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Ecobank Ltd Annual Report 2017 Ghana branches

ECOBANK GH MAIN ECOBANK GH TAFO ECOBANK GH KNUST ECOBANK GH STADIUM AMAKOM 2 Morocco Lane, Off The Tafo Mampoteng Road Tafo Kumasi Commercial Area, KNUST Ground Gloor of building formerly ECOBANK SAKUMONO BRANCH Independence Avenue (233) 03220-40890 (233) 03220 63051/2/3 known as Edward Nassar Building, Sakumono Estates Junction, (233) 0302-61 04 00 [email protected] (233) 03220 63050 Kumasi Sports Stadium near the Traffic Light (233) 0302 68 08 66 PMB GPO Kumasi [email protected] (223) 03220-83841 (233)0303-413617 [email protected] PMB, GPO, Kumasi (233) 03220 83844 (233)0302-413617/8 P.O.Box AN 16746 Accra-North ECOBANK GH A AND C ECOBANK GH SUNYANI [email protected] [email protected] Shopping Mall, No. 783, Jungle Rd, Plot No.5 Block B House NO B 5/2 PMB GPO Kumasi ECOBANK GH TEMA East Legon (233) 028 9109407 / Sunyani Central ECOBANK KWAME NKRUMAH AVE. Limited Tema 0302 51 88 91 / 90 (233) 03520-25498,25495 ECOBANK GH TANOSO Ground Floor, Okofo House, Kwame Branch Town Center Plot No. (233) 0302 518890 (233) 03520-25490 First Floor of property on site with Nkrumah Avenue Adabraka TC/ MKT / A / 76. [email protected] [email protected] Petrol Filling Station, No. 6, (233)0302-244835 (233) 0303 201053 - 6 P.O. BOX 17506, East Legon PMB Ecobank Sunyani Tanoso/Dekyemso Sunyani-Kumsai (233)0302-254693 (233) 0303 20 10 57 Highway [email protected] [email protected] ECOBANK GH LEGON ECOBANK GH ELUBO (233) 03220-52043/52045/52056 P.O Box co 3207 Tema Off Nuguchi Road Near Western Region , (233) 03220-52094 ASHTOWN EAST BRANCH Legon Mosque, (233) 03122-22054/95/83 [email protected] Dr. Mensah Traffic Light, Kumasi ECOBANK GH RING ROAD (233) 0302 519835/6 (233) 03122-22567 PMB GPO Kumasi (233)03220-80552/6 Fidelity House, 20 Ring Road Central (233) 0302 519837 [email protected] (233)03220-80699 PMB 43, Cantonments, Accra [email protected] P.O.Box 48 Elubo ECOBANK GH SAFE BOND BRANCH [email protected] (233) 0302 244007/8/9 P.O Box PMB GPO, Accra Ground floor safebond car (233) 0302 23 77 45 ECOBANK GH WEIJA park Building ECOBANK KWASHIEMAN BRANCH [email protected] ECOBANK GH TAKORADI Ground Floor Aplaku Building,Old (233) 0302 200946/7 Kwashieman Road, PMB 43,Cantonments, Accra Plot no. 34 Axim Road Harbour Weija Barrier, Opp. National (233) 0302 200979 P.O.BOX 1862 ACCRA Commercial Area PMB Takoradi Investment Bank, Winneba Road. [email protected] (233)0302-7008751 ECOBANK GH TUDU (233) 03120-23870/ 21250 / 21258 (233) 0302- 853202/3 P.O.Box CO 3207 Tema [email protected] Kimbu Road, opposite Accra (233) 03120 21 9 13 (233) 0302-853204 Central MTTU [email protected] [email protected] ECOBANK GH AFLAO BRANCH ECOBANK EAST AIRPORT BRANCH (233) 0302 685587/685559 PMB Takoradi. PMB GPO, Accra Hse No. ASI-B-489 Aflao Along Dede Plaza Near Action Chapel (233) 0302 68 55 85 Aflao Border Road (233)0302-817061/2 [email protected] ECOBANK GH MKT CLE TDI ECOBANK GH ABREPO MAIN (233) 03625- 30890, 30893 (233)0302-817071 P.O Box 16746 Accra North, Ghana Adjacent Arvo Hotel Ike 'O' Plaza ,Opposite the Neoplan (233) 03625 31028 [email protected] P. O. Box TD114, Takoradi Bus Assembly Plant [email protected] ECOBANK GH SST Tel: (233)312024158, 24190 (233) 03220-83835 / 83836/ 83837 P.O.Box CO 3207 Tema ECOBANK KWABENYA BRANCH Ground Floor Silver Star Tower, Fax: (233)312024173 (233) 03220-83838 Adjacent Champion Oil near Airport City [email protected] [email protected] ECOBANK GH LABONE BRANCH Kwabenya Roundabout (233) 0302, 767404/ 778277 PMB GPO Kumasi Block No. B56 (Opposite Coffee (233)0302-409241 (233)0302 78 71 67 ECOBANK GH TARKWA Shop) Labone [email protected] [email protected] Ground floor SIC Tarkwa ECOBANK GH HAATSO (233) 0302-933509 , 768132 PMB KA 92, Kotoka International office complex Ebenezer Plaza Atomic Road haatso, (233) 0302-768133 ECOBANK OKPONGLO BRANCH Airport, Accra. (233) 03123 22022/4 North Legon Residential Area [email protected] Okponglo towards La Bawlashie (233) 03123 22 0 25 0302-520834 / 520831 PMB General Post Office Accra Traffic Light, Legon ECOBANK GH ABEKA LAPAZ [email protected] 021-520833 P.O.BOX 1862 Meacham Hse Annex, Mallam- P.O Box 100 Tarkwa [email protected] ECOBANK GH TAMALE (233)0302922401/030-7008757 Abeka Lapaz Highway PMB GPO, Accra Plot N0. 84 in Rice City Residential (233)-277-900125 (233) 0302 230061 ECOBANK GH OSU Area, Tamale, lying along North East [email protected] (233) 0302 23 17 36 Osu Oxford street adjacent ECOBANK GH WESTLANDS of Tamale - Bolgatanga [email protected] SSNIT hospital. Ground Flour of building situated at Thrunk Road ECOBANK ASHIAMAN BRANCH PMB,GPO, Accra (233) 0302 912782/4/5/6 Christain village opposite Golf (233) 03720-27933/34 Plot No. Ash/b58 Ashaiman Market (233) 0302 76 31 20 Channel, Kisseman (233) 03720-27936 (233)03027051141 ECOBANK GH MACC HILL [email protected] 0302-920849 [email protected] [email protected] Kaneshie - Mallam Highway, Lower PMB CT 443,Cantonments,Accra [email protected] Mccarthy Hill, Gbawe South PMB GPO, Accra BURMA CAMP BRANCH ECOBANK TWIFO BRANCH 233) 0302 275375 / 028 910061 / ECOBANK GH KUMASI Opposite the Burma Camp Twifo Oil Palm Plantation Estate 275375 (233) 0302- 27 5375 Harper road, Prempeh II roundabout ECOBANK TEMA MOTOR WAY Post Office Twifo Praso [email protected] Adum PMB Kumasi ROUNDABOUT (233) 0302-767414 / 767645 0332 195513 PMB, GPO, Accra (233) 03220 37804 Ground Floor of Gyau Towers on [email protected] [email protected] (233) 03220 37 3 33 Plot No.LI//5A/13A,Accra tema ECOBANK GH DANSOMAN [email protected] Motorway Light Industrial Area ECOBANK REINSURANCE HOUSE ECOBANK BENSO BRANCH Plot No. 1A, High Street, Dansoman 0303-305510/11/12/14 BRANCH Benso oil Plam Plantation(BOPP) Estate (233) 0302 326580/82 ECOBANK GH KUMASI ADUM 0303-305513 Reinsurance House 68 Kwame Estate Adum-Benso , Estates (233) 0302 326595 Oak Arcade, Opp. Agyekum Building, [email protected] Nkrumah Avenue P.O. Box 1862 Western Region [email protected] Adum – Kumasi P.O.Box CO 3207 Tema Accra 0322092185/03220 902055 PMB, GPO, Accra (233) 03220-47948,47959,47969 (233)0302-240049 [email protected] (233) 03220-45872 ECOBANK GH MADINA (233)0302-240056/9 ECOBANK GH SOUTH IND [email protected] Ground Floor and entire first floor of [email protected] ECOBANK NEW ABEKA BRANCH Old KBL Depot, near PMB GPO,Kumasi the Agrimat Building on Plot No.389, New Abeka Branch, Agbogbloshie Market North Legon residential Area ECOBANK TESANO BRANCH H/N B8/27 Flat Top - George Bush (233) 0302-670770,670745,670752 ECOBANK GH TEMA MALL (233) 0302 521876 (233)0302-237317 Highway, Akweteman (233) 0302-670738 Ground Floor Tema Shopping Mall, (233) 0302 521878 (233)0302-237316 0289559780 [email protected] Heavy Industrial Area,Area Tema [email protected] [email protected] [email protected] PMB, GPO Accra (233) 0305-305175,305182,305183 PMB GPO, Accra Tesano P.O.Box 1862 (233) 0305 - 22305174 ECOBANK NEW ABIREM ECOBANK GH ACCRA MALL [email protected] ECOBANK GH MILE 7 ACHIMOTA ECOBANK HOSPITAL ROAD BRANCH No. 52 New Abirem Main Road Ground Floor, Accra International P.O.Box CO 3207 Tema Ground Floor of house No.AT/A39, Hospital Road, Com 11 Junction (233)0263-016719 Mall,Tetteh Quarshie Interchange, New Achimota (233)0303-300973 [email protected] Accra ECOBANK GH KENYASE (233) 0302 416904/5 233) (233)0303-308460 (233) 0302-823053/4/5 Newmont Bypass Road Kenyasi 0302 413807 [email protected] ECOBANK ESIAMA BRANCH (233) 0302- 823056 Brong Ahafo Region [email protected] Opposite Sunny Corner [email protected] (233) 024 2209099 / 03220 47034 PMB GPO, Accra ECOBANK KASOA BRANCH Lodge, Esiama PMB GPO, Accra (233) 03220-47034 BAWJIASE RAOD (233) 0504753270 / 0504753267 [email protected] ECOBANK GH KOTOBABI (233)0302-862887 [email protected] ECOBANK GH SPINTEX RD P.O.Box 91,Kenyasi Nkansa-Gyane House, Opp (233)0302-862886 Hse, No.56,Baatsona Highway AMA-Ayawaso Central Sub-Metro [email protected] ECOBANK DOME ST. JOHN'S AGENCY Extension( Spintex Road),Accra. ECOBANK GH LONG ROOM District Office, Kotobabi-New Town Ground Floor, Twyford House, Accra (233) 0302-815860 Ghana Ports and Harbours Head Road, Accra, Ghana ECOBANK KANTAMANTO BRANCH Nsawam Road. St. John's. (233) 0302-815861 Office Long Room, Tema (233) 0302 250325/7 Tarzan House near Hotel De Horses (233)0307010208 [email protected] (233) 0303-202125 / 206789 (233) 0302 250330 (233)0302-678243 [email protected] P.O.Box SR112, Tema (233) 0303 20 21 25 [email protected] (233)0302-678246 [email protected] PMB GPO, Accra [email protected] ECOBANK BUDUBURAM BRANCH ECOBANK ROMAN RIDGE P.O.Box CO 3207 Tema Buduburam Branch Hse, No. C1222, Olusegun ECOBANK GH BANTAMA ECOBANK MADINA CENTRAL P.O Box 1862Accra, Accra Obasanjo Highway ECOBANK GH TEMA COMM 6 Ground and First Floors of building BRANCH (233)233-30220184 (233) 0302 241883 Vertical Plaza, Hospital Road, situated on Plot No.20,Bantama Old Road Taxi Rank Near Randy [email protected] (233) 0302 241889 Community 6, High Street Kumasi Pharmacy, Accra [email protected] (233) 0303 216605 (233) 03220 49006 (233)0302-513321/2 PMB, GPO, Accra (233) 0303 205822 [email protected] (233)0302-513321 [email protected] PMB GPO Kumasi [email protected] ECOBANK GH DARKUMAN P.O. Box Co 3207, Tema Ground Floor, Ideal House, ECOBANK SUAME BRANCH Darkuman Junction, Kaneshie - Suame - Offinso Road, Kumasi Mallam Highwa (233)03220-44414 (233) 0302 321950 233-3220-30229 (233) o302 321940 [email protected] [email protected] PMB, GPO,Accra Ecobank Annual Report 2017 1 CONTENTS Annual reports and financial statements

Notice of meeting 4 Corporate information 7 Financial highlights 16 Business review 18 Chairman’s address 32 Managing Director’s statement 37 Directors’ report 43 Corporate governance 51 Corporate social responsibility 57 Sustainability report 62 Independent auditor’s report 67

Consolidated statement of comprehensive income 72 Consolidated statement of financial position 75 Consolidated statement of changes in equity 76 Consolidated statement of cashflows 80 Notes to the financial statements 85 Shareholders’ Information 172 Summary 174 Proxy form 176 Resolution 177

2 Ecobank Annual Report 2017 2017 snapshot

More clients using A strong and The opening of our our digital channels experienced board new Head Office

World class Strong growth in banking services customer deposit

Ecobank Annual Report 2017 3 NOTICE of meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting (AGM) of Ecobank Ghana Limited will be held at Ecobank Ghana Limited, 2 Morocco Lane, Off Independence Avenue, Ministerial Area, Accra on Friday 11th day of May, 2018 at 10.30 am to transact the following business:

AGENDA

(Ordinary Business) 1. TO CONSIDER AND ADOPT the Statement of Accounts of the Company for the year ended the 31st day of December, 2017 together with the Reports of the Directors and Auditors thereon. 2. TO RATIFY the appointment of Directors. 3. TO APPOINT Auditors. 4. TO AUTHORISE the Directors to fix the remuneration of the Auditors.

(Special Business) TO CONSIDER and if thought fit, pass the following resolutions which will be proposed as Special Resolutions:

5. That the Directors be and are hereby authorized to increase the stated capital of the Company up to GHS 416,641,000 in accordance with Section 66 (1) of the Companies Act, 1963 (Act 179). 6. That the Directors be and are hereby authorized to transfer the sum of GHC190,000,000 from Income Surplus to Stated Capital pursuant to section 66 (1) of the Companies Act, 1963 (Act 179). 7. That the Directors be and are hereby authorized to undertake a Capitalization Issue in accordance with Section 74 (1) of the Companies Act, 1963 (Act 179) and section 43 (a) of the Regulations of the Company by the issuance of one (1) ordinary share to each existing shareholder for every ten (10) ordinary shares held, to be credited as fully paid for.

A MEMBER entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his/her/its stead. A proxy need not be a member of the Company. The appointment of a proxy will not prevent a member from subsequently attending and voting at the meeting in person. A proxy form is on the last page of the Annual Reports which should be completed and deposited with the Registrars at Ghana , Registrars Office, Thorpe Road, High Street, Accra not later than 3.00pm on Thursday 10th May, 2018.

DATED AT ACCRA THIS 1ST DAY OF FEBRUARY, 2018.

BY ORDER OF THE BOARD

AWURAA ABENA ASAFO-BOAKYE (MRS.) (COMPANY SECRETARY).

4 Ecobank Annual Report 2017 Ecobank Annual Report 2017 5 6 Ecobank Annual Report 2017

Terence Ronald Darko (Chairman) CORPORATE INFORMATION Daniel Sackey (Managing Director) SECRETARY Felicity Acquah (Mrs) Awuraa Abena Asafo-Boakye Martin Eson-Benjamin 2 Morocco Lane Off The Independence Ave. Samuel Ashitey Adjei Ministerial Area Rosemary Yeboah (Mrs) Accra Morgan Fianko Asiedu REGISTRARS Edward Nartey Botchway GCB Bank Limited Henry Dodoo- Amoo Thorpe Road (Appointed 28/6/17) High Street Accra Ohene Aku-Kwapong (Appointed 28/6/17) REGISTERED OFFICE Ecobank Ghana Limited John Ofori-Tenkorang 2 Morocco Lane (Appointed 19/7/17) Off The Independence Ave. Thomas Chukwuemeka Awagu Ministerial Area (Resigned 7/5/17) Accra

AUDITORS KPMG Chartered Accountants 13 Yiyiwa Drive, Abelenkpe P.O. Box GP 242 Accra

Ecobank Annual Report 2017 7 BOARD profile

Mr. Terence Ronald Darko - Board Chairman

Mr. Terence Ronald Darko is the Managing Director of Company Limited, a position he has held since 1978. He is a seasoned business executive who has served on the Board of Directors of several institutions including the Board of Trustees of the Social Security and National Insurance (SSNIT). He has been the President of the Ghana Employers Association (GEA) since September, 2010. Mr. Darko holds a Bachelor’s Degree in Business Studies from the University of London.

Mr. Daniel Nii Kwei-Kumah Sackey - Managing Director

Mr. Daniel Nii Kwei-Kumah Sackey was appointed as the Managing Director of Ecobank Ghana Limited and Regional Executive for Anglophone region with effect from 1st September 2016. He is an accomplished banker with extensive banking experience across East, West and . He has played various key roles within the Ecobank Group since he joined the Bank in 1995. He previously served as Managing Director for Ecobank and Cluster Head for the Southern Africa Development Community (SADC) zone comprising Zimbabwe, , , Mozambique and Democratic Republic of Congo. Other positions he has occupied include Managing Director of Ecobank , Deputy Group Risk Manager and Regional Risk Manager. Mr. Sackey holds a Master’s degree in Business Administration with specialization in International Banking and Finance from the University of Birmingham, U.K and a Bachelor of Science Degree in Administration (Accounting Option) from the University of Ghana.

