Annual Report 2013

NATIONAL INVESTMENT BANK

2013 Annual Report

Your Business is Our Business National Investment Bank Limited | 2013 Annual Report

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CONTENTS

Notice and Agenda of Annual General Meeting 04 Corporate Information 05 Chairman’s Statement 07 Managing Director’s Statement 10 Prole of Board of Directors 12

Report of Directors 16

Financial Highlights 17

Independent Auditor’s Report 25

Statement of Comprehensive Income 27 Statement of Financial Position 29 Statement of Changes in Equity 30 Statement of Cash Flows 31 Notes to Financial Statements 63 Proxy Form 99 Head Oce and Branches 102 List of Correspondent Banks 104

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NOTICE AND AGENDA OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 45th Annual General Meeting of the National Investment Bank Limited will be held at the La-Palm Royal Beach Hotel, Accra at 10:00 a.m. on Thursday, 12th June, 2014 to transact the following business:

1. To receive and consider the Financial Statements for the year ended 31st December, 2013, together with the Reports of the Directors and Auditors thereon. 2. To elect / re-elect Directors 3. To approve Directors‘ Fees 4. To authorize the Directors to determine the remuneration of the Auditors.

Dated this 12th Day of May, 2014.

BY ORDER OF THE BOARD.

Frank S. Aidoo Board Secretary

NOTE: A member entitled to attend and vote may appoint a proxy who need not be a member of the Bank. The instrument appointing such proxy must be deposited at the offices of the Registrars, NTHC Limited, Martco House, No. D542/4 Okai Mensah Link, Adabraka, Accra, P. O. Box 9563, Airport-Accra, not less than 48 hours before the meeting. A proxy form is attached.

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CORPORATE INFORMATION

THE VISION

To be the most renowned Ghanaian bank for growth and efficiency.

THE MISSION

Our mission is to offer the highest-quality, customer-focused banking services to our clients and to create value for our shareholders.

MANAGEMENT TEAM Managing Director : Mr. Ernest Mawuli Agbesi Deputy Managing Director : Mr. Patrick Tei Kwapong General Manager – Treasury : Mr. Emmanuel Dabi General Manager – Risk : Mr. Alex Amadu Gariba General Manager – Client Services : Mr. John Kweku Asamoah General Manager – Finance & Strategy : Mr. Theophilus Dorgbetor General Manager – Operations & Technology : Mr. Martin Amenyedzi Board Secretary : Mr. Frank S. Aidoo

AUDITORS : Deloitte 4 Liberation Road P. O. Box GP 453 Accra Ghana

Registered Office : 37 Kwame Nkrumah Avenue and Contact Address P. O. Box GP 3726 Accra – Ghana

Swift and Website Address : SWIFT: NIBGGHAC www.nib-ghana.com

Registrar : NTHC Limited ` Martco House, Okai Mensah Link P. O. Box 9563, Airport Accra - Ghana

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CHAIRMAN‘S STATEMENTS

INTRODUCTION Growth in Sub-Sahara Africa remained robust and is expected to accelerate to 6 percent in Valued Shareholders, Distinguished Guests, 2014, emanating from strong domestic de- Directors, Management and staff, Ladies and mand. However, spillovers from sluggish ex- Gentlemen, it is my pleasure to welcome you ternal demand, reversal of capital flows and th to the 45 Annual General Meeting of Nation- declines in commodity prices have affected al Investment Bank Limited. Another chal- the growth prospects. lenging but fruitful year has ended and it is a privilege to present to you the Annual Report THE GHANAIAN ECONOMY and Financial Statements of our Bank for the financial year ended 31st December, 2013. The above external economic developments continue to feed through to the domestic Before I proceed, I want on behalf of the economy. Board, to take this opportunity to express my appreciation to all shareholders, past Direc- The domestic economy continues to experi- tors, Management and Staff of the Bank for ence fiscal pressures, resulting from: their dedication and commitment in support- •• cost-push effects from higher petroleum ing us to achieve quite impressive results in and utility prices. the year under review. •• heightened inflation expectations. The year 2013 was generally a difficult one, but the Bank made some significant gains on •• fiscal slippages due to slower than antici- a number of fronts, consolidating the gains pated revenue inflows in 2013. made in 2012 and recording an increase in •• worsened terms of trade, and the after-tax profit of the Bank. We believe, however, that much more work requires to •• significant decline in net current transfer be done in the years ahead in order to attain receipts and remittances. sustained increases in profitability, and shareholders’ value. Against the back-drop of a fragile global economy, the domestic economy registered a real GLOBAL ECONOMY GDP growth of 5.9% in 2013 (down from 7.1% in 2012), while headline inflation rose to 13.50 The latest estimates by the IMF indicated a percent (up from 8.80 percent in 2012). In re- pick-up in the pace of global activity at 2.9 sponse to the inflationary pressure, Bank of percent in 2013, driven largely by the ad- Ghana revised the policy rate to 16% (up from vanced economies, with the impulse to global 15% at the end of 2012). The cedi depreciat- growth coming mainly from the United States, ed against the three major trading currencies. against weaker prospects in emerging market The annual rate of depreciation of the cedi economies. recorded in 2013 against the US dollar, Brit-

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ish Pound Sterling and the Euro were 12.81%, GH¢95.0 million in 2012. The correspond- 14.88% and 16.79% respectively. ing operating expenses increased by 32.1% to GH¢61.2 million from GH¢46.3 million in THE BANKING SECTOR the previous year. Credit impairment losses continued to plague the fortunes of the bank The Ghanaian banking sector continued to as total provision for the year amounted to experience stiff competition, especially in the areas of deposit mobilization, new product GH¢26.1 million compared to GH¢37.3 million development and service delivery channels. in 2012 as the cleaning of the Bank’s books continued. In spite of this, the Bank recorded Bank of Ghana has also stepped up its reg- a profit after tax for the year 2013 of GH¢38.5 ulatory efforts because of the emergence of million, an increase of 231.1% over 2012 perfor- many microfinance institutions. mance of GH¢11.6 million.

In response to the upsurge in inflation, Trea- The balance sheet of the Bank also continued sury bill rates moved up. Lending rates, how- to strengthen as shareholders’ funds grew ever, have not changed as would have been by 184.8% to GH¢285.4 million by the end expected. The yield on the 91-Day Treasury of 2013 compared to GH¢100.02 million at bills closed the year at 19.22%. the end of 2012. Total Assets, grew by 35.7% Total assets in the banking industry grew by from GH¢876.9 million at the end of 2012 to 33.3% from GH¢27.2 billion in 2012 to GH¢36.2 GH¢1,189.9 million at the end of 2013. The billion at the end of 2013. Most banks focused growth was due largely to the 8.4% growth in on growing quality assets in response to the total deposit liability from GH¢700.5 million introduction by the Central Bank of stringent at the end of 2012 to GH¢759.2 million at the risk-based banking supervision. end of 2013, and revaluation of equity shares in Nestle Ghana Ltd. Similarly, total deposits of the banking industry grew by 14.8% from GH¢20.3 billion at the DIVIDEND end of 2012 to GH¢23.3 billion at the end of 2013. The industry registered an overall aver- The Directors are proposing that the payment age non-performing loans ratio (NPL) of 12% of dividends out of the profit realised for the in 2013 as compared to 13.6% in 2012, while year ended December 31, 2013 be shelved for the average Capital Adequacy Ratio declined now until the income surplus account be- marginally to 18.45% at the end of 2013 from comes positive in accordance with statutory 18.6% at the end of 2012. requirement and best practice.

NIB’S OPERATING RESULTS CORPORATE SOCIAL RESPONSIBILITY

For the fourth year in succession, the Bank The Bank continued to live up to its responsi- achieved very impressive operating results. bility as a good corporate citizen by assisting Total operating income for the year increased various organizations and supporting various by 38.3% to GH¢131.42 million in 2013 from causes. The year 2013 was no exception as

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several worthy causes were supported finan- for further competitiveness and to take ad- cially and otherwise. Some organizations and vantage of the emerging improved business corporate bodies that benefitted during the environment. The Bank’s strategic plan aims, year under review include the Ghana Heart among others, to enhance the recovery of Foundation, Graft Foundation, Kpando En- loans against which full provision have been dowment Fund, Ghana Red Cross Society, made, ensure the provision of quality service Commissioner of Police/CID and Obuasi Mu- to clients, enhance deposit mobilization, pro- nicipal Assembly. vide rigorous training to staff, ensure strategic recruitment of manpower and ensure contin- The Bank also assisted Ministry of Food and uous image building. Agriculture in its quest to reward our hard- working farmers. Several educational institu- CONCLUSION tions and student bodies were also benefi- ciaries including Ministry of Education, Cape Your Bank is on a good trajectory of growth Coast Polytechnic, University for Develop- and profitability. As Directors, we remain com- ment Studies, Takoradi Polytechnic, Keta Se- pletely dedicated to our objective of helping nior High School, and St. Margaret Mary Se- create value for our shareholders. nior High School, among others. We take this opportunity to thank all share- THE WAY FORWARD holders and other stakeholders of the Bank, especially our customers for their support and The Bank celebrated its jubilee anniversa- loyalty throughout the year. We also com- ry last year. In 2014 and beyond, the Board, mend the past Directors, Management and Management and Staff expect to maintain a Staff for their hard work. We have every hope strong momentum buoyed by an aggressive that with your support, NIB should achieve its Strategic Plan put in place for 2014 to 2016. growth and efficiency objectives sooner than later. This will enable the Bank forge the needed strategic partnerships which will reposition it Thank you and God bless you all.

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THE MANAGING DIRECTOR‘S STATEMENTS

INTRODUCTION Ghana revised the policy rate to 16% (up from 15% in 2012). The upsurge in inflation, pro- Chairman of the Board of Directors, Directors, pelled Treasury bill rates to move up. Interest distinguished Shareholders, Ladies and Gen- rate on 91-day Treasury bills closed the year tlemen, I am delighted to present your Bank’s at 19.22%. However, lending rates have not performance for the fiscal year 2013. Against responded due to their existing high levels. the backdrop of a very challenging financial A major blight to the industry was the high situation of the Bank in the year under re- levels of non-performing loans which posed view, National Investment Bank Limited made great risk to the overall credit delivery of the some modest gains. The bank is on track to banks. That notwithstanding, banks launched reversing its poor performances in the past a number of new products and services to few years. meet the growing needs of their customers who have become more sophisticated and THE ECONOMY well informed. The year 2013 started with deteriorating economic conditions. Inflation was on the ascen- THE BANK’S OPERATING RESULTS dancy after its run in the single digit for nearly The Bank’s performance in 2013 was a ma- three years. The value of the cedi fell drasti- jor improvement over that of 2012, which is cally against the major currencies and interest a clear indication of the Board and Manage- rates were high. The annual rate of deprecia- ment’s commitment to restructure and repo- tion of the cedi recorded in 2013 against the sition the Bank to be more profitable in spite US dollar, British Pound Sterling and the Euro of the systemic difficulties. The bank record- were 12.81%, 14.88% and 16.79% respectively. ed a net profit after tax of GH¢38.5 million for the year ended December 31, 2013. Also, Economic activities were generally sluggish in the bank registered 35.70 percent growth the year. However, the fiscal-monetary policy in its total assets from GH¢876.94 million in mix and the corrective measures put in place 2012 to GH¢1,189.95 million in 2013. Custom- by the government to halt the worsening eco- ers deposits also increased by 8.4 per cent to nomic conditions which characterized the GH¢759.23 million in 2013 from GH¢700.53 year have started yielding dividends. million recorded in 2012. Shareholder’s Funds THE BANKING INDUSTRY increased from GH¢100.21 million in 2012 to GH¢285.4 million in 2013. This represented an The Banking industry experienced keen com- annual growth of 184.8 percent. This was as a petition as the banks made efforts to increase result of revaluation of the bank’s equity stake their market share and profitability. In re- in Nestle Ghana Limited as well as the signifi- sponse to the inflationary pressure, Bank of cant net profit figure achieved in 2013.

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At the end of 2013, the bank met the required laying emphasis on improving the Bank’s risk Tier One capital level. management, credit delivery and monitoring, work ethics and general productivity. HUMAN CAPITAL DEVELOPMENT Aggressive branch network expansion will be The Bank remained committed to its affirmed commenced in 2014 to 2016 in order to make aim of constantly improving the skills and ca- the bank’ products and services more accessi- pabilities of its human resource base. In view ble to customers. About six (6) new branches of this, several training programmes were or- will be opened in 2014. ganized for staff to equip them with the requi- site skills to be able to deliver in the face of the There will be rigorous training of all staff mem- intense competition in the banking industry. bers. Additionally the Bank will embark upon The Bank relentlessly pursued its succession vigorous campaigns aimed at improving the plan to ensure a smooth and uninterrupted image of the Bank and deepening relation- transition from our experienced staff who will ships with customers and other stakeholders. shortly go on retirement to our young crop of The signs are very positive and there is every staff. indication that 2014 will be a very successful year. GOING FORWARD Thank you. We are committed to ensuring a complete turnaround from 2014. In this regard, we are

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PROFILE OF BOARD OF DIRECTORS

Togbe Afede XIV (Chairman) Administration (Accounting) Asogli Education Fund. from the University of Gha- He currently chairs the na (School of Administra- boards of Accra Hearts of tion), Legon, and a Master Oak Sporting Club Ltd, Accra of Business Administration World Trade Centre Ltd, Afri- (MBA) from the Yale Univer- ca World Airlines Ltd, Pioneer sity School of Management, Kitchenware Ltd and SAS Fi- New Haven, USA. nance Group Ltd. He is also a member of the boards of Among his key business ac- Africa Fertilizer and Agribusi- complishments, Togbe foun- ness Partnership, Aluworks ded Africa World Airlines Ltd, Ltd, Ensign College of Pub- Initiatives Strategiques Cote lic Health, SAS Investment D’Ivoire, SAS Finance Group Management Ltd and Sunon Ltd, Sunon Asogli Power Asogli Power (Ghana) Ltd. Ghana Ltd, World Trade Cen- tre Accra and co-founded the He was the Chairman of the Databank (Ghana) Limited, Togbe Afede XIV is the Pa- Economic Committee and among others. His key socio- ramount Chief of the Asog- the Head of Ministry of Fi- economic development ini- li Traditional Area, and the nance Management Team tiatives include the initiation President of the Volta Re- (Ghana Government Tran- of the Volta-Ningxia Sister gion House of Chiefs. He sition Team), January-April, Regions Relationship and the was educated in Ghana and 2009, and a member of the founding of the Volta Region the United States of Ameri- President’s Economic Ad- Development Agency and the ca (USA). He received a BSc. visory Council, 2009-2012.

Mr. Ernest Mawuli Agbesi (Managing Director) Mr. Ernest Mawuli Agbesi is Retail Banking. a Banker by profession. He holds an MBA, P.GD and a He joined uniBank (Gha- Diploma in Accounting. He na) Limited in January 2008 started his banking career where he was Head of Sales in 1985 with the then Ghana & Business Development and Co-operative Bank Limited later Head of Banking Ope- (in liquidation) rising to the rations where he supervised position of Deputy Manager the organic growth of the in January 2000. Bank until his appointment as the Managing Director of the He joined International Com- National Investment Bank Li- mercial Bank in 2000 where mited in March 2014. He has he became a Divisional Head excelled over the years in the in 2006 in charge of Sales & banking sector with his vast Business Development, Esta- experience. tes and General Services and

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Mr. Patrick Tei Kwapong (Deputy Managing Director)

Mr. Patrick Tei Kwapong is the Deputy Managing Director of the Bank. He holds a BSc Admin. and an MBA (Accounting Option) from the University of Ghana, Legon. He is a member of the Institute of Chartered Accountant (Ghana).

He has over twenty years working experience in the banking sector and is currently a member of the Board of NTHC Li- mited and Metro Mass Transit Limited.

Mr. Emmanuel Adu-Sarkodee (Director)

neurship from the Universi- positions including those of ty of Ghana. He also holds a Phoenix Insurance Company Bachelor of Law (LLB) degree Limited, Phoenix Life Assu- from the GIMPA Law School rance Company Limited, Accra and has undertaken a number City Hotels (Novotel) among of courses in Financial Ma- others. nagement and Communica- tions. Mr. Adu-Sarkodee is the ar- chitect of the Ghana National Mr. Emmanuel Adu-Sarkodee Buffer Stock Company Limited, has over a decade blazed the a project he led from concep- trail with a number of corpo- tualization to implementation. rate re-engineering projects in Ghana and elsewhere. He has also been involved in some major transactions, in- He is currently the Group Chief cluding the acquisition of Be- Executive of CDH Financial nefits Insurance Ghana Limited An Entrepreneur by professi- Holdings Limited, while also by Regency Alliance Insurance on, Emmanuel Adu-Sarkodee acting as the Chief Executi- and Capital Express Life Limi- holds a Bachelor of Arts (Ho- ve Officer (CEO) of Ivory -Fi ted as well as Nsia Insurance nours) degree in Sociology nance Company Limited (a Limited. with Political Science, and an CDH Company). He presently Executive MBA in Entrepre- occupies a number of Board

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Mr. Michael Ayesu (Director) Mr. Michael Ayesu is an Econo- nal Institute of Public Adminis- mist and was educated in Gha- tration – Paris and Assuring the na and the United Kingdom. Quality of World Bank Opera- He holds a Bachelor of Arts De- tions in Africa, World Bank – gree in Social Sciences (Econs. Washington D.C. & Sociology) and a Diploma in Education from the University He was a teacher at the St. of Cape Coast. Martins Secondary School, an Economics Officer at the -Mi Mr. Ayesu then undertook a nistry of Finance – Policy Ana- course of study at the Univer- lysis Division, a Senior Advisor sity of Glasgow, UK where he to Ghana’s Executive Director graduated with a Diploma and at the World Bank Group, Wa- M.Phil. in Monetary Economics. shington D.C. and Head of the He participated in various World Bank Unit of the Ministry courses and seminars among of Finance. which are seminar on Financi- al Management and Reporting, He is currently the Director, Ex- World Bank – Accra, Internati- ternal Resource Mobilization onal Economic and Financial Division at the Ministry of Fi- Negotiations at the Internatio- nance.

