#1DEPENDAB RESILIENT FirstBank Since 1894 FirstBank Group Results 6 Months Ended June 2011 Presentation to Analysts and Investors SERSHIP AL www PROFITABILITY EXCELLENCE GROWTH GROWTH LEADERSHI EXCELLENCE DEPEND PROF ABILITY VICEEXC NOISIAH ISION PROF#2Cautionary Note Regarding Forward Looking Statements FirstBank Since 1894 This presentation is based on the financial results of FirstBank's unaudited results for the period ended June 30, 2011, consistent with Nigerian GAAP. FirstBank of Nigeria Plc ('FirstBank' or the 'Group' or the 'Bank') has obtained some information from sources it believes to be credible. Although FirstBank has taken all reasonable care to ensure that all information herein is accurate and correct, FirstBank makes no representation or warranty, express or implied, as to the accuracy, correctness or completeness of the information. In addition, some of the information in this presentation may be condensed or incomplete, and this presentation may not contain all material information in respect of FirstBank. This presentation contains forward-looking statements which reflect management's expectations regarding the group's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expects", “intend”, “estimate”, “project”, “target”, “risks”, “goals” and similar terms and phrases have been used to identify the forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to the Bank's management. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally. FirstBank cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the Bank's continuous disclosure materials filed from time to time with the Nigerian banking regulatory authorities. The Bank disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 2#3GROWTH EXCELLENCE DEPENDABL RESILIENT ERSHIP AL www PROFITABILITY EXCELLENCE YGROWTH ADERSHIP PRORDABILITY Outline ELENCE NICEE PROFABRITYG DEPEN ROW THVISIO Highlights & Operating Environment ☐ Speaker: Group Managing Director Financial Review FirstBank Since 1894 Bisi Onasanya (Slides 4 - 8) Speaker: Chief Financial Officer Bayo Adelabu ☐ Speaker: Chief Risk Officer Remi Odunlami (Slides 9-18) (Slides 19-22) Risk Management & Corporate Governance ☐ Speaker: Chief Risk Officer Strategy & Transformation Remi Odunlami (Slides 23-25) ㅁ Speaker: Group Managing Director Bisi Onasanya (Slides 26 - 36) Summary & Outlook ☐ Speaker: Group Managing Director Bisi Onasanya (Slide 37) 3#4Operating Environment Highlights Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Governance Financial Review Headlines for H1 2011 - Road Map Highlights Sustained Improvement in Deposit Mix Macro Considerations Rising Interest Rate Environment Group Strategic Thrust Restructuring for Growth Bank Strategic Thrust FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Growth and efficiency Accelerating Earnings and Margin Expansion Significantly Improved Asset Quality Comfortable Capital and Liquidity Levels Rising Oil Prices Declining Inflation Rate Stable Exchange Rates Sequencing Growth Systematically Business Line Expansion International Expansion Enablers Service Excellence Performance Management Talent Management FirstBank Since 1894#5Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Operating Environment We continue the aggressive transformation of the Bank as we strive towards our vision of clear industry leadership FirstBank Since 1894 We aspire to be FIRST to our key stakeholders... Shareholders Aspirations in total shareholder #1 returns, growth, profitability, capital efficiency ...and have articulated four key goals for 2013 Defend our leadership position with Defend respect to balance sheet (total assets, deposits etc) Customers #1 in service levels, value to customers, brand equity Extend Employees #1 in desirability to work for Lead Regulators #1 in compliance and sound corporate governance Public #1 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 in national development and impact on society Balance Extend our performance to attain a leading position in terms of profitability, capital efficiency and service/operational efficiency Attain market leadership position in each strategic business unit and extend franchise into the most promising Sub- Saharan African markets Balance short-term performance with long-term health, delivering strong near- term earnings while making requisite investments for the future 5#6Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights What FirstBank Delivered in H1 2011 • Stronger & liquid balance Sheet • Capital Adequacy Ratio: 17.3% (Jun 10: 18%) Tier 1 capital ratio: 14.9% (Jun 10: 16.3%) Gross loan to deposit ratio: 67.0% (Jun 10: 79.9%) • Liquidity ratio: 38.3% (Jun 10: 63.5%) • NPL ratio: 3.8% (Jun 10: 5.7%) • YoY growth in deposit of 34.6% to 1.9tn; 32.3% ytd Business volumes • Lending up 12.7% yoy to #1.2tn; 7.2% ytd • No of business locations: 630; ATMs: 1,293 • Number of cards in issue: Over 1 million . FirstBank Since 1894 695,644 new customer accounts opened in H1 bringing total active accounts to 5,577,322 Gross earnings at N139.7bn, up14.2% yoy Earnings • Contribution from subsidiaries to gross earnings: 10.3% Non-interest income contribution of 23.4% (Jun 10: 23.0%) • Profit before tax: N35.7bn (Jun 10: N31.7bn) • Contribution from subsidiaries to profit before tax: 13% • Profitability Cost to income ratio: 58.6% (Jun 10: 64.1%) • After tax ROAE: 19.8% (Jun 10: 15.5%) • After tax ROAA: 2.4% (Jun 10: 2.4%) FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 • Annualised basic EPS: N1.91 (Jun 10: 1.75) Net interest margin: 8.2% (Jun 10: 5.7%) 9#7Review Operating Environment Highlights Governance Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Financial ப Strong growth maintained in domestic economy as well as emerging markets as a whole Global Economy ☐ ☐ Growth in most emerging and developing economies continues to be strong, while weak growth is prevalent in many advanced economies Apprehension over the global economy amid concerns over Europe and the United states; downside risks in both regions could affect capital flows to emerging and developing markets Annualised global economic expansion of 4.3% in the first quarter of 2011, with forecasts for 2011-12 largely unchanged The Nigerian Economy ☐ Provisional data from the statistics office puts economic growth at 7.43% in 1Q11, (1Q10: 7.36%); driven largely by the non-oil sector GDP growth of 6.9% expected for 2011, growing to 6.6% in 2012 Headline YoY inflation growth rate of 10.2% in June 2011 down from 12.4% in May 2011; Exchange rate * 154 149 144 Oil prices and exchange rate Exchange Rate Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Since 1894 Oil Prices $ 130 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Inflation - Inflation MPR 15% 110 90 70 70 The Central Bank of Nigeria (CBN) on 1st of July 2011 lifted the one-year holding period of government