8 Ecobank Annual Report 2017 Mrs. Felicity Acquah - Non-Executive Director

Mrs. Felicity Acquah, a Project Analyst and Development Banker by profession, recently retired as Managing Director of Eximguaranty Company (Gh) Limited. With over 35 years of banking and business experience, she served in senior positions at the Agricultural Development Bank, , Merchant Bank and Women’s World Banking. Mrs. Acquah was also a pioneer in establishing the Empretec Ghana Foundation where she worked for seven years. In 2005, the Kwame Nkrumah African Leadership Award was conferred on her by the West Africa magazine. She was also adjudged as the “Marketing Woman of the Year” in 2007 by the Chartered Institute of Marketing Ghana. Mrs. Acquah holds an Executive MBA (Finance) from GIMPA, a Bachelor of Arts Degree in Economics and Law from the Kwame Nkrumah University of Science and Technology and a Postgraduate Diploma in Project Appraisal and Management from the University of Connecticut, USA. She has served on numerous Boards in the past including Bayport and is currently a member of the Board of Camelot Limited.

Mr. Martin Eson-Benjamin - Non-Executive Director

Mr. Martin Eson- Benjamin was reappointed CEO of the Millennium Development Authority (MiDA) on 5th December, 2017. He earlier held this position from November 2006 to May 2014. Prior to this, he was the CEO of Empretec Ghana Foundation, serving concurrently as a member of the Presidential Commission on Pensions, from 2004 to 2006. This was subsequent to a very successful career, spanning over thirty years (1972-2004), in Unilever Ghana’s Lever Division, where he rose to become the Marketing Director. In the brewing industry, Mr. Eson-Benjamin served as the Chairman and first Ghanaian Managing Director of the Kumasi Brewery Limited (KBL) in 1995, a joint venture of Heineken and Unilever and then as Managing Director of the Ghana Breweries Limited (GBL), Heineken International’s subsidiary, in 1997, bowing out as Chairman of the GBL Board in 2004. He currently chairs the Enterprise Insurance Company Limited, Enterprise Properties Limited and the Advisory Board of the University of Ghana’s College of Health Sciences. He is also a member of the Board of CFAO Ghana Limited. He was named by the Chartered Institute of Marketing Ghana in 1994 as ‘Marketing Man of the Year’. In 2008, he was honoured by the State as Officer of the Order of the Volta, for his contribution to Industry. He holds a Bachelor of Science Degree in Administration from the University of Ghana.

Ecobank Annual Report 2017 9 BOARD PROFILE

Mr. Henry Dodoo-Amoo - Non-Executive Director

Mr. Henry Dodoo-Amoo is the Chief Executive Officer of IAF Management Consultancy with a focus on the areas of Governance, Risk and Compliance Management. He has held this position from 2013 to date. He is a seasoned former banker with over 30 years banking experience, having served in various capacities at the Standard Chartered Bank from 1978 to 2013. The positions he held included Corporate Banking Training Manager, West Africa; Senior Relationship Manager, Global and Multinational Corporates; Head of Sales and Credit Support; Credit Officer, Africa Regional Office; Area Credit Officer, West Africa; Senior Credit Officer in a number of African Countries, and Country Chief Risk Officer in and . Mr. Dodoo- Amoo holds an MBA from the University of Reading, Henley Business School and a certificate from Oxford University, Said Business School for executive education in leadership.

Dr. Ohene Aku Kwapong - Non-Executive Director

Dr. Ohene Aku Kwapong is a Chemical / Financial Engineer by profession. He is currently with the Songhai Group in Sarasota Florida, a corporate development company focused on strategy implementation, sales and operational excellence. Over the years, he has served in various capacities including Senior Applications Engineer at Exxon Research and Engineering, Florham Park and Associate, Structured Credit Financing at the Deutsche Bank, London. He later rose to become Vice President, Credit Trading, Structured Products at the Deutsche Bank. He also worked with Park Street Advisors, London, formerly in the capacity of Head, e-Trading Strategy & Business Development and then as the Chief Restructuring Officer. He has served on several boards such as the Nordicom A/S, Denmark and the New York City Economic Development Corporation, New York. Dr. Kwapong obtained a Bachelor of Science Degree and Master’s Degree in Chemical Engineering from Massachusetts Institute of Technology (MIT) as well as a PhD in Chemical Engineering from Columbia University, New York. He also holds an MBA in Financial Engineering from the MIT Sloan School of Management.

10 Ecobank Annual Report 2017 Dr. John Ofori-Tenkorang - Non-Executive Director

Dr. Ofori-Tenkorang is a seasoned Investment Banker and Engineer. He is currently the Director General of the Social Security and National Insurance Trust (SSNIT). Prior to his appointment, he worked in the office of the Vice President as a technical advisor. He has held various positions including serving as an instructor at MIT, Vice President with AIG Financial Products Corporation and subsequently as an Executive Director at Banque AIG. In this capacity, he was posted to South Africa, where he was responsible for AIGFP’s investment banking activities in Africa. Dr. Tenkorang attended Massachusetts Institute of Technology (MIT), where he was awarded a Bachelor of Science Degree and Master of Science Degree in Engineering, as well as a Sc,D in Electrical Engineering and Computer Science. He is a member of Tau Beta Pi, Eta Kappa Nu, and Sigma Xi Engineering Honor societies. He has also been the Chairman of the Ghanaian National Committee of United World Colleges since 2009.

Mr. Samuel Ashitey Adjei - Non-Executive Director

Mr. Samuel Ashitey Adjei is currently the Managing Director of Ecobank with additional responsibilities as Regional Executive of the Central, Eastern and Southern region of the Ecobank Group. Prior to this, he served as the Managing Director of Ecobank Ghana Ltd and Cluster Head for the Anglophone West African (AWA) region for over ten years. Mr. Adjei is a seasoned banker with over 26 years’ experience in the Ecobank Group. He holds a BSc in Statistics and an MBA (Finance) from the University of Ghana, Legon.

Mrs. Rosemary Yeboah - Non-Executive Director

Mrs. Rosemary Yeboah is an experienced Banker with over 22 years banking experience with international banks in the United Kingdom, Ghana and Southern Africa. These include Standard Chartered Bank and Credit Suisse First Boston. She has been with the Ecobank Group since 2008 and held various positions within the Group. She has served as Group Cluster Head; Corporate Banking-WAMZ region, Group Head, Multinational & Regional Corporates, with responsibility for managing the Networked Corporate Clients within the Bank, and Regional Head, Corporate Banking, EAC. Mrs. Yeboah holds a BA (Hons) in Economics from the University of Kent, Canterbury, UK, an MA, Economics, from the Université De Grenoble, and an MBA from the Laureate University of Liverpool, UK. She has also had executive education in leadership from the Centre for Creative Leadership and University of Oxford, SAID Business School, UK.

Ecobank Annual Report 2017 11 BOARD PROFILE

Mr, Morgan Fianko Asiedu - Executive Director

Mr. Morgan Fianko Asiedu has been with the Ecobank Group since February 1992. He was appointed Executive Director of Ecobank Ghana (EGH) with oversight responsibility for the Legal, Human Resource and Compliance Departments in September 2012. Prior to this appointment, he was the Group General Counsel and Company Secretary of Ecobank Transnational Incorporated (ETI), the parent company of the Ecobank Group. In this role Mr. Asiedu was Chief Legal Counsel to both the Board and Management of ETI. Before assuming the position of Group General Counsel in July 2010, he was Company Secretary and Head of the Legal Department for Ecobank Gh. In this role, Mr. Asiedu was part of the Management team that transformed EGH from a two branch Merchant bank into a Universal Bank with several branches across the country. Other positions held at EGH include Head of Administration and Head, Legal & Credit Administration Department. An alumnus of Mfantsipim and Achimota Schools, Mr. Asiedu qualified as a lawyer in 1989 and is a member of both the Ghana Bar Association and the International Bar Association. He holds Bachelor of Arts Degree (Law and Sociology) and Executive MBA both from the University of Ghana.

Mr. Edward Nartey Botchway - Executive Director

Mr. Edward Nartey Botchway joined Ecobank Ghana in November 2004. He was appointed Executive Director of Ecobank Ghana (EGH) Finance on 1st December 2016. He is the Regional Chief Finance Officer for Anglophone West Africa comprising Ghana, , , and Gambia. He also holds the position of Regional Chief Finance Officer for Central, Eastern, and Southern Africa. In 2011, he was transfered to Lome, where he held the position of Group budget and planning manager - ETI. Outside of Ecobank Ghana, Edward has held the positions of Executive Director Finance of GCB Bank, Finance Manager Citi Savings and and Head of Group Loans Citi Savings and Loans. Edward has over 20 years working experience in the banking sector. He has also had executive education in strategy and leadership from Columbia Business School, New York. Mr. Botchway is a Fellow of Association of Certified Chartered Accountants (ACCA) – United Kingdom, a member of Institute of Chartered Accountants (ICA) Ghana. He hold a Masters Degree in Applied Business Research from the Swiss Business School – Zurich Switzerland, a Postgraduate degree in Contemporary Management from the Nobel Business School, Accra and a BA Economics from the University of Ghana.

12 Ecobank Annual Report 2017 Awuraa Abena Asafo-Boakye - Company Secretary

Awuraa Abena Asafo-Boakye is the Company Secretary and Head of the Legal Department of Ecobank Ghana Limited. She also has additional responsibility for the Anglophone West Africa (AWA) region comprising Ghana, Guinea, Liberia, Sierra Leone and Gambia. She served previously as the Head of Human Resources of the Bank with oversight responsibility for the AWA region. Prior to joining Ecobank, she worked as a Legal Practitioner at Sena Chambers, a leading law firm in Ghana. An accomplished lawyer, Awuraa Abena was recognized in 2015 by Legal 500 as one of the top 100 in-house counsel in Africa. She is a member of the Ghana Bar Association as well as the International Bar Association. She serves on several Boards including Ecobank Capital Advisors Limited, Ecobank Venture Capital Fund 1 and the Board of Trustees for the Ecobank Ghana Tiers 2 & 3 Provident Fund Schemes. Awuraa Abena holds an LLB degree as well as an Executive MBA (finance) degree from the University of Ghana, Legon. She has also obtained executive education from the Harvard Business School, Boston MA and Columbia Business School, New York NY.

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Ecobank Annual Report 2017 13 MANAGEMENT TEAM

Daniel Nii Kwei- Morgan Asiedu Edward Botchway Kumah Sackey Executive Director, Legal, Executive Director, Finance Managing Director Compliance & Human Resource

Samuel Hiram Yaro Awuraa Abena Asafo-Boakye Tara Squire Head, Operations & Company Secretary & Head, Legal Head, Consumer Banking Information Technology

14 Ecobank Annual Report 2017 MANAGEMENT TEAM

Daphne Oppong Patrick Bleboo Alfred Sakyi Head, Human Resource Head, Internal Control Head. Commercial Banking

Joana Mensah Henry Ampong Albert Bartlett-Mingle Head, Risk Managemnt Head, Corporate Banking Head, Internal Audit

Rita Tsegah John Nyaaba Carl Asem Head, Venture Capital Head Treasury Business Manager

Ecobank Annual Report 2017 15 FINANCIAL highlights

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 31 December

Total assets 9,098,140 8,056,870 9,098,692 8,025,510

Loans and advances to customers (net) 2,685,468 3,480,544 2,685,759 3,480,471

Customer deposits 6,541,648 5,416,916 6,447,818 5,316,625

Shareholders’ equity 1,036,927 964,076 1,026,798 952,208

For the year ended 31 December

Revenue 1,116,846 1,206,657 1,115,831 1,201,168

Profit before tax 358,383 462,676 357,760 457,186

Profit after tax 253,645 327,896 255,384 325,594

Dividend per share (Ghana pesewas) - 82 - 82

Earnings per share (Ghana pesewas):

- Basic 87 112 87 111

- Diluted 87 112 87 111

Return on average equity (%) 25 35 26 36

Return on average assets (%) 3.0 4.4 3.0 4.5

At 31 December

Number of staff 1,583 1,617 1,575 1,611

Number of branches & agencies 67 77 67 77

16 Ecobank Annual Report 2017 Ecobank Annual Report 2017 17 BUSINESS REVIEW

Corporate & Investment Banking

Corporate and Investment Banking (CIB) is made up Corporate Bank, Transaction Banking and Treasury.

With local experience and international reach, we offer in-depth banking expertise and a range of innovative banking products and solutions to our Corporate Clients within and outside Ghana. Our services range from everyday banking to specialist services including Structured Trade Finance, Lending, Cash management and Foreign Exchange services.

Our experienced team provides tailored services built on a relationship based approach - understanding customer needs both now and in the future. Corporate bank operates a client-centric approach centered on the five main business segments below:

• Global Corporates primarily focuses on Global Conglomerates and Multinational Corporations • Regional Corporates deal with businesses with headquarters and operations in Middle Africa whose operations are regionally coordinated • Public Corporates focuses on Parastatal Companies and major state Institutions • Financial Institutions and International Organization provides world class banking solutions to Multinational & Bilateral Institutions, Embassies, NGOs etc • Local Corporates provides tailored financial solutions to local corporates with annual turnover exceeding $20m

Our Products

Our products are broadly classified into four main categories - Loans & Liquidity, Cash management, Trade and Fixed Income, Currencies & Commodities (FICC).

• Loans & Liquidity - We support the growth of our customers’ business with customized medium to long term lending opportunities

• Cash Management - We are experts in providing Collections, Payments and Liquidity Management solutions to our customers. We design solutions to fit the needs of our customers’ business operations and focus on achieving process visibility, speed, control and cost reduction in treasury management. We do these by leveraging varied digital platforms including Ecobank Omni, Internet Banking, BankCollect, Swift for Corporates, Ecobank Mobile App and Ecobank Scan & Pay. We have the capability to seamlessly integrate our banking systems to customers operating platforms to ensure all banking activities are initiated and completed from the comfort of our customers’ offices and even on the go

18 Ecobank Annual Report 2017 • Trade Finance - Our team of Trade experts is specialized in providing technical support in structuring complex Trade deals, advisory services and originating bridge financing. Our electronic Trade platforms; e-Trade, Trade flux and Finance Supply Chain provide speed-to-market support to our clients. Leveraging our wide footprints in the sub-region and Africa, we provide unparalleled advantage in Regional trade business for both traditional trade products (ie. Letters of Credit, Bills for Collections, and Guarantees) as well as non-traditional and innovative solutions

• Fixed Income - Currencies & Commodities (FICC)- Our Treasury provides integrated solutions tailored to meet the foreign currency needs of our corporate clients in Africa and beyond. The team is specialized in offering timely conversions and liquidity management solutions

Custody Business

Our Custody business is well resourced to provide an innovative range of security services regarding both domestic and cross border processing of trades in securities and safekeeping. This service is available to both local and foreign institutional clients, and high net worth individuals who wish to have a uniquely designed transaction solution for their financial assets. The wide range of services provided by custody services includes:

• Processing of Trade instructions • Asset safekeeping • Settlements • Proxy voting • Income Payment collection • Cash Management Services • Valuation and reporting of financial assets • Reconciliation of financial assets • Implementation of corporate actions instructions • Tax claim and exemption facilitation

The unit provides a core capability that allows the various Business segments to deepen banking relationships with their clients, while also generating sustainable income and liquidity in a capital efficient manner.

Ecobank Annual Report 2017 19 BUSINESS REVIEW

Corporate & Investment Banking % Performance in 2017 31 REVENUE Despite a challenging economic environment, Corporate and Investment Bank (CIB) delivered a credible performance in 2017. Our business model remained strong, providing a holistic solution for our local, regional and international clients across our footprint. We supported a number of clients, especially in Contribution from the Telecom Industry, Oil & Gas, Energy Sector, non-interest income Manufacturing and Trade & Commerce to expand their businesses. We aimed to diversify our revenue sources by focusing Lower volume of assets and downward trend in on superior service and customer experience to drive interest rates dampened growth from our net interest transactional income. To achieve this vision, greater income. This notwithstanding, our Corporate Bank emphasis was placed on accelerating our digital team working with our Investment Banking wing penetration and onboarding rate on our state-of-the- successfully closed a GHS 510m syndication facility art payment platform, OMNI to support trade and cash for Scancom Ltd to support their business expansion management businesses. The number of onboarding program. Additionally, our legacy exposure to the and transactions on the OMNI platform registered energy sector was successfully restructured against growth of 27% and a threefold increase year-on-year. bonds and operating cashflows from affected clients. Similarly, revenue from cash management and trade fees grew by 7% and 54% respectively, leading to 32% Our Fixed Income, Currencies and Commodities (FICC) revenue contribution from non-interest income (30% business provides clients with innovative foreign in 2016). exchange and fixed income solutions, leveraging the bank’s balance sheet to manage liquidity. In 2017, Our Cash management solutions provide the requisite we remained focused on Sales, Trading and Balance digital tools to handle collections and payments sheet management activities. Income from net trading efficiently in a seamless processing capacity. grew by 4% year-on-year driven by higher volumes and Complementary to Omni are our host-to-host and positive spreads. SWIFT integrated solutions which are targeted at high-volume customers, who process transactions from shared service centers. In 2017, our innovative solutions gained industry recognition when we were awarded the 2016 Best Bank in Cash management and Trade by Instinct Wave magazine.