Ms. Florence Chambas (Director) Ms. Florence Chambas is a of experience in private sec- Management Consultant by tor development. profession. Currently, she is the Business Development As a Business Development and Marketing Manager at Advisor of vast experience, EMPRETEC Ghana Foun- she has designed cutting dation and an Accredited edge solutions to manage- UNCTAD International Mas- ment problems especially ter Trainer in Entrepreneur- among women owned SMEs ship. and mentored many successful young entrepreneurs. As Lead Trainer, she has facilitated over 50 Entre- Ms. Chambas has a degree preneurship Development in Psychology and Manage- Training, and Management ment and Executive MBA in Skills Workshops in Ghana, Entrepreneurial Manage- Nigeria, South Africa, Ethio- ment. Ms. Chambas is mar- pia and South Sudan since ried with three daughters. 2006 and has over 18 years

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Mrs. Dedaa Wiredu-Agyei (Director)

Mrs. Dedaa Wiredu-Agyei is ministration, Programme a Civil Servant at the Minis- Based Budgeting, Public try of Trade & Finance. She Private Partnership (Univer- holds an MSc Economics sity of Queensland and Uni- (Finance & Credit). Mrs. versity of Pretoria), and SME Wiredu Agyei rose through Development (JICA Training the ranks and is currently a School, Kitakushu – Japan). Director at the Ministry of Trade and Industry. She has also participated in various workshops, Sympo- Mrs. Dedaa Wiredu-Agyei sia and Seminars both local has undertaken various trai- and overseas and is cur- ning programmes both local rently the secretary to the and abroad among which Ministerial Advisory Board. are Diploma in Public Ad-

Pimampim Yaw Kagbrese V (Director)

Pimampim Yaw Kagbrese V is the Omanhene of the Yeji Traditional Area. He is a farmer and a building contractor by profession.

Pimampim Yaw Kagbrese V was educated at the Yamba and the Bekwai College of Accountancy where he obtained a Royal Society of Arts (R. S. A.) Stage II. Currently, he is the President of the Brong- Ahafo (B/A) House of Chiefs and a member of the National House of Chiefs.

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REPORT OF THE DIRECTORS TO THE MEMBERS OF NATIONAL INVESTMENT BANK LIMITED

The Board of Directors in submitting to the shareholders their report and financial statements of the Bank for the year ended 31 December 2013 report as follows:

Statement of Directors’ Responsibility

The directors are responsible for the preparation and fair presentation of the consolidated financial statements, comprising the consolidated statement of financial position at 31 Decem- ber 2013 and the consolidated statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, and the notes to the financial statements which include general information and summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards, and in the manner required by the Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673) as amended by the Banking Act, 2007 (Act 738).

The Directors’ responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable to the circumstances.

The Directors have made an assessment of the Bank and its subsidiaries ability to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead

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FINANCIAL STATEMENTS

The following is a summary of the financial results for the year. The Bank The Group 2013 2013 GH¢'000 GH¢'000

Pro t for the year before taxation 45,012 44,182 From which is deducted: Taxation (1,321) (1,321) Deferred tax (4,038) (4,038) National fiscal reconstruction levy (1,125) (1,125)

Leaving a net Prot of 38,528 37,698 Add non - controlling share of loss - 375 deducted balance on retained earnings brought forward of (44,082) (44,082)

leaving a balance of (5,554) (6,009) Less: Transfer to Regulatory Reserves (19,264) (19,264) Transfer to credit reserve (799) (799)

leaving a balance carried forward to the statement of nancial position (25,617) (26,072)

Dividend

The Directors have proposed no dividends for ordinary shares.

Directors

The Directors who held office during the year were as follows:

Name Designation Madam Elizabeth Solomon Acting Chairperson Dr. P. A. Kuranchie Managing Director (Retired in June 2013) Mr. Patrick Tei Kwapong Deputy Managing Director Mr. Sampson Akuetteh Nortey Director Pimampim Yaw Kagbrese V Director Mr. D. K. Mensah Director Mr. Seth Ofori-Ohene Director Mr. Stephen Ahor Director Mrs. Catherine Hlodze Director Hon. Inusah A. B. Fuseini Director Hon. Mrs. Della Sowah Director

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Principal Activities

The Bank is permitted by its regulations to carry on, inter alia, the business of banking in all aspects and other businesses and agencies incidental thereto. There was no change in the principal activities of the Bank during the year.

The Bank seeks to be a leading bank offering high quality customer-focused development banking and providing complementary range of services to industry and commerce.

Subsidiary Companies

The Bank is a parent of three subsidiary companies incorporated in Ghana namely First Ghana Loans and Savings company, NIB Assets Recovery Limited and NIB Pension Custodian Limited. The nature of the business carried on by NIB Assets Recovery Limited is the management and recovery of non-performing assets. The nature of the business carried on by NIB Pension Cus- todian Limited is management of pension funds.

The NIB Asset Recovery Company Limited (ARC) was incorporated on 4th February, 2010 with the main purpose of recovering the non-performing loans of National Investment Bank Limited (NIB). NIB is the sole shareholder of ARC. ARC is expected to be in existence for a period of five years, after NIB has transferred some of its non-performing loans to the Company. On 7th July, 2010 the Bank of Ghana granted approval to NIB for the establishment of ARC. In July 2010, NIB transferred a net loan portfolio of GH¢143,201,699.44, involving 2,902 loan and overdraft accounts to ARC for recovery. The breakdown is as follows:

GH¢

Gross Loan 208,131,829.48 Provision for bad debts 64,930,130.04 Net 143,201,699.44

ARC does not earn any income and all its expenses are paid by NIB. The only assets of ARC are the loans transferred by NIB to ARC.

NIB Pension Custodian Company Ltd is yet to commence operations. Therefore the consolidated financial statements presented are that of the Bank and First Ghana Savings and Loan Company Limited.

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Dominion Corporate Trustees Limited Versus National Investment Bank Limited

In March 2010 the Bank was sued by a foreign entity by name Standard Bank Offshore Trust Company Limited (later substituted by another foreign entity by name Dominion Corporate Trustees Limited) for the sum of US$60,000,000 with interest thereon from 29th January 2009 to the date of final payment. The case has been heard and judgement was delivered on 21st February 2013 in favour of the Plaintiffs for US$60,000,000 with interest thereon at 11% per annum from 29th January 2013 to date of the final payment. Culminating into US$90,000,000 as pronounced at the judgement

The Bank has appealed against the judgement citing 8 grounds. In the opinion of the Bank there has been a grievous miscarriage of justice. The US$60,000,000 debt arose from a frau- dulent promissory note transaction carried out in 2007 with the connivance of the then Ma- naging Director of the Bank. The transaction was not reflected in any of the books of the Bank and was done on the blind side of the Board of Directors. Funds from the transaction were not utili ed as advertised but were shared among the issuers of the promissory notes and the transaction advisors. The chances of success of the appeal are very high indeed.

No provisions have been made in the financial statements pending the determination by the Appeal Court.

Approval of the Financial Statements

The financial statements of the Bank, as indicated above, were approved by the Board of

Directors on ……………………………… 2014 and are signed on their behalf by:

………………………………….. …………………………… Chairman Managing Director

Your business is Our Business 19 National Investment Bank Limited | 2013 Annual Report 2013 (1,125) 45,012 22.51% 38,528 (4,038) 133,824 251,853 285,397 759,234 602,753 380,720 1,189,951 GH¢' 000 0 (145 ) 201 2 11,78 2 11,63 7 17.90 % 95,78 0 513,52 7 176,49 5 210,64 5 876,93 9 100,20 9 700,52 9 GH¢' 00 0 201 1 872 5 -66 4 (474 ) 7,58 7 74,11 6 11.36 % 84,06 5 172,22 4 880,31 7 196,03 2 722,89 0 674,70 0 GH¢' 00 0 -16 3 93 8 201 0 1,64 9 2,42 4 60,51 2 721,13 7 10.53 % 66,09 3 126,43 3 164,90 7 447,59 3 498,80 3 GH¢' 00 0 0 47,11 8 200 9 14.37 % 63,37 9 (2,051 ) (23,113 ) 60,55 5 336,71 8 404,74 1 107,46 4 (21,062 ) 543,65 2 GH¢' 00 0 Prot After Tax & Reconstruction Levy Investments Reconstruction /Stabilization Levy Advances & Loans (GROSS) Shareholders Funds Deposits & Current Accounts Total Assets Prot Before Tax Tax Provision Cash & Balances With Bank of Ghana, Other Banks Financial Instituitons Capital Adequacy Ratio Total Income (Net of Interest Expenses) NATIONAL INVESTMENT BANK LIMITED INVESTMENT NATIONAL 2013 ) FINANCIAL HIGHLIGHTS ( 2009 TO

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NATIONAL INVESTMENT BANK LIMITED PROFIT AFTER TAX ( 2009 TO 2013 ) Amount GH¢’000 2009 2010 2011 2012 2013 Prot After Tax -23,113 2,424 7,587 11,637 38,528

NATIONAL INVESTMENT BANK LIMITED CASH & BALANCES WITH BANK OF GHANA, OTHER BANKS & FINANCIAL INSTITUITIONS ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Cash & Balances With Banks Of Ghana, 107,464 164,907 196,032 210,645 251,853 Other Banks & Financial Instituitions

NATIONAL INVESTMENT BANK LIMITED DEPOSIT & CURRENT ACCOUNTS ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Deposit & Current Accounts 336,718 498,803 722,890 700,529 759,234

NATIONAL INVESTMENT BANK LIMITED CORPORATE TAX ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Tax Provision -2,051 1,649 -664 -145 -4,038

NATIONAL INVESTMENT BANK LIMITED ADVANCES & LOANS ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Advances & Loans 404,741 447,593 674,700 513,527 602,753

NATIONAL INVESTMENT BANK LIMITED INVESTMENTS ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Investments 63,379 126,433 172,224 176,495 380,720

NATIONAL INVESTMENT BANK LIMITED TOTAL ASSETS ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Total Assets 543,652 721,137 880,317 876,939 1,189,951

NATIONAL INVESTMENT BANK LIMITED SHAREHOLDERS' FUNDS ( 2009 TO 2013 ) 2009 2010 2011 2012 2013 Shareholders' Funds 60,555 66,093 84,065 100,209 285,397

NATIONAL INVESTMENT BANK LIMITED TOTAL INCOME/PROFIT BEFORE TAX ( 2009 TO 2013 ) Total Income 47,118 60,512 74,116 95,780 133,824 2009 2010 2011 2012 2013 Prot Before Tax -21,062 938 8,725 11,782 45,012

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CHART FOR THE OUTSTANDING GROSS LOANS, ADVANCES AND OVERDRAFTS AS AT 31ST DECEMBER, 2013 Amount GH¢’000

CONSTRUCTION 30.19% 182,002 MANUFACTURING 18.42% 111,032 COMMERCE AND FINANCE 15.37% 92,646 SERVICES 14.45% 87,090 AGRICULTURE, FORESTRY & FISHING 7.52% 45,348 TRANSPORT, STORAGE & COMMUNICATION 6.79% 40,918 MINING & QUARRYING 4.82% 29,032 MISCELLANEOUS 1.56% 9,416 ELECTRICITY, GAS & WATER 0.88% 5,275 100.00% 602,759

NATIONAL INVESTMENT BANK LIMITED - GROSS OUTSTANDING TERM LOANS, OVERDRAFTS & OTHER ADVANCES BY SECTOR AS AT 31ST DECEMBER, 2013

1.56% CONSTRUCTION MANUFACTURING 6.79% 4.82% 0.88% COMMERCE AND FINANCE 30.19% SERVICES 7.52% AGRICULTURE, FORESTRY & FISHING

TRANSPORT, STORAGE & COMMUNICATION

MINING & QUARRYING 14.45% MISCELLANEOUS

ELECTRICITY, GAS & WATER

15.37% 18.42%

[email protected] 22 www.nib-ghana.com National Investment Bank Limited | 2013 Annual Report ana , h x a T r e Af t Banks Of G

t o r P Wit h s e c la n a B

Cash & 38,52 8 3 20 1 ,853 11,63 7 CASH & BALANCES CASH & BALANCES 2 25 1 3 20 1 20 1 2 0,64 5 7,58 7 1 1 2 20 1 EA R 20 1 Y 1 196,03 2 EA R 2,42 4 20 1 Y 0 20 1 0 164 , 90 7 20 1 4 6 , 4 23,11 3 - 200 9 10 7 200 9 0 0 0 0 0 0,00 0 1 10,00 0 30,00 0 20,00 0 40,00 0 - -20,00 0 -30,0 0 ,00 0 0,0 0 0,00 0 0 5 5 5 1 100,0 0 2 300,00 0 200,00 0 '000 ) ¢ ( 000 ) ' NT ¢

( NT AMO U NATIONAL INVESTMENT BANK LIMITED - INVESTMENT NATIONAL & FINANCIAL BANKS WITH BANK OF GHANA, OTHER 2013 2009 TO INSTITUITIONS FROM NATIONAL INVESTMENT BANK LIMITED - INVESTMENT NATIONAL 2013 2009 TO FROM AFTER TAX PROFIT AMO U com e com e s t n n tal I tal I o o T T vestme n n I 4 2 20 3 20 1 133, 8 3 380, 7 20 1 2 , 49 5 95,78 0 6 20 1 7 2 1 20 1

1 EA R 2,224 74,116 20 1 Y 7 1 1 EA R 20 1 Y 0 , 43 3 60,512 20 1 2 6 1 0 20 1 9 47,118 3,3 7 200 9 6 200 9 0 0 0 00 000 000 000 000 0 0,000 0 0 0 20 , 40 , 8 60 , 1 20 , 140, 0 100 , ,00 0 0,0 0 0,00 0 0,00 0 0 5 5 5 5 1 100,0 0 3 2 300,00 0 200,00 0 400,00 0 '000 ) '000 ) ¢ ¢ ( ( NT NT AMO U AMO U NATIONAL INVESTMENT BANK LIMITED - INVESTMENT NATIONAL 2013 2009 TO FROM INCOME TOTAL BANK LIMITED - INVESTMENT NATIONAL 2013 2009 TO FROM INVESTMENTS

Your business is Our Business 23 National Investment Bank Limited | 2013 Annual Report s n d F u

' s t s n u de r o l c o h e A c t a r n h e S ur r C & t i po s e D 97 3 , 8 5 2 3 1 0 4 2 3 , 2 75 9 3 20 9 20 1 100 , 2 1 0 29 2 00, 5 2 7 20 1 5 6 0 84 , 1 1 0 2 YEA R 1 EA R 722,89 0 20 1 Y 93 0 66 , 0 1 0 498,80 3 0 2 20 1 8 1 55 5 60 , 9 336, 7 0 0 2 200 9 0 0 0 0 0 0 0 0 0 0 00 0 00 0 , , ,0 0 ) 0 0, 0 0 0, 0 0, 0 0 5 5 5 00,00 0 00,00 0 0 0 1 1 100,0 0 2 7 300,00 0 200,00 0 30 0 2 0 5 400,00 0 800,00 0 600,00 0 0 ' 000 ) ' ¢ ( ¢

(

T T N N U O M A NATIONAL INVESTMENT BANK LIMITED INVESTMENT NATIONAL & CURRENT ACCOUNTS - DEPOSITS 2013 2009 TO FROM BANK LIMITED - INVESTMENT NATIONAL 2013 2009 TO FROM SHAREHOLDERS‘ FUNDS AMO U s s t e s Loa n es & tal A s c o T Adva n 3 5 3 20 1 602, 7 3 20 1 9,951 9 1,1 8 3 9 , 52 7 2 87 6 , 3 1 5 20 1 2 20 1 7 1 3 0 0 R 1 88 0 , A 4, 7 E 7 1 20 1 Y 6 EA R 20 1 Y 3 721,137 9 0 5 , 0 20 1 44 7 20 1 1 4 3,65 2 4 5 404, 7 200 9 200 9 0 0 0 0 200,00 0 400,00 0 800,00 0 600,00 0 00,00 0 00,00 0 1,200,00 0 1,000,0 0 100,0 0 7 300,00 0 200,00 0 5 400,00 0 600,00 0 '000 ) '000 ) ¢ ¢ ( ( NT NT TOTAL ASSETS FROM 2009 TO 2013 2009 TO ASSETS FROM TOTAL AMO U AMO U NATIONAL INVESTMENT BANK LIMITED - INVESTMENT NATIONAL BANK LIMITED - INVESTMENT NATIONAL OVERDRAFTS TERM LOANS, OUTSTANDING GROSS 2013 2009 TO FROM ADVANCES & OTHER

[email protected] 24 www.nib-ghana.com National Investment Bank Limited | 2013 Annual Report

INDEPENDENT AUDITORS’ REPORT To The Members Of National Investment Bank Limited

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of National Investment Bank Limited on pages 8 to 74 which comprise the consolidated financial position as at 31 December, 2013, consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, together with the summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial Statements

The Directors of the Bank and its subsidiaries are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act, 1963 (Act 179), and the Banking Act, 2004 (Act 673), as amended by the Banking Amendment Act, 2007 (Act 738); and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Bank and its subsidiaries have kept proper accounting records and the consolidated financial statements are in agreement with the records in all material respects and give in the

Your business is Our Business 25 National Investment Bank Limited | 2013 Annual Report

prescribed manner, information required by the Companies Act, 1963 (Act 179), and the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738). The consolidated financial statements give a true and fair view of the consolidated financial position of the Bank and its subsidiaries as at 31 December 2013, and of their consolidated financial performance and consolidated cash flows for the year then ended and are drawn up in accordance with the International Financial Reporting Standards (IFRS).

