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Annual Report and Financial Statements 2006 3

Fidelity has grownfrom strength tostrength in hermission to makefinancial serviceseasy andaccessible to hercustomers.

Annual Report and Financial Statements 20064

vision

To be number one in everymarket we serve and everybranded product we offer


contents

Page 6 Financial Highlights

Page 8 Notice of Annual General Meeting

Page 9 Corporate Information

Page 12 Chairman’s Statement

Page16 Managing Director & Chief ExecutiveOfficer’s Report

Page 23 Board of Directors

Page 24 Report of the Directors

Page 31 Audit Committee’s Report

Page 32 Report of the Independent Auditors

Page 33 Statement of Accounting Policies

Page 38 Balance Sheet

Page 39 Profit and Loss Account

Page 40 Statement of Cash Flows

Page 41 Notes to the Financial Statements

6 Group Statement of Value Added

Page 57 Bank Statement of Value Added

Page 58 Bank Five- Year Financial Summary


The Group The Bank2006 2005 Change 2006 2005 ChangeNm Nm % Nm N’000 %

Major profit and loss account items forthe year ended 30 June, 2006

Gross Earnings 11,931 6,367 87 11,572 6,159 88Interest expenses 3,208 2,265 42 3,170 2,250 41Operating expenses 4,746 2,274 109 4,579 2,190 109Loan loss expenses 303 178 71 235 155 53Profit before taxation 3,673 1,651 123 3,587 1,564 129Profit after taxation 3,219 1,306 146 3,162 1,237 156Dividend 1,811 - 1,811 -

Major balance sheet items as at 30 June:Deposits and other clients’ accounts 79,209 20,702 283 78,648 20,572 282Loans and advances 38,863 14,052 177 38,661 13,892 178Share capital 8,232 4,275 93 8,232 4,275 93Share premium 11,178 2,739 308 11,178 2,739 308Shareholders’ funds 25,665 9,778 163 25,597 9,724 163Total assets 121,089 35,584 240 119,986 34,953 243

Per 50k Ordinary Share Statistics:Based on 16,463,686,588(2005 - 8,549,840,796) ordinary shares issuedEarnings (kobo) 0.19 0.15 0.19 0.14Dividend 0.11 - 0.11 -Dividend cover (times) 1.73 - 1.73 -Net assets 1.67 1.14 1.66 1.14Total assets 7.35 4.16 7.29 4.09Stock Exchange Price at 30 June N2.93 N3.23

Number of branches 80 25 79 24Number of staff 1,169 405 1,159 395

Financial Highlights


Notice of Annual General Meeting

Notice is hereby given that the Eighteenth Annual General Meeting of Fidelity Bank Plc. will be held atthe Convention Hall, Protea Hotel, Nike Lake Resort, Nike Lake Road, Abakpa-Nike, Enugu, EnuguState on Tuesday, December 19, 2006 at 11.00 a. m. for the purpose of transacting the following business:

ORDINARY BUSINESS1. To receive the Statement of Accounts for the period ended June 30, 2006 together with the

Directors and Auditors Reports thereon.2. To declare a dividend.3. To elect/re-elect Directors.4. To approve the remuneration of Directors.5. To authorise the Directors to fix the remuneration of the Auditors.6. To elect members of the Audit Committee.

PROXYA member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy toattend in his stead. A proxy form is attached. The proxy need not be a member of the Company. To bevalid, a duly completed and stamped proxy form must be deposited at the offices of the Registrar, FirstRegistrars Nigeria Limited, Plot 2, Abebe Village Road, Iganmu, Lagos not later than 48 hours before thetime fixed for the meeting.

NOTES(A) DIVIDEND

If approved, dividend warrants will be posted on December 20, 2006 to shareholders whosenames appear in the Register of Members at the close of business on Friday, December 8,2006.

(B) CLOSE OF REGISTER OF MEMBERS

The Register of Members and Transfer Books of the Company will be closed from December 8,2006 to December 12, 2006, both days inclusive.

(C) AUDIT COMMITTEE

As stipulated by Section 359 (5) of the Companies and Allied Matters Act 1990, any membermay nominate a Shareholder for election to the Audit Committee by giving notice in writing ofsuch nomination to the Company Secretary at least 21 days before the Annual GeneralMeeting.

By Order of the Board.

CHIJIOKE UGOCHUKWUCompany Secretary2, Kofo Abayomi StreetVictoria Island, Lagos.

Dated this 19th day of October, 2006.


Christopher Ezeh (Chief) - Chairman - Appointed w.e.f 16/3/2006G. Peter Obi - Chairman – Resigned w.e.f 16/3/2006Reginald Ihejiahi - Managing Director/Chief ExecutiveWillie M. Obiano (Chief) - Executive DirectorAbdul-Rahman Esene - Executive DirectorIK Mbagwu - Executive DirectorNze (DR) Clement Maduako JP.MFR.NPMMajor General Mohammed Magoro(Galadima Zuru) (Rtd,OFR)Elias E. Nwosu (Dim)Bismarck J. RewaneNnamdi I. Oji (Chief)Bessie N. Ejeckam (Mrs)Umar Yahaya(Alhaji)Stephen Lawani(Chief)Rear Admiral G. Ndubuisi Kanu (NN, Rtd)

COMPANY SECRETARY: Chijioke Ugochukwu (Mrs.)

REGISTERED OFFICE: 2, Fidelity Bank Close,Victoria IslandLagos.

AUDITORS: Akintola Williams Deloitte(Chartered Accountants)235 Ikorodu Road,Ilupeju, Lagos.

CORRESPONDENT BANKS: ANZ Bank, LondonAfrican Export Import Bank, Cairo, EgyptABSA Bank, Johannesburg, South AfricaCommerz Bank, FrankfurtCitibank N.A. London and New YorkFBN Bank UK LtdStandard Chartered Bank, LondonUBA New YorkHSBC, South AfricaUnion Bank UK Plc

Corporate Information

Board ofDirectors


Our Staff

Our belief in empowering our people with knowledgethrough training led us to set up a well structuredTraining and Development Unit that runs regularand streamlined programmes for defined levels. Butself-help has its limits. We therefore identify excellentprogrammes in first rate business schools around theworld in order to build a knowledgeable workforce.That way we develop capacity and people whoseconfidence is based on knowledge


Chairman’sStatement



Chairman’s Statement

Distinguished Shareholders, Invited Guests, Ladies and Gentlemen, It is my great pleasure to welcomeyou to the 18th Annual General Meeting of our bank and to present to you a review of the environment inwhich our bank operated in the financial year ended June 30, 2006, as well as the financial reports as atthat date.

This is our first year as an enlarged institution after the consolidation that was necessitated by theN25billion capitalization threshold set by the Central Bank of Nigeria with effect from January 1, 2006. Ithas also brought new shareholders into the Fidelity fold. May I, therefore, welcome our new shareholderswho are attending our annual general meeting for the very first time.

Before I go on to present the financial reports, a review of the environment in which our bank operated isnecessary as the economic and political conditions had major impact on our operation during the period.

The Global EconomyThe global economy grew by 4.8% in 2005 down from 5.3% recorded in 2004. High and volatile oilprices, widening current account imbalances in the United States, structural rigidities in product andlabour markets in Europe as well as fragile security situations in Africa and Middle East fanned theembers of the decline.

Asia has remained the world powerhouse of economic growth with GDP growth rate at 7.8%. Chinapeaked at 9.9% in 2005. This was largely driven by recovery in domestic economy and United Statesdemand, while upturn in global information and communication technology market provided huge impetus.

Expansion of the United States economy moderated in 2005 with GDP growth at 3.5% against 4.2% in2004. Much of the growth resulted from large consumer spending driven by increased householdearnings from investments, wages and expansion in employment as well as burgeoning corporateprofits, exports and healthy financing terms. However volatility and high oil prices, continuing upwardtrend in interest rates set by Federal Reserve Board and a fierce hurricane season which disrupted oilmarket frustrated growth enormously.

The European economy remained depressed with GDP growth sliding to 1.3% in 2005 from 2.1% in2004. Whereas Eastern European economies achieved higher growth rates, the European Unionslacked mostly in Italy and Germany with 0.1% and 0.9% growth rates respectively. The decline washastened by increasing unemployment rates, lagging domestic demand, high energy costs and poorlabour market conditions.



African economies recorded relatively positive economic performance in spite of fundamental challengesof infrastructure and climatic setbacks to agricultural production. GDP grew by 5.2% from 5.5% in 2004.Favourable commodity prices, relatively better macro economic management across continent gavemuch vent to the growth except in Morocco where growth was constrained by dismal performance in theagricultural sector and textile and clothing exports.

Domestic Economy:The 2005/2006 financial year focused on the attainment of macroeconomic stability and sustainableeconomic growth devoid of exchange rate volatility and high inflation rate. It was a deciding year for thefinancial services industry on account of the financial sector reforms under the “New Agenda forRepositioning the CBN and the Financial System for the 21st Century”. Anchored on recapitalisation, itsqueezed the number of commercial banks from 89 to 25.

On the economic front, major feats were recorded in stabilizing the exchange rate and removing thepremium in the official and parallel markets. The government secured a historic $18billion debt relieffrom the Paris Club from its $34billion debt portfolio shortly after International Monetary Fund (IMF)approved the Policy Support Instrument of the Federal Government. Thereafter Nigeria ultimately exitedthe debtor league in April 2006 with the payment of the outstanding $6.4billion commitment to the ParisClub.

With the consolidation exercise over by December 31, 2005 which left only 25 banks standing, theglaring evidence of the positive impact of the various economic reforms including the debt deal andsignificant positive outlook of the country, the nation was assigned a BB- rating by two international ratingagencies – Fitch Rating Agency and Standard & Poor’s (S&P). Also in recognition of the results recordedby the country in fighting money laundering and the narcotics trade, the Financial Action Task Force(FATF) delisted Nigeria from its list of Non Co-operative Countries and Territories (NCCTs). These ratingsincreased the countries attractiveness for Foreign Direct Investments (FDIs) and dropped the investmentand country risk index significantly.

In the financial markets, the Naira has remained very strong against major international currencies. Theintroduction of the Wholesale Dutch Auction System (WDAS) early 2006 and the liberalisation of BureauDe Change operation have squeezed the gap between the parallel and official exchange rates andfurther improved exchange rate stability. This and the consistent rise in oil prices in the internationalmarket have ensured accretion in the external reserves which was $28.3billion by the end of December2005 and $36.6billion by the end of June 2006. Also the reduction of the Minimum Rediscount Rate(MRR) from 15% to 13% in 2005 and the pegging of maximum lending rate at MRR + 4% reflected inreduced lending rates in the economy. In order to reduce industry cost of funds, Cash Reserve Ratio wasreduced from 11% to 5% with the difference to be invested in special CBN instruments with 91 day tenorat 3% coupon rate. Overall interest rates dipped in 2005 relative to previous years due to excess moneysupply situation.

GDP growth was very strong at 7% above global growth rate of 4.8% and sub-Saharan African growthrate of 5.5%. Year-on-year inflation fell to 12% in December 2005 from 15% in 2004. During the yearunder review, weighted average import tariff dropped from 30% to about 18% which resulted directly fromthe liberalized import tariff regime in line with the ECOWAS Common External Tariff (CET).