20 Ecobank Annual Report 2017 2017 Highlights

Revenue 629 612 • Revenue in 2017 was largely impacted by lower 583 asset volumes and margin compression • The above notwithstanding, we were able to diversify our revenue sources driven by strong growth in non-interest income from fees and commission as well as trading activities 2015 2016 2017

Profit Before Tax 273 • Profit before tax dipped by GHS 51m largely on 253 the back of accelerated provisioning for legacy exposures within our Energy sector portfolio 202 • impairment loss of GHS 169m recorded during the year was aimed at cleaning the tail risk of impaired energy sector exposures • We have successfully restructured our legacy Energy sector exposure backed by bonds and anticipate 2015 2016 2017 profit rebound going forward

Loans 3,096 2,657 • Our loan book dipped due to reclassification of 2,629 some energy sector exposure from loans to bonds under the ESLA vehicle. With the resultant impact on our interest income, the business focused more on driving trade and cash management initiatives to diversify its revenue sources 2015 2016 2017

Deposits 2,446 2,123 • Our deposit volume remained high for most parts 1,924 of the year albeit a marginal reduction at year end

2015 2016 2017

* Amounts in GHS’ million

Ecobank Annual Report 2017 21 Dedicated to serving the non-governmental public sector

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22 Ecobank Annual Report 2017

7604_COM_GHA_Main-Launch_Ad_A4_Multi_Grow-faster_Magazine_EN_v4.indd 5 22/03/2018 10:23 Ecobank Annual Report 2017 23 BUSINESS REVIEW

Commercial Banking

Commercial Banking (CMB) focuses on nurturing The results of our strategic focus are motivating. At a thriving and growing Small and Medium-sized the end of 2017, our profit before tax contribution Enterprise (‘SME’), Local Corporate and Non- to Ecobank Ghana increased from 13.5% in 2016 to governmental Public Sector clients with a suite of 16.4%. There has also been significant growth in the specialized services and expertise. Our services number of our customers transacting through our go beyond traditional bank lending to include digital channels access to our pan-African footprint and digital banking platforms, trade finance, liquidity and cash Looking ahead, we are confident that the solid management, foreign exchange and value chain foundations required to place Ecobank Ghana’s finance. Commercial Banking business as a strategic partner for business development is on course. We The driving force behind this emphasis on are particularly excited about the Lead Ecobank the CMB target customers is in furtherance of Acceleration Project (LEAP) which is a program Ecobank’s mission of contributing to the economic aimed at making Ecobank the preferred bank for development of the African continent and the commercial banking clients across Middle Africa. recognition of the pivotal role of small and local We remain committed to providing our clients with businesses in the development of Africa. tailored and responsive customer service, as part of our vision of empowering Ghana’s entrepreneurs We have identified three areas of strategic focus to create positive socioeconomic change across our that will enable us to achieve our medium-term country. objectives of building local businesses in Ghana:

• Relationship management is at the heart of our business and we recognise the need to upskill our staff to enable them play effectively in client advisory roles

• Driving wider adoption and utilization of digital channels: We offer a range of online and mobile tools including Scan+Pay, Retail Internet Banking, Ecobank Mobile and Omni which are designed to address the varying needs of our diverse customer base

• Customer value creation: We seek to differentiate ourselves and build lasting relationships by providing our customers with solutions to their business challenges while anticipating their changing needs

24 Ecobank Annual Report 2017 SME club activities

1. SME Club Digital Forum

May 4, 2017 | African Regent Hotel, Accra

The Digital Forum is an Ecobank SME Club initiative which hosted a series of interactive educational seminars with real world examples and technology innovations provided by Ecobank to drive convenience, productivity and efficiency for our customers.

The Forum provided: • An Interactive discussion on how technology is transforming businesses to become key players • Demonstrations and product displays on Ecobank digital products to scale up and transform the banking operations of businesses

2. African SME Summit

22-23rd November, 2017 | Alisa Hotel, Accra

The SME Club as part of its capacity building agenda sponsored about 50 SME Club members to the African SME Summit organized by the African SME Organization aimed at helping businesses to scale up using digital technology to have access to markets globally.

The 2-day Forum was largely patronized with speakers including the Minister of Finance, Head of SME Banking-Ecobank Ghana Limited and Minister for Business Development, who took the participants through several discussions bordering on Corporate Governance, Access to Finance, Access to Markets and how small businesses can leverage on the digital economy to scale up their business.

Ecobank Annual Report 2017 25 BUSINESS REVIEW COMMERCIAL BANKING (CONT’D)

Revenue 228 212 • Headline revenue contracted by 7% year on year to GHc212 million 161 • This was due to downward trends in funded revenues on account of declining margins on assets. There were, however, strong growths in FICC and Trade revenues • Revenue is expected to rebound in 2018 on account of growth in volume of assets 2015 2016 2017

Profit Before Tax 86

62 • Profit before tax witnessed a marginal reduction of 5% compared to 59 2016 to close 2017 at GHc59 million • Substantial reduction in impairment partly cushioned PBT from the full impact of the decline in 2017 revenue • Contribution to total bank PBT increased from 13.5% in the prior year to 16.4% 2015 2016 2017

Net Impairment 25 • Net impairment declined by 88% to GHc3.4 million • Enhanced new asset selection and monitoring mechanism resulted in lower impairment charges 5 3 • Intensive collection mitigated gross provisions, resulting in a lower than 2016 net impairment • CMB’s net impairment as a proportion of total bank reduced to 2.0% compared to 13.8% the previous year 2015 2016 2017

Deposit 1,323 1,307

• A marginal contraction of 1% brought year end deposit to GHc1.3billion 932 • The drop was occasioned by a reduction in term deposits as the Unit strategically concentrated on funding its assets from low costs deposits since this presents a more potent competitive advantage • Consequently, non-interest bearing deposits constituted 77% of total deposits of CMB 2015 2016 2017

Loans 387 306 302 • The Unit’s asset size expanded by 28% to GHc387 million • This was in line with the growth trajectory of the CMB unit • Overall, the Business was a net supplier of deposit with a loan to deposit ratio of 29.6%

2015 2016 2017

* Amounts in GHS’ million

26 Ecobank Annual Report 2017 Ecobank Annual Report 2017 27 CONSUMER BANKING

OUR DIGITAL JOURNEY

The all-new Ecobank Mobile App

Since its launch in November 2016, the evolutionary Ecobank Mobile App has 400,000 users in Ghana alone. Across Africa, the Ecobank group is focused on financially empowering 100 million new customers by 2020 with the ultimate result of enabling more Africans gain access to financial tools using the Ecobank Mobile App.

The Ecobank Mobile App is a unique mobile banking application which gives customers fast, simple, convenient, secure and free access to their bank accounts whenever, wherever. Unlike most mobile banking applications available on the market, the Ecobank mobile app enables phone users to simply download and activate the app using existing Ecobank account details or open a new instant online Ecobank Xpress Account. The novelty the app offers is the ability of non-customers to instantly open a digital account known as the Ecobank Xpress Account, on their mobile phone in the shortest possible time.

28 Ecobank Annual Report 2017 The agnostic nature of the App allows customers of other banks to also access the app using their Visa, MasterCard or Union Pay International card details. What is more, Ecobank customers in the Diaspora (resident outside the 34 countries) can also onboard with their international mobile phone numbers and Visa, MasterCard or Union Pay International card details.

The Xpress Cash function of the app also enables the app user to send money to anyone without bank account by generating an e-token (8 digit code) which can be used by the beneficiary to withdraw the cash from any Ecobank ATM nationwide without a card.

This is done using the Card-less function on Ecobank ATMs.

Once activated, users of the app can begin transacting business right-away on this unique platform without visiting any branch of the bank. Apart from opening the instant account, users of the Ecobank Mobile App can also pay for goods and services from a variety of stores and do online shopping using their mobile phone. One can also pay bills (General Payments, utilities, travel, donations, government collections, Post-Paid Bills, School fees), top-up airtime , send money to any bank account in Ghana and across 34 countries in Africa, move money between bank accounts and mobile money wallets, amongst others.

The Ecobank mobile app can easily be downloaded from App Store or Google Play Store. Once downloaded, Ecobank customers can activate this app, using their account details on the Ecobank Internet Banking platform or (ATM Card) details. The app comes in four languages of; English, French, Spanish and Portuguese.

Users of feature phones (non-smart phones) can also perform these transactions by dialing *770# and following the appropriate steps

The Ecobank SCAN + PAY (mVISA and MasterPass)

The Ecobank SCAN + PAY is a new electronic payment option that lets customers pay for goods and services from their mobile phones. All that is required is for consumers to download, activate, scan (the QR code) and make payments online and at merchant point of sale.

The Ecobank SCAN + PAY delivers enormous benefits for both consumers and merchants of all kinds. It is fast, secure, convenient, cost-effective, and provides a viable alternative to cash transactions. It is simply a convenient new way of making safer payments and is available at retail shops, restaurants, market stalls, mechanic shops, corner shops, food vendors, online shopping and more. Besides these, transportation service providers, including; inter and intra-city bus service operators, shuttle services, taxi drivers and trotro drivers can all register for this service from Ecobank. The Ecobank SCAN + PAY is simply a viable way of extending e-payment services to merchants that are currently excluded from existing payment solutions available in the market.

Ecobank Annual Report 2017 29 The Ecobank Tbill4All

Ecobank is collaborating with MTN to market the Ecobank Tbill4All to all phone users in Ghana, who are willing and able to buy Government Treasury Bills from as low as GHS5. Phone users only need to dial *770# to register and to also buy and manage Treasury Bills. Registered MTN Mobile Money users, can register for the Ecobank Tbill4All by dialling *770# and following the prompts.

The registration is a one-time process only. Once registered for the service, individuals can immediately purchase the Government of Ghana 91 and 182 day bills, using the simple steps above to invest. Clients purchase and manage several bills as may be convenient to them.

Clients can rediscount any of their investments anytime on their own. There is an embedded interest calculator that provides customers with indicative earnings, based on actual previous interest rates. Clients are also prompted of rediscount proceeds before confirming their rediscount request. What is interesting about this product is that individuals can add onto or rollover investments at maturity without visiting the bank.

In conclusion, our digital journey cuts across the banked and the unbanked thus providing a bridge for financial inclusion. Our vision is to make it possible for every Ghanaian to have a bank accounts and be part of the financial services ecosystem.

30 Ecobank Annual Report 2017 CONSUMER BANKING

Revenue 350 293 • Consumer banking made revenue of GHS 293m 279 which was 16% below prior year • This was mainly due to declining lending rates and a contraction of the volumes of the remittance business as well as the rising cost of savings deposits

2015 2016 2017

Profit Before Tax 148 99 97 • The business closed the year with Profits before tax of GHS 97m. Compared to the prior year, profit dipped by 34% • This was due to the shortfalls in revenues as cost remained largely unchanged

2015 2016 2017

Deposit 2,019 1,723 • Customer Deposits grew by 17% to GHS 2,019m compared to 2016’s deposit of GHS 1,723m 1,517 • The growth was largely driven by growth in our savings and current deposits, anchored on our digital deposit mobilization drive

2015 2016 2017

LOANS 422 276 • Customer loans at the end of the year was GHS 318 276m, representing a 35% decline compared to 2016 actual of GHS 422m

2015 2016 2017

* Amounts in GHS’ million

Ecobank Annual Report 2017 31 a Word from our chairman Fellow Shareholders

Once again, I have the pleasure of welcoming you to our Annual General Meeting, to review our financial performance for the year ended 2017. Last year was a challenging one for the banking industry due to the difficult macro-economic environment, characterized by declining yields on financial instruments, high levels of non-performing loans and increased competition for deposits as a result of the implementation of the Treasury Single Account policy by the Government. The above notwithstanding, your Bank has been able to weather the storm and remains profitable.

The Government has taken the first steps to the resolution of the energy sector debts situation through engagement of key stakeholders and the issuance of two long-term bonds under the Energy Sector Levy Act (ESLA). The has also strengthened its supervisory, regulatory and compliance stance.

More importantly, your Board has worked closely with executive management to tackle these challenges head on. We remain focused on forging ahead with our digital agenda and the business of creating value for our customers and you our shareholders, despite the vagaries of the economic cycle or challenging economic environment.

2017 PERFORMANCE

The macroeconomic environment affected our and Boards of directors for public corporations. financial results in various ways. Interest rates Finally the delayed resolution of the energy sector continued their downward trend on the back of debts created asset quality challenges for the banking lower Government borrowings, impact of the sector. The Bank responded to these developments by implementation of the Treasury Single Account and tightening of credit underwriting standards and taking the refinancing of maturing short term debt for longer a higher than expected charge of GHS174 million for tenors and at more favourable rates. The first half loan impairments. of the year also witnessed a slowdown in economic The declining interest rate environment was evidenced activities as the new Government navigated the by the 330 basis points drop in the benchmark 91- day process of appointments of cabinet ministers, heads Treasury Bill to 13.01% at the end of 2017 while the

32 Ecobank Annual Report 2017 Terence Darko Board Chairman

Central Bank reduced the policy rate by 550 basis points over the same period. As a result, our total revenues fell by 7% to GHS 1.1 billion on the back of relatively flat Net Interest Income, which constitutes 67% of our total earnings. This was partially offset by stronger performance of Net Fee and Commission income driven by resilient trade and cash management revenues.

Our investment in technology, people and processes have enabled us to extend the reach of our service delivery points from the branches to the various electronic channels. Our Deposits grew by 21%, significantly higher than the average industry growth rate of 12.6 %, a reflection of the improved value proposition and customer care. These positive developments also reflected in the 26% growth in Net Fee and Commissions income to GHS199 million in 2017.

Ecobank generated earnings per share (EPS) of GHS0.87, a decline of 22% compared with the GHS1.12 reported in 2016. Return on total shareholders’ equity (ROE) was 25% in 2017 versus 35% in the prior year. Profit attributable to shareholders amounted to GHS254 million, compared to GHS328 million in 2016. The lower earnings figures

Ecobank Annual Report 2017 33 is attributable to the decline in revenues caused primarily by the one-off gains from derecongnition of financial assets measured at amortised costs in 2016 which was not present in 2017. As you will recall from our last AGM, these gains were energy sector related.

The cost base remained fairly stable, growing by just 3%, this is significantly lower than most of our peers who reported cost growths in the ranges of 15% to 20%. However the decline in revenues resulted in a cost-to-income ratio (CIR) of 52.4%. Our balance sheet is healthy, with a total capital adequacy ratio (CAR) of 13.76%, which is above the regulatory threshold of 10%.

Going forward, we expect a boost in business confidence as the declining interest rate regime translates into lower cost of production and increased productivity for our clients. The reduced cost of doing business should in turn lead to enhanced business opportunities for both our clients and the bank. We are confident that further gains can be made by way of increased efficiencies as your management team continues to work hard to diversify and improve its revenue streams.

DIVIDEND

The Board recognises the importance of dividends to our shareholders and is committed to paying the maximum sustainable dividends. However, as will be further explained in the Managing Director’s statement, we propose to capitalise our income surplus into stated capital to enable us to meet the new minimum capital requirements for banks of GHS400 million, set by the Bank of Ghana. As a result we are unable to pay cash dividend for the year 2017. We will however be issuing bonus shares of one share for every ten held, which in addition to the capital gains made on our stocks of 53% as at February 2018, is a big boost to our shareholders.

The Board, working closely with the executive management team, is confident that the strategy currently being implemented will underpin the long-term growth of your Company and should lead to the resumption of cash dividend payment in the near future.

BOARD CHANGES

Mr. Thomas Awagu resigned from the board in May 2017 after 6 years of invaluable service to Ecobank Ghana. We thank him for his contribution.

We also appointed Mr. Henry Dodoo-Amoo, Dr. Ohene Aku Kwapong and Dr. John Ofori-Tenkorang as non- executive directors during the year. These gentlemen have combined expertise that embrace risk management, strategy implementation, sales, governance, investment banking and more. (Please refer to their detailed profiles in the annual report). I believe that their extensive experience and business acumen will be vital to the next phase of our journey as the premier bank in Ghana.

SOCIAL RESPONSIBILITY Ladies and gentlemen, at Ecobank Ghana, we have always aimed at conducting business in a manner that creates value for our customers, shareholders, employees and the communities that we serve. Whilst we understand that the needs of shareholders are of primary importance, this has to be balanced with our corporate social responsibility (CSR).

During the year we supported various initiatives on maternal health and education through our flagship CSR activity, dubbed “Ecobank Day”. On that day, we donated a wide range of medical equipment to health facilities

34 Ecobank Annual Report 2017 A WORD FROM OUR CHAIRMAN

across the country that play a key role in the delivery of healthcare to Ghana’s women. Amongst the hospitals that received donations were the Korle Bu Teaching Hospital’s Maternity Ward in Accra, the Maternal and Child Health unit at the Tema Polyclinic, Kumasi South Hospital, Kwesimintsim Hospital in Takoradi and Savelugu Hospital. Our staff also visited mothers on admission at the various hospitals and donated items to them.

In the area of education, we donated 15 serviced computers for an ICT lab, as well as career development books, to Three Town Secondary School in Aflao. In addition, 25 bright but underprivileged students, selected from various secondary institutions across the country were awarded scholarships.

