FirstBank Annual Report 2010

1. First Bank Group Results
First Bank Group Results
6 Months Ended June 2010
Presentation to Analysts and Investors
Presentation to Analysts and Investors
www.firstbanknigeria.com/investorrelations

2. Cautionary Note Regarding Forward Looking Statements
This presentation is based on the financial results of FirstBank’s unaudited results for the period ended June 30, 2010,
consistent with Nigerian GAAP. FirstBank of Nigeria Plc (‘‘FirstBank’’ or the ‘‘Bank’’) has obtained some information from
sources it believes to be credible. Although FirstBank has taken all reasonable care to ensure that all information herein is
accurate and correct, FirstBank makes no representation or warranty, express or implied, as to the accuracy, correctness or
completeness of the information In addition some of the information in this presentation may be condensed or
information. addition,
incomplete, and this presentation may not contain all material information in respect of FirstBank.
This presentation contains forward‐looking statements which reflect management's expectations regarding the group’s
future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such
as "anticipate", "believe", "expects", "intend" "estimate", "project", "target", "risks", "goals" and similar terms and phrases
anticipate believe expects intend estimate project target risks goals
have been used to identify the forward‐looking statements. These statements reflect management's current beliefs and
are based on information currently available to the Bank's management. Certain material factors or assumptions have
been applied in drawing the conclusions contained in the forward‐looking statements. These factors or assumptions are
subject to inherent risks and uncertainties surrounding future expectations generally.
FirstBank cautions readers that a number of factors could cause actual results, performance or achievements to differ
materially from the results discussed or implied in the forward‐looking statements. These factors should be considered
carefully and undue reliance should not be placed on the forward‐looking statements. For additional information with
respect to certain of these risks or factors, reference should be made to the Bank's continuous disclosure materials filed
from time to time with the Nigerian banking regulatory authorities The Bank disclaims any intention or obligation to
authorities.
update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.
1

3. Outline
1 FirstBank Overview
2 Operating Environment
p g
3 Strategy and Transformation
4 Financial Review
5 Summary & Outlook
Summary & Outlook
6 Appendix
2

4. FirstBank is Nigeria’s leading bank across multiple dimensions
#1 bank by total assets ($15.2bn or 12.5% market share)
# 1 bank by total loans and advances ($7.4bn or 14.8% market share)
Financial # 1 bank by total deposits ($9.6bn or 12.5% market share)
Solid liquidity and capital positions (18 0% CAR) with shareholder’s equity of $2.07bn
(18.0% shareholder s $2 07bn
Extensive network with 635 branches and outlets
Network International locations in London, Paris, Johannesburg, and Beijing
Over 1,500 ATMs
Large customer base, with over 5 million customers
Relationships Partner to the Nigerian g
g government and regarded as a national icon
g
Important lender to the Nigerian economy across multiple sectors
Unparalleled reputation for leadership, financial strength, and stability
Consistently ranked as #1 most trusted bank in independent consumer surveys
Reputation
Oldest existing financial institution in Nigeria (established 1894) with record of
surviving and even thriving through banking and national crises
Boasts of a strong corporate governance structure
Corporate Underpinned by strong institutional processes, systems, and controls
Governance History of seamless leadership successions
3

5. Group Financial Highlights: H1 2010
Profit & Loss Balance Sheet
Gross Earnings: 6.7% decline from June 2009 (N131.1 billion) to Net Loans and Advances: 0.5% increase from Dec 2009 (N1.08
N122.3 billion trillion) to N1.09 trillion
Net Interest Income: 7.1% decline from June 2009 (N61.9 billion) to Total Provisions: 27.7% decline from Dec 2009 (N63.1 billion) to
N57.5
N57 5 billion N45.6
N45 6 billion
Operating Income: 7% decline from June 2009 (N91.9 billion) to Total Assets: 4.1% increase from Dec 2009 (N2.17 trillion) to N2.26
N85.6 billion trillion
Operating Expenses: 14.6% increase from June 2009 (N47.9 Deposit Liabilities: 6.5% increase from Dec 2009 (N1.3 trillion) to
billion) to N54.9 billion N1.4 trillion
Profit Before Tax: 637.4% increase from June 2009 (N4.3 billion) to Net Assets: 0.4% decline from Dec 2009 (N309.6 billion) to
N21.7 billion N308.4 billion
Provision for Credit Losses: N0.95 billion net recovery (June 2009: Net Assets per Share: N10.63 (Dec 2009: N12.45)
N39.8 billion provision)
Key Ratios Key Ratios
Net interest margin 5 8% (H1 2009: 6 7%)
5.8% 6.7%) NPL/total loans 5 8% (Dec 2009: 8 2%)
5.8% 8.2%)
Pre provisioning Cost to income* 64.1% (H1 2009: 61.8%) NPL Coverage 70% (Dec 2009: 67.1%)
Post provisioning Cost to Income* 63.0% (H1 2009: 96.5%) Loan to deposit ratio 79.2% (Dec 2009: 85.2%)
Credit loss charge -0.1% (Dec 2009: 3.5%) Liquidity ratio 40.4% (Dec 2009: 34.2%)
After tax return on equity 16 4% (H1 2009: 1 40%)
16.4% 1.40%) Capital adequacy 18 0% (Statutory minimum 10%)
18.0%
After tax return on assets 2.24% (H1 2009: 0.21%) Tier 1 Capital adequacy ratio 16.4%
*cost to income ratio – operating expenses/operating income 4

