#1FBN Holdings H1 2021 Results Presentation August 02, 2021 Committed FBN Holdings Plc PREMIUM BOARD LISTED 89#2Disclaimer This presentation is based on FBN Holdings Plc's ('FBNH' or 'FBNHoldings' or the 'Group') unaudited financial statements for the period ended 30 June 2021. The Group's Financial statements represent FBN Holdings Plc and its subsidiaries. FBNHoldings has obtained some information from sources it believes to be credible. Although FBNHoldings has taken all reasonable care to ensure that all information herein is accurate and correct, FBNHoldings 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 FBNHoldings. 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", "expect", "intend", "estimate", "project", "target", "risk", "goal" 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 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. FBNHoldings cautions readers that a number of factors could cause actual results, performances 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 risks or factors, reference should be made to the Group's continuous disclosure materials filed from time to time with the Nigerian Stock Exchange and other relevant regulatory authorities. The Group disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2#3FBN Holdings Key Highlights Financial Review Appendix 04 10 20 Committed#4FBN Holdings Key Highlights Committed#5H1 2021 highlights • Profit before tax of N45.2bn (up 9.2% y-o-y) . 48.1% increase y-o-y in non-interest Income • 20.0% decrease y-o-y in impairment charges • Continued expansion of electronic banking boosting revenue and driving financial inclusion • 32.7% increase y-o-y in e-banking revenues Leading agent banking network in Nigeria with 117k+ agents • Sustained improvement in asset quality . • Further decline in NPL ratio to 7.2% (FY20: 7.7%) Notable growth in quality loans and advances • • 14.5% increase in net customer loans to top quality obligors New Board appointments (non-executive directors) at FBNHoldings and FirstBank • Retention of Executive Management across the enterprise Key Highlights 5#6Key Highlights In the past 5 years, Management has focused on strengthening the organisation, driving stability and renaissance Optimising earnings through efficient Post 2016 H1 2021 balance sheet management and cost management tax ROaE 2.1% 9.9% 2016 NIR to Op. 35.2% Revenue diversification with focus on transaction-led and electronic banking offerings Income Improvement in subsidiary contribution to profitability Intl Subs. PBT Contribution 2016 <0.0% 2016 Radical overhaul of the Group's risk management practices Cost of Risk 10.4% 2016 Improved asset quality and de-risked loan book NPL Ratio 24.4% * International subsidiaries of FirstBank H1 2021 53.3% H1 2021 28.9% H1 2021 2.0% H1 2021 7.2% 6#7Creating an electronic banking unicorn Electronic Banking Revenue N'bn CAGR: 22% 48.0 48.7 +32.7% Key Highlights 28.8 24.2% 23.5% 23.7% 21.7 34.0 14.4% 23.4% 15.1% 24.2% 29.0% 25.0 15.1% 21.8 30.0% 30.6% 32.7% 15.9% 31.5% 32.2% 29.6% 10.2% 9.5% 7.4% 39.9% 5.0% 7.4% 10.4% 58.4% 0.4% 26.3% 11.5% 23.3% 21.9% 24.5% 23.5% 8.9% 1.2% 15.5% FY 16 FY 17 FY 18 FY 19 FY 20 H1 20 H1 21 (1) Others include ATM, POS, SMS & Web USSD Mobile & Internet Banking Agent Banking Cards Other (1) 7#82016 FBNHoldings today: Leading player with a solid platform to grow 2016 875 Business locations 8.8 million ATM cards 1.1 million Firstmobile users 33 billion USSD transaction value 2016 Zero (0) agentss 2016 13 million customer accounts 34+ million Customer accounts 818 Business locations¹ 11.4 million ATM cards 4.7 million Firstmobile