 2013
335,457
140,853
7,672
483,982
Nigeria
Rest of Africa
Rest of the World
Dec. 2012
362,902
38,410
401,312
Bank
Dec. 2013
Dec. 2012
335,457
362,902
5,138
340,595
362,902
47
Credit concentration - Industry
The following table analyses the Group‟s credit exposure at carrying amounts (without taking into account any collateral held or other credit support), as categorised by
the industry sectors of the Group‟s counterparties. Investment securities and financial assets held for trading analysed below excludes investments in equty instruments.
Group
Administrative and
Support Service
Activities
Agriculture, Forestry
and Fishing
Construction
Education
Finance And Insurance
General
General Commerce
Governments
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
Dec. 2012
Group
Bank
Dec. 2013
Dec. 2012 Dec. 2013
Dec. 2012
23,062
826
22,412
-
-
-
-
-
51,812
67,753
3,943
44,718
45,312
4,248
39,935
65,808
3,621
37,995
43,736
3,875
-
-
-
-
30,362
108,998
86,575
78,955
135,373
55,662
64,114
22,746
71,480
79,755
72,817
129,404
43,015
64,003
26,251
-
28,513
-
26,251
-
27,878
-
822
2,118
483
2,106
-
-
-
-
93,315
113,090
192,784
67,695
69,967
83,759
131,491
15,357
79,128
106,235
154,549
60,973
62,040
79,125
100,381
32
-
-
-
-
1,608
12,510
3,261
698
1,390
12,426
2,877
698
-
-
-
-
4,335
2,007
3,187
1,427
-
-
-
-
937,620
11
658,922
796,942
570,714
Credit risk (continued)
Credit concentration - Industry (continued)
Human Health and
Social Work Activities
Information And
Communication
Manufacturing
Oil And Gas
Power And Energy
Professional, Scientific
and Technical
Activities
Real
Estate Activities
Transportation
and
Storage
Water Supply Sewage, Waste
Management and Remediation
Activities
26,251
28,513
26,251
27,878
48
General
General Commerce
Governments
Information And
Communication
Manufacturing
Oil And Gas
Group
Dec. 2013
Dec. 2012
46,813
706,884
137,586
498,976
12,518
766,215
154
8,527
645,243
Group
Bank
Dec. 2013
Dec. 2012
33,079
499,497
25,166
459,555
784
457
777
456
8,845
541,422
8,144
492,865
784
457
777
456
Other assets
Group
Dec. 2013
Dec. 2012
Group
Bank
Dec. 2013
Dec. 2012 Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
Group
Bank
Dec. 2013
Dec. 2012 Dec. 2013
Dec. 2012
17,759
13,710
12,711
8,497
693,716
714,115
605,304
629,481
17,759
13,710
12,711
8,497
693,716
714,115
605,304
629,481
Credit Quality
Neither past due nor impaired
Past due but not impaired
Individually impaired
Gross
Less: allowance for impairment
Net
Group
Dec. 2013
Dec. 2012
904,278
40,972
11,697
956,947
(19,327)
937,620
Bank
Dec. 2013
Dec. 2012
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
640,348
20,940
13,439
674,726
(15,805)
658,921
769,372
31,045
4,841
805,259
(8,317)
796,942
570,417
6,180
2,700
579,297
(8,583)
570,714
26,308
26,308
(57)
26,251
28,699
28,699
(186)
28,513
26,308
26,308
(57)
26,251
28,064
28,064
(186)
27,878
(5,447)
(10,358)
(15,805)
(2,067)
(6,250)
(8,317)
(1,394)
(7,189)
(8,583)
(57)
(57)
(186)
(186)
(57)
(57)
(186)
(186)
Allowance for impairment is broken down as follows:
Specific allowance
Portfolio allowance
Total
(4,634)
(14,693)
(19,327)
Loans and advances to customers - neither past due nor impaired
The credit quality of the portfolio of loans and advances to customers that were neither past due nor impaired can be assessed by reference to the internal rating system
adopted by the Group.
- Loans and advances to individuals
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
Dec. 2012
Grades:
Extremely Low Risk
Very Low Risk
Low Risk
Acceptable Risk
Moderately High Risk
Total
Portfolio allowance
37
32
938
121,412
14,106
136,525
(2,377)
134,148
1,897
16,184
1,133
112,196
17,899
149,308
(2,957)
146,351
37
25
938
81,235
14,106
96,341
(757)
95,585
160
2,052
1,133
58,503
17,899
79,747
(2,923)
76,824
Group
Bank
Dec. 2013
Dec. 2012 Dec. 2013
Dec. 2012
26,308
26,308
(57)
26,251
28,699
28,699
(186)
28,513
26,308
26,308
(57)
26,251
28,064
28,064
(186)
27,878
49
Credit Quality (continued)
- Loans to corporate entities and others
Grades:
Extremely Low Risk
Very Low Risk
Low Risk
Acceptable Risk
Moderately High Risk
Total
Portfolio allowance
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
Dec. 2012
6,026
76,486
107,813
528,444
48,984
767,753
(11,989)
755,764
21,542
42,290
48,611
370,221
8,375
491,040
6,026
62,805
103,505
451,711
48,984
673,031
(6,797)
(5,282)
484,243
667,749
21,542
42,290
48,611
370,221
8,006
490,670
(4,106)
486,564
Loans and advances to customer - past due but not impaired
Group
Dec. 2013
Past due up to 30 days
Past due by 30 - 60 days
Past due by 60-90 days
Portfolio allowance
1,599
1,807
42
3,447
(58)
3,389
Dec. 2012
Bank
Dec. 2013
Dec. 2012
95
871
930
1,896
89
1,756
1,845
(39)
(6)
1,857
1,840
95
170
162
427
(8)
419
Group
Dec. 2013
Past due up to 30 days
Past due by 30 - 60 days
Past due by 60-90 days
Portfolio allowance
Loans and advances (net)
12,482
24,882
161
37,525
(270)
Dec. 2012
Bank
Dec. 2013
Dec. 2012
3,575
6,631
8,838
19,044
4,846
24,354
29,200
(565)
(206)
3,575
996
1,182
5,753
(152)
37,255
18,479
28,994
5,601
Gross amount
Specific impairment
Net amount
4,092
(2,988)
1,104
11,763
(5,255)
6,508
2,811
(1,307)
1,504
2,549
(1,243)
1,306
Gross amount
Specific impairment
Net amount
7,605
(1,646)
5,959
1,676
(192)
1,484
2,030
(759)
1,271
151
(151)
-
Loans and advances individually impaired
Credit Quality (continued)
Carrying amount
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
Dec. 2012
766,215
645,243
541,422
492,865
784
457
777
456
Low risk
557,372
552,152
340,978
401,348
-
-
-
-
Carrying amount - amortised cost
557,372
552,152
340,978
401,348
-
-
-
-
Held- to- maturity
Available for sale
Low risk
Carrying amount - fair value
Held for trading
208,843
208,843
93,091
93,091
200,444
200,444
91,517
91,517
784
784
457
457
777
777
456
456
Total carrying amount
766,215
645,243
541,422
492,865
784
457
777
456
Account receivables
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
Group
Bank
Dec. 2013
Dec. 2012
Dec. 2013
Dec. 2012
Carrying amount
17,759
13,692
12,711
8,497
693,716
714,115
605,304
629,481
Low risk
17,759
13,692
12,711
8,497
693,716
714,115
605,304
629,481
Carrying amount
17,759
13,692
12,711
8,497
693,716
714,115
605,304
629,481
50
Statement of Prudential Adjustments
Provisions under prudential guidelines are determined using the time based provisioning prescribed by the Revised Central Bank of Nigeria (CBN) Prudential Guidelines.
This is at variance with the incurred loss model required by IFRS under IAS 39. As a result of the differences in the methodology/provision, there will be variances in the
impairments allowances required under the two methodologies.
Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would be required to make provisions for loans as prescribed
in the relevant IFRS Standards when IFRS is adopted.
However, Banks would be required to comply with the following:
(a) Provisions for loans recognized in the profit and loss account should be determined based on the requirements of IFRS. However, the IFRS provision should be
compared with provisions determined under prudential guidelines and the expected impact/changes in general reserves should be treated as follows:
• Prudential Provisions is greater than IFRS provisions; the excess provision resulting should be transferred from the general reserve account to a "regulatory risk reserve".
• Prudential Provisions is less than IFRS provisions; IFRS determined provision is charged to the statement of comprehensive income. The cumulative balance in the
regulatory risk reserve is thereafter reversed to the general reserve account.
• The non-distributable reserve should be classified under Tier 1 as part of the core capital.
During the year ended 31 December 2013, the difference between the Prudential provision and IFRS impairment was N4,413 million requiring additional transfer of N3,300
million (2012: N1,113 million) to the Credit risk reserve as disclosed in the statement of changes in equity. This amount represents the difference between the provisions for
credit and other known losses as determined under the prudential guideline issued by the Central Bank of Nigeria (CBN), and the impairment reserve as determined in
line with IAS 39 as at year end.
Bank
Dec. 2013
Total impairment based on IFRS
Total impairment based on the Central Bank of Nigeria's Prudential Guidelines
8,374
12,787
(4,413)
Dec. 2012
8,769
9,882
(1,113)
51
Impaired loans and securities
Impaired loans and securities are loans and securities for which the Group determines that it is probable that it will be unable to collect all principal and
interest due according to the contractual terms of the loan / securities agreement(s). These are loans and securities specifically impaired and graded 6 in
the Group‟s internal credit risk grading system.
Past due but not impaired loans
Loans and securities where contractual interest or principal payments are past due but the Group believes that impairment is not appropriate on the basis
of the level of security / collateral available and / or the stage of collection of amounts owed to the Group.
Allowances for impairment
The Group establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main components of this
allowance are a specific loss component that relates to individually significant exposures, and a collective loan loss allowance, established for groups of
homogeneous assets in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment.
Set out below is an analysis of the gross and net (of allowances for impairment) amounts of individually impaired assets.
Group
31 December 2013
Gross
Moderately high risk
High risk
Very high risk
Total
Bank
Net
1,103
971
9,623
11,697
353
493
6,217
7,063
Gross
31 December 2012
Moderately high risk
High risk
Very high risk
Total
68
270
968
1,306
Gross
574
1,245
6,173
7,992
Gross
334
108
2,258
2,700
Bank
Net
-
Bank
Net
1,122
1,842
10,475
13,439
Group
Net
68
270
4,503
4,841
Group
Gross
Gross
-
-
Group
Net
162
52
1,092
1,306
Gross
-
-
Bank
Net
Gross
-
-
Net
-
Account receivables (other asset) and Cash and bank balances are neither past due nor impaired.
Work out and recovery
The Remedial Management & Credit Recovery Division (“RMCRD”) is the collections arm of Credit Risk Management that evaluates, monitors and supervises
the re-structuring, repayments and collections of all past due obligations that have been prudential classified and show early warning signs of default. The
division has a three level governance structure:
Level 1 is an oversight and supervisory function performed by the Divisional Head through the Regional Heads;
Level 2 is a supervisory and management function performed by the Regional Heads through the Zonal Heads; and
Level 3 is an operational function performed by the Zonal Head in conjunction with the Recovery/Remedial officers from the regional bank offices.
RMCRD maintains effective governance and control over its entire process and adopts a standard methodology consisting of five steps
52
4.2
( c) Liquidity risk
Maturity analysis for financial liabilities
Using the behavioral pattern of our funding sources over time, the Group's expected cash flows on some financial assets and liabilities to vary
significantly from the contractual cash flows. For example, demand deposit from customers are expected to remain stable and loan
commitments are not expected to be drawn down immediately. As part of the management of liquidity risk arising from financial liabilities, the
Group holds liquid assets comprising cash and cash equivalents, government securities and other securities which are readily acceptable in
repurchase agreements in the market and can be readily sold to meet liquidity requirements. In addition the Group maintains agreed lines of
credit and holds unencumbered assets eligible to be used as collateral.
Derivative contracts may be entered into as a part of our sales activities, if so, equal and opposite contracts are executed to fully eliminate
market risk. UBA may invest in structured investment products, with embedded derivative components from time to time to optimally utilise surplus
cash. Only principal guaranteed investment products are considered for this purpose. There were no nominal value of positions held in these
products at year end.
Our funding mix targets are structured in such a way as to ensure that there is adequate diversification of funding sources at all times by currency,
geography, provider, product, term etc.
The tables below show the undiscounted cash flow on the Group's financial liabilities and on the basis of the earliest possible contractual maturity.
The Gross nominal inflow/outflow disclosed in the table is the contractual, undiscounted cash flows on the financial liabilities or commitments.
Whilst the table below have been prepared based on the contractual maturities, the maturity profile based on the behavioral pattern of the
assets and liabilities observed over a very long period (5 years) presents management with a reliable basis to manage the inherent liquidity risks
December 31, 2013
Note
Gross
nominal
inflow/(outflow)
Less
than
1 month
1-3
Months
3-6
Months
6 - 12
Months
More
than
1 year
Group
Non-derivative financial liabilities
Deposits from banks
Retail Customers:
Term deposits
Current deposits
Savings deposits
Domiciliary deposits
Corporate Customers:
Term deposits
Current deposits
Other liabilities
Borrowings
0
0
#REF!
#REF!
34
Cross Currency Swap
Letters of credit
Loan commitments
Assets used to manage liquidity
Individual
Corporates
Available for sale
Treasury bills
Held to maturity
Treasury bills
Promissory note
Bonds
Account receivable
Derivative asset
GAP
68,534
68,534
-
-
-
-
150,126
113,186
316,372
41,757
29,386
11,317
46,597
6,264
8,506
33,967
46,830
6,264
33,626
22,634
32,023
4,176
32,624
22,634
79,212
10,439
45,983
22,634
111,710
14,615
321,945
521,400
706,349
78,071
51,196
62,500
2,431,436
112,454
52,140
105,955
78,071
1,757
512,475
18,756
126,420
105,955
241
3,750
350,689
54,626
134,280
70,620
605
352,590
30,820
104,280
176,591
1,159
3,750
461,510
105,288
104,280
247,228
47,434
55,000
754,172
31
31
281,176
202,806
39,746
-
-
-
-
32,094
72,844
14,276
34,148
98,968
19,396
53,009
28,459
5,577
90,773
2,188
429
71,151
347
68
525,748
784
26,610
419,431
659
21,628
71,756
10
4,982
34,561
-
-
148,086
849,082
-
59,804
135,552
19,113
159,806
5,438
191,679
4,730
244,801
208,843
51,053
85,561
69,843
2,386
180,015
45
377,357
17,759
3,265
2,337,594
95,319
21,103
17,759
3,265
825,573
15,507
45
12,128
368,908
9,986
47,685
359,192
44,275
134,805
430,997
14,928
161,636
352,925
208,129
(114,898)
(74,867)
(123,473)
(472,744)
(577,855)
115
59,002
117,244
53
4.2
( c) Liquidity risk - continued
December 31, 2013
Bank
Non-derivative liabilities
Deposits from banks
Retail Customers:
Term deposits
Current deposits
Savings deposits
Term deposits
Current deposits
Other liabilities
Borrowings
Gross
nominal
inflow/(outflow)
0
0
-
34
Cross Currency Swap
Letters of credit
Loan commitments
Individual
Corporates
Available for sale
Treasury bills
Held to maturity
Treasury bills
Promissory note
Bonds
Account receivable
Derivative asset
GAP
December 31, 2012
Group
-
Note
-
(ii)
1-3
Months
-
3-6
Months
6 - 12
Months
More
than
1 year
-
-
-
-
131,782
70,336
269,223
38,919
5,188
70,336
269,223
38,919
24,042
-
60,537
-
27,275
-
14,740
-
195,708
490,798
613,292
21
51,196
62,500
1,923,775
26,390
490,798
613,292
21
1,757
1,515,924
33,482
241
3,750
61,515
75,327
605
136,469
35,701
1,159
3,750
67,885
24,808
47,434
55,000
141,982
31
31
238,778
135,032
39,746
-
-
-
-
20,135
46,988
13,831
28,628
61,805
18,192
52,530
24,801
7,300
88,235
1,241
365
49,251
197
58
380,133
777
26,610
330,987
652
21,628
33,893
10
4,982
15,253
-
-
113,277
740,064
9,131
101,207
12,391
186,533
1,866
118,488
112
109,747
200,442
48,679
83,692
66,851
1,220
44,275
45
296,675
12,711
3,265
1,818,274
12,711
3,265
528,260
45
5,271
326,818
4,479
206,937
44,275
114,715
270,069
172,210
486,190
112,709
294,761
(479,340)
(1,054,817)
174,870
(6,862)
115
89,777
224,088
-
amount
Deposits from banks
Deposit from customers
Retail Customers:
Term deposits
Current deposits
Savings deposits
Term deposits
Current deposits
Other liabilities
Borrowings
Cross Currency Swap
Less
than
1 month
57,780
57,780
-
-
-
-
98,274
101,211
285,369
30,837
14,543
101,211
285,369
30,837
19,876
-
54,324
-
9,531
-
-
249,077
414,416
540,824
62,277
114,520
53,719
2,008,304
26,765
414,416
540,824
62,277
4,560
1,538,582
55,326
4,762
79,964
76,546
33,380
164,250
56,900
10,798
77,229
124
62
-
-
62
33,540
61,020
53,719
148,279
-
54
4.2
( c) Liquidity risk - continued
Gross
nominal
inflow/(outflow)
Letters of credit
Loan commitments
Individual
Corporates
Available for sale
Treasury bills
Held to maturity
Treasury bills
Promissory note
Bonds
Account receivable
GAPS
-
Letters of credit
Loan commitments
Individual
Corporates
Available for sale
Treasury bills
Held to maturity
Promissory note
Bonds
Account receivable
GAPS
1-3
Months
3-6
Months
6 - 12
Months
3,697
3,235
228
415
35,342
2,496
8,857
54,967
3,881
594,418
457
28,513
108,686
550,236
93,091
69,390
79
482,683
13,710
1,941,263
594,418
12,569
457
15,944
-
-
9,755
154,809
20,878
78,736
13,321
25,598
21,838
49,745
42,895
241,347
8,033
17,193
10,970
17,984
38,911
18,769
130,557
928,910
13,273
79
92,328
13,710
252,598
8,469
58,908
117,265
13,883
96,575
200,025
14,996
104,316
442,465
(616,666)
136,877
(110,809)
22,875
83,483
87,544
224,780
26,196
225,329
354,373
459,426
40,141
55,474
114,520
1,694,141
124
62
284,359
78,543
6,766
124,038
2,264
160
More
than
1 year
305,495
95,820
6,766
(468,480)
Bank
Deposits from banks
Retail Customers:
Term deposits
Current deposits
Savings deposits
Term deposits
Current deposits
Other liabilities
Borrowings
Cross Currency Swap
Less
than
1 month
(3,568)
168,488
12
1
-
125,686
22,875
-
-
-
-
10,153
87,544
224,780
26,196
12,475
-
52,324
-
8,531
-
-
17,845
354,373
459,426
12,438
4,560
1,220,190
54,998
4,762
72,235
72,046
33,380
157,750
55,972
27,703
10,798
103,004
-
-
3,344
2,835
244
375
23,247
2,003
8,009
50,403
4,342
512,569
456
27,878
512,569
9,318
456
18,560
-
-
80,857
489,857
9,402
135,662
14,614
49,843
9,193
11,760
5,328
45,770
42,320
246,823
91,517
7,933
17,165
10,853
17,567
37,999
79
401,269
8,497
1,612,979
114,329
789,213
79
92,009
8,497
201,223
27,995
59,801
48,682
117,347
118,254
445,396
(437,218)
105,366
(156,361)
(102,035)
146,061
(444,188)
62
24,468
55,474
61,020
140,962
114,269
2,047
176
158,362
11
1
-
55
4.2
( c)
Liquidity risk - continued
Contingent liabilities
The tables that follow highlight those financial commitments not presented on the consolidated statement of financial position but are treated as off
balance sheets items.
These transactions represent third party obligations that can crystallize in future and are generally not directly dependent on the customers‟ credit
worthiness.
These transactions include Performance Bonds and Guarantees, Letters of Credit, and Banker's Acceptances. As stated earlier, these instruments are
contingent in nature and carry the same credit risk as loans and advances. The Group ensures that off-balance sheet exposures are subjected to
detailed credit analysis.
Group
Note
December 31, 2013
Letters of credits
December 31, 2012
Letters of credits
Bank
December 31, 2013
Letters of credits
December 31, 2012
Letters of credits
Gross
nominal
inflow/(outflow)
Less
than
1 month
1-3
Months
3-6
Months
6 - 12
Months
More
than
1 year
279,123
238,073
517,196
30,042
82,844
112,886
34,148
108,968
143,116
53,009
43,727
96,736
90,773
2,188
92,961
71,151
347
71,498
312,181
97,329
409,510
3,697
3,235
6,932
415
35,342
35,757
8,857
56,476
65,333
130,724
2,264
132,988
168,488
12
168,500
Gross
nominal
inflow/(outflow)
Less
than
1 month
1-3
Months
3-6
Months
6 - 12
Months
More
than
1 year
238,778
135,032
373,809
20,135
46,988
28,628
61,805
52,530
24,801
88,235
1,241
49,251
197
67,122
90,433
77,331
89,476
49,448
288,302
86,648
374,950
3,344
2,835
6,179
375
31,352
31,727
8,009
50,403
58,412
118,212
2,047
120,259
158,362
11
158,373
4.2
(d) Market risks
Trading activities are centralised in our Group Treasury office in head office. The subsidiaries have treasury departments that reports to Group Treasury. The Group‟s risk profile has been changing as the
Group expands across geographies, taking into consideration the world-wide market turbulence, additional foreign exchange risks alongside interest rate risks that manifest in different countries where UBA
operates. The main objective of market risk management is not only to manage, measure and control market risk exposures but also to ensure that the Group carries out its affairs within acceptable parameters
and in line with the market risk appetite. Market risk achieves the above stated objectives, through a mix of quantitative and statistical controls.
Market risk governance
The Board through Board Risk Management Committee (BRMC) is responsible for the overall governance of market risk as well as defining the terms of reference and delegating responsibilities to both the
GRMC and GALCO. GALCO has Group oversight and is charged with ensuring that market risks are managed homogeneously in all areas of operation. Further to the above, oversight of market risk is
vested in BRMC, GALCO (Group Asset and Liability Committee) and the Finance & General Purpose Committee (F& GPC) while the day to day management rests with the Group Chief Risk Officer
(GCRO). The Group Market Risk is not only responsible for the development of detailed risk management policies but is also involved in the day to day review of their implementation. These risk
management policies are usually validated / approved by BRMC, GALCO or the full Board in accordance with the approval guidelines.
Market risk limits
UBA takes propriety trading positions in foreign exchange, money market and bonds, primarily in the Nigerian financial market. Market risk limits are based on recommendations by GALCO and approved
by the Board, as may be required. Transaction size and portfolio volume limits are in place for each trading portfolio. UBA Group sets various limits for total market risk and specific foreign exchange,
interest rate, equity and other price risks. The overall structure of limits is subject to review and approval by GALCO. Various limits are allocated to trading portfolios, and is measured daily for the actively
traded portfolios. These reports are consolidated for review by GALCO. We believe that market risk is most effectively managed through a combination of sensitivity analysis, gap analysis and volume limits
(open position limit).
The bank augments other risk measures with stress testing to evaluate the potential impact of possible extreme movements in financial variables. Consistent stress-testing methodology is applied to trading
and non trading books. The stress testing scenarios include market and credit scenarios, portfolio specific scenarios and macro economic scenarios.
(i) Exposure to interest rate risk- non-trading portfolio
The principal risk to which non-trading portfolios are exposed is the risk of loss from flunctuations in the future cashflows or fair values of financial instruments because of a change in market interest rates.
Interest rate risk is managed principally through monitoring interest rate gaps and having pre-approved limits for re-pricing bands. There will always be a mis-match between maturing assets and maturing
liabilities, and changes in interest rates means that the Net Interest Margin (NIM) is affected on a daily basis by maturing and re-pricing activities. This change is measured through calculation of Earnings at
Risk or EaR on a portfolio over the life of its assets and liabilities.
EaR is usually calculated at various levels of change to simulate the likely change in the course of normal business or the expected risk where there is an unusual market event.
GALCO has oversight for compliance with these limits and execution of gapping strategy is carried out by Group Treasury in its day-to-day activities, depending on their outlook for which direction rates
will move.
The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Group's financial assets and liabilities to various standard and non-standard interest
rate scenarios.
56
4.2
(d) Market risks - continued
(i) Interest rate risk
See table below for a summary of the group's interest rate gap position as at December 31, 2013 and December 31, 2012 respectively using 200bps
(a)
Group
31 December 2013
Cash and bank balancess
Loans and advances to customers:
Individual
Corporates
Treasury bills
Bonds
Promissory notes
Equity
Derivative assets
Account receivable
Note
0
23
24
Re-pricing period
3-6
6-12
months
months
34,561
7,689
-
Carrying
amount
716,803
784
26,251
<1
month
476,574
659
13,725
1-3
months
71,756
10
4,837
More than
1 year
115
-
Non-interest
bearing
133,912
-
139,917
797,703
59,212
434,210
18,556
5,151
5,130
29,071
4,339
24,588
52,680
304,682
379,509
386,661
45
44,991
3,265
17,759
2,513,688
197,493
3,265
1,185,137
49,601
60,295
210,206
52,108
29,864
158,423
80,307
89,591
198,826
206,911
45
564,433
31
60,582
2,161,182
78,071
55,653
48,866
2,404,385
31
68,469
1,155,271
1,366
1,225,137
740,119
740,119
52,025
2,447
54,472
12,375
12,375
197,278
55,653
45,053
297,984
