STANBIC BANK GHANA Annual report 2020 1 2

Contents

Our success and growth over the long 02 Our strategy and value creation term is built on making a difference 04 Chairman’s report 06 Chief executive’s report in the communities in which we 09 Financial review operate. 13 Corporate governance overview 14 Board of directors Stanbic Bank is one of Ghana’s topmost banks. The 16 Executive committee bank’s original vision was to understand its customers better, have people with strong 17 Corporate governance report knowledge of local business conditions and to do 21 Directors and advisors a better job of connecting borrowers with 22 Report of directors lenders. This vision created the platform for the kind of bank it would become and the 23 Independent auditor’s report ANNUAL qualities on which its customers and clients would come to rely. Over its history, Stanbic Bank has grown from a few staff members to over 831 today, and Annual financial statements REPORT extended its roots deep into the fabric 27 Statement of financial position of Ghanaian society. We have evolved and adapted along with our 28 Income statement 2020 customers and clients, growing a 29 Statement of other comprehensive rich heritage while nurturing and income protecting our reputation. 30 Statement of changes in equity 32 Statement of cash flows 33 Accounting policy elections 57 Notes to the financial statements

Annexure 125 Value added statement STANBIC BANK GHANA 3 Annual report 2020 4

Our strategy is centred on our commitment to Ghana and directs our growth and evolution to the shared benefit of our clients, our people and all our stakeholders. It allows us to lead with purpose, to build a better business, and to position our footprint and platform for the future Our key focus areas work together to ensure we offer our clients everything they need in the most effective way possible. Our values serve as beacons for the behaviour and Our values-driven qualities that define us at our best as we execute our strategy. culture •• Being proactive. Our culture is ‘the way we do things’. Our work to shift our The way we work/The way we win Ethics •• Constantly raising the bar. •• Working in teams. culture for the better •• Delivering to our stakeholders. recognises that how we do things is as important as the Behaviours •• Respecting each other. things we do. Our culture is Client centricity requires that our people and processes •• Serving our customers. are outwardly focused on our clients as their needs and determined by our purpose, CLIENT CENTRICITY Principles •• Upholding the highest levels of integrity. expectations change. This means we align the way we plan, vision, values and our places our clients at •• Growing our people. approach to ethics. Our code deliver and execute work, doing the basics brilliantly and the centre of consistently so that we can do what our clients value. of ethics guides us to be everything we do. responsible and respectful in our dealings with all our WE ARE WORKING TO: stakeholders as we work to See clients as real people, not numbers. become Ghana leading Provide our clients with relevant solutions. Our strategy financial services Be a trustworthy partner on our clients’ growth journeys. organisation. It outlines  Do the basics brilliantly and deliver on our promises quickly, acceptable business conduct efficiently, reliably and respectfully. BUSINESS and is an important reference point for LINES employees acting on behalf CORPORATE Universal capabilities of the Bank. These clearly FUNCTIONS defined parameters empower us to make faster, •• Shared •• Internal more confident decisions Digitisation is more than just technology – Services Audit PBB that have the interests of our it is about delivering the full range of financial •• IT •• Legal clients, and the people of Our purpose Ghana at heart. DIGITISATION services through secure, personalised, relevant Ghana is our home, we •• Governance means enhancing our and digitally enhanced experiences to our clients CIB drive her growth with •• Finance We are focusing on three products and and employees in real-time, all the time. innovative and •• Human critical behaviours that will processes to best-in-class solutions. Capital shift our culture and make continually improve WE ARE WORKING TO: •• Marketing the most difference in how we meet our Ensure that the services our clients and employees and Comms Our clients Wealth supporting our strategic clients’ and need are consistently available, anywhere, anytime – journey: employees’ needs. irrespective of channel. •• Compliance Client service teams Use data proactively to guide our decisions, discover •• Risk •• Connect every team’s Our vision work to the group’s valuable insights and deliver personalised experiences. To harness all resources broader objective of Remove friction, paper-based processes and waste to ensure in customer centric serving our clients with intuitive, easy to use, reliable interfaces for our clients and manner to deliver integrity. employees. sustainable superior OUR SOLUTIONS •• Create common goals Create a workplace that encourages curiosity, digital thinking shareholder value. across different areas and and continuous improvement for quick and frequent refinement of follow through urgently. ideas and brilliant delivery. *Asset *Stock Banking management Bancassurance brokerage and •• Enable people to take advisory ownership of their work and help to remove obstacles. * Provided by our related companies

Offering a complete range of financial services follows from our commitment to client centricity and reinforces the Our INTEGRATED competitive advantages of our scale, scope and expertise. FINANCIAL This means that our business units, legal entities and SERVICES offering corporate functions must work as an integrated whole to Our strategic value drivers delivers holistic service our clients’ financial needs in a seamless way. help us focus our efforts and measure the progress solutions which are towards delivering on our strategy and vision. relevant to our WE ARE WORKING TO: clients. Seamlessly and efficiently deliver an integrated financial services group, so our clients have access to and experience all our propositions relevant to their needs.

CLIENT EMPLOYEE RISK AND FINANCIAL SEE FOCUS ENGAGEMENT CONDUCT OUTCOME IMPACT BUSINESS REVIEW STANBIC BANK GHANA 5 Chairman’s report Annual report 2020 6

PROFESSOR ERNEST ARYEETEY - CHAIRMAN services online through our virtual Corporate and Investment Banking branch. This greatly helped in the (CIB) and Executive Director of the situation we found ourselves where Bank, subject to regulatory approvals. minimal physical interaction was On behalf of the shareholders and the needed to stay safe. other members of the Board, I wish to Chairman’s report congratulate all the new board We also continued to serve clients as members and extend our sincere "Profit after tax for the year of GHS326 million was a 16% growth on prior an integrated financial services welcome. We look forward to spending year. Total assets rose from GHS9.3 billion in 2019 to GHS12.7 billion in 2020, organisation and introduced industry- fruitful times in steering the affairs of specific insurance value propositions the Bank together. a growth of 37%, while total equity closed the year at GHS1.68 billion.” across key sectors of the economy, including Agriculture, Oil & Gas, Outlook for 2021 Manufacturing, Power & Utilities and Construction. We were also able to Indeed, 2020 was a year like none +16% +37% leverage on our offshore banking teams other, where our existing way of doing Profit Total Bank business was challenged and forced after tax assets to grant our private clients access to increased opportunities to efficiently most businesses to accept the “new GHS12.7Billion GHS326 Million manage their assets. normal”. In essence, it accelerated the 2019: GHS281 Million 2019: GHS9.3 Billion digital transformation journey of most Board Changes sectors, especially the financial services industry. We will continue to invest in 2020 represented a major milestone our technological infrastructure which for the board as our long serving Chief should improve client experience and Executive summary helped the country maintain stability production improved, whilst increased credit flow. Most banks were able to Executive, Mr Alhassan Andani, who help us deepen client relationships. over the years. consumer consumption helped to raise gain client acceptance and adoption of had been at the helm of affairs for over The year 2020 was like none other had Acknowledgement prices. It is, however, uncertain if the their digital solutions, which is expected 14 years retired from active service of been in decades. Lockdowns, curfews, Ghana has a cordial diplomatic improving economic growth will be the Bank. work from home and governments relationship with its neighbours and to improve operational efficiencies The pandemic created unprecedented sustained as the pandemic is yet to be across the industry. This will help engaging in an almost synchronised across the continent as it seeks to Mr Andani was instrumental in growing challenges for various economies, brought under control. Notwithstanding sustain the industry amid the injection of massive economic support deepen its trade ties with them going the bank from four (4) branches to organisations and households. That the emergence of a second wave, it is uncertainties in the environment. became commonplace following the forward. During the year, the African anticipated that the roll out of vaccines forty (40) branches and in the process, notwithstanding, Stanbic Bank World Health Organisation’s (WHO) remained resolute in developing world Union (AU) commissioned its trade will lead to more stability in the global Corporate governance transforming Stanbic Bank to a top tier declaration of COVID-19 as a pandemic. secretariat in Accra and established economy. bank in Ghana. Mr Kwamina Asomaning, class solutions and liaised with other These actions characterised the the African Continental Free Trade Stanbic Bank remains committed to a senior member of the executive team key partners to bring some financial economic environment, which Area (AfCFTA) Secretariat to promote Ghana’s projected economic growth the principles of King’s Code of for the past decade, was appointed as respite to our customers. The witnessed an almost total halt to intra-African trade. This AU initiative dwindled in 2020 following a brief Corporate Practices and Conduct and the new Chief Executive to steer the development of new vaccines presents significant sectors of the economy and reinforces Ghana’s image as one of the lockdown and as a result of the impact maintains a high standard of corporate affairs of the Bank. We owe Mr Andani a sign of hope in troubling times to our made the banking environment even most preferred investment destinations of trade and supply chain disruptions at governance practices. In the year a debt of gratitude for his selfless and dependable customers, hardworking more tenuous. in the sub-region and across African. the start of the second quarter of 2020. under review, the board continued in outstanding professional services to staff and the general population with The country expects that future trade The negative effects of the COVID-19 the Bank, the banking industry and the whose support the Bank continued to In spite of these challenges, Stanbic the exercise of its oversight on opportunities on the continent will grow pandemic on trade and capital flows country, as a whole. Additionally, Mr. show financial resilience over the year. Bank performed strongly and delivered management by holding board and Ghana will become a key also led to uncertainties in financial Kodwo Mills resigned on 31 December excellent results while maintaining meetings on virtual platforms. There stakeholder in these. markets. In response, Bank of Ghana 2020 as an independent non-executive On behalf of the Board, I would like to commendable corporate social is diversity on the Board and members introduced a number of directives in member of the Board, after serving the express my heartfelt gratitude to the investments. Profit after tax for the have a thorough understanding of their Economic environment support of the government’s efforts regulatory period. Nana Dwemoh management and staff of Stanbic Bank year of GHS326 million was a 16% corporate governance responsibilities. and to encourage reduction in the cost Benneh also resigned as Executive Ghana Limited for their tireless efforts growth on prior year. Total assets rose The global economy suffered a The Board constructively challenges of borrowing to aid key sectors of the Director and Head of Personal and and unflinching commitment in an from GHS9.3 billion in 2019 to GHS12.7 significant dislocation as growth senior management on their choices to economy. These measures resulted in Business Banking (PBB) of the Bank in unusually difficult year to improve the billion in 2020, a growth of 37%, while projections plummeted with the ensure that appropriate value is created some reliefs to the economy. The October to pursue other interests. On business, whilst making a difference to total equity closed the year at GHS1.68 emergence of the COVID-19 pandemic for all stakeholders. Last year, the measures also contained the threats of behalf of the shareholders, other the communities in which we operate. billion representing a growth of 24% at the beginning of 2020. At the close annual general meeting was recession and supported the economic members of the Board and the entire over the previous year. of the year, about two million people successfully conducted as a hybrid of To our loyal customers, we thank you recovery efforts. At the height of the staff of the Bank, I express our profound across the world had succumbed to the virtual and in-person attendance, with for the privilege of doing business with pandemic, our staff donated up to 30% gratitude and appreciation for their Political environment disease with many still under all Covid-19 protocols strictly observed. you in the past year even as we continue of their salaries for three months to services and enormous contribution to emergency care. This presented to improve our business to serve you purchase PPEs and test kits for Strategy oversight the Board and the Bank’s business and Ghana held its 8th consecutive enormous challenges to global health better in 2021. donation to government health facilities wish them well in their future Presidential and Parliamentary systems, necessitating lockdowns to across the country in support of the Stanbic Bank in 2020 continued to do endeavours. elections of the 4th Republic in curb the spread of the disease. The Finally, to our shareholders, we are December 2020. This was largely fight against Covid-19. business along its three key strategic grateful that you made your capital resulting global economic downturn led I also welcome to the Board Mrs. Sarah- peaceful despite some protestations pillars of Client Centricity, Integrated available to enable the Bank fulfil its to falling production, supply chain Banking environment Financial Services Organisation and Mary Frimpong, Mrs. Esi Tawia Addo- from the main opposition party, the disruptions and attendant job losses, purpose in Ghana. National Democratic Congress (NDC). Digitalisation. We continued to place Ashong and Mr. Myles John Denniss mainly in small and medium scale The banking industry responded The NDC presidential candidate has clients at the heart of all activities and Ruck, who were appointed as non- enterprises. positively to the pandemic by providing petitioned the Supreme Court seeking be our clients’ trusted partners in their executive directors of the Bank in various reliefs to customers through businesses. Our investments in November. They bring to the Board, a to annul the presidential results and an By the third quarter of the year, global reductions in lending rates, granting digitalising our platforms helped the rich diversity in experiences in their order for a re-run. The case is being growth was gradually increasing with moratoria on loan repayments and Bank immensely to deploy intelligent various fields, which will be of much heard. Ghana’s political credentials commodity prices largely recovering in restructuring existing facilities. This automation to serve customers value to the Bank. globally remain high as the legal line with a pickup in supply chain helped to reduce the economic impact remotely. In the year under review, we recourse continues to be used to activities. Particularly, crude oil prices of COVID-19 on customers and established our virtual branch where Finally, Mr Timothy Mugodi was Professor Ernest Aryeetey address electoral differences. This has increased in the third quarter as global minimised the possible disruptions to clients can receive all their banking nominated in December 2020 as Head, Chairman BUSINESS REVIEW Chief executive’s report STANBIC BANK GHANA 7 Annual report 2020 8

Chief executive’s report

"Headline earnings grew by 16.2 percent and our return Return on on equity (ROE) was 21.5 percent. These results reflect Headline earnings equity higher levels of interest income, driven by a 43.1 percent growth in the customer deposit base." 16.2% 21.5%

KWAMINA ASOMANING – CHIEF EXECUTIVE Additionally, in the year under review, Delivering relevant and complete digital support to complement the actions the Bank entered into an agreement solutions to our clients of the fiscal and monetary authorities. with Investing For Employment (IFE) On the corporate citizen front, we of Kreditanstalt für Wiederaufbau • EMPLOYEE ENGAGEMENT (Value supported our communities by (KfW) to disburse a grant of EUR6 for our employees): donating PPEs and test kits, funded million to small and medium scale partly by voluntary donations from Government’s effort to cushion the Shaping a workforce that is ready to Introduction informal economy, Government has so companies in Ghana which had been staff. impact on the population through the meet our clients’ needs, now and in the far not pursued that option again. adversely impacted by the pandemic. The opportunity to serve as Chief introduction of generous fiscal stimulus future. The bank continues to do the right Executive of Stanbic Bank Ghana is an Earlier in the year under review, we packages and supportive monetary business the right way by embedding • RISK AND CONDUCT (Value for all honour and a privilege. I applaud the activated our Business Continuity policy measures, output contracted in an ethical and risk-conscious culture our stakeholders): contributions of my predecessor, Mr. Plan, which led to approximately 80% the second and third quarters, for the Our purpose and strategic and a system of internal controls. We Alhassan Andani, who led the bank for progress of the staff in our Head Office and first time in 40 years. Despite this Doing the right business, the right way. have undertaken a multi-layered the past 14 years to build a solid legacy other units other than the branches background, our financial results were approach to cyber security, given the Our mission, vision, purpose, and over the past 22 years of its operations working from home. This situation respectable. Headline earnings grew by • FINANCIAL OUTCOME (Value for increasing spate of cyber-attacks. values statements taken together, in Ghana. Under his guidance, Stanbic remains unchanged, given the current 16.2 percent and our return on equity our shareholders): Our governance around data privacy Bank Ghana established a strong client- describe our overall organisational conditions under the pandemic. (ROE) was 21.5 percent. These results has also been strengthened by centric culture, underpinned by direction and focus. Stanbic Bank Nevertheless, the teams have reflect higher levels of interest income, Striving to meet our medium-term allocating the appropriate levels of talented and highly motivated staff. Ghana’s mission is to deliver simple, financial targets. continued to engage with our clients driven by a 43.1 percent growth in the resources. Naturally, it will be difficult to enumerate relevant, and holistic financial and other stakeholders to address customer deposit base, and a Mr. Andani’s many contributions to the solutions to our clients in a seamless • SOCIAL, ECONOMIC, In 2020, we attained the ISO 27001 their needs despite these uniquely favourable tax credit of GHS16 million. Bank. We are truly grateful for his manner. We believe our mission ENVIRONMENTAL IMPACT (SEE) certification. The certification is challenging circumstances. In doing Notably, our cost-to-income ratio of exemplary service. supports the broader vision of our (Value for our society): awarded to institutions which adopt so, we have been mindful of the need 52.8 percent was largely unchanged parent company, Standard Bank best practices in managing The second wave of Covid-19 infections to safeguard the health and safety of from the prior year. Driving positive SEE impact. Group, to be the leading financial information security. With this which the world is currently our staff and to protect our financial services organisation in, for and These results are the product of strong We believe strongly that our outcomes certification, our clients and other experiencing appears to be more resources in a manner that ensures across Africa. In Ghana, our purpose performances across our three for 2020, despite the negative impact key stakeholders can be assured that widespread and creating higher levels that we preserve the sustainability of is to drive growth with innovative and business segments – Corporate & of the COVID-19 pandemic, underscores the information assets that we hold of anxiety. The stigma and secrecy that the business. On behalf of my best-in-class solutions. We do so by Investment Banking (CIB), Personal & our progress in fulfilling our purpose. are secured. were associated with infections in this colleagues on the Executive harnessing all the capabilities and Business Banking (PBB), and Wealth & We continued to place our clients at the part of the world, appear to have Committee, I thank all staff for their resources of the Standard Bank Investments (Wealth). In CIB, strong subsided, as more individuals and Group across multiple geographies, center of all that we do, adapting to dedication, ingenuity, and selflessness. client activity coupled with prudent households contend with positive to deliver unique and compelling their evolving needs and expectations. cost and balance sheet management The task ahead cases and sadly, deaths in many other solutions, in a manner that derives As the world came to a standstill, we resulted in profit before tax of GHS324 instances. value to all our stakeholders. found novel ways of sustaining our Public health experts surmise that million, an increase of 8.7 percent. PBB 2020 Financial Performance engagements with our clients and the combination of factors such as As the case count and death rates rise, produced equally decent results, with The Standard Bank Group has provided them with the required the timely availability of vaccines and the Government has intensified public To describe the operating environment profit before tax increasing to GHS80 developed a framework against support. Our past investments in the attainment of herd immunity will education on the pandemic, urging the in 2020 as a difficult one will be an million, a growth of 7.6 percent, driven which we measure our progress in digital channels adequately positioned dictate the speed with which the population to continue to respect the understatement. The COVID-19 by annuity income on the back growth fulfilling our purpose and realising us to divert traffic seamlessly from easing of social restrictions and a protocols, and for the Police to clamp pandemic and associated lockdowns in customer deposits. The blossoming our vision: physical channels onto our digital possible return to normalcy will down on noncompliance. Fearing the and supply chain disruptions resulted Wealth unit generated profit before tax platforms. We further cushioned the occur. In even the most optimistic of adverse economic effects of a lockdown • CLIENT FOCUS (Value for our in a sharp drop in economic activity of GHS2.8 million, an increase of 200 impact of the pandemic on our outcomes, the likelihood that these on Ghana’s largely subsistence and clients): and a spike in social hardship. Despite percent. customers by providing financial disruptions persist deep into 2021 is BUSINESS REVIEW Chief Executive’s report Financial ReviewSTANBIC BUSINESS BANK REVIEW GHANA 9 Annual report 2020 10

very strong, given the indicative Final thoughts timeline shared by the President of Financial Overview the Republic for vaccines to arrive in I take this opportunity to extend my Ghana. We therefore expect the gratitude to the Chairman and the downstream economic impact of Board of Directors for their steadfast support and steer throughout the Economic environment Total income for 2020 was GHS1.08 billion, 11% up on prior social distancing and restrictions on year of GHS975 million. This was fairly evenly distributed year. Their wise counsel and inspiring gatherings to linger, resulting in a The year 2020 will be remembered for its disruptions to the between Net interest income and Non-Interest revenue. dampening effect on our clients, and leadership were crucial in supporting global economy and an environment which challenged our business. us to lead the bank with purpose, governments on how they can best keep citizens safe from Net Interest income grew by 17% to GHS621 million driven especially during the challenging the Covid-19 pandemic. Even though the pandemic is yet to by significant improvement in local currency deposits to We welcome the on-going monetary moments. My appreciation also goes be defeated, development of vaccines and commitments by fund an increase in financial investments and loans and and fiscal interventions by the to the Executive Management team governments to keep the global economy working are advances to customers. The balance sheet growth in Government to sustain the economy and all staff for their remarkable positive advances. earning assets of 47% was able to help the bank mitigate and preserve disposable incomes. response to our clients, our the reduction in margins during the year. In the first quarter of 2020, after the COVID-19 pandemic We are also encouraged by communities and other stakeholders was identified in the country, the focus of the government Non-interest revenue of GHS463 million marginally Government’s focus on addressing during this period of unprecedented was to moderate the pace of erosion of economic gains surpassed 2019 reflecting the challenging operating the high fiscal deficit, concerning turmoil. To our shareholders, we are chalked over the past 3 years. These interventions included environment as economic activity slowed down amidst the debt to GDP ratio, and restrictions on grateful for your continued large fiscal stimuluses, supportive monetary policies and supply chain disruptions and border closures. travel. These matters will impact our investment and confidence in the systematic easing of the pandemic related restrictions. The Net fees and commissions revenue declined 4% to GHS212 business positively when resolved. Bank. Finally, to our clients, thank economy thus far, is responding favourably to these million. The waiving of fees on electronic transactions for 6 you for your unwavering loyalty to interventions, with GDP growth projected at 0.9% from the In addition, we have a new set of months, and the restrictions on global supply-chains our institution. We assure you of our negative growth reported in the second and third quarters. adversely impacted transactional volumes, particularly competitors, the Fintechs and Telcos, firm resolve to remain focused on The key sectoral activities that have seen positive rebound trade and card volumes. We witnessed some significant who are growing at a fast pace and addressing your existing and evolving after the second quarter contraction were construction and recovery in the fourth quarter but not enough to make up are nimble and aggressive. We are needs this year and beyond. manufacturing. This has been as a result of an improvement for the lost quarters. aware of these developments and in business and consumer confidence levels. have embraced Standard Bank Net trading income increased by 13% to GHS250 million Inflation pressures from panic buying just before the Group’s response to this trend to over the year mainly driven by intra period volatility, lockdown saw inflation of 7.8% in the first quarter skyrocket adopt a “Platform Mindset.” Our goal growth in market related activity, good portfolio positioning to 11.4% in July driven mainly by food price hikes, but this is to meet our customers’ needs and increasing non-vanilla opportunities. Difficult as it subsequently trended downwards over the year to end the through the establishment of an was, trading income demonstrated resilience over the Kwamina Asomaning year at 10.4%. It is projected that the fiscal deficit for the ecosystem that creates relationships period. Chief Executive country which was under 5% from the previous year will with other providers that offer increase to 11.4% by the end of the year. Credit impairments increased by GHS4.6 million to GHS58 complementary, or sometimes million representing an 9% increase. Credit impairments competing services, rather than by The fiscal and monetary stimuluses improved liquidity in the are reflective of the forward-looking assumptions of the promoting our solutions and services. economy and supported key sectors of the economy badly current operating environment after adjusting the impact This also presents us with the impacted by the pandemic. The Bank of Ghana for instance of key recoveries made during the period. Even though opportunity to be more data-driven reduced its monetary policy rate by 150 bps which moderated credit growth has been relatively muted over the year, the by deploying analytics and artificial interest rates in the market. The interbank rate as a result, bank remains very vigilant in managing asset quality of the intelligence into our delivery of value reduced from 15.20% in December 2019 to 13.56% by the book. We do expect a delayed uplift in impairment charges to clients. end of the year while the 91-Day treasury bill rate was down over 2021. by an average of 50bps over the year. The Ghana Reference Rate consequently reduced by an average of 137 bps over Operating expenses increased by 12% to GHS571 million the year ending at 14.76% in December 2020. as significant investments were made in information technology infrastructure to support the new ways of work The Ghanaian Cedi ended the year strongly with a and engagements with clients. Also, the bank witnessed an depreciation rate of less than 5% to the USD. Positive trade increase in regulatory compliance cost which muted any flows, lower levels of imports and a strong Gross International COVID-19 induced reductions in discretionary spend. The Reserves of 4 months import cover helped the currency to bank continues to make substantial investments towards remain relatively steady through the challenging global modernising the digital platforms of the bank. economic environment. Total assets of GHS12.74 billion at the end of 2020 was higher than prior year by 37%. The increase was mainly as a result of a rise in investment securities by GHS1.75 billion Financial Overview to close the year at GHS2.42 billion, and an increase in Stanbic Bank Ghana Limited posted strong results during cash and cash equivalents from GHS2.93 billion to the year despite the difficult operating environment. The GHS4.02 billion. The significant growth in assets was Bank made a PAT of GHS326 million representing a 16% mainly funded by growth in customer deposits which increase on 2019. This performance was anchored on the increased by 43% to GHS9.70 billion. disciplined execution of our client-led strategies during the A summary of the key results of the bank is provided pandemic with a strong focus on improving transactional below: activity and growing our liquidity. BUSINESS REVIEW Financial Review STANBIC BANK GHANA 11 Annual report 2020 12

Indicator 2020 2019 and integration in the services provided to clients in the During the year, we identified sectors and clients who were Average customer assets increased from GHS2.23 billion in coming year. most vulnerable and proactively offered support. This 2019 to GHS2.47 billion representing an increase of 11% Return on equity 21.49% 22.98% support included restructuring of existing facilities and driven by the origination momentum and focused execution The PBB and Wealth business expanded in 2020 returning a Profit after tax (GHS’million) 326.06 281.29 granting of interest and principal payment moratoriums. which started in prior year. This was adequately funded by higher profit after tax of GHS63 million, 18% above the prior Through this, a number of key clients have been assisted to average customers liabilities which grew by 40% from Profit after tax growth 15.91% 24.39% year of GHS54 million owing to some improvement in successfully manage their financial commitments through GHS3.85 billion in 2019 to GHS5.39 billion in 2020 on the customer risk assets volumes, efficiencies in processing of the pandemic. back of successful execution of client-led deposit Earnings per share GHp 147 127 customer transactions and improved deposit mobilisation mobilisation strategy. Earnings per share growth 15.91% -1.55% efforts. Our investments into digital platforms to help clients integrate their payment platforms with those of the bank The year closed with total income of GHS502 million, 10% Net interest margin 11.47% 5.75% proved very beneficial as we were able to seamlessly serve above prior year of GHS456 million. The performance was Capital Management our clients and give them access to uninterrupted and fast Cost-to-income ratio 52.69% 52.27% mainly driven by a strong annuity income. banking solutions. We also accelerated our roll-out plans to The capital requirement directive (CRD) which sets the Credit loss ratio 1.30% 1.31% Net interest income of GHS346 million was higher than prior migrate qualifying clients to our self-service channels. requirements by which banks calculate capital adequacy year of GHS296 million by 17%. The impressive performance ratio (CAR) became effective in January 2019. The Bank of Whilst our focus through the crisis was on maintaining the of net interest income was driven by growth in customer risk Ghana (BOG) however revised sections of the directive in integrity of our balance sheet, we nonetheless onboarded assets in 2020. This was partly mitigated by margin February 2020 after taking into considerations certain Business Units Review new strategic clients and continued to drive new solutions, squeezes orchestrated by the downward trend of the Ghana concerns raised by Ghana Association of Bankers (GAB). including an enterprise collection platform and a health pay Stanbic Bank segments customers under three main Reference Rate (GRR) and increased interest cost from The revised areas are below: App. business units: growth in deposits. • Composition of common equity tier 1 was amended In the midst of the challenging business environment, we • Personal & Business Banking (PBB); Non-interest revenue of GHS156 million was however lower to include 50% of unaudited profit subject to full than prior year of GHS159 million by 2%. The reduction were able to pursue our strategies to improve our funding provision of loan loss impairment based on BOG • Wealth and; compared to prior year was mainly driven by the effect of mix. This resulted in a strong growth in customer deposits. prudential norms and approval by BOG. temporary closure of the nation’s boarders which led to • Corporate and Investment Banking (CIB). The operating environment during the year was difficult, • Intra-group exposures are no longer capital deductible reduced volumes in international trade. Additionally, the nevertheless, the CIB business delivered a profit after tax of unless amount exceeds 25% of the net own funds. international travel bans led to reduced card transactional GHS229 million, which represents a 12% growth on 2019. activities as movement of people was partially restrained • The outstanding balance of any form of pledged assets PBB and Wealth performance The growth was primarily driven by improvement in leading to lower card transactions and hence lower cards revenues, while keeping cost within inflation and some tax are not deductible from capital. In a year characterised by significant disruptions and revenue. writebacks. • Reduction of leverage ratio from 6% to 4.5%. uncertainties, it was imperative for the business to rise to Total credit impairment provisions of GHS44 million Total income for the year of GHS544 million was 10% up on our purpose and reduce the stress on our clients. • Cost of software (intangibles) to be deducted from represents an increase of 18% above prior year of GHS37 prior year of GHS500 million driven by the increased focus capital over the first two (2) years of the implementation million. This is mainly due to an increase in customer risk on deposit growth to fund market opportunities. Guided by the bank’s strategic pillars of Client Centricity, of the CRD. Integrated Financial Services, and Digitisation, we refocused assets by 11%. Effective credit monitoring assisted the unit to keep impairment growth manageable. our efforts on delivering digital solutions to our clients which Net Interest Income increased by 11% to GHS281 million. • As part of the measures taken by Bank of Ghana to helped them to fulfil their desire to do their banking from The growth was supported by higher interest-bearing assets cushion banks’ capital from the impact of Covid-19, the Operating expenses for the year was 10% above prior year. albeit partly muted by margin compression emanating from anywhere even if they are unable to visit a physical channel. This was mainly driven by increased investment in technology capital conservation buffer (CCB1), required to ensure the reduction in interest rates. as part of the Bank’s digitisation drive and depositors’ capital is accumulated in good times to absorb losses in We launched a campaign dubbed “Imagine Digital insurance premiums. times of stress, has been reduced from 3% to 1.5%. Campaign”, to accelerate our digitisation agenda and serve Trading income increased by 13% to GHS250 million as improved liquidity, appropriate product mix and market This effectively puts the prudential limit at 11.5% as our clients seamlessly. This led to the establishment of our Gross average risk assets of GHS2.04 billion was 11% up on knowledge provided the right leverage to optimise market against 13% in 2019. first Virtual Branch to allow customers to reach us at any prior year of GHS1.83 billion. The increase is mainly due to opportunities. time during the day to perform any banking transaction. The the strategic portfolio acquisitions which helps the business The bank was well capitalised at the end of December 2020 campaign resulted in a massive uplift in the sign-ups and to deepen its retail wallet share in favorable sectors of the Net fees and commissions declined by 8% to GHS57 million with CAR at 18.51% (2019: 14.40%) compared to regulatory minimum of 11.5%. The following key points explain the adoption of all our digital platforms. We also successfully economy. Improved collaboration with other business units reflecting the downturn in economic growth. New mandates CAR performance over the year: rolled out contactless Visa Infinite cards for the high net continue to support the PBB business in this endeavor. were won, and transactional fees increased however these worth segment. These cards ensure there is minimal contact were not enough to cover the lower international trade and Average customer liabilities of GHS3.97 billion was 35% • Qualifying capital base improved by GHS277million with payment devices and other persons when clients need portfolio flows and associated fees due to the Covid -19 higher than prior year of GHS2.95 billion. The year-on-year year- on-year based on the following: to transact. pandemic. growth in deposit balance was facilitated by several digital • Common equity tier 1 (CET1) increased with the We also improved our strategy to work as an Integrated initiatives undertaken during the year to mobilise deposits. The credit impairment charge increased by 13% to GHS15 appropriation of 2019 audited PAT of GHS281 million. Financial Services Organisation. There was increased million driven mainly by a worsening risk profile of a key Capital savings was also achieved from the non- collaboration across business units to deliver value to our client. deduction of Intragroup exposure within 25% of net own clients. Among the solutions we introduced were diverse CIB performance funds and the amortisation of software costs. insurance products, advisory services for inter-generational Operating Expenses increased 11% year on year reflecting wealth transfer, and collaboration with a related business Our Corporate & Investment Banking (“CIB”) business is a inflationary growth. This was achieved despite the • As at the end of the year, Risk Weighted Assets (RWA) entity, Stanbic Investment Management Services (SIMS), to market leader in its chosen markets. Key clients are local investments in digital enhancements and technology as well contracted by GHS127.09 million to GHS7.12billion in offer secure investment management to our clients. We corporates, multinationals and government and strategic as the full year impact of the new regulatory compliance 2020 arising from a year- on-year decline in on-balance expect improved collaboration of our various business lines parastatals’ businesses. cost on deposit insurance. sheet and off-balance sheet credit risk assets and a Corporate Governance Overview ENSURINGSTANBIC OUR SUSTAINABILITY BANK GHANA 13 ENSURING OUR SUSTAINABILITY Financial Review Annual report 2020 14 Corporate Governance Overview

decrease in market risk. We did on the other hand witness an increase in operational risk over the period.

• The leverage ratio ended the year flat at 7.53% (2019: 7.58%) against a regulatory limit of 4.5%.

Looking ahead Although Ghana’s economy is expected to rebound in 2021 with a growth rate of 4.7%, the lingering effects of covid-19 provides a downside risk to the country. Fiscal costs of another stimulus package, and the outstanding energy sector debts could worsen the already high debt to GDP ratio. Consequently, even though the business climate continues to improve we do expect further challenges with respect to asset quality and a slow recovery of consumer demand. We will focus on using client data to better understand clients’ needs and behaviours and offer solutions that meets their spending characteristics and improving their service experience. We will seek to complete efforts to completely revamp our self-service platforms and make the bank’s app and other digital platforms best in class in terms of ease of use and functionality. Finally, we will continue to be proactive in managing credit risk of our clients to maintain the asset quality of our books in order to protect the capital base of the business. STANBIC BANK GHANA ENSURING OUR SUSTAINABILITY Board of Directors 15 Annual report 2020 16

Board of directors

1. PROFESSOR ERNEST ARYEETEY 4. MS. ESTELLE AKOFIO-SOWAH 7. MRS. ESI TAWIA ADDO-ASHONG

Chairman Independent non-executive director Independent non-executive director Appointed 2010 Chair, Information Technology Committee Chair, Board Nominations Committee

Appointed chairman 2018 Appointed 2018 Appointed 2020 PROFESSOR KWAMINA ASHOK MS. ESTELLE • BA (Hons.) (University of Ghana), • BA (Hons.) (Sussex) • BA (Hons.) (University of Ghana) ERNEST ASOMANING MOHINANI AKOFIO-SOWAH • Fellow, West African Leadership Initiative • MSc. (KNUST, Ghana) • Barrister at Law (Ghana School of Law) ARYEETEY (Aspen, Colorado) • PhD (University of Dortmund, Germany) • Leadership Cohort programme (University of Denver)

Ms. Estelle Akofio-Sowah is country manager of Ernest Aryeetey is a professor of Economics and a Mrs Tawia Addo-Ashong is the managing partner of Ashong CSquared, an infrastructure company building former Vice-Chancellor of University of Ghana. He Benjamin & Associates, a law firm in Accra, Ghana. She has wholesale internet infrastructure across Africa. currently the Executive Secretary of African over 30 years’ experience as a lawyer. Research Universities Alliance. Other appointments Other appointments Other appointments • Databank Epack New Horizon Special School • African Research Universities Alliance • Ghana International School

• United Nations University, Tokyo Board Committees Board Committees • Natural Resource Governance Institute, New York Credit & Risk Committee Board Credit & Risk Committee Information Technology Committee Board Nominations & Remuneration Committee

2. KWAMINA KOANTENG ASOMANING 5. OLAYINKA OMOTOSHO SANNI 8. MRS. SARAH-MARY FRIMPONG

Chief Executive Non-Executive Director Independent non-executive director Chair, Board Audit Committee Appointed 2010 Appointed 2019 OLAYINKA MYLES JOHN MRS. ESI TAWIA MRS. SARAH-MARY Appointed 2020 OMOTOSHO RUCK ADDO-ASHONG FRIMPONG Appointed Chief Executive 2020 • BSc (Hons.) Agricultural Economics (University of SANNI Nigeria, Nsukka) • BSc. Business Admin. (University of Ghana) • ACCA (London School of Accountancy & • MBA (Obafemi Awolowo University) • MBA (Wharton School, University of Pennsylvania) Metropolitan College) • Advanced Management Programme • Chartered Certified Accountant • Institute of Chartered Accountants (Ghana) • Advanced Management Programme (Harvard (Harvard Business School) Business School) Olayinka Omotosho Sanni is a seasoned banker and the Mrs. Frimpong is a chartered accountant by profession and a former Assurance partner of Kwamina Asomaning is the Chief Executive of Stanbic West Africa Regional Chief Executive for Standard Bank Bank Ghana. He is a seasoned banker with over 20 years’ PricewaterhouseCoopers, Ghana. She is a Fellow of experience in the international and local banking Group. ACCA. industry. He is also a chartered certified accountant. Other appointments Board Committees • Stanbic IBTC Pension Managers Limited Other appointments Board Audit Committee • Stanbic IBTC Bank Limited • Stanbic Investment Management Services Ghana Information Technology Committee • SBG Securities • Stanbic IBTC Capital Limited • Chirano Gold Mines • Stanbic IBTC Asset Management Limited • Ghana Bankers Association Board Committee Board Nominations Committee Board Committee Information Technology Committee

3. ASHOK MOHINANI 6. MYLES JOHN RUCK Independent non-executive director Non-Executive Director ALHASSAN KODWO SAM NANA KWADWO Chairman, Credit & Risk Committee Appointed 2020 ANDANI ATTA MILLS DWEMOH BENNEH

Appointed 2013 • BSc (Actuarial) (University of Cape Town) • ACCA (England & Wales) Part • Higher Diploma Business Data Processing (University of Witwatersrand) Ashok Mohinani is an accomplished entrepreneur • PMD (Harvard Business School) and an executive director of the Mohinani Group of Companies. Myles Ruck is an experienced banker and a former Chief Other appointments Executive of Liberty Group Limited in South Africa. • Mohinani Group of Companies Other appointments Board Committees • Standard Bank Group Limited • The Standard Bank of South Africa Limited Credit & Risk Committee • The Bidvest Group Limited Audit Committee

Board Committee Board Credit & Risk Committee * * ** Board Audit Committee * RETIRED ** RESIGNED Corporate governance report ENSURINGSTANBIC OUR SUSTAINABILITY BANK GHANA 17 ENSURING OUR SUSTAINABILITY Executive Committee Annual report 2020 18

Corporate governance report Executive committee

Standard Bank Group Limited - All the directors of the Bank have Board Supervision of Management overview participated in the Corporate Governance program facilitated by the It is the Board’s responsibility to ensure The Standard Bank Group complies National Banking College and have been that adequate management is in place with the principles of the Code of certified. to implement the Bank’s strategies, and Corporate Practices and Conduct (King to consider issues relating to succession Kwamina Victor Benjamin Lucy Code). The principles of the King Code planning. The Board is satisfied that the Asomaning Yeboah-Manu Mensah current pool of talent available within Alando determine the standards for the Group’s Board and Directors Chief Executive Chief Financial Officer Head, Wealth Head, Risk governance framework and practices. the Bank and ongoing work to deepen Ultimate responsibility for governance the talent pool provides adequate Stanbic Bank Ghana Limited (the Bank) rests with the Board. The Bank has a succession depth in both the short and is guided by these principles in unitary board structure and the roles of long term. establishing our governance the chairman and chief executive are There is appropriate communication frameworks, which are aligned to separate and distinct. The chairman is between the Board and executive Standard Bank Group standards in an independent non-executive director. management. Employees are invited as addition to meeting the legal and The number and stature of independent required to make presentations to the regulatory requirements in Ghana. non-executive directors ensures that Board on material issues under sufficient independence is brought to consideration. At the close of each Standard Bank Africa is a division of The bear on decision making. Standard Bank of South Africa Limited, board meeting non-executive directors which oversees the Group’s operations meet without the executive directors at in Africa outside of South Africa, a closed session led by the Chairman. including Ghana. Directors Declarations The primary objective of these sessions Doreen Mawuko Emmanuel Doris Samuel Botchway is to provide non-executive directors Iliasu Afadzinu Martey Dzeha Directors declare their professional and Head, Business with the opportunity to test thoughts Head, Legal/Company Head, Marketing and Head, Information Head, Operations Secretary Communications Technology Development business interests to the Board before among peers. The Chairman, as the assumption of office and this declaration Codes and regulations primary link between the Board and is reviewed quarterly at each Board executive management, provides Compliance with applicable legislation, meeting. feedback from the closed sessions to regulations, standards and codes the Chief Executive. A Director with an interest in any matter remains an essential characteristic of being considered by the Board would the Bank’s culture. The Board of Directors have unrestricted access to declare the interest to the Board and Directors (Board) monitors compliance management and company information, then recuse himself from the discussions with these by means of management as well as resources required to carry of the Board on that matter. reports. Information on the outcomes of out their responsibilities, including any significant interaction with key external legal advice, at the Bank’s stakeholders, such as the Bank’s expense. regulators, is also provided to the Board. Board composition Benjamin Samuel Akosua Timothy Alhassan The Bank complies with all applicable Ahulu Teye Yelbert The Board is constituted in accordance Skills, knowledge, experience and Mugodi Farihan legislation, regulations, standards and Head, Internal Audit Head, Human Capital Head, Compliance and with the Regulations of the Bank. attributes of directors Acting Head, Corporate Acting Head, Personal codes in Ghana. Anti - Money Laundering and Investment Banking and Business Banking Currently, it is composed of five The Board possesses the skills, Corporate Governance Directives, 2018 independent non-executive directors, two non-executive directors and one knowledge and experience necessary to The Board certifies that the Bank is executive director. fulfil their obligations. The Directors largely compliant with the Corporate bring a balanced mix of attributes to the Governance Directives (CGD), 2018 Mrs. Sarah-Mary Frimpong, Mrs. Esi board, including: issued by Bank of Ghana which came Tawia Addo-Ashong and Mr. Myles John • international and domestic work into effect in March 2019. The corporate Denniss Ruck were appointed as non- experience governance processes of the Bank are executive directors of the Bank in November 2020. effective and meet its purposes. • management experience Mr. Kwamina Asomaning was appointed Messrs Ernst and Young Ghana (EY) • knowledge and understanding of Chief Executive on December 1, 2020 undertook a formal and rigorous both macroeconomic and following the retirement of Mr. Alhassan evaluation of the performance of the microeconomic factors affecting the Andani on November 30, 2020. Board for the years 2019 and 2020. The bank and Bank’s compliance with CGD was also Nana Benneh and Mr. Kodwo Mills independently assessed. The report will • financial, legal, entrepreneurial and resigned as directors in October 2020 be shared with Bank of Ghana. banking skills. and December 2020, respectively. The EY report confirmed that the Board No director has shares in the Bank. generally conformed with the provisions of CGD. ENSURING OUR SUSTAINABILITY Corporate governance report STANBIC BANK GHANA 19 Annual report 2020 20

Corporate governance report Corporate governance report

Board responsibilities Director Mar. Jun. Aug. Nov Board, through its nominations Audit Committee, the Board annually remain scarce. committee ensures that as directors considers and assesses the going The key mandate of the Board, which E. Aryeetey √ √ √ √ Credit & Risk Committee retire, candidates with the necessary concern basis for the preparation of The Group’s Board of Directors sets the forms the basis for its responsibilities, is (Chairman) skills and experience have been financial statements at the year end. At principles for the remuneration The Board Credit and Risk Committee is to ensure that the Bank is a sustainable identified to ensure that the board’s the interim reporting period, a similar philosophy in line with approved 1A. Andani √ √ √ √ composed of non-executive directors. organisation capable of fulfilling its competencies and balance are process is followed to enable the Board business strategy and objectives. The Its mandate is, inter alia, to ensure that stated objectives. ²Nana D. Benneh √ √ √ - maintained and enhanced. to consider whether or not there is philosophy aims to maintain an effective credit governance is in place sufficient reason for this conclusion to appropriate balance between employee for the adequate management, K.K. Asomaning √ √ √ √ In addition to managing non-executive be affirmed. and shareholder interests. This measurement, monitoring and control director succession, the Board remuneration philosophy is approved Strategy 3K.S.A. Mills √ √ √ √ of credit risk and to oversee considers the talent management of the by the Bank’s Board and aligned with management’s activities in managing Setting the Bank’s strategy is the A.R. Mohinani √ √ √ √ Bank’s leadership team. The Board is the Bank’s practices. the other risk types encountered by the Sustainability responsibility of the Board. This is satisfied with the depth of talent in the Ms. E. Akofio-Sowah √ √ √ √ Bank. At each Board meeting, the A key success factor for the Bank is its considered and approved by the Board Bank’s senior leadership. The Standard Bank Group’s annual Committee provides a report. ability to attract, retain and motivate the at a meeting dedicated for that purpose. O.O. Sanni √ √ √ √ sustainability report provides a comprehensive and detailed analysis of talent it requires to achieve its strategic and operational objectives. Once the financial and governance *Mrs. S. Frimpong - - - √ Management Committees the issues material to the Group’s objectives for the following year have Information Technology Committee sustainability and its stakeholders. been agreed, the Board monitors *Mrs. E.T. Addo-Ashong - - - √ Executive Committee performance on an ongoing basis. The Board Information Technology The Standard Bank Group sustainability Remuneration governance Performance against financial *M.J.D. Ruck - - - √ Committee is composed of independent The Chief Executive chairs the Executive report can be accessed on www. objectives is monitored by way of non-executive directors and the Chief Committee (“Exco”) of which standardbank.com/sustainability. The remuneration of Board members is quarterly management reports and Executive. The committee was Departmental Heads are members. Its reviewed by the Bank Remuneration ¹ Retired/resigned November 30, 2020 presentations at Board meetings. established to assist the Board in main function is to assist the Chief Committee (“remco”) and approved by Executive with the general executive ² Resigned October 19, 2020 fulfilling its corporate governance Ethics and organisational integrity shareholders. The remuneration of responsibilities with respect to IT and to control of the Bank within the limits laid executive management is reviewed and, ³ Resigned December 31, 2020 down by the Board of the Bank. Board effectiveness and evaluation provide oversight on the IT strategy. The Standard Bank Group’s revised in some instances, approved by remco, * Appointed November 26, 2020 The Committee also has oversight code of ethics is designed to empower and the Board. The Board and its Committees conduct √ Attendance responsibility of information and employees and enable faster decision annual self-evaluations to assess cybersecurity risks and provides a Assets and Liabilities Committee making at all levels of our business The following key factors have informed themselves against their objectives. - Not Applicable quarterly report to Board meetings. according to defined ethical principles. the implementation of reward policies Once every other year, an independent The Assets and Liabilities Committee is It also aims to ensure that, as a and procedures that support the external evaluation is undertaken. The also chaired by the Chief Executive and significant organisation in the financial achievement of business goals: comprises some members of executive aim of the evaluation is to assist the Board Committees Board Nominations Committee services industry, we adhere to the • the provision of rewards that enable Board in improving its effectiveness. management. Its purpose is to highest standards of responsible the attraction, retention and motivation The outcome of the evaluation is The role played by Board Committees is The Board Nominations Committee is recommend policies and guidelines to business practice. discussed at a board meeting and any key in facilitating the discharge of the composed of non-executive directors the Board for the management of of employees and the development of areas of concern are addressed. Board’s responsibilities. and the Chief Executive. Its mandate is, Balance Sheet growth; deposits, The code interprets and defines a high-performance culture inter alia, to maintain and oversee advances and investments; foreign Standard Bank’s values in greater detail Relevant action points are also noted • maintaining competitive remuneration Board Committees are established to nomination and re-election policies for exchange activities and positions; and and provides values-based decision- for implementation. in line with our markets, trends and assist the Board in discharging its directors, which will attract and retain risks associated with exchange rates making principles to guide our conduct. required statutory obligations The performance of the Chairman, the responsibilities. The Committees have the highest quality of directors. The and liquidity. It is aligned with other Standard Bank Board approved mandates that are Chief Executive and the Company Committee provides a report to the policies and procedures and supports • rewarding people according to their reviewed at least, annually. These Secretary are assessed annually. Board after each meeting. the relevant industry regulations and contribution mandates set out their roles, Company Secretary laws of the countries in which the Group responsibilities, scope of authority, operates. • allowing a reasonable degree of It is the duty of the Company Secretary Board meetings and attendance composition and procedures for flexibility in remuneration processes Board Remunerations Committee to ensure that the Board remains reporting to the Board. Details of these The code of ethics is supported by the and choice of benefits by employees Meetings of the Board are held once a committees are provided below: cognisant of its duties and appropriate organisational structure The Board Remunerations Committee quarter with additional meetings to responsibilities. The Board is satisfied namely an ethics advice process and an • moving to a cost-to-company is composed of independent non- consider the Bank’s strategy and to that an arm’s length relationship exists ethics reporting process. remuneration structure executive directors. Its mandate is, inter shape the budget. The Board is provided between it and the Company Secretary, Audit Committee alia, to assist the Board discharge its with comprehensive documentation at who is not a member of the Board. In • educating employees on the full responsibilities to ensure that directors least four days prior to each of the addition to providing the Board with Remuneration employee value proposition. The Board Audit Committee comprises and executives are fairly, responsibly scheduled meetings. of non-executive directors. It has a guidance on its responsibilities, the and appropriately remunerated. The Remuneration philosophy mandate to assist the Board discharge Company Secretary keeps the Board In 2020, attendance by Directors at the Committee provides a report to the its responsibilities to safeguard the abreast with relevant changes in meetings of the Board was as follows: Board after each meeting. The Standard Bank Group’s Bank’s assets; maintain adequate legislation and governance best remuneration philosophy aligns with its Remuneration structure accounting records; develop and practices. All Directors have unfettered access to the services of the Company core values, including growing our maintain effective systems of internal people and delivering value to our Non-executive directors Succession planning Secretary. control and monitor the Banks shareholders. The philosophy continues Terms of service compliance with applicable regulations to emphasise the fundamental value of and legislation. The Committee provides The careful management of the board All non-executive directors are provided Going concern our people and their role in ensuring a report to the Board at each meeting of succession process is vital to the with a letter of appointment setting out effective functioning of the Board. The sustainable growth. This approach is the Board. On the recommendation of the Board crucial in an environment where skills the terms of their engagement. ENSURING OUR SUSTAINABILITY Corporate governance report Directors and Advisors ENSURINGSTANBIC OUR SUSTAINABILITY BANK GHANA 21 Annual report 2020 22

Corporate governance report Directors and Advisors

Non-executive directors are appointed Management General staff Directors and Advisors for a 3-year tenure which is renewable Terms of service Terms of service for a maximum of three times. Board of Directors E. Aryeetey (Chairman) The terms and conditions of Most general staff are unionised. Their K. K. Asomaning (Appointed Chief Executive 1 December 2020) In terms of the Bank’s Regulations, non- employment of managers are guided by terms and conditions of employment executive directors are required to the legislation in Ghana and are aligned are therefore guided by the respective A. Andani (Chief Executive/ Retired 30 November 2020) retire at age 70. At the end of a 3-year to the Standard Bank Group practice. collective agreement. A.R. Mohinani tenure, a non-executive director is required to retire at the next annual Ms. E. Akofio-Sowah Fixed remuneration Fixed remuneration general meeting and may offer O. O. Sanni themselves for re-election. If Remuneration of all staff is based on a recommended by the directors and Managerial remuneration is based on a Mrs. E.T. Addo-Ashong (Appointed 26 November 2020) total cost-to-company structure. Cost- basic salary plus benefits, which supported by the Board, the Board then generally includes medical aid, Mrs. S. Frimpong (Appointed 26 November 2020) proposes their re-election to to-company comprises a fixed cash portion, compulsory benefits (medical retirement fund membership, housing M.J.D. Ruck (Appointed 26 November 2020) shareholders. benefits and a travel allowance for aid and retirement contribution) and K.S.A Mills (Retired 31 December 2020) select levels. There is a maximum tenor of nine (9) optional benefits. Market data is used to benchmark salary levels and benefits. N.D.Benneh (Resigned 19 October 2020) years for the appointment of non- Generally, salary increases are Salaries are normally reviewed annually executive directors. negotiated on an annual basis, usually in March. For all employees, effective in March. Salary increases are performance-related payments have based on similar factors as those formed an increasing proportion of total Secretary Mrs Doreen Iliasu Fees considered when reviewing managerial remuneration over time to achieve Stanbic Bank Ghana Limited staff increases. Non-executive directors receive fixed business objectives and reward Stanbic Heights fees for service on Boards and Board individual contribution. 215 South Liberation Link committees. This includes a retainer Bank snapshot Airport City that has been calculated in line with All employees (executives, managers Accra and general staff) are rated on the basis market practices. There are no 2020 2019 of performance and potential and this is contractual arrangements for used to influence actual performance- Branches 40 40 compensation for loss of office. Non- Auditor PricewaterhouseCoopers executive directors do not receive related remuneration. Rating and the ATMs 131 123 Chartered Accountants short-term incentives, nor do they consequent pay decision is done on an Headcount 831 827 PwC Tower participate in any long-term incentive individual basis. There is therefore a link CSI spend (GHS’000) 3,292 2,170 A4 Rangoon Lane schemes. between rating, measuring individual performance and reward. Cantonments City The following amount represents the PMB CT 42, Cantonments total remuneration paid to executive Short-term incentives Highlights of awards and Accra and non-executive directors for the year achievements in 2020: under review: Executives and managers participate in a performance bonus scheme. Individual 1. CIMG Awards- Bank of the Year Total amount paid GHS (‘000) awards are based on a combination of Registered Office Stanbic Heights business unit performance, job level 2. EMEA Finance Magazine Awards: 215 South Liberation Link Directors and individual performance. In keeping (executive and non-executive) 16,098 • Best local Investment Bank Airport City with the remuneration philosophy, the • Best Bond House Accra bonus scheme seeks to attract and Chief Executive retain high-performing managers. 3. Institute of Public Relations: The Chief Executive receives a Long-term incentives • PR Institute of the Year (Financial remuneration package and qualifies for Sector) long-term incentives on the same basis It is essential for the Bank to retain key • Best in Technology as other employees. The components of skills over the longer term. This is done his package are as follows: particularly through share-based incentive plans. The purpose of these is 4. Citibank – Straight Through • guaranteed remuneration – based on to align the interests of The Standard Processing (STP) Excellent award. his market value and the role that he Bank Group, its subsidiaries and plays; employees, as well as to attract and retain skilled, competent people. Material issues facing the bank • annual bonus and pension incentive – used to incentivise the There were no material deficiencies in achievement of bank’s objectives; the Bank in the course of the year. and

• pension – provides a competitive post-retirement benefit in line with bank’s employees. ENSURING OUR SUSTAINABILITY Report of the Directors IndependentSTANBIC Auditor’sBANK GHANA Report 23 Annual report 2020 24

Report of the Directors Independent Auditor’s Report Report of the Directors The directors submit herewith their report and the audited annual financial statements for the year ended 31 December 2020.

