OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 201
5. Segment reporting
The group is organised on the basis of products and services, and the segments have been identified on this basis. The principal business
units in the group are as follows:
Business unit Banking and other financial services to individual customers and small-to-medium-sized enterprises.
Personal and Mortgage lending – Provides residential accommodation loans to mainly personal market customers.
Business Instalment sale and finance leases – Provides instalments finance to personal market customers and finance of vehicles and
Banking equipment in the business market.
Card products – Provides credit and debit card facilities for individuals and businesses.
Corporate and Transactional and lending products – Transactions in products associated with the various points of contact channels such as ATMs,
Investment internet, telephone banking and branches. This includes deposit taking activities, electronic banking, cheque accounts and other
Banking lending products coupled with debit card facilities to both personal and business market customers.
Wealth Corporate and investment banking services to larger corporates, financial institutions and international counterparties.
Global markets – Includes foreign exchange, fixed income, interest rates, and equity trading.
Transactional and lending products – Includes corporate lending and transactional banking businesses, custodial services, trade
finance business and property-related lending.
Investment banking – Include project finance, structured finance, equity investments, advisory, corporate lending, primary market
acquisition, leverage finance and structured trade finance.
The wealth group is made up of the company’s subsidiaries, whose activities involve investment management, pension management,
portfolio management, unit trust/funds management, insurance brokerage and trusteeship.
An operating segment is a component of the group engaged in business activities from which it can earn revenues, whose operating
results are regularly reviewed by the group’s executive management in order to make decisions about resources to be allocated to
segments and assessing segment performance. The group’s identification of segments and the measurement of segment results is based
on the group’s internal reporting to management. Segment results include customer-facing activities and support functions.
202 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
5. Segment reporting (continued) Personal & Business Banking Corporate & Investment Banking
Operating segments 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
Net interest income
Interest income - external source 32,176 31,243 40,952 47,969
Interest expense - external source
Inter-segment revenue/(costs) 31,728 29,890 81,573 87,551
Non-interest revenue (10,436) (13,022) (29,737) (25,207)
Net fee and commission revenue
Trading revenue 10,884 14,375 (10,884) (14,375)
Other revenue
16,720 13,044 48,422 44,533
Revenue 16,515 12,664 16,013 15,060
Credit impairment charges 31,295 29,146
Income after credit impairment charges - -
Operating expenses 205 380 1,114 327
Staff costs
Other operating expenses 48,896 44,287 89,374 92,502
Profit before direct taxation (618) (14,970) 3,594 (10,607)
Direct taxation 92,968
Profit/(loss) for the period 48,278 29,317 (37,963) 81,895
(47,435) (44,234) (11,097) (33,038)
Total assets (24,831) (19,612) (26,866) (11,156)
Total liabilities (22,604) (24,622) 55,005 (21,882)
Depreciation and amortisation (14,917) (3,787)
Number of employees 843 51,218 48,857
(262) (1,608) (3,109)
(16,525) 45,748
581
341,342 227,531 1,188,167 1,140,332
264,578 203,721 1,182,482 959,069
538
1,619 3,251 413 454
2,003 2,030 422
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 203
Wealth Management Eliminations Group
31 Dec 2018
31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion Nmillion Nmillion
78,209 83,587
5,081 4,375 - - 118,382 122,911
(40,173) (39,324)
5,081 5,470 -
-
- (1,095)
--
42,284 35,087 (4,822) (3,482) 102,604 89,182
42,139 35,058 (4,822) (3,693) 69,845 59,089
31,311 29,148
16 2 (4,822) - 1,448
129 27 - 211 945
47,365 39,462 4,822 (3,482) 180,813 172,769
(36) - - - 2,940 (25,577)
- 147,192
47,329 39,462 (3,482) 183,753 (86,026)
(15,025) (12,236) 75,496 3,482 (95,601) (36,282)
(40,027) (43,027) (49,744)
(7,099) (5,514) 3,482 (52,574)
(7,926) (6,722) - 61,166
32,304 27,226 88,152 (12,785)
(9,663) (8,068) - (13,712)
22,641 19,158 74,440 48,381
(25,442)
58,656 43,995 25,444 1,663,661 1,386,416
16,961 12,964 1,423,994 1,201,198
209 387 2,241 4,176
533 547 2,958 3,031
204 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
6. Key management assumptions
In preparing the financial statements, In determining whether an impairment early arrears and other indicators of
estimates and assumptions were made loss should be recorded in profit or loss, potential default, such as changes in
that could materially affect the reported the group makes judgments as to whether macroeconomic conditions and legislation
amounts of assets and liabilities within there is observable data indicating a affecting credit recovery. These annual
the next financial year. Estimates and measurable decrease in the estimated loss ratios are applied to loan balances in
judgements are continually evaluated and future cash flows from a portfolio of the portfolio and scaled to the estimated
are based on factors such as historical loans before the decrease can be loss emergence period. At the period
experience and current best estimates of allocated to an individual loan in that end, the group applied the following loss
uncertain future events that are believed portfolio. For corporate and investment emergence periods.
to be reasonable under the circumstances. banking portfolio, estimates are made
Unless otherwise stated, no material of the duration between the occurrence For Personal and Business Banking
changes to assumptions have occurred of a loss event and the identification portfolio, the estimates for the duration
during the period. of a loss on an individual basis. This is between the occurrence of a loss event
calculated on a portfolio basis, based on and the identification of a loss impairment
6.1 Credit impairment losses historical loss ratios, adjusted for national for performing loans is calculated using
on loans and advances and industry-specific economic conditions portfolio loss given default and the
(applicable before 1 January 2018) and other indicators present at the probability of default for the arrears
Portfolio loan impairments reporting date that correlate with stage and linked to the relevant
The group assesses its loan portfolios defaults on the portfolio. These include emergence period.
for impairment at each reporting date.
Average loss emergence period Sensitivity1
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Months Months Nmillion Nmillion
Personal & Business Banking - 307
Mortgage lending
Instalment sale and finance leases NA 3 NA 9
Card debtors NA 3
Other lending NA 3 NA (5)
Corporate & Investment Banking (total loan portfolio) NA 3
NA (0.4)
12
NA 303
1,125
1 Sensitivity is based on the effect of a change of one month in the emergence period on the value of the impairment.
Specific loan impairments
Non-performing loans include those days or more. Management’s estimates amount and timing of future cash flows are
loans for which the group has identified of future cash flows on individually reviewed regularly to reduce any difference
objective evidence of default, such as impaired loans are based on historical loss between loss estimates and actual loss
a breach of a material loan covenant or experience for assets with similar credit experience. Recoveries of individual loans as
condition as well as those loans for which risk characteristics. The methodology and a percentage of the outstanding balances
instalments are due and unpaid for 90 assumptions used for estimating both the are estimated as follows:
Expected time to recovery Expected recoveries as a Impairment loss sensitivity1
percentage of impaired loans
Dec 2018 Dec 2017 Dec 2018 Dec 2017 Dec 2018 Dec 2017
Months Months % % Nmillion Nmillion
65
Personal & Business Banking NA 12 NA 38 NA 2
Mortgage lending NA 3
Instalment sale and finance leases NA 6 NA 48 NA 3
Card debtors NA 57
Other lending NA 8 NA 9
NA 8 NA 22
Corporate & Investment Banking
The estimated recoveries for Corporate and Investment Banking non performing loans are calculated on a customer by customer basis.
1 Sensitivity is based on the effect of a change of one percentage point in the value of the estimated recovery on the value of the impairment.
*NA = Not Applicable
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 205
Determination of statutory Nigeria stipulates that Banks would • Prudential Provisions is greater than
credit risk reserves be required to make provisions for IFRS provisions; the excess provision
Provisions under prudential guidelines loans as prescribed in the relevant IFRS resulting should be transferred from
are determined using the time based Standards when IFRS is adopted. However, the general reserve account to a
provisioning regime prescribed by the Banks would be required to comply with “regulatory risk reserve”
Revised Central Bank of Nigeria (CBN) the following:
Prudential Guidelines. This is at variance • Prudential Provisions is less than
with the expected loss model required Provisions for loans recognised in IFRS provisions; IFRS determined
by IFRS under IFRS 9 (after 1 January the profit and loss account should be provision is charged to the statement of
2019) and IAS 39 (before 1 January determined based on the requirements of comprehensive income. The cumulative
2018). As a result of the differences in the IFRS. However, the IFRS provision should balance in the regulatory risk reserve
methodology/provision regime, there will be compared with provisions determined is thereafter reversed to the general
be variances in the impairments allowances under prudential guidelines and the reserve account
required under the two methodologies. expected impact/changes in general
reserves should be treated as follows:
Paragraph 12.4 of the revised Prudential
Guidelines for Deposit Money Banks in
The company’s subsidiary Stanbic IBTC Bank, has complied with the requirements of the guidelines as follows:
Statement of prudential adjustments Note 31 Dec 2018 31 Dec 2017
Prudential Provision Nmillion Nmillion
Specific provision on loans and advances 12.1
General provision on loans and advances 12.1 12,697 14,995
Impairment on other financial assets and provision for other losses 12.1 8,830 7,338
17,683
IFRS Provision 39,210 18,148
Specific impairment on loans and advances 40,481
12-month ECL -
Lifetime ECL not credit-impaired 4,245 20,916
Portfolio Impairment on loans and advances 8,823 -
Lifetime ECL credit-impaired -
Impairment on other financial assets and provision for other losses -
10,843 10,848
Closing regulatory reserve 17,683 -
Opening regulatory reserve 41,594
Appropriation: Transfer (to)/from retained earnings 18,148
- 49,912
-
- -
1,025
(1,025)
6.2 Fair value of financial instruments are not based on available observable 6.3 Impairment of available-
The fair value of financial instruments, market data. Such assumptions include for-sale investments
such as unlisted equity investments and risk premiums, liquidity discount rates, (before 1 January 2018)
certain derivatives, that are not quoted credit risk, volatilities and correlations. The group determines that available-for-
in active markets, is determined using Changes in these assumptions could sale equity investments are impaired and
valuation techniques. Wherever possible, affect the reported fair values of recognised as such in profit or loss when
models use only observable market data. financial instruments. there has been a significant or prolonged
Where required, these models incorporate decline in the fair value below its cost.
assumptions that are not supported by Additional disclosures on fair value The determination of what is significant or
prices from observable current market measurements of financial instruments prolonged requires judgement. In making
transactions in the same instrument and are set out in notes 28. this judgement, the group evaluates,
206 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
among other factors, the normal volatility vote for the removal of the fund manager The group uses the Black-Scholes option
in the fair value. In addition, impairment without cause, but subject to approval of pricing model to determine the fair value
may be appropriate when there is evidence a vast majority of all unitholders, and the of awards on grant date for its equity-
of a deterioration in the financial health group’s aggregate economic interest in settled share incentive schemes. The
of the investee, industry or sector, or each case is less than 25%. As a result, the valuation of the group’s obligations with
operational and financing cash flows or group has concluded that it acts as agent respect to its cash-settled share incentive
significant changes in technology. for the investors in all cases, and therefore scheme obligations is determined with
has not consolidated these funds. reference to the parent and ultimate
Had the declines of financial instruments parent’s share price, which is an observable
with fair values below cost been Further disclosure in respect of investment market input. In determining the expense
considered significant or prolonged, the funds in which the group has an interest is to be recognised for both the cash and
group would have suffered an additional contained in note 14. equity-settled share schemes, the group
loss attributable to ordinary shareholders estimates the expected future vesting of
of nil (Dec 2017: Nil) in its financial 6.6 Recognition of deferred the awards by considering staff attrition
statements, being the transfer of the tax assets: levels. The group also makes estimates
negative revaluations within the available- Deferred tax assets are reviewed at each of the future vesting of awards that are
for-sale reserve to profit or loss. reporting date and are reduced to the subject to non-market vesting conditions
extent that it is no longer probable that by taking into account the probability of
6.4 Intangible assets the related tax benefit will be realised. The such conditions being met.
Direct computer software development most significant management assumption
costs that are clearly associated with an is the forecasts used to support the Refer to note 31.11 for further details
identifiable and unique system, which will probability assessment that sufficient regarding the carrying amount of the
be controlled by the group and have a taxable profits will be generated by the liabilities arising from the group’s
probable future economic benefit beyond entities in the group in order to utilise cash- settled share incentive schemes
one period, are capitalised and disclosed as the deferred tax assets. The forecasts and the expenses recognised in the
computer software intangible assets. of taxable profits are determined based income statement.
