OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 101
At 31 December 2017 Bonds and Letters Total
South South guarantees of credit* N’million
South West N’million
South East N’million 379
North West 379 - 152,098
North Central 118,054
North East 34,044 30
Outside Nigeria 30 - 120
Total 120 - 750
*Amount excludes letters of credit for which cash collateral has been received. -
750 - -
- - -
- 118,054 153,377
35,323
(b) Industry sectors 31 December 2018 31 December 2017
Agriculture Bonds and Letters of 2018 Total Bonds and Letters of 2017 Total
Business services guarantees credit N’million guarantees credit N’million
Communication 1,677
Construction and real estate N’million N’million 18,406 N’million N’million
Electricity 1,677 - -
Financial intermediaries & insurance 17,160 - 247 - 247
Hotels, Restaurants and Tourism - 1,246 -
Manufacturing - - 25,939 4,033 6,626 10,659
Mining/oil and gas - - 37,850
Private households - 47,317 ---
Transport, storage and distribution 25,939 - 8,631
Wholesale & retail trade - - 49 - 49
Carrying amount 37,850 129
13,279 34,038 6,522 ---
199 146,481
- 8,432 17,912 - 17,912
- -
- 45,159 45,159
5,018 129
63,282 1,504 3,981 27,019 31,000
83,199
2,393 26,851 29,244
---
168 1,728 1,896
6,540 10,671 17,211
35,323 118,054 153,377
Credit provisioning based on prudential guidelines
In accordance with the Prudential Guidelines issued by the Central Bank of Nigeria, provision against credit risk is as follows.
Non performing accounts Classification Minimum provision
Interest and/or principal outstanding for over: Watchlist 0%
Pass due date but less than 90 days Substandard 10%
90 days but less than 180 days Doubtful 50%
180 days but less than 360 days Lost 100%
Over 360 days
When a loan is deemed uncollectible, it is written off against the related provision for impairments. Subsequent recoveries are credited to the provision
for loan losses in the profit and loss account. If the amount of the impairment subsequently decreases due to an event occurring after the write-down,
the release of the provision is credited as a reduction of the provision for impairment in the statement of profit or loss.
102 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Performing accounts
A minimum of 2% general provision on performing loans is made in accordance with the Prudential Guidelines.
Prudential guidelines disclosures
Had the Prudential Guidelines been employed in the preparation of these financial statements, the impairments for loans and advances to customers
as well as related disclosures, would have been made as follows:
Group
31 Dec. 2018 31 Dec. 2017
N’million N’million
Prudential disclosure of loan and advances to customers 458,946 403,852
Customer exposure for loans and advances 5,801 7,426
Mortgage loans 8,671 12,167
Instalment sale and finance leases 1,155 1,451
Card debtors
Overdrafts and other demand loans 164,186 128,281
Other term loans 279,133 254,527
Interest in suspense (2,322)
Credit impairments for loans and advances (21,527) (22,333)
Specific provision (12,697) (14,995)
General provision (8,830)
Net loans and advances to customers 435,097 (7,338)
381,519
Prudential disclosure of loan classification 440,608 373,334
Performing 18,338 35,322
Non performing loans 3,808 17,732
1,563 8,736
Substandard 12,967 8,854
Doubtful
Loss
Total performing and non performing loans 458,946 408,656
Adjustment for Interest in suspense and below-market interest staff loans (2,322) (4,804)
Customer exposure for loans and advances 456,624 403,852
Non-performing loan ratio (Regulatory) 4.00% 8.64%
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 103
Liquidity risk The group ensures that the banking entity (Stanbic IBTC Bank
PLC) is within the regulatory liquidity ratio of 30% on a daily basis.
Framework and governance
Liquidity ratio Jan - Dec 2018 Jan - Dec 2017
The nature of banking and trading activities results in a continuous Minimum 98.60% 72.10%
exposure to liquidity risk. Liquidity problems can have an Average 110.67% 96.24%
adverse impact on a group’s earnings and capital and, in extreme Maximum 122.68%
circumstances, may even lead to the collapse of a group which is 109.85%
otherwise solvent.
The minimum, average and maximum liquidity ratios presented in
The group’s liquidity risk management framework is designed the table above are derived from daily liquidity ratio computations
to measure and manage the liquidity position at various levels
of consolidation such that payment obligations can be met at all Structural liquidity mismatch management
times, under both normal and considerably stressed conditions.
Under the delegated authority of the board of directors, the The mismatch principle measures the group’s liquidity by assessing
Asset and Liability Committee (“ALCO”) sets liquidity risk policies the mismatch between its inflow and outflow of funds within
in accordance with regulatory requirements, international best different time bands on a maturity ladder. The structural liquidity
practice and SBG stated risk appetite. mismatch is based on behaviourally-adjusted cash flows which
factor a probability of maturity into the various time bands.
Tolerance limits, appetite thresholds and monitoring items are As expected cash flows vary significantly from the contractual
prudently set and reflect the group’s conservative appetite for position, behavioural profiling is applied to assets, liabilities and
liquidity risk. ALCO is charged with ensuring ongoing compliance off- balance sheet items with an indeterminable maturity or
with liquidity risk standards and policies. The group must, at all drawdown period.
times, comply with the more stringent of Standard Bank imposed
tolerance limits or regulatory limits. A net mismatch figure is obtained by subtracting liabilities and
netting off-balance sheet positions from assets in each time
Liquidity and funding management band. The group’s liquidity position is assessed by means of the
net cumulative mismatch position, while its liquidity mismatch
A sound and robust liquidity process is required to measure, performance is an aggregation of the net liquidity position in each
monitor and manage liquidity exposures. The group has successive time band expressed as a percentage of total funding
incorporated the following liquidity principles as part of a related to deposits.
cohesive liquidity management process:
Maintaining minimum levels of liquid and marketable assets
• structural liquidity mismatch management;
Minimum levels of prudential liquid assets are held in accordance
• long-term funding ratio; with all prudential requirements as specified by the regulatory
authorities. The group needs to hold additional unencumbered
• maintaining minimum levels of liquid and marketable assets; marketable assets, in excess of any minimum prudential liquid
asset requirement, to cater for volatile depositor withdrawals,
• depositor restrictions; draw-downs under committed facilities, collateral calls, etc.
• local currency loan to deposit ratio; The following criteria apply to readily marketable securities:
• foreign currency loan to deposit ratio; • prices must be quoted by a range of counterparties;
• interbank reliance limit; • the asset class must be regularly traded;
• intra-day liquidity management; • the asset may be sold or repurchased in a liquid market,
for payment in cash; and settlement must be according to
• collateral management; a prescribed, rather than a negotiated, timetable.
• daily cash flow management;
• liquidity stress and scenario testing;
• funding plans;
• liquidity contingency planning.
The cumulative impact of these principles is monitored, at least
monthly by ALCO through a process which is underpinned by a
system of extensive controls. The latter includes the application of
purpose-built technology, documented processes and procedures,
independent oversight and regular independent reviews and
evaluations of the effectiveness of the system.
104 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Depositor concentration Daily cash flow management
To ensure that the group does not place undue reliance on any The group generates a daily report to monitor significant cash
single entity as a funding source, restrictions are imposed on flows. Maturities and withdrawals are forecast at least three
the short dated (0 – 3 months term) deposits accepted from any months in advance and management is alerted to large outflows.
entity. These include: The report, which is made available to the funding team, ALM and
market risk also summarises material daily new deposits as well as
• the sum of 0 – 3 month deposits and standby facilities provided the interbank and top depositor reliance (by value and product).
by any single deposit counterparty must not, at any time, The daily cash flow management report forms an integral part of
exceed 10% of total funding related liabilities to the public; and the ongoing liquidity management process and is a crucial tool to
proactively anticipate and plan for large cash outflows.
• the aggregate of 0 – 3 month deposits and standby facilities
from the 10 largest single deposit counterparties must not, Interbank reliance
at any time, exceed 20% of total funding related liabilities to
the public. Interbank funding traditionally is seen as the most volatile
and least stable source of funding, easily influenced by
Concentration risk limits are used to ensure that funding market sentiment and prone to flight under stress situations.
diversification is maintained across products, sectors, and Consequently, to ensure prudent liquidity management is
counterparties. Primary sources of funding are in the form of enforced, the group restricts the local currency interbank funding
deposits across a spectrum of retail and wholesale clients. As as a proportion of the local currency funding base to a maximum
mitigants, the group maintains marketable securities in excess of of 15% of the total currency funding base.
regulatory requirements in order to create a buffer for occasional
breaches of concentration limits. Liquidity stress testing and scenario testing
Loan to deposit limit Anticipated on- and off-balance sheet cash flows are subjected
to a variety of the group specific and systemic stress scenarios in
A limit is put in place, restricting the local currency loan to deposit order to evaluate the impact of unlikely but plausible events on
ratio to a maximum specified level, which is reviewed periodically. liquidity positions. Scenarios are based on both historical events,
Similarly, in order to restrict the extent of foreign currency such as past emerging markets crises, past local financial markets
lending from the foreign currency deposit base, a foreign currency crisis and hypothetical events, such as an entity specific crisis.
loan to deposit limit, which is also referred to as own resource The results obtained from stress testing provide meaningful input
lending, is observed. As mitigants, the group maintains high when defining target liquidity risk positions.
levels of unencumbered marketable and liquid assets in excess of
regulatory benchmark. Maturity analysis of financial liabilities by contractual
maturity
Intra-day liquidity management
The tables below analyse cash flows on a contractual,
The group manages its exposures in respect of payment and undiscounted basis based on the earliest date on which the group
settlement systems. Counterparties may view the failure to settle can be required to pay (except for trading liabilities and trading
payments when expected as a sign of financial weakness and derivatives) and may therefore not agree directly to the balances
in turn delay payments to the group. This can also disrupt the disclosed in the consolidated statement of financial position.
functioning of payment and settlement systems. At a minimum,
the following operational elements are included in the group’s Derivative liabilities are included in the maturity analysis on a
intra-day liquidity management: contractual, undiscounted basis when contractual maturities
are essential for an understanding of the derivatives’ future
• capacity to measure expected daily gross liquidity inflows and cash flows. All other derivative liabilities are treated as trading
outflows, including anticipated timing where possible; instruments and are included at fair value in the redeemable on
demand stage since these positions are typically held for short
• capacity to monitor its intra-day liquidity positions, including periods of time.
available credit and collateral;
The following tables also include contractual cash flows with
• sufficient intra-day funding to meet its objectives; respect to off-balance sheet items which have not yet been
recorded on- balance sheet. Where cash flows are exchanged
• ability to manage and mobilise collateral as required; simultaneously, the net amounts have been reflected.
• robust capacity to manage the timing of its intra-day
outflows; and
• readiness to deal with unexpected disruptions to its intra-day
liquidity flows.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 105
Maturity analysis of financial liabilities by contractual maturity
Redeemable Maturing Maturing Maturing Maturing Total
on demand within between between after 12 N’million
N’million 1-6 months 6-12 months months
1 month N’million
N’million N’million N’million
December 2018
Financial liabilities
Derivative financial instruments 313 1,782 1,434 623 - 4,152
83,633 - 9,876 125,684
Trading liabilities - 32,175 288,373 967,964
5,079 4
Deposits and current accounts 585,568 88,940 25,154 - 60,595 60,595
398,594 14,388 69,918
Subordinated debt -- 5,900 84,863 1,228,312
11,602
Other borrowings 279 24,196
Total 586,160 147,093
Unrecognised financial instruments - 8,620 66,069 8,510 - 83,199
Letters of credit 22,700 63,282
Guarantees - 416 13,543 26,623 46,568
Loan commitments 1,031 193,049
Total - 23,345 15,991 6,201 23,731
- 32,381 95,603 41,334
December 2017 134 449 1,678 331 - 2,592
Financial liabilities
Derivative financial instruments - 28,385 27,170 6,239 658 62,452
577,551 138,719 107,192 18,332 4 841,798
Trading liabilities 45,687
Deposits and current accounts - - - - 45,687
Subordinated debt 10,615 - 5,661 7,885 58,269 82,431
Other borrowings 588,300 167,553 141,701 32,787 104,618 1,034,959
Total
Unrecognised financial instruments - 30,128 87,096 8,128 - 125,352
Letters of credit 6,977 35,324
Guarantees - 332 20,365 7,650 1,496 56,108
Loan commitments 8,473
Total - 18,339 22,355 13,918 216,784
- 48,799 129,816 29,696
106 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Liquidity contingency plans Market risk
The group recognises that it is not possible to hold sufficiently The identification, management, control, measurement and
large enough quantity of readily available liquidity to cover the reporting of market risk is categorised as follows:
least likely liquidity events. However, as such events can have
devastating consequences, it is imperative to bridge the gap Trading market risk
between the liquidity the group chooses to hold and the maximum
liquidity the group might need. These risks arise in trading activities where the bank acts as a
principal with clients in the market. The group’s policy is that all
The group’s liquidity contingency plan is designed to, as far as trading activities are contained within the bank’s Corporate and
possible, protect stakeholder interests and maintain market Investment Banking (“CIB”) trading operations.
confidence in order to ensure a positive outcome in the event of
a liquidity crisis. The plan incorporates an extensive early warning Banking book interest rate risk
indicator methodology supported by a clear and decisive crisis
response strategy. Early warning indicators span group specific These risks arise from the structural interest rate risk caused
crises, systemic crises, contingency planning, and liquidity risk by the differing re-pricing characteristics of banking assets
management governance and are monitored based on assigned and liabilities.
frequencies and tolerance levels. The crisis response strategy
is formulated around the relevant crisis management structures Foreign currency risk
and addresses internal and external communications, liquidity
generation, operations, as well as heightened and supplementary These risks arise as a result of changes in the fair value or future
information requirements. cash flows of financial exposures due to changes in foreign
exchange rates.
Foreign currency liquidity management
Equity investment risk
A number of indicators are observed to monitor changes in
either market liquidity or exchange rates. Foreign currency These risks arise from equity price changes in listed and unlisted
loans and advances are restricted to the availability of foreign investments, and managed through the equity investment
currency deposits. committee, which is a sub-committee of the executive committee.
Funding strategy Framework and governance
Funding markets are evaluated on an ongoing basis to ensure The board approves the market risk appetite and standards for
appropriate group funding strategies are executed depending on all types of market risk. The board grants general authority to
the market, competitive and regulatory environment. The group take on market risk exposure to the asset and liability committee
employs a diversified funding strategy, sourcing liquidity in both (“ALCO”). ALCO sets market risk policies to ensure that the
domestic and offshore markets, and incorporates a coordinated measurement, reporting, monitoring and management of market
approach to accessing capital and loan markets across the group. risk associated with operations of the bank follow a common
governance framework. The bank’s ALCO reports to EXCO and
Concentration risk limits are used within the group to ensure that also to the board risk management committee.
funding diversification is maintained across products, sectors,
geographic regions and counterparties. The in-country risk management is subject to SBG oversight for
compliance with group standards and minimum requirements.
Primary funding sources are in the form of deposits across a
spectrum of retail and wholesale clients, as well as long-term The market risk management unit, which is independent of
capital and loan markets. The group remains committed to trading operations and accountable to ALCO, monitors market risk
increasing its core deposits and accessing domestic and foreign exposures due to trading and banking activities. This unit monitors
capital markets when appropriate to meet its anticipated funding exposures and respective excesses daily, report monthly to ALCO
requirements. and quarterly to the board risk management committee.
Depositor concentrations Dec 2018 Dec 2017 Market risk measurement
% %
Single depositor The techniques used to measure and control market risk include:
Top 10 depositors 7 7
• daily net open position
31 27
• daily VaR;
• back-testing;
• PV01;
• annual net interest income at risk;
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 107
Daily net open position PV01
The board on the input of ALCO, sets limits on the level of PV01 is a risk measure used to assess the effect of a change of
exposure by currency and in aggregate for overnight positions. rate of one basis point on the price of an asset. This limit is set for
The latter is also aligned to the net open position limit as the fixed income, money market trading, credit trading, derivatives
specified by the regulators, which is usually a proportion of and foreign exchange trading portfolios.
the groups’ capital.
