Annual Report and Accounts 2007 Get more on-line Leading the way As part of our policy to minimise our environmental impact, we have provided more information on our Standard Chartered aims to be Ghana’s best business on-line. international bank. With over 700 people employed in more than 19 locations, we are well positioned For more information visit: www.standardchartered.com to achieve growth from opportunities in some of Ghana’s most exciting and diverse product segments and client sectors. A guide to our on-line investor website We are leading the way through our: Information on the Group Information on building a sustainable business www.standardchartered.com www.standardchartered.com/sustainability Our website contains comprehensive information We have just re-launched the sustainability section Leading • Growth client sectors on Standard Chartered. of our website. On this site you will find details of Log on to find out more about our innovative our approach to building a sustainable business, • Innovative Products and Services product offerings and financial solutions. policies and procedures and progress against There is also an interactive timeline on the our priorities. • Talented and Diverse Teams rich history of our Group. the way Investor information Our approach to people management • Sustainable Business Strategy www.investors.standardchartered.com www.standardchartered.com/careers in Ghana You will find detailed information on our corporate To find out more about our approach to people governance practices, current debt ratings and management and career opportunities at Standard recent press releases on this section of our Chartered, please log on to our Careers section. For more information visit: www.standardchartered.com/gh website. The online version of our Annual Report The information here includes Diversity and and Accounts can also be found here. Inclusion, employee engagement and how we develop, reward and recognise our employees.
What we stand for
Strategic Intent
To be the world’s best international bank Leading the way in Ghana
Brand Promise
Leading by Example to be The Right Partner
Values
Trustworthy Responsive Creative International Courageous
Approach
Participation Competitive Positioning Management Discipline Focusing on attractive, growing Combining global capability, Continuously improving the way we work, markets where we can leverage our deep local knowledge and creativity balancing the pursuit of growth with firm relationships and expertise to outperform our competitors control of costs and risk
Commitment to Stakeholders
Customers Our People Communities Investors Regulators Passionate about our Helping our people to Trusted and caring, A distinctive investment Exemplary governance customers’ success grow, enabling individuals dedicated to making delivering outstanding and ethics wherever delighting them with the to make a difference and a difference performance and we are quality of our service teams to win superior returns
© Standard Chartered PLC. All rights reserved. The STANDARD CHARTERED word mark, its logo device and associated product brand names are owned by Standard Chartered PLC and centrally licensed to its operating entities. Registered Office: 1 Aldermanbury Square, London EC2V 7SB. Telephone +44 (0) 20 7280 7500. Principal place of business in Hong Kong: 32nd Floor, 4-4A Des Voeux Road, Central, Hong Kong. Registered in England No. 966425. Our International Footprint At the core of global trade flows
Middle East Standard Chartered in the Middle East • Current account and budget Over 3,000 employees in 39 branches surpluses over 20% of GDP • Long banking history – 50 years in the UAE; Asia since 2004 86 years in Bahrain North East Asia’s export growth • $800bn investment expected in • Appointed as the official clearing bank for the to China increased 16%, infrastructure over the next five years Dubai International Financial Exchange compared with a 1.2% export • Economic growth at an average • First bank to create a world class business growth to the US of 7% p.a. hub in Dubai International Financial Centre • Exports took a 73% share of South East Asia’s GDP in 2006, compared with 48% in 1996 • $500bn investment expected in infrastructure in India over the next five years, with the economy growing at around 8% p.a.
Standard Chartered in Asia 150 years in Asia – first branches opened in Calcutta, Shanghai and Mumbai in 1858, followed by branches in Hong Kong and Singapore in 1859 • Over 80% of total Group staff work in Asia The Americas • Largest international bank in India & Pakistan Latin America’s exports increased by • Locally incorporated in 21% to $429bn in 2006 China in 2007 • Latin America’s exports to Asia • Over 80% of Group’s profits increased by 24% to $62bn in 2006 generated from Asia • China & South Korea are the top trading partners with Latin America Africa Standard Chartered in Africa • Foreign Direct Investments • Over 5,500 employees in over 140 to Africa doubled in 2006 - branches spread across 13 countries China is top provider in Sub-Saharan Africa • Africa-China trade • Local subsidiaries listed on the stock Standard Chartered in the Americas up 10 fold in less than exchanges of Botswana, Kenya, Ghana, a decade to $55.5bn Zambia and Uganda in 2006 Over 100 years in the Americas, with • Long banking history - 145 years in Africa over 500 employees • $144bn cleared daily, making Standard Chartered the 8th largest US dollar clearing house in the US • Standard Chartered handles 30% of Chile’s Letter of Credit business with Asia Regional facts Standard Chartered facts Trade flows
Standard Chartered is well positioned to capitalise on the growing Our Offices Asia Nepal Middle East Africa Europe Americas international trade flows as a result of our broad geographical Afghanistan Pakistan Bahrain Botswana Ireland Argentina Standard Chartered is Australia Philippines Jordan Cameroon Jersey Bahamas headquartered in London footprint, the depth of our customer relationships, delivery of our Bangladesh Singapore Lebanon Cote d'Ivoire Switzerland Brazil where it is regulated by the Brunei South Korea Oman Ghana Turkey Canada UK’s Financial Services Cambodia Sri Lanka Qatar Kenya UK Colombia product capabilities and the expertise of our people. The Group Authority. The Group’s head China Taiwan UAE Nigeria Falkland Is. office provides guidance on Hong Kong Thailand Sierra Leone Mexico is investing in dynamic markets and benefiting from the shift in governance and regulatory India Vietnam South Africa Peru standards. Our Wholesale Indonesia Tanzania US economic power from West to East. Banking team in London Japan The Gambia Venezuela plays a key role in serving Laos Uganda corporate clients and financial Macau Zambia institutions doing business Malaysia Zimbabwe in our markets. Mauritius For more information visit: www.standardchartered.com Contents
Business Review
2 2007 Highlights 4 Notice and Agenda 5 Five Year Financial Summary 6 Ghana Overview - Our Business 8 Chairman’s Statement 10 Chief Executive’s Review 14 Leading Across Our Growth Sectors 16 Leading With Innovative Products and Services 18 Leading Through Our Talented And Diverse Teams 20 Leading With Our Sustainable Business Strategy
Corporate Information
23 Corporate Information 24 Board of Directors 26 Report of the Directors
Financial statements and Notes
27 Independent Auditor’s Report 28 Income Statement 29 Statement Of Recognised Income And Expense 30 Balance Sheet 31 Cash Flow Statement 32 Notes to the Financial Statements Form of Proxy
Get More Online Please visit us at www.standardchartered.com/gh for more information. w
2007 Highlights e i v e R
s s e n i s u A year of continued strong performance B
We recorded a strong performance in 2007, reflecting the resilience of our businesses in a dynamic market. Our strong balance sheet and healthy liquidity profile has put us in a strong position to seize the business opportunities that are unfolding in the financial services industry. Financial highlights
Operating income Profit before taxation Total assets For more information visit: www.standardchartered.com/gh GH¢93m GH¢43m GH¢809m 2006: GH¢85m 2006: GH¢47m 2006: GH¢711m 2005: GH¢71m 2005: Gh¢36m 2005: GH¢514m Operational highlights
Earnings per share Return on equity Dividend per share • Strong earnings: Operating income exceeded GH¢92.7 million and profit before tax stood at Gh¢43.2 million. GH¢1.88 37% GH¢1.45 2006: GH¢1.75 2006: 38% 2006: GH¢1.30 • Broad-based growth: Headline income grew 9.2 per cent. 2005: GH¢1.32 2005: 36% 2005: GH¢1.15
• EPS growth: Earnings per share increased 7.4 per cent to GH¢1.88. Non-financial highlights
• Strong balance sheet: The Bank's liquidity and capital positions remain Employees Locations Nationalities comfortably above the Central Bank’s targets. 717 19 10 2006: 679 2006: 19 2006: 10 • Consumer Banking: launched Bancassurance, Business Instalment Loan 2005: 600 2005: 19 2005: 9 and Access 247 to enhance our CB offerings.
• Wholesale Banking: Introduced RFX Powerhouse and Straight2Bank to give a further boost to our WB propositions. 0 7 3 9 . 4 9 0 5 8 0 4 3 . 1 5 1 4 0 1 8 3 7 1 6 0 . 3 3 5 3 1 1 1 4 4 1 3 7 7 1 . 7 5 6 3 0 0 . 6 6 4 0 5 1 4 6 5 9 3
03 04 05 06 07 03 04 05 06 07 0 03 04 05 06 07 Total assets Operating income Profit before Dividend per (GH¢’m) (GH¢’m) taxation (GH¢’m) share (Ghp)
2 Standard Chartered Annual Report and Accounts 2007 www.standardchartered.com 3 Notice and Agenda
Notice is hereby given that the Annual General Meeting of Standard Chartered Bank Ghana Limited will be held at the National Theatre
opposite the Efua Sutherland Children’s Park, Ridge, Accra on Wednesday, 30th April, 2008 at 11.00 a.m. for the ordinary business of the
Company.
Agenda
i. To receive the reports of the Directors and Auditors, the Balance Sheet as at 31st December, 2007 together with the Profit and
Loss and Income Surplus Accounts for the year ended on that date.
ii. To declare a Dividend.
iii. To elect Directors in place of those retiring.
iv. To approve Directors' remuneration.
v. To approve the remuneration of the Auditors.
A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not
be a member.
A form of proxy is attached.
Dated this 25th day of January, 2008
BY ORDER OF THE BOARD
Dawn Kwesi Zaney (Board Secretary)
4 Standard Chartered Annual Report and Accounts 2007 Five - Year Financial Summary
2003 2004 2005 2006 2007 GH¢'000 GH¢'000 GH¢’000 GH¢’000 GH¢’000
Interest income 47,183 47,912 58,196 76,053 94,866 Interest expense (13,791) (12,691) (14,063) (18,349) (30,727)
Net interest income 33,392 35,221 44,133 57,704 64,139
Commissions and fees 15,603 18,452 19,889 18,651 19,125 Other operating income 6,228 6,474 7,043 8,554 9,468
Net Revenue 55,223 60,147 71,065 84,909 92,732
Total operating expenses (27,328) (29,055) (32,715) (39,741) (47,770) Credit /(charge) for bad and doubtful debts 1,407 (610) (2,926) 1,452 (1,794)
Operating Profit 29,302 30,482 35,424 46,620 43,168
Other income 3,760 22 99 2 6
Profit before taxation 33,062 30,504 35,523 46,622 43,174 Taxation (12,051) (11,229) (12,220) (15,874) (10,136)
Profit after taxation 21,011 19,275 23,303 30,748 33,038
Interim Dividend (4,800) (5,103) - - - Transfer to Statutory Reserve Fund (22,032) (24,068) (58,038) (3,843) (4,130)
Retained Profit (5,821) (9,896) (34,735) 26,905 28,908
Shareholders' Equity 40,744 44,272 64,834 80,636 88,394 Total Assets 390,578 439,788 514,246 711,011 808,728 Total Deposits 281,795 307,665 325,471 445,544 534,840 Loans & Advances 141,076 163,674 216,060 239,918 287,069
GH¢ GH¢ GH¢ GH¢ GH¢ Earnings per share 1.19 1.10 1.32 1.75 1.88 Interim Dividend 0.27 0.29 - - - Proposed Final Dividend per share 0.60 0.67 1.15 1.30 1.45 Returns on Assets (PBT/Total Assets) 8% 7% 7% 7% 5% Returns on Equity (PAT/Equity) 52% 44% 36% 38% 37% Capital Adequacy ratio 12% 12% 20% 17% 16% Cost/Income Ratio 49% 48% 46% 47% 52%
www.standardchartered.com 5 w
Ghana Overview: Our Business e i v e R
s s e n i s u Balanced growth across our business B Consumer Banking Wholesale Banking We delivered notable financial performance across all Value We have delivered innovative, flexible and customer oriented Centres and deepened penetration into our chosen market solutions that have driven balanced and stable growth across all segments. We solidified our Balance Sheet footings and product segments and client sectors. Leveraging our international expanded our product suites by launching Access 247, network and global best practice, we have enhanced our critical Bancassurance and Business Instalment Loan. capabilities and diversified our participation options in key strategic areas.