users 11.3 trillion USSD transaction Value² 117,334 Agents across Nigeria 2016 2016 24+ million Monthly e-banking transactions 160+ million Monthly e-banking transactions 1. This includes 591 local branches, 144 QSPs and agencies for FirstBank (Nigeria) and 83, (local and international) subsidiary locations) 2. Inception to date - 2016 - June 2021 B Our Vision TO BE THE LEADING AFRICAN FINANCIAL SERVICES PROVIDER DELIVERING INNOVATIVE SOLUTIONS Key Highlights 80#9Key Highlights 2024 strategic plan centers on delivering growth, improving returns and enhancing customer experience Strategic Priorities Drive revenue growth and diversification . Leveraging portfolio of businesses to deliver robust solutions to customers . Deepening digital product adoption and use • Scaling-up agency banking network and increased value proposition Optimise regional footprint Increasing contributions from subsidiaries via organic growth in existing markets Expanding digital footprint to reach underserved and new customers Exploring new local and regional opportunities with acquisition/partnership considerations Enhance operational efficiency . Continuing automation of key processes in the Bank to improve quality of service, turnaround time and manage risk Consolidating technology deployments across the Group Key Enablers 2024 Financial Targets ROE Digital Innovation >20% CIR Technology +1+1 People and Talent <58% COR Deliver innovative solutions that enrich customer experience Continuing end-to-end digitization of the customer journey to enhance experience • Harnessing data analytics, leveraging robotics and Al, to create bespoke experiences for customers Risk Management Marketing and Branding <1% NPL <5% 9#10FBN Holdings Financial Review Committed#11Resilient performance Gross Earnings N'bn Net-Interest Income N'bn Non-Interest Income N'bn Operating Income 'bn -1.7% -20.9% +48.1% +5.3% Financial Review Impairment Charge N'bn -20.0% 131.3 118.7 296.4 291.2 211.4 222.5 30.7 103.8 24.5 80.1 H1 20 H1 21 Operating Expense N'bn +9.6% H1 20 H1 21 Profit Before Tax N'bn +9.2% H1 20 H1 21 Total Assets N'bn +4.4% H1 20 H1 21 H1 20 H1 21 Loans and Advances N'bn Customer Deposit N'bn +14.5% +3.7% 7,689 152.6 45.2 8,024 139.2 41.4 2,538 4,895 5,078 2,217 H1 20 H1 21 H1 20 H1 21 Profit after tax including discontinued operations is #38.0 (H1 20, 49.5). The discontinued operation in H1 20 was FBN Insurance FY 20 H1 21 FY 20 H1 21 FY 20 H1 21 11#12Driving stability and improving asset quality Post Tax ROaE (%) Financial Review Net Interest Margin (%) Cost of Funds (%) NPL Ratio % NPL Coverage (%) 6.8 14.5 9.9 4.4 H1 20 H1 21 Post Tax ROaA (%) H1 20 H1 21 Cost to Income (%) 2.8 53.3 7.7 48.0 7.2 1.8 H1 20 H1 21 FY 20 H1 21 FY 20 H1 21 Cost of Risk (%) Capital Adequacy Ratio (¹) (%) Liquidity Ratio (2) (%) 34.8 65.8 68.6 3.1 17.0 32.8 1.5 15.7 2.0 1.0 H1 20 H1 21 H1 20 H1 21 (1) CAR is for FirstBank (Nigeria); CAR for the Merchant Banking business is 26.6% for FY 2020 and 21.4% for H1 2021 (2) Liquidity Ratio for FirstBank (Nigeria) H1 20 H1 21 FY 20 H1 21 FY 20 H1 21 12#13Financial Review Revenue supported by improved non-interest income contribution • Gross earnings declined 1.7% y-o-y to #291.2bn, but improved 13.2% in Q2 21 from Q1 21 Significant shift in earnings mix as contribution from Non-interest income continues to increase Quarterly improvement also supported by increase in interest income and elongated tenor of fixed income instruments Focus is on driving asset creation from a strong pipeline and optimizing pricing (1) Non-interest income includes fees and commission expense Gross Earnings