Other market risk measures
Daily value-at-risk (VaR)
Other market risk measures specific to individual business units
VaR is a technique that estimates the potential losses that may include permissible instruments, concentration of exposures, gap
occur as a result of market movements over a specified time limits, maximum tenor and stop loss triggers. In addition, only
period at a predetermined probability. approved products that can be independently priced and properly
processed are permitted to be traded.
VaR limits and exposure measurements are in place for all market
risks the trading desk is exposed to. The bank generally uses Pricing models and risk metrics used in production systems,
the historical VaR approach to derive quantitative measures, whether these systems are off-the-shelf or in-house developed,
specifically for market risk under normal market conditions. Normal are independently validated by the market risk unit before
VaR is based on a holding period of one day and a confidence their use and periodically thereafter to confirm the continued
level of 95%. Daily losses exceeding the VaR are likely to occur, on applicability of the models. In addition, the market risk unit
average, 13 times in every 250 days. assesses the daily liquid closing price inputs used to value
instruments and performs a review of less liquid prices from a
The use of historic VaR has limitations as it is based on historical reasonableness perspective at least fortnightly. Where differences
correlations and volatilities in market prices and assumes that are significant, mark-to-market adjustments are made.
future prices will follow the observed historical distribution.
Hence, there is a need to back-test the VaR model regularly. Annual net interest income at risk
VaR back-testing A dynamic forward-looking annual net interest income forecast
is used to quantify the banks’ anticipated interest rate exposure.
The group and the banking business back-test its foreign currency, This approach involves the forecasting of both changing balance
interest rate and credit trading exposure VaR model to verify the sheet structures and interest rate scenarios, to determine the
predictive ability of the VaR calculations thereby ensuring the effect these changes may have on future earnings. The analysis
appropriateness of the model. Back-testing exercise is an ex-post is completed under both normal market conditions as well as
comparison of the daily hypothetical profit and loss under the stressed market conditions.
one-day buy and hold assumption to the prior day VaR. Profit or
loss for back-testing is based on the theoretical profits or losses Analysis of Value-at-Risk (VaR) and actual income
derived purely from market moves both interest rate and foreign
currency spot moves and it is calculated over 250 cumulative The table below highlights the historical diversified normal VaR
trading-days at 95% confidence level. across the various trading desks. The minimum and maximum
trading diversified normal VaR stood at N116 million and N472
Stress tests million respectively with an annual average of N227 million,
which translates to a conservative VaR limit utilisation of 12.7%
Stress testing provides an indication of the potential losses that on average.
could occur in extreme market conditions.
The stress tests carried out include individual market risk factor
testing and combinations of market factors on individual asset
classes and across different asset classes. Stress tests include a
combination of historical and hypothetical simulations.
Diversified Normal Var Exposures (N’million)
Desk Maximum Minimum Average 31-Dec-18 31-Dec-17 Limit
Bankwide 472 1,785
FX Trading 240 116 227 310 135
Money markets trading 475 315
Fixed income trading 77 1 28 10 75 679
Credit trading - 403
Derivatives - 93 221 308 124 234
2 11 2 10 52
----
----
108 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Analysis of PV01 • Endowment risk referring to the interest rate risk exposure
arising from the net differential between interest rate
The table below shows the PV01 of the money markets banking insensitive assets such as non-earning assets and interest rate
and the individual trading books as at period end. The money insensitive liabilities such as non-paying liabilities and equity.
markets trading book PV01 exposure remained relatively
unchanged at N1.2 million from that of the previous year. The Approach to managing interest rate risk on positions in the
money markets banking book PV01 exposure stood at N15.3 banking book
million; higher than that of the previous year as a result of T-bills
purchase of N28 billion, while the fixed income trading book Banking-related market risk exposure principally involves
PV01 exposure was N117,000. Overall trading PV01 exposure the management of the potential adverse effect of interest
was N1.3 million against a limit of N12.6 million thus reflecting movements on banking book earnings (net interest income and
a very conservative exposure utilisation. banking book mark-to-market profit or loss).
PV01 (NGN'000) 31-Dec-18 31-Dec-17 Limit The group’s approach to managing IRRBB is governed by prudence
1,213 6,099 and is in accordance with the applicable laws and regulations, best
Money market trading book 1,169 939 3,872 international practice and the competitive situation within which
- 2,050 it operates in financial markets. Interest rate risk is transferred
Fixed income trading book 117 - to and managed within the bank’s treasury operations under
2,151 539 supervision of ALCO.
Credit trading book - 12,560
10,057 17,000 Measurement of IRRBB
Derivatives trading book -
The analytical technique used to quantify IRRBB is an earnings
Total trading book 1,287 based approach. A dynamic, forward-looking net interest income
forecast is used to quantify the bank’s anticipated interest
Money market banking book 15,263 rate exposure. Desired changes to a particular interest rate risk
profile are achieved through the restructuring of on-balance
Interest rate risk in the banking book sheet repricing or maturity profiles. All assets and liabilities
are allocated to gap intervals based on either their repricing or
Interest rate risk in the banking book (“IRRBB”) can be defined as maturity characteristics. However, assets and liabilities for which
the reduction in banking book net interest income due to changes no identifiable contractual repricing or maturity dates exist are
in interest rates arising from the different re-pricing characteristics allocated to gap intervals based on behavioural profiling.
of banking book assets and liabilities. IRRBB is further divided into
the following sub-risk types: The impact on net interest income due to interest rate changes
covers 12 months of forecasting and allows for the dynamic
• Repricing risk referring to the timing differences in the maturity interaction of payments, new business and interest rates. The
(fixed rate) and repricing (floating rate) of assets and liabilities. analyses are done under stressed market conditions in which the
banking book is subjected to an upward 300 basis points and
• Yield curve risk arising when unanticipated shifts in the yield downward 300 basis points (2017: 300 basis points) parallel
curve have adverse effects on the group’s income. rate shocks for local currency and 100 basis points upward and
downward parallel rate shocks for foreign currency positions. The
• Basis risk arising from the imperfect correlation in the table below shows the sensitivity of the bank’s net interest income
adjustment of the rates earned and paid on different in response to standardised parallel rate shocks.
instruments with otherwise similar repricing characteristics.
• Optionality risk arising from the options embedded in bank
asset and liability portfolios, providing the holder with the
right, but not the obligation, to buy, sell, or in some manner
alter the cash flow of an instrument or financial contract.
31 December 2018 NGNm NGN USD Other Total
Increase in basis points NGNm 300 100 100 6,602
Sensitivity of annual net interest income 5,549 1,053 0 (6,954)
Decrease in basis points NGNm 300 100 100 Total
Sensitivity of annual net interest income NGNm (5,827) (1,127) 0 5,016
(7,420)
31 December 2017 NGN USD Other
Increase in basis points 300 100 100
Sensitivity of annual net interest income 4,808 264 (56)
Decrease in basis points 350 100 100
Sensitivity of annual net interest income (6,644) (832) 56
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 109
Hedging of endowment risk committee is tasked with the formulation of risk appetite and
oversight of investment performance. In this regard, a loss trigger
IRRBB is predominantly the consequence of endowment is in place for the non-strategic portion.
exposures, being the net exposure of non-rate sensitive liabilities
and equity less non-rate sensitive assets. The endowment risk is Exposure to currency risks
hedged using marketable liquid instruments in the same currency
as the exposure as and when it is considered opportune. Hedge The group takes on exposure to the effects of fluctuations in the
decisions are made by ALCO following careful consideration of the prevailing foreign currency exchange rates on its financial position
interest rate views to be hedged against, including magnitude, and cash flows. The board sets limits on the level of exposure
direction, timing and probability, and the exposure to be hedged. by currency and in aggregate for both overnight and intra day
positions, which are monitored daily. The table below summarises
Market risk on equity investment the group’s exposure to foreign currency exchange risk as at 31
December 2018.
The group’s equity and investment risk committee (“SEIRC”)
has governance and oversight of all investment decisions. The
Concentrations of currency risk – on- and off-balance sheet financial instruments
At 31 December 2018 Naira US Dollar GBP Euro Others Total
Financial assets N’million N’million N’million N’million N’million N’million
455,773
Cash and cash equivalents 250,505 177,028 4,413 21,468 2,359
- - 84,351
Trading assets 84,351 - - - - 142,543
- - 30,294
Pledged assets 142,543 - - - - 400,000
- -
Derivative assets 30,286 8 - - - -
8,548
Financial investments 393,460 6,540 - 13,433 1,821 432,713
32 49 77,787
Asset held for sale --- 1,632,009
34,933 4,229
Loans and advances to banks 1,401 7,146 -
-
Loans and advances to customers 218,925 198,069 465 -
10,927
Other financial assets 57,862 19,366 478 7,713
-
1,179,333 408,157 5,356 -
5,841
Financial liabilities 50,755 74,929 - 24,481 - 125,684
Trading liabilities 4,152 - - - 4,152
Derivative liabilities 453 10,452 1,721
Deposits and current accounts from banks 84,510 62,661 3,839 715 160,272
Deposits and current accounts from customers 510,600 284,825 - 11,713 - 807,692
Other borrowings - -
Debt securities issued 15,363 54,555 483 1,515 69,918
Other financial liabilitiies 46,028 14,567 4,775 3,951 60,595
134,816 19,056 161,711
846,224 510,593 1,390,024
Net on-balance sheet financial position 333,109 (102,436) 581 278 241,985
Off balance sheet 697 6,824 146,481
52,686 74,561
110 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Concentrations of currency risk – on- and off-balance sheet financial instruments
At 31 December 2017 Naira US Dollar GBP Euro Others Total
Financial assets N’million N’million N’million N’million N’million N’million
401,348
Cash and cash equivalents 196,431 187,599 4,424 11,741 1,153 151,479
- -
Trading assets 143,195 8,284 - - - 43,240
- - 11,052
Pledged assets 43,240 - - - - 316,641
- -
Derivative assets 11,044 8 - 114
8,173 12 372,088
Financial investments 316,266 375 - - -
- 9,623
Asset held for sale 114 - - 14 49,442
19,928 1,165 1,355,027
Loans and advances to banks 194,715 168,990 198
-
Loans and advances to customers 8,086 1,509 28 -
4,860
Other financial assets 47,523 1,895 10 9,489
-
960,614 368,660 4,660 5,408
-
Financial liabilities 2,584 8 - 19,757 - 2,592
Trading liabilities 62,449 - - - 62,449
Derivative liabilities 23,556 33,223 2 171 80 61,721
Deposits and current accounts from banks 438,537 301,476 4,029 111 753,642
Deposits and current accounts from customers 15,784 13,262 - 29,542 - 29,046
Subordinated debt 133,900 50,698 549 743 191,298
Other financial liabilitiies (restated) 15,581 59,311 - - 74,892
Other borrowings 692,391 457,978 4,580 934 1,175,640
Net on-balance sheet financial position 268,223 (89,318) 80 231 179,387
Off balance sheet 13,904 108,762 1,170
- 153,378
Exchange rates applied 2018 2017
364.18 331.16
period-end spot rate* 466.22 447.7
US Dollar 416.51 397.26
GBP
Euro
Sensitivity analysis
A reasonably possible strengthening (weakening) of the US dollar, GBP or Euro against Naira at 31 December would have affected the
measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown
below. This analysis assumes that all other variables, in particular interest rates, remain constant.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 111
Profit or loss Equity, net of tax
Effect in N million Strengthening Weakening Strengthening Weakening
At 31 December 2018 (20,487) 20,487 (14,341) 14,341
USD (20% movement) 58 (58) 41 (41)
GBP (10% movement)
EUR (5% movement) 523 (523) 366 (366)
At 31 December 2017 (17,864) 17,864 (12,505) 12,505
USD (5% movement) 8 (8) 6 (6)
GBP (2% movement) 9 (9) 6 (6)
EUR (1% movement)
Basel II framework Capital management
The Basel II framework stipulates a minimum level of capital Capital adequacy
that banks must maintain to ensure that they can meet their
obligations, cover unexpected losses; and can, very importantly, The group manages its capital base to achieve a prudent balance
promote public confidence. It also specifies comprehensive between maintaining capital ratios to support business growth
disclosure requirements for banks operating under the framework. and depositor confidence, and providing competitive returns
to shareholders. The capital management process ensures that
The Basel II framework is based on three pillars: each group entity maintains sufficient capital levels for legal
and regulatory compliance purposes. The group ensures that its
• Pillar I - Minimum Capital Requirements. This details various actions do not compromise sound governance and appropriate
approaches to measure and quantify capital required for the business practices and it eliminates any negative effect on
three major risk components that a bank faces: credit risk, payment capacity, liquidity and profitability
market risk and operational risk. Stanbic IBTC has adopted the
Standardized Approach for Credit and Market Risk and the The Central Bank of Nigeria (“CBN”) adopted the Basel II capital
Basic Indicator Approach for Operational Risk. framework with effect from 1 October 2014 and revised the
framework in June 2015. Stanbic IBTC Bank has been compliant
• Pillar II - Supervisory Review. This is structured along two with the requirements of Basel II capital framework since it
separate but complementary stages; the Internal Capital was adopted.
Adequacy Assessment Process (“ICAAP”) and the Supervisory
Review and Evaluation process (“SREP”). The bank conducts
a self- assessment of its internal capital requirements via the
ICAAP whilst the Central Bank of Nigeria (“CBN”) conducts its
assessment of the bank via the SREP.
• Pillar III – Market Discipline allows market participants access
information on risk exposure and risk management policies and
procedures through disclosures. The bank through this Pillar III
Disclosures report provides an overview of its risk management
practices in line with the CBN Guidance Notes on Pillar III
Disclosures.
The Pillar III Disclosures Report will be published on bi-annual
basis and will be made available through the bank’s website at
www.stanbicibtcbank.com.
112 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Regulatory Capital Capital Adequacy
The group’s regulatory capital is divided into two tiers: Regulatory capital adequacy is measured based on Pillar 1 of the
Basel II capital framework. Capital adequacy ratio is calculated
–– Tier 1 capital comprises share capital, share premium, by dividing the capital held by total risk-weighted assets. Risk
retained earnings and reserves created by appropriations weighted assets comprise computed risk weights from credit,
of retained earnings. The closing balance on deferred tax operational and market risks associated with the business of the
asset is deducted in arriving at Tier 1 capital; bank. Notional risk weighted asset for market risk is calculated
using the standardised approach while operational risk is
–– Tier 2 capital includes subordinated debts and determined using the basic indicator approach. Management
other comprehensive income. Subordinated debt at the monitors the capital adequacy ratio on a proactive basis.
end of the period totalled N30.4 billion and is broken
down as follows: Throughout the period under review, Stanbic IBTC Bank operated
above its targeted capitalization range and well over the minimum
–– Naira denominated subordinated debt totalling N15.6 regulatory capital adequacy ratio of 10% as mandated by CBN.
billion issued on 30 September 2014 at an interest rate
of 13.25% per annum; Regulatory Recommended transition adjustments of IFRS 9
–– N100 million Naira denominated subordinated debt The Central Bank of Nigeria issued a letter to all banks and
issued on 30 September 2014. Interest is payable discount houses on October 18, 2018 recommending transitional
semi-annually at 6-month Nigerian Treasury Bills arrangements to cushion the impact of IFRS 9 expected credit loss
yield plus 1.20%. It has a tenor of 10 periods and is on transition date on capital adequacy ratio.
callable after 5 periods from the issue date. The debt
is unsecured; Banks are required to hold static the adjusted Day One impact
and amortise on a straight-line basis over the four-year transition
–– USD denominated term subordinated non-collaterised period. The Group (Bank) wrote to the Central Bank on November
facility of USD40 million obtained from Standard Bank 9, 2018 advising that the impact of IFRS 9 transition adjustment
of South Africa effective 31 May 2013. The facility has been fully absorbed in reserves and audited as part of our half
expires on 31 May 2025 and is repayable at maturity. year audit process. The impact of the transitional adjustments
Interest on the facility is payable semi-annually at has been incorporated into the Group’s (Bank’s) capital plan,
LIBOR (London Interbank Offered Rate) plus 3.60%. which covers a three-year horizon and the Group’s (Bank’s)
should remain adequately capitalized during these periods.
