ZENITH BANK PLC CONSOLIDATED AND SEPARATE INTERIM ...

ZENITH BANK PLC CONSOLIDATED AND SEPARATE INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2017

Zenith Bank Plc Consolidated and separate interim financial statements for the period ended March 31, 2017

Index

Index

Page

Certification pursuant to section 60(2) of Investment and Securities Act No.29 of 2007

2

Statement of Directors' responsibility

3

Statements of profit or loss and other comprehensive income

4-5

Statements of financial position

6-7

Statements of cash flows

8-9

Statements of changes in equity

10 - 11

Notes to the consolidated and separate interim financial statements

12 - 42

1


Certification pursuant to section 60(2) of Investment and Securities Act No. 29 Of 2007 We the undersigned hereby certify the following with regards to our financial report for the period ended 31 March 2017 that: (a) We have reviewed the report; (b) To the best of our knowledge , the report does not contain: (i) Any untrue statement of a material fact, or (ii) Omit to state a material fact, which would make the statements misleading in the light of the circumstances under which such statements were made; (c) To the best of our knowledge, the financial statement and other financial Information included in the report fairly present in all material respects the financial condition and results of operation of the company as of, and the periods presented in the report. (d) We: (i) Are responsible for establishing and maintaining internal controls; (ii) Have designed such internal controls to ensure that material information relating to the company and its consolidated subsidiary is made known to such officers by others within those entities particularly during the period in which the periodic reports are being prepared; (iii) Have evaluated the effectiveness of the company's internal controls as of date within 90 days prior to the reports; (iv) Have presented in the report our conclusions about the effectiveness of our internal controls based on our evaluation as of that date; (e) We have disclosed to the auditors of the company and audit committee: (i) All significant deficiencies in the design or operation of internal controls which would adversely affect the company's ability to record, process, summarize and report financial data and have identified for the company's auditors any material weakness in internal controls, and (ii) Any fraud, whether or not material, that involve management or other employees who have significant role in the company's internal controls; (f) We have identified in the report whether or not there were significant changes in the internal controls or other factors that could significantly affect internal controls subsequent to the date of our evaluation, including any corrective actions with regards to significant deficiencies and material weaknesses .

Peter Amangbo

Ebenezer Onyeagwu

Group Managing Director/CEO

Deputy Managing Director

FRC/2013/ICAN/00000001310

FRC/2013/ICAN/00000003788

2


Statement Of Directors' Responsibilities In relation to the Interim financial statements for the period ended 31 March 2017 The Directors accept responsibility for the preparation of interim financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of Nigeria, the Banks and Other Financial Institutions Act of Nigeria and relevant Central Bank of Nigeria regulations. The Directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of Nigeria and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatements whether due to fraud or error. The Directors have made assessment of the Bank's ability to continue as a going concern and have no reason to believe that the Bank will not remain a going concern in the year ahead. Signed on behalf of the board of directors by:

Peter Amangbo Group Managing Director/CEO FRC/2013/ICAN/00000001310

Ebenezer Onyeagwu Deputy Managing Director FRC/2013/ICAN/00000003788

3


Statements of profit or loss and other comprehensive income Group

Bank

3 Months 3 Months 31-Mar-17 31-Mar-16

In millions of Naira

12 Months 31-Dec-16

3 Months 3 Months 12 Months 31-Mar-17 31-Mar-16 31-Dec-16

Notes

Gross earnings

147,736

Interest and similar income Interest and similar expense

14 15

Net interest income Impairment charge for credit loss

16

Net interest income after impairment charge for credit losses Fees and commissions income Trading income/(loss) Other income Share of profit from associates Amortisation of intangible assets Depreciation of property and equipment Personnel expenses Operating expenses

17 18 19 31 36 35 45 20

Profit before tax Income tax expense

21

99,435

507,997

118,092 84,177 384,557 (47,488) (26,020) (144,378)

88,591

454,808

105,144 (43,666)

76,847 343,556 (23,763) (131,910)

58,157 240,179 (2,577) (32,350)

61,478 (7,300)

53,084 211,646 (2,458) (26,295)

62,718 55,580 207,829 21,128 15,668 68,444 7,064 (1,893) 28,398 1,452 1,483 26,598 48 (282) (341) (1,435) (2,723) (2,252) (9,679) (18,166) (16,885) (69,042) (26,991) (19,287) (94,365)

54,178 17,300 7,051 564 (232) (2,492) (16,239) (23,205)

50,626 185,351 12,862 55,619 (1,893) 28,398 775 27,235 (328) (1,375) (2,039) (8,664) (15,410) (62,235) (17,517) (84,402)

70,604 (7,886)

Profit after tax

130,059

44,200 (6,701)

32,121 156,748 (5,548) (27,096)

36,925 (4,500)

27,076 139,927 (4,196) (20,642)

37,499

26,573

32,425

22,880

119,285

129,652

Other comprehensive income: Items that will never be reclassified to profit or loss Fair value movements on equity instruments

957

157

6,636

957

157

6,636

Items that are or may be reclassified to profit or loss Foreign currency translation differences

509

(10)

30,338

-

-

-

Other comprehensive income for the period Total comprehensive income for the period 4

1,466

147

36,974

957

38,965

26,720

166,626

33,382

(2,390) 23,037

6,636 125,921


Statement of profit or loss and other comprehensive income Group

Bank

3 Months 3 Months 12 months 31-Mar-17 31-Mar-16 31-Dec-16

In millions of Naira

3 Months 3 Months 12 months 31-Mar-17 31-Mar-16 31-Dec-16

Notes

Profit attributable to: Equity holders of the parent Non-controlling interests

37,446 53

26,525 48

129,434 218

32,425 -

22,880 119,285 -

Total comprehensive income attributable to: Equity holders of the parent Non-controlling interests

38,926 39

26,671 49

166,236 390

33,382 -

23,037 -

119 k

84 k

412 k

103 k

Earnings per share attributable to equity holders of parent Basic and diluted

22

5

73 k

125,921 -

380 k


Statements of financial position as at March 31, 2017 Group In millions of Naira

Bank

Note(s) 31-Mar-17 31-Mar-16 31-Dec-16

Assets Cash and balances with central banks Treasury bills Asset pledged as collateral Due from other banks Derivative assets Loans and advances Investment securities Investments in subsidiaries Investments in associates Deferred tax assets Other assets Property and equipment Intangible assets

23 24 25 26 27 28 29 30 31 33 34 35 36

Total assets Liabilities Customers' deposits Derivative liabilities Current income tax Deferred tax liabilities Other liabilities On-lending facilities Borrowings Debt securities issued

37 32 33 38 39 40 41

Total liabilities

6

31-Mar-17 31-Mar-16 31-Dec-16

604,419 646,387 338,996 389,541 19,519 2,349,470 221,967 6,638 49,119 105,768 8,004

638,242 441,882 259,303 367,158 5,756 1,928,526 208,638 578 5,516 43,838 89,218 3,424

669,058 557,359 328,343 459,457 82,860 2,289,365 199,478 6,440 37,536 105,284 4,645

565,419 468,498 338,996 325,598 19,519 2,124,199 129,619 33,003 6,041 48,894 93,576 7,405