securities currently in place for foreign investors 10% 5% Banking Industry Pick up Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 in M&A activities as the 30th September 2011 recapitalisation deadline for intervened banks approaches Interbank rates Rising interbank rates on the back of increases to the MPR and cash reserve ratio(CRR) by the MPC. MPR increased to 8.0% while the CRR increased by 2% to 4% T-Bills Inter-Bank Call Rate 7 day 30 day 15% FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 CBN guarantee on all interbank transactions, foreign credit lines and pension funds placed with Nigerian Banks to be lifted on the 30th of September 2011. Further extension till December 31, 2011 given to the three rescued banks that have reached advanced stages in their recapitalisation process namely; FinBank Plc, Intercontinental Bank Plc and Union Bank Plc 10% 5% Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Source: CBN 7 FirstBank Oil price#8Strategy & Summary & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights EXCALLON The Nigerian banking landscape is evolving at a rapid pace, in an era that will be remembered for dramatic regulatory and structural reform Key drivers of change Alternative sources of funding ■ Deepening of equity markets with focus on non-bank sectors " ■ Customers Increased sophistication and decreased loyalty of customers ■ Rapid increase of banked population Youth demographic (with ~50% of population under 18) becomes increasingly important Increase in bond issuances (public sector, corporates) FirstBank Since 1894 ☐ ■ Regulatory Repeal of universal banking model Recapitalization of intervened banks NPL purchases by AMCON Shared services initiatives Promotion of lending to key sectors Cash withdrawal/lodgement limits Nigerian Banking Industry " ■ ◉ Competition Increased specialisation and differentiated business models Stiff price competition in plain vanilla lending to large corporations Increased foreign presence within certain segments (e.g., retail, private banking) Strengthened position of intervened banks with imminent acquisitions/recapitalizations Technology Electronic sales and service channels gain popularity (i.e. ATM, POS, internet etc) Mobile money platforms open up means to cheaply and effectively reach the unbanked and to tap into enormous payment/transaction revenue opportunities FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 8#9Highlights Evolution of group profit after tax (N'bn) FirstBank Since 1894 Review Operating Environment 107.0 [94.2] [(36.7)] (18.8) 32.7 [28.1] [0.9] (14.4) TY Strategy & Risk Mgt & Financial Corporate Governance Transformation Summary & Outlook Interest Income []June 2010 [(54.9)] 35.7 31.3 [(6.3)] (70.8) [31.7] (4.5) [25.4] Interest Expense Non-Interest Income Net Provisions Operating Expenses Profit Before Taxation Tax* Profit After Tax *Estimated FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 9#10Operating Environment Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Gross earnings benefiting from improving yield environment as well as growth in non-interest income on the back of increasing activity Gross earnings N'bn Interest Income Non Interest Income 122 28 23% 231 57 25% 177 41 23% FirstBank Since 1894 Group Gross earnings split by business lines 140 33 23% N139.7 bn 174 75% 62 63 136 77% 12 20% 16 26% 107 77% 94 77% 50 80% 47 74% Retail & Corporate Banking 94.2% (Jun 10: 89.7%) Investment & Capital Markets 2.2% (Jun 10: 2.2%) Asset Management 2.0% (Jun 10: 2.8%) ■Mortgage Banking 0.5% (Jun 10: 0.4%) Other* 1.1% (Jun 10: 1.3%) Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 * Includes insurance brokerage, private equity and venture capital, and bureau de change business functions Comments • • . Sustained improvements in revenue generation, driven by both interest and non-interest income growth Gross earnings also benefiting from repricing of risk assets, increase in the volume of earning assets as well as higher interest rate environment Strong growth in non interest income; benefiting from rising credit related fees, COT and financial advisory fees Improvements in service quality, increased account activity as well as focus on shorter tenured loans; thus positively impacting non interest income Drive to scale up retail current accounts in order to enhance fees and commission income further FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 10 10#11Environment Operating Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Our continued focus on reducing our funding costs, coupled with rising yields across various asset classes, drove margin expansion Interest income mix Non-interest revenue mix FirstBank Since 1894 Placements Treasury bills Loans and advances 4.3% 3.6% 7.9% 14.1% 2.6% 2.4% 3.1% 14.0% 2.9% 2.9% 4.1% 3.1% Commission on Insurance and western union transfers 20.2% 21.6% 23.4% Other income* 5.1% 5.7% 4.8% 36.5% 64.4% 71.5% 70.3% 75.4% 73.6% 39.9% 40.5% Letters of Credit commissions and fees 30.4% 22.9% 27.9% 82.6% Other fees and commissions ** 10.0% 1.7% 9.4% 1.0% 8.7% 1.5% 3.3% 7.0% 10.9% 10.6% 3.8% 11.2% Remittance fees /Management fees 24.0% Credit related fees 18.3% 19.1% 14.9% 16.9% 37.0% 29.5% 29.2% 10.4% 27.2% 27.3% 26.7% 7.0% 9.8% 10.2% 11.6% 10.6% 9.4% ■Commission on turnover Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Asset yield and cost of liabilities Comments Net interest income N'bn Net interest margin Average yield on interest earning assets Cost of interest bearing liabilities 9.8% 9.4% 8.6% 8.6% 8.2% 8.3% 7.1% 6.8% 6.6% 5.7% 5.7% 5.4% 5.4% 5.7% 4.5% 3.8% Within the Bank, in line with our strategy for driving growth in non interest income by structuring our loans differently, increasing the velocity of the loan book, and increasing our cross sell ratio amongst other initiatives, we: Increased credit related fees by 122% yoy Increased letter of credit commissions and fees by 175% yoy At the subsidiary level, we have seen rising incomes from the investment banking and asset management business 2.5% 2.2% We remain focused on building each of our subsidiary businesses to leadership positions in their respective niches 28 57 90 121 38 88 We are still focusing on various strategies to minimize our cost of funds Q1'10 H1'10 **Investment income and recoveries 9m'10 FY'10 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Q1'11 H1'11 *Exchange gains/foreign exchange income, Gain on disposal of investment property, Financial advisory fees, Loss/(Profit) on disposal of property and equipment 11#12Highlights Risk Mgt & Corporate Governance Financial Review Operating Environment We have seen operating income grow at a faster rate than normalised expenses Operating income and expenditure Operating Income Operating Expenses QoQ operating income growth % QoQ operating expense growth % Staff cost FirstBank Since 1894 Operating