Total eligible Tier 2 Capital as at 31 December 2018 was N30.4
billion (Dec 2017: N29.1 billion).
Investment in unconsolidated subsidiaries and associations
are deducted from Tier 1 and 2 capital to arrive at total
regulatory capital.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 113
Capital management - BASEL II regulatory capital Basel II *Basel II - Adjusted for impact of Basel II
Stanbic IBTC Group IFRS 9 transitional adjustment
Group Group Group
31 Dec. 2018 31 Dec. 2018 31 Dec. 2017
N’million N’million N’million
Tier I
214,285 220,391 179,270
Paid-up share capital 5,120 5,120 5,025
Share premium 76,030 76,030 66,945
General reserve (retained profit) 105,602 105,602 85,227
SMEEIS reserve
AGSMEIS reserve 1,039 1,039 1,039
Statutory reserve 2,156 2,156 749
Other reserves 20,000 20,000
IFRS 9 Transitional Adjustment Relief 16,863
Non controlling interests 76 76 264
Less: regulatory deduction - 6,106 -
4,261
4,261 10,008 3,159
10,008 9,506
Goodwill 9,181 9,181 8,901
Deferred tax assets 827 827 605
Other intangible assets - - -
Current period losses - - -
Under impairment - - -
Reciprocal cross-holdings in ordinary shares of financial institutions - - -
Investment in the capital of banking and financial institutions - - -
Excess exposure(s) over single obligor without CBN approval - - -
Exposures to own financial holding company - - -
Unsecured lending to subsidiaries within the same group
Eligible Tier I capital 204,277 210,383 169,763
Tier II
32,949 32,949 34,239
Hybrid (debt/equity) capital instruments - - -
Subordinated term debt 30,414 30,414 29,046
Other comprehensive income (OCI)
Less: regulatory deduction 2,535 2,535 5,193
Reciprocal cross-holdings in ordinary shares of financial institutions - - -
Investment in the capital of banking and financial institutions - - -
Investment in the capital of financial subsidiaries - - -
Exposures to own financial holding company - - -
Unsecured lending to subsidiaries within the same group - - -
Eligible Tier II capital - - -
Total regulatory capital
32,949 32,949 34,239
237,226 243,332 204,002
Risk weighted assets:
Credit risk 635,860 635,860 604,262
Operational risk 299,944 299,944 249,669
Market risk 24,185 24,185 13,270
Total risk weighted assets 959,989 959,989 867,200
Total capital adequacy ratio 24.7% 25.3% 23.5%
Tier I capital adequacy ratio 21.3% 21.9% 19.6%
*Capital adequacy ratio will decrease by 64bps from 25.3% to 24.7% without the transitional adjustment relief given by the CBN to Banks. The transitional adjustment
relief is in adherence to the CBN circular on ”Transitional Arrangements - Treatment of IFRS 9 Expected Credit Loss for Regulatory Purposes by Banks in Nigeria”,
dated 18 October 2018. The transitional adjustment is a 20% discount on excess IFRS 9 day one impact over regulatory risk reserve (RRR) on day one 01 January
2018, and which is further discounted over a four year period at annual discount rate of 20%.
IFRS 9 day one impact amounted to N10.18billion as at 01 January 2018.
114 Stanbic IBTC Annual report for the year ended 31 December 2018
Enterprise Risk Review (continued)
Capital management - BASEL II regulatory capital
Stanbic IBTC Bank PLC Basel II *Basel II - Adjusted Basel II
for impact of IFRS 9
transitional adjustment
31 Dec. 2018 31 Dec. 2018 31 Dec. 2017
N’million N’million N’million
153,824 160,002 133,317
Paid-up share capital 1,875 1,875 1,875
Share premium 42,469 42,469 42,469
General reserve (Retained Profit) 72,386 72,386 65,767
SMEEIS reserve 1,039 1,039 1,039
AGSMEEIS reserve 2,156 2,156 749
Statutory reserve 33,863 33,863 21,405
Other reserves 36 36 13
IFRS 9 Transitional Adjustment Relief - 6,177 -
Non controlling interests ---
Less: regulatory deduction 9,190 9,190 8,976
Goodwill ---
Deferred tax assets 8,321 8,321 8,321
Other intangible assets 819 819 605
Investment in the capital of financial subsidiaries 50 50 50
Excess exposure(s) over single obligor without CBN approval ---
Exposures to own financial holding company ---
Unsecured lending to subsidiaries within the same group ---
Unsecured lending to subsidiaries within the same group ---
Eligible Tier I capital 144,634 150,812 124,341
Tier II 31,958 31,958 32,787
Hybrid (debt/equity) capital instruments ---
Subordinated term debt 30,414 30,414 29,046
Other comprehensive income (OCI) 1,544 1,544 3,741
50 50 50
Reciprocal cross-holdings in ordinary shares of financial institutions - - -
Investment in the capital of banking and financial institutions ---
Investment in the capital of financial subsidiaries 50 50 50
Exposures to own financial holding company ---
Unsecured lending to subsidiaries within the same group ---
Eligible Tier II capital 31,908 31,908 32,737
Total regulatory capital 176,542 182,720 157,078
Risk weighted assets:
Credit risk 598,610 598,610 574,948
Operational risk 215,971 215,971 179,605
Market risk 24,185 24,185 13,270
Total risk weighted assets 838,766 838,766 767,823
Total capital adequacy ratio 21.0% 21.8% 20.5%
Tier I capital adequacy ratio 17.2% 18.0% 16.2%
*Capital adequacy ratio will decrease by 74bps from 21.8% to 21.0% without the transitional adjustment relief given by the CBN to Banks. The transitional adjustment
relief is in adherence to the CBN circular on “Transitional Arrangements - Treatment of IFRS 9 Expected Credit Loss for Regulatory Purposes by Banks in Nigeria”,
dated 18 October 2018. The transitional adjustment is a 20% discount on excess IFRS 9 day one impact over regulatory risk reserve (RRR) on day one 01 January
2018, and which is further discounted over a four year period at annual discount rate of 20%.
IFRS 9 day one impact amounted to N10.30 billion as at 01 January 2018.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 115
116 Stanbic IBTC Annual report for the year ended 31 December 2018
PAGE TITLE
Stanbic IBTC Group
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 117
ANNUAL REPORT & FINANCIAL STATEMENTS
118 Directors’ report 142 Independent auditors report 150 Consolidated statement of
124 Statement of directors’ responsibilities 146 Consolidated and separate changes in equity
in relation to the financial statements statement of financial position 154 Consolidated and separate
125 Corporate governance report 148 Consolidated and separate statement of cash flows
129 Report of the external consultants on statement of profit or loss 155 Notes to the consolidated and
separate financial statements
board effectiveness and evaluation 149 Consolidated and separate
140 Report of the audit committee statement of other 287 Annexure A
comprehensive income 288 Annexure B
118 Stanbic IBTC Annual report for the year ended 31 December 2018
DIRECTORS’ REPORT
For the year ended 31 December 2018
The directors present their annual report on the affairs of Stanbic Asset Management Limited, Stanbic IBTC Capital Limited, Stanbic
IBTC Holdings PLC (“the company”) and its subsidiaries (“the IBTC Investments Limited, Stanbic IBTC Stockbrokers Limited,
group”), together with the consolidated financial statements and Stanbic IBTC Ventures Limited, Stanbic IBTC Insurance Brokers
auditor’s report for the year ended 31 December 2018. Limited and Stanbic IBTC Trustees Limited and two indirect
subsidiaries, namely: Stanbic IBTC Bureau De Change Limited and
a. Legal form Stanbic IBTC Nominees Limited.
The company was incorporated in Nigeria under the Companies & The Company prepares consolidated financial statements, which
Allied Matters Act (“CAMA”) as a public limited liability company include separate financial statements of the Company.
on 14 March 2012. The company’s shares were listed on 23
November 2012 on the floor of The Nigerian Stock Exchange. c. Operating results and dividends
b. Principal activity and business review The group’s gross earnings increased by 4.67%, while profit
before tax increased by 44.12% for the year ended 31 December
The principal activity of the company is to carry on business as a 2018. The board recommended the approval of a final dividend of
financial holding company, to invest and hold controlling shares in 150 kobo per share (31 Dec 2017: 50 kobo per share) for the year
as well as manage equity in its subsidiary companies. ended 31 December 2018.
The company has nine direct subsidiaries, namely: Stanbic IBTC Highlights of the group's operating results for the year under
Bank PLC, Stanbic IBTC Pension Managers Limited, Stanbic IBTC review are as follows:
Gross earnings 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Profit before tax Group Group Company Company
Income tax ₦Nmillion ₦Nmillion
Profit after tax Nmillion ₦Nmillion 19,463 29,922
Non controlling interest 222,360 212,434 16,000 27,545
Profit attributable to equity holders of the parent (501) (2,380)
Dividend proposed (final) 88,152 61,166 15,499 25,165
Dividend paid (interim) (13,712) (12,785) - -
74,440 15,499 25,165
(2,353) 48,381 15,361 5,025
72,087 (2,186) 10,114 6,000
46,195
15,361
10,114 5,025
6,000
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 119
d. Directors' shareholding
The direct interest of directors in the issued share capital of the company as recorded in the register of directors shareholding and/or as
notified by the directors for the purposes of section 275 and 276 of CAMA and the listing requirements of The Nigerian Stock Exchange
are as follows:
Direct shareholding
Number of Ordinary Shares Number of Ordinary Shares
of Stanbic IBTC Holdings PLC of Stanbic IBTC Holdings PLC
held as at 31 December 2018 held as at 31 December 2017
Basil Omiyi --
Yinka Sanni1
Salamatu Suleiman --
Ifeoma Esiri2
Ngozi Edozien --
Ballama Manu
Simpiwe Tshabalala 36,342,375 42,894,194
Fabian Ajogwu
18,563 18,563
151,667 151,667
--
--
1 Mr Yinka Sanni has indirect shareholding amounting to 5,005,466 ordinary shares through SITL The Sanni Family Trust.
2 Mrs Ifeoma Esiri has indirect shareholding amounting to 2,666,670 ordinary shares through Ashbert Limited.
In terms of Section 259 (1) of the Company and Allied Matters Act 2004, the company will hold its seventh Annual General Meeting in 2019, and Mrs. Salamatu
Suleiman, Mrs. Ifeoma Esiri and Mr. SIm Tshabalala, will be retiring by rotation, and being eligible, they will be presenting themselves for re-election by Shareholders at
the next Annual General Meeting. The Board also appointed two additional Directors: Mr. Barend Johannes Kruger (as Non-Executive Director) and Mr. Kunle Adedeji
(as Executive Director). Mr. Adedeji is also the Stanbic IBTC Group’s Chief Financial Officer. The two appointments will also be tabled at the next Annual General Meeting
for Shareholders’ approval (subject to receipt of all required Regulatory Approvals).
e. Directors’ interest in contracts f. Property and equipment
The Company currently has a number of Technical and Information relating to changes in property and equipment is given
Management Service Agreements with its subsidiaries, which in Note 17 to the financial statements. In the directors’ opinion
provide for the provision of shared services to these subsidiaries in the disclosures regarding the group’s properties are in line with
line with CBN Regulation for Holding Companies. These services the related statement of accounting policy of the group.
are provided at arm’s length and appropriate fees charged in line
with best practice.
120 Stanbic IBTC Annual report for the year ended 31 December 2018
Directors’ report (continued)
g. Shareholding analysis
The shareholding pattern of the company as at 31 December 2018 is as stated below:
Share range No. of shareholders Percentage of No. of holding Percentage holdings
1-1,000 39,003 shareholders 20,748,828 0.20
1,001-5,000 35,557 41.91 73,464,830 0.72
5,001-10,000 9,041 38.21 56,270,826 0.55
10,001-50,000 7,365 9.72 137,884,247 1.35
50,001-100,000 1,054 7.91 66,973,685 0.65
100,001-500,000 786 1.13 146,447,017 1.43
500,001-1,000,000 103 0.84 67,174,720 0.66
1,000,001-5,000,000 75 0.11 159,638,997 1.56
5,000,001-10,000,000 20 0.08 141,238,412 1.38
10,000,001-50,000,000 33 0.02 747,973,352 7.30
50,000,001-100,000,000 13 0.04 8.46
100,000,001-10,240,552,945 9 0.01 866,813,504 75.74
Grand Total 93,059 0.01 7,755,924,527 100
100 10,240,552,945
Foreign shareholders 158 - 6,891,378,230 68.57%
h. Substantial interest in shares
According to the register of members as at 31 December 2018, no shareholder held more than 5% of the issued share capital of the
company except the following:
Shareholder 2018 2017 Percentage
Stanbic Africa Holdings Limited (“SAHL”) No. of shares held Percentage shareholding No of shares held shareholding
Free float is c.30%
6,691,960,546 65.35% 5,333,569,874 53.07%
i. Share capital history
During the year under review, the Company issued an additional 191,087,214 ordinary shares of 50k each for scrip dividend, thereby
bringing the total issued and fully paid up share capital of the Company to 10,240,552,945 ordinary shares of 50k each amounting to
N5,120,276,472.
Authorised Issued and fully paid up
(No. of shares) ‘000 ₦N’000
Period Increase Cumulative Increase Cumulative
2012 5,000,000 5,000,000
2015 1,500,000 6,500,000 5,000,000 5,000,000
2017
2018 - - - 5,000,000
2018 - -
- - 24,733 5,024,733
32,104 5,056,837
63,439 5,120,276
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 121
j. Dividend history and unclaimed dividend as at 31 December 2018
Period end Dividend type Total dividend amount Dividend per share Net dividend amount Percentage
declared* unclaimed as at 31 Dec 2018 unclaimed
2005 Final 20 kobo %
2006 Final N₦ 20 kobo N₦
2007 Interim 2,170,298,271 30 kobo 3,693,332 0.17
2007 Final 2,170,297,800 25 kobo 48,152,001 2.22
2008 Final 3,375,000,000 40 kobo 0.02
2009 Final 4,218,750,000 30 kobo 612,284 0.07
2010 Final 6,750,000,000 39 kobo 3,150,000 3.50
2011 Interim 5,062,500,000 10 kobo 236,320,519 4.89
2012 Final 3,240,215,108 10 kobo 247,711,548 5.72
2013 Interim 1,687,500,000 70 kobo 185,336,148 1.64
2013 Final 10 kobo 27,702,276 2.00
2014 Interim 900,570,889 110 kobo 17,980,685 2.29
2014 Final 6,304,041,033 15 kobo 144,308,002 2.56
2015 Interim 90 kobo 23,066,647 2.40
2015 Final 901,992,337 238,261,003 2.44
2016 Final 9,920,077,516 5 kobo 32,983,736 2.67
2017 Interim 1,352,701,559 5 kobo 219,925,856 7.44
2017 Final 8,235,882,607 60 kobo 15,676,120 7.38
2018 Interim 50 kobo 15,555,952 4.19
Total 210,646,919 100 kobo 186,451,984
210,646,919
4,446,326,069 1,646,888,093
1,712,614,735
10,113,674,444
*Amount is less of withholding tax
k. Dividend history and unclaimed dividend as at 31 December 2018 (continued)
The total unclaimed dividend fund as at 31 December 2018 amounted to N1,690 million (Dec. 2017: N1,475 million). A sum of N1,249
million of the fund balance is held in an investment account (money market mutual fund) managed by Stanbic IBTC Asset Management
Limited (Dec. 2017: N1,301 million), while the balance is held in demand deposits maintained with Stanbic IBTC Bank PLC. Total income
earned on the investment account and recognised by the company for the year ended 31 December 2018 was N140 million (December
2017: N141 million).
