union bank of nigeria plc third quarter interim report 30 ... · union bank of nigeria plc third...

Union Bank of Nigeria Plc

THIRD QUARTER INTERIM REPORT

30 September 2017

Union Bank of Nigeria Plc and Subsidiary Companies

Consolidated financial statements for the period ended 30 September 2017

Consolidated and Separate Statements of Profit or Loss and Other Comprehensive IncomeFor the period ended 30 September 2017

Notes Sep.2017 Sep.2016 Sep.2017 Sep.2016

N million N million N million N million

Gross earnings 109,513 94,759 105,310 92,689

Interest income 1 88,470 72,290 85,060 70,549

Interest expense 1 (41,564) (24,220) (41,247) (24,162)

Net interest income (NRFF) 46,906 48,070 43,813 46,387

Net impairment charge for credit losses 6(a) (6,009) (12,870) (5,865) (12,845)

Net interest income after impairment charge for credit losses 40,897 35,200 37,948 33,542

Net fee and commission income 2 7,110 8,289 6,619 7,805

Net trading income 3 5,763 5,148 5,619 4,998

Cash recoveries 2,021 923 2,021 923

Net income from other financial instruments at fair value through profit

or loss 4 44 - 44 -

Gain on disposal of subsidiaries - 318 - 752

Other operating income 5 6,105 7,791 5,947 7,662

Non interest income (NII) 21,043 22,469 20,250 22,140

Operating income 61,940 57,669 58,198 55,682

Net impairment write-back/(loss) on other financial assets 6(a) 102 165 102 165

Net operating income after net impairment write-back/(loss) on

other financial assets 62,042 57,834 58,300 55,847

Personnel expenses 7 (23,279) (22,587) (21,882) (21,381)

Depreciation and amortisation (4,453) (3,816) (4,257) (3,670)

Other operating expenses 8 (21,312) (18,156) (20,428) (17,612)

Total expenses (49,044) (44,559) (46,567) (42,663)

Profit before income tax 12,998 13,275 11,733 13,184

Income tax expense 9 (588) (263) (288) (131)

Profit for the period 12,410 13,012 11,445 13,053

Foreign currency translation differences for foreign operations 184 8,356 - -

Fair value gains on property and equipment 5 - - -

Fair value gains/(losses) on available-for-sale investments 850 (6,757) 871 (7,065)

Other comprehensive income for the period 1,039 1,599 871 (7,065)

Total comprehensive income for the period 13,449 14,611 12,316 5,988

Group Bank

2



Notes Sep.2017 Sep.2016 Sep.2017 Sep.2016


Profit attributable to:

Equity holders of the Bank 12,241 12,929 11,445 13,053

Non-controlling interest 169 83 - -

Profit for the period 12,410 13,012 11,445 13,053

Total comprehensive income attributable to:

Equity holders of the Bank 13,280 14,528 12,316 5,988

Non-controlling interest 169 83 - -

Total comprehensive income for the period 13,449 14,611 12,316 5,988

Earnings per share for profit from total operations

attributable to equity holders of Bank

Basic and diluted (Kobo) 10 72 76 67 77

Group Bank

3

Union Bank of Nigeria Pie and Subsidiary Companies


Consolidated and Separate Statements of Financial Position Group Group Bank Bank

Notes Sep.2017 Dec.201 6 Sep.2017 Dec.2016 Nmillion Nmill ion N million Nmill ion

ASSETS Cash and cash equivalents II 174,128 136, 194 92,477 35,536

Non-pledged trading assets 12 44,197 8,323 44,197 8,323 Pledged assets 13 64,380 53,430 64,380 53,430 Derivative assets held for risk management 14 96 2,747 96 2,74.7 Loans and advances to customers 15 475,270 507,190 453,493 489,890 Investments in equity accounted investee 16 Investment securities 17 190,618 181 ,720 179,845 166,759 Trading properties 18 958 2,309 513 1, 124 Investment properties 19 4,778 4,347 Investment in subsidiaries 20 10,567 10,5 67 Property and equipment 21 54,651 52,800 54,464 52,567 Intangible assets 22 4,521 3,374 4,ll5 2,859 Deferred tax assets 23 95,910 95,9 10 95,875 95,875 Cash reserve requirement 24 2ll,460 154,954 211,460 154,954 Other assets 24 36,837 47,344 36,242 46,884 Defined benefit assets 29 1,643 1,643

1,357,833 1,252,285 1,247,724 1,123,158 Assets classified as held for sale 3 l{b) 397 397 325 325

TOT AL ASSETS 1,358,230 1,252,682 1,248,049 1,123,483

LIABILITIES Derivative liabilities held for risk management 90 13 90 13 Deposits from banks 25 108,391 90,266 27,790 4,351

Deposits from customers 26 767,861 658,444 757,863 633,827

Current tax liabil ities 27 713 465 307 177

Deferred tax liabilities 23 151 IOI Other liabilities 28 ll4,171 141 ,404 lll,675 141 ,191 Retirement benefit obligations 29 896 805 867 773 Other borrowed funds 30 80,414 89,5 14 85,378 91,8 12

1,072,687 981,012 983,970 872,144

Liabil ities classified as held for sale 3l(c)

TOT AL LIABILITIES 1,072,687 981,012 983,970 872,144

EQUITY Share capital and share premium 32 401,304 400,109 401,304 400, 109 Treasury shares (624) (624) Retained deficit (254,400) (244, 183) (258,881) (247,868) Other reserves 133,983 110,633 122,280 99,098

EQUITY ATTRIBUTABLE TO EQUITY -HOLDERS OF THE BANK 280,263 266,559 264,079 251,339

Non-controlling interest 33 5,280 5,111

TOT AL EQUITY 285,543 271,670 264,079 251,339

TOT AL LIABILITIES AND EQUITY 1,358,230 1,252,682 1,248,049 1,123,483

By order of the Board:

~L- cntl\..'\. '\. ""~~ EmekaEmuwa Oyinkansade Adewale

Group Managing Director Director/CFO

FRC/20 ! 3/CIBN/0000000 1774 FRC/20 !3/ICAN/00000001775

4

SOlayioye

Text Box

Signed on behalf of the Board of Directors on 24 October, 2017 by:



Consolidated and Separate Statements of Changes in Equity

For the period ended 30 September 2017

Group

Share

capital

Share

premium

Statutory

reserve

Treasury

shares

Fair value

reserve

Regulatory risk

reserve

Share based

payment reserve

Other

reserves

Retained

deficit Total

Non-

controlling

interest

Total

equity

N million N million N million N million N million N million N million N million N million N million N million N million

Balance at 1 January 2017 8,468 391,641 24,445 - 34,832 38,869 147 12,340 (244,183) 266,559 5,111 271,670

Total comprehensive income for the period

Profit for the period - - 1,717 - - - - - 10,524 12,241 169 12,410

Other comprehensive income, net of tax

Increase/(decrease) in revaluation surplus for the period - - - - 5 - - - 5 - 5

Foreign currency translation diferrence - - - - - - - 184 - 184 - 184

Fair value gains/(loss) on available-for-sale investment - - - - 850 - - - - 850 - 850 Appropriation:

Transfer from regulatory reserves - - - - 22,005 - 794 (22,799) - - -

Total comprehensive income for the period - - 1,717 - (1,203) 22,005 - 978 (10,217) 13,280 169 13,449

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners

Shares redeemed during the period - - - (624) - - - - - (624) - (624)

Equity-settled share-based payment - - - - - - 1,048 - - 1,048 - 1,048

Transfer from Share Based Payment Reserve 124 1,071 - - - - (1,195) - - - - -

Total contribution and distributions to owners 124 1,071 - (624) - - (147) - - 424 - 424