Statement of Directors’ Responsibilities To the Members of Stanbic Bank Ghana Limited The directors are responsible for the preparation of financial statements for each financial year which give a true and fair view of REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS the state of affairs of the Bank and of its profit or loss and cash flows for that year. In preparing these financial statements, the directors have selected suitable accounting policies and then applied them consistently, made judgements and estimates that Our opinion are reasonable and prudent and followed International Financial Reporting Standards and complied with relevant requirements of the Companies Act, 2019 (Act 992) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). In our opinion, the accompanying financial statements give a true and fair view of the financial position of Stanbic Bank Ghana Limited (the “Bank”) as at 31 December 2020, and of its financial performance and its cash flows for the year then ended in The directors are ultimately responsible for the internal controls of the Bank. Management enables the directors to meet these accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 2019 (Act 992) responsibilities. Standards and systems of internal controls are designed, implemented and monitored by management to and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). provide reasonable assurance of the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain accountability for shareholder investments and Bank’s assets. Systems and controls include the proper delegation of What we have audited responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties. It is the We have audited the financial statements of Stanbic Bank Ghana Limited for the year ended 31 December 2020. responsibility of the independent auditors to report on the fair presentation of the financial statements.

Based on the information and explanations provided by management and the Bank’s internal auditors, the directors are of the The financial statements comprise: opinion that the internal financial controls are adequate and that the financial records may be relied upon for preparing the financial statements in accordance with IFRS and to maintain accountability for the Bank’s assets and liabilities. Nothing has • the statement of financial position as at 31 December 2020; come to the attention of the directors to indicate that a breakdown in the functioning of these controls, resulting in material loss • Income statement for the year then ended; to the Bank, has occurred during the year and up to the date of this report. • the statement of other comprehensive income for the year then ended; The directors have a reasonable expectation that the Bank will have adequate resources to continue in operational existence and • the statement of changes in equity for the year then ended; as a going concern in the financial year ahead. • the statement of cash flows for the year then ended; and • the notes to the financial statements, which include a summary of significant accounting policies. Principal Activities The principal activities of the Bank are Corporate and Investment Banking, Personal and Business Banking, and Wealth and Investment Banking. Basis for Opinion Holding Company The Bank is a subsidiary of Stanbic Africa Holdings Limited, a company incorporated in the United Kingdom, which holds 99.54% We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those (2019: 99.54%) of the issued shares of the Bank. The ultimate holding company is Standard Bank Group Limited, a company standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. registered in South Africa. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Subsidiary The Bank disposed its subsidiary, SBG Securities Ghana Limited to Stanbic Holdings Ghana Limited on 14 October 2020. Independence

Results for the Year We are independent of the Bank in accordance with the International Code of Ethics for Professional Accountants (including The statement of financial position, income statement, statement of other comprehensive income and statement of cash flows International Independence Standards) (the Code) issued by the International Ethics Standards Board for Accountants and the independence requirements of section 143 of the Companies Act, 2019 (Act 992) that are relevant to our audit of the financial that are contained in this report reflect the results and the state of affairs of the Bank as at 31 December 2020. statements. We have fulfilled our other ethical responsibilities in accordance with the Code. Dividend The directors recommend the payment of dividend of GHS0.588 per share for ordinary shares amounting to GHS130,422,000. Key audit matters Auditor The directors recommend that PricewaterhouseCoopers, Ghana continues in office, in accordance with section 139 (5) of the Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial Companies Act, 2019 (Act 992). statements of the current period. These matters were addressed in the context of our audit of the Bank’s financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Directors Professional Development and Training Dates for ongoing training are scheduled in advance and form part of the board approved annual calendar. Directors are kept abreast of applicable legislation and regulation, changes to rules, standards and codes, as well as relevant sector developments that could affect the Bank and its operations. New Directors on appointment to the Board are provided with a full, formal and Key audit matter How our audit addressed the key audit matter tailor-made programme of induction to familiarise them with the Bank’s businesses, the risks and strategic challenges the Bank faces, as well as the economic, competitive, legal and regulatory environment in which the Bank operates. Impairment allowance on loans and advances – GHS191.98 million Corporate Social Initiatives Corporate Social Initiative spend for the year was GHS3.29 million (2019: GHS2.17 million). Gross loans and advances as at 31 December 2020 We obtained an understanding of controls over the loans Auditors Remuneration amount to GHS4.57 billion out of which an impairment origination, monitoring and provisioning process and tested relevant controls. External auditors’ remuneration for the year was GHS0.76 million (2019: GHS 0.68 million). allowance of GHS191.98 million was recorded.

Directors We tested the appropriateness of management’s assumptions The names of persons who were directors of the Bank at any time during the year are disclosed on page 21. including challenging management’s determination of: The 2020 annual financial statements and specified sections of the risk and capital management report were approved by the board of directors on 4 March 2021 and signed on its behalf by:

Ernest Aryeetey Kwamina Asomaning Chairman Chief Executive 4 March 2021 4 March 2021 STANBIC BANK GHANA Independent Auditor’s Report 25 Annual report 2020 26

conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to Independent Auditor’s Report continued report in this regard. When we read Our Values and Review of Performance, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

The impairment allowance has been determined on the - significant increase in credit risk, basis of the Expected Credit Loss (ECL) taking into - default, account forward looking information reflecting - probability of default, management’s view of potential future economic - exposure at default, and Responsibilities of the directors for the financial statements environment. The model used to determine ECL and - loss given default inputs used may not be fully observable because it The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with involves management’s independent judgement. We assessed management’s judgement on portfolio segmentation International Financial Reporting Standards and in the manner required by the Companies Act, 2019 (Act 992) and the Banks Management is guided by the IFRS 9 – financial to ensure that portfolio with similar risk characteristics were and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), and for such internal control as the directors determine is instruments methodology as well as the policies and grouped together in the ECL model; procedures in place by the Bank and the regulator, Bank necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or of Ghana. We tested the appropriateness of the staging in the ECL model by error. independently determining the staging of selected loans based on ECL is calculated on a portfolio basis for Personal and In preparing the financial statements, the directors are responsible for assessing the Bank’s ability to continue as a going customer’s repayment history, compliance to loan covenants and Business Banking (PBB) loans and on an individual basis concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the other qualitative factors. for Corporate and Investment Banking (CIB) loans. directors either intend to liquidate the Bank or to cease operations, or have no realistic alternative but to do so. We assessed the reasonableness of forward looking information We have focused on the determination of the following The directors are responsible for overseeing the Bank’s financial reporting process. significant judgements and estimates which could give used in the impairment calculations by challenging the multiple rise to material misstatement or management bias: economic scenarios used and the weighting applied. - Significant increase in credit risk (SICR) focusing on We assessed the completeness and accuracy of data used in the both the qualitative and quantitative criteria used by ECL models including collaterals. Auditor’s responsibilities for the audit of the financial statements the Bank. We recomputed the ECL model calculations to confirm the inputs Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material - Definition of default and credit impaired assets focusing and risk parameter outputs. on both the qualitative and quantitative criteria used by misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is the Bank. We tested the appropriateness of disclosures set out in the a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material financial statements. misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the - Probability of Default: estimate of the likelihood that aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial borrowers will be unable to meet their debt obligations statements. over a particular time horizon. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout - Exposure at default: amount expected to be owed the the audit. We also: bank at the time of default. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and - Loss given default: percentage exposure at risk that is perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a not expected to be recovered in an event of default. basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting - Forward looking economic information and scenarios from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,or the override of internal control; used in the models. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in The accounting policies, critical estimates and reflated the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control; judgements used in the calculation of ECL are set out in; • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related - Accounting policy elections 4.3 disclosures made by the directors; - Notes 5 and 22.6 • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, Other Information future events or conditions may cause the Bank to cease to continue as a going concern; and

The directors are responsible for the other information. The other information comprises, Chairman’s Statement, Chief • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether Executive’s Report, Financial Review, Corporate Governance Report, Directors and Advisors, Report of the Directors, Value the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Added Statement but does not include the financial statements and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and Our Values and Review of Performance which are expected to be made available to us after that We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant date. audit findings, including any significant deficiencies in internal control that we identify during our audit.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, assurance conclusion thereon. and have communicated with them all relationships and other matters that may reasonably be thought to bear on our In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, independence, and where applicable, actions taken to eliminate threats or safeguards applied. in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge From the matters communicated with the directors, we determine those matters that were of most significance in the audit of obtained in the audit, or otherwise appears to be materially misstated. the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we STANBIC BANK GHANA Independent Auditor’s Report Statement of financial position ANNUAL FINANCIAL STATEMENTS 27 Annual report 2020 28

determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Statement of financial position atSTANBIC 31 December BANK GHANA 2020 LIMITED Statement of financial position Report on Other Legal and Regulatory Requirements at 31 December 2020

The Companies Act, 2019 (Act 992) requires that in carrying out our audit we consider and report on the following matters. We confirm that: 2020 2019 Note GHS'000 GHS'000 i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the Assets purposes of our audit; Cash and cash equivalents 2 4,024,397 2,927,680 Non-pledged trading assets 3.6 1,033,482 642,833 ii ) in our opinion proper books of account have been kept by the Bank, so far as appears from our examination of those books; Investment securities 4 2,419,358 668,394 and Loans and advances to customers 5 4,373,529 3,946,591 iii) the Bank’s statement of financial position and Bank’s statement of comprehensive income are in agreement with the books Current tax assets 6 44,426 19,849 of account. Deferred tax assets 15 21,696 - Other assets 7 499,326 780,447 In accordance with section 85(2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) we hereby Investment in subsidiary 8 - 2,500 confirm that: Intangible assets 9 70,055 78,112 Property, equipment and right-of-use assets 10 255,863 229,276 i) the accounts give a true and fair view of the state of affairs of the Bank and the results of operations for the period under review; Total assets 12,742,132 9,295,682 ii) we were able to obtain all the information and explanations required for the efficient performance of our duties as auditor;

iii) the Bank’s transactions were within its powers; and Equity 1,680,044 1,356,202 iv) the Bank has, in all material respects, complied with the provisions of this Act. Stated capital 11 414,213 414,213 With respect to the provisions of the Anti-Money Laundering Act, 2008 (Act 749) (as amended), the Anti-Terrorism Act, 2008, (Act 762) and the Regulations made under these enactments, we did not identify any instances of non-compliance based on Reserves 1,265,831 941,989 procedures we performed. Retained earnings 719,505 479,565 Statutory reserve 12.1 469,533 388,019 Statutory credit risk reserve 12.2 76,120 73,732 Other reserve 12.3 673 673 The engagement partner on the audit resulting in this independent auditor’s report is Michael Asiedu-Antwi (ICAG/P/1138).

Liabilities 11,062,088 7,939,480 Trading liabilities 13 128,483 102,539 Deposits and current accounts 14 10,061,392 7,284,454 PricewaterhouseCoopers (ICAG/F/2021/028) Deposits from banks 14.1 394,427 529,142 Chartered Accountants Deposits from customers 14.2 9,666,965 6,755,312 Accra, Ghana Deferred tax liabilities 15 - 2,226 Provisions and other liabilities 16 785,368 466,705 24 March 2021 Subordinated debt 17 86,845 83,556

Total equity and liabilities 12,742,132 9,295,682

The financial statements were approved by the Board of Directors on 4 March 2021 and signed on its behalf by:

The financial statements were approved by the Board of Directors on 4 March 2021 and signed on its behalf by:

Board Chairman: Ernest Aryeetey Ernest Aryeetey Kwamina Asomaning Board Chairman Chief Executive

Chief Executive: Kwamina Asomaning

The accompanying accounting policies and notes from page 33 to 124 form an integral part of these financial statements

The accompanying accounting policies and notes from page 33 to 124 form an integral part of these financial statements. ANNUAL FINANCIAL STATEMENTS Income Statement Statement of other comprehensive income ANNUAL FINANCIALSTANBIC STATEMENTS BANK GHANA 29 Annual report 2020 30

Income Statement Statement of other comprehensive income forSTANBIC the year BANK ended GHANA 31 December LIMITED 2020 forSTANBIC the year BANK ended GHANA 31 December LIMITED 2020

Income statement Statement of other comprehensive income for the year ended 31 December 2020 for the year ended 31 December 2020

2020 2019 2020 2019 Note GHS'000 GHS'000 Note GHS'000 GHS'000

Net interest income 620,870 531,884 Profit for the year 326,055 281,297 Interest income 22.1 813,313 680,796 Interest expense 22.2 (192,443) (148,912) Other comprehensive income Non-interest revenue 462,971 443,035 Net fee and commission revenue 22.3 212,425 220,756 Items that may not be reclassified subsequently to profit or loss: Fee and commission revenue 22.3 256,562 255,585 (1,692) (385) Fee and commission expense 22.3 (44,137) (34,829) Defined benefit fund remeasurements 27. 1 (1,692) (385) Trading revenue 22.4 250,452 222,218 Other gains 22.5 94 61 Total comprehensive income for the year 324,363 280,912 Total income 1,083,841 974,919 Credit impairment charges 22.6 (58,387) (53,792) Income after credit impairment charges 1,025,454 921,127 The accompanying accounting policies and notes from page 35 to 118 form an integral part of these financial statements Operating expenses (571,112) (509,603) The accompanying accounting policies and notes from page 33 to 124 form an integral part of these financial statements. Staff costs 22.7 (308,200) (269,458) Depreciation and amortisation 22.9 (75,776) (75,679) Other operating expenses 22.8 (187,136) (164,466)

Net income before indirect tax 454,342 411,524 Indirect tax 23.1 (11,170) (15,609) Net income after indirect tax 443,172 395,915 Direct tax 23.2 (117,117) (114,618)

Profit from continued operations 326,055 281,297

Profit from disposal of subsidiary 8 (b) - - Profit for the year 326,055 281,297 Basic earnings per ordinary share (Ghana pesewas) 24 147 127

The accompanying accounting policies and notes from page 35 to 118 form an integral part of these financial statements

The accompanying accounting policies and notes from page 33 to 124 form an integral part of these financial statements.

32 ANNUAL FINANCIAL STATEMENTS Statement of changes in equity STANBIC BANK GHANA 31 Annual report 2020 32

STANBICSTANBICSTANBICSTANBICSTANBIC BANK BANK BANK BANK BANK GHANA GHANA GHANA GHANA GHANA LIMITED LIMITED LIMITED LIMITED LIMITED Statement of changes in equity forStatementStatement StatementtheStatement yearStatement ended of of of changes 31 changesof changes December ofchanges changes in in 2020 inequity equity inequity inequity equity forforfor the forthe thefor year theyear yearthe year ended endedyear ended ended ended 31 31 31 December December31 December 31 December December 2020 2020 2020 2020 2020

Stated Stated Stated Stated Stated Statutory Statutory Statutory Statutory Statutory StatutoryStatutory StatutoryStatutoryStatutory Retained Retained Retained Retained Retained Share-based Share-based Share-based Share-based Share-based Ordinary Ordinary Ordinary Ordinary Ordinary capitalcapitalcapitalcapitalcapital credit creditcredit credit risk creditrisk risk risk risk reservereservereservereservereserveearningsearningsearningsearningsearnings paymentpaymentpaymentpaymentpayment shareholders'shareholders' shareholders'shareholders'shareholders' reservereservereservereservereserve reservereservereservereservereserve equityequityequityequity equity

GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000GHS’000 GHS’000GHS’000GHS’000GHS’000GHS’000 GHS’000GHS’000GHS’000GHS’000GHS’000

BalanceBalanceBalanceBalanceBalance at at at1 1 Januaryat 1January Januaryat1 January1 January 2019 2019 2019 2019 2019 414,213 414,213 414,213 414,213 414,213 119,761 119,761 119,761 119,761 119,761 317,695 317,695 317,695 317,695 317,695 222,948 222,948 222,948 222,948 222,948 673 673 673 673 673 1,075,290 1,075,290 1,075,290 1,075,290 1,075,290 TotalTotalTotalTotal comprehensive comprehensiveTotal comprehensive comprehensive comprehensive income income income income income for for for the thefor the foryear theyear year the year year ------280,912280,912280,912280,912280,912 - - - - - 280,912 280,912 280,912 280,912 280,912 ProfitProfitProfitProfit for forProfit for the thefor the foryear theyear year the year year ------281,297281,297281,297281,297281,297 - - - - - 281,297 281,297 281,297 281,297 281,297 OtherOtherOtherOther comprehensive Othercomprehensive comprehensive comprehensive comprehensive income/(loss) income/(loss) income/(loss) income/(loss) income/(loss) for for for the thefor the foryear theyear year the year year ------(385) (385) (385) (385) (385) - - - - - (385) (385) (385) (385) (385) TransferTransferTransferTransferTransfer to to tostatutory statutory tostatutory tostatutory statutory credit credit credit credit risk riskcredit risk reserve riskreserve reserverisk reserve reserve (Note (Note (Note (Note 12.2) 12.2)(Note 12.2) 12.2) 12.2) - - - - - (46,029) (46,029) (46,029) (46,029) (46,029) - - - - - 46,029 46,029 46,029 46,029 46,029 ------TransferTransferTransferTransferTransfer to to tostatutory statutory tostatutory tostatutory statutory reserve reserve reserve reserve reserve (Note (Note (Note (Note 12.1) 12.1)(Note 12.1) 12.1) 12.1) ------70,324 70,324 70,324 70,324 70,324 (70,324) (70,324) (70,324) (70,324) (70,324) ------

BalanceBalanceBalanceBalanceBalance at at at31 31 at31 December Decemberat31 December 31 December December 2019 2019 2019 2019 2019 414,213414,213414,213414,213414,213 73,73273,73273,73273,73273,732388,019388,019388,019388,019388,019479,565479,565479,565479,565479,565 673673673673 673 1,356,202 1,356,202 1,356,202 1,356,202 1,356,202

BalanceBalanceBalanceBalanceBalance at at at1 1 atJanuary 1January Januaryat1 January1 January 2020 2020 2020 2020 2020 414,213414,213414,213414,213414,213 73,732 73,732 73,732 73,732 73,732 388,019388,019388,019388,019388,019479,565479,565479,565479,565479,565 673673673673673 1,356,2021,356,2021,356,2021,356,2021,356,202 TotalTotalTotalTotal comprehensive comprehensiveTotal comprehensive comprehensive comprehensive income income income income income for for for the thefor the for year theyear year the year year ------324324324 363324 363 363324 363 363 - - - - - 324,363 324,363 324,363 324,363 324,363 ProfitProfitProfitProfit for forProfit for the thefor the foryear theyear year the year year ------326,055 326,055 326,055 326,055 326,055 - - - - - 326,055 326,055 326,055 326,055 326,055 OtherOtherOtherOther comprehensive Othercomprehensive comprehensive comprehensive comprehensive income/(loss) income/(loss) income/(loss) income/(loss) income/(loss) for for for the thefor the foryear theyear year the year year ------(1,692) (1,692) (1,692) (1,692) (1,692) - - - - - (1,692) (1,692) (1,692) (1,692) (1,692)

TransferTransferTransferTransferTransfer from from from from statutory statutory fromstatutory statutory statutory credit credit credit credit risk riskcredit risk reserve riskreserve reserverisk reserve reserve (Note (Note (Note (Note 12.2) 12.2)(Note 12.2) 12.2) 12.2) - - - - - 2,388 2,388 2,388 2,388 2,388 - - - - - (2,388) (2,388) (2,388) (2,388) (2,388) ------TransferTransferTransferTransferTransfer to to tostatutory statutory tostatutory tostatutory statutory reserve reserve reserve reserve reserve (Note (Note (Note (Note 12.1) 12.1)(Note 12.1) 12.1) 12.1) ------81,514 81,514 81,514 81,514 81,514 (81,514) (81,514) (81,514) (81,514) (81,514) ------

TransactionsTransactionsTransactionsTransactionsTransactions with with with with shareholders, shareholders, withshareholders, shareholders, shareholders, recorded recorded recorded recorded recorded directly directly directly directly directly in in inequity equity inequity inequity equity ------(521) (521) (521) (521) (521) - - - - - (521) (521) (521) (521) (521) DisposalDisposalDisposalDisposalDisposal of of ofa a commonof acommon commonofa commona common control control control control controlentity entity entity entity (note (noteentity (note (note 8 8(note (a)) 8(a)) (a))8 (a))8 (a)) ------(521) (521) (521) (521) (521) - - - - - (521) (521) (521) (521) (521)

BalanceBalanceBalanceBalanceBalance at at at31 31 at31 December Decemberat31 December 31 December December 2020 2020 2020 2020 2020 414,213414,213414,213414,213414,213 76,12076,12076,12076,12076,120469,533469,533469,533469,533469,533719,505719,505719,505719,505719,505 673673673673673 1,680,0441,680,0441,680,0441,680,0441,680,044

The accompanying accounting policies and notes from page 33 to 124 form an integral part of these financial statements. TheTheThe Theaccompanying accompanying accompanyingThe accompanying accompanying accounting accounting accounting accounting accounting policies policies policies policies policies and and and notesand notes notesand notes from fromnotes from from page page frompage page 33 33page 33 to to33 to124 12433 to124 formto124 form form124 form an an forman intergral intergralan intergral an intergral intergral part part part partof of ofpartthese these ofthese ofthese financial financialthese financial financial financial statements statements statements statements statements ANNUAL FINANCIAL STATEMENTS Statement of cash flows Accounting policy elections ANNUAL FINANCIALSTANBIC STATEMENTS BANK GHANA 33 Annual report 2020 34

StatementSTANBIC BANK GHANA LIMITED of cash flows Accounting policy elections Statement of cash flows STANBIC BANK GHANA LIMITED forfor thethe year year ended ended 31 December 31 December 2020 2020 Accounting policy elections

The principal accounting policies applied in the presentation of the annual financial statements are set out below. 2020 2019 Note GHS'000 GHS'000 1 Reporting entity Net cash flows from operating activities 1,282,169 1,482,106 Stanbic Bank Ghana Limited (the Bank) is a financial services provider engaged in Corporate and Investment Banking, Personal and Business Banking, and Wealth services. Profit before direct taxation 443,172 395,915 Adjusted for: (485,056) (399,476) The Bank is a limited liability company incorporated and domiciled in Ghana. The address of its registered office is Stanbic Heights, Plot Credit impairment charges on loans and advances 22.6 58,387 53,792 No 215, South Liberation Link, Airport City, Accra, Ghana. Depreciation of property, equipment and right-of-use assets 22.9 67,719 67,888 Amortisation of intangible asset 22.9 8,057 7,791 2 Basis of preparation Interest expense 22.2 192,443 148,912 Interest income 22.1 (813,313) (680,796) (a) Statement of compliance Fair value adjustment on financial instrument 1,745 2,991 Profit on sale of property and equipment 10.2 (94) (54) The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), its interpretations adopted by the International Accounting Standards Board (IASB), and in the manner required by the Companies Act, 2019 (Act 992), the Increase in income-earning assets 25.1 (2,290,240) (1,869,015) Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). Explanatory notes are included to explain events and Increase in deposits and other liabilities 25.2 3,189,300 2,925,653 transactions that are significant to an understanding of the changes in financial position and performance of the Bank since the last Interest paid (186,575) (144,291) annual financial statements. Interest received 777,184 650,979 Direct tax paid 6.1 (165,616) (77,659) The annual financial statements for the year ended 31 December 2020 was approved by the Board of Directors on 4 March 2021.

(b) Basis of measurement Net cash flows used in investing activities (44,146) (44,870) These financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: Capital expenditure on property and equipment 10.1 (46,231) (32,608) • derivative financial instruments are measured at fair value Capital expenditure on intangible assets 9.1 - (12,322) Proceeds from sale of property and equipment 10.2 106 60 • financial instruments at fair value through profit or loss are measured at fair value Proceeds from sale of investment in subsidiary 8 1,979 - • financial instruments are measured at fair value through other comprehensive income • liabilities for cash-settled share-based payment arrangements are measured at fair value Net cash flows used in financing activities (73,529) (118,302) • trading assets and liabilities are measured at fair value Subordinated debt redeemed 25.3 - (65,938) Principal lease repayments 16 (d) (52,364) (73,529) The bank applies accrual accounting for recognition of its income and expenses. Effects of exchange rate changes 25.4 (67,777) (98,390) (c) Going concern assumption Net increase in cash and cash equivalents 1,096,717 1,220,544 These financial statements have been prepared on the basis that the Bank will continue to operate as a going concern. Cash and cash equivalents at beginning of the year 2,927,680 1,707,136 Cash and cash equivalents at end of the year 2 4,024,397 2,927,680 (d) Functional and presentation currency These financial statements are presented in Ghana Cedis, which is the Bank's functional and presentation currency. All financial The accompanying accounting policies and notes from page 35 to 118 form an integral part of these financial statements information presented in Cedis has been rounded to the nearest thousands (GHS'000), except when otherwise stated.

The accompanying accounting policies and notes from page 33 to 124 form an integral part of these financial statements. (e) Use of estimates and judgement Refer to key management assumptions in note 1 to the financial statements.

(f) Changes in accounting policies Except as described in accounting policy 3, the bank has consistently applied the accounting policies to all years presented in these financial statements.

35 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 35 Annual report 2020 36

STANBIC BANK GHANA LIMITED Accounting policy elections continued STANBICAccounting BANK GHANA LIMITED policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

3 Adoption of new and amended standards effective for the current financial year 4 Statement of significant accounting policies Except for the changes explained in accounting policy 3, the bank has consistently applied the following accounting (a) IFRS 3 Business Combinations (amendment) policies to all periods presented in these financial statements. The amendment clarifies the definition of a business, with the objective of assisting entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition. The amendment will be applied prospectively. 4.1 Foreign currency translations Foreign currency transactions are translated into the entity’s functional currency at exchange rates prevailing at the date of the (b) IAS 1 and IAS 8 (Amendments) transactions. The IASB has made amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors which use a consistent definition of materiality throughout International Financial Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets Reporting Standards and the Conceptual Framework for Financial Reporting, clarify when information is material and and liabilities denominated in foreign currencies at period-end exchange rates, are recognised in profit or loss. incorporate some of the guidance in IAS 1 about immaterial information. Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are translated using the Early adoption of revised standards: exchange rate at the transaction date, and those measured at fair value are translated at the exchange rate at the date that the fair value was determined. Exchange rate differences on non-monetary items are accounted for based on the classification of the (c) Conceptual Framework for Financial Reporting (revised) (Conceptual Framework) underlying items.

The revised Conceptual Framework includes a comprehensive set of concepts for financial reporting, replacing the previous version of the Conceptual Framework. These concepts are used by the IASB as the framework for setting IFRS 4.2 Cash and cash equivalents standards. Cash and cash equivalents presented in the statement of cash flows consist of cash and balances with central banks, and balances with other banks . Cash and balances with central banks comprise coins and bank notes and balances with Bank of (d) IFRS 3 Business Combinations (amendments) Ghana. This standard requires an entity to refer to the Conceptual Framework for Financial Reporting in determining what constitutes an asset or a liability. The amendments update the reference from the previous version of the Conceptual Framework that existed to the version issued in March 2018 and adds an exception for some types of liabilities and contingent liabilities to refer to IAS 37 instead of the Conceptual Framework. The amendments will be applied prospectively.

(e) IAS 16 Property, Plant and Equipment (amendments) (IAS 16). Narrow-scope amendments to IAS 16 for the accounting of amounts received when selling items produced while an entity is preparing an asset for its intended use. The amendments clarify the accounting requirements in prohibiting the entity from deducting such amount from the cost of property, plant and equipment and instead recognising such sales proceeds and related cost in profit or loss. The amendments will be applied retrospectively.

(f) IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amendments) (IAS 37) Narrow-scope amendments to IAS 37 in determining which costs to include in estimating the cost of fulfilling a contract for the purposes of assessing whether that contract is onerous. The amendments clarify that the cost of fulfilling the contract includes both the incremental costs of fulfilling the contract and an allocation of costs that relate directly to fulfilling contracts. The amendments will be applied retrospectively. Adjusting prior years is not required, but rather adjusting the opening retained earnings with the cumulative effect of the amendments on transition date.

The adoption of new and amended standards on 1 January 2020 did not affect the Bank’s previously reported financial results, disclosures or accounting policies and did not impact the Bank’s results upon transition.

36

37 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 37 Annual report 2020 38

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED AccountingAccounting policy elections (continued)policy elections continued AccountingAccounting policy elections policy (continued) elections continued

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued) 4.3 Financial instruments 4.3 Financial instruments (continued) The relevant financial instruments are financial assets classified at amortised cost, fair value through OCI, fair value through P/L and other liabilities. Subsequent measurement Subsequent to initial measurement, financial assets are classified in their respective categories and measured at either amortised cost or fair value as follows:

Financial instruments Amortised cost Amortised cost using the effective interest method with interest recognised in interest income, less any impairment losses which are recognised as part of credit impairment charges.

Directly attributable transaction costs and fees received are capitalised and amortised through Financial Derivatives Financial guarantee and embedded Other interest income as part of the effective interest rate. Financial assets liabilities contracts derivatives Fair value through OCI Debt instrument: Fair value, with gains and losses recognised directly in the fair value through OCI impairment reserve. When a debt financial asset is disposed of, the cumulative fair value adjustments, previously Amortised Designated at fair Sale and recognised in OCI, are reclassified to the other gains and losses on financial instruments within non- Reclassification Cost value through repurchase profit or loss agreements interest revenue. Interest income on debt financial asset is recognised in interest income in terms of Fair value the effective interest rate method. Dividends received are recognised in interest income within profit through OCI or loss. Held for trading Offsetting Equity instrument: Fair value, with gains and losses recognised directly in the fair value through OCI reserve. When equity financial assets are disposed of, the cumulative fair value adjustments in OCI Fair value through PL are reclassified within reserves to retained income. Dividends received on equity instruments are recognised in other revenue within non-interest Amortised cost Pledged assets income. Held for trading Held for trading Fair value, with gains and losses arising from changes in fair value) (including interest and dividends) recognised in trading revenue. Designated at fair value through profit Designated at fair value Fair value gains and losses (including interest and dividends) on the financial asset are recognised in or loss through profit or loss the income statement as part of other gains and losses on financial instruments within non-interest Fair value through profit or revenue. loss default Fair value through Fair value gains and losses (including interest and dividends) on the financial asset are recognised in the income statement as part of other gains and losses on financial instruments within non-interest Recognition and initial measurement – financial instruments profit or loss – revenue. All financial instruments are measured initially at fair value plus directly attributable transaction costs and fees, except for those financial default instruments that are subsequently measured at fair value through profit or loss where such transaction costs and fees are immediately recognised in profit or loss. Financial instruments are recognised (derecognised) on the date the Bank commits to purchase (sell) the instruments (trade date accounting). Impairment Financial assets Expected credit losses (ECL) are recognised on debt financial assets classified as at either amortised cost or fair value through OCI, financial guarantee contracts that are not designated at fair value through profit or loss as well as loan commitments that are neither Amortised cost A debt instrument that meets both of the following conditions (other than those designated at measured at fair value through profit or loss nor are used to provide a loan at a below market interest rate. fair value through profit or loss): • held within a business model whose objective is to hold the debt instrument (financial asset) in order to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows The measurement basis of the ECL of a financial asset includes assessing whether there has been a significant increase in credit that are solely payments of principal and interest on the principal amount outstanding. risk (SICR) at the reporting date which includes forward-looking information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. The measurement basis of the This assessment includes determining the objective of holding the asset and whether the contractual cash flows ECL, which is set out in the table that follows, is measured as the unbiased and probability weighted amount that is determined by are consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or evaluating a range of possible outcomes, the time value of money and forward looking information. volatility that are not considered de minimis and are inconsistent with a basis lending arrangement, the financial asset is classified as fair value through profit or loss – default.

Fair value through OCI Includes: Stage 1 A 12-month ECL is calculated for financial assets which are neither credit-impaired on origination nor • A debt instrument that meets both of the following conditions (other than those designated at fair value through for which there has been a SICR. profit or loss): Stage 2 A lifetime ECL allowance is calculated for financial assets that are assessed to have displayed a –– held within a business model in which the debt instrument (financial asset) is managed to both collect SICR since origination and are not considered low credit risk. contractual cash flows and sell financial assets; and –– The contractual terms of the financial asset give rise on specified dates to cash flows that are solely Stage 3 A lifetime ECL is calculated for financial assets that are assessed to be credit impaired. The following payments of principal and interest on the principal amount outstanding. criteria are used in determining whether the financial asset is impaired: • default This assessment includes determining the objective of holding the asset and whether the contractual cash flows • significant financial difficulty of borrower and/or modification are consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are not considered de minimis and are inconsistent with a basis lending arrangement, the financial • probability of bankruptcy or financial reorganisation asset is classified as fair value through profit or loss – default. • disappearance of an active market due to financial difficulties. • Equity financial assets which are not held for trading and are irrevocably elected (on an instrument-by- instrument basis) to be presented at fair value through OCI.

Held for trading Those financial assets acquired principally for the purpose of selling in the near term, those that form 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.

Designated at fair value Financial assets are designated to be measured at fair value in the following instances: through profit or loss - to eliminate or significantly reduce an accounting mismatch that would otherwise arise - where the financial assets are managed and their performance evaluated and reported on a fair value basis - where the financial asset contains one or more embedded derivatives that significantly modify the financial asset’s cash flows.

Fair value through profit or Financial assets that are not classified into one of the above-mentioned financial asset categories. loss default 39

38 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 39 Annual report 2020 40

STANBIC BANK GHANA LIMITED AccountingSTANBIC BANK GHANA LIMITED policy elections continued Accounting policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued)

4.3 Financial instruments (continued) 4.3 Financial instruments (continued) The key components of the impairment methodology are described as follows: Financial liabilities Significant increase At each reporting date the bank assesses whether the credit risk of its exposures has increased significantly since initial recognition by considering the change in the risk of default occurring over the in credit risk (SICR) Nature expected life of the financial asset. Held for trading Those financial liabilities incurred principally for the purpose of re-purchasing in the near term, those Credit risk of exposures which are overdue for more than 30 days are also considered to have that form part of a portfolio of identified financial instruments that are managed together and for which increased significantly. there is evidence of a recent actual pattern of short-term profit taking. Low credit risk Exposures are generally considered to have a low credit risk where there is a low risk of default, the exposure has a strong capacity to meet its contractual cash flow obligations and adverse changes in Designated at fair value Financial liabilities are designated to be measured at fair value in the following instances: economic and business conditions may not necessarily reduce the exposure’s ability to fulfil its through profit or loss - to eliminate or significantly reduce an accounting mismatch that would otherwise arise contractual obligations. - where the financial liabilities are managed and their performance evaluated and reported on a fair value basis Default The bank’s definition of default has been aligned to its internal credit risk management definitions and - where the financial liability contains one or more embedded derivatives that significantly modify the approaches. A financial asset is considered to be in default when there is objective evidence of financial liability’s cash flows. impairment. The following criteria are used in determining whether there is objective evidence of At amortised cost All other financial liabilities not included the above categories. impairment for financial assets or banks of financial assets: • significant financial difficulty of borrower and/or modification (i.e. known cash flow difficulties experienced by the borrower) Subsequent measurement • a breach of contract, such as default or delinquency in interest and/or principal payments Subsequent to initial measurement, financial liabilities are classified in their respective categories and measured at either amortised • disappearance of active market due to financial difficulties cost or fair value as follows: • it becomes probable that the borrower will enter bankruptcy or other financial reorganisation Held for trading Fair value, with gains and losses arising from changes in fair value) (including interest and dividends) • where the bank, for economic or legal reasons relating to the borrower’s financial difficulty, grants the recognised in trading revenue. borrower a concession that the bank would not otherwise consider. Exposures which are overdue for more than 90 days are also considered to be in default. Designated at fair value Fair value, with gains and losses arising from changes in fair value (including interest and dividends) Forward-looking Forward looking information is incorporated into the bank’s impairment methodology calculations and through profit or loss recognised in interest expense. information in the bank’s assessment of SICR. The bank includes all forward looking information which is At amortised cost Amortised cost using the effective interest method with interest recognised in interest expense. reasonable and available without undue cost or effort. The information will typically include expected macro-economic conditions and factors that are expected to impact portfolios or individual counterparty exposures. Derecognition of financial assets and liabilities Write-off Financial assets are written off when there is no reasonable expectation of recovery. Financial Financial assets and liabilities are derecognised in the following instances: assets which are written off may still be subject to enforcement activities. Financial assets Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired, or where the Bank has transferred its contractual rights to receive cash flows on ECLs are recognised within the statement of financial position as follows: the financial asset such that it has transferred substantially all the risks and rewards of ownership of Financial assets measured Recognised as a deduction from the gross carrying amount of the asset (bank of assets). Where the the financial asset. Any interest in transferred financial assets that is created or retained by the bank at amortised cost impairment allowance exceeds the gross carrying amount of the asset (bank of assets), the excess is is recognised as a separate asset or liability. (including loan recognised as a provision within other liabilities. The bank enters into transactions whereby it transfers assets recognised in its statement of financial commitments) position, but retains either all or a portion of the risks or rewards of the transferred assets. If all or Off-balance sheet Recognised as a provision within provisions. substantially all risks and rewards are retained, then the transferred assets are not derecognised. exposures (excluding loan Transfers of assets with the retention of all or substantially all risks and rewards include securities commitments) lending and repurchase agreements. Financial assets measured Recognised in the fair value reserve within equity. The carrying value of the financial asset is at fair value through OCI recognised in the statement of financial position at fair value. In transfers where control over the asset is retained, the bank continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. Reclassification Financial liabilities Financial liabilities are derecognised when the obligation of the financial liabilities are extinguished, Reclassification of financial assets are permitted only in the following instances: that is, when the obligation is discharged, cancelled or expires. Reclassifications of debt financial assets are permitted when, and only when, the bank changes its business model for managing financial assets, in which case all affected financial assets are reclassified. Reclassifications are accounted for prospectively from the Modification of financial assets and liabilities date of reclassification as follows: Where an existing financial asset or liability is replaced by another with the same counterparty on substantially different terms, or the • Financial assets that are reclassified from amortised cost to fair value are measured at fair value at the date of reclassification with terms of an existing financial asset or liability are substantially modified, such an exchange or modification is treated as a any difference in measurement basis being recognised in other gains and losses on financial instruments derecognition of the original asset or liability and the recognition of a new asset or liability at fair value and recalculates a new • The fair value of a financial asset that is reclassified from fair value to amortised cost becomes the financial asset’s new carrying effective interest rate, with the difference in the respective carrying amounts being recognised in other gains and losses on financial value instruments within non-interest revenue. The date of recognition of a new asset is consequently considered to be the date of initial recognition for impairment calculation purposes. • Financial assets that are reclassified from amortised cost to fair value through OCI are measured at fair value at the date of reclassification with any difference in measurement basis being recognised in OCI If the terms are not substantially different for financial assets or financial liabilities, the bank recalculates the new gross carrying amount by discounting the modified cash flows of the financial asset or financial liability using the original effective interest rate. The • The fair value of a financial asset that is reclassified from fair value through OCI to amortised cost becomes the financial asset’s difference between the new carrying gross carrying amount and the original gross carrying amount is recognised as a modification new carrying value with the cumulative fair value adjustment recognised in OCI being recognised against the new carrying value gain or loss within credit impairments (for distressed financial asset modifications) or gains and losses on financial instruments • The carrying value of financial assets that are reclassified from fair value through profit or loss to fair value through OCI remains at within non-interest revenue (for all other modifications). fair value • The carrying value of financial assets that are reclassified from fair value through OCI to fair value through profit or loss remains at fair value, with the cumulative fair value adjustment in OCI being recognised in the income statement at the date of reclassification.

