MANAGING DIRECTOR'S REVIEW FOR THE FINANCIAL YEAR ENDED 31ST
MARCH 2004

Introduction
Industry Review
The Bank
Our Subsidiaries
The Future
Conclusion

1 INTRODUCTION

Distinguished Shareholders, Ladies, and Gentlemen. I am pleased to welcome you to the 35th Annual General Meeting (AGM) of our Bank, and to present to you the financial statements for the year ended March 31 2004.

The main task before the Bank in the financial year under review was the consolidation of our strategic growth initiatives designed to strengthen our leadership position. Both the correctness of our vision and the desire to attain key benchmarks along our defined growth path within the agreed time frame were validated in the review period as the demands of a fast changing banking environment tested our resilience and competences.

In spite of the challenge posed by an increasingly competitive operating environment characterized by declining margins, and a stricter regulatory regime, we were able to broaden and strengthen our presence in the financial services industry. Accordingly, we remain committed to our strategic goal of building long-term shareholder value, by being the pre-eminent provider of financial services in the country.

Our resolve in this direction has created many opportunities for the Bank as well as raised critical concerns that need to be addressed in the short term.

These issues mainly concern the firmness of our structures and our commitment to the provision of excellent customer service. Thus the challenge going forward is to re-jig our institutional structures, and realign our processes to take full advantage of windows of opportunity wherever and whenever these open. In pursuit of this goal, it has become clear that our market-leadership advantage will be determined by our ability to create these opportunities out of seemingly adversarial situations. Nevertheless, the critical dimensions of our work will be the degree of fit between our resource-conversion process, and available market possibilities.

In this process, our ultimate goal is the creation of a mega-brand with low cost structures, and a greatly improved customer service model accentuated by a passion to outperform the industry. This was our main focus in the review period. As an institution, we have responded to this by re-designing our operating model in line with global best practice. The potential for growth seems enormous and we are confident that the future of this great Bank is indeed very exciting.

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2 INDUSTRY REVIEW

The industry currently faces an array of changes, challenges, and opportunities in many fronts than ever before. The balance of risk in the domestic economy tilted to the downside as investment in the non- financial private sector remained flat, household incomes came under renewed downward pressure, and public spending increased. Product pricing decisions in the industry were further complicated by the downward review of the Minimum Rediscount Rate (MRR) from 16.5% to 15%. Government's expansionary fiscal policies and the accommodative policies of the Central Bank of Nigeria (CBN) continued to impact the economy as inflation in the twelve months to end-December 2003 rose to 13.8% as against the 12.9% recorded in the corresponding period in 2002. However, because of the tight monetary policy stance of the CBN in the second half of fiscal 2003 the average monthly inflation rate for the twelve-month ended December 2003 was 11.18% as against 16.16% for the twelve-month ended December 2002. The inflation rate recorded in 2003 was, therefore, at variance with government's target of a single digit inflation rate. Moreover, demand shocks in the last quarter of the review period placed renewed burden qn the naira exchange rate at the twice-weekly Dutch Auction Sessions. The naira exchange rate after having initially stabilised around N127 to the dollar for the better part of the review period exchanged for about H137 to the dollar as at end-December 2003. The CBN's concern about the safety and soundness of the financial services sector led to the suspension of some banks from the clearing house. Furthermore, the incessant threats to the integrity of the system by the activities of a few banks which were showing signs of distress informed the apex bank's decision to introduce new clearing/settlement arrangement with the number of banks participating directly in clearing operations reduced to seven. I am pleased to inform you that our Bank is one of the first to be appointed a settlement bank under the new arrangement and that we currently have agency arrangement with eighteen non-settlement banks.

Other regulatory measures implemented in the review period include: the introduction of daily Treasury Bills auctions; the upward review of the minimum ratio of capital to risk-weighted assets from 8% to 10% in January 2004; and the publication of the Code of Best Practice on Corporate Governance in Nigeria.

As a result of the reduction in MRR, other money market rates fell during the review period. Lending rates dropped from about 28% to average at 20%. You would recall that a tripartite understanding reached between banks, the CBN and the Federal Government had agreed to peg lending rates at MRR+4. Treasury bills rate stabilised at between 13.5% and 14% same as it was in the previous year. US Dollar and Sterling interest rates also remained at their lowest levels during the period, impacting negatively on our ability to earn decent interest income on our foreign balances.

