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Business & Operating Highlights 09 1 Overview of the Bank 03 Review of Operating Environment 04 Policy Highlights 05 Recap of 2017 Commitments 06 ALAT – Full Digital Bank 07 Digital Performance – Alternate Platforms 08 Non-Financial Highlights 2 0 1 7 F U L L Y E A R R E S U L T S 2
Overview of the Bank Digital Credit BBB- (SHORT TERM RATING) BBB- (NATIONAL LONG TERM RATING) Banking Ratings A3 (LONG TERM RATING) F3 (LONG TERM RATING) Pioneer bank in Africa to offer a full N65.27bn Earnings digital banking experience 20.07% Alternate Customer 1.87mn Banking Base Channels 4,971 296 Agency Improved Branch ISMS Banking partners Service ISO Network 151 Rating certified 285 Branches Ranked National Corporate 8 th in Banking Governance Customer License survey 2 0 1 7 F U L L Y E A R R E S U L T S 3
Review of Operating Environment 3mth Avg. Brent Crude Data Global Environment • Global economy recorded further improvement despite concerns about protectionism and geo-political fallouts. • The E.U and U.K continued discussions towards the agreement of terms (transitional period) after invoking Article 50. • Interest rate normalization across developed countries. Domestic Environment • Domestic economy improved during the year, as measured by GDP, PMI and inflation data. • Economic reforms still ongoing, as the government aims to give full effect to the Economic Growth and Recovery Plan (ERGP). Inflation Rate & 1mth NIBOR Oil Price, Foreign Reserve and Borrowings 20 • Oil price rebounds as agreed production cuts by OPEC and Russia records high compliance rate. However, rising production levels from the U.S 15 threatens the agreement. % • Foreign FX reserve rises to c. $40 billion, arising from increased oil 10 production and prices. • Increased debt issuances by the FGN during the year. The government 5 targets a debt portfolio in favour of foreign issuances. Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Inflation 1mth NIBOR Naira-Dollar Exchange Rate Inflation, Interest rates and Markets. Inflation rate trends downward year-on-year (base effect) from 18.72% 600 (Jan’17) to 15.37% (Dec’17). 500 N/$ 400 • Average 1mth NIBOR rate was 18.31% (Jan - Dec’17) as against 13.11% 300 (Jan - Dec’16). 200 • Yields on 3-mth NTB (av. Jan- Dec’ 17) closed at 17.27%, an increase of 5.74 percentage points from 11.53% (Jan – Dec’16). • Average bond yields increased by 1.72 percentage points to 15.99% (Jan – Dec’17) from 14.27% (Jan – Dec’16). Parallel Official (CBN) I&E window 2 0 1 7 F U L L Y E A R R E S U L T S 4
Policy Highlights The CBN reviews upward, foreign borrowing limit by banks from First MPC meeting for the year held. Key decision 75% to 125% of shareholders’ fund. Net Open Position (NOP) is Jan rates left unchanged. also increased from 5% to 10%, arising from the devaluation of the Naira Feb CBN commences the weekly sale of foreign exchange (FX) for Key decision rates left unchanged at MPC meeting . PTA, BTA & School fees. Mar Issues update on FX availability to retail end of the market CBN commences sale of dollars ($20,000/quarter) to SMEs. Introduces form “Q”, in its bid to further improve access to FX by SMEs. Apr Guidelines issued on Bancassurance referral model revised Investors & Exporters window is established. MPC leaves decision rates unchanged May CBN issues guidelines as it seeks the further Jun liberalization of the FX market. Policy on unutilized FX issued the SMIS wholesale and retail intervention . Jul MPC members leave key decision rates unchanged Introduction of funding for liquidity facility and Aug intra-day facility for non-interest banks. Guidance to banks & discount houses on IFRS 9 Sept implementation Extension of settlement banking Oct The MPC members vote to leave rates unchanged arrangement to all clearing sessions. Interest rate normalization and inflation Nov consideration within the domestic environment results in MPC members Regulatory reporting issued on FGN treasury leaving rates unchanged. Dec bills and CBN OMO bills. Comments Policy highlights reflecting some of the CBN’s activities during the year . 2 0 1 7 F U L L Y E A R R E S U L T S 5