on approved budgets for future periods
Computer software intangible assets and adjusted for any adjustments that 6.8 Depreciation and useful life of
are carried at cost less accumulated management deems necessary and are property and equipment
amortisation and accumulated impairment supportable at the time of reporting. The estimation of the useful lives of assets
losses. The assets are tested for is based on management’s judgement. Any
impairment whenever events or changes in The tax exempt status of income realised material adjustment to the estimated useful
circumstances indicate that the carrying on Nigerian government securities is lives of items of property and equipment
amount may not be recoverable. The one of the major drivers for the negative will have an impact on the carrying value of
determination of the recoverable amount taxable income within Stanbic IBTC Bank these items.
of each asset requires judgement. The PLC, which is the largest contributor to the
recoverable amount is based on the value deferred tax asset, through tax losses, in 6.9 Provisions
in use and calculated by estimating future the group. The uncertainty surrounding The group make provisions for contingent
cash benefits that will result from each the ability to generate sufficient future items such as legal claims, fines, penalties
asset and discounting these cash benefits taxable income after the expiration of and other taxes penalties. The amount
at an appropriate pre-tax discount rate the tax exempt status in 2022 has made provided are based on the management
(see note 4.7). management to conclude that not all tax best estimate of the amounts that will
losses carried forward should be recorded be required to settle the obligation in
6.5 Investment funds as deferred tax assets. The assessment of the event that it crystallises. Provisions
The group acts as fund manager availability of future taxable profit against are determined by discounting the
to a number of investment funds. which carry forward tax losses can be expected future cash flows using a pre-tax
Determination of whether the group utilised is disclosed under Note 16. discount rate that reflects current market
controls such an investment fund assessments of the time value of money
usually focuses on the assessment of the 6.7 Share-based payment and the risks specific to the liability. Any
aggregate economic interest of the group The group has both cash and equity- material difference in management best
in the fund and the investors’ rights to settled share incentive schemes which estimates will have an impact to the
remove the fund manager. For all the are issued to qualifying employees based carrying amount of the provisions. Refer
investment funds managed by the group, on the rules of the respective schemes. to note 25 for further details.
the trust deed empowers the investors to
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 207
Key management assumptions
(After 1 January 2018)
Expected credit loss on On-balance Sheet • In terms of IFRS 9, the group is avoidance of doubt, the overdue
period may be measured using either a
and Off-balance sheet exposures required to incorporate both historical ‘days past due’ or a ‘number of missed
payments or part thereof’ approach.),
Inputs, assumptions and techniques used experience as well as forward looking on any material credit obligation to the
for estimating impairment information when assessing whether an group, whichever occurs first.
instrument’s credit risk has increased
Write-off
See accounting policy in note 3.2 significantly since initial recognition. An impaired loan is written off once all
reasonable attempts at collection have
Significant increase in credit risk A useful reference tool that is used been made and there is no economic
The following are considered by the group in the assessment of significant benefit expected from attempting to
in determining whether there has been increase in credit risk is the exposure’s recover the balance outstanding.
a significant increase in credit risk on a credit rating.
Modified financial assets
financial instrument since initial recognition: Low credit risk financial instruments A modification is a change to the
contractual cash flows of a financial asset.
• Change in the probability of default from Management assesses whether an It involves the renegotiation of
initial recognition to the reporting date. instrument would be considered as having the terms of the financial asset such that
a low credit risk. In this regard: the contractual cash flows (amount, timing,
basis, etc.) are changed or the contractual
• A 30-day past due rebuttal, requiring • If internal risk gradings are based terms materially change the probability
exposures to be classified in stage 2. It on external credit risk ratings, all that the cash flows will be received (e.g.
is however not considered sufficient to instruments within the ‘investment change in counterparty).
only look at arrears data such as days grade’ category would be considered as
past due in considering whether there having a low credit risk. In calculating impairment losses, the
is a significant increase in credit risk group to assesses whether there has been
a significant increase in the credit risk
and the group would need to assess for • If internal risk gradings are not of modified financial assets that do not
qualify for derecognition at the reporting
significant increase in credit risk through based on external credit risk ratings, date by comparing:
other means. Arrears data are used internal ratings is utilised in order to • the credit risk of the modified
instrument at the reporting date based
after exhausting all other methods of determine a low credit risk threshold. on the modified contractual terms; and
determining whether there has been The threshold reflects a low credit risk • the credit risk at initial recognition
based on the original unmodified
a significant increase in credit risk. assumption from a market participant’s contractual terms.
• Other means of considering whether perspective taking into account the Incorporation of forward-looking
there is a significant increase in credit exposure’s terms and conditions. information
risk includes the evaluation of internal Default Forward-looking information
The process to include forward looking
and external credit ratings as well as The group has Corporate and Investment information into the expected credit loss
impairment model when assessing whether
information from external credit bureaus. Banking (“CIB”) as well as Personal and a customer’s credit risk has increased
significantly, involves the following:
Information about the economic sector Business Banking (“PBB”) exposures.
Building a forward looking information
and geographical region of the borrower Due to the different nature of financial IFRS model: In this stage, a calculation
model or expert driven approach is used
are also being taken into account. instruments that the group holds, the to adjust the impairment requirement
based on the forward looking macro-
• Where a single customer has more than group uses a single definition of default economic outlook.
one loan with the group (for example, which applies to all financial assets, with
a home loan, revolving facility, vehicle implementation guidance for specific
and asset finance, etc.), a one customer circumstances which would meet default in
view is taken when considering whether terms of this definition. Default is defined
there has been a significant increase in as follows:
credit risk. In this instance, a significant • Based on objective evidence the
increase in the customer’s credit risk on counterparty is unlikely to pay
one loan account is taken into account amounts payable to the group on
when assessing the customer’s other loan due date or shortly thereafter without
accounts. If it is assessed that there is a recourse to actions such as realisation
significant increase in credit risk in one of security; or
exposure, then there is a presumption • the counterparty is past due (or, in
that the customer’s other loans also have the case of revolving facilities such as
a significant increase in credit risk. overdrafts, is in excess of the current
limit) for more than 90 days (for the
208 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Macro-economic forecast : In this stage, Review of the outcome: In this stage the customers) and not on an individual basis.
an alignment in the base / expected outcome of the model should be reviewed When demonstrated that a sufficient
macro-economic outlook is created by the relevant governance committee. linkage between forward looking factors
between the group’s stress testing, and a portfolio exist, a given factor is
budgeting and forward looking information In certain instances, the assessment of implemented at the appropriate level
for the IFRS expected credit loss significant increase in credit risk using of aggregation.
impairment model. The same economic forward looking information is done
base case outlook is used for all these on a collective basis (i.e. portfolio of
processes and across the group.
7. Cash and cash equivalents Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Coins and bank notes 36,853 -
Balances with central bank Nmillion 177,990 Nmillion -
Current balances with banks within Nigeria 102,334 519 - 7,545
Current balances with banks outside Nigeria 230,679 185,986 - -
401,348 7,545
4,108 15,533
118,652 -
455,773
15,533
Balances with central bank include cash Included in current balances with banks Included in current balances with banks
reserve of N207,755 million (Dec. 2017: outside Nigeria is N24,344 million (Dec. outside Nigeria is N10,586 million (Dec.
N150,523 million) and special intervention 2017: N19,602 million) which represents 2017: N19,641 million) due from Standard
fund of N20,817 million (Dec. 2017: Naira value of foreign currency bank Bank Group. See note 36.3 for details.
N20,817 million) that are not available for balances held on behalf of customers in
use by the group on a day to day basis. respect of letters of credit transactions.
These restricted cash balances are held The corresponding liability is included in
with Central Bank of Nigeria (“CBN”). other liabilities (See note 26.1).
8. Pledged assets Group 31 Dec 2017 Company 31 Dec 2017
Nmillion Nmillion
8.1 Pledged assets 31 Dec 2018 31 Dec 2018
Nmillion Nmillion
Financial assets that may be repledged or resold
by counterparties 106,524 10,769 --
Treasury bills – Trading - 32,471 --
Treasury bills – Available-for-sale --
Treasury bills - FVOCI 36,019 43,240 --
142,543
Maturity analysis
The maturities represent periods to contractual 37,872 - - -
redemption of the pledged assets recorded.
Maturing within 1 month 68,652 43,240 - -
Maturing after 1 month but within 6 months
Maturing after 6 months but within 12 months 36,019 - - -
142,543 43,240 - -
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 209
8.2 Total assets pledged Financial assets pledged (ii) N 106,524 million was pledged
The assets pledged by the group are as collateral for liabilities in respect of repurchase lending
strictly for the purpose of providing The carrying amount of total financial agreements (Dec. 2017: N10,768
collateral to counterparties for various assets that have been pledged as collateral million). These transactions are
transactions. These transactions include for liabilities (included in amounts conducted under terms that are usual
assets pledged in connection with reflected in 8.1 above) at 31 December and customary to standard lending,
clearing/settlement activities of 2018 was N118,214 million (Dec. 2017: and securities borrowing and lending
the group. N13,699 million). The transactions in activities.
respect of which the collaterals were
To the extent that the counterparty is pledged are as follows: (iii) N11,690 million (Dec. 2017: Nil)
permitted to sell and/or repledge the pledged with FMDQ in respect of
assets in the absence of default, the (i) No facility was pledged in respect of OTC futures.
assets are classified in the statement of on-lending facility obtained from Bank
financial position as pledged assets. of Industry as disclosed under note
22(iii) (Dec. 2017: N2,931 million).
9. Trading assets and trading liabilities
Trading assets and trading liabilities mainly relate to client-facilitating activities carried out by the Global Markets business. These instruments
are managed on a combined basis and are therefore be assessed on a total portfolio basis and not as stand-alone assets and liability classes.
9.1 Trading assets Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion Nmillion
Classification 31 Dec 2018
Listed Nmillion 143,195 Nmillion
Unlisted 8,284
81,826 --
Comprising: 2,525 151,479 --
Government bonds --
Treasury bills 84,351 2,930
Placements 140,265 --
1,390 --
80,436 8,284 --
151,479
2,525
84,351
Dated assets 84,351 151,479 - -
Undated assets
----
84,351 151,479 -
Maturity analysis
The maturities represent periods to contractual redemption of the trading assets recorded.
Redeemable on demand ----
Maturing within 1 month 3,587 8,284 - -
Maturing after 1 month but within 6 months 69,319 82,768 - -
Maturing after 6 months but within 12 months 10,237 57,513 - -
Maturing after 12 months 1,208 2,914 - -
Undated assets ----
84,351 151,479 - -
Redemption value
Trading assets with maturity dates had a redemption value at 31 December 2018 of N84,351 million (Dec. 2017: N151,479 million).
210 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
9.2 Trading liabilities Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion Nmillion
Classification 31 Dec 2018
Listed Nmillion 52,451 Nmillion
Unlisted 9,998
116,712 62,449 --
Comprising: 8,972 --
Government bonds (short positions) 657 --
Repurchase agreements 125,684 -
Deposits --
Treasury bills (short positions) 934 9,998 --
79,928 51,794 --
62,449 --
8,972 --
35,850
125,684
Dated liabilities 125,684 62,449
125,684 62,449
Maturity analysis
The maturity analysis is based on the remaining
periods to contractual maturity from period end.
Repayable on demand ----
Maturing within 1 month 32,175 28,383 - -
Maturing after 1 month but within 6 months 83,634 27,170 - -
Maturing after 6 months but within 12 months - 6,239 - -
Maturing after 12 months 9,875 657 - -
125,684 62,449 - -
10. Derivative instruments The risks associated with derivative (i) F oreign exchange swaps are contractual
instruments are monitored in the same obligations between two parties to swap
All derivatives are classified as derivatives manner as for the underlying instruments. a pair of currencies. Foreign exchange
held for trading and measured at fair value Risks are also measured across the product swaps are tailor-made agreements
through profit or loss. range in order to take into account that are transacted between
possible correlations. counterparties in the Over-the-
10.1 Use and measurement counter (“OTC”) market.
of derivative instruments The fair value of all derivatives is
In the normal course of business, the recognised on the statement of financial (ii) Forwards are contractual obligations
group enters into a variety of derivative position and is only netted to the extent to buy or sell financial instruments
transactions for both trading and risk that there is both a legal right of set-off or commodities on a future date at
management purposes. Derivative and an intention to settle on a net basis. a specified price. Forward contracts
financial instruments are entered into for are tailor-made agreements that are
trading purposes and for hedging foreign Swaps are transactions in which two transacted between counterparties in
exchange and interest rate exposures. parties exchange cash flows on a the OTC market.