6. Outline
1 FirstBank Overview
2 Operating Environment
p g
3 Strategy and Transformation
4 Financial Review
5 Summary & Outlook
Summary & Outlook
6 Appendix
5

7. The operating environment has shown some resilience
Economy Banking Industry
• Strong growth in GDP driven mainly by the non-oil sector, telecoms • Declining interest rates as a result of excess liquidity in the system;
sector recording the highest growth; • The Asset Management Company (AMCON) has been signed into law
• 7.23% growth in real GDP in Q1 2010 (Q1 2009: 4.50%);
g ( ); by the President of Nigeria;
• GDP growth for 2010 projected at 7.74% by the Central Bank of • AMCON would be a permanent structure (part of CBN regulatory
Nigeria (CBN); infrastructure) with a life span of 10 years;
• Relatively stable oil prices ($70 - $78/barrel range), with substantial
• The CBN in a bid to unlock the credit market has approved the
increase in oil production; investment of N500 billion debenture stock through the Bank of
• Downward trend in inflation rates; Industry:
• Relative stability in exchange and interest rates, MPR stable at 6%;
– N300 billion for power projects; and
• Foreign reserves down to $37.4b in June 2010 from $40.7b March
– N200 billion for re-financing/re-structuring of banks existing
2010;
loan portfolios to SMEs/Manufacturing sector
• Relative political stability;
• CBN has extended guarantees for all inter-bank transactions, foreign
• Growth, although marginal, in credit to private sector ;
credit lines and pension funds placements with banks up till June 30,
• Expected increase in spending due to 2011 presidential elections;
2011;
• Gradual rebound in the stock market; and
• R i d prudential guidelines released with effect f
Revised d ti l id li l d ith ff t from 1 t J l 2010
1st July 2010;
• Increase of 20.7% and 24.9% in the Nigerian All-Share index and
market capitalisation of equity respectively in H1 2010. • Bid results for CBN managed banks to be released in September 2010;
and
• New guidelines issued on liquidity criteria for banks’ investment in state
government bonds is expected to encourage growth in the bond
market.
6

8. Agenda
1 FirstBank Overview
2 Operating Environment
p g
3 Strategy and Transformation
4 Financial Review
5 Summary & Outlook
Summary & Outlook
6 Appendix
7

9. While starting from a position of strength, we recognize current and potential
challenges and have set a bold TRANSFORMATION agenda to address these
Strong assets & opportunities….
Strong assets & opportunities
• Largest and strongest balance
sheet of any SSA bank (ex‐SA)
Some challenges…
• Extensive distribution network
• Translating scale into
(635 branches/outlets)
profits
• Deep institutional, retail, and
p , ,
• O ercoming legac
Overcoming legacy
government relationships and
service delivery FirstBank is
client base of over 5 million
issues aggressively
• Consistently rated the most
Consistently rated the most TRANSFORMING
TRANSFORMING
• Managing credit
trusted Nigerian financial to meet present
quality in the present
services brand in independent and future
macroeconomic
surveys challenges
climate
li t
• Visionary, experienced
• Increased
leadership
competition from
• Operating in Africa’s most foreign entrants
promising financial services
marketplace 8

10. Our primary focus in the near term will be the growth and transformation of
the Bank while creating future growth options for the Group
FirstBank Group – Priorities by growth horizon
Build scale internationally…
Diversify group and
transform bank…
• Significant SSA expansion
and growth in banking with
Consolidate in
• Drive bank transformation selective international forays
Nigeria…
to completion in non-bank financial
• Build scale in inv. banking services
and i d leverage • Focus on driving
d insurance and l
• Drive organic and inorganic group synergies economies of scale and
expansion • Commence SSA regional scope across international
• Continue aggressive bank expansion in earnest network and portfolio of
transformation businesses
• St t for growth in inv.
Structure f th i i
banking and insurance
• Rep office expansion; initial
SSA explorations
2010 2011 - 2012 2013 - 2014
9

