The Polaris Bank Story

On January 2, 2019, Tokunbo Abiru, Group Managing Director of Polaris Bank sent an email to all staff…in the over three years Abiru had been invited by the Central Bank of Nigeria (CBN) to rescue the troubled institution which had its license withdrawn before Polaris Bank was established, he had paid a lot of attention to internal communication with all the employees and stakeholders in the bank. This particular email however appeared somewhat more significant as it outlined the aspirations and desired future trajectory of the emerging Polaris… “…Welcome to 2019. The year 2018 was pivotal in the life of the bank with the transition from Skye to Polaris Bank Limited. 2019 however, is even more important as we commence the journey of truly building a bank and brand we will all be proud of in years to come…” In the rest of that “pivotal” email, Adetokunbo M. Abiru known to everyone as “Tokunbo Abiru” outlined the new bank’s corporate transformation agenda and revealed his ambitions for “accelerated growth” and financial services industry leadership anchored on investments in information technology architecture, redefining strategy, brand development and digital transformation. In managing the bank’s human capital, Abiru emphasized “consequence management” based on rewards for success and sanctions for non-performance while the bank seeks enhanced profitability and efficiency. By the end of 2019 and as Polaris Bank settled into a new financial year early in 2020, it was evident that the bank had achieved Abiru’s objectives for that critical financial year and was primed to consolidate on that good start in 2020. The 2019 financial accounts of the bank reflected very strong and positive outcomes. In that first full year of operations, Polaris Bank recorded strong earnings with a Profit before Tax of N27.8Billion, very good return ratios and a modest operating expense ratio. It was early days yet, but the financial and performance portents for the bank appeared quite promising. All income lines-net interest, fees and commission, and investment/other income had performed creditably especially in the context of Polaris Bank’s birth and transition. At N1.143Trillion, the bank’s balance sheet for

1 its inaugural year was strong reflecting strong liquidity and improving capitalisation. On January 2, 2020 Abiru sent out a “Welcome to 2020” email to all staff. Understandably the mail was in part celebratory-“…I am confident to state that our Bank has indeed stabilized and is now headed towards our purpose which is to become a “Top Retail Bank” in Nigeria. This was demonstrated by our collective and sustained performance trajectory in 2019…” he proclaimed. He proceeded to lay out his basis for optimism, “…our prudential ratios-capital adequacy and liquidity ratios are now in full compliance with stipulated regulatory requirements. We returned to profitability on a month-on-month basis throughout 2019; our Cost-to-Income ratio is also in line with industry average--- we aggressively pursued our IT infrastructure refresh with a view to replacing and upgrading the aged, obsolete and sub-optimal performance IT equipment. The impact on efficiency, effectiveness, transactions and customers’ experience will become noticeable from the end of the first quarter of Year 2020…” He however went beyond celebrating the 2019 performance and thanking the work force for their contributions. He laid out strategic initiatives for future growth including the commencement of the Digital Transformation journey with recruitment of professionals and set up of structures and systems; launch of Polaris Bank’s agency banking platform “Sure Padi”, which is designed to provide banking services to the unbanked and underbanked as well as in locations in which the bank is not present; introduction of the PAYDAY loan product which booked over N1billion in loans in just four months; efforts to increase business volumes and activity, as well as lower costs; approval of a comprehensive performance incentive scheme in the form of PAY-FOR-PERFORMANCE and execution of the bank’s Corporate Transformation Plan.

2019 Financial Performance See Appendix By all objective standards, the results are impressive especially given the legacy constraints under which the institution was birthed.