Derivative instruments used by the group specified notional amount for a
in both trading and hedging activities predetermined period.
include swaps, forwards and other similar
types of instruments based on foreign The major types of swap transactions
exchange rates and interest rates. undertaken by the group are as follows:
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 211
10.2 Derivatives held-for-trading currency. The counterparties settle the valuation difference is disclosed under
The group trades derivative instruments difference between the contracted NDF note 10.7.
on behalf of customers and for its own price or rate and the prevailing spot price
positions. The group transacts derivative or rate on an agreed notional amount. 10.4 Fair values
contracts to address customer demand The fair value of a derivative financial
by structuring tailored derivatives 10.2.3 Interest rate derivatives instrument represents for quoted
for customers. The group also takes Interest rate derivatives are primarily used instruments the quoted market price and
proprietary positions for its own account. to modify the volatility and interest rate for unquoted instruments the present
Trading derivative products include the characteristics of interest-earning assets value of the positive or negative cash
following derivative instruments: and interest-bearing liabilities on behalf flows, which would have occurred if the
of customers and for the group’s own rights and obligations arising from that
10.2.1 Foreign exchange derivatives positions. Interest rate derivatives primarily instrument were closed out in an orderly
Foreign exchange derivatives are primarily consist of swaps. market place transaction at period end.
used to hedge foreign currency risks
on behalf of customers and for the 10.3 Unobservable valuation 10.5 Notional amount
group’s own positions. Foreign exchange differences on initial recognition The gross notional amount is the sum
derivatives primarily consist of foreign Any difference between the fair value of the absolute value of all bought and
exchange forwards. at initial recognition and the amount sold contracts. The notional amounts
that would be determined at that date have been translated at the closing rate
10.2.2 Non-deliverable foreign using a valuation technique in a situation at the reporting date where cash flows
exchange derivatives contract in which the valuation is dependent on are receivable in foreign currency. The
Non-deliverable foreign exchange unobservable parameters is not recognised amount cannot be used to assess the
derivative contracts (“NDFs”) is a variation in profit or loss immediately but is market risk associated with the positions
of foreign exchange derivatives described recognised over the life of the instrument held and should be used only as a means
above. NDFs are cash settled and do on an appropriate basis or when the of assessing the group’s participation in
not require physical delivery of foreign instrument is redeemed. Unobservable derivative contracts.
10.6 Derivative assets and liabilities Maturity analysis of net fair value
31 December 2018 Within After 1 year After Net fair Fair value Fair value Contract/
Derivatives held-for-trading but within notional
Forwards 1 year 5 years 5 years value of assets of liabilities amount
Swaps Nmillion Nmillion Nmillion Nmillion Nmillion Nmillion Nmillion
Total derivative assets/(liabilities)
1,052 1,052 5,170 (4,118) 622,264
25,082 - 25,082 25,116 (34) 237,813
26,134 - - 26,134 30,286 (4,152) 860,077
31 December 2017 1,455 1,455 4,038 (2,583) 482,364
Derivatives held-for-trading
Forwards 7,005 - 7,005 7,014 (9) 115,140
Swaps
Total derivative assets/(liabilities) 8,460 - - 8,460 11,052 (2,592) 597,504
Included in derivative assets is N169 million (Dec. 2017: N973 million) due from related parties. See note 36.3 for details.
Included in derivative liabilities is N87 million (Dec. 2017: N186 million) due from related parties. See note 36.3 for details.
212 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
10.7 Unobservable valuation differences on initial recognition
The table below sets out the aggregate difference yet to be recognised in profit or loss at the beginning and end of the period with a
reconciliation of the changes of the balance during the period for derivative assets and liabilities.
Unrecognised profit at beginning of the period Note Group 31 Dec 2017
Additional profit on new transactions 31.4 31 Dec 2018 Nmillion
Recognised in profit or loss during the period -
Unrecognised profit at end of the period Nmillion 14,098
4,500 (9,598)
8,685
4,500
(8,827)
4,358
11. Financial investments
Financial investments comprise assets held for liquidity requirement purposes.
Short – term negotiable securities Group 31 Dec 2017 Company 31 Dec 2017
Listed 31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Unlisted 301,995 -
Other financial investments Nmillion 301,995 Nmillion -
Listed 376,917 - - -
Unlisted 376,917 14,646 - 1,625
Gross financial investments 11,293 - 1,625
Expected credit loss on financial investment - 3,353 -
Stage 1 23,150 316,641 1,796 1,625
Stage 2 13,320 1,796
Stage 3 9,830 -
Total expected credit loss on financial investment 400,067 - -
Net financial investments - 1,796
(67) -
- 316,641 - -
- - -
- -
(67) - -
400,000 1,796 1,625
11.1 Comprising: 2,290 1,530 - -
Government bonds 376,917 301,995 - -
Treasury bills - -
Corporate bonds 6,735 1,079 - -
Unlisted equities (see note 11.2 below) 2,815 2,274
Mutual funds and unit-linked investments 1,796 1,625
(see note 14) 11,030 9,763 - -
Commerical papers 280 -
1,796 1,625
400,067 316,641
Mutual funds and unit-linked investments include N1.25 billion (Dec 2017: N1.3 billion) held against unclaimed dividend liability as disclosed in note 26.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 213
Maturity analysis
The maturities represent periods to contractual redemption of the financial investments recorded.
Redeemable on demand Group 31 Dec 2017 Company 31 Dec 2017
Maturing within 1 month 31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Maturing after 1 month but within 6 months - -
Maturing after 6 months but within 12 months Nmillion 29,873 Nmillion -
Maturing after 12 months - 179,562 - -
Undated investments1 92,560 - -
51,789 2,609 - -
101,328 12,037 - 1,625
223,801 316,641 - 1,625
9,025 1,796
14,124 1,796
400,067
There were no ECL transfers between stages for financial investments during the period.
1Undated investments include unlisted equities and mutual funds and linked investments.
11.2 Analysis of unlisted equity investments
At 31 December 2018, the Group designated certain investments shown in the following table as equity securities as at FVOCI. In 2017,
these investments were classified as available-for-sale and measured at cost. The FVOCI designation was made because the investments
are expected to be held for the long term for strategic purposes.
Unified Payment Services Ltd ( formerly Smart 307 219 --
Card Nigeria PLC) 659 650 --
FSDH Merchant Bank Limited --
FMDQ OTC PLC 35 29 --
MTN Communications 655 553 --
Nigeria Mortgage Refinance Company Ltd 156 --
Central Securities Clearing System PLC - --
Nigerian Interbank Settlement System PLC 30 18 --
973 805
2,815 2,274
11.3 Asset classified as held for sale Group Company
31 Dec 2018 31 Dec 2018
Unquoted equity investment Nmillion Nmillion
Disposal 114 -
(114) -
- -
214 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
12. Loans and advances Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
12.1 Loans and advances net 9,623
of impairments Nmillion 9,623 Nmillion -
Loans and advances to banks - -
Placements with banks 8,548 372,088 -
Expected credit losses 8,605 403,852 -
Loans and advances to customers 149,325
Gross loans and advances to customers (57) 7,426 --
Personal and business banking (PBB) 432,713 12,167 --
Mortgage loans 458,946 1,451 --
Instalment sale and finance leases 179,813 128,281 --
Card debtors 254,527 --
Other loans and advances 5,801 254,527 --
Corporate and Investment banking (CIB) 8,671 --
Corporate loans 1,155 (31,764) --
Interest in suspense 164,186 -
Credit impairments for loans and advances 279,133 --
(note 12.3) 279,133 -
(2,322) (20,916) --
12-month ECL (10,848) --
Lifetime ECL not credit-impaired (23,911)
Lifetime ECL credit-impaired (4,245)
Specific credit impairments (8,823)
Portfolio credit impairments (10,843)
-
-
Net loans and advances 441,261 381,711 --
Comprising:
Gross loans and advances 467,551 413,475 --
Less: Credit impairments allowance (23,968) (31,764) --
Interest in suspense
Net loans and advances (2,322) 381,711 --
441,261
Regulatory prudential disclosures on loans and advances have been disclosed under note 6 and credit risk management– prudential guidelines disclosures.
Included in loans and advances to banks is N8,813 million (Dec. 2017: N9,234 million) due from Standard Bank Group. See note 36.3 for details. Of this amount, N7,123
million (Dec 2017: N7,027 million) relates to proceeds received from SBSA from sale of Finacle software. The fund are placed in an escrow account and are not available for
use by the group on a day to day basis.
Included in gross loans and advances to customers is an amount of N11,974 million (2017: N16,951 million) relating to both PBB and CIB instalmental sale and finance leases.
See note 12.2 for analysis of finance lease receivable.
The group has a standby contingency funding agreement with a Tier 1 bank under which the group commits to provide up to N10 billion liquidity cover to the bank. The
agreement took effect from 09 February 2017. The bank did not draw on the commitment during the year. See page 106 under “Liquidity Contingency” for further details.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 215
Analysis of gross loans and advances by product Total expected credit loss Interest in Net
suspense carrying
Gross 12-month Lifetime Lifetime Total
carrying ECL ECL not ECL credit- value
value (4,302) credit- impaired 441,261
(2,991) impaired 162,330
Gross loans and advances to customers 467,551 (117) (8,823) (10,843) (23,968) (2,322) 4,591
Personal and business banking (PBB) 179,813 (176) (16,998) (485) 6,565
Mortgage loans (83) (3,914) (10,093) (84) 15,444
Instalment sale and finance leases 5,801 (2,615) (1,126) - 135,730
Card debtors 8,671 (1,254) (500) (509) (2,106) - 270,383
Other loans and advances 1,155 (1,254) 14,289 (401) 270,383
Corporate and Investment banking (CIB) 164,186 (57) (280) (1,650) (28,055) 8,548
Corporate loans 279,133 (4,302) (6,913) (1,837) 441,261
Loans and advances to banks 279,133 (96) 14,468 (6,913) (1,837)
Total 8,605
467,551 (3,038) (22,402) (57) -
(23,968) (2,322)
(4,909) (750)
(4,909) (750)
--
(8,823) (10,843)
Maturity analysis
The maturity analysis is based on the remaining periods to contractual maturity from the period end.
Redeemable on demand Group 31 Dec 2017 Company 31 Dec 2017
Maturing within 1 month 31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Maturing after 1 month but within 6 months 26,217 -
Maturing after 6 months but within 12 months Nmillion 62,244 Nmillion -
Maturing after 12 months 52,691 79,076 - -
Gross loans and advances 57,401 25,004 - -
125,133 220,934 - -
24,542 413,475 - -
207,784 -
467,551 -
216 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
12 Loans and advances (continued) Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Segmental analysis - industry 24,760 -
Nmillion 4,213 Nmillion -
Agriculture 37,466 20,494 - -
Business services - - -
Communication 9,126 42,737 - -
Community, social & personal services 8,162 - - -
Construction & real estate 10,235 - -
Electricity, gas & water supply - 22,285 - -
Financial intermediaries & insurance 43,507 36 - -
Government 125,979 - -
Hotels, restaurants and tourism 56 71,226 - -
Manufacturing 9,866 50,607 - -
Oil & gas 32,656 8,601 - -
Private households 32,302 - -
Transport, storage & distribution 428 413,475 - -
Wholesale & retail trade 163,057 -
Gross loans and advances -
70,757
51,452
4,600
36,418
467,551
Segmental analysis – geographic area
The following table sets out the distribution of the group’s loans and advances by geographic area where the loans are recorded.
South South 24,112 16,673 --
South West 377,983 346,409 --
South East --
North West 10,876 8,289 --
North Central 21,468 17,762 --
North East 23,385 13,629 --
Outside Nigeria 1,090 --
Gross loans and advances 1,122 9,623 --
8,605 413,475
467,551
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 217
12.2 Instalment sale and finance leases
Included in gross loans and advances to customers are finance leases as analysed below:
Gross investment in instalment sale and finance leases Group 31 Dec 2017 Company 31 Dec 2017
Receivable within 1 year 31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Receivable after 1 year but within 5 years 16,951 -
Receivable after 5 years Nmillion Nmillion
Unearned finance charges deducted 11,974 2,310 - -
Net investment in instalment sale and finance leases 14,641 -
Receivable within 1 year 1,774 -
Receivable after 1 year but within 5 years 10,200 - - -
Receivable after 5 years (3,431) -
- 13,520 - -
(2,359) - -
2,125 - -
9,615 11,395 - -
1,665 -
7,950 - -
-
N944 million (Dec 2017:N1.35 billion) of instalment sales and finance is included in corporate loans and advances and all loans and advances to customers are held at
amortised cost.