Our annual blood donation exercise carried out across our key locations in Accra, Tema, Kumasi, Takoradi and Tamale, yielded over 500 pints of blood for the National Blood Bank.

Other organisations that benefitted from our CSR activities in 2017 included:

• The National Diabetes Association: to which we presented over 600 Glucose test strips • The Children’s Heart Foundation: to which we contributed the full cost of surgery for two children with ‘Hole in Heart’ conditions. Over the years Ecobank has sponsored this procedure for 17 children through the Children’s Heart Foundation. • Ghana Medical Students: Ecobank supported 30 medical students by subsidising the cost of their exchange programmes to various countries as part of their curriculum for completing medical school. • The National Malaria Control Programme: We presented over 2,000 treated mosquito nets to the National Malaria Control programme to support the national fight against malaria • Village of Hope Orphanage: Ecobank also sponsored the school fees of 15 orphans at the Village of Hope orphanage

AWARDS

Dear shareholders, I am delighted to inform you that Ecobank Ghana was adjudged the Best Bank in Ghana by three leading award bodies: Corporate Initiative Ghana (CIG), the Chartered Institute of Marketing Ghana (CIMG), and Euromoney. Accordingly, your bank, Ecobank Ghana, for the second time, stands as the only Ghanaian bank to earn all three prestigious awards in a single year. We are extremely proud of this achievement. CIG also awarded us the ‘Best Bank in Financial Performance’ and ‘Corporate Social Responsibility’.

My congratulations goes to the management and staff for all their hard work and commitment.

CONCLUSION

Ladies and gentlemen, you will agree with me that the Ecobank brand remains strong. We are determined to continue projecting our brand values and shaping the banking landscape in Ghana. Our staff and management are galvanised around the singular goal of providing accessible and convenient banking services to our customers, whilst focusing on reinstating cash dividend payments to our shareholders.

The Board is committed to establishing the highest standards of corporate governance that enables effective decision-making, with clear responsibilities.

I appreciate the support of the Board during the year and I am grateful for the continued confidence of all of our stakeholders. Most importantly, I thank God for seeing us through a challenging, but successful, year.

Thank you and may the Good Lord bless us all

Ecobank Annual Report 2017 35 Dan Sackey Managing Director

36 Ecobank Annual Report 2017 MANAGING DIRECTOR’S ADDRESS

Dear Shareholders,

It is my great pleasure to again welcome you all to our Annual General Meeting and to report on your Bank’s progress in 2017, which must be viewed against the backdrop of a challenging economic climate that has negatively impacted asset quality throughout the banking industry. Ghana is in the final year of its three-year US$918 million IMF credit facility program. Under the program, the government has so far implemented various initiatives aimed at fiscal consolidation. Key among them include the introduction of the Treasury Single Account (TSA), restructuring of debt towards cheaper external borrowing and longer maturity profile which resulted in lower interest rates during the year. Similarly, structural moves towards more efficient revenue collection via the National identification and address systems, and the National Single Window platform is expected to improve revenue generation in the long term.

The Bank of Ghana, our regulator, has issued new directives concerning minimum capital requirement and corporate governance, with the aim of strengthening the industry, but which also have the potential to dampen future returns on investment at least in the short term. The delayed resolution of the Bulk Oil Distribution Companies (‘BDCs’) loan book continues to have an adverse impact on asset quality across the sector. Consequently, the industry’s average gross non -performing loan (NPL) ratio, which amounted to 17.3% at year-end 2016, escalated further to 21.6% in 2017.

Overall, the banking sector continues to be liquid, profitable and solvent although asset quality remains a concern.

Ecobank Annual Report 2017 37 UPDATE ON OUR DIGITAL STRATEGY

I updated you last year on our digital strategy and the initiatives we were implementing in that regard. I am pleased to inform you that barely a year after the launch of our digitization drive and adoption of mobile technologies, Ecobank has become Ghana’s leading bank in the % digital space. 55 GHS 612m Our new range of digital offerings including the Ecobank Mobile App, Scan+Pay, Tbill4All, Xpress Account, ABMT and Rapid transfer Mobile have all enjoyed enormous patronage across the market. Not relenting on our oars, we have subsequently upgraded our Mobile App with additional functionalities, including cardless withdrawals from our ATMs, Corporate & Investment acquisition of other bank cards, withdrawals from agents, attachment Bank Contribution of cards, and person-to-person mobile transfers from VISA cards (mVisa P2P), Additionally, we extended the scope of our QR product to accept both Master and Visa cards, and rebranded it as Ecobank ‘Scan and Pay’.

Today, we have over 500,000 subscribers on our mobile app. Our flagship corporate payment platform; OMNI has been well received by our corporate clients and currently boasts of an estimated annual transaction value of GHS12.3 billion in 2017 % 26 We have also broadened our bancassurance product suite with the GHS 292m addition of non-life insurance products working with our partners in the bancassurance space.

I am delighted at the progress we have made so far and I am confident that as we consolidate the gains from these numerous initiatives we will Consumer continue to return value to our shareholders Contribution

FINANCIAL REVIEW

In 2017, despite the challenging environment, your bank recorded total revenue of GHS1.1 billion, keeping our market leadership in revenue terms, although this was lower by 7% compared to 2016. The slight drop in revenue was as a result of the declining interest rate environment % driven in turn by the successful implementation of the TSA impacting our net interest income. Furthermore, the one-off gains from de-recognition 19 GHS 212m of financial assets measured at amortised costs in 2016 which was not present in 2017 impacted our revenue performance. Accelerated recognition of impairment charges of GHS174 million related mainly to legacy loans in the oil and gas sector due to continuing delays in the resolution of the legacy BDC debt. Commercial Bank Contribution The above factors resulted in profit before tax of GHS358 million compared with GHS463 million for the previous year. This translate into

38 Ecobank Annual Report 2017 MANAGING DIRECTOR’S ADDRESS

earnings per share of GHS 0.87 compared to GHS SHAREHOLDER RETURNS – 2017 1.12 in the prior year. Consequently, the return RECAPITALISATION OF RETAINED generated on average total equity, fell to 25% EARNINGS DUE TO TIGHTENING OF from 35% in 2016. REGULATORY FRAMEWORK

Despite the adverse impact on topline performance, Dear Shareholders, as you are all aware, the we maintained our market leadership in customer Bank of Ghana has issued a directive for all banks deposits with a growth of 21%. This is a testament in the country to increase their stated capital of the confidence reposed in the Ecobank brand to a minimum of GHS400 million by the end of by our customers, and the success of our digital 2018, from the current GHS120 million. Ecobank and cash management value proposition. Ghana currently has a stated capital of GHS226 million and total shareholder funds of GHS1.0 The issuance of bonds to cover loans extended to billion. To enable us meet this new requirement, state owned entities in the energy sector resulted in without raising new capital, we will need to the reclassification of loans to the tune of GHS679 recapitalise our retained earnings, out of which million. This together with the tightening of our dividends are normally paid, as stated capital. As credit screening process in the face of challenges a result, we will not be paying cash dividend to in the oil and gas portfolio resulted in decline in our shareholders for the 2017 financial year. net customer loans by 23% from GHS3.48 billion in 2016 to GHS2.68 billion in 2017. However, I am pleased to inform you that we will be issuing bonus shares of one share for In terms of business unit contributions to total every ten held (1:10) on all existing shares. This revenues, Corporate & Investment banking is in addition to the excellent performance of our accounted for 55%, with Consumer banking, and shares on the , which as Commercial banking contributing 26% and 19% at February 2018 had made returns of 53% and respectively. outperformed the GSE Composite Index (29%) and the GSE Financial Stock Index (35%) over the We made significant progress in cost reduction same period. and improved operational efficiency through headcount reductions, network rationalisation, IFRS 9 – FINANCIAL INSTRUMENTS vendor contract renegotiations, enhanced procurement procedures and process automation. There has been a number of revisions to the The marginal increase of 3% in our total operating International Financial Reporting Standards cost is significantly lower than the year end (‘IFRS’) since they were adopted by the Ghanaian inflationary rate of 11.8% as reported in 2017 and banking industry in 2007. The most significant is evidence of the success of our cost management of these, which became effective from January initiatives. Going forward, we expect our right- 2018, is IFRS 9 – Financial Instruments. This sizing initiatives, notably unification of branches standard, which replaces IAS 39 - Financial within close proximity and staff rationalisation, to Instruments – Recognition and Measurement; impact positively on our cost base and efficiency introduces more stringent principles for the levels even further. classification, measurement and impairment of financial instruments, including loans. We have worked diligently to ensure we are ready for these changes and have assessed their impact on our Statement of Financial Position and Income Statement; the results of which are disclosed in detail in our Financial Statements.

Ecobank Annual Report 2017 39 Instant and PEOPLE trade and cash management capabilities for increased non-interest income. Our people continue to be our most valuable assets, and their commitment to diligence In this low interest rate environment, we have to easy mobile over the years has undoubtedly been a major take risks but balanced with returns by ensuring contributory factor to Ecobank Ghana’s that our risk management practices and systems continuous success. We recognize however, that are robust enough to identify, measure, and the global banking industry needs to be more monitor the various risks associated with our banking means efficient as business processes increasingly business. We will continue to invest in an agile trend towards digitization. risk management framework with a prudent approach to credit loan extension that supports In Ecobank, our digitization drive has resulted strong business growth. more power in improved convenience and accessibility for our customers. Currently, about 77% of our IN CLOSING customer transactions are executed through our digital channels. We at Ecobank are grateful to God for how far He for everyone Whoever you bank has brought us. I thank our Board of Directors for with, enjoy our instant However, as our digitization drive accelerates, their dedication and commitment to furthering digital services: it has become necessary for us to review our the market leadership of this institution. I thank brick and mortar presence. We will continue to our parent company, Ecobank Transnational SEND money instantly re-evaluate our business operating model to Incorporated, for their immense support to 33 countries identify opportunities for continuous success. throughout the year, particularly in supporting our digital transformation agenda. SHOP cash-free with Scan+Pay QR LOOKING AHEAD My heartfelt thanks go to the entire staff for their PAY bills on-the-go Ghana’s banking industry remains highly willingness to embrace innovation with a ‘can- quickly and easily fragmented, consisting of numerous small do’ attitude, whilst clinging to our core values operators with less than 5% market share of service excellence and placing our customers GO XPRESS – open an in terms of assets and deposits. The new first. account instantly on regulatory minimum capital requirement is your phone with zero expected to engender some consolidation across Finally, on behalf of the management and staff, account fees the industry as under-capitalised banks are likely I thank all our customers for their continued to merge to be able to meet the new regulatory loyalty to the Ecobank brand. LINK and use any card requirements. This expected consolidation if with the app executed successfully will fundamentally alter Thank you all our competitive landscape with the emergence of financially stronger indigenous banks.

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Ecobank Annual Report 2017 41

7552_GRP_8-Benefits_Ad_A4_P_MASTER_Multi_EN_V3.indd 1 03/11/2017 16:56 42 Ecobank Annual Report 2017 DIRECTORS’ report 2017

The Directors submit their report together with the consolidated and separate financial statements for the year ended 31 December 2017.

RESPONSIBILITY STATEMENT

The Directors are responsible for the preparation enable the preparation of financial statements that of consolidated and separate financial statements are free from material misstatement, whether due that give a true and fair view of Ecobank Ghana to fraud or error, and for maintaining adequate Limited comprising the statements of financial accounting records and an effective system of position as at 31 December 2017 and the risk management. The Directors have made statements of comprehensive income, changes in an assessment of the ability of the Bank and its equity and cash flows for the year then ended and subsidiaries to continue as going concerns and the notes to the financial statements which include have no reason to believe that the businesses will a summary of significant accounting policies not be going concerns in the year ahead. and other explanatory notes, in accordance with International Financial Reporting Standards and in The auditor is responsible for reporting on the manner required by the Companies Act, 1963 whether the consolidated and separate financial (Act 179) and the Banks and Specialized Deposit- statements give a true and fair view in accordance Taking Institutions Act 2016 (Act 930). In addition, with the applicable financial reporting framework the Directors are responsible for the preparation and laws and regulations. of the Report of the Directors.

The Directors are also responsible for such internal control as the Directors determine is necessary to

Ecobank Annual Report 2017 43 PRINCIPAL ACTIVITIES

The Bank is registered to carry on the business of banking. Its principal activities comprise corporate, investment and retail banking. It also engages in investment and advisory services, management of investments on behalf of customers and provision of operating and finance lease facilities through its subsidiaries. There was no change in the nature of business of the Bank’s business during the year.

FINANCIAL STATEMENTS AND DIVIDEND

The financial results of the Bank for the year ended 31 December 2017 are set out in the attached financial statements, highlights of which are as follows:

2017 2016 GH¢’000 GH¢’000

Profit after tax (attributable to equity holders) 255,384 325,594 to which is added the balance brought forward on income surplus account of 260,078 263,775

515,462 589,369 out of which is transferred to the statutory reserve fund in accordance with the Banking Act an amount of (31,923) (40,700) transfers to the credit risk reserve of (44,310) (42,279) and dividend paid of (240,447) (246,312)

(316,680) (329,291)

leaving a balance to be carried forward in the Income Surplus account of 198,782 260,078

In accordance with section 34 (1b) of the Banks and Specialized Deposit-Taking Institutions Act 2016 (Act 930), an amount of GH¢31.9 million (2016: GH¢40.7 million) was transferred to the statutory reserve fund from the income surplus account bringing the cumulative balance on the statutory reserve fund at the reporting date of 31 December 2017 to GH¢354.5 million (2016: GH¢322.6 million).

The Directors do not recommend any dividend payment (2016: 82 Ghana pesewas per share amounting to GH¢240,447,265.04).

The Directors consider the state of the Bank and the Group’s affairs to be satisfactory.

44 Ecobank Annual Report 2017 DIRECTORS’ REPORT

OBJECTIVES OF THE BANK

The objective of the Bank is to build a world-class bank seeking to provide its customers with convenient and reliable banking and financial products and services both locally and regionally.

SUBSIDIARIES AND ASSOCIATES

Subsidiaries

The Bank has the following wholly owned subsidiaries, which are incorporated in Ghana and provide the following services:

• Ecobank Investments Managers Limited - Management of investments • Ecobank Leasing Company Limited - Finance lease facilities • Ecobank Venture Capital Fund 1 Limited - Venture capital • Ecobank Capital Advisors Limited - Fund management

Associate

The Bank holds 49% interest in Pan African Savings and Loans Company Limited, a company incorporated in Ghana which provides microfinance to small and medium-sized enterprises.

RELATED PARTY TRANSACTIONS

Information regarding Directors’ interests in ordinary shares of the Bank and remuneration is disclosed in Appendix I and note 44 to the financial statements respectively. Apart from the parent company (ETI shares) no Director has any other interest in any shares or loan stock of any Group company. Other than service contracts relating to appointment agreements, no Director had a material interest in any contract to which any Group company was a party during the year. Related party transactions and balances are also disclosed in note 44 to the financial statements.

AUDITOR

The Audit & Compliance Committee has responsibility delegated from the Board of Directors for making recommendations on the appointment, reappointment, removal and remuneration of the external auditor. Messrs KPMG has been the auditor of the Bank commencing with the financial statements for the year ended 31 December 2011. The auditor, KPMG, will not continue in office in accordance with Sections 81(4) and 81(5) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) with effect from May 2018 after seven (7) years of service as auditor. In their stead, PwC, whose previous engagement with the bank ended in May 2011, has been appointed in accordance with Section 134 (1) of the Companies Act, 1963 (Act 179). Fees for approved non-audit services amounted to GH¢114,769.

Ecobank Annual Report 2017 45 DIRECTORS’ REPORT

BOARD OF DIRECTORS - PROFILE

Non-Executive Qualification Outside Board and Position Held Management position

Terence Ronald Darko BSc Business Studies Mechanical Lloyd Company Managing Director Private Enterprises Federation Director Edendale Properties Limited Director

Martin Eson-Benjamin BSc Admin-Mgt CFAO Ghana Limited Director Limited Director Enterprise Properties Limited Director A&C Dev Company Limited Director Enterprise Insurance Co Limited Director Advisory Board, College of Health Sciences, University of Ghana Chairman Millennium Development Authority Director

Felicity Acquah BA (Hons) Bayport Financial Services Limited Director Economics & Law Camelot Company Limited Director EMBA Finance

Samuel Ashitey Adjei BSc Statistics Ecobank Director MBA Finance Director Ecobank Kenya Managing Director eProcess International SA Director

Rosemary Yeboah BA (Hons) Economics MA, Economics EDC Stockbrokers Limited Director MBA

Henry Dodoo-Amoo MBA Theovision International Director

John Ofori-Tenkorang Bsc Engineering Ghanaian National Committee Chairman Msc Engineering of United World Colleges Sc. D Electrical Engineering & Computer Social Security and National Insurance Director Science Trust (SSNIT)

Ohene Aku Kwapong BSc Chemical Engineering Nordicom A/S (NASDAQ OMX), Denmark Director MSc Chemical Engineering New York City Economic Development Practice Corporation, New York, NY Director MBA, Finance/Financial Engineering PhD Chemical Engineering

46 Ecobank Annual Report 2017 Executive Qualification Outside Board and Position Held Management position

Daniel Nii Kwei-Kumah BSc Administration eProcess International SA Director Sackey MBA Ecobank Guinea Director Ecobank Liberia Director Ecobank Investment Managers Limited Chairman Ecobank Leasing Co Limited Chairman Ecobank Venture Capital Fund 1 Chairman Ecobank Capital Advisors Limited Chairman

Morgan Fianko Asiedu BA (Hons) Law & Sociology Abba-Ponenna Limited Chairman EMBA Entrepreneur Pioneers Ghana Scripture Union Director

Edward N. Botchway BA (Hons) Economics Ecobank Investment Managers Limited Director M Phil (Applied Business Ecobank Venture Capital Fund 1 Director Research) Ecobank Leasing Company Limited Director CA (Ghana) Member Ecobank Capital Advisors Limited Director FCCA (UK) Eximguarantee Company Ltd Director

BIOGRAPHICAL INFORMATION OF DIRECTORS

Up to 40 Above 60 Age 41 - 60 Years Years N/A 8 3 Directors Directors

Ecobank Annual Report 2017 47 Role of the board

The Directors are responsible for the long term success of the Bank. They determine the strategic direction of the Bank and review operating, financial and risk performance. There is a formal schedule of matters reserved for the Board of Directors, including approval of the Bank’s annual business plan, strategy, acquisitions, disposals and capital expenditure projects above certain thresholds, treasury policies, the financial statements, the Bank’s dividend policy, transactions involving the issue or purchase of shares, borrowing powers, appointments to the Board, alterations to the regulations, legal actions brought by or against the Bank and the scope of delegations to the Board and Board committees. Responsibility for the development of policy and strategy and operational management is delegated to an executive management committee, which as at the date of this report includes three (3) executive directors and twelve (12) senior managers.

