Quarter 2 - financial statement for 2025

Q2

UNAUDITED ACCOUNT 2025

Introduction 2

Directors, Officers & Professional Advisers 3

Statement of Financial Position 5

Statement of Profit or Loss and Other Comprehensive 6

Statement of Changes in Equity 7

Statement of Cash flows 8

Notes to Financial Statements 9

J

aiz Banks unaudited Financial Statements for the period ended 30th June 2025 comply with the applicable legal requirements of the Securities and Exchange Commission regarding interim Financial Statements. These financial statements contain extract of the unaudited financial statements prepared in accordance with IAS 34 Interim financial Reporting, its interpretation issued by the International Accounting Standards Board and adopted by the Financial Reporting Council of

Nigeria.

Mohammed Mustapha Bintube -

Alh. Ibrahim Mohammed Indimi -

Alh. Hadi Muhammad Abdul Mutallab -

Chairman

Non-Executive Director Non-Executive Director

Mr. Mohammed Seedy Njie - Non-Executive Director

Alh.Tajudeen Aminu Dantata -

Hajiya Sa'adatu Hamza Mohammed

Non-Executive Director

Non-Executive Director

Mallam Mustapha Ibrahim Ahmad Ahmed Mohammed Indimi

Mrs (Dr) Aisha Waziri Umar

Dr. Abdullateef Bello

Nike Kolawole Haruna Musa Ph.d Alhassan Abdulkarim

• Non-Executive Director

• Non-Executive Director

• Independent Director

• Independent Director

• Independent Director

• Managing Director/CEO

• Executive Director

Mohammed Shehu

FRC/2017/NBA/00000016416

500,000

-

31-Dec-2020 31-Dec-2019

Total Assets Financing & Investment Assets

Deposits Share Capital

Total Equity Gross Earnings

Plot 1073 J.S Tarka Street, Garki Area 3, Abuja.

Jaiz Bank PLC

Jaiz House

Plot 1073 J. S Tarka Street Garki Area 3, Abuja.

Africa Prudential Plc.

(Formerly UBA Registrars Plc.) 220B Ikorodu Road, Lagos.

Delloite & Touché

Civic Towers

Plot GA1 Ozumba Mbadiwe Avenue Lagos

Tax Advisors

Oladele Konsulting

(Chartered Tax Practitioner & Management Consultants) Suite C11 Othini Plaza, Plot 1528, Nouakchott Street Wuse Zone 1, Abuja.

3

The accompanying notes form an integral part of these financial statements. Signed on behalf of the Board of Directors on 28th July, 2025

Chairman

Managing Director/CEO

Chief Financial Officer

FRC/2018/PRO/00000018479

FRC/2017/CIBN/000000016515

FRC/2013/ICAN/000000002476

As at ended 30 June, 2025

3 Month Ended 3 Month Ended

Notes

JUNE 2025 N'000

JUNE 2024 N'000

JUNE 2025 N'000

JUNE 2024 N'000

DEC 2024 N'000

31st DECEMBER 2024

As at ended 30 June, 2025

Share Share Retained Risk CBN Other Statutory Total Capital Premium Earnings Regulatory (AGSMEIS) Comp Reserve

Reserve Reserve income

Balance at January 2024 17,270,586 1,348,446 5,408,868 5,007,534 1,455,169 112,313 8,712,010 39,314,925

Additions during the year

5,024,119 5,024,119

- 10,048,238

-

-- 23,484,251

-

-

-

- 23,484,251

Transfer to risk regulatory reserve Transfer to statutory reserve

- - (3,599,722)

- - (7,045,275)

3,599,722

-

- - - -

- - 7,045,275 -

Transfer to AGSMEIS Dividend Paid

- - (1,174,213) -

- - (1,381,647) -

1,174,213 -

- -

- -

- (1,381,647)

2,629,381 112,313 15,757,285

71,465,767

30th JUNE 2025

Share Share Retained Risk CBN Other Statutory Total Capital Premium Earnings Regulatory (AGSMEIS) Comp Reserve

Reserve Reserve income

7

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Balance at 1January 2025 22,294,705 6,372,565 15,692,261 8,607,256 2,629,382 112,313 15,77,285 71,465,767

Profit for the period - - - - - - -

Dividend Paid

- - - -

- - - -

22,294,705 6,372,565 15,692,261 8,607,256 2,626,382 112,313 15,757,285 71,465,767

Nigerian banking regulations require Banks to make an annual appropriation to a stipulated to a statutory reserve.As stipulated by section 15(1) of the Banks and other Financial Institutions Act of 2020, 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 capital.