11. We are restructuring at a group level to enhance portfolio optimization,
coordination and reduce risks and duplications across our businesses
Operational division and
Operational division and Operational division but
Operational division but
FirstBank Group operating structure
Fi tB k G ti t t legal standalone entity not legal standalone
Group FirstBank Group
Holdco
Corporate
Corporate Shared
Shared
Centre Services
Group Management Committee
Business Investment Banking
Groups FirstBank FBN Bank International Insurance and Asset Emerging Ventures
Management
Business ▪ Institutional Banking ▪ FBN Bank UK* ▪ General life/non‐life ▪ Financial advisory ▪ Houses standalone
Units ▪ Corporate Banking ‐ London underwriting ▪ Capital markets subsidiaries
▪ Retail Banking ‐ Paris ▪ Insurance Brokerage ▪ Asset management ▪ Incubation and
– Affluent/High Net
Affluent/High Net • New countries… e.g.,
N i ▪ P i i li
Principal investment development of new
d l f
worth (HNI)
– Mass market ‐ Kenya and private equity businesses
– Enterprise ‐ Ghana etc ▪ Securities services
– Local government ▪ Global custodianship
▪ Public sector ▪ Research
– Federal government
– State government
Mapping to ▪ FirstBank of Nigeria ▪ FBN Bank UK ▪ FBN Insurance Brokers ▪ FBN Capital ▪ First Pension Custodian
present ▪ FBN Bureau de ▪ First Trustees First Registrars
entities Change (BdC) ▪ First Funds ▪ FBN Mortgages
▪ Foreign rep offices
Foreign rep offices ▪ FBN Securities
FBN Securities ▪ FBN Microfinance Bank
FBN Microfinance Bank
10

12. We are reorganizing the bank in order to drive deeper segment specialization
and ensure competitiveness/consistency across all geographies
New Bank S Structure
FirstBank
Five Strategic Business Units
1 2 3 4 5
Institutional Corporate Retail Public Sector Public Sector
Operations Risk Finance
Banking Banking Banking North South
Bank Customer Segments
Company
Secretary
Human
Capital Mgt
1 Insti- HNI Federal
tutional Gov’t
Legal
4 5
Corporate
C t
Corpo- Affluent Trans-
2
State formation
rate Gov’t
3 Internal audit*
Enterprise Mass Local Strategy &
market Gov’t
Corporate
Development
p
Corporate
Businesses Individuals Public sector Commu-
nications
*Reports to Board of Directors via Board Audit and Risk Assessment Committee
11

13. The Bank’s ongoing transformation initiatives are organized along four
strategic themes
Be the clear leader and
Nigeria’s bank of First choice
1 GROWTH 2 SERVICE 3 PERFORMANCE 4 TALENT
EXCELLENCE MANAGEMENT
Attain full benefits of Drive unparalleled Deliver unmatched Become a hub for the
scale and scope by service levels by results by creating a best industry talent;
accelerating growth developing world performance culture cultivate a highly-
and di ersification of
diversification class instit tional
institutional with clear individual
ith l i di id l motivated, capable,
ti t d bl
assets, revenue and processes, systems & accountability at all and entrepreneurial
profits capabilities levels workforce
12

14. Recent progress against strategic initiatives
Key Initiatives Recent Progress
1 • Restructuring for growth • Bank SBU operating plans, staffing plan and detailed migration
path mapped out for movement from geographic to segment-
• Business line expansion
Growth • International expansion
based SBUs in bank in 4th Qtr
• Bank operations reporting centralized with highly skilled
• Revenue enhancement initiatives
regional/area operations managers recruited internally/externally
& trained; implementation ongoing
• Insurance JV implementation ongoing with Sanlam (top team
selection, go-to-market model etc); launch 2H10
• I-banking/asset mgt-related subsidiaries reporting centralized;
g g p g ;
Attain full benefits of scale operational unification plans underway
and scope by accelerating • Bank revenue enhancement initiatives ongoing (new pricing
growth & diversification of framework designed, risk asset creation drive)
assets, revenue and profits • International expansion framework approved by Board; China
rep office formally launch/business underway
2
• Channel Migration/Optimization • Concluded centralized processing centre pilot successfully and
• Branch customer experience detailed rollout plan completed
Service transformation • Implementation of ATM diagnostic effort now in progress
Excellence • End-to-end process re-design (regionalized ATM support structure within IT;
• Touch point re-engineering routine/centralized monitoring etc)
• Construction of model branch/‘end-to-end’ design centre in
progress in Lagos
• Ongoing vendor selection for revamp of internet Banking
Drive unparalleled service
platform
levels by developing world
class institutional processes, • Implemented contact centre services expansion including
cheque confirmation
systems & capabilities
• Several credit process/risk mgt initiatives ongoing 13