The Cash Reserve Requirement (CRR) for banks was harmonised at 9.5% for all banks in the last quarter of our financial year. This is against the dual CRR introduced in July 2002 which allowed a lower cash reserve ratio of 9.5% for banks which increased their exposure to the real sector by 20% or more over the preceding year's level and a rate of 12.5% for banks which were unable to achieve this target.

Generally, the operating environment was characterised by sharp decline in margins fuelled by increased regulatory and competitive pressures. As a result, the ensuing struggle for survival compelled many banks to adopt more aggressive business models which put the entire industry under enormous pressure. In order to ensure transparency in an industry struggling under the weight of waning confidence, the CBN and the Bankers' Committee set up the Sub- Committee on Corporate Governance to make recommendations and propose a draft code for adoption by all banks. All banks are now enjoined to comply strictly with the code. In spite of the unsavoury news of three banks declared insolvent by the regulatory authority, the industry experienced some quiet and peace towards the end of the year but compliance with the minimum paid-up capital of N2 billion by banks remained a major cause for concern for some banks.

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3 THE BANK

3.1 Financial Performance

In spite of the harsh business environment under which the industry operated during the review period, our Bank maintained its consistency during the year. Gross earnings increased marginally to N45.12 billion from N45.06 billion in the preceding year. Interest earnings, which represent 66.2% of the total earnings, dropped by 10.7% to close at H29.9 billion, while non-interest income grew by 31.69% to close at H15.3 billion. Our balance sheet closed at H312.5 billion representing a decrease of 2.5% on the H321 billion achieved in the 2002/2003 financial year. The reduction in Balance Sheet size was due to the positive impact of technology on the alignment of interbranch entries and records as well as improved speed of reconciliation of nostro account balances.

Aggregate deposit liability, which is a major balance sheet driver, grew by4% from H199 billion in previous year to H207 billion in the year under review. This is an H8 billion net growth in deposit in absolute terms. The actual growth in the bank's volume of local currency deposit was H25 billion or 16.3%. However this was diluted towards the year-end by the impact of the implementation of the Federal Government policy of using public sector funds to manage liquidity. Our domiciliary deposit volume was also depleted as at Balance Sheet date.

Loans and Advances rose from N56 billion in the previous year to H78 billion recording a growth of 39.3%. In spite of this growth, we were able to maintain sufficient liquid assets that surpassed the regulatory minimum and at the same time guaranteed optimum returns to the bank.

Stringent cost control measures implemented during the review period paid off as Overheads for the year closed atN26.64 billion representing a decrease of 2% when compared with the N27.02 billion recorded in the corresponding period of last year. This was in spite of substantial increase in staff benefits. The improvement here was largely due to reduced loan loss provisioning; and the successful husbandry of other operating expenses.

Pre-tax profit rose by 5.32% to close at N14.11 billion from N13.39 billion recorded in 2002/2003. Overall, prudent risk management, aggressive debt recovery and stringent cost control boosted our performance during the period under review, even though gross earnings remained flat. Consequently, profit after tax moved up by 7.49% to close at N11.0 billion from the N 11.0 billion recorded the previous year.

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3.2 Appropriations

In Compliance with the provisions of the law, N1.6 billion has been transferred to the statutory reserve, while N1.4 billion representing 10% of profit before tax has been set aside for the Small and Medium Industries Equity Investment Scheme reserve. The sum of N5.4 billion representing 48.9% of profit after tax is being proposed to be paid as dividend to shareholders. This amounts to a dividend payout of N1.55 for each 50 kobo share held, and an increase of 3.3% over the amount paid out in the last financial year.

Furthermore, we are proposing a bonus issue of one for every eight ordinary shares held in line with our commitment to increase our paid-up capital by the year-end in compliance with the minimum capital requirement for banks. The balance of N2.4 billion has been transferred to general reserve.

3.3 Corporate Governance

In 2003 a number of financial services industry practices came under sharp scrutiny by both the regulators and the public due to the failure of some banks to meet their obligations, and the pervasive foreign exchange manipulations by some banks. Thus, market confidence in the reporting period came to depend on the extent to which both inventors and regulators perceived financial institutions to be complying with the tenets of good corporate governance.