INTERNAL CONTROL SYSTEMS

The Directors have overall responsibility for the Group’s internal control systems. The Directors annually review the effectiveness of internal controls, including a review of financial, operational, compliance and risk management controls. The implementation and maintenance of the risk management and internal control systems are the responsibility of the Executive Committee. The systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and to provide reasonable, but not absolute, assurance against material misstatement or loss. The Directors have reviewed the effectiveness of the internal control systems, including controls related to financial, operational and reputational risks identified by the Bank as of the reporting date and no significant failings or weaknesses were identified during this review.

DIRECTORS’ PERFORMANCE EVALUATION

Every year the performance and effectiveness of the Board of Directors (the Board), its committees and individual directors are evaluated. The evaluation is conducted by the completion of detailed and comprehensive written survey questionnaires. The results of the evaluation are shared with all members of the Board. The Board and all Directors are also periodically evaluated by an independent external firm in order to assess the effectiveness of the Board as well as the contribution of the individual Directors. Overall, it was noted that the Board of Directors and its committees were operating in an effective manner and performing satisfactorily, with no major issues identified.

48 Ecobank Annual Report 2017 DIRECTORS’ REPORT

PROFESSIONAL DEVELOPMENT AND TRAINING

On appointment to the Board, Directors are provided with a full, formal and tailored programme of induction to familiarize them with the Bank’s businesses, the risks and strategic challenges the Bank faces, as well as the economic, competitive, legal and regulatory environment in which the Bank operates. A programme of strategic and other reviews, together with the other training provided during the year, ensures that Directors continually update their skills and knowledge of the Bank’s businesses, and the sectors in which the Bank operates and familiarizes themselves with risk, regulatory, legal, financial and other developments to enable them to fulfil effectively their role on the Board and its committees.

CONFLICTS OF INTEREST

The Bank has established appropriate conflicts authorization procedures, whereby actual or potential conflicts are regularly reviewed and authorizations sought as appropriate. During the year, no such conflicts arose and no such authorizations were sought.

BOARD BALANCE AND INDEPENDENCE

The composition of the Board of Directors and its committees is regularly reviewed to ensure that the balance and mix of skills, independence, knowledge and experience is maintained. The Board considers that the Chairman is independent on appointment and all non-Executive Directors are independent as it pertains to the management of the Bank. The continuing independent and objective judgement of the non-Executive Directors has been confirmed by the Board of Directors.

CORPORATE SOCIAL RESPONSIBILITY

Corporate responsibility activities can be found at note 48.

HOLDING COMPANY

The Bank is a subsidiary of Ecobank Transnational Incorporated (ETI), a company incorporated in the Republic of Togo. ETI owns 68.93% of the issued ordinary shares of the Bank.

APPROVAL OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

The consolidated and separate financial statements of Ecobank Ghana Limited were approved by the Board of Directors on 26 February 2018 and signed on their behalf by

SIGNED SIGNED

CHAIRMAN MANAGING DIRECTOR

Ecobank Annual Report 2017 49 50 Ecobank Annual Report 2017 CORPORATE governance

COMMITMENT TO CORPORATE GOVERNANCE

Corporate Governance is important to Ecobank as it seeks to implement the ideals of fairness, transparency, accountability and responsibility in its dealings with all stakeholders. Ecobank recognizes, as a banking group, the critical nature of its relationships with its Regulators across the Group, in executing its vision and safeguarding the deposits of the general public and other lenders. To this end, Ecobank ensures that their interests are taken into account in a balanced and transparent manner. Ecobank believes that, only good governance can deliver sustainable good business performance.

The Ecobank Group Corporate Governance Charter sets out the structures and processes that are followed by the Group to build credibility, ensure transparency and accountability across the group.

As members of the Ecobank Group, Ecobank Ghana and its subsidiaries operate according to the Ecobank Transnational Incorporated (ETI) Group principles and practices on corporate governance. The principles and practices therein are based on the Basel Committee standards on corporate governance, which constitute the best of international practice in this area.

The key guiding principles of the Group’s governance practices are as follows:

• Good corporate governance enhances shareholder value

• The respective roles of the shareholders, Board of Directors and management in the governance architecture should be clearly defined

• The Board of Directors should have majority membership of independent Directors, defined broadly as “Directors who are not employed by the Group or who are not affiliated with organizations with significant financial dealings with the Group”

These principles have further been articulated in a number of corporate documents including the Bank’s Regulations, Rules of Procedures for Boards, Code of Conduct for Directors and Rules of Business Ethics for staff.

Ecobank Annual Report 2017 51 CORPORATE GOVERNANCE

THE BOARD OF DIRECTORS GOVERNANCE COMMITTEE

The Board is responsible for setting the This Committee is chaired by Mr. Terence Darko institution’s strategic direction, leading and (the independent non-executive Board Chairman) controlling the Bank and monitoring activities of and has as its members, Mrs. Felicity Acquah, Mr. executive management. Martin Eson –Benjamin. Mr. Henry Dodoo-Amoo and Dr. Ohene Aku Kwapong. The Committee met As of 31 December 2017, the Board of Directors four times in the year ended 31 December 2017. of Ecobank Ghana consisted of eleven (11) members made up of an independent Non- The role of the Committee includes: executive Chairman, seven (7) Non-executive Directors, five (5) of whom are independent • Handling relationships with regulators and and three (3) Executive Directors. These board third parties members have wide experience and in-depth • Handling relationships with shareholders knowledge of management, industry and the • Evaluating the performance of Board financial and capital markets, which enable members and various committees them make informed decisions and valuable • Reviewing all issues relating to good contributions to the Bank’s business. governance; and • Reviewing and recommending the Regarding term limits, a non-executive director appointment of Directors shall be elected for a period of 3 years at a time and shall be eligible for re-election provided The role of the Governance Committee with that no individual shall serve as a director for a regards to Human Resources includes: cumulative period of more than nine (9) years. A person who is more than 70 years old shall, • Periodically reviewing the organizational subject to local laws retire at the next Annual structure of the Bank to ensure it conforms General Meeting following his/her 70th birthday. to the standard Group structure An Executive Director shall retire as Director • Setting criteria, in line with Group policies, upon attaining the mandatory retirement age for for recruitment of staff employees or on termination of their employment • Ensuring human resource management for whatever reason. The term of the Chairman policies align with the Group Human shall not exceed six (6) years. Resource policies • Evaluating the performance of management The Board has adopted standard evaluation tools staff and making recommendations for that help assess the performance of the Board, approval by the Board its committees and individual members on an • Recommending disciplinary actions against annual basis. erring management staff • Recommending appropriate levels of The Board and all Directors are also periodically remuneration and packages for staff evaluated by an independent external firm in • Reviewing succession plan for key positions; order to assess the effectiveness of the Board as and well as the contribution of the individual Directors • Any other responsibilities as may be assigned The Board met four (4) times during the year. by the Board. The Board has delegated various aspects of its work to the Governance, Audit and Compliance, Credit and Risk Management Committees.

52 Ecobank Annual Report 2017 AUDIT AND COMPLIANCE COMMITTEE

The Audit and Compliance Committee has as its Chairperson, Mrs. Felicity Acquah, an independent non- executive Director.

This Committee includes three (3) other non-executive members of the Board namely Mr. Terence Darko, Mr. Martin Eson-Benjamin and Dr. John Ofori-Tenkorang. The Managing Director, Chief Finance Officer, Internal Auditor and if need be, a representative of the external auditors, sit in attendance. The Committee met four (4) times in the year ended 31 December 2017.

The role of the committee includes:

• Reviewing the internal audit function, its mandate and audit activities • Reviewing internal and external audit reports, particularly reports of regulatory and monetary authorities and supervising the implementation of recommendations • Facilitating dialogue between auditors and management on the outcome of audit activities • Proposing external auditors and their remuneration • Working with the external auditors to finalize the annual financial statements for Board approval • Reviewing the dividend policy and issues relating to the constitution of reserves • Reviewing quarterly, half-yearly and annual financial results before the Board’s review and approval • Setting up procedures for selecting suppliers, consultants and other service providers and ensuring compliance therewith • Organizing periodic discussions with the departments of Internal Audit and Finance • Defining appropriate measures to safeguard assets of the Bank • Ensuring compliance with all applicable laws and regulations and operating standards • Reviewing, approving and following up major contracts, procurement and capital expenditures • Reviewing actual spending against budget; and • Reviewing and approving proposals for extra-budgetary spending

EXTERNAL AUDITORS

External auditors are appointed through a bidding process and on a rotational basis for a period outlined by the Bank of Ghana’s regulations. The external auditors present and discuss their audit findings with the Board and Audit & Compliance Committee.

INTERNAL AUDITORS

The Internal Audit function of the Bank reports directly to the Board Audit Committee. Internal Audit provides independent, objective audit assurance designed to add value and improve the Bank’s operations while ensuring the effectiveness of risk management, control, and governance processes. The Internal Audit department presents its reports to the Board Audit and Compliance Committee.

Ecobank Annual Report 2017 53 RISK MANAGEMENT COMMITTEE

The Committee has as its Chairman, Mr. Henry Dodoo-Amoo. Other members are Dr. Ohene Aku Kwapong and Mrs. Rosemary Yeboah. The role of the committee includes:

• Reviewing and approving risk policy changes initiated by Management • Ensuring compliance with the Bank’s risk policies and statutory requirements prescribed by the regulatory or supervisory authorities • Reviewing periodic risk management portfolio reports and assess portfolio performance • Reviewing operational, market, reputational and legal risk management • Approving all credits within limits defined in Group Credit Policy and within the statutory requirements set by the respective regulatory and supervisory authorities • Reviewing and endorsing credits approved by executive management • Reviewing and recommending to the full Board, credit policy changes initiated by executive management • Ensuring compliance with the Bank’s credit policies and statutory requirements prescribed by the regulatory and supervisory authorities • Reviewing periodic credit portfolio reports and assessing portfolio performance; and • Approving exceptions, write-offs and discounts of non-performing credit facilities

BUSINESS CONTINUITY PLAN

The Bank has a business continuity and disaster recovery plan for its Head Office and branches that will enable it respond to unplanned significant interruptions in essential business functions that can lead to the temporary suspension of operations. It provides guidelines to fully recover operations and ensure coordinated processes of restoring systems, data and infrastructure to enable essential client needs to be met until normal operations are resumed. The plan is tested at least three times every year to assess the readiness of the Group to respond to unplanned interruptions of operations.

SYSTEMS OF INTERNAL CONTROL

The Bank has a well-established internal control system for identifying, managing and monitoring risks. These are designed to provide reasonable assurance that risks faced by the Bank are reasonably controlled. The corporate internal audit and compliance function of the Bank plays a key role in providing an objective view and continuing assessment of the effectiveness of the internal control systems in the business. The systems of internal control are implemented and monitored by appropriately trained personnel, with clearly defined duties and reporting lines.

54 Ecobank Annual Report 2017 CORPORATE GOVERNANCE

CODE OF BUSINESS ETHICS

Management has communicated principles in the Bank’s Code of Conduct to its employees to provide guidance in the discharge of their duties. This Code sets the standards of professionalism and integrity required for the Bank’s operations. It covers compliance with applicable laws, conflicts of interest, environmental issues, reliability of financial reporting, bribery and strict adherence to laid down principles, so as to eliminate the potential for illegal practices.

WHISTLE BLOWING POLICY

The Bank believes in and has adopted the highest standards of ethical behaviour to ensure that any form of malpractice is dealt with and mitigating action taken. Employees are therefore encouraged to uphold these virtues by always acting in good faith and also alerting the appropriate authority of any identified malpractice, concern or suspicious activity or behaviour within the Bank. In all cases, employees who blow the whistle in good faith about perceived malpractices or concerns within the Bank shall be protected by the Bank. The Bank shall blow the whistle whenever its business relationships or customers act in breach of local laws and regulations or they do not adopt the required ethics required in conducting banking activities. The process for whistle-blowing is well documented in a policy established by the Bank and made available to all staff.

ANTI-MONEY LAUNDERING

The Bank also has an established anti-money laundering system in place in compliance with requirements of Ghana’s Anti-Money Laundering Act, 2008 (Act 749) as amended by Anti-Money Laundering (Amendment) Act, 2014 (Act 874).

These include due diligence for opening new accounts, customer identification, monitoring of high risk accounts, record keeping and training and sensitization of staff on money laundering, which assist in reducing regulatory and reputational risks to its business. Staff members receive training on anti-money laundering policies and practices.

Ecobank Annual Report 2017 55 56 Ecobank Annual Report 2017 CORPORATE social responsibility report 2017 EVENTS

INTRODUCTION

At Ecobank Ghana, Corporate Social responsibility is a fundamental obligation and we aim at conducting business in a manner that creates value for our customers, shareholders and communities that we serve in. The bank understands that the needs of shareholders are of primary importance. However, we must balance this with doing business in a manner that is beneficial for our communities.

Through the various activities we undertook as highlighted below, we significantly impacted the lives of our communities in the areas of maternal health, education, financial inclusion amongst others.

Ecobank Annual Report 2017 57 SOCIAL RESPONSIBILITY REPORT

The Ecobank Day Celebration.

As part of our annual Ecobank day activities, for 2017, we focused on maternal health care and education in Ghana. We committed an amount of GHS600,000 to this cause and donated various medical equipment to health facilities which play a key role in female healthcare delivery. Some of the hospitals which received donations included; Korle Bu Teaching Hospital Maternity ward in Accra, Tema Polyclinic in Tema, Maternal and Child Health Hospital, South Hospital, Kwesimintsim Hospital in Takoradi, and Savelugu Hospital etc. Our staff also visited mothers in admission at the various hospitals and donated items to them.

In the area of education, we donated Fifteen (15) serviced computers for an ICT lab and career development books to Three Town Secondary School in Aflao. In addition, 25 brilliant underprivileged students selected from various second cycle institutions across the country were awarded scholarships.

58 Ecobank Annual Report 2017 Ecobank Annual Report 2017 59 Blood Donation Exercise

Our annual blood donation exercise across our key locations in in Accra, Tema, Kumasi, Takoradi and Tamale, yielded over 500 pints of blood for the National Blood Bank.

60 Ecobank Annual Report 2017 SOCIAL RESPONSIBILITY REPORT

CSR Day in Ecobank Ghana

Ecobank Ghana in May 2017 set a day aside to make various donations:

The National Diabetes Association: Ecobank presented Over 600 Glucose test strips to the National Diabetes Association as part of support for free health screening in commemoration of World Diabetes Day 2017. Staff of Ecobank Ghana also later in the year joined the Association for a health walk to raise awareness on the prevalence of the disease to commemorate World Diabetes Day.

The Children’s Heart Foundation: Ecobank over the years has sponsored heart surgeries for 17 children through the Children’s Heart Foundation. In 2017, the foundation received a donation for the full payment of surgery for 2 children with a “Hole in Heart” condition, through the Children’s Heart Foundation.

Ghana Medical Students: Ecobank supported 30 medical students by subsidizing the cost of their exchange programs to various countries as part of their curriculum for completing training in medical school.

The National Malaria Control Program: Ecobank also presented over 2000 treated mosquito nets to the National Malaria Control program, to support them in the national fight against malaria. This was in commemoration of World Malaria Day.

Village of Hope Orphanage: Ecobank also sponsored the school fees of 15 orphans at the Village of Hope orphanage.

Other Beneficiaries

FHI 360: Ecobank Supported the FHI 360 project of constructing 100 reading kiosks, to encourage reading in rural areas.

The National Partnership for Children’s Trust (NPCT): Ecobank supported 20 underprivileged university students through The NPCT in 2017.

School For the Deaf: Ecobank supported the school for the deaf to commemorate their 50th anniversary celebration.

Safe Water Project: Ecobank Supported the Safe Water Project to provide safe drinking water to rural areas.

Ecobank will continue in its commitment to support education, health, financial inclusion, underprivileged individuals, groups and institutions, and the environment.. We are committed to the welfare of the communities in which we operate and we will continue to find ways to impact society positively.