N'bn Gross Earnings Mix Interest Income Mix 17.9% 27.0% 35.0% 40.7% 296.4 291.2 80.3% 70.0% 65.0% 55.3% H1 20 H1 21 H1 20 H1 21 H1 20 I Non-interest income (1) Interest Income H1 21 Investment securities Loans and advances 13#14Enhancing non-interest income generative capacity Non-interest income increased 48.1% y-o-y to N118.7 Electronic banking fees grew by 32.7% y-o-y, despite regulatory developments reducing fees by c. 50% Increased electronic banking fees contribution to fees and commission (H1: 21 41.7% vs H1 20: 38.9%) Letters of credit commission grew 74.5% y-o-y in line with our facilitation capability, funding reliability, competitive pricing and other value additions to our clients Financial Review Non-interest Breakdown Net (N'bn) Fees & Commission Breakdown Gross (N'bn) +48.1% +23.8% 118.7 17.0 69.1 12.0 55.8 80.1 5.4 16.7 3.3 44.3 6.0 9.0 30.0 3.3 3.4 7.9 Payment and cash management fees contribution benefited from continued platform enhancement 5.1 5.6 Gains on investment securities grew by 30.4% y-o-y through efficient treasury management 57.4 46.8 28.8 21.7 Diversification benefit coming through from annuity income (Asset Management and Trustee) H1 20 H1 21 H1 20 Net fees & commission Trading income Other E-banking Remittances LoC commission & fees (1) Others include commission on bonds and guarantees, custodian fees, financial advisory fees, fund management fees, brokerage and Intermediations, other fees and commissions, trust fee income H1 21 Account Maintence ■Credit related fees Others (1) 14#15Financial Review Controlled costs despite high inflationary environment, currency devaluation and increased regulatory cost • Opex increased by 9.6% y-o-y to #152.6 bn; materially below the inflation rate of 17.8% OPEX Drivers (N'bn) Regulatory cost increased by +35.4% y-o-y; the largest driver for the opex increase over the comparable period 2.3 H1 21 51.2 15.1 13.3 8.5 4.8 26.7 30.7 152.6 Maintaining focus on cost control remains key priority H1 20 49.5 13.4 11.6 9.0 3.53.7 25.8 22.7 139.2 Staff cost Outsourced cost Others (1) (1) Amortization and Impairment, directors' remuneration, cash handling charges, communication, lights and power, legal & professional fees, donations & Subscriptions, insurance premium, rent and rates, stationery & printing, passages and travels & other operating expenses Maintenance Advert & corporate promotions Regulatory Depreciation & amortisation Operational & other losses 15#16Solid retail franchise continues to support liquidity Customer deposits increased by 3.7% to #5.1 trillion (FY 20: #4.9 trillion) Customer Deposits Mix (N'bn) Liquidity position further supported by increased agent banking and e-banking growth H1 21 1,781 . Retail banking remains key driver of deposit growth with low-cost deposits at 91.7% of total deposits (FY 20: 91.4%) in First Bank Nigeria FY 20 1,791 Strong access to funding with an unwavering support from market counterparts First Bank of Nigeria Low-cost deposits (1) Financial Review 1,593 1,037 653 13 5,078 1,507 939 645 13 4,895 ■Savings Current Term Domiciliary Electronic purse 91.4% 91.7% 83.3% 82.9% 85.0% 86.5% FY 16 FY 17 FY 18 FY 19 FY 20 H1 21 (1) Deposits from customers minus Term deposits 16#17Increasing diversified loan book First Bank of Nigeria Loan Currency Mix First Bank of Nigeria Gross Loan per Sector Financial Review 48.9% 50.4% 47.3% 54.2% 52.1% 52.5% H1 21 19.3% 16.0% 11.1% 7.4% 7.7% 7.2% 4.9% 5.2% 21.2% #2.2trn 51.1% 49.6% 52.7% 45.8% 47.9% 47.5% FY 20 17.7% 17.3% 9.0% 7.8% 7.5% 7.3% 5.4% 5.4% 22.6% N1.9trn FY 16 FY 17 FY 18 FY 18 FY 20 H1 21 FCYLCY ■Manufacturing O&G Upstream