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The Annual Financial Statements ending December 31, 2019 show gross earnings of over N150billion, Profit before Tax of N27.83billion and Profit after Tax of N27.35billion showing very strong profitability and profit potential going forward. The bank’s deposits from customers was N857.8billion with Total Assets in excess of N1.14Trillion confirming that Polaris Bank remains a systemically important bank within the Nigerian financial system. The bank’s capital is multiples of the regulatory minimum of N25billion at N82.9billion with a Capital Adequacy Ratio of 14% providing sufficient capital buffers to customers and other counterparties. Apart from strong capital adequacy, the bank’s other ratios are equally impressive- Return on Assets (ROA) at 2%, Return on Equity (ROE) is 33%, Return on Sales (ROS) is 18%, and Liquidity Ratio at 81%. These ratios demonstrate operating efficiency, strong inherent capacity for profitability and returns to stakeholders, very comfortable liquidity and asset efficiency. The bank’s Cost to Income ratio of 59% is well in line with industry averages and further reinforces the institution’s underlying reality of operational and cost efficiencies, which is a significant achievement in view of its legacy constraints. One remaining legacy challenge, perhaps understandably, is that the bank’s Non- Performing Loans Ratio (NPL) is 46%. Even though the management has brought this ratio down to this level from around 80% at the time of the regulatory intervention, it is evident that the work of the management of Polaris Bank to clean up its inherited loan portfolio must continue until NPLs are within acceptable benchmarks. However given their success over the last three years in loan recovery, collateral documentation and cleaning up the portfolio, they appear to be on course to a successful portfolio repositioning. Polaris Bank’s 2019 result reflected a positive comparison with 2019 results of the leading Tier 1 banks and other banks. Its Return on Assets (RoA) at 2% ranked ahead of Ecobank Nigeria (0.03%), at par with Zenith Bank (2.01%), and ahead of Access Bank (1.35%), UBA (1.54%) and First Bank (0.72%). Only GTBank of the leading Tier 1 banks has a better RoA (5.73%) than Polaris. Polaris RoA is also far better than every Tier 2 bank in our comparison sample (Sterling, FCMB, Fidelity, Standard Chartered, Union, Keystone, Heritage, Wema and UNITY) except Rand Merchant, Citibank and Stanbic IBTC all of which minus Stanbic IBTC are relatively small, wholesale banks.

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Polaris Bank’s Return on Equity (RoE) at 33% beats most Tier 1 banks except GTBank (33.67%) with which it is at par; Ecobank (0.24%), Zenith (15.85%), Access Bank (17.44%), UBA (15.35%) and First Bank (6.66%) are all inferior to Polaris. It is also better than all Tier 2 banks in our sample with the exception of Citibank (39.17%). Polaris Bank’s Return on Sales (RoS) at 18% ranks third against Tier 1 banks behind GTBank (50.63%) and Zenith Bank (38.30%). It beats Ecobank (0.33%), Access Bank (13.46%), UBA (15.11%) and First Bank (7.27%). It is also better than all local Tier 2 banks in the sample including Sterling Bank (4.28%), FCMB (6.43%), Fidelity (11.9%), Union (10.11%), Wema (5.66%) and Unity Bank (6.55%). Polaris Bank’s Capital Adequacy (14%) and Liquidity (81%) ratios are well above regulatory requirements demonstrating a strong return to prudential compliance and providing assurance of a strong capital buffer and careful liquidity management to customers and regulators. The bank’s Cost to Income Ratio at 59% is better than Ecobank (83.33%), Access Bank (70.08%), UBA (68.26%) and First Bank (75.83%). Only GTBank and Zenith Bank of the leading Tier 1 banks have better Cost to Income Ratio than Polaris, which is also better at cost management than Fidelity (73.79%), FCMB (86.71%), Sterling (84.24%) and Union Bank (84.27%). Not surprisingly, Polaris Bank’s non- performing loans at 46% is relatively high given its inherited portfolio, but management’s efforts to improve loan quality, strengthen collateralisation and collect outstanding loans should see this ratio normalise over time. With N857.86billion in Deposits and Total Assets standing at N1.143trillion at the end of 2019, Polaris Bank is a major and systemically important Nigerian bank.

Strategy and Corporate Transformation Plan In 2018, immediately after the transition to Polaris, the Bank worked with a team of first-class advisers to develop both Corporate Strategy and Corporate Transformation Blueprints to provide direction for the bank into the future and define its corporate and strategic aspirations. While KPMG served as anchors to the project apart from working on business transformation; they also looked at cost optimisation-it was necessary to realign the institution’s corporate footprint especially as this had not been done after the merger with Mainstreet Bank (former