614,141 399,182 259,303 364,838 5,756 1,781,702 145,598 33,003 90 5,015 43,064 82,857 3,066

627,385 463,787 325,575 354,405 82,860 2,138,132 118,622 33,003 6,041 35,410 94,613 3,903

4,739,828

3,992,079

4,739,825

4,160,767

3,737,615

4,283,736

2,996,262 2,027 13,578 46 227,372 360,213 296,041 156,431

2,563,932 281 7,972 35 153,724 306,110 237,527 101,425

2,983,621 66,834 8,953 45 208,680 350,657 263,106 153,464

2,441,246 2,027 11,427 265,881 360,213 329,379 156,431

2,348,809 281 6,614 166,866 306,110 237,527 101,425

2,552,963 66,834 6,927 243,736 350,657 292,802 153,464

4,051,970

3,371,006

4,035,360

3,566,604

3,167,632

3,667,383


Statements of financial position as at March 31, 2017 In millions of Naira

Note(s)

Group

Bank

31-Mar-17 31-Mar-16 31-Dec-16

31-Mar-17 31-Mar-16 31-Dec-16

Capital and reserves Share capital Share premium Retained earnings Other reserves

42 43 43 43

15,698 255,047 244,019 172,072

15,698 255,047 226,640 123,046

15,698 255,047 267,008 165,729

15,698 255,047 190,497 132,921

15,698 255,047 183,288 115,950

15,698 255,047 218,507 127,101

Attributable to equity holder of the parent Non-controlling interests

43

686,836 1,022

620,431 642

703,482 983

594,163 -

569,983 -

616,353 -

Total shareholders' equity

687,858

621,073

704,465

594,163

569,983

616,353

Total liabilities and equity

4,739,828

3,992,079

4,739,825

4,160,767

3,737,615

4,283,736

7


Statements of cash flows Group In millions of Naira

Bank

Note(s) 31-Mar-17 31-Mar-16 31-Dec-16

31-Mar-17 31-Mar-16 31-Dec-16

Cash flows from operating activities Profit after tax for the period Adjustments for non-cash items: Impairment Impairment loss on overdraft Impairment loss on term loan Impairment loss on on-lending Impairment loss on leases Impairment loss on other assets Impairment on investment in associates Fair value changes in trading bond Depreciation of property and equipment Amortisation of intangible assets Dividend income Net revaluation loss on debt securities issued Interest and similar income Interest and similar expense share of (profit)/loss of associates Profit on sale of property and equipment Tax expenses

Changes in operating assets and liabilities: Net (increase)/decrease in Loans and advances Net (increase)/decrease in Other assets Net (increase)/decrease in Treasury bills with maturity greater than 3 months Net (increase)/decrease in treasury bills (FVTPL) Net (increase)/decrease in asset pledged as collateral Net (increase)/decrease in investment securities Net (increase)/decrease in Restricted balances (cash reserves) Net (increase)/decrease in Debt securities Net (increase)/decrease in Customer deposits Net (increase)/decrease in Other liabilities Net (increase)/decrease in derivative assets Net (increase)/decrease in derivative liabilities

37,499

16

31 19

7,610 276 (34) 2,723 282 2,967 (118,092) 47,488 (27) 6,701

26,573

2,400 177 206 2,252 341 1,607

129,652

32,425

13,786 19,099 (1,336) (13) 284 530 328 9,679 1,435 (349) 53,256

7,300 (21) 2,492 232 2,967

(84,177) (384,557) 26,020 144,378 (48) (58) (236) 5,548 27,096

(105,144) 43,666 (27) 4,500

22,880

2,400 58 206 2,039 328 1,607

119,285

12,811 14,465 (1,336) (13) 278 90 328 8,664 1,375 (3,949) 53,256

(76,847) (343,556) 23,763 131,910 (57) (172) 4,196 20,642

(12,607)

(19,159)

13,032

(11,610)

(19,427)

14,078

(67,947)

69,310

(298,548)

6,633

76,008

(283,807)

(13,484) 91,101

(21,391) (68,461)

(14,015) (63,608)

(11,583) 85,466

(21,064) (15,046) (64,047) (111,193)

(53,626)

-

(20,683)

(53,625)

-

(20,683)

(10,653)

5,748

(63,292)

(13,421)

5,017

(61,255)

(21,532)

-

18,337

(10,040)

-

513

(90,009) (124,630)

881

38,410

(89,962) (124,563)

12,641

4,645 4,009

420,498

(111,717)

5,283 13,753

215,326

18,780 63,341 (64,807)

(50,857) 2,725 (103)

4,047 (74,379) 66,450

23,666 63,341 (64,807)

(45,289) 2,725 (103)

31,312 (74,379) 66,450

(62,014) (158,802) (185,407)

8

(93,082) (141,847) (276,734)


Statements of cash flows Group In millions of Naira Interest received Dividends received Interest paid Tax paid VAT paid

Note(s)

21

Net cash flows(used in)/generated from operating activities

Bank

31-Mar-17

31-Mar-16

103,945 (33,059) (261) (1,061)

73,185 345,410 349 (23,981) (139,139) (856) (22,444) (481) (429)

7,550

31-Dec-16

31-Mar-17

31-Mar-16 31-Dec-16

93,006 (30,532) (1,061)

65,855 312,529 3,949 (21,724) (127,290) (17,159) (481) (212) (98,197) (104,917)

(110,935)

(1,660)

(31,669)

Cash flows from investing activities 35

(7,113) 125

(4,604) 76

(27,421) 603

(4,686) 112

(3,728) 76

(22,737) 360

36

(587) -

(675) (142) -

(2,417) 681

(587) -

(641) (157) -

(2,066) -

(7,575)

(5,345)

(28,554)

(5,161)

(4,450)

(24,443)

9,556

19,229

63,776

9,556

19,229

63,776

32,935 (55,572)

148 (21,483) -

82,017 (77,773) 390 (56,514)

35,141 (55,572)

148 (30,732) -

104,043 (79,352) 390 (56,514)

Net cash from/(used) in financing activities

(13,081)

(2,106)

11,896

(10,875)

(11,355)

32,343

(Decrease)/Increase in cash and cash equivalent Cash at the beginning of the year Effect of exchange rate movement on cash balances

(13,106) (118,386)

(18,318)

(47,705) (114,002)

(97,017)

727,399 (68)

709,714 (71)

709,714 36,003

566,358 -

663,375 -

663,375 -

714,225

591,257

727,399

518,653

549,373

566,358

Purchase of property and equipment Proceeds from sale of property and equipment Purchase of intangible assets Purchase of equity securities Proceeds from sale of equity securities Net cash from/(used) in investing activities Cash flows from financing activities Net inflow from on-lending facilities Borrowings - inflow from long term borrowing -repayment of long term borrowing Repayment of debt securities issued interest Dividends paid

Cash and cash equivalent at the end of the period/year

48

9


Statements of changes in equity Attributable to equity holders of the Bank Share capital Share premium In millions of Naira