Balance at 30 September 2017 8,592 392,712 26,162 (624) 33,629 60,874 - 13,318 (254,400) 280,263 5,280 285,543

December 2016

Share

capital

Share

premium

Statutory

reserve

Treasury

shares

Fair value

reserve

Regulatory risk

reserve

Share based

payment reserve

Other

reserves

Retained

deficit Total

Non-

controlling

interest

Total

equity

N million N million N million N million N million N million N million N million N million N million N million N million

Balance at 1 January 2016 8,468 391,641 22,062 - 33,050 23,876 - 4,389 (244,902) 238,584 5,337 243,921

Prior period adjustment - - - - - - - - 2,839 2,839 - 2,839

Balance at 1 January 2016 8,468 391,641 22,062 - 33,050 23,876 - 4,389 (242,063) 241,423 5,337 246,760


Profit for the period - - - - - - - - 15,617 15,617 (226) 15,391

Other comprehensive income, net of tax

Remeasurement of defined benefit liability - - - - - - - 305 - 305 - 305

Foreign currency translation diferrence - - - - - - - 7,746 - 7,746 - 7,746

Fair value gains/(loss) on available-for-sale investment - - - - 1,939 - - - - 1,939 - 1,939

Total comprehensive income for the year - - - - 1,939 - - 8,051 15,617 25,607 (226) 25,381

Appropriation: - - Transfer from regulatory reserves - - - - (157) 14,993 - (100) (14,736) - - - Transfer from other reserves - - 2,383 - - - (2,383) - - -

Total comprehensive income for the period - - 2,383 - (157) 14,993 - (100) (17,119) - - -



Dividend to non- controlling interest - - - - - - - - (618) (618) - (618)

Equity settled -share-based payment - - - - - - 147 - 147 - 147

Total contribution and distributions to owners - - - - - - 147 - (618) (471) - (471)

Balance at 31 December 2016 8,468 391,641 24,445 - 34,832 38,869 147 12,340 (244,183) 266,559 5,111 271,670

5



Consolidated and Separate Statements of Changes in Equity

For the period ended 30 September 2017

Bank

Share capital

Share

premium

Statutory

reserve

Treasury

shares

Fair value

reserves

Regulatory risk

reserves

Share based

payment reserve Other reserves

Retained

deficit Total

N million N million N million N million N million N million N million N million N million N million

Balance at 1 January 2017 8,468 391,641 24,445 - 33,579 38,869 147 2,058 (247,868) 251,339


Profit or loss - - 1,717 - - - - - 9,728 11,445

Other comprehensive income

Fair value gains/(loss) on available-for-sale

investment - - - - 871 - - - - 871

Transfer between reserves - - - (2,058) 22,005 - 794 (20,741) -

Total comprehensive income for the period - - 1,717 - (1,187) 22,005 - 794 (11,013) 12,316



Shares redeemed during the period - - - (624) - - - - - (624)

Equity-settled share-based payment - - - - - - 1,048 - - 1,048

Transfer from Share Based Payment Reserve 124 1,071 - - - - (1,195) - - -

Total contribution and distributions to owners 124 1,071 - (624) - - (147) - - 424

Balance at 30 September 2017 8,592 392,712 26,162 (624) 32,392 60,874 - 2,852 (258,881) 264,079

December 2016

Share capital

Share

premium

Statutory

reserve

Treasury

shares

Fair value

reserve

Regulatory risk

reserve

Share based

payment reserve Other reserves

Retained

earning

/accumulated

deficit Total

N million N million N million N million N million N million N million N million N million N million

Balance at 1 January 2016 8,468 391,641 22,062 - 32,240 23,876 - 1,753 (249,372) 233,507

Prior year adjustment - - - - - - - - 2,839 2,839

Balance at 1 January 2016 8,468 391,641 22,062 - 32,240 23,876 - 1,753 (246,533) 233,507

Total comprehensive income for the year

Profit or loss - - - - - - - - 15,885 15,885

Other comprehensive income -

Fair value gains/(loss) on available-for-sale

investment - - - - 1,495 - - - - 1,495

Remeasurement of defined benefit liability - - - - - - - 305 - 305

Total comprehensive income for the year - - - - 1,495 - - 305 15,885 17,685

Appriopriation

Transfer between reserves - - - (156) 14,993 - - (14,837) -

Transfer to statutory reserve - - 2,383 - - - - (2,383) -

- - 2,383 - (156) 14,993 - - (17,220) -



Equity-settled share-based payment - - - - - - 147 - - 147

Total contribution and distributions to owners - - - - - - 147 - - 147

Balance at 31 December 2016 8,468 391,641 24,445 - 33,579 38,869 147 2,058 (247,868) 251,339

6



Consolidated and Separate Statements of Cash FlowsFor the period ended 30 September 2017

Group Group Bank Bank

Notes Sep.2017 Dec.2016 Sep.2017 Dec.2016


Cash flows from operating activities

Profit for the year 12,241 15,391 11,445 15,885

Income tax expense 16 588 347 288 168

Profit before tax 12,829 15,738 11,733 16,053

Adjustments for:

Impairment losses on loans and advances 9,383 21,159 9,239 21,063

Recoveries on loans and advances (2,021) (1,297) (2,021) (1,297)

(Reversal of impairment)/impairment loss on loans and advances (3,374) (3,280) (3,374) (3,280)

Impairment loss on equity accounted investee - 24 - -

Reversal of impairment on other assets (102) (717) (102) (717)

Write-off of intangible assets 29 - 193 -

Write-off of property and equipment 28 - 24 - 26

Revaluation gains on investment properties 28 (431) - - -

Allowances on other assets - - - -

Gain on sale of property and equipment (1,728) (2,562) (1,728) (2,562)

Gain on disposal of available for sale - unquoted equity 25 - (297) - (297)

Gain on sale of trading properties - (90) - -

Gain on sale/liquidation of subsidiaries - (368) - (802)

Depreciation of property and equipment 28 3,237 3,806 3,277 3,775

Amortisation of intangible assets 29 1,064 1,100 935 925

Dividend income from equity investment (837) (765) (837) (765)

Interest paid on borrowings 8,779 8,210 8,777 8,210

Contributions to defined contribution plans 454 722 454 619

Increase in liability for defined benefit plans 70 464 70 461

27,323 42,064 26,423 41,412

Change in non-pledged trading assets (35,874) (8,323) (35,874) (8,323)

Change in pledged assets (10,950) 31,298 (10,950) 31,298

Change in loans and advances to customers 27,932 (157,051) 32,553 (157,392)

Change in other assets (44,341) (63,343) (44,147) (62,686)

Change in derivative financial instruments-assets 2,651 13 2,651 13

Change in derivative financial instruments-liabilities 77 (927) 77 (927)

Change in deposits from banks 18,125 46,175 23,439 (7,449)

Change in deposits from customers 109,417 87,805 124,036 64,711

Change in other liabilities (31,106) 29,588 (32,828) 31,384

63,254 7,298 85,380 (67,959)

Income tax paid 35 (340) (269) (158) (220)

Payment from defined contribution plan 37(a)(i) (466) (722) (466) (619)

Payment from defined benefit plan - (1,343) - (1,335)

Net cash provided by/(used in) operating activities 62,448 4,965 84,756 (70,133)

Cash flows from investing activities

Disposal of investment properties 27 - 199 - -

Proceeds from sale of trading properties 1,351 958 - -

Proceeds from sale of property and equipment 4,131 5,271 4,132 5,245

Proceed on disposal of subsidiaries - 3,006 - 3,006

Proceed/(acquisition) of investment securities (7,879) 35,653 (12,215) 44,256

Acquisition of trading properties 26 - - - -

7



Acquisition of property and equipment 29 (7,569) (9,126) (7,549) (8,962)