15. Recent progress against strategic initiatives
Key Initiatives
K I iti ti Recent P
R t Progress
3 • Realignment of metrics and targets • Detailed project underway to:
to new bank structure • Redesign market-facing scorecards to support the
Performance • Back office scorecard design / SLAs new Bank structure and strategy
Management (Ops, HCM, Risk etc) • Define scorecards for back-office functions
• Scorecard automation / • Refine the consequence management and enterprise
enhancement of management performance mgt framework to reflect global best
information systems practices and internal innovations
• Deployed HP Service Manager to measure internal SLA
Deliver unmatched results by performance for Operations and IT
creating a performance • Deployed Oracle Business Analytics (OBIEE) to deliver
culture with clear individual dashboards to the desktops of managers
accountability at all levels
4
• Staff capability building initiatives in • Concluded comprehensive training needs analysis in targeted
key areas areas (e.g., service levels/quality)
Talent • Recruitment and talent value • Commenced significant credit analysis training programme for
proposition initiatives RMs/credit ffi
RM / di officers and customer service training f f
d i i i for frontline
li
• Culture change programme branch staff
• Career management initiatives • Concluded selection process for service provider to institute
competency based recruitment framework
• Continued success in fostering p
g performance driven
Become a hub for the best environment including recent financial/non-financial rewards
industry talent; cultivate a for high performers and performance counseling or exits for
highly-motivated, capable, and underperforming staff
entrepreneurial workforce • Leadership team additions (Corp. Comm., Proj. Impl.)
14

16. Agenda
1 FirstBank Overview
2 Operating Environment
p g
3 Strategy and Transformation
4 Financial Review
5 Summary & Outlook
Summary & Outlook
6 Appendix
15

17. Strong and liquid balance sheet predominantly funded by sustainable low
cost deposits
Funding (June 2010)
di ( ) Yield
i ld
2,262 bn 2,262 bn
11.9% 11.4%
Other Assets 5% 121 134 Other Liabilities 6% 11.0%
Managed Funds 3% 59 75 Other Borrowings 3% 10.4%
9.5%
Investments 21% 470
7.2%
6.5%
5.7% 6.0%
5.3%
1671 Deposits & other accounts* 74%
Loans & Advances 48% 1094
Treasury Bills 1% 23
74 Short Term Liabilities 3%
Inter Bank & Cash 22% 494 H2‐Mar‐08 H1‐Sep‐08 H2‐Mar‐09 H1‐Sep‐09 H1‐Jun‐10
308 Capital & Reserves 14%
Yield on Interest Earning Assets Cost of Interest bearing Liabilities
Assets Liabilities
Net Interest Margin Comment
8.4% • Very liquid balance sheet
7.9%
7.3% • Strong liquidity ratio of 40.4%, significantly above the 25% regulatory
6.7%
requirement
q
5.8%
5 8%
• Stable funding base through large proportion of core deposits, to
exploit market opportunities. Balance sheet 63% funded by customer
deposits
66 60 57 • Lower costs of funds and declining yields on interest earning assets in
55 53
line with currently low interest rate environment
• Net interest margin remained stable Q/Q (Q1: 5.9%) despite
H2‐Mar‐08 H1‐Sep‐08 H2‐Mar‐09 H1‐Sep‐09 H1‐Jun‐10 continued downward pressure on yields
Net Interest Income (N'bn) Net Interest Margin
*Includes deposits due to other banks 16

18. Improving mix as deposit growth continues, evidencing customer
confidence
Deposits (N’bn) Deposits Mix
1,427 9.5% 13.7%
1,339
1,194 1,198 24.8% 18.9%
851 Domiciliary deposit
28.4% 29.1% Term deposits
700
Savings deposits
Current deposits
Current deposits
37.3% 38.2%
Mar‐08 Sep‐08 Mar‐09 Sep‐09 Dec‐09 Jun‐10 Sep‐09 Jun‐10
Deposits by Maturity Deposits by Customer Segmentation
7.7% 7.9%
13.6% 14.1%
12.4% 13.0% 50.0%
50 0% 49.3%
49 3%
Over 12 months
Individuals
6‐12 months
33.9% 29.9% Coprorates
3‐6 months
Finance Companies
1‐3 months 37.0%
37 0% 37.7% Government
G t
0 ‐ 30 days
32.4% 35.1%
0.2% 0.2%
12.8% 12.9%
Sep‐09 Jun‐10
Sep‐09 Jun‐10 17