Foreign currency translation reserve

Revaluation reserve

Statutory reserve

SMIEIS reserve

Credit risk reserve

Retained earnings

Total

Non-controlling Total equity interest

267,008 32,583 -

703,482 37,446 523 957

983 53 (14) -

704,465 37,499 509 957

32,583 (55,572)

38,926 (55,572)

39 -

38,965 (55,572)

Group At January 01, 2017 Profit for the period Foreign currency translation differences Fair value movements on equity instruments

15,698 -

255,047 -

28,465 523 -

10,950 957

112,114 4,863 -

3,729 -

10,471 -

-

-

523 -

957 -

4,863 -

-

-

At March 31, 2017

15,698

255,047

28,988

11,907

116,977

3,729

10,471

244,019

686,836

1,022

687,858

At January 01, 2016 Profit for the period Transfer between reserves Foreign currency translation differences Fair value movements on equity instruments

15,698 -

255,047 -

(1,701) 30,166 -

4,314 6,636

93,093 19,021 -

3,729 -

23,465 (12,994) -

200,115 123,407 -

593,760 123,407 6,027 30,166 6,636

593 218 172 -

594,353 123,625 6,027 30,338 6,636

-

-

30,166 -

6,636 -

19,021 -

-

(12,994) -

123,407 (56,514)

166,236 (56,514)

390 -

166,626 (56,514)

15,698

255,047

28,465

10,950

112,114

3,729

10,471

267,008

703,482

983

704,465

Total comprehensive income for the period Dividends

Total comprehensive income for the period Dividends At December 31, 2016

10


Consolidated and separate statements of changes in equity In millions of Naira

Share capital

Bank At January 01, 2017 Profit for the period Fair value movement on equity instruments

15,698 -

255,047 -

10,950 957

-

-

At March 31, 2017

15,698

At January 01, 2016 Profit for the period Transfer between reserves Fair value movement on equity instruments

Total comprehensive income for the period Dividends

Total comprehensive income for the period Dividends At December 31, 2016

Share premium

Revaluation reserve

Statutory reserve

SMIEIS reserve

Credit risk reserve

Retained earnings

Total equity

104,293 4,863 -

3,729 -

8,129 -

218,507 27,562 -

616,353 32,425 957

957 -

4,863 -

-

-

27,562 (55,572)

33,382 (55,572)

255,047

11,907

109,156

3,729

8,129

190,497

594,163

15,698 -

255,047 -

4,314 6,636

86,400 17,893 -

3,729 -

21,350 (13,221) -

160,408 114,613 4,672 -

546,946 114,613 4,672 6,636

-

-

6,636 -

17,893 -

-

(13,221) -

119,285 (56,514)

125,921 (56,514)

15,698

255,047

10,950

104,293

3,729

8,129

223,179

616,353

11


Notes to the consolidated and separate interim financial statements 1.

The Bank

Zenith Bank Plc (the "Bank") was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on May 30, 1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commenced business on June 16, 1990. The Bank was converted into a Public Limited Liability Company on May 20, 2004. The Bank’s shares were listed on October 21, 2004 on the Nigerian Stock Exchange, and in August 2015, the bank was admitted into the Premium Board of the Nigerian Stock Exchange. The principal activity of the Bank is the provision of banking and other financial services to corporate and individual customers. Such services include granting of loans and advances, corporate finance and money market activities. The Bank has five subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pension Custodian (Nigeria) Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited and Zenith Bank (Gambia) Limited. The results of the bank's subsidiaries have been consolidated in these first quarter financial statements. 2.

Condensed statement of accounting policies

Interim Financial Statements The Condensed Financial Statements of Zenith Bank PLC and its subsidiaries (together "The Group") for the first quarter ended 31 March 2017 are presented and have been prepared based on the provisions of IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board. As a result, the Group applied the same accounting methods used for the Consolidated Financial Statements for the year ended 31 December 2016, prepared in accordance with the International Financial Reporting Standards(refer to Note “Basis of preparation” presented in the Statement of Accounting Policies (Notes 1 and 2 of the 2016 Financial Statements). Provisions for income taxes have been calculated on the basis of the estimated annual effective tax rate applied to the pre-tax profit. However, where a lower tax rate is applicable, the current rate is adjusted. The assessment of the annual effective tax rate takes into consideration any anticipated deferred tax assets not previously recognized. There were no changes to the accounting policies adopted by the group during the period in the preparation of its quarterly report. 3.

Seasonality of operations

The impact of seasonality or cyclicality on operations is not regarded as significant to the condensed interim consolidated financial statements. The operations of the bank and its subsidiaries are expected to be even within the financial year. However, global and national events and occurences may affect the group's operations depending on the extent of relationship these events and occurences have with the operations. 4.

Unusual items

There were no unusual transactions or occurences within the reporting period. 5.

Changes in Estimates

There were no changes to the accounting estimates applied by the group. 6.

Divdends

The directors did not recommend the payment of any dividend for the Group's first quarter results to 31 March 2017 (31 March 2016: NIL).

12


Notes to the consolidated and separate interim financial statements 7.

Significant events after the end of the interim period

There were no significant events that occurred after the first quarter that would necessiate a disclosure and/or adjustment to the quarterly return presented herein. 8.

Business combinations

There was no business combination during the period. 9.

Restructuring and reversals of restructuring provisions

No reversals of provision for restructing were made in the Group's books in the current period as there was no restructuring during the period neither were there reversal of previous restructuring arrangements for the first quarter results to 31 March 2017 (31 March 2016: NIL). 10.

Correction of prior period errors

No error has been noted in relation to the prior quarterly results. However, certain items reported in prior period returns have been restated to conform to current year presentation. This is to facilitate comparability. 11.

Impairment loss of property, equipment, intangible or other assets, and reversal of such impairment loss

Within the period under review, none of the group's property, plant and equipment was impaired and there were no reversals of previous impairment charges in the current period. 12.

Litigation settlements

There was litigation settlement of N1.3 million in the first quarter ended 31 March 2017 (31 March 2016: N1.5 million). 13. Segment The group's operations are primarily organised on the basis of its geographic coverage which are: Nigeria, Rest of Africa and Europe.

13


Notes to the consolidated and separate interim financial statements In millions of Naira Nigeria

Outside Nigeria Africa Europe

Total reportable segments

Eliminations Consolidated

In millions of Naira March 31, 2017 Revenue: Derived from external customers Derived from other business segments

127,881 676

10,577 -

3,559 36

142,017 712

1,897 (712)

143,914 -

Total revenue*

128,557

10,577

3,595

142,729

1,185

143,914

Interest expense Impairment charge for credit losses Admin and operating expenses

(43,666) (7,300) (43,575)

(4,033) (310) (3,412)

(499) (276) (1,256)

(48,198) (7,886) (48,243)

710 (918)

(47,488) (7,886) (49,161)

Profit before tax Tax expense

34,016 (5,073)

2,822 (1,284)

1,564 (344)

38,402 (6,701)

(977) -

39,379 (6,701)

Profit after tax

28,943

1,538

1,220

31,701

(977)

32,678

Nigeria

In millions of Naira March 31, 2017 Capital expenditure**

Outside Nigeria Africa Europe



6,288

1,106

306

7,700

Identifiable assets

4,180,125

274,510

350,531

4,805,166

(73,026)

4,732,140

Identifiable liabilities

3,572,882

219,160

229,793

4,021,835

26,268

4,048,103

* Revenues are allocated based on the location of the operations. ** Capital expenditure consists of expenditure on intangible assets and property and equipment during the period.