This is a reserve created by comparing impairment of risk assets under IFRS and provisions for risk assets using CBN Prudential Guidelines.

Where the impairment amount under IFRS is lower than the provisions amount under Prudential Guidelines, the IFRS impairment figure is used in the the account. However, the difference between the IFRS impairment and Prudential guidelines provisioning is charged to the retained earnings and transferred to a non distributable reserve.

As at ended 30 June, 2025

N'000 N'000

Depreciation

Amortisation of intangible asset Amortisation of leasehold Amortisation of right of use assets Impairment on financing asset Income tax expense

Foreign currency revaluation loss

977,026

60,408

53,326

389,864

351,599

309,895

-

1,689,728

120,118

25,053

602,789

(166,333)

960,624

9,389,411

Financing Assets (net) 7,356,041 (32,244,269)

Inventory Financing Other asset

Customers' current account Customers' investment account Other financing

Other liabilities Tax paid

6,252,308 (30,860,574)

(20,211,888) (1,989,528)

(18,137,970) 269,135,440

(52,664,724) 169,081,319

(1,868,816) (12,432,873)

(44,383,972) 41,476,757

(1,412,858) (457,341)

Investment in Sukuk (208,333) (197,698,880)

Interbank Mudarabah

10,927,484

(43,119,315)

Purchase of property & equipment (2,160,250) (9,867,876)

Proceed from disposal of property & equipment - -

Improvement on leasehold properties -

(72,964)

Purchase of intangible assets

- (195,122)

- 10,048,238

- (1,381,647)

Increase/(decrease) In cash and cash equivalents (110,799,146) 185,885,495

Effect of Exchange rate changes on cash and cash equivalent Cash and cash equivalents at beginning of period

-381,166,117

(9,245,312)

204,417,935

As at ended 30 June, 2025

1. Reporting entity

   Jaiz Bank Plc (the"Bank") is the first fully fledged non-interest financial institution in Nigeria.The Bank was granted a banking license to carry on the business of non interest banking and commenced operation on January 6th, 2012 with three branches in two states and the Federal Capital Territory. It was established as a private limited liability Company but was converted to a Public limited liability company in April 2016 and now trades its Stock on the Nigeria Exchange Bank .

   The address of the Bank's registered office is Jaiz House, Plot 1073, J.S Tarka Street,Area 3, Garki Abuja, Nigeria.The Financial Statement of the Bank as at 30th June 2025, is only for the Bank as it has no subsidiary and/or Associate company. These audited financial statements were approved and authorized for issue by the Board of Directors on 29th July, 2025.The Directors have the power to amend and issue the financial statements.

2. Basis of preparation

   The financial statements have been prepared in accordance with the requirements of IFRS Accounting Standards as issued by International Accounting standards Board (IASB).For matters that are peculiar to Islamic Banking and Finance, the Bank shall rely on the Statement of Financial Accounting ("SFA") and Financial Accounting Standards ("FAS") issued by the Accounting and Auditing Organization for Islamic Financial Institutions ("AAOIFI"), Standards issued by the Islamic Financial Services Board ("IFSB") and Circulars issued by the Central Bank of Nigeria ("CBN") shall also be of guidance.

   MaterialAccounting Policies

   The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

   1. Basis of measurement

      The Bank's financial statements are to be prepared under the historical cost convention, and may be modified by their valuation of certain investment securities, property, plant and equipment. Financial statements are to be prepared mainly in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board ("IASB"). For matters that are peculiar to Islamic Banking and Finance, the Bank shall rely on the Statement of Financial Accounting ("SFA") and Financial Accounting Standards ("FAS") issued by the Accounting and Auditing Organization for Islamic Financial Institutions ("AAOIFI"), Standards issued by the Islamic Financial Services Board ("IFSB") and Circulars issued by the Central Bank of Nigeria ("CBN") shall also be of guidance, except for the following:

      1. Financial assets measured at fair value through profit or loss.

      2. Financial instruments measured at fair value through other comprehensive income.

   2. Going Concern

      The Bank's management shall be making assessment of the Bank's ability to continue as a going concern and where satisfied that the Bank has the resources to continue in business for the foreseeable future, shall form a judgment and prepare accounting information based on that premise. In any situation whereby the Board of Directors is aware of any material uncertainties that may cast significant doubt upon the Bank's ability to continue as a going concern such issues shall be disclosed in the annual report.