The banking industry witnessed an unprecedented repositioning in the history of Nigerian FinancialServices Industry. This crashed the count of banks from 89 to 25 with a minimum capitalisation ofN25billion each. In the process, about N406billion was raised from the capital market while $652millionworth of Foreign Direct Investment (FDI) was generated from outside the country. In keeping with itspromise to release part of the external reserve to qualified banks with $1billion capital base or foreignbanks in partnership with local banks for capacity development, the CBN released $7billion of theexternal reserve to 14 banks that met certain conditions as specified by the CBN.

A similar reform is sweeping through the Insurance sub-sector with the capitalisation threshold increasedto N2billion for Life business and N3billion for Non-life business. Re-insurance companies mustrecapitalise to N10billion. This new capital base shall come into effect by end of February 2007.

Financial ResultYour bank’s financial result shows outstanding appreciation in all operating parameters whichdemonstrates our strong financial health. Profit before tax grew from N1.56billion in 2005 to N3.58billionin the year under review. This represents an improvement of 130% over the previous year. Grossearnings shot up to N11.57billion from N6.16billion; up by 88%. Total assets plus contingents rose toN158billion from N46billion which shows a growth of 243% over the figure of the previous period. In thesame vein, deposits grew by 276% to N81.3billion from N21.6billion in 2005. All these go to prove ourbank as one of the fastest growing banks in the industry. In recognition of this performance and inkeeping with the promise at the initial public offer, our bank has recommended a dividend of 11k perordinary share of 50k each which translates to total dividend payout of N1.8billion. These improvementsare remarkable considering that the gains of consolidation were reaped for only six months before thebank’s financial year ended in June 30, 2006.

AppreciationOur staff deserve my special commendation for their unrelenting commitment and dedication to service,the result of which is laid before us all today. I also appreciate the continued fellowship and support ofprevious staff of our bank for their contributions. Special appreciation to you our valued shareholders foryour faith in the institution and belief in its leadership. I want to reassure you that we will not let you down.

I owe a debt of gratitude to our esteemed customers. You have remained with us all through the challengesof recapitalization, consolidation and subsequent integration. We are humbled by your loyalty andfaithfulness. We recommit ourselves to those values which endeared us to you, and hereby dedicatethese results to you as they reflect your loyalty and the bond between you and the institution.

Finally, my sincere thanks go to the Central Bank of Nigeria and other regulatory bodies for their supportand guidance; and the federal, state and local governments for their patronage and opportunities toserve them.

Distinguished Ladies and Gentlemen, I thank you so much for your attention. God bless.

Chief Christopher EzehChairman, Board of Directors

Managing Director &Chief Executive Officer’s Report



Distinguished shareholders, ladies and gentlemen, Our Bank has concluded the first six months afterconsolidation which coincided with the second half of our financial year ended June 30, 2006. Thefinancial year 2006/2007 was one of the most challenging in the history of our bank as we had to grapplewith the challenges of recapitalisation, consolidation and integration on the one hand and retainingcustomers and growing new businesses on the other. Now that the consolidation coast is clear andhaving emerged a stronger and enlarged institution, I am sincerely delighted to welcome you to the 18th

Annual General Meeting of our bank and to present to you a review of the operations of our bank for theyear ended June 30, 2006. In spite of the challenges of the times, the financial results show superiorperformance in all operating indices. This gives us all confidence about the great possibilities ahead. Iwant to say on our behalf, a big thank you to our numerous customers for the business they have givenus this past year and for their understanding. Next, I want to thank our team of talented and passionateFidelity People who have made all this happen. Finally our Board of Directors has been wonderful ingiving freely of their time and their wide experience.

The New FidelityLegally, the new and enlarged Fidelity emerged on 23 December, 2005, when court approval wasobtained for the merger of Fidelity Bank Plc with the old FSB International Bank Plc and Manny Bank Plc.The fusion of the operations of the three banks did not materialize until January 2, 2006, when theGovernor of the Central Bank of Nigeria announced (a day earlier) the banks that scaled the capitalisationhurdle and licensed to operate in the country. The strategic rationale for the merger of the three bankswas to bring together banks of complementary competencies to create value in a vastly changingfinancial services market place.

Prior to the pronouncement of the approved 25 commercial banks by the CBN Governor, the operatingenvironment was very different in many respects. Post consolidation, the industry has been laden withchallenges of integration (process, staff, technology and products) and customer growth. Our bank hashad its dose of these challenges. The integration challenges, having been surmounted, and as one ofthe fastest growing banks, our institution is poised to deliver even better results in the years ahead. It isin this regard that we are confident that the result of the years to come would be more impressivebecause our bank has not yet fully leveraged on the synergies of the consolidation.




Branch ExpansionBefore the merger, our bank had only 23 operating branches in key business centres across the country.The merger expanded our reach to 83 locations. We emerged from consolidation with a focused strategyto deploy a robust retail banking infrastructure that will enable us serve chosen markets. Our bankobtained the approval of CBN at the beginning of the last quarter of the financial year, to open 10 newbranches in strategic locations in traditional areas of Lagos and some state capitals where we wereunder-represented. This first phase of post consolidation branch expansion has been rigorous becauseof the need to establish very clear parameters and standards in the implementation of our branchexpansion strategy. At the conclusion of these new branches, our branch reach would have increased to93 locations. It shall also pave the way for fresh request for another set of new branches. Our bank hasalso made a significant investments in the deployment of electronic touchpoints like Automated TellerMachines (ATMs) and Point-Of-Sales terminals to complement the brick and mortar branches. We expectthe benefit of these investments beginning from the current financial year. Our card strategy is equallyambitious in keeping with the expectations of our customers for electronic payment format.

Collection mandates and AlliancesWithin the fiscal year 2006, it is projected that the Federal Government of Nigeria would receive aboutN1.4 trillion through various taxes collectible by the Federal Inland Revenue Service (FIRS). Our bank isone of the banks appointed by the Board of FIRS for the collection of such taxes on behalf of the FederalGovernment. The bank’s experience, expertise and integrity in the collection and processing of suchtransactions have earned us more mandates from public institutions at all levels including StateGovernments, Federal and State parastatals. The impact of the collection efficiencies is reflected in thevolume of duty collection recorded by the Federal Government. For that reason, the Board of Customsand Excise regularly updates the list of their collecting banks to ensure efficiency and integrity in theremittance of funds collected. I am glad to report that your bank has continued to make the list of bankswith the mandate to collect the duties for the government of Nigeria and other private agencies andcorporate organisation including Saudi Airlines.

Primary Dealer for FGN BondsTo deepen the nation’s capital market and introduce greater efficiency, the Debt Management Office ofthe Presidency in Quarter 3 of the financial year under review, appointed 15 Primary Dealers and MarketMakers (PDMM) as direct dealers in the Federal Government of Nigeria (FGN) Bonds. Of this number 10banks and 5 discount houses were approved. The process of selection was rigorous and thorough butour bank emerged as one of the 10 banks selected and has remained a top three market maker in FGNBonds trading. In addition, the Budget Office of the Presidency and the Federal Ministry of Financeapproved our bank as one of five banks for the provision of N75 billion for the payment of pension arrearsto Federal public servants through the issuance of pension bonds. These opportunities reflect theconfidence of the appropriate agencies in the integrity, capacity and efficiency of our bank.

Leveraging the Investment Banking FranchiseIn recognition of the need to grow the economic base of the nation through the liberalisation of marketforces and the development of the Small and Medium scale Enterprises (SME), our bank has continuedto leverage on our background in investment banking to provide peculiar services to a core of specializedclientele. This includes public institutions like the Bureau of Public Enterprises (BPE) in the privatizationand commercialization programme and private institutions either seeking to raise equity for their operations



or business advisory services for improved performance. We are proud to mention ABC Transport Plc, acompany that has been nurtured, repositioned and brought to the capital market as a leader in roadtransportation and logistic services. We were the Issuing House and Receiving Bank to the Offer. In likemanner, we have handled several other Issuing House mandates within the year. Community bankswishing to convert to Micro Finance Banks (MFBs) have found solace in our specialized package whichguarantees stress free recapitalisation and repositioning. Our bank is now known for making smallcompanies big and big ones even bigger, bolder, better and confident to compete in all areas of theirbusiness.

Product Development and Customer Service InitiativeIn the review period, we set to realise our vision of developing well designed, packaged, researchedand innovative financial products to the marketplace. Our determination to excel in product innovationbased on established needs; not perceived needs of the customer, led to the launching of a technologyproduct – the Fidelity Mobile Banker – an SMS product which enables the customer to track movementsin his account through the mobile phone. We also launched a package of savings products calledSaveright. Our flagship kiddies’ product called SWEETA was repackaged, making it more vibrant andaccessible. We are confident that in a short while these products will begin to make their contributions tothe bottomline. While we strive to position products in the market place, we have also set the stage fortotal overhaul of the customer service function to improve customer convenience through self renewalprogrammes aimed at re-orientating all staff cadre on the reason for our existence as an institution - toserve the customer and the community.

Corporate Social Responsibility and Community BrandingInitiativeIn our business, we believe that strategy makes the difference and the reason for our existence as aninstitution is to serve the customer and the society. Our bank’s partnership with state governments inbeautification projects and helping hand to the community has permeated the society and changed ourbank from a familiar stranger to a known neighbour. In this regard, the beautification of Falomo andMilverton Avenue Roundabouts both in Ikoyi, Onikan, Dopemu and Matori all in Lagos and Kirika Samain Maiduguri, Kachiya Road, Kaduna and Kano come to mention. There are other locations in Owerri,Aba and Enugu. We have also branded and beautified the Niger Bridge in Onitsha. Our bank alsoembarked on a specialized programme called Hello Neighbour Crusade to bring us closer and make usmore visible to our neighbours in markets, churches, streets, schools and other specialised locationsthan ever before. This is in addition to our partnership with the Spinal Chord Injuries Association ofNigeria (SCIAN). Also worth mentioning is the Fidelity Helping Hands Project: a unique side to ourcorporate social responsibility initiative through which we co-operate with our customers in any of ourlocations to assist in addressing the needs of any community in which we do business.

Staff Development and TrainingWhat makes a winning strategy is the success of its execution. It is people that execute. People whosucceed without knowledge do so by rote. They would fail easily because they would not know why theysucceeded. Our belief in empowering our people with knowledge through training led us to set up a wellstructured Training and Development Unit that runs regular and streamlined programmes for definedlevels. But self-help has its limits. We therefore identify excellent programmes in first rate businessschools around the world in order to build a knowledgeable workforce. That way we develop capacity



and people whose confidence is based on knowledge; not brute boldness. This stems from our beliefthat to win in the marketplace, every member of the Fidelity Team must have Talent, Ambition andCharacter. We motivate, empower and challenge our people to deliver. Time and again, they haveproven they can do it. We are proud of them and relish their ability.

The FutureWith the conclusion of the regulation imposed consolidation in the industry, our reading of the situation isthat this will be followed by market driven consolidation as has been the case in most consolidatedindustries globally. In spite of the challenges of the foregoing financial year, our bank has a bright futureahead. Even in the heat of the challenges of the democratic experiment, the consolidation has openedsubstantial growth opportunities in our areas of core business and further expansion of our businessreach is inevitable. The country is expected to receive over $1.4billion in foreign investments in thevarious energy projects in the medium term. After a successful debt deal that enabled the country to exithigh profile debt obligations and improved its sovereign credit rating, the country is poised to break outfrom the woods. Also the de-listing of Nigeria by FATF from Non Co-operating Countries and Territorieson money laundering and narcotics activities has reduced the country risk index. All these tend toposition the country for the influx of foreign direct investments as well as remove certain impedimentswhich had hitherto frustrated trade relations with organisations and other countries of the world. Theunbundling of National Electric Power Authority (NEPA), now PHCN, the dividends of the high profileinvestments in the power sector and infrastructure development shall redefine economic fundamentalsand expand the productive capacity frontier of the economy.