We continued re-engineering our processes and products Revenue to deliver exceptional Industry-leading and trendsetting customer experiences; thereby ensuring our revenue growth and balance sheet Revenue objectives were met We have delivered balanced and stable growth GH¢51.82m across all our product segments and Client GH¢40.91m 2006: GH¢47.92m sectors. We are still focused on expanding our 2005: GH¢37.13m Francis Mills-Robertson, Executive Director, Consumer Banking 2006: ¢36.99m product sophistication and providing increasing 2005: ¢33.94m strategic and value-added capabilities to clients Description Consumer Banking Ghana serves over 134,000 customers provided with a variety of world-class innovative financial products. We serve a broad spectrum of customer segments ranging from individuals to small/medium scale enterprises. Guided by the Ousman Lamin, Executive Director, Global Markets paradigm of 'the whole organization serving the frontline, and the frontline serving the Trading Profit customer', we are able to leverage further our superior customer experiences. Trading Profit Alex Mould, Executive Director, Origination & Client Coverage GH¢32.26m 2007 Highlights and Achievements Description GH¢10.91m 2006: GH¢36.70m • Consumer Banking achieved exceptional • Bancassurance was introduced: An Wholesale Banking provides a wide range of solutions to help corporate and institutional clients 2005: GH ¢ 23.87m 2006: GH¢9.92m balance Sheet growth: innovative and convenient product relevant facilitate trade and finance across some of the fastest growing markets and trade corridors in 2005: GH¢11.55m Personal loans were up by 47% to the needs of our customers. This is the Ghana's economy. Our focus is on building a client-driven business, being the leading SME lending up 57% very first in our market international bank of choice in Ghana and leveraging our in-depth local knowledge, cross Total Consumer Banking loans industry expertise and international network. grew by 38% • We also launched Business Instalment Loans and grew assets by GH¢1.728m • YOY Revenue growth was 8%. The within 3 months Consumer Banking business exhibited 2007 Highlights, achievements and innovations resilience in an intensely competitive • Access 247 was rolled out and 16,500 new • Successfully launched On-Line Trading • Mandated Lead Arranger for Cocobod business environment account relationships were established (OLT) platform for direct dealing in foreign USD900m Pre-Credit Finance between April and December 2007 exchange transactions • Trading profit improved by 6% above 2006 • Developed practical financial risk performance • Successfully launched Straight2Bank; management solutions for corporates offering our e-banking payment platform to • We successfully completed the our clients • Developed an active market for secondary re-denomination exercise and upgraded all trading of bonds ATMs in our network with minimum • Thought leadership in the processes leading distraction to our customers. This helped to the first sovereign bond issue in Ghana improve our Loyal & Positive score to 87% from the previous year’s figure of 82% Priorities Priorities • We will continue to deliver superior financial • We shall remain committed to enhancing and • Leverage network to capture trade and • Expand our product sophistication and performance by: increasing the relevance of our products in investment flows provide increasing strategic and value- (i) leading the industry in customer all Value Centres added capabilities to clients experience • Continue to build scale in our core (ii) relevantly expanding our footprint and • W e shall carry on actively supporting our businesses • Establish talent development execution improving our sales capability to capture new local regulators in their efforts to develop and programme – including progress tracking growth opportunities grow the Banking Industry • Engage fully in build-out of derivatives and mechanisms forwards markets • Our ability to identify, train and coach leaders • We will continue to live our promise of being • Increase cross-sell to drive cash, trade and remain the industry benchmark; we will the right partner to our customers by • We will relentlessly improve the way we work RFX volumes continue to massively multiply our ensuring our brand values are mirrored in all by continuing to optimise productivity in our leadership pool and capacity interactions with our customers and processes and service delivery • Support Corporate Finance and Debt Capital communities Markets – capabilities and sales linkages • We will relentlessly improve the way we work by continuing to optimize productivity in our processes and service delivery
6 Standard Chartered Annual Report and Accounts 2007 www.standardchartered.com 7 Chairman’s Statement w e i v e R
s s e n i s u B
Total Shareholder Return
Earnings per High aspiration and share 2.00 1.80 1.60 1.40 1.20 1.00 well positioned 0.80 0.60 0.40 Divident per share 0.20 4 2 6 7 3 5 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 for growth 2
I am delighted to report that 2007 was another receiving a boost from strong growth in the industry and governance expertise for the year of good performance by Standard cocoa and gold sectors, underpinned by high effective management of the Bank. Earnings per Share Chartered Bank. Our financial performance international prices. remained strong within the context of an There were a few changes in the increasingly competitive financial services We believe the fundamentals of the domestic membership of the Board in 2007. Mr. Albert GH¢1.88 sector. The bank's capital base is solid and we economy will continue to support our high Saltson, formerly Executive Director for are proactively executing our strategy which aspiration for growth, in spite of the Consumer Banking resigned to take up the continues to enhance shareholder value. possibility of a second round effect of appointment of Chief Executive Officer, dampened US demand on commodity prices. Standard Chartered Bank, Sierra Leone. Highlights Mr. Simon Millet, Non-Executive Director, · Profit after tax up by 7.4 percent to GH¢33 Overall growth of the economy in 2007 stood also resigned to take up other responsibilities million at 6.3%, below the budgeted output growth within the Standard Chartered Group. We are Dividend per Share · Net interest income up by 11 percent to of 6.5% mainly on account of the energy grateful to them for their great contribution to GH¢64 million shortage experienced in the country. The the bank and wish them the best in their new · Earnings per share up by 7.4 percent to industry sector, which is highly energy roles. GH¢1.88. intensive, was the hardest hit by the energy Gh¢1.45 crisis in 2007 and could not achieve its We are also happy to announce the The Board has therefore proposed an annual output target. We have however, been appointment of Mr. Francis Chapman Mills- dividend of GH¢25.5 million (GH¢22.9 million in actively engaged in re-positioning our Robertson as the Executive Director for 2006) with dividend per share increasing by portfolio with an emphasis on key growth Consumer Banking. 11.5% to GH¢1.45 The dividend declared in sectors for optimum return. We are conscious of the enormous 2007 represents a yield of 5.0% and remains the responsibilities conferred on us by virtue of highest on the official list of the Ghana Stock 2007 saw unprecedented foreign interest in the experience we bring to bear and the Exchange. Ghana sovereign backed commercial paper demands of the franchise we work for. The with several issues of medium-term bonds, Board will continue to play a pivotal role in Global Economy including a US$750 million 10-year Eurobond strategy formulation, execution and The 2008 short-term outlook of the global that was 4-times over-subscribed. maintenance of Governance standards that economy is dominated by fears of a US mirror global best practices. recession, which is driven by waning confidence We are however conscious of the inherent We remain deeply attached to our corporate in the economy and the recent credit crisis. challenges on the economic management social responsibility agenda with a focus on front including: maintaining debt health, education, the environment and In 2007, the global economy was characterised sustainability; the soaring crude oil prices; diversity and inclusion which has become by the US housing slump and related problems public sector reform; high wage demands part of the fabric of the Bank. in sub-prime mortgages. However, emerging and fiscal discipline. countries, led by China, experienced significant Summary growth. The resilience of emerging economies We will continue to support government's The resilience and robustness of our to the sub-prime issues is likely to continue. initiatives in seeking to improve the financial business gives us confidence about the Notwithstanding, it would be prudent to system. Standard Chartered Bank continues future. anticipate an effect on the commodity market, to lead the way as a key player in the market, since the US economy is not completely actively involved in furthering the agenda of We are excited about the versatility of our The fundamentals of the economy continue decoupled from the rest of the World. In the the ongoing consolidation of the Banking core staff and believe our momentum is short term, commodity prices firmed up System and establishment of a National strong enough to help us achieve our to support our high aspiration for growth, in significantly, with oil prices moving above the Switch (E-ZWICH) to allow the formation of a aspirations. US$100 a barrel mark and gold prices similarly common platform for all payment spite of the possibility of a second round effect rising to near record levels. This positive trend transactions in the country. These reforms We will stay focused on our strategic path has similarly been reflected in cocoa and gold will help further deepen financial and reinforce our partnership with the of a dampened US demand on commodity prices. intermediation. government to assist in progressing the country's development agenda. prices … Headline inflation also increased globally due to Governance higher energy and food prices. As a reputable international bank, we are committed to ensuring the best corporate Ishmael Yamson, Chairman Domestic Economic Outlook professionals, with a vast wealth of business The outlook for the economy remains positive in and corporate experience are entrusted with spite of resurgent inflationary pressures caused the upkeep of the bank's governance Ishmael Yamson in most part by the soaring world price of crude standards. Our Board therefore comprises of Chairman oil. The economy is expected to continue carefully selected Independent Non- 10 March 2008 Executive and Executive Directors to provide the optimum balance of specialist, cross
8 Standard Chartered Annual Report and Accounts 2007 www.standardchartered.com 9 Chief Executive’s Review
Strategically positioned for sustainable performance in dynamic market conditions
We have created long-term sustainable income streams, based on strategic options and effective stakeholder engagement …
Ebenezer N Essoka Chief Executive Officer
10 Standard Chartered Annual Report and Accounts 2007 Chief Executive’s Review continued
for efficient growth has been further economy migrating from stability to solidified in all profitable segments of the growth. market. We will continue to be the right partner, We managed our balance sheet with leading by example as the best optimum portfolio allocation, by creatively international bank in Ghana, leveraging originating new business opportunities, on our group network to migrate best which were appropriately priced to reflect practices. the inherent risks. On the other hand, our deposit mobilisation activities enabled us These efforts have been duly recognized to end the year with a strong liquidity by the market through the numerous position. awards we won in 2007.
Firm Foundations Challenges ahead We have a strong global business with an We are operating in an economy that is extensive sales and service network, migrating from stability to growth with the serving our customers nationwide across view of achieving a middle income Final Results 2007 multiple geographies and industries. Our country status by 2015. From experience, Standard Chartered Bank has delivered a Group is uniquely positioned to offer we know that such a journey is generally progressive financial performance amidst unparalleled business propositions to the a challenge. a myriad of challenges emanating from most demanding and sought after the global scene and the evolving local customers. Fiscal discipline and the ability to manage financial services sector. We faced external shocks will be a pre-requisite for intense competition with utmost discipline SCB is the only financial institution in success. and reinforced our position by sustaining Ghana with strong physical presence in performance; improving stakeholder the most dynamic growth markets. Areas requiring attention include: engagement and strengthening our brand ?Maintaining debt sustainability. equity. Investor confidence was From 2001 to 2007, our profit before tax ?Managing public sector reforms and enhanced, evidenced by the increase in (PBT) and earnings per share (EPS) have creating harmonious labour relations. our stock price. grown by over 170 percent and 155 ?Mitigating the risks of oil price volatility percent respectively. During the same and its impact on inflation and interest Over the years we have continued to period, our share price surged from rates. seek out and take opportunities that GH¢2.10 to GH¢26.00, representing a ?Overall capacity planning to bridge the create greater shareholder value by growth rate of over 1,100 percent. Our infrastructural gap mainly in the areas leveraging on our core competencies to dividend yield continues to lead the official of transportation, energy, water and drive excellence in banking. We have list of the Ghana Stock Exchange as the communications. continued to introduce initiatives that most rewarding stock for investors. create long-term, sustainable income On the monetary policy side, the streams based on strategic options and We are a high performance bank with an continued independence of the Central effective stakeholder engagement. The in-depth understanding of the Legislative Bank should not be compromised. As the stability of these core revenue streams and regulatory environment and operate financial services sector continues to gives us the market permanency and to the highest standards of corporate evolve post de-regulation, the Central financial flexibility to continue with our governance. Bank would have the further challenge of investment agenda. effectively supervising all the institutions We have positioned ourselves as the key operating in the market. Experience has Our 2007 results indicate this trend as our strategic partner to the government and shown that in dynamic market conditions overall performance remains positive. people of Ghana, providing effective as that which prevail in Ghana, the search Having cautiously managed the emerging solutions through various thought for high yields may lead some operators risks inherent in the outlook with greater leadership programmes and value to over-trade, mis-sell and often fail to understanding and focus, our foundation propositions to meet the needs of an price for risk which could potentially expose the industry to systemic risks.
2007: A year of milestones and renewed hope This year we celebrated Ghana@50, a milestone in the history of the country. Standard Chartered as the oldest commercial bank in the country reaffirmed our commitment to the nation by making Ghana's development agenda our priority
Ghana@50 - Future Leaders Programme Stakeholders – Being Their Right Partner We played our role in support of the centenary I worked in concert with the most senior leaders of year with the rollout of the “Standard Chartered my geography to seek solutions to the challenges Ghana@50 Future Leaders Program” involving of the day. Above: In an exchange with President the distribution of 5000 dual desk units to Kufuor of Ghana and immediate past UN Secretary needy schools across the nation and 49,500 General – Kofi Annan Long-Lasting Insecticide Treated Nets in support of the fight against malaria
www.standardchartered.com 11 Chief Executive’s Review continued
We will continue to be the right partner, leading by example as the best international bank in Ghana, leveraging on our group network to migrate best practices.
In this regard we urge the Central Bank to Business Installment Loan and ATM-only FX transactions and deployed our new continue its efforts at ensuring financial 'Access 247' propositions. Straight2Bank solution, which enables discipline and the adoption of industry clients to seamlessly access the bank's e- best practices such as Anti Money The CB Business will continue to lead the banking platform. laundering (AML), Know your Customer way in the retail market by: Policies (KYC) etc. through an effective ?Enhancing and increasing the The priority for WB going forward is to risk-based supervision. relevance of our propositions to all continue to build scale in our core clients activities, increase cross-selling to drive On our part, we will continue to support ?Supporting our local regulators in their cash, trade and RFX volumes and to these initiatives by sharing international efforts to develop the industry support Corporate Finance and Debt best practices as well as help to get the ?Multiplying our leadership capability Capital Markets capabilities and linkages. country ready for Basel II. by continuing to identify, train and coach future leaders Sustainable Business Strategy Our Businesses ?Expanding our footprints and We continue to champion the Our strategy continues to revolve around increasing our sales capability development of a sustainable business by our two key businesses namely ?Relentlessly improving the way we focusing on the following key pillars: Consumer Banking (CB) and Wholesale work by continuing to optimize ?Sustainable finance banking (WB). productivity in our processes and ?Protecting the environment service delivery ?Community investment Consumer Banking ?Access to financial services Our CB business delivered good results Wholesale Banking ?Great place to work across the various value streams, leading Our WB business is made up of two units ?Tackling financial crime the way in product offerings and superior namely Origination & Client Coverage ?Responsible selling and marketing customer service across all business (OCC) and Global Markets (GM), which segments. focus on delivering a wide range of In support of these initiatives, the bank solutions to our corporate and institutional has rolled out an environmental policy In 2007, CB achieved significant balance clients in support of their operating which aims at reducing paper sheet growth, with the total loan portfolio activities. consumption by 20%, electricity by 10% growing by 38%. and air travel by 3%. SCB is also a In 2007, WB once again led the way in collection point for the 1.5% environment Key product initiatives included the launch developing an active market for the levy charged to Timber companies for the of our Bancassurance proposition - an secondary trading of bonds, successfully support of re-forestation activities. industry first and the rollout of the popular launched an Online Trading platform for
LW HIV – Welcome Champions Painting – My Employee Volunteering Contribution As part of our World AIDS Day celebrations, Helping to paint the walls of the Princess Marie - Louise I met with our Living with HIV team and Children’s Hospital in Accra, turned out to be a rewarding took the opportunity to welcome and and exciting experience. congratulate our new champions for their I encouraged all staff to get involved and to claim their decision to join in the fight against HIV / AIDS share of our sustainability efforts. and for working towards the success of our “building a sustainable business” agenda.
12 Standard Chartered Annual Report and Accounts 2007 Chief Executive’s Review continued
The bank has a strict policy on KYC/AML help, in no small measure, to attract 2008 Management Agenda and security perfection as a measure to highly talented people to Standard mitigate credit risk and is actively Chartered Bank. • Enhance performance engaged in supporting the central bank in the promotion of these governance I am excited by the scope of talent, standards. energy, enterprise and commitment the • Continuously improve the way bank has churned out in its people, some we work Developing talented leadership remains a of who are occupying senior positions passion for the bank's top management. within the Standard Chartered network • Enhance service delivery The continued success of the bank is globally. therefore a tribute to the effort and enthusiasm of management who have Outlook • Build leadership been actively involved in the development We continue to deepen stakeholder of talented leaders and maintaining a relationships by effectively liaising with • Reinforce the brand robust talent pipeline. our customers, communities, regulators, investors and our people to forge In 2007 we embarked on a Great workable partnerships in the pursuit of Managers' Programme, engaging and national interests. Our exemplary grooming talented managers who have corporate governance standards have the right values and capabilities to take been well embedded in Ghana and we the business to the next level. will continue to work in concert with the Central Bank to strengthen the regulatory This will remain a core component of our framework. management and development process. The fast changing demographic and In a diverse international bank employing technological fabric of the country's people of different nationalities, we are population is driving an ever increasing bound together by embracing common demand for dynamic, flexible and modern SCB values that provide us with the banking products, which we are uniquely signposts and guidelines of how we placed to offer by leveraging our group conduct our business. In this vein, we network to introduce customer focused continue to pursue the concept of and attractive product propositions. Diversity and Inclusion (D&I) in our people and in our business, attracting and retaining a diverse pool of talented Summary professionals regardless of gender, In 2007, against the backdrop of dynamic ethnicity or physical handicap to ensure market conditions, we traded with the realisation of their full potential. These discipline and are armed with the right are achieved through personal strategic agenda. Our core product range development and supportive workplace has been refreshed and enhanced, practices that provide both staff and making our business better positioned to customers with an enabling and inclusive sustain performance in 2008 and beyond. business environment.
The above-mentioned initiatives stimulate the commitment of our high quality staff members to be trusted and reliable partners to our valuable stakeholders and Ebenezer Essoka Chief Executive Officer March 10, 2008
Community – Investing in the future talent pool Key Message – Deliver on our Brand Promise My involvement in our Schools Desk Project has My message to over 600 of our staff at our mid-year been motivated by the fact that it is a great way of townhall meeting was for all of us to work together ensuring a continuous flow of talent for the future. as a team, continuously delivering on our brand 5,000 dual desks for 50 schools translates into promise and being prepared to take the good but 10,000 sitting places; increasing the capacity of the tough decisions. Using Jack Bauer of CTU in the schools to meet rising school enrolment figures. TV series, 24, I sounded the call for us to be courageous, creative, responsive, trustworthy, international plus daring, disciplined and committed.
www.standardchartered.com 13 Leading across our growth sectors Leading the way
Leading across our growth sectors
Business Instalment Strengthening Migrating Best Loans and more our pole position Practise to Outserve for SMEs in Ghana customers
Since the revamp of the SME proposition in We strengthened our position as the best On July 1 2007, the Ghanaian currency, the 2005 a lot of effort has gone into the research international bank, leading the way in Ghana Cedi, was re-denominated. The exercise was and design of products, services and the way by being awarded the Euromoney Bank of to set Ten Thousand Cedis to One Ghana the relationships are managed. This improved the Year award and the Chartered Institute of Cedi, eliminating four zeros from the current approach has so far resonated well with the Marketing Ghana's Bank of the Year award. currency. We in Standard Chartered SME segment in Ghana. delivered on our promise to all our We also received a national Gold award for stakeholders by ensuring 100% readiness on One such innovation is Business Instalment our “economic and social contribution to the the take off date. Loans which was launched during the year. development of Ghana” in connection with The product allows borrowers to have access Ghana@50, the celebrations marking Preparations towards the roll-out date to funds without going through the Ghana's fiftieth independence anniversary. covered training of staff, customer bureaucratic process and awareness fora and the introduction of stress of providing collateral security. requisite technology, which included new ATMs. With a firm commitment to our To further deepen our engagement with promise of being the Right Partner, we SMEs, the Bank invited 13 SME customers migrated best practice from areas within the to the Hong Kong SME Expo in December. Standard Chartered Group where we have This provided the customers an opportunity to experienced re-denomination. network and develop business links.