14

-

7,700


Notes to the consolidated and separate interim financial statements In millions of Naira Nigeria Enter Segment In millions of Naira 31 March 2016 Revenue: Derived from external customers

Outside Nigeria Banking Enter Enter Segment Segment

90,199

7,496

(23,763) (2,458) (35,712)

(2,231) (2,147)

Profit before tax Tax expense

28,266 (4,472)

Profit after tax

23,794

Share of profit of associates Interest expense Impairment charge for credit losses Operating expenses

Nigeria Enter Segment In millions of Naira 31 March 2016 Capital expenditure**

2,278



99,973

(538)

99,435

(565) (119) (906)

(26,559) (2,577) (38,765)

48 539 -

48 (26,020) (2,577) (38,765)

3,118 (904)

688 (172)

32,072 (5,548)

(49) -

32,121 (5,548)

2,214

516

26,524

(49)

26,573

Outside Nigeria Banking Enter Enter Segment Segment



4,772

350

157

5,279

Identifiable assets

3,755,685

151,623

214,672

4,121,980

(129,902)

3,992,078

Identifiable liabilities

3,169,150

123,690

176,234

3,469,074

(98,068)

3,371,006

* Revenues are allocated based on the location of the operations. ** Capital expenditure consists of expenditure on intangible assets and property and equipment during the period.

15

-

5,279


Notes to the Consolidated and separate interim financial statements Group In millions of Naira

3 Months 31-Mar-17

Bank

3 Months 12 Months 31-Mar-16 31-Dec-16


14. Interest and similar income Inter-bank placement Treasury bills Government and other bonds Loans and advances to customers

968 26,927 11,388 78,809

156 11,643 12,668 59,710

2,289 60,187 48,730 273,351

147 21,110 10,303 73,584

165 9,063 11,977 55,642

1,089 44,347 45,286 252,834

118,092

84,177

384,557

105,144

76,847

343,556

1,792 4,189 8,659 32,848

685 2,542 6,288 16,505

4,125 12,516 33,368 94,369

1,667 4,137 8,074 29,788

648 2,525 5,945 14,645

3,808 12,379 31,734 83,989

47,488

26,020

144,378

43,666

23,763

131,910

7,610 276 -

2,400 177 -

284 13,786 19,099 (1,336) (13) 530

7,300 -

2,400 58 -

278 12,811 14,465 (1,336) (13) 90

7,886

2,577

32,350

7,300

2,458

26,295

15. Interest and similar expense Current accounts Savings accounts Borrowed funds Time deposits

16. Impairment charge Other financial assets Overdrafts (See note 28) Term loans (See note 28) On-lending facilities (See note 28) Advances under finance lease (See note 28) Investment in Associates

16



3 Months 31-Mar-17

Bank



17. Fees and commission income Credit related fees Commission on turnover Current Account Maintenance Income from financial guarantee contracts issued Fees on electronic products Foreign currency transaction fees and commissions Asset management fees Auction fees income Corporate finance fees Foreign withdrawal charges Commission on agency and collection services

3,218 411 9,160 1,301 1,424 393 1,840 271 1,165 721 1,224

2,930 5,406 846 1,704 351 1,360 57 1,804 621 589

18,512 934 17,374 2,997 10,687 1,724 6,224 772 2,123 3,004 4,093

2,526 9,160 1,230 1,157 270 271 1,091 721 874

2,198 5,146 791 1,598 290 57 1,778 621 383

16,214 16,863 2,574 9,954 1,156 772 2,064 3,004 3,018

21,128

15,668

68,444

17,300

12,862

55,619

18. Trading income Foreign exchange trading (loss)/income Treasury bill trading income Bond trading (loss)/income

238 6,792 34

(2,299) 612 (206)

20,077 8,649 (328)

238 6,792 21

(2,299) 612 (206)

20,077 8,649 (328)

7,064

(1,893)

28,398

7,051

(1,893)

28,398

19. Other income Income on cash handling Gain on disposal of equity secuirities Dividend Income from equity instruments Gain on disposal of property and equipment Foreign currency revaluation gain

101 27 1,324

85 58 1,340

426 349 236 25,587

101 27 436

86 57 632

426 3,949 172 22,688

1,452

1,483

26,598

564

775

27,235

Dividend income from equity investments represents dividends received on equity intruments held for strategic purposes and for which the Group has elected to present fair value gains and losses in other comprehensive income.

17



3 Months 31-Mar-17

20. Operating expenses Directors' emolument Auditors' renumeration Deposit insurance premium AMCON Advertisement Bank charges Donations Telephone and postages Corporate promotions Fines and penalties Information technology Fraud and forgery Professional fees Insurances Operating lease Expenses on electronic products Printing and stationery Fuel and maintenance Security and cash handling Licenses, registrations and subscriptions Training and development Travel and hotel expenses Other expenses

18

Bank



233 128 2,700 5,355 960 458 859 393 506 2,388 24 690 616 915 875 460 5,561 806 470 854 513 1,227

122 143 2,400 4,688 1,006 345 968 351 360 1,289 7 454 319 693 551 350 2,574 708 395 958 341 265

1,057 626 10,393 18,752 4,991 1,461 2,564 1,530 2,450 16 5,856 33 3,323 1,907 3,288 3,818 1,627 14,021 3,322 1,770 3,215 2,998 5,347

95 105 2,700 5,355 897 411 858 304 484 2,277 24 619 586 571 795 346 3,877 711 407 812 359 612

60 105 2,400 4,688 970 323 967 304 339 1,199 7 402 298 508 528 275 1,987 672 305 919 237 24

404 486 10,393 18,752 4,801 1,331 2,557 1,277 2,323 16 5,425 33 2,957 1,799 2,077 3,661 1,227 10,911 3,060 1,573 3,012 2,513 3,814

26,991

19,287

94,365

23,205

17,517

84,402



3 Months 31-Mar-17

Bank



21. Taxation Major components of the tax expense

Current Corporate tax Excess dividend tax Information technology tax Education tax Effect of tax rates in foreign juridictions Prior year over provision Total income tax expense Deferred tax expense (see note 33)

6,701 6,701 -

5,548 5,548 -

12,726 12,909 1,448 1,009 (189) 27,903 (807)

4,500 4,500 -

4,196 4,196 -

6,530 12,909 1,385 917 (189) 21,552 (910)

Total tax expense

6,701

5,548

27,096

4,500

4,196

20,642

(b) The movement in the current income tax payable balance is as follows: At start of the period Tax paid Tax effect of translation Income tax charge

8,953 (261) (1,815) 6,701

3,579 (856) (192) 5,441

3,579 (22,444) (85) 27,903

6,927 4,500

2,534 4,080

2,534 (17,159) 21,552

At the end of the period

13,578

7,972

8,953

11,427

6,614

6,927

Applicable tax rate

30 %

19

30 %

30 %

30 %

30 %

30 %



3 Months 31-Mar-17

Bank



22. Earnings per share Profit attributable to shareholders of the Bank (N'million)

37,446

26,525

129,434

32,425

22,880

119,285

Number of shares in issue at end of the period (millions)

