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Report and Financial Statement

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Contents

Directors and Advisers 03

Chairman’s Statement 04

Managing Director/Chief Executive’s Review 06

Directors’ Report 09

Statement of Directors’ Responsibilities 10

Independent Auditors’ Report 11

Profit and Loss Account 12

Balance Sheet 13

Notes to the Accounts 14

FBN Bank (UK) Limited

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FBN Bank (UK) Ltd commenced trading on the 1st November2002 following receipt of the relevant authorisation from theFinancial Services Authority and the approval of the courtsunder the Financial Services and Markets Act 2000. The assetsand liabilities of the former London branch of First Bank ofNigeria PLC were absorbed by FBN Bank (UK) Ltd.

It is a wholly owned subsidiary of First Bank of Nigeria Plcand the office is based in the heart of the city of London,at 28 Finsbury Circus, EC2M 7DT.

First Bank of Nigeria Plc for over a century has distinguisheditself as a leading banking institution and a major contributorto the economic advancement and development of Nigeria.

Founded in 1894 by a shipping magnate from Liverpool,Sir Alfred Jones, the Bank commenced as a small operationin the office of Elder Dempster & Company in Lagos.

It was incorporated as a Limited Liability Company onMarch 31, 1894, with the Head Office in Liverpool. It startedbusiness under the corporate name of the Bank for BritishWest Africa (BBWA) with a paid – up capital of £12,000, afterabsorbing its predecessor, the African Banking Corporation,which was established earlier in 1892. This signalled thepre-eminent position which the Bank was to establish in thebanking industry in West Africa. In the early years ofoperations, the Bank recorded impressive growth and workedclosely with the Colonial Government in performing thetraditional functions of a Central Bank.

To justify its West Africa coverage, a branch was openedin Accra, Gold Coast (now Ghana) in 1896 and another inFreetown, Sierra Leone in 1898. These marked the creationof the Bank’s international banking operations. The secondbranch of the Bank in Nigeria was in the old Calabar in1900 and two years later, services were extended toNorthern Nigeria.

Currently with 394 branches spread throughout Nigeria,the Bank maintains the largest branch network in the industry.

To satisfy the needs of its customers, First Bank has diversifiedinto a wide range of banking activities and services. Theseinclude Corporate and Retail Banking, Registrarship, PensionFund Custodianship, Trusteeship and Insurance Brokerage.

Over the years, the Bank has experienced phenomenal growth.With a share Capital of N55.6 million in 1980, the Bank’sCapital grew to N5.238 billion as at March 2007. The Bank’stotal asset base was N762.88 billion while its deposit basestood at N581.83 billion as at March 2007.

Market capitalization stood at N350.99 billion ie N33.50/share as at 31st March 2007.

To reposition and to take advantage of opportunities inthe changing environment, the Bank embarked on severalrestructuring initiatives. In 1957, it changed its name fromBank of British West Africa to Bank of West Africa. In 1969,the Bank was incorporated locally as the Standard Bank ofNigeria Limited in line with the Companies’ Decree of 1968.

Changes in the name of the Bank also occurred in 1979and 1991, to First Bank of Nigeria Limited and First Bankof Nigeria Plc, respectively. In 1985, the Bank introduceda decentralized structure with five regional administrations.This was reconfigured in 1992 to enhance the Bank’soperational efficiency. In 1996, the Bank introduced theFBN Century – II project to revolutionise its operationsin line with the dynamics of the environment.

FBN obtained a listing on the Nigerian Stock Exchange (NSE)in March 1971 and has won the NSE President’s merit awardnine times for the best financial report in the banking sector.

The Bank has continued to be a leader in financing long-termdevelopment of the economy, which was demonstrated in1947 when the first long-term loan was advanced to the thencolonial government. To demonstrate its commitment to itscustomers and the development of the Nigerian economy,the Bank has since broadened its loan and credit portfoliosto various sectors of the economy.

The Bank has developed tremendously judging from a numberof parameters including number of branches, growth in depositbase, asset size and size of loans and advances. Furthermore,its track record of profitability and reliability in sound bankinghas continually placed the Bank in its leadership position.

In line with its mission statement “remain true to our nameby providing the best financial services possible” the Bank willconsistently transform itself as it forges ahead in its secondcentury of qualitative banking to the nation.

Profile


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Directors

Ayoola Oba Otudeko, OFR Chairman

Peter Stuart Hinson Managing Director/Chief Executive

John Oche Aboh

Jacobs Moyo Ajekigbe

Michael John Bamber Executive Director, Operations

Christiana Ekaete Fashogbon Executive Director, Business Development

Peter Arnhem Grafham

Abdullahi Sarki Mahmoud

Anthony Robert Paget Williams

Company Secretary

Venetia Carpenter, FCIS

Registered office

28 Finsbury CircusLondonEC2M 7DT

Bankers

HSBC Bank plc, London

Standard Chartered Bank PLC, New York

WestLB AG, Dusseldorf

Solicitors

DLA Piper UK LLP, London

Auditors

Deloitte & Touche LLPChartered Accountants and Registered AuditorsLondon

Directors and Advisers


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Distinguished shareholders, invited guests,distinguished ladies and gentlemen,

It gives me great pleasure to welcome you all to our 5thAnnual General meeting. We are thankful that the remarkableachievements that FBN Bank (UK) Limited has recorded sinceinception have been sustained. In the 2006/2007 financialyear, we successfully improved our performance by deliveringa better return to our customers and shareholders. Theincreasing challenge is how to maintain this level of financialperformance and increase shareholder value, againsta background of the introduction of Basel II.

Most crucially, as we execute our business plan, we are obligedto rigorously fulfil our corporate governance responsibilitiesby adhering to prescribed guidelines. Furthermore, as weexpand into new markets, the Financial Services Authority(FSA) regularly assesses our performance to ensure that risksfaced by our operations are within acceptable limits. We valuethe relationship and guidance received from our Regulator.

As we look ahead to our sixth year of operation, let mespend a few minutes highlighting some key trends in theglobal economy for 2007.

The emergence of China as an economic superpower isgraphically illustrated by its relentless double-digit growthrate and current US$1.2 trillion in external reserves. Hugetrade imbalances with the U.S., in particular, and perceivedundervaluation of the Chinese currency, the Renminbi, arepredictably raising American hackles. While China’s hugeappetite for input commodities continues to benefit resource-rich exporters, global inflation has been generally moderate,with the exception of some countries where inflationconcerns have led to interest rate adjustments. Corporateprofits have remained relatively strong, helping to fosterrecord-setting stock market performance.