Business Instalment Loans booked Number of awards received in 2007: Number of locations for serving since launch: customers:
Over GH¢ 2.4m 5 19
For more information visit: www.standardchartered.com
www.standardchartered.com 15 Leading with innovative products and services Leading the way
Leading with innovative products and services
Straight2Bank: Launching RFX Powerhouse Introducing Bancassurance Campaign Convenience in our market For Customers In keeping with our Brand Promise of being With the increasing globalization of business, Straight2Bank (S2B) is an electronic the Right Partner, we partnered with ELAC Ghanaian enterprises are running and payments service that enables customers to Ghana to launch Bancassurance; another recognizing the foreign exchange and view and initiate cash, custodial, treasury and innovative addition to our financial portfolio. interest risk they face. trade transactions on-line. S2B affords customers the convenience of accessing Under the Bancassurance model, the Bank Standard Chartered Bank, Ghana Limited various banking products and services works with a partner Insurance company to identified the need for financial risk including Payroll, Local and Foreign design, develop and distribute insurance management products in the country. We Currency Bank Cheque Orders, Bankers products. This partnership combines the best of Insurance and financial expertise to give therefore migrated our global expertise and Cheques Orders, Local Bank Drafts, Book greater flexibility, security and investment emerging markets experience to our Transfers, Automated Clearing House options to our customers. marketplace providing the much needed Facilities and SWIFT Messages securely, support to local businesses. from the comfort of their offices or homes As part of the evolution of Bancassurance we through a variety of distribution channels. will roll out other products to offer our The RFX Powerhouse campaign saw customers a wide range of options in Life Standard Chartered Bank leading the market This one-stop shop facility for corporate and Insurance products as we have exhibited with interest, and foreign exchange risk tools. institutional clients provides a fully integrated with our regular Banking portfolio We are also the leader in the provision of end-to-end platform which can be accessed commodity derivatives for a wide array of by our clients from any location. Significant Standard Chartered Bank Ghana is the first commodities. efficiencies and cost savings are some of the Standard Chartered franchise in Africa to benefits of this very innovative product. launch Bancassurance and the Family Funeral Finance was the maiden product offered on the Bancassurance model. Volume of new businesses generated by *Number of policies sold in first two months: the RFX Campaign: Payments as at December 2007 504 GH¢ 100m GH¢ 5m
For more information visit: www.standardchartered.com/sustainable/ourpeople
www.standardchartered.com 17 Leading through our talented and diverse teams Leading the way
Leading the way through our talented and diverse teams
Engaging emerging A great place to Building our women leaders work management skills D&I enables us to drive and sustain strong Positioned as the “Great place to work”, we Leadership development continued to be key business performance, giving us a have woven a fine workplace culture mesh on our people agenda. Through the Great competitive advantage in serving our people, which reinforces trust, engagement, diversity Managers Programme, our scalable customers and communities. This year, SCB and inclusion. Our leadership development approach to building management skills, we Ghana focused on creating awareness goals for future leaders and our merit-based intend to develop our managers into leaders across the Bank of the business imperative platform for development ensure that we live with the skills to make a difference. for promoting and embedding inclusive the values in our day-to-day activities. behaviours and policies within the A significant number of managers organization. This was achieved through With a high sense of work/life balance, our participated in the programme and they were seminars and training programs ranging from staff made time to share engaging moments equipped with crucial people management Effective Communication in a Diverse with their families away from the workplace. skills. Over fifty-five (55) managers were Corporate Environment to the Management Activities engaged in ranged from Teen Talk, taken through various modules to familiarise of Flexible working schemes. bouncy castles, musical chairs, to visits by them with best practice management Cartoon Characters. This event was driven techniques. As part of our efforts to drive Gender by the SCB Ladies Association. Diversity, we organized activities marking the Feedback indicates that most of these International Women's Day (8th March 2007), The bank also introduced FlexiHours, in managers have generally made changes to the highlights of which included engaging order to create an inclusive workplace the way they manage and engage their sessions with some of the most prominent environment where everyone has the teams. Going forward, we are committed to female leaders in the community and our opportunity to maximise their potential and ensuring a 100% participation of our Chief Executive Officer, who is also an SCB perform to their very best, making it the first managers in the programme. Group D&I Ambassador. in the market to model international workplace trends.
Great Managers Program participants: Percentage of women in SCB Ghana Employee engagement score:
45.59% 4.15 39% of Managers
For more information visit: www.standardchartered.com/gh
www.standardchartered.com 19 Leading with our sustainable business strategy Leading the way
Leading with our sustainable business strategy
Fighting malaria Taking financial Seeing is Believing through a dual services to the covers more ground approach un-banked In February 2007 we launched “Nets for Life” Under our sustainability agenda and through After the initial take-off in Ghana of the our anti-malaria initiative through which we our Access 247 product we are offering “Seeing Is Believing” initiative, where we are distributing 49,500 Long Lasting services to persons and groups who are raised over USD169,000 through a walk by Insecticide Treated Nets (LLITNs) in the financially excluded so that we can support staff from Kumasi to Accra, we have provided three northern regions of Ghana. sustainable economic growth. an additional USD442,400 to reach out to more beneficiaries through the The distribution of LLITNs is complemented Access 247 is an ATM only account. Its Comprehensive Eye Care Program (CECP) by parallel educational programs which seek features include an initial deposit of GHS5 in the Eastern Region of Ghana. to raise awareness on the proper usage of (about USD6) and no minimum balance the LLITNs to maintain its effectiveness in requirements. This product was introduced in The CECP is aimed at eliminating river the fight against the spread of malaria. Within direct response to the needs of a section of blindness as a major public health problem the coverage communities, “Nets for Life” will and it provides sight restoring procedures the population such as students who could primarily focus on the vulnerable segments of and other eye care treatments. There is also not maintain our minimum balance and the population, mainly children under 5 the prevention aspect where Mectizan is years, pregnant women, the chronically ill or wanted a lower initial deposit threshold. made available to the people in the immuno-compromised and the elderly. Access 247 targets to establish a lifelong communities to protect them against River partnership with the customer and inducts Blindness. More than 100,000 lives are expected to be them into a strong brand thereby making saved from malaria as a result of the roll-out available to them the many benefits of The project involves integrating all eye care of “Nets for Life”. banking. into existing health facilities including referral hospitals, district hospitals and health centres. It also involves capacity building for Eye Care health professionals like Ophthalmic Nurses etc. Number of LLITNs distributed Number of accounts opened between April Estimated number of beneficiaries as at end of December 2007 and December 2007 23,370 16,500 1,076,318
For more information visit: www.standardchartered.com/gh
www.standardchartered.com 21
Corporate Information
BOARD OF DIRECTORS Ishmael Yamson (Chairman) Ebenezer N. Essoka (Chief Executive Officer) Alexander Mould Ousman Lamin Sanjay Rughani Francis Mills-Robertson (Appointed 13 November, 2007) Samuel Daisie Henry Gilbert Dei Professor Henrietta Mensa-Bonsu Albert Saltson (Resigned 30 April, 2007) Simon Millett (Resigned 30 November, 2007)
SECRETARY Dawn Kwesi Zaney
AUDITORS KPMG Chartered Accountants Marlin House 13 Yiyiwa Drive P O Box GP 242 Accra
SOLICITORS Kudjawu & Co. House No. 5 Yantrabi Road Labone Cresent Labone
Postal Address P O Box GP 294 Accra
REGISTRARS NTHC Limited Martco House P O Box KIA 9563 Airport – Accra
REGISTERED OFFICE Standard Chartered Bank Building High Street P. O. Box 768 Accra
Telephone No. 664591
www.standardchartered.com 23 w
Board of Directors e i v e R
s s e n i s u B
Ishmael E. Yamson Ebenezer N. Essoka Alexander Mould Sanjay Rughani Francis Chapman Ousman Z. Lamin Chairman Chief Executive Officer Executive Director Executive Director Mills-Robertson Executive Director Appointed to the Board on (CEO) of Standard Chartered Bank Origination & Client Coverage Finance Executive Director Global Markets 1 February, 2005 Ghana Limited Appointed to the Board on Appointed to the Board on Consumer Banking Appointed to the Board on Also Chairman for Unilever He is also the CEO of the Standard 24 March, 2003 26 January, 2007 Appointed to the Board on 11 February, 2005 Ghana Limited Chartered Bank Franchise in 13 November, 2007 Central and West Africa. Appointed to the Board on 31 July, 2001
Audit and Risk Committee
1. Samuel Daisie
2.Henry Gilbert Dei
3.Professor Henrietta Mensa-Bonsu
Samuel Daisie Henry Gilbert Dei Professor Henrietta Dawn Kwesi Zaney Economic Consultant A former Director General of SSNIT Mensa-Bonsu Country Head, Legal & Appointed to the Board on Appointed to the Board in July, 1998 Lecturer Faculty of Law Compliance/ November, 1990 University of Ghana Company Secretary Appointed to the Board on Appointed in October, 1997 13 March, 2007
24 Standard Chartered Annual Report and Accounts 2007 www.standardchartered.com 25 Report of the Directors to the members of Standard Chartered Bank Ghana Limited
The Directors in submitting to the shareholders their report and The Directors are recommending a dividend of GH¢1.45 per financial statements of the Bank for the year ended share for ordinary shares amounting to GH¢25.5 million. 31 December 2007 report as follows: In accordance with Section 29(c) of the Banking Act, 2004 (Act 673) of Ghana, a cumulative amount of GH¢26.1 million has Directors' Responsibility Statement been set aside to a Reserve Fund from the Income Surplus The Bank's directors are responsible for the preparation and fair Account. presentation of the financial statements, comprising the balance sheet at 31 December 2007 and the income statement, the Nature of Business statement of recognised income and expense, cash flow The Bank is licensed to carry out universal banking business statement for the year then ended, and the notes to the financial in Ghana. statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with There was no change in the nature of the Bank's business International Financial Reporting Standards, and in the manner during the year. required by the Companies Code, 1963 (Act 179) of Ghana and the Banking Act, 2004 (Act 673) of Ghana. Holding company The Bank is a subsidiary of the Standard Chartered Holdings The directors' responsibility includes: designing, implementing (Africa) B.V., a company incorporated in The Netherlands. and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from Subsidiary material misstatement, whether due to fraud or error; selecting The Bank incorporated a subsidiary, SCB Investment Services and applying appropriate accounting policies; and making Limited, in 2005. The subsidiary did not carry out operational accounting estimates that are reasonable in the circumstances. activities during the year. The subsidiary's financial statements have not been consolidated with that of the parent The directors have made an assessment of the company's as the directors are of the opinion that it is insignificant and ability to continue as a going concern and have no reason to would present no real value to members. believe that the business will not be a going concern in the year ahead. Approval of the Financial Statements The financial statements of the Bank, as indicated above, were Change in Financial Reporting Framework approved by the board of directors on 25 January 2008 and In line with changes in the financial reporting framework are signed on their behalf by: announced by the Institute of Chartered Accountants in consultation with other regulatory bodies, the Bank adopted International Financial Reporting Standards (IFRS) as the reporting framework with effect from 1 January 2007. As a ………………...... result, the attached financial statements have been prepared in accordance with IFRS. Comparative financial information which Ebenezer Essoka was prepared in accordance with Ghana Accounting Standards Director has also been restated accordingly. The impact of the change in comparative results and position has been disclosed in note 42 of the attached financial statements.