31,396

31,396

31,396

31,396

31,396

31,396

Weighted average number of ordinary shares in issue (millions)

31,396

31,396

31,396

31,396

31,396

31,396

Basic earnings per share

119 k

20

84 k

412 k

103 k

73 k

380 k


Notes to the consolidated and separate interim financial statements Group In millions of Naira

Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

15,257 61,491 446,982 80,689

82,372 62,307 493,563 -

36,953 103,921 447,495 80,689

6,529 31,764 446,437 80,689

77,182 43,553 493,406 -

24,342 75,036 447,318 80,689

604,419

638,242

669,058

565,419

614,141

627,385

23. Cash and balances with central banks Cash Operating accounts with Central Banks Mandatory reserve deposits with central bank Cash Requirement Special Intervention Reserve

Mandatory reserve deposits with central banks represents a percentage of customers' deposits ( prescribed from time to time by the central bank) which are not available for daily use. For the purposes of the Statement of cashflow, this balance is excluded from cash and cash equivalents. 24. Treasury bills Treasury bills (FVTPL) Treasury bills (Amortized cost)

Treasury bills less than 3 months maturity

128,007 518,380

56,132 385,750

74,381 482,978

128,006 340,492

56,132 343,050

74,381 389,406

646,387

441,882

557,359

468,498

399,182

463,787

247,936

79,420

127,068

154,762

63,800

112,575

5,173 190,072 143,751 -

97,202 51,000 111,101

2,768 76,428 113,544 135,603

5,173 190,072 143,751 -

97,202 51,000 111,101

76,428 113,544 135,603

338,996

259,303

328,343

338,996

259,303

325,575

25. Assets pledged as collateral Treasury bills pledged as collateral Bonds pledged as collateral Treasury bills under repurchase agreement Bonds under repurchase agreement

The total financial assets recognised in the statement of financial position that has been pledged as collateral for liabilities as at 31 March 2017 and 31 March 2016 as shown above. Financial assets are pledged as collateral as part of sales and repurchases, borrowing transaction and collection agency transactions under terms that are usual for such activities.

21



Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

16,485 253,917 119,139

16,823 273,985 76,350

12,344 291,254 155,859

303,882 21,716

320,183 44,655

336,868 17,537

389,541

367,158

459,457

325,598

364,838

354,405

19,519

5,756

82,860

19,519

5,756

82,860

26. Due from other banks Current balances with banks within Nigeria Current balances with banks outside Nigeria Placements with banks and discount houses

27. Derivative assets Forward contracts (fair value) Non-hedging derivative assets and liabilities The Group enters into currency forward contracts with counterparties. On initial recognition, the Group estimates the fair value of derivatives transacted with the counterparties using valuation techniques. In many cases, all significant inputs into the valuation techniques are wholly observable-e.g with reference to similar transactions in the wholesale dealer market. 28. Loans and advances to customers Overdrafts Term loans On-lending facilities Advances under finance lease

657,294 1,405,604 359,864 5,093

509,656 1,153,200 301,453 9,145

591,219 1,417,860 345,940 5,790

620,684 1,201,256 359,864 4,787

477,062 1,032,443 301,453 8,860

551,798 1,289,864 345,940 5,622

Gross loans and advances to customers Less: Allowances for impairment

2,427,855 (78,385)

1,973,454 (44,928)

2,360,809 (71,444)

2,186,591 (62,392)

1,819,818 (38,116)

2,193,224 (55,092)

(32,809) (45,576)

(22,282) (22,646)

(32,896) (38,548)

(17,607) (44,785)

(16,116) (22,000)

(17,607) (37,485)

Specific allowances for impairment Collective allowance for impairment Net loans and advances to customers

2,349,470

22

1,928,526

2,289,365

2,124,199

1,781,702

2,138,132



Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

Gross Overdrafts Less: Allowances for impairment

657,294 (37,115)

509,656 (20,745)

591,219 (30,567)

620,684 (29,545)

477,062 (15,712)

551,798 (22,245)

Specific allowances for impairment Collective allowance for impairment

(14,257) (22,858)

(9,860) (10,885)

(14,737) (15,830)

(7,478) (22,067)

(5,473) (10,239)

(7,478) (14,767)

Net Overdrafts

620,179

488,911

560,652

591,139

461,350

529,553

1,405,604 (39,865)

1,153,200 (21,429)

1,417,860 (39,472)

1,201,256 (31,442)

1,032,443 (19,651)

1,289,864 (31,443)

(18,552) (21,313)

(12,421) (9,008)

(18,159) (21,313)

(10,129) (21,313)

(10,643) (9,008)

(10,129) (21,314)

Overdrafts

Term loans Gross Term loans Less: Allowances for impairment Specific allowances for impairment Collective allowance for impairment Net Term loans

1,365,739

1,131,771

1,378,388

1,169,814

1,012,792

1,258,421

On-lending facilities Gross On-lending facilities Less: Allowances for impairment Collective allowance for impairment Net On-lending facilities

359,864 (1,337)

301,453 (2,673)

345,940 (1,337)

359,864 (1,337)

301,453 (2,673)

345,940 (1,337)

(1,337)

(2,673)

(1,337)

(1,337)

(2,673)

(1,337)

358,527

298,780

344,603

358,527

298,780

344,603

Advances under finance lease Gross Advances under finance lease Less: Allowances for impairment - collective

5,093 (67)

9,145 (80)

5,790 (67)

4,787 (67)

8,860 (80)

5,622 (67)

Net Advances under finance lease

5,026

9,065

5,723

4,720

8,780

5,555

23


Notes to the consolidated and separate interim financial statements In millions of Naira Reconciliation of impairment allowance on loans and advances to customers Group

Overdrafts

Term loans

Balance at 1 January 2017

30,568

39,472

1,337

67

71,444

Specific impairment Collective impairment

14,738 15,830

18,158 21,314

1,337

67

32,896 38,548

7,610

276

-

-

7,886

9,650 (2,040)

276

-

-

9,650 (1,764)

(161) (901)

117 -

-

-

(44) (901)

Additional impairment for the period Specific impairment Collective impairment Foreign currency translation and other adjustments Write-offs

On-lending Advances facilities under finance lease

Total

Balance at 31 March 2017

37,116

39,865

1,337

67

78,385


14,258 22,858

18,552 21,313

1,337

67

32,810 45,575

Balance at January 01, 2016

18,880

21,310

2,673

80

42,943


10,088 8,792

12,302 9,008

2,673

80

22,390 20,553

Additional impairment for the period

2,400

177

-

-

2,577


2,400

177 -

-

-

177 2,400

(57) -

-

-

Foreign currency translation and other adjustments Write-offs

(51) (484)

(108) (484)


20,745

21,430

2,673

80

44,928


9,860 10,885

12,422 9,008

2,673

80

22,282 22,646

24


Notes to the consolidated and separate interim financial statements In millions of Naira Bank Overdrafts Balance at January 01, 2017