For us as a bank, technology shall continue to be a major driver of our business in the years ahead. Theimplementation of our new core banking application – Finacle – by Infosys is very much on course andshall be concluded by the beginning of the third quarter. This shall provide us a leverage to play formidablerole in all areas of our business. Also our strategic partnership with Investec of South Africa for themanagement of the nation’s external reserve and Diaspora Mutual Fund in London provide furtherimpetus to the bank’s outlook. As we constantly review the market and the environment to convertopportunities that have continued to emerge in our marketplace, we are appropriately positioned notonly to hedge against unnecessary risks, but also to take advantage of the opportunities that marketdevelopments provide.

ConclusionFinally, I want to express my profound gratitude to you all shareholders of the bank for your support invarious ways. I thank the esteemed customers whose unalloyed loyalty has made the difference. Permitme also to thank the staff and colleagues in management for their support, hard work and commitment.As we thank God for the results this year, we are confident that the best lies in the year to come.

Thank you once again, and God bless you all.

Reginald IhejiahiManaging Director & Chief Executive Officer


Our Customers

We thank our esteemed customers whoseunalloyed loyalty has made the difference.


Our Shareholders

“Special appreciation to youour valued shareholders for

your faith in the institutionand belief in its leadership. We

want to reassure you that wewill not let you down.”


BOARD OF DIRECTORS


The Directors are pleased to submit their report together with the financial statements for the year ended30 June 2006

1. RESULTSN’000

The group profit for the year after taxation 3,218,617Less: Minority interest 41,920

Profit after taxation and minority interest 3,176,697

Less: Appropriations: Transfer to Statutory Reserve 948,704 Reserve for Small Scale Industries 316,235 Proposed dividend 1,811,006

100,752

2. LEGAL FORMThe Bank was incorporated as a private limited liability company on 19 November 1987.It obtained a merchant banking license on 31 December 1987 and commenced bankingoperations on 3 June 1988. The bank converted to a commercial bank on 16 July 1999 andregistered as a public limited company on 10 August 1999. The Bank obtained its universalbanking license on 6 February 2001. The shares were quoted on the Nigerian StockExchange on 17 May 2005.

With effect from 1 January, 2006, the bank merged her assets, liabilities and undertakingsincluding real and intellectual property rights with that of FSB International Bank Plc and MannyBank Plc.

3. PRINCIPAL BUSINESS ACTIVITIESThe bank provides commercial banking services from its Headquarters in Lagos and eightythree branches in Nigeria.

4. BENEFICIAL OWNERSHIPThe bank is owned 100% by Nigerian citizens.

5 SHARE CAPITAL1 At the Extra Ordinary General Meeting held on 19 December 2005, the authorised share

capital of the bank was increased from N8 billion to N10 billion by the creation ofadditional 4 billion ordinary shares of 50k each ranking equally with the existing shares.

2 In line with the resolutions passed by members at the 17th Annual General Meeting held on19 December 2005, a bonus issue of one new ordinary share for every ten sharespreviously held was made during the year by capitalizing the sum of N427,492,040 out ofthe balance standing to the credit of the general reserve.

3 Range of shareholding as at 30 June 2006:

REPORT OF THE DIRECTORSFOR THE YEAR ENDED 30 JUNE 2006


Number of Number of Percentage ofRange shareholders shares held shareholding (%)

1 - 10,000 99,949 243,909,732 1.4810,001 - 50,000 12,435 298,278,692 1.8150,001 - 100,000 2,858 218,739,083 1.33

100,001 - 500,000 4,060 1,036,249,977 6.29500,001 - 1,000,000 936 676,584,495 4.11

1000,001 - and above 1,225 13,989,924,609 84.98

6. DIRECTORS AND THEIR INTERESTS

1 The names of the present Directors are listed on page 2.

2. Since the last Annual General Meeting, Christopher Ezeh (Chief) was appointed asChairman of the Board of Directors in place of Mr. G Peter Obi, who resigned from theboard, following his election as the executive Governor of Anambra state.

3. In accordance with Article 80 of the Articles of Association of the Bank, the Directors retiringby rotation are and being eligible, they offer themselves for re-election.

4 Directors’ shareholdings:

NAME OF DIRECTOR DIRECT INDIRECT TOTAL 30 JUNEHOLDING HOLDING 2005

Chief Christopher I. Ezeh 31,215,245 - 31,215,245 -Alhaji Umar Yahaya 2 - 2 -Chief Stephen Lawani - 40,950,825 40,950,825 -Mr Bismarck J. Rewane 16,294 - 16,294 -Mr Nnamdi Oji 4,300,000 72,820,338 77,120,338 14,285,522Major Gen. M. Magoro 57,119,705 - 57,119,705 41,897,800Mrs Bessie N. Ejeckam 3,015,714 129,337,337 132,353,051 113,774,319Rear Adm. Ndubuisi Kanu 46,398,037 - 46,398,037 37,209,522Chief Elias E. Nwosu 125,151,750 469,214,114 594,365,863 113,774,319Nze (Dr) Clement O. Maduako - 89,833,331 89,833,331 -Mr Reginald Ihejiahi 87,040,718 - 87,040,718 41,454,996Chief Willie M. Obiano 48,960,419 - 48,960,419 16,701,338Mr Abdulrahman Esene 3,005,738 - 3,005,738 -Mr Ik. Mbagwu 1,925,000 - 1,925,000 -

7. POST BALANCE SHEET EVENTSThere are no significant post balance sheet events which could have had a material effect onthe state of affairs of the bank as at 30 June 2006 and on the profit for the year ended on thatdate, which have not been adequately provided for or disclosed.

8. DIRECTORS’ RESPONSIBILITIESThe Directors are responsible for the preparation of financial statements which give a true andfair view of the state of affairs of the bank at the end of the financial year, and of the profit or lossfor that year, and which comply with the provisions of the Companies and Allied Matters Act,CAP C20 LFN 2004 and the Banks and Other Financial Institutions Act, CAP B3 LFN 2004.In so doing they do ensure that:- proper accounting records are maintained;



- internal control procedures are instituted which, as far as is reasonably possible, safeguardthe assets and prevent and detect fraud and other irregularities;

- applicable accounting standards are followed;- suitable accounting policies are adopted and consistently applied;- judgements and estimates made are reasonable and prudent; and- the going concern basis is used, unless it is inappropriate to presume that the company will

continue in business.

9. CORPORATE GOVERNANCE REPORTOn 3 April 2006, the Central Bank of Nigeria published a formal Code of CorporateGovernance for Banks and other financial institutions.

However, Fidelity’s operations have always been guided by time-honoured principles of goodcorporate governance, with the objective of achieving improved corporate performance, whilstensuring adherence to the highest ethical standards.

The core values of our abiding governance philosophy are accountability, fairness,transparency, responsibility and achievement of the overall corporate strategy.

The Bank’s governance strategy is hinged on its internal governance framework, which isexecuted through the following organs:

(a) The Board of Directors(b) Board Committees and the Shareholders Audit Committee(c) Management Committees

THE BOARD OF DIRECTORSPresently, the Board consists of fourteen Directors made up of four Executive Directors and tenNon Executive Directors. The Non Executive Directors include two independent Directors whodo not represent any shareholder interests and have no special business connections to theBank.

Following the successful merger with FSB International Bank Plc and MannyBank Plc, AlhajiUmar Yahaya, Nze Clement Maduako, Mr. Bismarck J. Rewane and Chief Stephen Lawanijoined the Board as Non Executive Directors.

Two Executive Directors also joined the Board in the period under review, Mr. AbdulrahmanEsene, Executive Director, Investment Banking (formerly of FSB International Bank Plc) and Mr.Ik. Mbagwu, Executive Director, Shared Services.

The Board of Directors is responsible for providing stable and effective leadership for the Bank,to facilitate achievement of the corporate operating objectives and performance expectations ofinvestors.

BOARD COMMITTEESThe Board executes its functions through the four Board Committees indicated below:

1. Board Risk Management & Credit Committee:

This Committee functions as a Standing Committee of the Board with responsibility for Creditand other Enterprise Risk Management.



The Committee comprises six Non Executive Directors and the Executive Director, InvestmentBanking. Its terms of reference include:

Exercising all board assigned responsibilities on Risk and Credit related issues.Ensuring compliance with the Bank’s Enterprise Risk Policies including Credit Risk,Market Risk and Operational Risk policies.Review and recommend to the full Board, Credit Policy changes.Ensure compliance with statutory requirements.Approving Credits above the Management credit approval limits.Tracking the quality of the Bank’s loan portfolio through quarterly review of risk assets.Receive and consider recommendations from the Management Credit & InvestmentCommittee (MCIC), Asset & Liability Committee (ALCO), and Operational Risk ReviewCommittee on matters relating to Risk Management.Consider and recommend for full Board approval, all Director, Shareholder and Insiderrelated credits.Consider exceptions to rules or policies and counsel on unusual credit transactions.

2. Board Audit Committee:The Board Audit Committee is comprised of Four Non-Executive Directors and the Executive

Director, Business Banking. The Committee’s terms of reference include:Reviewing internal and external audit reports periodically.Periodically review and recommend for full Board approval accounting, operations andprocedural policies and controls for the Bank.Evaluating the performance and effectiveness of the Bank’s External Auditors and makerecommendations to the full Board as to their retention or change.Reviewing major expense lines periodically.Reviewing the Bank’s accounts before presentation and or publication in all instances.

3. Board Standing Committee:The Board Standing Committee comprises of five (5) non-Executive Directors and theExecutive Director, Shared Services. Its terms of reference include consideration of:Major issues that are neither credit nor audit related.Issues related to senior management (Manager and above) including Executive Directors(“EDs”) and the Managing Director (“MD”), human resource management includingrecruitment, reassignments, compensation matters, promotions, deployment, bonusprograms and profit sharing schemes etc.Major expenditure approvals in excess of Management’s approval limits.Serious disciplinary cases involving Senior Management (Manager and above) and majorfrauds.

4. Board Corporate Strategy & Business Development Committee:This Committee comprises five Non Executive Directors, the Managing Director & ChiefExecutive Officer and all the Executive Directors. The Committee’s terms of reference include:

Harnessing the Board’s contacts and resources for expanding the Bank’s business.Regularly reviewing the business development strategy of the Bank and its execution.Evaluating significant developments in the global economy and how they impact on theBank.Reviewing and advising on major investment proposals by Management.



SHAREHOLDERS AUDIT COMMITTEEThis Committee is established in compliance with Section 359 (3) of the Companies & AlliedMatters Act, CAP C20 LFN 2004. The Committee has six members and membership is splitevenly between three members of the Board Audit Committee and three members nominatedannually by shareholders at the Annual General Meeting. The Shareholders Audit Committeereviews and approves the Bank’s financial statements before publication.

MANAGEMENT COMMITTEESIn addition to the Board and Board Committees, the Bank’s corporate governance objectivesare also met through the instrument of the following Management Committees:

1. Executive Committee:This Committee is comprised of the Managing Director & Chief Executive Officer and theExecutive Directors of the Bank. The Committee meets fortnightly to consider the following keyobjectives:

Determine the strategic planning objectives of the Bank.Review the business plan and ensure that same is in keeping with objectives.Review the Human Resource and Audit Policy of the Bank.Review all decisions that affect the management of the Bank and its staff.