Financial Statement and Dividend GH¢'000 ………………...... Profit for the year ended 31 December 2007 Sanjay Rughani before taxation is 43,174 Director
from which is deducted taxation of (10,136) ACCRA giving a profit for the year after taxation of 33,038 25 January 2008 Less: Transfer to Statutory Reserve Fund and Other Reserves of (6,098)
leaving a balance of 26,940
to which is added balance on Income Surplus Account brought forward (excluding balance on Statutory Reserve Fund and Other Reserves) of 38,330
giving a cumulative amount available for distribution of 65,270
out of which a final dividend for 2006 of GH¢1.30 per share for ordinary shares and GH¢0.0357 per share for March 2007 and GH¢0.0351 per share for September 2007 for preference shares amounting to (24,113)
was paid leaving a balance on Income Surplus Account carried forward of 41,157
26 Standard Chartered Annual Report and Accounts 2007 to themember Independent the Banking required bytheCompaniesCode,1963(Act179)ofGhanaand International FinancialReportingStandardsandinthemanner presentation ofthesefinancialstatementsinaccordancewith The Bank'sdirectorsareresponsibleforthepreparationandfair other explanatorynotesassetoutonpages32to63. which includeasummaryofsignificantaccountingpoliciesand year thenended,andthenotestofinancialstatements, recognised incomeandexpense,cashflowstatementforthe December 2007,andtheincomestatement,statementof Bank GhanaLimitedwhichcomprisethebalancesheetat31 W statements basedonouraudit.W Our responsibilityistoexpressanopiniononthesefinancial estimates thatarereasonableinthecircumstances. appropriate accountingpolicies;andmaking whether duetofraudorerror;selectingandapplying financial statementsthatarefreefrommaterialmisstatement, control relevanttothepreparationandfairpresentationof includes: designing,implementingandmaintaininginternal statements. evidence abouttheamountsanddisclosuresinfinancial An auditinvolvesperformingprocedurestoobtain misstatement. whether thefinancialstatementsarefreefrommaterial plan andperformtheaudittoobtainreasonableassurance standards requirethatwecomplywithethicalrequirementsand accordance withInternationalStandardson suf W the financialstatements. management, aswellevaluatingtheoverallpresentationof used andthereasonablenessofaccountingestimatesmadeby includes evaluatingtheappropriatenessofaccountingpolicies ef not forthepurposeofexpressinganopinionon audit proceduresthatareappropriateinthecircumstances,but fair presentationofthefinancialstatementsinordertodesign considers internalcontrolrelevanttotheentity'spreparationand or error misstatement ofthefinancialstatements,whetherduetofraud judgement, includingtheassessmentofrisksmaterial the Banking required bytheCompaniesCode,1963(Act179)ofGhanaand International FinancialReportingStandardsandinthemanner cash flowsfortheyearthenendedinaccordancewith Limited at31December2007,anditsfinancialperformance of thefinancialpositionStandardCharteredBankGhana In ouropinion,thefinancialstatementsgiveatrueandfairview Opinion opinion. Auditor's Responsibility Directors' ResponsibilityfortheFinancialStatements fectiveness oftheentity'sinternalcontrol. e haveauditedthefinancialstatementsofStandardChartered e believethattheauditevidencewehaveobtainedis ficient andappropriatetoprovideabasisforouraudit . Inmakingthoseriskassessments,theauditor Act, 2004(Act673)ofGhana. Act, 2004(Act673)ofGhana. The proceduresselecteddependontheauditor's Auditor s ofStandar e conductedourauditin ’ s Report This responsibility Auditing. An auditalso d CharteredB Those 25 January2008 ACCRA P 13 CHAR (Act 673). complied withtherelevantprovisionsofBanking The Bank'stransactionswerewithinitspowers,andtheBank accounts areinagreementwiththebooksofaccount. the balancesheet,incomestatementandsurplus In ouropinion,properbooksofaccounthavebeenkept,and the Banking Companies Code,1963(Act179)ofGhanaandSection78 Compliance withtherequirementsofSection133 Report onOtherLegalandRegulatoryRequirements purpose ofouraudit. to thebestofourknowledgeandbelief,werenecessaryfor W Other Matter . O.BOXGP242 e haveobtainedalltheinformationandexplanationswhich, YIYIW TERED ank GhanaLimi A DRIVE Act, 2004(Act673)ofGhana. ACCOUNT ANTS ted www .standardchartered.com 27 Act, 2004
Financial Statements and Notes to the Accounts Income Statement For the year ended 31 December 2007
2007 2006
Note GH¢'000 GH¢'000
Interest Income 8 94,866 76,053 Interest Expense 9 (30,727) (18,349)
Net Interest Income 64,139 57,704
Net Fees and Commissions Income 10 19,125 18,651 Other Operating Income 11 9,468 8,554
Operating Income 92,732 84,909
Operating Expenses 13 (47,770) (39,741)
Operating profit before impairment loss and taxation 44,962 45,168
Impairment loss 15 (1,794) 1,452
Operating Profit 43,168 46,620
Other Income 12 6 2
Profit before taxation 43,174 46,622 Taxation - Corporate Tax 17(i) (10,136) (13,234) - National Reconstruction Levy 17(ii) - (2,640)
Profit after Taxation 33,038 30,748
Basic earnings per share (Ghana Cedi per share) 38 GH¢1.88 GH¢1.75
28 Standard Chartered Annual Report and Accounts 2007 s t
Statement of Recognised Income and Expense n u o c For the year ended 31 December 2007 c A
e h t
o t
s e t o N
d n a
s t n e m e
2007 2006 t a GH¢'000 GH¢'000 t S
l a i c
Income and expense recognised directly in equity: n a n
Net change in fair value of available for sale financial i Assets (Note 33 (i)) (1,556) 2,502 F Profit for the year 33,038 30,748 ------Total recognised income and expense for the period 31,482 33,250 ======
www.standardchartered.com 29 Balance Sheet As at 31 December 2007
2007 2006 Note GH¢'000 GH¢'000
Assets Cash and Balances with Bank of Ghana 19 97,930 55,609 Short - Term Government Securities 20(i) 93,761 87,302 Due from Other Banks and Financial Institutions 21 80,308 92,993 Loans and Advances 22 287,069 239,918 Other Assets 25 75,824 32,718
634,892 508,540
Medium - Term Investments in other securities 20(ii) 161,981 190,259 Investment in Subsidiaries 100 100 Property and equipment 23 11,656 11,912 Intangible assets 24 99 200
Total Assets 808,728 711,011
Liabilities Customer Deposits 27 534,840 445,544 Due to other Banks and Financial Institutions 28 43,911 20,780 Interest Payable and Other Liabilities 30 68,388 43,013 Borrowing 32 63,743 72,338 Provisions 31 5,042 7,394 Taxation 17(iii) 1,494 2,375
717,418 591,444
Medium-Term Borrowing - 35,000 Deferred Taxation 18 2,916 3,931
Total Liabilities 720,334 630,375
Equity Stated Capital 33(ii) 13,131 13,131 Income Surplus 33(iii) 41,157 38,330 Statutory Reserve Fund 33(iv) 26,069 21,940 Other Reserves 33(v) 8,037 7,235
Total Shareholders' Funds 88,394 80,636
Total Liabilities and Shareholders' Funds 808,728 711,011
Net Assets Value per Share (Ghana Cedis per share) 5.00 4.58
These financial statements were approved by the Board of Directors on 25 January 2008 and signed on its behalf by:
…………………………………. ……………………………….. Ebenezer Essoka Sanjay Rughani Director Director
30 Standard Chartered Annual Report and Accounts 2007 s t
Cash Flow Statement n u o c For the year ended 31 December 2007 c A
e h t
o t
s e t o N
d n a
s t n
2007 2006 e m e
GH¢'000 GH¢'000 t a t S
l a i c
Profit before tax for the period 43,174 46,622 n a n i Adjustments for: F Depreciation and amortisation 1,509 1,127 Impairment on financial assets 1,794 (1,452) Loss on sale of property and equipment 68 52 ------46,545 46,349
Change in investment other than those held for the purpose of trading 76,382 (121,166) Change in investments held for trading (56,119) - Change in loans and advances (51,828) (23,854) Change in other assets (43,106) (7,003) Change in customer deposits 89,296 114,186 Change in amounts due to other banks 23,131 (25,597) Change in interest payable, other liabilities and provisions 26,301 28,116 Change in borrowing (43,595) 62,923
67,007 73,954 Income tax paid (11,643) (9,357)
Net cash from operating activities 55,364 64,597
Cash flows from investing activities Purchase of property and equipment (1,631) (1,146) Proceeds from sale of property and equipment 16 - Investment in Subsidiary - (100)
Net cash used in investing activities (1,615) (1,246)
Cash flows from financing activities Dividends paid (24,113) (21,287) Repayment of subordinated debt - (4,558)
Net cash used in financing activities (24,113) (25,845)
Net increase in cash and cash equivalents 29,636 37,506
Analysis of changes in cash and cash equivalents during the year Cash and cash equivalents at 1 January 148,602 111,096 Net increase in cash and cash equivalents 29,636 37,506
Cash and cash equivalents at 31 December 178,238 148,602
Analysis of cash and cash equivalents during the year
Cash and balances with Bank of Ghana 97,930 55,609 Nostro Account Balances 17,453 11,415 Items in course of collection 15,461 18,863 Placement with other Banks 47,394 62,715
178,238 148,602
www.standardchartered.com 31 Notes to the Financial Statements For the year ended 31 December 2007
1. REPORTING ENTITY Standard Chartered Bank Ghana Limited is a bank incorporated in Ghana. The address and registered office of the Bank can be found on page 23 of the annual report. The Bank operates with a universal banking license that allows it to undertake all banking and related activities.
2. BASIS OF PREPARATION
a. Statement of Compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB). These are the Bank's first set of financial statements prepared in accordance with IFRS and IFRS 1 has been applied. In accordance with the transitional requirements of these standards, the Bank has provided full comparative information.
b. Basis of measurement The financial statements are presented in Ghana cedis, rounded to the nearest thousand. They are prepared on the historical cost basis except for the following assets and liabilities that are stated at their fair value: derivative financial instruments, financial instruments that are fair value through profit or loss and financial instruments classified as available-for-sale.
c. Use of estimates and judgement The preparation of financial statements in conformity with IFRS requires management to make judgement, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgement about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements by the Bank.
a. Basis of Consolidation (i) Subsidiaries Subsidiaries are all entities including special purpose entities over which the Bank has the power to directly or indirectly govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.
Subsidiaries are fully consolidated from the date on which the bank effectively obtains control. They are de-consolidated from the date that control ceases. Subsidiaries that are considered insignificant are not consolidated and the Bank's interests in those subsidiaries are classified as long term investments.
(ii) Investments in subsidiaries, Associates and Joint Ventures Investments in subsidiaries, associates and Joint Ventures are held at cost less impairment and dividends from pre-acquisition profits received, if any.
b. Revenue Recognition Interest income and expense on available-for-sale assets and financial assets and liabilities held at amortised cost, are recognised in the income statement using the effective interest method.
Gains and losses arising from changes in the fair value of financial assets and liabilities held at fair value through profit or loss, as well as any interest receivable or payable, is included in the income statement in the period in which they arise. Gains and losses arising from changes in the fair value of available-for-sale financial assets, other than foreign exchange gains and losses from monetary items, are recognised directly in equity, until the financial asset is derecognised or impaired at which time the cumulative gain or loss previously recognised in equity is recognised in the income statement. Dividends are recognised in the income statement when the Bank's right to receive payment is established.
c. Interest income and Expense Interest income and expense on available-for-sale assets and financial assets or liabilities held at amortised cost is recognised in the income statement using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period.
32 Standard Chartered Annual Report and Accounts 2007 short term. profit orlossat inception. This categoryhas twosub-categories:financial assetsandliabilitiesheldfortrading, andthosedesignatedat fairvaluethrough (ii) loss, oratamortisedcost.Management determinesthecategorisationofitsfinancialassets and liabilitiesatinitialrecognition. receivables andavailable-for-sale financialassets.Financialliabilitiesareclassifiedaseither heldatfairvaluethroughprofitor The Bankclassifiesitsfinancial assetsinthefollowingcategories:financialheldatfair valuethroughprofitorloss;loansand (i) h. periodic rateofinterestontheremainingbalanceliability outstanding leaseliability Minimum leasepaymentsmadeunderfinanceleasesareapportioned betweenthefinanceexpenseandasreductionof of penaltyisrecognisedasanexpenseintheperiodwhichtermination takesplace. When anoperatingleaseisterminatedbeforetheperiod hasexpired,anypaymentrequiredtobemadethelessorbyway Payments madeunderoperatingleasesarechargedtotheincome statementonastraight-linebasisovertheperiodoflease. (ii) Other leasesareclassifiedasoperatingleases. accounting policyapplicabletothatasset. the minimumleasepayments.Subsequenttoinitialrecognition,leasedassetisaccountedforinaccordancewith leases. Uponinitialrecognitiontheleasedassetismeasuredatanamountequaltolowerofitsfairvalueandpresent of Leases thattheBankassumessubstantiallyallrisksandrewardsofownershipunderlyingassetareclassifiedas finance (i) g. shareholders' equityasappropriate. exchange ratesifheldatfairvalue,andtheresultingforeigngainslossesarerecognisedinincomestatement or statement. Non-monetaryassetsandliabilitiesaretranslatedathistoricalexchangeratesifheldcostoryear-end year-end exchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrencies,arerecognisedtheincome transactions. Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactions,translation at Foreign currencytransactionsaretranslatedintothefunctionalusingexchangeratesprevailingatdatesof the f. liabilities, derecognisedavailableforsalefinancialassets,andforeignexchangedifferences. Other operatingincomecomprisesotherincludinggainsorlossesarisingonfairvaluechangesintradingassetsand e. received. Other feesandcommissionexpenserelatesmainlytotransactionservicefees,whichareexpensedastheservices basis. and arrangementfeessyndicationarerecognisedastherelatedservicesperformed,usuallyontimeproportionate Other feesandcommissionincome,includingaccountservicingfees,investmentmanagementsalescommission,placement included inthemeasurementofef Fees andcommissionincomeexpensesthatareanintegralparttotheef d. statement intheperiodtheyarise. Interest incomeandexpenseonfinancialassetsliabilitiesheldatfairvaluethroughprofitorlossisrecognisedinthe recognised usingtherateofinterestusedtodiscountfuturecashflowsforpurposemeasuringimpairmentloss. When afinancialassetorgroupofsimilarassetshavebeenwrittendownasresultimpairment,interestincomeis integral partoftheef does notconsiderfuturecreditlosses. calculating theef instrument or The ef For the Notes totheFina fective interestrateisthethatdiscountsestimatedfuturereceiptsorpaymentsthroughexpectedlifeoffinancial Financial assetsandliabilitiesheld atfairvaluethroughprofitorloss Leases Foreign Currency Other OperatingIncome Fees andcommissions Categorisation offinancialassets andliabilities Financial assetsandliabilities Lease Payments Classification , whenappropriate,ashorterperiod,tothenetcarryingamountoffinancialassetorliability year ended fective interestrate,theBankestimatescashflowsconsideringallcontractualtermsoffinancialinstrumentbut fective interestrate,transactioncostsandallotherpremiumsordiscounts. . A The financeexpenseisallocatedtoeachperiodduringthelease termsoastoproduceaconstant financialasset or liabilityisclassifiedastrading ifacquiredprincipallyforthe purpose ofsellinginthe ncial Statements 31 Decembe fective interestrate. The calculationincludesallfeesreceivedorpaidbetweenpartiestothecontractthatarean r 2007 . fective interestrateonfinancialinstrumentsare www .standardchartered.com 33 . When
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
Financial assets and liabilities may be designated at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on a different basis, or a group of financial assets and/or liabilities is managed and its performance evaluated on a fair value basis.
(iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
(iv) Available for sale financial assets Available-for-sale assets are those non-derivative financial assets that are designated as available for sale or are not classified as financial assets at fair value through profit or loss, loans and receivable and held to maturity.
(v) Financial liabilities measured at amortised cost This relates to all other liabilities that are not designated at fair value through profit or loss.
(vi) Initial Recognition Purchases and sales of financial assets and liabilities held at fair value through profit or loss, available for sale financial assets and liabilities are recognised on trade - date (the date the Bank commits to purchase or sell the asset). Loans and receivables are recognised when cash is advanced to customers or borrowers.
Financial assets and liabilities are initially recognised at fair value plus directly attributable transaction cost except for those that are at fair value through profit or loss.
(vii) Subsequent measurement Available-for-sale financial assets and financial assets and liabilities held at fair value through profit or loss are subsequently carried at fair value with the resultant fair value changes recognised in equity or the income statement respectively. The fair value changes on available-for-sale financial assets recycle to the income statement when the underlying asset is sold, matured or derecognised.
Loans and receivables and other liabilities are subsequently carried at amortised cost using the effective interest method.
(viii). Derecognition Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or where the Bank has transferred substantially all risks and rewards of ownership. Any interest in transferred financial assets that is created or retained by the Bank is recognised as a separate asset.
Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire.
(ix) Fair value measurement The determination of fair values of quoted financial assets and financial liabilities in active markets are based on quoted market prices or dealer price quotations. If the market for a financial asset or financial liability is not actively traded or unlisted securities, the Bank establishes fair value by using valuation techniques. These techniques include the use of arms' length transactions, discounted cash flow analysis, and valuation models and techniques commonly used by market participants.
For complex instruments such as swaps, the bank uses proprietary models, which usually are developed from recognised valuation models. Some or all of the inputs into these models may derive from market prices or rates or are estimates based on assumptions.
The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the balance sheet.
(x) Offsetting Financial assets and liabilities are set off and the net amount presented in the balance sheet when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Bank's trading activity.
34 Standard Chartered Annual Report and Accounts 2007 This comprises investments inshort-termGovernment securitiesandmedium terminvestmentsinGovernment andothersecurities k. sheet. financial assetswithmaturities less thanthreemonths.Cashandcashequivalentsarecarried atamortisedcostinthebalance Cash andcashequivalentsinclude notesandcoinsonhand,unrestrictedbalancesheldwith centralbanksandhighlyliquid j. in thederivativearerecognisedincomestatement. All derivativesarecarriedasassetswhenfairvalueispositive andasliabilitieswhenfairvalueisnegative.Thechanges market transactions,andvaluationtechniques,includingdiscounted cashflowmodelsandoptionpricingmodels,asappropriate. subsequently remeasuredattheirfairvalue.Fairvaluesmay be obtainedfromquotedmarketpricesinactivemarkets,recent Derivative contractsareinitiallyrecognisedatfairvalueonthe dateonwhichaderivativecontractisenteredintoandare i. assets todecrease,theimpairmentlossisreversedthrough incomestatement. acquisition costandcurrentfairvalueoutofequitytotheincome statement.Whenthesubsequenteventscauseavailable-for-sale Impairment lossesonavailable-for-salefinancialassetsarerecognised bytransferringthedif loss isreversedbyadjustingtheallowanceaccount. after theimpairmentwasrecognised(suchasanimprovementindebtor subsequent period,theamountofimpairmentlossdecreasesanddecreasecanberelatedobjectivelytoaneventoccurring of amountspreviouslywritten after allthenecessaryprocedureshavebeencompletedandamountoflosshasdetermined.Subsequentrecoveries T the historicallossexperienceisbased,andtoremoveef adjusted onthebasisofcurrentobservabledatatoreflectef historical lossexperienceforassetswithcreditriskcharacteristicssimilartothoseintheBank.Historicalis Future cashflowsinagroupoffinancialassetsthatarecollectivelyevaluatedforimpairmentestimatedonthebasis being indicativeofthedebtors'abilitytopayallamountsdueaccordingcontractualtermsassetsevaluated. status andotherrelevantfactors). on thebasisofBank'sgradingprocesswhichconsidersassettype,industry purposes ofacollectiveevaluationimpairment,financialassetsaregroupedonthebasissimilarcreditriskcharacteristics (i.e. may resultfromforeclosure,lesscostforobtainingandsellingthecollateral,whetherornotforeclosureisprobable.For The calculationofthepresentvalueestimatedfuturecashflowsacollateralisedfinancialassetreflects that interest ratedeterminedunderthecontract. future creditlossesthathavenotbeenincurred),discountedattheasset'soriginalef a loanandreceivablehasvariableinterestrate,thediscountrateformeasuringanyimpairmentlossiscurrenteff the assetisreducedthroughuseofanallowanceaccountandamountlossrecognizedinincomestatement. If measured asthedif If thereisobjectiveevidencethatanimpairmentlossonaloanandreceivablehasbeenincurred,theamountof collective assessmentofimpairment. individually assessedforimpairmentandwhichanlossisorcontinuestoberecognised,arenotincludedina in agroupoffinancialassetswithsimilarcreditriskcharacteristicsandcollectivelyassessesthemforimpairment. objective evidenceofimpairmentexistsforanindividuallyassessedfinancialasset,whethersignificantornot,itincludestheasset significant, andindividuallyorcollectivelyforfinancialassetsthatarenotsignificant.IftheBankdeterminesno The Bankfirstassesseswhetherobjectiveevidenceofimpairmentexistsindividuallyforfinancialassetsthatare other observabledatathatsuggestsadversechangesinthepaymentstatusofborrowers. Objective evidencethatfinancialassetsareimpairedcanincludedefaultordelinquencybyaborrower financial assetsthatcanbereliablyestimated. "loss event"),andthatlossevent(orevents)hasanimpactontheestimatedfuturecashflowsoffinancialassetorgroup there isobjectiveevidenceofimpairmentasaresultoneormoreeventsthatoccurredaftertheinitialrecognitionasset(a assets isimpaired. The Bankassessesateachbalancesheetdatewhetherthereisobjectiveevidencethatafinancialassetorgroupof (xii) dif recognition, minusprincipalrepayments,plusorthecumulativeamortisationusingef The amortisedcostofafinancialassetorliabilityistheamountatwhichmeasuredinitial (xi) For the Notes totheFina o theextentaloanisirrecoverable,itwrittenof ference betweentheinitialamountrecognisedandmaturityamount,minusanyreductionforimpairment. Investments insecurities Cash andcashequivalents Derivative financialinstruments Identification andmeasurementofimpairment. Amortised costmeasurement year ended ference betweentheasset'scarryingamountandpresentvalueofestimatedfuturecashflows(excluding A financialassetoragroupofassetsisimpairedandimpairmentlossesareincurredif,only f decreasetheamountofprovisionforloanimpairmentinincomestatement.If,a ncial Statements These characteristicsarerelevanttotheestimationoffuturecashflowsforgroupsuchassets 31 Decembe f againsttherelatedprovisionforloanimpairment.Suchloansarewrittenof The amountofthereversalisrecognisedinincomestatement. fects ofconditionsinthehistoricalperiodthatdonotexistcurrently r 2007 fects ofcurrentconditionsthatdidnotaf ’ s creditrating),thepreviouslyrecognisedimpairment , geographicallocation,collateraltype,pastdue fective interestrate. ference betweentheamortised fective interestmethodofany , restructuringofaloanand fect theperiodonwhich The carryingamountof www .standardchartered.com 35 Assets thatare ective f .
