2018 Annual Report - Stanbic IBTC Holdings PLC

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 51

“A household
name in the
supply of day
old chicks,
frozen chicken,
processed
chicken and
processed beef”

Business development and future prospects

In 2019, Zartech’s plan is to grow its production
capacity to ensure the company meets up the ever
growing demand for the consumption of poultry
products in view of the increasing populace of Nigeria.

The company has vast ecosystem opportunities
embedded in the value chain, ranging from
thousands of day-old-chick off takers, grain suppliers
and over 2000 permanent employees.

Zartech’s success story can be attributed
to its commitment to product quality and
consistency, its investment in its distribution
capacity and integrated cold chain which has
given it an edge over the competition.
The Nigerian market has come to accept and love
the taste of locally produced chicken over imported
frozen poultry.

52 Stanbic IBTC Annual report for the year ended 31 December 2018

Case Study
NECIT NIGERIA LIMITED

The Business The first facility, Overdraft and Advance/Guarantee, granted to the
company was approved in 2015. This loan was thereafter enhanced
Necit Nigeria Limited is a downstream petroleum marketing in March 2016, and a Bank Guarantee in favour of the Bank of
company which was incorporated in September 1999. The Industry (BOI) was included. A further enhancement was concluded
company started operations by distributing lubricant products such in September 2016 when an LC/Confirmation Line was included.
as Lubcon, A – Z and Ammasco.
There has been corresponding growth in our share of the wallet of
In 2014, its blending plant with daily capacity of 140,000 the customer’s business over the years from 32% to 90% today with
tons was set up in Sokoto State. This enabled the Company the company operating its account and facilities satisfactorily and all
manufacture products locally. Production of lubricants from the obligations have been serviced appropriately.
plant commenced in May 2014 and the raw materials (which
include base oil and additives) are purchased majorly from Gulf The company has a staff strength of 108 which are diligently taken
Petrochemical Nigeria Limited, Jackpual Nigeria Limited, Duzzle care of by the Workplace banking bouquet of products and services
Oil Nigeria Limited, Ibeto Nigeria Limited and A-Z Petrochemical of the bank, which include salary accounts. In the works, is the
Nigeria Limited. pre-enlistment of Necit’s staff for unsecured personal loans,
credit cards and Vehicle and Asset Finance facilities.
Necit has product range that contains Climax synthetic oil; ATF
in 5 litres and 7 litres; climax 20W50 in 4 litres, 1 litre, 5 litres Business Location and Outlets
and 200 litres; climax gear oil in 1 litre and 4 litres; climax oil
treatment; and climax smoke stop. The company’s main factory is located at Hajiya Halima Estate
Opposite Kofar Kalambaina Sokoto Central Market Sokoto State with
Relationship with Stanbic IBTC another one situated at 35/39 Emerald Road Opposite Deeper Life
Camp Mowe, Ogun State.
Necit Nigeria Limited commenced banking relationship with
Stanbic IBTC in December 2013.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 53

“There has been
corresponding
growth in our
share over the
years from 32%
to 90% today”

Business development and future prospects

The client is aggressively penetrating the South
West/South South Zone of the country with the
establishment of a modern Lube plant in Mowe, Ogun State.
The plant is expected to meet the demand of the market in
the SW/SS Zone with its daily capacity of 160MT.

Staff strength is about 108, with most of them being
expert hands headhunted and employed from companies that
engage in the same line of business who have therefore come
with good knowledge of the industry.

The key strategy of the client is to improve accessibility
and availability to the market. This is the key driver and
strategy for the establishment of plant in Mowe, Ogun State
to create awareness and closeness to the targeted market.

Another key strategy adopted to win their market
is pricing. The market is highly competitive. As a young
entrant into the market, Necit is utilizing pricing to create a
niche for penetration.

The company plans to increase its revenue by over 30%
in H1 of 2019, while H2 growth is projected to be 60%.

54 Stanbic IBTC Annual report for the year ended 31 December 2018

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OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 55

CORPORATE AND INVESTMENT BANKING

Introduction in various sectors, works closely with The debt advisory solutions include
clients to identify and understand their debt arranging, optimal capital structure
The Corporate and Investment Banking needs, proffer solutions embedded across advisory across energy & infrastructure,
(“CIB”) business continues to make the various product houses, and give real estate, telecommunications, media
great strides in Nigeria’s challenging and our clients the best banking experience and technology, consumer, financial
complex economic, capital markets and through our digitisation initiatives. institutions and industrials sector.
regulatory environment in pursuit of its
goal of being the clear leader in corporate Stanbic IBTC Capital Limited (“SICL”) SICL 2018 highlights
and investment banking in Nigeria.
Stanbic IBTC Capital is the investment Nigeria experienced a stable
The business leverages Standard Bank’s banking subsidiary of Stanbic IBTC macroeconomic and business
heritage with presence in twenty African Holdings and the leading investment environment in 2018. The first three
countries and major financial centers bank in Nigeria, a status that has been quarters were largely characterised by
around the world, in delivering end-to-end maintained consistently over numerous increased economic activity, supported
financial service solutions to our clients. years. The firm provides corporate finance by rising oil prices, a stable FX market,
and debt advisory services to a diversified declining interest rates and declining
CIB comprises four business units: Client client base that include corporate and inflation, compared to 2017. These
Coverage, Global Markets, Investment government entities. It helps clients raise factors positively impacted our investment
Banking and Transactional Products equity and/or debt capital to strengthen banking activity broadly, which was
and Services, with great focus on and grow their businesses and provides reflected in the number of transactions
delivering a superior client experience financial and strategic advisory services. Stanbic IBTC Capital successfully closed
through our Universal Financial Services Stanbic IBTC Capital is registered with and its financial performance for the year.
Organization for a deeper products the Securities and Exchange Commission
penetration across CIB, PBB and Wealth as an Issuing House and Underwriter. Stanbic IBTC Capital successfully closed
into our clients’ ecosystem. over 40 transactions in 2018 making
The corporate finance solutions Stanbic it the leading investment banking
Client Coverage IBTC Capital provides include private and institution in Nigeria by value and
public equity capital raises (initial public volume of transactions. This position
Our Client Coverage team provides the offerings, follow-on public offerings and was reinforced by the 16 domestic and
main point of contact to our clients rights issues), mergers & acquisitions, international awards won during the year.
and manages corporate relationship. divestitures, corporate restructurings,
With client centricity being one of our bonds and commercial papers (“CP”)
specific focus areas, it is only fit that an issuances, and ratings advisory.
experienced team, made up of experts

56 Stanbic IBTC Annual report for the year ended 31 December 2018

Corporate and Investment Banking (continued)

Notable transactions for the • Financial adviser to Allianz SE on • Issuing House with the largest value
year 2018 its USD30m acquisition of 99% in in a single deal (The Nigerian Stock
Ensure Insurance PLC and subsequent Exchange CEO Awards)
• Sole financial adviser to the Federal mandatory tender offer.
Government of Nigeria’s USD2.5 • Issuing House with highest number
billion Eurobond issuance. • Sole arranger to Presco PLC’s N10.8 of debt issuance – Corporate Bonds
billion debt structuring (The Nigerian Stock Exchange
• Sole arranger and dealer to Dangote CEO Awards)
Cement PLC’s N100.0 billion Series • Sole arranger to Dufil Prima Foods
1-4 CP issuance. PLC’s USD15m debt structuring • Issuing House with the highest
number of primary issuance
• Sole arranger and dealer to Stanbic • Sole arranger to Eland Oil & Gas PLC’s - Equity (The Nigerian Stock
IBTC Bank PLC’s USD31 million Series USD75.0 million debt structuring for Exchange CEO Awards)
45 CP issuance. the development of oil fields.
• Capital Markets Securities Origination
• Lead arranger and dealer to Sterling • Lead arranger and Co-ordinator Primary Market Champion Award
Bank Plc’s N108.8 billion Series 4-7 to GZ Industries Limited’s N4.8 billion (FMDQ Gold Awards)
CP issuance. debt structuring.
• Registration Member (Quotations)
• Lead arranger and dealer to Nigerian • Joint mandated lead arranger Award (FMDQ Gold Awards)
Breweries Plc’s N27.9 billion Series to Indorama Eleme Fertilizer &
11-15 CP issuance. Chemicals Limited’s US$1 billion • Best Debt Capital Market House
syndicated debt structuring for the (Association of Issuing Houses
• Lead arranger and dealer to FSDH expansion of its urea fertilizer plant in of Nigeria)
Merchant Bank Limited’s N19 billion Port Harcourt.
Series 5-6 CP issuance. • Best Mergers & Acquisition
• Sole arranger to a USD54.3 million House (Association of Issuing
• Lead arranger and dealer to Lafarge debt structuring for Jabi Lake Mall, Houses of Nigeria)
Africa Plc’s N11.1 billion Series 5-6 Abuja.
CP issuance. • Best Loan Finance Bank in
• Sole arranger to a USD44.2 million Nigeria (Euromoney Real
• Lead issuing house and bookrunner debt structuring for Heritage Place, Estate Survey Awards)
to Flour Mills of Nigeria PLC’s N20.1 Ikoyi.
billion Series 1 & 2 bond issuance. • Deal of the year (Debt)
• Sole arranger to a USD13.3 million (African Bankers Awards)
• Lead issuing house and bookrunner debt structuring for Novare Central
to Union Bank of Nigeria PLC’s N13.5 Office Park, Abuja. • Most Innovative Bond (emeafinance
billion Series 1 & 2 bond issuance. Achievement Awards)
SICL 2018 Awards
• Joint issuing house and bookrunner • Best Sovereign Bond in Africa
to Sterling Bank Plc’s N32.9 billion • Best Investment Bank in Nigeria (emeafinance Achievement Awards)
Series 2 bond issuance. (Euromoney Awards for Excellence)
Global Markets (“GM”)
• Joint Issuing house to Nigeria • Best Foreign Investment Bank
Mortgage Refinance Company Plc’s (emeafinance African Banking Our Global Markets business partners
N11 billion Series 2 bond issuance. Awards) with the rest of the group to deliver
superior client experience. The business
• Lead issuing house to Flour Mills • Best Debt House (emeafinance operates through the sales, trading and
of Nigeria PLC’s N39.9 billion African Banking Awards) research teams, with specialties in foreign
rights issue. exchange, fixed income, money markets
• Best Equity House (emeafinance and a bouquet of structured financial
• Joint issuing house to UAC of Nigeria African Banking Awards) hedging solutions. In 2018, we had an
PLC’s N15.4 billion rights issue. outstanding year with our first-class sales,
• Best Loan House (emeafinance trading and research teams remaining
• Financial adviser to Cement Company African Banking Awards) market and thought leaders in their
of Northern Nigeria PLC on its N308 respective fields.
billion merger with Kalambaina
Cement Company Limited.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 57

GM 2018 Awards Transactional Products and Services Notable Transactions for the year
(“TPS”)
1. FMDQ Gold Awards - 1st Lustrum • Appointed sole collecting bank
Dealing Member Secondary Market Transactional Products and Services for Onne operations of Maersk
Champion Award (“TPS”) provides standardized and tailored Nigeria Limited
transactional products and services
2. FMDQ Gold Awards - FX Market including trade finance, cash management, • Appointed joint collecting bank
Liquidity Provider Award and working capital solutions. The team for CMA CGM Nigeria
offers a full range of solutions to deliver
3. FMDQ Gold Awards - Member specific payments, collections and liquidity • Appointed strategic partner bank
Compliance Award management capabilities. The team’s and received the joint collecting
wealth of experience ensures products bank mandate for Promasidor
4. Financial Mail Top Analyst Awards are designed to meet our clients’ specific Nigeria Limited
2018 - Best Research House business needs. Our online channel
capabilities continue to evolve to meet • Appointed Settlement bank &
Stanbic IBTC Stockbrokers Limited our clients’ complex and changing Custodian for FMDQ’s Dealing
(“SISL”) requirements. Member Specialist (DMS) framework
for Fixed Income Securities
Stanbic IBTC Stockbrokers Limited, a The TPS demonstrated resilience despite
market leading firm, provides stockbroking the headwinds of increasing funding costs, TPS 2018 Awards
services to local and foreign investors in lower margins and fees during the 2018
the Nigerian Capital Market. SISL remains financial year. Risk assets grew by 68% • Best Sub-Custodian Bank Award 2018
Nigeria’s largest stockbroking firm in while total deposit liabilities increased - Global Finance
terms of transaction value - a position that by 26% over prior year. Throughout
has been held since 2006 (2018 current 2018, the business remained focused on • Best Sub-Custodian Bank Award 2018
market share of 19.38%). its strategy, partnered with clients and - Global Investor Services Forum
continued to invest in improving business
SISL 2018 Awards systems and processes. • Best Custodian 2018 - Central
Securities Clearing System (CSCS)
• Received the 2018 NSE (The Nigerian Stanbic IBTC Nominees Limited
Stock Exchange) CEO award for the (“SINL”)
seventh consecutive year as the best
dealing member with highest value Stanbic IBTC Nominees Limited provides
on The NSE. custodial services to both local and
international clients and investors,
• Won the inaugural NSE CEO award namely fund managers, asset managers,
for dealing member with the highest global custodians, international broker
volume of trade in 2018. dealers, insurance companies, and other
institutional investors wishing to invest in
• Awarded the inaugural award as the Nigerian market. SINL is currently the
best stockbroker 2018 by Central largest custodian in the Nigerian market
Securities Clearing System (CSCS). with approximately 75% market share of all
foreign institutional portfolios investing in
Notable transactions for the year the Nigerian market.