   3. Functional and presentation currency

      Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency').The consolidated financial statements are presented in Naira', which is the Bank's presentation currency which is further rounded up to the nearest thousand.

   4. Use of estimates and judgments

      The preparation of the financial statements in conformity with IFRS Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.Actual Results may differ from these estimates.

      The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

   5. Changes to accounting policies

The accounting policies adopted are consistent with those of the previous financial period.

The accounting policies adopted are consistent with those of the previous financial period except as noted below which became effective for the year ended 31 December 2024.Adoption of the standard did not result in changes in the amounts previously recognised in the financial statements. However the standard affected disclosures of the Bank.

Amendments to the following standard(s) became effective in the annual period starting from 1 January, 2024.The new reporting requirements as a result of the amendments and/or clarifications have been evaluated and their impact or otherwise are noted below:

What is meant by a right to defer settlement.

• That a right to defer must exist at the end of the reporting period.

• That classification is unaffected by the likelihood that an entity will exercise its deferral right.

• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

The amendment did not have any material impact on the Bank .

In September 2022, the Board issued Lease Liability in a Sale and Leaseback.The amendment to IFRS 16 specifies the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains.

However, the requirements do not prevent the seller-lessee from recognizing any gain or loss arising from the partial or full termination of a lease.

The amendment did not have any impact on the Bank , as there is no such transaction as Sale and Leaseback within the Bank or with external parties.

In May 2023, the Board issued amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments.The amendments clarify the characteristics of supplier finance arrangements. In these arrangements, one or more finance providers pay amounts an entity owes to its suppliers.The entity agrees to settle those amounts with the finance providers according to the terms and conditions of the arrangements, either at the same date or at a later date than that on which the finance providers pay the entity's suppliers.

The amendments require an entity to provide information about the impact of supplier finance arrangements on liabilities and cash flows, including terms and conditions of those arrangements, quantitative information on liabilities related to those arrangements as at the beginning and end of the reporting period and the type and effect of non-cash changes in the carrying amounts of those arrangements.The information on those arrangements is required to be aggregated unless the individual arrangements have dissimilar or unique terms and conditions.

The amendment does not have any material impact on the Bank

This amendment clarifies the situation when a foreign currency transaction or operation is not exchangeable into another currency at a specified measurement date for a particular purpose. As per the explanation, a currency is considered exchangeable if it can be obtained, typically through a market or exchange mechanism, with a normal administrative delay.The amendment would likely apply to entities engaging in transactions with foreign currencies that have specific non-exchangeable characteristics.

The Bank does not appear to have any immediate or material exposure to such non-exchangeable foreign currencies or related transactions, so this amendment does not have a material impact.

IFRS 19 allows eligible subsidiaries to apply reduced disclosure requirements while still following other IFRS recognition, measurement, and presentation standards.To qualify for these reduced disclosures, an entity must meet several conditions, including being a subsidiary without public accountability and having a parent that prepares consolidated financial statements complying with IFRSAccounting Standard.

The Bank is not an eligible entity under IFRS 19, as it does not meet the criteria for applying the reduced disclosure requirements.Therefore, this standard does not impact the Bank.

The Bank plans to adopt the amendments when they become effective, which suggests that the amendments will impact the Bank's reporting and financial instruments but are not expected to have a material disruptive impact. The adoption is aligned with the Bank's future operational needs.

IFRS 18 aims to improve the presentation and disclosure of financial statement information, focusing on aggregation, classification, and disaggregation.The standard sets out new requirements for presenting assets, liabilities, income, expenses, and cash flows with greater clarity.

The Bank plans to adopt IFRS 18 when it becomes effective, as the standard relates to its operations and will enhance its financial statement presentation and disclosures. However, the adoption is scheduled for a later date, and the impact will be more relevant as the effective date approaches.

