SUNTRUST BANK NIGERIA LIMITED BANK NIGERIA LIMITED (FORMERLY SUNTRUST MORTGAGE BANK LIMITED) AUDITED FINANCIAL STATEMENTS 31 DECEMBER 2015 Aminu Ibrahim & Co Chartered Accountants

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SUNTRUST BANK NIGERIA LIMITED

(FORMERLY SUNTRUST MORTGAGE BANK LIMITED)

AUDITED FINANCIAL STATEMENTS

31 DECEMBER 2015

Aminu Ibrahim & Co

Chartered Accountants

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REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

CONTENTS PAGE

Directors and Advisers 2

Report of the Directors 3 - 5

Audited Financial Statements:

-Report of the Independent Auditors 6 - 7

-Statement of Financial Position 8

-Statement of Comprehensive Income 9

-Statement of Cash Flows 10

-Statement of Changes in Equity 11

-Statement of Prudential Adjustment 12 - 13

-Notes to the Financial Statements 14 – 50

Supplementary Information

-Statement of Value Added 52

-Financial Summary 53 – 54

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DIRECTORS AND ADVISERS FOR THE YEAR ENDED 31 DECEMBER 2015

DIRECTORS:

Abubakar Sadiq Mohammed Chairman

Ahmed Garba Ririwai Chairman (Resigned on 30/4/2015)

Muhammad Jibrin Managing Director/CEO

Arho Akpe Executive (Resigned on 19/5/2015)

Aliyu Abdullahi Sumaila Executive (Resigned on 6/2/2015)

Yunusa Yakubu Director

Nasiru A. Dantata Director

Kenneth Ofili Director

Muhammad Awwal Na’iya Director (Resigned on 30/4/2015)

Hamza Sule Wuro Bokki Director (Resigned on 6/2/2015)

COMPANY SECRETARY

Omega Reigns Chambers

REGISTERED

OFFICE: 50, Kumasi Street

Off Aminu Kano Crescent

Wuse II

Abuja

AUDITORS: Aminu Ibrahim & Co.

[Chartered Accountants]

City Plaza, 3rd Floor

Plot 596 Ahmadu Bello Way

Garki II, Abuja

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REPORT OF THE DIRECTORS


The Directors have pleasure in presenting to the members of the bank, their report and the audited

financial statements for the year ended 31 December, 2015.

CORPORATE STRUCTURE AND BUSINESS

The Bank was incorporated on September 24, 1992 as a Private Limited Liability Company in

accordance with the provisions of the Companies and Allied Matters Act. It was licensed to

operate as a Mortgage Institution in December 1992 and commenced operations in January 1993.

It merged with Suntrust Savings & Loans Limited and Dala Building Society Plc on 31 December

2013. It however spinned off its operations that approximate the businesses of Dala Building

Society with effect from January 2015. It obtained final licence to operate as regional commercial

bank in September 2015 and changed its name from Suntrust Mortgage Bank Limited to Suntrust

Bank Nigeria Limited during the year.

RESULT

The Bank’s results are shown as follows:

December 2015

N’000

Profit after taxation 76,654

Less: Appropriations

Transfer to statutory reserve -

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

Profit for the year transferred to general reserve 76,654

=======

PRINCIPAL ACTIVITIES

The Bank engaged in the business of mortgage banking during the year under review.

STATE OF AFFAIRS

In the opinion of the Directors, the state of the mortgage bank's affairs is satisfactory and no event

has occurred since the balance sheet date, which would affect the financial statements as

presented.

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REPORT OF THE DIRECTORS (CONTINUED)


FIXED ASSETS

Information relating to changes in fixed assets is given in Note 10 to the financial statements.

DIRECTORS' INTERESTS

The interest of the Directors in the issued share capital of the mortgage bank as recorded in the

register of Director’s holding as at 31 December 2015 are as follows:

Names 2015 (units) 2014 (units)

Abubakar Saddiq Mohammed

Arho Akpe

76,822,798

76,892,798

76,822,798

76,892,798

Kenneth Ofili

Hamza Sule Wuro Bokki

76,822,798

76,822,798

76,822,798

76,822,798

Muhammad Jibrin 7,682,280 7,682,280

SIGNIFICANT SHAREHOLDERS

Names % holdings

(2015)

% holdings

(2014)

Midland Corporate Investments Limited 18 16

Afric Capital Limited 9 8

Northside Apartments Limited 13 12

Braimuh Nigeria Limited 14 13

Vergnet Properties Limited 13 12

Metrocorp Limited 12 11

Bridgestone Limited 9 8

Kano State Government - 8

Various individuals having less than 4% each 12 12

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SUNTRUST MORTGAGE BANK LIMITED

REPORT OF THE DIRECTORS (CONTINUED)

RESPONSIBILITIES OF DIRECTORS

In accordance with the provisions of sections 334 and 335 of the Companies and Allied Matters

Act and the requirements of Bank and Other Financial Institutions Act 2004. Directors are

responsible for the preparation of financial statements which give a true and fair view of the state

of affairs of the Bank as at the end of the financial year and of its financial performance for the

period and comply with the provisions of the Act. These responsibilities include ensuring that:

i) adequate internal control procedures are instituted to safeguard assets and prevent and

detect fraud and other irregularities;

ii) proper accounting records are maintained and applicable accounting standards followed;

iii) suitable accounting policies are used and consistently applied;

iv) the financial statements are prepared on a going concern basis unless it is inappropriate to

presume that the Company will continue in business.

EMPLOYEES INVOLVEMENT

The bank is committed to keeping employees fully informed as far as possible regarding the

bank’s performance and progress and seeking their views wherever practicable on matters, which

particularly affect them as employees.

Management, professional and technical expertise are the bank’s major assets and investment in

developing such skills continues.

EMPLOYMENT OF PHYSICALLY CHALLENGED PERSONS

No physically challenged person was employed by the mortgage bank during the year. It is

however the bank's policy to consider such persons for employment if academically and medically

qualified.

HEALTH, SAFETY OF EMPLOYEES

Health and safety regulations are enforced within the bank’s premises and employees are aware of

the safety regulations.

DONATION

The mortgage bank did not make any donation during the year

BY ORDER OF THE BOARD

COMPANY SECRETARY

04 April 2016

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Aminu Ibrahim & Co Chartered Accountants

City Plaza, 3rd Floor Plot 596, Ahmadu Bello Way P.O. Box 971, Garki II, Abuja, Nigeria Tel: +234 9 8706058, 3145724 www.aminuibrahim.com

REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF SUNTRUST BANK NIGERIA LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Suntrust Bank Nigeria Limited which

comprise the statement of financial position as at 31 December 2015 and the statements of comprehensive

income and cash flow for the year then ended and a summary of significant accounting policies and other

explanatory notes. Directors' Responsibility for the Financial Statements

The Directors are responsible for the preparation and fair presentation of these financial statements in

accordance with the International Financial Reporting Standards. This responsibility includes

designing, implementing and maintaining internal controls relevant to the preparation and fair

presentation of financial statements that are free of material misstatement, whether due to fraud or

error; selecting and applying appropriate accounting policies; and making accounting estimates that are

reasonable in the circumstances. Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with International Standards on Auditing and Nigerian Standards on

Auditing issued by the Institute of Chartered Accountants of Nigeria, which require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the

financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the financial statements. The procedures selected depend on the auditors’ judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, the auditors consider internal control relevant to the entity's

preparation and fair presentation of the financial statements in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness

of the entity's internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by directors, as well as evaluating

the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion. Opinion

In our opinion, the financial statements give a true and fair view of the financial position of Suntrust

Mortgage Bank Limited as at 31 December 2015, and of its financial performance and its cash flows

for the year then ended in accordance with International Financial Reporting Standards, relevant

circulars issued by the Central Bank of Nigeria, Companies and Allied Matters Act and the Banks

and Other Financial Institutions Act.

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Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act

In our opinion, proper books of account have been kept by the Bank, so far as appears from our

examination of those books and the Bank’s statement of financial position and income statement are in

agreement with the books of account.

Compliance with Section 27(2) of the Banks and Other Financial Institutions Act and Central Bank of

Nigeria circular BSD/1/2004

i. The bank did not contravene any sections of the Guidelines for Primary Mortgage Bank issued

by the Central Bank of Nigeria during the year ended 31 December 2015.

ii. Related party transactions and balances are disclosed in the notes to the financial statements in

accordance with Central Bank of Nigeria Circular BSD/1/2004.

Compliance with Section 4.3 of the Revised Guidelines for Primary Mortgage Banks in Nigeria 2011

Taking into consideration, the post balance sheet date event regarding the conversion of the bank to a

regional commercial bank as detailed in Note 1 to the financial statements, we report that nothing has

come to our attention to indicate that the Bank will not remain in business for at least twelve months

from the date of this report.

Abuja, Nigeria Adekunle Lasisi FCA FRC/2013/ICAN/00000000945

Engagement Partner

For: Aminu Ibrahim & Co

Chartered Accountants

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STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2015

31-Dec-15 31-Dec-14

NOTES N'000 N'000

ASSETS

Cash and cash equivalents 5 8,256,151 6,302,031

Financial assets 6 100,000 6,597,413

Loans and advances to customers 7 7,249,739 9,198,708

Other assets 9 580,270 780,937

Property, plant and equipment 10 22,122 181,098

Intangible assets 11 9,941 17,159

Goodwill 12 317,704 317,704

. 16,535,927 23,395,050

Non-current assets held for sale 8 1,365,591 2,015,159

Total assets . 17,901,518 25,410,209

LIABILITIES

Deposits from customers 13 788,583 1,493,766

Current tax liabilities 14.2 55,274 45,799

Deferred tax liabilities 14.4 5,134 50,324

Retirement benefit obligation 15 403 1,317

Other liabilities 16 167,554 256,694

Interest bearing loans and borrowings 17 6,647,716 12,494,962

Total liabilities 7,664,664 14,342,862

EQUITY

Issued and paid up share capital 18 11,839,000 10,000,000

Share premium 19 - 2,791,337

Statutory reserves 20 24,919 24,919

Retained earnings 21 (1,627,065) (1,748,909)

Shareholders fund 10,236,854 11,067,347

TOTAL LIABILITIES AND EQUITY 17,901,518 25,410,209

The company financial statements were approved by the Board of Directors

on 04 April 2016 and signed on its behalf by:

………………………………………………………. ………………………………………………

Innocent Mbagwu (FRC/2013/ICAN/00000005412)

Chief Financial Officer

……………………………………………………………

Abubakar Sadiq Mohammed (FRC/2013/IODN/0000001877)

Chairman

The accompanying notes to the account form an integral part of these financial statements.

Managing Director/CEO

Muhammad Jibrin (FRC/2014/IODN/00000008076)

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2015.