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40 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 41 Annual report 2020 42

AccountingSTANBIC BANK GHANA LIMITED policy elections continued STANBICAccounting BANK GHANA LIMITED policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued)

4.3 Financial instruments (continued) 4.4 Fair value

Financial guarantee contracts Fair value A financial guarantee contract is a contract that requires the bank (issuer) 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 original or modified terms of a debt instrument. Inputs and valuation Financial guarantee contracts are initially recognised at fair value, which is generally equal to the premium received, and then Day one profit/ loss Cost exception Fair value hierarchy amortised over the life of the financial guarantee. Financial guarantee contracts are subsequently measured at the higher of the: techniques

• the ECL calculated for the financial guarantee; and • unamortised premium. Hierarchy transfers Derivatives and embedded derivatives A derivative is a financial instrument whose fair value changes in response to an underlying variable, requires no initial net Fair value investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to levels have a similar response to changes in market factors and is settled at a future date. In terms of IFRS, the Bank is either required to or elects to measure a number of its financial assets and financial liabilities at fair Derivatives are initially recognised at fair value on the date on which the derivatives are entered into and subsequently remeasured value. Regardless of the measurement basis, the fair value is required to be disclosed, with some exceptions, for all financial at fair value. assets and financial liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal All derivative instruments are carried as financial assets when the fair value is positive and as financial liabilities when the fair value (or most advantageous) market between market participants at the measurement date under current market conditions. Fair value is negative, subject to offsetting principles as described under the heading “Offsetting” below. is a market based measurement and uses the assumptions that market participants would use when pricing an asset or liability All gains and losses from changes in the fair values of derivatives are recognised immediately in profit or loss as trading revenue. under current market conditions. When determining fair value it is presumed that the entity is a going concern and is not an amount that represents a forced transaction, involuntary liquidation or a distressed sale. In estimating the fair value of an asset or a liability, the Bank takes into account the characteristics of the asset or liability that market participants would take into account Other when pricing the asset or liability at the measurement date. Pledged assets Financial assets transferred to external parties that do not qualify for de-recognition are reclassified in the statement of financial Inputs and valuation techniques position from financial investments or trading assets to pledged assets, if the transferee has received the right to sell or re-pledge Fair value is measured based on quoted market prices or dealer price quotations for identical assets and liabilities that are traded them in the event of default from agreed terms. Initial recognition of pledged assets is at fair value, whilst subsequently measured at in active markets, which can be accessed at the measurement date, and where those quoted prices represent fair value. If the amortised cost or fair value as approriate. These transactions are performed in accordance with the usual terms of securities market for an asset or liability is not active or the instrument is not quoted in an active market, the fair value is determined using lending and borrowing. other applicable valuation techniques that maximise the use of relevant observable inputs and minimises the use of unobservable inputs. These include the use of recent arm’s length transactions, discounted cash flow analyses, pricing models and other Sale and repurchase agreements valuation techniques commonly used by market participants. Securities sold subject to linked repurchase agreements (repurchase agreements) are reclassified in the statement of financial position as pledged assets when the transferee has the right by contract or custom to sell or repledge the collateral. The liability to Fair value measurements are categorised into level 1, 2 or 3 within the fair value hierarchy based on the degree to which the inputs the counterparty is included under deposit and current accounts or trading liabilities, as appropriate. to the fair value measurements are observable and the significance of the inputs to the fair value measurement. Where discounted cash flow analyses are used, estimated future cash flows are based on management’s best estimates and a Securities purchased under agreements to resell (reverse repurchase agreements), at either a fixed price or the purchase price plus market related discount rate at the reporting date for an asset or liability with similar terms and conditions. a lender’s rate of return, are recorded as loans and included under trading assets or loans and advances, as appropriate. For If an asset or a liability measured at fair value has both a bid and an ask price, the price within the bid-ask spread that is most repurchase and reverse repurchase agreements measured at amortised cost, the difference between the purchase and sales price representative of fair value is used to measure fair value. is treated as interest and amortised over the expected life using the effective interest rate method. The bank’s valuation control framework governs internal control standards, methodologies, and procedures over its valuation processes, which include the following valuation techniques and main inputs and assumptions per type of instrument: Offsetting Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally Item Description Valuation technique Main inputs and enforceable right to set-off the recognised amounts and there is an intention to settle the asset and the liability on a net basis, or to assumptions (Level 2 realise the asset and settle the liability simultaneously. and 3 fair value hierarchy items) Derivative Derivative financial instruments Standard derivative contracts are valued • Discount rate* financial comprise foreign exchange, and using market accepted models and • Spot prices of the instruments interest rate. quoted parameter inputs. More complex underlying assets derivative contracts are modelled using • Correlation factors more sophisticated modelling techniques • Volatilities applicable to the instrument. Techniques • Dividend yields include: • Earnings yield • Discounted cash flow model • Valuation multiples

Trading assets Trading assets and liabilities comprise Where there are no recent market and Trading instruments which are part of the transactions in the specific instrument, liabilities bank’s underlying trading activities. fair value is derived from the last These instruments primarily include available market price adjusted for sovereign and corporate debt, and changes in risks and information since collateral. that date.

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43 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 43 Annual report 2020 44

Accounting policy elections continued Accounting policy elections continued STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED Accounting policy elections (continued) Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued)

4.4 Fair value (continued) 4.4 Fair value (continued)

Item Description Valuation technique Main inputs and Day one profit or loss assumptions For financial instruments, where the fair value of the financial instrument differs from the transaction price, the difference is (Level 2 and 3 fair commonly referred to as day one profit or loss. Day one profit or loss is recognised in profit or loss immediately where the fair value value hierarchy items) of the financial instrument is either evidenced by comparison with other observable current market transactions in the same instrument, or is determined using valuation models with only observable market data as inputs. Pledged Pledged assets comprise Where a proxy instrument is quoted in an active market, the • Discount rate* assets instruments that may be sold or fair value is determined by adjusting the proxy fair value for • Spot prices of Day one profit or loss is deferred where the fair value of the financial instrument is not able to be evidenced by comparison with repledged by the Bank’s differences between the proxy instrument and the financial the underlying other observable current market transactions in the same instrument, or determined using valuation models that utilise non- counterparty in the absence of investment being fair valued. Where proxies are not • Correlation observable market data as inputs. default by the Bank. Pledged available, the fair value is estimated using more complex factors The timing of the recognition of deferred day one profit or loss is determined individually depending on the nature of the instrument assets include sovereign debt modelling techniques. These techniques include discounted • Volatilities and availability of market observable inputs. It is either amortised over the life of the transaction, deferred until the instrument’s fair (government treasury bills and cash flow using current market rates for credit, interest, • Dividend yields value can be determined using market observable inputs, or realised through settlement. bonds) pledged in terms of liquidity, volatility and other risks. Combination techniques • Earnings yield repurchase agreements. are used to value unlisted equity securities and include • Valuation Any difference between the fair value at initial recognition and the amount that would be determined at that date using a valuation inputs such as earnings and dividend yields of the underlying multiples technique in a situation in which the valuation is dependent on unobservable parameters is not recognised in profit or loss Financial Financial investments are non- entity. investments trading financial assets and immediately but is recognised over the life of the instrument on an appropriate basis or when the instrument is redeemed. primarily comprise of sovereign and corporate debt, unlisted equity Fair value hierarchy instruments, investments in The Bank’s financial instruments that are both carried at fair value and for which fair value is disclosed are categorised by level of mutual fund investments and unit- fair value hierarchy. The different levels are based on the degree to which the inputs to the fair value measurements are observable linked investments. and the significance of the inputs to the fair value measurement.

Loans and advances comprise: For certain loans fair value may be determined from the • Discount rate. Loans and Hierarchy levels advances to • Loans and advances to banks: market price of a recently occurring transaction adjusted for • Probability of The levels have been defined as follows: banks and call loans, loans granted under changes in risks and information between the transaction default. customers resale agreements and balances and valuation dates. Loans and advances are reviewed for • Loss given Level 1 Fair value is based on quoted market prices (unadjusted) in active markets for an identical financial asset or held with other banks. observed and verified changes in credit risk and the credit default. liability. An active market is a market in which transactions for the asset or liability take place with sufficient • Loans and advances to spread is adjusted at subsequent dates if there has been an frequency and volume to provide pricing information on an ongoing basis. customers: mortgage loans (home observable change in credit risk relating to a particular loan Level 2 Fair value is determined through valuation techniques based on observable inputs, either directly, such as loans and commercial or advance. In the absence of an observable market for quoted prices, or indirectly, such as those derived from quoted prices. This category includes instruments mortgages), other asset-based these instruments, discounted cash flow models are used to valued using quoted market prices in active markets for similar instruments, quoted prices for identical or loans, including collateralised debt determine fair value. Discounted cash flow models similar instruments in markets that are considered less than active or other valuation techniques where all obligations (instalment sale and incorporate parameter inputs for interest rate risk, foreign significant inputs are directly or indirectly observable from market data. finance leases), and other exchange risk, liquidity and credit risk, as appropriate. For secured and unsecured loans credit risk, probability of default and loss given default Level 3 Fair value is determined through valuation techniques using significant unobservable inputs. This category (card debtors, overdrafts, other parameters are determined using the relevant terms of the includes all instruments where the valuation technique includes inputs not based on observable data and the demand lending, term lending and loan and loan counterparty such as the industry classification unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments loans granted under resale and subordination of the loan. that are valued based on quoted prices for similar instruments where significant unobservable adjustments or agreements). assumptions are required to reflect differences between the instrument being valued and the similar instrument. Deposits from Deposits from banks and For certain deposits, fair value may be determined from the • Discount rate. bank and customers comprise amounts market price on a recently occurring transaction adjusted for • Probability of customers owed to banks and customers, all changes in risks and information between the transaction default. Hierarchy transfer policy deposits under repurchase and valuation dates. In the absence of an observable market • Loss given Transfers of financial assets and financial liabilities between levels of the fair value hierarchy are deemed to have occurred at the agreements, negotiable for these instruments discounted cash flow models are used default. end of the reporting period during which change occurred. certificates of deposit, credit- to determine fair value based on the contractual cash flows linked deposits and other related to the instrument. The fair value measurement deposits. incorporates all market risk factors including a measure of the Bank’s credit risk relevant for that financial liability. The market risk parameters are valued consistently to similar instruments held as assets stated in the section above. For collateralised deposits that are designated to be measured at fair value through profit or loss, such as securities repurchase agreements, the credit enhancement is incorporated into the fair valuation of the liability.

* Discount rates, where applicable, include the risk-free rate, risk premiums, liquidity spreads, credit risk (own and counterparty as appropriate), timing of settlement, storage/service costs, prepayment and surrender risk assumptions and recovery rates/loss given default.

44 45 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 45 Annual report 2020 46

STANBICAccounting BANK GHANA LIMITED policy elections continued STANBICAccounting BANK GHANA LIMITED policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued)

4.5 Employee benefits 4.5 Employee benefits (continued) Long service awards scheme Type Description Statement of financial Statement of other Income statement position comprehensive income Employee benefits Long The Bank rewards employees who are Liability is recognised for Remeasurrements of Interest expense, service in employment for a period of ten years unpaid service cost and actuarial valuation. service costs and awards or more through its long service award actuarial losses. movement in Post-employment Termination Short-term benefits Equity-linked scheme scheme. The award scheme is a actuarial benefits benefits Long service transactions awards scheme defined benefit scheme where gains/losses obligations to fund the scheme's resulting from benefits are derived from actuarial changes in Defined contribution Equity-settled share plans based-payments valuations performed by an appointed assumptions are actuary taking into account various recognised in assumptions. Income statement.

Cash-settled share based-payments Equity-linked transactions Equity-settled The fair value of the equity-settled share based payments are determined on grant date and accounted for within share based operating expenses - staff costs over the vesting period with a corresponding increase in the bank’s share-based payments payment reserve. Non-market vesting conditions, such as the resignation of employees and retrenchment of Type Description Statement of financial position Statement of other Income statement staff, are not considered in the valuation but are included in the estimate of the number of options expected to comprehensive vest. At each reporting date, the estimate of the number of options expected to vest is reassessed and adjusted income against profit or loss and equity over the remaining vesting period.

Defined The bank operates a contributory Liability is recognised for No impact. Contributions are On vesting of the equity-settled share based payments, amounts previously credited to the share-based payment contribution pension plan in line with the unpaid contributions. recognised as an reserve are transferred to retained earnings through an equity transfer. plans National Pension Act, 2008 (Act expense in profit or 766). Employees and the Bank loss in the periods contribute 10.5% and 24.5% of during which services Cash-settled Cash-settled share based payments are accounted for as liabilities at fair value until the date of settlement. The employees' basic salary are rendered by share based liability is recognised over the vesting period and is revalued at every reporting date up to and including the date respectively of each of the employees. payments of settlement. All changes in the fair value of the liability are recognised in operating expenses – staff costs. qualifying staff salary in line with the provisions of the National Pension Act, 2008 (Act 766). 4.6 Non-financial assets (Intangible assets, Property and equipment) Termination Termination benefits are recognised A liability is recognised for the No impact. Termination benefits benefits when the Bank is committed, termination benefit are recognised as an without realistic possibility of representing the best expense if the bank withdrawal, to a formal detailed plan estimate of the amount has made an offer to terminate employment before the payable. encouraging voluntary normal retirement date, or to redundancy, it is provide termination benefits as a probable that the offer result of an offer made to will be accepted, and encourage voluntary redundancy the number of when it is probable that the offer will acceptances can be be accepted, and the number of estimated reliably. acceptances can be estimated reliably.

Short-term Short-term benefits consist of A liability is recognised for the No direct impact. Short-term employee benefits salaries, accumulated leave amount expected to be paid benefit obligations are payments, profit share, bonuses under short-term cash bonus measured on an and any non-monetary benefits plans or accumulated leave if undiscounted basis and such as medical aid contributions. the bank has a present legal are expensed as the or constructive obligation to related service is pay this amount as a result of provided. past service provided by the employee and the obligation can be estimated reliably.

47

46 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 47 Annual report 2020 48

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED Accounting policy elections continued AccountingAccounting policy elections policy (continued) elections continued Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued)

4.6 Non-financial assets (Intangible assets, Property and equipment) (continued) 4.6 Non-financial assets (Intangible assets, Property and equipment) (continued)

Type Initial and subsequent measurement Useful lives, depreciation/ Impairment Derecognition Leases amortisation method or fair value Type and description Statement of financial position Income statement basis Tangible Property and equipment are measured Property and equipment are Intangible assets that The non-financial Lessee accounting policies assets at cost less accumulated depreciation depreciated on the straight-line have an indefinite useful assets are Single lessee accounting Lease liabilities: Interest expense on lease liabilities: and accumulated impairment losses. basis over estimated useful life are tested annually derecognised on model Initially measured at the present value of the A lease finance cost, determined with Cost includes expenditure that is directly lives (see below) of the assets for impairment and disposal or when All leases are accounted for contractual payments due to the lessor over the lease reference to the interest rate implicit in the attributable to the acquisition of the to their residual values. Land is additionally when an no future by recognising a right-of-use term, with the discount rate determined by reference lease or the bank’s incremental borrowing asset. Land is measured at cost less not depreciated. indicator of impairment economic asset and a lease liability to the rate implicit in the lease unless (as is typically rate, is recognised within interest expense accumulative impairment loss. Land is exists. benefits are except for: the case for the bank) this is not readily determinable, over the lease period. not depreciated. Computer 3-5 years expected from • leases of low value assets; in which case the bank’s incremental borrowing rate equipments Other non-financial their use or and on commencement of the lease is used. The bank’s Costs that are subsequently incurred assets are reviewed for disposal. The Motor vehicles 4-5 years • leases with a duration of internal funding rate is the base on which the are included in the asset’s related impairment at each gain or loss on twelve months or less. incremental borrowing rate is calculated. Variable carrying amount or are recognised as a Office 5-10 years reporting date and tested derecognition is equipments lease payments are only included in the separate asset, as appropriate, only for impairment whenever recognised in measurement of the lease liability if they depend on Furniture and 5-13 years when it is probable that future economic events or changes in profit or loss and an index or rate. In such cases, the initial fittings benefits will flow to the Bank and the circumstances indicate is determined as measurement of the lease liability assumes the cost of the item can be measured Capitalised over the that the carrying amount the difference variable element will remain unchanged throughout reliably. Expenditure, which does not leased assets/ shorter of the may not be recoverable. between the net the lease term. Other variable lease payments are meet these criteria, is recognised in branch lease term or disposal expensed in the period to which they relate. On initial profit or loss as incurred. refurbishments its useful life An impairment loss is proceeds and the recognition, the carrying value of the lease liability recognised in profit or carrying amount also includes: Where significant parts of an item of loss for the amount by of the non- property or equipment have different The residual values, useful lives which the asset’s financial asset. • Amounts expected to be payable under any residual useful lives, they are accounted for as and the depreciation method carrying amount exceeds value guarantee; separate major components of property applied are reviewed, and its recoverable amount. • The exercise price of any purchase option granted and equipment. adjusted if appropriate, at each The recoverable amount in favour of the bank, should it be reasonably certain is determined as the financial period end. that this option will be exercised; higher of an asset’s fair • Any penalties payable for terminating the lease, value less costs to sell should the term of the lease be estimated on the and value in use. basis of this termination option being exercised. Subsequent to initial measurement, lease liabilities Fair value less costs to increase as a result of interest charged at a constant sell is determined by rate on the balance outstanding and are reduced for ascertaining the current lease payments made. market value of an asset and deducting any costs Intangible Costs associated with developing or Amortisation is recognised in related to the realisation Right of use assets: Depreciation on right of use assets: assets/ maintaining computer software profit or loss on a straight-line of the asset. Initially measured at the amount of the lease liability, Subsequent to initial measurement, the right Computer programmes and the acquisition of basis at rates appropriate to the reduced for any lease incentives received, and of use assets are depreciated on a straight- software software licences are generally expected lives of the assets (2 In assessing value in increased for: line basis over the remaining term of the recognised as an expense as incurred. to 15 years) from the date that use, the estimated future i) lease payments made at or before commencement lease or over the remaining economic life of However, direct computer software the asset is available for use. cash flows are of the lease; the asset should this term be shorter than development costs that are clearly discounted to their ii) initial direct costs incurred; and the lease term unless ownership of the associated with an identifiable and Amortisation methods, useful present value using a pre- iii) the amount of any provision recognised where the underlying asset transfers to the bank at the unique system, which will be controlled lives and residual values are tax discount rate that bank is contractually required to dismantle, remove or end of the lease term, whereby the right of by the bank and have a probable future reviewed at each financial reflects current market restore the leased asset. use assets are depreciated on a straight-line economic benefit beyond one period, periodend and adjusted, if assessments of the time basis over the remaining economic life of are recognised as intangible assets. necessary. value of money and the The bank applies the cost model subsequent to the the asset. This depreciation is recognised as Intangible assets are carried at cost less risks specific to the initial measurement of the right of use assets. part of operating expenses. accumulated amortisation and asset. accumulated impairment losses from the date that the assets are available for Termination of leases: Termination of leases: use. When the bank or lessor terminates or cancels a On derecognition of the right of use asset lease, the right of use asset and lease liability are and lease liability, any difference is Expenditure subsequently incurred on derecognised. recognised as a derecognition gain or loss computer software is capitalised only in profit or loss. when it increases the future economic benefits embodied in the specific asset to which it relates.

48 49 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 49 Annual report 2020 50

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED AccountingAccounting policy elections policy (continued) elections continued Accounting policy elections continued Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued) 4.6 Non-financial assets (Intangible assets, Property and equipment) (continued) 4.7 Equity Leases Type and description Statement of financial position Income statement Equity Lessee accounting policies continued All leases that meet the Accruals for unpaid lease charges, together with a Payments made under these leases, net of criteria as either a lease of a straight-line lease asset or liability, being the any incentives received from the lessor, are low value asset or a short difference between actual payments and the straight- recognised in operating expenses on a term lease are accounted for line lease expense are recognised. straight-line basis over the term of the lease. Distributions on ordinary on a straight-line basis over When these leases are terminated before Share issue costs shares the lease term. the lease period has expired, any payment required to be made to the lessor by way of a penalty is recognised as operating expenses in the period in which termination Share issue costs Incremental external costs directly attributable to a transaction that increases or decreases equity are takes place. deducted from equity, net of related tax. All other share issue costs are expensed.

Distributions to Distributions are recognised in equity in the period in which they are declared. Distributions declared after the Reassessment and Reassessment of lease terms and lease modifications that are not accounted for as a owners reporting date are disclosed in the distributions note to the financial statements. modification of leases separate lease: When the bank reassesses the terms of any lease (i.e. it re-assesses the probability of exercising an extension or termination option) or modifies the terms of a lease without increasing the scope of the lease or where the increased scope is not commensurate with the stand-alone price, it adjusts 4.8 Provisions, contingent assets and contingent liabilities the carrying amount of the lease liability to reflect the payments to be made over the revised term, which are discounted at the applicable rate at the date of reassessment or modification. The Provisions, contingent carrying amount of lease liability is similarly revised when the variable element of future lease assets and contingent payments dependent on a rate or index is revised. liabilities For reassessments to the lease terms, an equivalent adjustment is made to the carrying amount of the right of use asset, with the revised carrying amount being depreciated over the revised lease Provisions Contingent Contingent term. However, if the carrying amount of the right of use asset is reduced to zero any further assets liabilities reduction in the measurement of the lease liability is recognised in profit or loss. For lease modifications that are not accounted for as a separate lease, an equivalent adjustment is Provision for legal claims made to the carrying amount of the right of use asset, with the revised carrying amount being depreciated over the revised lease term. However, for lease modifications that decrease the scope of the lease the carrying amount of the right-of-use asset is decreased to reflect the partial or full Provision for termination of the lease, with any resulting difference being recognised in profit or loss as a gain or restructuring loss relating to the partial or full termination of the lease. Provision for onerous Lease modifications that are accounted for as a separate lease: contracts When the bank modifies the terms of a lease resulting in an increase in scope and the consideration for the lease increases by an amount commensurate with a stand-alone price for the increase in scope, the bank accounts for these modifications as a separate new lease. This Provision for tax accounting treatment equally applies to leases which the bank elected the short-term lease claims exemption and the lease term is subsequently modified. Provisions Provisions are recognised when the bank has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the Separating components of The bank has elected to apply the practical expedient to not separate non-lease components from obligation and a reliable estimate of the amount of the obligation can be made. Provisions are determined by a lease contract lease components, and instead account for each lease component and any associated non-lease discounting the expected future cash flows using a pre-tax discount rate that reflects current market components as a single lease component. The practical expedient is applied to each class of assessments of the time value of money and the risks specific to the liability. The bank’s provisions typically underlying asset. (when applicable) include the following:

50 51 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 51 Annual report 2020 52

STANBIC BANK GHANA LIMITED STANBICAccounting BANK GHANA LIMITED policy elections continued Accounting policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued) 4.9 Taxation (continued) 4.8 Provisions, contingent assets and contingent liabilities (continued) Type Description, recognition and measurement Offsetting Provisions Provisions for legal claims (continued) Provisions for legal claims are recognised on a prudent basis for the estimated cost for all legal claims that have not been Deferred tax- Deferred tax is recognised in profit or loss except to the extent that it relates to a Current tax assets and settled or reached conclusion at the reporting date. In determining the provision management considers the probability and determined for business combination (relating to a measurement period adjustment where the liabilities, deferred tax likely settlement (if any). Reimbursements of expenditure to settle the provision are recognised when and only when it is future tax carrying amount of the goodwill is greater than zero), or items recognised directly assets and liabilities virtually certain that the reimbursement will be received. consequences as part of OCI. are offset if there is a Provision for restructuring legally enforceable right A provision for restructuring is recognised when the bank has approved a detailed formal plan, and the restructuring either has Deferred tax is recognised in respect of temporary differences arising between to offset current tax commenced or has been announced publicly. Future operating costs or losses are not provided for. the tax bases of assets and liabilities and their carrying values for financial liabilities and assets, and Provision for onerous contracts reporting purposes. Deferred tax is measured at the tax rates that are expected they relate to income A provision for onerous contracts is recognised when the expected benefits to be derived by the Bank from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the to be applied to the temporary differences when they reverse, based on the laws taxes levied by the same lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a that have been enacted or substantively enacted at the reporting date. Deferred tax authority on the provision is established, the bank recognises any impairment loss on the assets associated with that contract. tax is not recognised for the following temporary differences: same taxable entity, or Provision for tax claims • the initial recognition of goodwill; on different tax entities, Provisions for taxes claims relates to additional assessment on taxes, including withholding tax, value added tax, PAYE tax. • the initial recognition of assets and liabilities in a transaction that is not a but they intend to settle business combination, which affects neither accounting nor taxable profits or current tax liabilities and losses; and assets on a net basis or Contingent assets Contingent assets are not recognised in the annual financial statements but are disclosed when, as a result of past events, it is • investments in subsidiaries, associates and jointly controlled arrangements their tax assets and probable that economic benefits will flow to the bank, but this will only be confirmed by the occurrence or non-occurrence of (excluding mutual funds) where the Bank controls the timing of the reversal of liabilities will be realised one or more uncertain future events which are not wholly within the bank’s control. temporary differences and it is probable that these differences will not reverse in simultaneously. Contingent Contingent liabilities include certain guarantees (other than financial guarantees) and letters of credit and are not recognised in the foreseeable future. liabilities the annual financial statements but are disclosed in the notes to the annual financial statements. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of the asset or liability and is not 4.9 Taxation discounted.

Taxation Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the unused tax losses 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. Income tax Indirect tax

Indirect taxation Indirect taxes are recognised in profit or loss. Indirect taxes are separately None Current tax disclosed in the income statement. Dividend tax Taxes on dividends declared by the bank are recognised as part of the dividends None paid within equity as dividend tax represents tax on the shareholders.

Deferred tax Type Description, recognition and measurement Offsetting 4.10 Revenue and expenditure Current tax- Current tax represents the expected tax payable on taxable income for the period, using tax rates determined for enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect Revenue and expenditure current period of previous periods. transactions and events Current tax is recognised as an expense for the period and adjustments to past periods except to the extent that current tax related to items that are charged or credited in OCI or directly to equity. Net interest income Non interest revenue Operating expenses

In Ghana, Income tax rates applicable to companies differ according to industry, location and type of business. Corporate tax rates of 25% and 35% are applicable to entities in general which do not Net fee and qualify for incentives and companies engaged in mining or upstream petroleum business commission respectively. revenue

Trading revenue

Other revenue

Management fees on asset under management Description Recognition and measurement Net interest Interest income and expense (with the exception of borrowing costs that are capitalised on qualifying income assets, that is assets that necessarily take a substantial period of time to get ready for their intended use or sale and which are not measured at fair value) are recognised in profit or loss using the effective interest method for all interest-bearing financial instruments.

53

52 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 53 Annual report 2020 54

STANBICAccounting BANK GHANA LIMITED policy elections continued STANBICAccounting BANK GHANA LIMITED policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

4 Statement of significant accounting policies (continued) 4 Statement of significant accounting policies (continued) 4.10 Revenue and expenditure (continued) Description Recognition and measurement 4.10 Revenue and expenditure (continued) Net interest In terms of the effective interest method, interest is recognised at a rate that exactly discounts estimated future cash payments or receipts income through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount of the financial asset IFRS 9 accounting treatment or financial liability. Direct incremental transaction costs incurred and origination fees received, including loan commitment fees, as a result Requires that interest for financial assets classified as stage 3 (i.e. in default) only be calculated on the gross carrying of bringing margin- yielding assets or liabilities into the statement of financial position, are capitalised to the carrying amount of financial amount less impairments (i.e. amortised cost balance). The bank has applied this requirement by suspending all instruments that are not at fair value through profit or loss and amortised as interest income or expense over the life of the asset or liability as part of the effective interest rate. contractual interest on such financial assets and recognising interest on the amortised cost balance utilising the financial assets’ effective interest rate. IFRS 9 requires that the suspended contractual interest be recognised as part of the Where the estimates of payments or receipts on financial assets or financial liabilities are subsequently revised, the carrying amount of the financial assets’ gross carrying amount and be deducted as part of the reconciliation to the net carrying amount which is financial asset or financial liability is adjusted to reflect actual and revised estimated cash flows. reported in the balance sheet. The bank has elected to continue to present upon the curing of the non-performing The carrying amount is calculated by computing the present value of the adjusted cash flows at the financial asset or financial liability’s original effective interest rate. Any adjustment to the carrying value is recognised in net interest income. financial asset, this suspended contractual interest (previously unrecognised interest) in credit impairment provision line When a financial asset is classified as Stage 3 impaired, interest income is calculated on the impaired value (gross carrying value less of the income statement . This policy was elected on the basis that the presentation best represented the nature of the specific impairment) based on the original effective interest rate. The contractual interest income on the gross exposure is suspended and amount in terms of IAS 1. is only recognised in credit impairments when the financial asset is reclassified out of Stage 3.

Dividends received on preference share investments classified as debt form part of the Bank’s lending activities and are included in interest income. 4.11 Other significant accounting policies

Net fee and Fee and commission revenue, including transactional fees, account servicing fees, investment management fees, sales commissions and commission placement fees are recognised as the related services are performed. Loan commitment fees for loans that are not expected to be drawn revenue down are recognised on a straight-line basis over the commitment period. Other significant Loan syndication fees, where the Bank does not participate in the syndication or participates at the same effective interest rate for accounting policies comparable risk as other participants, are recognised as revenue when the syndication has been completed. Syndication fees that do not meet these criteria are capitalised as origination fees and amortised as interest income. The fair value of issued financial guarantee contracts on initial recognition is amortised as income over the term of the contract.

Fee and commission expenses, included in net fee and commission revenue, are mainly transaction and service fees relating to financial Statutory credit risk Other regulatory instruments, which are expensed as the services are received. Expenditure is recognised as fee and commission expenses where the Fiduciary activities Non interest banking reserve expenditure is linked to the production of fee and commission revenue. reserve

Trading revenue Trading revenue comprises all gains and losses from changes in the fair value of trading assets and liabilities, together with related interest income, expense and dividends. Other revenue Other revenue includes dividends on equity financial assets, underwriting profit from the bank’s short-term insurance operations and related Statutory reserves insurance activities and re- measurement gains and losses from contingent consideration on disposals and purchases.

Dividend income Dividends are recognised in profit or loss when the right to receipt is established. Fiduciary activities The bank commonly engages in trust or other fiduciary activities that result in the holding or placing of assets Management fees Fee income includes management fees on assets under management and administration fees. Management fees on assets under on behalf of individuals, trusts, post-employment benefit plans and other institutions. These assets and the management are recognised over the period for which the services are rendered, in accordance with the substance of the relevant on assets under income arising directly thereon are excluded from these annual financial statements as they are not assets of management agreements. the bank. However, fee income earned and fee expenses incurred by the bank relating to the bank’s Operating Expenses are recognised on an accrual bases regardless of the time of cash outflows. Expenses are recognised in the income statement responsibilities from fiduciary activities are recognised in profit or loss. expenses when a decrease in future economic benefit related to a decrease in an assets or an increase of a liability has arisen that can be measured Statutory credit The statutory credit risk reserve represents a reserve component created when credit impairment on loans reliably. risk reserve and advances as accounted for under IFRS using the expected loss model differ from the Bank of Ghana Guidelines set by the Central Bank of Ghana. Expenses are recognised in the same reporting period when they are incurred in cases when it is not probable to directly relate them to particular income earned during the current reporting period and when they are not expected to generate any income during the coming Statutory reserve The Banks and Specialised Deposit-taking Institutions Act 2016 (Act 930) require the Banks to make an periods. Expenses that are not related to the income earned during the reporting period, but expected to generate future economic annual appropriation to a statutory reserve. Section 34 of the Act requires that proportion of profits after tax benefits, are recorded in the financial statements as assets. ranging between 12.5% and 50% depending on the ratio of existing statutory fund to paid-up capital of the Bank be transferred to the statutory reserve. Offsetting Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a bank of similar transactions.

54 55 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 55 Annual report 2020 56

STANBIC BANK GHANA LIMITED STANBICAccounting BANK GHANA LIMITED policy elections continued Accounting policy elections continued Accounting policy elections (continued) Accounting policy elections (continued)

5 New standards and interpretations not yet adopted or effective 4 Statement of significant accounting policies (continued) The following new or revised standards, amendments and interpretations are not yet adopted or effective for the year ended 31 4.12 Non-current assets held for sale and disposal groups December 2020 and have not been applied in preparing these annual financial statements. Type Description Statement of financial position Income statement Pronouncement Title IAS 1 Presentation of Financial Statements (amendments) Non-current Comprising assets and Immediately before classification, the assets Impairment losses on initial assets/disposal liabilities that are expected (or components of a disposal group) are classification as well as The amendment clarifies how to classify debt and other liabilities as current or non-current. The objective of the groups that are held to be recovered primarily remeasured in accordance with the Bank’s subsequent gains and losses on amendment is aimed to promote consistency in applying the requirements by helping entities determine whether, for sale through sale rather than accounting policies and tested for remeasurement of these assets debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to continuing use (including impairment. Thereafter, the assets are or disposal groups are be settled within one year) or non-current. The amendment also includes clarifying the classification requirements regular purchases and sales measured at the lower of their carrying recognised in profit or loss. for debt an entity might settle by converting it into equity. These are clarifications, not changes, to the existing in the ordinary course of amount and fair value less costs to sell. requirements, and so are not expected to affect entities' financial statements significantly. However, these business). Property and equipment and clarifications could result in reclassification of some liabilities from current to non-current, and vice versa. The Assets and liabilities (or components of a intangible assets are not amendment will be applied retrospectively. The impact on the annual financial statements has not yet been fully disposal group) are presented separately in depreciated or amortised. determined. the statement of financial position. Effective date 1 January 2023

Title IFRS 17 Insurance Contracts 4.13 Equity-linked transactions This standard replaces IFRS 4 Insurance Contracts which provided entities with dispensation to account for insurance contracts (particularly measurement) using local actuarial practice, resulting in a multitude of different The Bank's equity approaches. The overall objective of IFRS 17 is to provide a more useful and consistent accounting model for compensation plans insurance contracts among entities issuing insurance contracts globally. The standard requires an entity to measure insurance contracts using updated estimates and assumptions that reflect the timing of cash flows and any uncertainty relating to insurance contracts. A general measurement model (GMM) will be applied to long-term insurance contracts and is based on a fulfilment objective (risk-adjusted present value of best estimate future cash flows) and uses current estimates, informed by actual trends and investment markets. IFRS 17 establishes what is called a contractual service margin (CSM) in the initial measurement of the liability which represents the unearned profit on the contract and results in no gain on initial recognition. The CSM is released over the life of the contract, Equity-settled share based- Cash-settled share based- but interest on the CSM is locked in at inception rates. The CSM will be utilised as a “shock absorber” in the event payments payments of changes to best estimate cash flows. On loss making (onerous) contracts, no CSM is set up and the full loss is recognised at the point of contract inception. The GMM is modified for contracts which have participation features. Equity-settled The fair value of the equity-settled share based payments are determined on grant date and An optional simplified premium allocation approach (PAA) is available for all contracts that are less than 12 months share based accounted for within operating expenses - staff costs over the vesting period with a corresponding at inception. The PAA is similar to the current unearned premium reserve profile over time. The requirement to payments increase in the Bank’s share-based payment reserve. Non-market vesting conditions, such as the eliminate all treasury shares has been amended such that treasury shares held for a group of direct participating resignation of employees and retrenchment of staff, are not considered in the valuation but are contracts or investment funds are not required to be eliminated and can be accounted for as financial assets. included in the estimate of the number of options expected to vest. At each reporting date, the These requirements will provide transparent reporting about an entities’ financial position and risk and will provide estimate of the number of options expected to vest is reassessed and adjusted against profit or metrics that can be used to evaluate the performance of insurers and how that performance changes over time. An entity may re-assess its classification and designation of financial instruments under IFRS 9, on adoption of loss and equity over the remaining vesting period. IFRS 17. The standard will be applied retrospectively. The impact on the annual financial statements has not yet On vesting of the equity-settled share based payments, amounts previously credited to the share- been fully determined. based payment reserve are transferred to retained earnings through an equity transfer.

Effective date 1 January 2023 Cash-settled share Cash-settled share based payments are accounted for as liabilities at fair value until the date of based payments settlement. The liability is recognised over the vesting period and is revalued at every reporting date up to and including the date of settlement. All changes in the fair value of the liability are recognised Title IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or in operating expenses – staff costs. Joint Venture The amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The amendments will be applied prospectively and are not expected to have a material impact on the bank’s financial statements.

Effective date deferred the effective date for these amendments indefinitely until further notice

56 57 ANNUAL FINANCIAL STATEMENTS Accounting policy elections STANBIC BANK GHANA 57 Annual report 2020 58

STANBIC BANK GHANA LIMITED Accounting policy elections continued NotesSTANBIC BANK GHANA to LIMITEDthe financial statements Accounting policy elections (continued) Notes to the financial statements for for thethe year year ended ended 31 December 31 December 2020 2020

5 New standards and interpretations not yet adopted or effective (continued) 1 Key management assumptions Pronouncement Title IFRS 16 Leases (amendment) In preparing the bank's financial statements, estimates and assumptions are made that could materially affect the reported amounts of assets and IFRS 16 requires an entity to account for a change in consideration or term of a lease contract to be accounted for liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on factors such as historical experience and disclosed as a lease modification. In light of the recent Covid-19 pandemic and resultant rent concessions to and current best estimates of future events. While models have been enhanced, no material changes to assumptions have occurred during the be granted by lessors, the amendment permits lessees, as a practical expedient, not to assess whether particular current year. The following represents the most material key management assumptions applied in preparing these financial statements. Covid-19 related rent concessions are lease modifications and instead account for those rent concessions as if they were not lease modifications. The amendment permits the application of the practical expedient to rent concessions that meet specific Covid-19 related requirements and requires specified disclosures. An entity shall apply the practical expedient as an accounting policy choice and consistently to contracts with similar 1.1 Computer software Intangible assets characteristics and in similar circumstances. The purpose of the amendment is to provide relief to lessees from the Direct computer software development costs that are clearly associated with an identifiable and unique system, which will be controlled by the bank complexity arising in applying the requirements of IFRS 16 to Covid-19 related rent concessions. The amendment and have a probable future economic benefit beyond one period, are capitalised and disclosed as computer software intangible assets. will be applied retrospectively and is not expected to have a material impact on the Bank. Computer software intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. The assets are tested Effective date 1 June 2020 for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.These circumstances include, but are not limited to, new technological developments, obsolescence, changes in the manner in which the software is used or is expected to be used, changes in discount rates or changes in estimates of related future cash benefits. The impairment tests are performed by comparing an Title Annual improvements 2018-2020 cycle asset’s recoverable amount to its carrying amounts. The review and testing of assets for impairment inherently requires significant management The IASB has issued various amendments and clarifications to existing IFRS, none of which is expected to have a judgement as it requires management to derive the estimates of the identified assets’ future cash flows in order to derive the asset’s recoverable significant impact on the bank’s annual financial statements. amount. The recoverable amount is based on the value in use and calculated by estimating future cash benefits that will result from each asset and Effective date 1 January 2022 discounting these cash benefits at an appropriate pre-tax discount rate.

1.2 Provisions

The Bank make provisions for contingent items such as legal claims, fines, penalties and other taxes penalties. The amount provided are based on the management best estimate of the amounts that will be required to settle the obligation in the event that it crystallises. Provisions are determined by discounting the expected future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. Any material difference in management best estimates will have an impact to the carrying amount of the provisions.

The principal assumptions taken into account in determining the value at which provisions are recorded at include determining whether there is an obligation as well as assumptions about the probability of the outflow of resources and the estimate of the amount and timing for the settlement of the obligation. For legal provisions management assesses the probability of the outflow of resources by taking into account historical data and the status of the claim in consultation with the bank’s legal counsel. In determining the amount and timing of the obligation once it has been assessed to exist, management exercises its judgement by taking into account all available information, including that arising after the reporting date up to the date of the approval of the financial statements. Refer to note 16 for further details.

1.3 Fair value of financial instruments The fair value of financial instruments, such as unlisted equity investments and certain derivatives, that are not quoted in active markets is determined using valuation techniques. Wherever possible, models use only observable market data. Where required, these models incorporate assumptions that are not supported by prices from observable current market transactions in the same instrument and are not based on available observable market data. Such assumptions include risk premiums, liquidity discount rates, credit risk, volatilities and correlations. Changes in these assumptions could affect the reported fair values of financial instruments. Additional disclosures on fair value measurements of financial instruments are set out in the accounting policies.

1.4 Current and deferred tax The Bank is subject to direct and indirect taxation requirements which are determined with reference to transactions and calculations for which the ultimate tax determination has an element of uncertainty in the ordinary course of business. The Bank recognises provisions for tax based on objective estimates of the amount of taxes that may be due. Where the final tax determination is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions, disclosed in note 6 and note 23, respectively, in the period in which such determination is made.

1.5 Depreciation and useful life of property and equipment The estimation of the useful lives of assets is based on management’s judgement. Any material adjustment to the estimated useful lives of items of property and equipment will have an impact on the carrying value of these items.

1.6 Share-based payment The bank has both cash and equity-settled share incentive schemes which are issued to qualifying employees based on the rules of the respective schemes. The valuation of the bank’s obligations with respect to its cash-settled share incentive scheme obligations is determined with reference to the parent and ultimate parent’s share price, which is an observable market input. In determining the expense to be recognised for both the cash and equity-settled share schemes, the bank estimates the expected future vesting of the awards by considering staff attrition levels. The bank also makes estimates of the future vesting of awards that are subject to non-market vesting conditions by taking into account the probability of such conditions being met. Refer to notes 22.7 for further details regarding the carrying amount of the liabilities arising from the Bank’s cash-settled share incentive schemes and the expenses recognised in the income statement.

58 59 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 59 Annual report 2020 60

NotesSTANBIC BANK GHANA to LIMITED the financial statements STANBICNotes BANK GHANA to LIMITED the financial statements for Notes the to yearthe financial ended statements 31 December 2020 Notesfor the to the year financial ended statements 31 December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

1 Key management assumptions (Continues) Key management assumptions (Continues) 1.7 Long service awards scheme 1.8 Expected credit loss (ECL) on financial assets - drivers (continued) The bank’s long service awards scheme is a defined benefit scheme where obligations to fund the scheme's benefits are derived from actuarial valuations performed by an appointed actuary taking into account various assumptions. The scheme is subject to a annual financial review by the bank’s Significant increase in credit risk (Continues) independent actuary. The principal assumptions used in the determination of the bank's obligation include the following:

Default The principal assumptions used in the determination of the bank’s obligations include the following: The definition of default, which triggers the credit impaired classification (stage 3), is based on the bank’s internal credit risk management approach and definitions. Whilst the specific determination of default varies according to the nature of the product, it is compliant to the Basel definition of default, and generally determined as occurring at the earlier of: Long service award incentive • where, in the bank’s view, the counterparty is considered to be unlikely to pay amounts due on the due date or shortly thereafter without recourse to actions such as the realisation of security; or Discount rate 10.5% • when the counterparty is past due for more than 90 days (or, in the case of overdraft facilities in excess of the current limit). Salary/benefit inflation 11% The bank has not rebutted the 90 days past due rebuttable presumption. Consumer price index (CPI) inflation 10% Mortality rate 75% SSNIT Mortalty Average credited years of service 9 years Write off policy Average age of employees 38 An impaired exposure is written off once all reasonable attempts at collection have been made and there is no material economic benefit expected from Age definition Age nearest Birthday attempting to recover the balance outstanding. The following criteria must be met before a financial asset can be written off: • the financial asset has been in default for the period defined for the specific product (i.e. vehicle and asset finance, mortgage loans, etc.) which is deemed Disability rate 0% sufficient to determine whether the bank is able to receive any further economic benefit from the impaired loan; and Long service terms in years 10,15,20,25,30,30+ • at the point of write-off, the financial asset is fully impaired (i.e. 100% ECL allowance) with no reasonable expectation of recovery of the asset, or a portion thereof.

1.8 Expected credit loss (ECL) on financial assets - drivers Curing For the purpose of determining the ECL: Continuous assessment is required to determine whether the conditions that led to a financial asset being considered to be credit impaired (i.e. stage 3) still exist. Distressed restructured financial assets that no longer qualify as credit impaired remain within stage 3 for a minimum period of six months (i.e. six full • The Personal and Business Banking (PBB) portfolios are based on the product categories or subsets of the product categories, with tailored ECL consecutive monthly payments per the terms and conditions). In the case of financial assets with quarterly or longer dated repayment terms, the classification models per portfolio. The IFRS 9 impairment provision calculation excludes post write off recoveries (PWOR) from the loss given default (LGD) in of a financial asset out of stage 3 may be made subsequent to an evaluation by the bank’s CIB or PBB Credit Governance Committee (as appropriate), such calculating the expected credit loss. This LGD parameter has been aligned to market practice. evaluation will take into account qualitative factors in addition to compliance with payment terms and conditions of the agreement. Qualitative factors include compliance with covenants and compliance with existing financial asset terms and conditions. • Corporate and Investment Banking (CIB) exposures are calculated separately based on rating models for each of the asset classes. Where it has been determined that a financial asset no longer meets the criteria for SICR, the financial asset will be moved from stage 2 (lifetime expected ECL measurement period credit loss model) back to stage 1 (12-month expected credit loss model) prospectively. i) The ECL measurement period for stage 1 exposures is 12-months (or the remaining tenor of the financial asset for CIB exposures if the remaining lifetime is less than 12-months). Modified financial assets ii) A loss allowance over the full lifetime of the financial asset is required if the credit risk of that financial instrument has increased significantly since initial A modification is a change to the contractual cash flows of a financial asset. It involves the renegotiation of the terms of the financial asset such that the recognition (stage 2). contractual cash flows (amount, timing, basis, etc.) are changed or the contractual terms materially change the probability that the cash flows will be received iii) Lifetimes include consideration for multiple default events, i.e. where defaulted exposures cure and then subsequently re-default. This consideration (e.g. change in counterparty). increases the lifetime and the potential ECL. iv) A lifetime measurement period is applied to all credit impaired (stage 3) exposures. In calculating impairment losses, the Bank assesses whether there has been a significant increase in the credit risk of modified financial assets that do not v) The measurement periods for unutilised loan commitments utilise the same approach as on-balance-sheet exposures. qualify for derecognition at the reporting date by comparing: • the credit risk of the modified instrument at the reporting date based on the modified contractual terms; and Significant increase in credit risk • the credit risk at initial recognition based on the original unmodified contractual terms. The following are considered by the bank in determining whether there has been a significant increase in credit risk on a financial instrument since initial recognition: Incorporation of forward-looking information (FLI) in ECL measurement • Change in the probability of default from initial recognition to the reporting date. Forward-looking information • A 30-day past due rebuttal, requiring exposures to be classified in stage 2. It is however not considered sufficient to only look at arrears data such as In considering the forward-looking information, a range of Base, Bull and Bear macro economic expectations were determined, as at 31 December 2020, for days past due in considering whether there is a significant increase in credit risk and the bank would need to assess for significant increase in credit inclusion in the Bank’s forward-looking process and ECL calculation. risk through other means. Arrears data are used after exhausting all other methods of determining whether there has been a significant increase in credit risk. For PBB these forward-looking economic expectations are included in the ECL where adjustments are made based on the Bank’s macroeconomic outlook, using models that correlate these parameters with macroeconomic variables. Where modelled correlations are not viable or predictive, adjustments are based on expert judgement to predict the outcomes based on the Bank’s macroeconomic outlook expectations. In addition to forward-looking macroeconomic • Other means of considering whether there is a significant increase in credit risk includes the evaluation of internal and external credit ratings as well as information, other types of FLI, such as specific event risks and industry data, have been taken into account in ECL estimates when required, through the information from external credit bureaus. Information about the economic sector and geographical region of the borrower are also be taken into application of out-of-model adjustments. These out-of-model adjustments are subject to Credit governance committee oversight. account. • Where a single customer has more than one loan with the bank (for example, a home loan, revolving facility, vehicle and asset finance, etc.), a one The Bank’s macroeconomic outlooks are incorporated in CIB’s client rating and include specific forward-looking economic considerations for the individual customer view is taken when considering whether there has been a significant increase in credit risk. In this instance, a significant increase in the client. The reviews and ratings of each client are performed at least annually. This process entails credit analysts completing a credit scorecard and customer’s credit risk on one loan account is taken into account when assessing the customer’s other loan accounts. If it is assessed that there is a incorporating forward-looking information. The weighting is reflected in both the determination of significant increase in credit risk as well as the measurement of significant increase in credit risk in one exposure, then there is a presumption that the customer’s other loans also have a significant increase in credit the resulting provision for the individual client. Therefore the impact of forward-looking economic conditions is embedded into the total provision for each CIB risk. client and cannot be stressed or separated out of the overall CIB provision. Covid-19 has had a profound impact globally and there remains much uncertainty as to the future economic path and recovery. The outcome of the Covid-19 • In terms of IFRS 9, the bank is required to incorporate both historical experience as well as forward looking information when assessing whether an pandemic is unpredictable and this makes determining these scenarios and the assumptions underlying them complex. Given this uncertainty, and the fact that instrument’s credit risk has increased significantly since initial recognition. A useful reference tool that is used in the assessment of significant increase the pandemic has impacted clients across all geographies and client segments, the Bank has deemed it appropriate to recognise judgemental credit in credit risk is the exposure’s credit rating. adjustment on the total loans and advances to customers portfolio. The credit adjustment is based on reasonable and supportable information available at the Low credit risk financial instruments reporting date. • If internal risk gradings are based on external credit risk ratings, all instruments within the ‘investment grade’ category would be considered as having a low credit risk. • If internal risk gradings are not based on external credit risk ratings, internal ratings is utilised in order to determine a low credit risk threshold. The threshold reflects a low credit risk assumption from a market participant’s perspective taking into account the exposure’s terms and conditions.

