Annual Report and Accounts 2005 - Standard Chartered · re-capitalization, Standard Chartered still...

Standard Chartered Bank Nigeria 1

Strategic Intent The world’s best international bankLeading the way in Africa, Asia and the Middle East

Brand Promise The Right Partner - Leading by Example

Values Responsive Trustworthy Creative International Courageous

Approach ParticipationFocusing on attractive, growingmarkets where we can leverageour customer relationships andexpertise

Competitive PositioningCombining global capacity, deeplocal knowledge and creativity tooutperform our competitors

Management DisciplineBalancing the pursuit ofgrowth with firm control ofcosts and risks

Commitment tostakeholders

CustomersPassionate aboutour customers’success, delightingthem with thequality of ourservice

Our PeopleHelping ourpeople to grow,enablingindividuals tomake a differenceand teams to win

CommunitiesTrusted andcaring, dedicatedto making adifference

InvestorsA distinctiveinvestmentdeliveringoutstandingperformance andsuperior returns

RegulatorsExemplarygovernance andethics whereverwe are

2 Chairman’s Statement 6 Chief Executive Officer’s Review 15 The Board of Directors 16 Executive Management 18 The Group Chairman’s Visit 20 The Accounts

Contents

Gross Earnings

up 32%to N7.66 Billion2004; N5.79 Billion

Profit before taxation


Total assets


Customer deposits


Earning per share

up 83%to 99k2004; 54k

Net interest revenue


Annual Report and Accounts 20052

I am delighted to inform you that yourbank maintained its growth momentumand delivered another year of strongperformance in 2005. The Bank’sperformance has established StandardChartered as one of the country’s mostefficient, strategically focused andprofessionally managed financialinstitutions in Nigeria.

Operating Environment

The bank consolidation programembarked on in 2004 was concludedas planned at the end of 2005. Theconsolidation program was aimed atstrengthening the financial sector and,in time, enhancing its ability to providecredit to the private sector. StandardChartered satisfied the consolidationcriteria of the Central Bank by injectingalmost $150 million of new capital intoour business. Standard Chartered wasthe first foreign bank to announce itsintention to meet the capitalizationrequirements and we were amongstthe largest investors of foreign directinvestment in Nigeria in 2005. StandardChartered Nigeria remains a 100%subsidiary of Standard Chartered PLC(UK).

Amongst a number of significanteconomic reforms, the historic debtrepayment deal brokered with the ParisClub was probably the most significant.In November 2005, the FederalGovernment won Paris Club approvalfor a historic debt-relief deal that haseliminated a large portion of thecountry’s total external debt. This

Chairman’s Statement

“We have maintainedour growth momentum”

Standard Charteredachieved excellent

revenue growth in achanging environment

and amidst intensecompetition in the

banking sector.


N2.4 b2005 Highlights

Profit After Tax

N3.7 bNet Interest Revenue

N2.9 bNon Interest Revenue

N33.4 bCustomer Deposits

agreement has eased thecountry’s exit from the Club anda total of ~$30billion wasremoved from Nigeria’s foreignindebtedness. The annual $750million fiscal space now createdby the debt deal must beallocated towards developmentalprojects and the achievement ofMillennium Development Goalsand poverty reduction. TheWorld Bank and DFID will behelping the Government to setup a Monitoring and EvaluationSystem to monitor these fundsand civil society groups will beactively involved.

Nigeria, obviously, has thepotential to build a prosperouseconomy, reduce povertysignificantly, and provide thehealth, education, and improvedinfrastructure which our peopleneed. The economic reformprogram embarked on by thegovernment has started to yieldresults and Nigeria’s macro-economic performance over thelast two years has beencommendable.

In 2005, GDP growth continuedto be strong at 7% for theeconomy as a whole and 8% forthe non-oil sector. This growthwas not only due to increased oilprices but also a result of astrengthened non-oil sector.

Significantly, in January 2006,the country received its firstforeign currency sovereignratings (BB-) from Fitch andStandard & Poor’s. This ratingconfirms Nigeria as one of theemerging market economieswith tremendous growthpotential like Brazil, Russia, Indiaand China. Indeed, withinNigeria, this so called BRICgroup (so named by theGoldman Sachs organization)has been relabeled BRINC,reflecting the sense of impactgrowth in Nigeria will have onthe world-stage in the comingyears.

The Federal Government’s effortin the fight against corruptionhas actually started to improvethe country’s international imagethrough TransparencyInternational surveys and otherresults. Streamlined ‘dueprocess’ procedures at theFederal level are ensuring thatpublic money cannot bedisbursed for investmentspending unless procurementprocedures have beenrespected. The Government isalso committed to forcefullyimplementing the NigeriaExtractive IndustriesTransparency Initiative (NEITI).For the first time in Nigeria’shistory, a financial audit for theoil and gas sector over the


period 2000-2004 has beencompleted and made public.

Overview of FinancialPerformanceIn spite of the general state offlux pervading the entirebanking industry last year as aresult of the various moveswithin the industry to fulfill theCentral Bank requirements onre-capitalization, StandardChartered still achieved veryremarkable results.

Standard Chartered achievedexcellent revenue growth in achanging environment andamidst intense competition inthe banking sector. StandardChartered Bank Nigeria’s profitbefore tax for the full yearended December 31, 2005 wasNGN3.2 billion representing animpressive 108% increase overthe 2004 results. This wasachieved based on strongrevenue growth, prudent costmanagement and robust riskcontrol systems.

The highlights are as follows:

Non-interest revenueincreased to NGN2.9 billionrepresenting a 46%increase from 2004.Total assets increased toNGN68.5 billion, a decent97% increase from theprevious year’s results.Costs went up by 32% toNGN3.3 billion instead ofthe 41% increase in 2004, afact that underscoressignificant investment andvery prudent operationalcost management.Net interest revenue was

NGN3.7 billion, a strong71% increase from the lastresults.Customer depositsincreased to NGN33.4billion representing a 42%increase.Profit after tax rose by 83%to NGN2.4 billion from=N=1.3 billion in 2004.Earnings per share alsogrew by 83% to 99 koboper share from 54 kobo pershare the previous year.

The BoardThe Board of Directors ofStandard Chartered BankNigeria are primarilyresponsible for corporategovernance in the Bank. Toensure good governance, ourBoard is responsible forestablishing strategicobjectives, policies andprocedures that guide anddirect the activities of the Bankand for establishing themechanisms for monitoringmanagement’s performance.Thus while management of theday-to-day affairs of the Bankshall be the responsibility ofour management team, theBoard of Directors areresponsible for monitoring andoverseeing management’sactions. Consequently theBoard of Standard CharteredBank Nigeria has at its disposalan experienced, high quality,diversified and professionalBoard of Directors and theseindividuals are charged withensuring compliance with local(CBN) regulatory andinternational (UK/ FSA's)policies on CorporateGovernance as well as the

100% shareholder’s (StandardChartered PLC) specificsubsidiary governancepolicies.

The Board underwent a fewchanges during the year withthe appointment of three newmembers. David Wallace theGroup Head of ConsumerBanking was appointed anExecutive Director with effectfrom January 1, 2005. Davidjoined the bank in Nigeria asHead of Consumer Banking inFebruary 2004 from SCBBotswana where he played thesame role. He has been withinthe SCB Group for over 20years and has held seniorpositions in the UnitedKingdom, Dubai, Hong Kong,Phillipines and Botswana.

