Distinguished Shareholders, Invited Guests, Ladies and Gentlemen, it is with pleasure that I welcome you to the Annual General Meeting of our great bank Oceanic Bank International Plc and to present to you the Annual Report and Statement of Accounts for the year ended 30th September, 2005.

Operating Environment

Social-political

The social-political environment in which the bank’s businesses were transacted in the last fiscal year posed numerous challenges. These challenges appeared largely as backdrops to government reform programs, especially as it relates to the oil and gas sector, which is the mainstay of the economy. Government liberalization program in this sector repeatedly resulted in strains in government/labour relations, with the attendant disruptions in business activities
occasioned by labour unrest.

We acknowledge government’s bold steps in its anti-corruption crusade, which has further improved the nation’s credit rating and enhanced business transaction at the global level.

Economic Environment

Key macro economic variables performed relatively well during the period under review. Inflation rate was at 18.9 per cent in September 2004, but dropped to 12.5 per cent by May. The latest official figure published by the Central Bank of Nigeria (CBN) shows that inflation rose marginally to 12.7 per cent by June 2005. This reveals a tendency for prices to move away from the single digit target set by the CBN at the beginning of the year. The naira exchange rate responded to gains from the international market, appreciating against the dollar by 2.54 per cent to close the year at N129.50/US$ in official market, as against N132.87/US$ for the corresponding period of last year. The exchange rate was also helped by government ability to curtail the spiral growth in foreign exchange demand. The
Central Bank, armed with the good fortune of high and rising external reserves arising from increasing international oil prices, was able to intervene in the foreign exchange market on time to prevent speculative demand pressures on the exchange rate of the naira. Total foreign exchange demand in the review period therefore stood at $420million.

The reform program initiated by the federal government gathered momentum during the year. The relentless pursuit of these reforms through National Economic Empowerment and Development Strategy (NEEDS), along side its state and local government equivalents, SEEDS and LEEDS, has begun to define the growth path for the private sector especially in the manufacturing and agricultural sectors. Of particular mention in this regard is government’s resolve to finally unbundle the National Electric Power Authority (NEPA), through the enactment of Electricity Power Reform Act of March 2005. This law formed the basis of establishing the Power Holding Company of Nigeria, which is expected to prepare NEPA for privatization. The unbundling of NEPA, however, promises to trigger investment
opportunities in the power sector in the same manner with the Telecommunications sector in 2001. The multiplier effect of these reforms can only portend well for the growth of the Nigerian economy.

Government’s effort at getting debt forgiveness from the Paris Club of Creditors yielded positive results during the year, as the creditors granted a conditional debt relief to the country. When these conditions are met, a large proportion of the nation’s RESOURCEs would be freed for productive uses, while the country’s credit rating would also improve considerably, thereby encouraging inflow of investment funds into the economy.

The requirement to meet the new capital base stipulated by the CBN under the ongoing bank consolidation exercise has seen banks rushing to raise capital through the capital market. As at September 2005, some N270 billion had been raised by banks from the capital market. These notwithstanding, the market continued to experience swings in its major indices. Market capitalization increased by 2.53 per cent from N23,598.70 billion in September 2004 to N24,195.36 billion in September 2005. All share index increased from 1.674 trillion in September 2004 to 2.90 trillion by the end of September 2005.
Within the review period, the CBN commenced phased withdrawal of N74.5 billion government funds from the deposit money bank. The attendant crisis from this exercise disrupted the system, as some relatively smaller banks, which depended on such funds, were reported to have defaulted on their financial obligations. Also, in other to align interest rate movement with market fundamentals, CBN reduced the MRR by 200 basis points to 13 per cent in the first quarter of 2005. The spread between banks deposit and lending rates, however, remained wide through the review period.

Industry Review
The CBN continued with its policy of ensuring stability in the economy, while the banks struggled to meet the minimum capital base of banks now N25 billion before the 31st December 2005 deadline. The new capital base is to strengthen the industry, make banks stronger and more effective financial intermediation agents. So far, banks have raised over N300 billion through a combination of public offerings and private placement so as to meet the consolidation requirement.