O&G Downstream O&G Services Government Construction Real Estate ICT Others ¹ FBNQuest Merchant Bank Gross Loan per Sector • Net customer loans increased by 14.5% y-t-d • Maintained currency mix (FCY: 47.5% vs. LCY: 52.5%) despite devaluation through growth in LCY loan book H1 21 32.8% Restructured 14.0% of the loan book primarily in the oil & gas, power and utilities sectors FY 20 32.7% • Continuous optimization of transaction pipeline 21.2% 10.1% 11.1% 5.5% 6.0% 13.3% #71.2bn 18.3% 10.6% 10.3% 8.5% 7.6% 12.0% #57.1bn 2 ■Manufacturing ■O&G Upstream Real Estate ■O&G Downstream ■ICT Natural Gas Others (1) Personal & professional, power & energy, general, general commerce, public utilities, agriculture, transportation, finance & insurance, education, human health & arts (2) Construction, General, Admin & Support Services, Power & Energy, Finance & Insurance, General Commerce & Transportation & Government. 17#18Financial Review Asset quality improvements supporting the drive to enhance balance sheet strength First Bank of Nigeria NPL per Sector NPL Ratio H1 21 12.9% Agriculture General Commerce 17.9% 14.2% 16.9% General FY 20 2.7% 26.0% Oil & Gas upstream 24.4% 22.8% 3.4% 4.1% Real Estate 4.4% 13.1% Oil & Gas services 5.7% 5.7% 13.4% Manufacturing 9.9% 7.7% 7.2% 5.9% 6.6% 6.1% 5.8% Oil & Gas downstream FY 16 FY 17 FY 18 FY 19 FY 20 H1 21 6.1% 4.0% 1 Others Cost of Risk 10.4% FY 16 6.4% 4.0% FY 17 FY 18 (1)Others include personal & professional, construction, transportation, power & energy, education, ICT, Health, finance & insurance & arts 2.6% 2.4% FY 19 FY 20 2.0% H1 21 18#19Financial Review Cleaner balance sheet and resilient earnings generative capacity continue to provide a solid platform for sustainable capital accretion First Bank Nigeria H1 21 CAR at 16.8% including half year profit (15.7% exc. profit) Businesses across the group are sufficiently capitalized Increasingly diversified earnings from non-capital consuming sources support capital capacity * Half year profit FirstBank Nigeria CAR (%) 17.0 16.8 1.1* Reg. threshold: 15% 15.7 FY 20 H1 21 FBNQuest Merchant Bank CAR (%) 26.6 FY 20 21.4 H1 21 Reg. threshold: 10% 19#20FBN Holdings Appendix Committed#21Commercial Banking Group Driving sustainable growth and profitability Key financial highlights & performance ratios Appendix H1 20 H1 21 y-o-y Statement of Financial Position Nbn FY 20 H1 21 y-o-y Gross earnings 278.7 273.9 -1.7% Loans and advances 2,220.5 2,528.8 13.9% Operating income Impairment charge 198.9 211.8 6.5% 30.5 23.6 -22.6% Deposits from customers 4,715.0 4,877.2 3.4% Net interest income 126.1 102.4 -18.8% Shareholders fund 705.3 729.2 3.4% Non-interest icnome Operating expense 72.8 109.3 50.1% 132.1 145.3 10.0% Total assets 7,367.5 7,689.4 4.4% Profit before tax Profit after tax 36.4 42.9 17.9% 32.6 37.4 14.7% • • Strong performance despite a challenging operating environment with 17.9% y-o-y profit before tax Enhanced earnings have been driven by 50.1% y-o-y growth in non-interest income and 22.6% decline in impairment charge Electronic banking have continued to boost non- interest income growing 32.7% y-o-y and now contributing 44.9% (H1 21: 41.9%) In line with our strategic focus on improving asset quality, NPL ratio has continued to decline from 7.6% in FY 20 to 7.2%, further strengthening the balance sheet Focus is on driving quality asset creation and optimising pricing Contribution from our international subsidiaries continues to improve, now 28.9% from 8.5% in the prior period Going into the second half of 2021, the expectation is to fully harness the returns from the strong and quality