During the year, SISL played a critical role SINL maintained its market leading status
in the successful execution of leading in 2018. Assets under custody peaked at
equity capital markets deals. Most notable N6.9trillion in April. The business closed
of these are: the year at N4.8trillion due to investor
apathy towards the Nigerian market in the
• Stockbroker to Flour Mills of Nigeria run up to the 2019 elections.
Plc’s NGN39.85billion ($110 million)
rights issue

• Stockbroker to Flour Mills of Nigeria
Plc’s N20.11 billion ($55 million) bond
offer

• Joint stockbroker to CCNN-Kalambaina
Merger with a combined market
capitalisation of $1 billion dollars

58 Stanbic IBTC Annual report for the year ended 31 December 2018

Case Study
DANGOTE CEMENT PLC

Dangote Cement Plc Stanbic IBTC Capital acted as sole arranger Stanbic IBTC Capital subsequently handled
and dealer to a N50 billion Dangote a follow-on N50 billion Series 3 & 4 CP
Dangote Cement Plc (“Dangote Cement”) Cement Series 1 & 2 commercial paper issuance under the Programme in July
is the largest cement producer in sub- (“CP”) issuance in June 2018, which was 2018, which attracted even more interest
Saharan Africa. The company operates best the debut issuance under its N150 billion from institutional investors resulting in
in class cement factories in ten countries CP Programme. This transaction was a subscription level of 158%. The series
and has 45.6 million tonnes of cement the largest non-bank CP issuance in the 3 and 4 CP issuance featured bids from
production capacity. Headquartered in domestic debt capital markets at that time diversified pool of funds managed by
Nigeria, Dangote Cement also operates and marked the first entry of Dangote pension funds, asset managers, insurance
in Cameroon, the Republic of Congo, Cement to the debt capital markets. The companies and high-net worth individuals,
Ethiopia, Ghana, Senegal, Sierra Leone, series 1 and 2 notes were priced at thin and helped cultivate the non-bank
South Africa, Tanzania and Zambia. In spreads of 25 and 50 basis points over institutional investor base.
Nigeria, Dangote Cement produces from the chosen primary market sovereign
its cement plants in Obajana (Kogi State), benchmark rate and attracted wide-spread Both CP issuances enabled Dangote
Ibese (Ogun State) and Gboko (Benue participation among institutional investors, Cement to broaden its sources of funding
State). Dangote Cement is the largest with a subscription level of 112%. beyond established bank lines of credit to
company listed on The Nigerian Stock cheaper debt capital markets funding, and
Exchange (“The NSE”) with a market
capitalisation of N3.2 trillion (USD9 billion)
as at 31 December 2018.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 59

“both transactions
confirm Stanbic
IBTC Capital’s
position as the
leading investment
banking institution
in Nigeria”

lower its overall cost of borrowing. The
overwhelming success of both transactions
confirm Stanbic IBTC Capital’s position as
the leading investment banking institution
in Nigeria and highlights Stanbic IBTC
Holdings’ value proposition as a universal
financial services organisation, with
collaborative efforts across teams within
the Group to ensure Dangote Cement
achieved its strategic objectives. Stanbic
IBTC Bank PLC also acted as the issuing,
calculation and paying agent for all notes
issued under Programme.

60 Stanbic IBTC Annual report for the year ended 31 December 2018

Case Study
ACTIS

Actis Heritage Place is a 14-floor investment The mall has a gross lettable area of
grade office building located in approximately 25,000sqm spread over
Actis is a leading investor in growth Ikoyi, Lagos. The building comprises two levels with over 700 parking bays. The
markets across Africa, Asia and Latin approximately 16,000sqm gross lettable development and operation of the mall has
America investing across various sectors in area of office space with over 350 parking created over 2,000 jobs whilst attracting
private equity, energy, infrastructure and bays. It is the first commercial office more than 400,000 shoppers every month
real estate. Since 2004, Actis Africa Real building in Nigeria to achieve a Leadership and is expected to boost businesses in the
Estate Funds (“AAREF”) have sponsored in Energy and Environmental Design local supply chain, including agriculture
over 20 real estate developments across (“LEED”) certification in both design and consumer goods industry. The mall is
Africa. Actis has successfully raised 3 and construction and meets the core anchored by leading pan Africa grocery
real estate funds with an aggregate fund requirements of multinational clients with tenants, Shoprite and Game.
size of USD884m. Notable real estate respect to the use of sustainable materials.
developments led and sponsored by Actis In 2018, Stanbic IBTC Capital acted as sole
in Nigeria include Ikeja City Mall, which Jabi Lake Mall is the largest retail mall in Mandated Lead Arranger to structure and
it exited in 2015, and more recently, Nigeria. It is a one-stop leisure and retail arrange debt financing of approximately
Heritage Place in Ikoyi and Jabi Lake destination and is located a few minutes USD100m for both Jabi Lake Mall and
Mall in Abuja. from Abuja’s Central business district along Heritage Place. The Standard Bank of
the shores of the Jabi Lake waterfront.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 61

“Actis has
successfully
raised 3 real
estate funds with
an aggregate fund
size of USD884m”

South Africa was the sole lender, while
Stanbic IBTC Group entities; Stanbic
IBTC Trustees Limited acted as security
trustee, and Stanbic IBTC Bank PLC acted
as Account Bank in addition to providing
hedging and agency services. The success
of the transaction highlights Stanbic
IBTC’s and Standard Bank Group’s value
proposition as a universal financial services
organisation, with collaborative efforts
across the entire organisation to ensure
that we delivered value to Actis.

Both transactions demonstrate Stanbic
IBTC Capital’s ability to structure, arrange
and execute innovative financial solutions
for clients and underpins our status as the
go-to investment banking institution for
real estate finance in Nigeria.

62 Stanbic IBTC Annual report for the year ended 31 December 2018

Case Study
ELAND OIL & GAS

Eland Oil & Gas Through its joint venture company Elcrest The company subsequently brought two
Exploration & Production Nigeria Limited further wells on stream, resulting in an
Eland Oil & Gas Plc (“Eland”) is an (“Elcrest”), Eland acquired the 45% all-time production high in early 2018.
independent, West Africa focused interest in the OML 40 licence in the Niger Gross production from OML 40 was
oil and natural gas exploration and Delta in 2012. In 2014, Eland acquired a 30,000 barrels of oil per day (“bopd”) as
production company, with highly stake in a second licence, Ubima. at December 2018 (approximately 13,500
experienced technical teams across bopd net to Eland), with production
offices in Lagos, Aberdeen and London. Since acquiring the Opuama oil field volumes coming from the Opuama field.
Eland was founded in 2009 and listed in OML 40, Eland has successfully
on Alternative Investment Market of redeveloped the asset with first oil In 2018, Stanbic IBTC Capital arranged up
the London Stock Exchange in commencing in February 2014 from the to USD75 million senior secured reserved
September 2012. recommissioning of two existing wells. based financing (with an accordion for up
to an additional US$100 million), which

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 63

“The transaction
demonstrates
Stanbic IBTC
Capital’s ability
to structure,
coordinate and
execute innovative
financial solutions”

will be used to grow and develop the OML IBTC Bank PLC was a lender (along with
40 asset comprising of the producing Mauritius Commercial Bank) and Stanbic
Opuama field and the Gbetiokun field. IBTC Trustees Limited acted as facility and
The development of the Gbetiokun field is security agent for the transaction.
expected to raise output to about 50,000
barrels per day. The transaction demonstrates Stanbic IBTC
Capital’s ability to structure, coordinate
The success of the transaction was wholly and execute innovative financial solutions
attributable to the collaborative effort for clients and underpins our status as the
of various subsidiaries of the Stanbic go-to adviser for indigenous oil and gas
IBTC Group. Stanbic IBTC Capital was companies looking to grow their business.
mandated as the sole arranger, Stanbic

64 Stanbic IBTC Annual report for the year ended 31 December 2018

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OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 65

WEALTH

What we offer (“PFA”) in terms of AUM and number of Customer Focus
Retirement Savings Accounts (“RSAs”).
There are four legal entities in the Wealth The asset management company, SIAML • SIAML significantly improved the
business unit of Stanbic IBTC Holdings also maintained its position as the largest turnaround time for subscriptions
PLC (“SIBTC”). These entities generate non-pension assets manager measured by and redemption of mutual funds
annuity type income, and focus on value of AUM, number and size of mutual through improved technology from
pension administration and management, funds and number of customers while an average of 5 business days to
private non-pension asset management, SITL and SIIBL further broadened the an average of 24 hours for online
trusteeship and estate planning as well product offering by catering to the needs redemptions while redemptions done
as insurance brokerage. The businesses of different strata of our clientele with with physical paper documentation
within Wealth underline SIBTC’s capability respect to estate management, trusteeship now take an average of 48 hours. This
to meet the broader financial needs of and brokerage for various classes of was achieved with the introduction of
its customers and ensure adequate insurance respectively. new workflow applications.
protection and preservation of their
assets. It completes the loop in our 2018 highlights • We expanded our Mutual Fund
promise of being a universal financial subscription channels with our
services organisation as we seek to These have been classified based on our enhanced USSD platform to make
provide solutions at every stage of an strategic value drivers: further inroads into the retail
individual’s life cycle. segment of the market.
Financial Outcome
Overview • Our trusteeship business maintained
• Wealth maintained its leading position its profitable position and was
Outlined below are the Stanbic IBTC as the largest institutional investment appointed joint trustees to four
subsidiaries which make up Wealth: business and number one wealth Corporate Bonds.
manager in Nigeria with assets under
• Stanbic IBTC Pension Managers management of N3.22 trillion (US$ • Our Insurance brokerage business
Limited (“SIPML”) for the 8.95 billion). won significant key mandates during
administration and management of the year, including its appointment to
pension assets, • Growth of 18% was recorded year- provide insurance brokerage services
on-year in net profit. to one of the major players in the
• Stanbic IBTC Asset Management oil & gas downstream sector. We
Limited (“SIAML”) for the • Cost efficiency remained stable at a have been able to increase market
management of non-pension assets. cost-to-income ratio of 31.7%. penetration in the manufacturing,
Our Wealth & Investment team; hospitality, financial services and
experts who serve as advisors to • Recorded a return on equity (“ROE”) oil & gas sector. We were also able
high net-worth individuals sits within of 49.8%. to broker annuity deals for various
this subsidiary. retirees in excess of N3.5 billion
• Stanbic IBTC Money Market fund and has processed claims in excess of
• Stanbic IBTC Trustees Limited defended its position as the largest N1 billion on behalf of its customers.
(“SITL”) for trusteeship and estate mutual fund in Nigeria thereby
management functions and maintaining its leadership position. • We reduced the timeline for upload of
The fund achieved an AUM growth contributions into Retirement Savings
• Stanbic IBTC Insurance Brokers of 38% in 2018, thereby reaching Accounts through the deployment of
Limited (“SIIBL”) for insurance N230 billion. an Auto-Upload portal that was built
brokerage and risk management entirely in-house.
functions • Our Dollar Fund remained the largest
dollar denominated Mutual Fund and • Following its commencement in July
As at 31 December 2018, Wealth had is our fastest growing fund as it more 2018, we successfully implemented
N3.22 trillion (US$ 8.95 billion) in assets than doubled from $18.7 million to the Multi-Fund Structure and
under management (“AUM”) and has cross the $52 million mark in 2018. undertook the attendant client
remained the leading wealth manager in education pre-launch and post-
Nigeria with the pension business - SIPML • We achieved a significant milestone launch successfully.
consolidating its pre-eminent position as as the assets under management
the largest Pension Fund Administrator for the Education Trust attained
and surpassed the half a billion
Naira mark.