122 Stanbic IBTC Annual report for the year ended 31 December 2018
Directors’ report (continued)
l. Donations and Charitable Gifts
The Group and Company made contributions to charitable and non – political organizations amounting to N233.40 million and N175.16
million, respectively (December 2017: Group - N436.63 million; Company - N142.81 million) during the period.
Deepening financial inclusion Group Company
Lagos State Security Trust Fund N‘000 ₦N‘000
Global Fund for the eradication of Malaria, HIV/AIDS and Tuberculosis 35,000 35,000
Together4alimb project 25,000 25,000
Adopted School Project - Lagos Progressive School, Surulere, Lagos 21,827 -
Federal Ministry of Finance - Ministry capacity building 12,277 12,277
Renovation and construction of Bethel Primary School Maya, Ikorodu 12,087 12,087
Together4alimb Education Trust Fund - South East 12,000 12,000
Kaduna State Business Incubator Project 9,224 9,224
Itedo Community Nursery and Primary School, Lekki 6,000 6,000
Slum2School Malaria Day Initiative - World Malaria Day 6,000 -
Ministry of Women Affairs and Poverty Alleviation 5,800 5,800
Jigawa State - Flood Victims Support 5,578 5,578
Offa security trust fund 5,496 5,496
Katsina State - Flood Victims Support 5,000 -
Delta State - Flood Victims Support 5,000 5,000
REBISI Community educational grants 5,000 -
Rivers State - Flood Victims Support 5,000 -
Ogun State - Flood Victims Support 5,000 5,000
Mushin General Hospital - Revamping of the Paediatric ward 5,000 -
Lagos University Teaching Hospital - Renovation of Accident and Emergency Ward 5,000 -
Junior Achievement Nigeria 4,000 4,000
Back to School CSI project for disadvantaged children 3,825 3,825
Together4alimb Education Trust Fund - North Central 3,600 3,600
Abaranje Nursery & Primary School, Idimu, Lagos -construction and deployment of block of modern toilet facilities 3,170 3,170
The Rose of Sharon Foundation 3,000 3,000
Yaba Maternity Centre and Ifako Ijaiye General Hospital - donation of hospital equipments 2,500 2,500
Together4alimb Education Trust Fund - South South 2,000 -
Provision of clean water to Farabiyi Community, Bariga in partnership with MegaSea foundation 1,833 1,833
Child Correctional Centre, Idi-Araba, Surulere, Lagos. 1,500 1,500
CBN's Financial Literacy Campaign 1,500 1,500
Upgrades and capacity building at the Badagry prisons 1,329 1,329
World Savings day 1,240 85
Laboratory Project for the Department of Pharmacology and Toxicology, University of Ibadan 1,436 1,436
Library project at Community Secondary School (Lanbe – Akute) 1,143 1,143
Women and Poverty Alleviation Skills Acquisition Programme 1,059 1,059
Ketu Special Children Centre, Yaba, Lagos 1,000 1,000
Pure Souls Learning Foundation Nigeria -
Ladipo Primary School in Mushin, Lagos State - Information and Communications Technology (“ICT”) center 915 874
Save the Children Grant Project 874 726
Federal Neuro-Psychiatric Hospital Yaba 726 656
The Joy Hub Fundraiser 656 -
Eti- Osa Local Govt Primary Healthcare Centre (“PHC”) 600 590
590 500
500 430
430
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 123
Continued: Group Company
N‘000 N‘000
Borehole construction for the Oko-agbon community, Agboyi, Ketu 350
Centre for Destitute Empowerment International 350 327
2 Counting machines @NYSC Camp 327 -
Awesome Treasures Foundation 273 -
Edwin Albinism awareness project 2018 250 250
Heart of Gold Children Hospice 250 232
National Orthopaedic Hospital - End of the Year party support 232 250
Bales of Mercy Orphanage, Gbagada, Lagos (Home for special kids) 250 150
Down Syndrome Foundation Nigeria (“DSFN”) 150 150
Special Correctional Centre For Boys Oregun 150 -
Spinal Cord Injuries Association of Nigeria (“SCIAN”) Rehabilitation Home 150 150
Compassionate Homes Orphanage 150 80
CSI Project - Rumubekwe Youth PH -
Total 80
70 175,157
233,397
m. Events after the reporting date o. Employee involvement and training
There were no other events after the reporting date which could The company ensures, through various fora, that employees are
have a material effect on the financial position of the group as at kept informed on matters concerning them. Formal and informal
31 December 2018 which have not been recognised or disclosed. channels are employed for communication with employees with
an appropriate two - way feedback mechanism. In accordance
n. Human resources with the company’s policy of continuous staff development,
training facilities are provided in the group’s well equipped
Employment of physically challenged Training School (the Blue Academy). Employees of the Company
The company continues to maintain a policy of giving fair attend training programmes organized by the Standard Bank
consideration to applications for employment made by physically Group (“SBG”) in South Africa and elsewhere and participate in
challenged persons with due regard to their abilities and aptitude. programmes at the Standard Bank Global Leadership centre in
The company’s policy prohibits discrimination against physically South Africa. The company also provides its employees with on the
challenged persons or persons with HIV in the recruitment, job training in the company and at various Standard Bank locations.
training and career development of its employees. In the event
of members of staff becoming physically challenged, efforts will p. Auditors
be made to ensure that, as far as possible, their employment
with company continues and appropriate training is arranged to The auditor, Messrs. KPMG Professional Services, having satisfied
ensure that they fit into the company’s working environment. the relevant corporate governance rules on their tenure in office
have indicated their willingness to continue in office as auditor.
Health safety and welfare at work In accordance with Section 357 (2) of the Companies and Allied
Matters Act of Nigeria, a resolution would be tabled at the next
The company enforces strict health and safety rules and practices annual general meeting seeking shareholders approval to allow
at the work environment which are reviewed and tested regularly. Directors fix the remuneration to be paid to the External Auditors.
The company’s staff are covered under a comprehensive health
insurance scheme pursuant to which the medical expenses of By order of the Board
staff and their immediate family are covered up to a defined
limit. Fire prevention and firefighting equipment are installed Chidi Okezie
in strategic locations within the company’s premises. Company Secretary
FRC/2013/NBA/00000001082
The company has both Group Personal Accident and 31 January 2019
Workmen’s Compensation Insurance cover for the benefit
of its employees. It also operates a contributory pension
plan in line with the Pension Reform Act 2014.
124 Stanbic IBTC Annual report for the year ended 31 December 2018
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RELATION TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
The directors accept responsibility for the preparation of the The directors further accept responsibility for maintaining
consolidated and separate annual financial statements that give adequate accounting records as required by the Companies and
a true and fair view in accordance with International Financial Allied Matters Act of Nigeria and for such internal control as the
Reporting Standards (“IFRS”) and in the manner required by directors determine is necessary to enable the preparation of
the Companies and Allied Matters Act, Cap C. 20, Laws of the financial statements that are free from material misstatement
Federation of Nigeria, 2004, the Financial Reporting Council of whether due to fraud or error.
Nigeria Act, 2011 and the Banks and Other Financial Institutions
Act, Cap B3, Laws of the Federation of Nigeria, 2004 and relevant The directors have made an assessment of the Company’s ability
Central Bank of Nigeria (“CBN”) Guidelines and Circulars. to continue as a going concern and have no reason to believe the
Company will not remain a going concern in the year ahead.
Signed on behalf of the directors by:
Basil Omiyi Yinka Sanni
Chairman Chief Executive
FRC/2016/IODN/00000014093 FRC/2013/CISN/00000001072
31 January 2019 31 January 2019
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 125
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2018
Introduction company. As Stanbic IBTC Holdings PLC is its equity stake in the company in
the holding company for the subsidiaries in May 2018 from 53.07% to 64.45%
The company is a member of the Standard the group, the company’s board also acts through the acquisition of additional
Bank Group, which holds a 65.35% equity as the group board, with oversight of the 1.142 billion shares in an off-market
stake (through Stanbic Africa Holdings full activities of the group. transaction.
Limited) in the company.
A number of committees have been • The Company held its 6th Annual
Standard Bank Group (“SBG”) is committed established by the company’s board General Meeting on Tuesday, 19 June
to implementing initiatives that improve that assists the board in fulfilling its 2018 at which shareholders approved
corporate governance for the benefit of stated objectives. The committees’ the 2017 Audited Financial Statements
all stakeholders. SBG’s board of directors roles and responsibilities are set out as well as other resolutions tabled
remains steadfast in implementing in their mandates, which are reviewed before the meeting.
governance practices that comply with periodically to ensure they remain
international best practice, where relevant. The mandates set out their • T he Securities and Exchange
substance prevails over form. roles, responsibilities, scope of authority, Commission approved Scrip Dividend
composition and procedures for reporting Issues following the declaration of the
Subsidiary entities within SBG are guided to the board. 2017 final dividend by Shareholders at
by these principles in establishing their the Annual General Meeting of
respective governance frameworks, which Codes and regulations the Company held on 19 June 2018
are aligned to SBG’s standards in addition as well as the 2018 Interim Dividend
to meeting the relevant jurisdictional The company operates in highly regulated approved by Directors. Consequently,
requirements in their areas of operation. markets and compliance with applicable an additional 64,208,713 ordinary
legislation, regulations, standards and shares and 126, 878,501 ordinary
Stanbic IBTC Holdings PLC (“the codes, including transparency and shares respectively, were registered,
company”), and its subsidiaries (“the accountability, remain an essential and alloted to shareholders who
group”), as a member of SBG, operate characteristic of its culture. The board elected to receive fully paid ordinary
under a governance framework which monitors compliance with these by shares in lieu of cash dividends. This
enables the board to balance its role means of management reports, which increased the issued shares of the
of providing oversight and strategic include information on the outcome company to 10,240,552,945 as at
counsel with its responsibility to of any significant interaction with key 31 December 2018.
ensure conformance with regulatory stakeholders such as regulators.
requirements, group standards and • F ollowing SAHL’s election to receive
acceptable risk tolerance parameters. The group complies with all applicable fully paid ordinary shares of the
legislation, regulations, standards Company in lieu of cash payments for
The direct subsidiaries of the company and codes. the 2017 final dividend as well as the
are: Stanbic IBTC Bank PLC, Stanbic 2018 interim dividend of the Company,
IBTC Asset Management Limited, Shareholders’ responsibilities the equity stake of SAHL increased
Stanbic IBTC Pension Managers Limited, to 65.35%.
Stanbic IBTC Insurance Brokers Limited, The shareholders’ role is to approve
Stanbic IBTC Trustees Limited, Stanbic appointments to the board of directors and • T here was continued focus on directors
IBTC Stockbrokers Limited, Stanbic the external auditors as well as to grant training via attendance at various
IBTC Ventures Limited, Stanbic IBTC approval for certain corporate actions courses such as Value Creation Through
Investments Limited and Stanbic IBTC that are by legislation or the company’s Effective Boards, Finance for Lawyers
Capital Limited and these subisidiaries have articles of association specifically reserved Program, AML/CFT Training (Including
their own distinct boards and take account for shareholders. Their role is extended Feedback Session on CBN AML/
of the particular statutory and regulatory to holding the board accountable and CFT Circular); and as with prior years,
requirements of the businesses they responsible for efficient and effective the Board also held its annual Board
operate. These subsidiaries operate under corporate governance. Strategy Session on 26 July 2018 which
a governance framework that enables their focused on digitization in line with the
boards to balance their roles in providing Developments during the year ended Group’s strategy for 2018.
oversight and strategic counsel with their 31 December 2018
responsibility for ensuring compliance with • T he Financial Reporting Council
the regulatory requirements that apply in During the period under review, the (“FRC”) released an exposure draft
their areas of operation and the standards following developments in the company’s of the proposed National Code
and acceptable risk tolerance parameters corporate governance practices occurred: of Corporate Governance and has
adopted by the company. In this regard requested for comments on the draft
they have aligned their respective • The Standard Bank Group through its Code from Stakeholders.
governance frameworks to that of the wholly owned subsidiary, Stanbic Africa
Holdings Limited (“SAHL”), increased
126 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
• Following the strategic decision taken believed that it had acted properly in an • continue to enhance the level of
by the board of Stanbic IBTC Ventures agency capacity. information provided to and interaction
Limited (“SIVL”) a wholly owned with shareholders, investors and
subsidiary of Stanbic IBTC Holdings • T he CBN has also confirmed that our stakeholders generally.
PLC, to discontinue business as Venture banking subsidiary will not be debited
Capital Managers, the Securities and for USD2.632 billion, being the portion Board and directors
Exchange Commission approved the of the remittances the Bank had made
voluntary surrender of the Venture on the basis of the CCIs, which the CBN Board structure and composition
Capital Licence granted to SIVL. had previously suggested that the Bank
Accordingly SIVL has ceased to be a should also be prepared to refund. Ultimate responsibility for governance
Capital Market Operator. The company rests with the board of directors of the
would however remain a going concern. • O n 9 October, 2018 the CBN held company, who ensure that appropriate
separate meetings with the four banks controls, systems and practices are in
• S tanbic IBTC Bank PLC (SIBTC Bank), and also held a tripartite meeting place. The company has a unitary board
the banking subsidiary of Stanbic involving the CBN, the four banks structure and the roles of chairman
IBTC Holdings PLC, received a letter and MTN with a view to arriving and chief executive are separate and
on 29 August 2018 from the Central at an equitable resolution of the distinct. The company’s chairman is a
Bank of Nigeria (“CBN”), notifying it issue. Sequel to the above, the CBN non-executive director. The number and
of penalties imposed against it and announced on 24 December 2018, that stature of non-executive directors ensure
three other banks, pursuant to the it had reached an amicable settlement that sufficient consideration and debate
CBN’s review of transactions relating with MTN Nigeria in respect of the are brought to bear on decision thereby
to the remittance of foreign exchange, above matter. contributing to the efficient running of
on the basis of what the CBN termed the board.
as “irregular” Certificates of Capital • Dominic Bruynseels resigned on 6 April
Importation (“CCI’s”) issued to MTN 2018 following his retirement from the One of the features of the manner in which
Nigeria Communications Limited (MTN Standard Bank Group. the board operates is the role played by
Nigeria), between 2007 and 2015.The board committees, which facilitate the
CBN, by its letter advised Stanbic IBTC • M r. Ratan Mahtani resigned his discharge of board responsibilities. The
Bank that it was subject to a penalty appointment as a Non-Executive committees each have a board approved
of NGN 1.885 billion for violations Director on the Board of the Company mandate that is regularly reviewed.
of regulations pertaining to foreign with effect from 19 July 2018.
exchange transactions. Strategy
• P rof. Fabian Ajogwu was re-designated
• I t is pertinent to mention that at no from independent Non-Executive The board considers and approves the
time did Stanbic IBTC Bank utilise Director to Non-Executive Director company’s strategy. Once the financial and
irregular CCIs to make remittances on following the approval of the Central governance objectives for the following
behalf of MTN Nigeria. On the contrary, Bank of Nigeria. year have been agreed, the board monitors
all remittances were undertaken performance against financial objectives
with the knowledge and approval • The Boards of the subsidiaries across and detailed budgets on an on-going basis,
of the CBN, and in accordance with the Stanbic IBTC Group appointed through quarterly reporting.
the Foreign Exchange (Monitoring Independent Non-Executive Directors
and Miscellaneous Provisions) Act, during the year in line with regulatory Regular interaction between the board and
1995 and other extant Regulations. requirements. Mrs Funmi Ilama was the executive is encouraged. Management
Furthermore, Stanbic IBTC Bank appointed on the Board of Stanbic IBTC is invited, as required, to make
was not a beneficiary of any of the Capital Limited, Mrs. Abimbola Afolabi- presentations to the board on material
remittances made on the basis of those Ajayi was appointed on the Board of issues under consideration.