Ms Helen Dennis wasappointed as a Director witheffect from January 1, 2005and the latest board member,Ms Ann Grant was appointedto the board on December 1,2005. Ann, who was a careerBritish Foreign Office executiveand a past High Commissionerto South Africa bringsexcellent credentials to theBoard.

These are three high-calibreindividuals with a wide rangeof skills who will addtremendous value and alreadyhave extended the diversity ofthe Board. Otherappointments will take place in2006 as the Bank conformswith new CBN regulatorycodes of conduct andStandard Chartered’s owncomprehensive subsidiarygovernance policies.


Conclusion

I am very pleased with thebank’s performance in 2005which clearly reflects ouremerging leadership positionin the Nigerian market. OurGroup’s strategic presence insome of the world’s fastestgrowing regions placesStandard Chartered in aunique position to facilitate thedevelopment of trade andinvestment corridors betweenNigeria and these highpotential regions.

Standard Chartered have solidand historical experience inChina having established ourpresence almost 150 yearsago as the first foreign bank.We are now the largestInternational Bank in India andhave strategic presence inother Asian countries likeThailand, Indonesia,Singapore, Malaysia, HongKong and Taiwan. Our SouthKorean franchise is alsogrowing at an extremely fastpace after our strategicacquisition of Korea First Bank(KFB) now Standard

Chartered First Bank (SCFB) inApril 2005.

Locally, Standard Charteredhave a good knowledge of themarket, a very sound anddiverse management team,in-depth knowledge of ourcustomer segments, a robustgrowth strategy and a solidcapital base.

Finally, I would like to thank ourcustomers for giving us theopportunity to be their preferredbank and the staff of StandardChartered Bank Nigeria for theirdeep sense of commitment andcontinued contribution to thegrowth of the Bank. Thesefactors are responsible for theremarkable success of ourNigerian franchise.

Finally, I wish to thank themembers of the Board for theirconsistent support over theyears, and their continuedcommitment to the Bank’sprogress.

Thank you.

HRM Oba Oladele Olashore CON

Chairman

I am verypleased with thebank’sperformance in2005 whichclearly reflectsour emergingleadershipposition in theNigerian market.


“Leading the waythrough performance”

PerformanceStandard Chartered Nigeria’sfinancial results, for the year ended31 December 2005, reflect animpressive year of growth. Our grossearnings rose by 32% to NGN7.66billion from NGN5.79 billion in 2004.Profit before tax was NGN3.24 billion,an impressive 108% increase fromNGN1.56 billion in 2004. Earningsper share rose an impressive 83% to99 kobo from 54 kobo in 2004.

Our overall performance for 2005reflects the depth of our growthstrategy, the viability of our range ofproducts, the robust nature of ourservice delivery channels, thestrength of our people and our

Chief Executive Officer’s Review

The Bank maintainedits strong momentum,ambition andleadership indelivering goodresults across abalanced scorecardof performancecriteria to sustain ourbusiness growthmodel.

Standard Chartered Bank Nigeria had anotheryear of growth and delivery of an acceptablefinancial performance in 2005. The Bankmaintained its strong momentum, ambitionand leadership in delivering good resultsacross a balanced scorecard of performancecriteria to sustain our business growth model.Just as I reported in December 2004 (over2003), in 2005 Standard Chartered Nigeria,again, doubled its 2004 financial result . TheBank’s team continues to deliver outcomes tothe aggressive growth expectations of our100% shareholder, Standard Chartered BankPlc. We continue to work to significantlyimprove in delivery of our commitments to allstakeholders and we are guided by ourstrategic intent to be “the world’s bestinternational bank, leading the way in Africa,Asia and the Middle East”.


unwavering determination to liveup to our brand promise ofbeing the right partner to ourstakeholders – our customers inparticular. Of critical importancewas that Standard Chartered’sperformance growth in 2005was achieved with efficiency andproductivity – while theindustry’s expense to incomeratio remained broadly static at70%, Standard Chartered’sexpense to income ratio (acritical performance measure)improved from 61% in 2004 to50% in 2005. We expect an evenbetter performance in 2006.

Every component part of ourbusiness performed well in 2005as follows.

Wholesale BankingThe wholesale business inStandard Chartered Nigeriarecorded good results in 2005as we worked closely with ourlarge corporate and institutionalclients to deliver the productsand services they need at theright price. Revenue for 2005was up 54% on 2004, withtrading profit up 78%, well abovethe industry average of 21%. Wehave consistently exceededexpectations by double digitgrowth over our six years ofoperation.

Standard Chartered’s client ledstrategy continues to driveperformance across ourproducts and we are focused oninvesting for sustainable growth,

extending our product reachand leveraging our globalcapabilities. This wasdemonstrated by notable leadarranger mandates awarded inthe field of corporate finance thisyear in Nigeria. The addition oflocal corporate financeresources in-country will alsolend weight to our vastlyimproved and expandedorigination capabilities. Cashmanagement also continues todeliver tailor made solutions toour target clients supported byworld class technologyplatforms. Global markets(treasury) activities continue to“Lead the way” in thedevelopment of the foreignexchange and debt capitalmarkets. Standard Chartered isnow a significant player andmarket maker in the inter-bankforeign exchange market inNigeria and the team has gaineda reputation for providinginnovative solutions to meetcustomer requirements.

Standard Chartered’s riskmanagement framework, built toworld class standards guided bystrict codes of conduct, is beingcomplemented by our excellentquality Nigerian staff that haveadapted well to ourorganization’s culture andvalues. This has translated intominimal loan loss provisions inover 6 years following our re-entry into the Nigeria market in1999. Being in the lendingbusiness, a bad debt at some

N3.24 b2005 Highlights

Profit Before Tax

N7.66 bGross Earnings

99kEarnings per share


point is inevitable but weremain confident that ourprofessionalism and expertisewill minimize such outcome.We have entrenched thereforms taking place in thebanking sector under theguidance of the Central Bankof Nigeria and look forward tospeedy adaptation of the BaselII risk based approaches toregulation in Nigeria, which willfurther serve to strengthen thequality of the banks thatremain in this marketplace inthe post consolidation periodafter 31 December 2005.

Overall, 2005 was a strongperformance year for thewholesale banking businessand Standard Charteredappreciated the continuedsupport of our customers andother various stakeholders inour business. Aided by therecent banking reforms,Standard Chartered is wellpositioned to capitalize on newwholesale banking businessopportunities underpinned byour commitment to deliverworld class customer servicethrough Outserve.

Consumer BankingThe Consumer Bankingbusiness in Nigeria alsoexperienced significant growthacross all performancemeasures in 2005. Customernumber growth exceeded ourexpectations growing by over80% yoy and the business hastripled the number of newcustomers since thebeginning of 2004. In 2005,revenue exceeded budget byover 20% and the consumerbank liability base grew byover 80%. Our world classproduct lines (including VisaElectron debit card andAmerican ExpressTravelers’cheques) witnessedunprecedented growth levelsin the year.

The introduction of a uniqueand cost effective salesscheme utilizing Direct SalesRepresentatives (DSRs) todrive product sales was largelyresponsible for the rapidcustomer growth andsignificant increase in liabilitybase. With the increase indiscerning customers, ourservice levels continue toimprove and our globalcapability, coupled with ourdeep local knowledgecontinue to enable us providecreative solutions for ourcustomers.