Acquisition of intangible assets 30 2,191 (664) 2,191 (634)

Dividend income received 13 837 765 837 765

Net cash generated from/(used in) investing activities (6,938) 36,061 (12,605) 43,676

Cash flows from financing activities

Inflow from other borrowings 7,446 47,784 7,446 47,784

Repayment of borrowings (16,546) (34,329) (13,880) (32,031)

Interest paid on borrowings 9 (8,779) (8,210) (8,777) (8,210)

Net cash generated from/(used in) financing activities (17,879) 5,245 (15,211) 7,543

Net increase/(decrease) in cash and cash equivalents 37,631 46,270 56,940 (18,915)

Cash and cash equivalents at beginning of year 19 136,194 82,252 35,536 54,451

Effect of exchange rate fluctuations on cash held 303 7,672 - -

Cash and cash equivalents at end of period 19 174,128 136,194 92,477 35,536

8



1 Net interest incomeGroup Group Bank Bank

Sep.2017 Sep.2016 Sep.2017 Sep.2016

N million N million N million N millionInterest income

Cash and cash equivalents 1,775 2,743 1,345 2,248

Loans and advances to customers 64,746 51,258 63,095 50,285

Investment securities 21,949 18,289 20,620 18,016

Total interest income 88,470 72,290 85,060 70,549

LCY 66,787 54,210 66,333 54,048

FCY 21,683 18,080 18,727 16,501

Total interest income 88,470 72,290 85,060 70,549

Interest expenseDeposits from banks - - - -

Deposits from customers 32,785 16,799 32,470 16,741

Other borrowed funds 8,779 7,421 8,777 7,421

Total interest expense 41,564 24,220 41,247 24,162

LCY 33,315 17,666 33,313 17,661

FCY 8,248 6,554 7,933 6,501

Total interest expense 41,564 24,220 41,247 24,162

Net interest income 46,906 48,070 43,813 46,387

2 Net Fees and commission income


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Credit Related fees and commissions income 3,967 4,449 3,967 4,377

Account Maintenance Fee 1,067 901 1,067 901

E-business fee income (See note (a) ) 707 1,838 707 1,838

Commission on LCs, Invisible Trades and Guarantees 878 689 878 689

Other fees and commission 491 412 - -

7,110 8,289 6,619 7,805

(a) E-business fee income


Sep.2017 Sep.2016 Sep.2017 Sep.2016


ATM on-us 1,569 1,003 1,569 1,003

POS 84 37 84 37

E-card maintenance 594 503 594 503

Online transfer 70 46 70 46

2,317 1,590 2,317 1,590

Card FX gain/(loss) 25 1,486 25 1,486

2,342 3,076 2,342 3,076

E-business fee charge


Sep.2017 Sep.2016 Sep.2017 Sep.2016


ATM on-us 579 405 579 405

POS 108 56 108 56

E-card maintenance 857 777 857 777

Priority pass card 91 - 91 -

1,636 1,238 1,636 1,238

Net E-business fee 707 1,838 707 1,838

9



3 Net trading income/(loss)


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Gain on disposal of fixed income securities 3,645 4,145 3,645 4,145

Mark to market gains on fixed income securities 878 55 841 55 FX future trading income - - - -

Foreign exchange gain on trading 1,240 948 1,133 798

5,763 5,148 5,619 4,998

4 Net income from other financial instruments at fair value through profit or loss


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Derivatives held for risk management purposes:

Foreign exchange swap contracts 44 - 44 -

44 - 44 -

5 Other operating income


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Dividends 837 410 837 410

Gains on disposal of property and equipment 1,728 2,452 1,728 2,452 Revaluation gain on 'fair value through profit or loss - - - -

Foreign exchange revaluation gain 299 4,306 299 4,306 Rental income 189 97 130 97 Sundry income 3,041 526 2,953 397

6,105 7,791 5,947 7,662

(a) Sundry income


15Sep.2017 Sep.2016 Sep.2017 Sep.2016N million N million N million N million

Cash handling fees 42 46 42 46

Fraud recoveries 59 27 59 27

Excess provision no longer required 2,539 - 2,539 -

Other income 401 452 313 323

3,041 526 2,953 397

6 Net Impairment loss on financial assets

(a) Net impairment charge for credit losses


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Net impairment charge for credit losses:-specific impairment 8,241 11,650 8,097 11,625

-portfolio impairment 1,142 3,611 1,142 3,611

Total impairment charge on loans and advances 9,383 15,261 9,239 15,236

Reversal of impairment (3,374) (2,391) (3,374) (2,391)

6,009 12,870 5,865 12,845

(b) Net impairment loss on other financial assets:

Allowance no longer required on other assets (102) (165) (102) (165)

(102) (165) (102) (165)

Total net impairment loss on financial assets 5,907 12,705 5,763 12,680

Net trading (loss)/income includes the gains and losses arising both on the purchase and sale of trading instruments and from changes in

fair value.

10



7 Personnel expenses


Sep.2017 Sep.2016 Sep.2017 Sep.2016N million N million N million N million

Wages and salaries 22,755 22,048 21,358 20,842

Contributions to defined contribution plans 454 467 454 467

Increase in liability for defined benefit plans 70 72 70 72

23,279 22,587 21,882 21,381

8 Other operating expenses


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Auditors' remuneration 116 98 113 98

NDIC Premium 2,322 2,002 2,322 2,002

Rents and Rates 774 771 769 771 Accomodation and travels 819 578 760 531 Fleet management and vehicle related expenses 500 491 500 491

Repair and Maintenance 1,000 668 812 523

Professional fees 1,052 1,001 709 881

Advertising and Promotion expenses 1,126 727 1,126 727

Security expense 775 766 775 766

Expenses on software 2,968 2,227 2,968 2,227

Donations and Subscriptions 268 198 268 198

General administrative expenses (see note (a) below) 5,152 4,666 4,868 4,434

Insurance 227 224 225 224

AMCON surcharge 4,212 3,739 4,212 3,739

21,312 18,156 20,428 17,612

(a) General administrative expenses


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Office cleaning 222 196 222 196

Cash movement expense 961 786 961 786

Entertainment 177 24 177 24

Directors fees and allowances 266 291 266 291

Diesel and power 1,529 1,197 1,529 1,197

Stationery, printing, postage and telephone 404 323 404 323

Sports promotion 6 39 6 39

Penalties 2 37 2 37

Restitution and other charges 493 390 493 390

Group restructuring expenses - 437 - 437

Other expenses 1,093 946 809 714

5,152 4,666 4,868 4,434

11



9 Income tax expense

(a) Recognised in the profit or loss


Sep.2017 Sep.2016 Sep.2017 Sep.2016


Current tax expense

Company Income Tax 300 64 - -

Education tax - - - -

Capital Gains tax 172 41 172 41

NITDA Levy 116 158 116 90

Total income tax expense 588 263 288 131

10 Earnings per share

(a) Basic earnings per share

Weighted average number of ordinary shares


Sep.2017 Sep.2016 Sep.2017 Sep.2016

Issued ordinary shares at beginning of the period 17,184 16,936 17,184 16,936

Weighted effect of shares issued during the period 16,998 16,936 16,998 16,936

(b) Profit attributable to ordinary shareholders

In millions of Nigerian Naira Group Group Bank Bank

Sep.2017 Sep.2016 Sep.2017 Sep.2016

Profit/(Loss) for the period attributable to equity holders 12,241 12,929 11,445 13,053

Basic earnings/(loss) per share (in kobo) 72 76 67 77

(c) Diluted earnings per share

The Group does not have any dilutive potential ordinary shares, therefore, Basic EPS and Diluted EPS are the same for the Group.