December

2015

December

2014

Note N'000 N'000

Interest income 25 1,440,558 1,470,321

Interest expense 26 (1,220,215) (842,074)

Net interest income 220,343 628,247

Fees and commission income 27 65,389 126,824

Income from financial assets and recoveries 28 62,700 995,837

Operating income 348,432 1,750,908

Fair value adjustments 6i 982,079 (631,353)

Net impairment charges 32 (837,634) (566,272)

Net operating income after net impairment charges 492,877 553,283

Personnel expenses 29 (87,365) (162,532)

Depreciation and amortisation 10 & 11 (27,282) (53,277)

Other operating expenses 30 (246,302) (226,393)

Total expenses (360,949) (442,202)

Profit before tax 131,928 111,081

Income tax expense 14 (10,084) (78,399)

Profit after tax 121,844 32,682

Other comprehensive income (OCI), net of tax

Other comprehensive income for the year - -

Total comprehensive income for the year 121,844 32,682

Basic earnings per share (kobo) 22 1.0 0.3


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STATEMENT OF CASH FLOWS


2015 2014

N'000 N'000

Cash flows from operating activities

Operating result before changes in working capital 23 (17,732) 1,251,654

Changes in working capital

Loans and advances to customers 7 2,572,475 (2,329,679)

Other assets 9 393,495 39,280

Deposit from customers 13 (308,632) 233,603

Other liabilities 16 (15,308) (1,391,568)

Retirement benefit obligation 15 (914) 741

Income tax paid 14.2 (45,799) (28,031)

Net cash from operating activities 2,577,585 (2,224,000)

Cash flows from investing activities

Proceeds from sale of non-current assets held for sale 8 477,905 3,866,534

Proceeds from sale of financial assets 6i 7,092,102 513,172

Proceeds from sale of property, plant & equipment - 6,000

Addition to property, plant and equipment and intangible

assets10&11 (6,366) (26,212)

Acquistion of financial assets 6 - (100,000)

Purchase of non-current assets held for sale 8 (497,136) (179,345)

Net cash provided by investing activities 7,066,505 4,080,149

Cash flows from financing activities

Cash proceeds of share issue - 5,500,000

Proceeds from borrowings 17 1,208,402 747,307

Repayments of borrowings 17 (7,044,027) (3,939,838)

Net cash provided by financing activities (5,835,625) 2,307,469

Net Increase/(decrease) in cash and cash equivalent 3,808,465 4,163,618

Cash and cash equivalent at the beginning of the year 4,423,728 260,110

Cash and cash equivalent at the end of the year 5b 8,232,193 4,423,728


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STATEMENT OF CHANGES IN EQUITY


Paid up share

capital

Share

premium

Statutory

reserve

Retained

earnings Total

N'000 N'000 N'000 N'000 N'000

Balance at 1 January 2014 2,570,000 250,000 24,919 (1,781,590) 1,063,329

Arising from merger during the year 4,471,337 4,471,337

Addition during the year 2,958,663 2,541,337 5,500,000

Result for the year - - - 32,682 32,682

Balance at 1 January 2015 10,000,000 2,791,337 24,919 (1,748,909) 11,067,347

Arising from spin-off during the year - (952,337) - - (952,337)

Arising from issue during the year 1,839,000 (1,839,000)

Result for the year - - - 121,844 121,844

Balance at 31 December 2015 11,839,000 - 24,919 (1,627,065) 10,236,854

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STATEMENT OF PRUDENTIAL ADJUSTMENT

AS AT 31 DECEMBER 2015.

A

2015 2014

A1 Classification according to Prudential Guidelines N'000 N'000

Performing loans (A4.1) 6,752,537 8,479,968

Non performing loans

Watchlist 166,311 345,890

Substandard 384,321 504,199

Doubtful 220,139 1,020,948

Lost 252,349 467,521

Total Non-performing loans (A4.2) 1,023,120 2,338,557

Gross loans 7,775,657 10,818,525

A2 Prudential provision

General provision (A5.1 & A5.2) 135,042 84,800

Specific provision (A5.1 & A5.2) 380,173 1,013,296

Total 515,215 1,098,096

A3 IFRS provision

Specific impairment 440,137 1,511,786

Collective impairment 85,781 108,031

Total 525,918 1,619,817

Difference in impairment figures (10,703) (521,721)

Transfer (to) / from regulatory risk reserve 0 0

Balance per regulatory risk reserve - -

The regulatory body - CBN, stipulates that provision for loans recognised in the profit or loss

account shall be determined based on the requirements of IFRS. The IFRS provision should be

compared with provisions determined under prudential guidelines and the expected impact /

changes in general revenue should be treated as follows:-

(i) Prudential provision is greater than IFRS provision, transfer the difference from general reserve

to a non-distributable regulatory reserve.

(ii) Prudential provision is less than IFRS provision, the excess charges resulting should be

transfered from the regulatory reserve account to the general reserve to the extent of the non-

distributable reserve previously recognised.

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STATEMENT OF PRUDENTIAL ADJUSTMENT (CONTINUED)

2015 2014

N'000 N'000

A4 Classification according to Prudential Guidelines

A4.1 Performing loans by nature:

Retail mortgage loans 6,270,240 7,074,938

Commercial real estate loans 186,288 1,060,295

Other loans 296,009 344,734

6,752,537 8,479,968

A4.2 Non Performing loans by nature:

Retail mortgage loans 656,279 574,053

Commercial real estate loans 2,140 2,987

Other loans 364,701 1,761,517

1,023,120 2,338,557

A5.1 Prudential provision at 31 December 2015

Retail

Mortgage

Commercial

real estate Other loans Total

General provision:

Performing [@ 2%] 125,405 3,726 5,912 135,042

Specific provision:

Watchlist 3,326 - - 3,326

Substandard 32,542 214 5,676 38,432

Doubtful 34,444 - 51,622 86,066

Lost 47,232 - 205,117 252,349

117,545 214 262,414 380,173

242,949 3,940 268,326 515,215

A5.2 Prudential provision at 31 December 2014

Retail

Mortgage

Commercial

real estate Other loans Total

General provision:

Performing [@ 1%] 70,749 10,603 3,447 84,800

Specific provision:

Watchlist 3,459 - - 3,459

Substandard 15,121 - 35,299 50,420

Doubtful 19,901 1,494 470,502 491,896

Lost - - 467,521 467,521

38,481 1,494 973,322 1,013,296

109,230 12,097 976,769 1,098,096

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NOTES TO THE FINANCIAL STATEMENTS


1 Corporate information

2 Accounting policies

2.1 Basis of preparation

2.1a Functional and presentation currency

2.1b Basis of measurement

2.1c Use of estimates and judgements

2.1d Fair value of financial instruments

Suntrust Bank Nigeria Limited (formerly known as Suntrust Mortgage Bank Limited and at various times previously

known as Suntrust Savings & Loans Limited and Oceanic Homes Savings & Loans Limited) was incorporated in

Nigeria on 24 September, 1992, as a Private Limited Liability Company in accordance with the provisions of the

Companies and Allied Matters Act, 1990. It was licensed to operate as a Mortgage Institution and commenced

operations in 2 January 1993.

The address of the Bank's head office is 50, Kumasi Street, Wuse II, Abuja and the principal business of the bank

during the year is mortgage banking.

The principal accounting policies applied in the preparation of these financial statements are disclosed below. These

policies have been consistently applied to all the years presented, unless otherwise stated.

The financial statements of the bank have been prepared in accordance with International Financial Reporting

Standards (IFRS) as issued by the International Accounting Standards Board (IASB), the requirements of the

Companies and Allied Matters Act, the Banks and Other Financial Institutions Act, Regulatory and Supervisory

Guidelines for Primary Mortgage Institutions in Nigeria and relevant Central Bank of Nigeria Circulars.

The bank obtained a final licence from the Central Bank of Nigeria in September 2015 to operate as a regional

commercial bank in the South-West and South-South regions. The operational areas covered by the commercial

banking licence exclude the bank's present areas of operation as a mortgage bank in the North-West (Kano State) and

North-East (Gombe State). In preparation for take-off as a commercial bank in 2016, it spinned-off its business in Kano

Region which approximate the business of one of the entities- former Dala Building Society Plc that merged with the

bank in 2014. The spin-off took effect from 01 January 2015 while the bank plans to close down its operations in

Gombe early in 2016.

These financial statements are presented in Nigerian Naira, which is the Bank’s functional currency. Except where

indicated, financial information presented in Naira has been rounded to the nearest thousand. (N'000).

These financial statements have been prepared on the historical cost basis, except for the following:

The preparation of financial statements in line with IFRSs requires management to make judgements,estimates and

assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are

believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about

carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from

these estimates.

Discontinuation of business of the bank in North-West region

The financial statements have been prepared based on the order of liquidity.

· Non-derivative financial instruments, carried at fair value through profit or loss, are measured at fair value.

· Available-for-sale financial assets are measured at fair value through equity. However, when the fair value of the

· Assets and Liabilities held to maturity are measured at amortised cost.

· Loans and Receivables are measured at amortised cost.

Available-for-sale financial assets cannot be measured reliably, they are measured at cost less impairment.

Financial assets and liabilities for which fair values are disclosed are listed below:

· Loans and advances

· Non-current assets held for sale

· Borrowings

In September 2015, it was licenced to operate as a regional commercial bank but it operated as a mortgage bank

throughout 2015.

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.

2.2 Summary of significant accounting policies

2.2.1 Foreign currency translation

2.2.2 Business combinations

Monetary items denominated in foreign currency are translated with the spot rate as at the reporting date. Non

monetary items measured at historical cost denominated in a foreign currency are translated with the spot exchange

rate as at the date of initial recognition; non-monetary items in a foreign currency that are measured at fair value are

translated using the exchange rates at the datewhen the fair value was determined.

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business

combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets

transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity

interests issued by the Company in exchange for control of the acquiree. Acquisition-related costs are generally

recognized in profit or loss as incurred.

The accounting policies set out below have been consistently applied by the bank in preparing its financial statements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. The fair value measurement is based on the presumption that

the transaction to sell the asset or transfer the liability takes place either:

· In the principal market for the asset or liability

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Bank determines

whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest

level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Bank has determined classes of assets and liabilities on the basis of the

nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. The

fair values determined closely approximate the carrying value.

Or

· In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Bank.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when

pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic

benefits by using the asset in its highest and best use or by selling it to another market participant that would use the

asset in its highest and best use.

The Bank uses valuation techniques that are appropriate in the circumstances and for which sufficient data are

available to measure fair value, maximising the use of relevant observable inputs and minimising the use of all assets

and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair

value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement

as a whole:

· Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

· Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is

directly or indirectly observable

· Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is

unobservable

Transactions in foreign currencies are translated to the functional currency using the exchange rates prevailing at the

dates of the transactions.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the

translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are

recognised in the income statement,

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2.2.3 Financial assets and liabilities

(a) Date of recognition and initial measurement

(b) Subsequent measurement

the Bank initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the

date that they are originated. All other financial assets and liabilities are initially recognised on the trade date at which

the Bank becomes a party to the contractual provisions of the instrument. All financial instruments are measured initially

at their fair value plus transaction costs.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value,

except that:

Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized

and measured in accordance with IAS

Liabilities or equity instruments related to share-based payment arrangements of the acquiree are measured in

accordance with IFRS 2 Share-based Payment at the acquisition date; and

Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held

for Sale and Discontinued Operations are measured in accordance with that standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling

interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over

the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. if, after

assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds

the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value

of the acquirer's previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss

as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the

entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling

interests' proportionate share of the recognized amounts of the acquiree's identifiable net assets. The choice of

measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are

measured at fair value or, when applicable, on the basis specified in another IFRS.

When the consideration transferred by the Company in a business combination includes assets or liabilities resulting

from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value

and included as part of the consideration transferred in a business combination. Changes in the fair value of the

contingent consideration that qualify as measurement year adjustments are those that arise from additional information

obtained during the 'measurement year' (which cannot exceed one yea r from the acquisition date) about facts and

circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as

measurement year adjustments depend on how the contingent consideration is classified. Contingent consideration

that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted

for within equity. Contingent consideration that is classified as an assets or a liability is remeasured at subsequent

reporting dates in accordance with IAS 39, or IAS 37 provisions, Contingent Liabilities and Contingent Assets, as

appropriate, with the corresponding gain or loss being recognized in profit or loss.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is

remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or

loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date

that have previously been recognized in other comprehensive income are reclassified to profit or loss where such

treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting year in which the

combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those

provisional amounts are adjusted during the measurement year (see above), or additional assets or liabilities are

recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that,

if known, would have affected the amounts recognized at that date.

Subsequent to initial measurement, financial instruments are measured either at fair value or amortised cost,

depending on their classification:

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(bi) Held-to-maturity

(bii) Loans and receivables

(biii) Available-for-sale investments

(biv) Promissory notes

(c) Impairment of financial assets

(ci) Financial assets carried at amortised cost

The difference between amortised cost and fair value will be accounted for in equity. Held-to-maturity investments are

carried at amortised cost, using the effective interest method (EIR), less any impairment losses. The EIR amortisation is

included as interest income on investment securities in the income statement while losses arising from impairment are

recognised in the income statement as finance cost.

Available for sale financial assets are carried at costs when equity instruments cannot be carried at fair value because

its fair value cannot be reliably measured. These are tested for impairment in line with IAS 39 and any impaired

expenses that arise therefrom are not reversed in subsequent periods.