(40,000)
(529,913)
103,951
186,450
266,449
122,365
714,115
457
28,513
658,922.00
154,187
504,735
680,817.00
162,481
482,683
79
35,574
15,021
2,097,845
349,670
457
8,491
215,064.00
25,808
189,256
35,895.00
35,895
609,577
216,694
5,082
98,835.00
77,360
21,475
96,989.00
55,261
41,728
417,600
14,940
39,452.00
5,918
33,534
11,620.00
11,620
284,242.00
41,901
242,341
402,969.00
402,890
79
687,211
147,751
-
66,012
21,329.00
3,199
18,130
97,770.00
59,705
38,065
119,099
35,574.00
35,574
15,021
198,346
124
57,780
1,720,008
81,438
53,719
114,520
2,027,589
124
57,780
1,480,060
4,275
1,542,239
128,359
3,719
4,320
136,398
27,930
32,451
60,381
16,325
3,719
8,939
28,983
67,334
46,281
64,535
178,150
81,438
81,438
281,202
5,631
90,116
509,061
116,908
-
25
Derivative liability
Deposits from banks
Other liabilities
Borrowings
GAPS
109,303
44,991
17,759
196,662
(7,887)
4,113
78,071
74,297
31 December 2012
(b)
Loans and advances to banks:
Individual
Corporates
Treasury bills
Bonds
Promissory notes
Equity
Account receivable
Deposits from banks
Other liabilities
Borrowings
23
24
25
33
34
34
35
GAPS
70,256
(932,662)
-
4.2
(i) Interest rate risk - continued
(b)
Bank
(ii)
Carrying
amount
<1
month
Individual
Corporates
Treasury bills
Bonds
Promissory notes
Equity
Derivative assets
Account receivable
620,426
777
26,251
796,942.00
103,092
693,850
585,445.00
200,444
340,933
45
44,023
3,265
12,711
490,319
652
13,725
88,253.00
11,416
320,366
200,328.00
79,045
Deposits from banks
Other liabilities
Borrowings
2,045,817
31
1,793,263
54,351
55,653
48,866
1,952,164
GAPS
32
33
34
35
93,653
1-3
months
Re-pricing period
3-6
6-12
months
months
33,893
10
4,837
54,844.00
7,095
45,447
63,463.00
41,675
21,788
-
15,253
7,689
51,440.00
6,654
37,637
28,495.00
14,512
13,983
-
918,788
31
7,886
939,185
1,432
948,534
154,745
-
95,728
52,025
-
(29,746)
(422,130)
3,265
-
576,875
576,875
-
More than
1 year
115
Non-interest
bearing
80,961
-
316,297.00
40,916
40,916
124,528.00
65,212
59,316
-
286,108.00
37,011
249,484
80,333.00
245,846
45
-
88,298.00
44,023
12,711
2,447
54,472
206,360
12,375
12,375
532,501
212,803
55,653
44,987
313,443
137,695
(7,886)
54,351
46,465
41,256
193,984
219,058
91,230
57
31 December 2012
Individual
Corporates
Treasury bills
Bonds
Promissory notes
Equity
Account receivable
Deposits from banks
Other liabilities
Borrowings
GAPS
Note
0
629,481
456
27,878
570,714.00
80,857
489,857
527,994.00
91,467
401,269
79
35,179
9,296
1,765,819
336,067
456
8,295
179,776.00
25,470
154,306
22,142.00
22,142
-
157,627
4,965
84,042.00
11,907
72,135
58,361.00
36,559
21,802
-
14,618
36,687.00
5,198
31,489
5,238.00
5,238
-
17,275.00
2,447
14,828
76,223.00
27,528
48,645
-
252,933.00
35,835
217,098
330,901.00
330,822
79
-
546,736
304,995
56,543
93,448
583,834
135,787
1.00
1
35,129.00
35,179
9,296
180,263
124
22,875
1,461,131
57,299
55,474
114,520
1,711,423
124
22,875
1,319,365
4,275
1,346,639
115,875
3,719
4,320
123,914
20,852
32,451
53,303
5,039
3,719
8,939
17,697
48,036
64,535
112,571
57,299
57,299
181,081
3,240
75,751
471,263
122,964
54,396
(799,903)
Interest rate movements affect reported equity in the following ways:
• Retained earnings arising from increases or decreases in net interest income and the fair value changes reported in profit and loss.
• Fair value reserves arising from increases or decreases in fair values of available-for-sale financial instruments reported directly in equity.
Overall non-trading interest rate risk positions are managed by Group Treasury, which uses investment securities, advances to other financial institutions (banks and discount houses) to manage the overall
position arising from the Group‟s non-trading activities.
Current maturity mis-match profile
Over the years, the Nigerian yield curve has lengthened significantly with much longer tenors being available for investors. This is a significant change from being a predominantly 90-day economy. There
are available tenors of up to ten years, with much activity in the 3 -5 year tenor buckets.
Market risks - continued
Equity risk
The Group did not undertake in equity trading activity in 2013. Our legacy equity portfolio and the embedded price risk is still subject to regular monitoring by the Group Market Risk.
The legacy portfolio value as at December 31, 2013 had reduced to N9million, (down from N131 million in 2012) which is not a significant risk to the Group, though it contains investments that are still
quoted on the Nigerian Stock Exchange (NSE) and therefore exposed to price risk. In 2013 the investment bank and other areas of the business that undertake proprietary equity trading were spun off into a
separate legal entity.
The NSE was the most rewarding stock market in Africa, as investors harvested 47.2 percent return on investment during the year. However, for the purpose of sensitivity analysis we have made a
conservative assumption that the stocks could appreciate a further 5% or lose 10% in value. The Group has investments in African Finance Corporation (AFC) which is a non-quoted investment with a fair
value of N39.93 billion as at December 31, 2013 (2012: N32.251billion). Full details are disclosed in Note 5 (ii).
Level 1 Equity Sensitivities
Impact on profit or loss:
Favourable change @ 5% increase in indicative value
Unfavourable change @ 10% reduction in indicative value
Group
Dec. 2013
Dec. 2012
-
Impact on Other comprehensive income:
-
1
(1)
7
(13)
9
131
9
131
Bank
Dec. 2013
Dec. 2012
-
-
1
(1)
7
(13)
9
131
9
131
Level 1 Equity Positions
In million of Nigerian Naira
Financial assets held for trading:
Available-for-sale investment securities:
-
Total
-
100
(201)
81
(162)
100
(201)
81
(162)
Total
-
-
-
-
2,008
2,008
1,623
1,623
2,008
2,008
1,623
1,623
2,087
(4,173)
1,613
(3,225)
2,087
(4,173)
1,613
(3,225)
Total
-
-
-
-
41,731
41,731
32,251
32,251
41,731
41,731
32,251
32,251
58
4.2
(iii) Fixed income instruments re-pricing gap
Price sensitivity analysis of fixed rate financial instruments
The tables below shows the impact of interest rate changes (increase / decrease) on our various fixed income portfolios and the effect on income statement and the other comprehensive income (OCI).
However, for the purpose of sensitivity analysis we have made a conservative assumption of 200 basis point change on the instruments with other variables remaining constant and also assuming there is no
asymmetrical movement in yield curve.
The Group also uses a wide range of stress tests to model the financial impact of a variety of exceptional market scenarios, such as periods of prolonged market illiquidity, on individual trading portfolios and
the Group‟s overall position.
Statement of financial position interest rate sensitivity (fair value and cashflow interest rate risk)
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
Decrease
Asset
Liability
7,506
(24,282)
(31,788)
9,162
(16,478)
(25,640)
8,196
(16,630)
(24,826)
8,910
(12,422)
(21,332)
Increase
Asset
Liability
(7,506)
24,282
31,788
(9,162)
16,478
25,640
(8,196)
16,630
24,826
(8,910)
12,422
21,332
The aggregate figures presented above are further segregated into their various components as shown below:
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Dec. 2012
582,891
566,364
539,465
Impact on income statement:
11,658
(11,658)
11,327
(11,327)
10,789
(10,789)
493,694
9,874
(9,874)
Treasury bills
Government bonds
49
735
784
174
283
457
(16)
16
(9)
9
42
735
777
172
284
456
(16)
16
(9)
9
Term loans
26,251
26,251
(525)
525
27,878
27,878
(558)
558
26,251
26,251
(525)
525
27,878
27,878
(558)
558
Individual
Corporates
139,917
797,703
937,620
154,187
504,735
658,922
103,092
693,850
796,942
80,857
489,856
570,713
(18,752)
18,752
(13,178)
13,178
(15,939)
15,939
(11,414)
11,414
208,843
208,843
93,091
93,091
200,444
200,444
91,517
91,517
Treasury and similar bills
Total
Impact on other comprehensive income statement:
held-to-maturity investment securities:
(4,177)
4,177
(1,862)
1,862
Group
Dec. 2013
Dec. 2012
(4,009)
4,009
Bank
Dec. 2013
Dec. 2012
Debt Securities
Treasury & similar bills
Total
377,557
179,815
557,372
482,762
69,390
552,152
(11,147)
11,147
(11,043)
11,043
(6,820)
6,820
3,265
-
3,265
Derivative assets
(111)
112
31
(1)
1
Deposit from banks
Money market deposits
Due to other banks
Total
59,682
900
60,582
-
296,703
44,275
340,978
(111)
112
124
31
(4)
4
51,596
6,184
57,780
(1,830)
1,830
(1)
1
-
401,348
401,348
(8,027)
8,027
124
(4)
4
16,844
6,031
22,875
59
Retail customers:
Term deposits
Savings deposits
Corporate customers:
Term deposits
(1,212)
1,212
(1,156)
1,156
-
(458)
458
141,618
310,437
98,274
285,369
125,026
268,552
83,483
224,780
322,322
709,400
1,483,777
249,077
540,824
1,173,544
186,340
616,342
1,196,260
225,329
459,426
993,018
(29,676)
29,676
(23,471)
23,471
(23,925)
23,925
(19,860)
19,860
31,812
13,175
44,987
36,612
13,869
50,481
31,812
13,175
44,987
36,612
13,869
50,481
Borrowings
On-lending facilities:
- Central Bank of Nigeria (note 36.2)
- Bank of Industry (BoI) (note 36.3)
(900)
900
(1,010)
1,010
(900)
900
(1,010)
1,010
(iv) Floating rate financial instruments re-pricing gap
Price sensitivity analysis of floating rate financial instruments
The tables below shows the impact of interest rate changes (increase / decrease) on our floating-rate financial instrument portfolios and the effect on income statement For the purpose of sensitivity analysis
we have made a conservative assumption of 50 basis point change on the instrument with other variables remaining constant and also assuming there is no asymmetrical movement in yield curve.
Borrowings
- African Development Bank (AfDB) (note 36.1)
- Afrexim (note 36.4)
- Standard Chartered Bank (note 36.5)
- HSBC (note 36.6)
- European Investment Bank (EIB) (note 36.7)
1,432
2,447
3,879
Favourable change @ 0.5% increase in indicative value
Unfavourable change @ 0.5% reduction in indicative value
57
(57)
23,707
14,452
25,093
787
64,039
260
(260)
1,432
2,447
3,879
57
(57)
23,707
14,452
25,093
787
64,039
260
(260)
60
4.2
(iv) Exchange rate exposure limits
FCY sensitivity analysis on foreign exchange rate
The Naira fluctuated in 2013 but however recovered from its 2013 lows of around NGN164.00 in September to trade at NGN160/US$ in
December in the interbank market. This recovery has come at the cost of declining foreign exchange reserves. Nigeria's external reserves
decreased to a 13 month low of $43.51bn as at December 31st, 2013 with a peak of $48.87bn during the year. UBA remains a top player in
the foreign exchange market and also very active in third currency trading, with “enforcement of stop loss limits on position taking” acting
as a primary risk mitigant.
Our foreign exchange risk is primarily controlled by tight policies around trading limits. The Board and Group ALCO set limits on the level
of exposure by currency and in aggregate for both overnight and intra day positions. These limits must be in line with regulatory Open
Position Limit (OPL). Compliance with both internal limits and regulatory limits are monitored daily with zero tolerance to limit breaches.
These limits include OPL, dealers' limit, overnight/intraday limits, maturity gap limits, management action trigger, product limits,
counterparty limits and cross border limits.
Group
Note
US Dollar
Euro
Pound
Others
Total
31 December 2013
Non-pledged trading assets
Derivative assets
Account receivables
Total financial assets
401,537
109
26,251
281,982
126,433
836,312
71,923
4
40,617
112,544
44,563
31
44,594
12,098
12,364
24,462
530,121
113
26,251
322,630
12,364
126,433
1,017,912
Deposits from banks
Other liabilities
Other borrowed funds
Total financial liabilities
Net FCY Exposure
31
60,582
688,818
11,581
3,585
764,596
71,715
68,762
834
69,596
42,948
43,654
204
43,858
736
19,064
19,064
5,398
31
60,582
801,234
31,684
3,585
897,115
120,797
Sensitivity at 200bps Naira appreciation
Sensitivity at 400bps Naira depreciation
31 December 2012
Account receivables
(1,434)
2,869
435,439
21,545
156,855
39,812
653,652
(859)
1,718
13,009
18
4,563
17,590
(15)
29
4,707
97
4,804
(108)
216
77,081
6,950
94,122
7,948
154,595
340,697
(2,416)
4,832
530,237
28,513
255,638
7,948
194,407
1,016,743
61
4.2
(d)
(iv)
Market risks - continued
Exchange rate exposure limits - continued
Deposits from banks
Net FCY Exposure
US Dollar
124
10,653
556,219
62,100
629,096
24,556
(491)
982
Euro
2,131
9,759
11,890
5,700
(114)
228
Pound
Others
3,471
3,471
1,333
(27)
53
39,976
242,093
282,069
58,628
(1,173)
2,345
Total
52,760
811,542
62,100
926,526
90,217
(1,804)
3,609
Bank
31 December 2013
Derivative assets
Account receivables
305,859
109
26,251
278,825
2,089
77,493
690,626
8,029
4
3,766
11,799
4,266
31
4,297
1,303
1,302
2,605
319,457
113
26,251
282,622
3,391
77,493
709,327
Deposits from banks
Other liabilities
Net FCY Exposure
31
594,058
11,582
3,879
609,550
81,076
7,571
834
8,405
3,394
3,719
204
3,923
374
2,605
31
605,348
12,620
3,879
621,878
87,448
(1,622)
3,243
(68)
136
(7)
15
31 December 2012
Account receivables
414,852
27,860
126,385
1,203
36,336
606,637
6,181
18
4,462
4,489
97
10,661
Deposits from banks
Net FCY Exposure
124
525,334
63,969
589,427
17,209
5,180
5,180
5,481
(344)
688
(110)
220
(52)
104
(1,749)
3,498
4,586
2,875
750
4,832
8,457
428,397
27,878
130,944
1,953
41,168
630,340
3,310
3,310
1,277
8,457
124
533,824
63,969
597,916
32,424
(26)
52
(169)
338
(648)
1,296
62
(f) Capital management
There is a risk that the Group may not have adequate capital in relation to its risk profile and/or to absorb losses when they arise. There is also a risk that the capital
may fall below the required regulatory minimum. Capital management is overseen by the Board of Directors who have overall responsibility for ensuring adequate
capital is maintained for the Group.
The Group has therefore put in place a process of ensuring adequate capital is maintained and this process includes:
·
·
·
·
·
Capital planning
Prudent portfolio management
Maintaining adequate capital across all jurisdictions
Capital adequacy stress testing
Contingency Planning
The objective of the capital management process is to:
·
Adequately assess impairment losses and impact on capital impairment;
· Meet CBN‟s requirements capital adequacy requirements
·
Optimise the use and allocation of capital resources and align our target capital with our optimum capital structure
Regulatory capital
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders
and benefits for other stakeholders and to maintain an optimal structure to reduce the cost of capital.
Consistent with others in the industry, the group monitors regulatory capital using the capital adequacy ratio. This ratio is calculated as total regulatory capital
divided by risk weighted assets. Total regulatory capital and risk weighted assets are calculated as shown in the table below.
The Group‟s lead regulator, the Central Bank of Nigeria sets and monitors capital requirements for the Bank. The parent company and individual banking
operations are directly supervised by the Central Bank of Nigeria and the respective regulatory authorities in the countries in which the subsidiary banking
operations are domiciled.
The Central Bank of Nigeria requires the Bank to maintain a prescribed ratio of total capital to total risk-weighted assets.
The Group‟s regulatory capital is analysed into two tiers:
Tier 1 capital, which includes ordinary share capital, share premium, retained earnings, translation reserve and minority interests after deductions for goodwill and
intangible assets, and other regulatory adjustments relating to items that are included in equity but are treated differently for capital adequacy purposes.
Tier 2 capital, which includes qualifying subordinated liabilities, collective impairment allowances and the element of the fair value reserve relating to unrealised
gains on financial instruments classified as available-for-sale.
Various limits are applied to elements of the capital base. The qualifying tier 2 capital cannot exceed tier 1 capital. There are also restrictions on the amount of
collective impairment allowances that may be included as part of tier 2 capital.
Banking operations are categorised mainly as trading book or banking book, and risk-weighted assets are determined according to specified requirements that
seek to reflect the varying levels of risk attached to assets and off-balance sheet exposures.
During the year, the Group's strategy, which was unchanged, was to maintain a strong capital base so as to retain investor, creditor and market confidence and
to sustain future development of the business. The impact of the level of capital on shareholders‟ return is also recognised and the Group recognises the need to
maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital
position.
Capital adequacy ratio is the quotient of the capital base of the Bank and the Bank‟s risk weighted asset base. UBA Plc operates under an international banking
authorization with a minimum regulatory capital of N50 billion and a minimum capital adequacy ratio of 15%. During the year, the Group complied with all
external capital requirements to which it is subject.
63
In millions of Nigeria naira
Tier 1 capital
Ordinary share capital
Share premium
Retained earnings
Translation reserve
Other reserves
Non-controlling interests
Shareholders‟ fund
Less:
Fair value reserve for available-for-sale securities
Less: Investment in subsidiaries and equityaccounted investee
Note
38
38
38
38
38
38
26, 27
Total
(f) Capital management (continued)
Tier 2 capital
Fair value reserve for available-for-sale securities
Debenture stock
Collective allowances for impairment
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
107,932
(3,153)
35,898
7,387
148,064
16,491
107,932
49,572
(1,514)
16,625
3,361
192,467
107,932
67,443
67,672
243,047
107,932
47,723
48,171
203,826
(24,452)
(7,387)
(15,223)
(3,361)
(25,063)
-
(15,834)
-
116,225
173,883
(67,537)
150,447
(66,727)
121,265
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
Total
24,452
55,653
14,750
7,387
102,242
15,223
53,719
10,358
3,361
82,661
25,063
55,653
6,307
87,023
15,834
55,474
7,189
78,497
Total regulatory capital
218,467
256,544
237,470
199,762
1,352,161
1,091,824
1,157,847
907,514
38
37
23,24
Risk-weighted assets
Capital ratios
Total regulatory capital expressed as a
percentage of total risk-weighted assets
Total tier 1 capital expressed as a percentage
of risk-weighted assets
16.2%
23.5%
20.5%
22.0%
8.6%
15.9%
13.0%
13.4%
Capital allocation
The allocation of capital between specific operations and activities is, to a large extent, driven by optimisation of the return achieved on the capital allocated.
The amount of capital allocated to each operation or activity is based primarily upon the regulatory capital, but in some cases the regulatory requirements do not
reflect fully the varying degree of risk associated with different activities. In such cases the capital requirements may be flexed to reflect differing risk profiles,
subject to the overall level of capital to support a particular operation or activity not falling below the minimum required for regulatory purposes.
Although maximisation of the return on risk-adjusted capital is the principal basis used in determining how capital is allocated within the Group to particular
operations or activities, it is not the sole basis used for decision making. Account also is taken of synergies with other operations and activities, the availability of
management and other resources, and the fit of the activity with the Group‟s longer term strategic objectives.
(g) Fair value measurement
Fair values of financial instruments
The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all
other financial instruments, the Group determines fair values using other valuation techniques.
For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment
depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.
Valuation models
The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements.
• Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments. The fair value of financial instruments traded in active
markets is based on quoted market prices at the balance sheet date. A market is regarded as active 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. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1.
Instruments included in Level 1 comprise primarily quoted equity and debt investments classified as trading securities or available for sale.
• Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e as prices) or indirectly (i.e. derived from prices). This
category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in
markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation
techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates.
If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based
on observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include:
• Quoted market prices or dealer quotes for similar instruments;
• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves;
• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting
value discounted back to present value;
• Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
64
4.2
(g) Fair value measurement - continued
• Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data
and the unobservable inputs have a significant effect on the instrument‟s valuation. This category includes instruments that are valued based on quoted prices
for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
Valuation techniques include net present value and discounted cashflow models, comparison with similar instruments for which market observable prices exist,
Black-Scholes and polynomial option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and
benchmark interest rates, credit spreads and other premia used in estimating discount rate, bond and equity prices, foreign currency exchange rates, equity and
equity index prices and expected price volatilities and correlations.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the
liability in an orderly transaction between market participants at the measurement date.
The Group uses widely recognized valuation models for determining the fair value of common and more simple financial instruments, such as interest rate and
currency swaps that use only observable market data and require little management judgment and estimation. Observable prices or model inputs are usually
available in the market for listed debt and equity securities, exchange-traded derivatives and simple over-the-counter derivatives such as interest rate swaps.
Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty
associated with determining fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to
changes based on specific events and general conditions in the financial markets. The Group‟s valuation methodology for securities uses a discounted cash flow
methodology and dividend discount methodology. The methodologies are often used by market participants to price similar securities.
For more complex instruments, the Group uses proprietary valuation models, which are usually developed from recognized valuation models. Some or all of the
significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions.
Valuation models that employ significant unobservable inputs require a higher degree of management judgment and estimation in the determination of fair
value. Management judgment and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future
cash flows on the financial instrument being valued, determination of the probability of counterparty default and prepayments and selection of appropriate
discount rates.
Fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties, to the extent that the Group believes
that a third party market participant would take them into account in pricing a transaction. Fair values reflect the credit risk of the instrument and include
adjustments to take account of the credit risk of the Group entity and the counterparty where appropriate. For measuring derivatives that might change
classification from being an asset to a liability or vice versa such as interest rate swaps, fair values take into account both credit valuation adjustment (CVA) and
debit valuation adjustment (DVA) when market participants take this into consideration in pricing the derivatives.
Model inputs and values are calibrated against historical data and published forecasts and, where possible against current or recent observed transactions in
different instruments and against broker quotes. This calibration process is inherently subjective and it yields ranges of possible inputs and estimates of fair value,
and management judgment is required to select the most appropriate point in the range.
If the Group measures portfolios of financial assets and financial liabilities on the basis of net exposures to market risks, then it applies judgment in determining
appropriate portfolio-level adjustments such as bid-ask spreads and relevant risk premiums. These significant assumptions to these valuations have been
disclosed in note 5.
Valuation framework
The Group has an established control framework with respect to the measurement of fair values. This framework includes a Financial Analysis and Technical Unit