66 Stanbic IBTC Annual report for the year ended 31 December 2018

Wealth (continued)

• We exceeded our record for the total Risk & Conduct Asset Management
number of new mutual funds in a
calendar year. The previous record • All the companies within Wealth, i. The best Non-Pension Asset
was 17,317 achieved in 2017, but we apart from Insurance Brokerage Management Company in Nigeria
on-boarded over 28,000 new mutual business (which did not participate for 2018 by Global Banking &
fund holders in 2018. in the certification process at this Finance Review
time) received the prestigious ISO
• In line with our customer centricity 9001:2015 certification, which ii. The best Fund Manager in
and digitization strategy, we underscores the standard and quality Nigeria at the 4th Nigeria Finance
extended the online portal benefit of our customer service as well as Innovation Award,
application access to our customers an attestation of the strength of our
submitting 25% application. business model. iii. FMDQ Gold Awards as the Largest
Fund Manager in Nigeria 2018.
• Our alternative investments desk was • We upheld a Risk conscious
fully set up and positioned to deliver environment and have maintained iv. Our Wealth and Investment Team also
quick-wins by leveraging the group’s a cordial relationship with our received the 2018 award for the Best
internal capabilities. regulators ensuring that we recorded Private Bank in Nigeria at the Wealth
zero regulatory fines this year. Management (“PWM”) and Financial
Employee Engagement Times Global Private Banking Awards
• As stakeholder engagement is key for the third year in a row.
• As part of our goal on remaining a to us, we actively engaged with the
great place to work while attracting regulators within our respective Pension Managers
and retaining talent as we propagate industries to impact positively and
our core values, we welcomed often providing thought leadership i. Pension Fund Administrator of the
feedback through an independently and championing several causes on year from the Business Day Banking &
conducted survey from employees emerging issues within the industry. Finance Awards
and achieved a net promoter score
of +35, a 40% increase compared to SEE (Social, Economic & ii. The award for the most active
the previous year. Environmental) Impact buy side participant in the FMDQ
(Financial Markets Dealers Quotation)
• We carried out 8 cross functional • We conducted financial planning
job rotations (CFJRs) and 9 stretch sessions & customer fora for We carried out some CSI activities as
assignments as part of career growth corporates and religious bodies to outlined below:
and capacity building efforts. promote savings culture, financial
literacy and inclusion. i. We also commissioned a project
• An Innovation team that was set (football pitch, common room, septic
up to drive innovative thinking and • In our bid to drive awareness, improve tank revamp and vocational centre) at
track submission from staff held an education on the contributory the Badagry prisons.
‘’innovation week’’ where various pension scheme, and prepare RSA
activities were held to promote the holders who are 45 years and above ii. We visited Compassionate Homes
culture of creativity and innovation for a happy retirement, SIPML hosted Orphanage & Heart of Gold Children
within Wealth. up to 5,000 clients at the employer Hospice to donate several provisions,
forums across 3 locations (Lagos, toiletries and other relief materials.
Abuja and Port-Harcourt).

• Our external recognition reflected
through the number of awards won
listed thus;

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 67

2019 Priorities • We plan to deliver new products and • We will keep growing our people and
solutions through traditional and build their capacities in delivering
• We will seek to reduce the turnaround alternative investment vehicles that on the integration goal through
time of our mutual fund offering are focused on customers’ needs. implementation of leadership identity
onboarding process. Similarly, programmes to encourage active
we will sustain our efforts and • We will continue to strive for employee engagements to raise staff
further improve our customers’ improved efficiency in operations by productivity and overall efficiency.
experience with our online streamlining processes and time lines
Mutual Fund subscriptions and in order to reduce customer wait time • We will develop an Omni Channel
redemption process. and overall experience. network to ensure that our
customer channels and touch points
• We intend to introduce a number of • We will increase market share as complement each other on one hand
customised, self-help digital initiatives measured by growth in insurance and lead to overall enhancement of
designed to improve engagement commission income as a result, user experience on the other.
and assist investors with financial we have begun positioning in the
planning, decision making and insurance retail sector following • As the pension industry evolves
straight through investing. the revised Guidelines to improve into the informal sector, we intend
financial inclusion through the Micro to leverage on the new frontier to
• We will sustain our focus on investors’ insurance guidelines. consolidate on our industry leadership
education through traditional and in pension assets and customers base.
digital media channels as well as • We will drive the adoption of
direct engagements. a sustainable savings lifestyle • We will continue to conduct
amongst our clients to create more our businesses in a way that is
• We intend to continue our active opportunities to maintain a desired positively impacting to the business
engagements with the regulators standard of living after retirement. environment in which we operate.
at industry level to promote We will achieve this by delivering
confidence, transparency and • We will continue to partner with value and contributing to the
positive investors’ experience. regulators to safeguard our clients’ social, economic and environmental
assets and interests through client wellbeing of the communities
• We will leverage on the group’s impacting regulatory initiatives. we serve.
Africa-China Banking platform to We will work more with our Business
deliver investment products and Transformation team with a view
opportunities to Chinese clients to mining and utilizing client data
within and outside of Nigeria. Also, with a bid to anticipating their
our marketing materials will be investment decisions.
available to Chinese prospects in
Mandarin to strengthen and build
new relationships with potential.

• We will continue to actively grow our
client base and AUM to increase our
market share and footprint across the
country as well as explore potential
partnerships to strengthen our
presence in the Diaspora market for
the asset management business.

68 Stanbic IBTC Annual report for the year ended 31 December 2018 2018 2017

WPAeGalEthT(cIToLntEinued) N47.37 billion N39.46 billion
31.7% 31.0%
Total income
Cost to income ratio N3.22 trillion N2.71 trillion
Assets under Management 1,695,861 1,595,343
Retirement Savings Accounts
Profit before tax N32.30 billion N27.23 billion

Revenue by business unit

SIPML – 82.47%
SIAML – 15.22%
SITL – 1.04%
SIIBL – 1.27%

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 69

Strategy RSA retiree fund was also changed We will continue to execute our strategy
to fund IV under the new structure. by focusing on three key areas; client
The wealth business focuses on providing Sequel to the commencement of the centricity, digitisation and universal
wealth management solutions to individual multi-fund structure, the management financial service organisation. We will also
and institutional clients to help these fee for RSA fund II was reduced by continue to measure our progress using
clients achieve their financial goals. The 1.25% effective July 2018 with further our five strategic value drivers; client
solutions include investment management, reductions expected from January 2019. focus, employee engagement, risk and
estate planning, trusteeship, financial Furthermore, micro pension for informal conduct, financial outcome and social
advisory and a number of other financial sector contributors is poised to take-off in economic and environmental impact.
services. In line with our strategic value the first quarter of 2019.
drivers, these service offerings are We expect the following to continue
client focused, continuously deployed In asset management, we retained our to shape wealth management industry
through innovative channels and engaged leadership position in the industry through in 2019:
employees whose expertise are brought innovative and client focused solutions.
to bear towards ensuring we deliver The Stanbic IBTC Money Market fund • Technology will continue to be the
sustainable and competitive return over recorded an impressive growth of 38% mainstream channel for distribution
the client’s life cycle within an optimal in asset under management and closed and investing
governance framework. We believe the year with an AUM of N230 billion
that helping our clients achieve their while our Stanbic IBTC Dollar Fund, which • Low-cost distribution channels and
financial goals within an appropriate was launched last year, also witnessed a bundled products will gain market
risk and conduct framework will translate significant growth as we focus on providing share
to sustainable financial outcomes for innovative products through our digital
our business. channels to enhance customer experience. • The current regulatory environment
will be sustained
Despite the headwinds of 2018, the In our insurance brokerage business, our
wealth business continued to maintain market share increased as we acquired • Allocation to Passive strategies
its leadership position across various significant mandates from various to increase
segments of the market. In the pensions organizations across different sectors of
business, assets under management the economy. We have also developed an • Successful business models will
grew by 16% to close the year at N2.69 online insurance sales portal to further depend on operating efficiency
trillion ($7.47 billion). Furthermore, our increase penetration in the retail sector (Speed, Execution, Return)
RSA clients increased by 6% (100,518) following the revised micro insurance
to 1,695,861 RSA clients. While in guidelines. We will continue to leverage on To maintain our leadership position across
assets management, our assets under the group’s network to offer services to our legal entities, we will continue to focus
management increased by 33% to N533 our clientele base whilst paying attention on the following:
billion ($1.48 billion). Also, in our trustee to the needs of customers.
and insurance brokerage businesses, we • Growing our AUM while enhancing
achieved significant milestones during Our trusteeship business ended the year investment returns
the year. on a positive note; a key driver of this were
the fees earned from our appointment as • Technology, process and service
In the course of the year a number of joint trustees to a number of corporate improvements
regulatory-led initiatives commenced bonds and the attainment of a huge
in the pension industry as the industry milestone as the assets under management • Continue to leverage on our Group
continues to evolve. Pension funds for the Education Trust Fund crossed the resources
switched from using the Nigerian GAAP half a billion-naira mark. Furthermore,
to the IFRS based reporting. The multi- as is our usual manner, we created trust • Cost optimisation
fund structure commenced in July 2018 and estate planning awareness, which is
which was implemented to enable active expected to drive future growth for our • Our people
contributors in the RSA fund align their trust business while leveraging on Stanbic
risk appetite and investment horizon at IBTC group’s strong brand and positioning
each stage of their life cycle. As a result across the value chain of financial services
of this initiative, the RSA active fund was to further drive penetration of our
split into funds I, II and III. The existing products.

70 Stanbic IBTC Annual report for the year ended 31 December 2018

Wealth (continued)

Financial performance the year. Consequently, fixed income yields Eurobond issuances of $5.36 billion in
remained elevated, which was attractive to 2018 at competitive yields, the high debt
The stock market witnessed a sharp domestic and some carry trade investors. service to revenue ratio remains a concern.
reversal in 2018, closing with a negative Open market operations (“OMOs”) acted
return of 17.81%. This reversal was as the CBN’s main monetary policy tool As the year came to a close, investors
driven by significant market sell-off in during the year. Increased frequency in focused on selectively buying undervalued
emerging markets; weak gross domestic OMO issuances drove yields on short dated blue-chip companies and locking in
growth; reversal in foreign portfolio flows assets to 17% levels, offering a healthy attractive yields across tenors.
over political uncertainty regarding the cushion to inflation. Similarly, federal
2019 elections, exacerbated by jitters government bond yields rose to 16% Total income grew by 20% and net
caused by the fallout of some regulatory levels in the final quarter of the year as profit by an impressive 18% over the
pronouncements during the year. demand remained weak. Notwithstanding 2017 figures, while total assets under
management increased by 31% to close
The Central Bank of Nigeria (“CBN”) the year at N3.22 trillion (USD8.95 billion).
maintained a tight monetary policy during

Net interest income 2018 (N’million) 2017 (N’million) Growth (%)
Non-interest revenue
Total income 5,081 4,375 16
Staff cost 42,284 35,087 21
Other operating cost 47,365 39,462 20
Tax provision (7,099) (5,514) (29)
Profit after tax (7,926) (6,722) (18)
(9,663) (8,068) (20)
22,641 19,158 18