218 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
12.3 Credit impairments allowance for loans and advances
A reconciliation of the allowance for impairment losses for loans and advances, by class:
Opening ECL Transfers between stages
1 January 2018
Transfer 12 Transfer Lifetime Transfer Lifetime Total
month ECL to/ ECL not credit- ECL credit-
(8)
from impaired to/from impaired to/from (167)
12 month ECL 52 (8) - 11
Mortgage loans 148 (164) (3) (1,918)
Instalment sales and finance lease (1)
Card debtors 56 12 (127) -
Other loans and advances 3,177 (1,791) (2,082)
Corporate loans 1,182 -
Total 4,615 - (131) 7
- (1,951) 151
(18)
Lifetime ECL not credit-impaired 89 8 (1) 779
Mortgage loans 357 164 (13)
Instalment sales and finance lease 129 (12) (6) -
Card debtors 6,962 1,791 (1,012) 919
Other loans and advances 8,257 -
Corporate loans 15,794 1,951 - (1,032) 1
Total 16
Lifetime ECL credit-impaired (excluding IIS) 655 -1 - 7
Mortgage loans 2,550 3 13 - 1,139
Instalment sales and finance lease 16
Card debtors 288 127 1,012 -
Other loans and advances 7,320 1,163
Corporate loans 10,103 131 1,032
Total 20,916 -
-
Purchased/originated credit impaired - - - - -
Total 41,325 - - -
Total ECL 2,082 (919) (1,163)
During the period under review ECL model methodology for Business Banking loans greater than N700 million was updated from a
portfolio approach to an individual counterparty approach.
The portfolio approach is better suited for retail loans which are high volume driven business, while the individual counterparty approach
reflects the underlying credit Risk profile on an individual basis.
The threshold of N700 million was determined after considering:
• Stability of the portfolio impairment modelling approach below the cut-off;
• Number and impact of defaults below the threshold;
• Number of clients/risk groups in excess of the threshold
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 219
Income statement movement Impaired Closing balance Post write-off
accounts recoveries
Originated Changes in Subsequent Derecognised Total written off
"New" ECL - due to changes in ECL incuding write recognized in
modifications P/L
impairments offs
raised
4 69 - 73 - 117 -
22 173 - 195 - 176 -
- - 83 -
1 15 - 16 - 2,615 -
1,242 114 - 1,356 - 1,254 -
(84) - - 4,245 -
156 - 287 72
1,425 1,712
- - 404 404 - 500 -
- (2) (226) 280 -
- - (15) (228) - -
1 (51) (4,653) 96 -
92 3,765 (15) - 3,038 -
93 (53) (725) 4,909 -
(4,703) - 8,823
3,857 (7,205)
- (685) (7,205)
497 - (533) (36) (111) 509 138
222 - 2,046 93
- (14,700) 2,268 (3,184) 1,650 13
45 - 16,107
1,788 - (6,984) (14,655) (108) (14,468) 2,217
- (4,064) 590
124 437 18,332 (4,389) 22,402
2,676 -- 3,051
(53) (4,502) (6,860) (2,493) 750
- -
- 437 (951) (10,285) 10,843 -
4,194 3,051
-
-- -
437 76 (17,490) 23,911
220 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
12.3 Credit impairments allowance for loans and advances (continued)
Group Mortgage Instalment sale Card debtors Other loans Corporate Total
lending and finance Nmillion and advances loans Nmillion
31 Dec 2017 Nmillion leases
Specific impairments Nmillion Nmillion Nmillion 11,249
Balance at beginning of the period 28,235
Net impairments raised 164 784 211 10,090 - (18,439)
Impaired accounts written off 507 3,079 114 14,408 10,127
Discount element recognised in interest (6) (1,306) (36) (17,091) (129)
income - 20,916
Balance at end of the period (9) (6) (2) (88)
656 2,551 287 7,319 (24) 11,102
10,103 (254)
Portfolio impairments 51 275 49 3,136 10,848
Balance at beginning of the period 23 (99) (27) (633) 7,591 31,764
Net impairments raised /(released) 74 176 482
Balance at end of the period 730 2,727 22 2,503
Total 309 9,822 8,073
18,176
Segmental analysis of Stage 3 loans - industry
The following table sets out the segment analysis of the group credit impaired loans and impairment by industry.
Group Stage 3 loans and Credit impaired Lifetime ECL credit Specific impairment
Agriculture advances impairment
Business services 31 Dec 2017 31 Dec 2017
Communication 31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Construction & real estate Nmillion 1,492 Nmillion 886
Electricity, gas & water supply 2,201 225 1,411 121
Government 288 8,537 140 6,784
Hotels, restaurants and tourism - 1,780 - 792
Manufacturing 518 - 316 -
Oil and Gas 44 165 44 132
Private households 1,660 23 803 14
Transport, storage & distribution 18 125 10 79
Wholesale & retail trade 130 7,379 91 3,938
945 6,551 636 4,754
7,948 4,027 4,333 2,414
2,502 1,409 1,639 1,002
1,460 31,713 1,420 20,916
17,714 10,843
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 221
Segmental analysis of lifetime ECL credit impaired loans - geographic area
The following table sets out the distribution of the group’s impairments by geographic area where the loans are recorded.
Stage 3 loans and Credit impaired Lifetime ECL credit Specific impairment
advances impairment
31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
South South 1,401 1,917 805 1,488
South West
South East 9,266 26,377 5,932 16,918
North West
North Central 3,118 1,365 1,968 872
North East
824 1,009 479 793
2,962 965 1,582 780
143 80 77 65
17,714 31,713 10,843 20,916
13. Equity investment in subsidiaries
% Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Stanbic IBTC Ventures Limited 100 - 500
Nmillion - Nmillion 63,467
Stanbic IBTC Bank PLC 100 - - 500 3,500
- - 710
Stanbic IBTC Capital Limited 100 - - 63,467 16,913
- - 3,500 300
Stanbic IBTC Asset Management Limited 100 - - 710 20
- - 16,913 20
Stanbic IBTC Pension Managers Limited 88.24 - - 300 109
- - 20 85,539
Stanbic IBTC Trustees Limited 100 - 20
- 109
Stanbic IBTC Insurance Brokers Limited* 75 85,539
Stanbic IBTC Investments Limited 100
Stanbic IBTC Stockbrokers Limited 100
*Stanbic IBTC Holdings has 75% direct and 25% indirect shareholdings in Stanbic IBTC Insurance Brokers Limited.
222 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
13.1 List of significant subsidiaries
The table below provides details of the direct and indirect subsidiaries of the group.
Country of Percentage Financial
incorporation
Subsidiaries Nigeria Nature of business holdings period end
Stanbic IBTC Ventures Limited Nigeria
Stanbic IBTC Bank PLC Nigeria Undertakes proprietary investment activities 100% 31 December
Stanbic IBTC Capital Limited
Nigeria Provision of banking and related financial services 100% 31 December
Stanbic IBTC Asset Management Limited
Nigeria Provision of general corporate finance and debt 100% 31 December
Stanbic IBTC Pension Managers Limited advisory services
Nigeria
Stanbic IBTC Trustees Limited Acting as an investment manager, portfolio 100% 31 December
Nigeria manager and as a promoter of unit trust and funds
Stanbic IBTC Stockbrokers Limited Nigeria
Stanbic IBTC Insurance Brokers Limited Nigeria Administration and management of pension fund 88.24% 31 December
Stanbic IBTC Investments Limited Nigeria assets
Stanbic IBTC Bureau De Change Limited
(Indirect holding) Acting as executors and trustees of wills and 100% 31 December
Stanbic IBTC Nominees Limited trusts and provision of agency services
(Indirect holding)
Provision of stockbroking services 100% 31 December
Provision of insurance brokerage services 75% 31 December
Undertakes equity investments for the group 100% 31 December
Buying and selling of currencies 100% 31 December
Nigeria Investor services as well as acting as an agent of 100% 31 December
its parent company Stanbic IBTC Bank PLC in the
execution of various mandates relating to the
custody of assets.
13.2 Significant restrictions
The group did not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting
from the regulatory frameworks within which the subsidiaries operate.
The regulatory frameworks require all the subsidiaries (except Stanbic IBTC Ventures Ltd and Stanbic IBTC Investments Ltd) to maintain
certain level of regulatory capital. In addition, the banking subsidiary (Stanbic IBTC Bank PLC) is required to keep certain levels of liquid
assets, limit exposures to other parts of the group and comply with other ratios.
For information on assets, liabilities and earnings of the subsidiaries, see Note 13.4.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 223
13.3 Non-controlling interests (“NCI”) in subsidiaries
The following table summarises the information relating to the group subsidiary that has material NCI.
Stanbic IBTC Pension Managers Limited: The principal place of business is Wealth House, Plot 1678, Olakunle Bakare Close, Off Sanusi
Fafunwa Street, Victoria Island, Lagos.
NCI percentage 31 Dec 2018 31 Dec 2017
11.76% 11.76%
Total assets Nmillion Nmillion
Total liabilities 49,591 38,144
Net assets
Carrying amount of NCI (13,406) (11,290)
Revenue 36,233 26,854
Profit 4,261 3,158
Profit allocated to NCI 39,078 35,328
Cash flows from operating activities 20,002 18,589
Cash flows from investing activities 2,353 2,186
Cash flow from financing activities, before dividends to NCI 18,668 17,991
Cash flow from financing activities - cash dividends to NCI (1,239) (8,736)
Net increase in cash and cash equivalents (8,824)
(1,176) (20,912)
7,429 (2,788)
(14,445)
224 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
13.4 Summarised financial information of the consolidated entities
Stanbic IBTC Stanbic IBTC Stanbic IBTC Stanbic IBTC Stanbic IBTC
Holdings PLC Bank PLC Capital Ltd Pension Mgrs Ltd Asset Mgt Ltd
Nmillion Nmillion
Company Nmillion Nmillion
Nmillion 71,705
Income statement 55,447 715 4,759 165
Net interest income 271 127,152 4,245 34,319 6,630
Non interest revenue 19,192 (32,169) 4,960 39,078 6,795
Total income 19,463 (44,664) (1,665) (4,829) (1,856)
Staff costs (1,662) (894) (6,066) (1,209)
Operating expenses (1,801) 2,988
Credit impairment charges (73,845) (6) (34) (2)
Total expenses - (2,565) (10,929) (3,067)
Profit before tax (3,463) 53,307
Tax 16,000 (2,517) 2,395 28,149 3,728
Profit for the period 50,790 (802) (8,147) (1,412)
(501) 1,593 20,002
Profit for period ended 31 December 2017 15,499 28,842 2,316
Assets 25,165 1,687 18,589 1,447
Cash and cash equivalents
Derivative assets 15,533 451,666 8,065 4,171 304
Trading assets - 30,286 - - -
Pledged assets - 84,276 - - -
Financial investments - 142,543 - - -
Asset held for sale 357,574
Loans and advances to banks 1,796 2,450 34,783 3,922
Loans and advances to customers - - - - -
Deferred tax asset - 8,548 - - -
Equity investment in group companies - 432,713 - - -
Other assets - 8,398
Property and equipment 241 337 144
Intangible assets 85,539 - - - -
Total assets 4,091 64,688
993 18,004 1,036 7,563 2,870
Total assets at 31 December 2017 - 16 2,737 88
818 - 8
107,952 1,599,514 -
11,808 49,591 7,336
97,374 1,332,670
10,167 38,144 4,762
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 225
Stanbic IBTC Stanbic IBTC Stanbic IBTC Stanbic IBTC Stanbic IBTC Consolidations/ Stanbic IBTC
Ventures Ltd Trustees Ltd Insurance Brokers Investments Stockbrokers Ltd Eliminations Holdings PLC
Nmillion
Nmillion Nmillion Limited Limited Nmillion Group
Nmillion Nmillion Nmillion
80
22 82 75 - 357 - 78,209
102 410 525 102,604
492 600 - 1,333 (19,519) 180,813
- (191) (223) (43,027)
(10) (95) (156) - 1,690 (19,519) (52,574)
(3) - - - (432) - 2,940
(13) (286) (379) (92,661)
(1) (259) 2,581
89 206 221 88,152
16 (49) (55) - (3) - (13,712)
105 157 166 74,440
(1) (694) 2,581
(2) 48,381
(1) 996 (16,938)
- (245) -
(1) 751 (16,938)
118 99 (13) 756 (28,307)
5 63 303 25 1,374 (25,736) 455,773
--- - - - 30,286
- - 75 - - - 84,351
--- - - - 142,543
2,202 604 416 - 2,297 (6,044) 400,000
--- -- --
--- - - - 8,548
- -1 - - (1) 432,713
7 16 17 - 21 - 9,181
--- - - (85,539) -
- 158 89 - 71 (2,779) 77,787
- 3 14 - 5 (208) 21,652
--- - - 1 827
2,214 844 915 25 3,768 (120,306) 1,663,661
2,046 688 354 133 9,437 (109,358) 1,386,416
226 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
13.4 Summarised financial information of the consolidated entities (continued)
Stanbic IBTC Stanbic IBTC Bank Stanbic IBTC Stanbic IBTC Stanbic IBTC Asset
Holdings PLC PLC Capital Ltd Pension Mgrs Ltd Mgt Ltd
Nmillion Nmillion
Company Nmillion Nmillion
Nmillion
Liabilities and equity: - 4,152 - - -
Derivative liabilities - 125,684 - - -
Trading liabilities - 160,272 - - -
Deposits from banks - 839,473 - - -
Deposits from customers - - - -
Other borrowings - 69,918 - - -
Debt securities issued 463 60,595 1,007 8,258 1,451
Current tax liabilities - - - -
Deferred tax liabilities 5,279 3,217 5,238 5,148 1,588
Provisions and other liabilities 102,210 - 5,563 36,185 4,297
Equity and reserves 107,952 11,808 49,591 7,336
Total liabilities and equity 164,184
172,019
Total liabilities and equity at 31 December 2017 1,599,514
97,374 1,332,670 10,167 38,144 4,762
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 227
Stanbic IBTC Stanbic IBTC Stanbic IBTC Stanbic IBTC Stanbic IBTC Consolidations/ Stanbic IBTC
Ventures Ltd Trustees Ltd Insurance Investments Ltd Stockbrokers Ltd Eliminations Holdings PLC
Nmillion
Nmillion Nmillion Brokers Ltd Nmillion Nmillion Group
Nmillion Nmillion
- -
- - ---- 4,152
- - 125,684
- - ---- 160,272
- - 807,692
- - ----
116 62 69,918
137 - - - - (31,781) 60,595
9 224 14,899
1,952 558 ----
2,214 844 137
---- 180,645
2,046 688 239,667
77 - 248 - 1,663,661
---- 1,386,416
549 6 1,528 (3,108)
289 19 1,992 (85,417)
915 25 3,768 (120,306)
354 133 9,437 (109,358)
228 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
14. Involvement with unconsolidated investment funds
The table below describes the types of investment funds that the group does not consolidate but in which it holds an interest. The funds
are not consolidated because they are held in other organisations and are separate legal entities.