19. We have continued to grow our loan book whilst maintaining
diversified sector exposures
Loans & Advances N’bn
& d ’b Business Lines (Bank Only)
i i
1,094 6.4% 6.1%
0.6% 0.8% Public Sector
874 24.2%
862 30.5%
Agric/Misc
752
16.4%
Financial Institutions &
25.5% 8.7% Treasury
466
Retail
10.2%
43.7% Consumer
26.7%
Corporates
Mar‐08 Sep‐08 Mar‐09 Sep‐09 Jun‐10 Dec‐09 Jun‐10
Efficiency Gross Sector Exposure ‘June 10 (Bank Only)
Public Sector 6.1% Agriculture
(6%) 0.8% (1%)
Retail Services
Leverage Ratio (Times) Loan to Deposit Ratio
11.0% (10%)
Oil and gas 23.2%
Utilities 0.2% (1%) (17%)
102.7%
General Commerce
4.6% (5%)
79.2%
72.0% Communication
66.6%
62.0% 6.4% (5%)
7.3 Consumer Credit
6.6 Transportation
6.0 0.1% (1%) 8.7% (7%)
5.4
4.4
44
Finance and Manufacturing
Insurance 24.2% 7.3% (8%)
(28%) Real estate
Construction 0.6%
6.8% (10%)
Mar‐08 Sep‐08 Mar‐09 Sep‐09 Jun‐10 (1%)
( ) March 2010 18

20. Evolution of H1 2010 group profit after tax
N’ bn
’b
94
28 1
37
31
55 25
6
Interest Income Interest Expense Non‐Interest Income Provisions Operating Expenses Profit Before Taxation Tax Profit After Tax
19

21. Despite currently low interest rate environment, gross earnings maintained
an encouraging growth trend
Gross Earnings N’bn
i ’b Comments
128 • Interest income negatively impacted by declining yields
121 122
20% 25 • Increasing contribution to gross earnings from non-interest
17% 21 23% 28
97 income, with heightened focus on driving transactional volumes
89
21% 20 • Expected increase in lending over second half to support gross
19% 17
earnings growth
• Focus also on driving higher contribution of non-bank entities to
83% 80% 103
100 77% 94 group performance (supported by anticipated positive impact of
81% 72 79% 77 AMCON)
Breakdown of interest & non interest income
H2‐Mar‐08 H1‐Sep‐08 H2‐Mar‐09 H1‐Sep‐09 H1‐Jun‐10
Interest Income Non Interest Income
Non‐ Interest Income
Gross Earnings by Business Lines 14.1% 19.4% Other Income
N128 bn N122 bn 30.9% 20.9% Other fees and commissions
1.5 8.6% Remittance fees /Management fees
1% 1.7 1% 9.4% 9.1%
1.1 0% 0.4 7.2% Exchange gain
1% 11.8% 16.5%
0% 0.4 Credit related fees
3% 3.4 Other 26.5% 25.5%
Commission on turnover
Commission on turnover
5% 5.8
Mortgage Banking Interest Income
0.6% 0.3%
6% 7.1
Asset Management Other
69.3% 75.1%
Loans and Advances
Investment & Capital
93% 119 k
Markets Treasury Bills/ Bonds
T Bill / B d
10.9%
Retail & Corporate 14.8% Placements
90% 109.8 19.2%
Banking 9.7%
H1‐Sep‐09 H1‐Jun‐10
H1‐Sep‐09 H1‐Jun‐10
20

22. Strategic investments in branch and IT infrastructure as well as
staff, sustain operating expenses
Operating Expense Breakdown
i kd Comment
Staff Cost Depreciation NDIC Premium on Deposits • Cost/income ratio negatively impacted by decline
Admin and General Expenses Loan Loss Expense in gross earnings coupled with rising costs
• Upward trend in costs driven by sharp increases
83
in depreciation and maintenance (IT and branch
network)
63
30 36%
54 • Ongoing staff rationalisation plans
16 26%
43 44 • Decline in admin and general expenses reflect
28% 21 38%
4 9% 3 7% 23 early wins from ongoing cost optimisation
3% 4
4 7% schemes
2
4 4 8%
47 74%
39 91% 41 93% 4% • Total net write back of N0.95 billion made up of:
26 49%
24 29%
o Net write back of provisions on
(1) ‐2% investments and other assets of N4.7 bn
H2‐Mar‐08 H1‐Sep‐08 H2‐Mar‐09 H1‐Sep‐09 H1‐Jun‐10 no longer required
Cost/Income Ratio* o Credit related write back of N1.1 bn
o Loan loss expense of N4.9 bn
96.5%
• Key initiatives are ongoing to ensure major
improvement in income side of cost to income
72.8%
72 8%
ratio
ti
60.2% 61.8% 64.1% 63.0%
59.2%
55.0% 55.1% 54.0% • Cost efficiencies anticipated from strategic
44.9% investments
10.2% 24.5% 29.1%
6.2%
8.5% ‐4.6%
‐27.6%
H2‐Mar‐08 H1‐Sep‐08 H2‐Mar‐09 H1‐Sep‐09 H1‐Jun‐10
Pre Provisioning Post Provisioning Total Income Growth Total Cost Growth
*cost to income ratio – operating expenses/operating income 21