Interest earned whilst holding available-for-sale financial investments is reported as interest income using the effective

interest rate (EIR). The losses arising from impairment of such investments are recognised in the income statement in

‘Impairment losses on financial investments’ and removed from the Available-for-sale reserve.

For financial assets carried at amortised cost (such as amounts due from banks, loans and advances to customers as

well as held to maturity investments), the Bank first assesses individually whether objective evidence of impairment

exists for financial assets that are individually significant, or collectively for financial assets that are not individually

significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial

asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses

them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or

continues to be, recognised are not included in a collective assessment of impairment.

Promissory notes are written, dated and signed two-party instruments containing an unconditional promise by the issuer

to pay a definite sum of money to a payee on demand or at a specified future date. Promissory notes are measured at

amortised cost using the effective interest method, less any impairment losses. Origination transaction costs and

origination fees received that are integral to the effective rate are capitalised to the value of the promissory note.

the Bank assesses at each reporting date whether there is objective evidence that a financial asset or group of

financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are

incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after

the initial recognition of the assets (a ‘loss event’), and that loss event (or events) has an impact on the estimated

future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Held-to-maturity investments are non-derivative financial assets with fixed determinable payments and fixed maturities

that management has both the positive intent and ability to hold to maturity and whichwere not designated as at fair

value through profit and loss or as available for sale. A sale or reclassification of more than an insignificant amount of

held-to-maturity investments would result in the reclassification of all held-to-maturity investments as available-for-sale,

and prevent the Bank from classifying investment securities as held-to-maturity for the current and the following two

financial years.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an

active market, other than those classified by the Bank as at fair value through profit or loss or available-for-sale.

Loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Origination transaction costs and origination fees received that are integral to the effective rate are capitalised to the

value of the loan and amortised through interest income as part of the effective interest rate. All of the Bank’s advances

are included in the loans and receivable category.

Available-for-sale investments are non-derivative investments that are neither classified as held for trading nor

designated at fair value through profit or loss. Unquoted equity securities whose fair value cannot be reliably measured

are carried at cost.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value. When the

investment is disposed of or impaired, the cumulative gain or loss previously recognised in equity is recognised in the

income statement in other operating income.

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(cii) Available-for-sale financial assets

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the

difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future

expected credit losses that have not yet been incurred).

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is

recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is

accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment

loss. The interest income is recorded as part of Interest and similar income.

the Bank considers evidence of impairment at both a specific asset and collective level. All individually significant

assets are assessed for specific impairment. All significant assets found not to be specifically impaired are then

collectively assessed for any impairment that has been incurred but not yet identified by grouping together financial

assets (carried at amortised cost) with similar risk characteristics. Objective evidence that financial assets (including

equity securities) are impaired can include:

- a breach of contract such as a default or delinquency in interest or principal repayments by a borrower; restructuring

of a loan or advance by the Bank on terms that the Bank would not otherwise consider

- indications that a borrower or issuer will enter bankruptcy;

- the disappearance of an active market for a security, or other

- observable data relating to a group of assets data indicating that there is a measurable decrease in the estimated

future cash flows from the group of assets since the initial recognition of those assets, although the decrease cannot

yet be identified with the individual financial assets in the portfolio, including

Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and

all collateral has been realised or has been transferred to the Bank. If, in a subsequent year, the amount of the

estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised,

the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-

off is later recovered, the recovery is credited to the ’Credit loss expense’.

Estimates of changes in future cash flows reflect, and are directionally consistent with, changes in related observable

data from year to year (such as changes in unemployment rates, property prices, commodity prices, payment status, or

other factors that are indicative of incurred losses in the group and their magnitude). The methodology and

assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss

estimates and actual loss experience.

Available-for-sale financial assets are impaired if there is objective evidence of impairment, resulting from one or more

loss events that occurred after initial recognition but before the reporting date, that have an impact on the future cash

flows of the asset. In addition, an available-for-sale equity instrument is generally considered impaired if a significant or

prolonged decline in the fair value of the instrument below its cost has occurred. Where an available-for-sale asset,

which has been remeasured to fair value directly through equity, is impaired, the impairment loss is recognised in the

income statement. If any loss on the financial asset was previously recognised directly in equity as a reduction in fair

value, the cumulative net loss that had been recognised in equity is transferred to the income statement and is

recognised as part of the impairment loss. The amount of the loss recognised in the income statement is the difference

between the acquisition cost and the current fair value, less any previously recognised impairment loss.

If, in a subsequent year, the amount relating to an impairment loss decreases and the decrease can be linked

objectively to an event occurring after the impairment loss was recognised in the income statement, where the

instrument is a debt instrument, the impairment loss is reversed through the income statement. An impairment loss in

respect of an equity instrument classified as available-for-sale is not reversed through the income statement but

accounted for directly in equity.

a) adverse changes in the payment status of borrowers or issuers in the group, or

b) national economic conditions that correlate with defaults in the group.

In assessing collective impairment, the Bank uses statistical modelling of historical trends of the probability of default,

timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current

economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by

historical modelling. Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked

against actual outcomes to ensure that they remain appropriate

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(ciii) Offset of financial instruments

(civ) Derecognition of financial instruments

2.2.4 Cash and cash equivalents

2.2.5 Property and equipment

(i) Recognition and measurement

(ii) Subsequent costs

(iii) Depreciation

Leasehold land and Building 50 years

Computer hardware 3 years

Furniture and office equipment 5 years

Motor vehicles 4 years

Depreciation methods, useful lives and residual values are reassessed at each reporting date.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and

only when, the Bank has currently enforceable a legal right to offset the amounts and intends either to settle on a net

basis or to realise the asset and settle the liability simultaneously. The financial assets and liabilities are presented on a

gross basis.

Income and expenses are presented on a net basis only when permitted by accounting standards, or for gains and

losses arising from a group of similar transactions such as in the Bank’s trading activity.

the Bank derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it

transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all

the risks and rewards of ownership of the financial asset are transferred, or has assumed an obligation to pay those

cash flows to one or more recipients, subject to certain criteria.

Any interest in transferred financial assets that is created or retained by the Bank is recognised as a separate asset or

liability.

the Bank derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. the Bank

enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all risks or

rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the

transferred assets are not derecognised from the balance sheet. In transactions where the Bank neither retains nor

transfers substantially all the risks and rewards of ownership of a financial asset, it derecognises the asset if control

over the asset is lost.

The rights and obligations retained in the transfer are recognised separately as assets and liabilities as appropriate. In

transfers where control over the asset is retained, the Bank continues to recognise the asset to the extent of its

continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred

asset.

the Bank writes off certain loans and investment securities when they are deemed to be uncollectible.

Cash and cash equivalents include notes and coins in hand, unrestricted balances held with central banks and highly

liquid financial assets with original maturities of less than three months, which are subject to insignificant risk of

changes in their fair value, and are used by the Bank in the management of its short-term commitments.

Items of property and equipment are carried at cost less accumulated depreciation and impairment losses. Cost

includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property or

equipment have different useful lives, they are accounted for as separate items (major components) of property and

equipment.

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is

probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured

reliably. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.

Depreciation is recognised in profit or loss on a straight-line basis to write down the cost of property, plant and

equipment to their residual values. Leased assets are depreciated over the shorter of the lease term and their useful

lives. Depreciation begins when an asset is available for use and ceases at the earlier of the date that the asset is

derecognised or classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and

Discontinued Operations.

The estimated useful lives for the current and comparative year are as follows:

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(iv) De-recognition

2.2.6 Non-current asset held for sale

2.2.7 Intangible assets

Computer software: 3 years

Computer software

2.2.8 Leased assets – lessee

2.2.9 Impairment of non-financial assets

An item of property and equipment is derecognised on disposal or when no future economic benefits are expected from

its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net

disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is

derecognised.

A property is classified for sale as non-current assets held for sale when it is expected that the carrying amount will be

recovered principally through sale rather than from continuing use. For this to be the case, the property must be

available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such

property and its sale must be highly probable. For sale to be highly probable:

- The sale should be expected to qualify for recognition as a completed sale within one year from the date of

classification.

- The Board must be committed to a plan to sell the property and an active programme to locate a buyer and

complete the plan must have been initiated

- the property must be actively marketed for sale at a price that is reasonable in relation to its current fair value

Leases in terms of which the Bank assumes substantially all the risks and rewards incidental to ownership are

classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its

fair value and the present value of the minimum lease payments.Subsequent to initial recognition, the asset is

accounted for in accordance with the accounting policy applicable to that asset.

The carrying amounts of the Bank’s non-financial assets are reviewed at each reporting date to determine whether

there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable

amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are

independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses

recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any intangible asset

allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro

rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the

asset. In determining fair value less costs to sell, an appropriate valuation model is used normally by reference to a

quoted price in an active market for an identical asset.

The Bank’s intangible assets include the value of computer software. An intangible asset is recognised only when its

cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will

flow to the Bank.

Computer software acquired by the Bank is stated at cost less accumulated amortisation and accumulated impairment

losses.

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible

assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in

the asset are accounted for by changing the amortisation year or method, as appropriate, and they are treated as

changes in accounting estimates. The amortisation expense on intangible assets with finite lives is presented as a

separate line item in the income statement.

Amortisation is calculated using the straight–line method to write down the cost of intangible assets to their residual

values over their estimated useful lives as follows:

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2.2.10 Deposits

2.2.11 Employee benefits

(i) Defined contribution plans

(ii) Short-term benefits

2.2.12 Share capital and reserves

(i) Share issue costs

(ii) Dividend on ordinary shares

(iii) Earnings per share

2.2.13 Related party transactions

The Bank operates a defined contribution plan, which requires contributions to be made to a separately administered

fund.

A defined contribution plan is a pension plan under which the Bank pays fixed contributions to a separate entity. the

Bank has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to

pay all employees the benefits relating to employee service in the current and prior periods.

For defined contribution plans, the Bank pays contributions to publicly or privately administered pension fund

administrators (PFA) on a mandatory, contractual or voluntary basis. the Bank has no further payment obligations once

the contributions have been paid. The contributions are recognised as employee benefit expense in the profit or loss

when they are due.

Employee benefits include:

Short-term employee benefits, such as the following, if expected to be settled wholly before twelve months after the end

of the annual reporting period in which the employees render the related services:

(i) wages, salaries and social security contributions;

(ii) paid annual leave and paid sick leave;

(iii) profit-sharing and bonuses; and

(iv) non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for

current employees;

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the

Bank has a present legal or constructive obligation to pay this amount as a result of past service provided by the

employee and the obligation can be estimated reliably.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in

prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An

impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An

impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount

that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Reversals of impairment losses are recognised in profit or loss.

the Bank presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the

profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares

outstanding during the year.

Parties are considered to be related if one party has the ability to control the other party or exercise influence over the

other party in making financial and operational decisions, or one other party controls both. The definition includes

subsidiaries, associates, joint ventures, as well as key management personnel.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average

number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

Deposits are initially measured at fair value plus transaction costs, and subsequently measured at their amortised cost

using the effective interest method,

Incremental costs directly attributable to the issue of an equity instrument are deducted from the initial measurement of

the equity instruments.

Dividends on the Bank’s ordinary shares are recognised in equity in the year in which they are paid or, if earlier,

approved by the Bank’s shareholders. No dividends were declared nor paid during the financial years ended 31

December 2015 and 31 December 2014

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2.2.14 Segment reporting

2.2.15 Interest income

2.2.16 Fees and commission

2.2.17 Income tax expense

2.2.19 Current income tax

2.2.20 Deferred tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement

except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the

taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially

enacted, at the reporting dated in the countries where the Bank operates and generates taxable income.

Deferred tax assets and liabilities are measured at the tax rates that are expected to be apply in the year when the

asset is realised or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively

enacted at the reporting date.

- temporary differences arising on the initial recognition of goodwill

Other fees and commission expense relates mainly to transaction and service fees, which are expensed as services

are received.