60 61 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 61 Annual report 2020 62

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED Notes to the financial statements NotesNotes to the financial to the statements financial statements Notesfor the to year the ended financial 31 statementsDecember 2020 forfor the yearyear ended ended 31 31 December December 2020 2020 for the year ended 31 December 2020

3 Derivative instruments 2020 2019 All derivatives are classified as derivatives held for trading and measured at fair value through profit or loss. GHS'000 GHS'000 2 Cash and cash equivalents 3.1 Use and measurement of derivative instruments In the normal course of business, the bank enters into a variety of derivative transactions for both trading and risk Cash and balances with Bank of Ghana 3,151,406 1,071,558 management purposes. Derivative financial instruments are entered into for trading foreign exchange, interest rate Coins and bank notes 545,612 252,861 exposure. Derivative instruments used by the bank in both trading activities include swaps, forwards and other Balances with central bank 2,605,794 818,697 similar types of instruments based on foreign exchange rates and interest rates.

Due from other banks and financial institutions (net) 872,991 1,856,122 The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. Risks are also measured across the product range in order to take into account possible correlations. 4,024,397 2,927,680 The fair value of all derivatives is recognised on the statement of financial position and is only netted to the extent The balances with central bank include an amount of GHS935 million (2019: GHS818 million) maintained as that there is both a legal right of set-off and an intention to settle on a net basis. cash reserve requirements with Bank of Ghana. Swaps are transactions in which two parties exchange cash flows on a specified notional amount for a Included in due from other banks and financial institutions is an amount of GHS3.9 million (2019: GHS39.9 predetermined period. million ) due from Standard Bank Group. See note 26.2 for details. The major types of swaps transactions undertaken by the bank are as follows: * interest rate swap contracts generally entail the contractual exchange of fixed and floating rate interest payments 2019 2020 in a single currency, based on a notional amount and an interest reference rate; GHS'000 GHS'000 * total return swaps are contracts in which one party (the total return payer) transfers the economic risks and rewards associated with an underlying asset to another counterparty (the total return receiver). The transfer of risk and reward is effected by way of an exchange of cash flows that mirror changes in the value of the underlying asset Due from other banks and financial institutions (gross) 873,052 1,856,171 and any income derived therefrom.

Expected credit loss Forwards are contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price. Forward contracts are tailor made agreements that are transacted between counterparties in an Stage 1 (61) (49) (over-the-counter) OTC market. Stage 2 - - Stage 3 - - 3.2 Derivatives held-for-trading Total expected credit loss (61) (49) The Bank transacts derivative contracts to address customer demand both as market maker in the wholesale Due from other banks and financial institutions (net) 872,991 1,856,122 markets and in structuring tailored derivatives for customers. Trading derivative products include the following derivative instruments:

3.2.1 Foreign exchange derivatives Foreign exchange derivatives are primarily used to hedge foreign currency risks on behalf of customers. Foreign exchange derivatives primarily consist of foreign exchange forwards.

3.2.2 Interest rate derivatives Interest rate derivatives are primarily used to modify the volatility and interest rate characteristics of interest-earning assets and interest-bearing liabilities on behalf of customers and for the bank's own positions. Interest rate derivatives primarily consist of swaps. 3.3 Fair values The fair value of a derivative financial instrument represents for quoted instruments the quoted market price and for unquoted instruments the present value of the positive or negative cash flows, which would have occurred if the rights and obligations arising from that instrument were closed out in an orderly market place transaction at period end.

3.4 Notional amount The gross notional amount is the sum of the absolute value of all bought and sold contracts. The notional amounts have been translated at the closing rate at the reporting date where cash flows are receivable in foreign currency. The amount cannot be used to assess the market risk associated with the positions held and should be used only as a means of assessing the bank's participation in derivative contracts.

62 63 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 63 Annual report 2020 64

NotesSTANBIC BANK to GHANA the LIMITED financial statements NotesSTANBIC BANK to GHANA the LIMITED financial statements for Notes the toyear the ended financial 31 statements December 2020 forNotes the toyear the ended financial 31 statementsDecember 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

3.5 Derivative assets and liabilities 3.6 Non-pledged trading assets Maturity analysis of net fair value Non-pledged trading assets mainly relate to assets acquired as part of the trading activities carried out by the Global Markets business. These instruments are managed and assessed on a total portfolio basis. After 1 Fair Fair value Contract/ Within 1 year but After 5 Net fair value of of notional year within 5 years value assets liabilities amount 2019 years 2020 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000

Comprising: At 31 December 2020 Government bills and bonds 986,325 631,173 Forwards 47,157 - - 47,157 47,157 - 888,293 Derivative assets (note 3.5) 47,157 11,660 Swaps (4,306) - - (4,306) - (4,306) 153,480 1,033,482 642,833

Total derivative 42,851 - - 42,851 47,157 (4,306) 1,041,773 assets/(liabilities) Maturity analysis The maturities represent periods to contractual redemption of the trading assets Maturity analysis of net fair value recorded. Fair value Fair value Contract/ Maturing within 1 month 248,707 446,306 After 1 year Net fair of assets of liabilities Within 1 After 5 notional but within 5 value Maturing after 1 month but within 6 months 554,106 117,378 year years amount years Maturing after 6 months but within 12 months 77,585 11,593 Maturing after 12 months 153,084 67,556 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 1,033,482 642,833 At 31 December 2019 Forwards 11,660 - - 11,660 11,660 - 136,769 Swaps (4,292) - - (4,292) - (4,292) 520,163

Total derivative assets/(liabilities) 7,368 - - 7,368 11,660 (4,292) 656,932

Included in derivative assets is GHS1.35 million (2019: GHS19.42 million) due from related parties. See note 26.2 for details. Included in derivative liabilities is GHS1.14 million (2019: GHS0.257 million) due to related parties. See note 26.2 for details.

64 65 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 65 Annual report 2020 66

NotesSTANBIC BANK to GHANA the LIMITED financial statements STANBICNotes BANK GHANAto LIMITEDthe financial statements forNotes the toyear the ended financial 31 December statements 2020 Notesfor the to theyear financial ended statements 31 December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020 Group 2020 2019 2020 2019 2020 2019 GHS'000 GHS'000 GHS'000 GHS'000 5 Loans and advances to customers 4 Investment securities Investment securities comprise assets held for liquidity 5.1 Gross loans and advances to customers 4,565,505 4,113,861 4,565,505 4,113,861 requirement purposes. Mortgage loans 249,197 359,205 249,197 359,205 Instalment sale and finance leases 296,186 304,531 296,186 304,531 Overdrafts and other demand loans 1,354,943 1,201,017 1,354,943 1,201,017 Short - term negotiable securities 1,582,932 136,792 Other term loans 2,665,179 2,249,108 2,665,179 2,249,108

Other financial investments 839,556 532,127 Credit impairments for loans and advances (note 5.3) (191 976) (167,270) (191 976) (167,270) Gross financial investments 2,422,488 668,919 Stage 1 (37 469) (29,614) (37 469) (29,614) Stage 2 (28 962) (37,257) (28 962) (37,257) Stage 3 (100,399) (100,399) Less: Expected credit loss on investment securities (125 545) (125 545) Net loans and advances 4,373,529 3,946,591 4,373,529 3,946,591 Stage 1 (3,130) (525) Comprising: Net investment securities 2,419,358 668,394 Gross loans and advances 4,565,505 4,113,861 4,565,505 4,113,861 Less: Credit impairments allowance (191,976) (167,270) (191,976) (167,270) Net loans and advances 4,373,529 3,946,591 4,373,529 3,946,591 4.1 Gross financial investments comprising: Regulatory disclosures on loans and advances have been disclosed under credit risk management – Bank of Ghana guidelines disclosures. Government bonds 839,556 505,806 Included in gross loans and advances to customers is an amount of GHS 296.2 million (2019:GHS 304.5 million) relating to instalment Treasury bills 1,582,932 137,107 sale and finance leases. See note 5.2 for analysis of instalment sale and finance lease receivable.

Corporate bonds - 26,006 Total expected credit loss Analysis of gross loans and advances by Gross carrying Net carrying 2,422,488 668,919 Total performance value Stage 1 Stage 2 Stage 3 value Impairment Maturity analysis Gross loans and advances to customers The maturities represent periods to contractual redemption of the Mortgage loans 249,197 (1,574) (4,538) (3,286) (9,398) 239,799 296,186 267,021 financial investments recorded. Instalment sale and finance leases (500) (5,720) (22,945) (29,165) Overdrafts and other demand loans 1,354,943 (3,565) (1,944) (8,452) (13,961) 1,340,982 Maturing within 1 month 346,324 - Other term loans 2,665,179 (31,830) (16,760) (90,862) (139,452) 2,525,727 4,373,529 Maturing after 1 month but within 6 months 1,317,897 311,340 Total 4,565,505 (37,469) (28,962) (125,545) (191,976) Maturing after 6 months but within 12 months 36,177 250,167 Maturing after 12 months 722,090 107,412 Group 2,422,488 668,919 2020 2019 2020 2019 GHS'000 GHS'000 GHS'000 GHS'000 Maturity analysis The maturity analysis is based on the remaining periods to contractual maturity from the period end.

Redeemable on demand 1,301,140 1,161,815 1,301,140 1,161,815 Maturing within 1 month 166,472 69,426 166,472 69,426 Maturing after 1 month but within 6 months 606,287 436,373 606,287 436,373 Maturing after 6 months but within 12 months 929,921 332,454 929,921 332,454 Maturing after 12 months 1,561,685 2,113,793 1,561,685 2,113,793 Gross loans and advances 4,565,505 4,113,861

67

66 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 67 Annual report 2020 68

NotesSTANBIC BANK to GHANA the LIMITED financial statements forNotes the toyear the ended financial 31 Decemberstatements 2020 for the year ended 31 December 2020

2020 2019 GHS'000 GHS'000 5 Loans and advances to customers (continued) Segmental analysis - industry

Agriculture 169,327 335,352 Construction and real estate 167,269 291,789 Electricity 88,798 112,947 Finance, commerce and other business services 1,007,514 739,254 Individuals 782,110 727,337 Manufacturing 655,012 722,464 Mining 447,330 503,248 Other services 637,909 310,654 Transport 610,236 370,816 Gross loans and advances 4,565,505 4,113,861

Segmental analysis - geographic area STANBIC The following table sets out the distribution of the loans and advances by geographic area where the loans are recorded. ENTERPRISE DIRECT 2020 2019 GHS'000 GHS'000 Alwayson Support Ghana 4,565,505 4,073,971 Outside Ghana - 39,890 Do your thing from the comfort of your Gross loans and advances 4,565,505 4,113,861 office/workplace. Get personalized assistance from our trained Business Bankers via 5.2 Instalment sale and finance leases Telephone or Email. Included in gross loans and advances to customers are finance leases as analysed below: No need to visit the branch. 2020 2019 GHS'000 GHS'000 e’re open from 8am – 7pm on weekdays. Gross investment in instalment sale and finance leases 296,186 304,531 et’s help you grow your business Receivable within 1 year 70,196 65,683 Receivable after 1 year but within 5 years 225,101 238,079 #StaySafe Receivable after 5 years 889 769 Unearned finance charges deducted - -

Net investment in instalment sale and finance leases 296,186 304,531 Receivable within 1 year 70,196 65,683 Receivable after 1 year but within 5 years 225,101 238,079 Receivable after 5 years 889 769

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68 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 69 Annual report 2020 70

Notes to the financial statements for the year ended 31 December 2020

STANBICSTANBICSTANBICSTANBIC BANK BANKSTANBIC BANK GHANA STANBICSTANBICGHANA BANK GHANA BANK LIMITED GHANA LIMITED BANKBANK LIMITEDGHANA LIMITED GHANAGHANA LIMITED LIMITEDLIMITED NotesNotesNotes to to Notesthe the to financialNotes thefinancial to NotesfinancialtheNotes to financialstatements the statements toto financial thestatementsthe financialstatementsfinancial statements statementsstatements forfor the thefor year yearthefor ended year theendedfor year endedthe 31forfor 31 yearended December thethe December 31 yearendedyear December 31 endedendedDecember 202031 2020 December 31 312020 DecemberDecember 2020 2020 20202020

5 5 Loans5 Loans5Loans and and5Loans advances andadvances55Loans advancesandLoansLoans advancesto and to customers customers advances andtoand customers advancestoadvances customers (continued) to(continued) customers (continued) toto customerscustomers (continued) (continued) (continued)(continued)

5.35.3 Credit5.3Credit5.3Credit impairments impairments5.3Credit impairments5.35.3Credit impairments CreditallowanceCredit allowanceimpairments allowance impairmentsimpairments allowance for for loans allowance loansfor allowanceloans andallowancefor and loansadvances forandadvances loans advancesand forfor loansloansadvances and advances andand advancesadvances YearYear endedYear endedYear ended 31 31 DecemberYearended December 31 Year YearendedDecember 31 endedDecember ended2020 312020 December 2020 3131 DecemberDecember 2020 2020 20202020 A Areconciliation reconciliationA reconciliationA reconciliation ofA of reconciliationthe theA Aofallowance reconciliation reconciliationallowancethe of allowance the of forallowance thefor impairment of of impairment allowancefor thethe impairment allowanceforallowance impairment losses for losses impairment forlosses forfor for impairment impairment loanslosses loans for lossesandloans forand advances,loans losses lossesandadvances, for loansadvances,and forfor advances,loansby loansand by class: class:advances, andbyand class: advances,byadvances, class: by class: byby class:class: Transfers Transfers Transfers betweenTransfers between Transfersbetween stages betweenTransfersstagesTransfers stages between stages betweenbetween stages stagesstages IncomeIncomeIncome statement statementIncome statementIncome movementstatement movementIncomeIncome statement movement statementmovementstatement movement movementmovement PostPost write-offPost write-off Postwrite-off write-offPost Postwrite-offPost write-offwrite-off ImpairedImpairedImpaired Impaired Impaired ImpairedImpaired Opening Opening Opening ECL OpeningECL ECL Opening ECL OpeningOpening ECL ECLECL DerecognisedDerecognisedDerecognisedDerecognised Derecognised DerecognisedDerecognised CurrencyCurrencyCurrency translationCurrency translation translationCurrency translation CurrencyandCurrency and translation andClosing translationtranslation Closingand Closing and Closing andand recoveriesClosing recoveries ClosingrecoveriesClosing recoveries recoveries recoveries recoveries Transfer Transfer Transfer Stage TransferStage Stage 1Transfer 1Transfer StageTransfer Transfer1Transfer Transfer Stage 1 Stage TransferStage StageStage 1 Stage2Transfer 2 1 1Transfer Stage Transfer 2Transfer TransferStage 2 Stage TransferStage Stage 2 StageTransfer 22 Stage TransferTransfer Stage StageStage ImpairmentsImpairmentsImpairmentsImpairments Changes ChangesImpairments ChangesImpairmentsImpairments inChanges in ECL ECL inChanges - ECL due- due inChangesChanges toECL- dueto in - ECL todueSubsequent inSubsequentin - ECLtoECL due Subsequent --to dueSubsequentdue toto Subsequent SubsequentSubsequent accountsaccountsaccounts accounts accounts accountsaccounts 1 January1 January1 January 20201 2020January 12020 January 12020 1 JanuaryJanuary 2020 20202020 TotalTotalTotalTotalTotalTotalTotal incudingincudingincuding write incudingwrite writeincuding write incudingincudingTotal writeTotal writeTotalwriteTVMTVMTotal UnwindTVM UnwindTotal TVMUnwindTotalTotal UnwindTVM TVMUnwindTVM UnwindUnwindotherother movementsother movementsother movements othermovementsother othermovementsbalance movementsmovementsbalancebalance balancerecognised recognisedbalance recognisedbalancebalance recognised in in recognised in recognisedrecognised in in inin (to)/from(to)/from(to)/from (to)/from (to)/from(to)/from (to)/from(to)/from(to)/from(to)/from (to)/from 3(to)/from (to)/from3 (to)/from(to)/from3(to)/from (to)/from3 (to)/from3 (to)/from33 (to)/from(to)/from raisedraisedraisedraisedmodificationsmodificationsraisedmodificationsraisedraisedmodificationsmodificationsmodificationschangesmodificationschangeschanges in changesin ECL ECL inchanges ECL inchangeschanges ECL in ECL inin ECLECL writtenwrittenwritten off offwritten offwritten offwrittenwritten off offoff offsoffs offs offs offs offsoffs ProfitProfit Profitor or loss lossProfit or lossProfit or lossProfit Profitor loss oror lossloss

StageStage Stage1 1 Stage 1 Stage 1 StageStage 1 11 MortgageMortgageMortgage loans Mortgageloans loansMortgage loansMortgageMortgage loans loansloans 2,8712,8712,8712,8712,8712,8712,871- - - - 616- 616--616 616 616(1)(1)616616(1) (1)615615(1) 615(1)(1)615 615325615325615 325 325 325 325325 - - - - (949)- (949)-(949)- (949) (949)(949)(949)- - - -(624)(624)- (624)--(624) (624)- -(624)(624)------(4,933)(4,933)(4,933)(4,933)(2,071)(4,933)(2,071)(2,071)(4,933)(4,933)(2,071)(2,071)(2,071)(2,071)------InstalmentInstalmentInstalment salesInstalment sales and Instalmentsales and finance salesInstalmentfinanceandInstalment finance salesand lease lease finance salesandsales lease finance andand lease financefinance lease leaselease 1,0041,0041,0041,0041,0041,0041,004- - - - 2,9362,936- 2,936-- 2,9362,9362,9362,936- - - 2,936- 2,9362,936- 2,936-- 2,9362,9361712,936171 171 171 171 171171 - - - - (3,565)(3,565)- (3,565)-- (3,565)(3,565)(3,565)(3,565)- - - (3,394)-(3,394)(3,394)- (3,394)-- (3,394)-(3,394)(3,394)------(45)(45) (45) (45)501501(45)501(45)(45)501 501 501501------overdraftsoverdraftsoverdrafts andoverdrafts and other otherandoverdrafts demand other andoverdraftsdemandoverdrafts other demandand loans loans otherdemand andand loans otherdemandother loans demanddemand loans loansloans 11,97211,97211,97211,97211,97211,97211,972- - - - 1,6831,683- 1,683-- 1,6831,683(15)1,683(15)1,683(15) (15)1,6681,668(15)1,668(15)(15)1,6681,6683,3891,6683,3891,6683,3893,3893,3893,3893,389 - - - - (4,519)(4,519)- (4,519)-- (4,519)(4,519)(4,519)(4,519)- - - (1,130)-(1,130)(1,130)- (1,130)-- (1,130)-(1,130)(1,130)------1,0991,0991,0991,09913,60913,6091,09913,6091,0991,09913,60913,60913,60913,609------OtherOther termOther term loansOther termloans Othertermloans Otherloans Otherterm loans termterm loansloans 13,76713,76713,76713,76713,76713,76713,767- - - - 2,2862,286- 2,286-- 2,2862,286(368)(368)2,2862,286(368)(368)1,9181,918(368)1,918(368)(368)1,9181,91817,77417,7741,9181,91817,77417,77417,77417,77417,774 - - - - (8,263)(8,263)- (8,263)-- (8,263)(8,263)(8,263)(8,263)- - - 9,511- 9,511-9,511-9,511- 9,511- 9,5119,511------234234 234 23425,43025,43023425,43023423425,43025,43025,43025,430------TotalTotalTotalTotalTotalTotalTotal 29,61429,61429,61429,61429,61429,61429,614- - - - 7,5217,521- 7,521-- 7,5217,521(384)(384)7,5217,521(384)(384)7,1377,137(384)7,137(384)(384)7,1377,13721,65921,6597,1377,13721,65921,65921,65921,65921,659 - - - - (17,296)(17,296)- (17,296)-- (17,296)(17,296)(17,296)(17,296)- - - 4,363- 4,363-4,363-4,363- 4,363- 4,3634,363------(3,645)(3,645)(3,645)(3,645)37,46937,469(3,645)37,469(3,645)(3,645)37,46937,46937,46937,469------

StageStage Stage2 2 Stage 2 Stage 2 StageStage 2 22 MortgageMortgageMortgage loans Mortgageloans loansMortgage loansMortgageMortgage loans loansloans 7,7547,7547,7547,7547,754(616)7,754(616)7,754(616)(616) (616)(616)(616)- - - - (101)(101)- (101)-- (101)(717)(101)(717)(717)(101)(101)(717) (717)291(717)(717)291 291 291 291 291291 - - - - (2,789)(2,789)- (2,789)-- (2,789)(2,789)(2,789)(2,789)- - - (2,498)-(2,498)(2,498)- (2,498)-- (2,498)-(2,498)(2,498)------4,539-4,5394,539- 4,539-- 4,5394,5394,539------InstalmentInstalmentInstalment salesInstalment sales and Instalmentsales and finance salesInstalmentfinanceandInstalment finance salesand lease lease finance salesandsales lease finance andand lease financefinance lease leaselease 9,5659,5659,5659,5659,565(2,936)(2,936)9,5659,565(2,936)(2,936)(2,936)(2,936)(2,936)- - - - (475)(475)- (475)-- (475)(3,411)(3,411)(475)(3,411)(475)(475)(3,411)(3,411)(3,411)(3,411)130130 130 130 130 130130 - - - - (564)- (564)-(564)- (564) (564)(564)(564)- - - -(434)(434)- (434)--(434) (434)- -(434)(434)------5,720-5,7205,720- 5,720-- 5,7205,7205,720------overdraftsoverdraftsoverdrafts andoverdrafts and other otherandoverdrafts demand other andoverdraftsdemandoverdrafts other demandand loans loans otherdemand andand loans otherdemandother loans demanddemand loans loansloans 14,78614,78614,78614,78614,786(1,683)(1,683)14,78614,786(1,683)(1,683)(1,683)(1,683)(1,683)- - - - (309)(309)- (309)-- (309)(1,992)(1,992)(309)(1,992)(309)(309)(1,992)(1,992)2,275(1,992)(1,992)2,2752,2752,2752,2752,2752,275 - - - - 1,170-1,1701,170-- 1,1701,1701,1701,170- - - 3,445- 3,445-3,445-3,445- 3,445- 3,4453,445------16,23916,239- 16,239- 16,239-- 16,23916,23916,239------OtherOther termOther term loansOther termloans Othertermloans Otherloans Otherterm loans termterm loansloans 5,1525,1525,1525,1525,152(2,286)(2,286)5,1525,152(2,286)(2,286)(2,286)(2,286)(2,286)- - - - (1,039)(1,039)- (1,039)-- (1,039)(3,325)(1,039)(3,325)(3,325)(1,039)(1,039)(3,325)(3,325)3,179(3,325)(3,325)3,1793,1793,1793,1793,1793,179 - - - - (11,608)(11,608)- (11,608)-- (11,608)(11,608)(11,608)(11,608)- - - (8,429)-(8,429)(8,429)- (8,429)-- (8,429)-(8,429)(8,429)------9,0669,0669,0669,0662,4649,0662,4642,4649,0669,0662,4642,4642,4642,464------TotalTotalTotalTotalTotalTotalTotal 37,25737,25737,25737,25737,257(7,521)(7,521)37,25737,257(7,521)(7,521)(7,521)(7,521)(7,521)- - - - (1,924)(1,924)- (1,924)-- (1,924)(9,445)(1,924)(9,445)(9,445)(1,924)(1,924)(9,445)(9,445)5,875(9,445)(9,445)5,8755,8755,8755,8755,8755,875 - - - - (13,791)(13,791)- (13,791)-- (13,791)(13,791)(13,791)(13,791)- - - (7,916)-(7,916)(7,916)- (7,916)-- (7,916)-(7,916)(7,916)------9,0669,0669,0669,06628,96228,9629,06628,9629,0669,06628,96228,96228,96228,962------StageStage Stage3 3 Stage 3 Stage 3 StageStage 3 33 MortgageMortgageMortgage loans Mortgageloans loansMortgage loansMortgageMortgage loans loansloans 3,7363,7363,7363,7363,7363,7363,7361 1 1 1 1011 10111101 101 101 -101101- - - 102102- 102-- 102 102 102102------4,176-4,1764,176-- 4,1764,1764,1764,176- - - 4,176- 4,176-4,176-4,176- 4,1763873874,1764,176387 387(3,926)(3,926)387(3,926)387387(3,926)(3,926)(3,926)(3,926) 249249 249 2494,7244,7242494,7242492494,7244,7242344,7244,724234 234 234 234 234234 InstalmentInstalmentInstalment salesInstalment sales and Instalmentsales and finance salesInstalmentfinanceandInstalment finance salesand lease lease finance salesandsales lease finance andand lease financefinance lease leaselease 16,68716,68716,68716,68716,68716,68716,687- - - - 475- 475-475- 475 475 -475475- - - 475475- 475-- 475 475207475207475 207 207 207 207207 - - - - 6,107-6,1076,107-- 6,1076,1076,1076,107- - - 6,314- 6,314-6,314-6,314- 6,3141651656,3146,314165 165(830)165(830)(830)165165(830) (830)(830)(830) 1,0971,0971,0971,09723,90823,9081,09723,9081,0971,09723,90823,90823,90823,908674674 674 674 674 674674 overdraftsoverdraftsoverdrafts andoverdrafts and other otherandoverdrafts demand other andoverdraftsdemandoverdrafts other demandand loans loans otherdemand andand loans otherdemandother loans demanddemand loans loansloans 36,20936,20936,20936,20936,20936,20936,2091515 15 15 153093091515309 309 309 -309309- - - 324324- 324-- 324 3241,4031,4033243241,4031,4031,4031,4031,403 - - - - 8,226-8,2268,226-- 8,2268,2268,2268,226- - - 9,629- 9,629-9,629-9,629- 9,629- 9,6299,629- - (5,076)-(5,076)(5,076)- (5,076)-- (5,076)(5,076)(5,076) 1010 10 41,0961041,0961041,09641,0961010 41,0962,06541,09641,0962,0652,0652,0652,0652,0652,065 OtherOther termOther term loansOther termloans Othertermloans Otherloans Otherterm loans termterm loansloans 43,76743,76743,76743,76743,76743,76736843,767368 368 368 3681,0391,0393683681,0391,0391,0391,0391,039- - - 1,407- 1,407-1,4071,407-- 1,4071,4801,4071,4801,4071,4801,4801,4801,4801,480 - - - - 60,22660,226- 60,226-- 60,22660,226(18,116)(18,116)60,22660,226(18,116)(18,116)43,590(18,116)43,590(18,116)(18,116)43,59043,59043,59010610643,59043,590106 106(19,950)(19,950)106(19,950)106106(19,950)(19,950)(19,950)(19,950)(13,103)(13,103)(13,103)(13,103)55,817(13,103)55,817(13,103)55,817(13,103)55,81755,8171,36355,81755,8171,3631,3631,3631,3631,3631,363 TotalTotalTotalTotalTotalTotalTotal 100,399100,399100,399100,399100,399100,399100,399384384 384 384 3841,9241,9243843841,9241,9241,9241,9241,924- - - 2,308- 2,3082,308- 2,308-- 2,3083,0902,3083,0902,3083,0903,0903,0903,0903,090 - - - - 78,73578,735- 78,735-- 78,73578,735(18,116)(18,116)78,73578,735(18,116)(18,116)63,709(18,116)63,709(18,116)(18,116)63,70963,70963,70965865863,70963,709658 658(29,782)(29,782)658(29,782)658658(29,782)(29,782)(29,782)(29,782)(11,747)(11,747)(11,747)(11,747)125,545125,545(11,747)125,545(11,747)(11,747)125,545125,545125,5454,336125,5454,3364,3364,3364,3364,3364,336

Purchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originated credit credit creditimpaired impaired credit impaired credit impaired creditcredit impaired impairedimpaired ------TotalTotalTotalTotalTotalTotalTotal ------

TotalTotal ECLTotal ECLTotal ECL TotalECL Total TotalECL ECLECL 167,270167,270167,270167,270167,270(7,137)167,270167,270(7,137)(7,137)(7,137)(7,137)9,4459,445(7,137)(7,137)9,4459,4459,445(2,308)(2,308)9,4459,445(2,308)(2,308)(2,308)-(2,308)(2,308)- - - 30,62430,624- 30,624-- 30,62430,62430,62430,624 - - - - 47,64847,648- 47,648-- 47,64847,648(18,116)(18,116)47,64847,648(18,116)(18,116)60,156(18,116)60,156(18,116)(18,116)60,15660,15660,15665865860,15660,156658 658(29,782)(29,782)658(29,782)658658(29,782)(29,782)(29,782)(29,782)(6,326)(6,326)(6,326)(6,326)191,976191,976(6,326)191,976(6,326)(6,326)191,976191,976191,9764,336191,9764,3364,3364,3364,3364,3364,336

69696969 69 6969 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 71 Annual report 2020 72

Notes to the financial statements for the year ended 31 December 2020

STANBICSTANBICSTANBICSTANBIC BANKSTANBIC BANKSTANBIC BANK STANBICGHANA BANKSTANBIC GHANA BANKSTANBIC GHANA BANK STANBICLIMITEDGHANA BANK LIMITEDGHANA BANK LIMITEDGHANA BANK GHANALIMITED BANK GHANALIMITED GHANA LIMITED GHANALIMITED LIMITED LIMITED LIMITEDSTANBICSTANBIC BANK BANKSTANBIC GHANA GHANA LIMITEDBANK LIMITED GHANA LIMITED NotesNotesNotes toNotes thetoNotes theto financialNotes theto financialNotes theto financialNotes theto financialNotes statements tothe financial Notes statementstothe financial statementstothe financial thestatementsto financial statements the financial statements financial statements statements statements statements Notes Notes to theto the financial Notesfinancial tostatements thestatements financial statements for forthe forthe year forthe year forendedthe year forendedthe year forendedthe year31for theended year31Decemberfor the ended year 31December forthe endedyear 31December theendedyear 31December ended year 2020 31December ended 2020 31December ended 312020December 31December2020 December312020 December2020 2020 2020 2020for for2020the the year year ended endedfor 31the 31December year December ended 2020 31 2020 December 2020

5 5 Loans5 Loans5 Loans 5andLoans 5and advancesLoans5 and advances5Loans and advances5Loans and advancesLoans 5to and Loans advances customerstoand advances Loans customersandto advances andcustomersto advances customersandto advances (continued) customersto advances (continued) customersto (continued)customersto (continued)customersto customers (continued)to (continued)customers5 (continued)5 (continued)Loans (continued)Loans (continued) and and advances5 advancesLoans to and customersto customers advances (continued) to(continued) customers (continued) 5.3 5.3Credit5.3Credit5.3 Creditimpairments5.3Credit 5.3impairmentsCredit 5.3impairments5.3Credit impairments5.3Credit impairments allowanceCredit5.3 impairments allowanceCredit impairments allowanceCredit impairments allowance impairments for allowance impairmentsforloans allowance forloans allowance for andloansallowance forallowanceloansand advances forloansandallowance advances for loansand advancesfor 5.3loansand advancesfor loans 5.3and advancesforloansCredit and advances Creditloansand advances and impairments advances and impairmentsadvances5.3 advancesCredit allowance allowanceimpairments for forloans allowanceloans and and advances foradvances loans and advances YearYear endedYear endedYear ended31Year endedDecember31Year endedDecember31Year endedDecember31Year endedYearDecember31 2019 ended December31Year 2019ended 31December 2019 ended31December 2019 31December 2019 December31 2019 December 2019 2019 2019 2019 YearYear ended ended 31 December31Year December ended 2019 201931 December 2019 A reconciliationA reconciliationA reconciliationA reconciliationA reconciliation ofA thereconciliation Aof reconciliation the Aallowanceof reconciliation A theallowanceof reconciliation theAallowanceof reconciliation theallowanceof for theofallowance impairmentfor the ofallowance forimpairment the ofallowance for impairmentthe allowanceof forimpairment theallowance losses forimpairment allowance losses forimpairment lossesforimpairment for lossesimpairmentloansfor impairment lossesforAforloans reconciliation lossesandimpairmentAforloans reconciliation losses and forloansadvances, losses andforloans advances, losses andforloans advances, losses forofandloans advances, A bythe forloansofand reconciliationadvances, class: bytheloansallowanceforand advances, class: byandloansallowance advances, class:andby advances, class:byand advances,for ofclass:by advances,impairmentforthe byclass: impairment allowancebyclass: byclass: class:by losses class: for losses impairment for loansfor loans and losses and advances, advances, for loans by and class:by class: advances, by class: Transfers Transfers Transfers between Transfers between Transfers between Transfers stages betweenTransfers stages Transfersbetween stages Transfersbetween stages betweenTransfers stages between stages between stages between stages stages stages Transfers Transfers between betweenIncome stagesTransfersIncome stagesIncome statement Income statementbetween Income statement Income movementstatement Incomestages movementstatementIncome movementstatementIncome statementmovementIncome statementmovement statement movement statementmovement movement movement movement IncomeIncome statement statement movementIncome movement statement movement PostPost write-offPost write-offPost write-off Post write-off Post write-off Post write-off Post write-offPost write-off Post write-off write-off PostPost write-off write-off Post write-off ImpairedImpairedImpaired Impaired Impaired Impaired Impaired Impaired Impaired Impaired ImpairedImpaired Impaired Opening Opening Opening ECL Opening ECL Opening ECL Opening ECL Opening ECL Opening ECLOpening ECL Opening ECL ECL ECL Opening Opening ECL ECL Opening ECL CurrencyCurrencyCurrency translationCurrency translationCurrency translationCurrency andtranslationCurrency translation andCurrencyother Currencytranslationand other translationandCurrency other translation and Closingother translation and Closingother translationand Closingother and otherClosing and otherClosing andrecoveriesotherClosing recoveriesotherClosing recoveriesClosing Closingrecoveries recoveriesClosing Currency recoveries Currency recoveries recoveries translationrecoveries translationrecoveries Currency and and other other translation ClosingClosing and other recoveriesClosingrecoveries recoveries accountsaccountsaccounts accounts accounts accounts accounts accounts accounts accounts accountsaccounts accounts 1 January1 January1 January 20191 January 20191 January 20191 TransferJanuary 12019 JanuaryTransfer 12019 JanuaryTransfer1 Stage2019 January Transfer 1 2019Stage JanuaryTransfer 20191 Stage Transfer2019 1StageTransfer Transfer 2019 1Stage Transfer Transfer 1 StageTransfer Stage 1Stage Transfer Transfer Stage Stage1Transfer 2 Stage1 Transfer Transfer 2 Stage1Stage Transfer Transfer 21Stage Transfer Transfer 21Stage Transfer Stage 1 Transfer 2StageJanuary TransferStage1 TransferStage 2January3 Stage Stage2Transfer 3 Stage2019 2TransferStage 3 Stage 2019 2Transfer 3StageTransfer 2 Transfer 13Stage JanuaryTransfer TransferStage3 Stage3 ImpairmentsStage 20193Stage ImpairmentsStage 3 1 Impairments 3 1TransferImpairmentsTransfer ChangesImpairmentsTransfer ChangesImpairments StageStageChangesImpairments in StageChangesImpairments ECL 1in2 Impairments Changes ECL Transferin- 2Transfer ChangesImpairments dueECL Transferin-Changes duetoECL in-Changes Stagedue ECLtoStage Changesin- dueStage SubsequentECLto in-Changes 3 due ECL2 toSubsequentin - 3ECLTransferdue intoSubsequent - ECLdue toSubsequentin- due ECL toSubsequent- Stage due to Subsequent- dueto Subsequent Derecognised3 toSubsequentImpairmentsDerecognised SubsequentImpairmentsDerecognised SubsequentDerecognised Derecognised Changes Derecognised Changes Derecognised ImpairmentsDerecognised inDerecognised ECL in Derecognised ECL - due Changes - dueto to inSubsequent ECL Subsequent - duemovements to movements movements SubsequentDerecognisedmovementsDerecognisedmovementsmovements movements movementsbalancemovements balanceDerecognisedmovementsbalance balance recognisedbalance recognisedbalance recognisedbalance recognised inbalance Profitrecognised balancein Profitrecognised balancein Profitrecognised in recognisedProfit in recognised Profit movementsin recognisedProfit inmovements Profit in Profit in Profit in Profit movements balancebalance recognisedrecognisedbalance in Profit in Profit recognised in Profit TotalTotalTotalTotalTotalTotalTotalTotalTotalTotal TotalTotal Total TotalTotalTotalTotalwrittenTotalwrittenTotal TotaloffwrittenTotal writtenoffTotal writtenoffTotal writtenoff writtenoffwritten offwritten off writtenoff off off TotalTotal writtenwrittenTotal off off written off (to)/from(to)/from(to)/from (to)/from (to)/from (to)/from (to)/from(to)/from (to)/from(to)/from (to)/from(to)/from (to)/from(to)/from (to)/from (to)/from(to)/from (to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/from(to)/fromraised raised raisedraised(to)/frommodifications(to)/fromraisedmodifications(to)/fromraisedmodificationsraised modificationsraisedmodificationsraisedmodificationsraised(to)/from(to)/frommodificationschanges(to)/frommodificationschangesmodificationschanges inmodifications changesECL in changesECL in (to)/from changesECL incudingin changes ECL inincuding changes ECL inincuding changes write ECL in incuding changes writeECL raisedin offsincuding ECL writeinraised offsincuding ECL write in incudingoffs ECLwrite incuding offs modificationswrite incuding offs modificationswriteincuding offs raisedwrite offs write offs write offs offsmodificationschangeschanges in ECL in ECL changesincuding incuding writein ECL write offs offsincuding write offs or lossor lossor lossor lossor lossor lossor lossor lossor lossor loss or lossor loss or loss

StageStage 1Stage 1Stage 1Stage 1Stage Stage1 Stage1 Stage1 1Stage 1 1 StageStage 1 1 Stage 1 ------MortgageMortgageMortgage loansMortgage loansMortgage loansMortgage loansMortgage MortgageloansMortgage loans loansMortgage loans loans loans MortgageMortgage2,4962,496 loans2,496 loans2,4962,496Mortgage2,4962,4962,496 -loans2,496- 2,496- - - (198)- (198)- (198)- (198)- (198)- (198)(21)(198)(21)(198)2,496(21)(198)2,496(21)(198)(219)(21)(219)(21)(219)(21)(219)(21)2,496(21)(219)(219)(21)- 716(219)- 716(219)716(219)716(219)716(198)716-(198)716716716- 716- (198)(21)- (21)- - (122)- (219)(122)- (219)(122)- (21)-(122)(122)- (122)(122)(219)716-(122)716-(122)-(122)- 594- 594-716594- -594--594--594- 594-594-594-(122)594--(122)- - - - (122)------2,871-2,871594-2,871594-2,871- - 2,871- 2,871-2,8712,871-594- 2,871-- 2,871------2,8712,871- 2,871- - - InstalmentInstalmentInstalment salesInstalment Instalmentsales and Instalmentsales andfinance Instalmentsales and Instalment financesales andInstalment financeleasesales and Instalmentfinance saleslease and salesfinance lease and salesfinance lease and financesales lease and finance lease andfinance lease finance lease lease lease InstalmentInstalment1,5981,598 sales1,598 sales1,598 and1,598 Instalmentand finance1,598 finance1,598 lease1,598- sales 1,598lease- 1,598and- -finance-2,061- lease2,061- 2,061- 2,061- 2,061- 2,061(14)2,0612,061(14)2,0611,598(14)2,0611,598(14)2,047(14)2,047(14)2,047(14)2,047(14)2,0471,598(14)2,047(14)- 5782,047- 2,0475782,0475782,0475782,0615782,061578- 578578578- 578- 2,061(14)- (14)- -(3,219)-2,047(3,219)-2,047(3,219)- (14)(3,219)- (3,219)- (3,219)(3,219)2,047578(3,219)- (3,219)578- (3,219)- -(2,641)-(2,641)-(2,641)578-(2,641)-(2,641)-- (2,641)--(2,641)- (2,641)- (2,641)- (3,219)(2,641)- (3,219)------(3,219)------1,004(2,641)-1,004(2,641)-1,004-1,004- - 1,004- 1,004-1,004(2,641)1,004-- 1,004-- 1,004------1,0041,004- 1,004- - - overdraftsoverdraftsoverdrafts andoverdrafts andoverdraftsother andoverdrafts other demand overdraftsand other overdraftsdemand and other overdraftsdemand and otherloans overdraftsdemandand otherloans anddemand other loans and demandother loans demandandother loans demand other loans demand loans demand loans loans loans overdrafts11,954overdrafts11,954 and11,954 and 11,954other11,954 otheroverdrafts demand11,954 demand11,95411,954 -loans and11,954 loans- other11,954- -demand- - loans------11,954- -11,954------11,954------18- 18- - 18--- 18- 18 18 18- --18- -18- 18- -18 -18-18- 18-- 18-- 18- 18- 18- 18- 18-- 18------18-- -- 11,972- 11,972- 11,97218- 11,972-18- 11,972- -11,97211,972- 11,972--11,97218-- 11,972------11,97211,972- 11,972- - - OtherOther termOther term Otherloans termOther loans termOther loans termOther loans termOther loans termOther loans termOther loans term loans term loans loans OtherOther8,355 term8,355 term loans8,355 loans8,3558,355Other8,355 term8,3558,355- loans8,355- 8,355- - -1,575-1,575- 1,575- 1,575- 1,575- 1,575(138)1,575(138)1,575(138)1,5758,355(138)1,5758,3551,437(138)1,437(138)1,437(138)1,437(138)(138)1,4378,35517,6781,437(138)- 1,43717,678- 1,43717,6781,43717,6781,43717,6781,57517,6781,57517,678- 17,67817,67817,678- - 1,575(138)- (138)- -(7,757)-1,437(7,757)-1,437(7,757)-(138)(7,757)- (7,757)- (7,757)(6,076)17,678(7,757)1,437(6,076)(7,757)17,678(6,076)(7,757)(6,076)(7,757)(6,076)3,845(6,076)17,6783,845(6,076)(6,076)3,845(6,076)3,845(6,076)3,845- 3,845- 3,845- 3,845- 3,845- (7,757)3,845- (7,757)------130(7,757)(6,076)-130(6,076)13013013,76713013,7673,845130(6,076)13,7671303,84513,76713013,76713013,76713013,76713,7673,845--13,767-- 13,767------130-130 13,76713,767130 13,767- - - TotalTotalTotalTotalTotalTotalTotalTotalTotalTotal Total24,403Total24,40324,40324,40324,403Total24,40324,40324,403- 24,403- 24,403- - -3,438-3,438- 3,438- 3,438- 3,438- 3,438(173)3,438(173)3,43824,403(173)3,43824,403(173)3,4383,265(173)3,265(173)3,265(173)3,265(173)24,403(173)3,26518,9723,265(173)- 3,26518,972-3,26518,9723,26518,9723,26518,9723,43818,9723,43818,972- 18,97218,97218,972- - 3,438(173)- (173)- (11,080)- (11,080)-3,265(11,080)-3,265-(173)(11,080)-(11,080)-(11,080)(11,080)(6,076)18,9723,265(11,080)(6,076)18,972(11,080)(6,076)(11,080)(6,076)(6,076)1,816(6,076)18,9721,816(6,076)(6,076)1,816(6,076)1,816(6,076)1,816- 1,816- 1,816- 1,816- 1,816-(11,080)1,816-(11,080)------(11,080)130(6,076)-130(6,076)13013029,61413029,6141,816130(6,076)29,6141301,81629,61413029,61413029,61413029,61429,6141,816--29,614--29,614------130-130 29,61429,614130 29,614- - -

StageStage 2Stage 2Stage 2Stage 2Stage Stage2 Stage2 Stage2 2Stage 2 2 StageStage 2 2 Stage 2 ------MortgageMortgageMortgage loansMortgage loansMortgage loansMortgage loansMortgage MortgageloansMortgage loans loansMortgage loans loans loans Mortgage12,644Mortgage12,644 loans12,644 loans12,64412,644Mortgage12,64412,64419812,644 loans19812,64419812,644198198198198- 198-198- 198- -(998)-(998)-12,644(998)- 12,644(998)- (800)(998)- (998)(800)(998)(800)(998)(800)12,644(998)(800)198(998)(800)198792(800)792(800)792(800)792(800)792198792- 792- 792792- 792- (998)- (998)- - -(3,096)-(3,096)(800)- (3,096)(800)-(998)(3,096)- (3,096)- (3,096)(3,096)792(800)(3,096)- 792(3,096)- (3,096)- -(2,304)-(2,304)792-(2,304)-(2,304)- (2,304)- (2,304)--(2,304)- (2,304)- (2,304)- (3,096)(2,304)- (3,096)-- - - - (1,786)- (3,096)(1,786)- (1,786)- (1,786)- (1,786)7,754(1,786)(2,304)(1,786)7,754(2,304)(1,786)7,754(1,786)7,754- (1,786)7,7547,7547,754(2,304)7,754-- 7,754-- 7,754------(1,786)- (1,786)- 7,754(1,786)7,754 7,754- - - InstalmentInstalmentInstalment salesInstalment Instalmentsales and Instalmentsales andfinance Instalmentsales and Instalment financesales andInstalment financeleasesales and Instalmentfinance saleslease and salesfinance lease and salesfinance lease and financesales lease and finance lease andfinance lease finance lease lease lease Instalment10,902Instalment10,902 10,902sales 10,902sales and10,902 Instalmentand finance10,902 (2,061)finance10,902(2,061)10,902 lease sales10,902(2,061) lease(2,061)10,902 and(2,061) finance(2,061)(2,061) (2,061)lease- (2,061)- (2,061)- - (1,325)- (1,325)- (1,325)-10,902(1,325)- 10,902-(3,386)(1,325)(1,325)-(3,386)(1,325)(3,386)(1,325)(3,386)(1,325)10,902(3,386)(2,061)(1,325)(3,386)(2,061)1,066(3,386)1,066(3,386)1,066(3,386)1,066(3,386)1,066(2,061)1,066-1,066-1,0661,066-1,066(1,325)- (1,325)- - - - 3,865(3,386)- 3,865(3,386)- (1,325)3,865- 3,865- 3,865- 3,8653,865(3,386)1,0663,865-1,0663,865- 3,865- -4,931- 4,9311,066- 4,931- 4,931- 4,931- 4,931--(8)4,931(8)4,931(8)4,931(8)3,8654,931(8)3,865- (8)(8)(8)(2,874)(8)(2,874)3,865(8)(2,874)- (2,874)- (2,874)9,565(2,874)4,931(2,874)9,565(2,874)4,9319,565(2,874)9,565- (2,874)9,5659,5659,5654,931(8)9,565- (8)9,565- 9,565- - - (8)- - -(2,874)- (2,874)- 9,565(2,874)9,565 9,565- - - overdraftsoverdraftsoverdrafts andoverdrafts andoverdraftsother andoverdrafts other demand overdraftsand other overdraftsdemand and other overdraftsdemand and otherloans overdraftsdemandand otherloans anddemand other loans and demandother loans demandandother loans demand other loans demand loans demand loans loans loans overdraftsoverdrafts6,1216,121 and6,121 and other6,121 other6,121overdrafts demand6,121 demand6,121 6,121loans- and6,121 loans- other6,121- demand- - - loans------6,121- -6,121------6,121------104- -104- -104---104-104104104- 104-- -104- - 104- 104- 104- 104-- -104-104--104- 104- 104-104-104-- 104- - - 8,561- 8,561-1048,561- 8,561- 8,56114,7868,56114,7868,56110414,7868,56110414,7868,561- 14,7868,56114,78614,78614,786-104-14,786-- 14,786------8,561- 8,561- 14,78614,7868,561 14,786- - - OtherOther termOther term Otherloans termOther loans termOther loans termOther loans termOther loans termOther loans termOther loans term loans term loans loans OtherOther term462 term462 loans462 loans462Other462(1,575)462 term(1,575)462 462loans(1,575)462(1,575)462(1,575)(1,575)(1,575)(1,575)- (1,575)- (1,575)- - (1,446)- (1,446)- (1,446)- (1,446)-462-(3,021)(1,446)462(1,446)-(3,021)(1,446)(3,021)(1,446)(3,021)(1,446)(3,021)(1,575)(1,446)462(3,021)(1,575)5,880(3,021)5,880(3,021)5,880(3,021)5,880(3,021)5,880(1,575)5,880-5,880-5,880(926)5,880(926)5,880(1,446)(926)(1,446)(926)- (926)(926)(3,218)(926)(3,021)(3,218)(926)(3,021)(3,218)(1,446)(926)(3,218)(926)(3,218)(3,218)(3,218)(3,021)5,880(30)(3,218)5,880(30)(3,218)(30)(3,218)(30)(30)1,706(30)1,7065,880(30)1,706(30)1,706(926)(30)1,706(926)(30)1,7061,706- 1,706- 1,706- (3,218)1,706(926)- (3,218)- - - - 6,005- (3,218)6,005-(30)6,005(30)6,0056,0055,1526,0051,7065,1526,0051,7065,1526,005(30)6,0055,1525,1526,0055,1525,1521,7065,152-- 5,152-- 5,152------6,005- 6,005- 5,1526,0055,152 5,152- - - TotalTotalTotalTotalTotalTotalTotalTotalTotalTotal Total30,129Total30,12930,12930,12930,129Total30,129(3,438)30,129(3,438)30,12930,129(3,438)(3,438)30,129(3,438)(3,438)(3,438)(3,438)- (3,438)- (3,438)- - (3,769)- (3,769)- (3,769)-30,129(3,769)-30,129(7,207)-(3,769)(3,769)(7,207)- (3,769)(7,207)(3,769)(7,207)(3,769)30,129(7,207)(3,438)(3,769)(7,207)(3,438)7,738(7,207)7,738(7,207)7,738(7,207)7,738(7,207)7,738(3,438)7,738-7,738-7,738(926)7,738(926)7,738(3,769)(926)(3,769)(926)-(926)(926)(2,345)(926)(7,207)(2,345)(926)(7,207)(2,345)(3,769)(926)(2,345)(926)(2,345)(2,345)(2,345)(7,207)7,738(30)(2,345)7,738(30)(2,345)(30)(2,345)(30)4,437(30)4,437(30)7,738(30)4,437(30)4,437(926)(30)4,437(926)(30)4,437(8)4,437(8)4,4374,437(8)(2,345)(8)4,437(926)(2,345)(8) (8) (8) (8) (8)9,906(2,345)(8)9,906(30)9,906(30)9,9069,90637,2579,90637,2574,4379,90637,2574,4379,906(30)37,2579,90637,2579,90637,25737,25737,2574,437(8)-37,257(8)-37,257- - - (8)- - - 9,906- 9,906- 37,25737,2579,906 37,257- - -