Emphasis of Matter

We draw attention to note 32 to the financial statements which describes the uncertainty related to the outcome of the lawsuit in relation to the appeal filed by the Bank. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

The Ghana Companies Act, 1963 (Act 179) requires that in carrying out our audit work we consider and report on the following matters. We confirm that: i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit, ii. In our opinion proper books of accounts have been kept by the Bank and its Subsidiaries, so far as appears from our examination of those books, and iii. The Consolidated Balance Sheet [Statement of Financial Position] and Consolidated Profit & Loss [Statement of comprehensive income] of the Bank and its subsidiaries are in agreement with the books of accounts.

The Banking Act 2004 (Act 673), section 78 (2), requires that we state certain matters in our report We hereby state that:

I. The consolidated accounts give a true and fair view of the state of affairs of the Bank and its subsidiaries and its results for the period under review II. We were able to obtain all the information and explanation required for the efficient performance of our duties as auditors III. The Bank and its subsidiaries transactions are within their powers and IV. The Bank has generally complied with the provisions of Act 673 and the Banking (Amendment) Act of 2007.

Chartered Accountants Accra, Ghana Licence No. ICAG/F/12

27th March, 2014...... Felix Nana Sackey Practising Certificate: Licence No. ICAG/P/1131

[email protected] 26 www.nib-ghana.com National Investment Bank Limited | 2013 Annual Report

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

Notes 2013 2012 2013 2012

Interest Income 5 101,150 99,611 103,217 101,975 Interest Expense 6 (45,888) (45,288) ( 47,052) (46,154) ------Net Interest Income 55,262 54,323 56,165 55,821

16,260 14,926 16,616 15,293 Fees and Commission Income 7 Other Operating Income 8 59,896 25,788 59,896 25,788 ------Operating Income 131,418 95,037 132,677 96,902

(61,236) (46,354) (63,334) (47,988) Operating expenses 9 ------

Operating Profit before Impairment 70,182 48,683 69,343 48,914

2,544 175,791 2,544 175,791 Provision no longer required Bad Debts Written O (3,854) (176,127) (3,862) (176,127) Credit Impairment Loss 11 (26,074) (37,308) (26,154) (37,493) ------Prot before taxation and other income 42,798 11,039 41,871 11,085

Share of loss of associate (192) - (192) -

Other Income 12 2,406 743 2,503 803

Prot before taxation 45,012 11,782 44,182 11,888

Income tax expense 13a (1,321) - (1,321) (30) Deferred tax 13b (4,038) (145) (4,038) (145) National Fiscal stabilization levy (1,125) - (1,125) ------Pro t for the year 38,528 11,637 37,698 11,713

Other Comprehensive Income Items that Items that may be reclassied subsequently to prot or loss;

Net fair value gain on available-for-sale nancial 191,840 4,508 191,840 4,508 assets Deferred tax on fair value gain on available-for- (25,519) - (25,519) - sale nancial assets Reclassication adjustments relating to available for sale nancial assets disposed of during the (20,935) - (20,935) - year

Share of net fair value gain on available-for-sale 1,274 - 1,274 - nancial assets of associate ------Total Comprehensive Income for the year 185,188 16,145 184,358 16,221 ======

Your business is Our Business 27 National Investment Bank Limited | 2013 Annual Report

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013 Amount GH¢’000

Profit for the year attributable to; The Group

2013 2012

Owners of the company 38,073 11,679 Non – controlling interest (375) 34 ------

37,698 11,713 ======

Total comprehensive income attributable to;

Owners of the company 184,733 16,187 Non – controlling interest (375) 34 184,358 16,221 ======

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

Notes 2013 2012 2013 2012 Assets Cash and Balances with Bank of Ghana 15 165,841 111,643 166,715 113,176 Government Securities 16 155,323 123,078 155,340 123,095 Due from other Banks & Financial Institutions 17a 86,012 99,002 87,999 100,860 Available-for-sale Equity Investments 18a 32,365 31,597 32,377 31,598 Investment in associates 18c 189,878 18,667 189,878 18,667 Loans and advances to customers 19 515,624 449,657 521,260 454,947 Other Assets 20 13,020 10,959 11,671 9,723 Current Tax Asset 13a - 2,176 - 2,176 Investments Subsidiaries 18d 3,154 3,154 - - Property, Plant and Equipment 21 28,734 27,006 31,369 29,596 Goodwill 31 - 936 936 ------Total Assets 1,189,951 876,939 1,197,545 884,774 ======Liabilities Customer Deposits 22 759,234 700,529 770,897 710,942 Borrowings 23 59,231 51,190 59,231 51,190 Liability in Managed fund 24 1,002 538 1,002 538 Interest payable & Other Liabilities 25 27,461 20,246 23,601 17,046 Due to other banks & nancial institutions 17b 23,572 - 23,572 - Capital gain tax 13d - 384 - 384 Deferred Tax Liability 13b 32,340 2,783 32,340 2,783 National Fiscal Stabilization Levy 13c 1,125 474 1,125 474 Dividend tax 13e - 586 - 586 Taxation 13a 589 - 619 30 ------Total Liabilities 904,554 776 ,730 912,387 783,973 ------

Stated Capital 26 70,000 70,000 70,000 70,000 Statutory reserve funds 27 36,443 17,179 36,443 17,179 Regulatory credit risk reserve 28 4,241 3,442 4,241 3,443 Other reserves 29 200,330 53,670 200,330 53,670 Income surplus 30 (25,617) (44,082) (26,072) (44,082) Non controlling interest - - 216 591 ------Total Shareholders' Funds 285,397 100,209 285,158 100,801 ------Total Liabilities and Shareholders' Funds 1,189,951 876,939 1,197,545 884,774 ======

Net Assets value per share (Ghana Cedis per share) 1.46 0.51 1.45 0.51

Your business is Our Business 29 National Investment Bank Limited | 2013 Annual Report 8 5 1 - - - -

, Total Total 5 16,145 16,145

172,179 172,179 38,528 37,698 8 (25,519) (25,519) 84,656

84,064

100,801

285,397 2

100,209 100,209

100,800

------======6 1 591 591 591 Non Non

------(375)

interest interest controlling controlling

------======- - - - 1 4 Risk 2 678 678 799 799 ------,

4,241 4 2,764 2,764 3,442 3,442 3,442 3,442 Credit

reserve reserve

Credit risk ------======

3 4 ------4

, 5,819 5,819

11,361 17,179 17,179 17,179

17,180 11,360 6

19,264 19,264 reserve 36,443

Reserve 3

Statutory Statutory

------======- - - - Amount GH¢’000 Amount 0 3 - - - - - 3

, Other 4,508 4,508

49,162 49,162 0 172,179 172,179

53,670 53,670 53,670 53,670 (25,519) (25,519)

reserves 0

200,330 2

sale reserve

Available for ------======------======) 2 7 - - - - 0

, 11,637 11,637

(6,497) (6,497) surplus surplus Income 38,528 Income 38,073

(25,617) 2

(49,222) (49,222)

(44,082) (44,082) (44,082) (44,082) (20,063) (20,063)

(

------======- - - - 0 0 0 0 0 0 0 0 0 0 ------

0 0 0 0 0 , , , , , Stated Stated capital Capital 0 0 0 0 0 7 7 7 7 70,000 70,000

70,000

------======s s s s t t u u u u l l l l n n p p p p e e r r r r 3 2 3 2 m m u u u u 1 1 1 1 s s s s e e 0 0 0 0

v v 2 2 2 2 e e e e

o o y y y y m m m m r r r r m m

o o o o r r r r a a a a c c c c e e a a a a u u u u l l n n n n e e e e n n n n i i i i a a

y y y y s s a a a a

J J J J

r r m m m m e e e e 1 1 1 1

o o o o o o h h h h t t t t f f r r r r t t t t

f f f f a a a a

r r r r

e e r r r r l l e e e e o o o o e e e e f f f f b b c c c c f f f f

a a t t t t s s s s n n n n l l i i i i i i f f f f n n n n a a a a l l l l a a o o o o a a a a a a a a v v r r r r r r r r CONSOLIDATED STATEMENT OF CHANGES IN EQUITY OF CHANGES STATEMENT CONSOLIDATED 2013 ended 31 December the year For T Deferred tax on available for sale equit y T T A Deferred tax on available for sale equit y T P A P P B P B The Group The Bank B B Balance as at 31 December 2012 Balance as at 31 December 201 3 Balance as at 31 December 2013 Balance as at 31 December 2012

[email protected] 30 www.nib-ghana.com National Investment Bank Limited | 2013 Annual Report

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group 2013 2012 2013 2012 Cash ow from operating activities Net Prot for the year 45,012 11,782 44,182 11,887 Adjustment for: Depreciation 3 ,568 4,037 3,675 4,131 Dividend received (10,632) (9,353) (10,632) (9,353) Share of loss on associate 1 92 - 192 - Prot on disposal of Property, Plant and Equipment (33) (41) (33) (41) Prot on disposal of equity shares (20,053) - (20,053) ------Operationg prot before working capital changes 18,054 6,425 17,331 6,624

(Increase)/decrease in Loans & Advances (65,967) 15,512 (66,195) 14,665 (Increase)/decrease in Other Asset Accounts (2,061) 5,779 (2,642) 6,020 Increase/(decrease)in Customer Deposits 58,705 (22,361) 59,955 (22,039) Increase/(decrease) in Interest Payable & Other Liabilities 7,216 (1,762) 7,249 (1,913) Corporate tax paid - (58) - (58) ------Net cash from operating activities 15,947 3,535 15,698 3,299 Cash flows from investing activities Purchase of Property, Plant & Equipment (5,296) (3,014) (5,448) (3,320) Proceeds from sale of Property, Plant and Equipment 32 47 32 47 Proceeds from sale of equity shares 20,061 - 2 0,061 - Investment in equity shares - - (11) - Dividend received from Investments 10,632 9,353 10,632 9,353 ------Net Cash used in Investing actitives 2 5,429 6,386 25,266 6,080 Cash ows from nancing activities Increase in borrowing due within one year 3,349 2,075 3,231 1,949 Increase in borrowing due after one year 4,692 3,034 4 ,692 3,034 Increase /(decrease)in Managed funds 464 (654) 464 (654) Net Cash from Financing activities 8,505 4,455 8,387 4,329 ------Net increase in cash and cash equivalents 49,881 14,376 49,351 13,708

Cash & cash equivalents at beginning of year 333,723 319,347 337,131 323,423 Cash & Cash equivalents at end of period 383,604 333,723 386,482 337,131 ======Operational cash flow from interest Interest paid 45,888 45,287 47,052 46,052 Interest received 64,825 69,048 66,320 70,987

Your business is Our Business 31 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Corporate information National Investment Bank Limited, a public company limited by shares, was incorporated and domiciled in Ghana under the Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673). The Bank is permitted by its regulations to carry on, inter alia, the business of banking in all aspects and other businesses and agencies incidental thereto. The address of the registered office of the Bank is ‘37 Kwame Nkrumah Avenue, P. O. Box GP 3726, and Accra.

b. Statement of compliance The consolidated financial statements have been prepared in accordance with Interna- tional Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673) and the Banking (Amendment) Act 2007 (Act 738).

c. Basis of preparation The consolidated financial statements have been prepared on a historical cost basis except for the following assets and liabilities that are stated at their fair values: financial instruments that are at fair value through profit or loss; and financial instruments classified as available-for-sale.

d. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Bank and entities controlled by the Bank and its subsidiaries. Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Bank reassesses whether or not it controls an investee in facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Bank has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

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The company considers all relevant facts and circumstances in assessing whether or not the Bank’s voting rights in an investee are sufficient to give it power, including:

• the size of Bank’s holding of voting rights relative to the size and disper- sion of holdings of the other vote holders;

• potential voting rights held by the Bank, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Bank has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. e. Use of Estimates and Judgement The preparation of financial statements in conformity with IFRSs requires Management to make judgement, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and the associated assumptions are based on historical experience and other factors that are reasonable under the circumstances, the results of which form the basis of making the judgement about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and the underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Some of the estimates made in the preparation of the financial statements are as follows;

(i) Going concern

The Bank’s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast

Your business is Our Business 33 National Investment Bank Limited | 2013 Annual Report

significant doubt upon the Bank’s ability to continue as a going concern. Therefore, the consolidated financial statements continue to be prepared on the going concern basis.

(ii) Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are derived from observable market data where possible, but if this is not available, judgement is required to establish fair values. The judgements include consider- ations of liquidity and model inputs such as discount rates

(iii) Impairment losses on loans and advances

The Bank reviews its individually significant loans and advances at each statement-of-financial-position date to assess whether an impairment loss should be recorded in the income statement. In particular, management’s judgement is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.

Loans and advances that have been assessed individually (and found not to be impaired) are assessed together with all individually insignificant loans and advances in groups of assets with similar risk characteristics. This is to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident. The collective assessment takes account of data from the loan portfolio (such as levels of arrears, credit utilisation, loan-to-collateral ratios, etc.), and judgements on the effect of concentrations of risks and economic data (including levels of unemployment, real estate prices indices, country risk and the performance of different individual groups).

(iv) Impairment of available-for-sale investments

The Bank reviews its debt securities classified as available-for-sale investments at each reporting date to assess whether they are impaired. This requires similar judgement as applied to the individual assessment of loans and advances.

The Bank also records impairment charges on available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below their cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgement. In making this judgement, the Bank evaluates, among other factors, historical share price movements and du- ration and extent to which the fair value of an investment is less than its cost.

(v) Deferred tax assets

Deferred tax assets are recognised in respect of tax losses to the extent that it is probable that future taxable profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits, together with future tax-planning strategies

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f. Summary of Significant Accounting Policies The significant accounting policies adopted by National Investment Bank Limited under the International Financial Reporting Standards (IFRSs) are set out below:

i. Subsidiaries

The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries for the year ended 31 December 2013. The financial statements of National Investment Bank’s subsidiaries are prepared for the same reporting year as National Investment Bank, using consistent accounting policies.

All intra-group balances, transactions, income and expenses are eliminated in full.

ii. Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant- in fluence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in a associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture.

Your business is Our Business 35 National Investment Bank Limited | 2013 Annual Report

When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture.

In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as are classification adjustment) when the equity method is discontinued.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

iii. Interest Income and Expense Interest income and expenses are recognised in the statement of income for all instruments measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial

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instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses.

The calculation includes all fees paid or received between parties to the contract that are an integral part of the instrument.

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. iv. Commissions and Fees Commissions and fees income are generally recognised on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an adjustment to the effective interest rate on the loan. Loan syndication fees are recognised as revenue when the syndication has been completed and the Bank retained no part of the loan package for itself or retained a part at the same effective interest rate for the other participants. Commissions and fees arising from negotiating or participating in the negotiation of a transaction for a third party are recognised on completion of the underlying transaction. Portfolio and other management advisory fees are recognised based on the applicable service contracts, usually on a time-proportionate basis. Asset management fees related to investment funds are recognised rateably over the period the service is provided. The same principle is applied for wealth management, financial planning and custody services that are continuously provided over an extended period of time. v. Financial Assets and Financial Liabilities

• Categorization of Financial Assets and Financial Liabilities

The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivable; and available-for-sale financial assets; and held-to-maturity investments. Financial liabilities are classified as either held at fair value through profit or loss, or amortised cost. Management determines the categorisation of its financial assets and financial liabilities at initial recognition.