which is independent of front office management and reports to the Group Chief Financial Officer, and which has overall responsibility for valuations. There is also
the Risk Measurement unit responsible for independent independently verifying the results of third party valuation. Specific controls include:
• Verification of observable pricing;
• Re-performance of model valuations;
• A review and approval process for new models and changes to models involving both Product Control and Group Market Risk;
• periodic calibration and back-testing of models against observed market transactions;
• Analysis and investigation of significant daily valuation movements; and
• Review of significant unobservable inputs, valuation adjustments and significant changes to the fair value measurement of level 3 instruments compared with
the previous month, by a committee of senior Product Control and Group Market Risk personnel.
When third party information, such as broker quotes or pricing services, is used to measure fair value, The risk measurement unit assesses and documents the
evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS. This includes:
• Verifying that the broker or pricing service is approved by the Group for use in pricing the relevant type of financial instrument;
• Understanding how the fair value has been arrived at and the extent to which it represents actual market transactions;
• When prices for similar instruments are used to measure fair value, how these prices have been adjusted to reflect the characteristics of the instrument subject
to measurement; and
• If a number of quotes for the same financial instrument have been obtained, then how fair value has been determined using those quotes.
65
4.2
(g)
Fair value measurement - continued
Financial instruments measured at fair value
The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair
value measurement is categorised:
Group:
31 December 2013
Assets
Note
22
Government bonds
(ii) Treasury bills
Level 1
49
735
Derivative assets measured at fair value through profit and loss:
32(a)
-
32
-
Bank:
31 December 2013
Assets
208,843
22
Level 1
42
735
32(a)
-
3
7
209,636
Government bonds
Treasury bills
Derivative assets measured at fair value through profit and loss:
200,444
3
7
201,230
Liabilities
Financial liabilities at fair value through profit or loss
32
Group:
31 December 2012
Assets
22
Government bonds
Treasury bills
Equities
-
-
49
735
3,265
-
3,265
-
-
2,008
5,273
41,731
41,731
208,843
41,731
3
2,014
256,640
31
-
31
Level 2
-
Level 3
-
Total
42
735
3,265
-
3,265
-
-
200,444
-
2,008
5,273
41,731
41,731
41,731
3
2,014
248,234
-
31
-
31
284
173
-
-
-
284
173
-
93,091
-
-
-
93,091
-
11
3
117
93,679
1,623
1,623
32,251
32,251
25
Treasury bills
Bonds
Equity investments at fair value
Financial services
Insurance
Information Technology
Liabilities
Total
25
Treasury bills
Bonds
Financial services
Insurance
Level 3
25
Treasury bills
Financial services
Insurance
Total assets
Liabilities
Level 2
32
-
124
-
32,262
3
1,740
127,553
156
66
4.2
(g)
Bank:
31 December 2012
Assets
Note
Level 1
Level 2
Level 3
Total
284
172
-
-
284
172
91,517
-
-
91,517
11
3
117
92,104
1,623
1,623
32,251
32,251
22
Government bonds
Treasury bills
25
Treasury bills
Financial services
Insurance
Liabilities
-
32
124
-
32,262
3
1,740
125,978
124
There were no transfers between levels during the year.
The following table presents the changes in leve3 instruments for the year ended 31 December 2013. Level 3 instruments are all investment securities (unquoted
equites)
Group
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
32,251
1,804
Balance, beginning of period
Addition to level 3 (see (i) below)
Gain recognised in other comprehensive income (under fair value gain on available
for sale)
Balance, end of period
(i)
29,718
-
32,251
1,804
29,718
-
7,676
2,533
7,676
2,533
41,731
32,251
41,731
32,251
Addition to level 3 relates to some unquoted equity instruments classified as available for sale were carried at cost less impairment in prior year but measured at
fair value in the current year. The change in measurement was due to the availability of unobservable inputs to measure the instruments.
(ii) Level 2 fair value measurements
The Group's Level 2 unquoted equities were valued using last trading prices obtained from over-the-counter (OTC) trades that were done as at reporting date.
These prices are a reflection of actual fair value of the investments, as transactions consummated under the OTC trades were arms length transactions.
(ii) Level 3 fair value measurements - Unobservable inputs used in measuring fair value
All valuation processes and techniques are subject to review and approval by the Finance and General Purpose Committee of the Board of Directors. There was
no change in the in Group's valuation technique during the year.
The table below sets out information about significant unobservable inputs used as at 31 December 2013 in measuring financial isntruments categorised as Level 3
in the fair value hierarchy:
Type of financial instrument
Fair value as at
31 December 2013
(Group and Bank)
N'million
40,951
Valuation
technique
Cost of equity
Discounted
cashflow Terminal growth
rate
Unquoted equity securities
780
Significant
unobservable input
Dividend
discount
model
Range of
estimates for
unobservable
input
10.9% - 28.5%
Fair value measurement sensitivity
to unobservable inputs
Significant increases in cost of
equity, in isolation, would result in
lower
fair
values.
Signiicant
reduction would result in higher fair
values
3.90%
Significant increases in terminal
growth rate, in isolation, would
result in higher fair values. Signiicant
reduction would result in lower fair
values
Cost of equity
16% - 22%
Significant increases in cost of
equity, in isolation, would result in
lower
fair
values.
Signiicant
reduction would result in higher fair
values
Terminal growth
rate
7.0% - 9.2%
Significant increases in terminal
growth rate, in isolation, would
result in higher fair values. Signiicant
reduction would result in lower fair
values
67
4.2
(g)
(iii) Level 3 fair value measurements - Unobservable inputs used in measuring fair value (continued)
Significant unobservable inputs are developed as follows:
Discounted cashflow
• The Group used the Capital Asset Pricing Model to determine the cost of equities for its various unquoted equities which were fair valued at year
end.
• The risk free rate was determined using the yield on Federal Government of Nigeria eurobond (for unquoted securities denominated in USD) and
longest tenored Federal Government of Nigeria bond (for unquoted securities denominated in Nigerian naira).
• Equity risk premium was determined using market returns computed from the Nigerian All Share Index and Standards and Poors (S&P) 500 Stock
Price Index, for similar business sectors.
• Beta estimates were obtained from Damodaran Online
Dividend discount model
• The Group used the build-up approach to determine cost of equities for its various unquoted equities which were fair valued using dividend
discount model at year end.
• The risk free rate was determined using the yield on the longest tenored Federal Government of Nigeria bond.
• The dividend growth rate was determined using the historical four years weighted average growth rate of dividends paid by the respective
entities
• Equity risk premium were obtained from Damodaran Online (with specific focus on emerging markets data), adjusted for size premium
(iv) Level 3 fair value measurements - Effect of unobservable inputs on fair value measurement
The Group believes that its estimates of fair values are appropriate. However, the use of different methodologies or assumptions could lead to different
measurements of fair value. For fair value measurements in Level 3, changing the cost of equity or terminal growth rate by a reasonable possible value, in isolation,
would have the following effects on Other Comprehensive Income for the year:
Effect on other comprehensive income (OCI)
2013
2012
Key Assumption
5% Increase
(3,285)
1,415
Cost of Equity
Terminal Growth Rate
5% Decrease
3,845
(1,337)
5% Increase
(1,742)
1,806
5% Decrease
1,516
(1,387)
Financial instruments not measured at fair value
The table below sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair
value hierarchy into which each fair value measurement is categorised.
Group
Level 1
Carrying
amount
-
716,803
26,014
144,453
823,556
486,223
19,202
716,803
26,251
937,620
139,918
797,702
557,372
19,202
60,582
2,161,182
53,388
48,866
-
60,582
2,161,182
53,388
48,866
60,582
2,161,182
55,653
48,866
714,115
21,350
-
714,115
21,350
116,203
588,294
528,414
15,003
714,115
28,513
658,922
108,686
550,236
552,152
15,003
57,780
1,720,008
53,719
114,520
57,780
1,720,008
55,653
48,866
Level 3
Note
31 December 2013
-individual
-corporate
Held to maturity - Investment securities
Other assets
Deposits from banks
Borrowings
31 December 2012
-individual
-corporate
Other assets
Deposits from banks
Borrowings
Total fair
value
Level 2
318,665
-
346,316
-
716,803
26,014
823,556
167,558
19,202
588,294
182,097
15,003
144,453
116,203
-
57,780
1,720,008
53,719
114,520
-
68
Bank
31 December 2013
-individual
-corporate
Other assets
Deposits from banks
Borrowings
31 December 2012
-individual
-corporate
Other assets
194,947
-
620,426
26,014
716,338
102,505
13,793
53,388
-
1,797,376
48,866
-
1,797,376
53,388
48,866
1,797,376
55,653
48,866
629,481
27,878
-
629,481
27,878
85,433
517,578
401,348
9,296
629,481
27,878
570,714
80,857
489,857
527,994
9,296
Total fair
value
Carrying
amount
-
106,433
-
85,433
263,039
-
517,578
138,309
9,296
-
620,426
26,014
106,433
716,338
297,452
13,793
620,426
26,251
796,942
103,092
693,850
340,978
13,793
Level 1
Deposits from banks
Borrowings
-
Level 2
Level 3
7,886
1,793,263
55,653
48,866
-
7,886
1,793,263
55,653
48,866
7,886
1,793,263
55,653
48,866
The fair value for financial assets and liabilities that are not carried at fair value were determined respectively as follows:
i) Cash
The carrying amount of cash and balances with banks is a reasonable approximation of fair value.
ii) Loans and advances
Loans and advances are net of charges for impairment. To improve the accuracy of the valuation estimate for loans, homogenous
loans are grouped into portfolios with similar characteristics. The estimated fair value of loans and advances represents the discounted
amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates to
determine fair value.
iii) Investment securities
The fair value for investment securities is based on market prices from financial market dealer price quotations. Where this information is
not available, fair value is estimated using quoted market prices for securities with similar credit, maturity and yield characteristics.
Investment securities (available for sale) disclosed in the table above comprise only those equity securities held at cost less impairment.
The fair value for these assets is based on estimations using market prices and earning multiples of quoted securities with similar
characteristics. All other available for sale assets are already measured and carried at fair value.
iv) Other assets
The bulk of these financial assets have short (less than 3months) maturities and their amounts are a reasonable approximation of fair
value.
v) Deposits from banks and customers
The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, 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.
vi) Other liabilities
The carrying amount of financial assets in other liabilities is a reasonable approximation of fair value.
vii) Interest bearing loans and borrowings
The estimated fair value of fixed interest-bearing borrowings not quoted in an active market is based on discounted cash flows using
the contractual interest rates for these debts over their remaining maturity.
No fair value disclosures are provided for equity investment securities that are measured at the cost because their value cannot be
reliably measured.
69
5
Critical accounting estimates and judgments
Management discusses with the Audit Committee the development, selection and disclosure of the Group‟s critical accounting policies and estimates, and the application
of these policies and estimates.
These disclosures supplement the commentary on financial risk management (see note 4).
(a) Key sources of estimation uncertainty
(i) Allowances for credit losses
Assets accounted for at amortised cost are evaluated for impairment on a basis described in accounting policy 3(i).
The specific counterparty component of the total allowances for impairment applies to financial instruments evaluated individually for impairment and is based upon
management‟s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgments about
a counter party‟s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and
estimate of cash flows considered recoverable are independently approved by the Credit Risk function.
Collectively assessed impairment allowances cover credit losses inherent in portfolios of claims with similar economic characteristics when there is objective evidence to
suggest that they contain impaired claims, but the individual impaired items cannot yet be identified. In assessing the need for collective loan loss allowances, management
considers factors such as credit quality, portfolio size, concentrations, and economic factors. In order to estimate the required allowance. Assumptions are made to define
the way interest losses are modeled and to determine the required input parameters, based on historical experience and current economic conditions. The accuracy of the
allowances depends on how well future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective
allowances are estimated.
(ii) Determining fair values
The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of techniques as described in accounting
policy 3(i). Further disclosures on the Group's valuation methodology have been made on note 4(g). For financial instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions
and other risks affecting the specific instrument.
(b) Critical accounting judgments in applying the Group’s accounting policies
Critical accounting judgments made in applying the Group‟s accounting policies include:
(i) Valuation of financial instruments
The Group‟s accounting policy on valuation of financial instruments is discussed under note 3(i)
In measuring credit risk of loans and advances to various counterparties, the Group considers the character and capacity of the obligor, the probability that an obligor or
counterparty will default over a given period (probability of default -PD) , the portion of the loan expected to be irrecoverable at the time of loan default (loss given default LGD) and expected amount that is outstanding at the point of default . The table below shows the sensitivities of the impairment loss provision for 1% increase or decrease in
the LGD and PD.
31 December 2013
Probability of Default -PD
Increase/decrease
Impact (N'000)
1% increase
1% decrease
31 December 2013
31 December 2012
Probability of
Loss Given
Loss Given
Probability of Default -PD Default-LGD
Default -PD
Default-LGD
Impact (N'000)
Impact (N'000) Impact (N'000)
Impact (N'000)
57,230
(57,230)
57,230
(57,230)
60,841
(60,841)
73,742
(73,742)
73,745
(73,745)
(ii) Impairment testing for cash-generating units containing Goodwill
The Group has carried out an impairment assessment of the goodwill for UBA Benin and UBA Capital Europe as at 31 December 2013. Goodwill is not impaired. Goodwill on
UBA Benin CGU will only be impaired if the discount rate used in the value-in-use calculation for the CGUs had been more than 350% higher than management‟s estimates
at 31 December 2013 (i.e. if the discount rate had been 90% instead of 20%). Goodwill on UBA CAPe CGU will only be impaired if the discount rate used in the value-in-use
calculation for the CGUs had been more than 38% higher than management‟s estimates at 31 December 2013 (i.e. if the discount rate had been 35% instead of 25%). These
scenarios are highly unlikely. Goodwill is marginally sensitive to terminal growth rate used in the value-in-use calculation for the CGUs.
(iii) Depreciation and carrying value of property and equipment
The estimation of the useful lives of assets is based on management‟s judgment. Adjustment to the estimated useful lives of items of property and equipment will have an
impact on the carrying value of these items.
During the year, the bank reviewed the useful life of all its property and equipment in line IAS 16. para 76. This led to an upward review of the useful life of buildings from 40 to
50 years.
There was also a review of the residual values of all classes of Property and equipment (except land and leasehold improvement). This resulted in an upward adjustment in
the residual values of those assets. The combined effect of both reviews in the year is a reduction in depreciation charge by N2.1billion in the current period.
The rebasements results in the following change in the original trend of depreciation.
Year
Increase/(decrease)
2014
2015
(2,100)
2016
(1,890)
(1,890)
2017
2018
(1,701)
(1,701)
70
Operating segments
6
Segment information is presented in respect of the Group‟s geographicsegments which represents the primary segment reporting format and is based on the Group‟s managementand reporting
structure. The Managing Director of the Group, who is also the Chief Operating Decision Maker (CODM), reviews the Group's performance along these business segments and resources are
allocated accordingly.
Geographical segments
The Group operates in the following geographical regions:
· Nigeria: This comprises UBA Plc (excluding the branch in New York), UBA Pensions Custodian Limited and FX Mart Limited
· Rest of Africa:This comprises all subsidiaries in Africa, excluding Nigeria
· Rest of the world:This comprises UBA Capital Europe Limited and UBA New York branch
Business segments
The Group operates the following main business segments:
Corporate Banking- This business segment provides a broad range of financial solutions to multinationals, regional companies, state-owned companies, non-governmental organisations,
international and multinational organisations and financial institutions.
Retail/ Commercial banking– This business segment has presence in all major cities in Nigeria and in nineteen other countries across Africa where the Group has operations . It provides
commercial banking products and services to the middle and retail segments of the market.
Treasury and Financial Markets– This segment provides innovative financing and risk management solutions and advisory services to the Group‟s corporate and institutional customers. The
segment is also responsible for formulation and implementation of financial market products for the Group‟s customers.
No single external customer or group amounts to 10% or more of the Group's revenues.
Sales between segments are carried out at arm‟s length. The revenue from external parties reported to the Chief Operating Decision Maker is measured in a manner consistent with that in the
income statement.
(a) Geographical segments
(i) 31 December 2013
External revenues
Derived from other geographic segments
Total revenue
Profit before tax
Nigeria
Rest of Africa
210,951
5,187
216,138
56,803
56,803
Rest of the World
3,871
3,871
Elimination
(6,938)
(5,187)
(12,125)
264,687
264,687
Total
(11,198)
56,058
185,700
(82,469)
(6)
(13,078)
(9,457)
54,192
11,369
1,695
145,984
(71,297)
(6)
(456)
36,742
(11,129)
(12,607)
3,189
(258)
-
Income tax expenses
(6,256)
(3,114)
Profit for the year from continuing operations
47,936
8,255
1,688
(11,278)
46,601
2,174,429
1,923,410
555,808
501,871
103,446
93,712
(191,387)
(111,733)
2,642,296
2,407,260
Interest income
Interest expenses
Share of loss in equity-accounted investee
Impairment loss recognised in profit or loss
(7)
(215)
215
(15)
(80)
Profit/(loss) for the year
Total segment assets i
Total segment liabilities
i
Includes:
Investments in associate and accounted for by using the equity method
Expenditure for reportable segment:
Depreciation
Amortisation
-
2,977
-
(3,020)
(738)
(2,233)
(176)
-
(1)
-
2,977
-
(5,255)
(914)
(ii) 31 December 2012
External revenues
Derived from other business segments
Total revenue
Profit before tax
Interest income
Interest expenses
Share of profit/(loss) in equity-accounted investee
Impairment loss recognised in profit or loss
Income tax expenses
Rest of Africa
41,480
41,480
3,016
3,016
(1,996)
(1,996)
47,323
5,429
1,254
(1,996)
52,010
124,960
(51,171)
(2,652)
22,726
(7,078)
(1,907)
2,317
(137)
(54)
(1)
-
150,003
(58,386)
(54)
(4,560)
1,195
Profit/(loss) for the year from continuing operations
Profit for the year from discontinued operations
1
Total segment assets
1
Nigeria
175,633
1,996
177,629
Includes:
Investments in associate and joint venture accounted for by using the equity method
Non-current assets
Depreciation
Amortisation
Rest of the World
Elimination
Total
220,129
220,129
(1,728)
-
-
48,518
3,701
1,254
(1,996)
51,477
(533)
3,289
-
-
-
3,289
51,807
3,701
1,254
(1,996)
54,766
1,927,101
1,725,643
386,147
340,410
51,977
42,944
(92,302)
(28,541)
2,272,923
2,080,456
1,395
-
9,188
-
10,583
5,087
7,832
1,037
3,892
1,919
76
-
-
8,979
9,775
1,113
24
-
71
6
Operating segments
(b) Business reporting
31 December 2013
(i)
Corporate &
Investment
Revenue:
Derived from external customers
Total revenue
24,953
3,313
28,266
Continuing
operations
138,908
(29,368)
109,540
Interest expenses
Fee and commission expense
(82,469)
(5,225)
(33,791)
(391)
(44,335)
(4,725)
(4,343)
(110)
(82,469)
(5,225)
Net impairment loss on financial assets
(13,078)
(6,220)
(6,453)
(405)
(13,078)
Operating expenses
Depreciation and amortisation
(51,027)
(6,169)
(9,411)
(102)
(37,252)
(6,059)
(4,365)
(8)
(51,027)
(6,169)
(6)
56,058
(9,457)
14,431
(4,693)
9,929
(2,222)
(6)
31,698
(2,542)
(6)
56,058
(9,457)
100,826
26,055
126,881
Treasury and
financial markets
264,687
Share of profit of equity-accounted investee
Profit before income tax
Taxation
i
Retail
& commercial
264,687
264,687
46,601
12,235
7,492
26,874
46,601
Loans and advances
Deposits from customers and banks
963,871
2,221,764
730,557
797,747
180,363
1,295,968
52,951
128,049
963,871
2,221,764
Total segment assets i
2,642,296
2,407,260
1,089,337
992,439
1,165,273
1,061,620
387,686
353,200
2,642,296
2,407,260
5,255
1,843
2,742
670
5,255
Includes:
Non-current assets
Corporate
Revenue:
Derived from external customers
Total revenue
Interest expenses
Fee and commission expense
Treasury and
financial markets
Total
115,524
(46,600)
68,924
83,853
42,441
126,294
20,752
4,159
24,911
220,129
220,129
(23,923)
(189)
(24,112)
(31,388)
(2,285)
(33,673)
(3,075)
(53)
(3,128)
(58,386)
(2,527)
(60,913)
Net impairment loss on financial assets
(2,536)
(1,859)
Net operating income
42,276
90,762
21,618
154,656
(16,308)
(180)
(16,488)
25,788
(264)
25,524
(67,833)
(10,692)
(78,525)
12,237
(125)
12,111
(7,564)
(15)
(7,579)
(54)
13,985
(143)
13,841
(91,704)
(10,888)
(102,592)
(54)
52,010
(533)
51,477
Operating expenses
Taxation
(165)
(4,560)
-
-
3,289
3,289
25,524
12,111
17,130
54,765
Loans and advances
Deposits from customers and banks
521,035
638,333
128,635
1,036,994
37,765
102,461
687,435
1,777,788
Total segment assets
910,851
832,279
974,345
900,442
324,164
296,201
2,209,360
2,028,922
1
1
Retail &
commercial
Includes:
Investments in associate and joint venture accounted for by using the
equity method
-
-
10,583
10,583
Non-current assets
-
-
8,979
8,979
72
Group
Dec. 2013
7
Interest income
Loans and advances:
- To banks
- To customers
13,337
Group
Dec. 2012
8,281
1,983
1,467
96,674
81,824
9,545
5,761
64,161
52,670
185,700
150,003
Interest income includes accrued interest on impaired loans of N497.1 million (Bank: N425.7million) for the year ended 31
December 2013 and N800.53million (Parent: N210.95million) for the year ended 31 December 2012.
8
Interest expense
Deposits from banks
Borrowings
9
Group
Dec. 2013
Group
Dec. 2012
(2,737)
(70,229)
(9,503)
(82,469)
(2,225)
(44,876)
(11,285)
(58,386)
Fees and commission income
Credit-related fees and commissions
Commission on turnover
E-Banking related income
Pension custody fees
Trade related income
Remittance income
Other fees and charges
10
12,962
9,515
11,743
15,631
9,994
8,598
2,762
1,926
2,842
3,037
5,255
4,261
4,541
4,667
50,099
47,635
Credit-related fees and commissions income exclude any other fees considered in calculating the effective interest rate on the
principal facilities to which they were charged.
Fees and commission expense
Group
Group
Dec. 2013
Dec. 2012
Card services
Other expenses
11
(3,850)
(1,375)
(5,225)
(2,088)
(439)
(2,527)
845
13,447
3,358
775
13,373
693
17,650
14,841
Net trading income
Fixed income securities
Foreign exchange income
Fair value gain on derivatives (see note 32)
Net trading income includes the gains and losses arising from the purchase and sale of trading instruments.
12
Net gains/(losses) on investment securities
Financial assets classified as available-for-sale:
- Exchange differences on monetary items
- Allowance for impairment (equities)
Financial assets classified as held-to-maturity:
- Exchange differences on monetary items
Net fair value (losses)/gains
Financial assets classified as available-for-sale:
- Gain on disposal