In April 2005, our BusinessFinancial Service (BFS)structure was relaunched asSME Banking to provide small& medium enterprises acomprehensive range ofcommercial banking solutionsto meet their banking needseffectively. Considering theSME sector contributes 40% ofGDP in Nigeria, this area hasbeen and remains a potentialgrowth source for StandardChartered, but the pre-conditions necessary for rapidgrowth are not yet in place inNigeria. A Credit Bureau, aremoval of loan rate caps, thestrengthening of accountingstandards, a reduction inregulatory costs andGovernment charges insecurity perfection processes,and land-tenure reforms are allkey aspects that requireattention and StandardChartered is working withregulators and Government toremove these barriers to real-sector SME lending growth asquickly as possible.

Restrictions on representationgrowth during thecapitalization process of 2005meant that we did not openany new branches. However,2006 promises to be anexciting year with a new

“Acceleration of service improvementefforts to delight our customers willcontinue in 2006”



branch in The Palms Mall atLekki in Q1 and 3 to 4 otherbranches in Lagos and keyNigerian cities expected to beopened. Additionally, theconsumer bank plans theintroduction of severalinnovative products in 2005 todeliver to our target customersthe services and options theyrequire. Standard Chartered’sconsumer bank in Nigeria willaggressively continue thejourney to develop asustainable business basedon strong fundamentals. Thepotential for our business inNigeria is immense and weremain committed toproviding consumer bankingservices that delight ourpersonal and small businesscustomers.

Technology & OperationsThe Technology & Operationsfunction is the service deliveryarm of the Bank and the teamdelivered another strongperformance in a year ofsignificant growth for the Bankin 2005. Implementation ofkey initiatives to improve andsimplify processes were a keyfocus and Standard Charteredwas able to substantially lowerunit processing costs andimprove customer service.Acceleration of service

improvement efforts to delightour customers will continue in2006. The risk managementframeworks StandardChartered has in place arerobust and designed toprotect the business andmaintain stakeholder(especially customer)confidence.

Banking is technology driven;Standard Chartered maintainsquality platforms and systems.Our investment in appropriatenew technologies willcontinue, taking advantage ofour global capabilities insolution delivery, to meetingcustomers' increasinglysophisticated needs. Speed ofexecution, continuedefficiency, simplicity, alongwith innovation and creativitywill therefore be the focus ofTechnology and Operationsin 2006.

Human ResourcesThe Human Resourcesfunction is critical to our fastgrowing Bank in Nigeria andthe 3 key people priorities for2005 - EmployeeEngagement/Retention,Talent Management, Learningand Development – were thekey areas of focus.Standard Chartered

continued to embedperformance andengagement managementprocesses to drive businessperformance. The StandardChartered Nigeria Gallup Q12staff survey score (a measureof the level of employeeengagement) improved from4.30 to 4.35 and our Nigeriastaff are amongst the mostengaged in the StandardChartered Group. Ourretention strategies continueto deliver low staff turnoverwith voluntary turnover of only7% against an industryaverage of ~25%. We wantour company to be a greatplace to work and our peoplestay with us for their careergrowth and personaldevelopment. They alsodeliver in the jobs and the topperformers are very wellrewarded.Attracting talent continues tobe a challenge although thereduction in the number ofbanks from 89 to 25 during2005 has led to improvementsin available skills in theindustry. A key objective in2005 has been to securevalue-adding attachments forour people to provideexposure to other aspects ofthe business in other marketswithin the Standard Chartered



Group. In 2005, 20 people didwork attachments (rangingfrom 2 weeks to 4 months)across our Global networkand over 70 other attachmentsof less than 2 weeks wereundertaken outside of Nigeria(in all a third of staff were sentabroad for specific learningand development programs).We expect our business tobenefit from the learninggained in 2006. As we offeropportunities for our people togrow and acquire broad-based experience within theBank, close to 15% of staffwere given career-enhancingcross functional movesopportunities during 2005. Inaddition we continue topartner with our local trainingconsultants to offer qualitydevelopment opportunities forour people.Standard Charteredrecognizes that our people areour greatest resource and willbe in-valuable assets in ourgoal of driving sustainedbusiness performance.

Corporate Governance andRisksStandard Chartered maintainsa zero tolerance culture tonon-compliance with issues ofGovernance, Compliance(Regulatory and otherwise)and Money Launderingactivities. Our culture of zero-tolerance to all governanceissues and processes isevident as we continue toshow good discipline andabsolute vigilance in riskcontrol, despite our rapidgrowth and a challengingenvironment. Our people’sunderstanding of principlesguiding operational policies isvery clear and has beenfurther enhanced by a seriesof reviews within the year thatprovide a framework ofprocedures for the conduct ofour business.Additionally, arrangementshave now been put in placeby which the company'semployees may, inconfidence raise concernsabout possible improprietiesin matters of financialreporting or other matters.These arrangements arecovered in the company's"Speaking Up Policy"commonly known as a"whistle blowing policy". The

Bank has excellent resourcesin its Legal and Complianceand Finance teams to supportour strong governance andrisks culture.

OutserveOutserve remains a keyelement of our strategic intentand supports ourcommitment to delight ourcustomers with the quality ofour service. StandardChartered’s aspiration is to beknown worldwide for greatservice by 2008 and towardsachieving this goal, removingservice negatives andsimplifying processes is thepriority for us in 2006.

In 2005 we made progress inNigeria on our Outservejourney and there is a betterunderstanding of all the keycomponents – pillars - ofOutserve which are: voice ofthe customer, processimprovements, metrics andmeasurement, changemanagement, communicationand service culture. We areprogressing well on thisjourney and are determined tocontinue offering bettersolutions and faster responseto our customers’ needs.

“Standard Chartered recognizes that our people are ourgreatest resource and will be in-valuable assets in our goalof driving sustained business performance”


Activities like “ServiceStorming” and “First HandDays” are not only becomingentrenched, but are alsocreating value. The primarybenefit of these activities isthat they provide theopportunity for all staff todemonstrate commitment,experience front line service,listen to our customers,make service pledges whichare all designed to improveour service offerings andentrench the ‘customer isnumber 1’ philosophy.

We strongly believe thatprocess improvements drivecustomer serviceimprovements, efficiencyimprovements, costreduction and increasedrevenues and ultimately helpto emphasize that we areindeed the right partner asour brand promise states.Measuring our services using‘Voice of Customer’ data andmetrics and setting targets toimprove these metrics will beembedded in 2006.

You challengewe respond


Dr. Elizabeth El-Hassan of SightSavers International giving a thankyou speech after receiving the initialcheck for N6.5 million from StandardChartered Bank’s CEO, Simon Millett.The final sum received by the NGOwas N7.18 million.

Leading the waythrough responsiblebusiness

Cheif Executive Officer’s Review

Partnership with ourCommunityWe have continued to buildon our strong momentumand focus on CorporateSocial Responsibility in linewith the priorities ourshareholder, StandardChartered Bank PLC. Oursocial responsibility initiativesare driven by a strong desireto improve the quality of life ofthe less privileged and someof the following accentuateour partnership with ourcommunity in Nigeria in 2005:

Seeing is BelievingStandard Chartered’s Seeingis Believing program aims torestore sight to one millionpeople by the end of 2006. Insupport of this SCB Groupinitiative, in December, 2005,Standard Chartered Nigeriaconducted a "Walk for Sight"to raise funds for theeradication of blindness in

Nigeria. Our ‘walk’ wasplanned in conjunction withtwo institutional participants,our global partners on the"Seeing is Believing" project,Sight Savers International(SSI), and the Nigerian Societyfor the Blind.