• Financial Assets and Financial Liabilities at Fair Value through Profit or Loss

Financial asset or liability at fair value through profit or loss is a financial asset or financial liability that meets either of the following conditions:

• Held for trading

A financial asset or financial liability is classified as held for trading if it is: acquired or incurred principally for the purpose of selling or repurchasing in the near future; or part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking.

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• Designated at fair value through profit or loss

Upon initial recognition as financial asset or financial liability, it is designated by the Bank as at fair value through profit or loss except for investments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.

• Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than;

(a) Those that the company intends to sell immediately or in the near term, which shall be classified as held for trading.

(b) Those that company upon initial recognition designates as at fair value through profit or loss.

(d) Those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, which shall be classified as available for sale.

• Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are neither classified as held for trading nor designated at fair value through profit and loss. They are held for an indefinite period of time and may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or

Non-derivative financial assets that are not classified as;

i) Loans and receivables

ii) Held-to-maturity investment or

iii) Financial assets as fair value through profit or loss.

• Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Bank has the positive inten- tion and ability to hold to maturity other than;

(a) Those that the entity upon initial recognition designates as at fair value through profit or loss.

(b) Those that the entity designates as available for sale and

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• Initial Recognition of Financial Assets and Financial Liabilities

The Bank shall recognise a financial asset or financial liability on its statement of financial position when, and only when, the Bank becomes a party to the contractual provisions of the instrument subject to the provisions in respect of regular way purchases or sales of a financial asset which state that, ‘a regular way purchase or sale of financial assets is recognised and derecognized using either trade date or settlement date accounting’.

• Derecognition of Financial Assets and Financial Liabilities

Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or where the Bank has transferred substantially all the risks and rewards of ownership. Any interest in transferred financial assets that is created or retained by the Bank is recognised as a separate asset.

A financial liability (or part of a financial liability) is removed from the Bank’s statement of financial position when, and only when, it is extinguished – i.e. when the obligation specified in the contract is: discharged, cancelled, or has expired.

• Initial Measurement of Financial Assets and Financial Liabilities

When a financial asset or financial liability is recognised initially, the Bank measures it at its fair value plus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

When the Bank uses settlement date accounting for an asset that is subsequently measured at cost or amortised cost, the asset is recognised initially at its fair value on the trade date.

• Subsequent Measurement of Financial Assets

After initial recognition, the Bank shall measure financial assets, including derivatives that are assets, at their fair value, without any deduction for transaction costs it may incur on sale or other disposal, except for the following financial assets: loans and receivables, which shall be measured at amortised cost using the effective interest method; held-to-maturity investments, which shall be measured at amortised cost using the effective interest method; and investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, which shall be measured at cost.

• Subsequent Measurement of Financial Liabilities

After initial recognition, the Bank shall measure all financial liabilities at amortised cost using the effective interest method, except for: financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be measured at fair value except for a derivative liability that is linked to and must be settled by delivery of an unquoted equity instrument whose fair value cannot be reliably measured, which shall be measured at cost; and

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financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or is accounted for using the continuing involvement approach.

• Gains and Losses

The Bank shall recognise a gain or loss arising from a change in the fair value of a financial asset or financial liability that is not part of a hedging relationship as follows: a gain or loss on a financial asset or financial liability classified as at fair value through profit or loss shall be recognised in profit or loss; a gain or loss on an available for sale financial asset shall be recognised directly in equity, through the statement of changes in equity except for impairment losses and foreign exchange gains and losses until the financial asset is derecognized, at which time the cumulative gain or loss previously recognised in equity shall be recognised in profit or loss. Foreign exchange on available for sale related to monetary assets is recognised through profit and loss. Foreign exchange related to non-monetary asset is recognised in equity.

Interest calculated using effective interest method is recognised in profit or loss; dividends on an available-for-sale equity instrument are recognised in profit or loss when the Bank’s right to receive payment is established;

For financial assets and financial liabilities carried at amortised cost, a gain or loss is recognised in profit or loss when the financial asset or financial liability is derecognised or impaired, and through the amortization process.

• Amortised Cost Measurement

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minus principal repayment, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

• Fair Value Measurement

The determination of fair values of quoted financial assets and financial liabilities in active markets are based on quoted market prices or dealer price quotations. If the market for a financial asset or a financial liability is not actively traded or unlisted security, the Bank establishes fair value by using valuation techniques. These techniques include the use of arms’ length transactions, discounted cash flow analysis, and valuation models and techniques commonly used by market participants.

The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors that market participants take into account when entering into a transaction. Management believe that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value in the statement of financial position.

• Offsetting

Financial assets and financial liabilities are set off and the net amount presented

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in the statement of financial position when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expense are presented on the net basis only when permitted by the accounting standards or interpretation, or for gains and losses arising from a group of similar transactions such as in the Bank’s trading activity.

• Measurement of Impairment and Provision for Credit Losses

The Bank shall assess at each statement of financial position date, whether there is any objective evidence that a financial asset or group of financial assets is -im paired.

A financial asset or group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a loss event) and that loss event(s) has an impact on the estimated future cash flows of the financial assets or group of financial assets that can be reliably estimated. It may not be possible to identify a single, discrete event that caused the impairment. Rather, the combined effect of several events may have caused the impairment. Objective evidence that a financial asset or group of financial assets is impaired includes observable data that comes to the attention of the Bank about the following loss events:

Ø significant financial difficulty of the issuer or the obligor;

Ø a breach of contract, such as a default or delinquency in interest or principal payment;

Ø the lender (the Bank), for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the Bank would not otherwise consider;

Ø it is becoming probable that the borrower will enter bankruptcy or other financial reorganization;

Ø the disappearance of an active market for that financial asset because of financial difficulties; or

Ø observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with individual financial assets in the group, including:

• adverse changes in the payment status of borrowers in the group (e.g. an increased number of delayed payments); or

• national or local economic conditions that correlate with defaults in the group (e.g. an increase in the unemployment rate in the geograph- ical area of the borrowers, a decrease in property prices for mortgages in the relevant area, a decrease in oil prices for loan assets to oil companies, or adverse changes in the industry conditions that affect the

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borrowers in the group).

vi. Provision for credit losses is established if there is objective evidence that the Bank will be unable to collect all amounts due on a claim according to the original contractual term. A “claim” means a loan, a commitment such as a letter of credit, guarantee or commitment to extend credit or other credit product.

An allowance for credit loss is reported as a reduction in carrying value of a claim on the statement of financial position, whereas for an off-statement of financial position item such as a commitment, a provision for credit loss is reported in other liabilities. Additions to provisions for credit losses are made through credit loss expense.

Provision for credit losses is based on the following principles:

• Counterparty-specific – A claim is considered as a loss when management determines that it is probable that the Bank will not be able to collect all amounts due according to the original contractual terms.

• Individual credit exposures are evaluated based on the borrower’s char- acter, overall financial condition, resources and payment record, prospects of support from financially responsible guarantor and cash collat- erals.

• An impaired asset refers to an asset where there is no longer reasonable assurance of timely collection of the full amount of principal and interest due to deterioration in the credit quality of the counterparty. An asset is impaired if the estimated recoverable amount of an asset is less than its carrying amount shown in the books of the Bank. Impairment is measured and a provision for credit losses is established for the difference between the carrying amount and its estimated recoverable value.

• Estimated recoverable amount is measured by discounting the expected future cash flows at the effective interest rate inherent in the asset. When the amount and timing of future cash flows cannot be estimated with reasonable reliability, estimated, recoverable amounts may be measured at either:

• The fair value of any security underlying the assets, net of expected costs of recovery and any amount legally required to be paid to the borrowers; or observable market prices for the assets.

vii. Upon impairment the accrual of interest, income based on the original terms of the claim is discontinued until the asset has been written down to its estimated recoverable amount. Interest income thereafter is recognized.

A write-off is made when all or part of a claim is deemed uncollectible or forgiv- en. Write-offs are charged against previously established allowances for credit losses or directly to credit loss expense and reduce the principal amount of a claim.

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viii. Loans and Advances Loans and advances originated by the Bank include loans where money is provided directly to the borrower and are recognized when cash is advanced to the borrower. They are initially recorded at cost, which is fair value of cash originated by the Bank, including any transaction costs, and are subsequently measured at amortised cost using the effective interest method. ix. Property, Plant and Equipment Property, Plant and Equipment are stated at cost except Land and Building which are carried at revalued amount less accumulated depreciation and impairment losses. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of assets is the greater of their net selling price and value in use. The impairment losses are recognized in the statement of income.

Land and buildings comprise mainly offices occupied by the company. All items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes the purchase prices of items of property, plant and equipment and directly attributable cost of acquisition.

Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the statement of comprehensive income during the financial period in which they are incurred.

Increase in the carrying amount arising on revaluation of asset is credited directly to equity under the heading of revaluation surplus. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. On the other hand, a decrease in the carrying amount of an asset as a result of a revaluation is recognised in profit or loss. However, a decrease is debited directly to equity under the heading of revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

Land is not depreciated. Depreciation on other assets is computed using the straight-line method to allocate the depreciable amounts over the assets’ useful lives, at the following annual rates:

Leasehold properties 5% Improvement to Rented Premises 20% Generating Plant 20% Motor Vehicle 33.3% Furniture and Equipment 20% Computers 33.3%

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The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of assets is the greater of their net selling price and value in use. The impairment losses are recognised in the statement of comprehensive income.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount. These are included in other comprehensive income. When revalued assets are sold, the amount included in the revaluation surplus is transferred to income surplus.

x. Translation of Foreign Currencies The Bank’s functional currency is the Ghana Cedi. In preparing the statement of financial position of the Bank, transactions in currencies other than Ghana Cedis are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the statement of financial position date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement of income. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the statement of income for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in shareholders’ equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in the shareholders’ equity.

Reference Rate

The transaction rates used are the average of the buying and selling of the underlying inter-bank foreign exchange rate as quoted by the Association of Bankers – Ghana. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement. Non-monetary assets and liabilities are translated at historical exchange rates if held at historical cost or exchange rates at the date the fair value was determined if held at fair value, and the resulting foreign exchange gains and losses are recognised in the income statement or shareholders’ equity as appropriate.

xi. Cash and Cash Equivalents For the purposes of cash flow statement cash and cash equivalents include cash, non-restricted balances with Bank of Ghana, amounts due from other banks and financial institutions and short term government securities maturing in three months or less from the date of acquisition.

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xii. Leases Leases are tested to determine whether the lease is finance or operating lease and treated accordingly.

Finance leases - leases of property, plant and equipment where the Bank has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at inception of the lease at the lower of the fair value of the lease property, plant and equipment and the present value of minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The corresponding rental obligations, net of finance charges, are included on other long term borrowings. The interest element of the finance cost is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

Operating leases – leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating lease. Rentals payable under operating leases are charged to income statement on a straight- line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into operating lease are also spread on a straight-line basis over the lease term. xiii. Provision Provisions for restructuring costs, legal claims and similar events are recognised when: the Bank has a present legal or constructive obligation as a result of past events; it is more likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. xiv. Financial Guarantee

Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the term of a debt instrument.

Financial guarantees are initially recognised at fair value, and the fair value is amortised over the life of the financial guarantee. The financial guarantees are subsequently carried at the higher of the amortised amount and the present value of any expected payment (when a payment under the guarantee has become probable). xv. Deferred Taxation Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

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A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

xvi. Current Taxation The Bank provides for income taxes at the current tax rates on the taxable profits of the Bank.

Current tax is the expected tax payable on the taxable income for the year, using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date, and any adjustment to tax payable in respect of previous years.

xvii. Ordinary shares Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds

xviii. Dividend on Ordinary Shares Dividends on ordinary shares are recognised on equity in the period in which they are approved by the Bank’s shareholders.

Dividends for the year that are declared after the statement of financial position date are dealt with in the subsequent events notes.

Interim dividends are recognised when paid.

xix. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Bor- rowings are subsequently stated at amortised cost. Any difference between the amount initially recognised (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.

Borrowings are classified as non-current liabilities where the Bank has an uncondition- al right to defer settlement of the liability for at least 12 months after the statement of financial position date.

xx. Inventories Inventory is stated at the lower of cost or net realisable value. Costs of inventories includes, the purchase price, and related cost of acquisition. The cost of inventory is determined using weighted average cost formula.

xxi. Impairment of Non-financial Assets The carrying amount of the Bank’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated.

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An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Impairment losses are recognised in the income statement.

Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. xxii. Employee Benefits

• Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Bank pays fixed contributions into a separate fund and has no legal or contractual obligation to pay further contributions if the fund does not hold sufficient asset to pay all employee benefits relating to employee service in the current and prior periods.

Obligation for contributions to defined contribution plans are recognised as an expense in the statement of comprehensive income when they are due

• Short-Term Benefits

Short-term employee benefits are amounts payable to employees that fall due wholly within twelve months after the end of the period in which the employee ren- ders the related service.

The cost of short-term employee benefits are recognised as an expense in the period when the economic benefit is given, as an employment cost. Unpaid short-term employee benefits as at the end of the accounting period are recognised as an accrued expense and any short-term benefit paid in advance are recognised as pre- payment to the extent that it will lead to a future cash refund a reduction in future cash payment.

Wages and salaries payable to employees are recognised as an expense in the statement of comprehensive income at gross. The Bank’s contribution to social security fund is also charged as an expense.

• Pension Scheme

The bank in compliance to the National Pension Act, 2008 has in place a contribu- tory three tier pension scheme:

o Tier One – a mandatory National Social Security Scheme, managed by the Social Security and National Insurance Trust, under which a 13.5% contribution of employees’ total emoluments, is made by the bank.

o Tier Two – a fully funded privately managed occupational pension scheme under which employees contribute 5% of their total emoluments.

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• Termination Benefits

Termination benefits are recognised as an expense when the Bank is demonstra- bly committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognised if the Bank has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptance can be estimated reliably.

xxiii. Standards and Interpretations effective in the current period The following standards, amendments to the existing standards and interpretations issued by the International Accounting Standards Board are effective for the current period:

• IFRS 10 “Consolidated Financial Statements” published by IASB on 12 May 2011. IFRS 10 replaces the consolidation guidance in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities by intro- ducing a single consolidation model for all entities based on control, irrespective of the nature of the investee (i.e., whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special purpose entities). Under IFRS 10, control is based on whether an investor has 1) power over the investee; 2) exposure, or rights, to variable returns from its involvement with the investee; and 3) the ability to use its power over the investee to affect the amount of the returns.

• IFRS 11 “Joint Arrangements” published by IASB on 12 May 2011. IFRS 11 introduces new accounting requirements for joint arrangements, replacing IAS 31 Interests in Joint Ventures. The option to apply the proportional consolidation method when accounting for jointly controlled entities is removed. Additionally, IFRS 11 eliminates jointly controlled assets to now only differentiate between joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets.

• IFRS 12 “Disclosures of Interests in Other Entities” published by IASB on 12 May 2011. IFRS 12 will require enhanced disclosures about both consolidated entities and unconsolidated entities in which an entity has involvement. The objective of IFRS 12 is to require information so that financial statement users may evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk exposures arising from involvements with unconsolidated structured entities and non-controlling interest holders’ involvement in the activities of consolidated entities.

• IFRS 13 “Fair Value Measurement” published by IASB on 12 May 2011. IFRS 13 defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value measurements. However, IFRS 13 does not change the requirements regarding which items should be measured or disclosed at fair value.

• IAS 27 “Separate Financial Statements” (revised in 2011) published by IASB on 12 May 2011. The requirements relating to separate financial statements are unchanged and are included in the amended IAS 27. The other portions of IAS 27 are replaced

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by IFRS 10.

• IAS 28 “Investments in Associates and Joint Ventures” (revised in 2011) published by IASB on 12 May 2011. IAS 28 is amended for conforming changes based on the issu- ance of IFRS 10, IFRS 11 and IFRS 12.

• Amendments to IFRS 1 “First-time Adoption of IFRS” – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters published by IASB on 20 December 2010. The first amendment replaces references to a fixed date of “1 January 2004” with “the date of transition to IFRSs”, thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs. The second amendment provides guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.

• Amendments to IFRS 1 “First-time Adoption of IFRS” – Government Loans published by IASB on 13 March 2012. This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRSs. It also adds an exception to the retrospective e application of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement was incorporated into IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” in 2008.

• Amendments to IFRS 7 “Financial Instruments: Disclosures” – Offsetting Finan- cial Assets and Financial Liabilities published by IASB on 16 December 2011. The amendments require information about all recognised financial instruments that are set off in accordance with paragraph 42 of IAS 32. The amendments also require disclosure of information about recognised financial instruments subject to enforceable master netting arrangements and similar agreements even if they are not set off under IAS 32.

• Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Ar- rangements” and IFRS 12 “Disclosures of Interests in Other Entities” – Transition Guidance published by IASB on 28 June 2012. The amendments are intended to provide additional transition relief in IFRS 10, IFRS 11 and IFRS 12, by “limiting the requirement to provide adjusted comparative information to only the preceding comparative period”. Also, amendments were made to IFRS 11 and IFRS 12 to eliminate the requirement to provide comparative information for periods prior to the immediately preceding period.