In line with the Company Income Tax Act, 1990, as amended, the Bank is not liable to pay income tax as the Bank recorded a tax loss for the

period. The Bank is exempted from paying minimum tax under the Act, as it has imported share capital of over 25%. No education tax was charged

because the Bank has no assessable profit for the period.

Earnings/(loss) per share has been computed based on profit after taxation attributable to the Group ordinary shareholders and the weighted

average number of shares in issue during the period is as follows.

12



11 Cash and cash equivalents Group Group Bank Bank

Sep.2017 Dec.2016 Sep.2017 Dec.2016


Cash and balances with banks 44,465 24,139 48,501 21,447

Unrestricted balances with central bank 31,023 6,887 31,023 6,887

Money market placements 98,640 105,168 12,953 7,202

174,128 136,194 92,477 35,536

12 Non-pledged Assets (Held for trading)


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Treasury bills 44,197 8,323 44,197 8,323

44,197 8,323 44,197 8,323

13 Pledged assets

Financial assets that may be repledged or resold by counterparties


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Treasury bills 33,174 16,645 33,174 16,645

Bonds 31,130 36,544 31,130 36,544

Placement 76 241 76 241

64,380 53,430 64,380 53,430

Financial assets are pledged as collateral as part of securitized borrowing under terms that are usual and customary for such activities.

14 Derivative financial instruments

Group

Assets Liabilities Assets Liabilities


Instrument Type:

FX swaps 96 - 2,747 13

Non-deliverable futures - 90 - -

96 90 2,747 13

Bank Dec.2016

Assets Liabilities Assets Liabilities


Instrument Type:

FX swaps 96 - 2,747 13

Non-deliverable futures - 90 - -

96 90 2,747 13

15 Loans and advances to customers at amortised cost


(a) Sep.2017 Dec.2016 Sep.2017 Dec.2016


Gross amount 508,617 535,836 486,508 518,349

Specific impairment (18,316) (14,904) (18,300) (14,887)

Portfolio impairment (15,031) (13,742) (14,715) (13,572)

Total impairment (33,347) (28,646) (33,015) (28,459)

Carrying amount 475,270 507,190 453,493 489,890

The Group uses derivatives not designated in a qualifying hedge relationship, to manage its exposure to foreign currency risks. The

instruments used include forward contracts and cross currency linked forward contracts.

Sep.2017

Dec.2016Sep.2017

13



16 Investment in equity accounted investee


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Cost

Balance, beginning of the period 115 115 91 91

115 115 91 91

(Impairments) /increase in value (115) (115) (91) (91)

Balance, end of the period - - - -

17 Investment securities


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Available-for-sale investment securities comprise:

Treasury bills 61,636 38,626 53,051 26,407

Equity: Quoted see Note 17a 2,195 2,195 2,195 2,195

Unquoted see Note 17b 30,203 30,143 30,203 30,143

FGN Bonds 55,885 22,763 53,697 20,658

State Bonds 3,062 995 3,062 995 Corporate Bonds 1,009 1,058 1,009 1,058

153,990 95,780 143,217 81,455

Less: specific impairment allowance (5,002) (5,002) (5,002) (5,002)

148,988 90,778 138,215 76,453


Quoted Sep.2017 Dec.2016 Sep.2017 Dec.2016


17a Investment in REIT 2,195 2,195 2,195 2,195

17b Unquoted

AFC 24,613 24,553 24,613 24,553

Nigeria Auto Clearing System (NAC) 42 42 42 42

Interswitch 2 2 2 2

Credit Reference Company (CRC) 50 50 50 50

Afrexim Bank 494 494 494 494

Nig Superswitch Infrastructure 10 10 10 10

Banque de Benin 1152 1,152 1,152 1,152

AIB Cotonu 122 122 122 122

Investment in SMEEs 3,718 3,718 3,718 3,718

30,203 30,143 30,203 30,143

Total 32,398 32,338 32,398 32,338

Less: specific impairment allowance (5,002) (5,002) (5,002) (5,002)

27,396 27,336 27,396 27,336

Held to maturity investment securities comprise:

Federal Government of Nigeria -Bonds 20,735 52,270 20,735 51,634

State Government of Nigeria -Bonds 20,895 27,179 20,895 27,179

Corporate Bonds - 11,493 - 11,493

41,630 90,942 41,630 90,306

Investment securities 190,618 181,720 179,845 166,759

14



18 Trading properties


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, beginning of period 2,309 2,309 513 1,124

Disposal (1,351) - - -

Balance, end of period 958 2,309 513 1,124

19 Investment Properties


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, beginning of the period 4,347 4,546 -

Disposal - (199) -

Revaluation gains 431 - - -

Purchase of investment property - - - -

4,778 4,347 - -

Impairment allowance - - - -

Balance, end of the period 4,778 4,347 - -

20 Investment in subsidiaries

Cost

Bank Bank

Sep.2017 Dec.2016

N million N million

UBN Property Company Limited 2,195 2,195

Union Bank UK Plc 8,372 8,372

10,567 10,567

(a) The subsidiary companies, country of incorporation, nature of business and percentage equity holding are detailed below:

Country Direct ownership interest

Company Name Incorporation Nature of business Sep.2017 Dec.2016

Status/% Status/%

UBN Property Company Limited (ii) Nigeria Property Development 39 39

Union Bank UK Plc (iii) Nigeria Licensed UK Bank 100 100

(i) UBN Property Company Limited (Registered office at 36, Marina, Lagos)

(ii) Union Bank UK Plc (Registered office at 1 King's Arms Yard, London, EC2R 7AF)

This represents the cost of real estate properties held by the Group which are designated for resale. The movement on the trading properties account

during the period was as follows:

These investment properties were last revalued during the period ended 31 December 2013 by Messrs. Bode Adediji Partnership, a firm of estate

surveyors and valuers, using the open market basis of valuation, and their reports were dated 16 December 2013 for UBN Property Company Limited

respectively. As at 31 December 2016, the Directors are of the opinion that there were no material fluctuations in the value of the Bank's investment

properties since the last valuation.

The Company has 5,626,416,051 ordinary shares of N1.00 each of which 39.01% (December 2014 - 39.01%) is held by the Bank. In line with IFRS 10-

Consolidated Financial Statement, Union Bank of Nigeria Plc has control over this entity as it has the power, exposure to variability of returns and a

strong link between power and variability of returns. The Bank also governs the financial and operating policies of UBN Property Company Limited.

The Bank directly holds 100% holding of Union Bank UK's 60,000,000 ordinary shares and 99% of its 50,000 deferred shares of GBP1 each and 1%

indirect holding through Williams Street Trustees Limited, the nominee company for Union Bank of Nigeria Plc . Union Bank UK Plc was

incorporated in December, 2004 as an authorised United Kingdom subsidiary to carry out the business formerly conducted by the London Branch of

Union Bank of Nigeria Plc.