A segment is a distinguishable component of the company that is engaged either in providing related products or

services (business segment), or in providing products or services within a particular economic environment

(geographical segment), which is subject to risks and reward that are different from those of other segments.

the Bank's activities are concentrated in one geographic region. The Bank's primary format for segment reporting is

based on business segment. The business segments are determine by management based on the Bank's internal

reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as

those that can be allocated on a reasonable basis.

the Bank periodically evaluates positions taken in tax returns: ensuring information disclosed are in agreement with the

underlying tax liability which has been adequately provided for in the financial statements.

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and

liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except for:

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business

combination and that affects neither accounting nor taxable profit

Interest income and expense for all interest bearing financial instruments, are recognised within ‘interest income’ and

‘interest expense’ in the income statement using the effective interest method.The effective interest rate is the rate that

exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or

liability (or, where appropriate, a shorter year) to the net carrying amount of the financial asset or liability. The effective

interest rate is calculated on initial recognition of the financial asset and liability and is not revised subsequently.

The calculation of the effective interest rate includes all fees and points paid or received, transaction costs, and

discounts or premiums that are an integral part of the effective interest rate excluding future credit losses. Transaction

costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or

liability.

Interest income and expense presented in the income statement include interest on financial assets and liabilities at

amortised cost on an effective interest basis.

· temporary differences relating to investments in subsidiaries to the extent that they probably will not reverse in the

foreseeable future

Fees and commission income (such as processing and management fees charged for assessing the financial position

of the borrower, evaluating and reviewing guarantee, collateral and other security, negotiation of instruments’ terms,

preparing and processing documentation and finalising the transaction) and fees and commission expenses that are

integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective

interest rate of financial assets or liabilities

Other fees and commission income, including account servicing fees, placement fees, sales commission and

syndication fees, are recognized as the related services are performed.

When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised on

a straight-line basis over the commitment year.

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3 Significant accounting judgements, estimates and assumptions

These disclosures supplement the commentary on financial risk management.

(a) Key sources of estimation uncertainty

(i) Allowances for credit losses

(ii) Determining fair values

(iii) Depreciation and carrying value of property, plant and equipment

(iv) Current income tax assets and liabilities

The management periodically evaluates positions taken in tax returns: ensuring information disclosed are in agreement

with the underlying tax liability which has been adequately provided for in the financial statements.

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the

taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially

enacted, at the reporting dated in the countries where the Bank operates and generates taxable income.

The Board determines the development, selection and disclosure of the Bank’s critical accounting policies and

estimates, and the application of these policies and estimates.

Assets accounted for at amortised cost are evaluated for impairment on a basis described in accounting policy

2.2.3c. The specific counterparty component of the total allowances for impairment applies to claims evaluated

individually for impairment and is based upon management’s best estimate of the present value of the cash flows that

are expected to be received. In estimating these cash flows, management makes judgements about a counter party’s

financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its

merits, and the workout strategy and estimate of cash flows considered recoverable are independently approved by the

Credit Committee.

Collectively assessed impairment allowances cover credit losses inherent in portfolios of loans with similar economic

characteristics when there is objective evidence to suggest that they contain impaired loans, but the individual

impaired items cannot yet be identified. In assessing the need for collective loan loss allowances, management

considers factors such as credit quality, portfolio size, concentrations, and economic factors. In order to

estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to

determine the required input parameters, based on historical experience and current economic conditions. The

accuracy of the allowances depends on how well these estimate of future cash flows for specific counterparty

allowances and the model assumptions and parameters used in determining collective allowances are made.

The determination of fair value for financial assets and liabilities for which there is no observable market price requires

the use of techniques as described in accounting policy 2.2.3. For financial instruments that trade infrequently and have

little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity,

concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no

longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has

become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items

are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets

against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation

authority.

The estimation of the useful lives of assets is based on management’s judgement. Any material adjustment to the

estimated useful lives of items of property and equipment will have an impact on the carrying value of these items.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and

any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be

available against which the deductible temporary differences, and the carry forward of unused tax credits and unused

tax losses can be utilised.

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(b) Critical accounting judgements in applying the Bank’s accounting policies

Critical accounting judgements made in applying the Bank’s accounting policies include:

(i) Valuation of financial instruments:

• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

Level 1 Level 2 Level 3 Total

N'000 N'000 N'000 N'000

31 December 2015

Investments in equities - - 100,000 100,000

31 December 2014

Investments in equities 6,497,413 - 100,000 6,597,413

(ii) Financial assets and liabilities classification

(iii) Going concern

(iv) Determination of impairment of property, plant and equipment, and intangible assets, excluding goodwill

The table below analyses financial instruments measured at fair value into the fair value hierarchy at the end of the

reporting year:

• Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or

indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market

prices in active markets for similar instruments; quoted prices for identical or similar instruments in

markets that are considered less than active; or other valuation techniques where all significant inputs are

directly or indirectly observable from market data.

• Level 3: Valuation techniques using inputs that are not based on observable market data, i.e.,

unobservable inputs. This category includes all instruments where the valuation technique includes inputs

not based on observable data and the unobservable inputs could have a significant effect on the

instrument’s valuation. This category includes instruments that are valued based on quoted prices for

similar instruments where significant unobservable adjustments or assumptions are required to reflect

differences between the instruments.

The Bank’s accounting policies provide scope for assets and liabilities to be designated on inception into

different accounting categories in certain circumstances:

Details of the Bank’s classification of financial assets and liabilities are given under the accounting policies in note

2.2.3.

The Bank's management has made an assessment of its ability to continue as a going concern and is

satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management

is not aware of any material uncertainties that may cast significant doubt upon the Bank's ability to continue as a going

concern. Therefore, the financial statements continue to be prepared on the going concern basis.

Management is required to make judgements concerning the cause, timing and amount of impairment. In the

identification of impairment indicators, management considers the impact of changes in current competitive conditions,

cost of capital, availability of funding, technological obsolescence, discontinuance of services and other circumstances

that could indicate that impairment exists. The Bank applies the impairment assessment to its separate cash

generating units. This requires management to make significant judgements and estimates concerning the

existence of impairment indicators, separate cash generating units, remaining useful lives of assets, projected cash

flows and net realisable values. Management’s judgement is also required when assessing whether a previously

recognised impairment loss should be reversed.

The Bank’s accounting policy on fair value measurements is discussed under note 2.2.3. The Bank measures fair

values using the following fair value hierarchy that reflects the nature and process used in making the measurements:

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4 New standards and interpretations not yet effective

New Standards and Improvements

New standards, interpretations and amendments adopted by the Bank

Standards and Interpretations issued/amended but not yet effective

Summary of content StandardEffective

DateSale or Contribution of Assets between an Investor and its

Associate or Joint Venture (IFRS 10 and IAS 28 Amendments) 01-Jan-16

Investment Entities: Applying the Consolidation Exception

01-Jan-16

Accounting for Acquisitions of Interests in Joint Operations (IFRS 11 Amendments) 01-Jan-16

Regulatory Deferral Accounts (IFRS 14) 01-Jan-16

Disclosure Initiative ( IAS 1 Amendments) 01-Jan-16

Clarification of Acceptable Methods of Depreciation and

Amortisation (IAS 16 and IAS 38 Amendments) 01-Jan-16

Agriculture: Bearer Plant Amendments to IAS 16 and IAS 41 01-Jan-16

Equity Method in Separate Financial Statements Amendments to IAS 27 01-Jan-16

Revenue from Contracts with Customers (IFRS 15) 01-Jan-17

Financial Instruments (IFRS 9) 01-Jan-18

Non Current assets Held for Sale (IFRS 5) 01-Jan-16

Leases IFRS 16 01-Jan-19

Key amendments includes

There are no new standard or amendment to existing standard that took effect during the reporting year. Hence, there

was no impact on the accounting policies, financial position or performance of the Bank.

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint

Venture

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

IFRS 14- Regulatory deferral accounts:

· An investment entity accounts for its investments in subsidiaries at fair value through profit or loss in accordance

with IFRS 9 (or IAS 39, as applicable), except for investments in subsidiaries that provide services that relate to the

investment entity’s investment activities, which must be consolidated.

IFRS 14 is designed as a limited scope Standard to provide an interim, short-term solution for rate-regulated entities

that have not yet adopted International Financial Reporting Standards (IFRS). Its purpose is to allow rate-regulated

entities adopting IFRS for the first time to avoid changes in accounting policies in respect of regulatory deferral

accounts until such time as the International Accounting Standards Board (IASB) can complete its comprehensive

project on rate regulated activities. This standard would not have an impact on the Group as it is not a first time

preparer of IFRS financial statements. This is in addition to the fact that the regulators of the countries where we

operate do not allow creation of any regulatory deferral account.

(IFRS 10 10, IFRS 12 and IAS 28

Amendments)

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary

that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from

the sale or contribution of assets that constitute a business, as defined in IFRS 3 Business Combinations , between an

investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of

assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in

the associate or joint venture.

The investment entities amendments provide an exception to the consolidation requirement for entities that meet the

definition of an investment entity.

Investment entity’ is defined in IFRS 10 Consolidated Financial Statements.

· An entity must meet all three elements of the definition and consider whether it has four typical characteristics, in

order to qualify as an investment entity.

· An entity must consider all facts and circumstances, including its purpose and design, in making its assessment.

The accounting policies adopted in the preparation of the 2015 financial statements are consistent with those followed

in the preparation of the Bank’s 2014 financial statements.

The IASB and the IFRIC have published the following standards and interpretations, which were not yet effective at the

end of the financial year.

Commentaries on these new standards/amendments are provided below.

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• At cost

• In accordance with IFRS 9 (or IAS 39) or

• Using the equity method

The standards that are effective for annual periods beginning after 1 January 2015 have not been applied in preparing

these financial statements.

The Bank has not adopted any other standard, interpretation or amendment that has been issued but is not yet

effective

The amendments to IAS 16 and IAS 41 Agriculture change the scope of IAS 16 to include biological assets that meet

the definition of bearer plants (e.g., fruit trees). Agricultural produce growing on bearer plants (e.g., fruit growing on a

tree) will remain within the scope of IAS 41. This standard is not applicable to the Bank. In addition, this standard is

effective for the annual periods beginning after 1 January 2016 have not been applied in preparing these financial

statements.

The amendments to IAS 27 Separate Financial Statements allow an entity to use the equity method as described in IAS

28 to account for its investments in subsidiaries, joint ventures and associates in its separate financial statements.

Therefore, an entity must account for these investments either:

The entity must apply the same accounting for each category of investment. In addition, this standard is effective for the

annual periods beginning after 1 January 2016 and have not been applied in preparing these financial statements.

This standard was issued on 13 January 2016. The scope of the new standard includes leases of all assets, with

certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the

underlying asset) for a period of time in exchange for consideration.

This standard is effective for the annual periods beginning after 1 January 2019 and have not been applied in preparing

these financial statements.

Amendments to IFRS 7 - Financial Instruments: Disclosures

Amendments to IAS 19 - Defined Benefit Plans: Employee Contributions

Amendments to IFRS 5 - Non Current Asset Held for Sale and Discontinued Operations

IFRS 15 - Revenue from Contracts with Customers

IFRS 9 - Financial instruments

Amendments to IAS 16 and IAS 41 10 - Agriculture: Bearer Plants

Amendments to IAS 27 - Equity Method in Separate Financial Statements

IFRS 16 Leases

Amends IFRS 7 to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose

of determining the disclosures. An entity is required to provide disclosures for any continuing involvement in a

transferred asset that is derecognized in its entirety. It also clarifies the applicability of IFRS 7 on offsetting disclosures

to condensed interim financial statements. It states that these IFRS 7 disclosures are not required in the condensed

interim financial report.

Amends IAS 19 to clarify that high quality corporate bonds used in estimating the discount rate for post employment

benefits should be denominated in the same currency as the benefits to be paid (thus, the depth of the market for high

quality corporate bonds should be assessed at currency level).

Amends IFRS 5 with specific guidance on changes in disposal methods, for cases in which an entity reclassifies an

asset from held for sale to held for distribution or vice versa and cases for which held for distribution accounting is

discontinued. The amendment clarifies that changing from one of these disposal methods to the other should not be

considered to be a new disposal plan, rather it is a continuation of the original plan.