• Amendments to IAS 1 “Presentation of financial statements” – Presentation of Items of Other Comprehensive Income published by IASB on 16 June 2011. The amendments require companies preparing financial statements in accordance with IFRSs to group together items within OCI that may be reclassified to the profit or loss section of the income statement. The amendments also reaffirm existing requirements that items in OCI and profit or loss should be presented as either a single statement or two consecutive statements.

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• Amendments to IAS 19 “Employee Benefits” – Improvements to the Accounting for Post-employment Benefits published by IASB on 16 June 2011.The amendments make important improvements by: (1) eliminating an option to defer the recognition of gains and losses, known as the “corridor method”, improving comparability and faithfulness of presentation; (2) streamlining the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasure- ments to be presented

in other comprehensive income, thereby separating those changes from changes that many perceive to be the result of an entity’s day-to-day operations; (3) enhancing the disclosure requirements for defined benefit plans, providing better information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans.

• Amendments to various standards “Improvements to IFRSs (cycle 2009-2011)” published by IASB on 17 May 2012. Amendments to various standards and interpretations resulting from the annual improvement project of IFRS (IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34) primarily with a view to removing inconsistencies and clarifying wording. The revisions clarify the required accounting recognition in cases where free interpretation used to be permitted. The most important changes include new or revised requirements regarding: (i) Repeated application of IFRS 1, (ii) Borrowing costs under IFRS 1, (iii) Clarification of the requirements for comparative information, (iv) classification of servicing equipment, (v) tax effect of distribution to holders of equity instruments, (vi) Interim financial reporting and segment information for total assets and liabilities.

• IFRIC 20 “Stripping Costs in the Production Phase of a Surface Mine” published by IASB on 19 October 2011. The interpretation states that costs associated with a “stripping activity” should be accounted for as an addition to, or an enhancement of, an existing asset, and that this component should be amortised over the expected useful life of the of the identified component of the ore body that becomes more accessible as a result of the stripping activity (using the units of production method unless another method is more appropriate).

The adoption of these amendments to the existing standards and interpretations has not led to any change in the company’s accounting policies.

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2. FINANCIAL RISK MANAGEMENT

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

• Operational risk

This note presents information about the Bank’s exposure to each of the risks, the Bank’s objective, policies and processes for measuring and managing risks, and the Bank’s management of capital.

Risk management framework

The Bank maintains a Risk Management Framework (RMF), which is a document containing guidelines for the identification, measurement, control and management of credit, market, liquidity and operational risks. The Board of Directors is vested with the primary responsibility of understanding the risk run by the bank and ensuring that risks are appropriately managed. Under the RMF the Board has established Board Sub Committee on Risk Management, Board Sub Committee on Audit, the Executive Committee, Asset and Liability Management

Committee (ALCO), Head Office Credit Committee (HOCC), Portfolio Quality Review Commit- tee, Loan Provisioning Committee, Tender Committee, Disaster Management and Recovery Committee and Information and Communication Committee, who are responsible for implementing, monitoring and reviewing the Bank’s risk management policies and procedures in their specified areas set out in the RMF. These committees report regularly to the Board of Directors through the Board Sub Committees and the Managing Director on their activities.

The risk management policies and procedures are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and ad- herence to limits. Risk management policies and procedures are reviewed regularly to reflect changes in market conditions, products and services offered. The Bank, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board Sub Committee on Risk Management is responsible for the formulation of overall risk management policy to govern the operations of the bank particularly in the area of credit, market, liquidity, operational and reputational. It is also responsible for constant review of the bank’s strategies aimed at maintaining the acceptable risk tolerance consistent with optimum profitability targets of the bank subject to its statutory and regulatory and regulatory requirements as well as ensuring strict monitoring, control and adequate measurement of risk exposure of the bank at all times and in all areas of operations. This Division is assisted in these functions by a risk management structure in all the units of the Bank which ensures a consistent assessment of risk management control and procedures.

Your business is Our Business 51 National Investment Bank Limited | 2013 Annual Report

i) Credit Risk

Credit risk management

Credit risk is risk of financial loss to the Bank if a customer or a counterpart to a financial instrument fails to meet its contractual obligations, and arises principally from the bank’s loan and advances to customers and other banks and investment securities.

The HOCC has responsibility for credit risk issues. Procedures for managing credit risk are determined at the business levels with specific policies and procedures being adapted to different risk environment and business goals. Risk officers are located in the business units to maximize the efficiency of decision making.

The business units working with the Risk Officers take responsibility for managing pricing for risk, portfolio diversification and overall asset quality within the requirement of bank’s standards, policies and business strategy.

Wholesale Corporate Banking

Within the Wholesale or Corporate Banking business, a numerical grading system of 1-14 with 1 being the highest quality is used for quantifying the risk associated with counterparty. The grading is based on the probability of default measures. Expected loss is used for the further assessment of individual exposures and portfolio analysis. There is a clear segregation of duties with loan applications being prepared separately from the approval.

Consumer Retail Banking

For consumer banking standard credit application forms are generally used to process and approve loans. As with Wholesale Banking, origination and approval roles are segregated.

Problem Credit Management and Provisioning

Consumer Banking

An account is considered to be in default when payment is not received on the due date. Ac- counts that are overdue by more than 30days are considered delinquent. These accounts are closely monitored and subject to a collections process.

The process used for raising provisions is dependent on the product. For mortgages, individual impairment provisions (IIP) are generally raised at 150 days past due based on the difference between the outstanding amount of the loan and the present value of the estimated future cash flows. For unsecured products, individual provisions are raised for the entire outstanding amount at 150 days past due. For all product that have certain accounts, such as cases involving bankruptcy, fraud and death, the loss recognition process is accelerated.

A portfolio impairment provision (PIP) is held to cover the inherent risk of losses, which although not identified, are known through experience to be present in the loan portfolio PIP covers both performing loans and loans overdue for less than 150 days. The provision is set with reference to past experience using flow rate methodology, as well as taking account of

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judgmental factors such as the economic and business environment and the trends in a range of portfolio indicators.

Wholesale Banking

In wholesale Banking accounts or portfolios are placed on Early Alert when they display signs of weakness. Such accounts and portfolio are subject to a dedicated process with oversight involving senior Risk Officers and Remedial Officers and Loans Recovery Unit. Account plans are re-evaluated and remedial actions are agreed and monitored until complete. Remedial actions include, but are not limited to, exposure reduction, security enhancement, and exit of the account or immediate movement of the account into the control of Loans Recovery Unit.

Loans are designated as impaired and considered non-performing where recognized weakness indicates that full payment of their interest or principal has become questionable. Im- paired accounts are managed by Loans Recovery Unit, which is independent of the main business of the bank. Where any amount is considered uncollectible, an individual impairment provision is raised, being the difference between the loan carrying amount and the present value of the estimated future cash flows. In any decision relating to the raising of provision, the Bank attempts to balance economic conditions, local knowledge and experience, and the results of independent asset views. Where it is considered that there is no realistic prospect of recovering an account against which an impairment provision has been raised, then that amount will be written off.

A portfolio impairment provisions is held to cover the inherent risk of losses, which although not identified, are known through experience to be present in any loan portfolio. In Wholesale or Corporate Banking, the portfolio impairment provision is set with reference to the past experience using loss rates, and judgmental factors such as the economic environment and the trends in key portfolio indicators.

Loans and advances less than 90 days past due are not considered impaired, unless other information is available to indicate the contrary. Analysis of loans and advances to customers for impairment purposes were as follows:

Your business is Our Business 53 National Investment Bank Limited | 2013 Annual Report

The Group 2013 2012 GHC¢'000 GHC¢'000

Loans neither past due nor impaired: 413,611 342,932

Loans past due but not impaired 41,595 45,592 (less than 90 days due)

Impaired loans 155,126 131,042 ------Total loans 610,332 519,566

Less portfolio impairment loss 89,072 64,619 ------Total net loans 521,260 454,947 ======

Maximum credit exposure

At the financial position date, the maximum credit risk exposure of the Bank in the event of other parties failing to perform their obligations is detailed below. No account has been taken of any collateral held and the maximum exposure to loss is considered to be the instruments’ financial position carrying amount or, for non-derivative off financial position transactions, their contractual nominal amounts.

Credit risk exposures of financial assets on the statement of financial position are as follows:

The Bank The Group 2013 2012 2013 2012 GH¢'000 GH¢'000 GH¢'000 GH¢'000

Cash and Balances with Bank of Ghana 1 65,841 111,643 166,715 113,176

Government Securities 1 55,323 123,078 155,340 123,095

Placement with other Banks 8 6,012 99,002 87,999 100,860

Gross Loans and Advances 6 02,753 513,526 610,332 519,566

Other Assets 1 3,020 10,959 11,671 9,723

Available-for-sale Equity Investments 5 2,114 50,264 52,126 50,265 ------1 ,075,063 908,472 1,084,183 916,685

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Credit risk exposures off the statement of financial position are as follows:

The Group 2013 2012 GHC¢'000 GHC¢'000 The Bank The Group 2012 2011 2012 2011 Loans neither past due nor impaired: 413,611 342,932 GH¢'000 GH¢'000 GH¢'000 GH¢'000

Loans past due but not impaired 41,595 45,592 (less than 90 days due) Bid Performance Bond 9,232 1,223 9,232 1,223

Impaired loans 155,126 131,042 Letters of Credit 8,238 5,944 8,238 5,944 ------Total loans 610,332 519,566 Guarantees and Indemnities 10,959 14,310 10,959 14,310

Less portfolio impairment loss 89,072 64,619 28,429 21,477 28,429 21,477 ------Total net loans 521,260 454,947 ======

Maximum credit exposure Fair value of collateral held

At the financial position date, the maximum credit risk exposure of the Bank in the event of An estimate of the fair value of collateral and other security enhancements held against finan- other parties failing to perform their obligations is detailed below. No account has been taken cial assets is shown below: These securities are in the form of mortgage interest over property, of any collateral held and the maximum exposure to loss is considered to be the instruments’ other registered securities over assets and guarantees. financial position carrying amount or, for non-derivative off financial position transactions, their contractual nominal amounts.

Credit risk exposures of financial assets on the statement of financial position are as follows: The Bank The Group 2013 2012 2013 2012 The Bank The Group GH¢'000 GH¢'000 GH¢'000 GH¢'000 2013 2012 2013 2012 GH¢'000 GH¢'000 GH¢'000 GH¢'000 Against impaired assets 52,330 39,004 56,877 39,004 Against past due but not impaired 44,860 5,489 47,892 5,489 ------Cash and Balances with Bank of Ghana 1 65,841 111,643 166,715 113,176 97,190 44,493 104,769 44,493 Government Securities 1 55,323 123,078 155,340 123,095 ======

Placement with other Banks 8 6,012 99,002 87,999 100,860 Analysis of credit risk concentration: Gross Loans and Advances 6 02,753 513,526 610,332 519,566

Other Assets 1 3,020 10,959 11,671 9,723 The concentration of loans and advances by business segment and customer type are dis- Available-for-sale Equity Investments 5 2,114 50,264 52,126 50,265 closed in note 19b and c. ------1 ,075,063 908,472 1,084,183 916,685

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Credit quality or financial assets neither past due nor impaired

TheCreditBank qualitymanages by classthe credit of financialquality assetsof financial assets using internal credit ratings. The table below shows the credit quality by class of asset for all financial assets exposed to credit risk, based on the Bank's internal credit rating system. The amounts presented are gross of impairment allowances.

Neither past due nor impaired 2013 High Standard Sub-standard Past due but Individually grade grade grade not impaired impaired 2013 2013 Total Amount GH¢ ‘000 Cash and balances with Bank of Ghana 166,715 - - - - 166,715 Government Securities 155,340 - - - - 155,340 Due from other banks and - financial institutions 87,999 - - - - 87,999 Available-for-sale Equit invest. 32,377 - - - - 32,377 Investment in associates 189,878 - - - - 189,878 Loans and advances 366,276 44,860 42, 118 109,495 47,582 610,332 ------Total 998,585 44,860 42, 118 109,495 47,582 1,242,641 ======

Neither past due nor impaired 2012 High Standard Sub-standard Past due but Individually grade grade grade not impaired impaired Total 2012 2012

Amount GH¢ ‘000 Cash and balances with Bank of Ghana 1 13,176 - - - - 1 13,176 Government Securities 123,095 - - - - 123,095 Due from other banks and - financial institutions 100,860 - - - - 100,860 Available-for-sale Equit invest. 31,598 - - - - 31,598 Investment in associates 18,667 - - - - 18,667 Loans and advances 160,097 128,382 77,029 102,705 51,352 519,565 ------Total 547,493 128,382 77,029 102,705 51,352 906,961 ======

ii) Liquidity risk The Bank defines liquidity risk as the risk that the Bank either does not have sufficient financial resources available to meet all its obligations and commitments as they fall due, or can access them only at excessive cost.

It is the policy of the Bank to maintain adequate liquidity at all times, and for all currencies. Hence the Bank aims to be in a position to meet all obligations, to repay depositors, to fulfill

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commitments to lend and to meet any other commitments.

Liquidity risk management is governed by the Bank’s Asset and Liability Management Commit- tee (ALCO), which is chaired by an Executive Director. ALCO is responsible for both statutory and prudential liquidity. These responsibilities include the provision of authorities, policies and procedures.

ALCO has primary responsibility for compliance with regulations and Bank policy and maintaining a liquidity crisis contingency plan.

A substantial portion of the Bank’s assets are funded by customer deposits made up of current and savings accounts and other deposits. These customer deposits, which are widely diversi- fied by type and maturity, represent a stable source of surplus funds.

ALCO oversees the structural foreign exchange and interest rate exposures that arise within the Bank. These responsibilities are managed through the provision of authorities, policies and procedures that are co-ordinated by ALCO. Compliance with Bank ratios is also monitored by ALCO.

An analysis of various maturities of the Bank’s assets and liabilities is provided in note 36.

The table below shows the contractual expiry by maturity of the bank’s contingent liabilities and commitments.

Less than Over one 2013 On demand 3months 3-12 months year Total GH¢'000 GH¢'000 GH¢'000 GH¢'000 GH¢'000

Financial Guaranteeds 466 8,238 19,672 53 28 ,429 Other commitments ------466 8,238 19,672 53 28 ,429 ======

2012 Financial Guaranteeds 1,679 4,259 15,455 85 21,478 Other commitments ------1,679 4,259 15,455 85 21,478 ======

Your business is Our Business 57 National Investment Bank Limited | 2013 Annual Report

iii) Market risks Management of market risk

The Bank recognizes market risk as the exposure created by potential changes in market prices and rates. The Bank is exposed to market risk arising principally from customer driven transactions.

Market risk is governed by the Bank’s Market Risk Unit which is supervised by ALCO and which agrees policies, procedures and levels of risk appetite in terms of Value at Risk. The unit provides market risk oversight and guidance on policy setting. Policies cover both the trading and non-trading books of the Bank.

The non-trading book is defined as the banking book. Limits are proposed by the businesses within the terms of agreed policy.

The unit also approves the limits within delegated authorities and monitors exposures against these limits. Additional limits are placed on specific instruments and currency concentrations where appropriate.

Value at Risk models are back tested against actual results to ensure pre-determined levels of accuracy are maintained. Bank’s Market Risk Unit complements the Value at Risk measurement by regularly stress testing market risk exposures to highlight potential risks that may arise from extreme market events that are rare but plausible. Stress testing is an integral part of the market risk management framework and considers both historical market events and forward looking scenarios.

Ad hoc scenarios are also prepared reflecting specific market conditions. A consistent stress testing methodology is applied to trading and non-trading books.

Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The unit has responsibility for reviewing stress exposures and where necessary, enforcing re- ductions in overall market risk exposure. It also considers stress testing results as part of its supervision of risk appetite. The stress test methodology assumes that management action would be limited during a stress event, reflecting the decrease in liquidity that often occurs. Contingency plans are in place and can be relied on in place of any liquidity crisis. The Bank also has a liquidity crisis management committee which also monitors the application of its policies.

The Bank has not identified any limitations of the Value at Risk methodology it is currently using.

Foreign Exchange Exposure

The Bank’s foreign exchange exposures comprise trading and non-trading foreign currency translation exposures. Foreign exchange exposures are principally derived from customer driven transactions. Concentration of foreign currency denominated assets and liabilities are disclosed in note 35.

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Sensitivity Analysis

A 5% strengthening of the cedi against the following currencies at 31 December 2013 would have impacted equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2012.

Sensitivity analysis Effect in cedis 31 December 2013 Profit or loss

GH¢’000 USD 756 GBP 45 EUR 50 Others 250

31 December 2012

USD 344 GBP 19 EUR 23 Others 125

A best case scenario 5% weakening of the Ghana cedi against the above currencies at 31 De- cember would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest Rate Exposure

The Group’s interest rate exposures arise from the differing re-pricing characteristics of banking assets and liabilities.

Interest Rate Exposure The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctua- tions in the future cash flows or fair values of financial instrument because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for reprising bands.

Your business is Our Business 59 National Investment Bank Limited | 2013 Annual Report

The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Group’s financial assets and liabilities to various standard and non-standard interest rate scenarios. Standard scenarios that are considered on a monthly basis include a 100 basis point (bp) parallel fall or rise in market interest rates.