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 71

Looking forward We will maintain the momentum of on wheel vehicles to facilitate quick
positive regulatory changes with coverage of client engagements such as
A prolonged trade war between the continuous engagements with the various the Data Recapture Exercise.
United States and China remains a concern regulatory bodies to introduce rules and
for the global economy. However, of regulations to promote industry growth In view of the commencement of the
greater concern in the medium term will and customer experience. We will also micro pension initiative, we will offer
be markets’ response to tighter global enhance our digital touch points for eligible Nigerians in the informal sector
financial conditions. Consequently, we financial advisory and investment services market bespoke solutions and end-to-end
suspect emerging markets may still be as well as straight through processing for financial services leveraging on existing
roiled by rising interest rates in the United mutual fund subscriptions and redemptions expertise within the Group.
States, trade tensions and domestic while leveraging on Standard Bank group’s
policy missteps in 2019. Also, elections in knowledge sharing platforms and networks The trustees’ business will consolidate on
Africa’s biggest economies, South Africa to build new operating capabilities. Our its mandate acquisition drive for lucrative
and Nigeria will shape the region’s growth Wealth & Investment team will continue to transactions with worthwhile revenues
outlook in 2019. extract the best value from our universal in its attempt to significantly move the
offering from our clients via our strategic, dial and earn appreciable income to
In Nigeria, we expect election spending tailor-made service to each client’s need ensure it meets and exceeds its financial
to pick up at the beginning of 2019 and as we proffer the right solutions and targets. It will be aided by its revamped
the central bank to maintain its policy thoughtful client engagements. outlook, organizational re-design, strategy
anchor at mid-teens. This should enable adjustment and competency review to
the apex bank reduce pressure on the We intend to extensively penetrate ensure fit for purpose structure and
naira’s peg against the United States ecosystems available within our optimal results.
dollar. The stock market should witness client base, relationships and areas of
a rebound by the second half of 2019 in influence to grow our pension business. We will diversify SIIBL’s insurance portfolio
view of improved sentiments and growth We will continue to focus on business to focus on a wider coverage which
driven policy thrust. sustainability, risk and conduct as part of will ensure the insurance products are
our acquisition strategy as we focus our available to meet and satisfy the need
Our strategy will be to buy sound efforts on getting customer insights as of the customers. We will continue to
companies at deep discounts to valuation to their desires and therefore build our leverage on the Stanbic IBTC Bank branch
in anticipation of a rebound in stock process and services around these desires. network to offer services beyond the major
market. Furthermore, we expect yields to We will drive growth in pension assets cities. Collaborating this way will ensure
gradually decline later in 2019 as monetary by facilitating the uptake of voluntary our sales staff are closer to the source of
policy becomes more dovish post contributions as a sustainable avenue to business and positioned to work closely
elections. Thus, we would take advantage adopt a savings lifestyle by our clients, with various business units across Stanbic
of elevated yields across tenors to ensure actively leverage on digitisation strategies IBTC subsidiaries. Finally, we will continue
funds under management continue to to promote operational and service in our drive to position our business as
deliver consistent competitive returns. efficiency and lower costs, leverage on the firm of choice and ensure a mutually
expanded branch network and the pension beneficial partnership with our key internal
and external stakeholders.

72 Stanbic IBTC Annual report for the year ended 31 December 2018

PAGE TITLE

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 73

ABRIDGED SUSTAINABILITY REPORT 2018

Introduction from the Chief Executive desire to bring in fresh perspectives, ideas Therefore, we are mindful to develop
and hone competencies. We were able relevant solutions that not only ensure
Digitisation defined growth in the to provide significant support to fund our success but guarantee the success of
Nigerian financial services industry raising efforts by both government and individuals, businesses, and government.
in 2018. Competition from Financial corporates. We were instrumental to the
Technology (“FinTech”) companies for establishment of Dangote Cement’s N150 We pride ourselves on our rich heritage in
e-banking market share, especially the billion commercial paper programme (the financial services innovation, drawn from
retail end of financial services took front largest ever by a corporate in Nigeria), the our Standard Bank legacy. We continue to
burner and this will likely increase with successful issuance of Series 1-4 of the innovate in providing solutions that have
the introduction by the Central Bank of commercial paper notes, and the listing enhanced the quality of life of individuals
Nigeria (“CBN”) of guidelines for licensing, of the CP on the FMDQ OTC Securities and boost their financial security; facilitate
regulation and operation of Payment Exchange for secondary trading. We were business expansion, economic growth and
Service Banks (“PSBs”) in the country late equally instrumental in helping Flour Mills development in key sectors of agriculture,
last year. To remain competitive, traditional of Nigeria PLC to raise N20.11 billion via a oil and gas, real estate, manufacturing,
financial institutions were deliberate in Senior Unsecured Fixed Rate Bonds under healthcare, and power, among others.
recalibrating their operations, increasingly the company’s N70 billion Bond Issuance Our business strategy is to offer banking
adopting technology to help provide programme and the listing of the bond on services to assist our internal and
seamless services and developing bespoke both the FMDQ OTC Securities Exchange external stakeholders manage social and
products for clients. and The Nigerian Stock Exchange. environmental challenges and invest for
the future. We work hard to build trust in
Building on our impressive result in We remained a bellwether for innovation our operations and establish partnerships
2017, the Stanbic IBTC Group achieved and continued to experience positive that will be beneficial in the long term.
some remarkable milestones in 2018. transformational changes. Our retail and
We retained our AAA ratings by Fitch, personal banking drive has continued to This Sustainability Report details
a reflection of our strong management contribute to our strong growth, even as our corporate social investments,
and healthy capital and liquidity levels. we further consolidated on our leadership environmental and social risk management
Three of our subsidiaries, Stanbic IBTC position in investment banking and wealth and performance and our shared values
Pension Managers Limited, Stanbic management. in 2018. Our priority, going forward,
IBTC Asset Management Limited, and will be to ensure financial, social and
Stanbic IBTC Trustees Limited, received We are aware that the nation’s socio- environmental sustainability in our
the globally highly regarded quality economic growth, success of the operations. We not only want to achieve
management system certification, the businesses and the individuals we serve financial outcomes, but we also want to
ISO 9001:2015 Certification. There were are congruent with our own success. fulfill our purpose of driving the growth of
further changes at the management level our economy.
to reflect our digitisation drive and our

74 Stanbic IBTC Annual report for the year ended 31 December 2018

Abridged Sustainability Report 2018 (continued)

Our Approach To Sustainability • Credit Corporate governance

Our approach to sustainability begins • Group Real Estate Services (“GRES”) Creating thriving partnerships
with our objective to operate an ethical,
professional, accountable and profitable • Procurement Stanbic IBTC has a strong governance
business. This is couched in our three- structure, with distinct roles and
pronged sustainability framework Credit: Integrate Environmental and Social responsibilities between the board and
document. We designed the SEE (Social, Considerations into Credit Decision Making management. These roles are governed by
Economic and Environmental) framework process by ensuring on-boarding of new clearly marked policies and controls. Our
to ensure we support the wellbeing of business opportunities is E&S compliant work is governed by internal and external
communities by delivering value through and follows approved credit process, regulations as well as international best
the products and services that policy and guidelines for Corporate and practices. Corporate governance is a key
we provide. Investment Banking (“CIB”) and Business part of our entire operation in evaluating,
Banking (“BB”). approving, and monitoring of projects.
We have a commitment to contribute Our major CSI objectives remain: support
to sustainable development. This GRES: Monitor our ecological footprints for strategic and credible projects, in line
commitment is embedded in our core with respect to the impact of our with business objectives; deploy scalable
values of integrity, professionalism, and business operations, in terms of Power solutions that are beneficial to a higher
respect for both internal and external maximization, Waste management, Carbon number of people; work with credible
stakeholders as outlined in the SEE emissions, Energy and Water efficiency partners; and leverage existing
framework. and Building designs and Architecture business opportunities.
that are green.
In implementing the Nigerian Sustainable The Chief Executive of the Group has
Banking Principles in our business activities Procurement: Assess, develop and the overall responsibility for sustainability
and operations, Stanbic IBTC is under the screen suppliers with a view to ensuring accountability, supported by an executive
following three pillars. the sustainability of our vendors and their committee. However, care is taken to
ability to meet our procurement needs and ensure decisions are cascaded from
also assist them in mitigating social and the top management level to the
environmental costs. individual employee.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 75

Corporate Social Investment: Environmental and social risk Awareness Creation
Business and Societal Needs management
Our awareness creation drive increased
Our priority is to ensure financial, social Stanbic IBTC acknowledges that the across our stakeholder groups, in the
and environmental sustainability. Through development of a corporate culture where implementation of NSBP. Following the
our social investments, we hope to boost environmental sustainability principles NSBP adoption, a total of 120 employees
the Stanbic IBTC brand reputation, are adhered to, both in its operating received introductory environmental
increase our market share and improve environment and with counterparties, is and social risk training in 2015 and
employee relations in a way to enhance our crucial to sustainable development. several others in 2016 and 2017. All our
long-term competitiveness. employees have now received the training.
Our impacts on society and the We equally continued our engagements
For maximum impact, we identified, environment can be both indirect (arising with our vendors and partners to ensure
using a research-based approach and from the activities of our customers they align with our environmental and
by engaging with our stakeholders, who we finance) and direct (through our sustainability standards.
including communities, governments day-to-day operational activities and the
and individuals, the critical needs of our products and services we provide). These Benefits of Environmental & Social
business environment. These needs fall impacts are either internal, affecting Risk Management
under Education, Health and Economic employees or the organization, or external,
Empowerment and form the tripod upon affecting communities, customers, Appropriately and efficiently managed
which our Corporate Social Investment partners, and regulators, among others. environmental and social risks and
activities rest. The convergence of social opportunities will enhance our:
investment goals and business helps Thus, we go beyond compliance in our
engender long term benefits approach to environmental and social risk • Overall risk management which in
and sustainability. management. This approach has helped turn reduces costs and liabilities;
us achieve best practice performance
Sustainable Lending through sound governance structures • Ability to access capital and attract
and policies, monitoring mechanisms, foreign investors and partners;
In providing credit facilities to strategic partnership, energy efficient and
conglomerates, multinationals, small and renewable energy programmes, supplier • Financial and non-financial
medium scale enterprises, we continue development and screening, employee performance;
to review the environmental and social training and awareness, products and
(“E&S”) risk considerations embedded in services that help reduce carbon emission, • Brands and reputations at the
our credit approval process. This entails green building design. individual organisation as well as
the screening of credit transactions for sector level;
E&S risks, as well as monitoring their In line with regulatory stipulation, Stanbic
activities to ensure our clients carry out IBTC complies with the Nigeria Sustainable • Operational efficiencies;
their operations in line with acceptable Banking Principles (“NSBP”) and through
environmental and the Standard Bank Group is a signatory • Ability to attract and retain talents;
social standards. to the Equator Principles, thereby
adopting international best practice • Relationships with our clients by
From January to November 2018, we in Environmental and Sustainability becoming a trusted advisor; and
assessed 289 transactions (CIB and standards. We adopt a precautionary
Commercial Banking credit transactions) approach to environmental management, • Growth prospects by reaching new
for E&S risks. In terms of environmentally striving to anticipate and prevent markets and innovating new products
beneficial purposes; as of June 2018, environmental degradation in line with the and services.
N450 million credit facilities had been guidelines set out in the Equator Principles
approved for a client engaged in plastic and the provisions of the environmental
recycling (China Plastics). laws of Nigeria.