The 5km charity walk was anastounding success andattracted approximately 800participants from all walks oflife. These included themanagement and staff ofcompanies we work with – ourcustomers, as well as staff ofthe bank, spouses, friends andrelatives. Prior to the event, weset a target for ourselves toraise NGN6.5m ($50k) in orderto be in a position to fundcataract correcting operationsfor ~1,667 people at anapproximate cost of NGN3.9k($30) for corrective cataractsurgery per person. However,

at the end of the event weraised a total sum ofNGN10.257m ($80k).Subsequently, we presentedSSI with NGN7.18m ($55k)and NGN3m ($23k) was givento the Nigeria Society for theBlind for projects at theschool. Funds raised enabledcataract operations forapproximately 2,333 people.The Bank was proud of theoutcome of this event and,with the full support of ourcustomers and staff in Nigeriawe plan a similar ‘walk forsight’ in 2006.


Standard Chartered Bank’s CEOSimon Millett ‘Leading the Way’ byexample during the Walk for Sightinitiative.

StandardChartered’sSeeing isBelievingprogram aims torestore sight toone millionpeople by theend of 2006.

believingseeing is

HIV/AIDS VoluntaryCounseling and TestingCentre (VCT) - Partnershipwith SWAANOur ‘Living with HIV’campaign seeks to educateour employees, customers,friends and family about HIV /AIDS and care for infectedand affected persons. InFebruary 2005, SCB Nigeriaofficially commissioned theStandard CharteredVoluntary Counseling andTesting Centre in Surulere,Lagos for the Society forWomen and AIDS in Africa,Nigeria Chapter (SWAAN).SWAAN has had a history ofsuccessful partnership withcommunity/opinion leaders,other NGO’s, corporateorganizations, health careproviders and government increating awareness andimplementing HIV/AIDSprevention, care and supportprograms throughoutNigeria. We are proud of ourpartnership with them inestablishing the VoluntaryCounseling and TestingCentre. The project was fullysponsored by the Bank and

following commissioning,SWAAN has recorded amajor boost in informationdissemination, care andsupport for both HIV/AIDSinfected and affectedpersons. Over 200 personsliving with HIV/AIDS visit thecentre each month forcounseling, care or support.The centre has beencontinuously visited by otherpartner donors and SCB’sinitiative has been highlyapplauded. One of suchcommendations came fromthe Lagos State Government.After a visit to the centre, theLagos State Governmentappointed SWAAN, throughthe Lagos State AIDSControl Agency (LASAC)/World Bank HIV/AIDS Fund,to carry out a CommunityHome Based Care project(CHBC) in 5 LocalGovernments in Lagos Statefor a 9-month period. We willcontinue to work withSWAAN in 2006 as we havefound them to be anexcellent implementer NGOin Nigeria.


2006 PrioritiesOur strategic agenda remainsessentially the same as that in2005. Standard CharteredBank Nigeria will continue tobuild on its solid foundationsand we are well positioned todeliver further value to targetedindustry and customersegments. Outserve continuesto remain high on the agendaand so is growing andleveraging our ConsumerBanking business, improvingreturns in Wholesale Banking,sustaining effective RiskManagement and Control,investing in our people andmaintaining high teamengagement.

Internal in the Bank and criticalto our aspiration is our BHAG(Big Hairy Aggressive Goal)which for 2006-8 is the ‘triple /double’ – to “triple the numberof customers by the end of2007 and to double thenumber of products percustomer by end 2008”. ThisBHAG emphasizes thatcustomers are the backboneof our business and customergrowth is and remains criticalto our future success.

While delivering the BHAG, theBank will expand ourconsumer banking servicesboth in terms of physicalrepresentation and productsoffered. We will strengthen ourwholesale banking business

and consolidate on thegrowth we have achieved inthis area in the last few years.We will balance ourexpansion, growth andbanking system positionaspirations with very strict riskmanagement frameworks andcontrol tools. And StandardChartered will continue toinvest in our most importantassets - our staff and maintaintheir commitment to highlevels of engagement.

Standard Chartered are veryexcited by the long-termpotential of Nigeria – noclearer demonstrated by the$150m capital investment in2005. The Bank is now verywell positioned to support thebusiness opportunities inAfrica’s fastest growingeconomy through the moreeffective implementation ofour international expertise andglobal network. Theregulatory led capital injectionwas a very significantinvestment. Delivering asatisfactory return to ourshareholders on thatinvestment is no smallchallenge but we areconfident that we will meettheir expectations. Oursuccess in large part will bedue to our stakeholdersconfidence in our brand, ourcredibility internationally andour leading internalgovernance structures.

In conclusion, I express mysincere appreciation to theChairman, Board of Directors,Management and staff for theexcellent support that enabledthe achievement of the strongall-round performance forStandard Chartered in Nigeriain 2005. I look forward to asimilar support towardsdelivering to and indeedexceeding our performanceexpectations in 2006.

Simon MillettMD/CEO


9

6

32

8

5

7

4

1

1. HRM Oba Oladele Olashore, CON Chairman

2. Simon J. Millett, Chief Executive Officer

3. David Wallace

4. Douglas Stoneham

5. Shehu Malami

6. Ebby Essoka

7. Helen Dennis

8. Ann Grant

9. Fola Akande, Company Secretary

Board of Directors


Enabled individuals,a winning team

Executive Management

1. Simon J. MillettManaging Director/CEO

Simon joined StandardChartered Bank Nigeria inDecember 2003 and hasover 15 years bankingexperience. Prior tojoining SCB as ManagingDirector/CEO StandardChartered Bank SierraLeone in August 2001, hewas MD/CEO of WestpacPapua New Guinea andPacific Commercial Bankin Samoa, afterserving for 11 years in theRoyal Australian Navy.

2. Fola AkandeHead, Legal and Compliance

Joined Standard Char-tered Bank Nigeria Lim-ited in August 1999and has over 10 yearsbanking experience. Shewas the HumanResources Adviser forShell Nigeria Exploration& Production Companybefore taking up this role.

1 2 3

4 5

5. Yemi OwolabiChief Financial Officer

Joined StandardChartered Bank NigeriaLimited in August 1999and has over 12 yearsbanking experience.Before this role, she wasthe Financial Controller ofFidelity Bank Plc(Formerly Fidelity Union

4. Douglas StonehamED, Client Relationships

Joined StandardChartered Bank NigeriaLimited in January 2002and has over 18 yearsbanking experience. He

3. David WallaceED, Consumer Banking

Joined StandardChartered Nigeria Limitedas Head of ConsumerBanking in February 2004from SCB Botswanawhere he played thesame role. He has beenwithin the SCB Group forover 20 years and hasheld senior positions inthe UK, Dubai, HongKong, Philippines andBotswana.

joined the bank as Head ofCorporates & Institutions(now Client Relationships)and was appointed anExecutive Director inDecember of the sameyear. He was the Head ofSales in the Corporate &Institutional Banking teamof Standard CharteredBank, Uganda beforetaking up this position.


6 7

8 9 10

8. Isioma OgodaziHead, Human Resources

Joined StandardChartered Bank NigeriaLimited in July 1999 andhas over 17 yearsbanking experience. Shewas the Head of HumanResources at GuarantyTrust Bank Plc beforetaking up this role. Shealso has Total QualityManagement, Treasuryand Investment Bankingexperience.

6. Henry Dodoo-AmooSenior Credit Officer

Joined StandardChartered Nigeria Limitedas Senior Credit Officer,Nigeria and Cameroon inJanuary 2004 fromGhana where hesuccessfully set up andmanaged the WholesaleBank Credit function inthe six West Africancountries (includingNigeria and Cameroon)over a period of 30months.