Ecobank Annual Report 2017 61 SUSTAINABILITY report 2017

INTRODUCTION

Ecobank Ghana Limited (EGH) continues to pursue its sustainability path towards creating value and meeting stakeholders’ expectations. Our efforts continue to focus on, driving economic transformation by carrying out business and financing activities in a responsible manner, taking into account the social and environmental impact of activities on the economy. This is in addition to augmenting our operations by embracing local and international best practices.

In the area of environmental sustainability, the bank is advancing its commitment to paperless operations and pursuing its digitization agenda in 2017 this led to a reduction in operational costs, financial inclusion and greater efficiency.

PROMOTING GREEN INITIATIVES

Ecobank Ghana continues to show keen interest continues to lead in the search for viable Green in supporting the promotion of green business Financing alternatives and is currently pursuing initiatives. The bank in November 2017, accreditation to the Green Climate Fund (GCF). participated in a Green Finance Conference Ecobank is well placed to on-lend or blend GCF organized in conjunction with African Guarantee funds that will be accessed for project financing Fund, International Trade Centre and Nordic to achieve the primary objective of climate Development Fund at the Movenpick Ambassador change mitigation and adaptation priorities in Hotel. Ghana. Invariably, the bank is playing a critical role in shifting the development paradigm of During a panel discussion, Mr. Daniel Sackey, the country along with national objectives and the Managing Director of the bank, provided priorities in collaboration with the GCF and other positive insights on Green Finance solutions for stakeholders. Small and Medium Enterprises. Ecobank also

62 Ecobank Annual Report 2017 Group photograph of participants during the compliance training at Tarkwa – photo credit GIZ GmbH *AfIn also supports companies adhering to national and international anti-corruption standards.

GLOBAL INITIATIVE AND PARTNERSHIPS

Ecobank Ghana limited continued its collaboration with the Alliance for integrity (AfIn*) by connecting stakeholders, to build capacity and implement best practices on preventing and combating corruption. AfIn in collaboration with Ecobank Ghana and other stakeholders promote integrity by ensuring that Small and Medium Enterprises adopt appropriate compliance standards in the process of conducting their businesses.

As part of the programme, Ecobank Ghana Limited by relying on its world-class compliance systems has volunteered to train and support Small and Medium-sized Enterprises (SMEs) to counter corruption and develop skills in Compliance. These SMEs gain practical tools to solve problems related to corruption and thereby increase their competitiveness. In 2017 Ecobank trainers teamed up with the AfIn to conduct two training programmes in Accra and Tarkwa. Participants for the Tarkwa training came from 17 companies spread across Tarkwa, Takoradi and Mankessim. Participants were taken through topics covering the basics of corruption, as well as internal and external measures to counter corruption.

Ecobank Annual Report 2017 63 ENVIRONMENTAL AND SOCIAL RISK MANAGEMENT (ESRM)

Financial solutions that were offered by the bank to its customers include providing solutions on managing Environmental and Social (E&S) risks associated with our client’s business operations. We do this by integrating E&S Due Diligence, Assessment and Action Plan Formulation into our credit appraisal processes. The Policy categorizes E & S risks into High, Medium A, Medium B and Low.

The 2017 summary of the management of the credit portfolio for environmental and social risks is summarized in the chart below:

E & S TRANSACTIONS 2017

Volume in Number of USD TRANSACTIONS

LOW MEDIUM B MEDIUM A HIGH

SUSTAINABILITY AND BUSINESS GROWTH

Ecobank Sustainability strategy includes embarking on environmentally responsible operations and particularly embracing efficiency as a way of enhancing the environmental footprints in our operations. Subsequently the new Head Office Building for Ecobank Ghana, is defined by cutting edge green principles creating an energy efficient building.

The design embraces sustainable and economical building solutions with an optimized response to solar orientation, balanced with an inside- out approach. In addition the building optimises heat gains and resultant energy demand. The consideration of initial capital outlay and gains in the life cycle of the building have been carefully considered. This has been achieved through adopting innovative solutions through careful selection of

64 Ecobank Annual Report 2017 SUSTAINABILITY REPORT SUSTAINABILITY AND BUSINESS GROWTH (CONT’D) glazing, and shading devices. Thermal comfort in the the Tbill4 All, a product that offers the unbanked and building has been considered providing a building underbanked members of society with a secured envelope and mechanical systems that are closely means of investment. interrelated; this is a crucial step towards achieving Heat Ventilation & Air Conditioning (HVAC ) load By the end of year 2017, Ecobank Ghana Limited reduction. In addition a double glazed durable high switched from semi-manual credit processing to performance glass product ideal for the tropical an automated workflow on an electronic platform climate conditions has been used for the building which not only facilitates speedy credit decisions but casing. ensures that filing and archiving of important credit files and documents are stored electronically in an Exterior shading devise such as vertical fins environmentally friendly and sustainable manner. complimented by a perforated double skin on western exposed facades and horizontal louvers/ Banking operations naturally, continues to rely on light shelves to the southern and northern exposed paper as a natural resource most-utilized in our facades. These elements are strategically integrated offices and branches, including operations, contracts into the envelope as energy efficiency measures to and correspondence, services offered to clients and mitigate solar heat gains. promotional materials. However we have made In terms of Green Principles as they relate to the conscious efforts to reduce the use of paper through overall architectural design consideration has been well considered measures mentioned above. In given to; daylight, external views, internal noise levels addition the use of EGH’s Document Management and volatile organic compounds. These are to ensure System for the digitization of teller transaction indoor environmental quality. Energy is conserved records has saved the bank an estimated 2.3 million through roof insulation, as well as insulation of sheets of paper in the year 2017. all ‘open sky’ floors in accordance with HVAC and acoustic requirements.

DIGITALIZATION, CREDIT AUTOMATION AND SYSTEMS OPTIMIZATION

In line with the banks’ continuous commitment to adopt best international practice and optimise the use of resources, Ecobank continues to focus on transforming its management operating system across the business with sustainability considerations. Ecobank Ghana Limited continues to deepen its market through the digital agenda by launching a number of e-products, primarily the Ecobank Mobile App, a simple and convenient way of banking via the mobile phone that provides customers with reduced transaction costs and allows them to make instant payments within and across affiliates. The App also enables consumers to open a new Ecobank digital account, the Xpress account, in a matter of minutes. These are but a few of the services offered through our Mobile App. In addition the bank also introduced

1 North-West elevation of the head office building

Ecobank Annual Report 2017 65 66 Ecobank Annual Report 2017 INDEPENDENT auditor’s report

REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Opinion manner required by the Companies Act, 1963 (Act 179), and the Banks and Specialised Deposit- We have audited the consolidated (“the Group”) Taking Institution Act, 2016 (Act 930). and separate (“the Bank”) financial statements of Ecobank Ghana Limited, which comprise Basis for Opinion the consolidated and separate statements of financial position at 31 December 2017 and We conducted our audit in accordance with the consolidated and separate statements of International Standards on Auditing (ISAs). comprehensive income, changes in equity and Our responsibilities under those standards are cash flows for the year then ended, and the further described in the Auditor’s Responsibilities notes to the financial statements which include for the Audit of the Consolidated and Separate a summary of significant accounting policies and Financial Statements section of our report. We other explanatory notes, as set out on pages 85 are independent of the Group in accordance to 168. with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional In our opinion, these financial statements Accountants (IESBA Code) together with the give a true and fair view of the consolidated ethical requirements that are relevant to our and separate financial position of Ecobank audit of the financial statements in Ghana, and Ghana Limited at 31 December 2017, and of its we have fulfilled our other ethical responsibilities consolidated and separate financial performance in accordance with these requirements and the and consolidated and separate cash flows for the IESBA Code. We believe that the audit evidence year then ended in accordance with International we have obtained is sufficient and appropriate to Financial Reporting Standards (IFRSs) and in the provide a basis for our opinion.

Ecobank Annual Report 2017 67 Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter How the matter was addressed in our audit

Impairment of loans and advances to customers (GH¢215.8 million). Refer to Note 24 of the consolidated and separate financial statements.

Impairment Allowance on loans and advances Our procedures included:

The estimation of impairment allowance for loans and • Testing the design, implementation and operating advances to customers involves complexity and subjectivity effectiveness of key controls over capturing, in estimating the timing and amount of cash flows used monitoring and reporting of loans and advances to in the computation. Loans for which there is objective customers; evidence that an impairment event has occurred are assessed individually for impairment. If there is no evidence • Evaluating the year end impairment models for that an impairment exists on an individual basis, loans are collective and individual impairment by re-performing assessed collectively for impairment. calculations and agreeing a sample of data inputs to source documentation; Assessing impairment allowances on loans and advances to customers requires management to make assumptions • For individually significant impaired loans, we about financial conditions and the timing of expected future assessed the appropriateness of estimated cashflows, cash flows. Cash flows are determined from collateral values including reasonableness of collateral value used, the and/or contractual arrangements which are supported with appropriateness of effective interest rate and the appropriate documents. Management assumes that the reasonableness of recoverability of collateral in the value of collaterals will be fully realised through sale in the light of our industry knowledge and guidelines issued event of default on loans and advances. by Bank of Ghana.

The collective impairment loss allowance relates to losses • For collective impairment, we assessed the incurred but not yet identified (IBNR loss allowances) on appropriateness and consistencies of the model other loans and advances. The two key judgments in the used. collective provisioning assessment are the likelihood of default and the emergence period. The impairment • Evaluating the adequacy of the Group’s disclosures in assessment requires the application of significant relation to impairment about the changes in estimate judgement by management including the application occurring during the period and the sensitivity to the of industry knowledge, prevailing economic conditions key assumptions. and historical data to determine the level of impairment allowance required.

Interest Income (GH¢904.5 million) Refer to Note 6 of the consolidated and separate financial statements

Revenue Recognition Our procedures included:

Interest income is recognised using the effective interest • Testing the design, implementation and operating rates as opposed to the nominal rate. Determining the effectiveness of key controls over the existence and effective interest rate involves some level of complexity accuracy of reported revenues. which could lead to inaccurate interest recognition. In • Using computer assisted audit techniques to perform addition, there is a presumed risk that revenue may not be substantive testing to confirm completeness and appropriately recognised. accuracy of revenue reported. • Agreeing underlying data on loans and advances to details of loans and advances in the Bank’s general ledger and banking application. • Assessing the adequacy of the Bank’s disclosures of its revenue recognition policy and other related disclosures.

68 Ecobank Annual Report 2017 INDEPENDENT AUDITOR’S REPORT

Other Information as the Directors determine is necessary to enable the preparation of financial statements that are The Directors are responsible for the other free from material misstatement, whether due information. The other information comprises to fraud or error. the Report of the Directors as required by the Companies Act, 1963 (Act 179) and the Banks In preparing the consolidated and separate and specialised Deposit- Taking Institution Act, financial statements, the Directors are 2016 (Act 930), which we obtained prior to the responsible for assessing the Group’s ability date of this auditor’s report, and the Chairman’s to continue as a going concern, disclosing, as statement and the Managing Director’s Review, applicable, matters related to going concern which is expected to be made available to us and using the going concern basis of accounting after that date. Other information does not unless the Directors either intend to liquidate include the consolidated and separate financial the Group or to cease operations, or have no statements and our auditor’s report thereon. realistic alternative but to do so.

Our opinion on the consolidated and separate The Directors are responsible for overseeing the financial statements does not cover the other Group’s financial reporting process. information and we do not express any form of assurance conclusion thereon. Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial In connection with our audit of the consolidated Statements and separate financial statements, our responsibility is to read the other information Our objectives are to obtain reasonable and, in doing so, consider whether the other assurance about whether the consolidated and information is materially inconsistent with the separate financial statements as a whole are consolidated and separate financial statements free from material misstatement, whether due or our knowledge obtained in the audit, or to fraud or error and to issue an auditor’s report otherwise appears to be materially misstated. that includes our opinion. Reasonable assurance If, based on the work we have performed, we is a high level of assurance, but is not a guarantee conclude that there is a material misstatement that an audit conducted in accordance with ISAs of this other information, we are required to will always detect a material misstatement when report that fact. We have nothing to report in it exists. Misstatements can arise from fraud or this regard. error and are considered material if, individually or in the aggregate, they could reasonably be Responsibilities of the Directors for the expected to influence the economic decisions of Consolidated and Separate Financial users taken on the basis of these consolidated Statements financial statements.

The Directors are responsible for the preparation of consolidated and separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit-Taking Institution Act, 2016 (Act 930) and for such internal control

Ecobank Annual Report 2017 69 Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements (CONT’D)

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

70 Ecobank Annual Report 2017 INDEPENDENT AUDITOR’S REPORT

Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Section 133 of the Companies Act, 1963 (Act 179) and Section 85 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

We have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purpose of our audit.

In our opinion, proper books of account have been kept, and the consolidated and separate statements of financial position and profit or loss and other comprehensive income are in agreement with the books of account.

The Bank’s transactions were within its powers and except as indicated in Note 48, the Bank generally complied with the relevant provisions of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

The Bank has generally complied with the provisions of the Anti-Money Laundering Act, 2008 (Act 749), as amended by Anti-Money Laundering Amendments Act, 2014 (Act 874), the Anti-Terrorism Act, 2008 (Act 762) and the Regulations governing the Acts.

The engagement partner on the audit resulting in this independent auditor’s report is Anthony Kwasi Sarpong (ICAG/P/1369).

FOR AND ON BEHALF OF: KPMG: (ICAG/F/2018/038) CHARTERED ACCOUNTANTS 13 YIYIWA DRIVE, ABELENKPE P O BOX GP 242 ACCRA

26th February, 2018

Ecobank Annual Report 2017 71 FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017

The Group The Bank 2017 2016 2017 2016 Note GH¢’000 GH¢’000 GH¢’000 GH¢’000

Interest income 6 904,577 905,304 885,483 878,914

Interest expense 7 (160,308) (186,199) (157,451) (177,437)

Net interest income 744,269 719,105 728,032 701,477

Fees and commission income 8 202,276 160,489 202,070 160,503

Fees and commission expense 9 (3,521) (3,267) (3,471) (3,233)

Net fees and commission income 198,755 157,222 198,599 157,270

Net trading income 10 144,006 130,274 143,689 129,934

Other operating income 11 25,895 18,062 25,580 17,691

Other revenue 12 3,921 4,140 19,931 16,942

Gains from derecognition of financial assets measured at amortized cost 13 - 177,854 - 177,854

173,822 330,330 189,200 342,421

Revenue 1,116,846 1,206,657 1,115,831 1,201,168

Other income 14 267 291 267 291

Net Impairment loss on financial assets 15 (173,940) (178,597) (173,939) (178,570)

Personnel expenses 16 (343,672) (316,359) (343,108) (315,993)

Depreciation and amortisation 17 (26,296) (21,534) (26,296) (21,533)

Other expenses 18 (215,296) (228,468) (214,995) (228,177)

Operating profit 357,909 461,990 357,760 457,186

Share of profit of associates (net of tax) 42 474 686 - -

Profit before income tax 358,383 462,676 357,760 457,186

Income tax expense 19 (104,738) (134,780) (102,376) (131,592)

Profit after tax for the year 253,645 327,896 255,384 325,594

The notes on pages 85 to 168 form an integral part of these financial statements.

72 Ecobank Annual Report 2017 Ecobank Annual Report 2017 73 STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017

The Group The Bank 2017 2016 2017 2016 Note GH¢’000 GH¢’000 GH¢’000 GH¢’000

Profit for the year 253,645 327,896 255,384 325,594

Other comprehensive income Items that may be reclassified Subsequently to profit or loss

Reclassified fair value gains or losses to profit or loss 38 - 2,221 - 1,100

Related tax - (555) - (275)

Items that will never be reclassified Subsequently to profit or loss

Gains on revaluation of property 37 79,537 - 79,537 - Related tax 20 (19,884) (8,927) (19,884) (8,927)

Other comprehensive income for the year, net of tax 59,653 (7,261) 59,653 (8,102)

Total comprehensive income for the year 313,298 320,635 315,037 317,492

Profit for the year attributable to: Equity holders of the Bank 253,645 327,896 255,384 325,594

Comprehensive income for the year attributable to: Equity holders of the Bank 313,298 320,635 315,037 317,492

Earnings per share Basic and diluted (in Ghana pesewas) 22 87 112 87 112

The notes on page 85 to 168 form an integral part of these financial statements.

74 Ecobank Annual Report 2017 FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2017

The Group The Bank 2017 2016 2017 2016 Note GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and Bank Balances 23 2,952,753 3,193,202 2,969,557 3,191,866 Loans and advances to customers 24 2,685,468 3,480,544 2,685,759 3,480,471 Investment securities 25 2,518,542 641,010 2,462,208 578,985 Investment in subsidiaries 26 - - 28,771 22,778 Investment in associates 42 8,547 8,073 4,841 4,841 Current tax asset 19 28,692 6,003 27,293 5,593 Other assets 27 409,463 342,262 425,591 355,200 Intangible assets 28 4,182 5,389 4,182 5,389 Non-current asset held for sale 29 34,487 63,726 34,487 63,726 Property and equipment 30 456,006 316,661 456,003 316,661

Total assets 9,098,140 8,056,870 9,098,692 8,025,510

Liabilities Deposits from Banks 31 606,452 542,856 714,888 630,288 Deposit from customers 32 6,541,648 5,416,916 6,447,818 5,316,625 Deferred tax liabilities 20 30,160 6,801 30,167 6,810 Borrowings 33 203,200 232,744 203,200 232,744 Other liabilities 34 679,753 893,477 675,821 886,835

Total liabilities 8,061,213 7,092,794 8,071,894 7,073,302

Equity and reserves Stated capital 35 226,641 226,641 226,641 226,641 Income surplus 36 208,393 271,445 198,782 260,078 Revaluation reserve 37 109,782 50,129 109,782 50,129 Statutory reserve 40 355,064 323,124 354,546 322,623 Credit risk reserve 41 137,047 92,737 137,047 92,737

Total equity attributable to equity holders of the Bank 1,036,927 964,076 1,026,798 952,208

Total liabilities and equity 9,098,140 8,056,870 9,098,692 8,025,510

These financial statements were approved by the Board of Directors on 26 February 2018 and signed on its behalf by:

SIGNED SIGNED

CHAIRMAN MANAGING DIRECTOR

The notes on page 85 to 168 form an integral part of these financial statements.