StageStage 3Stage 3Stage 3Stage 3Stage Stage3 Stage3 Stage3 3Stage 3 3 StageStage 3 3 Stage 3 MortgageMortgageMortgage loansMortgage loansMortgage loansMortgage loansMortgage MortgageloansMortgage loans loansMortgage loans loans loans MortgageMortgage867 loans867 loans867867Mortgage86786786721 loans8672186721 86721 21 2199821998219982199821998998998- 998- 998867- 1,019998867- 1,019- 1,019- 1,019- 1,019- 867-211,0191,01921- -1,0191,019- -1,019- 99821- 998------998- - - - - 2,487-1,0192,487-1,0192,487- 2,487-- 2,487- 2,4872,4871,0192,487- - 2,487- - 2,487- -2,487- 2,487- 2,487- 2,487- 2,487-(2,102)2,487--(2,102)2,487(2,102)2,487(2,102)2,487(2,102)2,487(2,102)2,487- (2,102)(2,102)(2,102)(2,102)1,4652,4871,4651,465- 1,465- 1,4653,7361,4652,4873,7361,4652,4873,7361,4653,736-1,4653,7361,4653,736(2,102)3,736215(2,102)2,4873,7362153,7362153,736215215(2,102)2152152152151,4652151,465 3,7361,4653,736 3,736215215 215 InstalmentInstalmentInstalment salesInstalment Instalmentsales and Instalmentsales andfinance Instalmentsales and Instalment financesales andInstalment financeleasesales and Instalmentfinance saleslease and salesfinance lease and salesfinance lease and financesales lease and finance lease andfinance lease finance lease lease lease Instalment21,463Instalment21,463 21,463sales 21,463sales and21,463 Instalmentand finance21,463 finance21,46321,46314 lease sales21,46314 lease21,46314 and14 finance141,32514 lease1,32514 1,32514 141,3251,32514 1,3251,325-1,32521,463-1,32521,463-1,3251,339- 1,339- 1,339- 1,339- 21,4631,339- -141,3391,33914- -1,3391,339- -1,3391,325- 141,325------1,325------10,299-1,33910,299-10,2991,339- 10,299--10,299- 10,29910,2991,33910,299- 10,299- - -10,299- 10,299- 10,299- 10,299- --10,299-10,299(10,314)- 10,299(10,314)--10,299(10,314)10,299(10,314)10,299(10,314)10,299(10,314)10,299-(10,314)(10,314)(10,314)(10,314)(6,100)10,299(6,100)(6,100)- (6,100)- (6,100)16,687(6,100)10,29916,687(6,100)10,29916,687(6,100)16,687(6,100)- 16,687(6,100)16,687(10,314)16,6871,146(10,314)10,29916,6871,14616,6871,14616,6871,1461,146(10,314)1,1461,1461,1461,146(6,100)1,146(6,100) 16,68716,687(6,100) 16,6871,1461,146 1,146 overdraftsoverdraftsoverdrafts andoverdrafts andoverdraftsother andoverdrafts other demand overdraftsand other overdraftsdemand and other overdraftsdemand and otherloans overdraftsdemandand otherloans anddemand other loans and demandother loans demandandother loans demand other loans demand loans demand loans loans loans overdrafts36,174overdrafts36,174 and36,174 and 36,174other36,174 otheroverdrafts demand36,174 demand36,17436,174 loans- and36,174 loans- other36,174- demand- - - loans------36,174- -36,174------36,174------35- 35- - 35--- 35- 35 35 35- --35- -35- 35- -35 -35--35- 35- 35-- 35- 35- 35- 35- 35-- 35------35-- -- 36,209- 36,209- 36,20935- 36,209-35- 36,209- -36,20936,209- 36,209--36,20935--36,209------36,20936,209- 36,209- - - OtherOther termOther term Otherloans termOther loans termOther loans termOther loans termOther loans termOther loans termOther loans term loans term loans loans Other33,470Other term33,470 term 33,470loans33,470 loans33,470Other33,47033,470 term13833,470138 33,470loans13833,4701381381,4461381381,4461381,4461381,4461381,4461,4461,446-1,44633,4701,446- 33,470-1,4461,584- 1,584- 1,584- 1,584- 33,4701,584- 1381,584-1,5851381,584-1,5851,5841,5851,5841,5851,5841,5851,4461381,5851,4461,5851,5851,585-1,585-1,446- - - - -44,9131,584-44,913-1,58444,913- 44,913--44,913- 44,91344,9131,5851,58444,9131,585- 44,913- 44,913- 46,498- 46,498- 1,58546,498- -46,498-46,498(34,390)- 46,498(34,390)--46,498(34,390)46,498(34,390)46,498(34,390)44,91346,498(34,390)44,913-(34,390)(34,390)(34,390)(34,390)(3,395)44,913(3,395)(3,395)- (3,395)- (3,395)43,767(3,395)46,49843,767(3,395)46,49843,767(3,395)43,767(3,395)- 43,767(3,395)43,767(34,390)11,64743,767(34,390)46,49811,64743,76743,76711,64743,76711,64711,64711,647(34,390)11,64711,64711,64711,647(3,395)(3,395) 43,76743,767(3,395) 43,76711,64711,647 11,647 TotalTotalTotalTotalTotalTotalTotalTotalTotalTotal Total91,974Total91,97491,97491,97491,974Total91,97491,97417391,97417391,97417391,9741731731733,7691733,7691733,7691733,7691733,7693,7693,769-3,76991,974-3,76991,974-3,7693,942- 3,942- 3,942- 3,942- 91,9743,942- 1733,942- 1,5851733,942-1,5853,9421,5853,9421,5853,9421,5853,7691731,5853,7691,5851,5851,585-1,585- 3,769- - - - -57,734-3,94257,734-57,7343,942- 57,734--57,734- 57,73457,7341,5853,94257,734-1,58557,734- 57,734- 59,319- 59,319- 1,58559,319- -59,319-59,319(46,806)--59,319(46,806)--59,319(46,806)59,319(46,806)59,319(46,806)57,73459,319(46,806)57,734-(46,806)(46,806)(46,806)(46,806)(8,030)57,734(8,030)(8,030)- (8,030)- 100,399(8,030)(8,030)100,39959,319(8,030)100,39959,319(8,030)100,399(8,030)-100,399(8,030)100,399(46,806)100,39913,008(46,806)100,39959,31913,008100,39913,008100,39913,00813,00813,008(46,806)13,00813,00813,00813,008(8,030)(8,030) 100,399100,399(8,030) 100,39913,00813,008 13,008

Purchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originated creditPurchased/originated creditPurchased/originated impairedcreditPurchased/originated impairedcredit impairedcredit impairedcredit creditimpaired creditimpaired creditimpaired impairedcredit impaired impairedPurchased/originatedPurchased/originated- - - Purchased/originated- credit- credit- - impaired- -impaired- -- -- credit- - -impaired------TotalTotalTotalTotalTotalTotalTotalTotalTotalTotal TotalTotal - - - Total------

TotalTotal ECLTotal ECLTotal ECLTotal ECLTotal ECLTotal ECLTotal ECLTotal ECLTotal ECL ECL Total146,506Total ECL146,506 146,506ECL146,506146,506Total146,506146,506(3,265) ECL146,506(3,265)146,506(3,265)146,506(3,265)(3,265)(3,265)7,207(3,265)(3,265)7,207(3,265)7,207(3,265)7,2077,207(3,942)7,2077,207(3,942)7,207(3,942)146,5067,207(3,942)146,5067,207(3,942)(3,942)- (3,942)-(3,942)146,506-(3,942)(3,265)-(3,942)(3,265)28,295- 28,295- 28,295- 28,295- 28,295- (3,265)7,20728,295- 7,20728,29528,29528,295(926)28,295(926)(3,942)(926)7,207(3,942)(926)(926)(926)44,309(926)44,309(926)44,309(3,942)-(926)44,309-(926)44,30944,309(6,106)44,30928,295(6,106)44,30928,29544,309(6,106)- (6,106)44,309(6,106)65,572(6,106)65,57228,295(6,106)65,572(6,106)65,572(6,106)(926)65,572(6,106)(46,814)(926)65,572(46,814)65,572(46,814)65,572(46,814)65,572(46,814)44,30965,572(926)(46,814)44,309(46,814)(46,814)(46,814)(46,814)2,00644,309(6,106)2,006(6,106)2,0062,006167,2702,006167,2702,00665,572167,2702,006(6,106)65,5722,006167,2702,006167,2702,006167,270(46,814)167,27013,008(46,814)167,27065,57213,008167,27013,008167,27013,00813,00813,008(46,814)13,00813,00813,00813,0082,0062,006 167,270167,2702,006 167,27013,00813,008 13,008

70707070707070707070 7070 70 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 73 Annual report 2020 74

NotesSTANBIC BANK GHANAto LIMITEDthe financial statements STANBICNotes BANK GHANAto the LIMITED financial statements Notes to the financial statements forfor the the year year ended ended 31 December 31 December 2020 2020 Notesfor the to the year financial ended statements 31 December 2020 for the year ended 31 December 2020

5 Loans and advances to customers (continued) 6.2 Current tax (continued) 5.4 Credit impairments for loans and advances (continued)

Segmental analysis of Stage 3 loans - industry At 1 Charge to Payments At 31 January income during the December The following table sets out the segment analysis of the bank's non performing loans and impairment by industry. statement year GHS'000 GHS'000 GHS'000 GHS'000 Stage 3 loans and advances Stage 3 credit impairment

2020 2019 2020 2019 GHS'000 GHS'000 GHS'000 GHS'000 Corporate tax up to 2019 19,810 - - 19,810 Agriculture 22 9,026 4,638 2,931 2020 - (124,660) 139,079 14,419 Construction and real estate 27,589 22,339 11,479 7,255 Finance, commerce and other business services 131,782 195,084 38,065 63,355 19,810 (124,660) 139,079 34,229 Individuals 27,572 21,776 11,190 7,072 Manufacturing 576 - 102 - National stabilisation levy Mining 32,823 29,245 13,325 9,497 up to 2019 39 - - 39 Other services 41,377 21,008 31,430 6,822 Transport 79,056 10,675 15,316 3,467 2020 - (16,379) 26,537 10,158 340,797 309,153 125,545 100,399 39 (16,379) 26,537 10,197

Segmental analysis of lifetime ECL credit impaired loans - geographic area Total 19,849 (141,039) 165,616 44,426 The following table sets out the distribution of the bank's impairments by geographic area where the loans are recorded.

Stage 3 loans and advances Stage 3 credit impairment At 1 January Charge to Payments At 31 income during the December 2020 2019 2020 2019 statement year GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 Ghana 340,797 309,153 125,545 100,399 Outside Ghana - - - - 340,797 309,153 125,545 100,399 Corporate tax 5.5 Modifications on loans and advances measured at amortised cost up to 2018 49,756 - - 49,756 Stage 2 2019 - (94,312) 64,366 (29,946) Amortised cost Net 49,756 (94,312) 64,366 19,810 before modification modification gain /(loss) 2020 GHS'000 GHS'000 National stabilisation levy Corporate 369,093 - Other loans and advances 489,594 47 up to 2018 4,936 - - 4,936 Total 858,687 47 2019 - (18 190) 13,293 (4,897) 4,936 (18,190) 13,293 39 2019 GHS'000 GHS'000 Total 54,692 (112,502) 77,659 19,849 Corporate - - Other loans and advances 11,174 926 Total 11,174 926

The gross carrying amount for modifications during the reporting year is GHS845.4 million (2019: Nil).

This included GHS641.83 million of Client relief provided to clients to assist with temporary liquidity constraints as a result of the impact of Covid-19. The relief included increased liquidity facilities, loan restructuring, covenant relaxations and payment holidays.

Group 2020 2019 2020 2019 GHS'000 GHS'000 GHS'000 GHS'000 6 Current tax

Current tax assets 44,426 19,938 44,426 19,849 44,426 19,938 44,426 19,849

6.1 Reconciliation of current tax assets

Current tax assets at beginning of the year 19,938 54,790 19,849 54,692 Movement for the year 24,488 (34,852) 24,577 (34,843) Charge for the year (141,038) (112,511) (141,039) (112,502) Payment/(refund) 165,526 77,659 165,616 77,659

Current tax assets at end of the year 44,426 19,938 44,426 19,849

72 71 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 75 Annual report 2020 76

NotesSTANBIC BANK to GHANA the LIMITED financial statements NotesSTANBIC BANK to GHANA the LIMITED financial statements forNotes the to year the financialended 31 statements December 2020 forNotes the toyear the ended financial 31 Decemberstatements 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

7 Other assets

2020 2019 9 Intangible assets GHS'000 GHS'000 Items in the course of collections 92,577 469,358 Computer software Accounts receivable 3,896 63,408 Assets held for sale 21,493 27,669 GHS'000 Prepayments 96,613 87,658 9.1 Cost Other receivables 284,747 132,354 Balance at 1 January 2020 499,326 780,447 103,665 Additions Included in other assets is an amount of GHS3.9 million (2019: GHS32.1 million ) due from Standard Bank Group. - See note 26.2 for details. Balance at 31 December 2020 103,665

8 Investment in subsidiary Balance at 1 January 2019 91,343 2020 2019 Additions 12,322 GHS'000 GHS'000 Balance at 31 December 2019 103,665 Amount invested 2,500 2,500 Disposal (2,500) - Accumulated amortisation - 2,500 Balance at 1 January 2020 25,553 (a) Details of sale of subsidiary Amortisation for the year 8,057 Cash consideration received 1,979 - Balance at 31 December 2020 33,610 Less: Cost of investment 2,500 - Loss on disposal ( 521) - Balance at 1 January 2019 17,762 Amortisation for the year 7,791 Stanbic Bank Ghana Limited sold its shares in SBG Securities Ghana Limited to Stanbic Holdings Ghana Limited Balance at 31 December 2019 25,553 on 14 October 2020. Carrying amount (b) Financial performance information 2020 70,055 The financial performance information presented are for nine months ended 30 September 2020 (2020 column) 2019 78,112 and the year ended 31 December 2019

2020 2019 GHS'000 GHS'000

Investment income 331 412 Interest expense (18) (29) Fees and commission income 90 136 Operating expenses (875) (1,139) Indirect tax - (24) Loss before direct tax (472) (644) Direct tax - - Loss after tax of disposed subsidiary (472) (644) Gain on sale of the subsidiary 472 - Profit from sale of disposed subsidiary - -

(c) Details of gain on sale of the subsidiary Cash consideration received 1,979 - Carrying amount of net assets sold (1,507) - 472 -

(d) The carrying amounts of assets and liabilities at the date of sale were: Cash and cash equivalents 59 - Investment securities 2,757 - Other assets 121 - Right-of-use assets 134 - Total assets 3,071 - Provisions and other liabilities (1,564) -

Net assets 1,507 -

73

74 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 77 Annual report 2020 78

NotesSTANBIC BANK GHANAto theLIMITED financial statements NotesSTANBIC BANK GHANA to LIMITED the financial statements Notes to the financial statements forNotes the to year the financial ended statements 31 December 2020 forfor the the year year ended ended 31 December 31 December 2020 2020 for the year ended 31 December 2020

10 Property, equipment and right-of-use assets 2020 2019 GHS'000 GHS'000 11 Stated capital

Computer Motor Office Leasehold Funiture Right-of-use 11.1 Authorised equipment vehicles equipment improvement and fittings assets Total 500,000,000 Ordinary shares of no par value (2019: 500,000,000 Ordinary shares of no par value) GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 There was no change in authorised share capital during the year. 10.1 Cost 11.2 Issued Number of ordinary shares issued for cash consideration is 221,275,640 (2019: 221,275,640) 414,169 414,169 Balance at 1 January 2020 93,643 10,684 22,058 34,694 56,862 176,833 394,774 Number of ordinary shares issued for non-cash consideration is 443,600 (2019: 443,600) 44 44 Additions 16,419 1,140 1,561 22,658 4,453 48,087 94,318 Disposals (19) (378) - - (172) - (569) 414,213 414,213 Balance at 31 December 2020 110,043 11,446 23,619 57,352 61,143 224,920 488,523

Balance at 1 January 2019 80,673 6,635 15,935 32,896 49,863 156,018 342,020 11.3 Analysis of shareholding Additions 12,991 4,427 6,136 1,798 7,256 20,815 53,423 Number of Number of Percentage Disposals (21) (378) (13) - (257) - (669) shareholders shares held holding By number of shares Balance at 31 December 2019 93,643 10,684 22,058 34,694 56,862 176,833 394,774 2020 Category 1 -1000 - - - 1001 -5000 - - - Accumulated depreciation 5001 - 50 000 4 87,061 0.04% over 50 001 3 221,632,179 99.96% Balance at 1 January 2020 52,356 4,444 12,346 25,455 34,878 36,019 165,498 7 221,719,240 100% Charge for the year 15,105 1,934 3,175 4,048 8,009 35,448 67,719 2019 Release on disposals (7) (378) - - (172) - (557) Category Balance at 31 December 2020 67,454 6,000 15,521 29,503 42,715 71,467 232,660 1 -1000 - - - 1001 -5000 - - - 5001 - 50 000 4 87,061 0.04% Balance at 1 January 2019 37,836 3,441 9,564 20,822 26,610 - 98,273 over 50 001 3 221,632,179 99.96% Charge for the period 14,541 1,381 2,795 4,633 8,519 36,019 67,888 7 221,719,240 100% Release on disposals (21) (378) (13) - (251) - (663) Balance at 31 December 2019 52,356 4,444 12,346 25,455 34,878 36,019 165,498 2020 2019 Number of Percentage Number of Percentage Net book value shares held holding shares held holding 2020 42,589 5,446 8,098 27,849 18,428 153,453 255,863 By name 2019 41,287 6,240 9,712 9,239 21,984 140,814 229,276 Shareholder

Amount of work in progress in the net book value of Property and equipment for which depreciation has not yet commenced is GHS23.4 million Stanbic Africa Holdings Limited - UK 220,701,981 99.542% 220,701,981 99.542% (2019: GHS5.01 million). Estate of Edward Henaku Boohene 555,243 0.250% 555,243 0.250% Dannex Aryton Starwin Plc 374,955 0.169% 374,955 0.169% Group Bigfat Service Ltd 33,821 0.015% 33,821 0.015% Joseph Ofori 32,316 0.015% 32,316 0.015% 10.2 Profit on disposal of property and equipment 2020 2019 Kwame C. Serbeh-Yiadom 13,333 0.006% 13,333 0.006% GHS'000 GHS'000 ` GHS'000 GHS'000 Kwaku Gyesi Twum 7,591 0.003% 7,591 0.003% 221,719,240 100% 221,719,240 100% Cost 569 13,100 569 669 Accumulated depreciation (557) (12,982) (557) (663) Net book value 12 118 12 6 Sale proceeds (106) (62) (106) (60) Profit on disposals (94) 56 (94) (54)

76 75 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 79 Annual report 2020 80

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED NotesNotes to the financial to the statements financial statements Notes to the financial statements forfor the year year ended ended 31 31 December December 2020 2020 forNotes the toyear the ended financial 31 statementsDecember 2020 for the year ended 31 December 2020

Group Group Group 13 Trading liabilities 2020 2019 2020 2019 GHS'000 GHS'000 GHS'000 GHS'000 12 Reserves 2020 2019 GHS'000 12.1 Statutory reserve GHS'000 Trading liabilities At 1 January 388,019 317,695 388,019 317,695 Comprising: Transferred from retained earnings 81,514 70,324 81,514 70,324 Other instruments 124,177 98,247 At 31 December 469,533 388,019 469,533 388,019 Derivatives (note 3) 4,306 4,292 128,483 102,539 Statutory reserve fund represents the cummulative amounts set aside from the annual profit after tax required by section 34 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). The proportion of profits after tax transferred to this reserve ranges between 12.5% and 50% depending on the ratio of existing statutory fund to paid- Maturity analysis up capital of the Bank. The maturity analysis is based on the remaining periods to contractual maturity from period end. 12.2 Statutory credit risk reserve 2020 2019 Provisions for loans recognised in the profit and loss account should be determined based on the requirements of GHS'000 GHS'000 IFRS. However, the IFRS provision should be compared with provisions determined under Bank of Ghana guidelines Maturing within 1 month 32,134 48,806 and the expected impact/changes in reserves should be treated as follows: Maturing after 1 month but within 6 months 76,667 44,306 (i) If provisions per Bank of Ghana guidelines is greater than IFRS provisions; the excess provision resulting should be Maturing after 6 months but within 12 months 19,682 9,427 transferred from the income surplus account to statutory credit risk reserve. 128,483 102,539 (ii) If provisions per Bank of Ghana guidelines is less than IFRS provisions; IFRS determined provision is charged to the income statement. The cumulative balance in the statutory credit risk reserve is thereafter reversed to the income surplus account. 14 Deposits and current accounts Analysis of the statutory credit risk reserve is disclosed under statements of changes in equity. 2020 2019 GHS'000 GHS'000 12.3 Share based payment reserve Share based payment reserve represents obligations under the equity settled portion of the Bank's share incentive 14.1 Deposits from banks 394,427 529,142 scheme which enables key management personnel and senior employees to benefit from the performance of the Bank. Deposits from banks 394,427 529,142

12.4 Dividend 14.2 Deposits from customers 9,666,965 6,755,312 The directors' at their meeting on 4 March 2021 recommend payment of dividend of GHS0.588 per ordinary share amounting to a total of GHS130,422,000 (2019: Nil). Current accounts 4,662,147 3,482,031 Call deposits 2,810,898 1,711,701 Savings accounts 1,140,647 762,836 Term deposits 509,217 208,338 Negotiable certificate of deposits 544,056 590,406

Total deposits and current accounts 10,061,392 7,284,454

Included in deposits from banks is GHS167.5 million (2019: GHS 166.09 million) due to Standard Bank Group. See note 26.2.

Maturity analysis The maturity analysis is based on the remaining periods to contractual maturity from period end. 2020 2019 GHS'000 GHS'000 Repayable on demand 7,790,512 6,531,008 Maturing within 1 month 368,477 311,559 Maturing after 1 month but within 6 months 1,895,329 433,260 Maturing after 6 months but within 12 months 7,019 8,589 Maturing after 12 months but within 5 years 55 38 Total deposits and current accounts 10,061,392 7,284,454

77 78 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 81 Annual report 2020 82

NotesSTANBIC BANK GHANA to LIMITED the financial statements NotesSTANBIC BANK to GHANA the LIMITED financial statements forNotes the to the year financial ended statements 31 December 2020 forNotes the to year the financialended 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020 15 Deferred tax assets/(liabilities)

2020 2019 GHS'000 GHS'000 16 Provisions and other liabilities (continued) Deferred tax assets/(liabilities) 21,696 (2,226) (2,226) 21,696 (c) Provisions for legal charges 15.1 Deferred tax analysis by source In the conduct of its ordinary course of business, the bank is exposed to various actual and potential claims and lawsuits. The Bank makes provision for amounts that would be required to settle obligations that may crystallise in the event of unfavourable outcome of Credit impairment charges 36,141 (19,500) the lawsuits. Estimates of provisions required are based on management judgement. See note 21.4 for further details. Property and equipment (14,445) 17,274 Deferred tax closing balance 21,696 (2,226)

(d) Lease liabilities 15.2 Deferred tax reconciliation 2020 2019 Deferred tax at beginning of the year (2,226) (110) GHS'000 GHS'000 Originating/(reversing) temporary differences for the period 23,922 (2,116) Credit impairment charges 38,367 (19,898) Opening balance 54,363 75,246 Property and equipment (14,445) 17,782 Additions for the year 47,963 20,775 Deferred tax at end of the year 21,696 (2,226) Interest expense 10,326 10,706 Lease payments (73 529) (52 364)

16 Provisions and other liabilities Closing balance 39,123 54,363

Provisions (e) Items in the course of transmission relates to balances held in respect of clearing and settlement of customer transactions. Provisions for Impairment of off- Provisions for Total franchise and balance sheet legal charges technical exposure (f) Staff-related accruals include performance bonus of GHS 35.26 million (2019: GHS 29.71 million) and deferred bonus of GHS 2.2 services million (2019: GHS 3.4 million). 2020 (g) Actuarial loss on employee defined benefits of GHS13.7 million (2019: GHS10.5 million ) relates to the present value of the Balance at 1 January 2020 22,451 4,920 1,400 28,771 Bank's obligation on its long service award to staff. Refer to note 27 for details. Provisions made during the year 8,362 1,813 - 10,175 Provisions utitlised during the year - (933) - (933) Provisions reversed during the year (10,136) (1,349) (200) (11,685) Balance at 31 December 2020 20,677 4,451 1,200 26,328 17 Subordinated debt

Current - 4,451 - 4,451 Non-current 20,677 - 1,200 21,877 2020 2019 20,677 4,451 1,200 26,328 GHS'000 GHS'000

Provisions for Impairment of off- Provisions for Total Subordinated debt - 15 million US dollar 86,845 83,556 franchise and balance sheet legal charges technical services exposure

2019 The terms and conditions of the subordinated debt are as follows:

Balance at 1 January 2019 18,508 5,668 172 24,348 Subordinated debt represents a US dollar denominated term non-collaterised facility of USD15 million obtained from Standard Bank Provisions made during the year 8,069 756 1,228 10,053 of South Africa effective 29 November 2016. The facility matures on 27 November 2026 and is repayable at maturity. Interest on the Provisions utitlised during the year - (1,053) - (1,053) facility is payable quarterly at LIBOR (London Interbank Offered Rate) plus 5.32%. The facility is callable on 27 November 2021 and Provisions reversed during the year (4,126) (451) - (4,577) the rate after call date is three month LIBOR plus 6.32%. Refer to note 26.2 (g). Balance at 31 December 2019 22,451 4,920 1,400 28,771 The Bank has not had any default of principal, interest or any other convenant breaches with respect to its debt securities during the year (2019: Nil). Current - 4,920 - 4,920 Non-current 22,451 - 1,400 23,851 22,451 4,920 1,400 28,771 2020 2019 GHS'000 GHS'000 Other liabilities 759,040 437,934 Current 442 1,637 Items in the course of transmission 124,850 138,861 Non-current 86,403 132,585 Staff-related accruals 40,530 33,869 At end of year 86,845 134,222 Actuarial loss on employee defined benefits 13,662 10,581 Deferred revenue liability 58,847 28,559 Accounts payable 77,629 42,398 Indirect taxes accruals 6,193 2,425 Accrued expenses 39,891 17,085 Lease liabilities 39,123 54,363 Others 358,315 109,793

Provisions and other liabilities 785,368 466,705

(a) Provisions for franchise and technical services The Bank's franchise and information technology agreement with its parent company was approved by both GIPC and Bank of Ghana for a period of ten (10) years effective 1 September 2017. Provisions are held in line with the approved agreement.

(b) Impairment for off-balance sheet exposure Impairment for off-balance sheet exposure relates to expected credit loss on off balance sheet exposures in accordance with IFRS 9.

79

80 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 83 Annual report 2020 84

Notes to the financial statements for the year ended 31 December 2020

STANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBIC BANKBANK BANK BANK BANK BANK BANK BANK BANK GHANAGHANA GHANA GHANA GHANA GHANA GHANA GHANA GHANA LIMITEDLIMITED LIMITED LIMITED LIMITED LIMITED LIMITED LIMITED LIMITED

NotesNotesNotesNotesNotesNotesNotesNotesNotes toto to to to thethe totheto theto theto the thefinancialfinancial the financial thefinancial financial financial financial financial financial statementsstatements statements statements statements statements statements statements statements forforforforfor forthethe forthe forthe forforthe the yearthe year the year thetheyear year year year year endedyearyearended ended ended ended ended ended ended endedended 3131 31 31 31 December31 December 31 December 31 December 3131December December December December DecemberDecember 20202020 2020 2020 2020 2020 2020 2020 20202020 181818181818181818ClassificationClassificationClassificationClassificationClassificationClassificationClassificationClassificationClassification ofof of of offinancial financial of financial of financial of financial offinancial financial financial financial instrumentsinstruments instruments instruments instruments instruments instruments instruments instruments AccountingAccountingAccountingAccountingAccountingAccountingAccountingAccountingAccounting classificationsclassifications classifications classifications classifications classifications classifications classifications classifications andand and and and and and fairandfair andfair fair fair fair valuesfair values fair values fairvalues values values values values values TheTheTheTheTheThe The tabletableThe tableThe table table table table table belowtablebelow below below below below below below below setssets sets sets sets sets sets outsets outsetsout out out out theoutthe theout theout the the bank'sthebank's bank'sthe bank'sthe bank's bank's bank's bank's bank's classificationclassification classification classification classification classification classification classification classification ofof of of assetsof assetsof assetsof assetsof assetsofassets assets assets assets andand and and and and and liabilities,liabilities, and liabilities, andliabilities, liabilities, liabilities, liabilities, liabilities, liabilities, andand and and and and and theirtheir and their andtheir their their their theirfair fair theirfair fair fair fair values.fairvalues. values.fair values.fair values. values. values. values. values. FairFairFairFairFairFair Fair valueFairvalue Fairvalue value value value value value value throughthrough through through through through through through through P&LP&L P&L P&L P&L P&L P&L P&L P&L AmortisedAmortised Amortised Amortised Amortised Amortised Amortised Amortised AmortisedAmortised costcost cost cost cost cost cost cost cost cost OtherOther Other Other Other Other Other Other OtherOther non-financialnon-financial non-financial non-financial non-financial non-financial non-financial non-financial non-financialnon-financial Fair-value Fair-value Fair-value Fair-value Fair-value Fair-value Fair-value Fair-value Fair-valueFair-value throughthrough through through through through through through throughthrough otherother other other other other other other otherother OtherOther Other Other Other Other Other Other OtherOther amotisedamotised amotised amotised amotised amotised amotised amotised amotisedamotised TotalTotal Total Total Total Total Total Total TotalTotal carryingcarrying carrying carrying carrying carrying carrying carrying carryingcarrying FairFairFairFairFairFair Fair valueFairvalue Fairvalue value value value value value value 11 1 1 1 1 1 1 1 NoteNoteNoteNoteNoteNoteNoteNoteNote assets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilities comprehensivecomprehensivecomprehensivecomprehensivecomprehensivecomprehensivecomprehensivecomprehensivecomprehensive incomeincome income income income income income income income costcostcostcostcostcostcost cost cost amountamountamountamountamountamountamountamountamount

HeldHeldHeldHeldHeldHeldHeld Held forHeldfor for for for for for for Designated forDesignated Designated Designated Designated DesignatedDesignatedDesignatedDesignated atat at at at at at at at FairFairFairFairFairFair Fair valueFairvalue Fairvalue value value value value value value FairFair Fair Fair Fair Fair Fair valueFair value FairFairvalue value value value value value valuevalue DebtDebt Debt Debt Debt Debt Debt Debt DebtDebt EquityEquity Equity Equity Equity Equity Equity Equity EquityEquity tradingtradingtradingtradingtradingtradingtradingtradingtrading fairfairfairfairfair fair valuefairvalue fairvalue fairvalue value value value value valuethroughthroughthroughthroughthroughthroughthroughthroughthrough P/LP/L P/L P/L P/L P/L -P/L - P/L - P/L ------throughthroughthroughthroughthroughthroughthroughthroughthrough OCIOCI OCI OCI OCI OCI OCI OCI OCI defaultdefaultdefaultdefaultdefaultdefaultdefaultdefaultdefault GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 AtAtAtAt At 3131 At31At 31At 31At December31 December31December 31December 31December December December December December 20202020 2020 2020 2020 2020 2020 2020 2020 AssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssets CashCashCashCashCashCashCashCash Cashandand and and and and and cashcash and cash andcash cash cash cash cash equivalentscashequivalents equivalents equivalents equivalents equivalents equivalents equivalents equivalents 222222222 ------3,151,4063,151,4063,151,4063,151,4063,151,4063,151,4063,151,4063,151,4063,151,406 872,991872,991872,991872,991872,991872,991872,991872,991872,991 ------4,024,3974,024,3974,024,3974,024,3974,024,3974,024,3974,024,3974,024,3974,024,397 4,024,3974,024,3974,024,3974,024,3974,024,3974,024,3974,024,3974,024,3974,024,397 Non-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledged tradingtrading trading trading trading trading trading trading trading assetsassets assets assets assets assets assets assets assets 3.63.63.63.63.63.63.63.63.6 1,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,482 ------1,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,482 1,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,482 InvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestment securitiessecurities securities securities securities securities securities securities securitiessecurities 444444444 ------2,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,358 ------2,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,358 2,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,3582,419,358 LoansLoansLoansLoansLoansLoansLoansLoansLoans andand and and and and and advancesadvances and advances andadvances advances advances advances advances advances toto to to customersto customersto customersto customersto customerstocustomers customers customers customers 555555555 ------87,28887,28887,28887,28887,28887,28887,28887,28887,288 4,286,2414,286,2414,286,2414,286,2414,286,2414,286,2414,286,2414,286,2414,286,241 ------4,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,529 4,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,529 InvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestment inin in in subsidiaryin subsidiaryin subsidiary in subsidiary in subsidiary ininsubsidiary subsidiary subsidiary subsidiarysubsidiary 888888888 ------OtherOtherOtherOtherOtherOtherOtherOther Other financialfinancial financial financial financial financial financial financial financial assetsassets assets assets assets assets assets assets assets ------96,43996,43996,43996,43996,43996,43996,43996,43996,439 96,43996,43996,43996,43996,43996,43996,43996,43996,439 ------OtherOtherOtherOtherOtherOtherOtherOther Other non-financialnon-financial non-financial non-financial non-financial non-financial non-financial non-financial non-financial assetsassets assets assets assets assets assets assets assets ------794,927794,927794,927794,927794,927794,927794,927794,927794,927 794,927794,927794,927794,927794,927794,927794,927794,927794,927 ------1,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,4821,033,482 ------3,238,6943,238,6943,238,6943,238,6943,238,6943,238,6943,238,6943,238,6943,238,694 7,578,5907,578,5907,578,5907,578,5907,578,5907,578,5907,578,5907,578,5907,578,590 ------891,366891,366891,366891,366891,366891,366891,366891,366891,36612,742,13212,742,13212,742,13212,742,13212,742,13212,742,13212,742,13212,742,13212,742,132 11,850,76611,850,76611,850,76611,850,76611,850,76611,850,76611,850,76611,850,76611,850,766 LiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilities TradingTradingTradingTradingTradingTradingTradingTradingTrading liabilitiesliabilities liabilities liabilities liabilities liabilities liabilities liabilities liabilities 131313131313131313 128,483128,483128,483128,483128,483128,483128,483128,483128,483 ------128,483128,483128,483128,483128,483128,483128,483128,483128,483 128,483128,483128,483128,483128,483128,483128,483128,483128,483 DepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDeposits fromfrom from from from from from frombanks banks frombanks banks banks banks banks banks banks 14.114.114.114.114.114.114.114.114.1 ------394,427394,427394,427394,427394,427394,427394,427394,427394,427 ------394,427394,427394,427394,427394,427394,427394,427394,427394,427 394,427394,427394,427394,427394,427394,427394,427394,427394,427 DepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDeposits fromfrom from from from from from fromcustomers customers fromcustomers customers customers customers customers customers customers 14.214.214.214.214.214.214.214.214.2 ------9,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,965 ------9,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,965 9,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,9659,666,965 SubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinated debtdebt debt debt debt debt debt debt debt 171717171717171717 ------86,84586,84586,84586,84586,84586,84586,84586,84586,845 ------86,84586,84586,84586,84586,84586,84586,84586,84586,845 86,84586,84586,84586,84586,84586,84586,84586,84586,845 OtherOtherOtherOtherOtherOtherOtherOther Other non-financialnon-financial non-financial non-financial non-financial non-financial non-financial non-financial non-financial liabilitiesliabilities liabilities liabilities liabilities liabilities liabilities liabilities liabilities ------785,368785,368785,368785,368785,368785,368785,368785,368785,368 785,368785,368785,368785,368785,368785,368785,368785,368785,368 ------128,483128,483128,483128,483128,483128,483128,483128,483128,483 ------10,148,23710,148,23710,148,23710,148,23710,148,23710,148,23710,148,23710,148,23710,148,237 ------785,368785,368785,368785,368785,368785,368785,368785,368785,36811,062,08811,062,08811,062,08811,062,08811,062,08811,062,08811,062,08811,062,08811,062,088 10,276,72010,276,72010,276,72010,276,72010,276,72010,276,72010,276,72010,276,72010,276,720 111CarryingCarrying1Carrying1Carrying1Carrying1Carrying1Carrying1CarryingCarrying valuevalue value value value value value value value hashas has has has has hasbeen been has been hasbeen been been been been usedbeenused used used used used used used whereusedwhere where where where where where where where itit it closelyit closelyit closelyit closely it closely it closelyitclosely closely closely approximatesapproximates approximates approximates approximates approximates approximates approximates approximates fairfair fair fair fair fair values.fairvalues. values.fair values.fair values. values. values. values. values. FairFair Fair Fair Fair Fair Fair valueFairvalue valueFair value value value value value value estimatesestimates estimates estimates estimates estimates estimates estimates estimates areare are are are are madearemade aremade aremade made made made made made asas as as as ofofas ofas ofas aofas aof aof specifica specific ofa specific ofa specific a specific a specific aspecific specific specific pointpoint point point point point point point inpointin in in timein timein timein timein timeintime time basedtime basedtimebased based based based based based based onon on on on theon theonthe onthe onthe the characteristicsthecharacteristics characteristicsthe characteristicsthe characteristics characteristics characteristics characteristics characteristics ofof of of theof theof theof theof the ofthe financialthefinancial financialthe financialthe financial financial financial financial financial instrumentsinstruments instruments instruments instruments instruments instruments instruments instruments andand and and and and and relevantrelevant and relevant andrelevant relevant relevant relevant relevant relevant marketmarket market market market market market market market information.information. information. information. information. information. information. information. information. WhereWhere Where Where Where Where Where Where Where available,available, available, available, available, available, available, available, available, thethe the the the the mostthemost mostthe mostthe most most most most most suitablesuitable1Carryingsuitablesuitablesuitablesuitablesuitablesuitablesuitable measure measurehasmeasure measure measure measure measure beenmeasure measure forusedfor for for for fairfor fair for fair forwhere fair forfair fair valuefairvalue valuefair valuefair value value itvalue value closelyvalue isis is is theisthe theis isthe isthe isthe quotedapproximatesthequoted quotedthe quotedthe quoted quoted quoted quoted quoted marketmarket market market market market market market marketfair price.price. price. values.price. price. price. price. price. price. InIn In In FairtheIn theIn the In the In the In theabsencevaluetheabsence absencethe absencethe absence absence absence absence estimatesabsence ofof of of organisedof organisedof organised of organised of organised areoforganised organised organised organised made secondarysecondary secondary assecondary secondary secondary ofsecondary secondary secondary a specific marketsmarkets markets markets markets markets markets pointmarkets markets forfor infor for for time financialfor financial for financial for financial forfinancial financial financialbased financial financial instruments,instruments, instruments,on instruments, instruments, instruments, theinstruments, instruments, instruments, suchsuch such such such such such such assuchas as as as loans,loans,as loans,as loans,as loans,as loans, loans, loans, loans, depositsdeposits deposits deposits deposits deposits deposits deposits deposits andand and and and and and unlistedunlisted and unlisted andunlisted unlisted unlisted unlisted unlisted unlisted derivatives,derivatives, derivatives, derivatives, derivatives, derivatives, derivatives, derivatives, derivatives, directdirect direct direct direct direct direct direct direct marketmarket market market market market market market market pricesprices prices prices prices prices prices prices prices areare are are are are notarenot arenot arenot not not alwaysnotalways alwaysnot alwaysnot always always always always always available.available. available. available. available. available. available. available. available. TheThe The The The The The fairfairThe fairThe fair fair fair valuefairvalue valuefair valuefair value value value value value ofof of of suchof suchof such of such of such ofsuch such such such instrumentscharacteristicsinstrumentsinstrumentsinstrumentsinstrumentsinstrumentsinstrumentsinstrumentsinstrumentsinstruments waswas was was ofwas was was thereforethewastherefore thereforewas wastherefore therefore therefore financialtherefore therefore thereforetherefore calculatedcalculated calculated calculated instrumentscalculated calculated calculated calculated calculatedcalculated onon on on on andtheon theonthe onthe ontheon the basisrelevantthebasis basisthe basisthe thebasis basis basis basis basisofbasisof of of market well-establishedof well-established of well-established of well-established of well-established ofofwell-established well-established well-established well-establishedwell-established information. valuationvaluation valuation Wherevaluation valuation valuation valuation valuation valuationvaluation available, techniquestechniques techniques techniques techniques techniques techniques techniques techniquestechniques the most usingusing using using using using using suitableusing using usingcurrentcurrent current current current current current current currentcurrent measure marketmarket market market market market market market marketmarket parameters.forparameters. parameters. parameters. parameters. fairparameters. parameters. parameters. parameters.parameters. value is the quoted market price. In the absence of organised secondary markets for financial instruments, such as loans, deposits and unlisted derivatives, direct market prices are not always available. The fair value of such instruments was therefore calculated on the basis of well- established valuation techniques using current market parameters.