With lower growth expectations for the U.S. economy,symbolised by a slackening housing market, Europe and Asiawould appear to have picked up some of the slack therebydampening recession concerns. Nevertheless, deeper labourmarket reforms and further boost to domestic demand inkey economic blocs are urgent imperatives. Unfortunately,the Doha trade talks seem to have stalled, leading toa proliferation of bilateral and regional trade agreementsin different parts of the world. Unless a breakthrough isachieved soon, the impending U.S. elections in 2008 maydeter further progress.

Two issues in Nigeria overshadowed all others this past year.First, the festering agitation by militants in the oil-richNiger Delta Region loomed large domestically and unsettledinternational oil markets. Shutdown of oil flow-stations,abduction of foreign workers, and threats of violencedisrupted Nigeria’s export crude sales, while contributingtowards occasional spikes in world crude prices.

Chairman’s Statement

Dr Oba Otudeko (OFR)Chairman

Our strong financialperformance is a tribute tothe bank’s corporate vision,coherent business strategiesanchored by the Board ofDirectors, and an inspiredmanagement team.


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Second, after eight years of democratic rule and spiritedeconomic reforms, there was unprecedented interest in theoutcome of Nigeria’s 2007 general elections. For investorsin the Nigerian oil & gas industry, as well as other sectors ofthe economy, it was vitally important that the electionspaved the way for continuing political stability. In the event,although the conduct of the elections fell short of observers’expectations, the new administration of President UmarMusa Yar’Adua was successfully sworn-in late last month.Thankfully, post-election violence has been minimal, backedby expectations that official Election Tribunals will judiciouslyadjudicate all pending electoral petitions. President Yar’Aduahas promised to implement a vigorous 100-day agenda onthe basis of which his administration’s economic prioritiesshould soon become clearer.

In our host country, the strong economy is showing signs ofstrain with inflation indicators, the scourge of any economy,edging upwards. The interest rate lever is being worked butit remains to be seen if enough action has been taken at theappropriate time to ensure a continuance of stability. Addedto this is the possibility of changes in the policy direction ofthe ruling Labour Party prompted by the new Prime Minister,Mr. Gordon Brown.

1. Operating EnvironmentThe major reform by the Central Bank of Nigeria (CBN) in2005 which raised the minimum capital base of banks operatingin Nigeria to N25 billion (US$188 million) led to a reductionin the number of banks from over 80 to about 25. This reformhas generally been viewed as a success but further consolidationor substantial equity injections are required to enable Nigerianbanks to compete favourably alongside mega-banks in otherparts of the world.

We welcome the strengthening of the Nigerian financialservices industry and the increased competition this engenders.This trend supports our underlying aim of pursuing strongcorporate and brand name recognition in the Nigerianmarket. In anticipation of the activities of our more aggressivecompetitors, we constantly test our business model forrelevance and adjust our strategies accordingly, as eventsand incipient challenges unfold.

The Nigerian Naira was relatively stable against the US Dollar.Similarly, this was the case in respect of other traded currencies,against a weakness observed in the early years of this century.

2. Financial ResultsDuring the period under review, our business developmentefforts generated a substantial increase in volumes. Operatingincome increased by 37 percent to £13.2m compared to2005/2006, whilst the increase in the bank’s operating expenseswas held to 29.9 percent, at £5.34m. The higher returns oninvestment from our operations resulted in a significant risein Profit-before-Tax of 45 percent, from £5.30 million byend-March 2006, to £7.7 million in the year under review.

Our strong financial performance is a tribute to the bank’scorporate vision, coherent business strategies anchored by theBoard of Directors, and an inspired management team. As wecontinue to expand our business lines, we must continuallyfine-tune our execution capabilities through focusedprogrammes. Moreover, it is essential that we continue toexplore new market opportunities by investing in innovativeproducts and services, including our human capital.

3. OutlookThe future is very bright and, to ensure we can capitaliseon emerging opportunities, we have further strengthened ourmanagement team and expanded our strategic horizonsbeyond the footprint of current activities.

The growth prospect of the Nigerian market, presently ourcore business feeder, continues to be encouraging. As weseek to diversify risk, we shall expand our business activitiesacross West Africa in order to create the premier UK bankfor the region.

Whilst questions remain, the broad outlook for the UnitedKingdom’s economy remains healthy, even as Mr. Brown movesnext door from No. 11 to No. 10 Downing Street. Short termconcerns have somewhat subsided with consumer spendinglevelling off slightly. However, the housing market continuesto show signs of overheating albeit with no significant falloutto-date. Moderate increases in inflation and interest ratesmay be expected while high personal debt/income ratios willremain a cause for concern.

The competitive landscape in the top echelon of theNigerian banking industry has become extremely intense.In response, we believe that we are well-positioned tocontribute substantially towards ensuring that the First BankGroup remains one of the strongest brands within theNigerian economy. To boost our future prospects, we shallcontinue to rely on the cherished support provided by theparent bank, while doing our utmost to retain our positionas a centre of excellence within the larger group.

4. AppreciationIn closing, the Board of Directors would like to acknowledgethe leadership and co-operation of our regulators, coupledwith very deep appreciation to all our customers for theirsupport and unwavering loyalty. I must also acknowledgethe tremendous contributions of my fellow Board members,as well as the Management and staff of FBN Bank (UK)Limited, for their professionalism and dedication to thefulfilment of our Bank’s vision. We have every reason tolook forward proudly as we celebrate the 25th anniversaryof First Bank representation in London later this year.

Thank you for listening. God bless.

Dr. Oba Otudeko (OFR)Chairman


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Distinguished shareholders, invited guests,distinguished ladies and gentlemen.

I am delighted to present my report to the fifth AnnualGeneral Meeting of FBN Bank (UK) Ltd.

The IndustryThe financial services industry continues to be in relativelygood health, albeit against the background of higher inflationand a property market that appears to be on the verge ofover heating. Careful management of risks will be required toensure the record high level of consumer debt in the UK doesnot have a negative impact. Increasing interest rates to haltthe inflationary trends will eventually impact on consumersalthough there is little current evidence of this occurring.Customer confidence remains high with the industrysupported by a strong regulatory environment.

Our preparations for adherence to BASEL II at the end of2007 are almost complete and we are working to ensurethe increased complexity of this regime does not impact toonegatively on our business. We remain active membersof The Foreign Bankers Association, The British BankersAssociation and The International Chamber of Commerce,sitting on and contributing to various relevant committees.

Regulatory FrameworkThe Regulatory Framework in the UK under the auspicesof the Financial Services Authority (‘FSA’) continues to beconsidered as a leader of global regulatory standards.