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Afribank); EY carried out a deep and detailed review of Polaris Bank’s technology infrastructure and digital transformation needs. This was an important exercise given that investment in technology had stagnated in the precursor institution for over five years. Insight Communications worked with Polaris on brand transformation, while Deloitte advised on tax issues. Tokunbo Abiru also engaged leading Nigerian consultancies to advise on specific value adding areas including RTC Advisory Services, Agusto and Co. and Financial Derivatives Company. The Bank also worked with leading payments company Interswitch on aspects of technology strategy and organisational learning. The bank defined an aspirational and inspiring new vision statement-“The preferred partner providing superior financial solutions for Customers” and mission statement, “We will leverage our knowledge of an ever-changing world to constantly design innovative solutions that facilitate our customers’ enterprise”

The new core values are Boldness (We’re not afraid to be different), Sustainability (We are here today, We’ll be here tomorrow), Innovative (When its same old, same old, its not us), Continuous Learning (When we stop learning, we die) and Trustworthy (when we promise, we deliver). This new vision was shared with all stakeholders of the bank-Board, Management, Customers, Regulators particularly CBN and AMCON and other counterparties. The strategy blueprint acknowledged the bank’s capabilities-enhanced liquidity, strong relationship management, vast branch network and introduction of new brand offers. It defined the new bank’s value proposition:- • Ease, Friendliness and Accessibility: focused on convenience, customer excellence and customer delight • Creating opportunities and providing empowerment for selected sectors: Youths, SMEs, Women and the Underserved • Digital First: providing easy and simple banking through digital and being future focused. The strategy defined a predominantly retail market focus with clear definitions of sectors, segments and geographies and clearly outlined core strategies,

5 accelerators, enablers and strategic initiatives to achieve desired strategic aspirations. The objectives of the Corporate Transformation Plan included sustainability; profitability and capital preservation; regulatory compliance and buy-in; realizing value from investments; aligning business and operating models to strategic aspirations; and execution-achieving quick-wins, and phased implementation. The critical pillars of transformation as designed are Digital Transformation, Enhancement of IT Infrastructure and Technology Platforms, Cost Optimisation and Operational Efficiency, Workforce and Culture Alignment, Brand Equity Enhancement and Business/Strategic Initiatives. A December 2019 review confirms progress on all aspects of the Corporate Transformation Plan.

About Polaris Bank Polaris Bank was established by the CBN on September 21, 2018 to offer commercial banking services to the Nigerian public. The Bank commenced services on the same day, having purchased the assets and assumed certain liabilities of the defunct Skye Bank. With a footprint of over 370 branches across the country, Polaris Bank prides itself as a future-determining bank delivering exceptional customer experience and leveraging best-in-class technology. By focusing on ICT solutions across multiple service delivery channels (mobile banking, ATMs, POS and online platforms), Polaris Bank maintains a pivotal role in the Nigerian banking industry, providing customers with simple, seamless, efficient and secured banking services. Polaris Bank is led by vastly experienced and seasoned banking professionals with Mr. Muhammad K. Ahmad, OON, as its board Chairman; while Mr. Adetokunbo M. Abiru serves as Managing Director/CEO. They are supported by a team with proven industry track record across all areas of the banking profession with unwavering commitment to optimize stakeholders’ value. The management is vested with the responsibility of entrenching sound corporate governance and risk management practices, ensure enduring profitable operations while positioning the bank optimally for investors.

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Polaris Bank delivers industry-defining products, services and platforms across all the key market segments and customer profile from individuals to the multinationals. Its products and service offerings cater for customized needs of target customer base including large and small corporate organizations, SMEs, professionals, institutions and the public sector. The Bank has correspondent banking relationships with notable players in the international financial service sector, largely to support its customers’ requirements for project and international trade finance. The Bank also plays strongly in several other banking operations including: Retail Banking, Commercial Banking, Corporate Banking, Investment Banking, International Operations and Trade Services, Treasury and Public Sector. The Bank is currently implementing an enterprise transformation plan which is expected to enhance its competitive advantage as an industry leader in the digital banking era. From the defunct Skye Bank Plc to the new Polaris Bank Ltd…. On July 4 2016 the Central Bank of Nigeria (CBN) constituted a new board and management for Skye Bank Plc to address its declining prudential ratios and return the bank to sustainable profitability with a mandate to reduce cost to income ratio, improve asset quality, improve liquidity and capital adequacy and restore profitability. The new team, led by Mr. Muhammad K. Ahmed and Mr. Adetokunbo M. Abiru as Chairman and Managing Director/CEO respectively, and composed of other experienced and reputable professionals as executive and non-executive directors, found the institution in a poor state with many of its largest loans non-performing; its capital significantly eroded and liquidity impaired. At the core of the bank’s problems was a failure of corporate governance typified by a very high level of non- performing insider-related loans. The funding mix and structure as well as risk asset portfolio mix also signified improper risk management exposing the institution to policy and currency risks. The new management subsequently discovered significant infractions by previous managers of the institution through careful investigations by management and forensic audits conducted by reputable accounting firms. These infractions were reported to the appropriate authorities.