Group
Dec. 2013
Group
Dec. 2012
(181)
48
(673)
(64)
(245)
1,182
557
20
(225)
420
977
73
13
Other operating income
Group
Dec. 2012
Dividend income
Rental income
Recoveries on loans written-off
Net gain on deemed disposal of subsidiary (note 27 (c') (ii))
Others
1,101
314
3,430
2,422
3,246
10,513
Group
Dec. 2011
2,887
490
3,296
6,673
Included in dividend income for the Bank is a sum of N6.61 billion (2012: N1.58 billion) being dividend received from some
subsidiaries. This amount has been eliminated in the Group result.
14
Impairment loss on loans and receivables
Group
Dec. 2013
Group
Dec. 2012
(7,272)
(4,335)
(6,414)
964
129
(1,471)
385
(514)
357
(7,859)
8,513
934
(1,055)
-
(13,078)
(4,560)
Group
Dec. 2013
Group
Dec. 2012
(48,977)
(1,678)
(50,655)
(42,135)
(1,317)
(43,452)
(5,255)
(914)
(6,169)
(9,775)
(1,113)
(10,888)
(296)
(47)
(9,665)
(6,873)
(11,743)
(1,962)
(2,605)
(6,011)
(4,409)
(1,612)
(5,804)
(51,027)
(309)
(37)
(4,966)
(5,873)
(13,597)
(2,080)
(3,580)
(5,962)
(4,977)
(1,295)
(5,576)
(48,252)
Impairment losses on loans and advances to customers:
- specific impairment (Note 24(d))
- portfolio impairment (Note 24(d))
Impairment gains/(losses) on loans and advances to banks:
- portfolio impairment ((Note 23)
Write-off on loans and advances
Impairment no longer required (loans and advances (Note 24(d)))
Impairment no longer required (other assets)
Impairment
on other
assets (Note
26(a))
Impairment loss
charges
on investment
securities
(b)
Net trading income
15
Personnel expenses
Wages and salaries
Contribution to defined benefit plans
16
Depreciation of property and equipment (note 29)
Amortisation of intangible assets (note 30)
17
Other operating expenses
Auditors remuneration
Directors fees
Banking sector resolution cost
Deposit insurance premium
Occupancy and premises maintenance cost
Business travels
Advertisements
Contract services
Communication
Insurance
Other expenses
74
18
Taxation
Recognised in the statement of comprehensive income
(a) Current tax expense
Current year
(b) Deferred tax expense
Origination and reversal of temporary differences (Note 31)
Total income tax (expense)/credit
Group
Dec. 2013
Group
Dec. 2012
(9,955)
(3,126)
498
(9,457)
2,593
(533)
1,274
(8,368)
9,955
2,861
2,627
(4,479)
3,126
1,274
(c) Current tax liabilities
Balance, beginning of year
Tax paid
Income tax charge
Balance, end of year
(d) Reconciliation of effective tax rate
The tax on the Group‟s profit before tax differs from the theoretical amount that would arise using the tax rate applicable to
profits of the Bank (Parent).
(i) 31 December 2013
Group %
Group
56,058
Income tax based on the corporate tax rate
30%
16,817
Tax rate
17%
Companies income tax
Education tax
Effect of excess dividend tax on 2012 profit
Effect of WHT paid on dividend received
Effect of capital gains tax
Minimum tax
Effect of tax rates in foreign jurisdictions
Information technology levy
Disallowed permanent differences
Effect of tax assessment based on minimum tax law
Total income tax expense in comprehensive income
17%
3,624
625
85
(1,018)
513
4,247
(15,437)
9,457
Income tax payable for the Parent is based on the minimum tax provisions in the Nigerian tax law, which is applicable to
companies that do not have taxable profits
Group
Group
52,010
Income tax based on the corporate tax rate
Effect of tax rates in foreign jurisdictions
Information technology levy
Disallowed permanent differences
Effect of tax assessment based on minimum tax law
Total income tax expense in comprehensive income
30%
15,603
3%
821
459
403
(16,753)
1,683
Income tax payable for parent bank is based on the minimum tax provisions in the Nigerian tax law, which is applicable to
companies that do not have taxable profits
75
19
Non-current assets held for distribution and discontinued operations
Non-current assets held for distribution represent assets and liabilities relating to certain subsidiaries of the Group namely: UBA
Assets Management Limited; UBA Capital Plc; and UBA Insurance Brokers Limited; as well as the Group's joint venture, UBA
Metropolitan Life Insurance Limited, spun off by United Bank for Africa Plc to eligible shareholders effective January 1, 2013.
This was pursuant to Central Bank of Nigeria‟s circular (Regulation on Scope of Banking Activities and Ancillary Matters
No.3, 2010) repealing universal banking regime under which Nigerian banks operated . These assets have therefore been
presented as assets held for distribution to shareholders.
19
Non-current assets held for distribution and discontinued operations - continued
(a)
Assets of disposal group held for distribution to owners are analysed below:
Group
Dec. 2013
Investments in subsidiaries
Intangible assets
Deferred tax assets
Other assets
Total
(b)
Group
Dec. 2012
-
18,406
427
11
1,398
39,796
2,773
16
225
511
63,563
-
48,700
513
2,321
51,534
Liabilities of disposal group held for distribution to owners are analysed
below:
Managed funds
Other liabilities
Total
(c) Analysis of the result of discontinued operations is as follows:
Group
Dec. 2013
Revenue
Expenses
Profit before tax of discontinued operations
Tax
-
(d) Summarised cashflow of disposal group is presented below:
Operating cashflows
Investing cashflows
Financing cashflows
Total cash flows
-
(e) Gain on non-current assets distributed to owners
At the beginning of the year, the Group distributed non-current assets held for distribution to shareholders. The resulting gain on
distribution is as analysed below:
Group
Dec. 2013
Fair value of net asset distributed
12,907
Previous carrying value of net asset distributed
11,957
Gain on net asset distributed
950
76
20
Earnings per share
Basic earnings per share
The calculation of basic earnings per share as at 31 December 2013 was based on the profit attributable to ordinary shareholders of
N46,601 million (Bank: N46,483 million) and weighted average number of ordinary shares outstanding of 30,597,303,177 (Bank:
32,981,387,565), having excluded treasury shares held by the Parent's Staff Share Investment Trust.
Group
Dec. 2013
Group
Dec. 2012
Profit from continuing operations attributable to owners of the parent
Profit from discontinued operations attributable to owners of the parent
Total
46,601
46,601
51,477
3,289
54,766
Weighted average number of ordinary shares outstanding
30,597
30,974
1.52
1.52
1.66
0.11
1.77
127,584
80,455
262,502
470,541
246,262
716,803
162,353
82,395
349,670
594,418
119,697
714,115
Basic and diluted earnings per share (Naira)
From continuing operations
From discontinued operations
Total comprehensive income for the year
21
Cash and balances with banks
Unrestricted balances with central bank
Money market placements
Mandatory reserve deposits with Central Banks (note 21(i) below)
(i) This represents cash reserve requirement with central banks of the countries in which the Bank and its subsidiaries operate and is not
available for use in the Group‟s day-to-day operations.
Group
Group
Dec. 2013
Dec. 2012
(ii) Cash and cash equivalents for the purposes of the statements of cash flows include the following :
Money market placements (less than 90 days)
Financial assets held for trading (less than 90 days)
Cash and cash equivalents
22
162,353
82,395
335,189
579,937
735
49
284
173
784
457
784
784
457
457
Government bonds
Treasury bills
Current
23
127,584
80,455
109,014
666
317,719
Term loans:
Gross amount
Portfolio impairment
26,308
(57)
26,251
28,699
(186)
28,513
Current
26,251
26,251
28,513
28,513
77
23
Loans and advances to banks - continued
Impairment allowance on loans and advances to banks
Group
Dec. 2013
Provision no longer required
24
(a)
(i)
31 December 2013
Group
Loans to corporate entities and other organizations
Overdraft
Term Loans
Overdraft
Term Loans
Others
(b)
(ii)
Bank
Overdraft
Term Loan
Overdraft
Term Loan
Others
(b)
(i)
31 December 2012
Group
Overdraft
Term Loans
Overdraft
Term Loan
Others
Group
Dec. 2012
186
(129)
57
543
(357)
186
Specific
impairment
(1,971)
(2,663)
(4,634)
Portfolio
impairment
(3,251)
(11,442)
(14,693)
11,620
133,520
145,140
(720)
(1,251)
(1,971)
(255)
(2,996)
(3,251)
145,388
664,701
1,718
811,807
(680)
(967)
(1,016)
(2,663)
(1,706)
(9,385)
(351)
(11,442)
106,335
698,924
805,259
(1,307)
(760)
(2,067)
(1,936)
(4,314)
(6,250)
5,657
100,678
106,335
(360)
(947)
(1,307)
(128)
(1,808)
(1,936)
114,269
582,931
1,724
698,924
(760)
(760)
(1,055)
(3,208)
(51)
(4,314)
Specific
impairment
(1,556)
(3,891)
(5,447)
Portfolio
impairment
(1,130)
(9,228)
(10,358)
17,590
93,782
111,372
(556)
(1,000)
(1,556)
(271)
(860)
(1,130)
133,152
419,144
11,058
563,355
(3,681)
(210)
(2,438)
(6,670)
(119)
(9,228)
Gross
Amount
145,140
811,807
956,947
Gross
Amount
111,372
563,355
674,727
(3,891)
78
(ii)
Bank
Overdraft
Term Loans
82,353
496,944
579,297
(1,049)
(345)
(1,394)
(447)
(6,742)
(7,189)
11,459
70,894
82,353
(524)
(525)
(1,049)
(177)
(270)
(447)
Gross
Amount
Overdraft
Term Loans
Others
90,737
395,149
11,058
496,944
Specific
impairment
(151)
(194)
(345)
Group
Dec. 2013
(c)
Current
Non-current
(d)
Impairment allowance on loans and advances to customers
Portfolio
impairment
(1,227)
(5,396)
(119)
(6,742)
Group
Dec. 2012
820,922
116,698
937,620
374,680
284,242
658,922
5,447
7,272
(385)
(7,700)
4,634
13,131
6,414
(8,513)
(5,585)
5,447
Specific impairment
Impairment charge for the year (Note 14)
Reversal for the year (Note 14)
Write-offs
Group
Dec. 2013
Group
Dec. 2012
Net impairment charge/(reversal) for the year
25
10,358
4,335
14,693
11,322
(964)
10,358
Carrying amount
Available-for-sale investment securities comprise (see note (i)):
Treasury bills
Equity investments at cost (see note (ii) )
Less: specific allowance for impairment (equities)
811,206
680,817
208,843
208,843
93,091
93,091
2,151
(909)
1,242
43,749
253,834
2,941
(1,372)
1,569
34,005
128,665
79
Held to maturity investment securities comprise (see note (i)):
Treasury bills
Promissory notes
Bonds (note (iii & iv) )
Current
Non-current
(i)
179,815
45
377,512
557,372
69,390
79
482,683
552,152
529,423
281,783
811,206
82,802
598,015
680,817
Included in available-for-sale and held-to-maturity investment securities are pledged financial assets which cannot be re-pledged or
resold by counterparties, and these securities are stated as follows:
Group
Dec. 2013
Group
Dec. 2012
Pledged assets:
Treasury bills (available-for-sale)
Bonds (held-to-maturity)
(ii)
10,097
68,369
78,466
8,031
123,000
131,031
Certain unquoted investments for which fair values could not be reliably estimated have been carried at cost less impairment. These
include investments made by the Bank under the Small and Medium Enterprises Equity Investment Scheme (SMEEIS). These
investments were made in compliance with the regulatory requirement in force as at the time of the investment (Central Bank of Nigeria
Monetary Policy Circular No. 35). However, this regulatory requirement has been abolished. There are no active markets for these
financial instruments, fair value information are therefore not available, this makes it impracticable for the Group to fair value these
investments. They have therefore been disclosed at cost less impairment. The carrying amount is the expected recoverable amounts on
these investment.
These invesments are listed below:
Group
Dec. 2013
Tinapa Business Resort Ltd
Abuja Leasing Company Ltd
GIM UEMOA
CRC Credit Bureau (Formerly Credit Reference Company Ltd)
Lekky Hotels Limited
MP Budget Limited (Hotel Management Company)
ATM Consortium
Omonefe Foods Limited
Valucard Plc
African Export Import Bank
Central Securities and Clearing System
Nigerian Inter-Bank Settlement System
L' Office national des télécommunications (ONATEL)
Société Burkinabé des Fibers Textiles (SOFITEX)
Société de Gestion et d‟intermédiation (SGI)
L‟Africaine des Assurances (AA)
Assurance et Réassurance du Golfe de Guinée (ARGG)
SICAV ABDOU DIOUF
L‟AFRICAINE VIE
SBIF
National eGovernment Strategies (NeGSt)
Central d‟Achat d‟Intrants Agricoles (CAIA)
SOAGA
GIM-UEMOA
Société Africaine des Assurances
SN - CITEC
SOFIGIB
FMDA OTC INVESTMENT
SIMO
Société Ouest Africaine de Gestion d‟Actif (SOAGA)
Banque Régionale de Solidarité (BRS)
Others
550
343
339
106
71
70
69
66
58
47
36
34
34
27
24
23
21
20
19
17
17
15
14
13
8
110
2,151
(909)
1,242
Group
Dec. 2012
550
343
106
71
70
479
18
389
110
94
34
69
66
58
47
14
34
34
27
24
23
21
20
19
17
17
15
14
13
8
137
2,941
(1,372)
1,569
80
The Group neither controls nor significantly influences the activities of these investee companies.
(iii)
Included in bonds held to maturity are bonds issued by the Asset Management Company of Nigeria (AMCON). These are zero-coupon
bonds received as consideration for loans sold by the Bank to AMCON. These bonds are guaranteed by the Federal government of
Nigeria with annual yield ranging from 12.3% to 12.7%.
(iv)
Included in bonds held to maturity are Federal Government of Nigeria bonds amounting to 2013: N135 billion (2012: N187 billion). The
bonds are stated at amortised cost.
26
Other assets
Group
Dec. 2013
Accounts receivable
Prepayment
Others
19,202
6,616
6,061
31,879
15,003
4,888
18
19,909
Impairment loss on other assets (account receivable)
(1,443)
30,436
(1,311)
18,598
1,311
514
(382)
1,652
1,055
(934)
(462)
1,443
1,311
29,352
1,084
30,436
16,930
1,668
18,598
(a) Movement in impairment loss for other assets
At start of year
Charge for the year (Note 14)
Provision no longer required
Write-off
(b) Current
Non-current
27
Group
Dec. 2012
Investment in equity-accounted investee
In December 2013, the Group's holding in UBA Zambia Ltd was diluted to 49% as a result of additional capital injection by a third
party. Consequently, UBA Zambia became an associate and ceased to be a subsidiary of the Group. Investment in UBA Zambia has been
accounted for using equity accounting.
The associate has share capital consisting solely of ordinary shares, which are held directly by the Group.
UBA Zambia was incorporated in 2009 and operates as a licensed commercial bank in Zambia.
There are no contingent liabilities relating to the group‟s interest in the associates
(a) Nature of investment in associates 2013
Place of
business/
country of
incorporation
Name of entity
Investment in UBA Zambia
Zambia
% of
ownership
interest
49
Nature of the
relationship
Trades with
UBA's brand in
Zambia
Measurement
method
Equity
(b) Summarised financial information for associates
Set out below are the summarised financial information for UBA Zambia accounted for using the equity method.
(i) Summarised balance sheet
Dec. 2013
Assets
Other current assets (excluding cash)
Non-current assets
Total assets
4,670
2,301
4,664
11,635
Financial liabiliites (excluding trade payables)
Othe current liabiliites (including trade payables)
Non-current financial liabilities
Other non-current liabilities
Total liabiliites
(2,798)
(478)
(4,642)
(7,918)
Net assets
3,717
81
27
Investment in equity-accounted investee (continued)
(ii) Summarised statement of comprehensive income
Revenue
Interest income
Interest expense
Loss from continuing operations
Income tax credit
Post-tax loss from continuing operations
939
(67)
443
(463)
(565)
175
(389)
The information above reflects the amounts presented in the financial statements of the associates (and not UBA Group's share of those
amounts) adjusted for differences in accounting policies between the group and the associates. The are no differences in the accounting
policy of the associate and the Group acounting policies.
(c) Movement in investment in equity-accounted investee
Group
Dec. 2013
Fair value of previously held interest in associate
Fair value of residual interest in subsidiary (note (i) below)
Share of current year result
Reclassification to investment in subsidiaries
Reclassification from investment in subsidiaries (note 28 (vii))
2,983
(6)
2,977
Group
Dec. 2012
9,211
31
(54)
(9,188)
-
(i) Fair value of residual interest in subsidiary represents fair value gain on deemed disposal of UBA Zambia and it arose from measuring
the investment retained by the Bank in UBA Zambia at fair value, following loss of control by the Bank during the year. The fair value
gain on deemed disposal (N2,983 million) has been recognised as "other operating income" in the statement of comprehensive income
under note 13 of the financial statements.
Significant restrictions:
There are no significant restrictions on the Group‟s ability to access or use the assets and settle the liabilities of the associate to the
extent that regulation does not inhibit the Group.
(ii) Net gain on deemed disposal of subsidiary is analysed below:
Group
Dec. 2013
2,983
(561)
2,422
Fair value of residual interest in subsidiary
Net asset on date of acquisition of associate
(iii) Purchase price allocation on acquisition of associate
The fair value on the date of acquisition is allocated as follows
Share of net assets
Notional goodwill
Group
Dec. 2013
1,797
1,186
2,983
82
28 Investment in subsidiaries
(a) Holding in subsidiaries
Bank
Dec. 2013
Bank In millions of Nigerian Naira
Bank subsidiaries (see note (i) below):
Year of
acquisition/
Commencement
Holding
2004
2007
2008
2008
2008
2008
2008
91%
100%
100%
100%
100%
74%
64%
9%
26%
36%
2008
2009
2009
2009
2010
2010
2010
2010
2011
76%
85%
100%
86%
24%
15%
14%
2011
2011
100%
85%
2008
100%
-
2004
2008
100%
100%
-
2012
100%
-
2012
100%
-
UBA Ghana Limited
UBA Cameroun SA Limited
UBA Cote d'Ivoire
UBA Liberia Limited
UBA (SL) Limited
UBA Uganda Limited
Banque International Du Burkina Faso
Continental Bank Benin
UBA Kenya Bank Limited
UBA Chad SA )
UBA Senegal (SA)
UBA Zambia Limited ( (see (vii) below)
UBA Tanzania Limited
UBA Gabon Limited
UBA Guinea Limited
UBA Congo DRC Limited
UBA Congo Brazaville Limited
UBA Mozambique Limited
UBA Retail Financial Services Limited (RFS)
Non-Bank Subsidiaries:
UBA Pensions Custodian Limited (see (ii)
below)
UBA FX Mart Limited (see (iii) below)
UBA Capital Europe Limited (see (iv) below)
Non Country
controlli
ng
interest
100%
100%
100%
100%
15%
Ghana
Cameroun
Cote d'Ivoire
Liberia
Sierra Leone
Uganda
Burkina Faso
Benin
Republic
Kenya
Chad
Senegal
Zambia
Tanzania
Gabon
Guinea
Congo DRC
Congo
Brazzaville
Mozambique
Nigeria
Nigeria
UBA Capital Holding Mauritius (see (v) below)
Nigeria
United
Kingdom
Mauritius
Bank
Dec. 2012
Industry
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Pension
custody
Banking
Investment
banking
Investment
banking
-
8,048
1,845
5,995
2,330
1,269
2,718
5,352
8,048
1,845
5,995
2,330
1,269
2,718
5,352
6,726
1,770
2,440
2,400
1,770
2,760
1,475
2,500
6,726
1,770
2,440
2,400
1,770
1,770
2,760
1,475
1,690
3,024
869
3,024
869
-
-
2,000
502
2,000
502
9,974
9,974
-
-
65,767
66,727
The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held. The parent company
further does not have any shareholdings in the preference shares of subsidiary undertakings included in the Group.
During the reporting period the Bank and some subsidiaries provided financial support to other subsidiaries in the group as follows:
Dec. 2013
Provider
UBA Plc
Receiver
UBA Congo DRC Limited
UBA Congo Brazaville Limited
UBA Gabon Limited
Type of support
Purchase of equity
instrument
Reasons for support
Compliance to minimum
regulatory capital at
jurisdiction
Amount
810
822
313
1,945
The movement in investment in subsidiaries during the year is as follows:
Additional investments during the year
Reclassification from investment in associates
Reclassification of non-current assets held for distribution (note 18(a))
Reclassification to investment in associates (note 27 (c))
Impairment loss
Dec. 2012
Amount
-
Dec. 2013
Dec. 2012
66,727
810
(1,770)
65,767
56,695
3,133
9,974
(2,408)
(667)
66,727
83
(i)
UBA Ghana, UBA Cameroon SA, UBA Cote d'ivoire, UBA Liberia, UBA Uganda, Banque International Du Burkina Fasso, UBA Retail Financial Services, UBA Chad SA, UBA
Senegal SA, Continental Bank Benin, UBA Kenya, UBA Zambia, UBA Tanzania, UBA Gabon, UBA Guinea, UBA Sierra Leone, UBA Mozambique, UBA Congo DRC, UBA Congo
Brazaville and UBA Retail Financial Services Limited are engaged in the business of banking and provide corporate, commercial, consumer and international banking, trade services,
cash management and treasury services.
(ii)
UBA Pensions Custodian Limited obtained an operating license on 20 February 2006 and commenced operations on 3 May 2006. It principally operates as a custodian of pension
assets, to hold and deal in such assets as directed by the Pension Fund Administrators and in line with regulations of National Pension Commission in conformity with the Pensions
Reforms Act 2004.
(iii) UBA FX Mart was incorporated on January 30, 2008 and commenced operations May 22, 2008. It operates as a licensed bureau de change dealing in foreign currency and traveller's
cheques.
(iv)
UBA Capital Europe Limited is a London-based investment banking company which was incorporated on September 25, 1995. It is primarily engaged in brokerage, trade finance and
wealth management businesses.
(v)
UBA Capital Holding Mauritius (formerly Afrinvest Holdings Mauritius) is a fully owned non-operatng subsidiary of the Bank. The Bank completed the first stage of liquidation of
UBA Capital Holding Mauritius during the year by effecting a transfer of its shareholding of 2% in UBA Capital Europe Limited to United Bank for Africa Plc. The second and final
stage of liquidation will be finalised in the next financial year.
(vi)
Significant restrictions:
There are no significant restrictions on the Group‟s ability to access or use the assets and settle the liabilities of any member of the Group to the extent that regulation does not inhibit
the Group from having access, and in liquidation scenario, this restriction is limited to its level of investment in the entity .
(vii) In December 2013, the Group's holding in UBA Zambia Ltd was diluted to 49% as a result of additional capital injection by a third party. Consequently, UBA Zambia effectively
ceased to be a subsidiary of the Group. Investment in UBA Zambia has been considered as an investment in associate and has been accounted for using equity accounting.
(b) Non-fully owned subsidiaries
(i) The total non-controlling interest for the period is N7.387 billion (2012: N3.36 billion), attributed to the following non-fully owned
subsidiaries as follows:
Dec. 2013
1,204
1,984
430
1,564
1,243
485
477
7,387
UBA Ghana Limited
Banque International Du Burkina Faso
UBA Uganda Limited
UBA Senegal (SA)
Dec. 2012
951
1,159
1,251
3,361
Set out in note 28(c) are the summarised financial information for all (including the non-fully owned) subsidiaries. Details of allocation of total comprehensive income to noncontrolling interests and dividends paid to subsidiaries are shown below:
UBA Ghana Limited
Dec. 2012
Dec. 2013
5,504
1,937
(2,025)
(2,951)
1,368
Total comprehensive income allocated to noncontrolling interest
663
508
702
(734)
(697)
323
Dividends paid to non-controlling interests
199
-
-
Total comprehensive income
Dec. 2012
UBA Uganda Limited
Dec. 2013
Dec. 2012
(262)
(67)
(334)
-
Dec. 2013
7,182
Dec. 2013
Banque International Du
Burkina Faso
-
Dec. 2013
Dec. 2012
(505)
(76)
(539)
-
41
Dec. 2012
-
UBA Senegal (SA)
Dec. 2013
Dec. 2012
1,249
169
1,310
-
Dec. 2013
Dec. 2012
(70)
(10)
(202)
-
84
28 Investment in subsidiaries - continued
(c) Condensed result of consolidated subsidiaries -contd
For the year ended 31 December 2013
UBA Ghana
UBA Liberia
UBA Cote D'
Ivoire
UBA Senegal
UBA Kenya
UBA Guinea
UBA Gabon
UBA Benin
Condensed statements of comprehensive income
Operating income
Total operating expenses
Net impairment gain/(loss) on financial assets
Income tax expense
543
(1,013)
(45)
1,300
(481)
(115)
1,218
(848)
(144)
2,678
(2,379)
(3,251)
1,249
-
(515)
10
703
(140)
226
-
(2,951)
-
133
133
1,249
1,249
(505)
(505)
563
563
226
226
(2,951)
(2,951)
10,879
2,626
344
83
211
14,143
1,557
12,145
15,110
2,323
346
113
31,595
22,137
15,493
18,606
191
319
56,746
1,888
1,450
2,714
215
144
12
436
6,859
3,486
3,427
4,365
129
140
17
11,563
5,146
6,949
2,285
(145)
125
14,361
5,201
20,101
29,501
2,759
603
25
58,189
49,519
48,258
3,881
139
13,043
114,840
12,134
133
1,876
14,143
14,656
14,064
644
2,230
31,595
1,387
48,826
1,550
4,984
56,746
161
4,600
119
16
1,962
6,859
2,416
5,818
897
12
2,420
11,563
9,770
2,125
2,466
14,361
8,628
46,210
1,531
1,821
58,189
Net cash from investing activities
26,060
(4,442)
14
3,079
32
39
(295)
458
29
15,663
62
60
(460)
1,667
73
1,364
(337)
6
(3,253)
901
19
(4,812)
(522)
32
Increase/(decrease) in cash and cash equivalents
21,632
3,150
192
15,785
1,279
1,032
(2,333)
(5,302)
3
9,264
30,899
7,729
10,879
1,365
1,557
6,352
22,137
609
1,888
2,454
3,486
2
7,478
5,147
(4)
10,507
5,201
0
0
0
(0)
0
Profit/(loss) for the year from discontinued operations
Profit for the period.
14,168
(3,712)
(476)
848
(723)
(70)
2,042
(1,897)
(12)
9,981
(2,799)
54
-
133
-
7,182
7,182
54
54
30,899
12,814
69,864
581
580
101
114,840
3,141
(1,458)
(433)
Condensed statements of financial position
Assets
Loans and Advances to Banks
Other assets
Investments in Subsidiaries
Property and Equipment
Intangible assets
Deferred tax assets
Financed by:
Deposits from banks
Other liabilities
Borrowings
Total Equity
Condensed cash flows
Cash and cash equivalents at beginning of year
(0)
(0)
(0)
Condensed result of consolidated subsidiaries continued
UBA Sierra
Leone
UBA Burkina