CCIs and denies any imputation of Stanbic IBTC Trustees Limited, while
wrongdoing. Mrs. Titilola Lawani was appointed to Directors are provided with unrestricted
the Board of Stanbic IBTC Nominees access to the company’s management
• Following subsequent engagements, Limited. These appointments are and company information, as well as the
the CBN wrote to advise Stanbic subject to Regulatory approval. resources required to carry out their
IBTC Bank that it would examine new responsibilities, including external legal
submissions and documentations made Focus areas for 2019 advice, at the company’s expense.
by the Bank, and where justified, it
would review its earlier decision on The group intends during 2019 to: It is the board’s responsibility to ensure
the penalty it imposed on the Bank. that effective management is in place
The Bank had communicated that it • c ontinue the focus on directors’ to implement the agreed strategy, and
training via formal training sessions to consider issues relating to succession
and information bulletins on issues planning. The board is satisfied that the
that are relevant; current pool of talent available within
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 127
the company, and the ongoing work to Mrs. Salamatu Suleiman, Mrs. Ifeoma Esiri • consider and evaluate reports
deepen the talent pool, provides adequate and Mr. Sim Tshabalala, will be retiring by submitted by members of
succession depth in both the short and rotation, and being eligible, they will be the executive;
long term. presenting themselves for re-election by
Shareholders at the next Annual General • e nsure that an effective risk
Skills, knowledge, experience and Meeting. The Board also appointed two management process exists and is
attributes of directors additional Directors: Mr. Barend Johannes maintained throughout the bank and its
Kruger (as Non-Executive Director) subsidiaries to ensure financial integrity
The board ensures that directors possess and Mr. Kunle Adedeji (as Executive and safeguarding of the group’s assets;
the skills, knowledge and experience Director). Mr. Adedeji is also the Stanbic
necessary to fulfill their obligations. The IBTC Group’s Chief Financial Officer. The • r eview and monitor the performance
directors bring a balanced mix of attributes two appointments will also be tabled at of the chief executive and the
to the board, including: the next Annual General Meeting for executive team;
Shareholders’ approval (subject to receipt
• international and domestic experience; of all required Regulatory Approvals). • e nsure consideration is given to
succession planning for the chief
• operational experience; The board’s size as at 31 December 2018 executive and executive management;
was eight (8), comprising one (1) executive
• k nowledge and understanding of director and seven (7) non-executive • establish and review annually, and
both the macroeconomic and the directors. It is important to note that of approve major changes to, relevant
microeconomic factors affecting the seven (7) non-executive directors, group policies;
the group; two (2) namely; Mrs. Salamatu Hussaini
Suleiman and Ms. Ngozi Edozien are • approve the remuneration of
• l ocal knowledge and networks; and Independent Non-Executive Directors in non-executive directors on the
compliance with the CBN Code. The board board and board committees,
• f inancial, legal, entrepreneurial and has the right mix of competencies and based on recommendations made
banking skills. experience. by the remuneration committee,
and recommend to shareholders
The credentials and demographic profile of Board responsibilities for approval;
the board are regularly reviewed, to ensure
the board’s composition remains both The key terms of reference in the board’s • approve capital funding for the group,
operationally and strategically appropriate. mandate, which forms the basis for its and the terms and conditions of rights
responsibilities, are to: or other issues and any prospectus in
Appointment philosophy connection therewith;
• agree the group’s objectives, strategies
The appointment philosophy ensures and plans for achieving those • e nsure that an adequate budget and
alignment with all necessary legislation objectives; planning process exists, performance
and regulations which include, but are not is measured against budgets and
limited to the requirements of the Central • a nnually review the corporate plans, and approve annual budgets
Bank of Nigeria; SEC Code of Corporate governance process and assess for the group;
Governance; the Companies & Allied achievement against objectives;
Matters Act as well as the legislations of • a pprove significant acquisitions,
Standard Bank Group’s home country. • review its mandate at least annually and mergers, take-overs, divestments
approve recommended changes; of operating companies, equity
Consideration for the appointment of investments and new strategic
directors and key executives take into • delegate to the chief executive or any alliances by the group;
account compliance with legal and director holding any executive office or
regulatory requirements and appointments any senior executive any of the powers, • consider and approve capital
to external boards to monitor potential authorities and discretions vested in the expenditure recommended by
for conflicts of interest and ensure board’s directors, including the power the executive committee;
directors can dedicate sufficient focus to of sub-delegation; and to delegate
the company’s business. The board takes similarly such powers, authorities and • consider and approve any significant
cognisance of the skills, knowledge and discretions to any committee and changes proposed in accounting
experience of the candidate, as well as subsidiary company board as may exist policy or practice, and consider the
other attributes considered necessary to or be created from time to time; recommendations of the statutory
the prospective role. audit committee;
• d etermine the terms of reference and
In terms of Section 259 (1) of the procedures of all board committees and
Company and Allied Matters Act 2004, review their reports and minutes;
the company will hold its seventh
Annual General Meeting in 2019, and
128 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
• consider and approve the annual • r eview non financial matters that have committee assists the chief executive
financial statements, quarterly results not been specifically delegated to a when the board is not in session, subject to
and dividend announcements and management committee; and specified parameters and any limits on the
notices to shareholders, and consider board’s delegation of authority to the
the basis for determining that the • s pecifically agree, from time to time, chief executive.
group will be a going concern as matters that are reserved for its
per the recommendation of the decision, retaining the right to delegate Membership of the executive committee is
audit committee; any of these matters to any committee set out on page 130.
from time to time in accordance with
• assume ultimate responsibility for the articles of association. In addition, a governance framework for
financial, operational and internal executive management assists the chief
systems of control, and ensure Delegation of authority executive in his task. Board-delegated
adequate reporting on these authorities are regularly monitored by the
by committees to which they The ultimate responsibility for the company secretary’s office.
are delegated; company and its operations rests with the
board. The board retains effective control The corporate governance framework
• t ake ultimate responsibility for through a well-developed governance was adopted by the board on 28
regulatory compliance and ensure structure of board committees. These November 2012 and formalised with
that management reporting to the committees provide in-depth focus on mandate approvals which were reviewed
board is comprehensive; specific areas of board responsibility. in July 2018. The corporate governance
framework is set out below:
• e nsure a balanced and understandable The board delegates authority to the
assessment of the group’s position in chief executive to manage the business
reporting to stakeholders; and affairs of the company. The executive
Stanbic IBTC HoldCo governance structure
Stanbic IBTC Board Shareholders
Management Board Committees Statutory Audit
Committees Committee
Executive Risk Remuneration Nominations Legal Information Board Audit
Committee Management (REMCO) Technology Committee
Risk Oversight
Committee
Internal Equity and Operational Risk Information IT Steering New & Amended
Financial Investment Risk & Compliance Strategy & Committee Products,
Control Committee Governance Business &
Committee Committee Services
Board Committees Statutory Committees Management Committees
Board effectiveness and evaluation Governance for Banks in Nigeria (“the contribution and participation at these
Code”). The report of the consultants meetings and relationship with other
The board is focused on continued would also assess the performance of the Board members. Individual Director’s
improvements in its corporate governance individual Directors on the Board for the Assessment reports will be prepared and
performance and effectiveness. year under review as perceived by the made available to each director while a
other directors based on their individual consolidated report of the performance of
The directors will undergo an evaluation competence, level of attendance to all Directors will also be submitted to the
by independent consultants as required Board and Board Committee meetings, Chairman of the Board.
by Section 2.8.1 of the Central Bank
of Nigeria (“CBN”) Code of Corporate
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 129
REPORT OF THE EXTERNAL CONSULTANTS
on board effectiveness and evaluation
20 March 2019
The Chairman
Stanbic IBTC Holdings PLC.
The Head Office, IBTC Place
Walter Carrington Crescent
Victoria Island
Lagos
Dear Sir,
Report to the Directors of Stanbic IBTC Holdings PLC. on the Outcome of the 2018 Board Performance Assessment
PricewaterhouseCoopers (“PWC”) was engaged to carry out an evaluation of the Board of Directors of Stanbic IBTC Holdings PLC.
(“the Company”) as required by Section 15.1 of the Securities and Exchange Commission (SEC) Code of Corporate Governance for
Public Companies in Nigeria (“the Code or “SEC Code”). The evaluation covers the Board’s structure, composition, responsibilities,
processes, relationships and performance of the committees for the year ended 31 December 2018.
The Board is responsible for the preparation and presentation of information relevant to its performance. Our responsibility is to reach
a conclusion on the Board’s performance based on work carried out within the scope of our engagement as contained in our letter of
engagement. In carrying out the assessment, we have relied on representations made by the Directors and on the documents provided for
our review.
The Board has complied to a large extent with the provisions of the Code. Areas of compliance include maintaining oversight of the
implementation of the Company’s digitisation strategy, engagement of an independent consultant to review the performance of the
Boards of the subsidiaries, initiation and monitoring of the “FraudStop” campaign to encourage a culture of integrity, update of the Code
of Conduct Policy and adequate oversight of the Company’s risk exposures.
Some areas of improvement and other findings were also highlighted in the course of our review. Details of these are contained in the full
Report to the Board.
We also facilitated a Self and Peer assessment of each Director’s performance in the year under review. This assessment covered the
Director’s time commitment to the business of the Company, commitment to continuous learning and development and a self & peer
assessment. Each individual Director’s assessment report was prepared and made available to them respectively, while a consolidated
report of the performance of all Directors was submitted to the Board Chairman.
Yours faithfully
For: PricewaterhouseCoopers Chartered Accountants
Femi Osinubi
FRC/2017/ICAN/00000016659
PricewaterhouseCoopers Limited
Landmark Towers, 5B Water Corporation Road, Victoria Island, PO Box 2419, Lagos, Nigeria
T: +234 (1) 271 1700, www.pwc.com/ng
TIN: 00290010-0001 RC 39418
Directors: S Abu, O Adeola, W Adetokunbo-Ajayi, UN Akpata, O Alakhume, C Azobu, E Erhie, D McGraw, U Muogilim, P Obianwa, T Ogundipe, C Ojechi, O Oladipo,
P Omontuemhen, O Osinubi, T Oyedele, AB Rahji, O Ubah
130 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
Induction and training organisation on an on - going basis. This is achieved by way of
management reporting and quarterly board meetings, which are
An induction programme designed to meet the needs of each structured to form part of ongoing training.
new director is being implemented. One-on-one meetings are
scheduled with management to introduce new directors to the Directors attended various trainings at different periods during the
company and its operations. The company secretary manages the year that included trainings on Risk Management; enhancing Board
induction programme. The CBN Code of Conduct as well as the performance, Change Management, and Financial Reporting.
Securities & Exchange Commission’s code of corporate governance These trainings were aimed at enhancing the understanding of key
is provided to new directors on their appointment. issues, and skills of directors.
Directors are kept abreast of all relevant legislation and regulations
as well as sector developments leading to changing risks to the
Executive committee members
As at 31 December 2018, the Group Executive committee comprised 16 members drawn from key functions within the Company as well
as its subsidiaries.
S/N Name Responsibility
i Yinka Sanni Chief Executive, Stanbic IBTC Holdings PLC
ii Demola Sogunle Chief Executive, Stanbic IBTC Bank PLC
iii Andrew Mashanda Executive Director, Corporate & Transactional Banking, Stanbic IBTC Bank PLC
iv Wole Adeniyi Executive Director, Personal and Business Banking Stanbic IBTC Bank PLC
v Angela Omo - Dare
Head, Country Legal Services Stanbic IBTC Holdings PLC
vi Olufunke Amobi Head, Human Capital, Stanbic IBTC Holdings PLC
vii Kola Lawal Head, CIB Credit Stanbic IBTC Bank PLC
viii Chidi Okezie Company Secretary
ix Taiwo Ala Head, Internal Controls Stanbic IBTC Bank PLC
x Kunle Adedeji Chief Financial Officer Stanbic IBTC Holdings PLC
xi Gboyega Dada Head, Information Technology
xii Rotimi Adojutelegan Chief Compliance Officer, Stanbic IBTC Bank PLC
xiii Eric Fajemisin Head, Wealth
xiv Tosin Odutayo Ag. Head of Finance, Stanbic IBTC Bank PLC
xv Sam Ocheho Head, Global Markets, Stanbic IBTC Bank PLC
xvi Benjamin Ahulu Head, Internal Audit, Stanbic IBTC Bank PLC
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 131
Board meetings
The board meets, at a minimum, once every quarter with ad-hoc meetings being held whenever they are deemed necessary. The board
held a strategy session on 26 July 2018. Directors, in accordance with the articles of association of the company, attend meetings
either in person or via tele / video conferencing.
Directors are provided with comprehensive board documentation at least seven days prior to each of the scheduled meetings.
Name Feb April June Out July August September October
Basil Omiyi of Cycle
√√√√
√√√
Yinka Sanni √√√√√√√
Prof. Fabian Ajogwu √√ √ √ √ √ √
Sim Tshabalala √AA√√√√
Dominic Bruynseels √------
Ifeoma Esiri √√√√√√√
Ballama Manu √√√√√√√
Ratan Mahtani √√A - - - -
Ngozi Edozien* √√√√√√√
Salamatu Suleiman* √√√√√√√
= Attendance A = Apology - = Not a member of the Committee at the relevant time * Independent Director
Board committees
Some of the functions of the board have been delegated to board committees, consisting of board members appointed by the board,
which operates under mandates approved at the board meeting of 27 July 2018.
Risk management committee
The board is ultimately responsible for risk management. The • to periodically review the group’s risk management systems and
main purpose of the risk management committee, as specified report thereon to the board;
in its mandate is the provision of independent and objective
oversight of risk management within the company. The committee • t o ensure that the group’s material business risks are being
is assisted in fulfilling its mandate by a number of management effectively identified, quantified, monitored and controlled
commitees. and that the systems in place to achieve this are operating
effectively at all times; and
To achieve effective oversight, the committee reviews and
assesses the integrity of risk control systems and ensures that risk • s uch other matters relating to the group’s risk assets as may
policies and strategies are effectively managed and contribute to a be specifically delegated to the committee by the board.
culture of discipline and control that reduces the opportunity
for fraud. The committee’s mandate is in line with SBG’s standards, while
taking account of local circumstances.
The risk management committee during the year under review was As at 31 December 2018, the committee consisted of five
vested, among others, with the following responsibilities: directors, all of whom, including the chairman are non – executive
directors.
• to oversee management’s activities in managing credit, market,
liquidity, operational, legal and other risks of the group; Members’ attendance at risk management committee meetings
for the year ended 31 December 2018 is stated below:
Name Jan April July Oct
Ifeoma Esiri (Chairman) √√ √ √
Yinka Sanni √√ √ √
Dominic Bruynseels √A - -
Ngozi Edozien* √√ √ √
Ballama Manu √√ √ √
Fabian Ajogwu SAN √√ √ √
= Attendance A = Apology - = Not a member of the Committee at the relevant time * Independent Director
132 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
Remuneration committee
The remuneration committee (“REMCO”) was vested with The chief executive attends meetings by invitation. Other
responsibilities during the year under review that included: members of executive management are invited to attend when
appropriate. No individual, irrespective of position, is expected to
• reviewing the remuneration philosophy and policy; be present when his or her remuneration is discussed.
• considering the guaranteed remuneration, annual performance When determining the remuneration of executive and non-
bonus and pension incentives of the group’s executive directors executive directors as well as senior executives, REMCO is
and managers; expected to review market and competitive data, taking into
account the company’s performance using indicators such
• reviewing the performance measures and criteria to be used as earnings.
for annual incentive payments for all employees;
• determining the remuneration of the chairman and non- REMCO utilises the services of a number of suppliers and advisors
executive directors, which are subject to board and to assist it in tracking market trends relating to all levels of staff,
shareholder approval; including fees for non-executive directors.