expense breakdown (N'bn) Depreciation Admin and general expenses NDIC Premium 13% 9% 25% 13% 12% 5% 2% 6% 6% -2% 6 7% 7 6% 42% 48 3 4% 26 37% Laka aka -10% -13% 40 26 Q1'10 7% 4 6% 32 38% 7% 8 4 7% 7% 21 38% 6 4 7% 52 2 7% 17 39% 10 41 39% 45% 37 2-7% 2 7% 26 48% 48% 53% 86 55 130 84 178 117 54 34 121 71 12 14 46% 46% H1'11 H1'10 9m'10 FY'10 Q1'11 H1'11 Q1'10 Operating income breakdown by SBU N'bn (bank only) 161 49 61 7 13% 31 19% 14 23% 20 20 76 48% 42% 25 ■Institutional banking Retail banking 25 42% Public sector Corporate banking 5 11% 7 19 12% 6 13% 11% Private banking 0.3 1% 8 20 12% 12% Treasury 0.4 1% 1% 10 20% 7 13 8% 11% Dec-10 Mar-11 Jun-11 . H1'10 9m'10 FY'10 Q1'11 Comments Customer focused approach driving better granularity and innovative approach to growing our income streams Focus on increasing cross sell ratio across our client base, as well as driving growth in transactional banking Rise in operating costs attributable mainly to one off increases in staff costs to bring remuneration in line with industry as part of a holistic talent management strategy Adjusting for the one-off increase in staff costs, as well as the N3 bn AMCON resolution fund charge our controllable costs grew 5% Branch rebranding was completed in 20 branches over Q1 with additional 55 branches in 12 locations up for rebranding by end of Q3 We have started seeing positive impacts of various cost reduction strategies Strategy & Summary & Transformation Outlook FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 12#13Financial Review Operating Environment Risk Mgt & Corporate Governance Summary & Strategy & Transformation Outlook Highlights 69 1-Jan-11 Driving sustained and long lasting efficiency gains remain a priority for us as we continue to expand our various businesses Provision for credit and other losses (N'bn) 21.6 5.7 3.8 (1.5) (1.0) Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Group movement in loan loss provision* (N'bn) 13.7 80.0 11.4 Additional provision *Includes interest in suspense and provision against leases FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 (42) 14.4 FirstBank Cost efficiency (%) Pre-provisioning cost to income Post-provisioning cost to income 65% 62% 64% 63% 64% 69% 65% 78% 64% 71% 59% 70% Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Comments We are optimising our costs by focusing on various initiatives such General provision as: 51.8 11.4 10 40 - - - Migrating mass retail customers to alternative delivery channels thereby reducing branch operational costs Enhancing controllable cost discipline Changing the mix of our branch architecture in favour of smaller quick service points, as part of our hub and spoke branch strategy, thus reducing acquisition and maintenance costs considerably Expanding our automated solutions across a larger proportion of the branch network We are optimising staff productivity by ensuring appropriate mapping, and mix of front to back office/core to non-core staff Amounts written off 30-Jun-11 13 Since 1894#14Risk Mgt & Corporate Governance Highlights Summary & Outlook Strategy & Transformation • FirstBank Improving profitability as benefits of various strategic initiatives begin to converge Profit before tax (N'bn) Group H1 PBT split by business lines 105% 127% 15 32 41 43 16 36 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Comments We have continued to enhance the efficiency of our balance sheet, resulting in expanding net interest margins Changing mix of loans driving improvements in non interest income Significant improvement in earnings per share FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 N31.2 bn Since 1894 Retail & Corporate Banking 92.6% (Jun 10: 72.5%) Investment & Capital Markets 4.3% (Jun 10: 10.5%) Asset Management 0.5% (Jun 10: 14.7%) Mortgage Banking 0.5% (Jun 10: 0.0%) Other* 2.1% (Jun 10: 2.2%) * Includes insurance brokerage, private equity and venture capital, and bureau de change business functions Earnings per share* N 1.7 1.7 1.3 1.0 1.5 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 1.9 * Annualised 14#15Strategy & Summary & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights Improving profitability matrices, attractive fundamentals and an increasingly supportive environment, position FirstBank as an investment of choice Return on average equity Shareholders funds N'bn After-tax ROAE 15.3% Return on average assets FirstBank Since 1894 Total assets N'bn -After-tax ROAA 2.4% 2.4% 2.3% 2.1% 19.8% 2.0% 15.5% 14.0% 15.5% 10.3% 1.5% 28.8% 4.2% 310 308 310 341 341 321 2,292 2,261 2,424 2,305 2,496 2,913 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 Per share matrices ―― Price-earnings ratio --Price-to-book ratio 31.1 27.2 1.3 ㅁ 1.2 1.3 1.4 1.3. 1.2 13.5 13.5 13.4 10.4 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Comments QoQ decline in shareholders' funds (SHF) driven by payment of 2010 dividends; in addition, current SHF does not yet reflect unaudited profits for H1 2011 15#16Financial Review Operating Environment Risk Mgt & Corporate Governance Summary & Strategy & Transformation Outlook Highlights The quality of our funding base has continued to improve; benefiting from our strong franchise, innovative products and well executed market penetration initiatives Balance sheet structure as at June 11 (N'bn) FirstBank Since 1894 Deposits (N'bn) 2,913 Other Assets 4% [5%] Managed Funds 1% [2%] Investments 17% [21%] 105 505 2,913 Bank Subsidiaries Bank growth rate 213 Other Liabilities 7% [7%] Group growth rate 1,920 116 Other Borrowings 4% [3%] 311 Due to Other Banks 11% [11%] 254 1,528 1,550 1,407 1,427 1,451 21% 184 195 67 113 120 20% 1,234 Loans & Advances 42% [48%] 9% 9% 8% 1,920 Deposits 66% [63%] 1% Treasury Bills 2% [1%] 62 5% 4% -3% 4% -2% 974 Inter Bank & Cash 33% 33 [22%] 322 Short Term Liabilities 1% [2%] Capital & Reserves 11% [14%] -6% 1,340 1,314 1,367 1,331 1,388 1,666 [] Jun 2010 Assets Liabilities Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Deposits by SBU (bank only) (N'bn) Deposits by maturity (bank only) ■0-30 days ■1-3 mths 3-6 mths 6-12 mths Over 12 mths A1.3 th A1.4 th A1.7tn 8.5% 9.2% 10.2% 9.6% 10.1% 9.9% 174 13% 186 13% 298 18% 34 3% 13 1% 15.0% 16.0% 16.3% 16.6% 17.4% 17.2% 28 2% 308 313 23% Institutional banking 23% 13.9% 426 14.1% 14.0% 14.8% 25% 15.6% 14.7% Treasury 101 7% 95 7% 19 2% 1% 113 7% 19 Public sector 25.4% 1% 24.1% 23.4% 22.9% 22.8% 22.8% Corporate banking Private banking 697 52% 54% 755 800 48% Retail banking 37.2% 36.6% 36.1% 36.1% 34.0% 35.4% Dec-10 Mar-11 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Jun-11 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 16 Jun-11#17Operating Environment Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review CALOR By focusing on branch efficiency, customer service and product awareness, we grew our deposits quite strongly- especially in