The financial statements are presented in Nigerian Naira, which is the reporting currency in line with IAS21 (Effects of foreign exchange) Transactions in foreign currencies are recorded in the books at the rate of exchange ruling on the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies are converted into Naira at the rate of exchange ruling at the balance sheet date. Gains and losses on conversion are reported the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated into Naira using the exchange rates as at the dates of the initial recognition. Nonmonetary items measured at fair value in a foreign currency are translated into Naira using the exchange rates at the date when the fair value is determined. Exchange gains and losses on nonmonetary items classified as "fair value through statement of income" are taken to the income statement and for items classified at"fair value through equity" such differences are taken to the statement of comprehensive income.

• Cash in hand

• Balance held with Central Bank of Nigeria.

• Balance with banks in Nigeria and outside Nigeria.

• Demand deposit denominated in Naira and other foreign currencies.

Cash equivalents are short term, highly liquid instruments which are readily convertible into cash, whether in local or foreign currencies; and so near to their maturity dates with original maturities of three months or less as it present insignificant risk of changes in value as a result of changes in profits rates.

Financial assets and liabilities, with the exception of financing to customers, deposits to customers and banks, are initially recognised on the trade date, i.e., the date that the Bank becomes a party to the contractual provisions of the instrument. Financing from customers are recognised when assets purchased are transferred to the customers. The Bank recognises deposits from customers and banks when funds are received.

Financial asset or liability are measured initially at fair value plus or minus, for an item not at fair value through profit or loss, direct and incremental transaction costs that are directly attributable to its acquisition or issue.Transaction costs of financial assets and liabilities carried at fair value through profit or loss are expensed in income statement at initial recognition.

Financial assets are classified into one of the following measurement categories:

those to be measured at amortised cost.

those to be measured at fair value through other comprehensive income those to be measured at fair value through profit or loss

The classification depends on the Bank's business model (i.e. business model test) for managing financial assets and the contractual terms of the financial assets cash flows (i.e. solely payments of principal and return - SPPI test).

The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and return on the principal amount outstanding.The gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in income statement when the asset is derecognised or impaired. Returns from these financial assets is determined using the effective rate of return (ERR) method and reported in income statement as'income'.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and.

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and return on the principal amount outstanding.The gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in income statement when the asset.

is derecognised or impaired. Returns from these financial assets is determined using the effective rate of return (ERR) method and reported in income statement as'income'.

The amortised cost of a financial instrument is defined as the amount at which it was measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the 'effective rate of return method' of any difference between that initial amount and the maturity amount, and minus any loss allowance.The effective rate of return method is a method of calculating the amortised cost of a financial instrument (or Bank of instruments) and of allocating the income or expense over the relevant period.The effective rate of return (ERR) is the rate that exactly discounts estimated future cash payments or receipts over the expected life of the instrument or, when appropriate, a shorter period, to the instrument's net carrying amount.

The Bank makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.The information considered includes:

The stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's strategy focuses on earning contractual return revenue, maintaining a particular return rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;

• How the performance of the portfolio is evaluated and reported to management;

• The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• How managers of the business are compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• The frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Bank's stated objective for managing the financial assets is achieved and how cash flows are realised.

  The business model assessment is based on reasonably expected scenarios without taking 'worst case' or 'stress case' scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Bank's original expectations, the Bank does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.

  Assessment of whether contractual cash flows are solely payments of principal and return.

  The Bank assesses the contractual terms of financial to identify whether they meet the SPPI test.

  'Principal' for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortization of the premium/discount).'Return' includes consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

  The most significant elements of return within a lending arrangement are typically the consideration for the time value of money and credit risk.To make the SPPI assessment, the Bank applies judgement and considers relevant factors such as the currency in which the financial asset is denominated, and the period for which the return rate is set.

  Financial liabilities

  The Bank's holding in financial liabilities is in financial liabilities at fair value through profit or loss and financial liabilities at amortised cost. Financial liabilities are derecognised when the obligation under the liability is discharged or cancelled or expires.When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.The difference in the respective carrying amounts is recognised in income statement.

  .