2. Asset and Liability Committee:Membership of the Asset & Liability Committee is derived mainly from the asset and liabilitygeneration divisions of the Bank. The Committee meets fortnightly and has the following keyobjectives:

Review the economic outlook and its impact on the Bank’s strategy.Ensure adequate liquidity.Management interest rate risk within acceptable parameters.Maintain and enhance the capital position of the Bank.Maximize the risk adjusted returns to stakeholders over the long term,

3. Management Credit and Investment Committee:The Management Credit & Investment Committee is charged with the following keyresponsibilities amongst others:

Review of the Bank’s Credit Policy Manual.Establishing Minimum Lending Rate (MLR).Establishing the Prime Lending Rate (PLR).Approving Target Market Definitions (TMD)Approving Risk Asset Acceptance Criteria (RAAC).Approving New Credit Products & Initiatives.Approving Individual Lending Limits subject to confirmation from Sector Head, RiskManagement.Pre-approval of Platform Credits (Product papers).Approving Risk Rating.Approving Inter-Bank and Discount House Placement Limits.Approving Exposures up to maximum of N100 MillionApproving Credit Portfolio Structures and Market Development.



4. Credit Review Committee:The Credit Review Committee is charged with the following:

Review of the Bank’s credit risk portfolio.Review of collateral documentation to ensure compliance with approvals.Review of non-performing loan stock.Approving recovery strategies for bad loansApproving portfolio classification/reclassification and level of provisioning.Approving interest waivers and loan write offs.

5. Monthly Performance Review Committee:This Committee meets monthly and is concerned primarily with reviewing the Bank’s

performance on set targets:Review of the Bank’s performance monthly.Monitor budget achievement.Assess efficiency of resource deployment in the Bank.Review product performance.Reappraise cost management initiatives.

GENERALExcept for the Board Risk Management & Credit Committee which meets monthly, all other Board andBoard Committee meetings are held quarterly or as the need arises. The Chairman is not a member ofany Board Committee. Each Board Committee Chairman presents a formal report on their Committeesdeliberations at Board meetings.

With the exception of the Executive Committee, Assets & Liability Committee and Monthly PerformanceReview Committee, which the Managing Director & Chief Executive Officer chairs, all other ManagementCommittees meetings are presided over by Executive Directors.

Management Committee Meetings are held weekly, fortnightly or monthly per the terms of reference ofeach Committee or as the need arises.

10. DONATIONS AND CHARITABLE CONTRIBUTIONS

Donations and gifts to charitable organisations during the period amounted to N1,757,794(2005 – N16,050,000). There were no donations to any political organizations during the year.The beneficiaries are:

NSpinal Cord Injury Association of Nigeria 352,500Guards-mark Security 150,000African Bethlehem Church Bazaar 100,000NAF Officers’ Mess 80,000Mercy Cancer operation for Chinyere 50,000Bankers’ Forum 55,000St. Paul’s Anglican Church Harvest 100,000Methodist Church Nigeria Lagos Diocese 150,000Money Market Association of Nigeria –Hosting 225,000Others 495,294

1,757,794



11. EMPLOYMENT AND EMPLOYEES

Employment of disabled personsIt is the policy of the bank to ensure that there is no discrimination in considering applicationsfor employment including those from physically challenged persons. The policy ensures that disadvantaged persons are afforded, as far as is practicable, identical opportunities with otheremployees. There was no such physically challenged person employed during the year.

Employee involvement and trainingThe Bank is committed to keeping employees as fully informed as possible regarding theinstitution’s performance and progress. Opinions and suggestions of members of staff aresought and considered not only on matters affecting them as employees but also on thegeneral business of the bank.

Sound management and professional expertise are considered to be the bank’s major assets,and investment in their future development continues to be a top priority. Each employee has adocumented training and career development programme. To this end, short and long termtraining programmes are tailored to suit the requirements of both employees and the bank.

Employees are adequately rewarded and motivated to achieve results.

Health, safety, and welfare of employees

The bank accords high priority to the health, safety and welfare of its employees both in andoutside their place of work. In furtherance of this, the bank has a group life insurance policy anda group personal accident policy to adequately insure and protect its employees. The servicesof clinics are retained in several locations to facilitate employees’ access to health care.

12. AUDITORSMessrs Akintola Williams Deloitte have indicated their willingness to continue in office as theBank’s auditors in accordance with Section 357(2) of the Companies and Allied Matters Act,CAP C20 LFN 2004. A resolution will be proposed at the annual general meeting to empowerthe Directors to determine their remuneration.

BY ORDER OF THE BOARD

CHIJIOKE UGOCHUKWU (MRS.)Company Secretary

LAGOS, NIGERIA

19 October 2006



Audit Committee’s Report

In compliance with Section 359 (6) of the Companies and Allied Matters Act Cap C20 LFN2004, we;

i). Reviewed the scope and planning of the audit requirements and found themadequate.

ii) Reviewed the financial statements for the year ended 30 June 2006 and are satisfiedwith the explanations obtained.

iii) Reviewed the External Auditors Management Report for the year ended 30 June 2006and are satisfied that Management is taking appropriate steps to address the issuesraised.

iv) Reviewed all insider related credits as defined in Section 20(5) of Banks and OtherFinancial Instititions Act, Cap B3 LFN 2004. Our review confirmed that the bankdisclosed all such credits and they were reported in line with the CBN’s prescribedformat.

v) Ascertained that the accounting and reporting policiesof the company for the yearended 30 June 2006 are in accordance with legal requirements and agreed ethicalpractices.

The External Auditors confirmed having received full cooperation from the company’smanagement and that the scope of their work was not restricted in any way.

Mr. S. Ade OdeleyeChairman, Audit Committee

October 17, 2006

Members of the Audit Committee are:

1. Mr. S. Ade. Odeleye - Chairman2. Dr. Christian Nwinia - Member3. Chief Augustine F. Agorua - Member4. Rear Adm. G. Ndubuisi Kanu NN. Rtd. - Member5. Mrs. Bessie N. Ejeckam - Member6. Mr. Nnamdi I. Oji - Member

To the members of Fidelity Bank Plc:


Report of the Independent AuditorsTO THE MEMBERS OF FIDELITY BANK PLC

We have audited the financial statements of Fidelity Bank Plc as at 30 June 2006 set out on pages 38 to 58 whichhave been prepared on the basis of the accounting policies on pages 33 to 35.

Respective responsibilities of Directors and AuditorsIn accordance with the Companies and Allied Matters Act, CAP C20 LFN 2004, the Bank’s Directors are responsiblefor the preparation of the financial statements. Our responsibility is to form an independent opinion, based on ouraudit, on those statements and to report our opinion to you.

Basis of opinionWe conducted our audit in accordance with the international standards on auditing issued by the InternationalFederation of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amountsand disclosures in the financial statements. It also includes an assessment of the significant estimates andjudgments made by the Directors in the preparation of the financial statements, and of whether the accountingpolicies are appropriate to the Bank’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations, which we considerednecessary to provide us with sufficient evidence to give reasonable assurance that the financial statements arefree from material misstatement. In forming our opinion, we also evaluated the overall adequacy of the presentationof information in the financial statements and assessed whether the Bank’s accounting records have been properlykept. We have obtained the information and explanations we required for the purpose of our audit and havereceived adequate returns from branches not visited by us. The assets of the Bank have been properly valued andadequate provision has been made for diminution in value thereof.

OpinionIn our opinion, the Group and the Bank have kept proper accounting records and the financial statements are inagreement with the records. The financial statements drawn up in conformity with Statement of Accounting Standardsissued by the Nigerian Accounting Standards Board and relevant International Accounting Standards, give a trueand fair view of the state of affairs of the Group and the Bank at 30 June,2006 and of the profit and cash flows forthe year ended on that date, and have been properly prepared in accordance with the Companies and AlliedMatters Act, CAP C20 LFN 2004, the Banks and Other Financial Institutions Act, CAP B3 LFN 2004.

Other reporting responsibilitiesDuring the year, the bank contravened certain sections of the Banks and other Financial Institutions Act CAP B3LFN 2004 and circulars of the Central Bank of Nigeria. The particulars thereof and the penalties paid thereon areset out in note 35 on page 55.

In accordance with circular BSD/1/2004 issued by the Central Bank of Nigeria, details of insider-related credits areas disclosed in note 34.

Chartered AccountantsLagos, Nigeria

19 October 2006


A summary of the significant accounting policies consistently adopted by the Bank in the preparationofits financial statements are as follows:

1. Basis of accountingThe financial statements are prepared under the historical cost convention.

2. Basis of consolidationThe group financial statements include the financial statements of the bank and Fidelity UnionSecurities Limited with two of its subsidiaries, FUSL Insurance Brokers Limited and FUSLNominees Limited. All the financial statements are made up to 30 June. This is the first yearthese accounts are being consolidated and the corresponding year’s amounts have beenadjusted accordingly for comparative purposes.

The results of FSB International Bank Plc and Manny Bank Plc which combined their businessoperations with Fidelity Bank Plc are included in the Banks financial statements with effect from1 January 2006.All intra-group transactions, balances, income and expenses are eliminated on consolidation.

3. Fixed assets1 Fixed assets are stated at cost less accumulated depreciation.

.2 Assets on lease are treated as fixed assets. The relevant assets are purchased in thename of the bank and subsequently leased to customers as operating leases, usually onshort term basis. Such assets are depreciated.

4. DepreciationDepreciation is provided on a straight line basis on all items of fixed and leased assets at ratescalculated to write off the cost of each asset over its estimated useful life at the following annualrates:

Furniture and fittings - 20%Computer and equipment - 20%Motor vehicles - 25%Assets on lease - Motor vehicles - 25%

- Other assets - 20%Land and buildings - Freehold - 2%

- Leasehold Over the period of lease

5. Assets on LeaseAssets on lease are accounted for over the lease period. Operating leases are purchased inthe name of the bank and subsequently leased to customers .Income on the lease is accruedevenly over the respective period of the leases.

Assets leased out to customers under finance leases are accounted for at the present value ofthe minimum lease payments less the amount charged against the rentals.

Finance lease provisions are determined from a specific assessment of each customer’s

STATEMENT OF ACCOUNTING POLICIESFIDELITY BANK PLC


account and relate to those advances considered doubtful in line with CBN PrudentialGuidelines for Licensed Banks. A general provision of at least 1% is made on advances whichhave not been specifically provided for.

Income arising there from is allocated to each year on the basis of the annual finance chargesthat are equivalent to the implicit interest rate agreed on the facility.

6. InvestmentsInvestments are held as long term and are stated at cost. Provisions are made for permanentdiminution in the value of such investments.

7. Income recognition1 Interest is recognised on accrual basis daily, on all assets and liabilities to which interest is

applicable and is included as either income or expenses in the profit and loss account.Interest on non-performing credit facilities is suspended and only recognised on recoveryof the related asset.

2 Credit-related fees and income, where material and collectibility is not in doubt, aredeferred and amortised systematically over the life of the related credit. Credit-related feesare considered material if they constitute at least 10% of the projected average annualyield over the life of the facilities to which they relate. Where it is not material, it isrecognized as and when earned.

3 Non-credit related fees are recognised on collection.Rentals are recognized as income when due from the lessee.

8. Risk assetsRisk assets (which include loans, advances, overdrafts, commercial papers, bankers’acceptances, bills discounted and leases connected with the bank’s credit risks) are reviewedmonthly with a view to identifying performing and non-performing facilities.