• considering the average percentage increases of the The board reviews REMCO’s proposals and, where relevant, will
guaranteed remuneration of executive management across the submit them to shareholders for approval at the annual general
group, as well as long-term and short-term incentives; and meeting (“AGM”.). The board remains ultimately responsible for
the remuneration policy.
• agreeing incentive schemes across the group.
As at 31 December 2018, the committee consisted of three
directors, all of whom are non-executives, with the Chairman
being an Independent Director.
Members’ attendance at REMCO meetings during the year ended 31 December 2018 is stated below:
Name January April July October
Salamatu Suleiman (Chairman) √ √ √√
Dominic Bruynseels √ - --
Sim Tshabalala √ A √√
Fabian Ajogwu SAN √ √ √√
= Attendance A = Apology - = Not a member of the Committee at the relevant time
Remuneration • maintaining competitive remuneration in line with the market,
trends and required statutory obligations;
Introduction
The purpose of this section is to provide stakeholders with an • rewarding people according to their contribution;
understanding of the remuneration philosophy and policy applied
across the group for executive management, employees, and • a llowing a reasonable degree of flexibility in remuneration
directors (executive and non-executive). processes and choice of benefits by employees;
Remuneration philosophy • utilising a cost-to-company remuneration structure; and
The group’s board and remuneration committee set a
remuneration philosophy which is guided by SBG’s philosophy and • educating employees on the full employee value proposition.
policy as well as the specific social, regulatory, legal and economic
context of Nigeria. The group’s remuneration philosophy aligns with its core values,
including growing our people, appropriately remunerating
In this regard, the group employs a cost to company structure, high performers and delivering value to our shareholders. The
where all benefits are included in the listed salary and philosophy emphasises the fundamental value of our people and
appropriately taxed. their role in ensuring sustainable growth. This approach is crucial
in an environment where skills remain scarce.
The following key factors have informed the implementation of
reward policies and procedures that support the achievement of The board sets the principles for the group‘s remuneration
business goals: philosophy in line with the approved business strategy and
objectives. The philosophy aims to maintain an appropriate
• the provision of rewards that enable the attraction, retention balance between employee and shareholder interests. The
and motivation of employees and the development of a high deliberations of REMCO inform the philosophy, taking into account
performance culture;
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 133
reviews of performance at a number of absolute and relative levels Remuneration structure
– from a business, an individual and a competitive point of view.
Non-executive directors
A key success factor for the group is its ability to attract, retain Terms of service
and motivate the talent it requires to achieve its strategic and
operational objectives. The group’s remuneration philosophy Directors are appointed by the shareholders at the AGM,
includes short-term and long-term incentives to support this ability. although board appointments may be made between AGMs.
These appointments are made in terms of the company’s policy.
Short-term incentives, which are delivery specific, are viewed as Shareholder approvals for such interim appointments are however
strong drivers of competitiveness and performance. A significant sought at the annual general meeting that holds immediately after
portion of top management’s reward is therefore variable, being such appointments are made.
determined by financial performance and personal contribution
against specific criteria set in advance. This incites the commitment Non-executive directors are required to retire after three years
and focus required to achieve targets. and may offer themselves for re-election. If recommended by the
board, their re-election is proposed to shareholders at the AGM.
Long-term incentives seek to ensure that the objectives of
management and shareholders are broadly aligned over longer In terms of CAMA, if a director over the age of 70 is seeking re-
time periods. election to the board his age must be disclosed to shareholders at
the meeting at which such re-election is to occur.
Remuneration policy
Fees
The group has always had a clear policy on the remuneration
of staff, executive and non-executive directors which set such Non-executive directors’ receive fixed annual fees and sitting
remuneration at levels that are fair and reasonable in a competitive allowances for service on the board and board committees.
market for the skills, knowledge, experience required and which There are no contractual arrangements for compensation for
complies with all relevant tax laws. loss of office. Non-executive directors do not receive short-term
incentives, nor do they participate in any long-term incentive
REMCO assists the group’s board in monitoring the implementation schemes.
of the group remuneration policy, which ensures that:
REMCO reviews the non-executive directors’ fees annually and
• salary structures and policies, as well as cash and long term makes recommendations on same to the board for consideration.
incentives, motivate sustained high performance and are linked to Based on these recommendations, the board in turn recommends
corporate performance objectives; a gross fee to shareholders for approval at the Annual General
Meeting (“AGM”).
• stakeholders are able to make a reasonable assessment of reward
practices and the governance process; and Fees that are payable for the reporting period 1 January to 31
December of each period.
• the group complies with all applicable laws and codes.
Category 2019(i) 2018
N N
Chairman
Non-Executive Directors 39,200,000 35,000,000
Sitting Allowances for Board Meetings(ii) 26,350,000 23,500,000
Chairman
Non-Executive Directors 515,000 460,000
450,000 400,000
(i) To be presented to shareholders for Approval at the 7th AGM of the Company to be held in 2019.
(ii) Fees quoted as sitting allowance represent per meeting sitting allowance paid for board, board & audit committees and ad hoc meetings. No annual fees are payable to
committee members with respect to their roles on such committees.
Retirement benefits Executive director’s bonus and incentives are subject to an
assessment by REMCO of performance against various criteria. The
Non-executive directors do not participate in the pension scheme. criteria include the financial performance of the company, based
on key financial measures and qualitative aspects of performance,
Executive directors such as effective implementation of group strategy and human
resource leadership. In addition, the Group’s remuneration
The company had only one executive director as at philosophy is designed in such a way as to prevent excessive risk
31 December 2018. taking by Management.
Executive directors receive a remuneration package and qualify
for long-term incentives on the same basis as other employees.
134 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
Management and general staff There is therefore a link between rating, measuring individual
performance and reward. However, as noted earlier, the Group’s
Total remuneration packages for employees comprises remuneration philosophy is designed in such a way as to prevent
the following: excessive risk taking by Management.
• guaranteed remuneration – based on market value and the Short-term incentives
role played;
All staff participate in a performance bonus scheme. Individual
• annual bonus – used to stimulate the achievement of group awards are based on a combination of business unit performance,
objectives; job level and individual performance. In keeping with the
remuneration philosophy, the bonus scheme seeks to attract and
• long term incentives – rewards the sustainable creation of retain high-performing managers.
shareholder value and aligns behaviour to this goal;
As well as taking performance factors into account, the size of the
• pension – provides a competitive post-retirement benefit in award is assessed in terms of market-related issues and pay levels
line with other employees. for each skill set, which may for instance be influenced by the
scarcity of skills in that area.
• where applicable, expatriate benefits in line with other
expatriates in Nigeria. The company has implemented a deferred bonus scheme
(“DBS”) to compulsorily defer a portion of incentives over a
Terms of service minimum threshold for some senior managers and executives.
This improves alignment of shareholder and management interests
The minimum terms and conditions for managers are governed and enables clawback under certain conditions, which supports
by relevant legislation and the notice period is between one to risk management.
three months.
Long-term incentives
Fixed remuneration
It is essential for the group to retain key skills over the longer
Managerial remuneration is based on a total cost-to-company term. The group has put in place a deferred bonus scheme for top
structure. Cost-to-company comprises a fixed cash portion, talents. The scheme is designed to reward and retain top talents.
compulsory benefits (medical aid and retirement fund
membership) and optional benefits. Market data is used to Post-retirement benefits
benchmark salary levels and benefits. Salaries are normally Pension
reviewed annually in March.
Retirement benefits are typically provided on the same basis for
For all employees, performance-related payments have formed an employees of all levels and are in line and comply with the Pension
increasing proportion of total remuneration over time to achieve Reform Act 2014.
business objectives and reward individual contribution.
All employees (executives, managers and general staff) are
rated on the basis of performance and potential and this is used
to influence performance-related remuneration rating and the
consequent pay decision is done on an individual basis.
Remuneration as at 31 December 2018
The amounts specified below represent the total remuneration paid to executive and non-executive directors for the year under review:
Fees & sitting allowance Dec 2018 Dec 2017₦
Executive compensation N million N million
Total 401
429 373
545 774
974
The group will continue to ensure its remuneration policies and practices remain competitive, drive performance and are aligned across
the group and with its values.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 135
The board nominations committee
The board nominations committee is a Name April August • consider the adequacy of disclosures;
sub-committee of the Board of Directors Sim Tshabalala √√
(“the board”) of the company and has the Ngozi Edozien √√ • review the significant differences of
responsibility to: Yinka Sanni √√ opinion between management and
internal audit;
a) provide oversight on the selection, = Attendance
nomination and re-election process • review the independence and
for directors; The Audit Committee objectivity of the auditors; and
b) provide oversight on the performance The role of the audit committee is defined • all such other matters as are reserved to
of directors on the various committees by the Companies & Allied Matters Act the audit committee by the Companies
established by the board; and and includes making recommendations & Allied Matters Act and the company’s
to the board on financial matters. These Articles of Association.
c) provide oversight in relation to the matters include assessing the integrity
board evaluation and governance and effectiveness of accounting, financial, As required by law, the audit committee
process and the reports that are to be compliance and other control systems. members have recent and relevant
made to the Securities & Exchange The committee also ensures effective financial experience.
Commission, Central Bank of Nigeria communication between internal
and shareholders with respect to same. auditors, external auditors, the board and Composition
management.
The goal of the committee is to review As at 31 December 2018, the committee
nomination and election and re- election The committee’s key terms of reference was made up of six members, three
for directors in such a way as to attract comprise various categories of of whom are non-executive directors
and retain the highest quality directors responsibilities and include the following: while the remaining three members are
whose attributes will ensure that their shareholders elected at the Annual General
membership of the board will be of benefit • review the audit plan with the external Meeting (“AGM”). The committee, whose
and add value to the bank. auditors with specific reference to the membership is stated below, is chaired by a
proposed audit scope, and approach to shareholder representative.
The committee consists of such number risk activities and the audit fee;
of directors as may be approved by the As at 31 December 2018, the committee
board, but shall not be less than three • meet with external auditors to discuss consists of the following persons:
and shall include the Chief Executive. the audit findings and consider
In addition, any member of senior detailed internal audit reports with Mr. Samuel Ayininuola* Chairman
management may be invited to attend the internal auditors;
meetings of the committee. Mr. Ibhade George* Member
• annually evaluate the role,
Composition independence and effectiveness Mr. Olatunji Bamidele* Member
of the internal audit function in the
The committee is made up of two non- overall context of the risk management Ms. Ngozi Edozien** Member
executive directors and one executive systems;
director appointed by the Board. Mrs. Ifeoma Esiri** Member
• r eview the accounting policies adopted
The Board Nomination Committee met by the group and all proposed changes Mr. Ballama Manu** Member
on 5 April 2018 and 17 August 2018 and in accounting policies and practices;
all members of the Committee were in Mr. Ratan Mahtani*** Member
attendance.
* = Shareholders representative
** = Non Executive Director
*** = resigned in the course of the year
Members’ attendance at audit committee meetings for the period 01 January to 31 December 2018 is stated below:
Name January April July October
Mr. Samuel Ayininuola √ √ √√
Mr Dominic Bruynseels √ - --
Mrs Ifeoma Esiri √ √ √√
Mr Ratan Mahtani √ √ --
Mr. Olatunji Bamidele √ √ √√
Mr Ibhade George √ √ √√
Ms. Ngozi Edozien - √ √√
Mr Ballama Manu - - -√
= Attendance - = Not a member of the Committee at the relevant time
136 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
The board audit committee - annually evaluate the role, independence and effectiveness
of the internal audit function in the overall context of the risk
The Board also established a board audit committee in line with management systems;
regulatory requirements separate from the Statutory Audit
Committee - review the accounting policies adopted by the group and all
proposed changes in accounting policies and practices;
Composition
- consider the adequacy of disclosures;
As at 31 December 2018, the committee was made up of three
members, two of whom are non-executive directors while the - review the significant differences of opinion between
Chairman of the committee is an independent non executive management and internal audit;
director representative.
- review the independence and objectivity of the auditors; and
The committee’s key terms of reference comprise various
categories of responsibilities and include the following: - all such other matters as are reserved to the audit committee by
the Code of Corporate Governance for Banks and Discount Houses
- review the audit plan with the external auditors with specific issued by the Central Bank of Nigeria
reference to the proposed audit scope, and approach to risk
activities and the audit fee;
Members’ attendance at board audit committee meetings for the period 01 January to 31 December 2018 is stated below:
Name January April July October
Mrs Ifeoma Esiri √ √ √√
Mr Ratan Mahtani √ √ --
Ms. Ngozi Edozien - √ √√
Mr Ballama Manu - - -√
= Attendance - = Not a member of the Committee at the relevant time
The board Information Technology b) assist the Board to fulfil its oversight The committee consists of a minimum of
(“IT”) committee responsibilities for Stanbic IBTC’s two Non-Executive Directors and shall
investments, operations and strategy also include the Chief Executive.
The board IT committee is one of the in relation to IT; In addition, any member of senior
committees established by the Board in management may be invited to attend
2015. The committee has c) review Stanbic IBTC’s assessment meetings of the committee.
the following responsibilities: of risks associated with IT including
disaster recovery, business continuity
a) provide guidance on how IT decisions and IT security.
are made, enforced and evaluated
within Stanbic IBTC in accordance
with Central Bank of Nigeria (“CBN”)
IT standards blue print;
Members’ attendance at the Board IT Committee meetings for the period 01 January to 31 December 2018 is stated below:
Name January April July October
- -√
Mr Dominic Brynseels √ √ √√
√ √-
Mr Yinka Sanni √ √ √√
Ms. Ngozi Edozien √
Mr Ballama Manu √
= Attendance - = Not a member of the Committee at the relevant time
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 137
The board legal committee
This Committee was also established by 1. reviewing the legal risks and other 2. review and assess the likely success
the Board in 2015 and has the following legal issues facing Stanbic IBTC of the individual matters included
key responsibilities. and its subsidiaries and for discussing in the Litigation Portfolio and of
appropriate strategies to address the any threatened litigation and where
The committee’s key terms of reference risk arising from the litigation portfolios necessary shall recommend that
comprise various categories of of Stanbic IBTC and its subsidiaries (the Management seek appropriate out-of-
responsibilities and include the following: Litigation Portfolio). court settlement of specific matters.
Composition
The committee is made up of at least two non-executive directors and one executive director appointed by the Board.
Members’ attendance at the Board Legal Committee meetings for the year 01 January to 31 December 2018 is stated below:
Name January April July October October November November
Mrs. Ifeoma Esiri √ √
Mr Yinka Sanni √ √ √√√√√
Prof Fabian Ajogwu √ √
Mr. Dominic Bruynseels √ - √√√√√
Mrs. Salamatu Suleiman √ √
√√√√√
-----
√√√√√
= Attendance - = Not a member at the relevant time
The Board has also established a number Management committees Voting at general meetings is conducted
of Ad-Hoc Committees with specific either by a show of hands or a poll
responsibilities. As those Committees The group has the following management depending on the subject matter of the
are not Standing Committees of the committees: resolution on which a vote is being cast
Board, those Ad-Hoc Committees and separate resolutions are proposed on
would be dissolved as soon as they • Executive Committee (Exco) each significant issue.
have concluded their responsibilities
as delegated by the Board. • Equity Investment Committee Dealing in securities
Company secretary • Information Strategy & Data In line with its commitment to conduct
Governance Committee business professionally and ethically, the
It is the role of the company secretary to company has introduced policies to restrict
ensure the board remains cognisant of its • Operational Risk and Compliance the dealing in securities by directors,
duties and responsibilities. In addition to Committee shareholder representatives on the audit
providing the board with guidance on its committee and embargoed employees. A
responsibilities, the company secretary • New & Amended Products Committee personal account trading policy is in place
keeps the board abreast of relevant to prohibit employees and directors from
changes in legislation and governance • Risk Oversight Committee trading in securities during close periods.
best practices. The company secretary Compliance with this policy is monitored
oversees the induction of new directors, • Internal Financial Control Committee on an ongoing basis.
including subsidiary directors, as well
as the ongoing training of directors. All Relationship with shareholders Sustainability
directors have access to the services of
the company secretary. As an indication of its fundamental The company as a member of the Standard
responsibility to create shareholder value, Bank Group (“SBG”) is committed to
Going concern effective and ongoing communication conducting business professionally,
with shareholders is seen as essential. ethically, with integrity and in accordance
On the recommendation of the audit In addition to the ongoing engagement with international best practice. To this
committee, the board annually considers facilitated by the company secretary end, the company subscribes to and adopts
and assesses the going concern basis for and the head of investor relations, the risk management standards, policies and
the preparation of the financial statements company encourages shareholders to procedures that have been adopted by the
at the year end. attend the annual general meeting SBG. The company is also bound by the
and other shareholder meetings where Nigerian Sustainable Banking Principles
The board continues to view the interaction is welcomed. The chairman of (“the Principles”) and the provisions of the
company as a going concern for the the company’s audit committee is available Principles are incorporated into policies
foreseeable future. at the meeting to respond to questions approved by the Board.
from shareholders.