23. We have made significant improvements in our non performing loan
portfolio
NPL & Coverage Ratios
& i Comments
NPL/TL TL LP/NPL • Reduction in group non performing loans from N94 billion in
142.9% December 2009 to N65 billion in H1
o Decline in NPL’s due to write off of N28 billion on
fully provisioned accounts
Going Forward:
87.5% • Early recognition of impaired assets for remedial action
70.8% and/or classification
63.9% 64.9%
• Focus on improving results from remedial management team
to restructure NPL’s
NPL s
8.1% • Enhanced monitoring mechanisms and risk management
4.7% 5.8% processes across the bank
1.5% 1.8%
• Recovery efforts to be focused especially on large accounts
Mar‐08 Sep‐08 Mar‐09 Sep‐09 Jun‐10 with option of restructuring
Time Past Due ‘June 10 (Bank Only) Sector Exposure ‘June 10 (Bank Only)
Manufacturing Others 2.3% (4%)
N82bn N60 bn
Construction 7.5% 4.7% (3%)
(3%) Asset Management
13.4% 8 Lost 17.0% (18%)
26.6% 16 Commercial
Residential 3.4%
(3%)
44.8% 34 Interest in suspense Utility 2.2% (6%) Personal &
Professional 8.5%
43.7% 26 Doubtful > 360 days (13%)
180 ‐ 359 days Oil & Gas 13.6%
(12%)
20.8%
11
90 ‐ 179 days
y
Commercial Non
29.7% 8 Sub Standard Residential 25.8%
21.0% 29 (17%)
General Commerce
5.4% (6%)
Retail Others
Mar‐10 Jun‐10
7.7% (11%)
( ) March 2010 22

24. We have sustained an improving trend in our profitability matrices
PBT Split by business lines
PBT Split by business lines Comments
N3bn N32bn
0.71 2.2% • Within retail and corporate banking, the new operating
0.00 0.01%
3.33 10.5% structure is expected to drive income growth and improve
31% 0.99
4.67 14.7% Other* share of customers’ wallet
6.8%
• The investment banking and asset management division
0.22 Mortgage Banking
should benefit from the new group operating structure.
Investment & Capital Launch of AMCON and a pick up in activities in the capital
Markets
42.5% 1.35 markets is expected to drive improved performances in
22.98 72.5% Asset Management
these divisions
Retail & Corporate
9.3% 0.30 Banking
• Mortgage banking subsidiary is focused on asset portfolio
10.5% 0.34 growth, as well as marketing and cost minimisation
strategies which should see profitability pick up in the
Sep‐09 Jun‐10
second half of the year
ROE, ROAA & EPS
• Growing branch network expected to continue to accelerate
EPS (Kobo) ROE ROAA long-term deposit collection
• At least 10% loan growth expected to year end
16.4%
14.26% • Si ifi
Significantly reduced credit i
tl d d dit impairment charges, d i
i t h driven b
by
9.86% stricter credit risk management framework
1.40% • Continued benefits expected from cost optimisation
2.27% 2.65% 2.24%
initiatives
‐1.11%
0.21%
• Continued focus on recoveries, as well as working on
‐6.64%
1.74 1.91 (0.90) 0.17 1.55 restructuring options on selected accounts should positively
impact on income and asset quality respectively
H2‐Mar‐08 H1‐Sep‐08 H2‐Mar‐09 H1‐Sep‐09 H1‐Jun‐10
* Insurance, Pension Custodians, Bureau de Change & First Funds 23

25. Our capital ratios remain well above regulatory requirements
N’ bn X
X
62.6%
X
372
362 X
354
26
26 X
28 335 334
26 X
28 31
X 47.5%
X 41.2%
X
40.4%
X 37.9%
37 9% 37.0%
X 38.3%
X 28.2%
25.2%
23.4%
26.0%
X 23.4%
23 4% 18.0%
18 0%
346 21.4%
328 334 X
307 303 Xxx 16.4%
1,854
1,404
1,404 1,432
,
1,287
1 287
904
Mar‐08 Sep‐08
p Mar‐09 Sep‐09
p Jun‐10
Mar‐08 Sep‐08 Mar‐09 Sep‐09 Jun‐10 total RWA (N'mn) Tier 1 capital adequacy ratio %
total capital adequacy ratio % Liquidity Ratio
Tier 1 Capital Tier 2 Capital
24