  Financial liabilities at fair value through profit or loss

  Financial liabilities at fair value through profit or loss are financial liabilities held for trading.A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held for trading unless they are designated and effective as hedging instruments. Financial liabilities held for trading also include obligations to deliver financial assets borrowed by the Bank.

  Gains and losses arising from changes in fair value of financial liabilities classified as held for trading are included in the income statement and are reported as 'Net gains/(losses) on financial instruments classified as held for trading'. Return expenses on financial liabilities held for trading are included in'Net income'.

  Financial liabilities at amortised cost

  Financial liabilities that are not classified at fair value through profit or loss fall into this category and are measured at amortised cost. Financial liabilities measured at amortised cost are deposits from banks or customers, debt securities in issue for which the fair value option is not applied, convertible bonds and subordinated debts.

  Financial assets

  When the terms of a financial asset are modified, the Bank evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value. Any difference between the amortised cost and the present value of the estimated future cash flows of the modified asset or consideration received on derecognition is recorded as a separate line item in income statements as 'gains and losses arising from the derecognition of financial assets measured at amortised cost'.

  If the cash flows of the modified asset carried at amortised cost are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the Bank recalculates the gross carrying amount of the financial asset as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial asset's original effective rate of return (or credit-adjusted effective rate of return for purchased or originated credit-impaired financial assets).The amount arising from adjusting the gross carrying amount is recognised as a modification gain or loss in income statement as part of impairment charge for the year.

  Financial liabilities

  The Bank derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different.This occurs when the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate of return, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. In this case, a new financial liability based on the modified terms is recognised at fair value.The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in income statement. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment (i.e. the modified liability is not substantially different), any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.

  Offsetting of financial instruments

  Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right and under Sharia'a framework to set off the recognized amounts and the Bank intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously.

  Impairment of financial assets

  The Bank recognizes allowance for ECL (expected credit losses) for all risk asset and other debt financial assets not held at FVPL (fair value through profit or loss), together with commitments and financial guarantee contracts, in this section all referred to as 'financial instruments'. Equity instruments are not subject to impairment under IFRS 9.

  The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss or LTECL), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12mECL (12 months' expected credit loss)

  The 12m ECL is the portion of LTECLs (lifetime expected credit loss) that represent the ECLs that result from default events on a financial instrument that are possible within the 12months after the reporting date. Both LTECLs and 12mECLs are calculated on either an individual basis or a collective basis, depending on the nature of the underlying portfolio of financial instruments.

  Loss allowances for accounts receivable are always measured at an amount equal to lifetime ECL.The Bank has established a policy to perform an assessment, at the end of each reporting period, of whether a financial instrument's credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument.

  Based on the above process, the Bank Banks its financing facilities into Stage 1, Stage 2, Stage 3 and POCI, as described below:

  Stage 1: When risk asset are first recognised, the Bank recognises an allowance based on 12mECLs. Stage 1 risk asset also include facilities where the credit risk has improved and the risk asset has been reclassified from Stage 2. Stage 2: When a risk asset has shown a significant increase in credit risk since origination, the Bank records an allowance for the LTECLs. Stage 2 risk asset also include facilities, where the credit risk has improved and the risk asset has been reclassified from Stage 3. Stage 3: risk asset considered credit-impaired.The Bank records an allowance for the LTECLs .A lifetime ECL is calculated for financial assets that are assessed to be credit impaired.The following criteria are used in determining whether the financial asset is impaired:

  default

• significant financial difficulty of borrower and/or modification

• probability of bankruptcy or financial reorganisation.

• disappearance of an active market due to financial difficulties.

If, in a subsequent period, credit quality improves and reverses any previously assessed significant increase in credit risk since origination, depending on the stage of the lifetime 2 or stage 3 of the ECL bucket, the Bank would continue to monitor such financial assets for a probationary period of 90 days to confirm if the risk of default has decreased sufficiently before upgrading such exposure from Lifetime ECL

(Stage 2) to 12months ECL (Stage 1). In addition to the 90 days probationary period above, the Bank also observes a further probationary period of 90 days to upgrade from Stage 3 to 2.This means a probationary period of 180 days will be observed before upgrading financial assets from Lifetime ECL (Stage 3) to 12months ECL (Stage 1).