Once an account shows signs of non-performance (e.g. interest or instalmental repayment isdue and unpaid) interest due is immediately suspended, that is, ceases to be recognised in theprofit and loss account and is released to profit only when such amounts are recovered.

Placements with financial institutions are given the same treatment as risk assets in lossrecognition.

9. Loan loss recognition1 Specific provisions were made against non–performing loans and advances, and other risk

assets while a general provision of 1% is made for loans and advances not specificallyprovided for in accordance with the prudential guidelines of the Central Bank of Nigeria

2. Provision for non-performing loans and advances is made in accordance with thePrudential Guidelines as follows:

Interest and/or principal Classification ProvisionThat is outstanding for:90 days but less than 180 days Substandard 10%180 days but less than 360 days Doubtful 50%360 days and over Lost 100%




10. TaxationProvision for income and education taxes is made in line with the provisions of relevant taxlaws.

11. Deferred taxationProvision for deferred taxation is made by the liability method and calculated at the currentrate of taxation on the difference between the net book value of fixed assets qualifying forcapital allowances and their corresponding tax written down value. Deferred taxation isprovided on timing differences.

12. Foreign currenciesTransactions in foreign currency are recorded in the books at the rates of exchange ruling onthe dates of the transactions. Assets and liabilities in foreign currency balances areconverted to Naira at the rates of exchange ruling at the balance sheet date and thedifferences arising thereon are dealt with in the profit and loss account.

13. Staff retirement benefitsLiabilities in respect of employees’ retirement benefits, which consist of a contributorypension scheme, is managed by Linkage Assurance Plc. Contributions are made by both thebank and each employee at the rates of 20% and 5% respectively of the employeespensionable emoluments

Contributions made by the bank each year are charged against income in the Profit and Lossaccount and is included in staff costs.

The bank is working out modalities to ensure full compliance with the provisions of the 2004Pension Reform Act.

14. Off Balance Sheet EngagementsTransactions that are not currently recognized as assets or liabilities in the balance sheet butwhich nonetheless give rise to credit risks, contingencies and commitments are reported offbalance sheet. Such transactions include letters of credit, bonds, guarantees, indemnities,acceptances and trade related contingencies such as documentary credit, etc.

Outstanding and unexpired commitments at year end in respect of these transactions areshown by way of note to the financial statements.

Income on off balance sheet engagements is in form of commission which is recognized asand when transactions are executed. Such commission is included in commission income inthe profit and loss account.

15. Accounting for business combinationThe business combination of Fidelity bank Plc with the former FSB International Bank Plc andManny Bank Plc was accounted for under the acquisition method of accounting.


Our Financials


BALANCE SHEETAS AT 30 JUNE 2006

The Group The Bank2006 2005 2006 2005

Note N’000 N’000 N’000 N’000ASSETSCash and short-term funds 2 12,224,961 5,278,687 12,174,536 5,219,332Due from other banks 3 34,779,729 8,385,619 34,834,546 8,281,394Treasury bill 25,285,350 4,427,223 25,285,350 4,427,223Investments 4 1,408,288 492,056 1,376,748 618,315Loans and advances 5 38,863,149 14,052,493 38,661,271 13,892,290Finance leases 6 251,814 123,817 251,814 123,817Other assets 7 3,219,255 1,434,132 2,587,204 1,220,900Equipment on lease 8 3,426 - 3,426 -Tangible fixed assets 9 5,053,387 1,390,237 4,810,906 1,170,080

121,089,359 35,584,264 119,985,801 34,953,351

LIABILITIESDeposits and other clients’ accounts 10 79,208,500 20,701,854 78,647,638 20,572,061Due to other banks 2,737,804 1,050,283 2,681,841 1,050,283Other liabilities 11 10,323,194 1,846,380 10,130,032 1,581,082Deposit for shares 12 263,280 1,589,380 263,280 1,589,380Taxation payable 24 901,823 293,896 855,011 248,563Dividend payable 1,811,006 - 1,811,006 -Deferred taxation 13 2,116 190,550 - 188,434

95,247,723 25,672,343 94,388,808 25,229,803

CAPITAL AND RESERVESShare capital 14 8,231,843 4,274,920 8,231,843 4,274,920Share premium 15 11,177,852 2,739,150 11,177,852 2,739,150Statutory reserve 25 2,449,500 1,500,796 2,449,500 1,500,796Small scale industries reserve 26 763,771 447,536 763,771 447,536General reserve 27 487,780 814,520 420,056 761,146Capital reserve 29 2,553,971 - 2,553,971 -

Shareholders’ funds 25,664,717 9,776,922 25,596,993 9,723,548Minority interest 28 176,919 134,999 - -

121,089,359 35,584,264 119,985,801 34,953,351

Acceptances, guarantees and other obligationsfor the account of the customers and thecustomers’ liabilities thereof 16 38,441,284 10,815,271 38,441,284 10,815,271

The financial statements on pages 26 to 47 were approved by the Board of Directors on 19 October 2006 and signed on its behalf by:

Chief Christopher Ezeh Reginald Ihejiahi

The significant accounting policies on pages 26 to 28 together with the notes on pages 31 to 43 form part of these financial statements.


PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2006


Note N’000 N’000 N’000 N’000

Gross earnings 11,930,912 6,366,558 11,572,151 6,158,659

Interest and discount income 19 7,742,154 4,596,959 7,670,471 4,547,905Interest expense 20 (3,207,824) (2,264,595) (3,169,886) (2,249,833)

Net interest and discount income 4,534,330 2,332,364 4,500,585 2,298,072Provision for risk assets 21 (303,222) (177,643) (235,364) (154,669)

4,231,108 2,154,721 4,265,221 2,143,403Other income 22 4,188,759 1,769,599 3,901,680 1,610,754

Operating income 8,419,867 3,924,320 8,166,901 3,754,157Operating expenses (4,746,469) (2,273,821) (4,579,601) (2,189,767)

Profit before taxation 23 3,673,398 1,650,499 3,587,300 1,564,390Taxation 24.1 (454,781) (344,645) (424,953) (327,600)

Profit after taxation 3,218,617 1,305,854 3,162,347 1,236,790Minority Interest 28 (41,920) (34,793) - -

Profit after tax and minority Interest 3,176,697 1,271,061 3,162,347 1,236,790

Appropriated as follows:Transfer to the statutory reserve 25 948,704 371,037 948,704 371,037Transfer to small scale industry reserve 26 316,235 123,679 316,235 123,679Transfer to general reserve 27 100,752 776,345 86,402 742,074Proposed dividend 1,811,006 - 1,811,006 -

3,176,697 1,271,061 3,162,347 1,236,790

Earnings per share (Basic) 32 0.19 0.15 0.19 0.14Dividend per share (Basic) 0.11 - 0.11 -

The significant accounting policies on pages 26 to 28 together with the notes on pages 31 to 43 form part of these financial statements.


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2006


Note N’000 N’000 N’000 N’000Cash flows from operating activitiesInterest and discount income 19 7,742,154 4,596,959 7,670,471 4,547,905Interest paid 20 (3,207,824) (2,264,595) (3,169,886) (2,249,833)Recoveries on loans previously written off 21 379,168 110,594 376,806 103,853Cash payments to employees and suppliers (4,231,397) (2,015,995) (3,800,588) (1,993,718)Other income received 3,570,151 1,660,291 3,013,330 1,584,576Income Tax paid 24 (295,512) (180,487) (267,163) (173,717)

Operating profit before changes in operating assets 3,956,740 1,906,767 3,822,970 1,819,066

Changes in operating assets/liabilitiesLoans and advances (24,810,656) (4,156,608) (24,768,981) (4,156,608)Advances under finance lease (127,997) (179,487) (127,997) (123,817)Other assets (1,785,123) (632,072) (1,366,304) (491,914)Deposits from customers 60,194,167 1,159,965 59,707,135 1,066,168Other liabilities 6,665,364 (1,721,149) 6,586,125 (1,755,344)

Net cash provided by/(used in)operating activities 17 44,092,495 (3,622,584) 43,852,948 (3,642,449)

Cash flows from investing activitiesPurchase of fixed assets 9 (534,846) (535,176) (504,359) (429,380)Proceeds from sale of fixed assets 536,151 9,233 536,151 8,510Purchase of investments (1,222,067) (335,181) (758,433) (335,181)Investment income 124,952 65,483 38,350 4,548

Net cash used in investing activities (1,095,810) (795,641) (688,291) (751,503)

Cash flows from financing activitiesProceeds of new shares issued 12,715,135 7,285,663 12,715,135 7,197,163Share issue expenses paid 15 (888,134) (602,827) (888,134) (602,827)Refund to subscribers 12 (625,175) (52,000) (625,175) (52,000)

Net Cash provided by financing activities 11,201,826 6,630,836 11,201,826 6,542,336

Net increase in cash and cash equivalents 54,198,511 2,212,611 54,366,483 2,148,384Cash and cash equivalents at 1 July 18,091,529 15,878,918 17,927,949 15,779,565

Cash and cash equivalents at 30 June 18 72,290,040 18,091,529 72,294,432 17,927,949


NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2006

1 History of IncorporationThe bank was incorporated as a private limited liability company on 19 November 1987. It obtained a merchant banking licence on 31December 1987 and commenced banking operations on 3 June 1988. The bank converted to a commercial bank on 16 July 1999 andre-registered as a public limited company on 10 August 1999. The bank obtained its universal banking licence on 6 Febuary 2001. Theshares are quoted on the Nigerian Stock Exchange. Following the banking industry consolidation program announced in July 2004,Fidelity bank combined its business operations with former FSB International Bank Plc and former Manny Bank Plc with effect from 1January,2006.


N’000 N’000 N’000 N’0002 Cash and short-term funds

(i) Cash 4,243,233 639,244 4,243,067 639,209(ii) Balances held with the

Central Bank of Nigeria- Cash reserve 2,675,271 1,564,646 2,675,271 1,564,646- Current accounts 5,306,457 3,074,797 5,256,198 3,015,477

7,981,728 4,639,443 7,931,469 4,580,123

12,224,961 5,278,687 12,174,536 5,219,332

3 Due from other banks- In Nigeria (i) 27,459,934 7,199,405 27,507,386 7,095,180- Foreign bank balances (note (ii)) 7,640,082 1,186,214 7,640,082 1,186,214Provision on balances doubtful of recovery (320,287) - (312,922) -

34,779,729 8,385,619 34,834,546 8,281,394

(i) Balances held in Nigeria are:Denominated in local currency 27,459,934 7,199,405 27,507,386 7,095,180

(ii) Foreign bank balances comprise:Foreign currencies held:

On behalf of the bank’s clientele 7,237,998 1,035,256 7,237,998 1,035,256In its own right 402,084 150,958 402,084 150,958

7,640,082 1,186,214 7,640,082 1,186,214

4 Investments(i) Quoted (At cost) :Nigeria International Growth Fund 52,500 52,500 52,500 52,500Lagos State Government Bond (TB rate + 5%,2009) 40,000 45,000 40,000 45,000Afprint Nigeria Plc 1,863 - 1,863 -Neimeth International Pharmaceuticals Plc -- Debentures(MRR+7.5%,2008) 12,600 16,800 12,600 16,800Other quoted Investment- market valueN314,639,697 (2005-N208,250,586) 365,994 199,945 - -Provision for dimunition in value (53,529) (45,279) - -

419,428 268,966 106,963 114,300


NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2006


N’000 N’000 N’000 N’000(ii) Unquoted equity stocks

Investment in Central Security Clearing System 95,500 87,500 95,500 87,500Smart Card Nigeria Plc 11,556 15,606 11,556 15,606Nigeria Interbank Settlement System Plc 7,066 7,000 7,066 7,000African Export and Import Bank 5,310 5,310 5,310 5,310MB Petroleum and Gas Limited 50,739 - 50,739 -Agro- Tec and Farms Limited 30,000 - 30,000 -Pioneer Sorting Consortium Ltd 24,750 - 24,750 -Valucard Nigeria Ltd 301,517 - 301,517 -ATM Consortium 20,500 - 20,500 -Ist FGN Bonds 10,015 - 10,015 -Neimeth Convertible Debenture Stock 2009 30,000 - 30,000 -SME Partnership LP 245,256 75 245,256 -SMIES Investment (CBN) 212,750 107,599 212,750 107,599Fidelity Union Securities - 281,000 281,000

Other Unquoted equities 75

1,045,034 223,090 1,325,959 504,015Provision for dimunition in value oflong term investment (56,174) - (56,174) -

988,860 223,090 1,269,785 504,015

1,408,288 492,056 1,376,748 618,315

The Directors are of the opinion that the realisable value ofthe unquoted investments is not materially lower than the cost.