Faso
UBA Chad
UBA Uganda
UBA Congo
Brazzaville
UBA
Mozambique
UBA Cameroun
UBA Pension
Custodians
Operating income
Income tax expense
975
(536)
(1)
6,936
(3,784)
(1,185)
1,297
(1,128)
(40)
894
(1,042)
(113)
437
(126)
311
311
1,968
(31)
1,937
1,937
129
(198)
(69)
(69)
(262)
(262)
(262)
8,296
278
2,959
200
228
11,961
16,549
24,522
48,716
755
2,799
6
93,346
2,903
10,652
4,129
106
354
34
18,178
7,203
7
3,076
2,551
379
226
744
14,185
1,500
(1,263)
(189)
782
(723)
(129)
4,975
(3,121)
(160)
3,787
(596)
-
48
48
48
(70)
(70)
(70)
1,695
1,695
1,695
3,190
(770)
2,420
2,420
9,598
8,906
3,542
1,098
310
28
23,482
1,890
2,775
14
91
183
23
4,976
14,796
26,129
9,277
1,349
1,169
557
53,278
5
51
7,071
579
22
13
7,740
Assets
Other assets
Intangible assets
(b) Deferred tax liabilities
85
Financed by:
Deposits from banks
Other liabilities
Borrowings
Total Equity
10,333
96
128
1,405
11,961
15,636
70,824
1,346
31
5,510
93,346
5,302
10,052
148
75
2,601
18,178
481
10,454
1,008
2,243
14,185
466
18,716
593
3,707
23,482
4,444
34
498
4,976
(ii)
2,737
21
(61)
1,321
45,318
942
5,697
53,278
3,858
821
2
3,059
7,740
7,930
353
(427)
(2,460)
167
(103)
3,603
1,940
21
164
1,036
8
(587)
552
(25)
(4,047)
223
(1,382)
(710)
(6,282)
(5)
2,697
1
7,857
4
(2,396)
-
5,564
-
1,208
41
(59)
-
(5,205)
9
(6,997)
-
5,598
8,296
8,688
16,549
5,299
2,903
1,638
7,202
8,349
9,598
1,949
1,890
19,992
14,796
7,002
5
(0)
0
0
0
(0)
0
UBA Insurance
Brokers
UBA RFS Limited
(0)
(0)
UBA Tanzania
UBA Zambia
UBA Congo DRC
Operating income
Income tax expense
560
(933)
(306)
UBA Asset
Management
Group
UBA Capital
Group
610
(751)
(89)
UBA FX Mart
(679)
(679)
430
(922)
(55)
(6)
(553)
170
(383)
162
(50)
-
(230)
(0)
(230)
-
-
-
-
-
-
-
-
111
(26)
85
(679)
(383)
(230)
-
-
-
-
85
-
455
2
114
203
774
Assets
Other assets
Intangible assets
Deferred tax assets
3,920
8,543
2,047
140
123
265
15,038
-
4,142
10,028
467
262
17
14,917
-
-
201
652
0
0
1
855
86
Financed by:
Deposits from banks
Other liabilities
Borrowings
Total Equity
8,094
4,133
2,529
281
15,038
-
10,649
2,085
119
7
12
2,044
14,917
-
-
-
70
36
668
774
798
26
31
855
3,479
(6)
72
-
2,148
879
(24)
-
-
-
-
382
(320)
2
3,545
1
-
3,004
65
-
-
-
-
64
374
3,919
-
1,073
4,142
-
-
-
455
455
137
201
0
-
0
0
0
UBA Capital
Europe
SSIT
Bank
Group
Adjustments
Group
Operating income
Income tax expense
445
(525)
-
1,115
(292)
-
137,944
(85,922)
(181)
(80)
(6)
(86)
(86)
824
(102)
721
721
51,841
(5,358)
46,483
46,483
(11,358)
6,249
(6,083)
(11,192)
(80)
(11,272)
(11,272)
176,993
(107,851)
(13,078)
(6)
56,058
(9,457)
46,601
46,601
Assets
Derivative assets
Other assets
Intangible assets
Deferred tax assets
6,392
-
21,312
21,312
620,426
777
3,265
26,251
796,942
585,445
19,069
1,770
65,767
67,661
1,401
28,643
2,217,417
(61,165)
(50,864)
(21,828)
(99)
1,207
(66,936)
6
5,667
(194,012)
716,803
784
3,265
26,251
937,620
811,206
30,436
2,977
75,409
7,356
30,189
2,642,296
21,577
2,530
51
4
30,553
18,022
4,569
3
7,959
30,553
27
31,121
(9,837)
21,312
31
1,797,376
54,351
1,602
55,653
259,538
2,168,551
(58,135)
(20,323)
(3,263)
(31,121)
(81,171)
(115,942)
31
60,582
2,161,182
78,071
2,861
55,653
14
235,036
2,671,500
5,259
238
1
-
(136,105)
(83,886)
(54,304)
22,243
3,965
(64,107)
(58,620)
(83,298)
(120,061)
5,499
2
-
(274,295)
(254)
(37,899)
(109)
(261,979)
(239)
893
6,394
-
498,088
223,539
(25,355)
(63,363)
579,937
317,719
Financed by:
Deposits from banks
Other liabilities
Borrowings
Total Equity
87
29
(a) (i)
Group
As at 31 December 2013
Bank
Land
Buildings and
Leasehold
Improvement
Cost
Balance at 1 January 2013
Additions
Reclassification
Disposals
Deemed disposal (see note iii below)
Exchange difference
Balance at 31 December 2013
30,543
59
7
(57)
30,552
34,269
1,219
160
(729)
(127)
(3)
34,789
3,877
76
3,953
Accumulated depreciation
Charge for the year
Disposals
Exchange difference
-
11,488
1,307
(376)
(42)
(1)
12,376
Carrying amounts
30,552
30,543
(ii)
Furniture and
Office
Equipment
Work in
progress
Total
9,531
1,100
30
(534)
(69)
(1)
10,057
49,235
3,027
1,407
(212)
(276)
(2)
53,179
3,260
5,367
(1,680)
(3)
6,944
130,715
10,772
(1,535)
(472)
(6)
139,474
1,211
166
1,377
8,205
621
(412)
(48)
(1)
8,365
39,064
3,161
(162)
(115)
41,948
-
59,968
5,255
(950)
(206)
(2)
64,066
22,413
2,576
1,692
11,231
6,944
75,409
22,781
2,665
1,326
10,171
3,260
70,746
Bank
Land
Buildings and
Leasehold
Improvement
Cost
Additions
Reclassifications
Disposals
30,543
59
7
(57)
30,552
25,802
75
51
(181)
25,747
3,877
76
3,953
Charge for the year
Disposals
-
7,832
451
(34)
8,249
Carrying amounts
30,552
30,543
(b) (i)
Other Motor Vehicles
Transportation
Equipment
Transportation
Equipment
Furniture and
Office
Equipment
Work in
progress
Total
7,923
810
30
(439)
8,324
41,064
1,892
1,403
(186)
44,173
3,036
5,094
(1,567)
6,563
112,245
7,930
(863)
119,312
1,211
166
1,377
6,932
347
(324)
6,955
33,152
2,061
(143)
35,070
-
49,127
3,025
(501)
51,651
17,498
2,576
1,369
9,103
6,563
67,661
17,970
2,666
991
7,912
3,036
63,118
Group
As at 31 December 2012
Land
Cost
Additions
Reclassification
Disposals
Transfer to Non-current assets held for distribution
Exchange difference
Furniture and
Office
Equipment
Work in
progress
Total
2,557
3,119
(931)
(775)
(708)
(2)
3,260
107,861
29,872
(4,481)
(2,500)
(37)
130,715
-
10,490
316
51
(1,312)
46,707
3,216
397
(1,077)
3,877
(14)
9,531
-
(13)
34,269
(8)
49,235
-
10,661
1,490
(644)
(19)
11,488
1,019
193
(88)
1,124
7,644
1,133
(477)
(7)
8,293
32,919
6,959
(799)
(15)
39,064
-
52,243
9,775
(2,008)
(41)
59,969
Carrying amounts
30,543
22,781
2,753
1,238
10,171
3,260
70,746
13,715
20,008
2,704
2,846
13,788
2,557
55,618
(1,422)
30,543
30,669
4,916
384
(1,317)
(370)
Transportation
Equipment
3,723
55
99
-
Charge for the year
Reclassification
Disposals
Exchange difference
13,715
18,250
Buildings and
Leasehold
Improvement
88
(ii)
Bank
Land
Buildings and
Leasehold
Improvement
13,715
18,250
(1,422)
23,009
3,740
384
(961)
(370)
3,723
55
99
-
30,543
25,802
Cost
Additions
Reclassification
Disposals
Transfer to Non-current assets held for distribution
Exchange difference
Transportation
Equipment
Furniture and
Office
Equipment
Work in
progress
Total
8,016
146
51
(290)
40,137
825
397
(295)
2,169
2,954
(931)
(448)
(708)
90,769
25,970
(1,994)
(2,500)
3,877
7,923
41,064
3,036
112,245
Charge for the year
Reclassifications
Disposals
Exchange difference
-
7,218
658
(44)
1,018
193
-
6,429
765
(262)
29,038
4,427
(313)
-
-
7,832
1,211
6,932
33,152
-
43,703
6,043
(619)
49,127
Carrying amounts
30,543
17,970
2,666
991
7,912
3,036
63,118
13,715
15,791
2,705
1,587
11,099
2,169
47,066
(iii) Deemed disposal of subsidiary relates to the elimination of items of property and equipment in the opening balances of the Group that relates to UBA Zambia. During the year UBA
Zambia ceased to be a subsidiary of UBA Plc and is now accounted for as an associate. (see note 27 (ii))
30
Intangible assets
Goodwill
Purchased
software
Total
5,673
9,636
705
(37)
10,305
15,309
705
(37)
15,978
-
7,741
914
(8)
(25)
8,622
7,741
914
(8)
(25)
8,622
5,673
5,673
1,683
1,895
7,356
7,568
Bank
Cost
Additions
8,000
557
8,557
8,000
557
8,557
Amortization and impairment losses
Amortisation for the period
6,422
734
7,156
6,422
734
7,156
Carrying amounts
1,401
1,578
1,401
1,578
(a) (i)
Group
Cost
Additions
Transfer to associate
5,673
-
Transfer to associate
Exchange difference
Carrying amounts
(ii)
89
(b) (i)
Goodwill
Purchased
software
Total
3,479
2,194
5,673
9,086
558
(8)
9,636
12,565
2,752
(8)
15,309
-
6,635
1,113
(7)
7,741
6,635
1,113
(7)
7,741
5,673
3,479
1,895
2,451
7,568
5,930
Bank
Cost
Additions
7,661
339
8,000
7,661
339
8,000
5,562
860
6,422
5,562
860
6,422
Carrying amounts
1,578
2,099
1,578
2,099
Group
Cost
Additions
Exchange difference
Exchange difference
Carrying amounts
(ii)
In 2012 the Bank (Parent company) increased its 49% stake in UBA Capital Europe to 100% effective 31 August 2012 by the conversion of existing preference shares to ordinary shares.
This increased the Bank's stake to 98%, while the remaining 2% was owned by UBA Capital Holdings Mauritius (a wholly owned non-operating subsidiary of the Bank).
In 2013, the Bank commenced liquidation of UBA Capital Holdings Mauritius Limited. The Bank completed the first stage of liquidation of UBA Capital Holding Mauritius during the
year by effecting a transfer of its shareholding of 2% in UBA Capital Europe Limited to United Bank for Africa Plc. The second and final stage of liquidation will be finalised in the next
financial year.
Impairment testing for cash-generating units containing Goodwill
For the purpose of impairment testing, goodwill acquired through business combinations is allocated to cash generating units (CGUs). The recoverable amounts of the CGUs have been
determined based on the value-in-use calculations; using cash flow projections based on the financial budgets approved by senior management covering a period of five years. Cash
flows beyond the five-year period are extrapolated using the estimated growth rates stated above. The growth rate does not exceed the long-term average growth rate for the business in
which the CGU operates.
The following is the result of impairment test and key assumption used for value-in-use calculations
Goodwill
- Continental Bank Du Benin
- UBA Capital Europe
3,479
2,194
5,673
Net asset
3,540
7,959
11,499
Total carrying
amount
7,019
10,153
17,172
Discount rate
23%
24%
Terminal
growth rate
1.50%
1.00%
Excess of recoverable
Recoverable amount over carrying
amount
amount
29,146
22,127
18,551
8,398
47,697
30,525
Reasonably expected changes in key assumptions would not result in the carrying amount exceeding recoverable amount.
The Continental Bank Du Benin and UBA Capital Europe CGU relate to "Rest of Afirca" and "Rest of the World" respectively for the purpose of segment reporting as disclosed in note
6(a). The key assumptions described above may change as economic and market conditions change. The Group estimates that reasonably possible changes in these assumptions would
not cause the recoverable amount of the CGUs to decline below the carrying amount for both CGUs.
90
31
(a)
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
31 December 2013
Assets
Property, equipment, and software
Allowances for loan losses
Account receivable
Tax losses carried forward
Others
Net tax assets /liabilities
31 December 2012
Group
Liabilities
6,279
1,892
325
21,159
535
30,189
Assets
Property, equipment, and software
Account receivable
Others
Net tax assets /liabilities
14
14
Group
Liabilities
7,452
2,213
240
19,352
367
29,624
Bank
Liabilities
Assets
4,761
1,892
325
21,159
507
28,643
Bank
Liabilities
Assets
59
59
-
5,980
2,213
240
19,352
367
28,152
-
Deferred tax assets and liabilities
Movements in temporary differences during the year
Group
Opening
Property, equipment and software
Account receivable
Others
7,394
2,212
240
19,352
367
29,565
Deferred tax assets:
To be recovered within 12 months
To be recovered after more than 12 months
Bank
Property, equipment and software
Account receivable
Others
Deferred tax assets:
Recognised
in profit or loss Recognised
balance
in equity
(1,101)
(320)
85
1,807
140
610
-
Closing
balance
6,293
1,892
325
21,159
507
30,175
7,651
28,200
(5,183)
4,622
2,468
32,822
(53)
(6,233)
29,565
53
1,118
610
(5,115)
30,175
Opening
5,980
2,212
240
19,352
368
28,152
Recognised
in profit or loss Recognised
balance
in equity
(1,219)
(320)
85
1,807
139
491
-
Closing
balance
4,761
1,892
325
21,159
507
28,643
7,710
26,728
(5,242)
4,548
2,468
31,276
(53)
(6,233)
28,152
53
1,132
491
(5,101)
28,643
91
32
(a)
Derivative assets
Group
Dec. 2013
Instrument type:
Cross-currency swap
Group
Dec. 2012
3,265
3,265
-
3,265
3,265
-
The movement in derivative assets is as follows:
Fair value gain on cross-currency swap
Derivative assets are current in nature
(b)
Instrument type:
Cross-currency swap
31
31
124
124
124
(93)
31
817
(693)
124
3,265
93
3,358
Group
Dec. 2013
693
693
Group
Dec. 2012
The movement in derivative liability is as follows:
Fair value gain on cross-currency swap
Derivative liabilities are current in nature
(c ) Fair value gain on derivatives
Fair value gain on:
Derivative assets
33
34
Deposits from banks
Due to other banks
59,682
900
60,582
51,596
6,184
57,780
Current
60,582
60,582
57,780
57,780
Retail customers:
Term deposits
Current deposits
Savings deposits
Term deposits
Current deposits
Current
Group
Dec. 2013
Group
Dec. 2012
141,618
113,186
310,437
41,757
98,274
101,211
285,369
30,837
322,322
522,462
709,400
2,161,182
249,077
414,416
540,824
1,720,008
2,161,182
2,161,182
1,720,008
1,720,008
92
35
Other liabilities
Group
Dec. 2013
35
Group
Dec. 2012
Account payable (note (i))
Creditors
Accruals
Customers' deposit for foreign trade (note (ii))
Provisions (note (iii))
Dividend in specie
210
47,799
4,622
25,276
164
78,071
600
48,983
6,108
12,694
146
12,907
81,438
Current
Non-current
78,048
22
78,071
81,296
142
81,438
Other liabilities
(i)
Bank
Dec. 2013
Bank
Dec. 2012
Group
Dec. 2013
Group
Dec. 2012
Account payable (note (i))
Creditors
Accruals
Customers' deposit for foreign trade (note (ii))
Provisions (note (iii))
Dividend in specie
210
47,799
4,622
25,276
164
78,071
600
48,983
6,108
12,694
146
12,907
81,438
21
31,882
1,959
20,325
164
54,351
600
26,847
4,105
12,694
146
12,907
57,299
Current
Non-current
78,048
22
78,071
81,296
142
81,438
54,329
22
54,351
57,157
142
57,299
The Bank and its employees each contributes a minimum of 7.5% of basic salary, housing and transport allowance to each employee's retirement savings account maintained with their
nominated pension fund administrators. Account payable represents the amount not yet transferred as at period end of N 210 million (December 2012: N600million) but settled
subsequent to reporting date.
The movement during the year is as follows:
Balance, beginning of the year
Charge to profit or loss
Contributions remitted
Balance, end of the year
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
600
2,537
(2,927)
210
665
1,317
(1,382)
600
600
2,348
(2,927)
21
665
850
(915)
600
(ii) Customers' deposit for foreign trade represents the naira value of foreign currencies held to cover letter of credit transactions. The corresponding balance is included in cash and balances
with bank in note 21
(iii) The amounts represent a provision for certain legal claims. The provision charge is recognised in profit or loss within „other operating expenses‟. In the directors‟ opinion, after taking
appropriate legal advice, the outcome of these legal claims will not give rise to any significant loss beyond the amounts provided at 31 December 2013. The expected timing of the
cashflows arising from the legal claim provision is within 2years. The effect of discounting the non-current portion of the liability is immaterial and has therefore not been considered.
Movement in provision during the year:
At 1 January
Charged to the income statement:
Used during year
At 31 December
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
146
22
(4)
164
64
82
146
146
22
(4)
164
64
82
146
142
22
164
4
142
146
142
22
164
4
142
146
Analysis of total provisions:
Current
Non-current
93
36
Borrowings
- African Development Bank (AfDB) (note 36.1)
- Central Bank of Nigeria (note 36.2)
- Bank of Industry (BoI) (note 36.3)
- Afrexim (note 36.4)
- Standard Chartered Bank (note 36.5)
- HSBC (note 36.6)
- European Investment Bank (EIB) (note 36.7)
Current
Non-current
36
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
31,812
13,175
1,432
2,447
48,866
23,707
36,612
13,869
14,452
25,093
787
114,520
31,812
13,175
1,432
2,447
48,866
23,707
36,612
13,869
14,452
25,093
787
114,520
3,762
45,104
48,866
53,500
61,020
114,520
3,762
45,104
48,866
53,500
61,020
114,520
Borrowings - continued
Movements in borrowings during the year:
Opening balance
Additions
Interest accrued
Repayments
Group
Group
Dec. 2013
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
114,520
137,040
114,520
137,040
3,529
9,170
3,529
9,170
1,741
(70,924)
48,866
7,682
(39,372)
114,520
1,741
(70,924)
48,866
7,599
(39,289)
114,520
36.1
The balance on amount drawn under the African Development Bank (AfDB) long term unsecured loan facilities was fully liquidated on August 1, 2013. The AfDB borrowing comprised
an unsecured emergency liquidity funding (ELF) and an unsecured trade finance initiative facility (TFI). Interest rate on the ELF was six (6) months USD LIBOR plus 500 basis points.
Interest rate on the TFI was six (6) months USD LIBOR plus 450 basis points.
36.2
Amount represents on-lending facilities provided by the Central Bank of Nigeria (CBN) with the sole purpose of granting loans, at subsidised rates, to companies engaged in agriculture.
36.3
Amount represents on-lending facilities provided by the Bank of Industry (BoI) with the sole purpose of granting loan, at subsidised rates, to companies engaged in manufacturing,
power and aviation industries.
36.4
The outstanding balance on amount drawn under a secured term loan facility granted by Afrexim and amount drawn down under a guaranteed note purchase was completely liquidated on
June 21, 2013. Interest rate on the term loan facility was three (3) months USD LIBOR plus 430 basis points while Interest rate on the guaranteed note purchase facility was three (3)
months USD LIBOR plus 475 basis points.
36.5
This represents the amount drawn down under a secured term loan facilities granted by Standard Chartered Bank. The borrowing comprises a term loan facility of USD 55 million and a
term loan facility of NGN equivalent of USD 45 million. Interest rate on the USD 55 million term loan facility is six (6) months USD LIBOR plus 450 basis points. Interest rate on the
USD 45 million term loan is six (6) months USD LIBOR plus 530 basis points. Interest on both term loans are payable semi-annually. The outstanding balance on the facility is US $9
million.
36.6
The outstanding balance on the amount drawn down under a HSBC Export Credit Agency-backed framework agreement facility was fully liquidated on June 28, 2013. Interest rate on the
facility was six (6) months USD LIBOR plus 125 basis points.
36.7
This represents the amount granted by European Investment Bank with the sole purpose of supporting lending to small and medium sized enterprises in Nigeria and through its regional
subsidiaries. The amount of the facility is US $16.296 million. Interest rate on the facility is six (6) months USD LIBOR plus 350.9 basis points. Interest on the loan is payable semiannually.
1
2
3
4
5
6
7
37
(i)
Group
Dec. 2013
Bank
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2012
Medium term notes - series 1
20,364
35,289
55,653
18,555
35,164
53,719
20,364
35,289
55,653
20,310
35,164
55,474
Current
Non-current
7,500
48,153
55,653
53,719
53,719
7,500
48,153
55,653
55,474
55,474
Subordinated liabilities represent medium-term bonds issued by the Bank. In 2010, the Bank offered for subscription N20 billion fixed rate subordinated unsecured notes, maturing in
2017 with a coupon of 13%. In 2011, the Bank also offered N35billion fixed rate subordinated unsecured notes, maturing in 2018 with a coupon of 14%. These represent the first and
second issuance respectively under the Bank's N400 billion medium term note programme. Coupon on the note is payable semi-annually.
Movements in subordinated liabilities during the year:
Opening balance
Re-instatement of opening balance of distributed entity
(see note 38(ii))
Additions
Interest accrued
Repayments
Group
Group
Dec. 2013
Dec. 2012
53,719
1,755
7,679
(7,500)
55,653
53,500
219
3,603
(3,603)
53,719
Bank
Dec. 2013
55,474
7,679
(7,500)
55,653
Bank
Dec. 2012
55,254
220
3,681
(3,681)
55,474
(ii) Re-instatement of opening balance of distributed entity represents balance of UBA Plc Corporate bonds held by UBA Capital Plc which was eliminated in the consolidated statement of
financial position as at 31 December 2012. Following the distribution of this entity (see note 19(e)), it ceased to be a member of the Group, requiring a re-instatement of an earlier
eliminated balance in the consolidated statement of financial position.
94
38
(a)
(i)
Capital and reserves
Share capital
Share capital comprises:
Authorised 45,000,000,000 Ordinary
shares of 50k each
(ii) Issued and fully paid 32,981,387,565 Ordinary
shares of 50k each
On issue, at start of the year
Transfer from share premium
On issue, at year end
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
22,500
22,500
22,500
22,500
16,491
16,491
16,491
16,491
32,982
32,982
32,982
32,982
32,982
32,982
32,982
32,982
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
(3,153)
40,028
24,452
4,413
(32,996)
32,745
(1,514)
33,120
15,223
1,113
(32,831)
15,111
38,196
25,063
4,413
67,672
31,224
15,834
1,113
48,171
(b) Share premium
Share premium is the excess paid by shareholders over the nominal value for their shares.
(c) Retained earnings
Retained earnings is the carried forward recognised income net of expenses plus current period profit attributable to shareholders.
(d) Other Reserves
Other reserves include the following:
Translation reserve (note (i))
Statutory reserve (note (ii))
Fair value reserve (note (iii))
Regulatory risk reserve (note (iv))
Treasury shares (note (v))
(i) Translation reserve
Translation reserve comprises all foreign exchange differences arising from translation of the financial statements of foreign operations.
(ii) Statutory reserve
In accordance with existing legislation, the Bank transferred 15% (2012: 15%) of its profit after taxation to statutory reserves. Also included in statutory reserves is the Bank's Small and Medium
Enterprises Equity Investment Scheme (SMEEIS) reserves. The Bank has suspended further appropriation to SMEEIS reserves (now known as Microcredit Fund) reserve account in line with the
decision reached at the Banker‟s Committee meeting and approved by CBN.
(iii) Fair value reserve
The fair value reserve includes the net cumulative change in the fair value of available-for-sale investments until the investment is derecognised or impaired.
(iv) Regulatory credit risk reserve
The regulatory credit risk reserve represents the difference between the impairment on loans and advances determined using the Central Bank of Nigeria prudential guidelines, compared with the incurred
loss model used in determining the impairment loss under IFRSs.
Where the loan loss impairment determined using the Central Bank of Nigeria prudential guidelines is higher than the loan loss impairment determined using the incurred loss model under IFRSs, the
difference is transferred to regulatory credit risk reserve and it is non-distributable to owners of the parent.
(v) Treasury shares
Treasury shares represent the Bank‟s shares held by the Staff Investment Trust as at 31 December 2013.
39
Dividends
A dividend in respect of the year ended 31 December 2013 of 50 kobo per share (2012: 50 kobo) amounting to a total dividend of N16.491billion (2012: N16.491billion) is to be approved at the Annual
General Meeting. These financial statements do not reflect this dividend payable. Dividends in respect of the 2012 results were paid in 2013.
40
(i)
Contingencies
Litigation and claims
No provision in relation to litigation and claims has been recognised in the consolidated financial statement, as legal advice incicates that it is not probable that a significant liability will arise. Further
claims for which provisions have been made are disclosed in note 35(iii)
(ii) Contingent liabilities
In the normal course of business, the Group conducts business involving acceptances, performance bonds and indemnities. Contingent liabilities and commitments comprise acceptances, endorsements,
guarantees and letters of credit.
(iii) Loan commitment
At the balance sheet date, the Group had loan commitments amounting to N39.7 billion (2012: N6.8 billion) in respect of various loan contracts.
(iv) Capital commitments
At the balance sheet date, the Group had capital commitments amounting to N4.5 billion (2012: N1.3 billion) in respect of authorised and contracted capital projects.
95
Intangible assets
Group
Group
Dec. 2013
4,374
157
4,531
Dec. 2012
1,255
45
1,300
Nature of instruments
An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The Group expects most acceptances to be presented, but reimbursement by the customer is normally
immediate. Endorsements are residual liabilities of the Group in respect of bills of exchange, which have been paid and subsequently rediscounted.
Guarantees and letters of credit are given to third parties as security to support the performance of a customer to third parties. As the Group will only be required to meet these obligations in the event of
the customer‟s default, the cash requirements of these instruments are expected to be considerably below their nominal amounts.
Other contingent liabilities include performance bonds and are, generally, short-term commitments to third parties which are not directly dependent on the customers‟ credit worthiness.
Documentary credits commit the Group to make payments to third parties, on production of documents, which are usually reimbursed immediately by customers.
The following tables summarise the nominal principal amount of contingent liabilities and commitments with off-balance sheet risk
Contingent liabilities:
Letters of credits
41
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