15


Consolidated financial statements for the period ended 30 September 2017(c) Condensed results of consolidated entities

(i) The condensed financial data of the continuing operations as at 30 September 2017, are as follows

Condensed statement of comprehensive income

Statement of Comprehensive income

Group

balances

Consolidation

entries Total Bank

Union

Properties

Atlantic

Nominees

Union Bank

UK

N million N million N million N million N million N million N million

Operating income 67,949 (48) 67,997 64,063 576 - 3,359

Net operating income after net impairment loss 62,042 (47) 62,089 58,300 576 - 3,213 - -

Operating Expenses (49,044) 46 (49,090) (46,569) (141) - (2,380)

Net impairment loss on financial assets (6,009) (101) (5,908) (5,763) - - (145) -

Share of proit of equity accounted investees - - -

Profit before income tax 12,896 (103) 12,999 11,731 435 - 833

Taxation (588) (1) (587) (288) (139) - (161)

Profit after income tax 12,308 (104) 12,412 11,444 296 - 672

Condended Statement of financial position

Group

balances

Consolidation

entries Total Bank

Union

Properties

Atlantic

Nominees

Union Bank

UK


Cash and cash equivalents 174,128 (16,439) 190,567 92,477 5,029 - 93,061

Non-pledged trading assets 44,197 - 44,197 44,197 - - -

Pledged assets 64,380 - 64,380 64,380 - - -

Derivative financial instrument 96 - 96 96 - - -

Loans and advances to customers 475,270 (4,963) 480,233 453,493 - - 26,740

Investments in equity-accounted investee - - - - - - -

Investment securities 190,618 1 190,617 179,845 - - 10,772

Assets held for sale 397 (325) 722 325 - 397 -

Trading properties 958 (1) 959 513 446 - -

Investment properties 4,778 - 4,778 - 4,778 - -

Investment in subsidiaries - (10,567) 10,567 10,567 - - -

Property and equipment 54,651 (0) 54,651 54,464 31 - 156

Intangible assets 4,521 (0) 4,521 4,115 - - 406

Deferred tax assets 95,910 185 95,725 95,875 (150) - -

Other assets 248,297 (215) 248,512 247,702 162 - 648

Defined benefit assets 29 29 - -

Total assets 1,358,230 (32,296) 1,390,526 1,248,049 10,296 397 131,783

Financed by:

Derivative financial instruments 90 - 90 90 - - -

Deposits from banks 108,391 0 108,391 27,790 - - 80,601

Deposits from customers 767,861 (16,439) 784,300 757,863 - - 26,437

Deferred tax liabilities 151 151 - - - - -

Current tax liabilities 713 1 712 307 266 - 139

Other liabilities 114,171 (542) 114,713 111,675 2,341 - 697

Retirement benefit obligations 896 (13) 909 867 42 - -

Other borrowed funds 80,414 (4,964) 85,378 85,378 - - -

Equity and reserves 285,543 (10,489) 296,032 264,079 7,647 397 23,909

Total liabilities 1,358,230 (32,296) 1,390,526 1,248,049 10,296 397 131,783

16


Consolidated financial statements for the period ended 30 September 2017(c) Condensed results of consolidated entities

(i) The condensed financial data of the continuing operations as at 31 December 2016, are as follows

Condensed statement of comprehensive income

Statement of Comprehensive income

Group

balances

Consolidation

entries Total Bank

Union

Properties

Atlantic

Nominees

Union Bank

UK


Operating income 93,627 (1,759) 95,386 91,882 508 - 2,995

Net operating income after net impairment loss 77,738 (487) 78,225 74,819 508 - 2,897 - -

Operating Expenses (62,000) 51 (62,051) (58,765) (761) - (2,525)

Net impairment loss on financial assets (15,889) 1,272 (17,161) (17,064) - - (98) -

Profit before income tax 15,738 (436) 16,174 16,054 (253) - 372

Taxation (347) - (347) (168) (116) - (62)

Profit after income tax 15,391 (436) 15,827 15,886 (369) - 310

Condended Statement of financial position

Group

balances

Consolidation

entries Total Bank

Union

Properties

Atlantic

Nominees

Union Bank

UK


Cash and cash equivalents 136,194 (1,476) 137,670 35,536 1,476 - 100,658

Non-pledged trading assets 8,323 - 8,323 8,323 - - -

Pledged assets 53,430 - 53,430 53,430 - - -

Derivative financial instrument 2,747 - 2,747 2,747 - - -

Loans and advances to customers 507,190 (5,245) 512,435 489,890 - - 22,545

Investments in equity-accounted investee - - - - - - -

Investment securities 181,720 3 181,717 166,759 2,876 - 12,082

Assets held for sale 397 (325) 722 325 - 397 -

Trading properties 2,309 - 2,309 1,124 1,185 - -

Investment properties 4,347 - 4,347 - 4,347 - -

Investment in subsidiaries - (10,567) 10,567 10,567 - - -

Property and equipment 52,800 - 52,800 52,567 20 - 212

Intangible assets 3,374 - 3,374 2,859 - - 515

Deferred tax assets 95,910 - 95,910 95,875 - 35

Other assets 202,298 (184) 202,481 201,838 86 - 557

Defined benefit asset 1,643 1,643 1,643

Total assets 1,252,682 (17,794) 1,270,475 1,123,483 9,990 397 136,605

Financed by:

Derivative financial instruments 13 0 13 13 - - -

Deposits from banks 90,266 - 90,266 4,351 - - 85,915

Deposits from customers 658,444 (1,477) 659,921 633,827 - - 26,094

Deferred tax liabilities 101 - 101 - 101 - -

Current tax liabilities 465 - 465 177 288 - -

Other liabilities 141,404 (3,533) 144,937 141,191 2,225 - 1,521

Retirement benefit obligations 805 - 805 773 32 - -

Other borrowed funds 89,514 (2,298) 91,812 91,812 - - -

Equity and reserves 271,670 (10,486) 282,156 251,339 7,346 397 23,074

Total liabilities 1,252,682 (17,794) 1,270,475 1,123,483 9,990 397 136,604

(i) In the course of the year, the Group realised its receivable in respect of Union Pension Ltd which was previously derecognised as a subsidiary due to the liquidation of

the entity and loss of control by the Group.

17



21 Property and equipment

(a) Group:

The movement in these accounts during the period was as follows:

Land Buildings

Leasehold

improvement

Fixtures and

fittings

Furniture &

equipment

Motor

vehicles

Capital work

in progress Total

N million N million N million N million N million N million N million N million

Cost

Balance at 1st January, 2016 14,079 23,294 11,962 3,201 17,577 3,342 1,589 75,045

Exchange difference - - 19 - (3) - - 16

Additions 73 - 2,897 802 3,354 271 172 7,569

Disposals (1,329) (1,191) (71) (55) (69) (3) - (2,718)

Reclassification to other assets 30 2 (5) 14 3 - - 44

Balance as at 30 September 2017 12,853 22,105 14,802 3,962 20,862 3,610 1,761 79,957

Balance at 1st January, 2016 14,267 26,193 8,187 3,052 15,665 3,230 2,181 72,776

Exchange difference - - 111 - 113 10 - 235

Additions 12 24 3,966 193 2,614 244 2,074 9,126

Disposals - (2,923) (524) (27) (826) (141) - (4,441)

Write off - - - - - - (24) (24)

Reclassification to other assets (200) - 223 (18) 11 0 (2,642) (2,627)

Balance as at 31 December 2016 14,079 23,294 11,962 3,201 17,577 3,342 1,589 75,044

Depreciation and impairment losses

Balance at 1st January 2017 - 5,826 1,688 1,435 10,239 3,057 - 22,245

Prior period revaluation - - - - - -

- 5,826 1,688 1,435 10,239 3,057 - 22,245

Exchange difference - - 5 - 150 - - 155

Charge for the period - 316 179 240 2,400 101 - 3,237

Disposals - (201) (15) (29) (66) (3) - (314)

Write-off/Adj - - - - - - - -

Reclassifications - - (4) 12 (25) - - (17)

Derecognition of subsidiaries - - - - - - - - Assets classified as discontinued

operations - - -

Balance as at 30 September 2017 - 5,941 1,854 1,658 12,697 3,155 - 25,305

Balance at 1st January, 2016 200 5,798 1,374 1,167 8,379 3,087 159 20,164

Charge for the year - 478 181 282 2,765 100 - 3,806

Disposals - (422) (367) (14) (788) (141) - (1,732)

Write-off/Adj - - - - - - - -

Exchange difference - - 111 - 69 11 - 191 Reclassifications (200) (28) 389 0 (186) 1 (159) (183)

Balance as at 31 December 2016 - 5,826 1,688 1,435 10,239 3,057 - 22,245

(iii) Net Book Value

Balance as at 30 September 2017 12,853 16,164 12,949 2,305 8,165 455 1,761 54,651

Balance as at 31 December 2016 14,079 17,468 10,274 1,766 7,338 286 1,589 52,800

(iv) In the opinion of the directors, the market value of the Group's properties is not less than the value shown in the financial statements.