We keep the FSA closely informed of our future direction andstrategy to ensure this aligns with good market practice.

Our BusinessOur Banking Division serves four main markets:Correspondent Banking, Government and Parastatal Banking,Commercial and Corporate Banking (Trade Finance),and Private Banking.

Correspondent Banking – working closely with quality Banksin Nigeria and West Africa, we provide a professional serviceto most of the upper quartile Banks and their customers,largely through the facilitation of Trade Finance, ForeignExchange and Payment transactions.

Government and Parastatal Banking – The banking needs ofGovernment and parastatal or state industries are immenseand, whilst the main relationships are managed through ourparent bank, we provide the essential international leg ofthe services.

Commercial and Corporate Banking, (Trade Finance) –according to available statistics Nigeria is the world’s leadingissuer of Letters of Credit and we have seen significant growthin this business for the third consecutive year. We continueto expand our services beyond Nigeria to capitalize on ourstrength of delivery.

Managing Director/Chief Executive’s Review

Peter S HinsonManaging Director

& Chief Executive

The market is becoming morecompetitive and, to ensurecontinuing success, the Bankhas been working oninitiatives that have beenthoroughly examined bythe Board Strategic ReviewCommittee and will ensureit remains the leader inour peer group.


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Private Banking – London has traditionally been a place for‘High Net Worth’ visitors from Nigeria and indeed many othercountries. We provide a highly professional and personalservice to this niche market sector.

Business DevelopmentWe continue to strive to offer superior levels of customer servicewith face to face meetings in London and Nigeria generallyavailable within 24 hours. Add to this the ability for customersto access their bank accounts from anywhere in the worldthrough our internet banking module, it is a unique offering.

Our core business remains that of Trade Finance and ourhighly experienced team have all undergone training to ensurethe introduction of UCP 600 does not disrupt the efficientand timely flow of work. Quality of service in this and ourother business areas is repeatedly quoted as being thedeciding factors for customers undertaking business withour Bank.

We are winning increasing amounts of business in WestAfrica as we seek to broaden our customer base whilst atthe same time maintaining a dominant position in Nigeria.Further resources are being employed to ensure we canreap the benefits of this attractive market.

Financial PerformanceFor the fifth consecutive year the Bank performed very wellreflecting the growth in the volume of business with profitbefore tax of £7.7 million being achieved. This is a substantialincrease on the previous year reflecting the success of ourstrategic plan. This translates into a return on capital employedbeing one of the highest for a bank in London.

All income lines evidenced substantial growth matched bya sensible control on expenses. We continue to reap thebenefits of the earlier investment in technology in our fiercechallenge on the ever rising costs of operating a businessin London.

Following our successful entry into the London syndicatedloan market in 2005, we raised a further twelve month loanof US$42 million in the last year at a lower price. This loanassists us in funding our Trade Finance activity and it ispleasing to note that the lending syndicate is growing.

Our CustomersI have again had the pleasure of meeting many of ourcustomers, both in the UK and Nigeria – the most importantasset a Bank can have. The continuing support received isimmense and we are very grateful for their business. It hasalso been exciting to listen to our customers’ plans for thefuture, plans in which we will assist to ensure their visionstranslate into reality.

Corporate ResponsibilityWorking with our parent bank we have undertaken to bea good corporate citizen by supporting worthy causes invarious ways. Donations are approved by the ExecutiveManagement Committee and take into account the benefitto society and the support of our staff who may be eitherdirectly or indirectly involved in the good cause.

We are proud to have specifically supported the followingduring the year:-

The Nigeria High Commission Nigeria Day celebrations

The London Business School

The Anthony Nolan Trust

The London Nigerian Rugby Club

The Imperial College Charity fashion show

The Christopher Okigbo Foundation –‘Tapping into the Known’ exhibition

The FutureThe market is becoming more competitive and, to ensurecontinuing success, the Bank has been working on initiativesthat have been thoroughly examined by the Board StrategicReview Committee and will ensure it remains the leader inour peer group.

We will continue to broaden our business base by expandingour coverage into West Africa whilst maintaining our preeminent position in Nigeria. Whilst our business will remainfocused largely on the provision of Trade Finance andCorrespondent Banking, we will seek to expand the range ofproducts available to High Net Worth individuals and enterthe UK savings market.

ConclusionI am grateful for the continuing support of the Group’s Lagosbased Executives and the way in which they have helpedwith our establishment and growth as well as the guidancefrom the learned Non-Executive Directors. We have a soundbusiness model and will take advantage of it to deliverexcellent growth.

In closing I would especially thank our customers,our employees and our Board alike.

Peter S HinsonManaging Director/Chief Executive


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Executive Directors

Non Executive Directors

Peter Stuart HinsonManaging Director/

Chief Executive

Michael John BamberExecutive Director,

Operations

Christi Ekaete FashogbonExecutive Director,

Business Development

Ayoola Oba Otudeko, OFRChairman

Jacobs Moyo AjekigbeJohn Oche Aboh

Peter ArnhemGrafham

Abdullahi SarkiMahmoud

Anthony RobertPaget Williams

Senior staff

Trevor FallHead of Customer Services

Samuel AiyereHead of Finance

Christopher BrownHead of Administration

Graham ThorpeHead of Trade Finance

Michael BarrettHead of Risk


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The directors have pleasure in presenting their annual reportand the audited financial statements for the year ended31 March 2007.

Business review and principal activitiesThe company is an authorised banking institution andprovides a range of banking and financial services. There havenot been any significant changes in the company’s principalactivities in the year under review. The directors are notaware, at the date of this report, of any likely changes inthe company’s activities in the forthcoming year.

The company continues to invest in human capital andtechnology which has resulted in improved productivity.The directors regard such investment as necessary for thecontinued success in the medium to long term future ofthe business.

As shown in the company’s profit and loss account onpage 7, the company’s net interest income and fee incomeincreased by 36.8% and 35% respectively over the prioryear (2006: 74.9% and 98.3%). The income growth canbe directly attributable to increased business volume.

One of the company’s key measurements of effectivenessof its operations is calculating operating margin after directcosts. The company achieved an operating margin after directcosts of 58.3% which is an improvement over the prior yearoperating margin of 54.9%.

The balance sheet on page 8 shows that the company’sfinancial position at the year end has improved, in net assetsterms, over the prior year. The company’s asset level increasedby 14.2%, from £436m as at March 2006 to £498m as atMarch 2007. The growth is due to a general increase in thecustomer base and business conducted.

Directors and their interestsThe directors, who all served throughout the year, are set outon page 1. No directors have any interest in the shares of thecompany. Details of directors’ interests in the shares of FirstBank of Nigeria Plc are disclosed in the group accounts.