Recap of 2017 Commitments Status Priorities • Grow deposit volume through Retail and Digital Partnerships. o Additional 400,372 retail accounts opened in 2017; an increase of 103.51%. o Deposit volumes declined by 10.18% to N254.46billion (2016; N283.30 billion) due to the high yield environment and repricing of deposits. o Savings deposit increased by 9.76% from N45.40 billion (2016) to N49.83 billion (2017). • Continued refreshing of existing branch network & additional strategic openings. Excellence o Re-opened branches in commercial hubs – Bauchi, Kaduna, Kano and Mararaba. Re-opening Warri, Aba and Sangotedo next. • Improved service rating across the Bank through the implementing the Purple Rules (service delivery) Charter . o Industry rating improved from 13th to 8th (KPMG). The Bank continues to improve on service deliveries. • Developing new digital capabilities. o Launched Nigeria’s first full digital bank (ALAT); developing new capabilities. Expertise o Recorded USSD volume growth of 564% in 2017; ATM transaction volume grows by 44.79%. o Launched agency banking in 19 States, including the Federal Capital Territory (FCT). • Improving operational efficiency through increasing use of technology in processes. o OPEX increased by 7.99% (Y-o-Y) in 2017; below inflation rate of 15.37% as at Dec. 2017. Efficiency o Net Interest Margin increased from 6.57% (2016) to 6.61% in 2017. o Obtained Shareholders’ approval for capital reduction exercise. 2 0 1 7 F U L L Y E A R R E S U L T S 6
ALAT – Full Digital Bank ALAT has Revolutionized the Banking Space; Close to a Thousand Accounts Opened Daily. 853,007 178,574 13,644 transactions executed Accounts opened savings goals created. totaling N12bn 0 1 1 0 0 1 1 0 N N N 1 0 0 1 1 0 0 1 0 1 1 1 0 1 1 1 1 1 0 0 1 1 0 0 1 0 1 0 1 0 1 0 0 0 1 0 0 0 1 0 11 > N1bn app revisions released to customers since Average Balance in 2017 launch More • Finger Print Login • Refer a friend • partnership & Card details recalled (local and international engagements • Sign up with a signature underway and selfie Others Recurring bill Cardless Virtual Dollar Loans payments withdrawal Card 2 0 1 7 F U L L Y E A R R E S U L T S 7
Alternate Platforms Delivering Value through Simple, Convenient & Reliable Platforms. Internet Platform 1 Mobile Platform 2 1000% 500% 800% 400% 600% 300% 400% 200% 200% 100% 0% 0% 2014 2015 2016 2017 2014 2015 2016 2017 Subscribers Transaction value Transaction Count Value Transaction Count Subscribers USSD (volume) ATMs (volume) 300 Billions 70 N ’Billions 250 60 50 200 40 150 30 100 20 10 50 0 0 2015 2016 2017 2015 2016 2017 ▪ Cumulative growth rate 1 & 2 ▪ The Bank launched its USSD platform (*945#) in 2016. 2 0 1 7 F U L L Y E A R R E S U L T S 8
Non-Financial Highlights Campus Storms Awards The Bank has been involved in over 10 University Campus storms, as we continue onboarding the younger generation The Launching of ALAT the First Digital Banking in Nigeria – ALAT by Wema. Capital Reorganization Negative retained earnings resolved having received regulatory and shareholders Kaduna approval Investor Conference Leading discussions on economic growth and Kaduna Branch Opening Supporting the Creative development in Kaduna state His Excellency, Nasir El-Rufai, Governor of Industry Kaduna State in attendance during the formal opening Expanding our Footprint L-R: • .Bauchi Branch • .Kano Branch • .Maraba Branch 2 0 1 7 F U L L Y E A R R E S U L T S 9
Financial Performance 20 2 2017 Full Year Financial Highlights 11 2017 Full Year Profit Before Tax 12 Earnings Trend 13 Efficiency 14 Efficiency & Margin Analysis Cont’d 15 Deposits 16 Loan Portfolio and Analysis 17 Asset Quality 18 Capital Ratio & Funding 19 Stable Performance 2 0 1 7 F U L L Y E A R R E S U L T S 10
FY2017 Financial Highlights 2017FY 2016FY % 2017FY 2016FY % Deposits Gross Earnings N65.27bn N54.36bn +20.07 N254.46bn N283.33bn (10.19) (customer) PBT N3.01bn N3.25bn (7.38) Loans (net) N215.84bn N227.01bn (4.92) PAT N2.26bn N2.56bn (11.72) Interest Income N53.07bn N44.45bn +19.39 CAR 14.32% 11.07% +29.36 Non-Interest N12.19bn N9.80bn +24.39 Income Earnings, Profit, Capital Revenue Generation Operating Efficiency Margin & Asset Quality 2017FY 2016FY % 2017FY 2016FY % Cost-to-Income 89.90% 88.32% +1.79 Net Interest Margin 6.61% 6.57% +0.61 Yield on Assets 17.76% 15.65% +13.48 ROAE (annualised) 4.60% 5.48% (16.06) Cost of Risk 0.97% 0.20% +385 ROAA (annualised) 0.56% 0.63% (11.11) Operating NPL (%) 3.52% 5.07% +3.06 N26.77bn N24.79bn +7.99 Expenses Loan to Deposits 84.82% 87.10% (2.62) Coverage Ratio (%) 130.16% 100.00% (30.16) 2 0 1 7 F U L L Y E A R R E S U L T S 11
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