281,176
202,806
483,982
305,495
95,820
401,315
240,830
99,765
340,595
284,359
78,543
362,902
Related parties
United Bank for Africa Plc (UBA Plc) is the ultimate parent/controlling party of the Group. The shares of UBA Plc are listed on the Nigerian Stock Exchange and held by widely varied investors.
(b)
Parties are considered to be related if one party has the ability to control the other party or exercise influence over the other party in making financial and operational decisions, or one other party controls
both. The definition includes subsidiaries, associates, joint ventures as well as key management personnel.
(a) Subsidiaries
Transactions between United Bank for Africa Plc and the subsidiaries also meet the definition of related party transactions. Where these are eliminated on consolidation, they are not disclosed in the
consolidated financial statements.
(b) Associate
Transactions between United Bank for Africa Plc and its associate also meet the definition of related party transactions.The following transactions were carried out with associate:
Dec. 2013
Interest Income
Dec. 2012
48
-
2,521
25
21
-
The following balances were held with respect to associate:
cash and bank balances
Account receivable
Deposit liabities
96
(c.) Key management personnel
Key management personnel is defined as members of the board of directors of the Bank, including their close members of family and any entity over which they exercise control. Close members of family
are those family who may be expected to influence, or be influenced by that individual in the dealings with UBA Plc and its subsidiaries.
Key management personnel and their immediate relatives engaged in the following transactions with the Bank during the year:
Loans and advances to key management personnel
Dec. 2013
(ii) Loans and advances as at end of year
Interest income earned during the year
41
Dec. 2012
1,095
1,245
89
108
Related parties - continued
Loans to key management personnel are granted on the same terms and conditions as loans to other employees. Interest charged on loans to close members of family of key management personnel as
well as entities in which they exercise control were charged at commercial and market rates. Related party loans are secured over real estate, equity and other assets of the respective borrowers. No
impairment losses (2012: Nil) have been recorded against related party loans.
Loans and advances to key management personnel's related persons and entities as at end of year
Name of company/individual
Facility Type
Relationship
Name of Director
Bridge House College
Director-related
Vine Foods Limited
Director-related
Africa Royal Shipping Lines Ltd.
Paki International Motors Ltd
Director-related
Director-related
The Regent School
Director-related
Drunstix Food & Investment Limited
Director-related
Nigeria Pipes Limited
Director-related
Mrs. Foluke
Abdulrasaq
Security
Status
Rate
Currency
Real Estate
Legal ownership
over assets secured
Performing
20.0%
NGN
Performing
18.0%
NGN
-
Otherwise Secured
Otherwise Secured
Performing
Performing
22.0%
24.0%
NGN
NGN
166
-
-
Real Estate
Legal ownership
over assets secured
Performing
8.0%
USD
367
643
Performing
23.0%
NGN
51
Mortgage Debenture
Performing
21.0%
NGN
50
31
652
702
61
43
Dec. 2013
Dec. 2012
17
Term loan
Mr. Emmanuel Nnorom Overdraft
Invoice
Alhaji Yahaya Zekeri Discounting
Alhaji Ja'afaru Paki
Term loan
Mrs. Foluke
Abdulrasaq
Term Loan
Mrs. Foluke
Abdulrasaq
Term Loan
Bankers'
Mr. Abdulqadir Bello Acceptance
Interest income earned during the year
24
3
1
-
Following the resignation of Ms. Angela Aneke from the board of the bank in 2013, Sahara Energy Resources (2012: N18.4bn) and Cole Uyi Sylvia (2012: N4m) ceased to qualify as related parties.
Deposit liabilities
Deposit liabilities relating to key management personnel and their related persons and entities as at end of year is as foolows:
Deposits as at end of year
Interest expense during the year
Dec. 2013
Dec. 2012
1,389
782
18
7
Compensation
Aggregate remuneration to key management staff during the year is as follows:
Executive compensation
Retirement benefit costs
Short-term employee benefits
Dec. 2013
613
13
Dec. 2012
614
13
626
627
97
42
Compensation to Employees and Directors
(i) The number of persons in the employment of the Group as at year end is as follows:
(In absolute units)
Group executive directors
Management
Non-management
Group
Dec. 2013
8
496
12,311
12,815
Group
Dec. 2012
8
355
11,174
11,537
Bank
Dec. 2013
8
399
9,896
10,303
Bank
Dec. 2012
8
244
8,791
9,043
Compensation for the above staff (including executive directors):
Salaries and wages
Retirement benefit costs:
Defined contribution plans
42
48,977
42,135
36,879
32,149
1,678
50,655
1,317
43,452
1,108
37,987
850
32,999
Compensation to Employees and Directors - continued
(ii) The number of employees of the Group, other than Directors, who received emoluments in the following ranges (excluding pension contributions) were:
(In absolute units)
N300,001 - 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
N6,500,001 - N7,800,000
N7,800,001 - N9,000,000
N9,000,001 - above
Group
Dec. 2013
Group
Dec. 2012
Bank
Dec. 2013
Bank
Dec. 2012
5,559
3,169
432
146
1,156
73
607
594
1,071
12,807
Dec. 2012
7,281
586
262
959
666
592
449
222
512
11,529
Dec. 2012
4,571
2,663
27
960
3
547
556
968
10,295
Dec. 2011
6,260
4
807
472
528
378
190
396
9,035
Dec. 2011
(iii) Directors
Remuneration paid to the Group's Directors was:
Fees and sitting allowances
Executive compensation
Retirement benefit costs
47
613
13
673
37
614
13
664
47
613
13
673
37
614
13
664
Fees and other emoluments disclosed above includes amounts paid to:
The Chairman
The highest paid Director
4
116
3
116
4
116
3
116
-
-
-
-
The number of Directors who received fees and other emoluments (excluding pension contributions) in the following ranges was:
(In absolute units)
Below
N1,000,000
N1,000,001 - N2,000,000
N2,000,001 - N3,000,000
N3,000,001 - N5,000,000
N5,500,001 and above
6
13
19
2
2
5
9
18
6
13
19
2
2
5
9
18
43
Subsequent events
There are no post balance sheet events that could materially affect either the reported state of affairs of the Bank and the Group as at 31 December 2013 or the profit/(loss) for the year ended on the same
date which have not been adequately provided for or disclosed.
44
Compliance with Banking regulations
During the period, the bank contravened the Banks and Other Financial Institutions Act (BOFIA) 1991 as amended and was penalized a total sum of N43.70 million (2012:N6.65 million) for opening a
branch without prior CBN approval; improper reclassification of Public Sector Deposits; appointment of staff without prior CBN approval; and non resolution of ATM dispute within stipulated time.
98
1.
Statement of Comprehensive Income
The following is the full year summary of the Company‟s Unaudited Statement of Comprehensive Income as
at 30 June, 2014
Group
Notes
2014
Gross earnings
138,318
Interest income
2
98,497
Interest expense
3
(43,336)
Net interest income
55,161
Net impairment loss on loans and receivables
8
Net interest income after impairment on loans and receivables
(2,049)
53,112
4
5
27,016
(2,809)
Net trading income
6
10,000
7
2,805
Personnel expenses
9
(28,573)
10
11
(2,837)
(29,803)
20(b)
(18)
28,893
Taxation charge
12
Profit for the period
(6,037)
22,856
Other comprehensive income
Items that will be reclassified to profit or loss:
Foreign currency translation differences
(3,286)
Fair value gains/(loss) on available-for-sale investments
Other comprehensive income
592
1
(2,694)
20,162
Profit attributable to:
Owners of Parent
22,281
Profit for the period
575
22,856
Total comprehensive income attributable to:
Owners of Parent
22,100
(1,938)
20,162
Total comprehensive income attributable to equity shareholders arises from:
- Continuing operations
22,100
22,100
Basic earnings per share (annualised) expressed in Naira
13
1.46
Diluted earnings per share (annualised) expressed in Naira
13
1.46
1
Items disclosed in other comprehensive income do not have tax effects based on relevant tax regulations.
The accompanying notes are an integral part of these consolidated and separate financial statements.
99
2.
Statement of Financial Position
Notes
As at
Group
Jun 2014
ASSETS
Derivative assets
Other assets
Intangible assets
Deferred tax assets
TOTAL ASSETS
14
15
21(a)
16
17
18
19
20
713,200
6,304
2,566
13,194
904,244
689,680
43,147
2,959
77,605
7,359
29,850
2,490,108
LIABILITIES
Deposits from banks
Other liabilities
Borrowings
21(b)
22
23
24
12
25
26
TOTAL LIABILITIES
72,604
1,982,511
61,609
2,164
76,745
55,752
16
2,251,401
EQUITY
Share capital
Share premium
Retained earnings
Other reserves
EQUITY ATTRIBUTABLE TO OWNERS
OF THE PARENT
16,491
107,932
76,270
32,565
233,258
5,449
TOTAL EQUITY
238,707
TOTAL LIABILITIES AND EQUITY
2,490,108
The accompanying notes are an integral part of these consolidated and separate interim financial statements.
100
3.
Statement of Cash Flow
Group
For the six months ended 30 June
Notes
2014
Cash flows from operating activities
28,893
Adjustments for:
Net impairment loss on loans and advances
10
8
2,837
1,579
W rite-off of loans and advances
8
241
Net impairment charge on other assets
Foreign exchange gains
8
6
Fair value loss on derivative financial instruments
6
Gain on non-current assets held for distribution
371
(10,406)
668
-
Dividend income
(1,113)
18
23,420
Change in financial assets held for trading
(6,186)
Change in cash reserve balance
Change in loans and advances to banks
(6,224)
13,057
Change in loans and advances to customers
31,556
Change in other assets
Change in deposits from banks
(13,082)
12,022
Change in deposits from customers
Change in placement with banks
(178,671)
154,760
30,651
Change in other liabilities and provisions
(16,462)
Income tax paid
(6,734)
7,455
Cash flows from investing activities
Proceeds/(acquisition) of investment securities
73,088
Acquisition of property and equipment
Dividend received
(5,033)
1,113
Change in intangible assets
Net cash used in investing activities
(3)
69,165
Cash flows from financing activities
Proceeds from borrowings
29,646
Repayments of borrowings
Dividend paid to owners of the parent
28
(1,668)
(16,491)
11,487
Net increase in cash and cash equivalents
88,107
(142)
Cash
cash equivalents
at beginning
of period
Effectand
of exchange
rate fluctuations
on cash
held
Cash and cash equivalents at end of period
14
317,720
14
405,685
The accompanying notes to the financial statements are an integral part of these
consolidated and separate financial statements.
101
4.
1
Notes to the Management Account
General information
United Bank for Africa Plc (the "Bank") is a Nigerian registered company with address at 57 Marina, Lagos,
Nigeria. The consolidated financial statements of the Bank for the period ended June 30, 2014 comprise the
Bank (Parent) and its subsidiaries (together referred to as the "Group" and individually referred to as Group
entities"). The bank and its other banking subsidiaries are primarily involved in corporate, commercial and
retail banking, trade services, cash management and treasury services.
2
Interest income
Group
2014
For the half year ended 30 June
7,664
Loans and advances to banks and customers
59,228
31,605
98,497
3
Interest expense
Group
2014
Deposits from banks
(1,831)
(37,224)
Borrowings
(4,281)
(43,336)
4
Group
2014
Credit-related fees and commissions
10,282
Commission on turnover
5,226
Pension custody fees
1,635
Other fees and charges
9,873
27,016
Credit-related fees and commissions income exclude any other fees considered in calculating the effective
interest rate on the principal facilities to which they were charged.
5
Group
2014
Card services
(2,483)
Other expenses
(326)
(2,809)
102
6
Group
Net trading income
2014
Group
2014
Fixed income securities
262
Foreign exchange income
10,406
Fair value loss on derivatives
(668)
10,000
Net trading income includes the gains and losses arising from the purchase and sale of trading instruments.
7
Group
2014
Dividend income
1,113
Rental income
138
Recoveries on loans written-off
792
Gain on non-current assets distributed to owners
-
Others
762
2,805
8
Impairment loss on loans and receivables
Group
2014
Impairment losses on loans and advances to customers:
- specific impairment (charge)/credit
(1,095)
- portfolio impairment charge
(484)
Write-off on loans and advances
(241)
Impairment no longer required (loans and advances)
Impairment
on other
assets
Impairment loss
charges
on investment
securities
142
(371)
(2,049)
9
Personnel expenses
Group
2014
Wages and salaries
(27,732)
Contribution to defined benefit plans
(841)
(28,573)
10
Group
2014
Depreciation of property and equipment
(2,506)
Amortisation of intangible assets
(331)
(2,837)
103
11
Group
2014
Auditors remuneration
Banking sector resolution cost
Deposit insurance premium
Other expenses
(100)
(5,578)
(4,331)
(19,794)
(29,803)
12
Group
2014
Taxation
Recognised in the statement of comprehensive income
(a) Current tax expense
Current period
(6,037)
(b) Deferred tax expense
Origination and reversal of temporary differences
Total income tax (expense)/credit
(6,037)
(c) Current tax liabilities
Group
2014
Tax paid
Income tax charge
2,861
(6,734)
6,037
2,164
104
13
Earnings per share
Group
2014
For the six months ended 30 June
Profit from continuing operations attributable to owners of the parent
22,281
Profit from discontinued operations attributable to owners of the parent
14
-
Total
22,281
W eighted average number of ordinary shares outstanding
30,597
Basic earnings per share (annualised) expressed in Naira
1.46
Diluted earnings per share (annualised) expressed in Naira
1.46
Group
Jun. 2014
158,994
52,024
Money market placements
249,696
460,714
Mandatory reserve deposits with Central Banks (note (i) below)
252,486
713,200
(i) This represents cash reserve requirement with central banks of the countries in which the Bank and its
subsidiaries operate and is not available for use in the Group‟s day-to-day operations.
(ii) Cash and cash equivalents for the purposes of the statements of cash flows include the following :
Group
Jun. 2014
158,994
52,024
Money market placements (less than 90 days)
194,667
Financial assets held for trading (less than 90 days)
15
405,685
Government bonds
4,266
Treasury bills
2,038
6,304
105
16
Group
Jun. 2014
Term loans:
Gross amount
17
13,251
(57)
13,194
Loans to individuals, corporate entities and other organisations
Specific impairment
924,906
(5,485)
(15,177)
904,244
Impairment allowance on loans and advances to customers
Group
Jun. 2014
Specific impairment
Impairment charge for the period
Reversal for the period
W rite-offs
4,634
1,095
(142)
(102)
5,485
Impairment reversal for the year
Net impairment charge/(reversal) for the period
14,693
484
15,177
106
Group
18
Jun. 2014
Carrying amount
689,680
Available-for-sale investment securities comprise (see note (i)):
Treasury bills
146,410
Equity investments at cost
1,819
(909)
910
43,749
191,069
Held to maturity investment securities comprise
(i)
Treasury bills
Promissory notes
132,039
24
Bonds
366,548
498,611
Included in available-for-sale and held-to-maturity investment securities are pledged financial assets which
cannot be re-pledged or resold by counterparties, and these securities are stated as follows:
Group
Jun. 2014
Pledged assets:
Treasury bills (available-for-sale)
26,291
Bonds (held-to-maturity)
19
101,005
127,296
Other assets
Group
Jun. 2014
Accounts receivable
26,855
Prepayment
Others
13,996
3,690
44,541
Impairment loss on other assets (account receivable)
(1,394)
43,147
(a) Movement in impairment loss for other assets
At start of period
Charge for the period
Group
Jun. 2014
1,443
371
W rite-off
(420)
1,394
107
20
In December 2013, the Group's holding in UBA Zambia Ltd was diluted to 49% as a result of additional
capital injection by a third party. This resulted in a loss of control of UBA Zambia; the Group retains
significant influence over UBA Zambia by virtue of the 49% shareholding. The investment is, therefore,
considered as an investment in associate and has been accounted for using equity accounting. The
associate has share capital consisting solely of ordinary shares, which are held directly by the Parent
Company.
(a) Summarised financial information for associates
Set out below are the summarised financial information for UBA Zambia accounted for using the equity
(i) Summarised balance sheet
Jun. 2014
Assets
2,280
Other current assets (excluding cash)
Non-current assets
5,722
1,071
Total assets
9,073
Financial liabiliites (excluding trade payables)
(1,634)
Othe current liabiliites (including trade payables)
(140)
Non-current financial liabilities
(4,020)
Total liabiliites
(5,793)
Net assets
3,280
(ii) Summarised statement of comprehensive income
2014
Revenue
656
Interest income
(35)
225
Interest expense
Loss from continuing operations
(217)
(37)
Income tax expense
-
Post-tax loss from continuing operations
(37)
The information above reflects the amounts presented in the financial statements of the associates (and
not UBA Group's share of those amounts) adjusted for differences in accounting policies between the group
and the associates. There are no differences in the accounting policy of the associate and the Group's
acounting policies.
(b) Movement in investment in equity-accounted investee
Group
Jun. 2014
Fair value of residual interest in subsidiary
Share of current year result
Reclassification from investment in subsidiaries
2,977
(18)
2,959
108
21
Group
(a) Derivative assets
Jun. 2014
Instrument type:
Cross-currency swap
2,566
2,566
The movement in derivative assets is as follows:
3,265
Fair value gain/(loss) on cross-currency swap
(699)
2,566
(b) Derivative liabilities
Instrument type:
Cross-currency swap
-
The movement in derivative liability is as follows:
31
Fair value (gain)/loss on cross-currency swap
(31)
-
(c ) Fair value gain on derivatives
Fair value gain on:
22
Derivative assets
(699)
31
Deposits from banks
(668)
Group
Dec. 2013
Due to other banks
72,372
232
72,604
23
Group
Dec. 2013
Retail customers:
Term deposits
Current deposits
169,927
136,466
Savings deposits
Domicilliary deposits
324,979
40,785
672,157
Term deposits
Current deposits
301,966
640,878
367,509
1,310,354
Total
1,982,511
109
24
Other liabilities
Group
Jun. 2014
Account payable
Creditors
Accruals
Customers' deposit for foreign trade
Provisions
25
Group
Dec. 2013
Borrowings
- Central Bank of Nigeria
- Bank of Industry (BoI)
- Standard Chartered Bank
- European Investment Bank (EIB)
26
92
33,255
6,037
22,061
164
61,609
31,311
13,179
30,975
1,280
76,745
Group
Jun. 2014
20,393
35,359
55,752
110
27 Accounting policy changes
The Bank applied the provisions of International Financial Reporting Standards (IFRS) in preparing the
accounting information included in these un-audited interim results. There was no change in
accounting policy in the period.
28 Seasonality of operations
This is not applicable as the services provided by the Bank are not dependent on seasonal or
cyclical demand.
29 Unusual items
There were no unusual items affecting assets, liabilities, equity, net income or cash flows during the
period.
30 Changes in estimates
There were no material changes in Management's estimates during the period.
31 Issuance, repurchases, and repayment of debts and equity
There was no repurchase of shares during the period, and the Bank did not issue any debt or equity
instrument during the period.
32 Dividends
No dividend is declared in respect of the half year ended 30 June 2014.
33 Significant event after the end of the interim period
There were no significant events that have post-balance sheet adjustment effect, after the period
34 Business combinations
The was no business combination during the period.
35 Discontinuing operations
There was no discontinuation of operation of any business line during the period.
36 Correction of prior period errors
There were no material prior period errors identified during the period.
37 Impairment loss of property and equipment, intangible or other assets, reversal of such impairment
loss
We have made allowances for certain assets during the period.
38 Any debt or any breach of debt covenant that has not been corrected subsequently
The Bank is not involved in any breach of debt covenant as at 30 June 2014.
39 Related party transaction
Some of the Bank's Directors are also directors of other companies with whom the Bank does
business. All such transactions are in normal course of business, and agreed terms which are
comparable to other customers of the Bank.
40 Compliance with banking regulations
The Bank did not contravene any regulation of the Banks and Other Financial Institutions Act CAP
B3 LFN 2004 or relevant circulars issued by the Central Bank of Nigeria.
41 Comparatives
The Bank applied the provisions of International Financial Reporting Standards (IFRS) in preparing the
comparative information included in these un-audited interim results.
111
42 Contingencies
(i) Litigation settlements
There were contingent liabilities in respect of legal actions against the Group for amounts totaling
N68.4billion for which provisions amounting to N164 million have been made. The directors having
sought the advice of professional legal counsel are of the opinion that based on the advice
received, no significant liability will crystalise from these cases beyond the provision made in the
financial statements.
(ii) Others
Other contingent liabilities include performance
bonds and are, generally, short-term
commitments to third parties which are not directly dependent on the customers‟ credit
worthiness. Documentary credits commit the Group to make payments to third parties, on
production of documents, which are usually reimbursed immediately by customers. The following
tables summarise the nominal principal amount of contingent liabilities and commitments with offbalance sheet risk:
Contingent liabilities:
Group
Jun-14
Dec-13
Letters of credits
285,321
282,938
568,259
281,176
202,806
483,982
112
1.
Letter from Issuing Houses on Financial Statements
RC No: 444999
UBA Capital Plc
57 Marina
Lagos
Tel: 234 1 280 7822
BGL Capital Limited
12A Catholic Mission Street
Lagos Island
Lagos
Tel: 234 1462 2601-9
13 October 2014
The Directors
57 Marina
Lagos
Dear Sirs,
RIGHTS ISSUE OF 3,298,138,756 ORDINARY SHARES OF 50K EACH IN UBA PLC AT N4.00K PER
SHARE
We write further to the Rights Circular issued in respect of the Rights Issue of 3,298,138,756
Ordinary Shares of 50 kobo each at N4.00 in United Bank for Africa Plc, which contains
financial statements of the Company for the years ended 31 December 2009, 2010, 2011,
2012, 2013; and Half year financial statement for the period ended 30 June, 2014.
We have discussed the basis and assumptions upon which the financial statements were
prepared with you and have reviewed your calculations, and we confirm that the
financial statements (for which the Directors are solely responsible) have been made by
you after due and careful enquiry.
Yours faithfully,
Wale Shonibare
Deputy Group CEO
UBA Capital Plc
Chibundu Edozie
Group Deputy Managing Director
BGL Plc
113
2.
Incorporation and Share Capital History
As at 31st December 2013, the authorized share capital of the Bank was N22,500,000,000 consisting
45,000,000,000 ordinary shares of 50 kobo each. Of this amount, 32,981,387,565 ordinary shares of 50 kobo
each are fully paid up. The following changes have taken place in the Bank‟s authorized and issued Capital:
Authorized capital
(N)
Date
Issued and fully paid capital
(N)
Consideration
2002
2,000,000,000.00
1,275,000,000.00
Bonus (1:2)
2004
6,000,000,000.00
1,530,000,000.00
Bonus (1:5)
2005
6,000,000,000.00
3,530,000,000.00
Merger with STB
2007
6,000,000,000.00
4,236,000,000.00
Bonus (1:5)
Foreign loan stock
conversion
Cash (rights and public
offering)
2007
6,000,000,000.00
4,290,214,285.50
2007
6,000,000,000.00
5,645,139,990.00
2008
7,500,000,000.00
5,645,139,990.00
-
2008
12,500,000,000.00
8,622,584,985.00
Bonus (1:2) (interim)
2009
12,500,000,000.00
10,778,231,231.00
Bonus (1:4) (final)
2009
17,500,000,000.00
10,778,231,231.00
-
2010
17,500,000,000.00
12,933,877,477.00
Bonus (1:5) (final)
2011
17,500,000,000.00
16,167,346,850.00
Bonus (1:4) (final)
2012
22,500,000,000.00
16,490,693,782.50
Bonus (1:50) (final)
Source: UBA Plc Board of Directors
3.
Shareholding Structure (5% and above)
As at 31st December 2013, the 32,981,387,565 ordinary shares of 50k each, issued and fully paid up capital of
UBA Plc are held as follows:
Shareholder
No of Ordinary Shares
% Holding
UBA Staff Investment Trust Scheme
2,484,527,057
7.53%
Stanbic Nominees Nigeria Ltd/C002
2,203,016,317
6.68%
Others
28,293,844,191
85.79%
Total
32,981,387,565
100%
Source: UBA 2013 Audited Financials
Except as stated above, no other Shareholder held up to 5% of the issued share capital of UBA as at the
date of this document.
4.
Directors’ Beneficial Interests
The beneficial interest of Directors in the issued share capital of the Bank as recorded in the register of
members and/or notified by them for the purpose of Section 275 of CAMA as at 30th September 2014 are as
follows:
Director
Direct
%
Indirect
%
116,067,153
0.35%
1,432,426,576
4.34
127,500
-
-
-