Results and dividendThe profit for the year after taxation amounted to £5,319,712(2006 – £3,639,534).

A final dividend of £1,200,000 in respect of the year ended31 March 2006 was paid during the year. A dividend of£2,700,000 (2006 – £150,000) in respect of the year ended31 March 2007 was also paid during the year.

Future prospectsThe Bank’s capacity to identify, generate and deliver newbusiness is strong and the focus is principally on profitablebusiness and sustainable balance sheet growth with a welldiversified risk asset portfolio.

FBN Bank (UK) Limited looks forward with optimism toa future of continued business growth and outstandingfinancial performance for the benefit of its customersand shareholders.

Charitable contributionsDuring the year the Bank made charitable contributionstotalling £20,800 (2006 – £15,700).

Financial Risk ManagementThe company is exposed to financial risk through its financialassets and liabilities. The key financial risk is that the proceedsfrom financial assets are not sufficient to fund the obligationsarising from liabilities as they fall due. The most importantcomponents of financial risk are interest rate risk, foreigncurrency risk, credit risk and liquidity risk. Due to the nature ofthe company’s business and the assets and liabilities containedwithin the company’s balance sheet the financial risks thedirectors consider relevant to this company are interest rate,liquidity, foreign currency and credit risks. These risks aremitigated by the routine monitoring of key managementinformation. See further details in Note 21.

AuditorsIn the case of each of the persons who are directors of thecompany at the date when this report is approved:

• so far as each of the directors is aware, there is no relevantaudit information (as defined in the Companies Act 1985)of which the company’s auditors are unaware; and

• each of the directors has taken all the steps that they oughtto have taken as a director to make themselves aware ofany relevant audit information (as defined) and to establishthat the company’s auditors are aware of that information.

Deloitte & Touche LLP have expressed their willingness tocontinue in office as auditors and a resolution to reappointthem will be proposed at the forthcoming AnnualGeneral Meeting.

Approved by the Board of Directorsand signed on behalf of the Board

Venetia Carpenter, FCISCompany Secretary2nd July 2007

Directors’ Report

Report and Financial Statements


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The directors are responsible for preparing the Annual Reportand the financial statements in accordance with applicablelaw and regulations.

Company law requires the directors to prepare financialstatements for each financial year. Under that law thedirectors have elected to prepare the financial statements inaccordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom Accounting Standardsand applicable law). The financial statements are required bylaw to give a true and fair view of the state of affairs of thecompany and of the profit or loss of the company for thatperiod. In preparing these financial statements, the directorsare required to:

• select suitable accounting policies and then applythem consistently;

• make judgments and estimates that are reasonableand prudent;

• state whether applicable UK Accounting Standards havebeen followed, subject to any material departures disclosedand explained in the financial statements;

• prepare the financial statements on the going concernbasis unless it is inappropriate to presume that thecompany will continue in business.

The directors are responsible for keeping proper accountingrecords that disclose with reasonable accuracy at any time thefinancial position of the company and enable them to ensurethat the financial statements comply with the Companies Act1985. They are also responsible for safeguarding the assets ofthe company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance andintegrity of the corporate and financial information includedon the company's website. Legislation in the United Kingdomgoverning the preparation and dissemination of financialstatements may differ from legislation in other jurisdictions.

Report and Financial StatementsStatement of Directors’ Responsibilities


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We have audited the financial statements of FBN Bank (UK)Limited for the year ended 31 March 2007 which comprisethe profit and loss account, the balance sheet and the relatednotes 1 to 29. These financial statements have been preparedunder the accounting policies set out therein.

This report is made solely to the company’s members, as a body,in accordance with section 235 of the Companies Act 1985.Our audit work has been undertaken so that we might stateto the company’s members those matters we are required tostate to them in an auditors' report and for no other purpose.To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the companyand the company's members as a body, for our audit work,for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorsThe directors’ responsibilities for preparing the financialstatements in accordance with applicable law and UnitedKingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) are set out in the Statementof Directors’ Responsibilities.

Our responsibility is to audit the financial statements inaccordance with relevant legal and regulatory requirementsand International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financialstatements give a true and fair view and are properly preparedin accordance with the Companies Act 1985. We also reportto you whether in our opinion the information given in theDirectors' Report is consistent with the financial statements.

In addition we report to you if, in our opinion, the companyhas not kept proper accounting records, if we have notreceived all the information and explanations we require forour audit, or if information specified by law regarding directors’remuneration and other transactions is not disclosed.

We read the Directors’ Report and consider the implicationsfor our report if we become aware of any apparentmisstatements within it.

Basis of audit opinionWe conducted our audit in accordance with InternationalStandards on Auditing (UK and Ireland) issued by the AuditingPractices Board. An audit includes examination, on a testbasis, of evidence relevant to the amounts and disclosures inthe financial statements. It also includes an assessment of thesignificant estimates and judgements made by the directorsin the preparation of the financial statements, and of whetherthe accounting policies are appropriate to the company’scircumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain allthe information and explanations which we considerednecessary in order to provide us with sufficient evidence togive reasonable assurance that the financial statements arefree from material misstatement, whether caused by fraudor other irregularity or error. In forming our opinion wealso evaluated the overall adequacy of the presentationof information in the financial statements.

OpinionIn our opinion:

• the financial statements give a true and fair view,in accordance with United Kingdom Generally AcceptedAccounting Practice, of the state of the company’saffairs as at 31 March 2007 and of its profit for theyear then ended;

• the financial statements have been properly preparedin accordance with the Companies Act 1985; and

• the information given in the Directors' Report isconsistent with the financial statements.

Deloitte & Touche LLPChartered Accountants and Registered AuditorsLondon

3rd July 2007

Report and Financial StatementsIndependent Auditors’ Report to the members of FBN Bank (UK) Limited


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Interest receivable 26,122,667 15,946,755

Interest payable (18,470,202) (10,351,901)

Net interest income 7,652,465 5,594,854

Fees and commissions receivable 4,269,114 3,162,660

Dealing and exchange profits 2 1,141,546 797,796

Other operating income 175,549 107,167

Operating income 13,238,674 9,662,477

Administrative expenses 4 (5,337,875) (4,108,466)

Provision for bad and doubtful debts 19 (186,192) (251,452)

Operating profit on ordinary activities before taxation 5 7,714,607 5,302,559

Tax on profit on ordinary activities 7 (2,394,895) (1,663,025)

Operating profit on ordinary activities after taxation 17 5,319,712 3,639,534

There are no recognised gains or losses for the current year or prior year other than as stated above.Accordingly, no Statement of Total Recognised Gains and Losses has been prepared. The profit for the yearis derived entirely from continuing operations.