(v) Exchange difference relates to the conversion of property and equipments acquired in the overseas office at the rate of exchange ruling at the end of the period.

(v)

(vi) There were no capitalised borrowing costs related to the acquisition of property and equipment during the period (December 2016: nil)

Capital work in progress represents construction costs in respect of new offices. On completion of construction, the related amounts are transferred to

appropriate categories of property and equipment.

18


Consolidated financial statements for the period ended 30 September 2017(b) Bank:

The movement in these accounts during the period was as follows:

Land Buildings

Leasehold

improvement

Fixtures and

fittings

Furniture &

equipment

Motor

vehicles

Capital work

in progress Total

(i) Cost N million N million N million N million N million N million N million N million

Balance at 1st January 2017 14,079 23,294 11,877 3,200 17,349 3,268 1,587 74,655

Additions 73 - 2,897 803 3,333 271 172 7,549

Disposals (1,329) (1,191) (71) (55) (60) (3) - (2,709)

Reclassifications 4 2 (5) 14 (3) - - 12

Balance as at 30 September 2017 12,827 22,105 14,698 3,963 20,619 3,537 1,759 79,507

Balance at 1st January 2016 14,267 26,193 7,977 3,052 15,426 3,186 2,181 72,282

Additions 12 24 3,881 193 2,553 224 2,074 8,962

Disposals - (2,923) (204) (27) (641) (141) - (3,936)

Reclassifications to other assets (200) - 223 (18) 11 - (2,642) (2,627)

Write off - - - - - - (26) (26)

Balance as at 31 December 2016 14,079 23,294 11,877 3,200 17,349 3,268 1,587 74,655

.

Land Buildings

Leasehold

improvement

Fixtures and

fittings

Furniture &

equipment

Motor

vehicles

Capital work

in progress Total

(ii) Accumulated depreciation N million N million N million N million N million N million N million N million

Balance at 1st January 2017 - 5,854 1,657 1,435 10,141 3,001 22,087

Prior period revaluation - - - - - -

- 5,854 1,657 1,435 10,141 3,001 - 22,087

Charge for the period - 316 189 240 2,435 96 - 3,277

Disposals - (201) (15) (29) (57) (3) - (305)

Reclassifications - - (4) 12 (25) - - (16)

Write-off/Adj - - - - - - - -

Balance as at 30 September 2017 - 5,969 1,827 1,658 12,494 3,095 - 25,043

Restated balance at 1st January 2016 200 5,798 1,515 1,167 8,022 3,049 - 19,751

Charge for the year - 478 178 282 2,745 92 - 3,775

Disposals - (422) (47) (14) (629) (141) - (1,253)

Reclassifications (200) - 11 - 3 1 - (186)

Write-off/Adj - - - - - - - -

Balance as at 31 December 2016 - 5,854 1,657 1,435 10,141 3,001 - 22,087

(iii) Net Book Value

Balance as at 30 September 2017 12,827 16,136 12,871 2,305 8,125 442 1,759 54,464

Balance as at 31 December 2016 14,079 17,440 10,220 1,765 7,208 268 1,587 52,567

(iv) In the opinion of the directors, the market value of the Bank's properties is not less than the value shown in the financial statements.

(v)

(vi) There were no capitalised borrowing costs related to the acquisition of property and equipment during the period (December 2016: nil)

Capital work in progress represents construction costs in respect of new offices. On completion of construction, the related amounts are transferred to

appropriate categories of property and equipment.

19



22 Intangible assets


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Cost

Balance, beginning of the period 6,693 6,395 5,774 5,314

Additions 2,191 664 2,191 634

Reclassification (1) (150) (1) (174)

Disposal - (754) - -

Exchange translation difference 80 537 - -

Balance, end of period 8,963 6,693 7,964 5,774

Amortization and impairment losses


Amortisation for the period 1,064 1,100 935 925


Exchange translation difference 60 - - -


Carrying amounts as at period end 4,522 3,374 4,115 2,859

Balance as at 1 January 3,374 3,749 2,859 3,318

(i)

(ii) There were no capitalised borrowing costs related to the acquisition of software during the period (December 2016 : nil)

23 Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Group

30 September 2017

Assets Liabilities Net

N million N million N million

Property, equipment, and software - 6,746 (6,746)

Allowances for loan losses - 192 (192)

Foreign exchange gains 573 - 573

Tax loss carry forward 100,630 - 100,630

Others 1,645 - 1,645

Net tax assets (liabilities) 102,848 6,938 95,910

Deferred tax liabilities Liabilities Net

N million N million

Property, equipment, and software 151 151

Net tax assets (liabilities) 151 151

Net deferred tax 95,759

31 December 2016







Others 1,645 - 1,645


Deferred tax liabilities Liabilities Net

N million N million

Property, equipment, and software 101 (101)

Net tax assets (liabilities) 101 (101)

Net deferred tax 95,809

In the opinion of the directors, the market value of the Group's software is not less than the value shown in the financial statements.

20



Bank

30 September 2017







Others 1,711 - 1,711


31 December 2016







Others 1,711 - 1,711


Deferred tax assets and liabilities

Movement on the net deferred tax assets/(liabilities) account during the period:


Sep.2017 Dec.2016 Sep.2017 Dec.2016



Credit for the period (50) (101) - -

Net assets/(liabilities) of discontinued operations - 27 - -

Net deferred tax assets/(liabilities) 95,759 95,809 95,875 95,875

Made up of

Deferred tax assets 102,848 102,848 102,914 102,914

Deferred tax liabilities (7,089) (6,938) (7,039) (7,039)

Recognised and unrecognised deferred tax assets

Recognition of deferred tax assets of N95,759 (December 2016: 95,809) is based on management's profit forecasts (which are based on the available

evidence, including historical levels of profitability), which indicate that it is probable that the Group's enities will have taxable profits against which these

assets can be utilized.

Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against

which the Group can use the benefits.