For financial assets for which the Bank has no reasonable expectations of recovering either the entire outstanding amount, or a proportion thereof, the gross carrying amount of the financial asset is reduced.This is considered a (partial) derecognition of the financial asset.

The Bank calculates ECLs based on probability-weighted scenarios to measure the expected cash shortfalls, discounted at an approximation to the expected profit rate.A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive.

The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

When estimating the ECLs, the Bank considers three scenarios (a base case, an upside and downside). Each of these is associated with different PDs, EADs and LGDs. When relevant, the assessment of multiple scenarios also incorporates how defaulted risk asset are expected to be recovered, including the probability that the risk asset will cure and the value of collateral or the amount that might be received for selling the asset. Impairment losses and releases are accounted for and disclosed separately from modification losses or gains that are accounted for as an adjustment of the financial asset's gross carrying value.

To estimate the expected credit loss (ECL) for off-balance sheet exposures, the Credit Conversion Factor (CCF) is used. CCF represents the proportion of any undrawn exposure that is expected to be drawn before a default event. It helps convert an off-balance sheet exposure into its credit equivalent exposure. In calculating CCF, the Bank takes into account its account monitoring practices, payment processing policies, and its ability to prevent further drawings when credit risk increases. The CCF is applied to off-balance sheet exposures to determine the Exposure at Default (EAD), and then the ECL impairment model is used on the EAD to calculate the expected credit loss on those exposures.

Financing commitments and letters of credit:When estimating LTECLs for undrawn financing in cash flows if the financing is drawn down, based on a probability-weighting of the four scenarios commitments, the Bank estimates the expected portion of the financing commitment that will be drawn down over its expected life.The ECL is then based on the present value of the expected shortfalls.The expected cash shortfalls are discounted at an approximation to the expected EIR on the financing.

Impairment losses and releases are accounted for and disclosed separately from modification losses or gains that are accounted for as an adjustment of the financial asset's gross carrying value.

Assessing significant increases in credit risk (SICR) requires careful judgment. The Bank uses 'backstop' indicators, with the presumption that an instrument's credit risk has increased significantly if payments are more than 30 days overdue.This presumption can be rebutted if there is evidence that credit risk has not increased significantly since initial recognition.

1. Disputes between the Bank and obligor not exceeding 90 days.

2. Insignificant outstanding amounts compared to the total due.

Assessments of SICR are performed at least monthly and at the instrument level. If credit risk is determined to have increased significantly, the asset will move from Stage 1 to Stage 2. After SICR subsides, assets may revert to Stage 1 or Stage 2, based on specified probationary periods:

The measurement of expected credit losses for each stage and the assessment of significant increase in credit risk will consider information about past events and current conditions as well as reasonable and supportable projections of future events and economic conditions.

The PD, LGD and EAD inputs to be used in estimating Stage 1 and Stage 2 credit loss allowances are modelled based on the macroeconomic variables (or changes in macroeconomic variables) that are most closely correlated with credit losses in the relevant portfolio. Each macroeconomic scenario used in the expected credit loss calculation includes a projection of all relevant macroeconomic variables applying scenario weights. Macroeconomic variables used in the expected credit loss models include GDP growth rate, foreign exchange rates, inflation rate, crude oil prices and population growth rate.

The estimation of expected credit losses in Stage 1 and Stage 2 is a discounted probability-weighted estimate that considers a minimum of three future macroeconomic scenarios. The base case scenario is based on macroeconomic forecasts published by relevant government agencies. Upside and downside scenarios vary relative to our base case scenario based on reasonably possible alternative macroeconomic conditions. Additional and more severe downside scenarios are designed to capture material non-linearity of potential credit losses in portfolios. Scenario design, including the identification of additional downside scenarios, occurs at least on an annual basis and more frequently if conditions warrant.

The assessment of significant increases in credit risk is based on changes in probability-weighted forward-looking lifetime PD as at the reporting date, using the same macroeconomic scenarios as the calculation of expected credit losses. In its ECL models, the Bank relies on a broad range of forward looking information as economic inputs, such as:

• GDP growth

• Unemployment rates

• Exchange rate

• House price indices

• Inflation

• Crude Oil prices

  To evaluate a range of possible outcomes, the bank formulates three scenarios: a base case, an upward and a downward scenario.The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the financial statements. To reflect this, qualitative adjustments or overlays are occasionally made as temporary adjustments when such differences are significantly material.