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In addition to the legacy problems met by the CBN-appointed management, the bank suffered significant deposit attrition as customers, depositors, shareholders and institutional partners panicked at the news of the CBN take-over, compounded by a series of negative campaigns deliberately orchestrated against the institution on social media and other informal channels. The management successfully arrested and managed the situation and significantly stemmed the tide and reduced deposit loss, restoring customer confidence and stabilizing the institution. The management has also successfully settled many matured trade and bilateral obligations and restructured outstanding balances with the relevant institutions and counterparties. One of the most important challenges the management addressed relates to the inadequacy of loan security and improper collateral documentation in the legacy portfolio of the bank. The management worked assiduously on cleaning up loan and collateral documentation on most of the high value facilities, thus putting the bank in a stronger position to enforce its rights as a lender. As a result of these and other measures, as well as aggressive loan recovery drive, the bank recovered over N60billion of outstanding bad loans in its first year in office and these recoveries were ramped up to over N100billion by the end of the second year. The management also reached settlement and restructuring agreements with many of the chronic bad debtors resulting in substantially improved payments and prospects of future recoveries. The management pursued other initiatives to restructure and reposition the bank based on its mandate including cost management and optimization, and divestments to improve the institution’s financial position. Cost management initiatives included branch rationalization, review of service contracts and cash management operations all of which have resulted in hundreds of millions of financial savings. The bank fully divested from several local and international subsidiaries releasing total cash value of over N19billion. In a statement issued to the public by the CBN-appointed management one year after its appointment, Tokunbo Abiru and M. K Ahmad reiterated their determination to repair “…the damage inflicted on the institution in the past…” and chart “…a sustainable path forward for the bank.”

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The statement affirmed that “the board and management of Skye Bank Plc has been committed and sacrificial, in the public interest, since July 2016 in its efforts to reposition the institution and put it back on the path of sustainable growth. Those efforts have stabilized the bank and restored customer confidence and uninterrupted banking services; resulted in significant loan recoveries and clean- up of the bank’s loan and security documentation; given the bank a more efficient cost profile; and produced accurate financial accounts for the institution. We have also identified clear and viable options for recapitalizing the bank and repositioning it for future growth.” In concluding, Abiru and Ahmad assured all stakeholders-customers, employees, shareholders, institutional partners and regulators-of their continuing commitment to the success and sustainability of the institution. Two and a half years after that first anniversary, truly Polaris Bank they appear to have solidly fulfilled that solemn undertaking!!! In “The Skye Bank Challenge” published in Nigeria’s leading business and financial newspaper, Businessday on August 3, 2016 few weeks after the CBN intervention in Skye Bank, one of Nigeria’s most authoritative economic columnists, Opeyemi Agbaje wrote in his “Economy, Polity, Society” column, “the two principal persons appointed by the banking regulator, Mr M.K Ahmad as chairman and Tokunbo Abiru who was appointed MD/CEO are individuals who re-assured me personally and should have re-assured the markets. Ahmad is a financial sector expert, former NDIC (Nigeria Deposit Insurance Corporation Director) and pioneer Director General at the National Pension Commission. More importantly he is reputedly a person of the highest integrity. I had a friend, unfortunately now deceased, who worked with Ahmad at the NDIC several years ago who never ceased to inundate me with reports about his competence, professionalism and integrity. And I can personally attest to Abiru’s serious-mindedness, character and professionalism. If there was any team that could be sent in the circumstances to stabilize, reposition and grow Skye Bank, it is without doubt, M. K Ahmad and Tokunbo Abiru…” In analysing the problems that led to the regulatory intervention in the defunct Skye Bank, Opeyemi Agbaje noted in the same article that, “…Skye Bank had some inherent potential even under the prior management team…it had some relative