Report and Financial StatementsProfit and Loss Account – Year ended 31 March 2007

Note

Yearended

31March2007

£ Yearended

31March2006

£


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Report and Financial StatementsBalance Sheet – As at 31 March 2007

Note

Yearended

31March2007

£ Yearended

31March2006

£

Assets

Cash at bank and in hand 2,480,320 7,003,420

Loans and advances to banks 9 468,151,273 419,244,834

Loans and advances to customers 10 23,664,189 7,410,315

Tangible fixed assets 11 759,643 780,954

Prepayments and accrued income 14 2,940,863 1,912,016

Total assets 497,996,288 436,351,539

Liabilities

Deposits by banks 12 336,440,503 324,609,478

Customer accounts 13 48,050,741 41,780,941

Other liabilities 15 69,838,120 28,563,021

Accruals and deferred income 3,575,828 2,726,715

457,905,192 397,680,155

Subordinated liabilities 27 11,500,000 11,500,000

Called up share capital 16 22,000,000 22,000,000

Profit and loss account 26 6,591,096 5,171,384

Equity shareholders’ funds 17 28,591,096 27,171,384

Total liabilities and shareholders’ funds 497,996,288 436,351,539

Memorandum items

Contingent liabilities (contra amount):

Letters of credit 124,198,997 60,843,043

Guarantees 26,011,395 20,753,378

Outstanding FX settlement – spot deals 5,104,587 1,613,819

– forward deals 19,491,064 461,266

174,806,043 83,671,506

Commitments

Undrawn commitments 22,961,183 927,418

These financial statements were approved by the Board of Directors on 2nd July 2007.Signed on behalf of the Board of Directors

Ayoola Oba Otudeko, OFR Peter Stuart HinsonChairman Managing Director/Chief Executive


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1. Accounting policiesAccounting conventionThe financial statements have been prepared under thehistorical cost convention and in accordance with Section 255and Schedule 9 of the Companies Act 1985 relating to bankingcompanies, applicable United Kingdom law and accountingstandards and Statements of Recommended AccountingPractice issued by the British Bankers’ Association and IrishBankers’ Federation. The particular accounting policiesadopted are described below:

Income recognitionInterest income is recognised in the profit and loss accountas it accrues. Certain front-end interest income relating toloans and advances is taken to profit over the period of theloan. All income derives from banking business carried outin the United Kingdom.

Fees and commissionsFees receivable that represent a return for services renderedare brought into profit when the related service is performed.

Foreign currencyTransactions in foreign currencies are recorded using the rateof exchange ruling at the date of the transaction. Monetaryassets and liabilities denominated in foreign currencies aretranslated into sterling using the rate of exchange as at thebalance sheet date and resulting gains and losses on translationare included in the profit and loss account.

Exchange profits on foreign exchange transactions withcustomers are recognised as income during the period.Any revaluation gain/loss as a result of exchange ratefluctuations is recognised in the profit and loss account.

Derivative financial instrumentsThe company uses derivative financial instruments to reduceexposure to foreign exchange risk. The company does not holdor issue derivative financial instruments for speculative purposes.

For a forward foreign exchange contract to be treated asa hedge the instrument must be related to actual foreigncurrency assets or liabilities or to a probable commitment.It must involve the same currency or similar currencies asthe hedged item and must also reduce the risk of foreigncurrency exchange movements on the company’s operations.Gains and losses arising on these contracts are deferred andrecognised in the profit and loss account or as adjustmentsto the carrying amount of fixed assets, only when the hedgedtransaction has itself been reflected in the company’sfinancial statements.

Loans and advancesThe Bank has a policy of making specific and general provisionsfor doubtful debts. The specific element is calculated to bringthe assets to their recoverable amount; the general elementrelates to other losses not separately identified but known fromexperience to exist in any portfolio of banking relationships.Provisions made during a period are charged to the Profit andLoss account.

Where uncertainty exists as to the recoverability of interestincome, the interest is credited to a suspense account, whichis netted in the balance sheet against the relevant balances.

Fixed assets and depreciationFixed assets are stated at the net of cost and accumulateddepreciation. Depreciation is provided on a straight-line basisat the following rates to write off the cost of fixed assetsover their estimated useful lives as follows:

Leasehold improvements 10 years

Office equipment/Furniture 5 years

Computer Software 5 years

Computer Hardware 3 years

Motor vehicles 4 years

Cashflow statementAs a wholly owned subsidiary of a company that producespublicly available consolidated financial statements, the Bank,by taking advantage of the exemption granted by FinancialReporting Standard 1 (Revised 1996), does not prepare a cashflow statement.

Lease paymentsA lease is classified as an operating lease where the risks andrewards of ownership have not substantially been transferredto the lessee.

Operating lease rentals are charged to the profit and lossaccount on a straight-line basis over the period in which theasset is in use.

TaxationThe charge for taxation is based on the profit for the period.Deferred taxation is provided in full on timing differences thatresult in an obligation at the balance sheet date to pay moretax, or a right to pay less tax at a future date at ratesexpected to apply when they crystallise based on current taxrates and law. Timing differences arise from the inclusion ofitems of income and expenditure of taxation computations inperiods different from those in which they are included infinancial statements. Deferred tax assets are recognised to theextent that it is regarded as more likely than not that they willbe recovered. Deferred tax assets and liabilities are notdiscounted.

Pension costsThe company operates a defined contribution pension schemeand the amount charged to the profit and loss account inrespect of pension costs and other post-retirement benefits isthe contributions payable in the period. Differences betweencontributions payable in the year and contributions actuallypaid are shown as either accruals or prepayments in thebalance sheet.

Report and Financial StatementsNotes to the Accounts – Year ended 31 March 2007

Yearended

31March2007

£ Yearended

31March2006

£


15


2. Dealing and exchange profitsDealing and exchange profits relate to foreign exchangeincome derived from customer foreign exchange transactionsand the revaluation of foreign currency assets and liabilities.