5 Loans and advances(i) Analysis by security and quality:

Secured against real estate 4,469,670 3,567,928 4,199,056 3,567,928Otherwise secured 41,728,294 12,130,262 41,728,294 11,948,904Unsecured 471,017 159,136 471,017 159,136

46,668,981 15,857,326 46,398,367 15,675,968Provision for doubtful accounts andinterest in suspense (Note 5(iv)) (7,805,832) (1,804,833) (7,737,096) (1,783,678)

38,863,149 14,052,493 38,661,271 13,892,290

(ii) Maturity profileUnder 1 month 19,904,303 8,613,110 19,904,303 8,613,1101 - 3 months 11,370,744 2,715,374 11,370,744 2,715,3743 - 6 months 6,706,140 958,037 6,435,526 958,0376 -12 months 3,017,215 3,229,131 3,017,215 3,229,131Over 12 months 5,670,579 341,674 5,670,579 160,316

46,668,981 15,857,326 46,398,367 15,675,968




N’000 N’000 N’000 N’000(iii) Analysis by performance

Performing 38,701,452 14,035,642 38,641,838 13,854,284Non-performing:Substandard 198,538 - 198,538 -Doubtful 465,653 357,753 465,653 357,753Lost 7,303,338 1,463,931 7,092,338 1,463,931

7,967,529 1,821,684 7,756,529 1,821,684

46,668,981 15,857,326 46,398,367 15,675,968

(iv) The gross analysis of loans above is divided as follows:Old Fidelity Bank Plc 23,037,277 15,675,968 23,037,277 15,675,968Fidelity Union Securities 270,614 181,358 -Former FSB International Bank Plc 17,122,691 - 17,122,691 -Former Manny Bank Plc 6,238,399 - 6,238,399 -

46,668,981 15,857,326 46,398,367 15,675,968

(v) Analysis of loan loss provisionThe Group The Bank

2006 2005 Specific General 2006 2005N’000 N’000 N’000 N’000 N’000 N’000

At 1 July 911,999 792,454 750,360 138,543 888,903 738,053Additions from merged banks 3,381,826 - 3,205,286 176,540 3,381,826 -Written - off - (1,943) - - - -

4,293,825 790,511 3,955,646 315,083 4,270,729 738,053

Provision for the year 476,576 230,141 359,601 71,335 430,936 254,703

Write-back arising from recoveries (562,960) (110,594) (562,960) (562,960) (103,853)

Per profit and loss account (86,384) 119,547 (203,359) 71,335 (132,024) 150,850

At 30 June (Note 21) 4,207,441 910,058 3,752,287 386,418 4,138,705 888,903Interest in suspense (Note 5(v) 3,598,391 894,775 3,598,391 - 3,598,391 894,775

7,805,832 1,804,833 7,350,678 386,418 7,737,096 1,783,678

The Group The Bank(vi) Interest in suspense 2006 2005 2006 2005

N’000 N’000 N’000 N’000At 1 July 894,775 539,840 894,775 539,840Transfer from merged banks 2,021,004 2,021,004 -Addition during the year 1,006,779 383,740 1,006,779 383,740Write-back arising from recoveries (324,167) (28,805) (324,167) (28,805)

At 30 June 3,598,391 894,775 3,598,391 894,775




N’000 N’000 N’000 N’0006 Finance leases

At 1 July 123,817 - 123,817 -Additions 130,541 125,068 130,541 125,068

254,358 125,068 254,358 125,068

General provision 1% (2,544) (1,251) (2,544) (1,251)

251,814 123,817 251,814 123,817

7 Other assetsPayments in advance and sundry accounts 1,349,916 879,430 1,320,511 842,306Accounts receivable 2,335,481 194,819 1,717,234 60,190Prepaid interest 284,598 298,585 284,598 298,585Interest receivable 173,064 104,653 173,064 56,762Interbranch 409,810 254 409,810 30

4,552,869 1,477,741 3,905,217 1,257,873Provision for doubtful accounts (Note 21) (1,333,614) (43,609) (1,318,013) (36,973)

3,219,255 1,434,132 2,587,204 1,220,900

8 Equipment on leaseAuthorised:Cost:At 1 July 252,120 252,120 252,120 252,120Addition from merged banks 799,679 - 799,679 -

At 30 June 1,051,799 252,120 1,051,799 252,120

Depreciation:At 1 July 252,120 235,757 252,120 235,757Addition from merged banks 759,707 - 759,707 -Charge for the year 36,546 16,363 36,546 16,363

At 30 June 1,048,373 252,120 1,048,373 252,120

Net book value:At 30 June 3,426 - 3,426 -



9 Tangible fixed assets.1 Group

Furniture Computer Land andMotor and and leasing Construction

vehicles fittings equipment property W.I.P Total N’000 N’000 N’000 N’000 N’000 N’000

At 1 July 2005 462,186 119,887 677,143 1,062,255 21,965 2,343,436Additions:New purchases 182,794 17,269 173,291 161,492 - 534,846Merged banks 660,334 425,021 2,349,074 2,210,055 877,551 6,522,035 Disposals (36,815) - (1,518) - - (38,333)

At 30 June 2006 1,268,499 562,177 3,197,990 3,433,802 899,516 9,361,984

Depreciation:At 1 July 2005 230,855 85,906 436,098 200,340 - 953,199Charge for the year 114,424 41,969 280,388 70,675 - 507,456Merged banks 585,708 325,230 1,824,837 142,943 - 2,878,718On disposals (30,486) - (290) - - (30,776)

At 30 June 2006 900,501 453,105 2,541,033 413,958 - 4,308,597

Net book valueAt 30 June 2006 367,998 109,072 656,957 3,019,844 899,516 5,053,387

At 30 June 2005 231,331 33,981 241,045 861,915 21,965 1,390,237

.2 The BankAt 1 July 2005 443,481 116,727 667,419 860,102 21,965 2,109,694Additions:New purchases 171,980 16,413 169,537 146,429 - 504,359Merged banks 660,334 425,021 2,349,074 2,210,055 877,551 6,522,035Disposals (36,815) - (1,518) - - (38,333)

At 30 June 2006 1,238,980 558,161 3,184,512 3,216,586 899,516 9,097,755

Depreciation:At 1 July 2005 222,279 84,039 432,956 200,340 - 939,614Charge for the year 108,982 41,241 278,395 70,675 - 499,293 Merged banks 585,708 325,230 1,824,837 142,943 - 2,878,718On disposals (30,486) - (290) - (30,776)

At 30 June 2006 886,483 450,510 2,535,898 413,958 - 4,286,849

Net book valueAt 30 June 2006 352,497 107,651 648,614 2,802,628 899,516 4,810,906

At 30 June 2005 221,202 32,688 234,463 659,762 21,965 1,170,080



10 Deposit and other client accountsThe Group The Bank

2006 2005 2006 2005N’000 N’000 N’000 N’000

(I) Summary:Current accounts 43,304,781 6,860,041 42,743,919 6,839,007Savings deposits 4,830,382 1,037,301 4,830,382 1,037,301Time and Call deposit 27,171,795 12,459,782 27,171,795 12,351,023Domiciliary accounts 3,901,542 344,730 3,901,542 344,730

79,208,500 20,701,854 78,647,638 20,572,061

(ii) Maturity profileUnder 1 month 51,413,336 8,384,948 51,503,788 8,384,9481 - 3 months 11,926,353 9,553,241 11,926,353 9,553,2413 - 6 months 14,886,765 2,593,440 14,886,765 2,593,4406 - 12 months 318,339 52,746 318,339 31,712Above 12 months 663,707 117,479 12,393 8,720

79,208,500 20,701,854 78,647,638 20,572,061

11 Other liabilitiesCreditors, accrued charges and provisions 2,870,666 411,335 2,817,354 384,399Accrued interest 1,425,561 152,940 1,425,560 152,940Other credit balances 489,528 942,416 377,002 740,748Deposit against drawings on letters of credit 5,537,439 339,689 5,510,116 302,995

10,323,194 1,846,380 10,130,032 1,581,082

12 Deposit for sharesAt 1 July 1,589,380 14,179 1,589,380 14,179Additions during the year 10,957,620 7,197,163 10,957,620 7,197,163Transfer to share capital (2,331,709) (2,227,985) (2,331,709) (2,227,985)Transfer to share premium (9,326,836) (3,341,977) (9,326,836) (3,341,977)Refund to subscribers (625,175) (52,000) (625,175) (52,000)

At 30 June 263,280 1,589,380 263,280 1,589,380

13 Deferred taxationAt 1 July 190,550 156,272 188,434 153,176Outstanding from merged bank 117,771 797 117,771 1,777Released for the year (306,205) 33,481 (306,205) 33,481

At 30 June 2,116 190,550 - 188,434

The deferred tax charged for the year was an asset (N249,394,646 )which was not recognised in this financial statement.




N’000 N’000 N’000 N’00014 Share Capital

.1 Authorised:

20,000,000,000(2005-16,000,000,000)ordinary shares of 50k each 10,000,000 8,000,000 10,000,000 8,000,000

.2 Called-up and fully paid:

16,463,686,588(2005-8,549,840,794)ordinary shares of 50k eachAt 1 July 4,274,920 1,533,731 4,274,920 1,533,731Rights issue during the year - 230,830 - 230,830Bonus issue during the year (Note14.3 ) 427,492 513,205 427,492 513,205Private placement - 1,997,154 - 1,997,154 Public offer(Note 14.3) 2,331,709 - 2,331,709 -Consideration for combined banks(Note 28 ) 1,197,722 - 1,197,722 -

At 30 June 8,231,843 4,274,920 8,231,843 4,274,920

3 (i)At an extra ordinary general meeting held on 19 December 2005, the authorised share capital of the bank was increased fromN8 billion to N10 billion by the creation of additional 4,000,000,000 billion ordinary shares of 50k each ranking equally with theexisting shares.

(ii)It was also resolved that the sum of N427,492,040 from the balance standing to the credit of the general reserve as at June 302005 be capitalised and distributed amongst the members whose names appeared in the register of members as at November 28,2005 in proportion to the number of shares held by them respectively and to apply the same on their behalf in paying up in full 854,989,080 ordinary shares of 50 kobo each in proportion of 1new share for every 10 held by them and the shares so distributedshall rank pari passu in all respects with the existing ordinary shares of the company and that the directors be and are herebyauthorised to give effect to the resolution.