9 post-consolidation success and had grown its industry relevance, brand positioning, branch network, ICT channels, competences and franchise over the past decade. On the other hand however, it appears to have embraced quite a bit of unrestrained ambition leading to aggressive acquisitions, especially that of Mainstreet Bank, and had grown its loans and assets probably forsaking some liquidity and prudential considerations in the process. I suspect that corporate governance and risk management standards were somewhat eroded as ambitious and powerful shareholders and stakeholders grew their ambitions within the Nigerian economy and led the bank along with them…my sense of the challenge the bank faced hinged principally on its adverse 2015 financial performance deriving from high loan impairment charges due to aggressive loan growth combined with negative macroeconomic trends which have negatively affected its loan books as businesses in oil and gas, power, telecommunications, manufacturing and financial services face serious short-term challenges.….’’ On the first anniversary of the CBN intervention in Skye Bank, the same commentator, Opeyemi Agbaje wrote, “…One year later, it does seem that the new management has restored relative depositors’ confidence and significantly stemmed the outward flow of deposits from the bank. The management has settled a significant portion of the matured trade and counterparty obligations with third-parties and reached amicable deals on remaining transactions. A major pre-occupation of the management in the last one year has naturally centred around cleaning up the loan portfolio. The institution appears to have significantly improved the quality of loan security and collateral documentation and has recovered more than N57.5billion of overdue loans in the last year. The improved security position has also encouraged many debtors to resume payment and agree restructuring terms for outstanding obligations…. another area of focus of the new management has been cutting and optimizing the institution’s operating cost structure. Actions taken include rationalizing the branch network, amending supplier contracts and improving cash management which resulted in major cost savings for the bank. Cost improvement measures also included divestment from local and international subsidiaries, an ongoing process that should also yield significant cost savings and cash flow enhancements…” Other commentators also expressed views on the situation Skye Bank found itself. One leading financial journalist and business correspondent Babajide Komolafe of

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Vanguard Newspapers noted that to succeed in their CBN-assigned mission, Ahmad, Abiru and their colleagues would have to battle against several odds-a weakening economy, negative public perception and erosion in public confidence occasioned by the manner of the regulatory intervention itself. Evidently Abiru and co. appear to have beaten those strong odds! On the second anniversary of the CBN intervention in Skye Bank in 2018, the Central Bank expressed its strong vote of confidence in the team it appointed to oversee Skye Bank, by reappointing Ahmad, Abiru and Co. and renewing and extending its regulatory and prudential support for the institution. By this time however, it was clear that attention of both the regulator and the management of the bank had shifted to assuring the future and sustainability of the institution. The respected analyst Opeyemi Agbaje who had maintained a running commentary on the bank had also begun to stress the same point. In his third column on the Skye Bank saga on the second anniversary of the regulatory intervention titled, “The Skye Bank Challenge: A Renewed Mandate” on June 13, 2018 after the CBN renewed Ahmad, Abiru and others tenure, Agbaje noted, “The key concern of the management…should be and indeed is around assuring the future of the institution.” Clearly that would require re-capitalising Skye Bank and that is where the attention of the bank’s management and the regulator are now focused. I’m aware the bank has appointed a leading investment bank and a team of professional advisers to advice and lead execution of options for recapitalising the bank. Industry information confirms management is working closely with the regulators and government to conclude this process expeditiously. Management expects the process may commence in Q3 2018 but clearly resolution of the recapitalisation process and assuring future profitability and sustainability will require continued strong support from government and the CBN…Two years into their mandate, the CBN-appointed board of Skye Bank has normalised the institution, restored its prudential stability, embraced proper risk management and corporate governance and most importantly restored customers’ and depositors confidence, earning a well- deserved renewal of their mandate. All stakeholders, especially the management, regulator and government must now focus on a final resolution of the recapitalisation imperative within the management’s extended tenure…”

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On September 21, 2018, the CBN took decisive action on this front! CBN and the Asset Management Corporation of Nigeria (AMCON) established Polaris Bank Limited after revoking the operating license of Skye Bank Plc. Polaris Bank, an entirely new and completely different institution assumed certain assets and liabilities of the now defunct Skye Bank and was capitalised to the tune of N25billion in new capital by its owners. This offered a final resolution of the long running saga and protected depositors whose funds were protected under the innovative arrangement. It is to be noted that the defunct Skye Bank was classified as a “systemically important bank” the size of whose deposit base could threaten the safety and stability of the Nigerian financial system and could result in “contagion” across the entire banking system. The bank had almost 5 million customers and N1Trillion in deposits as well as exposure of $569million to foreign interests. The regulators injected N898billion into Polaris Bank to take care of the “hole” caused by pre-existing liabilities of the now defunct predecessor institution. Polaris Bank thus started on a good footing-over 370 branches; more than 1,000 ATMs and other digital channels; a large, retail customer base across the country; the full regulatory minimum capital of N25billion; and a management team that had proven themselves through more than two years of steering a troubled institution out of trouble.