The resounding success of the capitalization efforts of banks testifies to the confidence of the investing public in the banking industry. It is also a manifestation of the resilience of the industry and its potential to actively participate in the economic turn around of the country given the right policy environment. Pursuant to government preference for low interest rates and in an attempt to stimulate investment through attractive rate of interest, the CBN reduced MRR to 13 per cent during the review period. The apex bank on the other hand raised the cash reserve requirement from 9.5 per cent to 10 per cent.

The new contributory Pension Scheme has accumulated a large pool of pension funds, currently being invested by CBN in Treasury Bills pending the final appointment and approval of Pension Funds Administrators (PFAs) and Pension Funds Custodians (PFCs) to manage the funds. I am happy to mention that our bank is a member of a consortium granted in principle approval for a PFA and that effort is being intensified to obtain approval for a PFC.

The financial sector reform was extended to Discount Houses and Insurance companies during the review period. The minimum capital of Discount Houses was increased to N1 billion from N500 million while its operating guidelines were revised. Similarly the Insurance Industry capital base for both life and non-life business were reviewed from
N150 million to N2 billion non-life and from N200 million to N3 billion life business. Thus for a composite insurance company, its minimum capital is now N5 billion while Re-Insurance business is now N10 billion. Theses measures will complement the banking sector reform and ensure a sound financial industry capable of playing developmental roles in the economy.

The CBN Committee on the implementation of Basle II Accord carried out sensitization campaign of the industry during the review period. The Basle II Accord is a capital regulatory framework, that aims to build prudent capital regulation, market discipline and enhance risk management. Overall, the Basle II Accord would promote the soundness and stability of the global banking and financial system, as it provides a widely applicable approach to the capital assessment process. Our bank as usual has responded to the provisions of the Accord by taking necessary steps to ensure that we are compliant before the tentative launch date of 2008.

The Bank

Balance Sheet
The performance of the bank during the review period reflected the gains of its listing on the Stock Exchange and subsequent Initial Public Offering. With higher capital, the operations of the bank increased significantly. The balance sheet rose (on and off) from N105.4 billion in 2004 to N281.1 billion in September 2005. This increase is a testimony of the effectiveness of the bank’s assets and liabilities policies. We shall continue to upgrade the Assets and liabilities Management skills of our staff as we are committed to improving on the policies in line with market dictates.

Capitalisation
The bank’s Shareholders’ funds rose from N10.36 billion in 2004 to N31.09 billion during the review period, reflecting 200 per cent increase. Accordingly, your bank’s shareholders’ fund is 24 per cent in excess of CBN’s new minimum capital requirement for operating banks in Nigeria come 31st December, 2005.

Total Assets
Our total assets witnessed substantial growth during the review period from N86.9 billion to N217.8 billion.

Loans And Advances
Loans and advances outstanding as at review date grew by 220 per cent, from N24.2 billion in 2004 to N77.7 billion in 2005. The bank continues to pursue its tight risk management policy to minimize incidence of non-performing loans. I am glad to report that our ratio of non-performing to performing loans is below industry average. In the year ahead, realizing the central position of credit extension in the business of banking, we shall continue to expose
our risk analysts to relevant courses to enhance their skills.

Deposits
The bank’s total deposit increased by 143 per cent from N68.9 billion in 2004 to N167.4 billion in 2005. The deposit position reflects the benefit of our network expansion during the period. We shall continue to leverage on this deposit mobilization efforts.

Earnings
The bank’s gross earnings increased significantly by 93 per cent from N12.6 billion in 2004 to N24.3 billion in 2005.

Consequently the bank posted Profit Before Tax of N7.26 billion for the period as against N3.45 billion recorded in 2004. This is a remarkable achievement given the consolidation exercise and general operating environment. Profit After Tax also grew by 79 per cent from N3.28 billion to N5.9 billion.

Branch Network And Customer Relationship

Our branch network expansion programme witnessed a fillip – from 53 to 81 while 24 e-banking centers were established during the review period thus giving us a total of105 business offices throughout the country. The network provided additional avenue for delivery of our liability generating products along side e-based products in all the 105 locations. Our customers have continued to be delighted with our products and as a customer centered bank, we shall continue to design products based on their needs. The advantage of our branch expansion is evident in the deposit base of the bank, which grew by 143 per cent during the last financial year.