A change of a 100 basis points in interest rates at the reporting date would have impacted equity and profit or loss by the amounts shown below:

100 bp 100 bp

Increase Decrease GH¢’000 GH¢’000

31 December 2013 Interest income impact 12,522 (12,522) Interest expense impact (14,861) 14,861 ------Net impact 2,339 (2,339) ======

100 bp 100 bp

Increase Decrease GH¢’000 GH¢’000

31 December 2012 Interest income impact 12,332 (12,332) Interest expense impact (14,667) 14,667 ------Net impact 2,335 (2,335) ======

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iv) Operational risks Operational risk is the risk of direct or indirect loss due to an event or action resulting from the failure of internal processes, people and systems, or from external events. The Group seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of policies, procedures and tools to identify, assess, monitor, control and report such risks.

The Group has established Risk Management Department (RMD) that supervises and directs the management of operational risks across the Bank. RMD is also responsible for ensuring adequate and appropriate policies and procedures are in place for the identification, assessment, monitoring, control and reporting of operational risks. The RMD is responsible for establishing and maintaining the overall operational risk framework and for monitoring the Bank’s key operational risk exposures.

v) Compliance and regulatory risk Compliance and Regulatory risk include the risk of non-compliance with regulatory requirements. The Bank’s compliance and regulatory risk unit or function is responsible for establishing and maintaining an appropriate framework of the Bank’s compliance policies and procedures. Compliance with such policies and procedures is the responsibility of all managers. However, compliance unit monitors and reports on compliance to executive management and the Board. vi) Capital Management The Central Bank sets and monitors capital requirements of the Bank.

In implementing current capital requirements, the Central Bank requires the Bank to maintain a prescribed ratio of total capital to total risk-weighted assets.

The Bank’s capital is analysed into two tiers:

Tier 1 capital, which includes ordinary paid up share capital and disclosed reserves, after de- ducting some assets such as investment in capital of other banks and financial institutions, investment in unconsolidated subsidiaries and associates.

Tier 2 capital, which includes some reserves such as the element of the fair value reserve relating to unrealized gains on equity instruments classified as available- for –sale.

Various limits are applied to elements of the capital base, and other assets and liabilities are given various classifications such as claims on government, claims on the central bank and contingent liabilities and risk-weighted assets are determined according to specified requirements that seek to reflect the varying levels of risk attached to assets and off-financial position exposures.

The Bank’s policy is to maintain a strong base so as to maintain investor, and market confi- dence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also taken into consideration, and the Bank recognizes the need to

Your business is Our Business 61 National Investment Bank Limited | 2013 Annual Report

maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by sound capital position.

The Bank has complied with all imposed capital requirements throughout the period.

There have been no material changes in the Bank’s management of capital during the period.

3. REGULATORY DISCLOSURES

(i) Non – performing loans

Percentage of gross non-performing loans (sub-standard to loss) to total credit portfolio (including contingent liabilities) as 31 December 2013 is 24% (2012: 24%)

(ii) Capital Adequacy Ratio

The capital adequacy ratio at the end of December 2013 was calculated at approximately 22.51% (2012: 17.9%).

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

Amount GH¢’000 The Bank The Group

2013 2012 2013 2012

4. Amount spent on fullling social responsibility 173 84 174 85

5. Interest Income

Loans and advances 65,484 69,048 66,978 70,987 Investment securities 35,666 30,563 36,239 30,988 ------101,150 99,611 103,217 101,975 ======There was no interest accrued on impaired nancial assets.

6. Interest expenses

Savings Accounts 4,996 3,956 5,035 3,995 Time Deposits 22,435 25,860 23,381 26,806 Borrowings 10,596 9,407 10,715 9,526 Demand Deposit 158 203 218 263 Call Deposit 7,703 5,861 7,703 5,861 ------45,888 45,287 47,052 46,451 ======

7. Commissions & fees

Investigation and Processing Fee 5,603 6,497 5,629 6,523 Commission on Guarantees 366 603 366 603 Commission, Discount and Related Exchange 6,891 4,367 6,891 4,367 Ledger Fees and Others 3,400 3,459 3,730 3,800 ------16,260 14,926 16,616 15,293 ======

The reported credit related fees and commissions are those which are not regarded as part of the eective interest rate on loans.

Your business is Our Business 63 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

8. Other operating income 2013 2012 2013 2012

Realised Gain on Foreign Exchange (Net) 11,546 5,383 11,546 5,383 Unrealised Gains on Foreign Exchange (Net) 15,228 10,991 15,228 10,991 Dividends from Investments (net) 10,632 9,353 10,632 9,353 Prot on disposal of equity shares 20,053 - 20,053 - Bad Debts Recovered 2,437 61 2,437 61 ------59,896 25,788 59,896 25,788 ======

9. Operating Expenses

Sta Cost (Note 9b) 29,667 24,814 3 0,933 25,765 Donations 173 84 174 85 Depreciation 3,584 4,037 3,688 4,131 Directors Remuneration 384 408 384 408 Audit fees and Charges 130 80 150 100 Advertisements & Marketing Expenses 736 521 736 521 Repairs and Maintenance 2,624 1,374 2,677 1,411 Insurance 901 739 912 739 Electricity and Water 2,038 1,941 2,134 2,054 Motor Vehicle Expenses 2,501 2,228 2,562 2,290 Overseas Travel 6 10 6 10 Local Travel 1,343 1,252 1,423 1,315 Postage and Cables 353 343 359 343 Legal and Professional Fees 1,656 742 1,656 748 Computer Expenses 132 80 151 91 Police/other Security Guard Expenses 1,654 1,321 1,758 1,383 Printing & stationery 1,096 948 1,170 37 Other Expenses 12,258 6,378 12,461 6,555 ------61,236 46,352 63,334 47,986 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

9b. Staff Cost 2013 2012 2013 2012

Salaries and allowances 14,183 11,372 15,449 12,323 Social Security Fund Contributions 1,640 1,457 1,640 1,457 Provident Fund Contributions 1,267 1,135 1,267 1,135 Retirement Bene t 1,094 746 1,094 746 Training Expenses 298 133 298 133 Other employee costs 10,145 9,315 10,045 9,315 Medical Expenses 1,040 655 1,040 655 ------29,667 24,813 30,833 25,764 ======

10. Particulars of directors emoluments

In line with section 128 of the companies code, 1963 (Act 179), the following are the agregate of the directors emoluments;

Salaries and allowances 376,206 408,585 384,761 415,523 Pension contributions - - - - Bonus paid or receivables - - - - Others ------376,206 408,585 384,761 415,523 ======11. Credit impairment loss

Individual impairment charge 800 1,667 800 1,667 Portfolio impairment charge 25,274 35,641 25,354 35,826 ------26,074 37,308 26,154 37,493 ======

12. Other Income

Pro t on Sale of Non-current Assets 33 48 33 62 Rent 511 133 511 133 Sundries 1,862 562 1,959 608 ------2,406 743 2,503 803 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group 2013 2012 2013 2012 13. Taxation

a. Corporate Tax

Balance at January 1, 2013 - (2,176) (2,118) (2,146) (2,118) Transfer from other tax accounts 1,444 (58) 1,444 (58) Charge for the year 1 ,321 - 1,321 30 ------589 (2,176) 619 (2,146) ======b. Deferred Tax

Balance at January 1, 2013 2,783 2,638 2,783 2,638 Recognised in income statement 4 ,038 145 4 ,038 145 Recognised in reserves 25,519 - 2 5,519 ------32,340 2,783 32,340 2,783 ======Deferred tax resulted from accelerated capital allowances on property, plant and equipment and revaluation of equity investments.

c. National Fiscal stabilization levy

Balance at January 1, 2013 474 474 474 474 Transfer to corporate tax (474) - (474) - Charge for the year 1,125 - 1 ,125 ------1,125 474 1,125 474 ======

d. Capital Gain Tax

Balance at January 1, 2012 384 384 384 384 Transfer to corporate tax (384) - ( 384) ------384 - 384 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

13e. Dividend Income Tax 2013 2012 2013 2012

Balance at January 1, 2013 586 586 586 586 Charge for the year 925 813 925 813 Payments (586) (813) (586) (813) Transfer to corporate tax (925) - (925) ------586 - 586 ======

13f. Factors affecting the current tax charged for the year

A reconciliation of the charge that would result from applying the standard Ghana corporate tax rate to prot before tax to tax charge for the year is given below:

Profit for the year 45,012 11,781 44,182 11,888

Tax charge thereon at Ghana corporate tax 11,253 2,945 11,046 2,972

Factors affecting charge: Tax eect of items not deductible for tax purposes 2,233 1,030 2,233 1,030 Tax loss not utilised - - - - Net tax eect of deductible income and un (11,614) (2,759) (11,614) (2,759) Tax eect of capital allowance (1,252) (1,122.00) (1,252) (1,122) Items of dierent tax rates - (2,338.00) - (2,338) ------619 (2,244) 412 (2,217) ======Current tax charge 619 Nil 619 Nil Effective tax rate 33% 33%

Your business is Our Business 67 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

2013 2012 2013 2012 14. Tax effect relating to other comprehensive income Available for sale Before tax amount Tax expense/benet 191,841 4,508 191,841 4,508 Net of tax amount ------191,841 4,508 191,841 4,508 ======

15. Cash and balances with Bank of Ghana

Cash in Hand 16,680 19,855 16,737 19,905 Balances with Bank of Ghana 149,161 91,788 1 49,978 93,271 ------165,841 111,643 166,715 113,176 ======Mandatory reserve deposits representing 9% of the bank's deposits are not available for use.

16. Government Securities

Short-Term Investments in Bills Discounted 63,745 50,239 63,745 50,239 SADA Bonds 10,000 10,000 10,000 10,000 Treasury Bills 81,578 62,839 8 1,595 62,856 ------155,323 123,078 155,340 123,095 ======

17. a Due from other banks and financial institutions

Time Deposits - 27,692 1,987 29,550 Nostro Account Balances - 41,107 - 41,107 Items in the course of Collection 7,754 7,703 7 ,754 7,703 Money at Short Notice 78,258 22,500 78,258 22,500 ------86,012 99,002 87,999 100,860 ======

List of correspondent banks with signicant balances included in the Nostro

Items in course of collection were cheques that are still within the banking

17.b Due to other banks and financial institutions

Vostro Account Balances 3 ,372 - 3 ,372 - Bank of Ghana 20,200 - 20,200 ------23,572 - 23,572 - ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group 18. Equity Investm ent

a) Available-for-sale equity investments (18e)

Listed Unlisted Total The Group GH¢ GH¢ GH¢

Fair value at 1 January 2013 29,264 2,333 31,597 31,598 Movements in 2013: Available for sale movement 21,711 - 21,711 21722 Transfer to disposal (20,943) - (20,943) (20,943)

Fair value at 31 December 2013 30,032 2 ,333 32,365 32,377

Fair value at 1 January 2012 24,756 2,333 27,089 27,090 Movements in 2012: Available for sale movement 4,508 - 4,508 4,508

Fair value at 31 December 2012 29,264 2,333 31,597 31,598

b) Disposal of available-for-sale equity investments Listed GH¢ Cost 8 8 Revaluation adjustments 20,934 20,934

Book value 20,942 20,942 Proceeds from disposal 20,061 20,061

881 881 Transfer from cap. Surplus 20,934 20,934 Profit on disposal 20,053 20,053

Your business is Our Business 69 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

18c. Investment in associate Bank

(i) Investment in associate measure at cost

The Company has a 20% or more interest in the following companies

Investee 2013 2012

GH¢’000 GH¢’000

Nexans Kable Metal Limited 0.02 0.02

Accra Markets Limited 0.04 0.04

Ayensu Starch Company Limited 750 750

These investees are private entities which are not listed on any stock exchange and there are no published price quotations for the fair value of this investment. In accordance with IAS 27, these investments are stated at cost.

(ii) Investment in associate measured at fair value

Investee 2013 2012

GH¢’000 GH¢’000

Nestle Ghana Limited 188,046 17,917

Group

Details of the bank’s associate at the end of the reporting period are as follows:

(iii) Name of associate: NTHC Limited

Principal activity: Assets management and corporate Finance and advisory,

Place of incorporation: Ghana

Proportion of Ownership and voting right; 25%

The financial year end; 31st December

Financial year end 2013 2012

GH¢’000 GH¢’000

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000 Balance at 1 January - -

Share of loss (192) 633

Share of movement in available for share equity 1,274

Balance as at December 31 1,082 633

Details of associate financial statements

Total Assets 319,645 228,693

Total Liabilities 296,172 208,775

Net assets 23,473 19,918

Share of net asset of associate 5,868 4,979

Total revenue of associate 59,645 27,545

Total (loss)/profit after tax of associate (768) 1,930

Share of (loss)/profit of associate

(iv) For the rest of the investees (Nestle Ghana Limited, Nexans Kable Metal Limited, Ayensu Starch Company Limited and Accra Markets Limited), the bank does not have the power to participate in their financial and the operating policy decisions, hence these investments are stated at their respective values in the consolidated financial statements but not equity accounted for.

(v) The associates had no contingent liabilities or capital commitments as at 31 Decem- ber 2013 (2012 Nl)

Your business is Our Business 71 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

18d. Subsidiary Companies

Details of the Group material subsidiaries at the end of the reporting period are as follows:

Place of Proportion of ownership Name of subsidiaries Principal Activities incorporat interest and voting power

2013 2012

First Ghana Loans and Savings co. Ltd Ghana 54.85% 54.85%

NIB Asset Recovery Co Ltd Management of non performing loans and advances of NIB Ghana 100% 100% NIB Pension Custodians Co Ltd Management of pension fund Ghana 100% 100%

Refer to Director’s report on page 18 for the rationale behind non-consolidation of NIB Pension Custodians Co. Ltd and NIB Asset Recovery Co Ltd.

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

Summarised nancial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below. The summarised nancial information below represents amounts before intragroup eliminations.

First Ghana Loans and Savings Ltd Amount GH¢’000

2013 2012

Current assets 10,293 10,003 Non-current assets 2,635 2,590 Current liabilities (12,449) (11,284) Non-current liabilities - - Equity attributable to owners of the Company (263) (718) Non-controlling interests (216) (591)

Revenue 2,520 2,791 Expenses 3,350 (2,685) Prot (loss) for the year 830 106 Prot (loss) attributable to owners of the Company (455) 42 Prot (loss) attributable to the non-controlling interests (375) 34

Other comprehensive income attributable to owners of the Company - - Other comprehensive income attributable to the non-controlling interests - - Other comprehensive income for the year - - Total comprehensive income attributable to owners of the Company (455) 42 Total comprehensive income attributable to the non-controlling interests (375) 34

Dividends paid to non-controlling interests - - Net cash inow (outow) from operating activities (249) (236) Net cash inow (outow) from investing activities (163) (306) Net cash inow (outow) from nancing activities (530) (126) Net cash inow (outow) (530) (668)

Your business is Our Business 73 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

18e. Details of equity investments of the Bank at the end of the year are as follows:

2013 2012 Holdings Holdings Listed equity Aluworks Company Limited 1% 1% Total Ghana Limited 5.36% 13.50%

Unlisted equity Intravenous Infusion Limited 17.9% 17.9% Accra City Hotel Limited 10% 10% Eximguaranty Company Limited 2.25% 2.25% Metro Mass Transit Limited 9.3% 9.3% Twofo Oil Palm Plantation 0.3% 0.3% Subri Industrial Plantation 1.0% 1.0% Consolidated Discount House 9.0% 9.0% Securities Discount House 1.1% 1.1% Vacuum Salt 10.0% 10.0%

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

19. Loans and advances to customers 2013 2012 2013 2012 a. Analysis by type

Loan 306,057 206,544 313,636 212,584 Overdraft 233,081 217,172 233,081 217,172 Loans - NIB Asset Recovery Ltd. 63,615 89,810 63,615 89,810 ------Gross Loans & Advances 602,753 513,526 610,332 519,566

Loans Impairment Allowance Account (d) (87,129) (63,869) (89,072) (64,619) ------Net Loans & Advances 515,624 449,657 521,260 454,947 ======(i) Loans and advances (including credit bills negotiated) Loans and advances 602,753 513,526 610,332 519,566 Credit commitments 28,429 21,478 28,429 21,478 ------631,182 535,004 638,761 541,044 ------(ii) Loans loss provision ratio 0.14:1 0.12:1 0.15:1 0.12:1

(iii) Gross non-performing loans ratio 0.24:1 0.14:1 0.24:1 0.14:1

(iv) Ratio of 50 largest exposures (funded and non-funded) to total exposures 0.59:1 0.48:1 0.59:1 0.48:1

Your business is Our Business 75 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

2013 2012 2013 2012

19b. Loans and advances to customers

Analysis by Business segment

Agriculture, Forestry and Fishing 45,348 75,624 45,348 75,624 Mining and Quarrying 29,032 36,480 29,032 36,480 Manufacturing 111,032 103,729 111,032 103,729 Construction 182,002 71,096 182,002 71,096