10. Diran OlojoHead, Corporate Affairs

Joined StandardChartered Bank NigeriaLimited in November 2005and has over 8 yearsbanking experience. Priorto joining StandardChartered Bank Nigeriaas Head CorporateAffairs, he worked inLeadbank Plc as HeadCorporate Affairs andCitibank Nigeria as Head,Public Affairs for the WestAfrican cluster.

9. Sheikh JobeHead, Technology & Operations

Joined StandardChartered Bank NigeriaLimited in July 2002 andhas over 10 yearsbanking experience. Hewas the Head ofTechnology & ServiceDelivery and Head of

7. Rahil TanejaHead, Global Markets

Joined StandardChartered Bank NigeriaLimited in August 2004from Botswana where healso headed GlobalMarkets. Rahil has 8 yearsexperience in StandardChartered Global Markets

Security, Legal &Compliance at StandardChartered Bank, Gambiabefore taking up thisrole.

Merchant Bank Limited)and worked as an AuditSenior at KPMG PeatMarwick Ani Ogunde &Co.

and has worked in India,United States and Africa.Prior to joining SCB, heheaded Treasury forHero Motors in India.


“Chief BryanOmowale OnaolapoSanderson”, CBE in

full Regalia

The Group Chairman, BryanSanderson in a discussionwith Mrs. Ngozi Okonjo-Iweala, Nigeria’s Minister ofFinance during a courtesycall at her office.

The GroupChairman of

StandardChartered Plc

BryanSanderson

visitedNigeria in

early 2006These are some

pictures of the visit

The Group Chairman’s visit


The Chairman of SCB Nigeria,HRM Oba Oladele Olashore, CONgiving a speech during the formalcommisioning of the Bank’s AbujaBranch

Members of the “Choir” (All SCB Abuja Branch Staff) regalingthe Group Chairman, Bryan Sanderson with their sonorousvoices with the rendition of both stanzas of our national anthemduring the commisioning ceremony of their branch.

Standing from left to right,Standard Chartered Bank’sCEO for Africa, SherazamMazari discussing withAmbassador ShehuMalami and Mr. EbbyEssoka, two of theDirectors of SCB in Nigeria


The Executive Director, ConsumerBank, David Wallace giving aspeech during the branchcommissioning

Members of “The Clan”waiting for the arrival of the GroupChairman prior to the cultural staff event organized in his honour


2005 Financial Review

21 Directors’ Report 24 Auditors’ Report 25 Statement of Accounting Policies 27 Balance Sheet 28 Profit and Loss Account 29 Statement of Cash Flows 30 Notes to the Financial Statements 41 Statement of

Value Added 42 Five-Year Financial Summary


Operating Results:The Bank’s results and transfers to reserves are as follows: 31December 31 December

2005 2004N’000 N’000

Profit before taxation 3,243,329 1,564,590Taxation (810,833) (237,443)Profit after taxation 2,432,496 1,327,147Transfer to statutory reserve (729,749) (398,144)Transfer to Small and Medium Industries reserve (243,249) (156,459)

Retained profit for the year 1,459,498 772,544

Directors and their Interests:The following directors of the Bank held office during the year and had interests in the shares of the Bankas noted: Number of ordinary

Shares of N1.00 held2005 2004

HRM Oba Oladele Olashore (Nigerian) Chairman Nil NilMr. Simon J. Millett (Australian) Managing Director 1 1Mr. Douglas Stoneham (British) Executive Director Nil NilAlhaji Shehu Malami (Nigerian) Director Nil NilMr. Ebenezer Essoka (Camerounian) Director Nil NilMr. David Wallace (British) Executive Director Nil Nil

(Appointed 1/01/05)Ms. Helen Dennis (British) Director Nil Nil

(Appointed 1/01/05)Ms. Ann Grant (British) Director Nil Nil

(Appointed 1/12/05)

In accordance with the provisions of Section 259 of the Companies and Allied Matters Act 1990, onethird of the directors of the company shall retire from office. The directors to retire in every year shall bethose who have been longest in office since their last election. In accordance with the provisions of thissection, Messrs. Douglas Stoneham and. Ebenezer Essoka retire by rotation and, being eligible, offerthemselves for re-election.

Directors’ ReportFor the year ended 31 December 2005

The directors present their annual report on theaffairs of Standard Chartered Bank Nigeria Limited(“the Bank”), together with the financialstatements and auditors’ report for the year ended31 December 2005.

Legal FormThe Bank was incorporated as a private limitedliability company on 6 May, 1999. It obtained acommercial banking licence on 6 September,1999 and commenced business on 15 September,1999. The Bank was issued a universal bankinglicense on 5 February, 2001.

Beneficial OwnershipThe Bank is wholly owned by Standard CharteredHoldings (Africa) BV, a wholly owned subsidiaryof Standard Chartered Bank, United Kingdom.

Principal Activity and Business Review:The principal activity of the Bank continues to bethe provision of commercial banking services toall its corporate and individual customers.

The New N25 billion Minimum Capital Basefor all Banks:The Central Bank of Nigeria (CBN) prescribed aminimum capital base of N25 billion for all banksoperating in Nigeria effective 31 December 2005.As noted in Note 27, Standard Chartered BankGroup recapitalized its Nigerian subsidiary duringthe year by an additional amount ofN19,285,909,532. The Banks’ shareholders’ fundas at 31 December 2005 was N26,652,839,000.CBN has approved the Bank’s recapitalization.


Statement of Directors’ Responsibilities:This statement, which should be read in conjunction with the Auditors’ Report, is made with a view tosetting out for shareholders, the responsibilities of the Directors of the Bank with respect to the financialstatements.

In accordance with the provisions of the CAMA, 1990 and Banks and Other Financial Institutions Act1991, the Directors are responsible for the preparation of annual financial statements which give a trueand fair view of the state of affairs of the Bank and of the profit or loss for the financial year.

The responsibilities include ensuring that:

(a) appropriate internal controls are established both to safeguard the assets of the Bank and to preventand detect fraud and other irregularities;

(b) the Bank keeps accounting records which disclose with reasonable accuracy the financial positionof the Bank and which have been prepared using suitable accounting policies that have beenconsistently applied and ensure that the financial statements comply with the requirements of theCompanies and Allied Matters Act 1990 and Banks and Other Financial Institutions Act 1991;

(c) the Bank has used suitable accounting policies, consistently applied and supported by reasonableand prudent judgments and estimates, and that all applicable accounting standards have beenfollowed; and

(d) it is appropriate for the financial statements to be prepared on a going concern basis unless it ispresumed that the Bank will not continue in business.

Fixed Assets:Information relating to changes in tangible fixed assets is given in Note 6 to the financial statements.

Charitable Contributions:The Bank identifies with the aspirations of the community and the environment in which it operates. TheBank made contributions to charitable and non-political organizations amounting to N4,813,000 (2004:N6, 877,000) during the year, as listed below:

N’000Walk for Sight (see Note below) 3,502Society for Women and Aids in Africa (SWAAN) 447Women in Management and Business 250Nigerian Agricultural Insurance Corporation (NAIC) 164Saint Saviours School 100Tosin Jegede Foundation 100British Women’s Group 100Elekahia Community 100Lagos Caledonian Society 50

4,813

On 10 December 2005, the Bank organized a “Walk for Sight” to raise N13.1 million (USD100,000) torestore sight to over 2,300 cataract patients throughout Nigeria by end 2006. A total amount of N3.5million was spent by the Bank in organizing the event which raised N10.2 million (USD78,000). Seventypercent of total funds raised will be donated to Sight Savers International (in Nigeria), whilst the balanceof thirty percent will go to Nigeria Society for the Blind.