21



24 Other assets


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Cash Reserve Requirement (see (i)) 185,937 129,431 185,937 129,431

Excess CRR balance to be refunded (see (ii)) 25,523 25,523 25,523 25,523

Total Cash Reserve Requirement 211,460 154,954 211,460 154,954

Other assets:

Clearing 781 744 781 744

Accounts receivable 707 1,558 439 1,108

Prepayments 7,727 4,863 7,492 4,863

Receivable on FX forward (see (iii)) 15,771 34,061 15,771 34,061

Sundry assets 17,764 12,050 17,672 12,040

42,750 53,276 42,155 52,816

Impairment on other assets(see (iv)) (5,913) (5,932) (5,913) (5,932)

Net other assets 36,837 47,344 36,242 46,884

248,297 202,298 247,702 201,838

(i)

(ii)

(iii) Receivable on FX forward

(iv) Movement in impairment on other assets:


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, beginning of the year 5,932 6,197 5,932 6,197

Allowance written off - (1,241) - (1,241)


Allowance no longer required - (717) - (717)

Allowance reinstated during the year - 2,000 - 2,000

Effect of exchange rate 83 83 83 83

Balance, end of year 5,913 5,932 5,913 5,932

25 Deposits from banks


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Money market deposits (See note (i) below) 27,790 4,351 27,790 4,351

Other deposits from banks 80,601 85,915 - -

108,391 90,266 27,790 4,351

(i) Money market deposits

LCY inter bank takings - - - -

FCY inter bank takings 27,790 4,351 27,790 4,351

27,790 4,351 27,790 4,351

The Bank had restricted balances of N185.937 billion (September: N177.416 billion) with the Central Bank of Nigeria (CBN) as at 30 September 2017,

representing the cash reserve requirement (CRR). The CRR is a mandatory cash deposit which should be held with the Central Bank of Nigeria as a

regulatory requirement.The CRR is non interest bearing and is not available for use in the Group’s day-to-day operations. As at the end of September 2017,

the CRRs in force were Public Sector Deposits 22.5% (Dec 2016: 22.5%) and Private Sector Deposits 22.5% (Dec 2016: 22.5%).

The MPC meeting held on September 25 - 26, 2017 maintained CRR at 22.5% . The excess CRR funds are only released to banks to fund approved

eligible real sector projects. The amount refundable to the Bank is N25.523 billion (Dec. 2015: N25.523 billion).

The balance represents the value of foreign currency receivable on forward transactions with Central Bank of Nigeria.

22


Consolidated financial statements for the period ended 30 September 201726 Deposits from customers


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Term deposits 258,658 229,596 257,895 224,581

Current deposits 330,532 259,251 321,297 239,649

Savings 178,671 169,597 178,671 169,597

767,861 658,444 757,863 633,827

Low-cost deposits 509,203 428,848 499,968 409,246

Low-cost deposits as % of total customer deposits 66.3% 65.1% 66.0% 64.6%

27 Current tax liabilities


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, beginning of period 465 382 177 229

Foreign exchange translation difference - (3) - -

Reclassification - 108 - -

Charge for the period 588 247 288 168

Payments during the period (340) (269) (158) (220)

Balance, end of period 713 465 307 177

28 Other liabilities

Group Group Bank BankSep.2017 Dec.2016 Sep.2017 Dec.2016


Deposits for foreign currency 54,530 48,206 54,530 48,206

Due to foreign correspondent banks 4,837 25,152 4,837 28,100

PAYE and other statutory deductions 1,023 1,569 1,023 1,569

Draft and Bills payable 8,728 8,511 8,728 8,511

Sundry creditors 604 429 604 429

Creditors and accruals 17,408 22,773 17,243 22,773

Unearned income 432 399 432 399

Provision for claims and contingencies 2,965 3,104 2,965 3,104

Accounts payable 3,406 8,800 2,937 5,635

OBB takings 5,000 - 5,000 -

Provisions for Ex-staff claims (AMCON provision) 4,272 4,272 4,272 4,272

Insurance premium payable 425 130 425 130

Electronic collections and other e-payment liabilities 4,608 5,031 4,608 5,031

Other credit balances 5,933 13,028 4,071 13,032

114,171 141,404 111,675 141,191

23



29 Employee benefit obligations


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Post employment benefit obligation (see (a) below) 169 181 140 152

Other long-term employee benefits (see (b) below) 727 624 727 621

896 805 867 773

(a) Post employment benefit obligation


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Defined contribution scheme (see (i) below) 140 152 140 152

Defined benefit obligation (See (ii) below) 29 29 - -

169 181 140 152

Defined benefit asset (See (ii) below) 29 1,643 - 1,643

Net defined benefit obligation - 1,614 - 1,643

(i) Defined Contribution Scheme


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, beginning of period 152 152 152 152

Charge during the period 454 722 454 619

Contribution remitted during the period (466) (722) (466) (619)

Balance, end of period 140 152 140 152

(ii) Defined benefit obligation

(b) Other long-term employee benefits

(i) Less than 5 periods of service: 12 weeks total emolument for each completed period of service.

(ii) 5 periods but less than 15 periods of service: 14 weeks total emolument for each completed period of service.

(iii) 15 periods of service and above: 16 weeks total emolument for each completed period of service.

(i)


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Present value of unfunded obligation 727 624 727 621

Present value of funded obligation - - - -

Total present value of the obligation 727 624 727 621

Fair value of plan assets - - - -

Present value of net obligation 727 624 727 621

Recognized liability for defined benefit obligations

727 624 727 621

The total emolument is defined as basic salary, housing and transport allowance and lunch subsidy.

The amounts recognised in the statement of financial position are as follows:

The basis of determining the benefit due to an employee is as stated below:

The Group and its employees make respective contributions of 10% and 8% of basic salary, housing and transport allowance to each

retirement savings account maintained with employees' nominated Pension Fund Administrators.

The Group also has a Legacy defined benefits pension scheme for its staff, which was set up prior to passage of the Pension Reform Act.

Under the scheme, terminal benefits were determined with reference to the employees' salaries upon disengagement. As at the period

end, the Group has transferred the benefits to the Retirement Savings Accounts (RSA) of the affected employees and the obligations are

Other long-term employee benefit represents liability in respect of long service award.

24



30 Other borrowed funds


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Due to CAC ( see (a)) 10,317 9,240 10,317 9,240

BOI on-lending facilities (see note (b) below) 5,365 6,286 5,365 6,286

Other borrowings ( see (c)) 64,732 73,988 69,696 76,286

80,414 89,514 85,378 91,812

(a)

(b)

(c)

Bank Bank Bank Bank

Sep.2017 Dec.2016 Sep.2017 Dec.2016

$ million $ million N million N million

Standard Chartered Bank - 11.2 - 3,422

Afreximbank 108.8 163.4 33,262 49,847

Ecobank EBISA - 8.9 - 2,711

ABSA Bank 0.0 1.9 3 579

British American Commercial Bank 0.1 - 23 -

Mashreq Bank 20.3 8.6 6,196 2,624

Union Bank, UK 7.6 7.5 2,331 2,298

African Finance Corporation 60.0 37.1 18,354 11,309

UBA New York - 4.5 - 1,383

Sky Enterprises 0.0 - 1 -

Access Bank Nig Ltd 31.2 6.9 9,526 2,113

228.0 250.1 69,696 76,286

31 Discontinued operations

(a) Assets classified as held for sale


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Investments in subsidiaries - - 325 325

Investment properties 188 188 - -

Other assets 209 209 - -

397 397 325 325

This represents the outstanding balance on an unsecured facility of N18,167,000,000 disbursed by the Central Bank of Nigeria (CBN), as

part of its developmental role, in collaboration with the Federal Government of Nigeria represented by the Federal Ministry of

Agriculture and Water Resources which established the Commercial Agriculture Credit Scheme for promoting agricultural enterprises in

Nigeria. The funds are made available to participating banks at zero cost, for on lending to commercial agricultural enterprises at a

maximum rate of 9.00% p.a.

This represents the outstanding balance of an intervention credit granted to the Bank by the Bank of Industry (BOI), a company

incorporated in Nigeria for the purpose of refinancing / or restructuring existing loans to Small and Medium Scale Enterprises (SMEs)

and manufacturing companies. The total facility is secured by Federal Government of Nigeria securities worth N7.5 billion (Dec. 2015:

N18.4 billion) and has a 15-period tenor and repayable quarterly.