Ecobank Annual Report 2017 75 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

Stated Income Revaluation Other Statutory Credit risk The Group capital surplus reserve reserves reserve reserve Total GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Balance at 1 January 2016 226,641 272,852 59,056 (1,666) 282,412 50,458 889,753

Total comprehensive income Profit for the year - 327,896 - - - - 327,896 Other comprehensive income, net of tax - - (8,927) 1,666 - - (7,261)

Total comprehensive income for the year - 327,896 (8,927) 1,666 - - 320,635

Transactions with equity holders Dividends paid - (246,312) - - - - (246,312)

Total contribution by and distribution to equity holders - (246,312) - - - - (246,312)

Regulatory transfers Statutory reserve - (40,712) - - 40,712 - - Credit risk reserve - (42,279) - - - 42,279 -

- (82,991) - - 40,712 42,279 -

Balance at 31 December 2016 226,641 271,445 50,129 - 323,124 92,737 964,076

The notes on page 85 to 168 form an integral part of these financial statements.

76 Ecobank Annual Report 2017 FINANCIAL STATEMENTS

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT’D)

Stated Income Revaluation Other Statutory Credit risk The Group capital surplus reserve reserves reserve reserve Total GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Balance at 1 January 2017 226,641 271,445 50,129 - 323,124 92,737 964,076

Total comprehensive income Profit for the year - 253,645 - - - - 253,645 Revaluation gains net of tax - - 59,653 - - - 59,653

Total comprehensive income for the year - 253,645 59,653 - - - 313,298

Transactions with equity holders Dividends paid - (240,447) - - - - (240,447)

Total contribution by and distribution to equity holders - (240,447) - - - - (240,447)

Regulatory transfers Statutory reserve - (31,940) - - 31,940 - - Credit risk reserve - (44,310) - - - 44,310 -

- (76,250) - - 31,940 44,310 -

Balance at 31 December 2017 226,641 208,393 109,782 - 355,064 137,047 1,036,927

The notes on page 85 to 168 form an integral part of these financial statements.

Ecobank Annual Report 2017 77 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

Stated Income Revaluation Other Statutory Credit risk The Bank capital surplus reserve reserves reserve reserve Total GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Balance at 1 January 2016 226,641 263,775 59,056 (825) 281,923 50,458 881,028

Total comprehensive income Profit for the year - 325,594 - - - - 325,594 Other comprehensive income, net of tax - - (8,927) 825 - - (8,102)

Total comprehensive income for the year - 325,594 (8,927) 825 - - 317,492

Transactions with equity holders Dividends paid - (246,312) - - - - (246,312)

Total contribution by and distribution to equity holders - (246,312) - - - - (246,312)

Regulatory transfers Statutory reserve - (40,700) - - 40,700 - - Credit risk reserve - (42,279) - - - 42,279 -

- (82,979) - - 40,700 42,279 -

Balance at 31 December 2016 226,641 260,078 50,129 - 322,623 92,737 952,208

The notes on page 85 to 168 form an integral part of these financial statements.

78 Ecobank Annual Report 2017 FINANCIAL STATEMENTS

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT’D)

Stated Income Revaluation Other Statutory Credit risk The Bank capital surplus reserve reserves reserve reserve Total GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Balance at 1 January 2017 226,641 260,078 50,129 - 322,623 92,737 952,208

Total comprehensive income Profit for the year - 255,384 - - - - 255,384 Revaluation gains net of tax - - 59,653 - - - 59,653

Total comprehensive income for the year - 255,384 59,653 - - - 315,037

Transactions with equity holders Dividends paid - (240,447) - - - - (240,447) Revaluation ------

Total contribution by and distribution to equity holders - (240,447) - - - - (240,447)

Regulatory transfers Statutory reserve - (31,923) - - 31,923 - - Credit risk reserve - (44,310) - - - 44,310 -

- (76,233) - - 31,923 44,310 -

Balance at 31 December 2017 226,641 198,782 109,782 - 354,546 137,047 1,026,798

The notes on page 85 to 168 form an integral part of these financial statements.

Ecobank Annual Report 2017 79 STATEMENTS OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2017

The Group The Bank 2017 2016 2017 2016 Note GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash flows from operating activities Interest paid (150,778) (206,986) (149,521) (184,667) Interest received 864,810 927,253 848,008 894,554 Net fees and commissions 212,304 157,222 212,148 157,270 Other income received 31,387 22,202 47,082 34,633 Net trading income 178,311 194,123 177,994 193,783 Gains from derecognition of financial assets At amortised cost - 177,854 - 177,854 Payments to employees and suppliers (664,522) (498,419) (663,637) (497,428) Tax paid (123,952) (125,669) (120,603) (122,352)

Cash flows from operating activities before changes in operating assets and liabilities 347,560 647,580 351,471 653,647

Changes in operating assets and liabilities Loans and advances (17,666) (493,709) (20,321) (488,424) Other assets (65,282) (4,907) (68,472) (5,009) Customer deposits 1,066,817 349,372 1,073,278 422,518 Other liabilities (170,910) 389,953 (166,620) 373,392 Mandatory reserves (368,645) (156,092) (368,645) (156,092)

Net cash generated from operating activities 791,874 732,197 800,691 800,032

Cash flow from investing activities Purchase of property and equipment 30 (82,857) (83,094) (82,854) (83,094) Purchase of software 28 (2,449) (956) (2,449) (956) Proceeds from sale of equipment 30 676 2,442 676 2,442 Proceeds from the sale of non-current Assets held for sale 16,418 - 16,418 - Government securities purchased (1,668,168) (3,750,837) (1,456,854) (3,515,475) Proceeds from sale of Government securities 256,510 3,534,928 45,954 3,279,529 Investment in subsidiaries - - (5,993) -

Net cash used in investing activities (1,479,870) (297,517) (1,485,102) (317,554)

The notes on page 85 to 168 form an integral part of these financial statements.

80 Ecobank Annual Report 2017 FINANCIAL STATEMENTS

STATEMENTS OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2017

The Group The Bank 2017 2016 2017 2016 Note GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash flows from operating activities Dividend paid (240,447) (246,312) (240,447) (246,312) Repayment of borrowed funds 33 (42,691) (180,646) (42,691) (180,646) Proceeds from borrowed funds 33 43,796 - 43,796

Net cash used in financing activities (283,138) (383,162) (283,138) (383,162)

Net increase in cash and cash equivalents (971,134) 51,518 (967,549) 99,316 Cash and cash equivalents at beginning of year 2,248,528 2,078,094 2,104,237 1,886,005

Effect of exchange rate fluctuations on cash and cash equivalents 39,611 118,916 39,611 118,916

Cash and cash equivalents at end of year 39 1,317,005 2,248,528 1,176,299 2,104,237

The notes on page 85 to 168 form an integral part of these financial statements.

Ecobank Annual Report 2017 81 COMMISSIONING OF THE ECOBANK GHANA HEAD OFFICE

82 Ecobank Annual Report 2017 Ecobank Annual Report 2017 83 84 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

1. GENERAL INFORMATION

Ecobank Ghana Limited is a limited liability company, incorporated and domiciled in Ghana. These financial statements comprise the consolidated financial statements of the Bank and its subsidiaries (together the Group) and its interest in associates as well as the separate financial statements of the Bank. The Group provides retail, corporate and investment banking and other financial services in Ghana.

The Bank is listed on the Ghana Stock Exchange.

The consolidated and separate financial statements were authorized for issue by the Board of Directors on 26th February 2018.

Ecobank Annual Report 2017 85 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all the periods presented in these financial statements and have been applied consistently by Group entities.

2.1 Basis of Presentation

The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. Additional information required by the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit- Taking Institution Act, 2016 (Act 930) have been included, where appropriate. The financial statements have been prepared under the historical cost convention, except for buildings which are carried at revalued amounts.

The financial statements are presented in Ghana cedis, which is the Bank’s functional currency. Except otherwise indicated, financial information presented in Ghana cedis has been rounded to the nearest thousand.

Information on risks from financial instruments and financial risk management policies are disclosed in Note 3.

2.2 Use of Judgment and Estimates

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going 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 revision and future periods, if the revision affects both current and future periods.

Areas involving a higher degree of judgement or complexity, or where assumptions and estimates are considered significant to the financial statements, are disclosed in Note 5.

2.3 New Standards and Interpretations issued but not yet effective

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2017, however, the Group has not applied these new or amended standards in preparing these financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to early adopt these standards.

Standard / Interpretation Effective Date

IFRS 9 Financial instruments 1 January 2018

IFRS 15 Revenue from contract with customers 1 January 2018

IFRS 16 Leases 1 January 2019

86 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. In October 2017, the IASB issued Prepayment Features with Negative Compensation (Amendments to IFRS 9). The amendments are effective for annual periods beginning on or after 1 January 2019 with early adoption permitted. The group and company have begun assessing the potential impact on the financial statements resulting from the application of the amendments to IFRS 9 as issued in October 2017.

Classification and measurement IFRS 9 will have a significant impact on the Bank, which will include changes in the measurement bases of the Bank’s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different.

The new classification reflects the business model in which assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale.

A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as at FVTPL:

• It is held within a business model whose objective is to hold assets to collect contractual cash flows; and • Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

A financial asset is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:

• It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and • Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. In addition, on initial recognition the Bank may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Ecobank Annual Report 2017 87 A financial asset is classified into will consider the contractual terms which may include reasonable one of these categories on initial of the instrument. This will include compensation for early recognition. assessing whether the financial termination of the contract. asset contains a contractual term Business Model assessment that could change the timing or Impact assessment amounts of contractual cash flows The Bank will make an assessment such that it would not meet this The standard will affect of the objective of the business condition. classification and measurement of model in which a financial asset is financial assets held at 1 January held at a portfolio level because this The Bank has the ability to change 2018 as follows: best reflects the way the business the interest rates on variable is managed and information is rate loans at its discretion. The • Loans and advances to provided to management. discretionary rate compensates Banks and to customers that for basic lending costs and allows are classified as loans and Financial assets that are held the Bank to remain competitive in receivables and measured at for trading and those that are the industry. In this case the Bank amortised cost under IAS 39 managed and whose performance will assess whether discretionary will in general be measured at is evaluated on a fair value basis feature is consistent with the SPPI amortised cost under IFRS 9; will be measured at FVTPL because criterion by considering a number they are neither held to collect of factors, including: • Debt investment securities contractual cash flows nor held that are classified as available- both to collect contractual cash • The borrowers’ ability to repay for-sale under IAS 39 may, flows and to sell financial assets. the loans without significant under IFRS 9, be measured at penalties; amortised cost, FVOCI or FVTPL, Assessment of whether depending on the particular contractual cash flows are • Market conditions ensures that circumstances; and solely payments of principal interest rates are consistent and interest between banks; and • Held-to-maturity securities (Government of Ghana bills) For the purpose of this assessment, • Any regulatory or customer measured at amortised cost “principal” is defined as the fair protection framework is in place under IAS 39 will in general be value of the financial asset on that requires Banks to treat measured at amortised cost initial recognition. ‘Interest’ is customers fairly. under IFRS 9. defined as consideration for the time value of money, for the credit Some of the Bank’s loans contain • Equity securities classified as risk associated with the principal prepayment features. The available-for-sale under IAS 39 amount outstanding during a borrower has the ability to early would generally be measured at particular period of time and for prepay (without paying any fees). FVOCI under IFRS 9. other basic lending risks and cost (eg liquidity risk and administrative A prepayment feature is consistent costs), as well as a profit margin. with the SPPI criterion if the prepayment amount substantially In assessing whether contractual represents unpaid amounts of cash flows are solely payments of principal and interest on the principal and interest, the Bank principal amount outstanding,

88 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

Impairment – Financial amount recognised will be gross carrying amount and assets, loan commitments 12-month ECLs: the present value of estimated and financial guarantee future cash flows; contracts • Debt investment securities that are determined to have low • Undrawn loan commitments: the IFRS 9 replaces the ‘incurred credit risk at the reporting date; present value of the difference loss’ model in IAS 39 with a and between the contractual cash forward looking ‘expected credit • Other financial instruments flows that are due to the Group loss’ model. This will require for which credit risk has not if the commitment is drawn considerable judgement over how increased significantly since down and the cash flows that changes in economic factors affect initial recognition. the Group expects to receive; ECLs, which will be determined on and a probability-weighted basis. The impairment requirements of IFRS 9 are complex and require • Financial guarantee contracts: The new impairment model management judgements, the expected payments to applies to the following financial estimates and assumptions, reimburse the holder less any instruments that are not measured particularly in the following areas: amounts that the Group expects at FVTPL: to recover. • Assessing whether the credit • Financial assets that are debt risk of an instrument has Financial assets that are credit- instruments; and increased significantly since impaired are defined by IFRS 9 in a • Loan commitments and financial initial recognition; and similar way to financial assets that guarantee contracts issued. • Incorporating forward- are impaired under IAS 39. looking information into the No impairment loss will be measurement of ECLs. recognised on equity investments. Measurement of ECL IFRS 9 requires a loss allowance to be recognised at an amount equal ECLs are a probability-weighted to either 12-month ECLs or lifetime estimate of credit losses and will ECLs. Lifetime ECLs are the ECLs be measured as follows: that result from all possible default events over the expected life of • Financial assets that are not a financial instrument, whereas credit-impaired at the reporting 12-month ECLs are the portion date: the present value of all cash of ECLs that result from default shortfalls (i.e. the difference events that are possible within between the cash flows due to the 12 months after the reporting the entity in accordance with the date. contract and the cash flows that the Group expects to receive); The Bank will recognise loss allowance at an amount equal • Financial assets that are credit- to lifetime ECLs, except in the impaired at the reporting date: following cases, for which the the difference between the

Ecobank Annual Report 2017 89 Definition of default

Under IFRS 9, the Group will consider a financial asset to be in default when:

• The borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or • The borrower is past due more than 90 days on any material credit obligation to the Group. Overdrafts are considered as being past due once the customer has breached as advised limit or been advised of a limit smaller than the current amount outstanding.

In assessing whether a borrower is in default, the Group will consider indicators that are:

• Qualitative – e.g. breaches of covenant; • Quantitative – e.g. overdue status and non-payment on another obligation of the same issuer to the Group; and • Based on data developed internally and obtained from external sources.

Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time to reflect changes in circumstances.

Significant increase in credit risk

Under IFRS 9, when determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the Group will consider reasonable and supportable information that is relevant and available without undue cost or effort, including both quantitative and qualitative information and analysis, based on the Group’s historical experience and expert credit assessment and including forward-looking information.

The Group is currently formulating its detailed methodologies for assessing increases in credit risk under IFRS 9.

The Group expects that identifying whether a significant increase in credit risk has occurred for an exposure will entail comparing:

• The remaining lifetime probability of default (PD) at the reporting date; with • The remaining lifetime PD for this point in time that was estimated at the time of initial recognition of the exposure.

The criteria for determining whether credit risk has increased significantly vary by portfolio and will include quantitative changes in PDs and qualitative factors, including a backstop based on delinquency. The Group is yet to develop quantitative modelling for determining whether credit risk has increased significantly using credit risk grades. As a backstop, as required by IFRS 9, the Group will presumptively consider that a significant increase in credit risk occurs no later than when an asset is more than 30 days past due. The Group expects to determine days past due by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received.

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Inputs into measurement of ECL

The key inputs into the measurement of ECL are likely to be the term structures of the following variables:

• Probability of default (PD); • Loss given default (LGD); • Exposure at default (EAD).

In general, the Group expects to derive these parameters from internally developed statistical models and other historical data. They will be adjusted to reflect forward-looking information as described below.

PD estimates are estimates at a certain date, which the Group expects to calculate based on internal experience. Transition matrix was developed for corporate and retail portfolios based on delinquency information. If an exposure migrates between delinquency classes, then this well lead to a change in the estimate of the associated PD. Under IFRS 9, the Group will incorporate forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since its initial recognition and its measurement. This process would involve developing two or more additional economic scenarios and considering the relative probabilities of each outcome. External information may include economic data and forecasts published by governmental bodies and monetary authorities in the countries where the Group operates and selected private- sector and academics forecasters. The Group is in the process of identifying and documenting key drivers of credit risk and credit losses for each portfolio of financial instruments and, using an analysis of historical data, estimating relationships between macro-economic variables and credit risk and credit losses.

LGD is the magnitude of the likely loss if there is a default. The Group plans to estimate LGD parameters based on the history of recovery rates of claims against defaulted counterparties. It expects the LGD models to consider the structure, collateral, seniority of the claim, counterparty industry and recovery costs of any collateral that is integral to the financial asset.