818181818181818181 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 85 Annual report 2020 86

Notes to the financial statements for the year ended 31 December 2020 STANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBIC STANBICBANK STANBICBANK STANBICBANK STANBICBANK STANBIC BANKBANK BANK BANKBANK BANK BANKGHANA BANKGHANABANK GHANA BANKGHANA BANK BANKGHANAGHANA BANKGHANA BANK GHANABANKGHANA BANKGHANA BANK GHANAGHANA GHANA GHANA LIMITED GHANALIMITED GHANALIMITED GHANA LIMITED GHANA LIMITED GHANALIMITED GHANA LIMITED GHANA LIMITEDLIMITED LIMITED LIMITEDLIMITED LIMITED LIMITED LIMITEDLIMITED LIMITED LIMITED LIMITEDLIMITED LIMITED

NotesNotesNotesNotesNotesNotesNotesNotesNotesNotes Notesto Notesto Notesto Notesto Notes thetoNotesto theNotes to theNotes tothe Notesto Notestheto theNotes tothefinancial to financial theto thefinancial to thefinancial to thefinancialto thefinancial to thefinancial to thefinancial tofinancialthe tothe financial theto financialfinancialthe financial thethefinancial thefinancial statementsfinancialstatementsfinancial statementsfinancialstatements financial financialstatements statementsfinancialstatements statements statementsstatements statements statementsstatements statements statements statementsstatements statements statements statements statements forforforforfor for the forthethefor the forforthe for the the foryear fortheyear yearfor theyear theforyearthe for foryeartheyear fortheyearthe for yearthe forended endedyear fortheended yearthe forended theyear endedyear the yearended theended year the ended yearthe endedyearended year ended year ended year31 31ended year 31 ended year31 ended 31 ended 31ended December 31 Decemberended December 31 ended December 31 endedDecember31 ended 31December endedDecember 31December31 31December December 31 December 31 31DecemberDecember 31 December 31 December 31 December31 December 31 December 2020 December2020 2020 December2020 December 2020 December 20202020 2020 20202020 2020 20202020 2020 2020 20202020 2020 2020 20202020 2020 181818181818181818Classification18Classification1818Classification18Classification18ClassificationClassification1818Classification18ClassificationClassification18Classification1818ClassificationClassification18ClassificationClassificationClassificationClassificationClassificationClassificationClassificationClassificationClassification of of of of financialofof financial of financial offinancial of financialof financial offinancial of financialof financialof financial offinancialof financialof financialof financial offinancial of instrumentsfinancialinstrumentsfinancialof instrumentsfinancialinstruments financial financialinstruments instrumentsfinancialinstruments instruments instrumentsinstruments instruments instrumentsinstruments instruments instruments instrumentsinstruments instruments instrumentsinstruments instruments(continued) (continued) (continued) (continued) (continued)(continued) (continued) (continued)(continued) (continued) (continued)(continued) (continued) (continued) (continued)(continued) (continued) (continued) (continued)(continued) (continued) FairFairFairFairFairFairFair FairValue FairValue FairValue FairValue Fair ValueFairValue FairValue Fair ValueFairValue FairValue Fair ThroughValueValue FairThroughFairValue ThroughFairValue Through ValueThroughValue ThroughValue ThroughValue Through ThroughValueValueThrough ValueThroughThrough Through Through ThroughP<hrough P<hrough P<hrough P&L ThroughThrough P&LP&L ThroughP&L P&LP&L P&L P&LP&L P&L P&L P&LP&L P&L P&L P&LP&L P&L Amortised AmortisedAmortised Amortised Amortised AmortisedAmortised Amortised AmortisedAmortised Amortised AmortisedAmortised Amortised Amortised AmortisedAmortised Amortised Amortised cost AmortisedcostcostAmortised cost Amortisedcost costcost cost cost cost cost cost cost cost cost Othercost Othercost Other cost OthercostOther costOthercost OtherOthercost Other Other Other non-financialOthernon-financialOther non-financial Other non-financial Other non-financial Other non-financialOther non-financial Other non-financial Other non-financial non-financialOtherOthernon-financial Othernon-financialnon-financial non-financial non-financial non-financialnon-financial non-financial non-financial non-financialnon-financial non-financial Fair-value Fair-valueFair-value Fair-value Fair-value Fair-valueFair-value Fair-value Fair-valueFair-value Fair-value Fair-valueFair-value Fair-value Fair-value Fair-valueFair-value Fair-value Fair-valuethrough through throughFair-value Fair-value throughFair-valuethrough throughthrough through throughthrough through throughthrough through through other throughotherotherthrough throughother otherthrough otherthroughother through other through otherother other other other other other otherOther Other other Other other Other other Other other Other other Other otherOther Other Other Other amotisedOther amotisedOther amotised Other amotised Other amotised Other amotised Other amotised Other amotised Other amotised amotisedOtherOtheramotised Otheramotisedamotised amotised amotised amotisedamotised amotised amotised amotised Total Totalamotised Total amotised Total Total Total Total Total Total Total Total carryingcarrying Totalcarrying Total carryingTotal carrying Total carrying Total carrying Totalcarrying Total carrying Total carrying Totalcarrying Total carryingTotal carryingcarrying carrying carrying carrying carrying carrying carrying carrying carrying Fair Fair Fair Fair FairFair Fair FairvalueFairvalue Fairvalue Fairvalue Fair valueFairvalue Fairvalue Fair valueFairvalue Fair value 1Fair1value1 valueFairFair 1value1Fair value 1value 1value1value 1value 1value1 value 1value 11 1 1 11 1 11 1 NoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNote assets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilitiesassets/liabilities comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensive comprehensivecomprehensive comprehensivecomprehensivecomprehensivecomprehensivecomprehensive income income income income incomeincome income incomeincome income incomeincome income income incomeincome income income incomeincome income costcostcostcostcostcostcost costcost cost cost cost cost cost cost cost cost cost costcost cost amount amount amountamount amount amount amount amountamountamountamountamountamount amount amount amount amount amount amount amount amount

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GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000GHS'000GHS'000 GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 AtAtAtAt At31 At31 At31 At31 At 31AtDecember 31AtDecember 31AtDecember 31AtDecember31 At 31DecemberAtDecember 31AtDecember31 At 31DecemberAtDecember 31AtDecember 31At 31DecemberAtDecember 31December 31December 31 December31 December 31December December 2019 December2019 December 2019 December2019 20192019 2019 20192019 2019 20192019 2019 2019 20192019 2019 2019 20192019 2019 AssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssetsAssets CashCashCashCashCashCashCashCash Cashand Cashand CashCashand Cashand Cashandand Cash Cashand cash Cashandcash andCashcash andCashcash Cashand andcashCashcash andcash and cashand cash andequivalentscashandequivalents cashandequivalents cash equivalentsand cash andequivalentscash equivalentsand cashequivalents cash equivalentscash equivalentscashequivalents cashequivalentscashequivalents equivalentscash equivalents equivalentsequivalents equivalents equivalents equivalentsequivalents equivalents 222222222222222222222 ------1,071,558- 1,071,558- 1,071,558- 1,071,558- - 1,071,558 1,071,558- 1,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,5581,071,558 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 1,856,122 ------2,927,680- 2,927,680- 2,927,680- 2,927,680- 2,927,680- 2,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,6802,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 2,927,680 Non-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledgedNon-pledged Non-pledgedtrading trading trading trading tradingtrading trading tradingtrading trading trading tradingassets trading assets trading assets tradingassetstrading tradingassets assets trading assets trading assetstrading assets tradingassets assetsassets assets assets assetsassets assets assets assetsassets assets 3.63.63.63.63.63.63.63.63.63.63.63.63.63.63.63.63.63.63.63.63.6642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833 ------642,833 - 642,833 - 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 642,833 InvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestment Investment securitiessecuritiesInvestmentsecurities Investment securitiesInvestmentsecurities securities securitiessecurities securities securitiessecurities securities securitiessecurities securities securities securitiessecurities securities securitiessecurities securities 444444444444444444444 ------668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 ------668,394 - 668,394 - 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 668,394 LoansLoansLoansLoansLoansLoansLoansLoansLoansLoans Loansand Loansand Loansand Loansand Loans andLoansand Loans and Loansadvances andadvancesLoans andLoansadvances andLoansadvances and andadvancesadvances andadvances and advancesandadvances andadvancesand advancesand advances andadvances andadvances and advances advancesto advancesto advancesto advances toadvances customers toadvancescustomers tocustomers tocustomers to tocustomerscustomers tocustomers to tocustomerscustomers tocustomers to customerstocustomers tocustomersto customers to customerstocustomers to customers tocustomers customerscustomers customers 555555555555555555555 ------80,955 - 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 80,955 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 3,865,636 ------3,946,591- 3,946,591- 3,946,591- 3,946,591- 3,946,591- 3,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 3,946,591 InvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestment Investment ininInvestmentin Investment inInvestment in subsidiary subsidiary insubsidiary insubsidiary in subsidiary in subsidiary insubsidiary in subsidiary in subsidiaryinsubsidiary in subsidiary in subsidiary insubsidiary insubsidiary in subsidiary in subsidiary insubsidiary in subsidiary insubsidiary subsidiarysubsidiary subsidiary 888888888888888888888 ------2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 ------2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 ------OtherOtherOtherOtherOtherOtherOtherOtherOther Otherfinancial Otherfinancial Otherfinancial Otherfinancial Other financialOtherfinancial Otherfinancial Other financialOtherfinancial Otherfinancial Other financialOtherfinancial financial financialassets financialassetsfinancial financialassets assetsfinancial assetsfinancialassets financial assets financial assetsassets assets assetsassets assets assets assetsassets assets assets assetsassets assets 777777777777777777777 ------512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 512,708 ------OtherOtherOtherOtherOtherOtherOtherOtherOther Othernon-financial Othernon-financial Othernon-financial Othernon-financial Other non-financialOthernon-financial Othernon-financial Other non-financialOthernon-financial Othernon-financial Other non-financialOthernon-financial non-financial non-financial non-financialnon-financial non-financial non-financial non-financialnon-financial non-financialassets assets assets assets assetsassets assets assetsassets assets assetsassets assets assets assetsassets assets assets assetsassets assets ------594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 594,976 ------642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833642,833 ------1,152,513- 1,152,513- 1,152,513- 1,152,513- - 1,152,513 1,152,513- 1,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,5131,152,513 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 6,392,652 ------1,107,684- 1,107,684- 1,107,684- 1,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6841,107,6849,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,6829,295,682 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 8,185,498 LiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilities TradingTradingTradingTradingTradingTradingTradingTradingTradingTradingTradingTrading Tradingliabilities Tradingliabilities TradingliabilitiesTrading liabilitiesTrading liabilitiesTradingliabilities TradingliabilitiesTrading liabilitiesTradingliabilities liabilities liabilitiesliabilities liabilities liabilities liabilitiesliabilities liabilities liabilities liabilitiesliabilities liabilities 131313131313131313131313131313131313131313102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539 ------102,539 - 102,539 - 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 102,539 DepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDeposits Deposits fromDepositsfrom Deposits fromDepositsfrom Deposits fromDeposits fromDepositsfrom frombanks frombanks frombanks frombanks from frombanksbanks from banks from frombanksbanks frombanks from banksfrombanks from banks frombanks banksbanks banks banks banksbanks banks 14.114.114.114.114.114.114.114.114.114.114.114.114.114.114.114.114.114.114.114.114.1 ------529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 ------529,142 - 529,142 - 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 529,142 DepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDepositsDeposits Deposits fromDepositsfrom Deposits fromDepositsfrom Deposits fromDeposits fromDepositsfrom fromcustomers fromcustomers fromcustomers fromcustomers from fromcustomerscustomers from customers from fromcustomerscustomers fromcustomers from customersfromcustomers from customers fromcustomers customerscustomers customers customers customerscustomers customers 14.214.214.214.214.214.214.214.214.214.214.214.214.214.214.214.214.214.214.214.214.2 ------6,755,312 - 6,755,312 - 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 ------6,755,312- 6,755,312- 6,755,312- 6,755,312- 6,755,312- 6,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,3126,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 6,755,312 SubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinatedSubordinated debt debt debt debt debtdebt debt debtdebt debt debtdebt debt debt debtdebt debt debt debtdebt debt 171717171717171717171717171717171717171717 ------83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 ------83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 83,556 OtherOtherOtherOtherOtherOtherOtherOtherOther Othernon-financial Othernon-financial Othernon-financial Othernon-financial Other non-financialOthernon-financial Othernon-financial Other non-financialOthernon-financial Othernon-financial Other non-financialOthernon-financial non-financial non-financial non-financialnon-financial non-financial non-financial non-financialnon-financial non-financialliabilities liabilities liabilities liabilities liabilitiesliabilities liabilities liabilitiesliabilities liabilities liabilitiesliabilities liabilities liabilities liabilitiesliabilities liabilities liabilities liabilitiesliabilities liabilities ------468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 ------102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539102,539 ------7,368,010 - 7,368,010 - 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 7,368,010 ------468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 468,931 7,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,4807,939,480 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549 7,470,549

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828282828282828282828282828282828282828282 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 87 Annual report 2020 88

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED NotesNotes to the financial to the statements financial statements NotesNotes to the financial to the statements financial statements forfor thethe year endedended 31 31 December December 2020 2020 forfor the yearyear ended ended 31 31 December December 2020 2020

19 Fair values of financial instruments 19.2 Financial instruments measured at fair value - fair value hierarchy (continued) 19.1 Valuation framework Carrying Note Level 1 Level 2 Level 3 Total The bank has an established control framework with respect to the measurement of fair values. This framework amount includes a market risk function , which has overall responsibility for independently verifying the results of trading GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 operations and all significant fair value measurements, and a product control function , which is independent of front At 31 December 2019 office management and reports to the Chief Financial Officer. The roles performed by both functions include: Assets Non-pledged trading assets 3.6 642,833 - 642,833 - 642,833 - verification of observable pricing; 642,833 - 642,833 - 642,833 - re-performance of model valuations; Comprising: - review and approval process for new models and changes to models; Held-for-trading 3.6 642,833 642,833 642,833 - calibration and back-testing of models against observed market transactions; 642,833 - 642,833 - 642,833 - analysis and investigation of significant daily valuation movements; and - review of significant unobservable inputs, valuation adjustments and significant changes to the fair value measurement of level 3 instruments. Liabilities Trading liabilities 13 102,539 102,539 - 102,539 Significant valuation issues are reported to the audit committee. 102,539 - 102,539 - 102,539 Comprising: Held-for-trading 13 102,539 102,539 - 102,539 19.2 Financial instruments measured at fair value - fair value hierarchy 102,539 - 102,539 - 102,539

The tables below analyse financial instruments carried at fair value at the end of the reporting period, by level of fair There were no transfers between Level 1 and Level 2 during the period. No reclassifications were made in or out of value hierarchy into which the fair value measurement is categorised. The amounts are based on the values level 3 during the period. recognised in the statement of financial position. See reference 4.4 on accounting policies on fair value.

Carrying Note Level 1 Level 2 Level 3 Total amount GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 At 31 December 2020

Assets Non-pledged trading assets 3.6 1,033,482 - 1,033,482 - 1,033,482 1,033,482 - 1,033,482 - 1,033,482 Comprising: Held-for-trading 3.6 1,033,482 1,033,482 1,033,482 1,033,482 - 1,033,482 - 1,033,482 Liabilities Trading liabilities 13 128,483 - 128,483 - 128,483 128,483 - 128,483 - 128,483 Comprising: Held-for-trading 13 128,483 - 128,483 - 128,483 128,483 - 128,483 - 128,483

There were no transfers between Level 1 and Level 2 during the period. No reclassifications were made in or out of level 3 during the period.

84

83 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 89 Annual report 2020 90

NotesSTANBIC BANK to GHANA the LIMITED financial statements NotesSTANBIC BANK to GHANA the LIMITED financial statements forNotes the to year the financialended 31 statements December 2020 forNotes the to year the endedfinancial 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

20 Financial instruments not measured at fair value - fair value hierarchy 2020 2019 2020 2019 Carrying value Level 1 Level 2 Level 3 Total GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 21 Contingent liabilities and commitments At 31 December 2020 Assets Cash and cash equivalents 4,024,397 4,024,397 - - 4,024,397 21.1 Contingent liabilities Investment securities 2,419,358 - 2,419,358 - 2,419,358 Letters of credit 182,695 134,920 182,695 134,920 Loans and advances to customers 4,373,529 - - 4,373,529 4,373,529 with cash collateral 137,410 39,120 137,410 39,120 10,817,284 4,024,397 2,419,358 4,373,529 10,817,284 without cash collateral 45,285 95,800 45,285 95,800 Guarantees 1,296,916 1,481,477 1,296,916 1,481,477 Liabilities with cash collateral 213,492 207,819 213,492 207,819 without cash collateral 1,083,424 1,273,658 1,083,424 1,273,658 Deposits from banks 394,427 394,427 - - 394,427 Deposits from customers 9,666,965 6,197,221 - 3,469,744 9,666,965 1,479,611 1,616,397 1,479,611 1,616,397 Subordinated debt 86,845 - 86,845 - 86,845 10,148,237 6,591,648 86,845 3,469,744 10,148,237 Guarantees and letters of credit are given to third parties as security to support the performance of a customer to third parties. As the bank will only be required to meet these obligations in the event of the customer’s default, the cash requirements of these instruments are expected to be considerably below their nominal amounts. The expected credit loss of GHS 4.45 million (2019: GHS4.92 million) on this has been included in provisions (see note 16). Carrying value Level 1 Level 2 Level 3 Total GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 At 31 December 2019 21.2 Commitments Assets During 2020, the Bank entered into contracts to purchase property and equipment for GHS0.395 million (2019: GHS Cash and cash equivalents 2,927,680 2,927,680 - - 2,927,680 Nil) Investment securities 668,394 - 668,394 - 668,394 Group Loans and advances to customers 3,946,591 - - 3,946,591 3,946,591 2020 2019 2020 2019 Investments in subsidiary 2,500 - - 2,500 2,500 GHS'000 GHS'000 GHS'000 GHS'000 7,545,165 2,927,680 668,394 3,949,091 7,545,165 Property and equipment 395 - 395 - Total 395 - 395 - Liabilities Deposits from banks 529,142 529,142 - - 529,142 At year end, the commitments were non-cancellable and are payable as follows: Deposits from customers 6,755,312 6,001,866 - 753,446 6,755,312 Subordinated debt 83,556 - 83,556 - 83,556 Within 12 Within 1 to 5 Total After 5 years 7,368,010 6,531,008 83,556 753,446 7,368,010 months years

Fair value of loans and advances is estimated using discounted cash flow techniques. Input into the valuation techniques Property and equipment 395 395 - - includes interest rates and expected cash flows. Expected cash flows are discounted at current market rates to determine fair Total 395 395 - - value. Fair value of deposits from banks and customers is estimated using discounted cash flow techniques, applying the rates offered for deposits of similar maturities and terms. The fair value of deposits payable on demand is the amount payable at the 21.3 Loan commitments reporting date. The bank had irrevocable loan commitments amounting to GHS1.49 billion (2019: GHS1.08 billion) in respect of various loan contracts.

21.4 Legal proceedings In the ordinary course of business the Bank is exposed to various actual and potential claims, lawsuits and other proceedings that relate to alleged errors, omissions, breaches. The directors are satisfied, based on present information and the assessed probability of such existing claims crystallising that the Bank has adequate insurance cover and/or provisions in place to meet such claims. Total provisions made for possible claims if cases went against the Bank at 31 December 2020 is GHS 1.2 million (2019: GHS1.4 million). These claims against the Bank are generally considered to have a low likelihood of success and the Bank is actively defending these claims. Management believes that the ultimate resolution of any of the proceedings will not have a significantly adverse effect on the bank. Where the Bank envisages that there is a more than average chance that a claim against it will succeed, adequate provisions are raised in respect of such claim.

85 86 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 91 Annual report 2020 92

NotesSTANBIC BANK to GHANA the LTD financial statements Notes to the financial statements STANBIC BANK GHANA LTD forNotes the to year the financialended 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020 Notes to the financial statements for the year ended 31 December 2020 22 Income statement information 22 Income statement information (continued) 2020 2019 GHS'000 GHS'000 2020 2019 GHS'000 GHS'000 22.5 Other gains 22.1 Interest income Gain on disposal of third party financial investment1 - 61 Interest on loans and advances 628,364 534,862 Gain on sale of property and equipment 94 - 94 61 Interest on investments 184,290 138,309 1Commission/adminstrative charges on disposal of third party treasury bills Unwinding of discount element of credit impairments for loans and advances 659 7,625 22.6 Credit impairment charges 813,313 680,796 Net expected credit loses raised and released for financial investments Stage 1 2,606 282 All interest income reported above relates to financial assets measured at amortised cost. Stage 2 - - Stage 3 - -

Included in interest income is GHS1.68 million (2019: GHS3.60 million) earned from related party transactions. See Net expected credit loses raised and released for banks note 26.2 (g). Stage 1 3,510 676 Stage 2 (384) (11) 22.2 Interest expense Stage 3 - -

2020 2019 Net expected credit loses raised and released for loan and advances GHS'000 GHS'000 Stage 1 4,363 1,816 Current accounts 9,351 8,692 Stage 2 (7,916) 4,437 Savings and deposit accounts 31,929 44,013 Stage 3 63,709 59,319 M311755Subordinated IC:Int.Exp.-Debentures debt 3,923 7,469 Net expected credit loses raised and released on off balance sheet exposures Interest on lease liabilities (note 16 (d)) 10,326 10,706 Stage 1 (1,606) 1,400 Stage 2 (193) Other interest bearing liabilities 136,914 78,032 1,137 Stage 3 - - 192,443 148,912 Modification (gains)/losses (47) (926) Recoveries on loans and advances previously written off (6,985) (13,008) All interest expense reported above relates to financial assets not carried at fair value through profit or loss for the Total credit impairment charge 58,387 53,792 bank. 22.7 Staff costs Included in interest expense reported above is GHS8.3 million (2019: GHS8.5 million) from related party Salaries and allowances 304,452 264,036 transactions. See note 26.2 (g). Deferred bonus scheme 1,476 3,407 Long service award incentive 2,272 2,015 308,200 269,458 22.3 Net fee and commission revenue 2020 2019 Share-based payment transactions GHS'000 GHS'000 The bank operates a number of share-based payment arrangements under which the entity receives services from employees as a consideraion for equity instrument or cash settlement based on equity instrument of the bank. It is essential for the bank to retain key skills over the longer term. This is done particularly Fee and commission revenue 256,562 255,585 through share-based incentive plans. The purpose of these plans is to align the interests of the bank and employees as well as to attract and retain skilled, Account transaction fees 84,548 76,982 competent people. Card based commission 44,471 49,141 The bank had the following share-based arrangements. Knowledge based fees and commission 12,520 Deferred bonus scheme: The bank has implemented this scheme to defer a portion of incentive bonuses over a minimum threshold for key management and 19,548 executives. This improves the alignment of shareholder and management interests by creating a closer linkage between risk and reward, and also facilitates Electronic banking 2,591 2,347 retention of key employees. Insurance - fees and commission 4,157 4,132 Foreign currency service fees 44,615 48,877 Long service award incentive Documentation and administration fees 9,620 11,826 The value of long service is acknowledged through long service awards that are regarded as an important aspect of recognition and the total Employee Value Proposition (EVP) of the Bank. Other fee and commision revenue 49,760 47,012 The award structure for long service awards is show below: Fee and commission expense (44,137) (34,829) 212,425 220,756 Years of service Award to employee 10 2 months basic salary plus certificate of recognition All fees revenue and expenses reported above relate to financial assets or liabilities not carried at fair value through 15 3 months basic salary plus certificate of recognition profit or loss for the bank 20 4 months basic salary plus certificate of recognition 25 5 months basic salary plus certificate of recognition Other fee income for Bank includes commission on sale of government securities, agency fee, account statement 30 6 months basic salary plus certificate of recognition fee, funds transfer charges, salary processing and administration charges, reference letter charges, and cash Above 30 years Prior Award plus 1 Month Basic Salary for every additional 5 Years of Service withdrawal charges.

2020 2019 22.4 Trading revenue GHS'000 GHS'000 2020 2019 Emoluments of Stanbic Bank Ghana Limited directors and prescribed officers GHS'000 GHS'000 Emoluments of directors in respect of services rendered 15,178 16,173 Foreign exchange 81,507 74,640 Non-executive directors Debt securities 168,945 147,578 Emoluments of directors in respect of services rendered 920 1,140 250,452 222,218 16,098 17,313 In order to align emolument with the performance to which they relate, emoluments reflect the amounts accrued in respect of the each year and not the amount paid.

87

88 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 93 Annual report 2020 94

NotesSTANBIC BANK to GHANA the LTD financial statements Notes to the financial statements forNotes the toyear the ended financial 31 statements December 2020 forSTANBIC the year BANK ended GHANA 31 December LIMITED 2020 for the year ended 31 December 2020 Notes to the financial statements for the year ended 31 December 2020 22 Income statement information (continued) 2020 2019 2020 2019 GHS'000 GHS'000 GHS'000 GHS'000 1 22.8 Other operating expenses 23 Tax Indirect tax (note 23.1) 11,170 15,609 Information technology 23,343 21,964 Direct tax (note 23.2) M346020 117,117 114,618 Communication 5,321 6,951 128,287 130 227 Premises 17,889 18,026 Auditors' remuneration 844 668 23.1 Indirect tax Non-executive directors' fees 920 1,140 Value added tax on franchise and technical services 7,112 2,559 Value added tax on other purchases and services 4,058 13 050 Professional fees 4,053 3,661 11,170 15 609 Marketing and advertising 6,423 11,521 Insurance 22,047 5,838 23.2 Direct tax Training 981 6,161 Donation and sponsorship 3,846 4,082 Current period 117,117 114,618 Franchise and technical service fees1 51,458 33,294 Current tax (note 6.1) 141,039 112 502 Stationary and printing 4,176 4,979 Deferred tax (note 15.2) (23,922) 2,116 Security expenses 4,980 4,038 Tax per income statement 117,117 114 618 Immovable bank property expenses 7,247 - Travel cost and motor vehicle expenses 12,639 28,892 23.3 Rate reconciliation Subscriptions and membership Fees 2,905 2,919 Processing costs 4,770 4,336 2020 2019 % % Operational risk losses 2,837 514 Other operating costs 10,457 5,482 The corporate tax charge for the year as a percentage of profit before tax 29 28 187,136 164,466 Other levy (National Stabilisation Levy) (5) (5) Other permanent differences 1 2 1The Bank's franchise and information technology agreement with its parent company has been approved by both Ghana Standard rate of tax 25 25 Investment Promotion Centre (GIPC) and Bank of Ghana for a period of ten (10) years effective 1 September 2017.

22.9 Depreciation and amortisation 2020 2019 GHS'000 GHS'000

Amortisation - intangible assets 8,057 7,791

Depreciation Property - leasehold 4,048 4,633 Equipment - Computer equipment 15,105 14,541 - Motor vehicles 1,934 1,381 - Office equipment 3,175 2,795 - Furniture and fittings 8,009 8,519 - Right-of-use assets 35,448 36,019 75,776 75,679

89 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 95 Annual report 2020 96

NotesSTANBIC BANK toGHANA the LIMITED financial statements NotesSTANBIC BANK to GHANA the LIMITED financial statements Notes to the financial statements Notes to the financial statements forfor thethe year year ended ended 31 December 31 December 2020 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

24 Earnings per ordinary share 2020 2019 GHS'000 GHS'000 2020 2019 25 Statement of cash flows notes 25.1 (Increase)/decrease in assets Non-pledged trading assets (343,968) (34,124) The calculations of basic earnings per ordinary share has been Investment securities (1,729,932) 49,499 based on the following profit attributable to ordinary shareholders Loans and advances to customers (417,141) (1,171,817) and the weighted average number of ordinary shares outstanding: Other assets 200,801 (712,573) (2,290,240) (1,869,015)

Earnings attributable to ordinary shareholders (GHS'000) 326,055 281,297 25.2 Increase/(decrease) in deposits and other liabilities

Deposits and current accounts 2,771,178 2,777,326 Weighted average number of ordinary shares in issue (in thousand) 221,719 221,719 Trading liabilities 25,930 (12,246) Other liabilities and provisions 392,192 160,573

Basic earnings per ordinary share (Ghana pesewas) 147 127 3,189,300 2,925,653

25.3 Repayment of subordinated debt

Subordinated debt redeemed - 65,938 - 65,938

25.4 Effect of exchange rate changes on cash and cash equivalents Currency USD 36,397 76,776 EUR 29,439 15,835 GBP 2,083 2,957 ZAR (142) 2,822 Effect of exchange rate 67,777 98,390

91 92 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 97 Annual report 2020 98

NotesSTANBIC BANK to GHANA the LIMITED financial statements NotesSTANBIC BANK to GHANA the LIMITED financial statements Notes to the financial statements forNotes the toyear the ended financial 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

26 Related party transactions 26 Related party transactions (continued) 26.1 Parent and ultimate controlling party The Bank is 99.54% owned by Stanbic Africa Holdings Limited, which is incorporated in the United Kingdom. The ultimate parent and controlling party of the bank is Standard Bank Group Limited, incorporated in South Africa. 2020 2019 Note GHS'000 GHS'000 Stanbic Bank Ghana Limited is related to other companies that are fellow subsidiaries of Standard Bank Group Amounts due to related parties Limited. These include Stanbic Investment Management Services (SIMS), Stanbic Holdings Ghana Limited, SBG Deposits and current accounts 14 167,852 166,132 Securities Ghana Limited, Standard Bank Isle of Man Limited, Standard Bank of South Africa (SBSA), Stanbic IBTC Trading liabilities 13 1,139 257 Holdings Nigeria PLC , Stanbic Bank Kenya Limited, Stanbic Bank Botswana, Stanbic Bank Uganda Limited, and Other liabilities 16 40,357 28,276 Standard Bank (Mauritius) Limited. ICBC Standard Bank PLC, which is an associate of Standard Bank Group Limited, Subordinated debt 17 86,845 83,556 is also a related party. 296,193 278,221

26.2 Balances with Standard Bank of South Africa (SBSA) and other related parties In the normal course of business, current accounts are operated and placements of foreign currencies and trades (d) Deposits and current accounts: These represent demand deposits with related parties. Balances are denominated between currencies are made with SBSA and other entities within the Standard Bank Group. in GHS with no interest rates and are repayable on demand.

The relevant balances are shown below: Standard Bank of South Africa 167,515 129,289 Stanbic Investments Management Services (SIMS) 132 247 2020 2019 SBG Securities Ghana Limited 205 43 Note GHS'000 GHS'000 167,852 129,579 Amounts due from related parties Cash and cash equivalents 2 3,929 39,890 (e) Trading liabilities (derivatives): These represent fair value of currency swap and forward transactions with entities Non-pledged trading assets 3 1,353 19,420 within the Standard Bank Group. Details per counterparty are as follows: Other assets 7 3,890 32,073 9,172 91,383 Standard Bank of South Africa 1,139 257 (a) Cash and cash equivalents (loans to banks) : This represents foreign currency placement with Standard Bank 1,139 257 Group entities. Placements are usually denominated in US dollars and Rands. Tenor is usually short ranging between 1-6 months. The contract terms are based on normal market terms. Details per counterparty are as follows: (f) Other liabilities: These relate to franchise and information technology accruals payable to SBSA. Also included in other liabilities are reimbursable expenses payable to SBSA and other members of the Standard Bank Group as follows: Standard Bank of South Africa 2 3,929 39,890 Franchise fees payable 11,223 9,883 3,929 39,890 Information Technology cost payable 26,432 18,076 (b) Non-pledged trading assets (derivatives): These represent fair value of currency swap and foreign exchange Other expenses payable 2,702 317 forward transactions with related parties. The transaction includes EUR/ USD swap, USD/ ZAR swap, and USD/GHS 40,357 28,276 swap with a combined notional principal of GHS21.79 million (2019: GHS656.93 million). The contracts maturity ranges from one month to 1 year. (g) Subordinated debt: See note 17 for details of the transaction. (c) Other assets: These represent reimbursable expenses recoverable and other receivables from related parties. No specific impairments have been recognised in respect of the amount. Profit or loss impact of transactions with Standard Bank of South Africa and other related parties

2020 2019 GHS'000 GHS'000

Interest income earned 1,677 3,599 Interest expense 8,327 8,540 Trading revenue/(loss) (304) (12,577) Operating expense incurred 51,722 32,507 Loss on disposal of subsidiary 521 -

(h) Interest income earned: This represents interest earned on placement with entities.

(i) Interest expense: This represents interest expense booked in respect of deposits, subordinated debt, and other borrowing transactions with group entities. (j) Trading revenue/(loss): This represents fair value gain/ (loss) on trading and derivative transactions with group entities.

94 93 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 99 Annual report 2020 100

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED Notes to the financial statements NotesNotes to the financial to the statements financial statements Notes to the financial statements for the year ended 31 December 2020 forfor thethe year endedended 31 31 December December 2020 2020 for the year ended 31 December 2020

26 Related party transactions (continued) 27 Long service award scheme The value of long service is acknowledged through long service awards that are regarded as an important aspect of 26.3 Balances with key management personnel recognition and the total Employee Value Proposition (EVP) of the Bank.

Key management personnel includes members of the Stanbic Bank Ghana Limited board of directors and its The scheme pays two (2) months basic salary for 10 years of service, three (3) months basic salary for 15 years of executive committee. The definition of key management includes close members of key management personnel service, four (4) months basic salary for 20 years, five (5) months basic salary for 25 years, six (6) months salary for and any entity over which key management exercise control, joint control or significant influence. Close family 30 years and over 30 years attracts prior award plus one (1) month basic salary for every additional five (5) years of members are those family members who may influence, or be influenced by that person in their dealings with service. The length of service is calculated each year and the awards paid when due. The employee makes no Stanbic Bank Ghana Limited. They include the person's domestic partner and children, the children of the person's financial contribution towards the scheme; the responsibility of funding the Awards Scheme is on the Bank. domestic partner, and dependents of the person or the person's domestic partner.

(i) Key management compensation 27.1 Description of risk The nature of the awards scheme is that of an Unfunded Scheme because the Actuarial Liability is not supported with 2020 2019 any dedicated assets. Its structure is equivalent to the traditional Pay-As-You-Go pension system which has no GHS'000 GHS'000 dedicated assets to back the pension liability. In valuing the liabilities, the Projected Unit Credited Method (PUCM), which is the recommended valuation method by Salaries and other short-term benefits 26,086 26,086 IAS 19, was employed together with a set of assumptions relating to employees demographic profiles as well as Value of share options and rights expensed - - assumptions on financial variables. 26,086 26,086

2020 2019 (ii) Loans and deposit transactions with key management personnel GHS'000 GHS'000 2020 2019 The amounts recognised in the statement of financial position in respect GHS'000 GHS'000 i) of the retirement fund is as follows: Loans and advances Present value of funded obligations 13,662 10,581 Loans outstanding at the beginning of the period 7,650 6,320 13,662 10,581 Net movement during the period (351) 1,330 Loans outstanding at the end of the year 7,299 7,650 ii) Movement in the present value of funded obligation Balance at the beginning of the year 10,581 10,196 Net interest earned 364 497 Current service cost 1,697 1,478 Interest cost 1,921 537 Loans include mortgage loans, instalment sale and finance leases and credit cards. Loans granted to employees Actuarial loss 1,692 385 and executive directors are granted at concessionary rates 0%-5% below the prime lending rate. No specific Benefits paid (2,229) (2,015) impairments have been recognised in respect of loans granted to key management at the reporting date (2019: Nil). Balance at the end of the year 13,662 10,581 The mortgage loans and instalment sale and finance leases are secured by the underlying assets. All other loans are unsecured. iii) The amounts recognised in profit and loss are determined as follows The maximum amount of all sums of staff loans and advances due to the Bank at the end of the year from officers Current service cost 1,697 1,478 was GHS226.62 million (2019: GHS194.18 million) Net interest income 1,921 537 Included in staff costs 3,618 2,015 Deposits and current accounts 2020 2019 iv Components of statement of OCI GHS'000 GHS'000 Actuarial loss 1,692 385 Deposits outstanding at beginning of the period 4,356 1,088 Net movement during the period 691 3,268 v) Sensitivity analysis for the scheme Deposits outstanding at end of the year 5,047 4,356 2020 2019 1% increase 1% decrease 1% increase 1% decrease Net interest expense 2 1 GHS'000 GHS'000 GHS'000 GHS'000 Inflation rate Deposits include cheque, current and savings accounts. Effect on the defined benefit obligation 11,128 (16,771) 2,457 (2,036) Discount rate Effect on the defined benefit obligation (2,533) 3,109 (2,028) 2,493 10% increase 10% decrease 10% increase 10% decrease Mortality improvements Effect on the defined benefit obligation 296 (291) 238 (234)

95

96 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 101 Annual report 2020 102

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED NotesNotes to the financial to thestatements financial statements Risk and capital management forfor thethe yearyear ended ended 31 31December December 2020 2020 forNotes the to year the financial ended statements 31 December 2020 for the year ended 31 December 2020

30 Risk and capital management 28 Compliance with banking regulations Enterprise risk review

Overview Liquidity breaches Risk Management's objective continues to align with the Bank's strategic focus "to be the leading end-to-end financial solutions provider in 2020 2019 Ghana through innovative and customer-focused people". Effective risk management is fundamental and essential to the achievement of the Number of incidents 1 - Bank’s strategic objectives. It is also one of the pillars of the institution’s strategic value drivers which entails supporting our clients by doing the right business the right way and maintaining the highest possible standards of responsible business practice using frameworks that align Sanctions amount (in GHS'000) 103 - with regulatory expectations and standard business practices as well as procedures.While we remain committed to increasing shareholder value by developing and growing our business within our broad-determined risk appetite, we are mindful of achieving this objective in line with the interests of all stakeholders. Other penalties The Risk function continues its oversight and advisory responsibilities by deploying a consistent, comprehensive and strategic approach to GHS'000 GHS'000 the identification, measurement, management and reporting of enterprise-wide risks across the Bank. This is executed through proactive risk • Breach of Bank of Ghana directive on new Ghana cedi notes 120 - management practices which ensure that the business maintains the right balance in terms of the risk-return trade off whilst limiting the • Breach of Bank of Ghana directive on foreign exchange act 105 - negative variations that could impact the Bank's capital, earnings, risk assets and appetite levels in a constantly changing and dynamic Penalty for bank's unsecured financial exposures to five institutions in excess of operating environment. Furthermore, Risk continues to shape, drive and monitor activities relating to risk and conduct in the institution • 10% of net own funds 1,335 - through various measures including strengthening the risk and control environment, monitoring risk appetite and governance standards across the institution and elevating risk awareness by deploying requisite compliance training programmes for all Stanbic Bank Ghana • Penalty for infraction on anti-money laundering 168 204 Limited employees with a standard process of monitoring and escalating deficiencies in meeting the required standards. This is also in line Penalty for not appropriately classifying one impaired loan account in with the established code of conduct and ethics that all members of staff must adhere and attest to on an annual basis. • 24 - accordance with Bank of Ghana guidelines • Breach of Bank of Ghana reporting directive of non-performing loan ratio - 6 The Board sets the tone and risk appetite for the organisation including the tolerance levels for key risks and ensure the right risk culture is established across the insittution. These risks are however managed in accordance with a set of governance standards, frameworks and • Breach of Bank of Ghana reporting directive of net open position - 6 policies which align with the global and industry best practices. Total amount paid 1,752 216 The overarching approach to managing enterprise-wide risk is based on the "Three Lines of Defense" principle which requires the first line (Business risk owners) to appropriately demonstrate ownership and accountability for risks and manage same closest to the point of incidence; second line (including Risk, Compliance, and Operations and Financial Control) to review and challenge as well as provide 29 Event after the reporting date oversight and advisory functions; and the third line (Internal Audit) to conduct assurance that control processes are fit for purpose, are implemented in accordance with standard operating procedures, and operating effectively or as intended. Internal Audit function reports all There were no events after the reporting date which could have a material effect on the financial position of the Bank as matters directly to the Board Audit Committee. at 31 December 2020 which have not been recognised or disclosed. Risk management framework Approach and structure The Bank’s approach to risk management is based on governance processes that rely on both individual responsibility and collective oversight that is supported by a tailored Management Information System (MIS). This approach balances corporate oversight at senior management level with independent risk management structures in the business where the business unit heads, as part of the first line of defense, are specifically responsible for the management of risk within their businesses using appropriate risk management frameworks that meet required Bank minimum standards. An important element that underpins the Bank’s approach to the management of all risk is independence and appropriate segregation of responsibilities between Business and Risk. Risk officers report separately to the Head of Risk who reports to the Chief Executive Officer of Stanbic Bank Ghana Limited and also through a matrix reporting line to the Standard Bank Bank (SBG).

All principal risks are supported by the Risk department.

Governance structure The risk governance structure provides a platform for the board, executive and senior management through the various committees to evaluate and debate material existential and emerging risks which the Bank is exposed to, and assess the effectiveness of risk responses through the risk profiles of the underlying business units and functional areas . The risk-focused board committees include the board audit committee, board credit committee, and board IT committee, while executive management oversight of the Bank is achieved through management committees that focus on specific risks. Each of the board and management committees is governed by mandates that set out the expected committee's terms of reference.

Risk governance standards, policies and procedures The Bank has developed a set of risk governance standards for each principal risk including credit, market, operational, IT and compliance risks. The standards define the acceptable conditions for the assumption of the major risks and ensure alignment and consistency in the manner in which these risks are identified, measured, managed, controlled and reported, across the Bank.

All standards are supported by policies and procedural documents. They are applied consistently across the bank and are approved by the Board. It is the responsibility of the business unit executive management to ensure that the requirements of the risk governance standards, policies and procedures are implemented within the business units.

98 97 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements Notes to the annual financial statements ANNUAL FINANCIALSTANBIC STATEMENTS BANK GHANA 103 Annual report 2020 104

STANBIC BANK GHANA LIMITED STANBIC BANK GHANA LIMITED RiskNotes to the and financial capital statements management Risk and capital management Notes to the financial statements forfor thethe yearyear ended ended 31 31 December December 2020 2020 for the year ended 31 December 2020 for the year ended 31 December 2020 30 Risk and capital management (continued) 30 Risk and capital management (continued) Risk appetite Risk appetite is an expression of the amount, type and tenure of risk that the Bank is prepared to accept in order to deliver its Liquidity risk business objectives. It is the balance of risk and return as the Bank implements business plans, whilst recognising a range of Liquidity risk is defined as the risk that the Bank, although balance-sheet solvent, cannot maintain or generate sufficient possible outcomes. cash resources to meet its payment obligations in full as they fall due (as a result of funding liquidity risk), or can only do so The Board establishes the Bank’s parameters for risk appetite by: at materially disadvantageous terms (as a result of market liquidity risk). - providing strategic leadership and guidance; Funding liquidity risk refers to the risk that the counterparties, who provide the Bank with funding, will withdraw or not roll- - reviewing and approving annual budgets and forecasts for the Bank; and over that funding. - regularly reviewing and monitoring the Bank’s performance in relation to set risk appetite. Market liquidity risk refers to the risk of a generalised disruption in asset markets that makes normal liquid assets illiquid and The risk appetite is defined by several metrics which are then converted into limits and triggers across the relevant risk types, the potential loss through the forced-sale of assets resulting in proceeds being below their fair market value. at both entity and business line levels, through an analysis of the risks that impact them. Stress testing Stress testing serves as a diagnostic and forward looking tool to improve the Bank’s understanding of its credit; market, Credit risk liquidity and operational risks profile under event based scenarios. Principal credit standard and policies Management reviews the outcome of stress tests and selects appropriate mitigating actions to minimise and manage the The Bank's Governance Standard, as reviewed regularly, sets out the broad overall principles to be applied in credit risk impact of the risks to the Bank. decisions and sets out the overall framework for the consistent and unified governance, identification, measurement, Residual risk is then evaluated against the risk appetite. management and reporting of credit risk in the Bank. The Corporate and Investment Banking (CIB), the Personal and Business Banking (PBB) and Wealth Global Credit Policies Risk categories have been designed to expand the Bank's Credit Risk Governance Standard requirements by embodying the core principles The Bank’s enterprise risk management framework is designed to govern, identify, measure, manage, control and report on for identifying, measuring, approving, and managing credit risk. These policies provide a comprehensive framework within the principal risks to which the Bank is exposed. The principal financial risks are defined as follows: which all credit risk emanating from the operations of the bank are legally executed, properly monitored and controlled in order to minimise the risk of financial loss; and assure consistency of approach in the treatment of regulatory compliance requirements. Credit risk Credit risk is the risk of loss arising out of the failure of obligors to meet their financial or contractual obligations when due. It In addition to the Credit Risk Governance Standard, CIB and PBB Global Credit Policies, a number of related credit policies is composed of counterparty/obligor risk (including borrowers and trading counterparties) and concentration risk. and documents have been developed, with contents that are relevant to the full implementation and understanding of the credit policies.

Counterparty risk Methodology for risk rating Counterparty risk is the risk of loss to the Bank as a result of failure by a counterparty to meet its financial and/or contractual obligations to the Bank. It has three components: Internal counterparty ratings and default estimates that are updated and enhanced from time-to-time play an essential role in the credit risk management and decision-making process, credit approvals, internal capital allocation, and corporate • primary credit risk which is the exposure at default (EAD) arising from lending and related banking product activities, governance functions. Ratings are used for the following purposes: including their underwriting; • Credit assessment and evaluation • pre-settlement credit risk which is the EAD arising from unsettled forward and derivative transactions, arising from the default of the counterparty to the transaction and measured as the cost of replacing the transaction at current market rates; • Credit monitoring and • Credit approval and delegated authority • Economic capital calculation, portfolio and management reporting • issuer risk which is the EAD arising from traded credit and equity products, and including their underwriting. • Regulatory capital calculation • RARORC (Risk-Adjusted Return on Regulatory Capital) calculation Concentration risk • Pricing: PDs, EADs, and LGDs may be used to assess and compare relative pricing of assets/facilities, in Concentration risk refers to any single exposure or Bank of exposures large enough to cause credit losses which threaten the conjunction with strategic, relationship, market practice and competitive factors. Bank’s capital adequacy or ability to maintain its core operations. It is the risk that common factors within a risk type or across risk types cause credit losses or an event occurs within a risk type which results to credit losses.

Market risk Market risk is defined as the risk of a change in the actual or effective market value or earnings of a portfolio of financial instruments caused by adverse movements in market variables such as equity, bond and commodity prices, foreign exchange rates, interest rates, credit spreads, recovery rates, correlations and implied volatilities in the market variables. Market risk covers both the impact of these risk factors on the market value of traded instruments as well as the impact on the Bank’s net interest margin as a consequence of interest rate risk on banking book assets and liabilities.

100

99 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 105 Annual report 2020 106

RiskSTANBIC BANKand GHANA capital LIMITED management Notes to the financial statements forfor the year year ended ended 31 31 December December 2020 2020

30 Risk and capital management (continued)

Methodology for risk rating (continued) The starting point of all credit risk assessment and evaluation lies in the counterparty risk grading, which is quantified and calculated in compliance with the Bank’s credit rating policy and using such Basel-2 compliant models as are in current use and which are updated or enhanced from time to time. Credit risk quantification for any exposure or portfolio is summarised by the calculation of the expected loss (EL), which is arrived at in the following way: • Based on the risk grading foundation which yields the counterparty’s probability of default (PD), the nature and quantum of the credit facilities are considered; • A forward-looking quantification of the exposure at default (EAD) is determined in accordance with Bank standard guidelines. • Risk mitigants such as security and asset recovery propensities are then quantified to moderate exposure at default to yield the loss given default (LGD). • Finally, the EL is a function of the PD, the LGD and the EAD. These parameters are in turn used in quantifying the required regulatory capital reserving, using the Regulatory Capital Calculator developed, maintained and updated in terms of Basel 2, and the economic capital implications through the use of Credit Portfolio Management’s (CPM’s) Economic Capital tools. Furthermore, bearing in mind the quantum of the facility and the risk/reward thereof, an appropriate consideration of Basel 2 capital requirements (where applicable) and the revenue and return implications of the credit proposal.

Framework and governance Credit risk remains a key component of financial risks faced by the Bank given the very nature of its business. The importance of credit risk management cannot be over emphasised as consequences can be severe when neglected. The Bank has established governance principles to ensure that credit risk is managed effectively within a comprehensive risk management and control framework. In reaching credit decisions and taking credit risk, both the credit and business functions must consistently and responsibly balance risk and return, as return is not the sole prerogative of business neither is credit risk the sole prerogative of credit. Credit (and the other risk functions, as applicable) and business must work in partnership to understand the risk and apply appropriate risk pricing, with the overall aim of optimising the bank’s risk adjusted performance.

The reporting lines, responsibilities and authority for managing credit risk in the Bank are clear and independent. However, ultimate responsibility for credit risk rests with the board.

Credit risk mitigation Credit risk mitigation is defined as all methods of reducing credit expected loss whether by means of reduction of EAD (e.g. netting), risk transfer (e.g. guarantees) or risk transformation. Guarantees, collateral and the transaction structures are used by the Bank to mitigate credit risks both identified and inherent though the amount and type of credit risk is determined on a case by case basis. The Bank’s credit policy and guidelines are used in a consistent manner while security is valued appropriately and reviewed regularly for enforceability and to meet changing business needs. The credit policy establishes and defines the principles of risk transfer, transformation and reduction. The processes and procedures for accepting, verifying, maintaining, and releasing collateral are well documented in order to ensure appropriate application of the collateral management techniques.

Credit risk measurement A key element in the measurement of credit risk is the assignment of credit ratings, which are used to determine expected defaults across asset portfolios and risk bands. The risk ratings attributed to counterparties are based on a combination of factors which cover business and financial risks: The Bank uses the PD Master Scale rating concept with a single scale to measure the credit riskiness of all counterparty types. The grading system is a 25-point scale, with three additional default grades.