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
such as treasury bills and bonds. Investments in securities are categorised as available-for-sale financial assets and carried in the balance sheet at fair values.
l. Loans and receivables
This is mainly made up of placements and overnight deposits with banks and other financial institutions and loans and advances to customers. Loans and receivables are carried in the balance sheet at amortised cost, i.e. gross receivable less impairment allowance.
m. Property, Plant and Equipment
(i) Recognition and measurement Items of property and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
(ii) Subsequent costs The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in the income statement as incurred.
(iii) Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
Buildings 50 years Leasehold improvements life of lease up to 50 years IT equipment and vehicles 3 - 5 years Fixtures and fittings 5 - 10 years
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
The residual values of useful lives of property and equipment are reviewed and adjusted if appropriate at each balance sheet date.
Gains and losses on disposals are included in the income statement.
n. Intangible assets
(i) Software Software acquired by the Bank is stated at cost less accumulated amortisation and accumulated impairment losses.
Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation is recognised in the income statement on a straight-line basis over the estimated useful life of the software, from the date that it is available for use. The estimated useful life of software is three to five years.
o. Taxation
The Bank provides for income taxes at the current tax rates on the taxable profits of the Bank.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
p. Deferred Taxation
Provision is made for deferred tax liabilities using the liability method on temporary differences. Deferred tax assets are recognised to the extent that there is reasonable certainty of realisation.
Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and 36 Standard Chartered Annual Report and Accounts 2007 can beestimatedreliably present legalorconstructiveobligation topaythisamountasaresultofpastserviceprovided bytheemployeeandobligation A provided. Short-term employeebenefitobligations aremeasuredonanundiscountedbasisandexpensed astherelatedserviceis (iv) accepted, andthenumberofacceptancescanbeestimatedreliably redundancies arerecognisediftheBankhasmadeanof withdrawal, toaformaldetailedplanterminateemployment before thenormalretirementdate. T (iii) Changes inthefairvalueofplanliabilitiesarerecognised theincomestatement. date onalong-datedinstrumenttheGhanamarket. discounted todetermineitspresentvalue,andanyunrecognised pastservicecosts. amount offuturebenefitthatemployeeshaveearnedinreturn fortheirserviceinthecurrentandpriorperiods;thatbenefitis The Bank'snetobligationinrespectofdefinedbenefitpension plansiscalculatedseparatelyforeachplanbyestimatingthe (ii) they aredue. Obligations forcontributionstodefinedcontributionpensionplansarerecognisedasanexpenseintheincomestatementwhen (i) v payment (whenaundertheguaranteehasbecomeprobable). The financialguaranteesaresubsequentlycarriedatthehigherofamortisedamountandpresentvalueanyexpected Financial guaranteesareinitiallyrecognisedattheirfairvalue,andthevalueisamortisedoverlifeoffinancialguarantee. because aspecifieddebtorfailstomakepaymentwhendueinaccordancewiththetermsofdebtinstrument. Financial guaranteesarecontractsthatrequirethebanktomakespecifiedpaymentsreimburseholderforalossitincurs u. where appropriate,therisksspecifictoliability by discountingtheexpectedfuturecashflowsataratethatreflectscurrentmarketassessmentsoftimevaluemoney and, reliably A t. term borrowings. This ismainlymadeupofcustomerdepositaccounts,overnightplacementsbybanksandotherfinancialinstitutionsmedium s. period inwhichtheyaredeclared. Dividend incomeisrecognisedwhentherighttoreceiveestablished.payablerecognizedasaliabilityin r under considerationandtheef Events subsequenttothebalancesheetdatearereflectedinfinancialstatementsonlyextentthattheyrelateyear q. probable thattherelatedtaxbenefitwillberealised. asset canbeutilised.Deferredtaxassetsarereviewedateachreportingdateandreducedtotheextentthatitisnolonger A the lawsthathavebeenenactedorsubstantivelybyreportingdate. Deferred taxismeasuredattheratesthatareexpectedtobeappliedtemporarydif dif For the Notes totheFina . . ermination benefitsarerecognisedasanexpensewhentheBank isdemonstrablycommitted,withoutrealisticpossibilityof provisionisrecognisedforthe amount expectedtobepaidundershort-termcashbonusorprofit-sharing plansiftheBankhasa provisionisrecognisedif,asaresultofpastevent,theBankhaspresentlegalorconstructiveobligationthatcanbeestimated deferredtaxassetisrecognisedonlytotheextentthatitprobablefuturetaxableprofitswillbeavailableagainstwhich ferences relatingtoinvestmentsinsubsidiariestheextentthattheyprobablywillnotreverseforeseeablefuture. , anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredetermined Defined benefitplans Defined contributionplans Short-term benefits Financial guarantees Provisions Deposits, amountsduetoBanksandborrowings Dividend Post BalanceSheetEvents T Employee benefits ermination benefits year ended They arecategorisedasotherfinancialliabilitiescarriedinthebalancesheetatamortisedcost. . fect ismaterial. ncial Statements 31 Decembe . The calculationisperformedusingtheprojectedunitcreditmethod. fer encouragingvoluntaryredundancy r 2007 . The discountrateistheyieldatreporting ferences whentheyreverse,basedon , itisprobablethattheof T ermination benefitsforvoluntary www .standardchartered.com 37 fer willbe
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
w. Impairment on non-financial assets
The carrying amount of the bank's non-financial assets other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated.
An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Impairment losses are recognised in the income statement.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
4. NON – PERFORMING LOANS RATIO
Percentage of gross non-performing loans ("substandard to loss") to total credit/advances portfolio (gross) is 4% (2006: 8%).
5. CONTINGENT LIABILITIES AND COMMITMENTS 2007 2006 GH¢'000 GH¢'000 (i) Contingent Liabilities
?Pending Legal Suits 96 15
(ii) Commitments for Capital Expenditure
?Under Contract 1,950 333
(iii) Unsecured Contingent Liabilities and Commitments 102,493 138,498
6. SOCIAL RESPONSIBILITY COST
An amount of GH¢168,590 (2006: GH¢22,000) was spent as part of social responsibility of the bank
7. SEGMENTAL REPORTING
Segmental information is presented in respect of the Bank's business segments. The Bank is organised into two main business segments: Wholesale banking and Consumer banking.
Some of the Bank's corporate costs are managed centrally and standardised basis are used to allocate these costs to the business segments on a reasonable basis.
Class of Business Consumer Wholesale Banking Banking Other Total GH¢'000 GH¢'000 GH¢'000 GH¢'000
Net Interest Income 30,285 33,854 - 64,139 Non Funded Income 10,626 17,967 - 28,593
Operating Income 40,911 51,821 - 92,732 Operating Expenses (29,441) (18,329) - (47,770)
Operating profit before impairment Losses and taxation 11,470 33,492 - 44,962
Impairment loss (565) (1,229) - (1,794)
Operating Profit 10,905 32,263 - 43,168 Other Income - - 6 6
Profit before taxation 10,905 32,263 6 43,174 Taxation - Corporate Tax - - (10,136) (10,136)
Profit after Taxation 10,905 32,263 (10,130) 33,038
Total Assets 128,915 612,587 67,226 808,728
Total Liabilities 361,859 291,475 67,000 720,334
38 Standard Chartered Annual Report and Accounts 2007 10. 9. 8. T Other Letters ofcreditissued Customer accountservingfees (ii) Net FeeandCommissionincome Fee andCommissionExpense Fee andCommissionIncome T Borrowings Overnight andCall T Current assets. Included underinterestincomeonloansandreceivableisatotalamountofGH¢Nil(2006:GH¢Nil)accruedimpairedfinancial Loans andreceivables A Financial assetsatfairvaluethroughprofitandloss (ii) Loans andadvances Investment securities Placements, Specialdeposits (i) Capital expenditure Depreciation andamortization Other SegmentItems For the Notes totheFina otal FeeandCommissionincome otal interestexpenseonfinancialliabilitiesheldatamortisedcostwasGH¢30,727,000(2006:GH¢18,349,000). ime andotherDeposit vailable forsaleinstruments Accounts NET FEE INTEREST EXPENSE INTEREST INCOME Fee andcommissionincome Categorisation Classification year ended Account AND COMMISSIONINCOME ncial Statements 31 Decembe 930 Consumer GH¢'000 Banking - r 2007 579 Wholesale GH¢'000 Banking - 1,631 GH¢'000 GH¢'000 GH¢'000 GH¢'000 (3,021) 22,146 10,096 19,125 22,146 30,727 21,266 94,866 52,771 34,601 94,866 38,708 42,095 14,063 Other 3,606 8,444 5,136 4,097 7,494 2007 2007 2007 228 - 1,509 1,631 www GH¢'000 GH¢'000 GH¢'000 GH¢'000 (2,614) 21,265 10,801 18,651 21,265 18,349 10,773 76,053 45,531 30,522 76,053 41,412 30,522 3,282 7,182 3,818 3,561 4,1 .standardchartered.com 39 T 2006 2006 2006 otal 197 19 -
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
2007 2006 GH¢'000 GH¢'000 (iii) Fee and commission expense
Inter -bank transaction fees (3,021) (2,614)
11. OTHER OPERATING INCOME
Gains on Foreign Exchange 9,468 8,554
12. OTHER INCOME
Rent 6 2
6 2
13. OPERATING EXPENSES
Staff Cost (Note 14) 22,923 18,645 Advertising and Marketing 332 419 Administrative 18,770 15,817 Training 420 306 Depreciation and amortisation 1,509 1,127 Directors' Emoluments 1,315 1,315 Auditors' Remuneration 48 43 Donations and Sponsorship 170 94 Others 2,283 1,975
47,770 39,741
14. STAFF COST
Wages, Salaries, Bonus and Allowances 19,262 15,697 Social Security Cost 1,720 1,427 Pension and Retirement Benefit 1,035 287 Other Staff Cost 774 1,115 Severance Pay 132 119
22,923 18,645
The average number of persons employed by the bank during the year was 717 (2006: 679). Included in this figure is staff of 182 (2006: 184) who work at the Shared Service Centre for processing transactions of six (6) countries in West Africa. For the purpose of analysis, about 55% of transactions processed are for the Ghana Office.
2007 2006 GH¢'000 GH¢'000 15. IMPAIRMENT LOSS
Specific impairment 232 (1,629) Portfolio impairment 1,562 177
Impairment loss 1,794 (1,452)
40 Standard Chartered Annual Report and Accounts 2007 The fairvaluesoffinancialassetsandliabilitiesdisclosedabove, approximatestheircarryingvalues. T Borrowings financialinstitutions Due tootherbanksand Customer Deposits T Borrowings Other Liabilities financialinstitutions Due tootherbanksand Customer Deposits T Investment insubsidiaries Loans and financialinstitutions Due fromotherbanksand Government Securities withBankofGhana Cash andbalanceswith T Other Investment insubsidiaries Loans and financialinstitutions Due fromotherbanksand Government Securities withBankofGhana Cash andbalanceswith The Bank'sclassificationofitsprincipalfinancialassetsandliabilitiesaresummarisedbelow: been combinedforpresentationonthefaceofbalancesheet. and designated),available-for-sale,held-to-maturityloansreceivables. Financial instrumentsareclassifiedbetweenfourrecognitionprinciples:heldatfairvaluethroughprofitorloss(comprisingtrading 16. For the Notes totheFina otal at31/12/06 otal at31/12/07 otal at31/12/06 otal at31/12/07 Assets FINANCIAL Advances Advances year ended INSTRUMENTSCLASSIFICA ncial Statements Notes 31 Decembe Note 32 28 27 32 30 28 27 22 21 20 19 25 22 21 20 19 GH¢'000 T rading 56,1 56,1 TION SUMMAR 19 19 ------through Profit at fairvalue Designated r 2007 orLoss GH¢'000 GH¢'000 T 35,914 35,914 rading Y ------through Profit at fairvalue Designated These categoriesoffinancialinstrumentshave A GH¢'000 GH¢'000 vailable for Sale 277,661 277,561 199,723 199,623 or Loss 34,991 34,991 100 100 ------Receivables Measured at Loans& Amortised Liabilities Financial GH¢'000 GH¢'000 573,662 107,338 445,544 642,494 534,840 388,520 239,918 465,307 287,069 20,780 63,743 92,993 55,609 80,308 97,930 43,91 Cost 1 ------www .standardchartered.com 41 Carrying Carrying GH¢'000 GH¢'000 Amount Amount 573,662 107,338 445,544 677,485 534,840 666,181 239,918 277,561 757,063 287,069 255,742 20,780 63,743 34,991 92,993 55,609 35,914 80,308 97,930 43,91 T T otal otal 100 100 1
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
17. TAXATION 2007 2006 GH¢'000 GH¢'000 (i) Income tax expense
Current Tax [Note 17(iii)] 10,762 12,748 Deferred Tax [Note 18] (626) 486
10,136 13,234
(ii) National Reconstruction Levy - 2,640
(iii) Taxation Payable Payments Balance at during Charge for Balance at 1/1/07 the year the year 31/12/07 GH¢'000 GH¢'000 GH¢'000 GH¢'000 Income Tax:- 2006 1,295 (1,341) (1,493) (1,539) 2007 - (10,106) 11,371 1,265 Capital Gains Tax:- 2006 (70) - 884 814 2007 - - - -
1,225 (11,447) 10,762 540 National Reconstruction Levy:- 2006 1,150 (196) - 954
2,375 (11,643) 10,762 1,494
(iv) Reconciliation of effective tax rate
Analysis of taxation charge in the year: 2007 2006 GH¢'000 GH¢'000 The charge for taxation based upon the profits for the year comprises:
Current tax on income for the year 11,371 11,549 Adjustments in respect of prior periods (609) 1,199
Total current tax 10,762 12,748 Deferred tax: Origination/reversal of temporary differences (626) 486
Tax on profits on ordinary activities 10,136 13,234
Effective tax rate 23% 28%
The effective tax rate for the year is lower than the standard rate of corporation tax in Ghana, 25% in 2007 (2006:25%).