Employment of Disabled Persons:The Bank operates a non-discriminatory policyon recruitment. Applications for employmentby disabled persons are always fullyconsidered, bearing in mind the respectiveaptitudes and abilities of the applicantsconcerned. In the event of members of staffbecoming disabled, every effort is made toensure that their employment with the Bankcontinues and that appropriate training isarranged. It is the policy of the Bank that thetraining, career development and promotion ofdisabled persons should, as far as possible, beidentical with those of other employees.

During the year under review, the Bank had nodisabled persons in its employment.

Health, Safety and Welfare at Work:The Bank accords high priority to the health,safety and welfare of its employees both in andoutside their place of work. In furtherance ofthis, the Bank has a group life insurance policyand a group accident policy to adequatelyinsure and protect its employees. The servicesof clinics are retained in several locations tofacilitate employees’ access to health care.

Employee Involvement and Training:The Bank is committed to keeping employeesas fully informed as possible regarding itsperformance and progress. Opinions andsuggestions of staff members are sought andconsidered not only on matters affecting themas employees but also on the general businessof the Bank.

Each employee has a documented training andcareer development program. To this end, shortand long term training programs are tailored tosuit the requirements of both employees andthe Bank. Sound management and professionalexpertise are considered to be the Bank’smajor assets, and investment in their futuredevelopment continues to be top priority.Employees are adequately rewarded andmotivated to achieve results.

Auditors:KPMG Professional Services have indicatedtheir willingness to continue in office inaccordance with Section 357(2) of theCompanies and Allied Matters Act, 1990.

BY ORDER OF THE BOARD

Fola AkandeCompany Secretary

Plot 105B Ajose Adeogun StreetVictoria IslandLagos

1 March, 2006



To the Members of Standard Chartered Bank Nigeria Limited:

We have audited the accompanying financial statements of Standard Chartered Bank Nigeria Limited(“the Bank”) as at 31 December, 2005 set out on pages 25 to 42 which have been prepared on the basisof the accounting policies set out on pages 25 to 26.

Respective responsibilities of directors and auditorsAs described in the Statement of Directors’ Responsibilities in relation to the financial statements set outon page 22, the Directors are responsible for the preparation of the financial statements. It is ourresponsibility to express an independent opinion, based on our audit, on those statements and toreport our opinion to you.

Basis of opinionWe conducted our audit in accordance with International Standards on Auditing. An audit includesexamination, on a test basis, of evidence relevant to the amounts and disclosures in the financialstatements. It also includes an assessment of the significant estimates and judgments made by thedirectors in the preparation of the financial statements, and of whether the accounting policies areappropriate to the Bank’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial statements are free from material misstatement, whether caused by fraud or other irregularityor error. In forming our opinion, we also evaluated the overall adequacy of the presentation of informationin the financial statements, and assessed whether the Bank’s books of account had been properly kept.We believe that our audit provides us with a reasonable basis for our opinion.

Banks and Other Financial Institution Act, 1991Based on our audit and the representations received, to the best of our knowledge and belief, the Bankcontravened sections 23(1) and 60(1) of the Banks and Other Financial Institutions Act, 1991 and CBNcircular numbers ECD/AD/122/87 and BSD/1/2003 during the year ended 31 December 2005. Thesecontraventions which are more fully set out in Note 26 to the financial statements have been reported tothe Central Bank of Nigeria and the assessed penalties paid.

OpinionIn our opinion,i. the Bank’s books of account have been properly kept;

ii. the financial statements referred to above, which are in agreement with the books of account, givea true and fair view of the state of affairs of the Bank as at 31 December, 2005 and of its profit andcash flow for the year then ended, and have been properly prepared in accordance with the Banksand Other Financial Institutions Act, 1991, relevant Central Bank of Nigeria circulars, generallyaccepted accounting principles in Nigeria and the Companies and Allied Matters Act, 1990.

Lagos, Nigeria

1 March, 2006

Auditor’s Report

Abayomi D. SanniAdetola P. AdeyemiJoseph O. Tegbe

Adebisi O. LamikanraAdewale K. AjayiOlumide O. Olayinka

Adekunle A. ElebuteAyodele H. OthihiwaOluseyi T. Bickersteth

KPMG Professional Services, a Partnership established underNigerian law, is a member of KPMG International, a SwissCooperaive. All rights reserved.

Registered in Nigeria No BN 986925

KPMG Professional Services22a Gerrard Road, IkoyiPMB 40014, FalomoLagos

Telephone 234 (1) 2694660-4234 (1) 2696040-4234 (1) 2692635

Fax 234 (1) 2691248234 (1) 2691908

Internet www.kpmg.com


Statement of Accounting Policies

A summary of the principal accounting policies, all of which have been applied consistently throughoutthe current and preceding years, is set out below:

(a) Basis of AccountingThe financial statements are prepared under the historical cost convention.

(b) InvestmentsShort-term investments are stated at face value as they are held until maturity. Unearned income isdeferred and amortised as earned.

Long term investments are stated at cost. Provisions are made for permanent diminution in the valueof such investments as appropriate.

(c) Loans and AdvancesLoans and advances are stated net of provisions. A specific risk provision for loan impairment isestablished to provide for management’s estimate of credit losses as soon as the recovery of anexposure is identified as doubtful. This provision is made for each account that is not performing inaccordance with the terms of the related facility. This is in accordance with the Statement of AccountingStandards for Banks and Non-Bank Financial institutions (SAS 10) issued by the Nigerian AccountingStandards Board and the Prudential Guidelines issued by the Central Bank of Nigeria in the mannerstated below:

Number of days of outstandingprincipal/interest Classification Required Provision

%90 days but less than 180 days Substandard 10180 days but less than 360 days Doubtful 50Over 360 days Lost 100

A provision of at least 1% is made for all performing accounts to recognize losses in respect of risksinherent in any credit portfolio.

When a loan is deemed not collectible, it is written off against the related provision and subsequentrecoveries are credited to the income statement.

(d) Repurchase AgreementsThe Bank enters into purchases (sales) of securities under agreement to resell (repurchase) substantiallyidentical securities at a certain date in the future at a fixed price. Securities repurchased subject tocommitments to resell them at future dates are accounted for as repurchase transactions. Securitiessold under repurchase agreements are recognized in the balance sheet and the proceeds from thesale of the securities are reported as liabilities. The net sale and repurchase consideration is recognizedover the period of the transaction in the profit and loss account.

(e) Fixed AssetsFixed assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis to write-off the cost of assets over their estimated useful lives, from the month of acquisition.The Bank’s rates of depreciation are:

Buildings - 2%Furniture - 20%Fittings - 10%Equipment - 33.33%Computer hardware - 33.33%Computer software - 33.33%Motor vehicles - 33.33%Leasehold improvements - Over the period of the leaseLand - Not depreciatedWork in progress - Not depreciated

Gains or losses on the disposal of fixed assets are included in the profit and loss account.



(f) Income RecognitionIncome is recognized as follows:

(i) Interest income is recognised on an accrualbasis and credited to income only when ithas been irrevocably earned. Interest overduefor more than 90 days is suspended andrecognised on cash basis only;

(ii) Credit related income is spreadsystematically over the tenor of the facilitywhere they constitute at least 10% of theprojected average annual yield of thefacility, otherwise, credited to income atthe time of occurrence.

(iii) Non-credit related fee income isrecognised at the time the service or therelated transactions are effected.