Standard & Bank's rating Grade description Poor's Fitch SB01 - SB12/SB13 Investment grades AAA to BBB- AAA to BBB- SB14 - SB21 Sub Investment grades BB+ to CCC+ BB+ to CCC+ SB22 – SB25 Cautionary grade CCC to C CCC to C

101 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 107 Annual report 2020 108

Risk and capital management for the year ended 31 December 2020 STANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBIC BANKSTANBIC BANKSTANBIC BANKSTANBIC STANBICBANK STANBICBANK STANBIC BANK GHANASTANBICBANK GHANA BANKSTANBICGHANABANK GHANABANK GHANABANK GHANABANK BANKGHANA BANKLIMITED GHANA BANKGHANALIMITED BANKGHANALIMITED GHANALIMITEDBANK GHANALIMITEDGHANA LIMITEDGHANA LIMITEDGHANA LIMITED GHANALIMITED GHANALIMITED LIMITED LIMITEDLIMITED LIMITED LIMITED LIMITED LIMITED

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1,570,0891,570,0891,570,0891,570,0891,570,0891,570,0891,570,089------232,956-232,956-232,956- 232,956-232,956- 232,956-232,956-232,956232,956232,956232,956232,956232,956232,956-232,956-232,956- 232,956- - - -209,848-209,848- 209,848- 209,848- 209,848--209,848-209,848-209,848209,848- 209,848-209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848209,848122,215209,848122,215209,848122,215122,215209,848122,215122,215122,215122,215122,215122,215122,215122,215122,215122,215122,215122,2155858122,215585858585858209,84858209,84858209,84858209,8485858209,84858209,84858209,84858209,848209,84858209,848209,848209,848209,848209,848209,84810.4209,84810.4209,84810.410.410.410.410.410.410.410.410.410.410.410.410.410.410.4 MortgageMortgageMortgageMortgageMortgageMortgageMortgage loansMortgage Mortgageloans loansMortgage Mortgageloans loansMortgageMortgage loansMortgage loansMortgage loans Mortgageloans loansMortgage loans loansloans loans loans loans loans 374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980374,980 ------266,929-266,929-266,929-266,929- 266,929- 266,929- 266,929- 266,929266,929- 266,929266,929266,929266,929266,929266,929266,929266,929------83,113-83,113-83,113-83,113-83,113-83,113-83,11383,11383,11383,11383,11383,11383,113-83,113-83,113-83,113- 83,113- - - -24,938- 24,938-24,938- 24,938--24,938-24,938-24,938-24,93824,938-24,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,93824,9389,39824,9389,3989,39824,9389,3989,3989,3989,3989,3989,3989,3989,3989,3989,3989,398 389,398 389,398 38 9,39838 38 38 38 38 3824 38 2438 24938 38 3824938 3824938 3824938 3824938 2493838 24938 24938 24938 2493824 93824 938249386.7 24938 6.7938246.7 9386.7 9386.76.76.76.76.76.76.76.76.76.76.76.76.7 InstalmentInstalmentInstalmentInstalmentInstalmentInstalmentInstalment InstalmentsaleInstalment saleInstalment saleInstalment andsaleInstalment Instalment saleand Instalmentandsale Instalment salefinanceand Instalmentandsalefinance sale financeandInstalment saleandfinance sale financeand andsale salefinanceleases andfinance sale leases and salefinanceleases finance and andsaleleases finance leasesandsalefinance andleases finance financeleasesand finance leases andleasesfinance leasesfinance leases finance leasesleases leases leases leases leases 296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186296,186 ------217,613-217,613-217,613-217,613- 217,613- 217,613- 217,613- 217,613217,613- 217,613217,613217,613217,613217,613217,613217,613217,613------36,641-36,641-36,641-36,641-36,641-36,641-36,64136,64136,64136,64136,64136,64136,641-36,641-36,641-36,641- 36,641- - - -41,932- 41,932-41,932- 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1,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,7271,341,727 ------1,085,547--1,085,5471,085,547- -1,085,5471,085,547-- 1,085,547-1,085,547- 1,085,547-1,085,5471,085,547- 1,085,5471,085,5471,085,5471,085,5471,085,5471,085,5471,085,547------113,202-113,202-113,202- 113,202-113,202- 113,202-113,202-113,202113,202113,202113,202113,202113,202113,202-113,202-113,202- 113,202- - - -142,978-142,978- 142,978- 142,978- 142,978--142,978-142,978-142,978142,978- 142,978-142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,978142,97883,652142,97883,65283,652142,97883,65283,65283,65283,65283,65283,65283,65283,65283,65283,65283,65283,6525983,652595983,6525959595959142,97859142,97859142,97859142,9785959142,97859142,97859142,97859142,978142,97859142,978142,978142,978142,978142,978142,97810.7142,97810.7142,97810.710.710.710.710.710.710.710.710.710.710.710.710.710.710.7 CorporateCorporateCorporateCorporateCorporateCorporateCorporate Corporate&Corporate &CorporateInvestment & CorporateInvestment &CorporateInvestment Corporate& Investment Corporate &Investment Corporate& Investment Corporate & Investment& Corporate Investment &Investment Banking& Investment Banking&&Investment Banking &Investment Investment Banking& BankingInvestment & InvestmentBanking Banking&Investment Banking InvestmentBanking Banking Banking BankingBanking Banking Banking Banking Banking 2,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,875------758,288-758,288--758,288-758,288-758,288-758,288758,288-758,288758,288758,288758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,4621,564,4621,564,4621,564,4621,564,4621,564,4621,564,4621,564,4621,564,462182,1751,564,462182,1751,564,462182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175-182,175-182,175-182,175------130,950-130,950- 130,950- 130,950- 130,950--130,950-130,950-130,950130,950- 130,950-130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,95069,761130,95069,76169,761130,95069,76169,76169,76169,76169,76169,76169,76169,76169,76169,76169,76169,7615369,761535369,7615353535353130,95053130,95053130,95053130,9505353130,95053130,95053130,95053130,950130,95053130,950130,950130,950130,950130,950130,950130,9505.0130,9505.05.05.05.05.05.05.05.05.05.05.05.05.05.05.05.0 CorporateCorporateCorporateCorporateCorporateCorporateCorporate loansCorporateCorporate loans CorporateloansCorporate loans CorporateloansCorporate loansCorporate loansCorporate loansCorporate loans Corporateloans loans loansloans loans loans loans loans 2,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,8752,635,875 758,288758,288758,288758,288758,288758,288758,288758,288758,288758,288758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,462758,2881,564,4621,564,4621,564,4621,564,4621,564,4621,564,4621,564,4621,564,4621,564,462182,1751,564,462182,1751,564,462182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175-182,175-182,175-182,175------130,950-130,950- 130,950- 130,950- 130,950--130,950-130,950-130,950130,950- 130,950-130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,950130,95069,761130,95069,76169,761130,95069,76169,76169,76169,76169,76169,76169,76169,76169,76169,76169,76169,7615369,761535369,7615353535353130,95053130,95053130,95053130,9505353130,95053130,95053130,95053130,950130,95053130,950130,950130,950130,950130,950130,950130,9505.0130,9505.05.05.05.05.05.05.05.05.05.05.05.05.05.05.05.0

GrossGrossGrossGrossGross loansGross loansGross loansGross Grossloans loansGrossand Grossloansand loansGrossandGross loans advancesandGrossloans and Grossadvancesloans advancesandGrossloans and advances loans Grossloansadvancesand and loansadvances loansandadvances and loansadvances advancesand andloans advancesand advancesand advancesadvancesand advancesand advances advances advances 4,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,7684,648,768------758,288-758,288--758,288-758,288-758,288-758,288758,288-758,288758,288758,288758,2883,134,551758,2883,134,551758,2883,134,551758,2883,134,551758,2883,134,551758,2883,134,551758,2883,134,5513,134,5513,134,5513,134,5513,134,5513,134,5513,134,5513,134,5513,134,551182,1753,134,551182,1753,134,551182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175182,175-182,175-182,175-182,175------232,956-232,956-232,956- 232,956-232,956- 232,956-232,956-232,956232,956232,956232,956232,956232,956232,956-232,956-232,956- 232,956- - - -340,798-340,798- 340,798- 340,798- 340,798--340,798-340,798-340,798340,798- 340,798-340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798340,798191,976340,798191,976340,798191,976191,976340,798191,976191,976191,976191,976191,976191,976191,976191,976191,976191,976191,976191,9765656191,976565656565656340,79856340,79856340,79856340,7985656340,79856340,79856340,79856340,798340,79856340,798340,798340,798340,798340,798340,798340,7987.3340,7987.37.37.37.37.37.37.37.37.37.37.37.37.37.37.37.3 Less:Less:Less:Less: Less:Total Less:Total Less:Total Less:Total Less:expectedTotal Less:expectedTotal Less:expectedTotal Less:expectedLess:Total TotalexpectedLess: TotalexpectedLess: Totalexpected creditLess: Totalexpected TotalcreditexpectedLess: creditTotalexpected Totalcreditexpected creditTotalloss expectedexpected creditloss Total expectedcreditloss expected creditforloss creditexpected lossfor creditforlossexpected loans credit lossfor loans credit creditforlossloans loss creditforloans losscreditforloansand loss creditforloansand forlossloss loansand credit for advanceslossloansand forloanslossandadvances for loansadvancesforlossand loansandadvances for loss loansadvancesforloansand and advancesforloans andadvancesloans for andat advances loans advances andat and amortisedloansatadvances and amortisedadvances at and amortised atadvances advances and amortised at advances amortised andatadvances amortised at advancesamortisedat costamortisedatadvances amortisedatcost amortisedcost at at amortisedcost at amortisedcost amortisedat cost amortised atcostamortised atcost amortisedcost amortisedcost cost costcost cost cost cost cost 12-month12-month12-month12-month12-month12-month12-month ECL12-month 12-monthECL ECL12-month 12-monthECL ECL12-month12-month ECL12-month ECL12-month ECL 12-monthECL ECL12-month ECL ECLECL ECL ECL ECL ECL (37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469)(37,469) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetime ECLLifetime ECLLifetimenot ECLLifetime not ECLLifetimenot Lifetime credit-impairedECL not Lifetime credit-impairedECLnot LifetimeECLcredit-impaired not LifetimeECL credit-impairednot ECLcredit-impairedLifetime not ECLcredit-impairednotECL credit-impairednotECL credit-impairednot ECLcredit-impaired not ECLnotcredit-impaired credit-impairednotECL not credit-impairedcredit-impaired not credit-impaired credit-impairednot credit-impaired credit-impaired (28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962)(28,962) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetime ECLLifetime ECLLifetimecredit-impaired ECLLifetime credit-impaired ECLLifetimecredit-impairedLifetime ECL credit-impairedLifetime ECLcredit-impaired LifetimeECL credit-impaired LifetimeECL credit-impaired ECLLifetime credit-impaired ECLcredit-impairedECL credit-impairedECL credit-impairedECL credit-impairedECLcredit-impaired credit-impairedECL credit-impaired credit-impaired credit-impaired (125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545)(125,545) Purchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originated Purchased/originatedcredit creditPurchased/originated credit credit creditimpaired creditimpaired creditimpaired creditimpaired creditimpaired creditimpaired creditimpaired creditcreditimpaired impaired credit impairedcredit impaired credit impairedimpaired credit impaired impaired impaired impaired InterestInterestInterestInterestInterest InterestInInterest In SuspenseInterestInInterest SuspenseIn Interest SuspenseInInterest SuspenseIn Interest SuspenseInterestIn SuspenseInterestIn SuspenseInInterest (IIS)SuspenseInInterest SuspenseIn(IIS) Interest Suspense(IIS) In InSuspense (IIS) In Suspense(IIS) SuspenseIn (IIS) Suspense In (IIS)Suspense In(IIS)Suspense (IIS) Suspense(IIS) (IIS) (IIS)(IIS) (IIS) (IIS) (IIS) (IIS) (83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263)(83,263) NetNetNet loansNet loansNet loansNet loansNet loansandNet Net loansand loansNetand Net loans advancesandloans NetandNet advancesloans advancesandNetloans andNet advances loans loansadvancesandNet and loansadvances Net loansandadvances and loansadvances advancesand andloans advancesand advancesand advancesadvancesand advancesand advances advances advances 4,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,529 AddAddAdd theAdd Addthe the Addfollowing Addthe followingthe AddfollowingAdd the followingAddthe followingAdd the followingtheAdd Add followingotherthe Add followingthe otherAddfollowing otherthe theAddfollowing other followingthebankingAdd other the following followingbanking other thebankingfollowingother followingthebankingother otherbankingfollowing otherbanking followingactivitiesotherbanking activities otherbanking otheractivitiesbanking otheractivitiesbanking otheractivitiesbanking other activitiesbankingbanking activities otherbanking activities banking activities banking activities activitiesbanking activitiesactivities activities activities activities activities exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures: CashCashCashCash andCash andCash andCash cashandCash Cashandcash cashCashand Cashand cashequivalents cashCashand Cashequivalents and cashCash equivalentsandcash Cashequivalents and cashCash equivalentscash andand equivalentscashCash andequivalentscash and equivalents cash cashequivalentsand cash equivalents andcashequivalents cashequivalentsequivalents cashequivalents equivalents equivalents equivalents DerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivatives FinancialFinancialFinancialFinancialFinancialFinancialFinancial investmentsFinancial investmentsFinancial investmentsFinancial investmentsFinancial investmentsFinancialFinancial investments FinancialinvestmentsFinancial investments investmentsFinancial (excluding investments Financial (excludinginvestments (excluding investments investments(excluding investments(excluding investments(excluding investments(excluding (excludingequity) investments(excluding equity) (excludingequity) (excluding equity) (excluding(excludingequity) (excludingequity) (excludingequity) (excludingequity) equity) (excludingequity) equity) equity)equity) equity) equity) equity) equity) LoansLoansLoansLoansLoans andLoans andLoans and Loans advancesandLoans andadvancesLoans advancesandLoans andadvancesLoans Loans advancesand andLoansadvances Loansandadvances toandLoansadvances advances toand and Loansbankstoadvances and banksadvances to and banks toadvances advances and banks toadvances banks toandadvances banks to advancesbanksto bankstoadvances banksto banks to tobanks to banks banksto banksto banks tobanks banks TradingTradingTradingTradingTrading TradingassetsTrading assets TradingassetsTrading assetsTrading assetsTrading assetsTrading Tradingassets Tradingassets Tradingassets Tradingassets assetsTrading assetsassets assets assets assets assets PledgedPledgedPledgedPledgedPledgedPledged assetsPledged assetsPledged Pledgedassets Pledgedassets Pledgedassets PledgedassetsPledged assetsPledged assetsPledged assetsPledged assets assetsPledged assetsassets assets assets assets assets OtherOtherOtherOther Otherfinancial Otherfinancial Otherfinancial Otherfinancial Otherfinancial Otherfinancial Otherassetsfinancial OtherOtherassetsfinancial financialassetsOther financialOtherassets financialassetsOther financialassetsfinancial Other assetsfinancial assetsfinancial assets financial assets assetsfinancial assetsassets assets assets assets assets

TotalTotalTotalTotal on-balanceTotal on-balanceTotal on-balanceTotal on-balanceTotal Totalon-balance Totalon-balance Totalon-balance Totalon-balanceTotal on-balance sheetTotal on-balance Total sheeton-balance sheetTotal on-balance on-balancesheetTotal sheeton-balanceexposure on-balance sheetexposure sheeton-balanceexposure sheet exposureon-balancesheet exposure sheet exposuresheet exposure sheet sheetexposure exposuresheet sheetexposure exposuresheet exposure exposuresheet exposure exposure exposure exposure 4,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,5294,373,529 UnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognised financialUnrecognised financialUnrecognisedUnrecognised financialUnrecognised financialUnrecognised financialUnrecognised financial assets:financialUnrecognised assets:financial financialassets: financialassets: financialassets: financialassets:financial assets:financial assets:financial assets: financial assets: assets:financial assets:assets: assets: assets: assets: assets: LettersLettersLettersLettersLetters ofLetters Lettersof creditofLetters Letterscreditof creditLettersof Letterscreditof creditLettersofLetters creditof LetterscreditofLetters creditof Letterscreditof credit Lettersof of credit of credit credit of credit of credit ofcredit credit 182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695182,695 90,45990,45990,45990,45990,45990,45990,45990,45990,45990,45990,45990,45990,45954,60690,45954,60690,45954,60690,45954,60654,60690,45954,60654,60654,60654,60654,60654,60654,60654,60654,60637,63054,60637,63054,60637,63054,60637,63037,63037,63037,63037,63037,63037,63037,63037,63037,63037,63037,63037,63037,630 ------GuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuarantees 1,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,9161,296,916 401,318401,318401,318401,318401,318401,318401,318401,318401,318401,318401,318401,318401,318611,069401,318611,069401,318611,069401,318611,069611,069401,318611,069611,069611,069611,069611,069611,069611,069611,069611,069284,529611,069284,529611,069284,529611,069284,529284,529284,529284,529284,529284,529284,529284,529284,529284,529284,529284,529284,529284,529 ------LoanLoanLoanLoan commitmentsLoan commitmentsLoan commitmentsLoan commitmentsLoan Loancommitments Loancommitments Loancommitments Loancommitments Loancommitments Loancommitments Loancommitments Loan commitmentscommitments Loancommitments commitments commitments commitments 1,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,9921,496,992 1,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,3841,326,384147,5131,326,384147,5131,326,384147,513147,5131,326,384147,513147,513147,513147,513147,513147,513147,513147,513147,513147,513147,51323,095147,51323,09523,095147,51323,09523,09523,09523,09523,09523,09523,09523,09523,09523,09523,09523,09523,09523,095 ------

TotalTotalTotalTotal exposureTotal exposureTotal exposureTotal exposureTotal Totalexposure Totalexposure Totalexposure TotaltoexposureTotal exposure toTotal creditexposuretoTotal exposure credittoTotal creditexposuretoexposure Totalcredittoexposure credit toexposurerisk credit toexposure risktocredit risk exposuretocredit riskcreditto risk credit to toriskcredit riskto credit credit torisk riskcreditto creditrisk toriskcredit riskriskcredit risk risk risk risk 7,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,1327,350,132 ExpectedExpectedExpectedExpectedExpectedExpected creditExpected creditExpected Expectedcredit Expectedcredit lossExpectedcredit lossExpectedcredit Expected losscredit for Expected losscredit Expected forlosscredit offfor Expectedlosscredit offforlosscredit Expected balanceofffor losscredit credit balancelossofffor balancecreditoffforloss credit balancelossofffor for balancecreditoff loss loss Sheetforbalance off credit lossoffforbalanceSheet loss Sheet offforbalance forbalance lossoffSheet for exposures balanceSheet offlossoff forbalance exposures Sheet offfor exposures balanceSheetbalanceoff exposures forSheetbalance offSheetexposures balance Sheetoffexposures balance Sheetexposures balance Sheetexposures Sheetexposures Sheetexposures Sheetexposures Sheet exposuresexposures Sheetexposures exposures exposures exposures 1 1 1 1 12-month1 12-month1 12-month1 12-month1112-month112-month112-month ECL112-month1 12-monthECL 1ECL12-month1 12-monthECL 1ECL12-month12-month ECL112-month ECL12-month ECL 12-monthECL ECL12-month ECL ECLECL ECL ECL ECL ECL (3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262)(3,262) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetime ECLLifetime ECLLifetimenot ECLLifetime not ECLLifetimenot Lifetime credit-impairedECL not Lifetime credit-impairedECLnot LifetimeECLcredit-impaired not LifetimeECL credit-impairednot ECLcredit-impairedLifetime not ECLcredit-impairednotECL credit-impairednotECL credit-impairednot ECLcredit-impaired not ECLnotcredit-impaired credit-impairednotECL not credit-impairedcredit-impaired not credit-impaired credit-impairednot credit-impaired credit-impaired (1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189)(1,189) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetime ECLLifetime ECLLifetimecredit-impaired ECLLifetime credit-impaired ECLLifetimecredit-impairedLifetime ECL credit-impairedLifetime ECLcredit-impaired LifetimeECL credit-impaired LifetimeECL credit-impaired ECLLifetime credit-impaired ECLcredit-impairedECL credit-impairedECL credit-impairedECL credit-impairedECLcredit-impaired credit-impairedECL credit-impaired credit-impaired credit-impaired ------TotalTotalTotal TotalexposureTotal exposure TotalexposureTotal exposure TotalexposureTotal exposureTotal exposuretoTotal exposureto TotalTotalexposure creditto Totalexposure creditto Totalexposure creditto Totalexposurecreditexposureto risk credittoTotalexposure riskcreditexposureto riskcreditto exposureon riskcreditto creditonriskexposureto Loanson creditrisk to to Loanscreditonrisk Loansonto creditrisk credit toriskLoanson credit Loansontoand riskcredit riskLoans onand to crediton Loans andrisk risk advancesonLoanscredit and riskLoans onadvances and riskadvances Loansonon and riskLoans advances andon advancesLoans riskLoansonand and advancesLoanson advancesandatLoans on andadvances atLoansadvancesamortised andat andadvancesLoansamortised atandadvancesamortised at and advancesamortised advances atandamortised atadvances amortised andadvancesat amortised atadvances amortisedat amortised advancesat amortised at atamortised at amortisedamortised at amortisedat amortised atamortised amortised costcostcostcostcostcostcostcostcostcostcostcostcostcostcostcostcost 7,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,6817,345,681

102102102102102102102102102102102102102102102102102 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 109 Annual report 2020 110

Risk and capital management

STANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBICSTANBIC STANBICBANK BANKSTANBIC STANBICBANK STANBICBANK STANBICBANK BANK GHANABANK GHANABANK BANK GHANA BANKGHANA BANKGHANA BANKGHANA BANK GHANA BANK GHANA LIMITEDGHANA LIMITEDGHANA LIMITEDGHANA LIMITEDGHANA LIMITEDGHANA LIMITEDGHANA LIMITED LIMITED LIMITEDfor STANBICLIMITED LIMITED LIMITED theLIMITED LIMITED year BANK endedSTANBIC GHANA 31 LIMITED BANKDecember GHANA 2020 LIMITED

NotesNotesNotesNotesNotesNotes toNotes toNotes Notestothe Notestothe toNotes the toNotes the financialNotes tothe financialNotesto thetofinancial thetofinancial the financialtothe financialtothe tofinancial the tofinancial the financial statementsthe financialstatementsthe financial statements financial statements financial statements financialstatements statements statements statements statements statements statementsNotes statements statements to the financialNotes tostatements the financial statements forforfor thefor thefor thefor theyearfor theyearfor theforyear fortheyear theforyear ended the foryear endedthe foryear ended the foryear endedthe year endedthe year ended the year31 ended year31 ended yearended 31 Decemberyearended 31 December31ended December31ended Decemberended 31 Decemberended 31 December31 31December December 31 December 31 December 312020 December312020 December 2020December for2020December 2020 2020 the 2020 2020 2020 2020year 2020 2020 2020 2020endedfor 31 the December year ended 2020 31 December 2020

3030 30 Risk30 Risk30 30 Risk Risk30 Risk30and 30Riskand 30 Riskand 30Risk and Riskcapital30 andRisk capital30 and 30 Riskcapital and Riskcapital and Riskcapitaland Riskcapitaland managementcapitaland managementcapitaland capitaland management capitalandmanagement capitalmanagement capitalmanagement capital managementcapital management management management management management (continued)management (continued)management (continued)30 (continued) (continued) (continued)Risk (continued) (continued) (continued) (continued) and(continued) (continued) (continued) (continued) capital30 Riskmanagement and capital (continued) management (continued)

MaximumMaximumMaximumMaximumMaximumMaximumMaximumMaximumMaximumMaximum exposure MaximumexposureMaximum exposureMaximum exposureMaximum exposure exposure exposure exposure exposure exposureto exposureto exposureto credit exposureto credit exposure to credit tocredit tocredit to credit to risk creditto risk credit tocreditrisk tocreditrisk tobyrisk creditMaximum tobyriskcredit creditby risk creditcreditby risk creditriskby riskcreditby creditriskby creditriskby creditbyrisk qualitybyrisk credit qualityexposurecreditby creditqualityby creditqualityby qualitycreditby qualitycredit Maximumcreditquality creditquality quality quality quality toquality quality creditquality exposure risk by to credit credit quality risk by credit quality

AtAt At31 At31 At 31December At 31December At31 DecemberAt31 AtDecember 31AtDecember 31 DecemberAt31 AtDecember31 AtDecember 31December At 31 December201931 December201931 December2019 December2019 December2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 At 31 December At2019 31 December 2019 StageStageStageStageStage 1Stage 1andStage 1andStage Stage 1and Stage 1and Stage 1StageandStage Stage1and StageStage 1 andStage1Stage andStage 1 and2 Stage 1and2 Stage 1 and 2Stage 1 and Stage2 1 andStage2 and2Stage Stage2 Stage2 2Stage 2 2 2 2 2 Stage 1 and Stage Stage2 1 and Stage 2 StageStageStageStageStage 3Stage 3Stage 3Stage Stage3 Stage3 3Stage Stage3 Stage3 3Stage 3 3 3 3 3 Stage 3 Stage 3

NeitherNeitherNeitherNeitherNeitherNeither pastNeither pastNeither Neitherpast Neitherpast dueNeitherpast dueNeitherpast dueNeitherpast dueNeithernorpast duepastnor due pastnor duepastspecificallynor duepastspecificallynor due pastnor specifically due pastspecificallynor duespecificallynor duenorspecifically duenor specificallydue norspecifically specificallynor specificallynorimpaired norspecificallyimpaired specificallyimpaired specificallyimpaired specificallyimpaired impaired Neitherimpaired impaired impaired impaired impaired impaired impairedpast impaired due norNeither specifically pastNotNotNot specificallyNot due specificallyNot Notimpairedspecifically specificallyNot norspecificallyNot NotspecificallyNot specifically specificallyNotspecifically specificallyNot specificallyNotimpaired Notspecificallyimpaired specificallyimpaired specificallyimpaired specificallyimpaired impaired impaired impairedimpaired impaired impaired impaired impaired impaired impairedNot specificallySpecificallySpecificallySpecificallySpecifically SpecificallyimpairedSpecificallyNotSpecificallySpecificallySpecificallySpecifically impairedspecifically SpecificallyimpairedSpecifically impairedSpecifically impairedSpecifically impaired impaired impaired loansimpaired impairedloans impairedimpairedloans impairedloans impairedloans impairedloans impaired loans loans loans loans loans loans loans loansSpecifically impairedSpecifically loans impaired loans

PerformingPerformingPerformingPerformingPerformingPerformingPerformingPerformingPerformingPerformingPerformingPerformingPerformingPerforming Performing Non-performingPerformingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performingNon-performing loansNon-performing loans loans loans loans loans loans loans loans loans loans loans loans loans Non-performing loansNon-performing loans

BalanceBalanceBalanceBalanceBalanceBalance Balancesheet BalancesheetBalance Balancesheet sheetBalance sheet Balance sheet Balance Balancesheet sheet sheet sheet sheet sheet sheet sheet Balance sheet Balance sheet impairmentsimpairmentsimpairmentsimpairmentsimpairmentsimpairmentsimpairmentsimpairmentsimpairmentsimpairments forimpairments forimpairments impairments for impairments for for for for for for forGross forGross forGross for Gross for Gross Gross Gross Gross Gross Gross Gross Gross Grossimpairments Gross for impairmentsGross for Gross non-performingnon-performingnon-performingnon-performingnon-performingnon-performingnon-performingnon-performingnon-performingnon-performingnon-performingnon-performing non-performing non-performing specific specific specific specific specific specific specific specific specific specific specific Totalspecific Totalspecific Totalspecific Totalnon-performing Total non- Totalnon- Total non- Total non-Total non-Total non-Total non-Total non- Totalnon- Totalnon- non- non- non-Non- non-performingnon-Non-Non-Non-Non-specificNon-Non-Non-Non-Non-Non- Non-Non- Non-Totalspecific non- TotalNon- non- Non- specificallyspecificallyspecificallyspecificallyspecificallyspecificallyspecificallyspecificallyspecifically specifically specifically specificallyimpairment specificallyimpairment specifically impairmentimpairment impairment impairment impairment impairmentimpairment impairment impairment impairment impairmentperforming impairmentperforming performing performing performing performing performingspecifically performingperforming performing performing performing performingperforming performingperforming performing performing performing performing performingimpairment performingperforming specificallyperforming performing performing performing performing performing impairment performingperforming performing NormalNormalNormalNormalNormalNormal monitoringNormal monitoringNormal Normalmonitoring Normalmonitoring Normalmonitoring Normalmonitoring Normalmonitoring Normalmonitoring monitoring monitoring monitoring monitoring monitoring monitoringCloseCloseCloseCloseClose monitoringNormalClose monitoringClose monitoringClose Closemonitoring Closemonitoring monitoringClose monitoringClosemonitoring Closemonitoring monitoringClose monitoring monitoring monitoring monitoring monitoringNormal monitoringEarlyEarlyEarlyEarly EarlyarrearsClose Earlyarrears Earlyarrears EarlyarrearsEarly arrearsEarly monitoringarrearsEarly arrearsEarly arrears Earlyarrears Earlyarrears arrears arrears arrears arrearsClose monitoringEarly arrears TotalTotalTotalEarlyTotal Total Total impairedTotalarrears impairedTotalTotal impairedTotal impairedTotal impairedTotal impaired Totalimpaired Totalloansimpaired impairedloansimpaired loans impairedloans impairedloans impairedloansimpaired loans loans loans coverageloans coverageloans coverageloans coverageloans coverageloanscoveragecoveragecoveragecoveragecoverageTotalcoveragecoveragecoveragecoverage loansimpairedloansloansloansloansloansloans loansloansloansTotalloansloansloans loansloansloansloansimpairedloansloanscoverageloansloansloansloansloans loansloansloansloansloansloans coverageloans loansloans loans NoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNoteNote Note GHS'000GHS'000NoteGHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000 GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000 GHS'000StageStageStageStageStage 3Stage 3Stage 3Stage Stage3GHS'000 Stage3 3Stage Stage3 Stage3 3Stage 3 3 GHS'0003 GHS'0003 3GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000StageGHS'000GHS'000GHS'000GHS'000GHS'000 3GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000Stage%%GHS'000%% 3%GHS%GHS%GHS%GHS %'millionGHS %'millionGHS %'millionGHS %'millionGHS %GHS'million %GHS'million GHS'millionGHS'000GHS'000 GHS'million 'millionGHS 'millionGHS 'million 'million 'million 'million%%%%GHS'000%%%%%%%%GHS%%% 'million % GHS 'million% % BalanceBalanceBalanceBalanceBalanceBalance Balancesheet BalancesheetBalance Balancesheet sheetBalance sheet Balance sheet Balance Balancesheet sheet sheet sheet sheet sheet sheet sheet Balance sheet Balance sheet TotalTotalTotalTotal TotalLoans TotalLoans TotalLoans TotalLoansTotal LoansTotal Loansand TotalandLoansTotal Loansand Total Loansand Total Loansand Loansand impairments Loansimpairmentsand Loansand impairmentsLoansand impairments and impairments and impairments andimpairments andimpairments and impairments impairments impairments impairments impairments impairments Total Loans and Totalimpairments Loans and impairments AdvancesAdvancesAdvancesAdvancesAdvancesAdvancesAdvancesAdvances Advancesto Advancesto Advancesto Advancesto Advancestofor Advancestofor to for performingto for toperforming for toperforming for toperforming fortoperforming fortoperformingfor toforperforming performing forperforming forperformingfor performingfor performing performing performing Advances to forAdvances performing to for performing Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub-Sub- Sub- Sub- CustomersCustomersCustomersCustomersCustomersCustomersCustomersCustomersCustomers Customers Customers Customers Customers Customers loans loans loans loansloans loans loans loans loans loans loans loans loans loans Customers Customersloans loans standardstandardstandardstandardstandardstandardstandardstandardstandardstandardstandardDoubtfulstandardDoubtfulstandardstandardDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtfulDoubtful standard Doubtfulstandard Doubtful GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000StageStageStageGHS'000StageStage 1Stage 1Stage 1Stage Stage1 Stage1 1Stage Stage1 Stage1 1StageStage 1Stage 1Stage GHS'0001Stage GHS'0001Stage 12Stage 2Stage 2Stage Stage2 Stage2 2Stage Stage2 Stage2 Stage2Stage Stage2 Stage2 Stage2 StageGHS'000 21 Stage 21StageStage 1Stage Stage1 Stage1 1Stage 1 Stage1 Stage1 1Stage 1Stage 1Stage 1Stage 1Stage 1Stage 2Stage Stage2Stage 2Stage Stage2 Stage2 2Stage 1 StageStage2 StageStage2 2Stage 2Stage Stage2 1Stage2 12Stage 21Stage Stage1Stage Stage1 1Stage Stage1 Stage1 1Stage2 Stage1Stage 1 Stage1 Stage1 Stage 12Stage 2Stage 2Stage Stage2 Stage2 GHS'0002StageGHS'000 Stage2 GHS'0001Stage2 GHS'0002Stage GHS'0002 GHS'0002 GHS'0002 GHS'0002 GHS'0002StageGHS'000GHS'000GHS'000GHS'000GHS'000StageGHS'000GHS'000 1GHS'000GHS'000GHS'000 2GHS'000GHS'000GHS'000GHS'000GHS'000GHS'000StageStageGHS'000GHS'000 2 1 GHS'000Stage 2 GHS'000GHS'000 GHS'000 PersonalPersonalPersonalPersonalPersonalPersonalPersonal Personal& Personal& PersonalBusiness &Business Personal& PersonalBusiness& PersonalBusiness& PersonalBusiness &Business & &Business &Business BankingBusiness &BankingBusiness & Banking Business & Banking Business & BankingBusiness BankingBusiness Banking Banking Banking Banking Banking Banking Banking BankingPersonal & BusinessPersonal Banking1,830,895 &1,830,895 Business1,830,8951,830,8951,830,8951,830,8951,830,8951,830,8951,830,8951,830,895 Banking1,830,8951,830,8951,830,8951,830,895------1,830,895------1,830,895------1,361,285-1,361,285- 1,361,285-1,361,285-1,361,285-1,361,285- 1,361,2851,361,2851,361,2851,361,2851,361,285-1,361,2851,361,285-1,361,285------1,361,285------286,469-286,469- -286,469-286,469286,469286,4691,361,285286,469286,469286,469286,469286,469-286,469286,469286,469------183,141---183,141-183,141-183,141-183,141-183,141-183,141183,141183,141183,141183,141183,141286,469183,141183,141183,141183,141183,141183,141183,141- 183,141183,141183,141183,141183,141183,141183,141183,14194,274-286,46994,27494,27494,27494,27494,27494,27494,274183,14194,27494,27494,27494,27494,27494,274-5151183,1415151515151183,1415151183,14151183,14151183,14151183,14151183,14151183,141183,141183,141183,14194,274183,141183,141183,141183,141183,14110.010.010.010.010.010.010.094,27410.010.05110.010.010.010.010.0183,14151 183,14110.0 10.0 MortgageMortgageMortgageMortgageMortgageMortgageMortgage loansMortgage MortgageloansMortgage loans Mortgageloans Mortgageloans MortgageloansMortgage loans loans loans loans loans loans loans loans Mortgage loans Mortgage357,652357,652 loans357,652357,652357,652357,652357,652357,652357,652357,652357,652357,652357,652357,652 - - - -357,652------357,652- - -- 218,214- 218,214- 218,214- 218,214- 218,214- 218,214218,214218,214218,214218,214- 218,214218,214218,214218,214------218,214------116,290-116,290- -116,290-116,290116,290116,290116,290218,214116,290116,290116,290116,290-116,290116,290116,290------23,148-23,148-23,148-23,148-23,148-23,14823,14823,14823,14823,14823,148116,29023,14823,14823,14823,14823,14823,14823,148-23,14823,14823,14823,14823,14823,14823,14823,14823,148-116,2909,3989,3989,3989,3989,3989,3989,3989,39823,1489,3989,3989,3989,3989,3989,398 -41 41 41 23,14841 41 41 41 41 23,14841 4123 4123 4123148 4123148 41 23148 23148 23148 2314823,14823 9,39814823 148 23148 23148 23148 23148 148 6.51486.56.56.56.56.56.5 419,3986.56.56.56.56.56.56.5 23 148 41 236.5 148 6.5 InstalmentInstalmentInstalmentInstalmentInstalmentInstalmentInstalmentInstalment Instalmentsale Instalmentsale Instalmentsale Instalmentsaleand Instalmentsaleand Instalmentsale and salefinanceand sale financeandsale andfinancesale financeandsale financeand sale and finance saleandleases financesale leases andfinance financeandleases financeandleases andleasesfinance leasesfinance financeleases financeleases leases leases leases leasesInstalment leases leases sale andInstalment finance304,531 leases304,531 304,531sale304,531304,531304,531 and304,531304,531304,531 304,531finance304,531304,531304,531304,531 leases - - - -304,531------304,531- - -- 212,747- 212,747- 212,747- 212,747- 212,747- 212,747212,747212,747212,747212,747- 212,747212,747212,747212,747------212,747------52,191-52,191- 52,191- 52,19152,19152,191212,74752,19152,19152,19152,191-52,19152,19152,191-52,191------39,593-39,593-39,593-39,593-39,593-39,59339,59339,59339,59339,59339,59339,59352,19139,59339,59339,59339,59339,59339,593-39,59339,59339,59339,59339,59339,59339,59339,59339,59329,165-29,16552,19129,16529,16529,16529,16529,16529,16529,16539,59329,16529,16529,16529,16529,165-74747439,593747474747439,593747439,5937439,5937439,5937439,5937439,59339,59339,59339,59329,16539,59339,59339,59339,59339,59339,59313.013.013.013.013.013.013.029,16513.013.07413.013.013.013.013.0 39,59374 39,59313.0 13.0 OtherOtherOtherOther Otherloans Otherloans Otherloans OtherloansOther loansandOther loansandOther loansandOther loans advancesandOtherloans advancesandOtherloans and advancesloans advancesandloans advancesand loans and advances loansand advances andadvances advancesand advancesand andadvances advances advances advancesOther loans and advancesOther 1,168,712loans1,168,7121,168,7121,168,7121,168,712 and1,168,7121,168,7121,168,712 advances1,168,7121,168,7121,168,7121,168,7121,168,7121,168,712 - - 1,168,712------1,168,712------930,324- 930,324- 930,324- 930,324- 930,324- 930,324930,324930,324930,324930,324- 930,324930,324930,324930,324------930,324------117,988-117,988- -117,988-117,988117,988117,988117,988930,324117,988117,988117,988117,988-117,988117,988117,988------120,400---120,400-120,400-120,400-120,400-120,400-120,400120,400120,400120,400120,400120,400117,988120,400120,400120,400120,400120,400120,400120,400- 120,400120,400120,400120,400120,400120,400120,400120,40055,711-117,98855,71155,71155,71155,71155,71155,71155,711120,40055,71155,71155,71155,71155,71155,711-4646120,4004646464646120,4004646120,40046120,40046120,40046120,40046120,40046120,400120,400120,400120,40055,711120,400120,400120,400120,400120,40010.310.310.310.310.310.310.355,71110.310.34610.310.310.310.310.3120,40046 120,40010.3 10.3 CorporateCorporateCorporateCorporateCorporateCorporateCorporateCorporate Corporate& Corporate& Investment Corporate &Investment Corporate& InvestmentCorporate& InvestmentCorporate& Investment &Investment & &Investment &Investment Investment &InvestmentBanking & Banking Investment& InvestmentBanking& InvestmentBanking InvestmentBanking Banking Banking Banking Banking Banking Banking Banking Banking CorporateBanking & InvestmentCorporate Banking2,386,837 2,386,837&2,386,837 Investment2,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,837 Banking2,386,8372,386,837------772,155- 772,155- 772,155- 772,155- 772,155- 772,1552,386,837772,155772,155772,155772,155772,155772,155772,155772,155- - -2,386,837------1,377,170-1,377,170- 1,377,170-1,377,170-1,377,170-1,377,170- 1,377,170772,1551,377,1701,377,1701,377,1701,377,1701,377,1701,377,170-1,377,170101,230101,230101,230101,230101,230101,230772,155101,230101,230101,230-101,230101,230101,230101,230101,230- -1,377,170------10,271-10,271- 10,271- 10,27110,2711,377,17010,27110,271101,23010,27110,27110,27110,27110,27110,271-10,271------126,011-101,230--126,011-126,011-126,011-126,011-126,011-126,011126,011126,011126,011126,011126,011126,01110,271126,011126,011126,011126,011126,011126,011- 126,011126,011126,011126,011126,011126,011126,011126,01172,314-72,31410,27172,31472,31472,31472,31472,31472,314126,01172,31472,31472,31472,31472,31472,314-5757126,0115757575757126,0115757126,01157126,01157126,01157126,01157126,01157126,011126,011126,011126,01172,314126,011126,011126,011126,011126,0115.35.35.35.35.35.372,3145.3575.35.35.35.35.35.35.3126,01157 126,0115.3 5.3 CorporateCorporateCorporateCorporateCorporateCorporateCorporate CorporateloansCorporate loansCorporate loansCorporate loansCorporate loansCorporate loansCorporate loans loans loans loans loans loans loans loans Corporate loans Corporate2,386,8372,386,8372,386,837 2,386,837loans2,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,8372,386,837 772,155772,155772,155772,155772,155772,1552,386,837772,155772,155772,155772,155772,155772,155772,155772,155- - -2,386,837- - - - -1,377,170-1,377,170- 1,377,170-1,377,170-1,377,170-1,377,170- 1,377,170772,1551,377,1701,377,1701,377,1701,377,1701,377,1701,377,1701,377,170101,230101,230101,230101,230101,230101,230772,155101,230101,230101,230-101,230101,230101,230101,230101,230- -1,377,170------10,271-10,271- 10,271- 10,27110,2711,377,17010,27110,271101,23010,27110,27110,27110,27110,27110,271-10,271------126,011-101,230--126,011-126,011-126,011-126,011-126,011-126,011126,011126,011126,011126,011126,011126,01110,271126,011126,011126,011126,011126,011126,011- 126,011126,011126,011126,011126,011126,011126,011126,01172,314-72,31410,27172,31472,31472,31472,31472,31472,314126,01172,31472,31472,31472,31472,31472,314-5757126,0115757575757126,0115757126,01157126,01157126,01157126,01157126,01157126,011126,011126,011126,01172,314126,011126,011126,011126,011126,0115.35.35.35.35.35.372,3145.3575.35.35.35.35.35.35.3126,01157 126,0115.3 5.3

GrossGrossGrossGrossGross Grossloans loansGross Grossloans Grossloans Grossloans andGrossloans and Grossloans andGrossloans andGrossloansadvances andloansadvances andloansadvances andloansadvances andloansadvances andloansadvances and advances and advances andadvances andadvances and advances advances advances advancesGross loans and advancesGross loans4,217,7324,217,7324,217,732 and4,217,7324,217,7324,217,732 advances4,217,7324,217,7324,217,7324,217,7324,217,7324,217,7324,217,7324,217,732------772,155- 772,155- 772,155- 772,155- 772,155- 772,1554,217,732772,155772,155772,155772,155772,155772,155772,155772,155- - -4,217,732------2,738,455-2,738,455- 2,738,455-2,738,455-2,738,455-2,738,455- 2,738,455772,1552,738,4552,738,4552,738,4552,738,4552,738,4552,738,455-2,738,455101,230101,230101,230101,230101,230101,230772,155101,230101,230101,230-101,230101,230101,230101,230101,230- -2,738,455------296,740-296,740- -296,740-296,740296,740296,7402,738,455296,740101,230296,740296,740296,740296,740296,740296,740296,740------309,152-101,230--309,152-309,152-309,152-309,152-309,152-309,152309,152309,152309,152309,152309,152296,740309,152309,152309,152309,152309,152309,152309,152- 309,152309,152309,152309,152309,152309,152309,152309,152166,588166,588-296,740166,588166,588166,588166,588166,588166,588166,588309,152166,588166,588166,588166,588166,588-5454309,1525454545454309,1525454309,15254309,15254309,15254309,15254309,15254309,152309,152309,152166,588309,152309,152309,152309,152309,152309,1527.37.37.37.37.37.3166,5887.3547.37.37.37.37.37.37.3309,15254 309,1527.3 7.3 Less:Less:Less:Less: Less:Total Less:Total Less:Total Less:TotalLess: expectedTotalLess: expectedTotalLess: expectedTotalLess: expectedTotal Less: Totalexpected Less: Totalexpected Totalexpected Totalcreditexpected expectedTotalcredit expectedTotalcredit expectedcredit expectedcreditloss expectedcreditloss expected creditloss credit lossforcredit lossforcredit loss forcreditloans lossforcreditloans loss forcreditlossloans forcreditlossloans forloansandloss forloans andlossforLess: lossloansforand lossloans advancesandforloans advancesandforloans and foradvancesloansTotal foradvancesandloans advancesand loans and advances loansand advances expected andadvancesat advancesand at advancesand amortisedat andadvances amortisedat advancesamortisedat advancesLess:amortisedat advances amortisedcreditat amortisedat atamortised at amortisedTotal cost amortised at cost amortisedlossat costamortisedat cost amortisedat expected cost amortised for costamortised cost loanscost cost cost cost credit costand cost cost advances loss for loans at amortised and advances cost at amortised cost 12-month12-month12-month12-month12-month12-month12-month 12-monthECL 12-monthECL12-month ECL 12-monthECL 12-monthECL 12-monthECL12-month ECL ECL ECL ECL ECL ECL ECL ECL 12-month ECL 12-month(29,614)(29,614) ECL(29,614)(29,614)(29,614)(29,614)(29,614)(29,614)(29,614)(29,614)(29,614)(29,614)(29,614)(29,614) (29,614) (29,614) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetimeLifetime ECLLifetime ECLnot Lifetime ECLnot LifetimeECL Lifetimenot credit-impaired ECLLifetimenot credit-impaired ECL notECL credit-impairednotECL credit-impaired not ECLcredit-impaired not ECLcredit-impairednot ECLnot credit-impairedECL credit-impairednot credit-impaired not credit-impaired not credit-impairednot credit-impaired credit-impaired credit-impairedLifetime ECL not credit-impairedLifetime (37,257)ECL(37,257)(37,257)(37,257) not(37,257)(37,257) (37,257)credit-impaired(37,257)(37,257)(37,257)(37,257)(37,257)(37,257)(37,257) (37,257) (37,257) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetimeLifetime ECLLifetime ECLcredit-impaired Lifetime ECLcredit-impaired LifetimeECL Lifetimecredit-impaired ECLLifetimecredit-impaired ECL credit-impairedECL credit-impairedECL credit-impairedECL credit-impaired ECLcredit-impaired ECLcredit-impaired ECL credit-impaired credit-impaired credit-impaired credit-impairedLifetime ECL credit-impairedLifetime(100,399) (100,399)ECL(100,399)(100,399)(100,399) credit-impaired(100,399)(100,399)(100,399)(100,399)(100,399)(100,399)(100,399)(100,399)(100,399) (100,399) (100,399) Purchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originatedPurchased/originated credit credit credit credit creditimpaired creditimpaired creditimpaired credit impairedcredit impairedcredit impaired credit impairedcredit impaired creditimpaired creditimpaired impaired impairedPurchased/originated impaired impaired Purchased/originated credit impaired credit impaired InterestInterestInterestInterestInterestInterest InInterest In Interest SuspenseInterestIn SuspenseInterestIn SuspenseInInterest SuspenseInInterest SuspenseInterestIn SuspenseInterestIn InSuspense In Suspense (IIS) Suspense In (IIS) SuspenseIn (IIS)SuspenseIn (IIS)SuspenseIn (IIS)Suspense (IIS)Suspense (IIS) (IIS) (IIS) (IIS) (IIS) (IIS) (IIS) (IIS)Interest In SuspenseInterest (IIS) (103,871) In(103,871)(103,871) Suspense(103,871)(103,871)(103,871)(103,871)(103,871)(103,871)(103,871) (103,871)(IIS)(103,871)(103,871)(103,871) (103,871) (103,871) NetNetNet loansNet loansNet Netloans loansNet loans Net andNetloans andNet loans andNetloans andloansadvancesNet andloansadvancesNet andNetloansadvances andloansadvances andloansadvances andloansadvances and advances and advances andadvances andadvances and advances advances advances advancesNet loans and advancesNet loans3,946,591 and3,946,5913,946,5913,946,591 3,946,591advances3,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,5913,946,591 3,946,591 3,946,591 AddAddAdd Addthe AddtheAdd the following Addthe following Addthe Addfollowingthe Addfollowing the Addfollowing the Addfollowingthe Addthe followingother Add followingtheotherfollowing the following otherthe otherfollowingthe otherbankingfollowing otherbankingfollowing followingotherbanking otherbanking otherbanking otherbanking otheractivitiesbanking otheractivitiesbanking otherbanking activities otherbanking activities bankingactivities bankingactivities banking activities banking activities activitiesAdd activities activities activities theactivities activities following otherAdd bankingthe following activities other banking activities exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures:exposures: exposures: exposures: CashCashCashCash Cashand Cashand Cashand Cashcashand CashcashandCash andcash Cashcashand Cashequivalentscashand Cashandequivalentscash Cash andequivalentscash andequivalentscash cashandequivalents cashandequivalents andcashequivalents cashequivalents equivalentscash equivalentscash equivalents equivalents equivalents equivalentsCash and cash equivalentsCash and cash equivalents DerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivativesDerivatives Derivatives Derivatives FinancialFinancialFinancialFinancialFinancialFinancialFinancial investmentsFinancial Financialinvestments Financialinvestments Financialinvestments Financialinvestments Financialinvestments Financialinvestments investments investments investments(excluding investments(excluding investments(excluding investments(excluding investments(excluding (excluding (excluding (excluding equity)(excluding equity)(excluding equity)(excluding equity)(excluding equity)(excluding equity)(excluding equity) equity)Financial equity) equity) equity) equity) equity) equity) investmentsFinancial (excluding investments equity) (excluding equity) LoansLoansLoansLoansLoans andLoans andLoans andLoans Loansadvancesand Loansadvancesand andLoansadvances Loansadvancesand Loansadvancesand andLoansadvances and advances and advances toadvancesand to advancesand banks toandadvances banks to advancesbanks to advancesbanks to advances banksto banksto tobanks tobanks banksto banksto banksto banksto banks banksLoans and advancesLoans to banks and advances to banks TradingTradingTradingTradingTradingTrading assetsTrading assetsTrading Tradingassets Tradingassets assetsTrading assetsTrading Tradingassets Tradingassets assets assets assets assets assets assets Trading assets Trading assets PledgedPledgedPledgedPledgedPledgedPledged Pledgedassets PledgedassetsPledged assetsPledged assets Pledgedassets PledgedassetsPledged assetsPledged assets assets assets assets assets assets assets Pledged assets Pledged assets OtherOtherOtherOther Otherfinancial Otherfinancial Otherfinancial OtherfinancialOther financialOther financialOther financialassetsOther financialassets Otherfinancial Otherassetsfinancial assets financial assets financial assets financial assetsfinancial assets assets assets assets assets assets assets Other financial assetsOther financial assets

