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Transformation Nigeria | London | Johannesburg | Paris | Beijing Nigeria | London | Johannesburg | Paris FIRST BANK OF NIGERIA PLC TRANSFORMATION FIRST BANK OF NIGERIA PLC ANNUAL REPORT & ACCOUNTS 2010 ANNUAL REPORT & ACCOUNTS 2010 ANNUAL REPORT Contact details and feedback Head, Investor Relations Oluyemisi Lanre-Phillips Email: [email protected] Tel: +234 1 9052720 Shareholder enquiries Email: [email protected] Tel: +234 1 8045681 Tel: +234 1 2799880 www.firstregistrarsnigeria.com Customer enquiries Email: [email protected] Tel: 0700 FIRSTCONTACT Tel: +234 1 4485500 Registered address Samuel Asabia House 35 Marina Lagos P.O. Box 5216 Nigeria Registration No. RC6290 www.firstbanknigeria.com NIGERIA | LONDON | JOHANNESBURG | PARIS | BEIJING 45755_FB_COVER_2010_V10.indd 1 28/04/2011 13:50 ABOUT FIRSTBANK FirstBank has its headquarters in Lagos, Nigeria and an international presence FFL First Funds Ltd NAICOM National Insurance Commission FGN Federal Government of Nigeria NBS National Bureau of Statistics in London, United Kingdom; Paris, France; Johannesburg, South Africa; and FIRS Federal Inland Revenue Service NDDC Niger Delta Development Commission Beijing, China. FPCNL First Pension Custodian Nigeria Limited NDIC Nigeria Deposit Insurance Corporation FRNL First Registrars Nigeria Ltd NESG Nigeria Economic Summit Group Drawing from our experience, spanning 117 years, we continue to consolidate our footprint in Nigeria, diversify and transform our bank FRR Facility Risk Rating NGN Nigerian Naira and build scale internationally. The Bank enjoys natural premium respect and first-mention privilege in the market (an excellent corporate FSA Financial Services Authority NPL Non-Performing Loan governance structure underpinned by strong institutional processes, systems and controls, a history of seamless leadership succession, a sound FSRCC Financial Sector Regulatory Coordinating Committee NSE Nigerian Stock Exchange risk management framework, several globally recognised awards and experienced management). FTNL First Trustees Nigeria Ltd OFR Officer of the Federal Republic The FirstBank Group is well diversified with contribution to national economic development through subsidiaries involved in capital FX Foreign Exchange OPEX Operating Expenditure market operations, insurance services, asset management and investment banking, private equity/venture capital, pension fund custodian GDP Gross Domestic Product OPL Open Position Limit management, registrar services, trusteeship, mortgage and microfinance banking. Within the Bank, we are structured along corporate, public, retail, institutional and private banking customer segments, giving us the ability to drive deeper product penetration and develop sector GDR Global Depositary Receipt ORM Operational Risk Management Division expertise with relationship management based on a deep understanding of customer needs. HCMD Human Capital Management and Development ORMC Operational Risk Management Committee With a primary listing on the Nigerian Stock Exchange, about 32.6 billion issued shares and one of the highest shareholders’ funds in HNI High Networth Individual ORR Obligor Risk Rating the Nigerian landscape, FirstBank is owned by over 1.3 million shareholders across the globe and has an unlisted Global Depositary HR Human Resources OTC Over The Counter Receipt (GDR) programme. IBAM Investment Banking and Asset Management PAT Profit After Tax The Bank continues to enjoy strong ratings from Standard & Poor’s, Fitch, Global Credit Rating and Agusto & Co. During the year, FirstBank IBG Institutional Banking Group PBOC People’s Bank of China attained ISO/IEC 27001: 2005 Information Security Management Systems (ISMS) certification from the British Standards Institution (BSI) ICAFAS Internal Control Anti-Fraud Automated System PDCA Plan-Do-Check-Act indicating its strictest adherence to the security and protection of the information of its over five million customers in over 600 locations ICAN Institute of Chartered Accountants of Nigeria PFA Pension Fund Administrator in Nigeria. IFC International Finance Corporation PFMS People First Management Software IGRC Integrated Governance, Risks and Compliance PFP Pay for Performance IMF International Monetary Fund PFR Pay for Role ISF Information Security Forum POS Point of Sale ISMD Information Security Management Department PPP Public Private Partnership Visit our online report at ISO International Organization for Standardization PSS Public Sector South www.firstbanknigeria.com/ir/ IT Information Technology RCSA Risk Control Self Assessment financialinformation/2010 ITF Industrial Training Fund RDAS Retail Dutch Auction System JAMB Joint Admissions and Matriculation Board RICO Resident Internal Control Officer • Quick and easy navigation KPI Key Performance