Type of investment funds Nature and purpose Interest held by the group
Mutual funds To generate fees from managing assets on Investments in units issued
behalf of third party investors. by the funds
These vehicles are financed through Management fees
the issue of units to investors.
The table below sets out an analysis of the investment funds managed by the group, their assets under management, and the carrying
amounts of interests held by the group in the investment funds. The maximum exposure to loss is the carrying amount of the interest
held by the group.
Asset under management Interest held by the group
S/N Investment fund 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
i Stanbic IBTC Nigerian Equity Fund Nmillion Nmillion Nmillion Nmillion
ii Stanbic IBTC Ethical Fund
iii Stanbic IBTC Imaan Fund 5,849 7,077 424 482
iv Stanbic IBTC Guaranteed Investment Fund
v Stanbic IBTC Money Market Fund 1,644 1,991 228 245
vi Stanbic IBTC Bond Fund
vii Stanbic IBTC Balanced Fund 179 183 45
viii Stanbic IBTC Dollar Fund
ix Stanbic IBTC Umbrella Fund 9,681 4,069 126 112
x Stanbic IBTC Exchange Traded Fund
Total 229,849 166,828 8,574 7,882
1,298 1,077 191 176
1,096 1,059 89 80
22,308 5,604 583 188
13,211 291 642 15
1,391 6,847 287 525
286,506 195,028 11,148 9,710
The interest held by the group is presented under financial investments in the statement of financial position. See note 11.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 229
15. Other assets
Group Company
31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
Trading settlement assets 25,210 12,742 --
Due from group companies (see note 36.3)
Accrued income 543 15 2,464 1,365
Indirect/withholding tax receivables
Accounts receivable (see note (v) below) 1,204 1,027 --
Receivable in respect of unclaimed dividends (see (ii) below)
Deposit for investment (see (iii) below) 1,709 1,360 236 409
Prepayments
Other debtors (see note (i) below) 40,719 31,626 49 11
441 250 441 250
2,156 749 --
7,318 6,655 943 219
2,581 50 --
81,881 54,474 4,133 2,254
Impairment allowance on doubtful receivables (see (iv) below) (4,094) (5,032) (42) (106)
77,787 49,442 4,091 2,148
Current 66,163 40,428 2,471 1,270
Non-current 11,624 9,014 1,620 878
77,787 4,091
49,442 2,148
(i) Other debtors includes an amount of N2.5 billion representing a judgment sum held with Access Bank PLC pursuant to a garnishee
order granted by the Federal high court. It also includes fee receivables and short term receivables in respect of electronic payment
transactions.
(ii) Amount represents receivable from the company’s registrar in respect of unclaimed dividends and forms part of the assets held
against unclaimed dividend liabilities as disclosed in note 26. This is in accordance with new Securities and Exchange Commission
(“SEC”) directives requiring transfer of unclaimed dividends previously held by the registrars to the company.
(iii) Deposit for investment relates to SIBTC Bank PLC’s annual commitment towards Agri-Business/Small and Medium Enterprises
Investment Scheme (“AGSMEIS”) based on CBN guidelines. The investment scheme represents 5% of annual profit after tax
appropriated from reserves (see note 19.4(b)(ii)). A transfer of N1,407 million was made into the AGSMEIS reserve, which
represents the Bank’s annual commitment under the scheme, for the period (2017: N749 million) (see note 19.4 (iii)). An amount of
N17.5 million has been disbursed to small and medium scale enterprises through the Bank as at 31 December 2018.
(iv) Provision on other assets are computed using the simplified approach as stipulated by IFRS 9 and are all in stage 1.
(v) Account receivable includes an amount of N14.7 billion (Dec 2017: N15.5 billion) representing cash collateral placed with the Central
Bank of Nigeria in respect of foreign exchange forward transactions executed on behalf of clients.
Group Company
Movement in expected credit loss for doubtful receivables 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
At start of period Nmillion Nmillion Nmillion Nmillion
Additions/(write back)
Amount written off 5,032 2,326 106 72
At end of period
(838) 3,068 - 34
There was no movement between provision stages during the period
(100) (362) (64) -
4,094 5,032 42 106
230 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
16 Deferred tax assets Group Company
Deferred tax assets (note 16.1)
31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
9,181 8,901 --
9,181 8,901 --
The directors have determined that based on the group’s profit forecast, it is probable that there will be future taxable profits against
which the tax losses, from which a deferred tax asset has been recognised, can be utilised. Deferred tax asset amounting to N24,284
million arising from unutilised tax losses and capital allowances have not been recognised as at 31 Dec 2018 (Dec 2017: N17,757 million)
(Company N224 million, Dec 2017: N229 million), (unrecognised income statement impact of deferred tax for 2018 is N14,832 million
(2017: N9,437 million)) as it is not probable that future taxable profit will be available against which the group can use the benefits
therefrom. The unutilised tax losses can be carried forward indefinitely.
16.1 Deferred tax analysis Group Company
Deferred tax liabilities 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Deferred tax asset Nmillion Nmillion Nmillion Nmillion
Deferred tax closing balance (137) (120) - -
9,181 8,901 - -
9,044 8,781 - -
16.2 Deferred tax analysis by source Nmillion Nmillion Nmillion Nmillion
i) Deferred tax assets analysis by source 4,055 3,756 - -
Credit impairment charges 7,114 3,432 - -
Property and equipment (7,874) (2,353) - -
Fair value adjustments on financial instruments 2,814 1,599 - -
Unutilised losses 2,947 2,468 - -
Provision for employee bonus & share incentive - -
Others 125 - - -
Deferred tax assets closing balance 9,181 8,901
(ii) Deferred tax liabilities by source Nmillion Nmillion Nmillion Nmillion
Fair value adjustments on financial instruments (137) (120) - -
Deferred tax liabilities closing balance (137) (120) - -
Deferred tax at end of the year 9,044 8,781 - -
16.3 Deferred tax reconciliation Nmillion Nmillion Nmillion Nmillion
8,781 8,591 - -
Deferred tax at beginning of the period 280 273 -
Originating/(reversing) temporary differences for the period: 299 426 - -
Credit impairment charges 3,683 (509) - -
Property and equipment - -
Fair value adjustments on financial instruments (5,521) (1,627) - -
Unutilised losses 1,215 1,550 - -
Others 125 - - -
Provision for employee bonus & share incentive 479 434 - -
Fair value adjustments on financial instruments-FVOCI/Available for sale (17) (83) - -
Deferred tax at end of the period 9,044 8,781
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 231
As required by IAS 12 (Income Taxes), the Company has assessed the recoverability of the deferred tax assets on the tax loss and has
only recognised income taxes, deferred tax assets to the extent that it is probable to recover from future tax profits. Consequently,
additional deferred tax assets has not been recognised during the period.
17. Property and equipment
Group Leasehold Land Motor Furniture, Computer Work in Total
improvements Nmillion vehicles fittings and equipment progress Nmillion
17.1 Cost Nmillion equipment Nmillion 53,087
Balance at 1 January 2018 and building 2,620 Nmillion
Additions Nmillion 1,046 1,059 Nmillion 17,306 50 4,438
Disposals/expensed 20,572 11,480 4 (254)
Impairments - 44 2,524 - (7,912)
Transfers/reclassifications 182 638
Balance at 31 December 2018 - (48) (107) (40) -
- 3,666 (99) 14
(41) (5,305) 49,359
(15) (2,551)
42 2
- (4)
1,056 14,420
20,739 9,464
Balance at 1 January 2017 20,579 939 699 11,120 14,624 2,539 50,500
Additions 139 1,681 380 477 1,646 815 5,138
Disposals (63) (113)
Transfers/reclassifications (156) - (277) 1,149 (1,942) (2,551)
Balance at 31 December 2017 10 - 43 160 17,306 (1,362) -
2,620 1,059
20,572 11,480 50 53,087
17.2 Accumulated 9,468 - 486 9,318 11,932 - 31,204
depreciation 1,190 - 4,433
Balance at 1 January 2018 - 210 771 2,262 - (235)
Charge for the period - - (7,695)
Disposals (15) - (47) (95) (93) - 27,707
10,643
Expense/write-off - (39) (2,411) (5,230)
Balance at 31 December 2018
- 610 7,583 8,871
Balance at 1 January 2017 8,317 - 384 8,799 10,038 - 27,538
Charge for the year 1,225 - 4,129
Disposals - 159 752 1,993 - (463)
Impairments (43) --
Balance at 31 December 2017 (31) - (57) (262) (101) - 31,204
9,468
- - 29 2
- 486 9,318 11,932
Net book value: 10,096 3,666 446 1,881 5,549 14 21,652
31 December 2018 11,104 2,620 573 2,162 5,374 50 21,883
31 December 2017
There were no capitalised borrowing costs related to the acquisition of property and equipment during the period (2017: Nil).