3. Segmental informationThe Bank has one main activity, commercial banking,which is carried out in the United Kingdom.

4. Administrative expenses

Average number of employees (including three executive directors) Number Number

Banking Division 17 14

Operations 20 17

Administration 3 2

40 33

£ £

Wages and salaries (including directors) 2,370,325 1,818,612

Social security costs 213,609 158,131

Other pension costs 96,706 74,380

Total staff costs 2,680,640 2,051,123

Other administrative expenses 2,657,235 2,057,343

5,337,875 4,108,466

Yearended

31March2007

£ Yearended

31March2006

£

Yearended

31March2007

£ Yearended

31March2006

£


16

5. Operating profit on ordinary activities before tax

Operating profit is stated after charging:

Depreciation 309,008 268,891

Auditors’ remuneration – audit work 84,000 80,000

Rental of premises held under operating leases 370,777 360,458

6. Directors’ emoluments

Directors’ fees 284,954 178,000

Other emoluments 446,769 267,278

Contribution to a money purchase pension scheme 30,479 6,479

762,202 451,757

The highest paid director received emoluments, excluding pension contributions, totalling £264,964 (2006 – £191,559)and pension contributions of £20,479 (2006 – £6,479) were paid.

Mortgages were approved and advanced on a commercial arm’s length basis, to three group directors during the year(Note 20).


Yearended

31March2007

£ Yearended

31March2006

£


17

7. Taxation

(i) Analysis of tax charge on ordinary activities

United Kingdom corporation tax based on the profit for the year (2,407,000) (1,670,351)

Prior year adjustment 2,952 (1,291)

Total current tax (2,404,048) (1,671,642)

Deferred tax:

Timing differences, origination and reversal 13,767 8,617

Adjustment in respect of prior years (4,614) –

Tax on profit on ordinary activities (2,394,895) (1,663,025)

(ii) Factors affecting tax charge for the current period

The tax assessed for the period is higher than that resulting from applying the

standard rate of corporation tax in the UK. The differences are explained below:

Profit on ordinary activities before tax 7,714,607 5,302,559

Tax at 30% thereon (2,314,382) (1,590,768)

Effects of:

Expenses not deductible for tax purposes (36,430) (37,215)

Depreciation in excess of capital allowance (14,188) (8,617)

Movement in short term timing differences (42,000) (33,751)

Prior year adjustment 2,952 (1,291)

Current tax charge for year (2,404,048) (1,671,642)

A deferred tax asset of £159,864 (2006 – £117,864) has not been recognised in respect of timing differences relatingto the general provision for bad and doubtful debts as there is insufficient evidence that the asset will be recoveredin the foreseeable future.



18


31March2007

£ 31March2006

£

8. Deferred tax

(i) Deferred tax provision

Movement in deferred taxation balance in the period:

Opening balance (17,721) (9,104)

Credit to the profit and loss account (9,153) (8,617)

Closing balance (26,874) (17,721)

(ii) Analysis of deferred tax balance

Capital allowances in excess of depreciation (26,874) (17,721)


19


Performing

Loans2007

£ Non-performing

Loans2007

£ Total

Loans2007

£ Performing

Loans2006

£ Non-performing

Loans2006

£ Total

Loans2006

£

9. Loans and advances to banks

Repayable on demand or at short notice 104,409,417 123,798 104,533,215 118,381,231 138,952 118,520,183

Remaining maturity:

– 3 months or less excluding

on demand or at short notice 287,672,044 – 287,672,044 265,592,006 – 265,592,006

– 1 years or less but over 3 months 75,846,087 – 75,846,087 35,552,477 – 35,552,477

– 5 years or less but over 1 year 510,425 – 510,425 – – –

– Over 5 years – – – – – –

Less:

Provision for bad and doubtful debts

(note 19) (286,700) (123,798) (410,498) (280,880) (138,952) (419,832)

468,151,273 – 468,151,273 419,244,834 – 419,244,834

Total loans advanced to First Bank of Nigeria Plc at 31 March 2007 were £52,029,685 (2006 – £18,626,269)


20


Performing

Loans2007

£ Non-performing

Loans2007

£ Total

Loans2007

£ Performing

Loans2006

£ Non-performing

Loans2006

£ Total

Loans2006

£

10. Loans and advances to customers

Repayable on demand or at short notice 1,233,694 46,192 1,279,886 594,170 25,857 620,027

Remaining maturity:

– 3 months or less excluding

on demand or at short notice 1,077,952 – 1,077,952 – ––

– 1 years or less but over 3 months 2,906,982 – 2,906,982 744,204 – 744,204

– 5 years or less but over 1 year 12,953,921 – 12,953,921 1,962,199 – 1,962,199

– Over 5 years 5,737,820 – 5,737,820 4,221,742 – 4,221,742

Less:

Provision for bad and doubtful debts

(note 19) (246,180) (46,192) (292,372) (112,000) (25,857) (137,857)

23,664,189 – 23,664,189 7,410,315 – 7,410,315

As at 31 March 2007, the Bank had advanced £1,279,886 overdrafts (2006 – £620,027) and £22,667,650 fixed term loans(2006 – £6,918,652) to customers. £9,025 was granted as staff loans (2006 – £9,493).


21


Computer

Hardware

£ Computer

Software

£ Leasehold

Improvements

£ Furniture&

Equipment

£ MotorVehicles

£ Total

£

11. Tangible fixed assets

Cost

At 31 March 2006 177,544 805,094 395,080 172,502 – 1,550,220

Additions 109,661 140,228 – 28,354 9,454 287,697

At 31 March 2007 287,205 945,322 395,080 200,856 9,454 1,837,917

Accumulated Depreciation

At 31 March 2006 131,204 361,643 144,627 131,792 – 769,266

Charge for the period 50,863 173,834 42,330 40,799 1,182 309,008

At 31 March 2007 182,067 535,477 186,957 172,591 1,182 1,078,274

Net book value

At 31 March 2007 105,138 409,845 208,123 28,265 8,272 759,643

At 31 March 2006 46,340 443,451 250,453 40,710 – 780,954


22


2007

£ 2006

£

2007

£ 2006

£

12. Deposits by banks

Repayable on demand 120,675,453 12,258,299

With agreed maturity dates or periods of notice by remaining maturity:

One year or less, but over three months 21,437,868 16,122,531

Three months or less 194,327,182 296,228,648

336,440,503 324,609,478

Total deposits due to First Bank of Nigeria Plc at 31 March 2007 were £128,901,124 (2006 – £103,687,828).

13. Customer accounts

Repayable on demand 22,496,444 11,357,494

With agreed maturity dates or periods

of notice by remaining maturity:

One year or less but over three months 71,460 332,000

Three months or less but not repayable on demand 25,482,837 30,091,447

48,050,741 41,780,941


23


2007

£ 2006

£

2007

£ 2006

£

14. Prepayments and accrued income

Prepayments 731,928 326,415

Accrued interest receivable 2,182,061 1,567,880

Deferred tax asset 26,874 17,721

2,940,863 1,912,016

Analysis of the deferred tax asset is at note 8.