(iii) During the year, the bank issued 2,395,442,879 ordinary shares of 50kobo each as consideration for the transfer of the entireassets/liabilities of former FSB International Bank Plc,and former Manny Bank Plc.The shares were exchanged at the rate of 8 FidelityBank Plc shares for 15 former FSB International Bank Plc shares and 2 Fidelity Bank Plc shares for 9 former Manny Bank PlcShares.

(iv) The bank offered for public subscription during the year a total of 4,663,418,000 ordinary shares of 50 kobo each at a price ofN2.50 per share.


N’000 N’000 N’000 N’00015 Share premium

At 1 July 2,739,150 - 2,739,150 -Transfer from deposit for shares - 3,341,977 - 3,341,977Stamp duty on increase in authorised share capital - (140,500) - (140,500)Share issue expenses (888,134) (462,327) (888,134) (462,327)Additions during the year (14.3) 9,326,836 - 9,326,836 -

At 30 June 11,177,852 2,739,150 11,177,852 2,739,150




N’000 N’000 N’000 N’00016 Acceptances, guarantees and other obligation

for the account of the customers and thecustomers’liabilities thereof.

Unconfirmed letters of credit and liabilityto customers thereon 18,614,935 3,103,243 18,614,935 3,103,243Bonds and guarantees issued to third parties 19,826,349 7,712,028 19,826,349 7,712,028

38,441,284 10,815,271 38,441,284 10,815,271

17 Reconciliation of cashflows statementProfit after taxation 3,218,617 1,305,854 3,162,347 1,236,790Adjustment for non-cash items:Profit on disposal of fixed assets (528,594) - (528,594) -Depreciation 544,002 263,251 535,839 275,501Provision for risk assets 303,222 177,643 235,364 154,669(Decrease)/Increase in deferred taxes (188,434) 33,481 (188,434) 33,481Increase in taxes payable 607,927 126,538 606,448 118,625

3,956,740 1,906,767 3,822,970 1,819,066Changes in assets and liabilities(Increase) in loans and advances (24,810,656) (4,156,608) (24,768,981) (4,156,608)(Increase)/decrease in advancesunder finance lease (127,997) (179,487) (127,997) (123,817)(Increase) in other assets (1,785,123) (632,072) (1,366,304) (491,914)Increase in deposits from customers 60,194,167 1,159,965 59,707,135 1,066,168(Decrease)/ Increase in other liabilities 6,665,364 (1,721,149) 6,586,125 (1,755,344)

Net cash provided by operating activities 44,092,495 (3,622,584) 43,852,948 (3,642,449)

18 Cash and Cash equivalentsCash and short term funds 12,224,961 5,278,687 12,174,536 5,219,332Due from other banks 34,779,729 8,385,619 34,834,546 8,281,394Treasury bills 25,285,350 4,427,223 25,285,350 4,427,223

72,290,040 18,091,529 72,294,432 17,927,949

19 Interest and discount incomeNon-bank sourcesLoans and advances 6,642,528 4,174,856 6,570,845 4,174,856Bank sources:Discount on bankers acceptances 269,667 180,385 269,667 131,331Treasury bills 637,352 207,942 637,352 207,942Placements with foreign banks 192,607 33,776 192,607 33,776

7,742,154 4,596,959 7,670,471 4,547,905



20 Interest expenseOther banks in Nigeria 1,523,671 779,511 1,523,671 598,627Customers and staff 1,684,153 1,485,084 1,646,215 1,651,206

3,207,824 2,264,595 3,169,886 2,249,833

1. Non-bank sourcesSavings deposits 74,674 35,647 74,674 35,647Current accounts 418,892 111,517 418,892 96,755Term deposits 1,190,587 1,337,920 1,152,649 1,518,804

1,684,153 1,485,084 1,646,215 1,651,206

2. Bank sourcesLocal banks 1,523,671 779,511 1,523,671 598,627

3,207,824 2,264,595 3,169,886 2,249,833

21 Loan loss expense and other provisions.1 The Bank

Loans and Finance Other Investment Cashadvances leases assets 2006 2005

N’000 N’000 N’000 N’000 N’000 N’000 N’000

At 1 July 890,154 1,251 36,973 - - 928,378 772,458Additions from merged banks 3,380,574 - 1,084,934 26,174 172,932 4,664,614 -

4,270,728 1,251 1,121,907 26,174 172,932 5,592,992 772,458Recoveries (361,795) - (15,011) - - (376,806) (103,853)Charge for the year 229,770 1,293 211,117 30,000 139,990 612,170 258,522

Per profit and loss account (132,025) 1,293 196,106 30,000 139,990 235,364 154,669

At 30 June 4,138,703 2,544 1,318,013 56,174 312,922 5,828,356 927,127

2 The GroupAt 1 July 911,309 1,251 43,609 45,279 2,362. 1,003,810 824,916Additions from merged banks 3,380,574 - 1,084,934 26,174 172,932 4,664,614 -

4,291,883 1,251 1,128,543 71,453 175,294 5,668,424 824,916Recoveries (361,795) - (15,011) - (2,362) (379,168) (110,594)Charge for the year 275,410 1,293 220,082 38,250 147,355 682,390 288,237

Per profit and loss account (86,385) 1,293 205,071 38,250 144,993 303,222 177,643

At 30 June 4,205,498 2,544 1,333,614 109,703 320,287 5,971,646 1,002,559




N’000 N’000 N’000 N’00022 Other income

Commission on turnover 926,661 337,353 926,661 337,353Commission on letters of credit 231,080 93,565 231,080 93,565Fees 1,626,029 1,238,433 1,428,283 1,142,048Foreign exchange 47,490 - 47,490 -Other income 1,232,547 34,765 1,229,816 33,240Investment income 124,952 65,483 38,350 4,548

4,188,759 1,769,599 3,901,680 1,610,754

23 Profit before taxationThis is stated after charging/(crediting)Directors’ emoluments 10,381 6,967 8,721 5,270Auditors’ remuneration 22,000 7,780 20,000 5,980Exchange Loss 1,419 1,988 1,419 1,988Profit on disposal of fixed assets (528,594) - (528,594) -Insurance premium on deposit liabilities 230,219 120,915 230,219 120,915Depreciation - Fixed assets 499,293 263,279 499,293 259,139

- Equipment on lease 36,546 16,363 36,546 16,363Employers’ contribution to staff retirementbenefit scheme 46,165 11,853 46,165 11,853

24 Taxation(i) Profit and loss account

Income tax based on profit for the year 686,334 246,037 659,244 229,377Education tax 74,652 19,569 71,914 19,184Under provision in respect of previous year - 43,781 - 43,781

760,986 309,387 731,158 292,342Deferred Tax Release (306,205) - (306,205) -Charge for the year - 35,258 - 35,258

Charge to profit 454,781 344,645 424,953 327,600

(ii) Balance sheetAt 1 July, 2005 293,896 164,996 248,563 129,938Payments during the year (295,512) (180,487) (267,163) (173,717)

(1,616) (15,491) (18,600) (43,779)

Outstanding from merged banks 448,658 - 448,658 -Current year charges 454,781 309,387 424,953 292,342

At 30 June,2006 901,823 293,896 855,011 248,563

(iii) The charge for income tax in these financial statements is based on the provisions of the Companies Income Tax Act, CAP C21 LFN2004 as amended. The charge for education tax is based on the provisions of the Education Tax Act, CAP E4 LFN 2004.




N’000 N’000 N’000 N’00025 Statutory Reserve

At 1 July 1,500,796 1,129,759 1,500,796 1,129,759Transfer from profit and loss account 948,704 371,037 948,704 371,037

At 30 June 2,449,500 1,500,796 2,449,500 1,500,796

This is computed at 30% of Profit After Tax in accordance with BOFIA Cap B3 LFN 2004.

26 Small scale industries reserveAt 1 July 447,536 323,857 447,536 323,857Transfer from profit and loss account 316,235 123,679 316,235 123,679

At 30 June 763,771 447,536 763,771 447,536

This is computed at 10% (2005-10%) of profit after tax in accordance with Central Bank of Nigeria Guideline.

27 General reserveAt 1 July 814,520 551,380 761,146 532,277Applied for bonus issue (Note 14) (427,492) (513,205) (427,492) (513,205)Transfer from profit and loss account 100,752 776,345 86,402 742,074

At 30 June 487,780 814,520 420,056 761,146

28 Minority interestThe Group

2006 2005N’000 N’000

At 1 July 134,999 -Transfer from profit and loss account 41,920 34,793Movement on reserves - 100,206

At 30 June 176,919 134,999



29 Capital Reserve on Business CombinationsDuring the year, pursuant to the Central Bank of Nigeria’s consolidation of the Banking Industry,Fidelity Bank entered in to a mergerarrangement with FSB International Bank Plc and Manny Bank Plc to combine their businesses by issuing its shares in return for the entireshare capital of the two banks. The net assets of the two banks at their book values as at the date of the combination, (31 December2005), were as follows:

FSB International Manny Bank Plc TotalBank Plc

N’000 N’000 N’000AssetsCash and short term funds 7,699,752 227,949 7,927,701Treasury bills 12,969,662 753,465 13,723,127Bankers acceptances - - -Loans and advances 12,512,634 3,321,973 15,834,607Investments 657,179 85,739 742,918Other assets 1,469,192 2,511,646 3,980,838Assets on lease 427 39,547 39,974Fixed assets 1,916,461 1,665,719 3,582,180

Total Assets 37,225,307 8,606,038 45,831,345

LiabilitiesDeposit 12,913,331 4,426,702 17,340,033Depost for shares - 215,052 215,052Tax payable 25,368 36,559 61,927Deferred taxation - 117,772 117,772Other liabilities 22,082,857 650,581 22,733,438

Total liabilities 35,021,556 5,446,666 40,468,222

Net assets 2,203,751 3,159,372 5,363,123Cost of combination (Note .1) (946,716) (664,714) (1,611,430)Value of share issued (Note.2) (769,959) (427,763) (1,197,722)

Capital Reserve 487,076 2,066,895 2,553,971

Note .1Costs of combinationThese are costs directly attributed to the combination and include professional fees paid to lawyers,accountants, consultants,valuers,andfinancial advisers. It also includes cost of disengagement of staff as a result of the combination.

Note.2Value of shares issuedFidelity Bank shares issued to the shareholders of the two banks were as follows:

Ordinary shares ValueNumber N’000

FSB International Bank Plc 1,539,917,190 769,959Manny Bank Plc 855,525,689 427,763

Total 2,395,442,879 1,197,722



30 Chairman’s and directors’ emoluments2006 2005

N’000 N’000(i) Emoluments:

Chairman 449 449Other directors 8,272 4,821

8,721 5,270

As Directors’ fees 4,049 2,608Emoluments as executives 4,672 2,662

8,721 5,270

(ii) The number of Directors, excluding the Chairman, whoseemoluments were within the following ranges are:N N Number Number150,001 250,000 9 6

31 Employees(i) Employees renumerated at higher rates

Employees of the bank, other than Directors, whose duties were wholly or mainly discharged in Nigeria received emolumentsexcluding allowances and pensions contributions within the following ranges were:

2006 2005N N Number Number100,000 - 110,000 414 103230,001 - 240,000 433 94250,001 - 260,000 - 55290,001 - 300,000 154 42390,001 - 400,000 54 31450,000 - 460,000 - 30470,001 - 480,000 - 10480,001 - 490,000 21 7500,001 - 510,000 - 7590,000 - 600,000 - 3620,001 - 630,000 13 2700,000 - 800,000 4 -800,001 - 900,000 4 -

(ii) StaffAverage number of persons employed in the financial year were:

Number NumberManagement staff 254 103Non-management staff 905 292

1,159 395

The related staff costs for the year amounted to N3,609 million (2005 - N928 million).