138 Stanbic IBTC Annual report for the year ended 31 December 2018
Corporate governance report (continued)
SBG’s risk management standards, policies and procedures have Compliance with the Securities and Exchange Commission’s
been amended to be more reflective of the Nigerian business code of corporate governance
and regulatory environment. All such amendments to the risk
management standards, policies and procedures have been agreed As a public company, Stanbic IBTC Holdings PLC confirms that as at
to by Standard Bank Africa (“SBAF”) Risk Management. the year ended 31 December 2018 the company has complied with
the principles set out in the Securities and Exchange Commission’s
The group is committed to contributing to sustainable code of corporate governance.
development through ethical, responsible financing and business
practices which unlocks value for our stakeholders. We manage The company applies the code’s principles of transparency, integrity
the environmental and social aspects that impact our activities, and accountability through its own behaviour, corporate governance
products and services whilst ensuring sustainable value creation best practice and by adopting, as appropriate and proportionate
for our customers. We are passionately committed to encouraging for a company of its size and nature. The policies and procedures
financial inclusion through the provision of banking and other adopted by the Board and applicable to the company’s businesses
financial services to all cadres of the society and a promoter of are documented in mandates, which also set out the roles and
gender equality. delegated authorities applying to the Board, Board Committees,
and the Executive Committee.
Social responsibility
Compliance with the Central Bank of Nigeria code
As an African business, the group understands the challenges and of corporate governance
benefits of doing business in Africa, and owes its existence to the
people and societies within which it operates. As a financial holding company, Stanbic IBTC Holdings PLC is
primarily regulated by the Central Bank of Nigeria (“CBN”). In this
The group is therefore committed not only to the promotion regard, compliance with the CBN Code of Corporate Governance,
of economic development but also to the strengthening of civil as well as all regulations issued by the CBN for Financial Holding
society and human well being. Companies remain an essential characteristic of its culture. We
confirm that as at the year ended 31 December 2018 the company
The group is concentrating its social investment expenditure in has complied in all material respects with the principles set out in
defined focus area which currently include education in order to the CBN’s code of corporate governance.
make the greatest impact. These areas of focus will be subject to
annual revision as the country socio-economic needs change. Compliance with the Central Bank of Nigeria
Whistleblowing Guidelines
Ethics and organisational integrity
In accordance with clause 4.11 of the CBN Guidelines for
The board aims to provide effective and ethical leadership and Whistleblowing, Stanbic IBTC Holdings PLC and its subsidiaries
ensures that its conduct and that of management is aligned to the have complied in all material respects with the principles set out
organization’s values and code of ethics. The board subscribes to in the Whistleblowing Guidelines, as at year end.
the SBG group’s values and enables decision making at all levels of
the business according to defined ethical principles and values. Complaints Management Policy
Compliance with The Nigerian Stock Exchange’s listing rule Stanbic IBTC Holdings PLC has a Complaints Management Policy in
place in compliance with the Securities & Exchange Commission rule,
Stanbic IBTC Holdings PLC (“SIBTC”) has adopted a Personal which became effective in February 2015. Shareholders may have
Account Trading Policy (“PATP”) for both employees and directors access to this policy via any of the following options:
which incorporates a code of conduct regarding securities
transactions by directors and employees. The PATP was circulated • By accessing same through our website
to all employees who in the course of the year had any insider http://www.stanbicibtc.com/nigeriagroup/AboutUs/Code-of-Ethics
or material information about SIBTC; it is also published in the
company’s internal communication on a regular basis and also • By requesting for a copy through the office of the
hoisted on the company’s website. Company Secretary
For the year ended 31 December 2018, we confirm that all
directors complied with the PATP regarding their SIBTC securities
transacted on their account during the year.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 139
Disclosure on diversity in employment
The group is an equal opportunity employer that is committed to maintaining a positive work environment that facilitates high level of
professional efficiency at all times. The group’s policy prohibits discrimination of gender, disabled persons or persons with HIV in the
recruitment, training and career development of its employees.
i) Physically challenged persons:
The group continues to maintain a policy of giving fair consideration to applications for employment made by physically challenged
persons with due regard to their abilities and aptitude.
ii) Gender diversity within the group
31 Dec 2018 31 Dec 2017
Workforce % of gender composition Workforce % of gender composition
Total workforce: 1,250 43% 1,285 42%
Women 1,683 57% 1,746 58%
Men 2,933 100% 3,031 100%
Recruitments made during the period: 74 41% 168 41%
Women 105 59% 242 59%
Men 179 100% 410 100%
Diversity of members of board of directors 3 38% 3 30%
– Number of Board members:
Women 5 62% 7 70%
Men
8 100% 10 100%
Diversity of board executives – Number of
Executive directors to Chief executive officer: - 0% - 0%
Women
Men 1 100% 1 100%
Diversity of senior management team – Number 1 100% 1 100%
of Assistant General Manager to General Manager
Women 25 31% 30 33%
Men
55 69% 61 67%
80 100% 91 100%
Chidi Okezie
Company Secretary
FRC/2013/NBA/00000001082
31 January 2019
140 Stanbic IBTC Annual report for the year ended 31 December 2018
REPORT OF THE AUDIT COMMITTEE
For the year ended 31 December 2018
To the members of Stanbic IBTC Holdings PLC After due consideration , the Audit Committee accepted the
report of the Auditors that the financial statements were in
In compliance with the provisions of Section 359(3) to (6) of the accordance with ethical practice and International Financial
Companies & Allied Matters Act Cap C20 Laws of the Federation Reporting Standards.
of Nigeria 2004, the Audit Committee considered the audited
consolidated and separate annual financial statements for the The Committee reviewed Management’s response to the auditors
period ended 31 December 2018 together with the management findings in respect of management matters and we are satisfied
controls report from the auditors and the company’s response to with management’s response thereto.
this report at its meeting held on 28 January 2019.
We are satisfied that the company has complied with the
In our opinion, the scope and planning of the audit for the period provisions of Central Bank of Nigeria circular BSD/1/2004 dated
ended 31 December 2018 were adequate. 18 February 2004 on “Disclosure of insider related credits in
the financial statements of banks”, and hereby confirm that an
We have exercised our statutory functions under Section 359 aggregate amount of N40,328,087,581 (31 December 2017:
(6) of the Companies and Allied Matters Act of Nigeria and N55,430,844,445) was outstanding as at 31 December 2018.
acknowledge the co-operation of management and staff in the The perfomance status of insider related credits is as disclosed in
conduct of these responsibilities. Note 37.
We are of the opinion that the accounting and reporting policies The Committee also approved the provision made in the
of the Company and the Group are in accordance with legal consolidated and separate annual financial statements in relation
requirements and agreed ethical practices, and that the scope and to the remuneration of the auditors.
planning of both the external and internal audits for the period
ended 31 December 2018 were satisfactory and reinforce the
Group’s internal control systems.
Mr. Samuel Ayininuola
Chairman, Audit Committee
FRC/2016/ICAN/00000015248
28 January 2019
Members of the audit committee are:
1. Mr. Samuel Ayininuola*
2. Mr. Ibhade George*
3. Mr. Olatunji Bamidele*
4. Ms Ngozi Edozien**
5. Mrs. lfeoma Esiri**
6. Mr. Ballama Manu**
* = Shareholders representative
** = Non Executive Director
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 141
AUDIT COMMITTEE
Samuel Ayininuola Ibhade George Olatunji Bamidele
Chairman/Shareholders’ Shareholders’ Representative Shareholders’ Representative
Representative
Ms. Ngozi Edozien Mrs. Ifeoma Esiri Mr. Ballama Manu
Non-Executive Director Non-Executive Director Non-Executive Director
142 Stanbic IBTC Annual report for the year ended 31 December 2018
INDEPENDENT AUDITORS REPORT
To the Shareholders of Stanbic IBTC in accordance with the International Ethics The Group applies a statistical ECL model
Holdings Plc Standards Board for Accountants’ Code to determine the impairment allowances
of Ethics for Professional Accountants for loans and advances. The Group’s ECL
Report on the Audit of the (IESBA Code) together with the ethical model includes certain judgements and
Consolidated and Separate requirements that are relevant to our audit assumptions such as:
Financial Statements of the consolidated and separate financial
statements in Nigeria and we have • the possibility of a loan becoming past
Opinion fulfilled our other ethical responsibilities in due and subsequently defaulting, the
We have audited the consolidated and accordance with these requirements and credit conversion factors applied to off
separate annual financial statements the IESBA Code. We believe that the audit balance sheet exposures, the rate of
of Stanbic IBTC Holdings PLC (“the evidence we have obtained is sufficient recovery on the loans that are past due
Company”) and its subsidiaries (together, and appropriate to provide a basis for and in default, the market values and
“the Group”), which comprise the our opinion. estimated time and cost to sell
consolidated and separate statements the collaterals;
of financial position as at 31 December, Key Audit Matters
2018, and the consolidated and separate Key audit matters are those matters • incorporation of forward looking
statements of profit or loss and other that, in our professional judgment, were information related to the expected
comprehensive income, the consolidated of most significance in our audit of the outlook on the country’s inflation
and separate statements of changes in consolidated and separate financial rates, exchange rates and the Gross
equity and the consolidated and separate statements of the current period. These Domestic Product (“GDP”) rates used
statements of cash flows for the year matters were addressed in the context of in determining the expected credit
then ended, and notes, comprising our audit of the financial statements as a losses in the loans and advances
significant accounting policies and other whole, and in forming our opinion thereon, portfolios; and
explanatory information, as set out on and we do not provide a separate opinion
pages 155 to 286. on these matters. • risk rating allocated to the
counterparties in the corporate and
In our opinion, the accompanying Impairment allowance for loans transactional banking category.
consolidated and separate financial and advances to customers
statements give a true and fair view The Group’s loans and advances to We focused on the impairment allowance
of the consolidated and separate customers are categorised into personal for loans and advances to customers due
financial position of the Company and its and business banking loans to customers to the significant judgements, estimates
subsidiaries as at 31 December, 2018, and (retail loans) and corporate and and assumptions made by management
of its consolidated and separate financial transactional banking loans to customers in determining the impairment
performance and its consolidated and (corporate loans). The determination of allowance required.
separate cash flows for the year then impairment on these loans and advances
ended in accordance with International is inherently a significant and judgemental How the matter was addressed in our
Financial Reporting Standards (“IFRSs”) area for the Group as subjective audit
and in the manner required by the assumptions are made over both the timing Our procedures included the following with
Companies and Allied Matters Act, Cap of recognition and the estimation of the respect of the impairment allowances as at
C.20, Laws of the Federation of Nigeria, size of the impairment allowance. 1 January 2018 and 31 December 2018:
2004 and the Financial Reporting Council
of Nigeria Act, 2011 and the Banks and The Group adopted IFRS 9 Financial • For both corporate and retail loans
other Financial Institutions Act, Cap B3, Instruments which became effective on 1 and advances, we evaluated the
Laws of the Federation of Nigeria, 2004 January 2018. The key change arising from design, implementation and tested the
and relevant Central Bank of Nigeria the adoption of IFRS 9 is the significant operating effectiveness of controls
(“CBN”) Guidelines and Circulars. difference in determining the impairment over the accuracy of credit data which
allowance which is now based on an included historical default rates, cash
Basis for Opinion Expected Credit Loss (“ECL”) model rather and collateral recoveries, exposures at
We conducted our audit in accordance than an Incurred Loss model. The ECL default and effective interest rates.
with International Standards on Auditing methodology incorporates the expected The controls included management
(“ISAs”). Our responsibilities under those future credit losses due to macro- review and approval of loan parameters
standards are further described in the economic variables unlike the incurred loss inputted into the model used in the
Auditor’s Responsibilities for the Audit of model where only past and present credit loans and advances impairment process.
the consolidated and separate Financial loss events were considered.
Statements section of our report. We are • For the corporate loans and
independent of the Group and Company advances, we evaluated the design,
implementation and tested the
operating effectiveness of controls
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 143
relating to management’s review of • tested the accuracy of the support the future recoverability of the
data inputted in the risk grading system calculation of the Loss Given Default deferred tax asset recognised.
as well as timing of reviews of risk (“LGD”) used by the Group and
grades allocated to counterparties. also reviewed the valuation of the We focused on this area due to the
collaterals used in the ECL model; significant judgments and assumptions
• For both corporate and retail loans involved in the estimation of future taxable
and advances, we assessed the • challenged the appropriateness profits to determine the amount of the
appropriateness of the Group’s of management’s forward looking recognised and unrecognised deferred tax
determination of significant increase assumptions comprising the assets as at the reporting date.
in credit risk and the resultant inflation rates, exchange rates and
classification of loans into the various GDP growth rates used in the ECL How the matter was addressed
stages. For corporate and retail loans calculations using publicly available in our audit
and advances which have shown a information from external sources; Our audit procedures in this area included
significant increase in credit risk, the following:
we evaluated the level of past due • tested the accuracy of the Group’s
obligations using qualitative factors impairment model by re-performing • We challenged management’s
such as publicly available information the calculations of impairment assessment of the recoverable
about the obligors to determine allowance for corporate and retail amounts, including the timing and
whether the Group should recognize loans and advances.. For loans amount of the projected future taxable
an impairment based on the losses and advances which have shown a profits and the underlying assumptions
expected to result from default events significant increase in credit risk, in the Group’s budgets and forecasts,
within a year or defined default events the recalculation was based on using our knowledge of the business
over the life of the facilities. the amount which the Group may and the industry and the Group’s
not recover throughout the life historical performance.
• With the assistance of our Financial Risk of the loans while for loans and
Management specialists, we: advances that have not shown • We re-computed management’s
significant increase in credit risk, calculation of deferred tax assets
• assessed the appropriateness of the recalculation was based on to determine whether the recognised
the Group’s ECL methodology by the losses expected to result from amount of deferred tax assets is
considering whether it reflects default events within a year. reasonable.
probability-weighted amounts that
are determined by evaluating a • We assessed whether the transition • We evaluated whether historical tax
range of possible outcomes, the adjustments to the opening balance losses, unutilised capital allowance and
time value of money and reasonable of the retained earnings effective other deductible temporary differences
and supportable information at the 1 January 2018 arising from the were determined in accordance with
reporting date about past events, application of the newly adopted the relevant tax laws.
current conditions and forecasts standard were appropriately determined
of future economic conditions, in accordance with the requirements of The Group’s accounting policy on deferred
as required by the newly adopted the standards. tax assets and other relevant disclosures
standard; are shown in notes 4.11, 6.6 and 16
The Group’s accounting policy on respectively.
• challenged the appropriateness impairment allowance for loans and
of the modelling approach and advances, disclosure on judgement Valuation of Derivative Instruments
the historical movement in the and estimate and relevant financial risk The Group’s derivative instruments
balances of facilities between disclosures are shown in notes 4.3, 6.1 comprise foreign currency swaps and
default and non-default categories and 12.3 respectively. foreign exchange forward contracts, which
in determining the Probability of are used to manage foreign exchange
Default (“PD”) used in the ECL Recoverability of deferred tax assets risk. Management uses complex valuation
calculations; The Group has recognised and methodologies involving multiple inputs
unrecognised deferred tax assets which including discount rates, exchange rates
• evaluated the appropriateness of arose from historical tax losses, unutilised and earning yields to estimate the fair
the data used in determining the capital allowances and other deductible value of these derivative instruments.