15. Other liabilities

Taxation and social security 1,221,889 906,676

Trade creditors 67,699,862 26,597,622

Customers unclaimed balances 916,369 1,058,723

69,838,120 28,563,021

2007

£ 2006

£


24


2006

No.ofShares

2006

Amount

£2007

No.ofShares

2007

Amount

£

16. Called up share capital

Authorised

Ordinary shares of £1 each 22,000,000 22,000,000 22,000,000 22,000,000

Issued, allotted and fully paid

Ordinary shares of £1 each 22,000,000 22,000,000 22,000,000 22,000,000

Ordinary Shares:First Bank of Nigeria Plc holds 22,000,000 (2006 – 22,000,000) or 100% (2006 –100%) of the ordinary shares.No new shares were issued during the year.

17. Reconciliation of movement in equity shareholders’ funds

Operating profit on ordinary activities after taxation 5,319,712 3,639,534

Dividends paid (3,900,000) (150,000)

Addition to shareholders’ funds 1,419,712 3,489,534

Opening shareholders’ funds 27,171,384 23,681,850

Closing shareholders’ funds 28,591,096 27,171,384

General2006

£Specific2006

£Total 2007

£General2007

£Specific2007

£ Total 2006

£


25


2007

£ 2006

£

18. Operating lease commitments

At 31 March 2007 the Bank was committed to making the following payments

during the next year in respect of operating leases for land and buildings:

Leases which expire:

After five years 360,000 360,000

360,000 360,000

19. Provisions for badand doubtful debts

At start of year 164,809 392,880 557,689 23,361 280,380 303,741

Charge to profit and loss account 46,192 140,000 186,192 138,952 112,500 251,452

Exchange Difference (17,650) – (17,650) 2,496 – 2,496

Amount written off (23,361) – (23,361) – – –

At end of year 169,990 532,880 702,870 164,809 392,880 557,689

Loans and advances to banks (Note 9) 123,798 286,700 410,498 138,952 280,880 419,832

Loans and advances to customers (Note 10) 46,192 246,180 292,372 25,857 112,000 137,857

169,990 532,880 702,870 164,809 392,880 557,689


26

20. Related party transactionsDuring the year, First Bank of Nigeria Plc, Lagos undertookcommercial arm’s length transactions with FBN Bank (UK) Ltd(“the Bank”), mainly in the form of deposits and loans withthe Bank. As at 31 March 2007, there were deposits fromFirst Bank of Nigeria Plc, Lagos amounting to £128,901,124(2006 – £103,687,828). For the year ended 31 March 2007,there were net interest payments to First Bank of Nigeria Plc,Lagos amounting to £4,605,258 (2006 – £1,891,491).

Total loans advanced to First Bank of Nigeria Plc at 31 March2007 were £52,029,685 (2006 – £18,626,269).

Mortgages were approved and advanced on a commercialarm’s length basis, to three group directors during the year.As at 31 March 2007, a total mortgage amount of £794,984(2006 – £858,684) was outstanding in respect of thesedirectors.

£11.5m subordinated loan granted by First Bank of Nigeria Plcin December 2005 was outstanding as at 31 March 2007(note 27).

There were no other related party transactions or balancesrequiring disclosure.

21. Financial instrumentsThe Bank holds and issues financial instruments for threemain purposes:

• to earn an interest margin or a fee;• to finance its operations; and• to manage the interest rate and currency risks arising

from its operations and from its sources of finance.

The Bank does not have a trading book. The Bank finances itsoperations by a mixture of shareholders’ funds and customerand bank deposits. The deposits raised may be in a range ofcurrencies at variable or fixed rates of interest. The Bank’slending is in USD, GBP, EUR, and CHF and may be eithervariable or fixed rate. The Bank deals in spot and forwardforeign exchange transactions.

The main risks arising from the Bank’s financial instrumentsare interest rate risk, foreign currency risk, liquidity risk andcredit risk. The management reviews and agrees policies formanaging each of these risks and they are summarised below.These policies were reviewed within the period being reported.

Interest rate riskInterest rate risk originating from banking activities arisesfrom the employment of non-interest bearing liabilities suchas shareholders’ funds and customer current accounts andalso from the interest rate gaps that arise from the normalcourse of business. The policy of the Bank is to price allplacements/exposures at floating rates or at fixed rates forfixed periods on appropriate rollover dates that allow formatching in the market.

Note 22 summarises the matching of the Bank’s assets andliabilities as at 31 March 2007. Items are allocated on thebasis of time bands.

Liquidity riskThe Bank is regulated in the United Kingdom by the FinancialServices Authority (FSA) who set the required liquidity mismatchparameters. The Bank manages the liquidity structure of itsassets, liabilities and commitments so that cash flows areappropriately balanced to ensure that all funding obligationsare met when due and the required mismatch parameters arenot breached. The policy of the Bank is to match to maturityand currency as far as practicable all (and particularly large)exposures or placements.

Foreign Currency riskForeign exchange exposure arises from normal bankingactivities, particularly from the receipt of deposits and theplacement of funds. It is the policy of the Bank to matchassets and liabilities in the currencies they are denominatedin. It is also the policy of the Bank to adhere to the limitslaid down by the FSA in respect of the “overall net openposition”. The Bank does not currently deal, and has no plansto deal in the foreseeable future, in FX Futures, FX Options orOptions on FX Futures. Note 23 gives details of the company’sassets and liabilities as at 31 March 2007, in sterling, basedon the currencies in which they are denominated to identifythe extent to which the foreign currency exposures of theBank are matched.

Credit riskCredit risk is the risk that a customer or counterparty of theBank will be unable or unwilling to meet a commitment thatit has entered into. It arises from lending, trade finance andother activities of the Bank.

The Bank carries out continuous risk assessment of all creditexposures. It is the policy of the Bank to make adequategeneral and specific provisions where probable or real problemsof asset recovery are identified.



27


Notmorethan

threemonths

£’000

Morethanthree

months butnot more

thansixmonths

£’000

Morethansix

months butnot more

thanoneyear

£’000

Morethanoneyear

but notmorethan

fiveyears

£’000

Morethanfiveyears

£’000

Non-interest

bearing

£’000

Total

£’000

22. Interest rate gap sensitivity analysis

Assets and liabilities are analysed in time bands according

to the earlier of the period to the next interest rate pricing

date or the maturity date.