risk assets portfolio created in the first half of the year, taking advantage of the uptick in interest rates Income statement Nbn Return On Average Equity (%) Cost To Income (%) Non-performing Loan Ratio (%) 10.4 10.4 66.4 68.6 7.6 7.2 H1 20 H1 21 H1 20 H1 21 FY 20 H1 21 21#22Merchant Banking and Asset Management Group (FBNQuest) Fee/Annuity Income dominates as net interest margins contract Appendix • Key Financial Highlights & Performance Ratios Profit before tax declined by 19.4% y-o-y driven by a 53.0% decline in net interest income which was moderated by a 28.0% growth in non-interest income largely from the Asset Management, Structured Products and Trustees businesses Income statement Statement of Financial Position Nmn H1 20 H1 21 y-o-y Nmn FY 20 H1 21 y-o-y Gross earnings 17,480 18,337 4.9% Loans and advances 55,759 69,729 25.1% The drop in net interest income is attributable to lower yields on assets y-o-y and increasing cost of funds in Q2 21 Operating income 11,553 10,482 -9.3% Deposits from customers 203,301 224,504 10.4% Operating expense 5,436 5,552 2.1% Shareholders' fund 59,253 63,092 6.5% Profit before tax 6,118 Profit after tax 4,181 4,929 -19.4% 3,298 -21.1% Total assets 348,730 362,385 3.9% • The marginal growth in operating expense despite the inflationary economy was due to strict cost containment initiatives which we will continue to drive for the rest of the year AuM declined by 16% in H1 21 as investors liquidated their holdings in search of higher returns with the upturn in the fixed income market. Going forward, the focus remains on improving net revenues, containing costs, optimizing our platforms (people, processes), driving digital and innovation, and actively building business partnerships Return On Average Equity (%) Cost To Income (%) 16.3 10.8 Non-performing Loan Ratio (%) 2.6 48.1 45.8 2.2 H1 20 H1 21 H1 20 H1 21 FY 20 H1 21 22#23Benign improvement in operating environment Welcomed growth, though slow 18.17 17.75 15.75 13.71 12.0 12.26 12.56 11.2 2.28 2.55 1.87 0.11 0.51 Increase in oil price helps to stabilise reserves Appendix -3.62 -6.1 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 19 GDP rate Inflation rate Q4 19 Q1 20 External reserve (USD billion) Q2 20 Q3 20 Brent oil price (USD/pb) Q4 20 Q1 21 Q2 21 Crude oil production (mbpd) Upward reversal in fixed income yields Convergence of the CBN rate and NAFEX 15.3 14.4 13.1 10.8 12.2 10.6 10.6 503 486 475 460 465. 11.2 410 409 412 9.5 415 387 386 9.1 7.5 362 365 386 5.6 5.6 3.2 4.9 5.8 3.7 4.0 3.5 4.9 360 360 3.1 2.5 1.0 1.7 3.5 361 361 380 380 380 3.2 2.1 1.7 0.4 307 307 1.3 0.5 1.0 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Average 91 days T/bills yield Average 182 days T/bills yield Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 CBN Rate - Parallel Market NAFEX Average 1 year T/bills yield 3 year bond yield Data source: CBN, NBS, OPEC, Abokifx and FBNHoldings Investor Relations * Crude oil production and GDP growth is obtained from NBS, but Q2 2021 data is yet to be published 23#24Key regulatory and policy interventions The CBN recently reviewed the minimum interest payable on local currency savings deposit to 10% of the Monetary Policy Rate (previously 30% of MPR) CBN introduced Special bill which created an additional liquidity management tool while also contributing to banks Liquidity Ratio The CBN introduced receipt of diaspora remittances through International Money Transfer Operation in foreign currency (FCY) The CBN extended the COVID-19 relief (moratorium and interest rate reduction) for another 12 months Q3 2020 The Monetary Policy Committee