Small And Medium Industries Equity Investment Scheme (SMIEIS)

In tandem with our determination to build a Stronger Nigeria, we continued to support the Micro Small and Medium Enterprises (MSMEs) through a combination of equity under SMIEIS and debt to the sector. Our bank cannot do less to this sector that holds the key to our national growth and development. Pursuant to the above, our bank’s total investment in this sector increased from 15 to 21 projects during the review period, while amount invested increased to N1.205 billion.

Human Capital

In recognition of the fact that the availability of knowledge-based workforce is a veritable tool for attaining a competitive edge, we vigorously pursued our recruitment policy of maintaining a skill mix. The injection of fresh entry-level graduates into the system as well as executive recruitment during the year is expected to rejuvenate our workforce. In all, we recruited 119 fresh graduates and 252 experienced staff nationwide to ensure adequate
staffing for our operations. This is our modest contribution to reduction of unemployment in the country as a responsible corporate entity.

Skills and knowledge upgrade were vigorously pursued particularly to equip staff to confront emerging challenges and stay ahead of competition. Consequently 1,231 staff across the cadres benefited from courses both locally and overseas during the review period.
Fellow shareholders and Co-Board members, the staff of our bank are a special breed. At all times they keyed into the vision and ideals of our bank while ensuring that our values are not compromised. The figures being celebrated today are a confirmation of their enterprise, hard work and commitment. I, therefore enjoin you to join me in thanking the staff for this feat. With your mandate, I reaffirm the commitment of the Board and Management to
continue to train and motivate our staff to attain greater efficiency and higher performance in the years ahead.

Corporate Governance

As a responsible corporate entity, we are committed to the principles of corporate governance and code of best practice. Oceanic Bank had institutionalized ethical practice and professionalism in its corporate culture, as reflected in our choice of directors. Our bank is regulation-compliant in all its ramifications. Consequently, our Board ensures
the long-term health and prosperity of the bank through the activities of the various Board Committees.

Our bank continues to expand its business rapidly, based on an enduring structure already institutionalized and with occasional fine-tuning, it handles regulatory reforms and emerging economic issues.

Distinguished Shareholders, I am glad to inform you that our bank has already designed its post-consolidation governance.

To further position the bank for emerging post-consolidation challenges and opportunities, management took strategic steps to establish new departments and subsidiaries. To this end, the bank now has an Investment Banking Department adequately staffed to provide investment banking, capital market, assets management and financial advisory services to our customers.

Also, the bank has established Oceanic Registrars Limited as a subsidiary to actively play in the share registrarship market. This subsidiary will compliment Investment Banking Department for effective market positioning and reach. Similarly, arrangement has reached advanced stage to upgrade our Insurance Desk/Unit through the acquisition of an Insurance Company.

The combined effect of these strategic investments is for the bank to become a financial supermarket that can play actively in all aspects of the financial industry.

Board Of Directors

Distinguished shareholders, our bank remains blessed with visionary Board members with total commitment. The quality of their contribution at both the Executive Management and Board meetings impacted positively on the performance of the bank during the review period. Given the figures before us, it is evident that the bank has performed well and we look forward to better performance in the new financial year.

During the review period, a new Executive Director joined the services of our bank. He brings to the Board almost 20 years of industry experience. Please join me to welcome Mr. Charles Mekwunye to the Board.

Distinguished Shareholders, it is now time for me to appreciate our various stakeholders. I wish to thank the Board for the invaluable sound advice and guidance, which I received abundantly from them. My gratitude also goes to our shareholders who believe in us and quickly decided to invest in our bank.

To our valued customers, who are the very essence of our existence as a bank, I say thank you for your support, encouragement and patronage at all times. Permit me on behalf of the bank to appreciate the regulatory authorities – CBN, NDIC, NSE, SEC and the banking public for their unflinching support during the year.

Finally, we thank the Almighty God for blessing our efforts during the year while we pray He graciously leads us into a prosperous new year.

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