  Definition of default and credit impaired financial assets The Bank considers a financial asset to be in default when:

• it is established that due to financial or non-financial reasons the borrower is unlikely to pay its credit obligations to the Bank in full without recourse by the Bank to actions such as realising security (if any is held);

• the borrower is past due 90 days or more on any material credit obligation to the Bank

  In assessing whether a borrower is in default, the Bank considers indicators that are

• qualitative - e.g. material breaches of covenant;

• quantitative- e.g. overdue status and non-payment on another obligation of the same customer/customer Bank to the banks; and based on data developed internally and obtained from external sources

• Disappearance of an active market for a security because of financial difficulties

• Others include death, insolvency, breach of covenants, etc

Inputs into the assessment of whether a financing exposure is in default and their significance may vary over time to reflect changes

Where possible, the Bank seeks to restructure financing facilities rather than to take possession of collateral.This may involve extending the payment arrangements and the agreement of new conditions. Management continually reviews renegotiated facilities to ensure that all future payments are highly expected to occur.When the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial difficulties of the finance customer, then an assessment is made of whether the financial asset should be derecognized and ECL are measured as follows:

• If the expected restructuring will not result in derecognition of the exiting asset, then the expected cash flows arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset.

• If the expected restructuring will result in derecognition of the existing asset, then the expected fair value of the new asset is treated as the final cash flow from the existing financial asset at the time of its derecognition.

  This amount is included in calculating the cash shortfalls from the existing financial asset. The cash shortfalls are discounted from the expected date of derecognition to the reporting date using the original effective profit rate of the existing financial asset.

  Rebuttal Process

  The rebuttal process allows the Bank to challenge automated staging classifications, particularly when an account breaches the 30 or 90 days past due criteria (Stage 2 or Stage 3, respectively). Rebuttals are only considered when there is strong, reasonable, and supportable evidence that the credit risk increase does not reflect the customer's actual financial condition.

  Criteria for Rebuttal

  The presumption of a significant increase in credit risk (SICR) or default can be rebutted under specific conditions, including

  • Temporary Payment Delays: Payment delays due to administrative issues or cashflow timing that are not indicative of credit deterioration.

  • Strong Financial Position: Customers with solid financial statements or assets demonstrating continued repayment capacity.

  • External Factors: Non-credit-related disruptions (e.g., technical or operational issues) beyond the customer's control.

  • Collateral Improvements:Additional or improved collateral that lowers the Bank's risk exposure.

  • Others: Material information not explicitly mentioned above.

    However, for a rebuttal to be granted, there are basic steps that must be met.

    When an account breaches the 30 days past due criteria for SICR (Significant Increase in Credit Risk) or the 90 days past due criteria for default, and is transferred to Stage 2 (SICR) or Stage 3 (default), the presumption of the transfer can be rebutted under the following process:

    Initiation by Relationship Manager (RM):

    The RM identifies a potential rebuttal case and collects relevant evidence, such as updated financials or customer interaction notes, to support the rebuttal.This evidence is then submitted to the Divisional Head for review.

    Divisional Head Review:

    The Divisional Head evaluates the evidence provided by the RM. If the evidence is deemed satisfactory, the Divisional Head escalates the rebuttal to the Credit Risk Management team and the Chief Risk Officer (CRO) for further assessment.

    Credit RiskTeam Evaluation:

    The Credit Risk team reviews the submitted evidence, considering factors like financial history, collateral, and external influences. Based on this review, they present the case to the Criticized Asset Committee (CAC).

    CriticizedAsset Committee (CAC):

    The RM and CRO present the rebuttal to the CAC, which reviews the case and recommends approval or rejection to the Managing Director/Chief Executive Officer (MD/CEO).

    Final Reclassification:

    If the rebuttal is approved by the MD/CEO, the account is reclassified back to its prior stage. If the rebuttal is rejected, the account remains in its current stage unless new, relevant evidence is provided.

    This process allows for the reconsideration of the stage reclassification based on new evidence that suggests the account may not warrant such a transfer.