(Chairman)
(Vice Chairman)
Rose A. Okwechime [Mrs.]
-
-
20,133,851
0.06

Phillips Oduoza
104,512,499
0.32
17,254,234
0.22

Kennedy Uzoka
35,403,723
0.11
-
-


114

Apollos Ikpobe
12,851,100
0.04
-
-

Femi Olaloku
8,645,482
0.03
-
-

Dan Okeke
10,352,146
0.03
-
-

Emeke Iweriebor
1,626,627
0.005
-
-

Obi Ibekwe
267,510
0.001
-
-

Ja‟afaru Paki
-
-
22,950,000
-

Foluke K. Abdulrazaq
3,000,000
0.009
6.120.000
0.070

Yahaya Zekeri
11,704
-
-
-

Kolawole B. Jawodu, OFR
484,015
0.001
53,811
0.000

Adekunle A. Olumide, OON
2,635,014
0.008
-
-

Owanari Duke
86,062
0.000
-
-
296,070,535
0.6
1,492,818,472
4.7
Total
Source: UBA Plc Board of Directors
Save as disclosed, none of the directors of UBA Plc has notified the Bank of having any other interest in its share capital.
5.
Statement of Compliance with Corporate Governance
UBA is fully committed to implementing best practice Corporate Governance standards. The bank
recognizes that Corporate Governance Practices must achieve two goals- protecting the interest of
Shareholders and guiding the Board and Management to direct and manage the affairs of the Bank
effectively and efficiently.
At UBA compliance with the code of corporate governance is imperative. In view of this, there is a high level
of observance of ethical standards in the Bank‟s operations and activities at all levels. The Board has
committed substantial time and resources towards the development and implementation of quality policies,
Code of Business Principles and a Code of Professional Responsibility for directors, managers and employees
of the Bank.
Composition of the Board
The Board is made up of sixteen (16) Directors, of whom seven Directors are Executive Directors. Board
members are professionals and business men with vast experience and credible track records. To enhance
corporate governance, Board Committees were constituted to help the Board properly assess
management reports, proposals and oversight functions and make recommendations to the main Board.
Currently, the Board has five (5) Committees namely; Board Audit Committee, Board Credit Committee,
Board Risk Management Committee, Nomination & Governance Committee and Finance & General
Purpose Committee.
Chairman and CEO Positions
Responsibilities at the top level are well defined and the Bank has separated the roles of the Managing
Director/CEO and Chairman in compliance with corporate governance rules on the roles and responsibilities
of the Board members. The Chairman is not involved in the day to day operations of the Bank and is not a
member of any Committee of the Board.
Proceedings and frequency of meetings
The Board meets at least once every quarter or as frequently as the Board‟s attention may be required on
any situation which may arise. Sufficient notices with clear agenda/report are usually given prior to
convening such meetings. All Directors have access to the Bank‟s Secretary who can only be appointed or
removed by the Board and is also responsible to the Board.
Non-Executive Directors
The non-executive Board members possess strong knowledge of the Bank‟s business and usually contribute
actively to Board meetings. The non-executive Directors retire by rotation at Annual General Meetings and
are eligible for re-election according to the relevant provisions of CAMA.
115
Reporting and Control
The Board is responsible for and ensures proper financial reporting as well as establishment of strong internal
control procedures. There is a Board Audit Committee which comprises five non-Executive Directors.
Shareholders’ Rights & Privileges
The Directors ensure that shareholders‟ statutory and general rights are protected at all times. Shareholders
are responsible for electing the Directors at Annual General Meetings for which at least a notice of 21 days
will normally be given before such meetings.
The Board currently has 16 (sixteen)Directors comprised of one non-executive Chairman and 8 other nonexecutive Directors, the Group Managing Director who is an executive Director plus 6 other executive
Directors. They are jointly responsible for the policy formation functions of the Bank. The oversight functions of
the Board are performed through the following Committees:
Board Audit Committee
The Board Audit Committee was set up to further strengthen the internal control process of the Bank. The
Committee assists the Bank in fulfilling its audit responsibilities by ensuring that an effective system of internal
control is in place. The Committee is currently constituted by 6 (six) members, made up of 5 non – executive
directors and one executive director.
The members are:
1. Mr. Adekunle Olumide
2. Mrs. Foluke Abdulrazaq
3. Chief Kola Jamodu
4. Mr. Kennedy Uzoka
5. Mrs. Rose Okwechime
6. Mrs. Owanari Duke
Chairman/Non-Executive Director
Member/Non-Executive Director
Member/Executive Director
Its Terms of Reference include the monitoring of processes designed to ensure compliance by the Bank in all
respects with legal and regulatory requirements including disclosure, controls and procedures and the
impact (or potential impact) of developments related thereto. It evaluates the independence and
performance of the External Auditor and reviews with management and the External Auditor, the audited
financial statements before its presentation to the Board.
Statutory Audit Committee
In line with the requirements of CAMA, the Bank‟s Statutory Audit Committee comprises of three shareholder
representatives and three representatives from the Board of Directors.
The members are:
1. Mr. Mathew Esonanjor
Chairman
3. Alhaji Alkassim Umar
Member
4. Mr. Valentine Ozigbo
Member
Finance and General Purpose Committee
The Board Finance and General Purpose Committee is responsible for strategic planning, periodic
budgeting and performance monitoring, supervision of assets, investment matters and providing oversight
on financial matters and performance of the Bank. The Committee is currently constituted by 5(five)
members, made up of 3 non – executive directors and 2 executive directors.
The members are:
3. Alhaji Ja‟afaru Paki
4. Mr. Phillips Oduoza
5. Mr. Kennedy Uzoka
116
Board Credit Committee
The Board Credit Committee is responsible for review and approval of the Group‟s credit strategy, credit risk
tolerance, review and recommendation to the Board for approval, all credit and lending policies and
makes credit decisions on behalf of the Board within limits defined by the credit policy as approved by the
Board. The Committee is currently composed of four Non-Executive Directors.
The members are:
2. Mr. Yahaya Zekeri
Board Risk Management Committee
The Board Risk Management Committee is responsible for approval of risk management plan, review of the
adequacy of the overall risk management framework of the Bank and recommending risk approval limits to
the Board for approval. The Committee is currently constituted by 4 non-executive directors and 2 executive
directors.
The members are:
1. Chief Kola Jamodu
2. Mr. Phillips Oduoza
4. Mr. Femi Olaloku
Nominations and Governance Committee
The Nominations and Governance Committee is responsible for establishing procedures for the nomination
of Directors, evaluation of the skills of members of the Board, approval of all human resources and
governance policies of the Group, recommending directors for appointment to the Board, appraising Board
performance and overseeing the evaluation of the Board. The Committee is comprised of 4 non-executive
directors.
The members are:
3. Mr. YahayaZekeri
Members of the Board of Directors attend regular trainings on Corporate Governance and related issues
both locally and internationally. In addition, the Bank Secretary provides advice to the Board on corporate
governance best practices from time to time.
The Bank always strives to ensure full compliance with the Code of Corporate Governance at all times.
6.
Indebtedness
As at 30 June 2014, UBA had borrowings, in the ordinary course of business amounting to N76.745 billion and
subordinated liabilities amounting to N55.752 billion. Save as disclosed, UBA has no outstanding loans,
charges or indebtedness.
7.
Claims and Litigation
UBA is, in the ordinary course of business, involved in 106 cases within the identified category of claims in
excess of N50,000,000 (Fifty Million Naira only). The total value of claims against UBA in these cases is
approximately N70,382,363,398 (Seventy Billion, Three Hundred and Eighty-Two Million, Three Hundred and
Sixty-Three Thousand, Three Hundred and Ninety-Eighty Naira only).
In the professional judgment of the Solicitors to the Issue, much less than an aggregate sum of
N7,038,236,339.8 (Seven Billion, Thirty-Eight Million, Two Hundred and Thirty-Six Thousand, Three Hundred and
Thirty-Nine Naira and Eight Kobo) of these claims can possibly be substantiated. The rest of the claims are
clearly exaggerated, frivolous and not likely to succeed.
117
The Solicitors to the Issue is of the professional view that UBA‟s liability in the event of an unfavorable
resolution of the disputes against UBA would have no material adverse effect on the Issue.
The Board of UBA is also of the opinion that the aforementioned cases are not likely to have any material
adverse effect on UBA and/or the Issue, and is not aware of any other pending and or threatened claims or
litigation involving UBA which would have any material adverse effect on the Issue.
8.
Relationship between the Issuer and the Issuing Houses/Other Advisers
No relationship exists between the Issuer and any of its advisers, except for in the ordinary course of business.
9.
Cost and Expenses
The costs and expenses of this Issue including fees payable to the SEC, the NSE and professional parties, filing
fees, legal fees, and other expenses, brokerage commission but excluding the costs of printing and
advertising the Issue are estimated at N360,699,857 representing approximately 2.73% of the total amount to
be raised.
10. Material Contracts
The agreement below has been entered into by UBA Plc and is deemed material to this Rights Issue:
A.
B.
A Vending Agreement dated 12th December, 2014 under the terms of which UBA Capital Plc and
BGL Capital Limited have agreed, on behalf of the Bank, to offer by way of rights 3,298,138,756
ordinary shares of 50 kobo each in UBA.
Other than as stated above, UBA has not entered into any material contract except in the
ordinary course of business.
11. Declarations
Except as otherwise disclosed in this Rights Circular:
1.
No share of UBA is under option or agreed conditionally or unconditionally to be put under option;
2.
No commissions, discounts, brokerages or other special terms have been granted by the Bank to
any person in connection with the Issue or sale of any share of the Bank;
3.
Save as disclosed herein, the Directors of UBA have not been informed of any holding representing
10% or more of the issued share capital of the Bank;
4.
There are no founders‟, management or deferred shares or any options outstanding in the Bank;
5.
There are no material service agreements between UBA or any of its Directors and employees other
than in the ordinary course of business;
6.
No Director of the Bank has had any interest, direct or indirect, in property purchased or proposed
to be purchased by the Bank in the five years prior to the date of this Circular.
7.
No Director or key management staff of the Bank is or has been involved in any of the following:
8.
a.
A petition under any bankruptcy or insolvency laws filed (and not struck out) against such
person or any partnership in which he was a partner or any Bank of which he was a director
or key personnel;
b.
A conviction in a criminal proceeding or is named subject of pending criminal proceedings
relating to fraud or dishonesty; and
c.
The subject of any order, judgment or ruling of any court of competent jurisdiction or
regulatory body relating to fraud or dishonesty, restraining him from acting as an investment
adviser, dealer in securities, director or employee of a financial institution and engaging in
any type of business practice or activity.
No existing and potential related-party transaction and conflict of interest in relation to the Bank
and its related-parties;
118
9.
There are no amounts or benefits paid or intended to be paid or given to any promoter within the
two years preceding the date of the Circular;
10. No merger/ take-over offers by third parties in respect of UBA Plc‟s securities or merger/takeover
offers by the Bank in respect of other Bank‟s securities during the preceding year and the current
financial year.
12. Mergers and Acquisition
No new merger or acquisition agreement has been entered into as at the date of this Rights Circular.
13. Research and Development
Whilst UBA continues to adopt best practices in its operational processes, the Bank did not make any
research and development capital expenditure over the last three (3) years.
14. Consents
The following have given and have not withdrawn their written consents to the issue of this Rights Circular
with the inclusion of their names and reports (where applicable) in the form and context in which they
appear:
DIRECTORS OF THE BANK:
Chairman
57, Marina, Lagos
Vice Chairman
57, Marina, Lagos
GMD/CEO
Phillips Oduoza
57, Marina, Lagos
Deputy Managing Director
Kennedy Uzoka
57, Marina, Lagos
Deputy Managing Director
Apollos Ikpobe
57, Marina, Lagos
Executive Director
Femi Olaloku
57, Marina, Lagos
Executive Director
Dan Okeke
57, Marina, Lagos
Executive Director
Emeke Iweriebor
57, Marina, Lagos
Executive Director
Obi Ibekwe
57, Marina, Lagos
Non-Executive Director
Ja’afaru Paki
57, Marina, Lagos
119
Foluke K. Abdulrazaq
57, Marina, Lagos
Yahaya Zekeri
57, Marina, Lagos
Kola Jamodu, OFR
57, Marina, Lagos
Adekunle Olumide, OON
57, Marina, Lagos
Rose Okwechime
57, Marina, Lagos
Owanari Duke
57, Marina, Lagos
Company Secretary
Bili Odum
57, Marina, Lagos
PROFESSIONAL PARTIES:
Lead Issuing House
Co-Issuing House
Lead Stockbroker
Joint Stockbrokers
UBA Capital Plc
57, Marina
Lagos
BGL Capital Limited
12A, Catholic Mission Street
Lagos
UBA Securities Limited
57, Marina
Lagos
Futureview Securities Limited
Futureview Plaza
22 Oju Olobun Street
Victoria Island
Lagos
Greenwich Securities Limited
Plot 1698A Oyin Jolayemi Street
Victoria Island
Lagos
Solicitors To The Company
Solicitors To The Issue
G. Elias & Co. (Solicitors and Advocates)
6 Broad Street
Lagos
M.E Esonanjor & Co
27 Oyewole Street
Palmgrove Illupeju
Lagos
120
Registrars
220B, Ikorodu Road, Palmgrove
Lagos
Receiving Bank
Fidelity Bank Plc
2 Kofo Abayomi Street
Victoria Island
Lagos
Auditors to the Issuer
PricewaterHouse Coopers
252E Muri Okunola Street
Victoria Island
Lagos
Nigeria
15. Documents Available for Inspection
Copies of the following documents may be inspected at the offices of UBA Capital Plc, 12th floor, UBA House,
57 Marina, Lagos, BGL Capital Limited, 12A, Catholic Mission Street, Lagos Island, Lagos, and UBA Plc, UBA
House,57, Marina, Lagos, during normal business hours on any Business Day, throughout the duration of the
Issue.
(a)
Certificate of Incorporation of the Bank;
(b)
Memorandum and Articles of Association of the Bank;
(c)
The Bank‟s Form CAC 7 (Particulars of Directors)
(d)
The Bank‟s Form CAC 2 (Statement of Share Capital and Returns of Allotment of Shares)
(e)
The Bank‟s banking licence;
(f)
This Rights Circular issued in respect of the Issue;
(g)
Shareholders‟ Resolution authorising the Issue;
(h)
Board Resolution recommending the Issue;
(i)
The Certificate of registration of increase in share capital obtained from the Corporate Affairs
Commission;
(j)
The audited accounts of the Bank for each of the five years ended, 31 December, 2013 and the
Management Accounts as at June 30, 2014
(k)
(l)
The Letter from The Exchange approving the Issue
The letter from SEC approving the Issue
(m)
The Certificate of Exemption from The Exchange
121
(n)
The list of Claims and Litigation referred to above;
(o)
Vending Agreement between UBA Plc, UBA Capital Plc and BGL Capital Limited;
(p)
The Material Contracts referred to above; and
(q)
The written Consents referred to above.
122
RC 2457
30 December 2014
Dear Sir/Madam
UBA PLC (“THE BANK”, “UBA” or “THE COMPANY”): RIGHTS ISSUE OF 3,298,138,756 ORDINARY SHARES OF 50K
EACH AT N4.00 PER SHARE (“THE ISSUE”)
1.
Provisional Allotment
The Securities & Exchange Commission (“SEC”) has approved the offer by way of Rights Issue of
3,298,138,756 ordinary shares of 50 kobo each to the existing shareholders of UBA and the Directors
of the Bank have provisionally allotted to you the number of new ordinary shares set out on the first
page of the Acceptance/Renunciation Form. The provisional allotment is in the proportion of One
(1) new ordinary share for every Ten (10) ordinary shares that appeared against your name in the
Company‟s Register of Members at the close of business on Wednesday, October 15, 2014.
Acceptance and Payment
iii)
a)
Full Acceptance
If you wish to accept this provisional allotment in full, please complete box B of the
enclosed Acceptance/Renunciation Form. The completed Acceptance/Renunciation
Form, together with the cash, cheque or Company draft for the full amount payable must
be submitted to any of the Receiving Agents listed in this document not later than Thursday,
February 5, 2015. The cheque or draft must be drawn on a Company in the same town or
city in which the Receiving Agent is located and crossed “UBA Plc Rights” with your name,
address and daytime telephone number (if any) written on the back of the cheque or draft.
All cheques and drafts will be presented upon receipt and all Acceptance/Renunciation
Forms in respect of which cheques are returned unpaid will be rejected and returned
through the post.
b)
Partial Acceptance
To accept your provisional allotment partially, please complete item (i) of box C and submit
your Acceptance/Renunciation Form to any of the Receiving Agents listed on Page 127
and 128 of this document together with a cheque or bank draft made payable to the
Receiving Agent for the full amount payable in respect of the number of shares you have
decided to accept.
If you wish to renounce your provisional allotment partially or in full, please complete items
(ii) and (iii) of box C and submit your Acceptance/Renunciation Form to a stockbroker (Not
the Bank) of your choice together with payment for any provisional allotment you are
accepting partially. The stockbroker will guide you on the procedure for trading your Rights.
c)
Applying for Additional Stock
This may be done through any of the following processes:
i.
By completing item (ii) of box B of the Acceptance/Renunciation Form
Payment should be made in accordance with (a) above. Shareholders who apply for
additional shares using the Acceptance/Renunciation Form will be subject to the
allotment process and may therefore be allotted less than the number of additional
shares applied for (please refer to item 4 on page 124).
123
ii.
3.
Trading in Rights