Three significant developments in the area of corporate governance occurred in the domestic operating environment during the review period. Each of these developments impinged on the Bank's decision to adopt proactive disclosure levels in its interaction with its principal stakeholders. The first was the publication in July 2003 of the JIC Governanceplus Ratings on the corporate governance practices of listed companies in Nigeria. Conducted by Johnston Irving Consulting (a pioneer Corporate Governance Processes & Ratings Specialist) in collaboration with ICRA Pty limited (an associate of Moody's investors, USA) the report evaluated the corporate governance practices of the top fifty listed companies in Nigeria which together account for over 90% of the capitalisation of the Nigeria Stock Exchange (NSE). Of this number the Bank came third while of the eighteen banks surveyed the Bank came first. The survey assigned a CGR2+ rating to the Bank; meaning that in the opinion of the rating firm the bank "follows such practices, conventions, and codes as would provide its financial stakeholders a high (improved compliance) level of assurance on the quality of corporate governance".

The second development was the publication in October 2003 of the "Code of Best Practices on Corporate Governance in Nigeria" which main audience was Boards of Directors of companies given the important roles they play as leaders of corporate organisations. Finally, the Bankers' Committee set up the Sub-Committee on Corporate Governance to make recommendations and propose a draft code for adoption by financial institutions in the country.

These developments created a conducive environment for the implementation of our commitment to highly ethical conduct in every facet of our business. In addition, as a reaffirmation of this commitment we repeatedly reviewed and raised the standards of our business processes and practices to meet international standards of good corporate governance underpinned by the principles of openness, integrity, and accountability. Our strict compliance with the various regulatory guidelines has ensured that we meet best of standards at all times.

The Board have always taken their responsibilities in this regard very seriously, and the size and nature of our Bank are such that directors are able to maintain a close watch on activities. Thus, the Board and the Audit Committee meet every quarter, and there is regular and frank dialogue between non-executive directors and management on all major issues.

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3.3.1 Board Composition

The Board of Directors is composed of 15 members, 8 in non-executive capacity, and 7 in executive capacity. The primary role of the Board is to ensure the long- term health and prosperity of the Bank while adhering to best practices. And this it accomplishes by:
Setting objectives, goals and strategic direction for management, with a view to maximizing shareholder value;
Setting the highest business standards and code for ethical behaviour;
Adopting an annual budget and monitoring financial performance;
Ensuring that significant business risks are identified and are appropriately managed; and
Ensuring that adequate internal controls exist and are appropriately monitored for compliance.

The above objectives are implemented through a number of standing committees. Currently, the following are the standing committees of the Bank:

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3.3.2 Frequency of Meetings

All Committees meet once a quarter, except the Executive Committee (General/Credit), which meets fortnightly and weekly respectively.

Notwithstanding the above, meetings of all these committees may, however, be convened as at when the need arises.

3.3.3 Support Functions

Whereas the preceding committees evidence the Bank's commitment to an open and transparent governance structure/process, the following standing committees fulfill the Bank's statutory obligations to the extent that they provide backing for the long-term management of the Bank's business.

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3.3.4 Group Management Structure

To integrate and consolidate its investment portfolio the Bank adopted the Group Management Structure in the review period. Part of the demands of our rapidly changing business landscape is the challenge of aligning the Bank's governance structures in such a way that while taking advantage of growth opportunities, we simultaneously achieve economies of scope and scale in our operations. Although this is essentially a strategic initiative, we expect the positive effects of this structural reform to begin to manifest in the near-term.

3.3.5 Material Issues Regarding Employees and Other Stakeholders

Currently we do not have any material human capital issues which could adversely affect the continuity of the Bank's business in the near future. The changing face of business worldwide means that possible frictions in relationship with the central labour unions will remain a key risk to the industry going forward. But we have adopted a proactive posture to managing this risk internally, and our welfare policies provide a strong mitigant against the likely adverse consequences associated with this risk.
The composition of our executive management continues to reflect an array of diligent officers with diverse qualifications, experience, knowledge, resources and skills. Its composition guarantees that the Bank is not faced with "key man risk". Looking forward, we do intend to retain this appropriate mix of these competencies to effectively achieve our vision and mission.
The state of social services infrastructure in the country has continued to challenge the human resource capacity of corporate Nigeria. We have responded to the resulting challenges by investing in the health services and building the capacity of our workforce. We do maintain a standard staff clinic in the Head Office and "retainership" agreements with several hospitals to provide health services to our workforce all over the country. During the year under review, the Bank sent members of staff with special medical cases for treatment abroad. We also drafted a comprehensive HIV/AIDS policy which would be followed by an aggressive enlightenment campaign to sensitise members of staff on the dangers of the disease.