26. Agenda
1 FirstBank Overview
2 Financial Review
3 Strategy and Transformation
4 Financial Review
5 Summary & Outlook
Summary & Outlook
6 Appendix
25

27. We expect the macro economic backdrop to positively contribute to our
performance
Operating Environment FirstBank
• 7.7% growth in GDP projected for 2010; Recovery in revenues on the back of:
• Resilient performance in the non-oil sector;
• New operating structure to drive increased contribution from
• Acceleration in lending activity over second half driven by
investment banking, asset management and insurance
opportunities created by the economic recovery;
• Enhanced customer focus within the bank’s 5 new strategic units as
• CBN interventions to support and direct credit formation;
from September 2010
• CBN inter bank guarantee extended till June 2011;
• Inorganic growth opportunities to be pursued only if value enhancing
• Improved regulatory environment enabling financing opportunities
to shareholders
in the real economy, infrastructure and personal mortgages;
• Improving asset quality
• Improved corporate governance;
• Stable exchange rate and oil prices, increasing oil production; Declining cost base driven by:
• Declining inflation rate;
• Securing sustainable lower cost of funding via cheap deposit
• Improved liquidity due to expected spending on 2011 elections;
collections
• Establishment of AMCON should ease tightened credit conditions;
• Strategic investments in operations to yield cost efficiencies
and
• Government focus on developing infrastructure - NGN300bn power Risks :
and aviation fund established to assist in development of both
• Continuing rejuvenation of the portfolio, focusing on trade finance and
sectors
structured self liquidating facilities
• Continuing review of target market and risk acceptance criteria
• More focused management arising from new organisation structure
26

28. In conclusion, we believe that FirstBank is well-poised to deliver solid
earnings growth and to extend its market leadership over time
• FirstBank is the leading Nigerian bank and largest bank in Sub-Saharan Africa (SSA)
outside of South Africa
• 2009 was a difficult year for the Nigerian banking industry as a whole but despite
tough market conditions, the bank was able to continue on a healthy growth trajectory
• We believe that the worst of the asset quality issues are behind us but continue to
proactively monitor and manage the loan portfolio
• 1st and 2nd quarter 2010 figures are promising and we believe are indicative of the
trajectory of the bank’s future performance
• With an array of formidable tangible and intangible assets we believe that FirstBank
assets,
is well poised to become a leading financial institution across SSA over time
• To meet challenges and potential threats in our home market and elsewhere head-
on,
on we have embarked upon a major transformation journey led by a progressive
leadership team
• We believe that by focusing on the bank transformation and local growth in the near-
term and extending our franchise into key geographies and adjacent business lines
over the medium/long term, we are well poised to deliver solid earnings while
extending our market leadership
27

29. Agenda
1 FirstBank Overview
2 Financial Review
3 Asset Quality and Risk Management
4 Update: Strategy and Transformation
5 Summary & Outlook
Summary & Outlook
6 Appendix
28

30. Contact
Yemisi Lanre-Phillips
Investor Relations Officer
Oluyemisi.Lanre-Phillips@firstbanknigeria.com
Tel: +234 1 905 2720
29

31. 30

32. Improving macro economic backdrop
Overview
X X$ N
X X 153
• 7.23% growth in real GDP in Q1 2010 (Q1 2009:
X 7.74 X80
6.97 6.66 4.50%)
X 6.21 5.98 X 150
X 5.39 X • GDP growth for 2010 projected at 7.74% by CBN
X X 147 • Oil prices remained stable at $70 - $78 per b
i i d t bl t barrel
l
X X60 • Foreign reserves down to $37.4b in June 2010
X X 144 from $40.7b
X X • Expected increase in spending due to 2011
X X40 141 presidential elections
X 2005 X
Apr‐10
0
May‐10
0
Jan‐10
0
Feb‐10
0
Mar‐10
0
Jun‐10
0
2006 2007 2008 2009 est • Decline in inflation rate to 11% as at May 2010
X 2010 X
X X from 12.5% in March 2010
GDP Growth % oDue to continuing underperformance of
Oil Prices Exchange Rate
monetary aggregates, constrained
X X demand, adequate food supply, relatively
X 7 X13 stable exchange rates
X 6
X • The low inter-bank rates reflective of surplus
X X funds within the banking system as well as slow
5
X X12 pace of risk asset creation
X 4 X • MPR stable at 6%
X 3 X
• Increase of 20.7% and 24.9% in the Nigerian All-
X 2 X11
X X Share index and market capitalisation of equity
1
X X respectively in H1 2010
0
X X10
pr‐10
y‐10
n‐10
b‐10
Mar‐10
n‐10
c‐09
b‐10
y‐10
n‐10
r‐10
r‐10
X X
May
Jan
Feb
Jun
Dec
Feb
May
Mar
Apr
Jan
Ap
X X
X X
X Inter‐Bank Call Rate % X Inflation %
Monetary Policy Rate (MPR) %
31