reduced MPR by 1.0% to 11.5% The CBN and Nigerian Communications Commission (NCC) introduced a flat fee of #6.98 per transaction for USSD services CBN adopted NAFEX/I&E as the official exchange rate Q4 2020 Q1 2021 Q2 2021 Appendix The Securities and exchange commission issued Fintech services license PENCOM launched the opening of the Retirement Savings Account transfer system The President approved an expansionary budget aimed at economy recovery. The budget is premised on exchange rate of #379/$ and oil benchmark of $40 per barrel The CBN introduced a "Naira 4 Dollar Scheme" as an incentive for diaspora remittances The CBN issued a regulatory framework for non-bank merchant acquiring to facilitate a sound electronic payment system 24#25Global footprint Appendix Nigeria Name FBN Holdings Plc. Туре Licensed financial holding company Established UK "I France Name Name FBNBank UK Ltd. FBNBank UK Ltd. Type Type Bank branch Licensed bank 2008 2012 (formerly First Bank of Nigeria Plc. Established 1894). Products/Services Commercial Banking, Merchant Banking & Asset Management, Insurance Established Products/Services Commercial Banking, International Banking Established 2002 Products/Services NZ International Banking and Trade Services Ghana Name FBNBank Ghana Type Licensed Bank Established 1996 Products/Services Commercial Banking Guinea Name FBNBank Guinea Type Licensed Bank Established 1996 Products/Services Commercial Banking Senegal Name FBNBank Senegal Type Licensed Bank Established 2006 Products/Services Commercial Banking Nigeria Name First Bank of Nigeria Ltd. (formerly First Bank of Nigeria Plc.) Type Licensed bank Established 2012 Products/Services Commercial Banking Democratic Republic of Congo Name FBNBank DRC Type Licensed Bank Established 1994 Products/Services Commercial Banking Representative Offices Name FBNBank China (2009) Products/Services Banking Services The Gambia Name FBNBank The Gambia Type Licensed Bank Established 2004 Products/Services Commercial Banking Sierra Leone Name FBNBank Sierra Leone Type Licensed Bank Established 2004 Products/Services Commercial Banking H 25#26Definitions Appendix Cost-to-income ratio computed as operating expenses divided by operating income Cost of risk computed as annualised impairment charges divided by the average opening and closing gross loans balances Net-interest margin computed as annualised net interest income divided by the average opening and closing balances of interest earning assets excluding financial assets at fair value through profit & loss plus unlisted debts Operating income is defined as gross earnings less interest expense, fee and commission expense, insurance claims and share of profit/loss from associate Pre-provision operating profit computed as operating profit plus impairment charge Net revenue computed as operating income plus share of profit/loss from associates NPL coverage computed as loan loss provisions plus statutory credit reserves divided by non-performing loans Loans to deposits ratio computed as gross loans divided by total customer deposits Leverage ratio computed as total assets divided by total shareholders' funds Return on average equity computed as profit after tax (annualised) divided by the average opening and closing balances attributable to its equity holders Return on average assets computed as profit after tax (annualised) divided by the average opening and closing balances of total assets 26#27Contact details Head, Investor Relations Tolulope Oluwole [email protected] +234 (1) 905 2720 Investor Relations Team [email protected] +234 (1) 905 1086; 1147 Appendix 27