4.
Purchasing Rights on the floor of the Nigerian Stock Exchange
Rights can only be purchased through any of the stockbrokers listed on pages 127 and
128 of this document. The stockbroker of your choice will guide you regarding payment
and other steps to take. Shareholders/investors who purchase Rights on the floor of the
NSE are guaranteed the number of shares purchased i.e. they will not be subject to the
allotment process in respect of the number of shares so purchased (please refer to
item 3 below).
The approval of the NSE has been obtained for the trading in the Rights of the Company.
The Rights will be tradable between Monday, December 29, 2014 and Thursday, February 5,
2015 at the price at which the Rights are quoted on the NSE. If you wish to renounce your
Rights partially or in full, you may trade such renounced Rights on the Floor of the NSE within
the period specified above. Please complete item (iii) of box C of the
Acceptance/Renunciation Form and contact your stockbroker for assistance. If you wish to
purchase renounced Rights, please contact your stockbroker who will guide you regarding
payment and procedure for purchasing the Rights. Shareholders who trade their Rights can
also apply for additional shares by completing item (ii) of box B of the
Acceptance/Renunciation Form.
Allotment of Additional Shares
Ordinary shares which are not taken up by Thursday, February 5, 2015 will be allotted, on a pro rata
basis in line with the SEC Rules and Regulations to existing shareholders who have applied and paid
for additional Ordinary shares by completing item (ii) of box B.
5.
E-Allotment and Share Certificates
At the completion of the Right Issue, the Ordinary shares will be registered and transferable in units
of 50 kobo each. The CSCS accounts of shareholders will be credited not later than 15 Business Days
from the date basis allotment is cleared by the SEC. Shareholders are thereby advised to state the
name of their respective stockbrokers and their Clearing House Numbers in the relevant spaces on
the Acceptance Form. Certificates will be dispatched to Shareholders that do not provide their
CSCS account details by registered post not later than 15 Business Days from the date of allotment.
6.
Surplus Monies
If any Rights is not accepted or accepted for fewer shares than the number of shares provisionally
allotted, the full amount or the balance (as the case may be) of the amount paid on acceptance
will be returned, together with accrued interest, by registered post within 5 (five) Business Days of
allotment.
Yours faithfully,
Bili Odum
Company Secretary
124
Acceptance List Closes
Acceptance List Opens
RC 2457
Rights Issue of
3,298,138,756
Ordinary Shares of 50k Each
At N4.00 per share
On the basis of One (1) new Ordinary share for every Ten (10) Ordinary shares each held
Payable in full on Acceptance
Lead Issuing
Co- Issuing House:
RC 444999
INSTRUCTIONS FOR COMPLETING THE ACCEPTANCE/RENUNCIATION FORM
1.
2.
3.
4.
5.
6.
7.
8.
9.
Acceptance and/or renunciation must be made on the prescribed form. Photocopies of the Acceptance/Renunciation
form will be rejected.
Allottees should complete only ONE of the boxes marked B and C on the reverse of this form.
Shareholders accepting the provisional allotment in full should complete box B and submit their Acceptance/Renunciation
Forms to any of the Receiving Agents listed in this Rights Circular together with the cash, cheque or bank draft made
payable to the Receiving Agent for the full amount payable on acceptance. The cheque or draft must be drawn on a bank
in the same town or city in which the Receiving Agent is located and crossed “UBA PLC RIGHTS”, with the name, address and
daytime telephone number (if any) of the Shareholder written on the back. If payment is not received by Thursday, February
5, 2015, the provisional allotment will be deemed to have been declined and will be cancelled.
Shareholders accepting their provisional allotment partially should complete box C and submit their
Acceptance/Renunciation Form to any of the Receiving Agents listed in this Rights Circular together with a cheque or bank
draft made payable to the Receiving Agent for the amount payable for the partial acceptance.
Shareholders renouncing the provisional allotment partially or in full should complete item (iii) of box C and return same to
the receiving agent together with the cheque or bank draft made payable to the Receiving Agent for any partial
acceptance. If payment is not received by Thursday, February 5, 2015, the provisional allotment for the partial acceptance
will be deemed to have been declined and will be cancelled.
Shareholders who wish to acquire additional shares over and above their provisional allotment may purchase renounced
rights, and/or apply for additional shares by completing item (ii) of box B.
All cheques or bank drafts will be presented for payment on receipt and all acceptances in respect of which cheques are
returned unpaid for any reason will be rejected and cancelled. Shareholders are advised to obtain an acknowledgement of
the amount paid from the Receiving Agent through which this Acceptance/Renunciation Form is lodged.
Joint allottees must sign on separate lines in the appropriate section of the Acceptance/Renunciation Form.
Acceptance/Renunciation Forms of corporate allottees must bear their incorporation numbers and corporate seals and
must be completed under the hands of duly authorized officials who should also state their designations.
FOR REGISTRAR’S USE ONLY
Control No:
Number of
Ordinary shares
Accepted
Account No
Additional Ordinary
shares applied for
Total Amount
Payable based on
shares applied for
Additional
Ordinary shares
allotted
N
Amount
payable based
on the total
shares allotted
Actual amount
paid
N
N
Amount to be
returned/
cheque/bank
draft number
Stamp of Receiving Agent
125
ACCEPTANCE / RENUNCIATION FORM
ACCEPTANCE/RENUNCIATION FORM
Acceptance List Closes
Acceptance List Opens
RC 2457
Acceptance/Renunciation Form
A. TRADING IN RIGHTS
i.
Shareholders who renounce their Rights partially or in full may trade their Rights on the floor of The Exchange. The renounced
Rights will be traded actively on the floor of The Exchange
ii.
Shareholders who wish to acquire additional shares over and above their provisional allotment may purchase renounced
rights, and/or apply for additional shares by completing item (ii) of box B below.
iii.
Shareholders who purchase Rights on the floor of The Exchange are guaranteed the number of shares purchased. They will
not be subject to the allotment process in respect of shares so purchased. Those that apply for additional shares by
completing item (ii) of box B will be subject to the allotment process i.e. they may be allotted a smaller number of additional
shares than what they applied for.
iv.
If you wish to purchase renounced Rights, please contact your stockbroker who will guide you regarding payment and the
procedure for purchasing the Rights.
Details of Shareholder’s Provisional Allotment
PLEASE COMPLETE SECTION B OR C AS APPLICABLE
B.
FULL ACCEPTANCE/REQUEST FOR ADDITIONAL ORDINARY SHARES
i)
I/We accept in full, the provisional allotment as shown above
ii)
I/We also apply for the following additional shares:
Number of Additional Ordinary
Shares applied for
This
section
should
be
completed if you wish to apply
for additional shares
Additional amount payable at
N4 per share
N
I/We agree to accept the same or smaller number of additional shares in respect of which allotment may be made
tome/us, in accordance with the Provisional Allotment Letter contained in the Rights Circular.
iii)
I/We enclose my/our cash/cheque/bank draft for N………………………..or evidence of payment of N(for amounts exceeding
N10 Million) being the amount payable as shown above, plus any additional amount as shown in item (ii) above.
Cheque details: Name of bank/branch
Cheque number
C.
RENUNCIATION OR PARTIAL ACCEPTANCE
1
Number of Ordinary shares
accepted
2
Amount Payable at N4
Per share
3
Number of Ordinary shares
Renounced
N
i)
I/We accept only the number of Ordinary shares shown in Column 1 above and enclose my/our cheque/bank draft for the
value shown in Column 2 above.
Cheque
details:
…………………………………………
ii)
Name
of
bank/branch:
………………………………………….
Cheque
number:
I/We hereby renounce my/our rights to the Ordinary shares shown in Column 3, being the balance of the Ordinary shares
allotted to me/us.
iii)
I/We agree confirm that our right cannot be traded and can however be allotted to any other shareholders who wish to
purchase additional units
(for either B or C)
Signature: ……………………………………………………… 2nd Signature (for Joint/Corporate Allottees) ………………………………
Date: ……………………………………………….… 2013 Next of Kin…………………………………………………………………………………..
Clearing House Number (CHN)
C
CSCS No (If you want shares allotted credited to your CSCS A/C
Name of your Stockbroker
OFFICIAL
SEAL
ALLOTTEES ONLY)
(FOR
CORPORATE
RC NO.: _________________________
Stamp of Receiving Agent
126
RECEIVING AGENTS
RECEIVING AGENTS
The Issuing Houses cannot accept responsibility for the conduct of any of the institutions listed below. Investors are
therefore advised to conduct their own enquiries before choosing an agent to act on their behalf. Evidence of lodgement
of funds at any of the Receiving Agents listed below, in the absence of corresponding evidence of receipt by the Issuing
Houses, cannot give rise to a liability on the part of the Issuing Houses under any circumstances.
BANKS
Access Bank Plc
Diamond Bank Plc
Ecobank Nigeria Plc
Enterprise Bank Limited
Fidelity Bank Plc
First Bank of Nigeria Limited
First City Monument Bank Plc
Guaranty Trust Bank Plc
Keystone Bank Limited
Mainstreet Bank Limited
Skye Bank Plc
Stanbic IBTC Bank Plc
Standard Chartered Bank Plc
Sterling Bank Plc
Union Bank of Nigeria Plc
Unity Bank Plc
Wema Bank Plc
Zenith Bank Plc
STOCKBROKERS AND OTHERS
Adonai Stockbrokers Ltd
Afrinvest (West Africa) Ltd
Aims Asset Management Ltd
Alangrange Securities Ltd
Allbond Investment Ltd
Altrade Securities Ltd
Amyn Investment Ltd
Anchorage Securities and Finance Ltd
Anchoria Investment and Securities Ltd
Apel Asset and Trust Ltd
APT Securities and Funds Ltd
Arian Capital Management Ltd
ARM Securities Ltd
Arthur Stevens Asset Management Ltd
Associated Asset Managers Ltd
Atlas Portfolio Ltd
Bauchi
Investment
Corporation
Securities Ltd
Belfry Investment and Securities Ltd
Bestlink Investment Ltd
Bestworth Assets and Investment Ltd
BGL Securities Ltd
Bytofel Trust and Securities Ltd
Cadington Securities Ltd
Calyx Securities Ltd
Camry Securities Ltd
Capital Assets Ltd
Capital Bancorp Ltd
Capital Express Securities Ltd
Capital Trust Brokers Ltd
Cardinal Stone Securities Ltd
Cashcraft Asset Management Ltd
Cashville Investments and Securities Ltd
Centre Point Investment Ltd
Century Securities Ltd
Chapel Hill Denham Securities Ltd
Chartwell Securities Ltd
Citi Investment Capital Ltd
City Code Trust and Investment
Company Ltd
Clearview Investment and Securities Ltd
Compass Investments and Sec.Ltd
Cordros Capital Limited
Covenant
Securities
and
Asset
Management Ltd
Cowry Securities Ltd
Cradle Trust Finance and Securities Ltd
Crane Securities Ltd
Crescent Capital Ltd
Crossworld Securities Ltd
Crown Capital Ltd
CSL Stockbrokers Ltd
Davandy Finance Ltd
DBSL Securities Ltd
Deep Trust and Investment Ltd
De-Lords Securities Ltd
Diamond Securities Ltd
Dominion Trust Ltd
DSU Brokerage Services Ltd
Dunbell Securities Ltd
Dynamic Portfolio Ltd
Foresight Securities Ltd
Forte Financial
Forthright Securities and Investments Ltd
Fortress Capital Ltd
Fountain Securities Ltd
FSDH Securities Ltd
Funds Matrix and Asset Management Ltd
Futureview Securities Ltd
Gem Assets Management Ltd
Gidauniya Invest and Sec. Ltd
Global Asset Management (Nig) Ltd
Global View Consult & Investment Ltd
GMT Securities & Asset Mgt Ltd
Golden Securities Ltd
Gombe Securities Ltd
Gosord Securities Ltd
Greenwich Securities Ltd
Prominent Securities Ltd
PSI Securities Ltd
Pyramid Securities Ltd
Quantum Securities Ltd
Rainbow Securities Ltd
Readings Investment Ltd
Regency Assets Management Ltd
Rencap Securities (Nig) Ltd
Resort Securities Ltd
Reward Investment & Services Ltd
Rostrum Investment & Sec. Ltd
Royal Crest Finance Ltd
Royal Trust Securities Ltd
Santrust Securities Ltd
Security Swaps Ltd
Shalom Investment & Securities Ltd
Shelong Investment Ltd
GTB Securities Ltd
GTI Capital Ltd
Harmony Investment & Securities Ltd
Heartbeat Investments Ltd
Hedge Securities & Investment Ltd
Heritage Capital Markets Ltd
Sigma Securities Ltd
Signet Investment & Securities Ltd
Skye Stockbrokers Ltd
Skyview Capital Ltd
Smadac Securities Ltd
Solid Rock Securities & Investment Ltd
Spring Trust & Securities Ltd
Horizon Stockbrokers Ltd
ICMG Securities Ltd
ICON Stockbrokers Ltd
Imperial Assets Managers Ltd
IMTL Securities Ltd
Independent Securities Ltd
Integrated Trust & Investments Ltd
International Standard Securities Ltd
Interstate Securities Ltd
Investment Centre Ltd
Investors & Trust Company Ltd
Kakawa Asset Management Ltd
Kapital Care Trust & Securities Ltd
Kedari Securities Ltd
Kinley Securities Ltd
Spring Board Trust & Investment Ltd
Stanbic IBTC Stockbrokers Ltd
Standard Alliance Capital & Asset Ltd
Standard Union Securities Ltd
Stanwal Securities Ltd
Strategy & Arbitrage Ltd
Summa Guaranty & Trust Company Ltd
Summit Finance Company Ltd
Support Services Ltd
TFS Securities & Investment Co.Ltd
The Bridge Securities Ltd
Tiddo Securities Ltd
Tomil Trust Ltd
Topmost Sec Ltd
Kundila Finance Services Ltd
Lambeth Trust & Investment Co.Ltd
Lead Securities & Investment Ltd
Tower Asset Management Ltd
Tower Securities &Invest Co. Ltd
Trade link Securities Ltd
Light House Asset Management Ltd
Traders Trust & Investment Co. Ltd
MACT Securities Ltd
Mainland Trust Ltd
Marina Securities Stockbroking Services Ltd
Marriot Securities Ltd
Maven Asset Management Ltd
Maxifund Investment & Securities Plc
Mayfield Investment Ltd
MBC Securities Ltd
MBL Financial Services Ltd
Mega Equities Ltd
Mercov Securities Ltd
Meristem Securities Ltd
Midas Stockbrokers Ltd
Midpoint Capital Ltd
Mission Securities Ltd
Molten Trust Ltd
Transafrica Securities Ltd
Transworld Investment & Securities Ltd
Trust Yield Securities Ltd
Trusthouse Investment Ltd
TRW Stockbrokers Ltd
UBA Stockbrokers Ltd
UIDC Securities Ltd
UNEX Capital Ltd
Union Capital Markets Ltd
Valmon Securities Ltd
Valueline Securities & Investments Ltd
Vetiva Securities Limited
Waila Securities and Funds Ltd
Wizetrade Capital & Assets Mgt Ltd
WSTC Financial Services Ltd
Yobe Investment Company Ltd
127
RECEIVING AGENTS
ECL Asset Management Ltd
EDC Securities Ltd
Emerging Capital Ltd
Emi Capital Resources Ltd
Enterprise Stockbrokers Ltd
Equity Capital Solutions Ltd
ESS Investment and Trust Ltd
Eurocomm Securities Ltd
Excel Securities Ltd
Express Portfolio Services Ltd
Falcon Securities Ltd
FBC Trust and Securities Ltd
FBN Securities Ltd
FCSL Asset Management Company Ltd
Fidelity Finance Company Ltd
Fidelity Securities Ltd
Financial Trust Company Ltd
Finbank Securities and Asset
Management Ltd
Finmal Securities Ltd
First Allstate Securities Ltd
First Integrated Capital Mgt Ltd
First Stockbrokers Ltd
FIS Securities Ltd
Fittco Securities Ltd
Morgan Capital Ltd
Mountain Investment & Securities Ltd
Mutual Alliance Invest & Securities Ltd
Networth Securities & Finance Ltd
Newdevco Investments & Sec. Co. Ltd
Nigerian International Securities Ltd
Nigerian Stockbrokers Ltd
Northbridge Invest & Stockbrokers Ltd
Nova Finance & Securities Ltd
Options Securities Ltd
PAC Securities Ltd
Partnership Investment Company Ltd
Peace Capital Markets Ltd
Perfecta Investment & Trust Ltd
Phronesis Securities Ltd
Pilot Securities Ltd
Pinefields Investment Services Ltd
PIPC Securities Ltd
Yuderb Investment & Securities Ltd
Zenith Securities Ltd
Pivot Trust & Investment Co. Ltd
Portfolio Advisers Ltd
Primera Africa Securities Ltd
Primewealth Capital Ltd
Professional Stockbrokers Ltd
Profound Securities Ltd
128
RECEIVING AGENTS
Hambak
129

the Rigths Circular - Africa Prudential Registrars Plc

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