On capacity building, we have a well-equipped modern training and development facility in Lagos, and four others across the country to train and retrain our workforce.

3.3.6 Material Credit Risk Events

We do not envisage any material credit risk-related changes to the Bank's business outlook in the medium-term. The near-term risks of counterparty default associated with our settlement Bank obligations have been mitigated by the requirement imposed on our clearing banks to pledge treasury bills commensurate with their assessed tolerable risk levels. However, in the short-to-medium-term, the industry will need to contend with consequences associated with changes in policy implementation by monetary and regulatory authorities as well as unpredictable changes in direction and intensity of occurrence of major social and macroeconomic policies. The inability of obligors to meet their payment schedules in a timely manner will remain a specific concern going forward.

In as much as these risks are general in nature, we envisage that the time profile of our risk assets, their pricing, and structure would pose some challenges. To this end our strategy would be in the main to increase our share of low cost liabilities, and to realign our credit risk management processes with the business environment.

3.3.7 The Compliance Function

Adherence to all government statutory obligations is a fundamental element of our work process. Consequently, our Compliance Department worked tirelessly in the year under review to match our reputation with our sterling performance by strictly complying with all legislations, regulations, and supervisory expectations applicable to our business in Nigeria, as well as relevant international laws. By the end of the last financial year ended March 31, 2004, the following milestones were recorded in this respect:
A compliance policy and procedure manual was developed and approved by the Board;
Compliance Officers were appointed for all branches, Area Offices and relevant Head Office Departments;
Relevant publications to sensitize staff on compliance, especially on money laundering and reporting of suspicious transactions were circulated to all staff;
A compliance intra net site was created to strengthen communication and awareness within the Bank; and
Training on the role and responsibility of the Board, Management, and Staff on compliance and money laundering was intensified and refocused.

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3.4 Rights Issue

With the successful completion of our rights issue, the Bank is now endowed with a strong capital base for investment in new cutting-edge technology, people, processes, brand equity, and growth initiatives. The integration of effort across these several dimensions in such a way that we optimise the individual value proposition presented by each is perhaps the greatest challenge going forward. We have re-configured our process precisely for this challenge.

3.5 Branding Initiative.

As you would have noticed, the Bank has changed the look and feel of its logo, and its two dimensional interface with the public. This is an essential part of our brand transformation project. Although the new brand was launched on April 27 2004, we spent a considerable part of the review period preparing for the various stages of this project. Our brand transformation initiative however goes way beyond re-invigorating the Bank's look and feel. It is established on four pillars that will ensure the Bank's continuity and progress. These are leadership; safety and security; enterprise; and service excellence. Our concept of leadership epitomises both our status and ability within the industry. On safety and security, we concern ourselves with the inviolability of depositors' funds in our care, the security of our investors' funds, and the protection of our employees' jobs. Enterprise represents our focus on flexibility, creativity, and tenacity, while service excellence emphasizes our relentless commitment to process efficiency, focused performance, and accessibility.

These are the soft dimensions to our continuous process re-engineering going forward.

3.6 Small & Medium Industries Equity Investment Scheme (SMIEIS)

We have always supported government's efforts to grow the Small and Medium Enterprises sector. This is because we believe the sector is the engine for economic development. In order to contribute effectively to the scheme, our private equity company, First Funds Limited, is charged with the responsibility of administering the over N2bn we have committed to the scheme. In addition, we have also committed a sum of N 180m per annum to SME Managers.