232 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Company Freehold Motor vehicles Furniture, Computer Work in Total
land and Nmillion fittings and equipment progress Nmillion
17.1 Cost buildings - equipment Nmillion
Balance at 1 January 2018 Nmillion - Nmillion 1,407
Additions - Nmillion 1,221 - 829
Disposals - 815 - (17)
Transfers/reclassifications 186 (12) - -
Balance at 31 December 2018 -
14 2,024 - 2,219
Balance at 1 January 2017 -
Additions (5) 1,135 1,683 2,993
Disposals 57 39 110
Transfers/reclassifications - - 195
Balance at 31 December 2017 (10) (1,683) (1,696)
- - 175 39 (39) -
17.2 Accumulated depreciation - - 14 -
Balance at 1 January 2018 - - (3) 1,221 1,407
Charge for the period --
Disposals/expensed - - 186
Transfers/reclassifications
Balance at 31 December 2018 - - 119 771 - 890
Balance at 1 January 2017 - - 25 321 - 346
Charge for the period
Disposals - - (5) (5) - (10)
Impairments
Transfers/reclassifications -
Balance at 31 December 2017
- - 139 1,087 1,226
Net book value:
31 December 2018 - - 82 507 - 589
31 December 2017
- - 39 269 - 308
- (2) (5) - (7)
------
------
- - 119 771 - 890
- - 56 937 - 993
- - 67 450 - 517
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 233
18. Intangible assets Purchased Software Total
Nmillion Nmillion
Reconciliation of carrying amount 684
Group 267 684
18.1 Cost - 267
Balance at 1 January 2018 951
Additions 746 -
Impairments (62) 951
Balance at 31 December 2018 684 746
Balance at 1 January 2017 (62)
Written-off/Expensed 79 684
Balance at 31 December 2017 45
124 79
18.2 Accumulated amortisation 33 45
Balance at 1 January 2018 46 124
Amortisation for the period 79 33
Balance at 31 December 2018 46
Balance at 1 January 2017 79
Amortisation for the period
Balance at 31 December 2017 827
605
Carrying amount: 827
31 December 2018 605
31 December 2017
There were no capitalised borrowing costs related to the internal development of software during the period (Dec 2017: Nil).
19. Share capital and reserves
Group 31 Dec 2017 Company 31 Dec 2017
Nmillion Nmillion
31 Dec 2018 31 Dec 2018
Nmillion Nmillion
19.1 Authorised 6,500 6,500 6,500 6,500
13,000,000,000 Ordinary shares of 50k each
(Dec 2017: 13,000,000,000 Ordinary shares of
50k each)
19.2 Issued and fully paid-up 5,120 5,025 5,120 5,025
10,240,552,945 Ordinary shares of 50k each
(Dec 2017: 10,049,465,732 Ordinary shares of
50k each)
Ordinary share premium 76,030 66,945 76,030 66,945
There was no increase in authorised share capital during the year.
All issued shares are fully paid up.
234 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Reconciliation of shares issued Number of ordinary shares Value of ordinary shares Ordinary share premium
million Nmillion Nmillion
Balance as at 31 December 2017 10,049 5,025 66,945
Shares issued in terms of the final scrip distribution 64 32 3,090
declared in respect of 2017 final dividend*
127 63 5,995
Shares issued in terms of the interim scrip 191 95 9,085
distribution declared in respect of 2018 interim 10,240 5,120 76,030
dividend**
Total scrip
Balance as at 31 December 2018
*The scrip was issued at N48.62 per share. 50k (i.e nominal value of the shares) was applied to share capital while N48.12 was applied to
share premium.
**The scrip was issued at N47.75 per share. 50k (i.e nominal value of the shares) was applied to share capital while N47.25 was applied to
share premium.
19.3 Dividend Payment Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion Nmillion
2017 Interim Dividend 9,788 31 Dec 2018
2017 Final Dividend Nmillion Nmillion 7,000
9,788
Scrip dividend 3,122 3,122
Cash dividend 1,903 1,903
2018 Interim Dividend
Scrip dividend 6,058 6,058 7,000
Cash dividend 4,055 4,055
Minority Interest 1,176
Total dividend paid 16,314 -
15,138
19.4 Reserves is greater than the paid up share capital. The bank (a subsidiary)
a) Merger reserve transferred 15% of its profit after tax to statutory reserves as at
Merger reserve arose as a result of the implementation of the period end.
holding company restructuring. It represents the difference
between pre-restructuring share premium/share capital and the Section 69 of Pension Reform Act, 2004 requires SIPML to
post-restructuring share premium/share capital. transfer 12.5% of its profit after tax to a statutory reserve.
b) Other regulatory reserves (ii) Agri-Business / Small and medium scale industries reserve
The other regulatory reserves includes statutory reserve and (“AGSMEEIS”)
the small and medium scale industries reserve (“SMEEIS”) as The SMEEIS reserve is maintained to comply with the Central
described below. Bank of Nigeria (“CBN”) requirement that all licensed banks set
aside a portion of the profit after tax in a fund to be used to
(i) Statutory reserves finance equity investment in qualifying small and medium scale
Nigerian banking and pension industry regulations require the enterprises. Under the terms of the guideline (approved by the
Stanbic IBTC Bank PLC (“the bank”) and Stanbic IBTC Pension Bankers’ Committee on 9 February 2017), participating banks
Managers Ltd (“SIPML”) that are subsidiary entities, to make an shall set aside 5% of their PAT annually. A transfer of N1,407
annual appropriation to a statutory reserve. million was made into the AGSMEEIS reserve, which represents
the Bank’s annual commitment under the scheme, for the period
As stipulated by S.16(1) of the Banks and Other Financial (2017: N749 million) (see note 15 (iii)).
Institution Act of 1991 (amended), an appropriation of 30% of
profit after tax is made if the statutory reserve is less than paid-up
share capital and 15% of profit after tax if the statutory reserve
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 235
c) Available for sale reserve (before January 1 2018) (i) If the Prudential Provision is greater than IFRS provisions;
transfer the difference from the general reserve to a non-
This represents unrealised gains or losses arising from changes distributable regulatory reserve (statutory credit reserve).
in the fair value of available-for-sale financial assets which are
recognised directly in the available-for-sale reserve until the (ii) If the Prudential Provision is less than IFRS provisions; the
financial asset is derecognised or impaired. excess charges resulting should be transferred from the regulatory
reserve account to the general reserve to the extent of the non-
Fair value through OCI reserve (After January 1 2018) distributable reserve previously recognized.
This represents unrealised gains or losses arising from changes Analysis of the statutory credit risk reserve is disclosed under
in the fair value of FVOCI financial assets which are recognised note 6.1.
directly in the FVOCI reserve. For equity investment under this
category, such changes cannot be recycled into income statement e) Share based payment reserve
when the financial asset is derecognised or impaired. This represents obligations under the equity settled portion of the
group’s share incentive scheme which enables key management
d) Statutory credit risk reserve personnel and senior employees to benefit from the performance
of Stanbic IBTC Holdings PLC and its subsidiaries.
Should credit impairment on loans and advances as accounted
for under IFRS using the expected loss model differ from the
Prudential Guidelines set by the Central Bank of Nigeria the
following adjustment is required.
20. Dividend
The directors recommend the payment of a dividend of 150 kobo per share (Dec 2017: 50 kobo per share). Withholding tax is deducted
at the time of payment.
21. Deposit and current accounts
Deposits from banks Group 31 Dec 2017 Company 31 Dec 2017
Other deposits from banks Nmillion Nmillion
Deposits from customers 31 Dec 2018 61,721 31 Dec 2018 -
Current accounts Nmillion 61,721 Nmillion -
Call deposits 160,272 753,642 - -
Savings accounts 160,272 322,440 - -
Term deposits 807,692 -
Total deposits and current accounts 391,195 75,480 - -
48,444 -
73,627 307,278 - -
67,340 815,363 - -
275,530 -
967,964 -
Included in deposits from banks is N36,207 million (Dec 2017: N38,843 million) due to Standard Bank Group. See note 36.3(e).
236 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Maturity analysis
The maturity analysis is based on the remaining periods to contractual maturity from period end.
Repayable on demand Group 31 Dec 2017 Company 31 Dec 2017
Maturing within 1 month 31 Dec 2018 Nmillion 31 Dec 2018 Nmillion
Maturing after 1 month but within 6 months 524,029 -
Maturing after 6 months but within 12 months Nmillion 162,281 Nmillion -
Maturing after 12 months 674,666 112,485 - -
Total deposits and current accounts 116,690 16,564 - -
171,192 4 - -
815,363 - -
5,412 -
4 -
967,964
Segmental analysis – geographic area
The following table sets out the distribution of the group’s deposit and current accounts by geographic area.
Group 31 Dec 2018 Nmillion 31 Dec 2017 Nmillion
South South % 58,555 % 43,702
South West 6 587,929 5 594,369
South East 61 21,250 73 15,076
North West 2 34,653 2 26,750
North Central 4 98,454 3 68,442
North East 10 8 5,303
Outside Nigeria 1 6,851 1 61,721
Total deposits and current accounts 17 160,272 8 815,363
967,964
100 100
22. Other borrowings Group 31 Dec 2017 Company 31 Dec 2017
31 Dec 2018 Nmillion Nmillion
On-lending borrowings 74,892 31 Dec 2018
FMO - Netherland Development Finance Company Nmillion Nmillion -
(see (i) below) 69,918 18,369
African Development Bank (see (ii) below) 543 -
Nigeria Mortgage Refinance Company (see (vi) 10,090
below) 641 1,669 --
Bank of Industry (see (iii) below) 3,116 --
Standard Bank Isle of Man (see (iv) below & note 3,139
36.3) 2,509 40,406 --
CBN Commercial Agricultural Credit Scheme (see --
(v) below) 43,825 10,789
Other borrowings 74,892 --
9,714
69,918 --
--
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 237
The terms and conditions of other borrowings are as follows: was granted under the Power and Aviation Intervention Fund
scheme and Restructuring and Refinancing Facilities scheme.
On-lending borrowings are funding obtained from Development Disbursement of these funds are represented in loans and
Financial Institutions and banks which are simultaneously lent advances to customers. Based on the structure of the facility,
to loan customers. The group bears the credit risk on the loans the bank assumes default risk of amount lent to its customers.
granted to customers and are under obligation to repay the The facility was not secured with treasury bills during the
lenders. Specific terms of funding are provided below. period ended 31 Dec 2018 (Dec. 2017: N2,931 million).
i) This represents an on-lending dollar denominated iv) The bank obtained dollar denominated long term on-lending
loan of US$42 million (2017: US$ 90 million) obtained from facilities with floating rates tied to LIBOR from Standard Bank
Netherlands Development Finance Company (“FMO”). No Isle of Man with average tenor of 5 years. The dollar value of
additional disbursements was received during the year. The the facility as at 31 December 2018 was USD$98 million (Dec
initial facility amount of US$45 million was effective from 2017: USD$122 million).
8 April 2015, while the second disbursement of US$45 million
was effective from 10 May 2017. The entire facility amount v) The bank obtained an interest free loan from the Central
expires on 20 December 2019. Repayment of principal is Bank of Nigeria (“CBN”) for the purpose of on - lending to
being made in seven equal instalments and commenced on customers under the Commercial Agricultural Credit Scheme
20 December 2016 (for the initial disbursement) and 6 June (“CACS”). The tenor is also based on agreement with
2017 (for the second disbursement) up till maturity. Interest is individual beneficiary customer. Disbursement of these funds
payable semi-annually at 6-month LIBOR plus 3.50%. are represented in loans and advances to customers. Based
on the structure of the facility, the bank assumes default risk
ii) This represents US$2.5 million on-lending facility obtained of amount lent to its customers.
during the year from African Development Bank. The facility
was disbursed in two tranches of US$1.25 million each. Tranch vi) This represents N1.835 million (Tranche 1) and N1.543 million
A is priced at 6-month LIBOR + 3.6%, while Tranche B is (Tranche 2) on-lending facilities obtained from Nigeria
priced at 6-month LIBOR +1.9%. Both tranches expires on Mortgage Refinance Company in June 2016 and June 2018
9 June 2022 and are unsecured. respectively. Tranche 1 is priced at 15.5% while Tranche 2 is
priced at 14.5%.
iii) The bank obtained a Central Bank of Nigeria (“CBN”) initiated
on-lending naira facility from Bank of Industry in September The group has not had any default of principal, interest or any
2010 at a fixed rate of 1% per annum on a tenor based on other breaches with respect to its debt securities during the
agreement with individual beneficiary customer. The facility year ended 31 December 2018 (Dec 2017: Nil).