the low cost segments Deposit mix by type (\'bn) FirstBank Since 1894 Earning assets (N'bn) Current accounts Savings accounts Term deposits Domiciliary accounts A1.99 tn A2.21 tn N2.63 tn 263 13% 398 18% 497 19% 124 9% 196 14% 236 15% 177 12% 191 12% 315 16% 550 28% 513 350 25% 270 19% 247 16% 276 19% 284 18% 23% 324 17% 842 32% Investment* 24 1% 36 2% 387 28% 435 28% 388 27% 432 27% 416 29% 476 25% 62 2% Due from other banks Treasury bills 1,151 58% 1,264 57% Loans and advances 1,236 47% 546 39% 545 38% 632 41% 609 42% 675 43% 804 42% Dec-10 Mar-11. Jun-11 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Balance sheet efficiency Leverage ratio (times) ― Gross loan to deposit ratio 84.9% 85.4% 81.3% 79.9% 77.3% *Investment in bonds, securities, subsidiaries/associates Comments Improving deposit mix, with cost of funds/interest expense declining despite rising interest rates and increasing volume of deposits Low cost deposits now account for 83% of deposits, compared to 80% at the beginning of the year 67.0% Our strong franchise, combined with our customer centric approach is driving faster than average growth in deposits Innovative product development, as well as mobile payment initiatives will play a pivotal role in redefining financial market boundaries and customer experience 9.1 7.4 7.3 7.8 6.8 7.3 Plans to expand branch footprint via quick service points, will drive further growth in retail deposits Mar-10 Jun-10 Sep-10 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Dec-10 Mar-11 Jun-11 Leveraging our balance sheet via cheap retail deposits provides significant scope to grow loans to customers 17#18Operating Environment Highlights Strategy & Risk Mgt & Summary & Transformation Outlook Corporate Governance Financial Review 69 We have continued to maintain very comfortable levels of capital and liquidity Comments • Capital base remains strong, and more than adequate to support growth of our business Focus on organic generation of capital, while exploring avenues to further enhance capital Components of capital Tier 1 Capital Tier 2 Capital 51 50 49 49 31 32 335 335 303 303 304 315 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Evolution of capital and liquidity ratios I Total RWA* (N'bn) Total capital adequacy ratio Liquidity ratio (Bank) 67.0% 64.8% 63.5% 50.9% FirstBank Since 1894 Tier 1 capital ratio Liquidity ratio (Group) 50.4% 44.1% 42.9% 42.1% 41.3% 40.4% 38.3% 32.1% 19.9% 20.4% 19.3% 18.0% 17.0% 17.3% 17.7% 16.2% 16.3% 16.8% 15.4% 14.9% 12.9% 1,694 1,733 1,857 1,893 1,856 1,956 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Q1'10 H1'10 9m'10 FY'10 Q1'11 H1'11 *Risk weighted assets 18#19Operating Environment Highlights Financial Review Risk Mgt & Corporate Governance Summary & Strategy & Transformation Outlook We have increased the proportion of higher yielding assets in our loan- book Net loans and advances - group (N'bn) FirstBank Loans and advances by type Since 1894 Bank Subsidiaries Bank growth rate A1.26 th 41.26 th Group growth rate 41.23 th Overdraft Term loans Commercial papers Money market lines 1.5% 6.8% 1.5% 6.5% 1.4% 8.5% 12.7% 10.3% 7.4% A16% 287 A1.15 th 41.15 th 41.09 tn 105 126 158 10% 148 13.9% 10.2% 12.7% 113 8% -6% 1% 5% 6% 0% -2% -2% -2% 75.2% 77.5% 76.3% 63.4% 62.8% 66.3% 975 -13% 981 1043 1025 1106 1086 16.6% 14.4% 13.9% 13.8% 14.2% 12.5% Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Mar-10 Jun-10 Sep-10 Dec-10 Ageing analysis of performing loan book (bank only) ■0-30 Days 31 - 60 Days > 61 Days Loans and advances by maturity 0-30 days 1-3 months 3-6 months 6-12 months Over 12 months 8.5% 8.6% 2.5% 1.6% 7.3% 2.2% 7.1% 7.5% 8.1% 3.4% 1.8% 1.8% 34.7% 31.9% 29.9% 35.9% 38.9% 41.6% Mar-11 Jun-11 7.7% 7.0% 6.7% 4.6% 9.8% 2:8% 21.3% 3.9% 10.2% 7.9% 8.6% 7.6% 85.1% 88.0% 89.3% 87.6% 87.6% 86.5% 8.5% 3.5% 7.6% 4.1% 12.8% Mar-10 Jun-10 Sep-10 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 45.9% 45.8% 42.1% 42.9% 39.5% 32.4% Dec-10 Mar-11 Jun-11 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 19 Jun-11#20Environment Operating Highlights Our loan book remains well diversified across business segments and sectors FirstBank Since 1894 Breakdown by SBU N'bn (Gross) (Bank only) №1.1 tn A1.2tn 41.2tn 170 15% 181 146 12% 15% 170 15% 229 226 20% 19% 71 6% Treasury 92 8% 115 10% 210 17% Corporate banking • 231 18% 217 19% Public sector* ■Retail banking 515 46% 489 40% 461 39% ■Institutional banking Dec-10 Mar-11 Jun-11 *Public sector exposures: federal and state governments Gross loans and advances (sector exposure) Mar 2011 (Bank only) Oil & gas services 14% (Mar 11: 13%) Oil & gas upstream 1% (Mar 11: 1%) Capital market 2% (Mar 11: 2%) Oil & gas downstream 15% (Mar 11: 13%) Real estate Construction 3% Government** 9% (Mar 11: 6%) Personal & professional 6% (Mar 11: 5%) Comments 13% y/y growth in net loan portfolio, 2% decline QoQ and 7% growth ytd QoQ reduction in loans due to pay down on facilities, N32 bn AMCON sale and write off of N22 bn non performing loans with full provisions as at Dec 31, 2010 Modifying loan mix to higher yielding types Foreign loans represent 23% of total loan portfolio while top 20 non bank customers account for 37% of the Bank's loan book We are increasing our involvement with small and medium scale enterprises Seawolf remains our largest exposure, we are working on reducing concentration to within regulatory limits as guided by CBN Core consumer/retail product portfolio¹ Co-operatives 8% (Mar 11: 7%) Asset backed - retail 2% (Mar 11: 2%) Personal loan 5% (Mar 11: 4%) Home loan 20% (Mar. 11:21%) N178 bn Asset backed - consumer 64% (Mar 11:65%) Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review (Mar 11: 4%) Real estate - Commercial 2% 41.16 tn (Mar 11: 2%) Finance and insurance Real estate - residential 3% (Mar 11: 3%) 11% (Mar 11: 14%) General✶✶✶✶ 10% (Mar 11: 9%) Information and communication 6% (Mar 11: 6%) General commerce 7% (Mar 11: 9%) Others*** 3% (Mar 11:3%) Manufacturing 9% (Mar 11: 9%) Consumer auto loan 1% (Mar 11: 2%) **Government exposures: federal, state and local governments ¹Core consumer/retail portfolio represents retail loan exposures <50m ***Others include agriculture, construction, power & energy and transportation ****General includes: hotels& leisure, logistics, retail others and religious bodies FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 20#21Operating Environment Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review CALEN We have seen significant improvement in our asset quality matrices 77.2% Asset quality ratios NPL N'bn NPL coverage --NPL % Cost of risk (annualised) 104.9% 84.2% 87.8% 70.1% 71.5% FirstBank NPL Sector exposure Jun 11 (bank only) Since 1894 Others* 1% (Mar 11: 7%) Agriculture 5% Finance and (Mar 11: 4%) insurance 2% commerce 4% (Mar 11: 1%) (Mar 11: 6%) General Retail others 24% (Mar 11: 24%) Oil downstream 8% (Mar 