A management fee of 1% , deductible at source, is paid by the Bank to BOI under the on-lending agreement and the Bank is under

obligation to on-lend to customers at an all-in interest rate of 7% per annum. Though the facility is meant for on-lending to borrowers in

specified sectors, the Bank remains the primary obligor to the BOI and therefore assumes the risk of default of customers.

Other borrowings consist of the following foreign currency denominated facilities:

25



DISCONTINUED OPERATIONS

Statements of Financial Position

Condensed statement of financial position for discontinued operations

Statement of financial position

Union

properties

Atlantic

Nominee

Intragroup

adj Total


ASSETS

Investment properties 188 - 188

Other assets 209 - 209

TOTAL ASSETS - 397 - 397

LIABILITIES - - - -

TOTAL LIABILITIES - - - -

26



32 Capital and reserves

Share capital Group Group Bank Bank

Sep.2017 Dec.2016 Sep.2017 Dec.2016


(a) Authorised :

35,000,000,000 (Dec 2016: 19,023,125,000) Ordinary shares of 50 kobo each 17,500 9,512 17,500 9,512


Sep.2017 Dec.2016 Sep.2017 Dec.2016 N million N million N million N million

(b) Issued and fully paid -

17,184,331,191 (Dec. 2016: 16,935,806,471) Ordinary shares of 50kobo each 8,592 8,468 8,592 8,468


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, beginning of period 8,468 8,468 8,468 8,468

Transfer from Share Based Payment Reserve 124 - 124 -


(c) Share premium

Share premium is the excess paid by shareholders over the nominal value for their shares.


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, begining of period 391,641 391,641 391,641 391,641

Transfer from Share Based Payment Reserve 1,071 - 1,071 -


Share capital and share premium 401,304 400,109 401,304 400,109

(d) Treasury Shares


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, begining of period - - - -

Acquisition of own shares during the year (624) - (624) -

Balance, end of period (624) - (624) -

(e) Other reserves


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Statutory reserves 26,162 24,445 26,162 24,445

Fair value reserve 33,629 34,832 32,392 33,579

Regulatory risk reserve 60,874 38,869 60,874 38,869

Share based Payment reserve - 147 - 147

Translation reserve 12,362 12,177 1,895 1,895

Excess clawback reserves (14,918) (14,918) (14,918) (14,918)

SMEEIES/AGSMEIS reserve 8,363 6,774 7,568 6,774

Capital reserve 5,489 5,489 5,489 5,489

2,818 2,818 2,818 2,818

134,778 110,633 122,280 99,098

The other reserves includes Statutory reserves, Fair value reserve, Regulatory risk reserves, Small and Medium Scale Industries Reserve (SMEEIS) and

Capital reserve.

Equity component of employee benefit remeasurement

27



(i) Statutory reserves

(ii) Fair value reserve

(iii) Regulatory risk reserve

(iv) Other reserves

(v) Agricultural/Small and Medium Enterprises Investment Scheme (AGSMEIS/SMEEIS):

(vi) Translation reserve

(vii) Excess Capital Clawback

(viii) Share based payment reserve

The movement is shown below


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Balance, begining of period 147 - 147 -

Share transferred during the period 1,048 147 1,048 147

Transfer to treasury shares (see note (b) above) (124) - (124) -

Transfer to share premium (see note (c) above) (1,071) - (1,071) -

Balance, end of period - 147 - 147

Translation reserve comprises all foreign exchange differences arising from translation of the financial statements of foreign operations.

Under the recapitalisation plan of the Bank executed in 2011, the Asset Management Corporation of Nigeria (AMCON) provided Financial

Accommodation to bring the Bank's Completion Net Assets Value (NAV) to zero.

The Financial Accommodation provided by AMCON exceeded the Bank's Completion NAV of zero, calculated as at 31 December 2011, by N14.918

billion. This excess amount was refunded to AMCON during the period ended 31st December, 2012.

This represents the provision for liabilities under the equity settled portion of the Group's shares incentive scheme which enables key management

personnel to benefit from the performance of the Group

Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by S.16(1) of the Banks and Other

Financial Institution Act of Nigeria, an appropriation of 30% of profit after tax is made if the statutory reserve is less than paid-up share capital and 15%

of profit after tax if the statutory reserve is greater than the paid up share capital. The Bank made a transfer of N1.717million to statutory reseves during

the period ended 30 September 2017 (September 2016 N1.958million).

The fair value reserve includes the net cumulative change in the fair value of available-for-sale investments securities recognised in other comprehensive

income.

The regulatory risk reserve warehouses the difference between the impairment on loans and advances computed under Nigeria GAAP based on the

Central Bank of Nigeria prudential guidelines and provisions specified by the central banks of foreign subsidiaries, compared with the incurred loss

model used in calculating the impairment under IFRSs.

The other reserves include Small and Medium Scale Industries Reserve (SMEEIS), Contingency reserve, Capital reserve, Translation reserve.

The SMEEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement that all licensed banks set aside a portion of the profit

after tax in a fund to be used to finance equity investment in qualifying small and medium scale enterprises. Under the terms of the guideline (amended

by CBN letter dated 11 July 2006), the contribution was 10% of profit after tax for the first 5 periods , and thereafter reduced to 5% of profit after tax.

In April 2017, the Central Bank of Nigeria issued guidelines to govern the operations of the Agricultural/Small and Medium Enterprises Scheme

(AGSMIES), which was established to support the Federal Government's efforts at promoting agricultural businesses and Small and Medium Enterprises

(SMEs) as vehicles for achieving sustainable economic development and employment generation.

Though there's no longer mandatory transfers to this reserve under the earlier directives, all Nigerian banks are now required to set aside an amount equal

to 5% of their annual Profits After Tax (PAT) towards the funding of equity investments, which qualify under the AGSMEIS Scheme.

During the period ended September 30, 2017, the Bank appropriated a total of N794million from retained earnings in compliance with the CBN's

directives.

28



(e) Retained deficit

(f) Rights issue

33 Non-controlling Interest Group Group

Movement in the non controlling interest Sep.2017 Dec.2016

N million N million

Balance, beginning of period 5,111 5,337

Profit/(loss) for the period 169 (226)

Balance, end of period 5,280 5,111

34 Acceptances, bonds, guarantees and other obligations for the account of customers


Sep.2017 Dec.2016 Sep.2017 Dec.2016


Performance bonds and guarantees 70,146 62,309 70,146 62,309

Letters of credit 50,594 155,888 50,594 155,888

Fx-Sold Spot 74,829 101,953 74,829 101,953

195,569 320,150 195,569 320,150

The following tables summarise the nominal principal amount of contingent liabilities and commitments with off-financial position risk:

During the period ended September 30, 2017, the Bank awarded a total of 248,524,720 unit of shares at N4.81, the market value of shares at grant date,

for the purpose of the share based payment incentive scheme out of which 118,820,848 had vested. The awarded but not vested shares (129,703,872

units) have been transfered to the trustees and recognised as treasury shares (see note (d) above).

Retained deficit represents the carried forward income net of expenses plus current period profit attributable to Group's shareholders. The Bank has

already commenced a process that will culminate in the elimination of this negative balance.

In December 2016, the Bank obtained shareholders approval to raise up to N50bn equity by way of a rights issue. It is expected that the offer will open in

Quarter 3 and close before the end of the year.

In common with other banks, the Group conducts business involving acceptances, performance bonds and indemnities. The majority of these facilities

are offset by corresponding obligations of third parties. Contingent liabilities and commitments comprise performance bonds, acceptances, guarantees

and letters of credit.

In the normal course of business, the Group is a party to financial instruments with off-balance sheet risks. These instruments are issued to meet the

credit and other financial requirements of customers. The total off-balance sheet assets for the Group was N195.569 billion (December 2016: N320.15

billion).

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