42 Standard Chartered Annual Report and Accounts 2007 20. 19. benchmarked againstthe91day 18. The GovernmentBondsconsist ofGhanaGovernmentfixedandfloatingrateinstruments. Government Bonds T (i) Balances withBankofGhana Cash onHand market valuationonavailableforsalefinancialassets. Included indeferredtaxesareamountsofGH¢1,322,000(2006:GH¢1,71 Balance at31December Others (Note33) (Released)/Charged fortheyear Balance at1January Current taxcredit/chargeonavailable-for-saleassetsfortheyearwasNil(2006:Nil). (v) agreement oftheInternalRevenueService. The taxliabilitiesupto2004havebeenagreedwiththeInternalRevenueService. The incometaxfortheyearisbasedonarateof25%profitbeforetax. Current taxcharge Other Deferred tax (Over)/Under provisioninpreviousyears Capital allowances T Non-deductible expenses T Profit beforetax The dif For the Notes totheFina ax exemptrevenues ax at25%(2006:25%) reasury Bills ferences areexplainedbelow: GOVERNMENT SECURITIES CASH T ax recogniseddirectlyinequity DEFERRED T Short-T
year ended AND BALANCESWITHBANKOFGHANA erm GovernmentSecurities AXA TION ncial Statements T reasury Billrateplusamarkup. 31 Decembe 93,761 92,91 850 97,930 77,846 20,084 GH¢000 2,916 (389) (626) GH¢'000 r 2007 1,000) recogniseddirectlyinequityrespectofmarkto GH¢'000 The nationalreconstructionlevyhasbeenabolished. 10,136 10,793 43,174 3,931
1,073 2007 (626) (609) (272) (223) 2007 2007 2006 The remainingliabilitiesaresubjecttothe 1 85,913 - The floatingrateinstrumentsare 1,389 1,71 486 3,931 1,734 GH¢'000 87,302 55,609 47,698 7,91 www 2006 13,234 46,622 1 1,198 1,323 1,655 (717) (205) (506) 2006 486 .standardchartered.com 43 1 1
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
(ii) Medium-Term Investment in other Securities 2007 2006 GH¢'000 GH¢'000
Government Bonds 161,981 190,259
These are fixed and floating Government of Ghana Bonds maturing between 2008 and 2009. The floating rate instruments are bench marked against the 91 day Treasury Bill rate plus a markup.
21. DUE FROM OTHER BANKS AND FINANCIAL INSTITUTIONS 2007 2006 GH¢'000 GH¢'000
Nostro Account Balances 17,453 11,415 Items in Course of Collection 15,461 18,863 Placement with Other Banks 47,394 62,715
80,308 92,993
22. LOANS AND ADVANCES
(i) Analysis by Type
Overdrafts 101,039 98,429 Term Loans 196,539 150,204
Gross Loans and Advances 297,578 248,633 Impairment allowance (10,509) (8,715)
Net Loans and Advances 287,069 239,918
The above constitutes loans and advances (including credit bills negotiated) to customers and staff.
(ii) Key ratios on Loans and Advances
a. Loan loss provision ratio is 4% (2006: 4%). b. Gross non-performing loan ratio is 1% (2006: 5%). c. Ratio of fifty (50) largest exposure (gross funded and non-funded) to total exposures is 53% (2006: 57%).
(iii) Analysis by Business Segments 2007 2006 GH¢'000 GH¢'000
Agriculture, Forestry and Fishing 4,321 3,762 Mining and Quarrying 2,586 3,882 Manufacturing 75,430 73,651 Construction 7,061 6,924 Electricity, Gas and Water 4,414 38,273 Commerce and Finance 63,116 41,532 Transport, Storage and Communication 3,962 3,506 Services 16,944 10,194 Miscellaneous 119,744 66,909
Gross Loans and Advances 297,578 248,633 Impairment allowance (10,509) (8,715)
Net Loans and Advances 287,069 239,918
44 Standard Chartered Annual Report and Accounts 2007 23. At 31/12/06 At 31/12/07 Net bookvalue At 31December Disposal Charge fortheyear At 1January Depreciation At 31December Disposal Additions At 1January Cost Balance at31December Recoveries ofamountspreviouslywritten Net increaseinprovisions Balance at1January (v) Net Loansand Impairment allowance Gross Loansand Staf Public Institutions Joint PrivateandStateEnterprises Private Enterprises Individuals (iv) For the Notes totheFina f Analysis byT wereasfollows lossallowanceonloansandadvances Movement intheBank'simpairment PROPERTY year ended Advances Advances ype ofCustomer
AND EQUIPMENT Assets incourse of construction GH¢000 ncial Statements (73) 31 Decembe 82 89 89 80 82 - - - - f Leasehold Buildings Land and GH¢000 12,178 1 9,898 9,013 2,546 2,280 1,559 (249) (640) 515 21 r 2007 Computers GH¢000 7,191 6,715 7,867 7,528 813 676 476 339 GH¢'000 (10,509) 287,069 297,578 237,674 - - (1,104) 10,509 20,084 17,972 17,058 2,898 8,715 4,790 2007 Furniture & Equipment GH¢000 1,078 1,859 2,654 2,262 4,513 1,191 3,340 (18) 395 (3) V GH¢000 ehicles GH¢'000 Motor 239,918 248,633 160,845 (2,736) (8,715) 10,167 14,914 38,289 30,298 156 134 175 175 8,715 1,284 4,287 2006 41 19 22 - - - www GH¢000 .standardchartered.com 45 12,547 24,203 23,303 1 1 1 1,912 1,656 1,408 1,391 1,631 (252) (731) T otal
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
(i) Profit on disposal of Property and Equipment arose as follows:
2007 2006 GH¢'000 GH¢'000
Gross value 731 2,772 Accumulated depreciation (252) (2,720)
Net book value 479 52 Proceeds from sale (16) - Release of Provision (395) -
Loss on disposal 68 52
24. INTANGIBLE ASSETS
Gross value 3,008 3,008 Amortisation (2,909) (2,808)
Net book value 99 200
This relates to the cost of purchased software.
25. OTHER ASSETS
Accounts Receivable and Prepayments 19,113 13,642 Accrued Interest Receivable 9,764 13,594 Impersonal Accounts 11,033 5,482 Others (Note 26) 35,914 -
75,824 32,718
26. DERIVATIVES
Included in other assets and liabilities are fair values of cross currency swaps with the following values: GH¢35,914,000 (other assets) and GH¢34,991,000 (other liabilities). The fair value movement on these derivatives are recognised in the income statement.
27. CUSTOMER DEPOSIT AND CURRENT ACCOUNTS
2007 2006 GH¢'000 GH¢'000
Current Accounts 284,714 242,517 Time Deposit 38,877 51,925 Savings Deposit 155,366 126,410 Call Deposit 55,883 24,692
534,840 445,544
46 Standard Chartered Annual Report and Accounts 2007 30. 29. 28. Others (Note26) Other Creditorsand Accrued InterestPayable GH¢25.5million (2006:GH¢22.9million) The DirectorsarerecommendingadividendofGH¢1.45pershareforordinaryshares(2006:GH¢1.30share)amounting to Payments duringtheyear Balance at31December Preference Dividend Ordinary Dividend(2006) Nostro Inter-Bank Balance Ratio oftwentylargestdepositorstototaldepositis17%(2006:16%). Public Enterprises Individuals andotherPrivateEnterprises i. For the Notes totheFina Account Balances DIVIDENDS Analysis byT INTEREST P DUE T year ended O OTHERBANKS Accruals A ype ofDepositors Y ABLE AND OTHERLIABILITIES ncial Statements AND FINANCIAL 31 Decembe
INSTITUTIONS r 2007 GH¢'000 GH¢'000 GH¢'000 (24,1 534,840 533,488 68,388 34,991 31,266 22,875 40,173 24,1 43,91 2,131 1,238 3,738 1,352 2007 2007 2007 13) 13 1 - GH¢'000 GH¢'000 GH¢'000 (21,287) 445,544 444,418 43,013 39,250 21,287 20,235 20,780 14,000 3,763 1,052 6,780 1,126 2006 2006 2006 - - www .standardchartered.com 47
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
31. PROVISIONS 2007 2006 GH¢'000 GH¢'000
Balance at 1 January 7,394 4,568 Charged to Income Statement 12,387 7,453
19,781 12,021 Utilised during the year (14,739) (4,627)
Balance at 31 December 5,042 7,394
Provisions include retired staff medical cost of GH¢791,397 (2006: GH¢859,436).
32. BORROWING 2007 2006 GH¢000 GH¢000
Intra-Group 18,000 67,338 Short-term Loan 45,743 5,000
63,743 72,338
The short -term loan represents borrowing on the local market with interest rates bench marked against the 91-day Treasury Bill rate.
33. CAPITAL AND RESERVES
(i) Reconciliation of movement in capital and reserves
Stated Income Statutory Other Capital Surplus Reserve Reserves Total GH¢'000 GH¢'000 GH¢'000 GH¢'000 GH¢'000
Balance at 1 January 2006 13,131 32,934 18,096 6,223 70,384 Total recognised income and expense - 30,748 - 2,502 33,250 Transfer (from)/to reserve - (4,065) 3,844 221 - Dividends to equity holders - (21,287) - - (21,287) Deferred Taxes - - - (1,711) (1,711)
Balance at 31 December 2006 13,131 38,330 21,940 7,235 80,636
Balance at 1 January 2007 13,131 38,330 21,940 7,235 80,636 Total recognised income and expense - 33,038 - (1,556) 31,482 Transfer (from)/to reserve - (6,098) 4,129 1,969 - Dividends to equity holders - (24,113) - - (24,113) Deferred Taxes - - - 389 389
Balance at 31 December 2007 13,131 41,157 26,069 8,037 88,394
48 Standard Chartered Annual Report and Accounts 2007 GH¢1,322,000 (2006:GH¢1,71 of statutoryimpairmentallowancefornon-performingloansand advancesaswelldeferredtaxesrecogniseddirectlyinequityof and anamountofGH¢4,074,000(2006:GH¢2,101,000)setaside fromincomesurplusaccounttomeettheminimumrequirements This comprisesmarked-to-marketgains/lossesonavailable-for-saleinvestmentsecuritiesofGH¢5,285,000(2006:GH¢6,845,000) (v) Act, 2004(Act673). This representsamountssetasideasanon-distributablereservefromannualprofitsinaccordancewithsection29oftheBanking (iv) This representstheresidualofcumulativeannualprofitsthatareavailablefordistributiontoshareholders. (iii) The preferencesharesareirredeemableandnon-cumulativewithrespecttodividendpayments. There isnoshareintreasuryandcallorinstallmentunpaidonanyshare. T No. ofPreferenceShares Issued andFullyPaid (b).
T Issued forCashConsideration Issued andFullyPaid value No. ofOrdinarySharesnopar Authorised (a). (ii) For the Notes totheFina Account otal StatedCapital ransferred fromIncomeSurplus
Other Reserves Statutory Reserve Income Surplus(RetainedEarnings) Preference Shares Ordinary Shares Stated Capital year ended 1,000). ncial Statements 31 Decembe No ofShares 100,000 17,486 17,596 13,596 4,000 '000 r 2007 2007 Proceeds GH¢000 13,131 9,090 4,041 4,040 1 No ofShares 100,000 17,486 17,596 13,596 4,000 '000 2006 www Proceeds GH¢000 13,131 .standardchartered.com 49 9,090 4,041 4,040 1
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
34. RELATED PARTY TRANSACTIONS
(i) Directors, Officers and other Employees:
The following are Loan Balances due from Related Parties: 2007 2006 GH¢'000 GH¢'000
Directors 425 643 Officers and other Employees 20,252 14,271
20,677 14,914
(ii) Associated Companies
Amounts due from associated companies at the balance sheet were as follows:
Nostros 17,453 11,312 Inter bank advances 47,350 62,715
64,803 74,027
Amounts due to associated companies at the Balance sheet date were as follows:
Short -Term Borrowing 18,000 67,339 Other Creditors Outstanding 49,960 9,830
67,960 77,169
(iii) Management and Technical Services Fees The bank has three agreements with its parent company. Total charges and provisions made in respect of these agreements amounted to GH¢3,075,000 (2006: GH¢2,131,000).
(iv) Share based Payments Included in staff cost is an amount of GH¢1,027,413 (2006: GH¢904,727) payable to the Holding company in respect of value of equity settled share based payments allocated to employees of the Bank on a group arrangement basis.
35. FINANCIAL RISK MANAGEMENT
(i) Introduction and Overview The Bank has exposure to the following risks from its use of financial instruments: · credit risk · liquidity risk · market risks · operational risks.
This note presents information about the bank's exposure to each of the above risks, the Bank's objectives, policies and processes for measuring and managing risk, and the Bank's management of capital.
Risk Management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Bank's risk management framework. The Board has established the Asset and Liability Management committee (ALCO), Credit Committee and the Country Operational Risk Group (CORG), which are responsible for developing and monitoring the Bank's risk management policies in their specified areas. All these committees include members of executive management and report regularly to the Board of Directors on their activities.
The Bank's risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. The Bank, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.
50 Standard Chartered Annual Report and Accounts 2007 experience usinglossrates,and judgmentalfactorssuchastheeconomicenvironmentand trendsinkeyportfolioindicators. experience tobepresentinany loanportfolio.InWholesaleBanking,theportfolioimpairment provisionissetwithreferencetopast A against whichanimpairmentprovision hasbeenraised,thenthatamountwillbewrittenof independent assetreviews.Whereitisconsideredthatthere is norealisticprospectofrecoveringanelementaccount raising ofprovisions,thebankattemptstobalanceeconomicconditions, localknowledgeandexperience,theresultsof dif businesses ofthebank.Whereanyamountisconsidereduncollectible, anindividualimpairmentprovisionisraised,beingthe interest orprincipalbecomesquestionable.Impairedaccounts aremanagedbyGSAM,whichisindependentofthemain Loans aredesignatedasimpairedandconsiderednon-performing whererecognisedweaknessindicatesthatfullpaymentofeither account intothecontrolofGSAM,specialistrecoveryunit. include, butarenotlimitedto,exposurereduction,securityenhancement, exitoftheaccountorimmediatemovement ("GSAM"). portfolios aresubjecttoadedicatedprocesswithoversightinvolving seniorRiskOf In WholesaleBanking,accountsorportfoliosareplacedonEarly Wholesale Banking as theeconomicandbusinessenvironmenttrendsinarangeofportfolioindicators. provision issetwithreferencetopastexperienceusingflowratemethodology experience tobepresentintheloanportfolioPIP A recognition processisaccelerated. days pastdue.Forallproductstherearecertainaccounts,suchascasesinvolvingbankruptcy the estimatedfuturecashflows.Forunsecuredproducts,individualprovisionsareraisedforentireoutstandingamountat 150 generally raisedat150dayspastduebasedonthedif The processusedforraisingprovisionsisdependentontheproduct.Formortgages,individualimpairment("IIP") are 30 daysareconsidereddelinquent. quantifying theriskassociatedwithacounterparty Within theWholesaleBankingbusiness,anumericalgradingsystemsof1–14withbeinghighestqualityisusedfor Wholesale Banking An accountisconsideredtobeindefaultwhenpaymentnotreceivedontheduedate. Consumer Banking Problem CreditManagementandProvisioning Banking, originationandapprovalrolesaresegregated. For ConsumerBanking,standardcreditapplicationformsaregenerallyusedtoprocessandapproveloans. Consumer Banking approval exposures andportfolioanalysis. analysed againstarangeofquantitativeandqualitativemeasures.Expectedlossisusedforthefurtherassessmentindividual asset qualitywithintherequirementsofbank'sstandards,policiesandbusinessstrategy The businessesworkingwiththeRiskOf business goals.RiskOf risk aredeterminedatthebusinesslevelswithspecificpoliciesandproceduresbeingadaptedtodifferentenvironment The CreditCommittee(CC),asub-committeeoftheboardhasresponsibilityforcreditriskissues.Proceduresmanaging obligations, andarisesprincipallyfromthebank'sloansadvancestocustomersotherbanksinvestmentsecurities. Credit RiskistheriskoffinanciallosstoBankifacustomerorcounterpartyinstrumentfailsmeetitscontractual Credit RiskManagement (ii) assessment ofriskmanagementcontrolsandprocedures. committee isassistedinthesefunctionsbyariskmanagementstructurealltheunitsofBankwhichensuresconsistent procedures, andforreviewingtheadequacyofriskmanagementframeworkinrelationtorisksfacedbyBank. The Bank's For the Notes totheFina portfolioimpairmentprovisions isheldtocovertheinherentriskoflosses,whichalthoughnot identified,areknownthrough portfolioimpairmentprovision("PIP")isheldtocovertheinherentriskoflosses,whichalthoughnotidentified,areknownthrough ference betweentheloancarryingamountandpresentvalue ofestimatedfuturecashflows.Inanydecisionrelatingtothe Credit Risk Account plansarere-evaluatedandremedialactionsagreed andmonitoreduntilcompletion.Remedialactions Audit RiskCommittee(ARCO)isresponsibleformonitoringcompliancewiththeBank'sriskmanagementpoliciesand year ended ficers arelocatedinthebusinesstomaximiseef ncial Statements There isaclearsegregationofdutieswithloanapplicationsbeingpreparedseparatelyfromthe These accountsarecloselymonitoredandsubjecttoacollectionsprocess. 31 Decembe ficers takeresponsibilityformanagingpricingrisk,portfoliodiversificationandoverall coversbothperformingloansandoverdueforlessthan150days. . The gradingisbasedonaprobabilityofdefaultmeasure,withcustomers ference betweentheoutstandingamountofloanandpresentvalue r 2007 Alert whentheydisplaysignsofweakness.Suchaccountsand ficiency ofdecisionmaking. , aswelltakingaccountofjudgmentfactorssuch ficers andGroupSpecial . Accounts thatareoverduebymorethan f. , fraudanddeath,wheretheloss www As withWholesale Asset Management .standardchartered.com 51 This The
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
Set out below is an analysis of various credit exposures.