11: 4%) 7.9% 5.7% 5.8% 7.7% 7.3% 3.8% 1.0% 0.3% 0.8% 1.8% 1.3% 2.3% Oil & gas services 12% (Mar 11: 91 65 70 94 99 49 11%) Capital market Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 NPLs by SBU N'bn (bank only) N91 N96 44 48% P 0.1 0% 52 52 №49 N48.9 bn Real estate- residential 29% (Mar 11: 13%) Information and communication 2% (Mar 11: 1%) Real estate construction 6% (Mar 11: 25%) 7% (Mar 11: 4%) *Others include water supply, finance and insurance, power & energy, government and transportation NPL ratio within each SBU (bank only) 8.3% 8.1% 4.3% 54% 34 70% Retail banking Public sector 22.7% 23.6% 16.5% Retail banking Public sector 1% Institutional banking 0.1% 1.5% 6.4% 05 0% Corporate banking Institutional banking Corporate banking 11% 5.7% 9.0% 1:1% 8.6% 6.4% 4.2% 33 36% 28 29% 15 16% 15 15% 10 20% Dec-10 Mar-11 Jun-11 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Dec-10 Mar-11 Jun-11 ང་ 21#22Operating Environment Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review 51.8% 24.0% Reduced concentration risks in our NPL portfolio Ageing analysis of NPL portfolio (bank only) 90-179 days 180-359 days above 360 days 26.6% 32.4% 42.7% 40.8% 47.6% 41.9% 33.1% 5.0% 30.4% 36.5% 47.4% 31.5% 34.5% 28.8% 24.2% 20.8% Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 8.1% 1.3% 0.6% FirstBank Since 1894 Comments Reduction in non performing loans driven by sale of N32bn in eligible assets to AMCON as well as N22bn write offs in line with CBN directive Continued focus on recoveries, with remedial business unit within the Bank and independent recovery agents Focus on enhancing quality of relationship management in order to drive better account management N18bn received from AMCON on the second phase of NPL sales with write back of N10.4bn Sector NPL Ratio's (bank only) 5.4% 1.6% Mar-11 Jun-11 % of gross loans as at Jun-11 7.5% 30.1% 0.5% 5.8% 9.1% 11.2% 8.8% 33.5% 18.2% 25.2% 15.2% 22.9% 3.2% 17.7% 18.2% 12.9% 18.8% 5.1% 2.1% 4.5% 2.9% 3.2% 1.3% 1.9% 1.2% 1.5% 0.1% 0.7% 0.6% 0.3% 0.0% Real estate Agriculture Construction Capital market Retail others activities General commerce Oil & gas FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Transportation and storage Information and communication Manufacturing Finance and insurance Government 22#23Operating Environment Highlights Summary & Outlook Strategy & Transformation Risk Mgt & Financial Corporate Governance Review Risk management framework (1 of 2) Detailed framework and disclosure Risk Appetite Asset quality • • • FirstBank Best in class risk management practice Publication of risk management disclosures, an integral part of FirstBank annual report Risk Management Framework A conservative balance is maintained between risk and revenue considerations Appetite for risk is governed by high quality assets measured by the following three key performance indicators: ratio of non-performing loans to total loans ratio of loan loss expenses to interest revenue: and ratio of loan loss provision to gross non-performing loans Board Credit Committee Board of Directors Board Audit and Risk Assessment GMD/MCC GMD/MANCO² 2 Performing accounts are marked to market Adequate provisions are made Technology Statistical analysis system is being implemented FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 3 ED/CRO Internal Audit Since 1894 1 Group Managing Director/Management Credit Committee 2 Group Managing Director/Management Committee 3 Executive Director/ Chief Risk Officer 23#24Operating Environment Risk Mgt & Corporate Governance Financial Review Strategy & Transformation Summary & Outlook Highlights Risk Management framework (2 of 2) Credit risk Creation of loans and management of the risks inherent in the loan portfolio remained a focal point A special recovery unit has been set up to revamp recovery strategy, to implement recovery initiatives that would ensure provisions taken in prior periods are reversed Market and liquidity risk Increased market confidence and perception of the Bank as strong and reliable Healthy liquidity position has been maintained Environmental and social risk • Environmental and social risk management system policy being implemented This is aimed at promoting environmental soundness and sustainable development in a socially responsible manner especially in large ticket project financing Operational risk Information security risk • • Through management focus and adequate deployment of resources the operational risk has been managed within acceptable levels We continue to work at minimising operational losses by strengthening control mechanisms To achieve timely prevention and detection of fraud, an internal control antifraud automated system software was recently deployed Obtained ISO27001 certification from British Standard Institute. The certification is the world's highest accreditation for information protection and security from the international Organisation for Standardisation (ISO) FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Legal and compliance Risk Improvement of access to sound legal advice and the awareness of the need to identify, mitigate and manage legal risks Compliance risks are being identified and mitigated through continuous improvement in technology infrastructure, process rejuvenation/revalidation and training of stakeholders to understand regulatory obligations and consequences of non-compliance. 24 FirstBank Since 1894#25Operating Environment Highlights Summary & Strategy & Transformation Risk Mgt & Corporate Financial Review Outlook Governance Our corporate governance framework Corporate Governance Framework Board Members December Current 2009 Executive 8 5 FirstBank Board Directors Non Executive 9 11 Directors Total 17 16 • Continued Board restructuring around the principle that the predominance of non- executive would improve objectivity and independent judgement. Ratio of executive directors to non executive directors is 1:2. This is in line with the provision of the corporate governance code • In addition to the independent non executive director on our board, we intend fast-tracking the appointment of a second independent director in compliance with the corporate governance code. • The Board performs its responsibilities through standing committees whose charters are reviewed regularly Asset & Liability Committee ManCo General ManCo Credit FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 FirstBank Since 1894 Shareholders ExCo Governance Committee Finance & General Purpose Audit & Risk Mgmt Committee Credit Committee Audit Committee Committee Statutory Committee Board Committee Management Committee 25#26Financial Review Operating Environment Highlights Risk Mgt & Corporate Governance Summary & Strategy & Transformation Outlook We have made solid progress towards our goals across key balance sheet and income statement metrics FirstBank market