76 Stanbic IBTC Annual report for the year ended 31 December 2018

Abridged Sustainability Report 2018 (continued)

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 77

Empowering Our People To also encourage physical exercise, we others. The bank participated in Financial
have instituted a no-lift-day once a week Literacy programmes in which over 16,700
We expect an increasingly productive across the organisation when staff are participants were engaged between
and highly motivated workforce, one that encouraged to opt for the staircases rather January and October 2018.
constantly exceeds the expectations of than use the lift.
customers. We are continuously engaging Under our staff volunteerism initiative,
our employees to ensure their growth For our external stakeholders, one water treatment plants were provided,
through leadership trainings and skills of the key pillars of our CSI initiative classrooms were renovated, laboratories
acquisition, a diversified and conducive is in the health sector. We partnered and libraries were built in some
work environment, and well-structured with an NGO Slum2School to create underserved communities.
compensation policy. Higher levels of awareness on the scourge of malaria and
employee engagement are linked to to distribute mosquito treated nets to Economic Empowerment
lower levels of absenteeism and employee indigent school children and pregnant
turnover. In 2018, employees formed women in underserved and malaria prone At Stanbic IBTC, we apply sustainable
an important part of our CSI, helping to communities, this outreach catered principles that drive the growth and
create awareness and actively participating to about 3,000 people. Through our development of the industries we finance
in chosen initiatives, individually and as signature CSI initiative, #Together4ALimb, and communities in which we operate in. It
a team. we provide prostheses for 20 children with gives us satisfaction to deliver value to the
limb losses as well as Education Trust Fund. communities we serve by contributing to
Our organisation is very sensitive to gender their social, economic and environmental
parity and inclusion. As a result, we have As a socially responsible citizen, our (“SEE”) wellbeing through the services
initiatives targeted at the wellbeing and organization has constructed wheelchair we provide. Our aim is to improve life for
advancement of women in business and in access ramps in 44 branches and our major everyone in Nigeria and beyond. We not
paid employment. head office campuses across the group only want to achieve financial outcomes,
as of November 2018 to facilitate access but we also want to fulfil our purpose of
• The Stanbic IBTC Blue Women of physically challenged persons into our driving the country’s growth.
Network is a platform for female office locations.
employees of Stanbic IBTC across all We made donations to orphanages,
cadres, which provides opportunities We will continue to explore ways to flood victims in five states across
for networking, development and alleviate the difficulties encountered the country, and to widows. We have
growth. By default, all women who by the physically challenged for a initiatives targeted at the wellbeing and
join our organization become crucial more inclusive banking experience for advancement of women in business and
members of the network. all our customers. in paid employment in a way to ensure
gender parity and inclusion. We also
We also ensure that staff policies Education partnered with the Ministry of Women
targeted at our female employees Affairs to empower 100 awardees with
address their needs. Education, through knowledge and skills various basic equipment across five
acquisition, is an essential ingredient for a (5) vocations- Fashion Designing, Hair
Health productive workforce. As a result, we are Dressing, Barbing, Carpentry and Shoe
continuously engaging our employees to making & Wood Works. From January
Our employees remain at the heart ensure their growth through leadership to October 2018, the lending to women
of our business; and we believe that trainings and skills acquisition, to (individuals) was about 17% of the total
their wellbeing is important to enable complement a diversified and conducive portfolio of loans for Stanbic IBTC Bank.
us deliver our promises to our clients work environment, and well-structured
and stakeholders as an organisation. compensation policy. The Stanbic IBTC Sustainability Practices
Therefore, we take matters concerning Blue Academy, where we retool young
their wellbeing to heart and have invested and vibrant graduates with financial Stanbic IBTC is a member of the
in several wellness programmes to services skills and knowledge, to prepare Nigerian Conservation Fund which
encourage healthy lifestyles for them. them for future management roles, supports sustainability related causes.
The wellness initiatives include: was accredited by the banking industry Our membership further attests to
umbrella body, the Chartered Institute of our commitment to maintain a robust
• Weekly on-site aerobics in our Bankers of Nigeria, and certification issued operation focused on environmental
four head office campuses across to ensure standardisation of training. education, biodiversity conservation,
the group; policy advocacy, public sensitization
We continue to invest in the educational on environmental issues, mitigating
• Physical activities encouraged in all advancements of our communities through environmental pollution and
our offices, including our branches our CSI Initiatives on financial literacy, poverty reduction.
nationwide; these are group walks leadership and analytical skills, among
and daily exercise-at-the-desk routine
for all employees.

78 Stanbic IBTC Annual report for the year ended 31 December 2018

Abridged Sustainability Report 2018 (continued)

Our key sustainability practices include: • Installation of motion sensors in • From January to July 2018, we
buildings for the control of power. recycled about 11.3 tons of waste
Energy efficiency in operations papers
• Use of alternative sources of
Replenishing our sources of energy power for ATMs and branches– • The bank commenced
remains an important aspect for the As of November 2018, 46 ATMs implementation of the “Speak Your
growth of our economy. As a result of this, and 14 branch locations have been Transaction” initiative (elimination
we introduced and continued to enforce on-boarded on alternative power of deposit slips for cheque and cash
energy efficiency initiatives across Stanbic sources (solar hybrid). lodgments in branches). Expected
IBTC Group. These include: impacts from this initiative include
• Paper reduction and recycling reduced environmental impacts from
• Operation Switch Off and UnPlug paper savings of about 12tons per
(“SOUP”) initiative, which As of October 2018, we had reduced year (based on 2017 data).
encourages staff members to switch paper usage from photocopy
off and unplug electronic devices at and printing by 4% Year-on-Year, • We are also supportive of paper
close of business, gained wider traction largely driven through our Minimize recycling and we continued to work
among staff in 2018. Unnecessary Printing (MUP) campaigns with partners to recycle tons of
and Digitisation initiatives. archived papers in exchange for
• Switch-off initiative, which aims to tissue papers used in our offices. In
save energy consumed by elevators Measures taken include: 2018, we recycled about 11.3tons
and central air conditioners in our of our waste papers.
head office campuses, continues • Installation of Follow Me Printing
to be implemented. 6pm is now on Printers These initiatives serve as one of the
established across our branches as ways we contribute to the reduction
the time to turn off power for the • Setting printers to Double Sided in tree-felling for paper production.
day. This initiative also encourages printing by default A more balanced ecosystem is
work-life balance among our achievable if such practice is
employees, who remain the drivers • Recycling of paper for printing encouraged by organisations.
of our business.
• The use of shared folders to • Green Branches
• Installation of energy saving LED document storage as against
bulbs across our bank branches and printing Our Go-Green Branches initiative,
head office campuses for reduced designed to run operations in these
energy consumption. • Eliminated the use of paper in 12 branches that ensure minimal paper
branch processes

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 79

use, increased energy and water that employees gain a lot of valuable skills and revalidation through various awards
efficiency, has taken firm roots. The and experiences which make them a better and certifications.
Green Branches is our way to drive asset to our organisation.
additional sustainability initiatives and Stanbic IBTC Bank PLC and its holding
processes. From January to August The sustainability of an idea needs company, Stanbic IBTC Holdings PLC, both
2018, ten (10) additional branches everyone in every title to be aligned to recorded AAA (nga) national long-term
were on-boarded on Go-Green. That our mission of moving forward. We believe ratings by Fitch Ratings, which provide
brought the total number of Go-Green our people and culture will determine our a relative measure of creditworthiness
branches to 14. success in executing our strategy, which for rated institutions. According to Fitch
includes our CSI. Our business philosophy Ratings, “AAA is the highest credit
• Waste segregation is anchored on and vested in building quality. They are assigned only in cases
relationships and trust with our clients/ of exceptionally strong capacity for
To address issues of environmental customers, employees, shareholders, payment of financial commitments. This
degradation resulting from regulators, communities and other key capacity is highly unlikely to be adversely
indiscriminate and inappropriate stakeholders. Our values underpin our affected by foreseeable events.” Fitch
disposal of waste, the group continues legitimacy and are intended to reinforce said AAA “denotes the lowest expectation
to invest in solid waste segregation the trust our stakeholders have in our of default risk” while the F1+ “indicates
and recycling initiatives involving the organization. As such, we endeavour to the strongest intrinsic capacity for timely
sensitization of staff and customers on carry along and get the buy in of all our payment of financial commitments.” Such
the need to separate solid waste for internal and external stakeholders. regular ratings provide an idea of the credit
further recycling. The deployment of worthiness of the institutions so rated.
waste bins designed for segregation We have a culture of staff involvement
of solid waste continued across our and participation in our social investment Three of our subsidiaries, Stanbic IBTC
operational bases. initiatives, which means that our staff are Pension Managers Limited, Stanbic
not only part of the activation but the IBTC Asset Management Limited, and
• Water utilisation entire process of identifying key areas Stanbic IBTC Trustees Limited, received
where we choose to support, collaborate the globally highly regarded quality
We implemented eco-friendly with or invest in. We try as much as management system certification, the
water utilization measures to reduce possible to encourage our staff to either ISO 9001:2015 Certification.
wastage by: as teams or units voluntarily contribute
and participate through departmental Awards
• Installing toilet systems with dual CSI activities. This initiative has proven
flush knobs hugely successful over the years. There The stockbroking arm of the Group,
were about 1,740 staff members who Stanbic IBTC Stockbrokers Limited,
• Installing of taps with motion participated in voluntary activities from received The Nigerian Stock Exchange
sensors in restrooms and kitchens January to December 2018. CEO award as the best dealing member
firm in 2018, for a high-performance
As a responsible corporate citizen, Sponsorships culture, the seventh consecutive time
we will continue to carry out our it would win the award.
business operations in ways that Development is key to our deciding on
minimize any negative social, economic what sponsorships we undertake. We Stanbic IBTC Bank was named the
and environmental impact. We will continually identify credible and impactful “Best Sub-Custodian” in Nigeria for
continue to review our operational initiatives that are compliant with our 2018 by London-based Global Finance
processes and engage our key sustainability policy to support through magazine, the eighth time in a row that
stakeholders to achieve as much sponsorships. And our sponsorships cut Stanbic IBTC Bank will be adjudged the
involvement in our sustainability across the broad spectrum of sectors best in the country.
initiatives as possible, for the benefit which we serve, to reflect our end-to-end
of the communities we operate in. financial services credentials. Stanbic IBTC Capital Limited and Stanbic
IBTC Bank emerged the overall winners
Employee Volunteerism From January to October 2018, 78% in the inaugural Gold Awards instituted
of total sponsorships (38 out of 49 by FMDQ OTC Securities Exchange. They
At Stanbic IBTC our vision recognizes that sponsorships) by the bank aligned with the both led in the Primary and the Secondary
our people are our most important asset, SEE impacts. Markets segments of the awards. Stanbic
which makes it imperative to inspire and IBTC Capital Limited was also adjudged
engage employees in ongoing CSI efforts Standards And Codes the Best Investment Bank in Nigeria at the
to make a meaningful impact. We see Euromoney Awards for Excellence 2018.
our employees as our partners in all our Stanbic IBTC’s business sustainability
sustainability initiatives. By doing this, not and international best practices continue Stanbic IBTC Group won five awards at the
only do we succeed in getting their active to attract commendations, recognitions HR People Magazine Awards 2018.
involvement, but also benefit from the fact

80 Stanbic IBTC Annual report for the year ended 31 December 2018

Abridged Sustainability Report 2018 (continued)

Workplace accidents, fatalities, to these incidences. In addition to this, • Reviewing operational procedure and
occupational and safety incidents the group manages the frequency of improve personnel adherence to them.
occurrence and severity of workplace
Stanbic IBTC is committed to a zero- accidents, fatalities and occupational • Ensuring security of lives and asset.
incident work environment with a safety and safety incidents through its Health,
culture based on teamwork and dedicated Safety and Environment (“HSE”) • Sustaining the strategy for
safety leadership. It reflects Stanbic IBTC’s management system. environmental protection and waste
safety vision, which is “Every person management.
going home safe and healthy every day”. Stanbic IBTC’s strategies to achieve its
All injuries and occupational illnesses are health, safety and environment objectives Workplace accidents, fatalities and
considered preventable. are as follows: occupational and safety incidents are
managed and tracked using indicators.
The group is committed to providing • Ensuring staff HSE awareness at In addition to this, a contingency plan
service to our customers in a safe and all levels. for any unwanted event is in place. The
healthy manner. Work related injury plan highlights what should be done and
or illness is unacceptable, and we are • Training all Stanbic IBTC staff to the persons to be contacted in the event
committed to identifying and eliminating the level of competence required of an emergency.
or controlling workplace hazards to by the job.
protect ourselves and others. Stanbic IBTC 2018 Report
seeks to promote a safe work place, earn • Incorporating HSE into work procedure.
the public’s trust as a safety conscious In 2018, Stanbic IBTC experienced eight
organization and meet regulatory • Safeguarding the integrity of our workplace incidents, seven of these were
requirements. facilities, analyse major equipment fire incidents, while the last accident was
failures and develop manuals for a as a result of a third-party vehicle running
Stanbic IBTC through a number of policies, proactive response. into a part of a branch.
guide the activities of staff and the
affairs of the organisation to eliminate • Encourage involvement of contractors There were no fatalities in all the incidents
or minimise the frequency of workplace and third parties in our HSE in 2018, and the total value of damages as
accidents, and optimise the response programmes. a result of work place incidents amounted
to N33.8 million.