Analysis by credit grade of loans and advances
2007 2006 GH¢'000 GH¢'000
Impaired loans, net of individual provisions 19,140 5,602
Loans past due but not impaired Past due up to 30 days 7,057 14,674 Past due 31-60 days 2,390 5,456 Past due 61-90 days 779 2,640 Past due 91-120 days 810 1,693 Past due 121-150 days 420 751 Past due more than 150 days 494 180
11,950 25,394
Loans neither past due nor impaired Credit grading 1-12 or equivalent 258,365 209,749 Less: Portfolio impairment provision (2,386) (827)
255,979 208,922
Total net loans 287,069 239,918
Analysis of credit concentration risk
The concentration of loans and advances by business segment and customer types are disclosed in Note 22 (iii) and 22 (iv) respectively. Investment securities are held largely in Government instruments.
Maximum credit exposure
At 31 December 2007, the maximum credit risk exposure of the Bank in the event of other parties failing to perform their obligations is detailed below. No account has been taken of any collateral held and the maximum exposure to loss is considered to be the instruments' balance sheet carrying amount or, for non-derivative off-balance sheet transactions, their contractual nominal amounts.
2007 2006 GH¢'000 GH¢'000
Short-Term Government Securities 93,761 87,302 Placements with other Banks 47,394 62,717 Loans and Advances 287,069 239,918 Unsecured Contingent liabilities and commitments 102,493 138,498
530,717 528,435
Fair value of collateral held
An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below
2007 2006 GH¢ 000 GH¢ 000
Against impaired assets 11,808 2,576 Against past due but not impaired assets 14,489 31,515
26,297 34,091
52 Standard Chartered Annual Report and Accounts 2007 Net LiquidityGap(2006) Net LiquidityGap(2007) T T Net liquidityGap T Medium T Provisions Borrowings Deferred T Interest PayablesandotherLiabilities Institutions Due tootherBanksandFinancial Customer Deposits Liabilities T Intangible assets Property Medium-T T Other Investment inSubsidiaries Loans and Due fromotherBanksandFinancialInstitutions Short-T Cash andBalanceswithBankofGhana Assets Maturities ofassetsandliabilities An analysisofvariousmaturitiesthebank'sassetsandliabilitiesisprovidedbelow is alsomonitoredby managed throughtheprovisionofauthorities,policiesandproceduresthatareco-ordinatedby ALCO overseesthestructuralforeignexchangeandinterestrateexposuresthatarisewithinBank. prudential investmentsofsurplusfunds. The Bankalsomaintainssignificantlevelsofmarketablesecuritieseitherforcompliancewithlocalstatutoryrequirementsoras is normallyfundedbyliabilitiesinthesamecurrency deposits. A ALCO hasprimaryresponsibilityforcompliancewithregulationsandBankpolicymaintainingaliquiditycrisiscontingencyplan. authorities, policiesandprocedures. Executive Director Liquidity riskmanagementisgovernedbytheBank's to meetallobligations,repaydepositors,fulfilcommitmentslendandanyothercommitments. It isthepolicyofBanktomaintainadequateliquidityatalltimes,andforcurrencies.Henceaimsbeinaposition (ii) For the Notes totheFina obligations andcommitmentsastheyfalldue,orcanaccessthemonlyatexcessivecost. The Bankdefinesliquidityriskasthethateitherdoesnothavesuf otal Liabilities otal otal CurrentLiabilities axation axation otal Liabilities otal substantialportionoftheBank'sassetsarefundedbycustomerdepositsmadeupcurrentandsavingsaccountsother Assets Assets Assets erm GovernmentSecurities Liquidity risk , PlantandEquipment T T erm Borrowing erm GovernmentSecurities These customerdeposits,whicharewidelydiversifiedbytypeandmaturity ax Advances year ended . ALCO isresponsibleforbothstatutoryandprudentialliquidity ALCO ncial Statements 31 Decembe 0-3 months GH¢'000 170,218 282,221 191,349 473,570 191,349 191,349 102,200 473,570 234,856 . 55,733 33,416 38,294 80,308 22,182 97,930 Asset andLiabilityManagementCommittee(ALCO),whichischairedbyan ------r 2007 3-6 months GH¢'000 (61,605) 94,298 32,693 94,298 94,298 28,743 53,536 32,693 22,407 10,021 6,395 1,494 3,768 6,757 265 ------6-12months ficient financialresourcesavailabletomeetallits . GH¢'000 (80,757) (14,474) 102,759 These responsibilitiesincludetheprovisionof 102,759 1 1 1 17,233 17,233 17,233 35,000 64,566 15,123 16,322 71,314 . 5,042 8,887 3,738 , representastablesourceoffunds.Lending ------over 1year ALCO. CompliancewithBankratios (1 GH¢'000 (15,220) 317,454 199,706 317,454 317,454 314,538 199,706 161,981 17,748) 25,870 1 2,916 1,656 100 99 These responsibilitiesare ------www GH¢'000 720,334 808,728 720,334 720,334 534,840 808,728 161,981 287,069 88,394 63,743 68,388 75,824 80,308 93,761 97,930 43,91 1 5,042 2,916 1,494 1,656 .standardchartered.com 53 2007 100 99 1 - - - GH¢'000 630,375 630,375 595,375 445,544 190,259 239,918 71 71 80,636 72,338 43,013 20,780 32,718 92,993 87,302 55,609 1 35,00 7,394 3,931 2,375 1,912 2006 1,01 1,01 200 100 1 1 - -
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
(iii) Market Risks
Management of Market Risk
The Bank recognises market risk as the exposure created by potential changes in market prices and rates. The Bank is exposed to market risk arising principally from customer driven transactions.
Market risk is governed by the Bank's Market Risk Unit which is supervised by ALCO, and which agrees policies, procedures and levels of risk appetite in terms of Value at Risk ("VaR"). The Unit provides market risk oversight and guidance on policy setting. Policies cover both the trading and non-trading books of the Bank. The non trading book is defined as the banking book. Limits are proposed by the businesses within the terms of agreed policy.
The Unit also approves the limits within delegated authorities and monitors exposures against these limits. Additional limits are placed on specific instruments and currency concentrations where appropriate. Sensitivity measures are used in addition to VaR as risk management tools.
VaR models are back tested against actual results to ensure pre-determined levels of accuracy are maintained. Bank's Market Risk unit complements the VaR measurement by regularly stress testing market risk exposures to highlight potential risks that may arise from extreme market events that are rare but plausible. Stress testing is an integral part of the market risk management framework and considers both historical market events and forward looking scenarios. Ad hoc scenarios are also prepared reflecting specific market conditions. A consistent stress testing methodology is applied to trading and non-trading books.
Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The Unit has responsibility for reviewing stress exposures and, where necessary, enforcing reductions in overall market risk exposure. It also considers stress testing results as part of its supervision of risk appetite. The stress test methodology assumes that management action would be limited during a stress event, reflecting the decrease in liquidity that often occurs. Contingency plans are in place and can be relied on in place of any liquidity crisis. The bank also has a liquidity crisis management committee which also monitors the application of its policies.
The bank has not identified any limitations of the VaR methodology it is currently using.
Foreign Exchange Exposure The Bank's foreign exchange exposures comprise trading and non-trading foreign currency translation exposures. Foreign exchange exposures are principally derived from customer driven transactions. Concentration of foreign currency denominated assets and liabilities are disclosed in note 36.
Interest Rate Exposure The Bank's interest rate exposures arise from the differing re-pricing characteristics of banking assets and liabilities.
(iv) Operational Risks Operational Risk is the risk of direct or indirect loss due to an event or action resulting from the failure of internal processes, people and systems, or from external events. The bank seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of policies, procedures and tools to identify, assess, monitor, control and report such risks.
The Bank's Country Operational Risk Group ("CORG") has been established to supervise and direct the management of operational risks across the bank. CORG is also responsible for ensuring adequate and appropriate policies, procedures are in place for the identification, assessment, monitoring, control and reporting of operational risks.
The CORG is responsible for establishing and maintaining the overall operational risk framework and for monitoring the banks key operational risk exposures. This unit is supported by Wholesale Banking and Consumer Banking Operational Risk units. These units are responsible for ensuring compliance with policies and procedures in the business, monitoring key operational risk exposures, and the provisions of guidance to the respective business areas on operational risk.
(v) Compliance and Regulatory Risk
Compliance and Regulatory risk includes the risk of non-compliance with regulatory requirements. The bank's compliance and Regulatory Risk function is responsible for establishing and maintaining an appropriate framework of the banks compliance policies and procedures. Compliance with such policies and procedures is the responsibility of all managers.
(vi) Capital Management
The Central Bank sets and monitors capital requirements for the Bank.
In implementing current capital requirements the Central Bank requires the Bank to maintain a prescribed ratio of total capital to total risk-weighted assets.
54 Standard Chartered Annual Report and Accounts 2007 36. Commitments 89,40315926,9491,081 Of Net-on BalanceSheetPosition (14,662)143728(852) (14,643) T T At 31December2006 Commitments Of Net-on BalanceSheetPosition T Liabilities Interest Payableandother Institutions Due tootherBanksandFinancial Customer Deposits Liabilities T Other Loans and Institutions Financial Due fromotherBanksand BankofGhana Cash andBalanceswith Assets There havebeennomaterialchangesintheBank'smanagementofcapitalduringperiod. The Bankhascompliedwithallexternallyimposedcapitalrequirementsthroughouttheperiod. and securityaf recognises theneedtomaintainabalancebetweenhigherreturnsthatmightbepossiblewithgreatergearingandadvantages development ofthebusiness. The Bank'spolicyistomaintainastrongcapitalbasesoasinvestor specified requirementsthatseektoreflectthevaryinglevelsofriskattachedassetsand claims ongovernment,thecentralbankandcontingentliabilitiesrisk-weightedassetsaredeterminedaccordingto V instruments classifiedasavailable-for-sale. T some assetssuchasinvestmentsincapitalofotherbanksandfinancialinstitutions. T The Bank'scapitalisanalysedintotwotiers: For the Notes totheFina otal Liabilities otal otal Liabilities otal ier 2capital,whichincludessomereservessuchastheelementoffairvaluereserverelatingtounrealisedgainsonequity ier 1capital,whichincludesordinarypaidupsharepermanentpreferencesharesanddisclosedreserves,afterdeducting arious limitsareappliedtoelementsofthecapitalbase,andotherassetsliabilitiesgivingvariousclassificationssuchas f-balance SheetCredit f-Balance SheetCredit Assets Assets Assets LIABILITIES CONCENTRA Advances forded byasoundcapitalposition. year ended AND OFFBALANCESHEETITEMS TION OFGHANA The impactofthelevelcapitalonshareholders'returnisalsotakenintoconsideration,andBank ncial Statements 31 Decembe GH¢000 144,026 CEDIEQUIV 55,153 88,873 59,317 29,556 65,310 16,226 54,459 78,686 147,105 22,86817,323505 187,801 161,767 22,72516,595 1,357 8,031 USD - GH¢000 1,000 14,091 19,736 14,350 ALENT OFFOREIGNCURRENCY 5,645 4,886 3,908 1,469 GBP 759 9 - r 2007 GH¢000 1 17,603 15,080 23,894 15,274 1,603 6,291 2,523 4,700 3,888 EUR 32 - , andmarketconfidencetosustainfuture GH¢000 Others 29,130 29,690 29,572 594 560 449 1 1 18 1 1 DENOMINA - - - f-balance sheetexposures. 1 202,444 GH¢000 104,665 217,346 1 12,681 62,710 49,971 84,492 64,848 59,934 91,883 49,387 8,072 2007 TED - ASSETS, www (14,643) GH¢000 202,444 159,545 187,801 17,592 33,689 88,644 73,348 24,429 9,210 1,380 .standardchartered.com 55 2006
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
37. DIRECTORS' SHAREHOLDING
The Directors named below held the following number of shares in the Bank as at 31 December 2007:
2007 2006 Ordinary Shares
Ishmael Yamson 2,000 2,000 Henry Gilbert Dei 274 274
2,274 2,274
38. NUMBER OF SHARES IN ISSUE
Earnings, dividend and net assets per share are based on 17,596,042 (2006: 17,596,042) ordinary shares in issue during the year.
39. NUMBER OF SHAREHOLDERS
The company had 4,751 ordinary and 1,043 preference shareholders at 31 December 2007 distributed as follows:
(i) Ordinary Shares Number of Range of shares Shareholders Holding Percentage
1 - 1,000 4,413 885,306 5.03 1,001 - 5,000 269 551,107 3.13 5,001 - 10,000 40 304,634 1.73 Over 10,000 29 15,854,995 90.11
4,751 17,596,042 100.00
(ii) Preference Shares Number of Range of shares Shareholders Holding Percentage
1 - 1,000 831 304,739 1.74 1,001 - 5,000 156 347,965 1.99 5,001 - 10,000 26 198,108 1.13 Over 10,000 30 16,635,271 95.14
1,043 17,486,083 100.00
40. EMPLOYEE BENEFITS
(i) Defined Contribution Plans
(a) Social Security Under a national pension scheme, the company contributes 12.5% of employee's basic salary to the Social Security and National Insurance Trust (SSNIT) for employee pensions. The bank's obligation is limited to the relevant contributions, which were settled on due dates. The pension liabilities and obligations, however, rest with SSNIT.
(b) Provident Fund The bank has a provident fund scheme for staff under which the bank contributes 7% of staff basic salary. The bank's obligations under the plan is limited to the relevant contributions and these are settled on due dates to the Fund Manager.
(ii) Defined Benefit Scheme
Retired Staff Medical Benefit The bank has a scheme to pay the medical cost of some retired staff and their spouses from the date of retirement till death. Under the scheme, the bank pays the medical cost of eligible persons with a cost cap of GH¢500 per person. The scheme is accounted for as a defined benefit scheme. The total provision carried in the balance sheet in respect of this scheme was GH¢791,397 (2006: GH¢ 859,436). The scheme will be actuarially valued within a period of 3-5 years.