position relative to other banks in Nigeria (bank only) Profit before Gross earnings Total loans Total assets Total deposits Tax 1H2011 2 1 1 1 1 I 2010 3 1 1 1 1 2009 5 сл 1 1 1 1 2008 5 5 2 5 6 2007 4 4 5 4 3 2006 1 1 2005 1 1 22 3 3 2 1 I 2004 1 1 2 2 2 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 26 #1 position post- crisis across most metrics, with strong profit momentum FirstBank Since 1894#27Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights Our corporate strategy for the Bank gives equal emphasis to financial as well as non-financial priorities Bank Strategic framework FirstBank Since 1894 CORPORATE STRATEGY FINANCIAL PRIORITIES ■ Fees & commissions increase ■ Selective ☐ loans/advances creation Pricing optimization SBU FOCUS Institutional Improved value proposition and tailored Banking solutions to serve largest corporations Corporate Lending at managed risk; improved Banking penetration of mid-sized corporates Public Sector Banking ■ Low cost deposit liability generation Retail Banking Operating expense containment Private Banking Bank of choice for government bodies at the Federal and State levels Strong affluent/SME customer acquisition with continued deposit drive and credit expansion Premium/differentiated sales and service model for high net worth individuals NON- FINANCIAL PRIORITIES ■ Service excellence ■ Credit quality/ process excellence Brand transformation ■ Talent management ■ Performance management FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 27#28Operating Environment Highlights Risk Mgt & Corporate Governance Financial Review Strategy & Transformation We continue to increase the level of granularity of our business model; each of the five Bank strategic business units has several key priorities that are integral to attaining our 2013 objectives Institutional Banking Group Grow lending in right portfolio mix/concentration Ensure linkage of lending to transaction banking / fee sources (e.g., cash mgt, trade finance, risk products) Leverage value chains of institutional clients Deepen capabilities for growth sectors (e.g., infrastructure) Corporate Banking Group Manage risk with large clients and drive fee income through payments, account turnover, trade finance etc Private Banking Group Establish a leading relationship team and robust back-end operating system (people, processes, tools) to ensure exceptional service levels Drive customer acquisition and contribution to FirstBank group with defined referral management system and Group cross-sell incentives Drive transaction and fee income via investment products/AUM and interest income via credit cards and mortgages (onshore/offshore) Institutional Clients HNI* Federal Government Grow small ticket lending at right price to large number of Corporate Clients Affluent corporate customers Establish strong acquisition pipeline for new/referred corporate customers Small and Medium Enterprises Mass Market Summary & Outlook Optimise relationship manager coverage/deployment model but manage cost for sales and service across the diverse segment High net worth individuals Business FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Individuals Retail Banking Group State Government Local Government FirstBank Since 1894 Public Sector Banking Group Target revenue/expenditure accounts (e.g., FAAC) in wealthiest states and business in key MDAs Drive value-added services (e.g., collections, payment services) Optimise lending within regulatory limits and extend via PPP participation and other Group offerings (e.g., IBAM state bond issues) Government Retail Banking Group Continue to generate low cost stable funding via current/svgs deposit mobilisation Make significant strides in acquiring affluent and small business customers as well as the youth Expand consumer and small business credit (secured lending, cards) Align sales and service costs to value of customers Establish strong mobile money offering 28#29Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights We have realised a number of achievements recently across our strategic priorities Financial Priorities Non-Financial Priorities 1 2 Priorities Fees & commissions increase: Significantly increase revenue from non-interest income sources Selective LAD creation: Selectively and prudently grow loan portfolio in key sectors and shift mix towards assets with higher (risk adjusted) total yield 3 Pricing optimisation: Implement strong risk-based pricing regime and manage revenue 'leakages' 4 LO Low cost deposit liability generation: Drive strong low- cost current and savings account (CASA) deposit liability generation 5 OPEX containment: Contain OPEX growth rate at level sufficiently below revenue growth rate 6 7 8 9 10 Service excellence: Make FirstBank renowned for fast and friendly service, without sacrificing processing quality or increasing transaction costs Credit quality/process excellence: Improve speed /quality of credit decisions and effectiveness of end-to-end credit process from origination to recovery Brand transformation: Significantly enhance FirstBank brand perceptions and drive business results via targeted campaigns Talent management: Build a superior workforce at FirstBank by attracting, developing, and retaining the best industry talent Performance management: Align individual incentives with enterprise/shareholder priorities and ensure accountability for commitments . • • • Recent Progress FirstBank Since 1894 Robust growth from new fees (e.g., Retail account maintenance) and increased fee-yielding businesses (e.g., IBG crude oil) Impressive half-year LAD growth of 13%; even higher when substitution of recalled loans to subsidiaries are taken into account Surgical acct-level loan re-pricing performed for IBG/CBG with general loan by product for Retail (June); continued emphasis on COT leakage with new targets by SBU Healthy Retail deposit growth (15% for 1H11) with favorable mix shift away from term and towards current/savings; best cost of fund profile of peer banks Turn-around/restructuring of loss-making branches ongoing with staff mix optimisation (contract/core, grade level) to function; channel migration yielding 60% ATM action mix 65% reduction in account-opening, customer service productivity up by 30%, 80% fewer regulatory exceptions (CPC-enabled branches) Continued bank-wide credit capability building with aggressive training for relationship managers, 70% improvement in retail loan application times enabled by CPC Prominent new campaigns launched - eg., 'Did you know', employee brand engagement 'Know your Brand'; strong social media drive/responses Launch of new competency framework - expected to have strong bank-wide impact, major milestones in culture change initiative (e.g., town hall meetings etc) Continued development of key tools (e.g., customer profitability), launch of Oracle-based MIS