32 Earnings per shareEarnings per share is calculated by using the profit after taxation for each year on the number of ordinary shares issued as at the end ofeach respective year.

33 Guarantees and their financial commitments(i) Contingent liabilities

There are contingent liabilities in respect of litigations for which no provision has been made in these financial statements amounting toN10,692 million (2005 - N9.526 million). The individual law suits are being contested and the Directors are of the opinion, havingtaken the appropriate legal advice, that no significant liability will arise therefrom.

(ii) Capital commitments:The capital commitments as at the date of these financial statements are summarised below

2006 2005N’000 N’000

Approved but not yet contracted 125,612 806,989

(iii) Financial commitments:The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the state of affairs of thebank have been taken into consideration in the preparation of these financial statements.

(iv) Outstanding tax liabilities of combined banks:The Federal Inland Revenue Service has given notice of its intention to do a tax audit on the combined banks. This may result in sometax liabilities which are yet to be ascertained and therefore has not been incorporated in these financial statements.

34 Related party transactionsAggregate credit facilities granted to companies and individuals with whom the directors of the bank are related or in which the directorshave vested interest amounted to N 1.956 billion (2005 - N2.284 billion).Details are as follows:

BalanceName of Account Name of related Director Date Expiry Outstanding Security Status

/Shareholder Granted Date N’000ALD Technical Services Ltd Chief Stephen Lawani 02-05-06 01-07-2006 539 Personal Guarantee Performing

Geolis & Co Nig. Ltd Chief Elias Nwosu 22-06-2005 21-06-2006 214,153 Ship.Doc &Gtee Performing

Next International Nigeria Mr. G.Peter Obi 25-11-2005 25-11-2006 354,559 Legal Mtge &Gtee Performing

Rossies Textile Ind Ltd. Chief Nnamdi Oji 16-12-2005 30-11-2006 23,329 Ship.Doc &Leg.Mtge Performing

Eastern Bulkcem Nze(Dr)C.O.Maduako 02-06-06 01-06-07 1,363,853 Promissory Note&Ship.Doc. Performing

1,956,433



35 Contravention of Banks and Other Financial InstitutionAct Cap B3 LFN 2004 (BOFIA),CBN Circulars and directives

The Bank contravened the following provisions of BOFIA,Cap B3 LFN 2004, certain CBN circulars and other guidelinesduring the year

Section Description PenaltyN’000

Non -compliance on recommendation of examiners onemployment of contract staff 2,000

CBN CircularsBED/DO/CIR/Vol1/11 Inadequate credit print out information on some customers 2,000

Monitoring & Miscellaneous Failure to report defaulting customers under Schedule IX contraventionprovision Act No.17 of 1995 of )foreign exchange guideline. 2,000

Section 10 of the MoneyLaundering Act 2004 Failure to render mandatory disclosure on six(6) customers 2,000

8,000


GROUP STATEMENT OF VALUE ADDEDFOR THE YEAR ENDED 30 JUNE 2006

2006 % 2005 %N’000 N’000

Gross earnings 11,930,912 6,366,558

Interest expense (3,207,824) (2,264,595)

8,723,088 4,101,963

Administration overheads andpayment for other services -Local (1,921,615) (1,098,450)

Provision for risk assets and other assets (303,222) (177,643)

VALUE ADDED 6,498,251 100 2,825,870 100

Applied as follows:To pay the employees:

- Salaries, wages and other benefits 2,016,566 31 951,025 34

To pay the providers of capital: - Dividend 1,811,006 28 - -

To pay the government:- Income tax 760,986 12 309,387 11

To provide for future replacementof assets and expansion of business:

- Depreciation 544,002 8 259,139 9- Deferred taxation - - 35,258 1

Profits re-invested into the business 1,365,691 21 1,271,061 45

6,498,251 100 2,825,870 100

Value added represents the additional wealth the group has been able to create by its own and its employees’ efforts. This statement showsthe allocation of that wealth among the employees, shareholders, government and the portion re-invested for creation of more wealth.


BANK STATEMENT OF VALUE ADDEDFOR THE YEAR ENDED 30 JUNE 2006

2006 % 2005 %N’000 N’000

Gross earnings 11,572,151 6,158,659

Interest expense (3,169,886) (2,249,833)

8,402,265 3,908,826

Administration overheads andpayment for other services -Local (1,778,449) (1,002,594)

Provision for risk assets and other assets (235,364) (154,669)

VALUE ADDED 6,388,452 100 2,751,563 100

Applied as follows:To pay the employees:

- Salaries, wages and other benefits 1,959,108 31 928,034 34

To pay the providers of capital: - Dividend 1,811,006 28 - -

To pay the government:- Income tax 731,158 11 292,342 7

To provide for future replacementof assets and expansion of business: - Depreciation 535,839 8 259,139 11 - Deferred taxation - 35,258 1

Profits re-invested into the business 1,351,341 21 1,236,790 47

6,388,452 100 2,751,563 100

Value added represents the additional wealth the bank has been able to create by its own and its employees’ efforts. This statement shows theallocation of that wealth among the employees, shareholders, government and the portion re-invested for creation of more wealth.


BANK FIVE-YEAR FINANCIAL SUMMARY

Year ended 30 JUNE 2006 2005 2004 2003 2002N’000 N’000 N’000 N’000 N’000

ASSETSCash and short-term funds 12,174,536 5,219,332 5,321,948 6,023,194 2,990,470Due from other banks 34,834,546 8,281,394 4,822,582 4,260,825 2,180,993Treasury bill 25,285,350 4,427,223 5,635,035 3,410,000 3,696,831Investments 1,376,748 618,315 283,134 174,634 55,603Loans and advances 38,661,271 13,892,290 9,735,682 7,175,055 4,934,514Finance leases 251,814 123,817 - 50,628 208,511Other assets 2,587,204 1,220,900 728,986 394,485 598,970Equipment on lease 3,426 - 16,363 - 72,463Tangible fixed assets 4,810,906 1,170,080 1,008,349 1,028,242 898,625

119,985,801 34,953,351 27,552,079 22,517,063 15,636,980

LIABILITIESDeposits 81,592,759 20,572,061 19,339,616 16,888,123 12,280,593Other liabilities 11,941,038 4,409,179 4,562,901 2,961,091 1,390,147Taxation payable 855,011 248,563 129,938 157,226 51,029

94,388,808 25,229,803 24,032,455 20,001,640 13,721,769

CAPITAL AND RESERVESShare capital 8,231,843 4,274,920 1,533,731 1,189,177 852,574Share premium 11,177,852 2,739,150 - 134,471 38,932Statutory reserves 2,449,500 1,500,796 1,129,759 855,678 598,612Small scale industries reserve 763,771 447,536 323,857 216,106 107,599General reserve 420,056 761,146 532,277 119,991 104,350Bonus shares reserve - - - - 213,144Capital reserve 2,553,971 - - - -

SHAREHOLDERS’ FUNDS 25,596,993 9,723,548 3,519,624 2,515,423 1,915,211

119,985,801 34,953,351 27,552,079 22,517,063 15,636,980

Gross earnings 11,572,151 6,158,659 5,471,267 4,386,189 3,242,861Profit before taxation 3,587,300 1,564,390 1,077,509 1,085,070 633,796Profit after taxation 3,162,347 1,236,790 913,604 856,885 539,242Dividend 1,811,006 - - 475,671 -

Per 50k share: N N N N NEarnings (Basic) 0.19 0.14 0.30 0.36 0.32Dividend (actual) 0.11 - - 0.20 -Net assets (actual) 1.66 1.14 1.15 1.06 1.12

NOTE: The earnings, dividend and net assets per share have been computed on the basis of the issued shares as at 30 June.


Notes

PROXY FORM

EIGHTEENTH ANNUAL GENERAL MEETING TO BE HELD AT CONVENTION HALL, PROTEA HOTEL, NIKE LAKE RESORT, NIKE LAKEROAD, ABAKPA-NIKE, ENUGU STATE AT 11.00 A. M. ON TUESDAY, DECEMBER 19, 2006.

I/We…………………………………................................................................of…………………………..………………………............................

being a shareholder of Fidelity Bank Plc. hereby appoint…………………………………………………………… or failing him Chief C. I.Ezeh or failing him Mr. Reginald Ihejiahi as my/our Proxy to act and vote for me/us on my/our behalf at the 18th Annual General Meetingto be held on Tuesday, December 19, 2006 and at any adjournment thereof.

DATED THE.....................DAY OF ...............................

SHAREHOLDER’S SIGNATURE………………………………………2006

This proxy form should NOT be completed and sent to the registered office if the member will be attending the meeting.

NOTE:(i) A member (shareholder) entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy in his stead. All proxy forms

should be deposited at the registered office of the Registrars (as in notice) not later than 48 hours before the meeting.(ii) In the case of Joint Shareholders, any of them may complete the form, but the names of all Joint Shareholders must be stated.(iii) If the shareholder is a Corporation, this form must be executed under its Common Seal or under the hand of some officers or an attorney duly

authorised.(iv) The Proxy must produce the Admission Card sent with the Notice of the meeting to gain entrance to the meeting.(v) It is a legal requirement that all instruments of proxy to be used for the purpose of voting by any person entitled to vote at any meeting of

shareholders must bear appropriate stamp duty from the Stamp Duties office (not adhesive postage stamps).

ADMISSION CARDEIGHTEENTH ANNUAL GENERAL MEETING TO BE HELD AT CONVENTION HALL, PROTEA HOTEL, NIKE LAKE RESORT, NIKE LAKE ROAD,ABAKPA-NIKE, ENUGU STATE AT 11.00 A. M. ON TUESDAY, DECEMBER 19, 2006.

NAME OF SHAREHOLDER: NUMBER OF SHARES HELD:

Please admit …………………………………………………………………… to the 18th Annual General Meeting of Fidelity Bank Plc.

Signature of person attending:……………………………………………………………...* This admission card should be produced by the Shareholder or his proxy in order to obtain entrance to the Annual General Meeting.* You are requested to sign this card at the entrance in the presence of the Company Secretary or her Nominee on the day of the Annual GeneralMeeting.

Please be advised that to enable a Proxy gain entrance to the meeting, the Proxy Form is to be duly completed and delivered to the Bank not later than48 hours before the time fixed for the meeting.

COMPANY SECRETARY

I/We desire this proxy to be used in favour of/or against the resolution as indicated alongside (strike out whichever is not required).

NO. ORDINARY BUSINESS FOR AGAINST

1. To receive the Statement of Accounts for the period ended June 30, 2006 together with theDirectors and Auditors Reports thereon

2. To declare a dividend.

3. To elect/re-elect Directors.

4. To approve the remuneration of Directors

5. To authorize the Directors to fix the remuneration of the Auditors.

6. To elect/re-elect the members of the Audit Committee.

Please indicate with an “X” in the appropriate column, how you wish your votes to be cast on the resolutions set out above. Unless otherwise instructed, the Proxy will voteor abstain from voting at his discretion.

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