238 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Maturity Analysis Group Company
The maturity analysis is based on the remaining periods
to contractual maturity from period end. 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Repayable on demand Nmillion Nmillion Nmillion Nmillion
Maturing within 1 month
Maturing after 1 month but within 6 months 279 160 --
Maturing after 6 months but within 12 months
Maturing after 12 months 24,196 18,014 --
Movement in other borrowings 25,154 27,293 --
At start of the period
Additions 5,900 7,157 --
Accrued interest
Effect of exchange rate changes [loss/(profit)] 14,389 22,268 --
Payments made
At end of the period 69,918 74,892 --
74,892 96,037 - 16,404
13,158 25,278 --
- 1,095
(100) 55 -
6,168 980 - (17,499)
(24,200) (47,458) --
69,918 74,892
23. Debts Securities Issued Group Company
Senior unsecured debt Naira (see (i) below) 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Subordinated fixed rate notes- Naira (see (ii) below) Nmillion Nmillion Nmillion Nmillion
Subordinated floating rate notes -Naira (see (iii) below)
Subordinated debt - US dollar (see (iv) below) 30,181 - --
15,668 15,636 --
103 104 --
14,643 13,306 --
60,595 29,046 --
The terms and conditions of subordinated debt are as follows: (iv) This represents US dollar denominated term subordinated
non-collaterised facility of USD40 million obtained from
(i) This represents Naira denominated Unsecured senior Standard Bank of South Africa effective 31 May 2013.
debt issued on 17 December 2018 at a fixed interest rate The facility expires on 31 May 2025 and is repayable at
of 15.75% per annum payable semi-annually. It has a tenor of maturity. Interest on the facility is payable semi-annually
5 years. The debt is unsecured. at LIBOR (London Interbank Offered Rate) plus 3.60%.
See note 36.3 (g).
(ii) This represents Naira denominated subordinated debt issued
on 30 September 2014 at an interest rate of 13.25% per The group has not had any default of principal, interest or
annum payable semi-annually. It has a tenor of 10 periods any other convenant breaches with respect to its debt
and is callable after 5 periods from the issue date. The debt securities during the period ended 31 December 2018
is unsecured. (2017: Nil).
(iii) This represents N100 million Naira denominated subordinated
debt issued on 30 September 2014. Interest is payable semi-
annually at 6-month Nigerian Treasury Bills yield plus 1.20%.
It has a tenor of 10 periods and is callable after 5 periods from
the issue date. The debt is unsecured.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 239
Movement in debt issued Group Company
At start of period 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Additions Nmillion Nmillion Nmillion Nmillion
Accrued interest for the period
Accrued interest paid 29,046 27,964 --
Effect of exchange rate changes [loss/(profit)]
Payments made 30,181 - --
At end of period
2,928 2,706 --
24. Current tax liabilities
(2,897) (2,678)
Current tax liabilities
1,337 1,054 --
24.1 Reconciliation of current tax liabilities --
Current tax liabilities at beginning of the period -- --
Movement for the period
Charge for the period 60,595 29,046
(Over) / under provision - prior period
Payment made Group Company
Current tax liabilities at end of the period
31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Nmillion Nmillion Nmillion Nmillion
14,899 12,240 463 157
14,899 12,240 463 157
Nmillion Nmillion Nmillion Nmillion
12,240 9,508 157 68
2,659 2,732 306 89
13,058 501 2,389
14,008
(8) (22) - -
(10,304) (195) (2,300)
(11,341)
14,899 12,240 463 157
240 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
25. Provisions Legal Taxes & levies Expected Interest cost Penalties & Total
Nmillion Nmillion credit loss on judgment fines Nmillion
31 December 2018
Balance at 1 January 2018 7,293 5,686 for off debt Nmillion 12,979
Provisions made during the period 629 1,392 balance sheet Nmillion 2,685
Provisions used during the period (1,829) - (2,212)
Balance at 31 December 2018 (383) 5,249 exposures - 13,452
7,539 Nmillion -
Current - - 664
Non-current - - 12,788
13,452
664
-
664
- - 664 - -
7,539 5,249 - - -
7,539 5,249 664 - -
Expected credit loss for off balance sheet exposures relates to off balance sheet letters of credits and commitments
31 December 2017 Interest cost Penalties &
on judgment fines
Legal Taxes & levies Total
debt Nmillion Nmillion
Nmillion Nmillion Nmillion
Balance at 1 January 2017 8,040 1,541 1,000 - 10,581
Provisions made during the year 250 5,189 - - 5,439
Provisions used during the year (96) (1,044) - - (1,140)
Provisions reversed during the year (901) - (1,000) - (1,901)
Balance at 31 December 2017 7,293 5,686 - - 12,979
Current ----
Non-current
7,293 5,686 - - 12,979
7,293 5,686 - - 12,979
(a) Legal (c) Interest cost on judgment debt
In the conduct of its ordinary course of business, the group is Provisions for interest cost on judgment debt relates to
exposed to various actual and potential claims, lawsuits. The additional liability that management estimates the group would
group makes provision for amounts that would be required be required to settle over and above a judgment debt in legal
to settle obligations that may crystallise in the event of cases where the group appealed a lower court decision but
unfavourable outcome of the lawsuits. Estimates of provisions believes its appeal is unlikely to be successful.
required are based on management judgment. See note 30.4
for further details. (d) Expected credit loss for off balance sheet exposures
This relates to expected credit loss on off balance sheet
(b) Taxes & levies exposures in accordance with IFRS 9.
Provisions for taxes and levies relates to additional assessment on
taxes, including withholding tax, value added tax, PAYE tax.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 241
26. Other Liabilities Group Company
26.1 Summary 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Trading settlement liabilities Nmillion Nmillion Nmillion Nmillion
Cash-settled share-based payment liability (note 31.11)
Accrued expenses - staff 15,232 13,250 - -
Deferred revenue (iv) 4,286 2,308 613 105
Accrued expenses - others 5,815 6,163 1,287 1,071
Due to group companies (see note 36.3) 5,482 4,690
Collections / remmitance payable (see note (i) below) 4,748 4,735 - -
Customer deposit for letters of credit 5,892 1,181 1,252
Unclaimed balance (see note (ii) below) 68,098 17
Payables to suppliers and asset management clients 24,344 58,824 32 227
Draft & bank cheque payable 2,019 47,077 96 146
Electronic channels settlement liability 1,878
Unclaimed dividends liability (see note (iii) below) 1,737 1,973 - -
Clients cash collateral for derivative transactions (v) 2,725 8,042 - -
Sundry liabilities 1,647 2,007 13 7
15,975 4,344 - -
Current 7,315 1,475 - -
Non-current 167,193 22,443 1,647 1 475
14,169 - -
191,517 410 280
5,279 4,563
149,156 168,685 3,006 2,976
18,037 22,832 2,273 1,587
167,193 191,517 5,279 4,563
(i) Collections and remittance payable includes N54 billion (Dec 2017: N19.6 billion) relating to balance held in respect of clearing and
settlement activities for NIBSS, FMDQ over-the-counter foreign exchange transactions.
(ii) Unclaimed balances include demand drafts not yet presented for payment by beneficiaries.
(iii) Amount represents liability in respect of unclaimed dividends as at 31 December 2018. The assets held for the liability are presented
in note 11 and note 15.
(iv) Deferred revenue include unrecognised gains on swaps transaction with the Central Bank
(v) Amount represents margin cash collateral for FX futures
242 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
27. Classification of financial instruments
Accounting classifications and fair values
The table below sets out the group’s classification of assets and liabilities, and their fair values.
Fair Value Through P&L Amortised Fair-value through other Other Total Fair value 1
cost comprehensive income amortised carrying
amount
Held for Designated Fair value Debt Equity cost
trading at fair value through Instrument Instrument Nmillion Nmillion
Note P/L -
31 December 2018 Nmillion Nmillion default Nmillion Nmillion Nmillion Nmillion
7 Nmillion
Assets 10.6
Cash and cash - - - 455,773 -- 455,773 455,773
equivalents 9.1 30,286 - 30,286 30,286
Derivative assets 8 84,351 -- - -- - 84,351 84,351
Trading assets 11 - 142,543 142,543
Pledged assets 12 - -- - -- - 400,067 400,067
Financial investments 12 -
Loans and advances -- - 142,543 -
to banks 10.6 -
Loans and advances 9.2 - 2,322 45,047 349,883 2,815
to customers 21 -
Other assets (see (a) 21 - - 8,548 -- - 8,548 8,815
below) 23 -
22 114,637 - - 432,713 -- - 432,713 382,526
Liabilities
Derivative liabilities 4,152 - - 68,760 -- - 68,760 68,760
Trading liabilities 125,684 - 1,623,041 1,573,121
Deposits from banks 1,010,841 492,426 2,815
Deposits from -
customers - - - - - - 4,152 4,152
Debt Securities - - - - - - - 125,684 125,684
Issued - - - - - 160,272 160,272 160,272
Other borrowings -
Other liabilities (see - - - - - - 807,692 807,692 782,524
(b) below)
- - - - - - 60,595 60,595 29,259
129,836 - - - - - 69,918 69,918 63,270
- - - - - 161,711 161,711 161,711
- - - - - 1,260,188 1,390,024 1,326,872
1 Carrying value has been used where it closely approximates fair values. Fair value estimates are made as of a specific point in time
based on the characteristics of the financial instruments and relevant market information. Where available, the most suitable measure
for fair value is the quoted market price. In the absence of organised secondary markets for financial instruments, such as loans,
deposits and unlisted derivatives, direct market prices are not always available. The fair value of such instruments was therefore
calculated on the basis of well-established valuation techniques using current market parameters.
(a) Other assets presented in the table above comprise financial assets only. The following items have been excluded: prepayment,
indirect / withholding tax receivable, and accrued income.
(b) Other liabilities presented in the table above comprise financial liabilities only other than deferred revenue.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 243
31 December 2017 Note Held-for- Loans and Available- Other financial Total carrying Fair value 1
Assets trading receivables for-sale liabilities amount Nmillion
Cash and cash equivalents 7 Nmillion Nmillion Nmillion Nmillion
Derivative assets 10.6 Nmillion
Trading assets
Pledged assets 9.1 - 401,348 - - 401,348 401,348
Financial investments 8 11,052 - - - 11,052 11,052
Loans and advances to banks 11 151,479 - - - 151,479 151,479
Loans and advances to customers 12 10,769 - 32,471 - 43,240 43,240
Other assets (see (a) below) 12 - 316,641 - 316,641 316,641
- - - 9,623 9,623
Liabilities 10.6 - 9,623 - - 372,088 353,431
Derivative liabilities 9.2 - 372,088 - - 41,427 41,427
Trading liabilities 21 - 349,112 - 1,346,898 1,328,241
Deposits from banks 21 173,300 41,427
Deposits from customers 23 824,486
Subordinated debt 22
Other borrowings 2,592 - - - 2,592 2,592
Other liabilities (see (b) below) 62,449 -
- - - 62,449 62,449
- -
- - - 61,721 61,721 61,721
- -
- - - 753,642 753,642 771,152
- -
65,041 - 29,046 29,046 27,611
- 74,892 74,892 69,984
- 186,827 186,827 186,827
- 1,106,128 1,171,169 1,182,336
1 Carrying value has been used where it closely approximates fair values. Fair value estimates are made as of a specific point in time based
on the characteristics of the financial instruments and relevant market information. Where available, the most suitable measure for fair
value is the quoted market price. In the absence of organised secondary markets for financial instruments, such as loans, deposits and
unlisted derivatives, direct market prices are not always available. The fair value of such instruments was therefore calculated on the basis
of well-established valuation techniques using current market parameters.
(a) Other assets presented in the table above comprise financial assets only. The following items have been excluded: prepayment, indirect /
withholding tax receivable, and accrued income.
(b) Other liabilities presented in the table above comprise financial liabilities only. The following items have been excluded: deferred revenue.