22,245

On-lending Advances facilities under finance lease 31,443 1,337 67


7,478 14,767

10,129 21,314

1,337

67

17,607 37,485

7,300

-

-

-

7,300


9,550 (2,250)

-

-

-

9,550 (2,250)

Balance at March 31, 2017

29,545

31,443

1,337

67

62,392


7,478 22,067

10,130 21,313

1,337

67

17,608 44,784

Balance at January 01, 2016

13,312

19,651

2,673

80

35,716


5,474 7,838

10,642 9,009

2,673

80

16,116 19,600


2,400

58

-

-

2,458


1,178 1,222

58

-

-

1,178 1,280

(58)

-

-


Write-offs

-

Term loans

Total 55,092

(58)


15,712

19,651

2,673

80

38,116


5,473 10,239

10,643 9,008

2,673

80

16,116 22,000

25



Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

Gross investment Less: Unearned income

5,286 (151)

10,292 (1,147)

5,896 (106)

4,880 (145)

9,967 (1,107)

5,728 (106)

Net Investment

5,135

9,145

5,790

4,735

8,860

5,622

The net investment may be analysed as follows: No later than 1 year Later than 1 year and no later than 5 years

5,135

1,356 7,789

5,790

4,735

1,142 7,718

5,622

5,135

9,145

5,790

4,735

8,860

5,622

124,769 66,023 1,332,900 904,162

143,639 7,251 922,521 900,042

98,000 52,333 1,180,353 1,030,123

116,190 60,332 1,217,343 792,726

131,129 7,209 887,708 793,772

95,990 52,332 1,157,333 887,569

2,427,854

1,973,453

2,360,809

2,186,591

1,819,818

2,193,224

204,358 17,609

197,799 10,839

173,124 9,702 16,652

112,010 17,609

135,426 10,172

92,268 9,702 16,652

221,967

208,638

199,478

129,619

145,598

118,622

(c) Advances under finance leases

(d) The nature of security in respect of loans and advances is as follows: Secured against real estate Secured by shares of quoted companies Cash collateral, lien over fixed and floating assets, Unsecured

29. Investment securities (a) Analysis of investments Debt securities (measured at amortised cost) Debt securities (measured at FVTPL) Equity securities (measured at FVOCI)

26


Notes to the consolidated and separate interim financial statements In millions of Naira 30. Interests in subsidiaries including consolidated structured entities The following table lists the entities which are controlled by the Bank, either directly or indirectly through subsidiaries. Bank Name of company

Effective holding 2017 -% -% -% -% -%

Zenith Bank (Ghana) Limited Zenith Bank (UK) Limited Zenith Bank (Sierra Leone) Limited Zenith Bank (Gambia) Limited Zenith Pensions Custodian Limited

Effective Nominal share Nominal share holding capital held capital held 2016 2017 2016 98.07 % 6,444 6,444 100.00 % 21,482 21,482 99.99 % 2,059 2,059 99.96 % 1,038 1,038 99.00 % 1,980 1,980 33,003

27

33,003



31-Mar-17

31-Mar-16

Bank 31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

31. Investments in associates The Group's investments under the Small and Medium Enterprises Equity Investment Scheme ("SMEEIS") compiles with the Policy Guidelines for 2001 Fiscal Year (Monetary Policy Circular No. 35). The Group generally holds 20 percent or more of the voting power of the investee and is therefore presumed to have significant influence over the investee. In instances where the Group holds less than 20 percent of the voting power of the investee, the Group concluded that it has significant influence due to the Group's representation on the board of the relevant investee, with such board generally limited to a small number of board members. Balance at beginning of the period Share of profit brought foward Share of profit for the period Dimunition in investment

-

Balance at end of the period

-

1,312 440 48 (1,222) 578

1,312 440 (1,752) -

-

1,312 (1,222) 90

1,312 (1,312) -

The financial statements used in applying the equity method may be as of a date or for a period that is different from the Group due to practical difficulties preventing the associate from producing coterminous figures in time for the Group's reporting period. There were no published price quotations for any associates of the Group. Furthermore, there are no significant restrictions on the ability of associates to transfer funds to the Group in the form of cash dividends or repayment of loans and advances. 32. Derivative liabilities Derivative liabilities

28

2,027

281

66,834

2,027

281

66,834

2,027

281

66,834

2,027

281

66,834



31-Mar-17

31-Mar-16

Bank 31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

33. Deferred tax Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 30% (2016: 30%). Deferred tax assets At the start of the period Charge for the period Foreign exchange differences

6,440 (46) 244

5,607 (132) 41

5,607 661 172

6,041 -

5,131 (116) -

5,131 910 -

At the close of the period

6,638

5,516

6,440

6,041

5,015

6,041

At the start of the period Charge for the period

19 27

19 16

19 26

-

-

-

At the close of the period

46

35

45

-

-

-

Prepayments Deposits for shares Electronic card related receivables Intercompany receivables Receivables

27,273 22,512 4,588

22,771 21,449 4,588

14,759 10,533 17,498

25,326 650 22,610 968 4,588

21,171 650 20,848 777 4,588

13,075 650 8,207 929 17,797

Less: Specific impairment

(5,254)

(4,970)

(5,254)

(5,248)

(4,970)

(5,248)

49,119

43,838

37,536

48,894

43,064

35,410

Deferred tax liabilities

34. Other assets

29


Notes to the consolidated and separate interim financial statements In millions of Naira 35. Property and equipment Group Land Cost At start of the period Additions Disposals Reclassification/Transfer from WIP Reclassification between assets Foreign exchange movements At the end of the period

25,015 101 -

Buildings Furniture and Motor vehicles fixtures

Computer Leasehold Equipment improvements

Work in progress

Total

2 -

35,030 376 100 7 -

52,398 2,820 (142) 100 23 (145)

18,473 281 (472) (59)

26,667 84 (5) 64 2 -

16,084 3,451 (4) (34) -

27,039 (48) (3,432) (859)

200,706 7,113 (671) (3,147) (1,063)

25,139

35,513

55,054

18,223

26,812

19,497

22,700

202,938

Land

Buildings Furniture and Motor vehicles fixtures

Computer Leasehold Equipment improvements

Work in progress

Total

Accumulated Depreciation At start of the period Charge for the period Disposals Reclassification Foreign exchange movements

1,949 63 1

4,723 182 (2) (6)

38,602 1,218 (101) 4 (94)

12,601 614 (465) (25)

23,943 444 (4) (158)

13,604 202 (3) (2) (120)

-

95,422 2,723 (573) (402)


2,013

4,897

39,629

12,725

24,225

13,681

-

97,170

Net Book Amount At March 31, 2017

23,126

30,616

15,425

5,498

2,587

5,816

22,700

105,768

At December 31, 2016

23,066

30,307

13,796

5,872

2,724

2,480

27,039

105,284

30


Notes to the consolidated and separate interim financial statements In millions of Naira 35.(b) Property and equipment Bank Land

Buildings

Furniture and Motor vehicles fixtures

Computer Equipment

Leasehold improvements

Work in progress

Total

Cost At start of the period Additions Disposals Reclassification/transfer from WIP Reclassification between class