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are Identification of the contract with the customer, Identification of the performance

obligations in the contract, Determination of the transaction price, Allocation of the transaction price to the performance

obligations in the contracts, and Recognition of revenue when (or as) the entity satisfies a performance obligation.

IFRS 9 includes requirements for the recognition and measurement of all financial instruments with emphasis on the

accounting for hedging transactions. The standard is a replacement for the current IAS 39. The bank will be impacted

by the adoption of IFRS 9 as all financial assets designated as Available for sale (AFS) would have to be classified as

either Fair Value Through Profit or Loss or measured at amortised cost.

However, the bank would continue to adopt IAS 39 (Financial Instrument: Recognition and Measurement) given that the

standard will be for annual periods beginning on or after 1 January, 2018.

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December

2015

December

2014

N'000 N'000

5 Cash and cash equivalents

This comprises of:

Cash at hand 4,285 42,161

Balances held with other banks 78,334 65,165

Short term placements 8,149,574 6,176,324

8,232,193 6,283,650

Mandatory cash reserve deposits with central bank (note 5a) 23,958 18,381

Total 8,256,151 6,302,031

5a

5b Cash and cash equivalent for the purposes of statement of cash flow

Total as arrived at in note 5 above 8,256,151 6,302,031

Less restricted cash and bank balances (23,958) (18,381)

Less cash and cash equivalents taken over on merger (note 24) - (1,859,922)

8,232,193 4,423,728

6 Financial assets

6i Investment in quoted equity designated at fair value through

profit and loss

At the beginning of the year (at cost) 7,479,492 365,121 From merged companies - 7,622,376 Less fully provisoned investments written off (365,121) - Less transferred on discontinued operation (22,269) - Disposal during the year (7,092,102) (508,005)

At the end of the year (at cost) - 7,479,492

Fair value loss (Note 6iii) - (982,079)

At the end of the year (at fair value) - 6,497,413

6ii Available for sale: Investment in unquoted equity.

Nigeria Mortgage Refinance Company [NMRC] (Note 6iv) 100,000 100,000

Balance, end of year 100,000 6,597,413

Mandatory cash reserve deposits with central bank represents a percentage of customers' deposits (prescribed from time

to time by the central bank) which are not available for daily use. For the purposes of the Statement of cashflow, this

balance is excluded from cash and cash equivalents.

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December

2015

December

2014

N'000 N'000

6iii Movement in fair value loss is as follow:

At the beginning of the year 982,079 350,726 During the year:

Used to write off fully provisioned investments (365,121) - No longer required on discontinued operation (9,890) - No longer required on assets disposed (607,068) - Charged during the year - 631,353

(982,079) 631,353

At the end of the year - 982,079

6iv

7 Loans and advances to customers

7a Loans and advances to customers

Gross loans and advances 8,394,093 10,818,525

Transferred on discontinued operations (618,436) -

7,775,657 10,818,525

Less:

Specific impairment 440,137 1,511,786

Collective impairment 85,781 108,031

525,918 1,619,817

7,249,739 9,198,708

Maturity profile

Current (within 12 months) 1,251,155 2,949,427

Non-current (above 12 months) 5,998,584 6,249,281

7,249,739 9,198,708

7b Movement in impairment on loan is as follow:

Balance begining of the year 1,619,817 1,600,192

Impairment charges on loans transferred on discontinued

operation(301,800) -

Used to write off fully provisioned balance (note 7c)(1,629,732) -

Provision no longer required - (1,122,323)

From merged companies - 575,676

Charge for the year 837,633 566,272

Balance, end of year525,918 1,619,817

NMRC act as a liquidity vehicle at injecting funds into the Nigerian Mortgage Sector. The objectives of the NMRC shall

be to support Mortgage Originators such as Primary Mortgage Banks (PMBs) and Deposit Money Banks (DMBs) to

increase mortgage lending by refinancing their mortgage loan portfolios and capital market investors who typically are

looking for long dated high equity securities.

The fair value of the unquoted equity security has not been disclosed, as the fair value cannot be reliably measured.

There is no similar investment that the price can be reliably benchmarked against because there is no active market. The

investment is likely to be recouped through redemption rather than disposal.

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December

2015

December

2014

N'000 N'000

7c

7d Classification of loans and advances by performance

Performing loans 6,732,537 8,479,968

Non performing loans 1,043,120 2,338,557

Total 7,775,657 10,818,525

7e Classification of loans and advances by nature

Term loans 214,266 107,049

Overdrafts 446,445 1,999,203

Commercial real estate mortgage 188,428 1,063,282

Residential retail mortgage 6,926,518 7,648,991

7,775,657 10,818,525

8 Non-current assets held for sale

Balance, beginning of year 2,015,159 2,378,956

Less transfer on discontinued operation (673,704) -

From merged companies - 3,323,087

Addition during the year 497,136 179,345

Reclassification to other assets - deposit for property - (21,190)

Disposal during the year (Note 8b) (473,000) (3,845,039)

Balance, end of year 1,365,591 2,015,159

8a

8b

The balance on non-current asset held for sale represent the stock of properties previously held by the Bank as

investment properties. In line with CBN regulation on permissible business of PMBs, they were derecognised as

investment properties and classified as held for sale in line with IFRS 5 as directed by the CBN vide its circular

OFI/DIR/CIR/GEN/01/07 dated 11 October 2013. They were expected to have been fully sold before the year end, but

due to market conditions, some of them were still unsold at the financial year end. However, the Bank is still committed to

disposing them off. They are held at cost. No impairment have been recognised in the properties since the market value

is much higher than the cost.

During the year, certain loans and advances amounting to N1.63 billion (2014: nil) were written off the loan portfolios.

The Directors believe the cashflow recovery from such loans and advances are not likely. However, they have been

transferred to the memorandum record with a view of pursuing recovery.

Some of the properties were disposed at a gain of N4.9 million during the year

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December

2015

December

2014

N'000 N'000

9 Other assets

Deposit for property (Note 9a) 281,514 311,514

Prepayment for contracts and services 173,289 188,574

Accounts receivable 488 65,584

Stationery stock 8,879 7,588

Merger issues suspense - 62,639

Sundry receivables (note 9b) 116,100 179,082

580,270 814,981

Provision for doubtful balances (note 9c) - (34,044)

580,270 780,937

9a

9b

9c Movement in impairment for other assets is as follow:

Balance beginning of the year 34,044 615,719

Used to write off fully provisioned balance - (615,719)

From merged company - 34,044

Transferred on discontinued operation (34,044) -

Balance, end of year - 34,044

9d

9e Maturity profile of other assets

Current 295,796 500,938

Non-current 284,474 314,043

580,270 814,981

The components of Other Assets have been fully reviewed and the Directors are of the firm opinion that they represent

balances for which the Bank will receive full benefits in the nearest future and no condition exist as at the balance sheet

date that require any of the balances to be impaired

This is the deposit made by legacy Suntrust for a leasehold property at Victoria Island, Lagos for which the company is

pursuing approval from Lagos State government.

N116,100,000 relates to amount receivable out of the proceeds of disposal of some properties reported in Note 8b

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10 Property, plant and equipment

Furniture & Computer Motor Office

Building Fittings equipment vehicles Equipment

N'000 N'000 N'000 N'000 N'000 N'000

Cost:

At 1 January 2015 137,270 65,339 148,480 84,646 75,095 510,830

Transferred on discontinued operation (137,270) (10,117) (16,480) (47,751) (37,898) (249,516)

Addition during the year - 23 3,580 - 716 4,319

At 31 December 2015 - 55,245 135,580 36,895 37,913 265,633

Accumulated depreciation

At 1 January 2015 6,169 60,832 122,429 67,425 72,877 329,732

Transferred on discontinued operation (6,744) (11,394) (9,644) (39,435) (37,021) (104,238)

Charged for the year 575 3,790 14,240 5,272 (5,860) 18,017

At 31 December 2015 - 53,228 127,025 33,262 29,996 243,511

Carrying amount at 31 December 2015 - 2,017 8,555 3,633 7,917 22,122

Carrying amount at 31 December 2014 131,101 4,507 26,051 17,221 2,218 181,098

10a

Total

There were no capitalised borrowing costs related to the acquisition of property, plant and equipment during the year (31 December 2014: Nil). Also,

there were no capital commitments as at reporting date in respect of items of property, plant and equipment.

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December

2015

December

2014

N'000 N'000

11 Intangible assets

This comprises of acquired computer software which does not form part of a related hardware.

CostAt the beginning of the year 340,848 326,796

Additions during the year 2,047 14,052

342,895 340,848

Accumulated amortisationAt the beginning of the year 323,689 311,476


332,954 323,689

Carrying amount

At end of year 9,941 17,159

11a The intangible asset comprises of acquired computer software which does not form part of a related hardware.

12 Goodwill 2015 2014

At end of the year 317,704 317,704

13 Deposit from customers

Retail

Demand deposits 255,810 345,961

Savings 9,249 106,547 265,059 452,508

Corporate

Term deposits 364,135 5,600

Current deposits 159,388 1,035,657 523,524 1,041,257

788,583 1,493,765

14 Income tax expense

Current tax expense:

Company income tax based on minimum tax 53,116 27,473

Education tax 852 -

Information technology levy 1,306 602

55,274 28,075

Deferred tax (reversed)/expense (45,190) 50,324

Total income tax expenses 10,084 78,399

There were no capitalised borrowing costs related to the acquisition of intangible assets during the year (31 December 2014: Nil). Also,

there were no capital commitments as at reporting date in respect of items of intangible assets.

The Goodwill arose on the merger of Oceanic Homes Savings and Loans Plc, Suntrust Savings & Loans Limited and Dala

Building Society Plc on 31 December 2013. The Directors have carried out an impairment test on the goodwill and have

concluded that there was no impairment

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December

2015

December

2014

N'000 N'000

14.1 Reconciliation of effective tax rate

Profit before income taxation 131,928 111,081

Income tax using the domestic corporation tax rate 39,578 33,324

Minimum tax 53,116 27,473

Temporary difference on property, plant and equipment (45,190) 50,324

Non-deductible expenses 256,517 120,787

Tax exempt income (296,095) (154,111)

Education tax 852 -

Information technology levy 1,306 602 Total Income Tax Expense In Statement Of

Comprehensive Income 10,084 78,399

14.2 Current tax liabilities

Balance, beginning of year 45,799 3,238

from merged companies - 42,517

Charge for the year (note 14) 55,274 28,075

Payment during the year (45,799) (28,031)

Balance at the end of year 55,274 45,799

14.3 Movement in deferred taxation

Balance, beginning of year 50,324 -

Movements during the year

Property, plant and equipment (45,190) 50,324

Balance at the end of year 5,134 50,324

14.4

2015 2014

The recognised deferred tax liability during the year is attributable to the following:

Deferred tax are attributable to the following:

Property, plant and equipment 5,134 50,324 5,134 50,324

The unrecognised deferred tax asset during the year is attributable to the following:

Allowance for loan losses and others (280,309) (206,854)

(280,309) (206,854)

Significant management judgment is required to determine the amount of deferred tax assets that can be recognized,

based upon the likely timing and the level of future profits together with future tax planning strategies.

The deferred tax liability of the Bank relate primarily to temporary difference in the recognition of depreciation and capital

allowance on property and equipment.

The Deferred tax asset of N280.3 million (2014: N206.8 million) which relate primarily to temporary difference in the

recognition of impairment charges and unrelieved losses was not recognised due to the uncertainty about the availability

of future taxable profits against for which deferred tax assets can be utilized especially when the bank is converting to

another sector of banking.