portal, scorecards refined to emphasize revenue, profitability FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 29#30Summary & Strategy & Transformation Risk Mgt & Corporate Financial Review Operating Environment Highlights Outlook Governance We continued the execution of our five key initiatives to transform service delivery FirstBank Since 1894 Transforming Service Delivery Centralised Processing Branch Transformation Manning/Front-Line Transformation Issue Resolution/ Customer Experience & Branch Process reengineering Channel Optimisation & Migration Continuously identify and resolve customer issues; monitor our customer experience, and prioritize improvements based on customer feedback • Centralise transactional processes and optimise branch processes, to drive standardisation, reduce transaction processing times, and decongest the branches. . Improve our branch ambience, increase awareness of our products & services, and encourage customer migration to alternative channels Optimise our manning structure, empower staff, and align our front- line staff with our service delivery mandate Optimise costs and increase customer satisfaction by ensuring alternative channels work, and migrating customers to appropriate channel (based on segment needs and requirements) CUSTOMERS RST FirstContact welcome to FirstBank 0700 FIRSTCONTACT (0700-34778-2668228) [email protected] FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Truly the first M Firstan CHEQUE CONFIRMATION WHAT YOU NEED OPTIONS customer care BRANCH OPERATIONS MANAGER HEAD FUNDS TRANSFER HEAD SERVICE HEAD CASH OPERATIONS Secreta HEAD CLEARING HEAD CREDIT &SUPPORT TREASURY OPERATIONS FUNDS ACCOUNT ATM CUSTODIAN HEAD TELLER ACCOUNTS& CREDIT& TRANSFER OPENING! CLEARINO MONITORINO OFFICER NAINTENANCE OFFICER OFFICER How way How may I help you? FOREIGN CUSTOMER OPERATIONS TREASURY TELLERS BULKTELLER OFFICER CARE OFFICER SUPPORT & OPERATIONS ADMINOFFICER OFFICER MONE! EBSMESS TRANSFER OFFICER SUPPORT OFFICERS NOTE COUNTERS & SORTERS ATM GALLERY INTERNET BANKING 30#31Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights EXCELLENT Strategic Delivery - Service Excellence CPC & Branch Process Re-engineering: Full rollout of our centralised processing centre in progress, with benefits being realised across multiple dimensions. FirstBank Since 1894 Centralised Processing Centre: Setup Branch Branch Branch FirstContact CPC Branch Growth Customer Satisfaction Efficiency Branch Account Opening: 150 branches Salary processing: 415 branches Retail Loan Processing: 89 branches Key Performance Measures Faster implementation of new processes/process changes • Improved cycle time • Reduced error rates ⚫ standardisation • Lower fixed cost per transaction Standardisation • Improved compliance and controls • • . Example results © COT amendment setup implementation Cash handling charges bankwide • Significant growth in e- product issuances and retail loan when compared with non-cpc branches • Increase in salary schedules and beneficiaries • ~65% reduction in account opening cycle time ~ 70% reduction in salary processing time ~70% reduction in retail loan processing time. • Standardised requirements across all CPC branches; and standardised for of delivery 70/30 noncore to core staffing model • Successful staff redeployment (in tandem with branch restructuring exercise) 81% reduction in regulatory exceptions in CPC branches FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 31#32Summary & Strategy & Transformation Risk Mgt & Corporate Financial Review Operating Environment Highlights Outlook Governance EXCELLENT Strategic Delivery - Service Excellence Branch Transformation: We have so far rolled out 21 branches in Lagos. Now moving to 12 other locations bankwide with a mandate to deliver 55 branches by end of Q3 20branches branded FirstBank Since 1894 INTERNET BANKING Banking Hall How in Q1 INTERNET MINING •Apapa ⚫Isolo •Festac ⚫Iganmu •Niger House •Keffi ⚫NIJ House ⚫lkota Mkt. •Adetokunbo Ademola •Chevron GET A TOKEN Self Service Area ⚫Eko Hotel customer care ⚫Ikeja Ind Est •Allen •Alausa ⚫Opebi •Yaba ⚫llupeju •Shomolu •Surulere S/c CHEQUE CONFIRMATION Customer Care Additional 55 branches in 12 locations up for rebranding to conclude end of Q3 - Abuja, Kano, PH, Kaduna, Benin, Abeokuta, Ibadan, Onitsha, Enugu, Awka, Asaba, Calabar and Lagos. FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Teller Area 32#33Operating Environment Highlights Summary & Strategy & Transformation Outlook Risk Mgt & Corporate Governance Financial Review Strategic Delivery - Service Excellence Branch Transformation: Driving awareness on key product offerings ("DID YOU KNOW"?) is also a major area of focus FirstBank Since 1894 DID YOU KNOW... your phone can double as your bank? FirstMobile Go to Menu Names Zob Lai SEAMY Tesn For all enquiries cat FirstContact 800EST CONTACT 070-34778-0-450-0500 FirstBank First Mobile balance enquiry pay bills top-up airtime transfer funds Now that's convenienti FirstBank truly the first DID YOU KNOW... you can secure your child's future with ease? Hi Fi For all eraisies cat FirstContact ООСОНТАСТ (0700-34778 2608281 01 4415500, 0708-082-5000 00 FirstBank Young Savers Account DID YOU KNOW... you can receive and transfer funds just as easily as passing a baton? FirstBank Money Transfer cheque deposits free birthday gifts free welcome pack win prizes Now that's dynamic! FirstBank ...truly the first For all enmuiries cat FirstContact ОЗОНТ СОМТАСТ КОГО ЗАГУВ-1068218101-4425540, 0708-02-1008 international transfers local transfers swift transfers fast and secure Now that's convenient! FirstBank ...truly the first DID YOU KNOW... that with U-First you can wake up to your dreams? FirstBank See your dreams w goal for a bette lile become amalty as our U-First suis of products empowers you to achieve them auto loan equipment loan DID YOU KNOW... you can take your bank wherever you go? FirstBank FirstBank Online balance enquiry confirm cheques DID YOU KNOW... your account can go everywhere with you? FirstBank FirstBank FirstCards Since 1894 balance enquiry For all enquines call FirstContact [email protected] E home loan personal loan Now that's convenient! FirstBank truly the first FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 For all enquiries call FirstContact transfer funds view statements Now that's convenient! FirstBank ...truly the first VISA bills payment cash withdrawal AYO BALA CHINEDU VS. DOZIXT OBON 08/09 4270 2306 8976 2215 7654 Por att ersquies cat FirstContact www.nigeria.com : 20 online shopping top-up airtime Now that's convenient! FirstBank truly the first 33#34Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Governance Financial Review Operating Environment Highlights Strategic Delivery - Service Excellence Channel Optimization & Migration: Continuous Improvement in ATM migration rate is top priority; driving online banking and contact centre awareness/usage also key FirstBank Since 1894 ATM Optimization Internet Banking Current Initiatives Key Initiatives • ATM optimisation drive concluded and enablers put in place (SLAs signed; SMS alert for custodians, etc), Migration improving appreciably - 60% as at end Q2 with 70% as target. • Contact Centre . 