As at 31 March 2007

Assets

Cash at bank and in hand – – – – – 2,480 2,480

Loans and advances to banks 392,205 35,112 40,734 510 – (410) 468,151

Loans and advances to customers 2,358 116 2,791 12,954 5,738 (293) 23,664

Tangible fixed assets – – – – – 760 760

Prepayments and accrued income – – – – – 2,941 2,941

Total assets 394,563 35,228 43,525 13,464 5,738 5,478 497,996

Liabilities

Deposits by banks 315,003 – 21,438 – – – 336,441

Customer accounts 47,979 71 – – – – 48,050

Other liabilities – – – – – 69,838 69,838

Accruals and deferred income – – – – – 3,576 3,576

Subordinated liabilities – – – – 11,500 – 11,500

Shareholders’ funds – – – – – 28,591 28,591

Total liabilities 362,982 71 21,438 – 11,500 102,005 497,996

Interest rate gap sensitivity 31,581 35,157 22,087 13,464 (5,762) (96,527) –


28


Notmorethan

threemonths

£’000

Morethanthree

months butnot more

thansixmonths

£’000

Morethansix

months butnot more

thanoneyear

£’000

Morethanoneyear

but notmorethan

fiveyears

£’000

Morethanfiveyears

£’000

Non-interest

bearing

£’000

Total

£’000

22. Interest rate gap sensitivityanalysis (continued)

As at 31 March 2006

Assets

Cash at bank and in hand – – – – – 7,003 7,003

Loans and advances to banks 384,112 21,409 14,143 – – (419) 419,245

Loans and advances to customers 620 630 114 1,962 4,222 (138) 7,410

Tangible fixed assets – – – – – 781 781

Prepayments and accrued income – – – – – 1,912 1,912

Total assets 384,732 22,039 14,257 1,962 4,222 9,139 436,351

Liabilities

Deposits by banks 308,487 – 16,123 – – – 324,610

Customer accounts 41,449 332 – – – – 41,781

Other liabilities – – – – – 28,563 28,563

Accruals and deferred income – – – – – 2,726 2,726

Subordinated liabilities – – – – 11,500 – 11,500

Shareholders’ funds – – – – – 27,171 27,171

Total liabilities 349,936 332 16,123 – 11,500 58,460 436,351

Interest rate gap sensitivity 34,796 21,707 (1,866) 1,962 (7,278) (49,321) –

Sterling

£’000

USdollar

£’000

EECdenominated

currencies

£’000

OtherCurrencies

£’000

Total

£’000


29

23. Net currency position analysis

The following table gives details of the company’s assets

and liabilities in sterling based on the currencies in which

they are denominated to identify the extent to which the

foreign currency exposures of the company are matched.

As at 31 March 2007

Assets

Cash at bank and in hand 272 696 594 918 2,480

Loans and advances to banks 72,460 378,912 15,150 1,629 468,151

Loans and advances to customers 4,947 15,809 2,908 – 23,664

Tangible fixed assets 760 – – – 760

Prepayments and accrued income 619 2,067 253 2 2,941

Total assets 79,058 397,484 18,905 2,549 497,996

Liabilities

Deposits by banks 22,118 309,966 4,011 346 336,441

Customer accounts 18,507 27,756 1,665 122 48,050

Other liabilities 2,233 65,013 2,102 490 69,838

Accruals and deferred income 1,316 2,260 – – 3,576

Subordinated liabilities 11,500 – – – 11,500

Shareholders funds 28,591 – – – 28,591

Total liabilities 84,265 404,995 7,778 958 497,996

Net currency position (5,207) (7,511) 11,127 1,591 –


Sterling

£’000

USdollar

£’000

EECdenominated

currencies

£’000

OtherCurrencies

£’000

Total

£’000


30

23. Net currency position analysis (continued)

As at 31 March 2006

Assets

Cash at bank and in hand 220 956 740 5,087 7,003

Loans and advances to banks 67,729 343,119 8,281 116 419,245

Loans and advances to customers 4,239 3,171 – – 7,410

Tangible fixed assets 781 – – – 781

Prepayments and accrued income 374 1,536 2 – 1,912

Total assets 73,343 348,782 9,023 5,203 436,351

Liabilities

Deposits by banks 14,009 308,053 2,330 218 324,610

Customer accounts 14,911 25,542 1,145 183 41,781

Other liabilities 5,280 13,022 5,533 4,728 28,563

Accruals and deferred income 792 1,934 – – 2,726

Subordinate liabilities 11,500 – – – 11,500

Shareholders funds 27,171 – – – 27,171

Total liabilities 73,663 348,551 9,008 5,129 436,351

Net currency position (320) 231 15 74 –



31


Fairvalue2006

£’000

Bookvalue2007

£’000

Bookvalue2006

£’000

Fairvalue2007

£’000

24. Fair values of financial instruments

Set out below is a year-end comparison of current

and book values of all the company’s financial instruments

(“instruments”) by category. Market values are used to

determine fair values. In the absence of readily

ascertainable market values, directors’ estimation

is used to determine fair values.

Assets

Loans and advances to banks 468,151 419,245 468,151 419,245

Loans and advances to customers 23,664 7,410 23,664 7,410

491,815 426,655 491,815 426,655

Liabilities

Deposits by banks 336,441 324,610 336,441 324,610

Customer accounts 48,050 41,781 48,050 41,781

384,491 366,391 384,491 366,391

Forward foreign exchange 19,491 461 80 1

25. Pension costs

The Bank operates a defined contribution pension scheme

for staff and contributions were made during the year totalling

£96,706 (2006 – £74,380). This amount forms part of total

staff costs recorded under administrative expenses.

There were no outstanding or prepaid contributions at the

balance sheet date.


32


Profitandloss

account2007

£ Profitandloss

account2006

£

26. Statement of movements on reserves

At start of year 5,171,384 1,681,850

Profit for the financial year 5,319,712 3,639,534

Dividends paid during the year (3,900,000) (150,000)

At end of year 6,591,096 5,171,384

27. Subordinated liabilitiesSubordinated liabilities represent a subordinated loan

of £11,500,000 granted by the parent company, First Bank

of Nigeria Plc, on 6th December 2005 and repayable on

7th December 2015. The interest rate payable on the

subordinated loan is at 0.25% margin over LIBOR for

the respective interest period.

28. Ultimate parent company and controlling partyThe ultimate parent company and controlling party is

First Bank of Nigeria Plc, a company incorporated in Nigeria

and which prepares group accounts for all companies within

the FBN group. The parent of the smallest and largest group

for which group accounts are prepared and of which the

company is a member is First Bank of Nigeria Plc. Copies of

such accounts may be obtained from the Company Secretary,

First Bank of Nigeria Plc, Lagos.

29. Dividend paidA final dividend of £1,200,000 in respect of the year ended

31 March 2006 was paid during the year. A dividend of

£2,700,000 (2006 – £150,000) in respect of the year ended

31 March 2007 was also paid during the year.

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