Date Incident Time Incident Type Incident Place Damage Value N
2/1/2018 1530 hours Fire incident Ibadan Main branch 50,000
3/24/2018 0910 hours Building damage Nyanya branch 0
8/7/2018 1232 hours Fire incident Allen Avenue branch 4,929,952
10/3/2018 1206 hours Fire incident IPC, Ilupeju 300,000
10/3/2018 1855 hours Fire incident Broad street branch 0
11/13/2018 0700 hours Fire incident Sokoto branch 2,325,263
11/25/2018 2307 hours Fire incident Iyana-church branch 25,722,319
11/28/2018 1717 hours Fire incident Ariaria branch 500,000
Total 33,827,534

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 81

82 Stanbic IBTC Annual report for the year ended 31 December 2018

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 83

ENTERPRISE RISK REVIEW

Overview the institution and elevating risk awareness review and challenge as well as provide
by deploying requisite compliance training oversight and advisory functions; and
Risk Management’s objective continues programmes for all Stanbic IBTC employees the third line (Internal Audit) to conduct
to align with the group’s strategic focus with a standard process of monitoring assurance that control processes are fit for
“to be the leading end-to-end financial and escalating deficiencies in meeting the purpose, are implemented in accordance
solutions provider in Nigeria through required standards. This is also in line with with standard operating procedures, and
innovative and customer-focused people”. the established code of conduct and ethics operating effectively or as intended.
Effective risk management is fundamental that all members of staff must adhere and
and essential to the achievement of the attest to on an annual basis. Risk management framework
group’s strategic objectives. It is also one Approach and structure
of the pillars of the institution’s strategic The Board sets the tone and risk appetite
value drivers, which entails supporting for the organisation, including the The group’s approach to risk management
our clients by doing the right business tolerance levels for key risks and ensure is based on governance processes that
the right way and maintaining the highest the right risk culture is established across rely on both individual responsibility and
possible standards of responsible business the institution. These risks are however collective oversight that is supported by a
practice using frameworks that align with managed in accordance with a set of tailored Management Information System
regulatory expectations and standard governance standards, frameworks and (“MIS”). This approach balances corporate
business practices as well as procedures. policies, which align with the global and oversight at senior management level with
industry best practices. independent risk management structures
The Risk function continues its oversight in the business where the business unit
and advisory responsibilities by deploying The group’s integrated risk management heads, as part of the first line of defense,
a consistent, comprehensive and architecture, as outlined in the Enterprise are specifically responsible for the
strategic approach to the identification, Risk Management (“ERM”) framework, management of risk within their businesses
measurement, management and reporting supports the evaluation and prioritisation using appropriate risk management
of enterprise-wide risks across the group. of the risk exposures and mitigation frameworks that meet required group
This is executed through proactive risk activities in line with the group’s minimum standards.
management practices which ensure approved risk appetite, through prudent
that the business maintains the right management of risk exposures in a way An important element that underpins the
balance in terms of the risk-return trade that balances the risk premium and return group’s approach to the management of
off whilst limiting the negative variations on equity. all risk is independence and appropriate
that could impact the group’s capital, segregation of responsibilities between
earnings, risk assets and appetite levels The overarching approach to managing Business and Risk. Risk officers report
in a constantly changing and dynamic enterprise-wide risk is based on the separately to the Head of Group Risk who
operating environment. Furthermore, Risk “Three Lines of Defense” principle which reports to the Chief Executive of Stanbic
continues to shape, drive and monitor requires the first line (Business risk IBTC Group and also through a matrix
activities relating to risk and conduct in owners) to appropriately demonstrate reporting line to the Standard Bank Group
the institution through various measures, ownership and accountability for risks (“SBG”).
including strengthening the risk and and manage same closest to the point
control environment, monitoring risk of incidence; second line (including Risk, All principal risks are supported by the
appetite and governance standards across Compliance, and Internal Control) to Risk department.

84 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Governance structure The risk-focused board committees include the statutory audit
committee, board credit committee, board IT committee, board
The risk governance structure provides a platform for the board, legal committee, and board risk management committee, while
executive and senior management through the various committees executive management oversight at the subsidiary and group
to evaluate and debate material existential and emerging risks levels is achieved through management committees that focus
which the group is exposed to, and assess the effectiveness on specific risks. Each of the board and management committees
of risk responses through the risk profiles of the underlying is governed by mandates that set out the expected committee’s
business units and functional areas (please refer to the pictorial terms of reference.
representation of the group risk governance structure below).

Risk management framework

Governance structurea

SIBTC HoldCo Stanbic IBTC Board Shareholders
Committees

Management Board Committees Statutory Audit
Committees Committee

Executive Risk Remuneration Nominations Credit Audit
Committee Management (REMCO)

Int. Financial Asset & Credit Risk
Control Liability Management
Committee Committee

Risk Oversight Credit
Committee Committee

Operational Risk
& Compliance
Committee

Information Strategy
and Data Governance

Committee

New & Amended Board Committees Statutory Committees Management Committees HoldCo Committee
Products, Business
aThis is continuously evolving to meet changing needs.
& Services

Risk governance standards, policies and procedures All standards are supported by policies and procedural documents.
They are applied consistently across the bank and are approved
The group has developed a set of risk governance standards for by the Board. It is the responsibility of the business unit executive
each principal risk, including credit, market, operational, IT and management to ensure that the requirements of the risk
compliance risks. The standards define the acceptable conditions governance standards, policies and procedures are implemented
for the assumption of the major risks and ensure alignment and within the business units.
consistency in the manner in which these risks are identified,
measured, managed, controlled and reported, across the group.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 85

Risk appetite Counterparty risk

Risk appetite is an expression of the amount, type and tenure Counterparty risk is the risk of loss to the group as a result of
of risk that the group is prepared to accept in order to deliver failure by a counterparty to meet its financial and/or contractual
its business objectives. It is the balance of risk and return as the obligations to the group. It has three components:
group implements business plans, whilst recognising a range of
possible outcomes. • primary credit risk which is the exposure at default (“EAD”)
arising from lending and related banking product activities,
The Board establishes the group’s parameters for risk appetite by: including their underwriting;

• providing strategic leadership and guidance; • pre-settlement credit risk which is the EAD arising from
unsettled forward and derivative transactions, arising from
• reviewing and approving annual budgets and forecasts for the the default of the counterparty to the transaction and
group and each subsidiary; and measured as the cost of replacing the transaction at current
market rates; and
• regularly reviewing and monitoring the group’s performance in
relation to set risk appetite. • issuer risk which is the EAD arising from traded credit and
equity products, and including their underwriting.
The risk appetite is defined by several metrics which are then
converted into limits and triggers across the relevant risk types, Wrong-way risk
at both entity and business line levels, through an analysis of the
risks that impact them. Wrong-way risk is the risk that arises when default risk and credit
exposure increase together. There are two types of wrong- way
Stress testing risk as follows: specific wrong way risk (which arises through poorly
structured transactions, for example, those collateralized by own
Stress testing serves as a diagnostic and forward looking tool to or related party shares) and general wrong way risk (which arises
improve the group’s understanding of its credit; market, liquidity where the credit quality of the counterparty may for non-specific
and operational risks profile under event based scenarios. reasons be held to be correlated with a macroeconomic factor
which also affects the credit quality of the counterparty).
Management reviews the outcome of stress tests and selects
appropriate mitigating actions to minimize and manage the impact Settlement risk
of the risks to the group.
Settlement risk is the risk of loss to the group from a transaction
Residual risk is then evaluated against the risk appetite. settlement, where value is exchanged, failing such that the
counter value is not received in whole or part.
The group’s enterprise risk management framework is designed
to govern, identify, measure, manage, control and report on Country and cross border risk
the principal risks to which the group is exposed. The principal
financial risks are defined as follows: Country and cross border risk is the risk of loss arising from
political or economical conditions or events in a particular country
Credit risk which reduce the ability of counterparties in that particular
country to fulfill their obligations to the group.
Credit risk arises primarily in the group operations where an
obligor/counterparty fails to perform in accordance with agreed Cross border risk is the risk of restriction on the transfer and
terms or where the counterparty’s ability to meet such contractual convertibility of local currency funds, into foreign currency funds
obligation is impaired. thereby limiting payment by offshore counterparties to the group.

Credit risk comprises counterparty risk, wrong-way risk,
settlement risk, country risk and concentration risk.

86 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Concentration risk In addition to the Credit Risk Governance Standard, CIB and
PBB Global Credit Policies, a number of related credit policies
Concentration risk refers to any single exposure or group of and documents have been developed, with contents that are
exposures large enough to cause credit losses which threaten the relevant to the full implementation and understanding of the
group’s capital adequacy or ability to maintain its core operations. credit policies.
It is the risk that common factors within a risk type or across risk
types cause credit losses or an event occurs within a risk type Methodology for risk rating
which results to credit losses.
Internal counterparty ratings and default estimates that are
Market risk updated and enhanced from time-to-time play an essential role in
the credit risk management and decision-making process, credit
Market risk is defined as the risk of a change in the actual or approvals, internal capital allocation, and corporate governance
effective market value or earnings of a portfolio of financial functions. Ratings are used for the following purposes:
instruments caused by adverse movements in market variables
such as equity, bond and commodity prices, foreign exchange • Credit assessment and evaluation
rates, interest rates, credit spreads, recovery rates, correlations
and implied volatilities in the market variables. Market risk covers • Credit monitoring
both the impact of these risk factors on the market value of traded
instruments as well as the impact on the group’s net interest • Credit approval and delegated authority
margin as a consequence of interest rate risk on banking book
assets and liabilities. • Economic capital calculation, portfolio and management
reporting
Liquidity risk
• Regulatory capital calculation
Liquidity risk is defined as the risk that the group, although
balance-sheet solvent, cannot maintain or generate sufficient cash • RARORC (Risk-Adjusted Return on Regulatory Capital)
resources to meet its payment obligations in full as they fall due calculation
(as a result of funding liquidity risk), or can only do so at materially
disadvantageous terms (as a result of market liquidity risk). • Pricing: PDs, EADs, and LGDs may be used to assess and
compare relative pricing of assets/facilities, in conjunction with
Funding liquidity risk refers to the risk that the counterparties, strategic, relationship, market practice and competitive factors.
who provide the group with funding, will withdraw or not roll-
over that funding. The starting point of all credit risk assessment and evaluation lies
in the counterparty risk grading, which is quantified and calculated
Market liquidity risk refers to the risk of a generalised disruption in compliance with the group’s credit rating policy and using such
in asset markets that makes normal liquid assets illiquid and Basel-2 compliant models as are in current use and which are
the potential loss through the forced-sale of assets resulting in updated or enhanced from time to time.
proceeds being below their fair market value.
Credit risk quantification for any exposure or portfolio is
Credit risk summarised by the calculation of the expected loss (“EL”),
which is arrived at in the following way:
Principal credit standard and policies
• Based on the risk grading foundation which yields the
The group’s Governance Standard, as reviewed regularly, sets out counterparty’s probability of default (“PD”), the nature
the broad overall principles to be applied in credit risk decisions and quantum of the credit facilities are considered;
and sets out the overall framework for the consistent and unified
governance, identification, measurement, management and • A forward-looking quantification of the exposure at
reporting of credit risk in the group. default (“EAD”) is determined in accordance with
group standard guidelines.
The Corporate and Investment Banking (“CIB”) and the Personal
and Business Banking (“PBB”) Global Credit Policies have been • Risk mitigants such as security and asset recovery propensities
designed to expand the Group Credit Risk Governance Standard are then quantified to moderate exposure at default to yield
requirements by embodying the core principles for identifying, the loss given default (“LGD”).
measuring, approving, and managing credit risk. These policies
provide a comprehensive framework within which all credit risk • Finally, the EL is a function of the PD, the LGD and the EAD.
emanating from the operations of the bank are legally executed,
properly monitored and controlled in order to minimize the risk of
financial loss; and assure consistency of approach in the treatment
of regulatory compliance requirements.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 87