244 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
28. Fair values of financial instruments that are valued based on third party market participant would take
instruments quoted prices for similar instruments them into account in pricing a transaction.
where significant unobservable For measuring derivatives that might
The fair values of financial assets and adjustments or assumptions are change classification from being an asset
financial liabilities that are traded in active required to reflect differences to a liability or vice versa such as interest
markets are based on quoted market between the instruments. rate swaps, fair values take into account
prices or dealer price quotations. For the credit valuation adjustment (“CVA”)
all other financial instruments, fair Valuation techniques include discounted when market participants take this into
values are determined using other cash flow models, comparison with similar consideration in pricing the derivatives.
valuation techniques. instruments for which market observable
prices exist, Black-Scholes and other 28.2 Valuation framework
28.1 Valuation models valuation models. Assumptions and
inputs used in valuation techniques include The group has an established control
The group measures fair values using risk-free and benchmark interest rates, framework with respect to the
the following fair value hierarchy, which bonds and equity prices, foreign exchange measurement of fair values. This
reflects the significance of the inputs used rates, equity prices and expected framework includes a market risk
in making the measurements. volatilities and correlations. function, which has overall responsibility
for independently verifying the results
Level 1 - fair values are based on quoted Specific valuation techniques used to value of trading operations and all significant
market prices (unadjusted) in active financial instruments include: fair value measurements, and a product
markets for an identical instrument. control function, which is independent
• Quoted market prices or dealer quotes of front office management and reports
Level 2 - fair values are calculated using for similar instruments; to the Chief Financial Officer. The roles
valuation techniques based on observable performed by both functions include:
inputs, either directly (i.e. as quoted • The fair value of interest rate swaps is
prices) or indirectly (i.e. derived from calculated as the present value of the • verification of observable pricing
quoted prices). This category includes estimated future cash flows based on
instruments valued using quoted market observable yield curves; • re-performance of model valuations;
prices in active markets for similar
instruments, quoted prices for identical • The fair value of forward foreign • review and approval process for new
or similar instruments in markets that exchange contracts is determined using models and changes to models
are considered less than active or other forward exchange rates at the balance
valuation techniques where all significant sheet date, with the resulting value • calibration and back-testing of models
inputs are directly or indirectly observable discounted back to present value; against observed market transactions;
from market data.
• Other techniques, such as discounted • analysis and investigation of significant
Level 3 - fair values are based on valuation cash flow analysis, are used to daily valuation movements; and
techniques using significant unobservable determine fair value for the remaining
inputs. This category includes all financial instruments. • review of significant unobservable
instruments where the valuation technique inputs, valuation adjustments and
includes inputs not based on observable Fair value estimates obtained from models significant changes to the fair value
data and the unobservable inputs have are adjusted for any other factors, such measurement of level 3 instruments.
a significant effect on the instrument's as liquidity risk or model uncertainties, to
valuation. This category includes the extent that the group believes that a Significant valuation issues are reported to
the audit committee.
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 245
28.3 Financial instruments measured at fair value - fair value hierarchy
The tables below analyse financial instruments carried at fair value at the end of the reporting period, by level of fair value hierarchy into
which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position.
See note 4.5 on accounting policies on fair value.
Group Note Carrying amount Level 1 Level 2 Level 3 Total
31 December 2018 Nmillion Nmillion Nmillion Nmillion Nmillion
Assets
Derivative assets 10.6 30,286 - 5,322 24,964 30,286
Trading assets 9.1 84,351 81,826 2,525 - 84,351
Pledged assets 8 142,543 142,543 - 142,543
Financial investments 11 400,000 397,185 - 400,000
657,180 621,554 - 2,815 657,180
Comprising: 7,847 27,779
Held-for-trading 114,637 81,826 114,637
Amortised Cost 45,047 45,047 7,847 24,964 45,047
FV through Other Comprehensive 497,496 494,681 - - 497,496
Income -
657,180 621,554 2,815 657,180
Liabilities 7,847
Derivative liabilities 10.6 4,152 - 27,779 4,152
Trading liabilities 9.2 125,684 36,784 4,152 125,684
129,836 36,784 88,900 - 129,836
Comprising: 93,052 -
Held-for-trading 129,836 36,784 - 129,836
129,836 36,784 93,052 129,836
93,052 -
-
There were no transfers between Level 1 and Level 2 during the period.No reclassifications were made in or out of level 3 during the period.
246 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
28.3 Financial instruments measured at fair value - fair value hierarchy (continued)
Group Note Carrying amount Level 1 Level 2 Level 3 Total
31 December 2017 Nmillion Nmillion Nmillion Nmillion Nmillion
Assets
Derivative assets 10.6 11,052 - 4,805 6 247 11,052
Trading assets 9.1 151,479 143,195 8,284 - 151,479
Pledged assets 8 43,240 43,240 - 43,240
Financial investments 11 316,641 313,288 - 316,641
522,412 499,723 1,536 1,817 522,412
Comprising: 14,625 8,064
Held-for-trading 173,300 153,964 167,053
Available-for-sale 349,112 345,759 13,089 - 355,359
522,412 499,723 1,536 8,064 522,412
Liabilities 8,064
Derivative liabilities 10.6 2,592 - 14,625 2,592
Trading liabilities 9.2 62,449 52,451 - 62,449
65,041 52,451 2,592 - 65,041
Comprising: 9,998 -
Held-for-trading 65,041 52,451 12,590 65,041
65,041 52,451 - 65,041
12,590 -
12,590
There were no transfers between Level 1 and Level 2 during the period. No reclassifications were made in or out of level 3 during
the period.
28.4 Level 3 fair value measurement
(i) The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in level 3
of the fair value hierarchy.
Balance at 1 January 2018 Derivative assets Financial investments Total
Gains/(losses) included in profit or loss - Trading revenue Nmillion Nmillion Nmillion
Gain/(loss) recognised in other comprehensive income 6,247 1,817
Originations and purchases 1,708 - 8,064
Day one profit / (loss) recognised - 998 1,708
Sales and settlements - -
Write back of impairment 23,256 - 998
Balance at 31 December 2018 (6,247) - -
Balance at 1 January 2017 - -
Gains/(losses) included in profit or loss - Trading revenue 24,964 2,815 23,256
Gain/(loss) recognised in other comprehensive income - 1,106 (6,247)
Originations and purchases (5,240) -
Sales and settlements - 711 -
Write back of impairment - - 27,779
Balance at 31 December 2017 11,487 -
- - 1,106
6,247 1,817 (5,240)
711
-
11,487
-
8,064
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 247
Gain or loss for the year in the table above are presented in the statement of profit or loss and other comprehensive income as follows:
Derivative assets Financial investments Total
Nmillion
Nmillion Nmillion
998
31 December 2018 - 998 1,708
Other comprehensive income 1,708 - 2,706
Trading revenue 1,708
998 711
31 December 2017 (5,240)
Other comprehensive income - 711 (4,529)
Trading revenue (5,240) -
(5,240)
711
(ii) U nobservable inputs used in measuring fair value
The information below describes the significant unobservable inputs used at period end in measuring financial instruments
categorised as level 3 in the fair value hierarchy.
Type of Fair value as Valuation Significant Fair value measurement
financial at 31 Dec 2018 technique unobservable sensitivity to unobservable input
instrument Nmillion input
Unquoted • Discounted A significant increase in the spread above the
equities 2,815 (2017: 1,817) cash flow • Risk adjusted discount rate risk-free rate would result in a lower fair value.
• Cash flow estimates
Derivative assets 24,965 (2017: 6,247) • Discounted A significant move (either positive or negative)
cash flow • Own credit risk (DVA) in the unobservable input will result in a
Counterparty credit significant move in the fair value.
risk (CVA, basis risk and
country risk premium)
• USD / NGN quanto risk
• Implied FX volatility
248 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
(iii) T he effect of unobservable inputs on fair value measurement (sensitivity analysis)
The table below indicates the valuation techniques and main assumptions used in the determination of the fair value of the
level 3 assets and liabilities measured at fair value on a recurring basis. The table further indicates the effect that a significant
change in one or more of the inputs to a reasonably possible alternative assumption would have on profit or loss at the
reporting date.
Effect on OCI
Valuation Significant Variance in fair Favourable Unfavourable
technique unobservable value measurement
input Nmillion Nmillion
2018
Unquoted equities Discounted cash flow Risk adjusted discount From (2%) to 2% 216 (225)
Derivative assets Discounted cash flow rate From (1%) to 1% 586 (580)
2017 - Own credit risk (DVA)
- Counterparty credit
risk (CVA, basis risk and
country risk premium)
Unquoted equities Discounted cash flow Risk adjusted From (2%) to 2% 144 (127)
discount rate
Derivative assets Discounted cash flow - Own credit risk (DVA) From (1%) to 1% 360 (362)
- Counterparty credit
risk (CVA, basis risk and
country risk premium)
OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 249
28.5 Financial instruments not measured at fair value – fair value hierarchy
The following table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair
value hierarchy into which each fair value measurement is categorised.
Group Carrying value Level 1 Level 2 Level 3 Total Fair Value
31 December 2018 Nmillion Nmillion Nmillion Nmillion Nmillion
Assets
Cash and cash equivalents 455,773 - 455,773 - 455,773
Loans and advances to banks 8,548 - - 8,815 8,815
Loans and advances to customers - - 382,526
Other financial assets 432,713 - 382,526
68,760 - 68,760 - 68,760
Liabilities 965,794 524,533 391,341 915,874
Deposits from banks -
Deposits from customers 160,272 - 160,272 - 160,272
Other borrowings 807,692 - 782,524 - 782,524
Debts Securities Issued - -
Other financial liabilities 69,918 - 63,270 - 63,270
60,595 - 29,259 - 29,259
31 December 2017 161,711 161,711 - 161,711
Assets 1,260,188 - 1,197,036 1,197,036
Cash and cash equivalents -
Loans and advances to banks 401,348 - 401,348 - 401,348
Loans and advances to customers 9,623 - - 9,623 9,623
Other financial assets - - 353,431
353,431 353,431
Liabilities 41,427 - 41,427 - 41,427
Deposits from banks - 442,775 363,054
Deposits from customers 805,829 - 805,829
Other borrowings - 61,721 -
Subordinated debt 61,721 - 771,152 - 61,721
Other financial liabilities 771,152 - 69,984 - 771,152
69,984 - 69,984
27,611 -
27,611 186,827 - 27,611
186,827 1,117,295 186,827
1,117,295 1,117,295
Fair value of loans and advances is estimated using discounted cash flow techniques. Input into the valuation techniques includes interest
rates and expected cash flows. Expected cash flows are discounted at current market rates to determine fair value.
Fair value of deposits from banks and customers is estimated using discounted cash flow techniques, applying the rates offered for
deposits of similar maturities and terms. The fair value of deposits payable on demand is the amount payable at the reporting date.
250 Stanbic IBTC Annual report for the year ended 31 December 2018
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2018
29. Financial instruments subject to offsetting, Accordingly, the following table sets out the impact of offset,
enforceable master netting arrangements and as well as financial assets and financial liabilities that are subject
similar agreements to an enforceable master netting arrangement or similar
agreement, irrespective of whether they have been offset in
IFRS requires financial assets and financial liabilities to be offset accordance with IFRS.
and the net amount presented in the statement of financial
position when, and only when, the group and company have a It should be noted that the information below is not intended to
current legally enforceable right to set off recognised amounts, as represent the group and company’s actual credit exposure, nor will
well as the intention to settle on a net basis or to realise the asset it agree to that presented in the statement of financial position.
and settle the liability simultaneously.
Gross amount Gross amounts Net amounts of Financial Net amount
of recognised of recognised financial assets instruments, Nmillion
financial assets1 financial liabilities presented in the
offset in the financial
Nmillion statement of statement of collateral & cash
financial position2 financial position
Group collateral3
31 December 2018 Nmillion Nmillion Nmillion
Assets
Derivative assets 1,428 - 1,428 (1,428) -
Loans and advances to customers 14,542 9,588
15,970 - 14,542 (4,954) 9,588
- 15,970 (6,382)
Group Gross amount Gross amounts Net amounts of Financial Net amount
31 December 2018 of recognised of recognised financial liabilities instruments, Nmillion
Liabilities financial assets
Derivative liabilities financial offset in the presented in the financial
Deposits from customers liabilities1 statement of statement of collateral & cash
Other liabilities Nmillion financial position2
financial position collateral3
Nmillion Nmillion Nmillion
1,073 - 1,073 (1,073) -
4,954
21,348 4,954 (4,954) -
27,375
- 21,348 (852) 20,496
- 27,375 (6,879) 20,496
1Gross amounts are disclosed for recognised assets and liabilities that are either offset in the statement of financial position or subject to a master netting arrangement or a
similar agreement, irrespective of whether the offsetting criteria is met.
2The amounts that qualify for offset in accordance with the criteria per IFRS.
3Related amounts not offset in the statement of financial position that are subject to a master netting arrangement or similar agreement, including financial collateral
(whether recognised or unrecognised) and cash collateral.
The table below sets out the nature of agreement and the types of rights relating to items which do not qualify for offset but that are
subject to a master netting arrangement or similar agreement.
Derivative assets and liabilities Nature of agreement Related rights
Trading liabilities ISDAs
The agreement allows for set off in the event
Global master repurchase agreements of default
The agreement allows for set off in the event
of default
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2018 Annual Report - Stanbic IBTC Holdings PLC
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