    Presentation of allowance for ECL in the statement of financial position

    Financing allowances for ECL are presented in the statement of financial position as follows:

• Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;

• financing commitments and financial guarantee contracts: generally, as a provision;

• Where a financial instrument includes both a drawn and an undrawn component, and the Bank cannot identify the

  ECL on the financing commitment component separately from those on the drawn component: the Bank presents a combined loss allowance for both components. The combined amount is presented as a deduction from the gross carrying amount of the drawn component.Any excess of the loss allowance over the gross amount of the drawn component is presented as a provision; and

• Debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the fair value reserve

  Collateral valuation

  To mitigate its credit risks on financial assets, the Bank seeks to use collateral, where possible.The collateral comes in various forms, such as cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other non-financial assets and credit enhancements such as netting agreements.The Bank's accounting policy for collateral assigned to it through its lending arrangements under IFRS 9 is the same is it was under IAS 39. Collateral, unless repossessed, is not recorded on the Bank's statement of financial position.

  However, the fair value of collateral affects the calculation of ECLs. It is generally assessed, at a minimum, at inception and re-assessed on a quarterly basis. However, some collateral, for example, cash or securities relating to margining requirements, is valued daily.

  To the extent possible, the Bank uses active market data for valuing financial assets held as collateral. Other financial assets which do not have readily determinable market values are valued using models. Non-financial collateral, such as real estate, is valued based on data provided by third parties such as mortgage brokers, or based on housing price indices.

  Write-off

  The Bank has in place Board approved policy that guides write-off of facilities. The Bank will write off financial assets (and any related allowances for impairment losses) when the Criticized Asset Committee(CAC) determines that the assets are uncollectible. In determining financial assets to write off, CAC considers amongst others:

  The occurrence of significant changes in the obliger/issuer's financial position such that the obligor/issuer can no longer pay the obligation; That proceeds from the collateral will not be sufficient to pay back the entire exposure.

  The Prudential Guidelines (Section 3.21) d.The Bank's Investment Policy.

  Every effort will be made to recover a debt owed to the Bank before it is considered for write off.This includes all the processes prescribed in the ERM policies from collection by the relationship officer once a facility is due, to employing recovery agents, and litigation for those considered to be in terminal default.The BOD is responsible for delegating limits and authority to write off.This limit may be delegated at the discretion of the Board.The BOD is responsible for defining and delegating the approval limits for all balances that meet the criteria to be written off.The following delegated limits applies to the concerned Board and Management committees:

  S/N	Board/Management	Delegation
  1	Crystalized Assets Committee	Five Million (N5,000,000:00) and Below
  2	Board Risk Committee	Above N5Million(N5,000,000:00-N50Million (N50,000,000:00)
  3	Board of Directors	Above N50 Million (N50,000,000:00), subject to any regulatory limit

• Recovery cost is expected to be higher than the outstanding debt

• Amount obtained from realisation of credit collateral security leaves a balance of the debt

• It is reasonably determined that no further recovery on the facility is possible

The bank recognizes items of property, plant and equipment at the time the cost is incurred. They are stated at historical cost less accumulated depreciation and accumulated impairment losses. Subsequent costs are included in the asset's carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the Bank and the cost of the asset can be measured reliably.All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.

Construction cost in respect of offices is carried at cost as work in progress. On completion of construction, the related amounts are transferred to the appropriate category of fixed assets. Payments in advance for items of fixed assets are included as Prepayments in Other Assets and upon delivery are reclassified as additions in the appropriate category of property and equipment.

Depreciation is to be provided on a straight-line basis to write off the cost of asset over their estimated useful live.The annual rate which should be applied consistently over time are as follows:

Motor vehicle (5 years) Furniture and fittings (5 years) Equipment (5 years)

Computer Equipment - General (3 years) Computer Equipment - Special (5 years) Computer Software (10 years)

Freehold Building (50 years)

Leasehold improvement over the expected life of the lease

Property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from it use. Gain and losses are recognised in the income statement.

Depreciation is charged when the assets are available for use irrespective of whether they are put to use.

Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.The recoverable amount is the higher of the asset's fair value less costs to sell and value in use.

Gains and losses on disposal are determined by comparing proceeds with carrying amount.These are included in the statement of income for the year.

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.The amortisation expense on intangible assets with finite lives is recognised in the consolidated statement of income in the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset is included in the consolidated statement of income.Intangible Asset includes ;