These parameters are in turn used in quantifying the required Credit risk measurement
regulatory capital reserving, using the Regulatory Capital
Calculator developed, maintained and updated in terms of Basel A key element in the measurement of credit risk is the assignment
2, and the economic capital implications through the use of of credit ratings, which are used to determine expected defaults
Credit Portfolio Management’s (“CPM’s”) Economic Capital tools. across asset portfolios and risk bands. The risk ratings attributed
Furthermore, bearing in mind the quantum of the facility and to counterparties are based on a combination of factors which
the risk/reward thereof, an appropriate consideration of Basel cover business and financial risks:
2 capital requirements (where applicable) and the revenue and
return implications of the credit proposal. The group uses the PD Master Scale rating concept with a single
scale to measure the credit riskiness of all counterparty types.
Framework and governance The grading system is a 25-point scale, with three additional
default grades.
Credit risk remains a key component of financial risks faced by
any bank given the very nature of its business. The importance Group’s rating Grade Standard Fitch
of credit risk management cannot be over emphasised as description & Poor’s AAA to BBB-
consequences can be severe when neglected. The group has SB01 - AAA to BBB- BB+ to CCC+
established governance principles to ensure that credit risk is SB12/SB13 Investment CCC to C
managed effectively within a comprehensive risk management and SB14 - SB21 grades BB+ to CCC+
control framework.
SB22 – SB25 Sub Investment CCC to C
In reaching credit decisions and taking credit risk, both the credit grades
and business functions must consistently and responsibly balance
risk and return, as return is not the sole prerogative of business Cautionary
neither is credit risk the sole prerogative of credit. Credit (and grade
the other risk functions, as applicable) and business must work
in partnership to understand the risk and apply appropriate risk
pricing, with the overall aim of optimising the bank’s risk
adjusted performance.

The reporting lines, responsibilities and authority for managing
credit risk in the group are clear and independent. However,
ultimate responsibility for credit risk rests with the board.

Credit risk mitigation

Credit risk mitigation is defined as all methods of reducing credit
expected loss whether by means of reduction of EAD (e.g.
netting), risk transfer (e.g. guarantees) or risk transformation.

Guarantees, collateral and the transaction structures are used by
the group to mitigate credit risks both identified and inherent
though the amount and type of credit risk is determined on a
case by case basis. The group’s credit policy and guidelines are
used in a consistent manner while security is valued appropriately
and reviewed regularly for enforceability and to meet changing
business needs.

The credit policy establishes and defines the principles of risk
transfer, transformation and reduction. The processes and
procedures for accepting, verifying, maintaining, and releasing
collateral are well documented in order to ensure appropriate
application of the collateral management techniques.

88 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

IFRS 7 (After 1 January 2018) Staging of financial instruments

The tables that follow analyse the credit quality of loans and Financial instruments that are not already credit-impaired are
advances measured in terms of IFRS 9, which came into effect originated into stage 1 and a 12-month expected credit loss
from 1 January 2018. provision is recognised.

IFRS 9 changes and methodology Instruments will remain in stage 1 until they are repaid, unless
they experience significant credit deterioration (stage 2) or
A summary of the primary changes for the Group are provided they become credit-impaired (stage 3).
below.
Instruments will transfer to stage 2 and a lifetime expected credit
New impairment model loss provision recognised when there has been a significant change
in the credit risk compared with what was expected at origination.
IFRS 9 introduces a new impairment model that requires
the recognition of expected credit losses (“ECL”) rather than Instruments are classified as stage 3 when they become
incurred losses under IAS 39. This applies to all financial debt credit-impaired.
instruments held at amortised cost, fair value through other
comprehensive income (“FVOCI”), undrawn loan commitments The framework used to determine a significant increase in credit
and financial guarantees. risk is set out below.

Loans

Stage 1 Stage 2 Stage 3
• 12-month expected credit loss • Credit impaired
• Performing • Life-time expected credit loss • Non-Performing
• Performing but significant

increase in credit risk

The accounting policies under IFRS 9 are set out in Note 3.2 Incorporation of forward looking information
IFRS 9 disclosure. The impact upon adoption of IFRS 9 as at 1
January 2018 is set out in the same note (note 3.2). The main The determination of expected credit loss includes various
methodology principles and approach adopted by the Group are assumptions and judgements in respect of forward looking
set out below; macroeconomic information.

Approach to determining expected credit losses Significant increase in credit risk (“SICR”)

The accounting policies under IFRS 9 are set out in Note 3.2 Expected credit loss for financial assets will transfer from a 12
Credit impairment and Note 3.2 Financial instruments. The impact month basis to a lifetime basis when there is a significant increase
upon adoption of IFRS 9 as at 1 January 2018 is set out in Note 3 in credit risk (“SICR”) relative to that which was expected at the
Transition to IFRS 9 Financial Instruments. The main methodology time of origination, or when the asset becomes credit impaired.
principles and approach adopted by the bank are set out in the On transfer to a lifetime basis, the expected credit loss for those
following table with cross references to other sections. assets will reflect the impact of a default event expected to occur
over the remaining lifetime of the instrument rather than just over
For portfolios that follow a standardised regulatory approach, the 12 months from the reporting date.
the Group has developed new models where these portfolios
are material.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 89

SICR is assessed by comparing the risk of default of an exposure Transfers between stages
at the reporting date with the risk of default at origination
(after considering the passage of time). ‘Significant’ does not Assets will transfer from stage 3 to stage 2 when they are no
mean statistically significant nor is it reflective of the extent longer considered to be credit-impaired. Assets will not be
of the impact on the Group’s financial statements. Whether a considered credit-impaired only if the customer makes payments
change in the risk of default is significant or not is assessed using such that they are paid to current in line with the original
quantitative and qualitative criteria, the weight of which will contractual terms. In addition:
depend on the type of product and counterparty.
• Loans that were subject to forbearance measures must remain
The Group uses a mix of quantitative and qualitative criteria to current for 12 months before they can be transferred to stage 2;
assess SICR.
• Retail loans that were not subject to forbearance measures must
Assessment of credit-impaired financial assets remain current for 180 days before they can be transferred to
stage 2 or stage 1.
Credit-impaired financial assets comprise those assets that have
experienced an observed credit event and are in default. Default Assets may transfer to stage 1 if they are no longer considered
represents those assets that are at least 90 days past due in to have experienced a significant increase in credit risk. This will
respect of principal and interest payments and/or where the be immediate when the original PD based transfer criteria are
assets are otherwise considered unlikely to pay. no longer met (and as long as none of the other transfer criteria
apply). Where assets were transferred using other measures, the
Unlikely to pay factors include objective conditions such as assets will only transfer back to stage 1 when the condition that
bankruptcy, debt restructuring, fraud or death. It also includes caused the significant increase in credit risk no longer applies (and
credit-related modifications of contractual cash flows due to as long as none of the other transfer criteria apply).
significant financial difficulty (forbearance) where the bank has
granted concessions that it would not ordinarily consider. Governance and application of expert credit
judgement in respect of expected credit losses
Modified financial assets
The determination of expected credit losses requires a significant
Where the contractual terms of a financial instrument have degree of management judgement, which is being assessed by the
been modified, and this does not result in the instrument being Credit Risk Management Committee (“CRMC”).
derecognised, a modification gain or loss is recognised in the
income statement representing the difference between the
original cash flows and the modified cash flows, discounted at
the effective interest rate. The modification gain/loss is directly
applied to the gross carrying amount of the instrument.

If the modification is credit related, such as forbearance or where
the Group has granted concessions that it would not ordinarily
consider, then it will be considered credit-impaired. Modifications
that are not credit related will be subject to an assessment of
whether the asset’s credit risk has increased significantly since
origination by comparing the remaining lifetime probability of
default (“PD”) based on the modified terms with the remaining
lifetime PD based on the original contractual terms.

90 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Maximum exposure to credit risk by credit quality Stage 1 and Stage 2
December 2018 Neither past due nor specifically

impaired Not specifically impaired

Performing loans

Note Balance Normal monitoring Close monitoring Early Arrears
sheet Nmillion Nmillion Nmillion

Total impairments Stage 1 Stage 2 Stage 1 Stage 2 Stage 1 Stage 2
Loans and for
advances to 140,580 6,458 - 842 6,401 9,394
customers performing 3,319 271 - 842 47 464
loans
Nmillion 4,542 496 - - 934 189
Nmillion 553 42 - - 119 118

Personal & Business 179,813 6,903 132,166 5,649 - - 5,301 8,623
Banking 5,801 616
238,798 6,613 - 19,973 1,521 10,653
Mortgage loans 8,671 456 238,798 6,613 - 19,973 1,521 10,653
1,155 178
Instalment sale and
finance leases 164,186 5,653

Card debtors 279,133 5,891
279,133 5,891
Other loans and
advances

Corporate &
Investment Banking

Corporate loans

Gross loans and 458,946 12,794 379,378 13,071 - 20,815 7,922 20,047
advances

Less: Total expected credit loss for loans and
advances at amortised cost

12-month ECL (4,245)

Lifetime ECL not (8,823)
credit-impaired

Lifetime ECL credit- (10,843)
impaired

Purchased/originated
credit impaired

Interest In Suspense
(IIS)

Net loans and advances 12 435,035

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 91

Stage 3

Specifically impaired loans

Non-performing loans

Stage 3 Purchased/Originated as credit Total Securities Net after Balance sheet Gross Total non- Non-
impaired Nmillion and securities impairments specific performing
for non- impairment performing
expected and performing coverage loans
recoveries expected specifically loans %
recoveries impaired % Nmillion
on loans
specifically on Nmillion
specifically
impaired
loans impaired
loans
Nmillion
Nmillion

Sub- Loss Sub- Loss
Nmillion Nmillion
standard Doubtful standard Doubtful
Nmillion Nmillion Nmillion Nmillion

1,760 4,076 10,303 - - - 16,139 6,046 10,093 10,093 63 16,139 9.0
72 490 296 - - - 858 349 509 509 59 858 14.8

7 1,659 844 - - - 2,510 860 1,650 1,650 66 2,510 28.9
318 98 324 28.1
28 33 263 - - - 324 6 318
7,616 61 12,447 7.6
1,653 1,894 8,900 - - - 12,447 4,831 7,616
750 48 1,575 0.6
1,575 - - - - - 1,575 825 750 750 48 1,575 0.6
1,575 - - - - - 1,575 825 750

3,335 4,076 10,303 - - - 17,714 6,871 10,843 10,843 61 17,714 3.9

92 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Maximum exposure to credit risk by credit quality (continued)

December 2018 Stage 1 and Stage 2
Neither past due nor specifically
Not specifically impaired
impaired

Performing loans

Note Balance Normal monitoring Close monitoring Early Arrears
sheet Nmillion Nmillion Nmillion

Total impairments Stage 1 Stage 2 Stage 1 Stage 2 Stage 1 Stage 2
for
Loans and
performing
advances to loans

customers Nmillion
Nmillion

Add the following
other banking activities
exposures:

Cash and cash equivalents 7 455,773
30,286
Derivatives 10.6
397,185
Financial investments 11
(excluding equity) 8,548
84,351
Loans and advances to 12 142,543
banks 68,760

Trading assets 9.1

Pledged assets 8

Other financial assets

Total on-balance sheet 1,622,481
exposure

Unrecognised financial
assets:

Letters of credit 20,543 70 18,499 2,044 - - - -

Guarantees 41,299 462 41,248 52 - - - -

Loan commitments 32,334 142 31,895 438 - - - -

Total exposure to 1,716,657
credit risk (664)

Expected credit loss for off 1,715,993
balance Sheet exposures

12-month ECL

Lifetime ECL not
credit-impaired

Lifetime ECL credit-
impaired

Total exposure to credit risk
on Loans and advances at
amortised cost

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 93

Stage 3

Specifically impaired loans

Non-performing loans

Stage 3 Purchased/Originated as credit Total Securities Net after Balance sheet Gross Total non- Non-
impaired Nmillion and securities impairments specific performing
for non- impairment performing
expected and performing coverage loans
recoveries expected specifically loans %
recoveries impaired % Nmillion
on loans
specifically on Nmillion
specifically
impaired
loans impaired
loans
Nmillion
Nmillion