25,015 101 21 2

34,670 374 100 7

50,280 2,747 (101) 100 23

16,933 197 (464) -

25,248 34 (4) 64 2

13,862 168 (3) (34)

18,963 1,065 (48) (3,432) -

184,971 4,686 (620) (3,147) -


25,139

35,151

53,049

16,666

25,344

13,993

16,548

185,890

Accumulated depreciation Land At start of the period Charge for the period Disposals Reclassification between class At the end of the period

1,949 63 -

Buildings

Furniture and Motor vehicles fixtures

Computer Equipment

Leasehold improvements

4,689 173 (2)

37,098 1,203 (98) 4

11,616 553 (430) -

22,746 330 (4) -

12,258 170 (3) (2)

Work in progress

Total -

90,356 2,492 (535) -

2,012

4,860

38,207

11,739

23,072

12,423

-

92,313

Net Book Amount At March 31, 2017

23,127

30,291

14,842

4,927

2,272

1,570

16,548

93,576

At December 31, 2016

23,065

29,982

13,182

5,317

2,500

1,604

18,963

94,613

31


Notes to the consolidated and separate interim financial statements In millions of Naira 36. Intangible assets Computer software Group 31-Mar-17

Group 31-Mar-16

Group 31-Dec-16

Cost At start of the period Exchange difference Reclassification Disposal Additions

11,998 (93) 3,147 587

8,761 (45) 675

8,761 410 460 (50) 2,417

At end of the period

15,639

9,391

Accumulated depreciation At start of the period Exchange difference Disposal Charge for the period

7,353 282

At the end of the period Carrying amount at period end

Bank 31-Mar-17

Bank 31-Mar-16

Bank 31-Dec-16

9,761 3,147 587

7,236 641

7,236 459 2,066

11,998

13,495

7,877

9,761

5,521 105 341

5,521 442 (45) 1,435

5,858 232

4,483 328

4,483 1,375

7,635

5,967

7,353

6,090

4,811

5,858

8,004

3,424

4,645

7,405

3,066

3,903

32



Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

1,580,778 362,231 511,163 542,090

1,318,627 274,715 534,756 435,834

1,463,144 358,951 555,547 605,979

1,198,846 307,529 445,754 489,117

1,195,659 249,860 504,856 398,434

1,215,533 285,250 502,418 549,762

2,996,262

2,563,932

2,983,621

2,441,246

2,348,809

2,552,963

29,459 2,203 11,743 13,568 2,647 6,857 906 3,521 8,404 108,610 16,758 22,696

16,774 530 30,827 12,591 2,063 12,143 472 3,208 9,766 52,565 5,796 6,989

35,962 1,580 9,720 13,724 2,495 11,594 906 2,932 8,404 104,631 6,914 9,818

29,406 1,963 64,017 13,000 2,511 6,857 906 3,521 8,404 108,415 12,785 14,096

16,765 432 51,271 11,978 1,975 12,143 472 3,208 9,766 52,484 3,142 3,230

35,898 1,458 57,077 12,952 2,358 11,594 906 2,932 8,404 104,530 3,827 1,800

227,372

153,724

208,680

265,881

166,866

243,736

37. Deposits Demand Savings Term Domiciliary

38. Other liabilities Settlement payables Electronic card related payables Due to banks for clean letters of credit Managers' cheques Tax collections Sales and other collections Deferred income on financial guarantee contracts Unclaimed dividend Provision for claims Customer deposits for letters of credit Customer's foreign transactions payables Other payables

33



Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

41,235 52,645 9,022 15,281 145,965 96,065

38,866 56,708 10,837 1,445 128,793 69,461

40,908 53,919 9,476 1,665 147,170 97,519

41,235 52,645 9,022 15,281 145,965 96,065

38,866 56,708 10,837 1,445 128,793 69,461

40,908 53,919 9,476 1,665 147,170 97,519

360,213

306,110

350,657

360,213

306,110

350,657

38,692 4,985 5,293 17,478 15,509 46,093 22,984 68,463 3,419 28,176 4,685 40,265

24,772 7,835 4,766 13,906 7,463 39,060 14,554 48,670 6,574 50,325 17,014 2,588 -

38,924 4,066 6,370 17,205 15,362 45,985 22,908 71,541 5,114 31,016 4,615 -

38,692 4,985 5,293 17,478 15,509 46,093 22,984 68,463 3,419 28,176 4,685 7,687 25,650 40,265

24,772 7,835 4,766 13,906 7,463 39,060 14,554 48,670 6,574 50,325 17,014 2,588 -

38,924 4,066 6,370 17,205 15,362 45,985 22,908 71,541 5,114 31,016 4,615 7,670 22,026 -

296,041

237,527

263,106

329,379

237,527

292,802

39. On-lending facilities This comprises: Central Bank of Nigeria (CBN) Commercial Agriculture Credit Scheme Loan Bank of Industry (BOI) Intervention Loan Central Bank of Nigeria (CBN) / Bank of Industry(BOI) - Power & Aviation intervention Funds CBN MSMEDF Deposit FGN SSB Intervention Fund Excess Crude Loan Facilty Deposit

40. Borrowings Long term borrowing comprise: Due to ADB Due to KEXIM Due to EIB Due to PROPARCO Due to CITIBANK Due to Citi Global Markets Due to ABSA bank Due to J P Morgan Chase bank Due to Standard Bank Due to First Rand bank Due to Commerzbank Due to IFC Due to British Arab Bank Due to Zenith Bank (UK) Due to Zenith Bank Ghana Due to AFC

34



Bank

31-Mar-17

31-Mar-16

31-Dec-16

31-Mar-17

31-Mar-16

31-Dec-16

156,431

101,425

153,464

156,431

101,425

153,464

156,431

101,425

153,464

156,431

101,425

153,464

20,000

20,000

20,000

20,000

20,000

20,000

15,698

15,698

15,698

15,698

15,698

15,698

15,698 255,047

15,698 255,047

15,698 255,047

15,698 255,047

15,698 255,047

15,698 255,047

270,745

270,745

270,745

270,745

270,745

270,745

255,047

255,047

255,047

255,047

255,047

255,047

41. Debt securities issued Due to euro bond holders

42. Share capital Authorised 40,000,000,000 Ordinary shares of 50k each (2016: 40,000,000,000)

. Issued 31,396,493,786 ordinary shares of 50k each (March 2016:31,396,493,786) Issued Ordinary Share premium

43. Share premium, retained earnings and other reserves Share premium

The nature and purpose of the reserves in equity are as follows: Share premium: Premiums from the issue of shares are reported in share premium. Retained earnings: Retained earnings comprise the undistributed profits which have not been reclassified to the other reserves noted below.