24% increase in transaction volumes by Q2 from Q1 • 38% increase in On-Us transaction also by Q2 from Q1 Impact • Sustained ATM uptime of ~90% • Increased migration rate from ~58% at end of q1, to -60% at end of q2 2011, Key Initiatives • Major revamp of internet banking system underway, with objective of increasing functionality, usability, and ease of sign-up • Continued push to increase awareness of internet banking features and improve sign- up turnaround time • Continued push to increase awareness of automated cheque confirmation enabled on internet banking Impact • 7% growth in users between q1 to q2 Key Initiatives . Deploying full contact centre solution (Avaya Aura) • With interactive voice response service options and Language options • Ongoing awareness of contact centre features, including VOIP phones deployed in select branches Impact • 9% growth in average monthly call volume between Q1 and Q2 2011 • 17% growth in average email volume between Q1 and Q2 2011 FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 34#35Strategy & Summary & Transformation Risk Mgt & Corporate Financial Review Operating Environment Highlights Outlook Governance At the group level, we continue the ongoing restructuring and optimisation of our governance model, alongside an increased focus on investment banking/asset mgt and insurance Proposed Group structure FBN Holdings Plc FirstBank Since 1894 First Bank of Nigeria FBN Capital FBN Life Assurance FBN Microfinance FBN Bank (UK) FBN Securities FBN Insurance Brokers FBN Mortgages FBN BDC First Funds First Trustees * First Pension Custodian to report directly to FBN Holdings subject to PENCOM approval First Registrars First Pension Custodian* To be ultimately divested This structure allows us to ring-fence the banking business from other non-banking subsidiaries and their associated risks, in full compliance with the CBN's directive and gives the opportunity to leverage strategic synergies across subsidiaries through arms length transactions. FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 35#36Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Financial Operating Review Environment Highlights Governance Within our Investment Banking/Asset Management Business, our strategy is to improve on our ability to provide financing and investment solutions to our clients, leveraging on the Group's customer base FirstBank Since 1894 Investment Banking: Our investment banking strategy is centered around deepening our customer relationships and leveraging on existing relationships with the bank. This will be augmented by building capability in the infrastructure and energy sectors. We continue to improve our alliance relationships and leverage our new research capabilities to proactively identify investment banking opportunities both in the private and public sector. We also continue to finalise our relationships with First Bank IBG, CBG, & PSG sectors in realizing the group synergies. Asset Management and Trustees: Our asset management strategy is centered around creating innovative products tailored to the needs of our customers. We continue to focus on taking advantage of current high interest rates as well as provide appropriate products to our clients, for example we will be launching two fixed income products in the second half of the year. In addition, we will finalize our working relationship with First Bank Private Banking group and capture synergies with First Bank Retail Banking for product distribution. We will also leverage on First Bank's relationships to acquire corporate and public trust mandates, and continue customer education for private trusts. Markets: Our new research team will work with institutional sales to ensure the right institutional customers are targeted. In addition, we plan to focus on operational excellence for the brokerage system. We will continue to manage our retail clients in a more cost- effective, and technology-driven manner. Private Equity / Principal Investments: We maintain our private equity strategy of partnering with medium-sized companies with scalable business models with products that have large addressable market and backed by experienced management team. We have recently increased our deal size to up to $10million. We believe this will allow us to participate in a wider space with more experienced management teams who possess the requisite skill sets to drive and achieve growth in a challenging environment FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 36#37Summary & Outlook Strategy & Transformation Risk Mgt & Corporate Financial Review Governance FirstBank H1'11 Investor & Analyst Presentation - 27/07/2011 Operating Environment Highlights FirstBank's investment case remains compelling given attractive business fundamentals and valuations metrics FirstBank Since 1894 Strong risk management and governance structure A leading banking franchise in Nigeria FirstBank Track record of sustained growth Stable Funding Base • 66% of liability funding is derived from customer deposits; and this have been relatively stable. Net placer of funds in the interbank market. Strong Liquidity Position • Since 1894 Leading financial performance Stable funding base Liquidity ratio well above the CBN regulatory requirement. H1 2011: 38.3%. Strong liquidity position A Leading Banking Franchise in Nigeria Established brand name and market leader in retail and corporate banking. Good brand recognition, wide branch network and strong customer loyalty. Track Record of Sustained Growth • Significant growth in total assets (CAGR=22.7% in 3 yrs). Leading position in earnings assets and deposit generation. • N1.28tn in lending as at H1 2011, up 13.05% y/y. Ability to finance large ticket transactions capable of supporting the economy. Leading Financial Performance One of the highest RoEs amongst peers; driven by strategic focus and superior operating model. Strong Risk Management & Governance Structure One of the lowest NPLs amongst peers. Diversification of loan portfolio within strict portfolio concentration limits. Seasoned management team, with transparent corporate governance. The focus remains executing our transformation towards being the clear industry leader. We will defend our current leadership position, whilst extending performance in profitability, capital and operating efficiency. We aim to attain market leadership position in each of our strategic business units and extend our franchise into promising sub- Saharan Africa markets. 37