3.7 First Bank Farm Settlement Scheme

During the year, the Bank approved a Farm Settlement Scheme to complement government's efforts at creating employment and diversifying the economy, as well as engendering national food security. The scheme is a bond-type programme that employs the benefits of the Agricultural Credit Guaranty Scheme (ACGS). Parties to the scheme are the Bank, young graduates/youths interested in agriculture, the states, and the Central Bank of Nigeria (CBN). Basically, it involves the establishment of farm settlements in various states across the country. We are working with States selected for the pilot scheme to ensure roll- out in the current financial year.

3.8 South Africa Representative Office

Following our success with the launch of FBN Bank (UK) Limited, our strategy of progressive internationalisation received a boost in the year to end-March 2004, with the commencement of business of our Representative Office in South Africa. With this development, the Bank has staked a major claim to a portion of the burgeoning trade flow between Nigeria and South Africa. Increasingly, we expect to play bigger roles in international trade flow as sub-Saharan economies move towards increased integration.

3.9 FBN Mortgages Limited

In the review period, we received the Central Bank of Nigeria's authorisation for our subsidiary, FBN Mortgages Limited, to carry on business as a primary mortgage institution (PMI). Consequently, FBN Mortgages Limited commenced business on May 3 2004. The Bank will continue to pursue growth opportunities in the economy, either through organic expansion, or through strategic alliances with established businesses. Going forward, the economic value-added to our bottom line will remain a key decision variable in our choice of expansion vehicle.

3.10 Expression of Interest in Afribank Plc

During the review period, we formally expressed interest in acquiring the Federal Government's 34% equity holding in Afribank Plc. In the quarter to end- December 2003, the Bank was pre-qualified by the National Council for Privatisation (NCP) along with 7 other bidders. Subsequently, the Bank was asked to submit a one billion naira bank draft as collateral deposit to the BPE in respect of our bid obligations. However the deal was aborted in preference for sale of the shares on the floor of the exchange, and our deposit was refunded with interest.

We consider the pursuit of this kind of growth opportunity essential to strengthening our objective of being the industry's "Clear Leader".

3.11 Branch Network & Customer Service Initiative

In order to realise our aspiration of being the pre- eminent provider of financial services in the country and to fulfill our intent of bringing quality banking services within the reach of all Nigerians, we opened new business locations across the country in the review period, bringing our network of branches to 358. Our expansion plans are continuous and are backed by an efficient customer relationship management structure which recognises the customer as the epicenter of our service delivery. Our Client Service Management Unit has impacted positively on service delivery, and is working endlessly to seeking new and faster ways of meeting and surpassing customers' expectations. I acknowledge that there is still room for improvement for us to beat the competition, and we are leaving no stone unturned in this regard.

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3.12 Information Technology

Today, we are operating in a knowledge economy largely driven by the rapid advances in information and communications technology. We are very well aware of these challenges and have deployed resources to position the Bank for effective delivery of our products and services through the multiple channels.

Our on-line web-enabled integrated banking application software Finacle has impacted positively on our service delivery to the extent that customers now find it easier and convenient to operate their accounts. They can now view their accounts and initiate transactions through the internet or use our on-line capability to operate their accounts irrespective of where the accounts are domiciled. As at the end of the last financial year, the list of our on-line branches grew to 118, making First Bank the largest on-line bank in Nigeria. Concerted efforts are aground to connect at majority of our branches to the network by the end of 2005.
I am also pleased to report that we have effected an upgrade of our banking application and achieved full automation of our inward clearing system. The automation of the inward clearing process was achieved through an interface between Docuview and Finacle. With this, the Bank is now better positioned to deal with issues arising from the present and future reductions in number of clearing days.

To ease congestion and facilitate prompt cash withdrawals, we have embarked on deployment of Automatic Teller Machines (ATMs) in our strategic branches.

We are also collaborating with other banks through InterSwitch to encourage increased use of cards for banking transactions. FBN cardholders can now visit the ATMS of any bank connected to InterSwitch to conduct transactions and vice versa. These banks include UBA, Zenith, UTB, STB and GTB.

On MasterCard, the Bank went live with on-line real-time transactions with the acquisition in Lagos of 5 POS terminals in December 2003 . Merchants, where terminals are located, can securely process MasterCard transactions electronically and obtain authorisations within seconds while the Bank receives the transaction file electronically at end of day. We expect to extend this service to Abuja and Port Harcourt shortly.