Electricity, gas and water 5,275 1,809 5,275 1,809

Commerce and Finance 92,640 60,575 92,640 60,575

Transport, storage and communication 40,918 22,352 40,918 22,352

Services 87,090 137,867 87,090 137,867 Miscellaneous 9,416 3,995 16,995 10,034 ------602,753 513,527 610,332 519,566 ======

19c. Analysis by type of customers

Individuals 2,373 2,021 9,595 7,501 Private Enterprises 514,012 437,923 514,012 437,923

Public Enterprises 74,475 63,451 74,475 63,451 Sta 11,893 10,132 12,250 10,691 ------602,753 513,527 610,332 519,566 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group 19d. Movement in Bank's provisions for impairment are 2013 2012 2013 2012 as follows:

Balance as at 1 January 63,869 209,530 63,869 209,530 General Provision 22,874 25,904 24,817 25,904 Specic Provision 2,930 4,225 2,930 4,225 Provision no longer required (2,544) (175,790) (2,544) (175,790) ------87,129 63,869 89,072 63,869 ======

20. Other Assets

Sundry Debtors (20b) 5,864 5,326 7,208 6,119 Stock Account 352 514 362 541 Accountable Imprest 221 201 232 201 Prepayments 3,803 2,832 3,869 2,862 Asset Recovery Ltd 2,780 2,084 ------13,020 10,957 11,671 9,723 ======

20b. Analysis of sundry debtors

Other debtors 144 377 1,488 1,170 MOWAC - NIB contribution - 447 - 447 Western union reimbursables 5,720 4,325 5,720 4,325 E-zwich Fee holding account 14 - 14 First Ghana Building Company Limited 800 692 800 692 ------6,664 5,855 8,008 6,648 Provision for sundry debtors (800) (529) (800) (529) ------5,864 5,326 7,208 6,119 ======

Your business is Our Business 77 National Investment Bank Limited | 2013 Annual Report - -

9 6 (128) (128) (128) (128)

3 Total Total , 3,675 1 3,568 5,296 5,448

59,811 51,425 24,419 54,491 27,859 28,734 3 28,442 56,593

24,895 29,596 27,006

------======------======161

175 1 4 2 326 250

, ------

2,741 2,991 2,99 1 3 5,982 2,958 6,100 2,991 2,902 3,109

2,783 3,080

Computers Computers

------======------======------======- -

8 77 0 ------859 0

- -

5,158 1,082 1,065 4,876 1,065 4,876 1 , 5,158 (4,581)

(4,935) Progres s Progres s Work - in Work - in

------======------======------======- 7 3 9 8 97 110 110

17 0 183 1 170

------1,212

1,199 1,199 1,102 Plan t Plan t

1,382 1,212 1,382 1,102

Generatin g Generatin g

------======------======6 0 3 0 4 936 936 ------

436 500 5

- Item s Item s 5,410 6,346 6,346 5,846 6,346 5,846

5,410

6,346

Leasehol d Leasehol d

------======------======Amount GH¢’000 Amount 3 9

5 4 99 54

142

168 1 5 395 278 253 267 552

433

(128) (128) (128) (128) - - 352 - 200

Moto r Moto r ehicle s ehicle s V V

======------======------======3 3 9 3 2 6 0 0 ------

8 , , 7,251 , 1,137 8,815 1 1

1,062 2,587 2,794 7,598 2,597 6,228 6,536 9,848

2 9,330 10,467

Equipment Equipment Furniture & Furniture &

======------======------======2 2 2 5 5 4 8 0 0 8 7 1 3 8 8 8 9 0 0 1 3 2 7 2 7 0

6 , - - - - 8 , 4 3 , , , ,

, , 1 4,581 1,851

8 1 8,712 8

4,935

6 8 0 3

2 31,703

10,563 10,493

34,001 2

2 2

Building s Building s Land an d Land an d t

======------======------======pmen i equ d an t r r 2 2 3 3 3 3 1 1 1 1 1 1 a a 0 0 0 0 0 e e 0 an 2 2 l y y 2 2 2 2

, , , r r r e e y y y e e r e r r r h h a b b t t b a a a y, p

e t u u u g g m m m y

n n n n n e e e i i e a a a c c r r c J J J

h e e e u u 1 1 1 t

d d D D D t t t r

roper t t t s s a a a o

l l l l f a a a P n n

e a e e a a a s s s o o e s s s s c c c i i a a a g t t o o o o n n n

i i r a a a p p p p V V V d d a l l l . s s s s B B B i i i i h a a a d d 21 The Group Balance as at 31 December, 2013 Depreciation B A D NBV as at December 2013 Transfer from work in progres s Balance as at 31 December, 2013 Depreciation Balance at 1 January, 2013 A Charge for the year Balance as at 31 December, 2013 Cost B C Cost B Transfer from work in progres s Balance as at 31 December, 2013 N D D D N N NOTES TO THE FINANCIAL STATEMENTS TO NOTES 2013 ended 31 December the year For

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000 21b. Disposal of non-current assets The Bank The Group

Motor Motor Vehicles Vehicles GH¢ GH¢ Less carrying amount:

Cost 128 128 Accumulated depreciation (128) (128) ------

Proceeds from disposal 33 33 ------Profit on disposal 33 33 ======

Your business is Our Business 79 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

22. Customers deposit 2013 2012 2013 2012

Current Account 353,014 351,380 358,827 357,125 Savings Account 177,186 170,342 177,594 170,722 Time Deposit 169,453 107,599 174,895 111,887 Call Deposit 59,581 71,208 59,581 71,208 ------759,234 700,529 770,897 710,942 ======

Analysis by type of Depositors

Individuals and other Private Enterprises 598,644 552,355 607,840 560,567 Government departments and agencies 127,170 117,337 129,124 119,081 Public Enterprises 22,722 20,965 23,071 21,277 Others 10,698 9,871 10,862 10,017 ------759,234 700,528 770,897 710,942 ======Ratio of 20 largest depositors to total dep 0.34:1 0.28:1 0.34:1 0.28:1

23. Borrowings

Borrowing due within one year 17,266 13,917 17,266 13,917 Borrowing due after one year 41,965 37,273 41,965 37,273 ------59,231 51,190 59,231 51,190 ======

Local currency borrowing 59,231 46,732 59,231 46,732 Foreign currency borrowing - 4,458 - 4,458 ------59,231 51,190 59,231 51,190 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

The Bank The Group

Analysis of Borrowings Amount GH¢’000 Details of borrowings: Name Summary of contract details

This amount is made up of two separate facilities of GHS17,265,592.36 and Export Development and 26,730 26,730 GHS9,464,230. They carry interest rates Investment Fund (EDIF) of 22% and 5% and will mature on June 2013 and November 2015 respectively . No security was given for these facilities.

This facility is foa a period of twenty-two years, with eight years grace period on the OVCF/KFW 1,410 1,410 principal and interest shall be repaid over a period of fourteen years. This carries an interest rate of 3% and GH Private Sector Development Fun 204 204 matures in December 2014. There is no security given.

This carries an interest rate of 7% and Government of Ghana (Rubber Proje 23,313 23,313 matures March 2028. There is no security given.

This carries an interest rate of 7% and Government of Ghana (Oil Palm) 7,574 7,574 matures in March 2026. There is no security given.

------59,231 59,231 ======

Your business is Our Business 81 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

24. Liability on managed funds 2013 2012 2013 2012

EEC II 256 256 256 256 Japanese grant - 265 - 265 PSI 15 16 15 16 Masloc 13 1 13 1 Mowac 267 - 267 - SIF 451 - 451 ------1,002 538 1,002 538 ======

Bank Group

25. Interest payable and other liabilities 2013 2012 2013 2012

Sta Provident Fund 181 1,017 398 1,017 Interest Payable 9,458 6,187 9,458 6,187 Predisbursement charges 622 742 622 742 Bankers Payment and Payment Orders 4,315 1,907 4,315 1,907 Other Creditors 6,206 8,229 4,903 7,085 Other accruals 3,899 80 3,905 108 NIB Asset recovery company 2,780 2,084 ------27,461 20,246 23,601 17,046 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

26. Stated Capital a. Authorised ordinary shares 2013 2012

Shares of no par value 1,000,000,000 1,000,000,000

Number Value Number Value GH¢’000 GH¢’000 b. Ordinary Shares: Issued for Cash Consideration 178,359,255 50,324 178,359,255 50,324 Capitalisation issue 17,751,056 2 17,751,056 2 Transfer from Capital Surplus - 19,674 - 19,674 ------196,110,311 70,000 196,110,311 70,000 ------

There is no unpaid liabilities on any of the shares in treasury.

27. Statutory reserve fund

This represents the cumulative amounts set aside as a non-distributable reserve fund from annual net prot after tax in accordance with Section 29 (1) of the Banking Act, 2004 (Act 673) as amended by the Banking (Amendement Act of 2007), Act (738). The amounts transferred represent 50% of net prot after tax.

Your business is Our Business 83 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

2013 2012 2013 2012 28. Regulatory credit risk reserve

This represents the excess of provision for bad and doubtful debts in respect ooans as per Bank of Ghana prudential guidelines and loan impairment loss provision as per IFRS computations. Movement is as follows:

Balance at 1 January 3,442 2,764 3,442 2,764 Transfer from income surplus 799 678 799 678

Balance at 31 December 4,241 3,442 4,241 3,442 ======

29. Other reserve This consists of gains on property, plant and equipment, available for sale investments stated at fair value and related taxes. Movement during the year is set out below:

2013 2012 2013 2012 Available- Revaluation for-Sale Surplus Total Total Fin. Assets Balance at 1 January 2013 40,983 12,687 53,670 49,162 53,670 49,162 Available for sale movement 172,179 - 172,179 4,508 172,179 4,508 Deferred tax on available for sale movement (25,519) - (25,519) - (25,519) -

Balance at 31 December 2013 187,643 12,687 200,330 53,670 200,330 53,670 ======

30. Income surplus

This represents the residual of cumulative annual prots or (loss) that are available for distribution to shareholders.

31 Goodwill 2013 2012

Cost 936 936 Impairment ------Goodwill 936 936 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

Impairment testing of Goodwill Amount GH¢’000

Goodwill acquired through business combinations has been allocated to two individual cash generating units, which is also reportable segment for impairment testing as follows:

2013 2012

Retail 28 27

Corporate 908 909

936 936

Key assumptions used in value – in – use calculations:

The recoverable amount of the retail and corporate banking units have been determined based on value- in- use calculations using cash flow projections based on financial budgets approves by senior management covering a five year period. The following rates are used by the bank.

Corporate

2013 2012

Discount rate 10% 9%

Projected growth rate 5% 5%

Inflation rate 13.1% 8.8%

Retail

2013 2012

Discount rate 10% 9%

Projected growth rate 5% 5%

Inflation rate 13.1% 8.8%

The calculation of value in use for both corporate banking and retail banking units is almost sensitive to interest margin, discount rate, market share during the budget period, projected growth rate used to extrapolate cash flows beyond the budget period and local inflation rates.

Your business is Our Business 85 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

Interest Margin:

Interest margins are based on current fixed interest yields.

Discount Rates:

Discount rates reflect the pre-tax rate of assessment of the risk specific to each cash generating unit.

Market share assumption

These assumptions are important because, as well as using industry data for growth rates, management assesses how the unit’s relative position to its competitors might change over the budget period. Management expect its share to be stable over the budget period.

Projected growth rate and local inflation rates

Assumptions are based on published industry research.

Sensitivity to change in assumptions

Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to exceed their recoverable amount.

31a. Contingencies & Commitments

In common with other banks, the bank conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are oset by corresponding obligations to third parties.

As at 31 December, 2013 the Bank has contingencies and commitments as follows:

2013 2012 (GH¢’000) (GH¢’000)

Bid performance bond 2,441 1,224 Letters of credit 8,238 5,944 Guarantees and indeminities 17,750 14,310 ------28,429 21,478 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

The Bank The Group 32. Legal proceedings:

Legal claims 2013 Dominion Corporate Trustees Ltd US$90,000,000 Rom Engineering Ltd GHS2,158,769

The Bank is currently involved in a number oegal proceedings that are incidental to their operations. Due to the inherent uncertainty of these legal cases no accurate quantication of all costs related to the case can be made. Amount disclosed above represent current quantied signicant claims for which judgements were pronounced. Based on the advice of the legal counselors of the Bank, no provisions have been made in the nancial statements pending the determination by the Appeal Court.

33. Related parties 2013 2012 2013 2012 a. Advances include the following amounts lent to related parties: Amount GH¢’000

Current directors - 34 - 34 Ex - directors 3,369 5,412 3,369 5,412 Ocers and other employees 2,869 9,045 2,869 9,045 ------6,238 14,491 6,238 14,491 ======

Interest rates charged on balances outstanding from related parties are lower than the bank's base rate which is in compliance with Bank of Ghana notice number BG/GOV/SEC/2012/02. No signicant impairment losses have been recorded against balances oustanding during the period from directors, ocers and employees.

33b. Subsidiary companies Administrative expenses paid on behalf of subsidiary companies which were outstanding were as follows;

The Bank The Group

NIB Asset Recovery Company Ltd 2,780 1,149 2,780 1,149 ------2,780 1,149 2,780 1,149 ======

Your business is Our Business 87 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Amount GH¢’000

The Bank The Group

33c. Key management compensation 2013 2012 2013 2012

Salaries/allowances 1,309 - 1,367 - Pension contribution 737 - 737 - Bonus paid or receivables 47 - 47 ------2,093 2,151 ======

Bank Group

Amount GH¢’000

34 Cash and cash equivalents 2013 2012 2013 2012 For the purpose of the cash ow Cash and balances with central bank 165,841 111,643 166,715 113,176 Government securities 155,323 123,078 155,340 123,095 Due from other banks 86,012 99,002 87,999 100,860 Due to other banks (23,572) - (23,572) 1,907 ------383,604 333,723 386,482 339,038 ======

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

Your business is Our Business 89 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

36.MATURITY ANALYSIS OF ASSETS AND LIABILITIES As at 31 December

Assets 0-3 Months 3-6 Months 6-12 Months Over I Year Total GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash & Balances with Bank of Ghana 166,715 - - - 166,715 Government Securities 45,141 19,125 17,329 73,745 155,340 Due from Other banks & Financial Institutio 87,999 - - - 87,999 Equity investment 222,255 - - - 222,255 Loans and Advances to Customers 187,459 168,918 41,595 123,288 521,260 Others Assets Accounts 11,671 - - - 11,671 Property, Plant and Equipment 31,369 - - - 31,369 Goodwill 937 - - - 937 ------Total Assets 753,546 188,043 58,924 197,033 1,197,546 ======Liabilities

Customer Deposits 541,863 147,550 30,125 51,359 770,897 Borrowings - - 17,266 41,965 59,231 Liability on managed fund 1,002 - - - 1,002 Other Liabilities 23,601 - - - 23,601 Due to other banks 23,572 - - - 23,572 Deferred tax - - - 32,340 32,340 Corporate tax 619 - - - 619 National Fiscal Stabilisation Levy 1,125 1,125 ------Total Liabilities 591,782 147,550 47,391 125,664 912,387 ======Net Liquidity Gap 161,764 40,493 11,533 71,369 285,159 ------At 31 December 2012 269,696 (358,714) 48,301 140,927 100,210 ------

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

37a. Segmental Reporting

For management purposes, the Bank is organised into four operating segments based on products and services, as follows:

Retail banking: Individual customers’ deposits and consumer loans, overdrafts, credit facilities and funds transfer facilities

Corporate banking: Loans and other credit facilities and deposit and current accounts for corporate and institutional customers

SME banking: Loans and other credit facilities and deposit and current accounts for small and medium enterprises.

The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profits or losses and is measured consistently with operating profits or losses in the financial statements. However, income taxes are managed at the bank level and are not allocated to operating segments.

Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Bank’s total revenue in 2013 or 2012.

Your business is Our Business 91 National Investment Bank Limited | 2013 Annual Report ) ) 7 - 5 1 2) 2 4) 2 - 6 == = - 9 1 ,343 - ( GH ¢ 2,544 2,503 - Total 41,871 16,61 6 == = 44,182 6,484) 56, 1 - 37,698 6 9 103, 2 (3,8 6 59,896 ( 132,677 (26,154) - (63,3 3 (47,0 5 - - === = - = - = = ------d - - == = - GH ¢ - 6,484 ) - (6,484 ) ( - === = locat e - = - = - Una l

) ) ) = 7 - 2 4 0 - - 5 0 = - = 2 - 1 - GH ¢ SME (52 4 - 6,504 == = 14,01 4 14,014 13,89 22,105 - 52,69 13,784) 28,20 24,08 8 40,46 = (18,355 ( - (24,4 9 = - = - - Amount GH¢’000 Amount

= - - - 7 1 - - ,63 1 == = ,02 3 - 7 GH ¢ 1,35 0 = 5,67 3 8,130 (655 ) 7 7,02 3 - 30,11 0 2 65, 8 = 2 35,25 2 - 50,57 5 2 2 (8,924 ) = - (30,619) (22,944) = - = - = - Corporate - 9 - ) 3) - 2 == = - 9 = - 1 1,03 3 GH ¢ = ( 1,982 3,145 3,14 5 2,54 4 - 12,18 2 5,69 8 5,88 9 6,4 2 2,30 4 14,10 9 = Retail (5,753) - (2,6 8 (3,446 ) (8,220) = - =

- = - -

com e com e

Los s e t er i n er i n

a i e c

o required

d ot h d ot h s irment s a n a n a

i nc o m

p a f

o m ng

x ncom e longer tax I tax come e me s t i a los s ens e s Expense s r t o no l

for e for e for e Inc o Ex p f n ng I n

t t o o inco m oper a b e aft e b e b e

i at i t e debt r a a x ther a h S T Intere s Intere s Other Prot Prot Net Interest I Commission Operating Provision Bad Impairment O Prot Ope r Prot

NOTES TO THE FINANCIAL STATEMENTS TO NOTES 2013 ended 31 December the year For income comprehensive of statement 37b. Segmental

[email protected] 92 www.nib-ghana.com National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

38. Comparative Information

The comparative financial information, have been restated to achieve consistency with presentation of current year figures.