(iv) Gains and losses on investment securitiesare recorded in income upon the sale ofthe securities. Temporary fluctuations inthe value of investment securities are notrecognised.

(g) Foreign Currency ItemsTransactions denominated in foreigncurrencies are converted to Naira at the actualexchange rates as of the date of thetransaction (or, where appropriate, the dateof the related forward contract). Monetaryassets and liabilities denominated in foreigncurrencies at the balance sheet date aretranslated at the official rates of exchangeprevailing at that date. Any gain or loss arisingfrom a change in exchange rates subsequentto the date of the transaction is included inthe profit and loss account.

(h) TaxationIncome tax expenses / credits are recognizedin the profit and loss account. Current incometax is the expected tax payable on the taxableincome for the year, using statutory tax ratesat the balance sheet date.

(i) Deferred TaxationDeferred taxation, which arises from timingdifferences in the recognition of items foraccounting and tax purposes, is calculatedusing the liability method. Deferred taxationis provided fully on timing differences, whichare expected to reverse at the rate of tax likelyto be in force at the time of reversal.

(j) Off Balance Sheet TransactionsTransactions to which there are no directbalance sheet risks to the Bank are reportedand accounted for as off balance sheettransactions and comprise:

Acceptances:Acceptances are undertakings by the Bankto pay bills of exchange drawn on customers.The Bank expects most acceptances to besettled simultaneously with the reimbursementfrom customers. Acceptances, which meet theconditions, set out in Central Bank of Nigeria(CBN) Guidelines on the treatment of BankersAcceptances and Commercial Papers areaccounted for and disclosed as contingentliabilities. The net income relating to theseacceptances are recognized and reported inthe profit and loss statements.

Guarantees and performance bonds:The Bank provides financial guarantees andbonds to third parties on the request ofcustomers in form of bid and performancebonds or advance payment guarantees.

The amounts reflected in the financialsstatements for bonds and guaranteesrepresent the maximum loss that would berecognized at the balance sheet date ifcounter-parties failed completely to performas contracted. Commissions and feescharged to customers for services renderedin respect of bonds and guarantees arerecognized at the time the services ortransactions are effected.

Letters of creditThe bank provides letters of credit toguarantee the performance of customers tothird parties.These are accounted for as off balance sheetitems. Commissions and fees charged tocustomers for the service are recognized atthe time the service or transaction is effected.

(k) Cash and cash equivalentsFor the purpose of reporting cashflows, cashand cash equivalents comprise cash andshort-term funds and has been reported grossof provision for doubtful balances.

(l) PensionIn compliance with the new Pension Reform Act2004, which took effect from January 2005, the Bankcommenced the deduction of pension contributionsat the rate of 7.5% of basic salary, transport and rentallowances as employee contribution and 7.5% ofbasic salary, transport and rent allowances asemployer’s contribution. Employee contributionsto the scheme are funded through payrolldeductions while the Bank’s contribution is chargedto the profit and loss account.

Prior to the Pension Reform Act 2004,contributions were deducted and remittedunder the NSITF scheme. The accumulateddeductions with the NSITF will be transferredto each individual’s designated Pension FundAdministrator.


Balance SheetAt 31 December 2005

31 December 31 DecemberNotes 2005 2004

N’000 N’000ASSETS:Cash and short-term funds 1 10,765,950 10,310,406Short-term investments 2 18,806,064 6,300,000Loans and advances 3 19,775,762 8,982,808Other assets 4 1,352,881 2,675,978Long-term investments 5 16,656,147 5,122,726Fixed assets 6 1,178,983 1,332,212

TOTAL ASSETS 68,535,787 34,724,130

LIABILITIES:Deposits and other accounts 7 33,440,322 23,526,202Other liabilities 8 7,398,379 5,866,675Taxation payable 9 1,028,226 267,274Deferred taxation 10 16,021 103,751

TOTAL LIABILITIES 41,882,948 29,763,902

NET ASSETS 26,652,839 4,960,228

CAPITAL AND RESERVES:Share capital 11 3,010,000 2,458,409Share Premium 12 18,708,524 -Statutory reserve 13 1,557,950 828,201Transfer to Small and Medium Industries reserve 14 598,413 355,164General reserve 15 2,777,952 1,318,454

SHAREHOLDERS’ FUNDS 26,652,839 4,960,228

Acceptances, bonds, guarantees and other obligationsfor the account of customers 16 11,151,044 8,159,551

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

)HRM Oba Oladele Olashore, CON )

) Directors)

Mr. Simon .J.Millett )

Approved by the Board of Directors on 1 March, 2006The accompanying notes form an integral part of these balance sheets.


Profit and Loss AccountFor the year ended 31 December 2005


N’000 N’000

GROSS EARNINGS 7,664,681 5,798,653

INTEREST AND DISCOUNT INCOME 17 4,716,961 3,777,962

INTEREST EXPENSE 18 (1,034,001) (1,624,299)

NET INTEREST INCOME 3,682,960 2,153,663Provision on risk assets 20 (106,492) (118,073)

NET INTEREST MARGIN 3,576,468 2,035,590

Other banking income 19 2,947,720 2,020,691

6,524,188 4,056,281Operating expenses (3,280,859) (2,491,691)

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 21 3,243,329 1,564,590Taxation 9 (810,833) (237,443)

PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 2,432,496 1,327,147

APPROPRIATIONS:Transfer to statutory reserve 13 (729,749) (398,144)Transfer to Small and Medium Industries reserve 14 (243,249) (156,459)

Retained profit, for the year 15 1,459,498 772,544

Earnings per share-Basic 22 99 Kobo 54 Kobo

The accompanying notes form an integral part of these profit and loss accounts.


Statement of Cash FlowsFor the year ended 31 December 2005


N’000 N’000

Net cash flow from operating activities before changes in operating assets 25 3,628,987 1,932,716

Changes in operating assets 26 (10,636,589) (703,952)

Income tax paid (137,611) (314,317)

(7,145,213) 914,447

Investing activities:Purchase of fixed assets (128,808) (691,683)Proceeds from sale of fixed assets 2,871 20,606Purchase of SME Investments (33,421) (122,726)Purchase of Federal Government of Nigeria bonds (11,500,000) -

Net cash flow from investing activities (11,659,358) (793,803)

Financing activities:Increase in Share Capital 551,591 -Share premium on new share capital 18,708,524 -

Net cash flow from investing activities 19,260,115 (793,803)

Net increase in cash and short-term funds 455,544 120,644Cash and short-term funds, beginning of year 10,310,406 10,189,762

Cash and short-term funds, end of year 10,765,950 10,310,406

The accompanying notes form an integral part of these statements of cashflows.