TotalTotalTotalTotal Totalon-balance Totalon-balance Totalon-balance Totalon-balanceTotal on-balanceTotal on-balanceTotal on-balanceTotal on-balance Totalon-balance Totalon-balancesheet sheeton-balance on-balancesheet on-balancesheet on-balancesheet exposuresheet exposure sheet exposuresheet exposuresheet exposuresheet exposuresheet exposuresheet exposuresheet exposuresheet exposure exposure exposure exposure exposureTotal on-balance sheetTotal exposureon-balance3,946,5913,946,5913,946,5913,946,5913,946,5913,946,591 3,946,591sheet3,946,5913,946,5913,946,5913,946,591 3,946,591exposure3,946,5913,946,591 3,946,591 3,946,591 UnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognisedUnrecognised Unrecognisedfinancial UnrecognisedfinancialUnrecognised financialUnrecognised financial financial financial financialassets: financialassets: financial assets:financial assets: financial assets: financial assets: financial assets:financial assets: assets: assets: assets: assets: assets: assets:Unrecognised financialUnrecognised assets: financial assets: LettersLettersLettersLettersLetters Lettersof Lettersof creditLettersof Letters creditofLetters creditof Letterscreditof Letters creditof Letters creditof Letters of credit of credit credit of credit of creditof creditof credit credit Letters of credit Letters of credit134,920134,920134,920 134,920134,920134,920134,920134,920134,920134,920134,920134,920134,920134,920 110,813110,813110,813110,813110,813110,813110,813134,920110,813110,813110,813110,813110,813110,813110,813- - - - -134,920- - -- - 18,573-18,573- 18,573- 18,573- 18,573110,81318,57318,57318,57318,57318,57318,57318,57318,57318,5735,5345,5345,5345,534110,8135,5345,5345,534-5,5345,5345,5345,5345,5345,534-5,534- - -18,573------18,573-5,534------5,534------GuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuaranteesGuarantees Guarantees Guarantees1,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,4771,481,477 1,207,8311,207,8311,207,8311,207,8311,207,8311,207,8311,207,8311,481,4771,207,8311,207,8311,207,8311,207,8311,207,8311,207,8311,207,831- - -1,481,477------266,193- 266,193- 266,193- 266,193- 266,193-1,207,831266,193266,193266,193266,193266,193266,193266,193266,193266,1935,8485,8485,8481,207,8315,8485,8485,8485,848-5,8485,8485,8485,8485,8485,848-5,848- -266,193------1,605-1,605- 1,6051,6051,6051,605266,1931,6055,8481,6051,6051,6051,6051,6051,605- 1,605------5,848------1,605------1,605------LoanLoanLoanLoan commitmentsLoan commitmentsLoan commitmentsLoan commitmentsLoan Loancommitments Loancommitments Loancommitments Loancommitments commitmentsLoan commitmentsLoan commitments commitments commitments commitments Loan commitments Loan commitments1,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,1341,085,134 892,727892,727892,727892,727892,727892,7271,085,134892,727892,727892,727892,727892,727892,727892,727892,727- - -1,085,134------187,769- 187,769- 187,769- 187,769- 187,769- 187,769892,727187,769187,769187,769187,769187,769187,769187,769187,7694,6384,6384,6384,638892,7274,6384,6384,638-4,6384,6384,6384,6384,6384,638-4,638- -187,769------187,769- -4,638------4,638------

TotalTotalTotalTotal Totalexposure Totalexposure Totalexposure TotalexposureTotal exposureTotal exposureTotal exposureTotal exposure toTotalexposure toTotalexposure credit to exposure credit toexposure tocreditexposure tocreditexposure creditto risk creditto risk tocredit toriskcredit creditriskto creditriskto risktocredit tocreditrisk creditrisk riskcredit risk risk risk risk Totalrisk exposure to creditTotal exposurerisk6,648,1226,648,1226,648,1226,648,1226,648,122 6,648,122to6,648,122 credit6,648,1226,648,1226,648,1226,648,1226,648,122 risk6,648,1226,648,122 6,648,122 6,648,122 ExpectedExpectedExpectedExpectedExpectedExpected Expectedcredit ExpectedcreditExpected creditExpected creditExpected losscreditExpected losscreditExpected losscreditExpected forlosscredit creditforloss credit lossofffor creditoffforloss creditforlossbalanceoff losscredit forbalanceoff losscredit offforbalance lossoffforbalance forlossbalance off forlossbalanceoff Sheetlossoff for balance Sheetoff forbalance forSheetbalanceoff forSheetbalanceoff Sheetexposuresoffbalance Sheetexposuresoffbalance Sheetbalanceexposures Sheetbalanceexposures ExpectedSheet exposures Sheet exposures Sheet exposures Sheet exposures Sheetexposures Sheetexposures exposurescredit exposures exposures exposures loss forExpected off balance credit Sheet loss forexposures off balance Sheet exposures 12-month12-month12-month12-month12-month12-month12-month 12-monthECL 12-monthECL12-month ECL 12-monthECL 12-monthECL 12-monthECL12-month ECL ECL ECL ECL ECL ECL ECL ECL 12-month ECL 12-month(4,868) ECL(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868)(4,868) (4,868) (4,868) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetimeLifetime ECLLifetime ECLnot Lifetime ECLnot LifetimeECL Lifetimenot credit-impaired ECLLifetimenot credit-impaired ECL notECL credit-impairednotECL credit-impaired not ECLcredit-impaired not ECLcredit-impairednot ECLnot credit-impairedECL credit-impairednot credit-impaired not credit-impaired not credit-impairednot credit-impaired credit-impaired credit-impairedLifetime ECL not credit-impairedLifetime ECL(52) not(52)(52) (52)credit-impaired(52)(52)(52)(52)(52)(52)(52)(52)(52)(52) (52) (52) LifetimeLifetimeLifetimeLifetimeLifetimeLifetime ECLLifetime ECLLifetimeLifetime ECLLifetime ECLcredit-impaired Lifetime ECLcredit-impaired LifetimeECL Lifetimecredit-impaired ECLLifetimecredit-impaired ECL credit-impairedECL credit-impairedECL credit-impairedECL credit-impaired ECLcredit-impaired ECLcredit-impaired ECL credit-impaired credit-impaired credit-impaired credit-impairedLifetime ECL credit-impairedLifetime ECL- credit-impaired------TotalTotalTotalTotal exposureTotal exposureTotal exposureTotal exposureTotal Totalexposure Totalexposure Totalexposure toTotalexposure exposuretoTotal creditexposureTotalto creditexposureto creditexposureto creditexposureto creditexposureriskto creditriskto to credit risk to crediton risk credit toon risk credit to riskonLoans creditto onLoans riskcreditto onriskLoans credit risk onLoans creditrisk onLoans andriskonLoans onandrisk Loans onrisk andLoans riskadvancesonLoansand advancesonLoansandTotal onandadvancesLoans onadvancesLoansand advancesLoansand andadvancesexposureLoans and advances andatadvances advancesandat advances andat andadvancesat advancesat advancestoat advances at credit at atTotal at at atrisk atexposure at on Loans to creditand advances risk on Loans at and advances at amortisedamortisedamortisedamortisedamortisedamortisedamortised amortisedcostamortised costamortised costamortised costamortised costamortised costamortised cost cost cost cost cost cost cost cost amortised cost amortised6,643,202 cost6,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,2026,643,202 6,643,202 6,643,202

103103103103103103103103103103103103103103 103 103 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 111 Annual report 2020 112

RiskSTANBIC BANK and GHANA LIMITED capital management RiskSTANBIC BANK and GHANA LIMITEDcapital management forNotes the to yearthe financial ended statements 31 December 2020 forNotes the to yearthe financial ended statements 31 December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

30 Risk and capital management (continued) 30 Risk and capital management (continued)

Collateral Collateral Total collateral coverage Total collateral coverage Secured Secured exposure Greater exposure Greater Total after than Total after than exposure Unsecured Secured netting 1%-50% 50%-100% 100% exposure Unsecured Secured netting 1%-50% 50%-100% 100% GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 At 31 December 2020 At 31 December 2019 Corporate 2,321,484 76,004 2,245,480 2,245,480 - 655,072 1,590,408 Corporate 2,490,817 - 2,490,817 2,490,817 - 2,490,817 - Sovereign 2,419,358 2,419,358 2,419,358 - 2,419,358 - Sovereign 1,310,702 - 1,310,702 1,310,702 - 1,310,702 - Bank 873,052 873,052 873,052 - 873,052 - Bank 2,927,729 - 2,927,729 2,927,729 - 2,927,729 - Retail 2,066,286 369,254 1,697,032 1,697,032 - 279,148 1,417,884 Retail 1,885,937 326,342 1,559,595 1,559,595 8,571 316,190 1,225,220 Retail Mortgage 451,536 - 451,536 451,536 - - 451,536 Retail Mortgage 288,438 - 288,438 288,438 - - 288,438 Other retail loans and advances 1,614,750 369,254 1,245,496 1,245,496 - 279,148 966,348 Other retail loans and advances 1,597,499 326,342 1,271,157 1,271,157 8,571 316,190 936,782

Total 7,680,180 445,258 7,234,922 7,234,922 - 4,226,630 3,008,292 Total 8,615,185 326,342 8,288,843 8,288,843 8,571 7,045,438 1,225,220

Add: Financial assets not exposed to credit risk 7,443,247 Add: Financial assets not exposed to credit risk 3,075,081

Less: Impairments for loans and advances (199,619) Less: Impairments for loans and advances (172,764) Less: Unrecognised off balance sheet items (2,976,603) Less: Unrecognised off balance sheet items (2,701,531)

Total exposure 11,947,205 Total exposure 8,815,971 Reconciliation to statement of financial position: Reconciliation to statement of financial position: Cash and cash equivalents 4,024,397 Cash and cash equivalents 2,927,680 Non-pledged trading assets 1,033,482 Investment securities 2,419,358 Non-pledged trading assets 642,833 Loans and advances to customers 4,373,529 Investment securities 668,394 Other financial assets 96,439 Loans and advances to customers 3,946,591 Other financial assets 630,473

Total 11,947,205 Total 8,815,971

104 105 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 113 Annual report 2020 114

STANBIC BANK GHANA LIMITED Risk and capital management RiskSTANBIC BANK and GHANA LIMITEDcapital management Notes to the financial statements forfor thethe yearyear ended ended 31 31 December December 2020 2020 forNotes the to yearthe financial ended statements 31 December 2020 for the year ended 31 December 2020 30 Risk and capital management (continued) 30 Risk and capital management (continued) Off Balance sheet exposures - Industry sectors Liquidity risk 2020 2019 Framework and governance Guarantees Letters of Guarantees Letters of The nature of banking and trading activities results in a continuous exposure to liquidity risk. Liquidity problems can have an adverse impact on a credit Total credit Total Bank’s earnings and capital and, in extreme circumstances, may even lead to the collapse of a Bank which is otherwise solvent. GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 The Bank's liquidity risk management framework is designed to measure and manage the liquidity position at various levels of consolidation such that payment obligations can be met at all times, under both normal and considerably stressed conditions. Under the delegated authority of the board of directors, the Asset and Liability Committee (ALCO) sets liquidity risk policies in accordance with regulatory requirements, international Agriculture 38,300 383 38,683 180,300 337 180,637 best practice and SBG stated risk appetite. Construction and real estate 160,576 1,505 162,081 136,409 143 136,552 Tolerance limits, appetite thresholds and monitoring items are prudently set and reflect the Bank's conservative appetite for liquidity risk. ALCO Electricity 103,684 - 103,684 - - - is charged with ensuring ongoing compliance with liquidity risk standards and policies. The Bank must, at all times, comply with the more Finance, commerce and other stringent of Standard Bank imposed tolerance limits or regulatory limits. business services 582,093 51,941 634,034 192,855 111,078 303,933 Liquidity and funding management Individuals 576 - 576 11,067 - 11,067 A sound and robust liquidity process is required to measure, monitor and manage liquidity exposures. The Bank has incorporated the following Manufacturing 50,754 16,316 67,070 39,960 12,051 52,011 liquidity principles as part of a cohesive liquidity management process: Mining 324,054 416 324,470 344,935 10,604 355,539 • structural liquidity mismatch management; • long-term funding ratio; Other services - 14,378 14,378 544,518 707 545,225 • maintaining minimum levels of liquid and marketable assets; Transport 36,879 97,756 134,635 31,433 - 31,433 • depositor restrictions; Carrying amount 1,296,916 182,695 1,479,611 1,481,477 134,920 1,616,397 • local currency loan to deposit ratio; • foreign currency loan to deposit ratio; Credit provisioning based on Bank of Ghana guidelines • interbank reliance limit; In accordance with the Bank of Ghana (BoG) Guidelines, provision against credit risk is as follows. • intra-day liquidity management; • collateral management; • daily cash flow management; Non performing accounts • liquidity stress and scenario testing; and • funding plans; Interest and/or principal outstanding for over: Classification Minimum provision • liquidity contingency planning. Less than 30 days Current 1% The cumulative impact of these principles is monitored, at least monthly by ALCO through a process which is underpinned by a system of 30 days but less than 90 days OLEM 5% extensive controls. The latter includes the application of purpose-built technology, documented processes and procedures, independent 90 days but less than 180 days Substandard 25% oversight and regular independent reviews and evaluations of the effectiveness of the system. 180 days but less than 365 days Doubtful 50% Structural liquidity mismatch management Over 365 days Lost 100% The mismatch principle measures the Bank's liquidity by assessing the mismatch between its inflow and outflow of funds within different time bands on a maturity ladder. The structural liquidity mismatch is based on behaviourally-adjusted cash flows which factors a probability of maturity When a loan is deemed uncollectible, it is written off against the related provision for impairments. Subsequent recoveries into the various time bands. As expected cash flows vary significantly from the contractual position, behavioural profiling is applied to assets, are credited to the provision for loan losses in the profit and loss account. If the amount of the impairment subsequently liabilities and off-balance sheet items with an indeterminable maturity or drawdown period. decreases due to an event occurring after the write-down, the release of the provision is credited as a reduction of the A net mismatch figure is obtained by subtracting liabilities and netting off-balance sheet positions from assets in each time band. The Bank’s provision for impairment in the statement of profit or loss. liquidity position is assessed by means of the net cumulative mismatch position, while its liquidity mismatch performance is an aggregation of the Performing accounts net liquidity position in each successive time band expressed as a percentage of total funding related to deposits. A minimum of 1% general provision on performing loans is made in accordance with the Bank of Ghana Guidelines. Maintaining minimum levels of liquid and marketable assets Minimum levels of prudential liquid assets are held in accordance with all prudential requirements as specified by the regulatory authorities. The Key Ratios for loans and advances to customers are as follows Bank needs to hold additional unencumbered marketable assets, in excess of any minimum prudential liquid asset requirement, to cater for volatile depositor withdrawals, draw-downs under committed facilities, collateral calls, etc. The following criteria apply to readily marketable securities: 2020 2019 • prices must be quoted by a range of counterparties; • the asset class must be regularly traded; Gross non-performing loans ratio 7.5% 7.4% • the asset may be sold or repurchased in a liquid market, for payment in cash; and Ratio of top 50 exposures to gross exposure 63.60% 63.82% settlement must be according to a prescribed, rather than a negotiated, timetable. Ratio of impairment charge to gross loans (income statement) 1.3% 1.3% Depositor concentration Loans and advances written off as required by BoG notices 134 million 144 million To ensure that the Bank does not place undue reliance on any single entity as a funding source, restrictions are imposed on the short dated (0 – 3 months term) deposits accepted from any entity. These include: • the sum of 0 – 3 month deposits and standby facilities provided by any single deposit counterparty must not, at any time, exceed 10% of total funding related liabilities to the public; and • the aggregate of 0 – 3 month deposits and standby facilities from the 10 largest single deposit counterparties must not, at any time, exceed 20% of total funding related liabilities to the public. Concentration risk limits are used to ensure that funding diversification is maintained across products, sectors, and counterparties. Primary sources of funding are in the form of deposits across a spectrum of retail and wholesale clients. As mitigants, the Bank maintains marketable securities in excess of regulatory requirements in order to create a buffer for occasional breaches of concentration limits.

Loan to deposit limit A limit is put in place, restricting the local currency loan to deposit ratio to a maximum specified level, which is reviewed periodically. Similarly, in order to restrict the extent of foreign currency lending from the foreign currency deposit base, a foreign currency loan to deposit limit, which is also referred to as own resource lending, is observed. As mitigants, the Bank maintains high levels of unencumbered marketable and liquid assets in excess of regulatory benchmark.

107 106 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 115 Annual report 2020 116

RiskSTANBIC andBANK GHANA capital LIMITED management RiskSTANBIC BANKand GHANA capital LIMITED management forNotes the yearto the ended financial 31 statementsDecember 2020 forNotes the toyear the endedfinancial 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

30 Risk and capital management (continued) 30 Risk and capital management (continued)

Intra-day liquidity management Maturity analysis of financial assets and liabilities by contractual maturity (continued) The Bank manages its exposures in respect of payment and settlement systems. Counterparties may view the failure to settle payments when expected as a sign of financial weakness and in turn delay payments to the Bank. This can also disrupt the functioning of payment and settlement systems. At a minimum, the following operational elements are included in the Bank’s intra-day liquidity management: Maturing Maturing Maturing Maturing Redeemable within between between after • capacity to measure expected daily gross liquidity inflows and outflows, including anticipated timing where possible; on demand 1 month 1-6 months 7-12 months 12 months Total • capacity to monitor its intra-day liquidity positions, including available credit and collateral; GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 • sufficient intra-day funding to meet its objectives; At 31 December 2020 • ability to manage and mobilise collateral as required; • robust capacity to manage the timing of its intra-day outflows; and Financial assets 4,742,975 935,977 2,647,274 633,297 2,891,243 11,850,766 • readiness to deal with unexpected disruptions to its intra-day liquidity flows.

Daily cash flow management Cash and cash equivalents 3,793,980 230,417 - - - 4,024,397 Non-pledged trading assets 43,967 201,550 554,106 77,585 156,274 1,033,482 The Bank generates a daily report to monitor significant cash flows. Maturities and withdrawals are forecast at least three months in Investment securities - 343,194 1,317,897 36,177 722,090 2,419,358 advance and management is alerted to large outflows. The report, which is made available to the funding team, ALM and market risk also Loans and advances to customers 905,028 160,816 775,271 519,535 2,012,879 4,373,529 summarises material daily new deposits as well as the interbank and top depositor reliance (by value and product). The daily cash flow management report forms an integral part of the ongoing liquidity management process and is a crucial tool to proactively anticipate and plan for large cash outflows. Financial liabilities 9,145,317 389,625 382,132 273,224 86,422 10,276,720 Trading liabilities 35,016 39,797 41,512 12,158 - 128,483 Interbank reliance Deposits from banks 394,427 - - - - 394,427 Interbank funding traditionally is seen as the most volatile and least stable source of funding, easily influenced by market sentiment and Deposits from customers 8,715,874 349,828 340,178 261,066 19 9,666,965 prone to flight under stress situations. Consequently, to ensure prudent liquidity management is enforced, the Bank restricts the local Subordinated debt - - 442 - 86,403 86,845 currency interbank funding as a proportion of the local currency funding base to a maximum of 15% of the total currency funding base.

Total recognised financial instruments (4,402,342) 546,352 2,265,142 360,073 2,804,821 1,574,046 Liquidity stress testing and scenario testing Anticipated on- and off-balance sheet cash flows are subjected to a variety of the Bank specific and systemic stress scenarios in order to Unrecognised financial instruments evaluate the impact of unlikely but plausible events on liquidity positions. Scenarios are based on both historical events, such as past Letters of credit 5,401 - 38,534 138,760 - 182,695 emerging markets crises, past local financial markets crisis and hypothetical events, such as an entity specific crisis. The results obtained Guarantees 114,592 135,748 353,656 463,960 228,960 1,296,916 from stress testing provide meaningful input when defining target liquidity risk positions. Total unrecognised financial instruments 119,993 135,748 392,190 602,720 228,960 1,479,611 Maturity analysis of financial liabilities by contractual maturity The tables below analyse cash flows on a contractual, undiscounted basis based on the earliest date on which the Bank can be required to pay (except for trading liabilities and trading derivatives) and may therefore not agree directly to the balances disclosed in the statement of financial position. Derivative liabilities are included in the maturity analysis on a contractual, undiscounted basis when contractual maturities are essential for an understanding of the derivatives’ future cash flows. All other derivative liabilities are treated as trading instruments and are included at fair value in the redeemable on demand bucket since these positions are typically held for short periods of time. The following tables also include contractual cash flows with respect to off-balance sheet items which have not yet been recorded on- balance sheet. Where cash flows are exchanged simultaneously, the net amounts have been reflected.

109

108 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 117 Annual report 2020 118

STANBIC BANK GHANA LIMITED Risk and capital management RiskSTANBIC BANKand GHANA capital LIMITED management forNotes the toyear the endedfinancial 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020 Notes to the financial statements for the year ended 31 December 2020

30 Risk and capital management (continued) 30 Risk and capital management (continued)

Maturity analysis of financial assets and liabilities by contractual maturity (continued) Liquity ratio

Maturing Maturing Maturing Maturing Redeemable within between between after The percentages below indicate the Bank's liquidity ratio. In measuring this, recognition is made to highly liquid assets (cash and on demand 1 month 1-6 months 7-12 months 12 months Total near cash and government notes with maturities up to 1 year). The volatile liabilites is constituted by demand deposits and GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 government instruments which could be called at short notice. At 31 December 2019

Financial assets 3,867,781 626,436 976,101 594,214 2,120,966 8,185,498 2020 2019 Cash and cash equivalents 2,705,966 110,704 111,010 - - 2,927,680 GHS'000 GHS'000 Non-pledged trading assets - 446,306 117,378 11,593 67,556 642,833 Investment securities - - 311,340 250,167 106,887 668,394 Loans and advances to customers 1,161,815 69,426 436,373 332,454 1,946,523 3,946,591 Cash and cash equivalents 4,024,397 2,927,680 Financial liabilities 6,175,835 715,538 478,117 18,016 83,043 7,470,549 Investments securities maturing within one year 1,700,399 561,507 Trading liabilities - 48,806 44,306 9,427 - 102,539 Non-pledged Trading assets 1,033,482 642,833 Deposits from banks 173,969 355,173 - - - 529,142 Deposits from customers 6,001,866 311,559 433,260 8,589 38 6,755,312 Liquid assets 6,758,278 4,132,020 Subordinated debt - - 551 - 83,005 83,556

Total recognised financial instruments (2,308,054) (89,102) 497,984 576,198 2,037,923 714,949 Demand deposits 8,184,939 7,284,454 Trading liabilities maturing within one year 128,483 102,539 Unrecognised financial instruments Volatile liabilities 8,313,422 7,386,993 Letters of credit 25,475 16,417 91,391 46 1,591 134,920 Guarantees 43,895 203,848 231,048 707,455 295,231 1,481,477 Liquidity ratio 81% 56%

Total unrecognised financial instruments 69,370 220,265 322,439 707,501 296,822 1,616,397

Liquidity contingency plans

The Bank recognises that it is not possible to hold sufficiently large enough quantity of readily available liquidity to cover the least likely liquidity events. However, as such events can have devastating consequences, it is imperative to bridge the gap between the liquidity the Bank chooses to hold and the maximum liquidity the Bank might need.

The Bank’s liquidity contingency plan is designed to, as far as possible, protect stakeholder interests and maintain market confidence in order to ensure a positive outcome in the event of a liquidity crisis. The plan incorporates an extensive early warning indicator methodology supported by a clear and decisive crisis response strategy. Early warning indicators span Bank specific crises, systemic crises, contingency planning, and liquidity risk management governance and are monitored based on assigned frequencies and tolerance levels. The crisis response strategy is formulated around the relevant crisis management structures and addresses internal and external communications, liquidity generation, operations, as well as heightened and supplementary information requirements.

Foreign currency liquidity management A number of indicators are observed to monitor changes in either market liquidity or exchange rates. Foreign currency loans and advances are restricted to the availability of foreign currency deposits.

Funding strategy

Funding markets are evaluated on an ongoing basis to ensure appropriate Bank funding strategies are executed depending on the market, competitive and regulatory environment. The Bank employs a diversified funding strategy, sourcing liquidity in both domestic and offshore markets, and incorporates a coordinated approach to accessing capital and loan markets across the Bank. Concentration risk limits are used within the Bank to ensure that funding diversification is maintained across products, sectors, geographic regions and counterparties. Primary funding sources are in the form of deposits across a spectrum of retail and wholesale clients, as well as long-term capital and loan markets. The Bank remains committed to increasing its core deposits and accessing domestic and foreign capital markets when appropriate to meet its anticipated funding requirements.

Depositor concentrations 2020 2019

Single depositor 17% 15% Top 10 depositors 40% 37%

110

111 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 119 Annual report 2020 120

RiskSTANBIC BANKand GHANA capital LIMITED management RiskSTANBIC BANK and GHANA capital LIMITED management Notes to the financial statements Notes to the financial statements for the year ended 31 December 2020 forfor the the yearyear ended ended 31 December 31 December 2020 2020 for the year ended 31 December 2020 30 Risk and capital management (continued) 30 Risk and capital management (continued) Market risk (continued) Market risk Stress tests Stress testing provides an indication of the potential losses that could occur in extreme market conditions. The identification, management, control, measurement and reporting of market risk is categorised as follows: The stress tests carried out include individual market risk factor testing and combinations of market factors on individual asset classes and across different asset classes. Stress tests include a combination of historical and hypothetical simulations.

Trading market risk Other market risk measures Trading market risk arises in trading activities where the bank acts as a principal with clients in the market. The Bank's policy is that all Other market risk measures specific to individual business units include permissible instruments, concentration of exposures, gap limits, maximum tenor and trading activities are contained within the bank's trading operations. stop loss triggers. In addition, only approved products that can be independently priced and properly processed are permitted to be traded.

Banking book interest rate risk Pricing models and risk metrics used in production systems, whether these systems are off-the-shelf or in-house developed, are independently validated by the market risk unit before their use and periodically thereafter to confirm the continued applicability of the models. In addition, the market risk unit assesses the Banking book interest rate risk arises from the structural interest rate risk caused by the differing re-pricing characteristics of banking daily liquid closing price inputs used to value instruments and performs a review of less liquid prices from a reasonableness perspective at least fortnightly. assets and liabilities. Where differences are significant, mark-to-market adjustments are made. Foreign currency risk Foreign currency risk arises as a result of changes in the fair value or future cash flows of financial exposures due to changes in foreign Annual net interest income at risk exchange rates. A dynamic forward-looking annual net interest income forecast is used to quantify the banks' anticipated interest rate exposure. This approach involves the forecasting of both changing balance sheet structures and interest rate scenarios, to determine the effect these changes may have on future earnings. The analysis is completed under both normal market conditions as well as stressed market conditions. Equity investment risk Equity investment risk arises from equity price changes in listed and unlisted investments, and managed through the equity investment committee, which is a sub-committee of the executive committee. Analysis of Value-at-Risk (VaR) and actual income The table below highlights the historical diversified normal VaR across the various trading desks. The minimum and maximum trading diversified normal VaR Framework and governance stood at GHS 220,240 and GHS 1,757,283 respectively with an annual average of GHS768,310 which translates to a conservative VaR base limit utilisation of 10% on average. The board approves the market risk appetite and standards for all types of market risk. The board grants general authority to take on market risk exposure to the asset and liability committee (ALCO). ALCO sets market risk policies to ensure that the measurement, reporting, monitoring and management of market risk associated with operations of the bank follow a common governance framework. Diversified Normal Var Exposures (GHS'000) The bank’s ALCO reports to EXCO and also to the board risk management committee. Desk Maximum Minimum Average 2020 2019 Limit The in-country risk management is subject to board risk management committee oversight for compliance with Bank standards and Bankwide 1,757 220 768 890 386 8,000 minimum requirements. FX Trading 1,418 7 187 47 88 2,822 Money markets trading 1,453 124 547 1,439 361 1,800 The market risk management unit which is independent of trading operations and accountable to ALCO, monitors market risk exposures Fixed income trading 770 5 173 379 63 5,000 due to trading and banking activities. This unit monitors exposures and respective excesses daily, report monthly to ALCO and quarterly Credit trading - - - - - 375 to the board risk management committee. Derivatives 9 - - - - -

Market risk measurement Currency risk The techniques used to measure and control market risk include: The table below indicates the extent to which the Bank was exposed to currency risk at 31 December 2020 on its non-monetary assets and liabilities, and • daily net open position forecast cash flows. In respect of currency risk, the Bank uses VaR methodology in estimating its exposures • daily VaR; • back-testing; Normal VaR as at Normal VaR as at • PV01; 31 December 2020 31 December 2019 • annual net interest income at risk Currency AUD 2,197 35 Daily net open position CAD 50 1,114 The board on the input of ALCO, sets limits on the level of exposure by currency and in aggregate for overnight positions. The latter is CHF 26 3,085 also aligned to the net open position limit as specified by the regulators, which is usually a proportion of the Banks’ capital. CNY 34 2,431 EUR 1,724 7,674 Daily value-at-risk (VaR) GBP 878 148 JPY 129 95 VaR is a technique that estimates the potential losses that may occur as a result of market movements over a specified time period at a SEK 214 3,001 predetermined probability. USD 76,564 14,638 VaR limits and exposure measurements are in place for all market risks the trading desk is exposed to. The bank generally uses the XOF 77 315 historical VaR approach to derive quantitative measures, specifically for market risk under normal market conditions. Normal VaR is ZAR 2,710 3,188 based on a holding period of one day and a confidence level of 95%. Daily losses exceeding the VaR are likely to occur, on average, 13 times in every 250 days. PV01 The use of historic VaR has limitations as it is based on historical correlations and volatilities in market prices and assumes that future PV01 is a risk measure used to assess the effect of a change of rate of one basis point on the price of an asset. This limit is set for the fixed income trading, prices will follow the observed historical distribution. Hence, there is a need to back-test the VaR model regularly. money market trading, credit trading, derivatives, foreign exchange trading and Interest Rate Banking portfolios.

VaR back-testing The Bank and the banking business back-tests its foreign currency, interest rate and credit trading exposure VaR model to verify the predictive ability of the VaR calculations thereby ensuring the appropriateness of the model. Back-testing exercise is an ex-post comparison of the daily hypothetical profit and loss under the one-day buy and hold assumption to the prior day VaR. Profit or loss for back-testing is based on the theoretical profits or losses derived purely from market moves both interest rate and foreign currency spot moves and it is calculated over 250 cumulative trading-days at 95% confidence level.

112

113 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 121 Annual report 2020 122

RiskSTANBIC BANKand GHANA capital LIMITED management RiskSTANBIC BANK and GHANA LIMITEDcapital management Notes to the financial statements for the year ended 31 December 2020 forNotes the to year the endedfinancial 31 statements December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

30 Risk and capital management (continued) 30 Risk and capital management (continued) Market risk (continued) Market risk (continued) Analysis of PV01 The impact on net interest income due to interest rate changes cover 12 months of forecasting and allows for the dynamic interaction of The table below shows the PV01 of the Interest Rate Banking (Money Markets Banking and Treasury Capital Management) and the payments, new business and interest rates. The analyses are done under stressed market conditions in which the banking book is subjected individual Trading books as at year end. The Money Markets Trading Local currency book PV01 exposure increased to GHS48,559, from to an upward 300 basis points and downward 300 basis points (2018: 300 basis points) parallel rate shocks for local currency and 100 basis GHS3,400 from 2019 due to an increase in its net cash positions (loans and deposits) as well as increase in Treasury bills and 182-day points upward and downward parallel rate shocks for foreign currency positions. The table below shows the sensitivity of the bank’s net Cocoa bill positions. Increase in cash position also causing a limit breach, resulted from an unhedged GHS received from two (2) FX interest income in response to standardised parallel rate shocks. swaps with Bank of Ghana. Hedging was partially done by deploying the cash into 182-day Cocoa bills a day after reporting period. These were however backdated. The Fixed Income Trading Local currency book also saw an increase in PV01 exposure from 2020 GHS USD Other Total GHS8,562 to GHS28,113 due to a net increase in bonds positions. Increase in basis points 300 100 100 Sensitivity of annual net interest income GHS'000 66 338 3 770 - 70 108 The Interest Rate Trading Foreign Currency book had exposures increase from a funding tenor mismatch on the Bank of Ghana FX swaps. This also resulted in a breach of the limit. The 1-year and 6-month swaps were being funded overnight. This was later corrected Decrease in basis points 200 100 100 by funding for the corresponding terms of the swaps to resolve the breaches. Sensitivity of annual net interest income GHS'000 (44 187 ) (550) - (44 737)

PV01 exposures on the Interest Rate Banking book remained zero (0) in 2020 as banking book instruments are held in Amortised Cost 2019 GHS USD Other Total (AMC) books and hence are not fair valued. Overall trading PV01 exposure was GHS20,700 against a limit of GHS63,500 as at 31 Increase in basis points 300 100 100 December 2020 thus reflecting a very conservative exposure utilisation. Sensitivity of annual net interest income GHS'000 60 297 10 737 - 71 034 Decrease in basis points 300 100 100 Sensitivity of annual net interest income GHS'000 (40 469) (10 726) - (51 195) PV01 (GHS'000) 2020 2019 Limit Money Market Trading Lcy book 48.6 3.4 23.5 Fixed Income Trading Lcy book (27.9) (8.6) 37.0 Hedging of endowment risk Credit Trading Lcy book - - 3.0 IRRBB is predominantly the consequence of endowment exposures, being the net exposure of non-rate sensitive liabilities and equity less non-rate sensitive assets. The endowment risk is hedged using marketable liquid instruments in the same currency as the exposure as and Derivatives Trading book - - 0.001 when it is considered opportune. Hedge decisions are made by ALCO following careful consideration of the interest rate views to be hedged Interest Rate Trading Fcy book (71.1) (9.0) 18.4 against, including magnitude, direction, timing and probability, and the exposure to be hedged. Total trading book 20.7 (5.2) 63.5 Interest Rate banking book - - 32.0 Exposure to currency risks Interest rate risk in the banking book The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash Interest rate risk in the banking book (IRRBB) can be defined as the reduction in banking book net interest income due to changes in flows. The board sets limits on the level of exposure by currency and in aggregate for both overnight and intra day positions, which are interest rates arising from the different re-pricing characteristics of banking book assets and liabilities. IRRBB is further divided into the monitored daily. The table below summarises the Bank’s exposure to foreign currency exchange risk. following sub-risk types: • Repricing risk referring to the timing differences in the maturity (fixed rate) and repricing (floating rate) of assets and liabilities. • Yield curve risk arising when unanticipated shifts in the yield curve have adverse effects on the Bank’s income. • Basis risk arising from the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar repricing characteristics. • Optionality risk arising from the options embedded in bank asset and liability portfolios, providing the holder with the right, but not the obligation, to buy, sell, or in some manner alter the cash flow of an instrument or financial contract. • Endowment risk referring to the interest rate risk exposure arising from the net differential between interest rate insensitive assets such as non-earning assets and interest rate insensitive liabilities such as non-paying liabilities and equity.

Approach to managing interest rate risk on positions in the banking book Banking-related market risk exposure principally involves the management of the potential adverse effect of interest movements on banking book earnings (net interest income and banking book mark-to-market profit or loss). The Bank’s approach to managing IRRBB is governed by prudence and is in accordance with the applicable laws and regulations, best international practice and the competitive situation within which it operates in financial markets. Interest rate risk is transferred to and managed within the bank’s treasury operations under supervision of ALCO.

Measurement of IRRBB The analytical technique used to quantify IRRBB is an earnings based approach. A dynamic, forward-looking net interest income forecast is used to quantify the bank’s anticipated interest rate exposure. Desired changes to a particular interest rate risk profile are achieved through the restructuring of on-balance sheet repricing or maturity profiles. All assets and liabilities are allocated to gap intervals based on either their repricing or maturity characteristics. However, assets and liabilities for which no identifiable contractual repricing or maturity dates exist are allocated to gap intervals based on behavioural profiling.

115

114 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements STANBIC BANK GHANA 123 Annual report 2020 124

STANBIC BANK GHANA LIMITED Risk and capital management RiskSTANBIC BANK and GHANA capital LIMITED management forNotes the toyear the ended financial 31 statements December 2020 forNotes the to year the financial ended statements31 December 2020 for the year ended 31 December 2020 for the year ended 31 December 2020

30 Risk and capital management (continued) 30 Risk and capital management (continued) Operational risk Market risk (continued) Operational risk is the loss arising as a result of the inadequacy of, or a failure in the internal processes, people, systems or external events. The Concentrations of currency risk - on- and off-balance sheet financial instruments Bank recognises the significance of operational risk in all facets of its business. Accordingly, a comprehensive framework detailing the identification, assessment, measurement, monitoring and reporting of operational risks have been formulated to guide all line managers in the GHS USD GBP ZAR Others Total collective effort to minimise exposures. GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 The tools for achieving the objective of minimal losses resulting from operational risk include: 2020 • operational loss reports which enable management to identify improvements to processes and controls arising from loss trends; At 31 December 2020 • risk and control self assessments through which existing and potential future risks and their related controls are identified and assessed; and Financial assets • key risk indicators which measure specific factors to provide an early warning to proactively address potential exposures. Cash and cash equivalents 2,155,818 1,540,210 104,655 7,801 215,913 4,024,397 Non-pledged trading assets 1,033,482 - - - - 1,033,482 Investment securities 786,967 1,632,391 - - - 2,419,358 In addition to these, a comprehensive insurance programme covering losses from fraud, theft and professional liability claims and damage to Loans and advances to customers 2,839,431 1,512,563 13,011 - 8,524 4,373,529 physical assets is held. The Bank manages its capital structure and makes adjustments to it in the light of changes in economic conditions and Other non-financial assets 863,187 27,399 306 474 - 891,366 the risk characteristics of its activities. Other financial assets - - - - - 7,678,885 4,712,563 117,972 8,275 224,437 12,742,132 COVID-19 impact on the Bank for the year ended 31 December 2020 The coronavirus pandemic, which was first detected in China (late 2019), has infected more than 100 million people and caused over 2 million Financial liabilities fatalities around the globe. The pandemic forced governments to implement lockdowns and restriction to movement, which negatively impacted Trading liabilities 128,483 - - - - 128,483 economic activities during the year. The global economy is climbing out from the depths to which it had plummeted during the lockdowns in Deposits from banks 67,111 321,462 - - 5,854 394,427 March-April, 2020. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating Deposits from customers 4,535,153 4,916,621 46,353 1,069 196,769 9,695,965 partial lockdowns to protect susceptible citizens. Subordinated debt - 86,845 - - - 86,845 Other non-financial liabilitiies 592,330 96,924 22,688 24,449 19,977 756,368 In response to the economic downturn owing to the pandemic, countries around the world have resorted to fiscal stimulus to boost economic 5,323,077 5,421,852 69,041 25,518 222,600 11,062,088 activities. The fiscal stimulus has varied across board, based on respective economic strength. Emerging market economies have averaged about 5% of GDP, while developed markets have averaged north of 10% of GDP in fiscal stimulus. Net on-balance sheet financial position 2,355,808 (709,289) 48,931 (17,243) 1,837 1,680,044 Also, central banks in most countries slashed interest rates, which is expected to make borrowing cheaper, encourage spending as well as Off balance sheet 182,777 1,208,249 - 190 88,395 1,479,611 improve production to boost the economy. Most significantly the US Fed slashed its policy rate to 0 - 0.25% range, from 1.50 -1.75% before the pandemic, while also providing up to $2.3 trillion in lending to support households, employers, financial markets, and state and local governments. At 31 December 2019 GHS USD GBP ZAR Others Total Financial assets GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 GHS'000 The corona virus was first detected in Ghana on the 12 March 2020. The country went into 2-week partial lockdown which had devastating effect on the economy and disrupted every facet of social life. Ghana’s GDP growth was consequently projected to contract to 0.9% compared to the Cash and cash equivalents 707,836 1,944,702 40,160 43,273 191,709 2,927,680 average growth rate of above 6.5% over the last three years. All the key economic sectors contracted during the year. Non-pledged trading assets 635,969 6,864 - - - 642,833 Investment securities 611,824 56,570 - - - 668,394 The Bank of Ghana took measures to mitigate the negative impact of Covid-19 by cutting interest rates and reserve requirements, and Loans and advances to customers 2,463,407 1,460,057 19,341 - 3,786 3,946,591 decreasing banks’ conservation buffers. It reduced interest from 16% to 14.5%; lowered reserve requirements for lenders from 10% to 8% in Other non-financial assets 556,301 39,092 21 2,062 - 597,476 order to provide liquidity support to critical sectors; reduced Banks’ conservation buffer from 3% to 1.5%, which cut the capital-adequacy ratio Other financial assets 512,708 - - - - 512,708 from 13% to 11.5%. Bank of Ghana also issued instructions to banks to take steps to reduce the risk of spreading the virus. The regulator asked 5,488,045 3,507,285 59,522 45,335 195,495 9,295,682 banks to ensure that bank-owned and bank-operated interfaces that customers interact with physically (e.g. banking halls, ATMs, money counting machines, etc.) are sanitised frequently. Financial liabilities Trading liabilities 96,683 5,856 - - - 102,539 Liquidity risks, capital deterioration, asset quality decline, business risk and operational risk are some of the principal risks and uncertainties that Deposits from banks 406,327 122,629 - - 186 529,142 Deposits from customers 2,705,171 3,827,404 34,806 3,544 178,857 6,749,782 businesses in the financial sector face as a result of the current COVID-19 pandemic. Subordinated debt - 83,556 - - - 83,556 Other non-financial liabilitiies 280,754 137,124 9,158 40,986 6,439 474,461 Like most financial Institutions, the operations and performance of Stanbic Bank Ghana Limited was fairly hit by the COVID-19 pandemic. However, the positive effects of a well-positioned balance sheet and diversified business lines of the Bank cushioned the impact. Nonetheless, 3,488,935 4,176,569 43,964 44,530 185,482 7,939,480 the Bank lost interest on loans that were restructured for the hospitality and education sectors due to effects of COVID-19; additional credit impairment provisions taken on accounts that have become non-performing due to the pandemic; donations of test kits and PPEs were Net on-balance sheet financial position 1,999,110 (669,284) 15,558 805 10,013 1,356,202 purchased for some hospitals; sanitisers and masks for staff in all branches and offices and laptops acquired for staff to work at home.

Off balance sheet 365,482 1,134,693 - 11,115 105,107 1,616,397 The adverse impact of covid-19 on the performance of the Bank are shown below:

2020 Exchange rates applied GHS'000 Loss of Interest Income on Loans & Advances related to COVID-19 14,952 year-end spot rate* 2020 2019 Net expected credit loses raised on loan and advances as a result of COVID-19 2,691 US Dollar 5.7602 5.5337 Operational cost related to COVID-19 1,100 GBP 7.8742 7.3164 Donations related to COVID -19 1,421 Euro 7.0643 6.2114 Total 20,164 ZAR 0.3933 0.3954 The Bank is endowed with strong and diversified funding base to sustain its business throughout the period of the crisis and take advantage of market opportunities as they arise. The Bank remains adequately capitalised with a capital adequacy ratio (CAR) of 18.5% (2019:14.4%) . Also, liquidity ratio stood at 81% as at 31 December 2020 (2019: 56%).The prudential cash reserving ratio for 31 December 2020 was 9.95% against the limit of 8%.

The significant doubt associated with COVID-19 virus currently does not result in a material uncertainty related to such events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern in the foreseeable future. Notwithstanding, the Bank will closely monitor the emerging impact of the pandemic to ensure that they are appropriately mitigated. There was no other event after the end of the reporting period which could have a material effect on the financial statements of the Bank for the year ended 31 December 2020 which has not been adjusted for, or disclosed in, the financial statements. 116

117 ANNUAL FINANCIAL STATEMENTS Notes to the annual financial statements Value added statementSTANBIC BANK ANNEXURE GHANA 125 Annual report 2020 126

STANBIC BANK GHANA LIMITED Risk and capital management STANBICAnnexure BANK GHANA LIMITED forNotes the toyear the endedfinancial 31 statements December 2020 Value added statement for the year ended 31 December 2020 for the year ended 31 December 2020 Annexure: Value added statement for the year ended 31 December 2020 30 Risk and capital management (continued) Capital Management 2020 2019 The Bank manages its capital levels to support business growth, maintain depositor and creditors confidence, create value for the shareholders GHS'000 GHS'000 and ensure regulatory compliance. The Bank's capital management function is designed to ensure that regulatory requirements are met at all times and that the Bank is capitalised Interest income and other operating income 1,083,841 974,919 in line with the its risk appetite and target ranges, both of which are approved by the Board of Directors. Direct cost of services (187,136) (164,466) It further aims to facilitate the allocation and use of capital, such that it generates a return that appropriately compensates shareholders for the risks incurred. Capital adequacy is actively managed and forms a key component of the bank’s budget and forecasting process. The capital Value added by banking services 896,705 810,453 plan is tested under a range of stress scenarios as part of the bank’s annual ICAAP and recovery plan. Credit impairments (58,387) (53,792) The capital management function is governed primarily by management level committees that oversee the risks associated with capital Valued Added 838,318 756,661 management, namely the Bank's asset and liability committee ( ALCO) and the executive management committee. The principal governance documents are the capital management governance framework and the model risk governance framework.

Regulatory Capital Distributed as follows: Regulatory capital adequacy is measured based on Pillar 1 of the Basel II capital framework. Capital adequacy ratio is calculated by dividing the capital held by total risk-weighted assets. Risk weighted assets comprise computed risk weights from credit, operational and market risks To Employees 308,200 269,458 associated with the business of the bank. Notional risk weighted asset for market risk is calculated using the standardised approach while operational risk is determined using the basic indicator approach. Management monitors the capital adequacy ratio on a proactive basis. Non-exective directors 920 1,140 Throughout the year, Stanbic Bank Ghana Limited operated above its targeted capitalisation range and well over the minimum regulatory capital Executive directors 15,178 16,173 adequacy ratio as mandated by Bank of Ghana. Other employees 292,102 252,145

Regulatory capital adequacy is measured through the following risk-based ratios: To Government 128,287 130,227 Taxation 128,287 130,227 - Tier 1 capital which comprises share capital, retained earnings and reserves created by appropriations of retained earnings. - Tier 2 capital relates to subordinated debts. To expansion and growth 75,776 75,679 Depreciation 67,719 67,888 Capital adequacy computation Amortisation 8,057 7,791

2020 2019 GHS'000 GHS'000 Retained earnings 326,055 281,297 Tier 1 Capital

Capital and unimpaired reserve funds 1,277,869 1,001,172 Issued ordinary share capital 414,213 414,213 Ordinary shareholders' reserves 863,656 586,959

Less: regulatory deduction 102,661 102,485

Software 70,055 78,113 Intra group transactions - 15,145 Investment in subsidiary - 2,500 Prepayment 10,910 6,727 Deferred tax 21,696 - Total Tier 1 Capital 1,175,208 898,687

Tier 2 Capital 142,404 144,946

Total regulatory capital 1,317,612 1,043,633

Risk weighted assets: Credit risk 5,417,014 5,784,813 On-balance sheet 4,929,819 5,234,877 Off-balance sheet 487,195 549,936

Operational risk 1,596,614 1,340,451 Market risk 106,589 122,039

Total risk weighted assets 7,120,217 7,247,303

Total capital adequacy ratio 18.5% 14.4% Tier I capital adequacy ratio 16.5% 12.4%

119 STANBIC BANK GHANA STANBIC BANK GHANA Annual report 2020 127 Annual report 2020 128 STANBIC BANK GHANA Annual report 2020 129 130

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