Sub- Loss Sub- Loss
Nmillion Nmillion
standard Doubtful standard Doubtful
Nmillion Nmillion Nmillion Nmillion

------- - - ----
------- - - ----
------- - - ----

94 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Maximum exposure to credit risk by credit quality (continued)

December 2017 Performing loans

Neither past due nor specifically Not specifically impaired
impaired

Note Total Balance Normal Close
Loans and sheet
advances to monitoring monitoring Early Arrears Non-performing
customers impairments Nmillion Nmillion Nmillion N’million
for
Nmillion
performing
loans

Nmillion

Personal & Business 149,324 2,775 106,656 12,186 13,526 -
Banking 7,426 76 4,365 724 889 -

Mortgage loans 12,167 162 4,555 2,596 772 -
1,451 20 923 6 210 -
Instalment sale and 128,280 11,655 -
finance leases 2,517 96,813 8,860
254,528 12,079 -
Card debtors 254,528 8,072 219,326 8,366 12,079 -
8,072 219,326 8,366
Other loans and advances 25,605 -

Corporate & Investment
Banking

Corporate loans

Gross loans and advances 403,852 10,847 325,982 20,552

Less: Impairment for loans 12 (31,764)
and advances 372,088
7
Net loans and advances 10.6 401,348
11 11,052
Add the following 12
other banking activities 9.1 314,367
exposures:
8 9,623
Cash and cash equivalents 151,479
43,240
Derivatives 41,427

Financial investments
(excluding equity)

Loans and advances to
banks

Trading assets

Pledged assets

Other financial assets

Total on-balance sheet 1,344,624
exposure
30.1 118,054
Unrecognised financial 30.1 35,323
assets:
56,108
Letters of credit

Guarantees

Loan commitments

Total exposure to credit risk 1,554,109

Additional disclosures on loans and advances is set out in note 12.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 95

Non-performing loans

Specifically impaired loans

Non-performing loans

Sub- Doubtful Loss Total Securities Net after Balance sheet Gross specific Total non- Non-
standard N’million N’million Nmillion securities impairment performing
N’million and expected and expected impairments for coverage performing
recoveries on % loans
recoveries on specifically non-performing loans %
impaired loans Nmillion
specifically Nmillion specifically

impaired loans impaired loans
Nmillion Nmillion

4,426 6,301 6,228 16,955 6,142 10,813 10,813 64 16,955 11.4
1,113 156 179 1,448 793 655 655 45 1 448 19.5

65 3,663 516 4,244 1,694 2,550 2,550 60 4,244 34.9
28 68 216 312 24 288 288 92 312 21.5
3,220 5,317 67 10,951 8.5
2,414 10,951 3,631 7,320 7,320
13,027 - 68 14,757 5.8
13,027 1,730 - 14,757 4,654 10,103 10,103 68 14,757 5.8
1,730 14,757 4,654 10,103 10,103
17,453 6,228 66 31,712 7.9
8,031 31,712 10,796 20,916 20,916

96 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Ageing of loans and advances with lifetime ECL but not credit impaired

Less than 31 days 31-60 days 61-89 days 90-180 days More than 180 Total
N’million N’million N’million N’million days N’million N’million

December 2018 -- 2,189
-- 153
Personal and Business Banking 939 1,151 99 -- 102
-- 72
Mortgage loans 101 46 6 --
1,862
Instalment sales and finance lease 60 42 -
25
Card debtors 42 23 7 25

Other loans and advances 736 1,040 86 2,214

Corporate and Investment Banking 19 5 1 - -
Corporate loans 19 5 1 - -

Total 958 1,156 100 - -

December 2017

Personal and Business Banking 10,170 1,923 1,432 - - 13,526

Mortgage loans 500 272 117 - - 889

Instalment sales and finance lease 489 272 11 - - 772

Card debtors 143 48 17 - - 208

Other loans and advances 9,038 1,331 1,287 - - 11,657

Corporate and Investment Banking 3,261 582 8,236 - - 12,079

Corporate loans 3,261 582 8,236 - - 12,079

Total 13,431 2,505 9,668 - - 25,605

Renegotiated loans and advances Collateral includes:

Renegotiated loans and advances are exposures which have been –– financial securities that have a tradable market, such as
refinanced, rescheduled, rolled over or otherwise modified due to shares and other securities;
weaknesses in the counterparty’s financial position, and where it
has been judged that normal repayment will likely continue after –– physical items, such as property, plant and equipment;and
the restructure. Renegotiated loans that would otherwise be past
due or impaired amounted to N10.3 billion as at 31 December –– financial guarantees, suretyships and intangible assets.
2018 (Dec 2017: N13.5billion).
All exposures are presented before the effect of any impairment
Collateral provisions.

The table that follows shows the financial effect that collateral In the retail portfolio, 39% (Dec 2017: 52%) is collateralised.
has on the group’s maximum exposure to credit risk. The table Of the group’s total exposure, 85% (Dec 2017: 85%) is
is presented according to Basel II asset categories and includes unsecured and mainly reflects exposures to well-rated corporate
collateral that may not be eligible for recognition under Basel II counterparties, bank counterparties and sovereign entities.
but that management takes into consideration in the management
of the group’s exposures to credit risk. All on- and off-balance
sheet exposures which are exposed to credit risk, including non-
performing assets, have been included.

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 97

Collateral Total collateral coverage

December 2018 Note Total Unsecured Secured Netting Secured 1%-50% 50%-100% Greater
Corporate exposure N’million N’million agreements exposure N’million N’million than
Sovereign N’million after netting
Bank N’million N’million 100%
Retail N’million
Retail Mortgage
Other retail 445,336 289,697 155,639 - - 63,368 76,818 15,453
868,336 868,336 - - --
134,658 134,658 - - - - --
259,360 158,726 - - 25,705 68,244 49,414
100,633 - - - 42,772 5,759
5,801 - 5,801 - - 25,705 25,472 43,655
253,558 158,726
94,832

Total 1,707,690 1,451,417 256,272 - - 89,073 145,062 64,867

Add: Financial assets not 102,324
exposed to credit risk (26,290)
(163,565)
Less: Impairments for loans
and advances and IIS

Less: Unrecognised off
balance sheet items

Total exposure 1,620,159

Reconciliation to statement of financial position:

Cash and cash equivalents 7 455,773

Derivatives 10.6 30,286

Financial investments 11 397,185
(excluding equity)

Loans and advances 12 441,261

Trading assets 9 84,351

Pledged assets 8 142,543

Other financial assets 68,760

Total 1,620,159

98 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

Collateral Total collateral coverage

December 2017 Note Total Unsecured Secured Netting Secured 1%-50% 50%-100% Greater
Corporate exposure N’million N’million agreements exposure N’million N’million than
Sovereign N’million after netting
Bank N’million N’million 100%
Retail N’million
Retail Mortgage
Other retail 396,023 273,744 122,279 - - 41,061 81,218 -
677,220 677,220 - -
223,600 223,600 - - - - --
196,068 -
94,153 101,915 - - - --
7,426 - 7,426 -
188,642 - 26,014 68,220 7,681
94,153 94,489
- - - 7,426

- 26,014 68,220 255

Total 1,492,911 1,268,717 224,194 - - 67,075 149,438 7,681

Add: Financial assets not 36,853
exposed to credit risk (31,763)
Less: Impairments for loans (153,377)
and advances 1,344,624
Less: Unrecognised off
balance sheet items

Total exposure

Reconciliation to statement of financial position:

Cash and cash equivalents 7 401,348

Derivatives 10.6 11,052

Financial investments 11 314,367
(excluding equity)

Loans and advances 12 381,711

Trading assets 9.1 151,479

Pledged assets 8.1 43,240

Other financial assets 41,427

Total 1,344,624

OVERVIEW BUSINESS REVIEW ANNUAL REPORT & FINANCIAL STATEMENTS OTHER INFORMATION 99

Concentration of risks of financial assets with credit risk exposure
(a) Geographical sectors

The following table breaks down the group’s main credit exposure at their carrying amounts, as categorised by geographical region as of 31 December
2018. For this table, the group has allocated exposures to regions based on the region of domicile of our counterparties.

At 31 December 2018 Trading Derivative Pledged Financial Loans and Loans and Total
South South assets assets assets investments advances to advances N ’million
South West to banks
South East N’million N’million N’million (excluding customers N’million 24,112
North West - - - equity) N’million 401,000
North Central - 24,112 8,605
North East 2,526 533 - N’million 377,983 8,605 10,884
Outside Nigeria - 8 - 10,876 21,469
Carrying amount - 1 - 21,468 654,396
142,543 23,384
81,825 29,350 - 19,958 1,122 1,122
- - - - 8,999
- - 458,945 1,121,982
394 142,543
84,351 30,286 -

377,294

-

-

397,252

At 31 December 2017 - - - - 14,896 - 14,896
South South 8,284 800 - 12,860 319,839 - 341,783
South West - -
South East - - - - 7,273 - 7,273
North West - - 43,240 - 16,623 - 16,623
North Central 143,195 8,521 301,507 12,466 508,929
North East - -
- - - - 991 9,623 991
Outside Nigeria - 1,731 43,240 - - 9,623 11,354
151,479 11,052 314,367 901,849
372,088

(b) Industry sectors - - - - 37,466 - 37,466
At 31 December 2018 - - - - 9,126 - 9,126
Agriculture - - - 655 8,162 - 8,817
Business services
Communication - - - - - - -
Community, social & personal - - - - 43,506 - 43,506
services - - - - -
Construction and real estate 2,525 320 - 20,219 - 8,605 -
Electricity 1,262 32,931
Financial intermediaries & insurance 81,826 616 142,543 374,955
Government (including Central - - - - 32,656 - 632,596
Bank) - - - - 428 - 428
Hotels, restaurants and tourism - - - - -
Manufacturing - - - - 163,055 - 163,055
Mining - - - - 70,814 - 70,814
Private households - - 51,452 - 51,452
Transport, storage and distribution 29,350 1,423 4,600 - 4,600
Wholesale & retail trade 84,351 30,286 142,543 397,252 36,418 8,605 67,191
Carrying amount
458,945 1,121,982

100 Stanbic IBTC Annual report for the year ended 31 December 2018

Enterprise Risk Review (continued)

(b) Industry sectors (continued)

At 31 December 2017 Trading assets Derivative Pledged Financial Loans and Loans and Total
N’million assets assets investments advances to advances N’million
to banks 23,829
Agriculture - N’million N’million (excluding customers N’million
621 equity) N’million 3,989
Business services - 22 - - 14,227
1 N’million 23,208 -
Communication - - - -
- - 3,967 41,529
3 - -
- - 13,673 - -
1,752 - 31,585
553 9,623
8,521 518,295
Community, social & personal - - --- - 22
services -
26 - 124,565
Construction and real estate - 1 - - 41,526 - 61,286
1 - 45,365
Electricity - - --- - 6,038
- 31,119
Financial intermediaries & insurance 8,284 104 - 11,326 600 9,623
11,052 901,849
Government (including Central 143,195 43,240 301,409 21,930
Bank) - - 22
- -
Hotels, restaurants and tourism - - - 124,539
- - 61,285
Manufacturing - - - 45,364
- 6,038
Mining - 1,079 29,936
43,240 314,367
Private households - 372,088

Transport, storage and distribution -

Wholesale & retail trade -

Carrying amount 151,479

(c) Analysis of financial assets disclosed above by portfolio distribution and risk rating

AAA to A- BBB+ to BBB- Below BBB- Unrated Total
N’million N’million N’million
N’million N’million 247,369 1,121,982
213,889 - 901,849
At 31 December 2018 240 874,373 754

At 31 December 2017 5 687,201

Concentration of risks of off-balance sheet engagements Bonds and Letters Total
(a) Geographical sectors guarantees of credit*
N’million N’million
At 31 December 2018 N’million 1,391
South South 1,391 -
South West 83,199 142,646
South East 59,447 33
North West 33 -
North Central - 1,254
North East 1,254 - 1,154
Outside Nigeria 1,154 -
Total - 2
*Amount excludes letters of credit for which cash collateral has been received. 2 83,199 -
- 146,480
63,281