Indicator RMD Risk Management Directorate KRI Key Risk Indicator RSA Retirement Savings Accounts • Search tool KYB Know Your Customers’ Business RTGS Real Time Gross Settlement System • Download the full report KYC Know Your Customer SAS Statistical Analysis Software • Download report sections L&D Learning and Development SBU Strategic Business Unit • Download Excel files LAD Loans and Advances SEC Securities and Exchange Commission • ‘Compare to last year’ function LASACS Large Scale Agricultural Credit Scheme SLA Service Level Agreement LASG Lagos State Government SLD Specialised Lending Department LEAP League of Abiriba Professionals SME Small and Medium Enterprises M&A Mergers & Acquisitions SMEEIS Small and Medium Enterprise Equity MANCO Management Committee Investment Scheme MBC MBC International Bank SMIEIS Small and Medium Industries Equity Investment Scheme mb/d million barrels a day SPV Special Purpose Vehicles MCC Management Credit Committee SRF Strategic Resource Function MDAs Ministries, Departments and Agencies Visit our investor relations website at SSA Sub-Saharan Africa MENA Middle East and North Africa www.firstbanknigeria.com/ir/ TLP Total Loan Portfolio MFBs Microfinance Banks TSR Total Shareholder Return Financial calendar MGC MANCO Committee (General & Credit) UAE United Arab Emirates www.firstbanknigeria.com/ir/financialcalendar MPC Monetary Policy Committee VaR Value At Risk Credit ratings MPR Monetary Policy Rate VAT Value Added Tax www.firstbanknigeria.com/ir/ratingreports MRAC Management Risk and Assessment Committee WAEC West African Examinations Council MRPC Market Risk Policy Committee WDAS Wholesale Dutch Auction System N Naira 45755_FB_COVER_2010_V10.indd 2 28/04/2011 13:50 www.firstbanknigeria.com/annualreport/2010/ First Bank of Nigeria Plc Annual Report & Accounts 2010 1 CONTENTS INTRODUCTION FINANCIAL STATEMENTS Overview 2 Statement of significant accounting policies 138 INTRODUCTION Financial highlights 4 Balance sheet 143 Chairman’s statement 6 Profit and loss account 144 Former Chairman’s statement 7 Cash flow statement 145 Quick read Notes to the financial statements 146 Growth 10 Financial risk analysis 177 Service delivery and operational excellence 12 Group statement of value added 185 Performance management 14 Bank statement of value added 186 Talent management 16 Group five-year financial summary 187 BU Leadership and governance 18 Bank five-year financial summary 188 S IN Awards 22 ESS R COMPANY INFORMATION E VI BUSINESS REVIEW E Group and department heads 190 W Group Managing Director/ Subsidiary MDs and Audit Committee 192 Chief Executive Officer’s review 24 Contact information 193 Operating environment and outlook 29 Branch network 194 Strategy and performance RI AND GOV S Our approach 32 K MANAG Group strategy 33 SHAREHOLDER INFORMATION Bank strategy 37 Shareholder information E Bank operating structure 46 Global depositary receipts (GDR) programme 214 RNANC E M Key Performance Indicators 57 Share statistics 214 E NT E Key risk summary 62 Dividend history 214 Financial review 67 Financial calendar 215 Corporate social responsibility 84 Share capitalisation history 216 Notice of Annual General Meeting Proxy form S FINANCIAL RISK MANAGEMENT AND GOVERNANCE TAT M-access Chief Risk Officer’s report 90 E Shareholder online access registration form M Risk management framework E E-share notifier subscription form NT Our approach 92 Stockbroker e-lodgement activation form S Governance 94 Internal control 96 Risk management disclosure Glossary of ratios Credit risk 99 Abbreviations INFORMATION COMPANY Market risk 105 Liquidity risk 109 Operational risk 112 Information security risk 116 Compliance risk 119 Legal risk 121 Directors’ report 122 Corporate governance report 127 S INFORMATION Accountability and audit HAR E Responsibility statement 132 HOLD Report of the External Consultant on the Board Appraisal 133 E R Report of the Independent Joint Auditors 134 Audit Committee statement 135 Directors and advisers 136 2 INTRODUCTION First Bank of Nigeria Plc Annual Report & Accounts 2010 OVERVIEW OF FIRSTBANK Group structure FBN BANK (UK) FIRSTBANK LIMITED The FirstBank Group comprises 10 subsidiaries, spanning asset management, investment banking, capital markets, insurance, microfinance, private equity, mortgage and FBN BANK (UK) LIMITED pension fund custodian services – making it one of the PARIS BRANCH most diversified financial conglomerates on the continent. FIRST FIRST FBN LIFE FIRST FIRST FBN FIRST FBN FBN FBN FIRSTBANK FIRSTBANK REGISTRARS INSURANCE ASSURANCE FUNDS TRUSTEES MORTGAGES PENSION CAPITAL BUREAU DE MICROFINANCE South Africa China BROKERS CUSTODIAN CHANGE BANK (Rep. Office) (Rep. Office) FBN SECURITIES Geographical presence Products and services BEIJING As a full-spectrum financial
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