56 Standard Chartered Annual Report and Accounts 2007 Government ofGhana Enterprise InsuranceCo.Limited Standard BankNOM/Tvl(Pty)Limited/Securities University ofScience& Estate ofFrancisKPoku Edward Kojo BBG NOM/UnileverGhanaProvidentFund BBGN/HSBC BankPlcaccountclient SSNIT BBGN/Unilever GhanaManagersPensionFund T Council forUniversityofGhana.Endowment Ghana Union DM V BBGN reEP BBGN/RBC DexiaInvestorServices BBGN/Statestreet BBGN/Statestreet BankX71 Social Security&NationalInsurance Standard CharteredHoldings(Africa)BV Name ofShareholder (i) 41. For the Notes totheFina eachers Fund entures itfGoldwyn SOSFund 20 LargestOrdinaryShareholdersat31December2007 DET AILS OFSHAREHOLDERS ACK InvestmentFundLimited Amoma Assurance CoLimited year ended TSTX 71 Anim-Addo T T echnology rading Co.Limited AX71 AX 71 ncial Statements T 31 Decembe T rust rust African Limited r 2007 Shares held 15,744,068 Number of 1 2,523,708 1,700,644 125,000 137,868 165,000 277,738 323,285 21,102 22,165 23,079 24,750 28,710 29,223 34,672 35,000 38,788 48,712 58,000 60,390 66,234 www Percentage (%) .standardchartered.com 57 holding 89.49 14.34 66.50 0.12 0.13 0.13 0.14 0.16 0.17 0.20 0.20 0.22 0.28 0.33 0.34 0.38 0.71 0.78 0.94 1.58 1.84
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
(ii) 20 Largest Preference Shareholders at 31 December 2007
Name of Shareholder Number of Percentage (%) Shares held holding
Standard Chartered Holdings (Africa) BV 15,220,598 87.04% BBGN/Statestreet Bank X71 AX 71 329,585 1.88% SSNIT SOS Fund 307,692 1.76% Edward K Amoma Anim-Addo 106,806 0.61% Ghana Union Assurance Co Limited 99,351 0.57% Norbert Kwasivi Kudjawu 68,775 0.39% Ophelia F. Akosa-Bempah 54,150 0.31% Kwaku Akosah- Bempah 40,654 0.23% Edmund Akoto-Bamfo 35,000 0.20% MSL Portfolio 29,647 0.17% Clifford Aryee 25,000 0.14% Ebenezer Magnus Boye 25,000 0.14% Anthony Minkah 20,268 0.12% John Percival Awuku Nyako 20,000 0.11% Kwakye Safo 20,000 0.11% Edem Yankson 20,000 0.11% SIC - General Business 19,231 0.11% SIC - Provident Fund 19,231 0.11% SIC – Life Business 19,231 0.11% NTHC Trading Account 19,231 0.11%
16,499,450 94.33%
58 Standard Chartered Annual Report and Accounts 2007 The adjustmentslistedabovehave beendescribedinthenotessetoutbelow: T T Other Reserves Statutory ReserveFund Income Surplus Stated Capital Shareholders’ T Deferred Medium-T
T Provisions Borrowing Interest PayableandotherLiabilities Institutions Due tootherBanksandFinancial Customer Deposits Liabilities T Intangible assets Property andequipment Investment inSubsidiaries othersecurities Medium-T
T Other Loans and Due fromotherBanksandFinancialInstitutions Short – Cash andBalanceswithBankofGhana Assets Balance Sheet and thenotesthataccompanytables. from GAStoIFRShasaf in accordancewiththepreviousaccountingframework,Ghana In preparingitsopeningIFRSbalancesheet,theBankhasadjustedamountsreportedpreviouslyinfinancialstatementsprepared preparation ofanopeningIFRSbalancesheetat1January2006(theBank'sdatetransition). 2007, thecomparativeinformationpresentedinthesefinancialstatementsforyearended31December2006and The accountingpoliciessetoutinnote3havebeenappliedpreparingthefinancialstatementsforyearended31December As statedinnote2(a),thesearetheBank'sfirstfinancialstatementspreparedaccordancewithIFRS. 42. For the Notes totheFina axation axation otal LiabilitiesandShareholders’ otal Shareholders’ otal Liabilities otal Assets Assets T EXPLANA erm GovernmentSecurities T erm Borrowing erm Investmentsin axation Advances year ended Funds TION OF Funds fected theBank'sfinancialposition,performanceandcashflowsissetoutinfollowingtables TRANSITION ncial Statements Funds 31 Decembe T O IFRS Note a,b b,d a,d e d b a c c c
12,076 514,247 64,834 18,096 33,607 13,131 1,958 514,247 48,974 16,179 4,568 70 GH¢’000 216,060 - 449,413 447,455 331,358 437,101 - - 78,973 84,550 46,376 65,000 21,740 3,656 32,122 - GAS 1 January2006 T r 2007 ransition to IFRSs GH¢’000 Effect of Accounting Standards(GAS). 7,185 5,550 6,223 1,635 1,859 1,555 304 7,185 3,848 1,555 (673) (224) 1,287 1,006 3,337 ------GH¢’000 - - 521,432 451,048 449,314 1,734 331,358 521,432 48,974 17,734 46,376 4,872 440,949 12,076 217,347 68,337 23,295 70 - 70,384 18,096 32,934 13,131 6,223 78,973 85,556 3,656 32,122 IFRSs GH¢’000 699,474 628,245 590,825 445,544 699,474 185,000 502,262 239,202 35,000 2,420 10,751 72,338 39,037 2,375 200 100 1 - 71,229 21,556 36,542 13,131 20,780 28,742 92,993 85,716 55,609 1,912 GAS An explanationofhowthetransition - 31 December2006 transition to GH¢’000 Effect of IFRSs 3,976 1 (3,357) 9,407 7,235 1,788 2,130 384 619 3,976 5,259 6,278 1,586 1,51 1 1,537 1,537 716 www - 1 ------.standardchartered.com 59 GH¢’000 630,375 591,444 445,544 190,259 508,540 239,918 71 71 35,000 3,931 72,338 43,013 7,394 100 1 80,636 21,940 38,330 13,131 7,235 2,375 20,780 32,718 92,993 87,302 55,609 IFRSs 1,912 1,01 1,01 200 - 1 1
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
(a) In accordance with IFRS, available-for-sale investments have been measured in the balance sheet at fair value. The effect of measuring available-for-sale securities at fair value is to increase short term government securities and other reserves by GH¢1,006,000 for 2005 and GH¢ 1,586,000 for 2006; whilst medium term investments in other securities increased by GH¢3,337,000 in 2005 and GH¢5,259,000 in 2006 respectively
This also had a deferred tax impact of GH¢nil in 2005 and GH¢1,711,000 in 2006 with the movements being recognised directly into equity (other reserves)
(b) Under GAS, provisions for bad debt were computed based on past due days as set out in the Central Bank's guidelines. A general provision of 1% was also required for net current contingent liabilities (Off balance sheet items). Under IFRS the impairment loss evaluation is done by calculating the present value of estimated future cash flows and comparing these against the carrying amounts of Loans and advances and a provision to cover inherent risk of losses in loan portfolios. The effect of this is an increase in net loans and advances for 2005 of GH¢1,287,000 and GH¢716,000 in 2006. These differences are also represented in reserves for both years.
(c) Under GAS loans granted to staff at concessionary rates were recorded at the amount of principal and interest outstanding. In accordance with IFRS, the fair value of loans and receivables that carries concessionary rates are estimated as the present value of all future cash receipts discounted using the prevailing market rate(s) of interest for a similar instrument with a similar credit rating. Since the favorable rate granted to employees is as a result of their future service to be provided to the bank, the discount is treated as an asset and spread over the term of the loan. This has resulted in increases of GH¢1,555,000 in both other assets and liabilities for 2005 and GH¢3,976,000 for 2006.
(d) SCB has a scheme of post retirement benefits for some retired staff. Under the GAS, the Bank recognised annual payments as an expense in the income statement. In line with IFRS principles the Bank is required to make a provision for the future payments as the cost relates to past services rendered by the retired staff. Provisions relating to prior periods are recognised in reserves. This has resulted in provisions of GH¢897,000 in 2005 and GH¢859,000 in 2006 with corresponding reductions to the income surplus account.
This also had a deferred tax impact of GH¢224,000 in 2005 and GH¢24,000 in 2006.
(e) The effect on the income statement for the year ended 31 December 2006 was to increase the previously reported profit of GH¢27,682,000 for the period by GH¢3,066,000. These adjustments resulted in an increase in the amount transferred out of profits to the statutory reserve fund by GH¢384,000.
60 Standard Chartered Annual Report and Accounts 2007
Profit aftertaxation T Profit beforetaxation Other Income Operating Profit Impairment loss lossandtaxation Operating Profitbeforeimpairment Operating Expenses Operating income Other OperatingIncome Fees andCommissionIncome Net interestIncome Interest Expense Interest Income (g) (f) For the Notes totheFina axation Reconciliation ofprofitfor2006 T Deferred Impairment Loss securities Mark tomarketonavailableforsale Contingent provision Other Reserves T Statutory reservetransfer Impairment loss Deferred Retired Staf The ef otal adjustmenttoShareholders’ otal adjustmenttoShareholders’ year ended fect oftheaboveadjustmentsonShareholders’ T T ax ax f Medicalbenefits ncial Statements 31 Decembe Note Funds Funds h,k h,i k j i r 2007 Fundsisasfollows: (15,850) (39,427) (18,349) GH¢000 (1,600) 27,682 43,532 43,530 45,130 84,557 21,695 54,308 72,657 8,554 Note GAS a,d 2 a b a b e b d Effectoftransition 1 January GH¢’000 6,223 1,287 4,343 (673) (897) 2006 593 224 - - GH¢000 to IFRS (3,044) 3,066 3,090 3,090 3,052 3,396 3,396 (314) (24) 352 38 - www 31December .standardchartered.com 61 GH¢’000 (15,874) (39,741) (18,349) GH¢000 (1,71 30,748 46,622 46,620 45,168 84,909 18,651 57,704 76,053 1,452 8,554 7,234 6,845 1,384 1,789 2,832 (384) (859) IFRS 2006 716 200 1) 2
Financial Statements and Notes to the Accounts Notes to the Financial Statements For the year ended 31 December 2007
The effects of adjustments on the income statement are described below
(h) As described in note 'a', above, under IFRS discounts on loans granted to staff on concessionary rates are treated as an asset and spread over the term of the loan. This resulted in an increase of GH¢352,000 to both interest income and operating expenses for 2006.
(i) Under GAS all arrangement fees for facilities granted were recognised in Fees and Commissions income on granting the facility. Under IFRS however arrangement fees on loans that are considered as an integral part of the effective interest calculation (EIR) are recognised as interest income over the life of the facility. This has resulted in reclassifications of Fees and Commissions income of GH¢ 3,044,000 to interest income for 2006.
(j) As described in note 'b', above unlike GAS, the impairment loss evaluation under IFRS is done by calculating the present value of estimated future cash flows and comparing these against the carrying amounts of Loans and advances as well as creating an allowance for inherent risk of loss in loan portfolio. The effect of this is a decrease in net impairment loss by GH¢3,052,000 for 2006.
(k) The reduction in the post retirement benefit provision resulted in a cost reduction of GH¢38,000 and also resulted in an increase in the deferred tax charge and consequently the current tax charge of GH¢24,000.
43. COMPARATIVE INFORMATION
The Government of Ghana re-denominated the currency with effect from 1 July 2007 by exchanging ¢10,000 (ten thousand Cedis) for GH¢1 (one Ghana cedi). Transactions from 1 January 2007 to 30 June 2007 have been converted to Ghana Cedis, as well as the comparative figures.
44. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The following sets out the bank's basis of establishing fair values of the financial instruments disclosed under note 16.
Cash and balances at central banks The fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using the prevailing money-market rates for debts with a similar credit risk and remaining maturity.
Loans and advances to customers Loans and advances are net of provisions for impairment. The estimated fair value of loans and advances represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates to determine fair value.
Investment securities Investment securities with observable market prices, including debt are fair valued using that information. Equity instruments held that do not have observable market data are presented at cost. Debt securities that do not have observable market data are fair valued by either discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity or using quoted market prices for securities with similar credit, maturity and yield characteristics.
Deposits and borrowings The estimated fair value of deposits with no stated maturity is the amount repayable on demand. The estimated fair value of fixed interest bearing deposits and other borrowings without quoted market prices is based on discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity.
Debt securities in issue subordinated liabilities and other borrowed funds
The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remaining term of maturity.
Derivatives The fair value of derivatives is based on discounted cash flows of using observable market quotes of similar credit risk and maturity.
62 Standard Chartered Annual Report and Accounts 2007 s t
Notes to the Financial Statements n u o c For the year ended 31 December 2007 c A
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s t n e m e 45. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS t a t S
l a The following pronouncements were issued at 31 December 2007 but have effective dates beginning after i c
31 December 2007. n a n i Pronouncements Issued Date Effective Date F
IFRS 8, 'operating segments' November 2006 January 2009 IAS 23, 'Borrowing Cost' March 2007 January 2007 IFRIC 13, 'Customer Loyalty Programmes' June 2007 July 2008 IFRIC 14, IAS 19 'The limit on a defined benefit asset, Minimum funding requirements and their interaction' July 2007 January 2008
www.standardchartered.com 63
Form of Proxy
I……………………………………………………………………………………………………………………………… (Block Capitals Please)
Of
……………………………………………………………………………………………………………………………….. Being Member/Members of STANDARD CHARTERED BANK GHANA LIMITED hereby appoint
…………………………………………………………………………………………………….
Of
………………………………………………………………………………………………………………………………
or failing him the duly appointed Chairman of the Meeting, as my/our Proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 11.00 am on Wednesday, 30th day of April, 2008 and at every adjournment thereof.
Please indicate with an X in the spaces below how you wish your votes to be cast.
RESOLUTION FOR AGAINST
Signed……………………………. day of ……………………… 2008 Signature …………………......
………………………...... …………………………………………………………………………………………...... CUT HERE CUT HERE
IMPORTANT: Before posting the Form of Proxy above, please tear off this part and retain it – see over. If you wish to insert in the blank space on the form the name of any person, whether a Member of the company or not, who will attend the meeting and vote on your behalf, you may do so; if you do not insert a name, the Chairman of the Meeting will vote on your behalf. If this Form is returned without any indication as to how the person appointed a proxy shall vote, he will exercise his discretion as to how he votes or whether he abstains from voting. To be valid, this Form must be completed and must reach the Registered Office of the Company not less than 48 hours before the time fixed for holding the Meeting or adjourned Meeting.
This Form is only to be completed if you will NOT attend the Meeting Form of Proxy
I……………………………………………………………………………………………………………………………… (Block Capitals Please)
Of
……………………………………………………………………………………………………………………………….. Being Member/Members of STANDARD CHARTERED BANK GHANA LIMITED hereby appoint
…………………………………………………………………………………………………….
Of
………………………………………………………………………………………………………………………………
or failing him the duly appointed Chairman of the Meeting, as my/our Proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 11.00 am on Wednesday, 30th day of April, 2008 and at every adjournment thereof.
Please indicate with an X in the spaces below how you wish your votes to be cast.
RESOLUTION FOR AGAINST
Signed……………………………. day of ……………………… 2008 Signature …………………......
………………………...... …………………………………………………………………………………………...... CUT HERE CUT HERE
IMPORTANT: Before posting the Form of Proxy above, please tear off this part and retain it – see over. If you wish to insert in the blank space on the form the name of any person, whether a Member of the company or not, who will attend the meeting and vote on your behalf, you may do so; if you do not insert a name, the Chairman of the Meeting will vote on your behalf. If this Form is returned without any indication as to how the person appointed a proxy shall vote, he will exercise his discretion as to how he votes or whether he abstains from voting. To be valid, this Form must be completed and must reach the Registered Office of the Company not less than 48 hours before the time fixed for holding the Meeting or adjourned Meeting.
This Form is only to be completed if you will NOT attend the Meeting