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December

2015

December

2014

N'000 N'000

15 Retirement benefit obligations

Defined contribution scheme

Balance, beginning of year 1,317 576


Contributions remitted (10,734) (6,106)

402 1,317

16 Other liabilities

Account payable 61,291 181,726

Other payables 8,608 46,279

Managers' cheques 97,654 28,689

167,553 256,694

16a Components of other liabilities are non-interest bearing and are normally settled on demand by the Bank

17 Interest bearing loans and borrowings

These are financial liabilities valued at amortised cost

Due to Nigeria Mortgage Refinance Company (17c) 435,577 -

Due to FMBN on NHF scheme (17d) 6,212,139 5,682,727

Due to Skye Bank plc (17e) - 250,000

Due to First Bank plc (17e) - 6,562,235

6,647,716 12,494,962

17a Movement in borrowings

Balance, beginning of the year 12,494,962 1,629,718

Additions during the year 1,208,402 747,307

From merged companies - 14,057,775

Transferred on discontinued operation (11,621) -

Repayments during the year (7,044,027) (3,939,838)

Balance, end of the year 6,647,716 12,494,962

17b Maturity profile

Current 654,124 3,784,966

Non-current 5,993,592 8,709,996

6,647,716 12,494,962

17c

17d

This represents funds obtained from Nigeria Mortgage Refinance Company Loans at interest rate of 16% to

refinance certain qualifying mortgage loans. The tenor is 15 years. Interest and principal are payable monthly.

This represents funds obtained from Federal Mortgage Bank of Nigeria at interest rate of 4% and disbursed to

beneficiaries of National Housing Fund at 6%. The tenor is between 10 to 15 years. Interest and principal are

payable monthly.

The Bank and its employees each contributes 10% and 8% respectively of basic salary, housing and transport allowance

to each employee's retirement savings account maintained with their nominated pension fund administrators. The

amount represents sums payable to pension fund administrators of which Personal Identification Number (PIN) of affected

employees has not been presented to effect the remittance

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17e

17f

18 Issued and paid up share capital

December

2015

December

2014

N'000 N'000

(a) Authorised

12,500,000,000 (2014:10,000,000,000) ordinary shares of N1 each 12,500,000 10,000,000

(b) Issued and fully paid

Ordinary shares of N1 each at the beginning of the year 10,000,000 2,570,000

Issued for cash during the year - 2,958,663

Bonus shares issued during the year from share premium 1,839,000 -

Issued in consideration for acquistion of legacy Suntrust Savings & Loans - 3,519,001

Issued in consideration for acquistion of Dala Building Society - 952,337

At year end 11,839,000 10,000,000

19 Share premium

Balance at beginning of the year 2,791,337 250,000

Reduction arising from discontinued operation during the year (note 23a) (952,337) -

Bonus shares issued during the year (1,839,000) -

Arising from shares issued for cash - 2,541,337

At year end 0 2,791,337

20 Statutory reserves 24,919 24,919

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled

to vote at meetings of the Bank. All ordinary shares rank pari-passu with the same rights and benefits at

meetings of the Bank.

Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by

S.11 of the Guidelines for Primary Mortgage Institutions, an appropriation of 20% of profit after tax is made if the

statutory reserve is less than paid-up share capital and 10% of profit after tax if the statutory reserve is greater than

the paid up share capital, subject to all identifiable losses being made good. Consequently, the Bank made no

transfer to statutory reserves as at 31 December 2015 (31/12/2014: nil).

The bank paid off the loans obtained from Skye Bank and First Bank during the year even though they are

due for final liquidation in 2016/2017. The repayments were financed from the proceeds of disposal of the

financial assets as well as cashlow of the bank. The liquidation is in fulfilment of the conditions attached to

the issuance of commercial banking licence to the bank.

The original terms of the Skye bank loan was a tenor of 4 years (excluding moratorium) at 16% interest rate

per annum while that of the First Bank was a tenor of 5 years at 17% interest rate.

The fair values of the bank's interest-bearing borrowings and loans are determined by using the DCF method

using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period

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21 Retained earnings

22 Earnings per share

Basic earnings per share (kobo)

March 2015

December

2014

N'000 N'000

Profit after tax attributable to equity holders 121,844 32,682

11,839,000 10,000,000

Basic earnings per share (kobo) 1.03 0.33

23

Profit after taxation 121,844 32,682

Taxation 10,084 78,399

Operating profit 131,928 111,081

Adjustments to reconcile profit before taxation to

net cashflow from operating activities:

Depreciation and amortisation 27,282 53,277

Profit on sale of non-current assets held for sale (4,905) (21,495)

Profit on sale of financial assets - (86,984)

Profit on sale of property, plant & equipment - (1,850)

Gain on discontinued operations (27,592) -

Write offs of loans -

Loan impairments 837,634 566,272

Fair value adjustments (982,079) 631,353

Cash flow from operating activities (17,732) 1,251,654

Net cash flow from operating activities before

changes in operating assets:

The retained earnings represents the amount available for dividend distribution to the equity shareholders of

the Company . See statement of changes in equity for movement in retained earnings.

The calculation of basic earnings per share at 31 December 2015 was based on the profit after tax

attributable to ordinary shareholders, and a weighted average number of ordinary shares outstanding on

that date calculated as follows:

Weighted average number of ordinary shares at end

of year

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23a Non-cashflow transaction

24 Discontinuation of business - net assets spinned off

Kano region

N'000

ASSETS

Cash and cash equivalents 134,013

Financial assets (notes 6i & 6iii) 12,379

Loans and advances to customers (notes 7a & 7b) 316,636

Non-current assets held for sale (note 8) 673,704

Other assets 124,740

Property, plant and equipment (note 10) 145,277

Total assets 1,406,749

LIABILITIES

Deposits from customers 396,551

Other liabilities 73,832

Interest bearing loans and borrowings (note 17) 11,621

Total liabilities 482,004

Fair value of assets spinned off 924,745

Settled by:

Share forfeited by shareholders of former Dala in exchange (952,337)

Gain on discontinued operation (note 28) 27,592

The company spinned off its Kano region operation which approximate the business of former Dala Building

Society Plc to another bank in consideration of former Dala shareholders relinguishing their shareholding in

Suntrust and receiving equivalent shares in the bank to which the business is spinned-off to.

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2015 2014

N'000 N'000

25 Interest income

Interest income on cash and cash equivalents 750,074 543,245

Interest income on loans and advances 690,484 927,076

1,440,558 1,470,321

26 Interest expense

Interest expense on deposit from customers 49,670 28,014

Interest expense on borrowings from commercial banks 922,115 586,673

Interest expense on borrowings from FMBN and NMRC 248,430 227,387

1,220,215 842,074

27 Fees and commission income

Commission on turnover 2,376 10,608

Administration and processing fees 76 369

Other fees and commission 62,937 115,847

65,389 126,824

28 Income from financial assets and recoveries

Income from financial assets - 461,220

Gain from discontinued operation (note 24) 27,592 -

Income from non current assets held for sale 4,905 51,384

Other recoveries 30,203 483,233

62,700 995,837

29 Personnel expenses

Salaries and wages 76,937 147,719

Contribution to defined contribution plan 5,034 7,323

Other staff cost 5,394 7,490

87,365 162,532

30 Other operating expenses

Directors' fees and expenses 8,398 11,777

Legal and professional fees 46,662 38,713

Auditors remuneration 7,000 8,000

Utilities, maintenance and travelling expenses 41,915 50,194

Insurance 9,548 7,002

Rent & rates 37,779 34,892

Expenses on increase in share capital 18,755 -

Back duty assessment on non-income taxes 24,253 -

Security expenses 10,441 16,503

Telecomunications expenses 3,624 6,398

Other administrative expenses 37,927 52,914

246,302 226,393

Other recoveries in prior year (2014) arose from the comprehensive reconciliation of various long

outstanding suspense accounts that arose during the merger exercise

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2015 2014

N'000 N'000

32 Net impairment

837,633 566,272

837,633 566,272

33 Emolument of Directors

i Emoluments:

Fees 5,500 8,000

Allowances 1,525 1,775

Aggregate emoluments 7,025 9,775

The Chairman's fees amounted to 250 1,000

Highest paid Director (Executive) 11,250 11,250

ii

Male Female Number Number

N1,000,001 - N5,000,000 9 0 9 8

Above N 5,000,001 1 0 1 3

Number of directors who had no

emoluments. 0 0 0 0

34 Employees and employees diversity

i

Male Female 2015 2014

- Management staff 3 0 3 4

- Senior staff 3 2 5 18

- Junior staff 16 6 22 59

22 8 30 81

ii The related staff costs were: N'000 N'000

Salaries and wages 76,937 147,719

Retirement benefit cost 5,034 7,323

Staff costs 81,971 155,042

Impairment charges on loans and advances (note 7b)

The table below shows the number of Directors of the Bank whose remuneration (excluding

pension contributions) in respect of services to the Bank fell within the ranges shown below.

The average number of persons employed (excluding Directors) in the Bank during the year

as follows:

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35 Contraventions and penalties

36 Related party transactions

36a

Name Relationship Security Interest Limit Balance Status

rate N'million N'million

Kenneth Ofili Director Real estate 16% 55 51.76 non-performing

Mohammed Sadiq Director Real estate 13% 50 16.99 performing

Hamza Wuro bokki Ex Director Real estate 13% 25 4.87 performing

Arho Akpe Ex Director Real estate 6% 15 13.89 performing

87.51

2015 2014

36b Key management transactions

i Loans an advancesSecured loans 22,224 22,965 Other loans 1,170 2,399

23,394 25,364

ii Deposit liabilitiesDeposits 41,114 10,871

37 Claims and litigations

38 Guarantees and other financial commitments

39 Fraud and forgeries

During the year, the bank granted various facilities to its related parties at the rate and terms comparable

to other facilities in the bank's portfolio. An aggregate of N87.51million (2014: N186.6 million) was

outstanding to the related parties on these facilities at the end of the year. The major movement was due

to exit of DBS Real Estate Limited as a related company. Details of these insider related credits are:

The bank is involved in 5 cases (2014: 7 cases) as defendant and 12 cases (2014: 24 cases) as plaintiff. The cases are

mostly in respect of recovery of loans advanced by the bank and counter-litigation by the debtors. The Directors, having

sought legal opinion, are of the opinion that no contingent liability will arise in respect of claims and litigation against the

Bank as at 31 December 2015.

The Directors are of the opinion that all known liabilities and commitments which are relevant in the assessment of the

state of financial affairs of the Bank have been taken into consideration in the preparation of these financial statements.

There was no fraud and forgeries whether successful or otherwise, during the year ended 31 December

2015.

The Bank did not contravene any provision of the Revised Guidelines for Primary Mortgage Institutions and no penalty

was paid during the year ended 31 December 2015.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)


40 Financial risk management

(a) Introduction and overview

the Bank has exposure to the following risks from its use of financial instruments:

(i) credit risk;

(ii) liquidity risk;

(iii) market risks; and

Risk management framework

(i)

(ii) Independent evaluation by external auditors, examiners or consultants.

(iii) Excessive risk concentration

Continuous self-evaluation and monitoring by the Risk Management and Compliance Division in conjunction with Internal

Audit; and

This note presents information about the Bank’s exposure to each of the above risks, the objectives, policies and processes for

measuring and managing risks, and the Bank’s management of capital.

the Bank’s Risk Management philosophy is that moderate and guarded risk attitude will ensure sustainable growth in shareholder

value and reputation.

The Board of Directors and Management are committed to establishing and sustaining tested practices in risk

management at par with leading international banks. For these purposes, the Board has established a Risk Management

department, with responsibility to ensure that the risk management processes are implemented in compliance with policies

approved by the Board of Directors.

The Board of Directors determines the Bank’s goals in terms of risk by issuing a risk policy. The policy both defines acceptable

levels of risk for day-to-day operations, as well as the willingness of the Bank to incur risk, weighed against the expected rewards.

The risk policy is detailed in the Enterprise Risk Management (ERM) Framework, which is a structured approach to identifying

opportunities, assessing the risk inherent in these opportunities and managing these risks proactively in a cost effective manner.

It is a top-level integrated approach Specific policies are also in place for managing risks in the different risk areas of credit,

market, liquidity and operational risks.

The evolving nature of Risk Management practices and the dynamic character of the banking industry necessitate

regular review of the effectiveness of each enterprise risk management component. In the light of this, the Bank’s Enterprise Risk

Management Framework is subject to continuous review to ensure effective and cutting-edge risk management. The review is

done in either or both of the following ways:

The Head, Enterprise Risk Management has the primary responsibility for risk management and for the review the ERM

Framework. All amendments to the Bank’s Enterprise Risk Management Framework require Board approval.