2005 Financial Review

21 Directors’ Report 24 Auditors’ Report 25 Statement of Accounting Policies 27 Balance Sheet 28 Profit and Loss Account 29 Statement of Cash Flows 30 Notes to the Financial Statements 41 Statement of

Value Added 42 Five-Year Financial Summary



2005 2004N’000 N’000








(Appointed 1/12/05)



















4,813













1 March, 2006











Lagos, Nigeria

1 March, 2006

Auditor’s Report







Telephone 234 (1) 2694660-4234 (1) 2696040-4234 (1) 2692635

Fax 234 (1) 2691248234 (1) 2691908






TOTAL ASSETS 68,535,787 34,724,130



NET ASSETS 26,652,839 4,960,228






) Directors)






N’000 N’000

GROSS EARNINGS 7,664,681 5,798,653
















N’000 N’000



Income tax paid (137,611) (314,317)

(7,145,213) 914,447










2005 2004N’000 N’000








(Appointed 1/12/05)



















4,813













1 March, 2006











Lagos, Nigeria

1 March, 2006

Auditor’s Report







Telephone 234 (1) 2694660-4234 (1) 2696040-4234 (1) 2692635

Fax 234 (1) 2691248234 (1) 2691908






TOTAL ASSETS 68,535,787 34,724,130



NET ASSETS 26,652,839 4,960,228






) Directors)






N’000 N’000

GROSS EARNINGS 7,664,681 5,798,653
















N’000 N’000



Income tax paid (137,611) (314,317)

(7,145,213) 914,447









Notes to the Financial StatementsFor the year ended 31 December 2005

1. Cash and Short-Term Funds: 31 December 31 December(a) Cash and short-term funds comprise: 2005 2004

N’000 N’000

Bank and cash balances in Nigeria: 1,191,178 667,646Current account and cash reserve with CBN 2,314,570 2,005,374Cheques in course of collections 24,573 196,765Bank balances with fellow Group companies outside Nigeria (see Note (b) below) 6,735,629 7,270,621Placements with other financial institutions in Nigeria 500,000 170,000

10,765,950 10,310,406

(b) Included in Bank balances outside Nigeria is an amount of N3,358,357,000 (2004: N2,174,654,000)which represents the Naira value of foreign currencies held on behalf of customers to coverletters of credit transactions. The corresponding liability for this amount is included in otherliabilities (see Note 8).

2. Short-term Investments: 31 December 31 December(a) Short-term investments comprise: 2005 2004

N’000 N’000Investments in Treasury Bills 16,883,581 6,300,000Investment in Special securities (see note (i) below) 1,922,483 -

18,806,064 6,300,000

(i) The Central Bank of Nigeria in its circular dated 1 December 2005 reduced the cash reserve ratioof banks in Nigeria from 11% to 5%. The amount of N 1.922 billion represents the excess fundthat Standard Chartered Bank had in its account as a result of the reduction, which the CentralBank of Nigeria has invested in a special instrument with a tenor of 91 days at a rate of 3% in linewith the circular.

3. Loans and Advances: 31 December 31 December(a) The classification of loans and advances 2005 2004

by security was as follows: N’000 N’000

Secured against real estate 2,295,077 1,425,906Otherwise secured 5,929,504 3,596,371Unsecured 11,803,348 4,145,500

20,027,929 9,167,777Loan loss provision (see Note (b) below)- Specific (15,454) (24,112)- Interest in suspense (1,839) (316)- General (234,874) (160,541)

19,775,762 8,982,808


Notes to the Financial StatementsFor the year ended 31 December 2005

26. Contraventions of the banks and other financial institutions act, 1991 and CBN Circulars:The Bank contravened the following provisions of the Banks and Other Financial Institutions Act(BOFIA, 1991) and CBN circulars during the year:

Section/ Nature of Number of PenaltyCircular Contravention Times N’000

60(1) Failure to implement recommendations inprevious routine examination report 1 500

60(1) Late filing of returns 4 1,06323(1) Non-display of lending rates in some branches 1 50060(1) Failure to net off accounts of a courier company

before remittance of funds 1 2,000

4,063

27 Capitalisation Plans:The Central Bank of Nigeria (CBN) prescribed a minimum capital base of N25 billion for all banksoperating in Nigeria effective 31 December 2005. In compliance with this new capital requirement,the Board of Standard Chartered Bank (UK) Plc approved the recapitalization of Standard CharteredBank Nigeria Limited by an amount of USD147 million (N19,285,909,532). This amount was appliedas follows:

(i) Call-up of 41,590,953 units of N1 ordinary share capital at N10 per share(ii) Creation and call-up of 510,000,000 units of N1 irredeemable non-cumulative preference shares

at N37 per share.

The Banks’ shareholders’ fund as at 31 December 2005 was N26,652,839,000, which is over andabove the new minimum capital requirement of N25,000,000,000. The approvals of all regulatoryagencies, including Central bank of Nigeria, have been obtained

28 Holding Company:The Bank is wholly owned by Standard Chartered Holdings (Africa) BV, a wholly owned subsidiary ofStandard Chartered Bank, United Kingdom.


Statement of Value AddedFor the year ended 31 December 2005

31 December 31 December

2005 % 2004 %

N’000 N’000

Gross earnings 7,664,681 5,798,653

Interest expense: Local (925,375) (1,317,808)

Foreign (108,626) (252,491)

6,630,680 4,174,354

Provision on risk assets and other assets (106,492) (118,073)

Bought-in materials and services (Local) (1,673,645) (1,314,320)

Value added 4,850,543 100 2,741,961 100

Applied to Pay:

Employees as wages, salaries and other staff costs 1,335,648 27 940,007 34

Government as taxes 810,832 17 237,443 9

Retained in the business:

- Depreciation 271,566 6 237,364 9

- Profit for the year (including all reserves) 2,432,497 50 1,327,147 48

4,850,543 100 2,741,961 100


Five-Year Financial Summary

2005 2004 2003 2002 2001N’000 N’000 N’000 N’000 N’000

ASSETSCash and short-term funds 10,765,950 10,310,406 10,189,762 9,861,083 4,315,201Short term investments 18,806,064 6,300,000 3,173,552 5,180,000 1,256,164Loans and advances 19,775,762 8,982,808 6,586,843 2,464,750 1,015,892Other assets 1,352,881 2,675,978 392,296 184,020 204,312Long-term investments 16,656,147 5,122,726 5,000,000 - -Fixed assets 1,178,983 1,332,212 911,188 736,321 279,580

68,535,787 34,724,130 26,253,641 18,426,174 7,071,149

LIABILITIESDeposit and other accounts 33,440,322 23,526,202 14,527,216 11,416,144 3,195,465Other liabilities 7,398,379 5,866,675 7,645,445 5,178,661 2,807,030Taxation payable 1,028,226 267,274 389,313 110,739 6,000Deferred taxation 16,021 103,751 58,586 103,933 -

41,882,948 29,763,902 22,620,560 16,809,477 6,008,495

NET ASSETS 26,652,839 4,960,228 3,633,081 1,616,697 1,062,654

CAPITAL AND RESERVESShare capital 3,010,000 2,458,409 2,458,409 1,166,409 1,166,409Share Premium 18,708,524 - - - -Statutory reserve 1,557,950 828,201 430,057 212,742 46,529Small and MediumIndustries reserve 598,413 355,164 198,705 92,959 16,110General reserves 2,777,952 1,318,454 545,910 144,587 (166,394)

SHAREHOLDERS’ FUNDS 26,652,839 4,960,228 3,633,081 1,616,697 1,062,654

INCOME & PROFITSGross earnings 7,664,681 5,798,653 3,558,995 2,308,556 1,055,652Net revenue 6,524,188 4,056,281 2,819,437 1,745,528 758,769Operating expenses (3,280,859) (2,491,691) (1,761,980) (977,038) (597,671)PROFIT BEFORE TAXATION 3,243,329 1,564,590 1,057,457 768,490 161,098Taxation (810,833) (237,443) (333,073) 214,447 6,000PROFIT AFTER TAXATION 2,432,496 1,327,147 724,384 554,043 155,098Basic earnings per share 99k 54k 45k 47k 13kNet assets per share 1,081k 202k 148k 138k 91k


Notes

Annual Report and Accounts 2005 - Standard Chartered · re-capitalization, Standard Chartered still...

Documents

Transcript of Annual Report and Accounts 2005 - Standard Chartered · re-capitalization, Standard Chartered still...