Exposure at Default, including the temporary differences. The recognition
contractual cash flow and credit of deferred tax assets required the Group We focused on this area due to the
conversion factor, outstanding loan to perform an assessment of when and significance and complexity in the
balance, loan contractual repayment whether sufficient future taxable profits valuation of these derivatives and the
pattern and loan tenor; are likely to be generated by the Group to related estimation uncertainty.
144 Stanbic IBTC Annual report for the year ended 31 December 2018
Independent auditors report (continued)
How the matter was addressed risk review, Directors’ Report, Statement concern, disclosing, as applicable, matters
in our audit of Directors’ Responsibilities, Corporate related to going concern and using the
Our audit procedures in this area included Governance Report, Report of the Audit going concern basis of accounting unless
the following: Committee, Other National Disclosures the directors either intend to liquidate
but does not include the consolidated and the Group and Company or to cease
• We evaluated the design, separate annual financial statements and operations, or have no realistic alternative
implementation and operating our audit report thereon. but to do so.
effectiveness of key controls over the
inputs used in determining the Group’s Our opinion on the consolidated and Auditor’s Responsibilities for the Audit
valuation of derivative instruments. separate financial statements does not of the Consolidated and Separate
cover the other information and we do Financial Statements
• We inspected derivative contract not express any form of assurance
documents on a sample basis to obtain conclusion thereon. Our objectives are to obtain reasonable
an understanding of the respective assurance about whether the consolidated
transactions. In connection with our audit of the and separate financial statements as a
consolidated and separate annual whole are free from material misstatement,
• With the assistance of our Financial Risk financial statements, our responsibility whether due to fraud or error, and to
Management specialists, we: is to read the other information and in issue an auditor’s report that includes
doing so, consider whether the other our opinion. Reasonable assurance is
• challenged the appropriateness of information is materially inconsistent with a high level of assurance, but is not a
the methodology and assumptions the consolidated and separate financial guarantee that an audit conducted in
used by management to assess statements or our knowledge obtained accordance with ISAs will always detect
whether the valuation model used in the audit or otherwise appears to be a material misstatement when it exists.
by the Group was in line with materially misstated. If, based on the Misstatements can arise from fraud or
acceptable market practice. work we have performed, we conclude error and are considered material if,
that there is a material misstatement of individually or in the aggregate, they could
• ascertained the accuracy of the this other information, we are required to reasonably be expected to influence the
fair value of derivative assets and report that fact. We have nothing to report economic decisions of users taken on the
liabilities by obtaining quoted rates in this regard. basis of these financial statements.
of the inputs used in the valuation
model for the market observable Responsibilities of the Directors As part of an audit in accordance with
rates and compared these rates to for the Consolidated and Separate ISAs, we exercise professional judgment
the mark-to-market rates used by Financial Statements. and maintain professional skepticism
management. throughout the audit. We also:
The Directors are responsible for the
• For the non-observable input, we preparation of consolidated and separate • Identify and assess the risks of material
reviewed the reasonableness of the annual financial statements that give a true misstatement of the consolidated
rates and other adjustments applied and fair view in accordance with IFRSs and and separate financial statements,
by management by independently in the manner required by the Companies whether due to fraud or error,
deriving the input using alternative and Allied Matters Act, Cap C.20, Laws of design and perform audit procedures
methodologies. the Federation of Nigeria, 2004 and the responsive to those risks, and obtain
Financial Reporting Council of Nigeria Act, audit evidence that is sufficient and
• re-computed the fair value of 2011 and the Banks and other Financial appropriate to provide a basis for our
the instruments using observable Institutions Act, Cap B3, Laws of the opinion. The risk of not detecting a
market rates. Federation of Nigeria, 2004 and relevant material misstatement resulting from
Central Bank of Nigeria (“CBN”) Guidelines fraud is higher than for one resulting
The Group’s accounting policy on and Circulars and for such internal control from error, as fraud may involve
derivative instruments and relevant as the directors determine is necessary collusion, forgery, intentional omissions,
financial risk disclosures are shown in notes to enable the preparation of financial misrepresentations, or the override of
4.3, 6.2, 10.6 and 27 respectively. statements that are free from material internal control.
misstatement, whether due to fraud
Information other than the Financial or error. • Obtain an understanding of internal
Statements and Audit Report thereon control relevant to the audit in order
In preparing the consolidated and separate to design audit procedures that are
The Directors are responsible for the financial statements, the directors are appropriate in the circumstances, but
other information which comprises the responsible for assessing the Group and not for the purpose of expressing an
Chairman’s statement, Chief Executive’s Company’s ability to continue as a going
statement, Economic and Financial
review, Sustainability report, Enterprise
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 145
opinion on the effectiveness of the an opinion on the consolidated financial Report on Other Legal and Regulatory
Group and Company’s internal control. statements. We are responsible for the Requirements
direction, supervision and performance
• Evaluate the appropriateness of of the group audit. We remain solely Compliance with the requirements of
accounting policies used and the responsible for our audit opinion. Schedule 6 of the Companies and Allied
reasonableness of accounting Matters Act, Cap C.20, Laws of the
estimates and related disclosures We communicate with the Board of Federation of Nigeria, 2004
made by the directors. Directors and the Audit Committee
regarding, among other matters, the In our opinion, proper books of account
• Conclude on the appropriateness of planned scope and timing of the audit and have been kept by the Group, so far as
directors’ use of the going concern significant audit findings, including any appears from our examination of those
basis of accounting and, based on the significant deficiencies in internal control books and the Company’s statement
audit evidence obtained, whether a that we identify during our audit. of financial position and statement of
material uncertainty exists related profit or loss and other comprehensive
to events or conditions that may We also provide the Board of Directors and income are in agreement with the books
cast significant doubt on the Group the Audit Committee with a statement that of account.
and Company’s ability to continue we have complied with relevant ethical
as a going concern. If we conclude requirements regarding independence, and Compliance with Section 27 (2) of the
that a material uncertainty exists, to communicate with them all relationships Banks and the other Financial Institutions
we are required to draw attention in and other matters that may reasonably be Act Cap B3, Laws of the Federation of
our auditor’s report to the related thought to bear on our independence, and Nigeria, 2004 and Central Bank of Nigeria
disclosures in the consolidated and where applicable, related safeguards. circular BSD/1/2004
separate financial statements or, if
such disclosures are inadequate, to From the matters communicated with i. The Group paid penalties in respect
modify our opinion. Our conclusions are the Board of Directors and the Audit of contravention of the Central Bank
based on the audit evidence obtained Committee, we determine those matters of Nigeria guidelines during the year
up to the date of our auditor’s report. that were of most significance in the audit ended 31 December 2018. Details of
However, future events or conditions of the consolidated and separate financial penalties paid are disclosed in note
may cause the Group and Company to statements of the current period and 40 to the financial statements.
cease to continue as a going concern. are therefore the key audit matters. We
describe these matters in our auditor’s ii. Related party transactions and
• Evaluate the overall presentation, report unless law or regulation precludes balances are disclosed in note 36 to
structure and content of the public disclosure about the matter or the financial statements in compliance
consolidated and separate financial when, in extremely rare circumstances, with the Central Bank of Nigeria circular
statements, including the disclosures, we determine that a matter should not BSD/1/2004.
and whether the consolidated and be communicated in our report because
separate financial statements represent the adverse consequences of doing so Kabir O. Okunlola
the underlying transactions and would reasonably be expected to
events in a manner that achieves outweigh the public interest benefits FRC/2012/ ICAN/00000000428
fair presentation. of such communication.
For: KPMG Professional Services
• Obtain sufficient appropriate audit Chartered Accountants
evidence regarding the financial 7 February 2019
information of the entities or business Lagos, Nigeria
activities within the Group to express
146 Stanbic IBTC Annual report for the year ended 31 December 2018
CONSOLIDATED AND SEPARATE
STATEMENT OF FINANCIAL POSITION
As at 31 December 2018
Group Company
Note 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
Assets 7 455,773 401,348 15,533 7,545
Cash and cash equivalents - -
Pledged assets 8.1 142,543 43,240 - -
Trading assets - -
Derivative assets 9.1 84,351 151,479
Financial investments 1,796 1,625
Asset held for sale 10.6 30,286 11,052 - -
Loans and advances - -
Loans and advances to banks 11 400,000 316,641 - -
Loans and advances to customers - -
Other assets 11.4 - 114
Equity investment in subsidiaries 4,091 2,148
Property and equipment 12 441,261 381,711 85,539 85,539
Intangible assets
Deferred tax assets 12 8,548 9,623 993 517
- -
Total assets 12 432,713 372,088 - -
15 77,787 49,442
13 - -
17 21,652 21,883
18 827 605
16 9,181 8,901
1,663,661 1,386,416 107,952 97,374
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 147
Group Company
Note 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
Equity and liabilities 239,667 185,218 102,210 92,654
Equity 92,654
Equity attributable to ordinary shareholders 235,406 182,060 102,210
Ordinary share capital 5,025
Share premium 19.2 5,120 5,025 5,120 66,945
Reserves 20,684
Non-controlling interest 19.2 76,030 66,945 76,030
Liabilities 19.4 154,256 110,090 21,060
Trading liabilities
Derivative liabilities 4,261 3,158
Current tax liabilities
Deposit and current accounts 1,423,994 1,201,198 5,742 4,720
Deposits from banks 9.2 125,684 62,449 - -
Deposits from customers 10.6 4,152 2,592 - -
Other borrowings 24 14,899 12,240
Debt Securities Issued 21 967,964 815,363 463 157
Provisions 21 160,272 61,721 - -
Other liabilities 21 807,692 - -
Deferred tax liabilities 22 69,918 753,642 - -
23 60,595 74,892 - -
Total equity and liabilities 25 13,452 29,046 - -
26 167,193 12,979 - -
16.1 137 191,517
120 5,279 4,563
- -
1,663,661 1,386,416 107,952 97,374
Yinka Sanni Basil Omiyi Adekunle Adedeji
Chief Executive Chairman Chief Financial Officer
FRC/2013/CISN/00000001072 FRC/2016/IODN/00000014093 FRC/2013/ICAN/00000001137
31 January 2019 31 January 2019 31 January 2019
The accompanying notes from page 155 to 286 form an integral part of these financial statements
148 Stanbic IBTC Annual report for the year ended 31 December 2018
CONSOLIDATED AND SEPARATE
STATEMENT OF PROFIT OR LOSS
For the year ended 31 December 2018
Group Company
Note 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
31.1
Gross earnings 31.2 222,360 212,434 19,463 29,922
Net interest income
Interest income 78,209 83,587 271 (1,050)
Interest expense
118,382 122,911 271 45
Non-interest revenue
Net fee and commission revenue (40,173) (39,324) - (1,095)
Fee and commission revenue
Fee and commission expense 102,604 89,182 19,192 29,877
31.3 69,845 59,089 2,171 1,491
Trading revenue 31.3 71,219 59,430 2,171 1,491
Other revenue 31.3 (1,374) - -
Income before credit impairment charges (341)
Net impairment write-back/(loss) on financial assets
31.4 31,311 29,148 - -
Income after credit impairment charges 17,021 28,386
Operating expenses 31.5 1,448 945 19,463 28,827
Staff costs
Other operating expenses 180,813 172,769 - -
Profit before tax
Income tax 31.6 2,940 (25,577)
Profit for the period 183,753 147,192 19,463 28,827
(3,463) (1,282)
Profit attributable to: (95,601) (86,026) (1,662)
Non-controlling interests (1,801) (590)
Equity holders of the parent 31.7 (43,027) (36,282) 16,000 (692)
Profit for the period 27,545
31.8 (52,574) (49,744) (501) (2,380)
Earnings per share
Basic earnings per ordinary share (kobo) 88,152 61,166
Diluted earnings per ordinary share (kobo)
33.1 (13,712) (12,785)
74,440 48,381 15,499 25,165
2,353 2,186 - -
72,087 46,195 15,499 25,165
74,440 48,381 15,499 25,165
34 704 460 151 250
34 704 460 151 250
The accompanying notes from page 155 to 286 form an integral part of these financial statements
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 149
CONSOLIDATED AND SEPARATE STATEMENT
OF OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2018
Group Company
31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Note Nmillion Nmillion Nmillion Nmillion
Profit for the period 74,440 48,381 15,499 25,165
Other comprehensive income 383 - - -
Items that will never be reclassified to profit or loss 356
Movement in fair value reserve (equity instruments):
Net change in fair value 27
Related income tax
Items that are or may be reclassified subsequently to profit or loss:
Movement in the available-for-sale revaluation reserve - 4,314 - -
Net change in fair value of available-for-sale financial assets before
reclassification 33.3 - 4,294 - -
Realised fair value adjustments on available-for-sale financial assets (63)
reclassified to income statement
Income tax on other comprehensive income 33.3 - 83 - -
Movement in debt instruments measured at fair value through other 33.3 (3,063) - -
comprehensive income (“OCI”) 33.3 (77) -
Total expected credit loss - -
Net change in fair value (2,203) - -
Realised fair value adjustments transfered to profit or loss (783) - 15,499 -
Related income tax - 4,314 25,165
52,695
Other comprehensive income for the period net of tax (2,680)
Total comprehensive income for the period 71,760
Total comprehensive income attributable to: 2,279 2,250 - -
Non-controlling interests 69,481 50,445 15,499 25,165
Equity holders of the parent 71,760 52,695 15,499 25,165
The accompanying notes from page 155 to 286 form an integral part of these financial statements
150 Stanbic IBTC Annual report for the year ended 31 December 2018
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 31 December 2018
Group Note Ordinary Share Merger Statutory
Balance as at 31 December 2017 share capital premium reserve credit risk
Impact of adopting IFRS 9 (net of tax) Nmillion Nmillion
Restated balance at 1 January 2018 Nmillion 66,945 reserve
Total comprehensive income for the period (19,123) Nmillion
Profit for the period 5,025 66,945
Other comprehensive (loss)/income after tax for the period -
Net change in fair value on debt financial assets at FVOCI -
Net change in fair value on equity financial assets at FVOCI 5,025 (19,123) -
Realised fair value adjustments on financial assets at FVOCI (debt) -
Expected credit loss on debt financial assets at FVOCI - --
Income tax on other comprehensive income -
Statutory credit risk reserve - - --
Transfer to statutory reserves -
- --
Transactions with shareholders, recorded directly in equity - - --
Equity-settled share-based payment transactions - --
Increase in paid-up capital (scrip issue) 9,085
Dividends paid to equity holders - - -
Balance at 31 December 2018 --
9,085
Balance at 1 January 2017 95 - --
Total comprehensive income for the period - --
Profit for the period 76,030
Other comprehensive income/(loss) after tax for the period 19.2 95 - -
Net change in fair value on available-for-sale financial assets - 65,450 (19,123) -
Realised fair value adjustments on available-for-sale financial assets
Income tax on other comprehensive income 5,120 -
Statutory credit risk reserve
Transfer to AGSMEIS reserves 5,000 - (19,123) 1,025
Transfer to statutory reserves -
- - --
Transactions with shareholders, recorded directly in equity -
Equity-settled share-based payment transactions - --
Increase in paid-up capital (scrip issue) - 1,495 --
Dividends paid to equity holders - - --
Balance at 31 December 2017 - - (1,025)
1,495
25 - - -
- - -
66,945 - -
25 - -
- (19,123) -
5,025
Refer to note 19.4 for an explanation of the components of reserve
The accompanying notes from page 155 to 286 form an integral part of these financial statements
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2018 Annual Report - Stanbic IBTC Holdings PLC
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