The Risk Management department has the responsibility to enforce the risk policy of the Mortgage Bank by constantly

monitoring risk, with the aim of identifying and quantifying significant risk exposures and acting upon such exposures as

necessary. To ensure that the decision-making process within the Mortgage Bank is regulated and that the boundaries

set by the Board of Directors and regulatory authorities are complied with, Risk Management regularly reviews and

reports risk exposures, usage of limits and any special concerns to senior management and the Board of Directors.

The Risk Management Framework is divided into three functional departments: Credit Risk Management, Market Risk

Management and Operational Risk Management.

Concentrations arise when a number of counterparties are engaged in similar business activities or activities in the same

geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be

similarly affected by changes in economic, political or other conditions.

Concentrations indicate the relative sensitivity of the Bank’s performance to developments affecting a particular industry or

geographical location.

In order to avoid excessive concentrations of risk, the Bank’s policies and procedures include specific guidelines focus on

maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

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(b) Credit risk management

Management of credit risk

(i)

(ii) Establishing the authorisation structure for the approval and renewal of credit facilities.

(iii)

(iv)

(v)

Exposure to credit risk

31/12/2015 31/12/2014 31/12/2015 31/12/2014

N'000 N'000 N'000 N'000Carrying amount 7,249,739 9,198,708 100,000 6,597,413

Assets amortised at cost

Individually impaired:

Grade 1-3: low-fair risk 185,892 345,890 - 7,139,492

Grade 4-6: watchlist 384,321 1,525,147

Grade 7-8: impaired 472,907 467,521 365,121 340,000

Gross amount 1,043,120 2,338,558 365,121 7,479,492

Allowance for impairment (440,137) (1,511,786) (365,121) (982,079)

Carrying amount less of allowance 602,983 826,772 0 6,497,413

Collectively impaired:

Grade 1-3: low-fair risk 4,241,498 5,342,380 100,000 100,000

Grade 4-6: watchlist 2,019,761 2,543,990

Grade 7-8: impaired 471,278 593,598

Gross amount 6,732,537 8,479,968 100,000 100,000

Allowance for impairment (85,781) (108,031) - -

Carrying amount less of allowance 6,646,756 8,371,937 100,000 100,000

Total Carrying amount less of allowance 7,249,739 9,198,708 100,000 6,597,413

Limiting concentrations of exposure to counterparties, geographies and industries (for loans and advances), and by issuer,

credit rating band, market liquidity and country (for investment securities)

Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its

contractual obligations, and arises principally from the Mortgage Bank’s loans and advances to customers and other

banks and investment securities. For risk management reporting purposes, the Bank considers and consolidates all elements of

credit risk exposure. For risk management purposes, credit risk arising on trading assets is managed independently; and

information thereon is disclosed below. The market risk in respect of changes in value in trading assets arising from

changes in market credit spreads applied to debt securities and derivatives included in trading assets is managed as a

component of market risk, further details are provided in notes below.

The Board of Directors has delegated responsibility for the oversight of credit risk to its Board Credit Committee. The Enterprise

Risk Management Group, reporting to the Board Credit Committee, is responsible for management of the Bank’s credit risk,

including:

(i) Formulating credit policies in consultation with business units, covering collateral requirements, credit assessment,

risk grading and reporting, documentary and legal procedures, and compliance with regulatory and statutory

requirements.

Authorisation limits are allocated to business unit Credit Officers. Larger facilities require Directors' approval as appropriate.

Reviewing and assessing credit risk. Group Credit assesses all credit exposures in excess of designated limits, prior to

facilities being committed to customers by the business unit concerned. Renewals and reviews of facilities are subject to the

same review process.

Providing advice, guidance and specialist skills to business units to promote best practice throughout the Group in the

management of credit risk.

Each business unit is required to implement the Bank's credit policies and procedures, with credit approval authorities delegated

from the Board Credit Committee. Each business unit has a Credit Risk officer who reports on all credit related matters to the

Head, Enterprise Risk Management. Each business unit is responsible for the quality and performance of its credit portfolio

and for monitoring and controlling all credit risks in its portfolios, including those subject to central approval.

Loans & Advances Investment Securities

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Maximum exposure

31 December 2015

Maximum

exposure Net exposure

Property Cash

N'000 N'000 N'000 N'000

Commercial real estate 188,428 (180,480) 7,948

Residential mortgage 6,926,518 (6,992,132) -

Others 660,711 (525,100) 135,611

Gross total 7,775,657 (7,697,712) 143,559

Investment securities 100,000 100,000

Cash and cash equivalents 8,256,151 (8,256,151) -

16,131,808 (7,697,712) (8,256,151) 243,559

31 December 2014

Maximum

exposure Net exposure

Property Cash

N'000 N'000 N'000 N'000

Commercial real estate 1,063,282 (703,840) 359,442

Residential mortgage 7,648,991 (7,723,697) -

Others 2,106,252 (501,177) 1,605,075

Gross total 10,818,525 (8,928,714) 1,964,517

Investment securities 7,579,492 7,579,492

Cash and cash equivalents 6,302,031 (6,302,031) -

24,700,048 (8,928,714) (6,302,031) 9,544,009

Impaired loans and securities

• Significant financial difficulty of the customer

• Payment defaults (interest and/or principal)

• Renegotiation of the terms of loans and advances due to the financial difficulty of the customer

• Significant restructuring of the customers’ business due to financial difficulty or expected bankruptcy

• A significant drop in customers’ credit ratings

Past due but not impaired loans

Allowances for impairment

Collateral held

Impaired loans and securities are loans and securities for which the Bank determines that it is probable that it will be unable to

collect all principal and interest due according to the contractual terms of the loan / securities agreement(s).

At each reporting date the Bank reviews its financial instruments (e.g. loans and advances) to ascertain whether

objective evidence of impairment exists for the financial instruments. The following factors are considered:

• Exposures to customers’ in the troubled sector e.g. capital market operators due to crash in the prices of shares listed on the

floor of the Nigerian Stock Exchange

• Other observable data or information indicating that there is a measurable decrease in the estimated future cash flows

obtainable from loan customers.

Loans and securities where contractual interest or principal payments are past due but the Bank believes that impairment is not

appropriate on the basis of the level of security / collateral available and / or the stage of collection of amounts owed to

the Bank.

the Bank establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The

main components of this allowance are a specific loss component that relates to individually significant exposures, and a

collective loan loss allowance, established for groups of homogeneous assets in respect of losses that have been incurred

but have not been identified on loans subject to individual assessment for impairment.

Collateral held

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Write-off policy

Credit collateral

Credit concentrations

31/12/2015 31/12/2014 31/12/2015 31/12/2014

N'000 N'000 N'000 N'000Carrying amount 7,249,739 9,198,708 100,000 6,597,413

Concentration by sector:

Financial institutions 100,000 6,589,244 Mortgages 6,977,258 8,430,178

Others 272,481 768,530 0 8,169

7,249,739 9,198,708 100,000 6,597,413

Concentration by location:

North-Central Nigeria 7,103,796 8,614,906 - - North-West Nigeria - 337,008 - 2,524 North-East Nigeria 57,068 80,814 - 4,380 South-West Nigeria 88,875 165,980 100,000 6,590,509

7,249,739 9,198,708 100,000 6,597,413

(c) Liquidity risk

(d) Management of liquidity risk

the Bank writes off a loan/security balance (and any related allowances for impairment losses) when Credit unit determines that

the loans/securities are uncollectible. This determination is reached after considering information such as the occurrence

of significant changes in the borrower/issuer’s financial position such that the borrower/issuer can no longer pay the

obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For smaller balance

standardised loans, write off decisions are generally based on a product specific past due status.

the Bank holds collateral against loans and advances to customers in the form of mortgage interests over property, other

registered securities over assets, and guarantees. Estimates of fair value are based on the forced sale value of collateral

assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as

impaired. Collateral generally is not held over loans and advances to banks, except when securities are held as part of

reverse repurchase and securities borrowing activity. Collateral usually is not held against investment securities, and no such

collateral was held at 31 December 2015.

the Bank monitors concentrations of credit risk by sector and by geographic location. An analysis of concentrations of credit risk

at the reporting date is shown below:

Loans & Advances Investment Securities

Concentration by location for loans and advances is measured based on the location of the Bank entity holding the asset, which

has a high correlation with the location of the borrower. Concentration by location for investment securities is measured based on

the location of the issuer of the security.

Liquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial liabilities

when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to

repay depositors and fulfil commitments to lend. The Bank's liquidity management process is primarily the responsibility of the

Risk Management and Investment Committee.

The funding liquidity risk limit is quantified by calculating liquidity ratios and measuring/monitoring the cumulative gap

between the Bank’s assets and liabilities. The monitoring process focuses on funding portfolios, the forward Balance Sheet and

general indicators. Where relevant, information and data are compared against limits that have been established.

The Bank's Treasury unit is responsible for maintaining sufficient liquidity by maintaining sufficient high ratio of liquid assets and

available funding for near-term liabilities. The secured liquidity measure is calculated and monitored by Risk Management.

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- Exposure to liquidity risk

Net Liquid assets to customer liability

31/12/2015 31/12/2014

At the end of the year 1045% 535%

Average for the year 709% 447%

(e) Market risks

Market risk is the risk that changes in market prices, such as interest rate, equity prices, foreign exchange rates and credit

spreads (not relating to changes in the obligor’s / issuer’s credit standing) will affect the Bank’s income or the value of its holdings

of financial instruments. The objective of market risk management is to manage and control market risk exposures within

acceptable parameters, while optimising the return on risk.

Increased withdrawals of short-term funds are monitored through measurements of the deposit base in the Bank.

Other general indicators are monitored in the marketplace, including credit spreads, credit default swap spreads, credit rating

watch status and market news. Liquidity risk is reported to the Board of Directors on a yearly basis.

The key measure used by the Bank for managing liquidity risk is the ratio of net liquid assets to deposits from

customers. For this purpose net liquid assets are considered as including cash and cash equivalents and investment grade debt

securities for which there is an active and liquid market less any deposits from banks and customers, debt securities issued, other

borrowings and commitments maturing within the next month. A similar calculation is used to measure the Bank’s compliance

with the liquidity limit established by the Bank’s lead regulator (Central Bank of Nigeria). Details of the reported Bank

ratio of net liquid assets to deposits and customers at the reporting year were as follows:

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40 Financial risk management continued

(f) Analysis of financial assets and liabilities by remaining contractual maturities

Carrying

amount

Gross nominal

inflow/ outflow

Less than 3

months 3 - 6 months 6 - 12 months over 1 year

N'000 N'000 N'000 N'000 N'000 N'000

31 December 2015

Financial assets:

Cash and cash equivalents 8,256,151 8,256,151 8,232,193 0 0 23,958

Loans and advance 7,249,739 7,249,739 272,481 488,408 697,726 5,791,124

Investment securities - Quoted equities 0 0 0

Investment securities - Unquoted equities 100,000 100,000 100,000

15,605,890 15,605,890 8,504,674 488,408 697,726 5,915,082

Financial liabilities:

Deposit from customers (788,583) (788,583) (257,416) (161,736) (369,431)

Borrowings (6,647,716) (6,647,716) (137,113) (222,693) (294,318) (5,993,592)

(7,436,299) (7,436,299) (394,529) (384,429) (663,749) (5,993,592)

Net undiscounted financial assets / liabilities 8,169,591 8,169,591 8,110,145 103,979 33,976 (78,510)

31 December 2014

Financial assets:

Cash and cash equivalents 6,302,031 6,302,031 6,283,650 18,381

Loans and advance 9,198,708 9,198,708 768,530 843,018 1,686,036 5,901,124

Investment securities - Quoted equities 6,497,413 6,497,413 6,497,413


22,098,152 22,098,152 7,052,180 843,018 8,183,449 6,019,505


Deposit from customers (1,493,766) (1,493,766) (444,865) (1,026,738) (22,163)

Borrowings (12,494,962) (12,494,962) (917,113) (918,908) (1,948,945) (8,709,996)

(13,988,728) (13,988,728) (581,978) (1,445,646) (581,969) (11,379,135)

Net undiscounted financial assets / liabilities 8,109,424 8,109,424 6,470,203 (602,628) 7,601,479 (5,359,630)

The table below summarises the maturity profile of the undiscounted cash flows of the Bank’s financial assets and liabilities as at 31 December 2015 and 31

December 2014.