The Leadership Team Adetokunbo M. Abiru-GMD/CEO Adetokunbo Mukhail Abiru (Tokunbo) is the Managing Director and Chief Executive Officer of Polaris Bank. With an estimated three decades experience, Tokunbo Abiru accumulated a vast array of dynamic experience through his service in both the public and private sectors. Tokunbo started his career in Guaranty Trust Bank Plc (GTBank) in 1991 where he worked for about a decade. In August 2000, he had short stints at National Bank and First Atlantic. He later joined First Bank of Nigeria in January 2002, where he undertook various managerial responsibilities that culminated into his elevation as Deputy General Manager in 2010. His banking career covers strategic mandates in

12 banking operations; financial control; corporate banking; commercial and public sector banking. In 2011, he was appointed Honourable Commissioner for Finance under the dynamic and transformational leadership of Governor Babatunde R. Fashola (SAN). After his service to Lagos State, he returned to FirstBank as Executive Director, Corporate Banking Group, a position he held until his voluntary retirement in 2016. Tokunbo was appointed by the Central Bank of Nigeria as Managing Director/ Chief Executive Officer of Skye Bank Plc. in July 2016 with a mandate to execute one of the most challenging corporate turnarounds in the history of Nigeria’s financial services industry. The assignment has been successfully accomplished with the transition of the defunct Skye Bank Plc into Polaris Bank Limited. Tokunbo has also served on the boards of several notable companies including Airtel Mobile Networks Limited; FBN Capital Limited (now FBN Merchant Bank Limited); FBN Bank Sierra Leone Limited and Nigeria Inter-Bank Settlement System (NIBSS) Plc. Tokunbo holds a B.Sc. (Hons) Economics from Lagos State University (LASU). He is an alumnus of Harvard Business School and Lagos Business School; a Fellow of the Chartered Institute of Accountants (FCA) and an Honorary Fellow of the Chartered Institute of Bankers of Nigeria (FCIB). Tokunbo is a transformational leader, passionate about efficient deployment of resources and service delivery. He is also a sports enthusiast and a committed family man happily married to Feyisola Abiru, the Managing Director of H & Y Limited, a truly indigenous furniture manufacturing company, and they are blessed with children.

Polaris Bank…into the Future As he pondered his next steps, Tokunbo Abiru was clear about his desired future for Polaris Bank… he strongly believed the future of banking globally and in Nigeria would be shaped by technology. Banks would be almost wholly dependent on technology for mobilising savings, extending and administering loans, making payments as well as for analytics and management decision making and bank CEOs and directors of the future would have to be technology savvy. Polaris Bank had

13 made a clear choice to be a retail bank and that choice meant its core would have to be around capabilities around technology. He also thought carefully about the demographics that would shape the customers and markets of the future. He was convinced that the technology adoption rate and pervasiveness of the millennial and so-called “Generation Z” was not a fad that would fade after a while; rather it would accelerate in pace and scope, thus banking would have to become a digital endeavour. In that context, the telecommunications companies and some IT/software businesses were very well placed to “disrupt” conventional banking as we knew it. He was clear that but for regulatory barriers, this disruption would have already occurred! These convictions had underpinned Tokunbo’s focus on digital transformation and on refreshing and upgrading Polaris Bank’s IT infrastructure. In 2019, he had overseen significant investment in the bank’s critical IT infrastructure including data centres, digital labs and human capital. Abiru reflected on other aspects of the likely evolution of banking in Nigeria and across the world-the imperative of financial inclusion both from the perspective of government and regulatory policy and bank strategy; the pervasiveness of the internet and social media; the revolution in payment systems as evidenced in markets such as Kenya and China; the rapid development of various streams of technology innovation including artificial intelligence, voice and facial recognition, robotics, blockchain etc.; the rise of so-called “fintechs”-financial technology firms who were entering financial services based on technology capabilities and business models all meant that increasingly financial services would become a technology play; the combined effect of all these trends meant that Polaris Bank would need to scale up very quickly! And that represented the most significant short to medium term challenge Abiru could see down the horizon-while Polaris Bank was now well capitalised based on regulatory standards, its capital was well below the major banks in the Nigerian market and much below the major telecommunications companies who might inevitably enter into the financial space…where would Polaris Bank get the capital to compete at the scaled-up level required? These considerations coupled with Polaris Bank’s status essentially as a “bridge bank” owned by the Central Bank and AMCON meant that a divestment by these