39. Determination of Fair Value and Fair Values Hierarchy

The Bank measures fair values using the following fair value hierarchy that reflects the signifi- cance of the inputs used in making the measurements:

•• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

•• Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

•• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions are assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker codes, investment in private equity funds with fair values obtained via fund managers and assets that are valued using the bank’s own models whereby the majority of assumptions are market observable.

Non-market observable inputs means that fair values are determined in whole or in parts, using a valuation technique, based on assumptions that are neither supported by prices from observable current market transactions in the same instrument, nor are they based on available market data. The main asset classes in this category are unlisted equity investments and debt instruments. Valuation techniques are used to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Therefore, observable inputs reflect the Bank’s own assumption about the assumptions that market participants will use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available which might include the Bank’s own data.

Your business is Our Business 93 National Investment Bank Limited | 2013 Annual Report - - = 5 8 6 0 - - = 47 7 9 176 lu e - - == = = 9 66 7 Fai r 26 0 , - a = , 000 6,715 1,598 2,377 ’ 9,723 9,723 - = 4 3,292 V 2,0 6 0,860 18 , 3 113 , 3 -- - - = 87,99 9 1 6 5 189, 8 - - = === = 155,3 4 123, 0 52 1 4 5 1 0 8 - = 1,1 6 GH ¢ - -

--- - -

- - ta l T o - - 7 = 7 g 5 8 9 6 6 1 nt - - = 7 n 6 - - = 37 7 u , 7 59 8 ,6 6 - - = , ,9 9 ,26 0 00 0 1 2 , ry i ’ 1 9, 72 3 9, 72 3 - - = 4,9 4 9,8 7 8 13, 1 7 5,3 40 3,09 5 6 1 3 1 3 - - ======5 8 8 1 5 2 1 - - = 1 1 5 2 4 Am o 100,860 852, 0 Ca r - 1,162,210 GH ¢ ------= 7 = 3 3 & 0 0 1 5 - - = = 2 2 6 les 7 - - = 7 7 , , - - = 7,311 3,17 6 9 9 - - = ans 4,9 4 66 , 1 - - = 7 o 87,99 9 1 - - ==== = 521,2 6 4 5 L 678,706 100, 8 - - GH¢’000 - - - - Receiva b ------= = 5 8 le - - 7 55 bl e - - 66 7 - - ,2 6 S a 000

- - ======0 31,59 8 18 , 32,37 7 - = = ail a 5 189, 8 - fo r 222, 2 v - -- - A GH¢ ’ - ) ------= = e d 0 0 g =

u 95 4 4 l n = ugh 3 -- - = , Loss He l o d i - = 3,09 5 a - ==== = 2 r o r ir v a - 15 5 1 155, 3 123, 0 th r

a ( T GH ¢ ’00 0 at f prot

4 9 0 17 17 15 15

1 6 1 6

1 1 9 2 18c 18c 18 a 18 a 2 Note

d d

n n s s

y y

h h a a e e t t

s s t t i i t t

i i

s s

e e a a u u

i i i i k k s s

w w s s t t q q

c c i i n n e e a a n n r r s s e e o o c c a a

n n o o e e u u s s i i n n e e a a B B

c c c c s s t t l l

a a h h r r s e e n n a a a a u u v v 1 2 1 3

t t e e s s G G a a S S

i i / /

l l d d e t

n n

h h t t r r s s f f i i

t t s a a t t

A A t t s s 1 2 1 2 o o

o o t t n n t t b b o o

e e / / f f n n

e e d d i i n n n n s s k k

l A s d d l l e e 3 1 3 1 e e n n e e s s n n m m l l m m a a n n a a t t i a A A a a i i o o

m m b b n n m m

a a a a c r r t t r r t t c c s s r r

B B a a f f l l

s s l l s s n

e e

e e n n n n h h i i a a h h a e e e e v v e e s s a a a a h h t t a a t t v v v v n t t i i o o u u a a v v n n o o o o i i i n n n n

D i D L F C w I I O T A G f C w G f O T A L

NOTES TO THE FINANCIAL STATEMENTS TO NOTES 2013 ended 31 December the year For

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1 1 r - - - 7 2 3 e i 0 0 3 0 4 42 u a 9 2 0 l 6 1 ,717 , 53 8 0 F , , 002 , ,3 0 a 0 1 9 3 ’ 1 , 7 8 0,89 7 0, 9 V 5 5 1 23,5 7 2 ======1 ¢ 7 7 77 9 ------= = 7 7 8 H - - - - G ------

l a t o T 1 1 t - - - 7 = = 3 2 g 0 0 3 = = 0 n 4 4 n 9 2 0 i 6 1 u ,717 , 53 8 0 , , y , 0 1 9 o r 3 ’ 1,00 2 7 8,3 0 0,89 7 0, 9 5 r 5 1 2 23,572 ======1 ¢ 7 7 m 77 9 a ------= = 7 7 8 H A - - C - - G ------

l 1 1 t t - - - s 7 3 2 d 0 0 a 3 s a 0 4 e 4 2 i

e 9 i 2 0 o 1 6 ,717 , c 538 t s 0 , , d 002 , i i ,3 0 0 , 1 C 9 n l ’ 3 t 1 e 7 i 8 0,89 7 0, 9 5 r 5 1 a r 23,5 7 2 ======1 ¢ 7 7 b 77 9 o ------= = 7 n u 7 8 H i a - - s i m F - - G a L - - A e - - - - M ) t ------s - = = e i d 0

g l s = = f u 0 ------= = l n e o o i - - r a 0 L H ’ - - d

v p

¢ a r r i o h H T a g ( f G

u t o a r h t 3 3 2 2 5 5 4 4 e t 2 2 2 2 2 2 2 2 17 b 17 b o N

d d n n

s s a a

n n s s s s s s o o t t k k e e i i i i i i

t t n n t t s s

i i s s u u a a l l

o o i i t t e e 1 3 1 2 i i B B i i d d p p

/ / b b t t t t n n r r i i e e s s a a

l l i i 1 2 1 2 i i e e u u D D s s n n f f / /

L I L I h h b b

g g

r r t t l l l l

a a d d 3 1 3 1 n n e e i i i i a a o o a a e e i i i i

t t L L m m

w c c w c c g g a a o o r r t t o o a a l l n n n n o o

e e t t r r a a a a a a n n e e r r s s h h t t a a n n n n t t u u u u o o i i i i o o B

B T D O M F C T D C M F F F O

NOTES TO THE FINANCIAL STATEMENTS TO NOTES 2013 ended 31 December the year For

Your business is Our Business 95 National Investment Bank Limited | 2013 Annual Report

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy.

Amount GH¢’000

2013 Note Level 1 Level 2 Total Government securities 16 155,340 - 155,340 Equity investments 18 - 32,377 32,377 155,340 32,377 187,717

2012 Note Level 1 Level 2 Total Government securities 16 123,095 - 123,095 Equity investments 18 - 31,598 31,598 123,095 31,598 154,693

40. Financial Instruments Classification Summary

Financial instruments are classified along three recognition principles: held at fair value through profit or loss (comprising trading and designated), available-for-sale and loans and receivables. The Bank’s classification of its principal financial assets and liabilities are summarised below:

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

41. Regulatory Breaches

The following breaches occurred during the year; i. The bank did not fully comply with the Bank of Ghana’s criteria in classifying some loan account resulting into downgrading of some loan balances hence provision. ii. The bank did not include outstanding contingent liabilities in the fifty (50) largest exposures to the non-monetary sector returns submitted to the bank of Ghana. iii. The bank did not sort the approval of Bank of Ghana before outsourcing its teller functions to Agate-Mabot Company Limited to provide teller services to Tamale, Dunkwa, Wenchi and Tema Habour branches.

42. Details of Shareholders at 31 December 2013

Percentage Name Holding

Ghana Government 52.58%

Financial Investment Trust 44.65%

Others 2.77%

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PROXY FORM

I/We ------(BLOCK CAPITAL LETTERS)

Of ------CUT OUT THIS PAGE Being member/members of National l Investment Bank, hereby appoint

------(Insert full name)

Of ------(of failing him the duty appointed Chairman of the meeting) as my/our proxy to vote for me/us at the Annual General Meeting to be held on 12th June 2014 at 10:00am and at every adjournment thereof.

Resolution

To receive and consider the financial statement for the year ended 31st December 2013 together with the Report of the Director and Auditors thereon.

To elect/re-elect Directors To approve Directors’ Fees To authorise the Directors to determine the remuneration of the Auditors. To appoint auditors

Signed this ------Day of------2014

------Shareholder’s Signature

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This Proxy Form should not be sent to the Registrar if the member will be attending the meeting

Notes

1. A member (Shareholder) who is unable to attend the Annual General Meeting is by law to vote by proxy. The above proxy form has been pre- CUT OUT THIS PAGE pared to enable you exercise your vote if you cannot personally attend. 2. Provision has been made on the form for the Chairperson of the Meeting to act as your proxy but, if you wish, you may insert in the blank space marked “x” the name of any person whether a Member of the company or not who will attend the meeting and vote on your behalf instead of the Chairperson on the Meeting. 3. In case of joint holders, each holder should sign 4. If executed by a corporation, the proxy form should bear its common seal or be signed on its behalf by a Director. 5. Please sign the above proxy form and post it so as to reach the address shown below not later than 48hours. 6. The proxy must produce the Admission Slip sent with the notice of the meeting to obtain entrance to the meeting.

THE REGISTRAR NTHC LIMITED MARTCO HOUSE OKAI MENSAH LINK P. 0. BOX 9563 AIRPORT, ACCRA, GHANA.

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Head Office

National Investment Bank Limited 37 Kwame Nkrumah Avenue P. O. Box GP 3726 Accra.

Telephones and Fax Main Lines: +233-30-2661701 - 10 Fax: +233-30-2661730/2673114/2673124/2673114

Swift: NIBGGHAC Website: www.nib-ghana.com

General Information/Enquiries: [email protected]

Banking: [email protected]

International Banking: [email protected]

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A Presence across the entire country

NIB is one of the few banks in Ghana that has at least one bank branch in every administrative region of the country. All 28 branches and two agencies are networked nationwide.

Ashanti Region Sunyani Branch Eastern Region P. O. Box 389, Sunyani Kumasi Central Branch Tel: +233-35- Koforidua Branch (Kejetia) 2027217/27353/27089 P. O. Box 106, Koforidua P. O. Box PMB, Kumasi Fax: +233-35-2027128 Tel: +233-34-2022600/23093 Tel: +233-32-2081800-2 [email protected] Telefax: +233-34-2022676 Fax: + 233-32-2081803 [email protected] kumasi.central@nib-ghana. Techiman Branch com Oda Branch P. O. Box TM 741, Techiman P. O. Box 926, Oda Tel: 233-35-2091064-6 Kumasi Main Branch Tel: +233-34-292861-3 Fax: 233-35-2522384 (Adum) Fax: +233-34-292864 [email protected] P. O. Box 1294, Kumasi [email protected] Tel: +233-32-2025188/25635 Wenchi Branch Tel: +233-32-2027197/23874 P. O. Box 233, Wenchi Fax: +233-32-2027198 Greater Accra Region Tel: +233-35-2092494 kumasi.main@nib-ghana. +233-35-2092096 com Fax: +233-35-2422380 Abeka Branch [email protected] c/o Accra Main Branch Obuasi Branch P. O. Box GP 3726, Accra P. O. Box 1067, Obuasi- Tel: + 233-30- Adansi Central Region 2400113/400157/406080 Tel: +233-32- + 233-28-9548314/5 2541273/41274/41276 Cape Coast Branch Fax: + 233-30-2416190 Fax: +233-32-2541277 P. O. Box 397, Cape Coast [email protected] [email protected] Tel: 233-33-2132649/34567 Telefax: +233-33-2132009 Accra Main Branch [email protected] Tel: + 233-30-2661725 Fax: + 233-30-2661713 Dunkwa-on-Offin Branch Brong Ahafo Region [email protected] P. O. Box 20, Dunkwa-on- Offin Kintampo Branch Tel: +233-33-2228229/28449 Dansoman Agency P. O. Box 214, Kintampo Tel: +233-33-2228439/28470 c/o Accra Main Branch Tel: +233-35-2092042 Fax: +233-33-2228510 P. O. Box GP 3726, Accra Fax: +233-35-2035937 [email protected] Tel: + 233-20-2025012 [email protected] +233-302-312763 +233-24-4341329 +233-24-4341332 Fax: +233-30-312762

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A National Presence

International Banking Tema Community 9 Branch Upper West Region P. O. Box GP 3726, Accra C/o Tema Branch Tel: +233-30-2661733 P.M.B. Tema Wa Branch Fax: +233-30-2673124 Tel: + 233-30-3311203-4 P. O. Box 365, Wa [email protected] Fax: + 233-30-3311324 Tel: +233-39-2020850-2 [email protected] Fax: +233-39-2020853 North Industrial Area Branch [email protected] C/o Accra Main Branch Tema Main Branch P. O. Box GP 3726, Accra P.M.B., Tema Volta Region Tel: + 233-30-2246682 Tel: +233-30- + 233-28-9548324 3204531/203305 Ho Branch Fax: + 233-30-2246690 Fax: +233-30-3202205 P. O. Box 303, Ho [email protected] [email protected] Tel: +233-36-2026401 +233-36-2028567 Osu Branch Winneba Road Branch +233-20-2025024 Osu Mail Bag, Accra C/o Accra Main Branch Fax: +233-36-2026694 Tel: +233-30-2770287 P. O. Box 3726, Accra [email protected] +233-30-2770491 Tel: + 233-30-2850905/6/8 +233-20-2025005 +233-28-9548312 +233-28-9548301/3 Fax: 233-30-2850907 Western Region Fax: +233-30-2770289 [email protected] [email protected] Takoradi Branch P. O. Box 609, Takoradi Spintex Road Branch Tel: +233-31- Northern Region C/o Accra Main Branch 2024601/22962/23813 P. O. Box GP 3726, Accra Fax: +233-31-2024701 Tamale Branch Tel: + 233-30-2814093/4/6 [email protected] P. 0. Box 400, Tamale Fax: + 233-30-2814095 Tel: +233-37- [email protected] Tarkwa Branch 2022420/22738/22106 P. O. Box 609, Takoradi Fax: +233-37-2022403 Adenta Branch Tel: +233-31-2321851 [email protected] C/o Accra Main Branch +233-31-2321848/9 P. O. Box GP 3726, Accra Fax: +233-31-2321854 Tamale Agency Tel: +233-28-954308/9 [email protected] P. 0. Box 400, Tamale Fax: + 233-57-7900098 Tel: +233-37-2028115 [email protected] Upper East Region Harbour Area Branch Bolgatanga Branch P.M.B., Tema P. O. Box 343, Bolga Tel: +233-30-3200474/78/79 Tel: +233-38 2023481 +233-28-9548306 /23826/23457 Fax: +233-30-3200480 Fax: +233-38-2023483 harbour.area@nib-ghana. [email protected] com

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LIST OF CORRESPONDENT BANKS

NAME & ADDRESS ACCOUNT NO. CURRENCY

1. JP MORGAN CHASE BANK 400210541 USD 4 NEW YORK PLAZA NEW YORK, NY 10004, U.S.A. 400210533 USD SWIFT: CHASUS33

2. GHANA INTERNATIONAL BANK PLC 69 CHEAPSIDE, P. O. BOX 77, 0001287201 GBP LONDON EC2P 2BB, U.K. 0001287204 USD SWIFT: GHIBGB2L 0001287209 EUR

3. BHF BANK A. G. 800721555 EUR 60302 FRANKFURT AM MAIN 100721555 EUR FRANKFURT, GERMANY SWIFT: BHFBDEFF

4. STANDARD CHARTERED BANK 3582023628001 USD 23RD FLOOR, AMERICAN EXPRESS TOWER, 200 VESSEY STREET NEW YORK, NYÅ 10285- 2300, U.S.A SWIFT: SCBLUS33

5. STANDARD CHARTERED BANK THEODORE – HEUSS- ALLLEE 112 18144206 EUR D- 60486 FRANKFURT MAN. GERMANY SWIFT: SCBLDFEFX

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