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(g) Interest Rate Risk Sensitivity Analysis

Carrying

amount

Gross nominal

inflow/ outflow

Less than 3

months 3 - 6 months 6 - 12 months 1- 5 years

N'000 N'000 N'000 N'000 N'000 N'000

31 December 2015

Financial assets:

Cash and cash equivalents 8,256,151 8,256,151 8,232,193 0 0

Loans and advance 7,249,739 7,249,739 272,481 488,408 697,726 5,791,124

Investment securities - Quoted equities 0 0 0


15,605,890 15,605,890 8,504,674 488,408 697,726 5,891,124


Deposit from customers (788,583) (788,583) (257,416) (161,736) (369,431)

Borrowings (6,647,716) (6,647,716) (137,113) (222,693) (294,318) (5,993,592)

(7,436,299) (7,436,299) (394,529) (384,429) (663,749) (5,993,592)

Net undiscounted financial assets / liabilities 8,169,591 8,169,591 8,110,145 103,979 33,976 (102,468)

INTEREST RATE SENSITIVITY ANALYSIS

changes in bp Net gapCummulative

gap

Sensitivity on

profit

Annualised

yearN'000 N'000 N'000

Less than 3 months +100bp 8,110,145 8,110,145 19,998 Three months

3 - 6 months +100bp 103,979 8,214,125 513 Six months

6 - 12 months +100bp 33,976 8,248,101 340 One year

1 - 5 years +100bp (102,468) 8,145,633 (1,025)

The management of interest rate risk against interest rate gaps limits is supplemented by monitoring the sensitivity of the Bank's financial assets and liabilities to

various standards and non-standards interest rate scenarios.

Analysis of the Bank's sensitivity to an increase or decrease in market interest rates, assuming no asymmetrical movement in yield curves and a

constant financial position was as follows:

The following table demonstrates the sensitivity to a reasonably possible change in interest rates for the gap between risk sensitive asset and risk sensitive liability

for the different maturities Gap of the Bank’s earning assets and liability. The sensitivity of the income statement is the effect of the assumed changes in interest

rates on the gap position of the different maturities mismatch.

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Carrying

amount

Gross nominal

inflow/ outflow

Less than 3

months 3 - 6 months 6 - 12 months over 1 year

N'000 N'000 N'000 N'000 N'000 N'000

31 December 2014

Financial assets:

Cash and cash equivalents 6,302,031 6,302,031 6,283,650 18,381

Loans and advance 9,198,708 9,198,708 768,530 843,018 1,686,036 5,901,124

Investment securities - Quoted equities 6,497,413 6,497,413 6,497,413


22,098,152 22,098,152 7,052,180 843,018 8,183,449 6,019,505


Deposit from customers (1,493,766) (1,493,766) (444,865) (1,026,738) (22,163)

Borrowings (12,494,962) (12,494,962) (917,113) (918,908) (1,948,945) (8,709,996)

(13,988,728) (13,988,728) (1,361,978) (1,945,646) (1,971,108) (8,709,996)

Net undiscounted financial assets / liabilities 8,109,424 8,109,424 5,690,203 (1,102,628) 6,212,340 (2,690,491)

INTEREST RATE SENSITIVITY ANALYSIS

changes in bp Net gapCummulative

gap

Sensitivity on

profit

Annualised

yearN'000 N'000 N'000

Less than 3 months +100bp 5,690,203 5,690,203 14,031 Three months

3 - 6 months +100bp (1,102,628) 4,587,574 (5,438) Six months

6 - 12 months +100bp 6,212,340 10,799,915 62,123 One year

1 - 5 years +100bp (2,690,491) 8,109,424 (26,905)

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Exposure to interest rate risk - non-trading portfolios

Carrying

amount

Less than 3

months 3 - 6 months 6 - 12 months 1- 5 years

N'000 N'000 N'000 N'000 N'000

31 December 2015

Cash and cash equivalents 8,256,151 8,232,193 0 0 23,958

Loans and advance 7,249,739 272,481 488,408 697,726 5,791,124

Investment securities - Quoted equities 0 0 0 0 0

Investment securities - Unquoted equities 100,000 0 0 0 100,000

15,605,890 8,504,674 488,408 697,726 5,915,082

Non-derivative liabilities:

Deposit from customers (788,583) (257,416) (161,736) (369,431) 0

Borrowings (6,647,716) (137,113) (222,693) (294,318) (5,993,592)

(7,436,299) (394,529) (384,429) (663,749) (5,993,592)

Gap assets / liabilities 8,169,591 8,110,145 103,979 33,976 (78,510)

Cummulative liquidity gap 8,110,145 8,214,125 8,248,101 8,169,591

31 December 2014

Cash and cash equivalents 6,302,031 6,283,650 18,381

Loans and advance 9,198,708 768,530 843,018 1,686,036 5,901,124

Investment securities - Quoted equities 6,497,413 0 0 6,497,413 0

22,098,152 7,052,180 843,018 8,183,449 6,019,505

Non-derivative liabilities:

Deposit from customers (1,493,766) (444,865) (1,026,738) (22,163) 0

Borrowings (12,494,962) (917,113) (918,908) (1,948,945) (8,709,996)

(13,988,728) (1,361,978) (1,945,646) (1,971,108) (8,709,996)

Gap assets / liabilities 8,109,424 5,690,203 (1,102,628) 6,212,340 (2,690,491)

Cummulative liquidity gap 5,690,203 4,587,574 10,799,915 8,109,424

The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instruments

because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for

repricing bands. The Risk Management and Investment Committee is the monitoring body for compliance with these limits and is assisted by Risk Management

unit in its day-to-day monitoring activities. A summary of the Bank’s interest rate gap position on non-trading portfolios is as follows:

<<<<<<<<<<<<< Repricing years >>>>>>>>>>>>>>>>>>

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Interest rate movement affect reported equity in the following ways:

(i) Retained earnings arising from increase or decrease in net interest income and the fair value changes reported in profit or loss.

41 Customers complaints

2015 2014

Number of complaints received 16 13

Number of complaints resolved 16 13

Number of complaints not resolved 0 0

N'000 N'000

Total disputed amount 125 38

The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Bank’s financial assets and to liabilities

various standards and non-standard interest rate scenarios. Credit spread risk (not relating to changes in the obligor/issuer’s credit standing) on debt securities

held by the Bank and equity price risk is subject to regular monitoring by the Risk Management committee, but is not currently significant in relation to the

overall results and financial position of the Bank.

Overall non-trading interest rate risk positions are managed by Treasury, which uses investment securities, advances to banks and deposits from banks to manage

the overall position arising from the Group’s non-trading activities.

In line with circular FPR/DIR/CIR/GEN/01/020, the returns on customer complaints for the year ended 31 December 2015 is as set out below:

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FINANCIAL STATEMENTS


SUPPLEMENTARY INFORMATION

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STATEMENT OF VALUE ADDED


December December

2015 2014

N'000 % N'000 %

Interest income 1,440,558 1,470,321

Interest expense (1,220,215) (842,074)

220,343 628,247

Fees, commission and other operating income1,110,168 491,308

Administrative and other expenses - Local (246,302) (226,393)

Provision for doubtful debts (837,634) (566,272)

Valued added 246,575 100 326,890 100

Applied to pay:

Staff cost 87,365 35 162,532 50

Government as tax 55,274 22 28,075 9

Retained in the business

Depreciation and amortisation 27,282 11 53,277 16

Deferred tax (45,190) (18) 50,324 15

Retained profit for the year 121,844 49 32,682 10

246,575 100 326,890 100

Value added is the additional wealth the company has been able to create by its own and its employees'

efforts. This statement shows the allocation of that wealth between employees, finance providers,

government and that retained for the future creation of more wealth or for amortisation.

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FINANCIAL SUMMARY

STATEMENT OF FINANCIAL POSITION BALANCE SHEET

YEAR ENDED: 31 DECEMBER 2015 2014 2013 2012 2011

N'000 N'000 N'000 N'000 N'000

ASSETS Assets:

Cash and cash equivalents 8,256,151 6,302,031 260,110 Cash and due from other banks 280,969 497,562

Financial assets 100,000 6,597,413 14,395 Investment securities 20,733 26,242

Loans and advances to customers 7,249,739 9,198,708 107,737 Investment properties 2,375,682 2,366,817

Non-current assets held for sale 1,365,591 2,015,159 2,378,956 Loans and advances 204,539 222,802

Other assets 580,270 780,937 192,924 Other assets 202,931 199,839

Property, plant and equipment and intangibles 349,767 515,961 730 Property, plant and equipment 7,345 15,880

Total assets 17,901,518 25,410,209 2,954,852 Total assets 3,092,199 3,329,142

LIABILITIES Liabilities

Deposits from customers 788,583 1,493,766 51,768 Due within one year:

Current & deferred tax liabilities 60,408 96,123 3,238 Deposit and current accounts 58,840 333,821

Retirement benefits obligation 403 1317 576 Taxation 34,800 34,256

Other liabilities 167,554 256,694 206,223 Other liabilities 1,851,786 1,855,289

Interest bearing loans and borrowings 6,647,716 12,494,962 1,629,718

Total liabilities 7,664,664 14,342,862 1,891,523 1,945,426 2,223,366

EQUITY Shareholders' funds

Issued and paid up share capital 11,839,000 10,000,000 2,570,000 Issued and paid up share capital 2,570,000 2,570,000

Share premium - 2,791,337 250,000 Share premium 250,000 250,000

Other reserves 24,919 24919 24919 Deposit for shares

Retained earnings (1,627,065) (1,748,909) (1,781,590) Reserves (1,676,227) (1,714,224)

Shareholders fund 10,236,854 11,067,347 1,063,329 Shareholders fund 1,143,773 1,105,776

TOTAL LIABILITIES AND EQUITY 17,901,518 25,410,209 2,954,852 TOTAL LIABILITIES AND EQUITY 3,089,199 3,329,142

NIGERIAN

GAAP <<<<<<<<<<<<<< IFRS>>>>>>>>>

>>>>>

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FIVE YEAR FINANCIAL SUMMARY CONTINUED

STATEMENT OF COMPREHENSIVE INCOME PROFIT AND LOSS ACCOUNT

December December December

YEAR ENDED: 31 DECEMBER 2015 2014 2013 YEAR ENDED: 31 DECEMBER 2012 2011

N'000 N'000 N'000 N'000 N'000

Gross earnings 1,568,647 2,592,982 444,523 Gross earnings 147,129 181,404

Interest and administrative expenses (1,436,719) (2,481,901) (405,416) Interest and administrative expenses (136,668) (660,746)

Profit before taxation 131,928 111,081 39,107 Loss before taxation 10,461 (479,342)

Profit/(Loss) after taxation 121,844 32,682 (9,425) Loss after taxation 9,917 (396,967)

Earnings/(loss) per share Earnings/(loss) per share

- Basic (Kobo) 1.03 0.33 (0.37) - Basic (Kobo) 0 (15)

Net assets per share Net assets per share

- Actual (kobo) 86 111 41 - Actual (kobo) 45 43

Note:

Net assets per share are based on the number of issued share capital at the end of each year.

<< NIGERIAN GAAP >>

Earnings / (loss) per share (basic) are based on profit after taxation and the number of issued ordinary shares at the end of each year.

<<<<<<<<<<<< IFRS>>>>>>> >>>>>

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SUNTRUST BANK NIGERIA LIMITED BANK NIGERIA LIMITED (FORMERLY SUNTRUST MORTGAGE BANK LIMITED) AUDITED FINANCIAL STATEMENTS 31 DECEMBER 2015 Aminu Ibrahim & Co Chartered Accountants