3.13 Manpower Development

In the last couple of years, our recruitment policy has continued to recognise the importance of our people to the Bank's grovvth and profitability. In the review period, we maintained a skill mix which sought to rejuvenate our workforce through a combination of entry level and executive recruitment. To this end, we recruited 660 Executive Trainees nationwide to ensure continuous supply of skilled personnel for our business. This initiative has also served to reduce unemployment level in the country and enhanced our corporate/social responsibility. We also recruited 96 experienced staff in different grades during the year.

In all these initiatives, we were concerned to ensure the strengthening of institutional memory through the retention of the larger corps of our current workforce. In pursuit of the latter objective, we continued to devote appreciable resources to staff training and development, a total of 5,046 staff, across the cadres were exposed to external training (both local and overseas) as well as our in-house programmes. The training covered all areas of Core Banking, General Management and Information Technology.

We have paid as much attention to the welfare of our pensioners as we have to our staff, convinced that our role as one of the leading employers of labour outside of the public sector imposes on us a responsibility for the post-employment reintegration of our personnel into the larger society. In order to improve the standard of living of pensioners the Bank reviewed their medical allowances upward by 150% and their salaries by 170%. Staff benefit was also reviewed upward during the period. We shall continue to motivate our people to achieve higher levels of productivity and engage men and women with the requisite skill and experience.

3.14 Employee Relations
In the wake of a more proactive management of the Bank's relationship with its staff across different levels industrial peace prevailed during the year under review. In February, however, considerable threat to the peaceful atmosphere emerged, following the decision by the Nigeria Labour Congress (NLC) to picket the Bank. The planned picketing was however put on hold following a meeting held with the NLC under the auspices of Nigerian Employers' Consultative Forum (NECA). The agreements reached at that meeting are now being implemented.

We remain committed to ensuring a harmonious industrial relations environment in the years ahead.

3.15 Corporate Citizenship

At First Bank, corporate social responsibility is a key concern of the Board and management and we have continued to lend our support to a variety of noble causes. On this front, the review period presented us with ample opportunities to re-dedicate ourselves to our host communities. In this regard we donated N50 million to the Federal Government through the Business Support Group for the hosting of the Commonwealth Heads of Government Meeting (CHOGM). In the educational sector, we continued with our endowment programme in the nation's federal universities. Specifically, in the year under review we undertook a review of the policy to ensure that more universities benefit from the scheme. To date 15 universities have benefited from the programme to which the Bank has committed over N219million.

In a similar vein, we continued with the sponsorship of the First Bank Annual Undergraduate Essay Competition to encourage scholarship among undergraduates of tertiary institutions in the country. The best three entrants in the annual competition are automatically employed by the Bank. The annual quiz competition, the first of which we organised for secondary schools in the country last year, also has these basic goals in mind.

In the area of health, the Bank and Western Union Financial Services International (WUFS) sponsored the construction of the Sickle Cell Emergency Care Unit for the Sickle Cell Foundation of Nigeria, to which a total of N11.3million was committed.

We are also avid supporters of sports development in the country. Despite our numerous sponsorship of sporting events like the Lagos Amateur Golf Championship, the Dala Hard Court Lawn Tennis Championship, the Elephant Golf Championship, and the Kaduna Polo Tournament, we maintain sporting clubs, which have won laurels for the nation. The Bank's female Basketball Team, Elephant Girls, recently won the 10th African Female Basketball Championship held in Mozambique, and our football Club was at the time of this report competing in the nation's professional league. We are very proud of them.

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3.16 Recognitions and Awards

During the year, our consistent superior performance was duly recognised by many institutions and stakeholders. Agusto & Co, a national credit rating agency upgraded its long term outlook on the Bank from an "A' in the 2002/2003 financial year, to an "Aa" in the review period: indicating that the bank's financial condition is good, and that it has strong capacity to meet its obligations as and when they fall due. Similarly, Fitch Inc., one of the world's top three credit rating agencies, assigned the Bank an "A+" long-term rating. Basically this rating, confirms the Bank's strong domestic franchise and systemic importance to the national industry.

In addition, the Bank received the prestigious "Banker of the Year 2003" award from The Banker magazine, a stable mate of the prestigious Financial Times of London and was equally nominated as the Best Foreign Exchange Bank in Nigeria by the reputable U.S.-based Global Finance Magazine.