33. Positive outlook for sustained profitability supported by
Recovery in revenues on the back of
• Acceleration in lending activity over second half driven by opportunities created by the economic
recovery
• Improved regulatory environment enabling financing opportunities in the real economy infrastructure
economy,
and personal mortgages
• Further revenue growth from new operating structure to drive increased contribution from investment
banking, asset management and insurance
• Enhanced customer focus within the bank’s 5 new strategic units as from September 2010
• Inorganic growth opportunities to be pursued only if value enhancing to shareholders
I i th t iti t b d l l h i t h h ld
Declining cost base driven by
• Securing sustainable lower cost of funding via cheaper deposit collections
g g p p
• Strategic investments in operations will yield cost efficiencies
Risks
• CBN interventions to support and direct credit formation
• Continuing rejuvenation of the portfolio, focusing on trade and structured self liquidating facilities
• Continuing review of target market and risk acceptance criteria
• Focused management arising from new organisation structure
32

34. ..... predominantly funded by sustainable low cost deposits
Deposits (N’bn) Deposits by Maturity
Current deposits Savings deposits Term deposits Domiciliary deposit
7.7% 7.9%
1,427
13.6% 14.1%
1,198 196 14%
12.4%
12 4% 13.0%
13 0%
114 9%
270 19% Over 12 months
297 25% 6‐12 months
33.9% 29.9%
416 29% 3‐6 months
1,194 340 28%
1‐3 months
851 0 ‐ 30 days
700
545 38% 32.4% 35.1%
447 37%
Mar‐08 Sep‐08 Mar‐09 Sep‐09 Jun‐10 Sep‐09 Jun‐10
Deposits by Customer Segmentation Comment
• Strong liquidity ratio of 45.6%, significantly above the 25%
regulatory requirement
49.3%
49 3%
• Stable funding base through large proportion of core deposits, to
g g g p p p ,
50.0%
50 0%
exploit market opportunities. Balance sheet 63% funded by
Individuals deposits
Coprorates • Improving mix as deposit growth continues, evidencing customer
Finance Companies confidence
37.0% 37.7%
Government
G t • Lower costs of funds and declining yields on interest earning assets
Lower costs of funds and declining yields on interest earning assets
in line with currently low interest rate environment
0.2% 0.2%
12.8% 12.9% • Net interest margin remained stable Q/Q (Q1: 5.9%) despite
continued downward pressure on yields
Sep‐09 Jun‐10
*due to other banks 33

35. Breakdown of Facilities Against Shares (FAS1) Portfolio
Dec – 09 Mar – 10 Jun ‐ 10
1 Facility Against Shares (FAS) N53.05b N48.72b N29.97b
2 Collateral value FAS N49.18b N51.06b N37.22b
3 Portfolio Coverage of FAS 92.72% 104.81% 124.20%
4 FAS/Total Loans 4.79% 4.61% 2.89%
5 Non‐Performing FAS Loans N30.07b N23.13b N10.2b
6 Non‐Performing FAS Loans (%) 56.70% 47.48% 33.29%
7 Provisions held against FAS N23.51b N19.16b N6.18
8 FAS NPL Coverage 78.18% 82.84% 60.59%
9 % FAS backed by shares in private placement
% FAS backed by shares in private placement 35.02%
35 02% 35.28%
35 28% 51.39%
51 39%
10 Margin Loan Exposure N11.79b N13.85b N5.89b
11 Percentage of margin loans to total LAD 1.17% 1.33% 0.59%
12 Collateral value of total margin loans
g N6.93b N8.92b N6.63b
13 Collateral value of non‐performing margin loans N4.96b N8.84b N6.58b
14 % of loan book renegotiated/restructured* 2.79% 5.88% 34.79%
Provisions have been made in line with prudential guidelines
p g
Portfolio is marked to market only for the purpose of considering open positions. Classified accounts are based on total balance outstanding and not the value at risk.
On recovery of the value at risk, the security value will be taken in to recover the entire sum outstanding
1FAS –Includes margin loans and other loans secured by shares
*Largely margin loan accounts Figures may not add up due to rounding 34