35


Notes to the consolidated and separate interim financial statements Statutory reserve: Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by section 16(1) of the Bank and Other Financial Institutions Act of 1991 (amended), an appropriation of 30% of profit after tax is made if the statutory reserve is less than the paid-up share capital, and 15% of profit after tax if the statutory reserve is greater than the paid-up share capital. SMIEIS reserve: The SMIEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement that all licensed banks set aside a portion of their profit after tax in a fund to be used to finance equity investments in qualifying small and medium scale enterprises. Under the terms of the guideline (amended by CBN letter dated 11 July 2006), the contributions will be 10% of profit after tax for the first 5 years and shall thereafter reduce to 5% of profit after tax. The small and medium scale industries equity investment scheme reserves are nondistributable. Revaluation reserve: Comprises fair value movements on equity instruments which the Bank has elected to present through the Other Comprehensive Income. Foreign Currency Translation reserve: Comprises exchange differences resulting from the translation to Naira of the results and financial position of entities within the group that have a functional currency other than Naira. Statutory Reserve for Credit Risk: the CBN requires the Bank to create a reserve for the difference between impaired charge determined in line with the principles of IFRS and provisions for loan losses determined in line with the prudential guidelines issued by the CBN, where the latter is greater. This reserve is not available for destribution to shareholders. 44. Pension contribution In accordance with the provisions of the Pensions Reform Act 2014, the bank and its subsidiaries commenced a contributory pension scheme in January 2005. For entities operating in Nigeria, the contribution by employees and the employing entities are 2.5% and 15.5% respectively of the employees' basic salary, housing and transport allowances. Entities operating outside Nigeria contribute in line with the relevant pension laws in their jurisdictions. The contribution by the group and the bank during the period were N898 million and N706 million respectively (2016: N869 million and N756 million). 45. Personnel expenses Compensation for the staff are as follows: Group 31-Mar-17 15,847 1,421 898

In millions of Naira Salaries and wages Other staff costs Pension contribution

18,166

36

Group 31-Mar-16 15,588 428 869 16,885

Group 31-Dec-16 60,536 4,982 3,524 69,042

Bank 31-Mar-17 14,071 1,462 706 16,239

Bank 31-Mar-16 14,240 414 756 15,410

Bank 31-Dec-16 54,365 4,901 2,969 62,235


Notes to the consolidated and separate interim financial statements In millions of Naira 46. Related party transactions Parent: Zenith Bank Plc (incorporated in Nigeria) is the ultimate parent company of the Group. Subsidiaries: Transactions between Zenith Bank Plc and its subsidiaries, which are eliminated on consolidation are not separately disclosed in the consolidated financial statements. The Group's effective interests and investments in subsidiaries as at 31 March 2017 are shown below. Entity

Effective holding %

Zenith Bank (Ghana) Limited Zenith Bank (UK) Limited Zenith Bank (Sierra Leone) Limited Zenith Bank (The Gambia ) Limited Domestic / non-banking subsidiaries: Zenith Pension Custodians Limited

Norminal share capital held

98.07 100.00 99.99 99.96

% % % %

6,444 21,482 2,059 1,038

99.00 %

1,980

-

33,003

Key management personnel Key management personnel is defined as the Group's executive and non-executive directors, including their family members and any entity over which they exercise control. Close members of family are those family members who may be expected to influence, or be influenced by that individual in their dealings with the Group.

Key management compensation In millions of Naira Salaries and other short-term benefits Retirement benefit cost Fees and sitting allowances 37

Group 31-Mar-17

Group 31-Mar-16

Group 31-Dec-16

150 6 77

116 6 -

403 625 29


Notes to the consolidated and separate interim financial statements In millions of Naira 233

122

1,057

Loans and advances At start of the period Repayment during the period

292 (73)

559 (14)

559 (267)

At end of of the period

219

545

292

Interest earned Loans to key management personnel include mortgage loans and other personal loans which are given under terms that are no more favourable than those given to other staff. No impairment has been recognised in respect of loans granted to key management (2016: Nil). The mortgage loans are secured by the underlying assets. All other loans are unsecured. Group 31 March 2017 In millions of Naira Name of company / Individual

Loans

Deposits

Interest received

Interest paid

Zenith General Insurance Company Zenith Trustee Limited Directors and Relatives Quantum Fund Management

-

661 5 190 18

-

1 1 -


-

874

-

2

Group 31 March 2016 In millions of Naira Name of company / Individual

Loans

Deposits

Interest received

Interest paid

Visafone Communications Ltd Quantum Fund Management

-

1,032 70

-

1


-

1,102

-

1

38


Notes to the consolidated and separate interim financial statements In millions of Naira Loans granted to related parties are secured by real estate and other assets of the respective borrowers. No impairment has been recognised of loans granted to related parties (2016:Nil)

39


Notes to the consolidated and separate interim financial statements In millions of Naira 47. Acceptances and guarantees (a) Legal proceedings The Bank is presently involved in 121 litigation suits in its ordinary course of business. The total amount claimed in the cases against the bank is estimated at N14.32 billion. The actions are being contested and the Directors are of the opinion that none of the aforementioned cases is likely to have a material adverse effect on the bank and are not aware of any other pending or threatened claims and litigations. (b) Capital commitments At the reporting date, the bank had capital commitments amounting to N3.11 billion (31 December, 2016: N6.5 billion) in respect of authorized and contracted capital projects. (c) Confirmed credits and other obligations on behalf of customers In the normal course of business the group is a party to financial instruments with off-balance sheet risk. These instruments are issued to meet the credit and other financial requirements of customers. The contractual amounts of the off-balance sheet financial instruments are: In millions of Naira Performance bonds and guarantees Usance Letters of credit Pension Funds (See Note (below))

Group 31-Mar-17 558,010 134,043 265,197 2,450,662

Group 31-Mar-16 599,965 101,583 176,423 2,047,789

Group 31-Dec-16 560,704 98,761 311,681 2,362,349

Bank 31-Mar-17 558,010 134,043 265,197 2,450,662

Bank 31-Mar-16 560,892 101,583 151,399 2,047,789

Bank 31-Dec-16 513,832 98,761 215,839 2,362,349

3,407,912

2,925,760

3,333,495

3,407,912

2,861,663

3,190,781

Letters of credit are agreements to lend to customers in the future, subject to certain conditions. Such commitments are either made for a fixed period, or have no specific maturity dates, but are cancellable by the Group (as lender) subject to notice requirements. These letters of credit are provided at market-related interest rates and cannot be settled net in cash. The amount of N 2,262 billion (31 December, 2016 : N 2,362 billion) represents the full amount of the bank's guarantee for the assets held by its subsidiary, Zenith Pensions Custodian Limited under the latter's custodial business as required by the National Pensions Commission.

40


Notes to the consolidated and separate interim financial statements In millions of Naira 48. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents include cash and non-restricted balances with central banks, treasury bills and other eligible bills, operating account balances with other banks, amounts due from other banks and short-term government securities. In millions of Naira Cash and balances with central banks (less restricted balances) Treasury bills(maturing within three months) Due from other banks

41

Group 31-Mar-17 76,748 247,936 389,541

Group 31-Mar-16 144,679 79,420 367,158

Group 31-Dec-16 140,874 127,068 459,457

Bank 31-Mar-17 38,293 154,762 325,598

Bank 31-Mar-16 120,735 63,800 364,838

Bank 31-Dec-16 99,378 112,575 354,405

714,225

591,257

727,399

518,653

549,373

566,358


Notes to the consolidated and separate interim financial statements

42