Our Bank also received the "Western Union Productivity Award for Africa"; the "Nigerian Stock Exchange (NSE) President's Merit Award" as joint winner in the "finance/investment" category for the December 2002/March 2003 financial year; and the "2003 Pearl Award" for sectoral leadership in the banking sector; and most active stock.

4. OUR SUBSIDIARIES

The subsidiaries in the First Bank Group are: FBN (Merchant Bankers) Limited, FBN Bank (UK) Limited, First Trustees Nigeria Limited, First Registrars Nigeria Limited, First Funds Nigeria Limited, First Insurance Broker's Limited and FBN Mortgages Ltd.

Despite the general harsh operating environment, some of the subsidiaries performed creditably well in the last financial year. Their performance has spurred us to continue to expand our investment focus. I am also glad to report that our international subsidiary in the U.K., FBN Bank (U.K.) Limited is fast consolidating. Our Merchant Bank, FBN (Merchant Bankers) Limited has, however, been re-capitalized and re-positioned to ensure improved performance.

5. THE FUTURE

The immediate past year has opened for us vistas that promise to position the Bank more firmly in the market. The year was very challenging and it has primed the Bank for more successes in the years ahead. Our Bank has substantial capacity for organic growth and significant investment opportunities in our core business.

The growing business confidence in Nigeria, occasioned by the arrival of democratic governance and the increasing acceptance of the country in the international world, would offer First Bank an opportunity to consolidate on its leading position in the Nigerian financial services industry and leave an appreciable in-footprint on the international market.

The future, no doubt, is bound to be highly competitive. We have, therefore, put in place structures that would enable us seek new strategic growth opportunities in our increasingly volatile operating environment. Indeed, we will continue to leverage on our strength as the largest Nigerian bank in terms of branch network and asset base.

In the year ahead, technology will drive our business more than ever before. We will target getting two- third of our branches on-line. Currently we have achieved more than 30% of this goal, making First Bank the largest on-line bank in Nigeria. We particularly hope to leverage on technology to improve our customer service delivery and further enhance our service value chain.

We are very optimistic that the current financial year will usher in an economic environment that would brighten our income expectations. Our appointment as one of the seven settlement banks would task us to innovatively use our strengths of size and scope to our advantage. We will be challenged to reengineer our work ethos and create new products to meet the demands and expectations of the growing banking public in the local market. Our customer service premise," the bank of first choice", would be reinvigorated.

The launch of corporate governance practices in our local market this year would ensure fair business practices in 2004, which would translate to fair competition in the market place. We do hope that our performance in the financial services industry would be given a fillip in the next year, given our spread and strict adherence to the ethics of the business we are involved in.

On the international scene, our presence would be enhanced with the consolidation of our subsidiary in the UK and our entry into the South African market. These two offshore investment outlets would position the Bank to compete internationally, and further enhance our service quality in the local market.

Our income expectations in the year ahead are bright. With the global economy on the rebound and recovery in the domestic economy, there will be increased business opportunities for our Bank. We will harness our resources to meet the growing demand for banking services, which the improved economy will engender. Our Management is continuously pressing ahead with enhanced customer service delivery to beat the competition.
On the whole, we believe 2004/2005 will be a year of' immense opportunities for our Bank in particular and the national economy in general. The economic reengineering taking place in Nigeria through the National Economic Empowerment and Development Strategy (NEEDS) should position the national economy for optimal performance if properly handled.

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6. CONCLUSION

Distinguished Ladies and Gentlemen, let us thank the Almighty God for another successful year. I would also like to thank my colleagues for their undiminished commitment to the success of our Bank. I am very proud of our team and feel highly privileged to lead this group of talented and entrepreneurial individuals. We are all dedicated to finding new value for the industry and see this as a way in which we can contribute to the well-being of both the industry and our society. I would also want to thank our esteemed customers for their faith in the Bank and inestimable patronage. No doubt, the success of our enterprise will continue to depend on the consolidation of our mutually advantageous relationship.

Distinguished Ladies and Gentlemen, I thank you sincerely for your attention.

Jacob M. Ajekigbe
Managing Director/Chief Executive
First Bank of Nigeria Plc