14 regulatory/government entities and investment by a well-capitalised financial services group would have to be a strong consideration.

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Tier 1 Banks

Polaris Ecobank Guaranty Trust United Bank First Bank Of DESCRIPTION Access Bank Bank Nigeria Bank For Africa Nigeria

ROA 2% 0.03% 1.35% 5.73% 1.54% 0.72% ROE 33% 0.24% 17.44% 33.67% 15.35% 6.66% ROS 18% 0.33% 13.46% 50.63% 15.11% 7.27% NPL 46% Capital Adequacy 14% Liquidity 81% Cost to Income 59% 83.33% 70.08% 32.06% 68.26% 75.83% Total Deposit (N'Bns) 857.89 1,375.46 3,461.56 2,074.75 2,526.75 3,340.71 Total Asset (N'Bns) 1,143.27 2,024.60 6,049 3,098 4,137 4,707 Total Equity (N'Bns) 83 280 469 528 416 509 Profit Before Tax (N'Bns) 27.83 0.83 91.71 200.18 79.86 42.41 Profit After Tax (N'Bns) 27.35 0.66 81.79 177.68 63.89 33.93

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Tier 1 Banks Guaranty United First Zenith Access DESCRIPTION Polaris Bank Ecobank Nigeria Trust Bank For Bank Of Bank Bank Bank Africa Nigeria ROA 2% 0.03% 2.01 1.35% 5.73% 1.54% 0.72% ROE 33% 0.24% 15.85 17.44% 33.67% 15.35% 6.66% ROS 18% 0.33% 38.30% 13.46% 50.63% 15.11% 7.27% NPL 46% Capital Adequacy 14% Liquidity 81% Cost to Income 59% 83.33% 45.23 70.08% 32.06% 68.26% 75.83% Total Deposit 857.89 (N'Bns) 1,375.46 3,089.62 3,461.56 2,074.75 2,526.75 3,340.71 Total Asset 1,143.27 (N'Bns) 2,024.60 5,276 6,049 3,098 4,137 4,707 Total Equity (N'Bns) 83 280 773 469 528 416 509 Profit Before Tax (N'Bns) 27.83 0.83 105.80 91.71 200.18 79.86 42.41 Profit After Tax (N'Bns) 27.35 0.66 105.80 81.79 177.68 63.89 33.93

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Tier 2 Banks First City Union Stanbic Sterling Fidelity Wema Unity DESCRIPTION Polaris Bank Monument Bank Of IBTC Bank Bank Bank Bank Bank Nigeria Bank ROA 2% 0.60% 0.66% 1.21% 0.94% 2.95% 0.70% 0.91% ROE 33% 6.29% 6.58% 11.90% 7.56% 34.79% 9.20% -1.22% ROS 18% 4.28% 6.43% 11.90% 10.11% 27.82% 5.66% 6.55% NPL 46% Capital Adequacy 14% Liquidity 81.00% Cost to 59% Income 84.24% 86.71% 73.79% 84.27% 54.49% 82.45% 83.73% Total Deposit 857.89 (N'Bns) 827.00 945.41 1,210.12 883.22 660.93 579.88 251.91 Total Asset 1,143.27 (N'Bns) 1,187 1,613 2,141 1,747 1,754 717 323 Total Equity (N'Bns) 83 113 162 218 216 149 55 (241) Profit Before Tax (N'Bns) 27.83 8.91 13.32 32.38 20.44 57.75 6.29 3.68 Profit After Tax (N'Bns) 27.35 7.13 10.66 25.90 16.35 51.82 5.03 2.95

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