EAD represents the expected exposure in the event of a default. The Group expects to derive the EAD from the current exposure to the counterparty and potential changes to the current amount under the contract including amortisation. The EAD of a financial asset will be the gross carrying amount at default. For lending commitments and financial guarantees, the EAD will consider the amount drawn, as well as potential future amounts that may be drawn or repaid under the contract, which will be estimated based on historical observations. For some financial assets, the Group expects to determine EAD by modelling the range of possible exposure outcomes at various points in time.

Ecobank Annual Report 2017 91 Impact Assessment

The Group will apply IFRS 9 as initially issued in July 2014 on 1 January 2018. Based on the assessments undertaken to date, the total estimated Expected Credit Loss (ECL) on the financial assets of the Group as at 31 December 2017 would have been in the range of GH¢263,000,000 and GH¢321,035,000. Total estimated adjustment (before tax) on the adoption of IFRS 9 on the opening balance of the Bank’s equity at 1 January 2018 will be approximately within the range of an increase of GH¢47,165,000 to GH¢ 105,200,000. From the assessment, IFRS 9 impairment could be lower than the regulatory provisions. The Bank has estimated that on adoption of IFRS 9, the impact on credit risk reserve will be an additional movement from credit risk reserve to retained earnings.

The above assessment is preliminary because not all transition work has been finalised. The actual impact of adopting IFRS 9 on 1 January 2018 may change because:

• IFRS 9 will require the Group to revise its accounting processes and internal controls and these changes are not yet complete. • Although parallel runs were carried out in the last quarter of 2017, the new system has not been operational for a more extended period. • The Group is refining and finalising its models for ECL calculation. • The new accounting policies, assumptions, judgements and estimation techniques are subject to change until the Group finalises its first financial statements that include the date of initial application.

Disclosure IFRS 9 will require extensive new disclosures, in particular about credit risk and ECLs.

Impact on Capital planning The Group’s lead Regulator (Bank of Ghana) is currently consulting on possible transition provisions relating to the implementation of IFRS 9 under which some of the capital impact of IFRS 9 would be phased over two years. The Bank of Ghana (“BoG”) has provided tentative guidelines on regulatory treatment of accounting provisions on capital. BoG recommended that Banks should compare CET1 capital based on the opening statement of financial position using ECL accounting with CET1 capital based on the closing statement of financial position (ie the day prior to the opening day) under the existing incurred loss accounting approach. Where this shows a reduction in CET1 capital due to an increase in provisions, net of tax effect, the decline in CET1 capital would be spread for regulatory purposes over two years.

Transition Changes in accounting policies resulting from the adoption of IFRS 9 will generally be applied retrospectively, except as described below:

• The Group plans to take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 will generally be recognised in retained earnings and reserves as at 1 January 2018.

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IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised

IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

The adoption of IFRS 15 is considered to have an impact on the Group’s fees and commission income. The Group earns fees and commission income (other than fees included in the calculation of the effective interest rates) on the provision of services. The Group is yet to perform a detailed impact assessment of IFRS 15 on its fees and commission income, therefore the impact of IFRS 15 is currently unknown.

IFRS 16 Leases

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of- use (ROU) asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases.

IFRS 16 replaces existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16.

The Group is yet to start an initial assessment of the potential impact on its consolidated and separate financial statements.

Ecobank Annual Report 2017 93 Transition

The Group currently plans to apply IFRS 16 initially on 1 January 2019.

As a lessee, the Group can either apply the standard using a:

• Retrospective approach - the standard is applied retrospectively to each prior reporting period presented applying IAS 8; or • Modified retrospective approach with optional practical expedients - the standard is applied retrospectively with the cumulative effect of initially applying IFRS 16 recognised in the opening balance of retained earnings (or other component of equity, as appropriate) at the date of initial application, instead of restating comparative information.

The lessee applies the election consistently to all of its leases. The Group has not yet determined which transition approach to apply. As a lessor, the Group is not required to make any adjustments for leases except where it is an intermediate lessor in a sub-lease. The Group has not yet quantified the impact on its reported assets and liabilities of the adoption of IFRS 16. The quantitative effect will depend on, inter alia, the transition method chosen, the extent to which the Group uses the practical expedients and recognition exemptions, and any additional leases that the Group enters into. The Group expects to disclose its transition approach and quantitative information before adoption.

2.4 Consolidation

The financial statements of subsidiaries used to prepare the consolidated financial statements were prepared as of the parent company’s reporting date. The accounting policies of subsidiaries that are consolidated by the group conform to these policies.

(a) Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date - i.e. when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.

Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if they are related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

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(b) Subsidiaries

Subsidiaries are investees controlled by the Group. The Group controls an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases. The financial statements of the subsidiary used to prepare the consolidated financial statements were prepared as of the Bank’s reporting date.

(c) Loss of control

When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any retained interest in the entity is measured at fair value with the change in carrying amount recognized in profit or loss. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(d) Transactions eliminated on consolidation

Intra-group balances and transactions and any unrealised income and expenses (except foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(e) Associates

Associates are all entities over which the Group has significant influence but not control. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

Profits and losses resulting from transactions between the Group and its associate are recognised in the group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

(f) Separate financial statements

In the separate financial statements, investments in subsidiaries and associates are accounted for at cost less impairment. Cost also includes direct attributable costs of investment.

Ecobank Annual Report 2017 95 2.5 Segment reporting

Operating segments are reported in a manner consistent with internal reporting to the Board of Directors, which has responsibility for allocating resources and measuring performance of operating segments.

All transactions between business segments are conducted on an arm’s length basis, with intra-segment revenue and costs being eliminated on consolidation. Income and expenses directly associated with each segment are included in determining business segment performance in accordance with IFRS 8. The Group has the following business segments: Consumer, Commercial and Corporate which are reportable segments. These divisions offer different products and services and are managed separately based on the Group’s management and internal reporting structure.

The business segments are defined as per below:

The credit quality of the portfolio of loans and advances to customers that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Group based on the various business segments.

(a) Consumer banking - This is personal banking and specializes in serving the Premier, Advantage, Classic and Direct customers

(b) Commercial banking - This is Business Banking and Medium Local Corporates with the following sub-segments SMEs, Medium Local corporates and Non-government public sector (schools, faith, NGOs & professional bodies)

(c) Corporate banking - Specializes in serving the public sector, multinational institutions, financial institutions/ international organizations and the Regional Corporate segment of the market.

2.6 Foreign currency translation

Transactions and balances

Transactions in foreign currencies are translated into the respective functional currency of the Group entities using exchange rates prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at exchange rates ruling at that date. Non-monetary items that are measured at historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are generally recognized in profit or loss.

Foreign exchange gains and losses arising from the translation of items recognized in other comprehensive income are presented in other comprehensive income.

96 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

2.7 Financial assets and liabilities

All financial assets and liabilities have to been recognised in the statement of financial position and measured in accordance with their assigned category.

2.7.1 Financial assets

The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale financial assets. Management determines the classification of its financial assets at initial recognition.

(a) Loans and receivables

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

• those that the Group intends to sell immediately or in the short term, which are classified as held for trading, and those that the Group upon initial recognition designates at fair value through profit or loss; • those that the Group upon initial recognition designates as available for sale; or • those for which the holder may not recover substantially all of the initial investment, other than because of credit deterioration.

Loans and advances include cash and balances with Bank of Ghana, government securities, loans and advances to banks, loans and advances to customers and some other assets.

Loans and advances are initially measured at fair value plus incremental direct transaction costs, and subsequently measured at their amortised cost using the effective interest method. Loans and receivables are reported in the statement of financial position as loans and advances to groups or customers or as investment securities. Interest on loans is included in profit or loss and is reported as ‘Interest income’. In the case of an impairment, the impairment loss is reported as a deduction from the carrying value of the loan and recognised in profit and loss as ‘loan impairment charges’.

(b) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Available-for-sale financial assets include investment securities: available for sale.

Available-for-sale financial assets are initially measured at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised.

Unquoted equity securities whose fair value cannot be measured reliably are carried at cost. If an available- for-sale financial asset is determined to be impaired, the cumulative gain or loss previously recognised in other

Ecobank Annual Report 2017 97 (b) Available-for-sale financial assets (cont’d)

comprehensive income is recognised in profit and loss. However, interest is calculated using the effective interest method, and foreign currency gains and losses on monetary assets classified as available for sale are recognised in profit and loss. Dividends on available-for-sale equity instruments are recognised in profit and loss in ‘Dividend income’ when the Group’s right to receive payment is established.

(c) Recognition

The Group uses trade date accounting for regular contracts when recording financial asset transactions. Financial assets that are transferred to a third party but do not qualify for derecognition are presented in the statement of financial position as ‘Assets pledged as collateral’, if the transferee has the right to sell or re-pledge them.

2.7.2 Financial liabilities

Financial liabilities include deposits from related entities, banks and customers or debt securities in issue, convertible bonds and subordinated and other debts for which the fair value option is not applied. Financial liabilities are measured initially at fair value less, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue and subsequently measured at their amortised cost.

2.7.3 Determination of fair value

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.

Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are

98 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

managed by the Group on the basis of the net exposure to either market or credit risk are measured on the basis of a price that would be received to sell a net long position (or paid to transfer a net short position) for a particular risk exposure. Those portfolio-level adjustments are allocated to the individual assets and liabilities on the basis of the relative risk adjustment of each of the individual instruments in the portfolio.

The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on which the amount could be required to be paid.

The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

2.7.4 Derecognition

Financial assets are derecognised when the contractual rights to receive cash flows from the financial asset has expired or the Group has transferred substantially all the risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss.

Any interest in the transferred financial asset that is created or retrieved by the Bank is recognised as a separate asset or liability. Financial liabilities are derecognised when contractual obligations are discharged, cancelled or expire.

Collateral (shares and bonds) furnished by the Group under standard repurchase agreements and securities lending and borrowing transactions are not derecognised because the Group retains substantially all the risks and rewards on the basis of predetermined repurchase prices, and the criteria for derecognition are therefore not met. This also applies to certain securitisation transactions in which the Group retains a portion of the risks.

2.7.5 Reclassification of financial assets

The Group may choose to reclassify a non-derivative financial asset held for trading out of the held-for-trading category, if the financial asset is no longer held for the purpose of selling in the near-term.

Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near-term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories, if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

Ecobank Annual Report 2017 99 2.7.6 Offsetting financial instrument the decrease cannot yet be identified with the individual financial assets in the portfolio, Financial assets and liabilities are offset and the net including: amount reported when there is a legally enforceable right to offset the recognised amounts and there is (i) adverse changes in the payment status of an intention to settle on a net basis or realise the borrowers in the portfolio; and asset and settle the liability simultaneously. (ii) national or local economic conditions that correlate with defaults on assets in the portfolio. 2.7.7 Impairment of financial assets The estimate period between a loss occurring and (a) Assets carried at amortised cost its identification is determined by local management for each identified portfolio. In general, the periods The Group assesses whether there is objective used vary between 3 and 12 months, in exceptional evidence that a financial asset or group of financial cases, longer periods are warranted. assets is impaired at each reporting date. A financial asset or a group of financial assets is considered The Group first assesses whether objective evidence impaired only if there is objective evidence of of impairment exists individually for financial assets impairment as a result of one or more events that that are individually significant, and individually occurred after initial recognition of the asset (a ‘loss or collectively for financial assets that are not event’) and that loss event (or events) has an impact individually significant. If the Group determines on estimated future cash flows of the financial asset that no objective evidence of impairment exists for or group of financial assets that can be reliably an individually assessed financial asset, whether estimated. significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics The criteria that the Group uses to determine and collectively assesses them for impairment. whether there is objective evidence of an impairment Assets that are individually assessed for impairment loss include: and for which an impairment loss is or continues to be recognised are not included in a collective • significant financial difficulty of the issuer or assessment of impairment. obligor; • a breach of contract, such as a default or The amount of loss is measured as the difference delinquency in interest or principal payments; between the asset’s carrying amount and the present • granting the borrower, the economic or legal value of estimated future cash discounted at the reasons relating to the borrower’s financial financial asset’s original effective interest rate. The difficulty, a concession that the lender would not carrying amount of the asset is reduced through the otherwise consider; use of an allowance account and the amount of the • a likely probability that the borrower will enter loss is recognised in profit or loss. If a loan or held-to- bankruptcy or other financial reorganisation; maturity investment has a variable interest rate, the • the disappearance of an active market for that discount rate for measuring any impairment loss is financial asset because of financial difficulties; or the current effective interest rate determined under • observable data indicating that there is a the contract. As a practical expedient, the Group may measurable decrease in estimated future cash measure impairment on the basis of an instrument’s flows from a portfolio of financial assets, since fair value using observable market prices. initial recognition of those assets, although

100 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

Assets carried at amortised cost (Cont’d) Such loans are written off after all the necessary procedures have been completed and the amount The calculation of the present value of estimated of loss has been determined. Impairment charges future cash flows of a collateralised financial asset relating to loans and advances are recognised in reflects cash flows that may result from foreclosure loan impairment charges whilst impairment charges less costs for obtaining and selling the collateral, relating to investment securities (held to maturity whether or not foreclosure is probable. and loans and receivables categories) are recognised in ‘Net gains/(losses) on investment securities’. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis If, in a subsequent period, the amount of the of similar credit risk characteristics (that is, on the impairment loss decreases and the decrease can be basis of the Group’s grading process that considers related objectively to an event occurring after the asset type, industry, geographical location, collateral impairment was recognised (such as an improvement type, past-due status and other relevant factors). in the debtor’s credit rating), the previously Those characteristics are relevant to the estimation of recognised impairment loss is reversed by adjusting future cash flows for groups of such assets by being the allowance account. The amount of the reversal is indicative of the debtors’ ability to pay all amounts recognised in profit or loss. due according to the contractual terms of the assets being evaluated. (b) Assets classified as available-for-sale

Future cash flows in groups of financial assets that are The Group assesses whether there is objective collectively evaluated for impairment are estimated evidence that a financial asset or a group of financial on the basis of the contractual cash flows of the assets is impaired at each reporting date. In the assets in the group and historical loss experience for case of equity investments classified as available assets with credit risk characteristics similar to those for sale, a significant or prolonged decline in the in the group. Historical loss experience is adjusted fair value of the security below its cost is objective on the basis of current observable data to reflect evidence of impairment resulting in the recognition the effects of current conditions that did not affect of an impairment loss. If any such evidence exists the period on which the historical loss experience is for available-for-sale financial assets, the cumulative based and to remove the effects of conditions in the loss – measured as the difference between the historical period that do not currently exist. acquisition cost and the current fair value, less any impairment loss on that financial asset previously Estimates of changes in future cash flows for groups recognised in profit or loss – is removed from equity of assets should reflect and be directionally consistent and recognised in profit or loss. Impairment losses with changes in related observable data from period to recognised in profit or loss on equity instruments are period including property prices, payment status and not reversed through profit or loss. If, in a subsequent other factors indicative of changes in the probability period, the fair value of a debt instrument classified of losses and their magnitude. The methodology and as available for sale increases and the increase can assumptions used for estimating future cash flows objectively be related to an event occurring after are reviewed regularly by the Group to reduce any the impairment loss was recognised in profit or differences between loss estimates and actual loss loss, the impairment loss is reversed through other experience. comprehensive income.

When a loan is uncollectible, it is written off against the related allowance for loan impairment.

Ecobank Annual Report 2017 101 (c) Renegotiated loans recognised at fair value. The impairment loss before an expected restructuring is measured as follows: Loans that are either subject to collective impairment assessment or individually significant • If the expected restructuring will not result in and whose terms have been renegotiated are no derecognition of the existing asset, then the longer considered to be past due but are treated estimated cash flows arising from the modified as performing loans, when performance has been financial asset are included in the measurement confirmed. In subsequent years, the asset is of the existing asset based on their expected considered to be past due and disclosed as such only timing and amounts discounted at the original if renegotiated again. effective interest rate of the existing financial asset. If the terms of a financial asset are renegotiated or • If the expected restructuring will result in modified or an existing financial asset is replaced derecognition of the existing asset, then the with a new one due to financial difficulties of the expected fair value of the new asset is treated borrower, then an assessment is made of whether as the final cash flow from the existing financial the financial asset should be derecognised. If the asset at the time of its derecognition. This cash flows of the renegotiated asset are substantially amount is discounted from the expected date different, then the contractual rights to cash flows of derecognition to the reporting date using the from the original financial asset are deemed to original effective interest rate of the existing have expired. In this case, the original financial financial asset. asset is derecognised and the new financial asset is

2.8 Interest income and expenses

Interest income and expense for all interest-bearing financial instruments are recognised within ‘interest income’ and ‘interest expense’ in profit or loss 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 allocating interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.

When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument, including prepayment options, but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

2.9 Fees and commissions income

Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred, together with related direct costs, and recognised as an adjustment to the effective interest rate on the loan. Loan syndication fees are recognised as revenue when the syndication has been completed and the Group has retained no part of the loan package for itself or retained a part at the same effective interest rate as the other participants.

102 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

2.10 Dividend income

Dividends are recognised when the entity’s right to receive payment is established.

2.11 Net trading income

Net trading income comprises gains less losses relating to trading assets and liabilities, including realised and unrealised fair value changes, interest and foreign exchange differences.

2.12 Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with the Central Bank and highly liquid financial assets with original maturities of three (3) months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group in the management of its short-term commitments.

Cash and cash equivalents are carried at amortised cost.

2.13 Leases

(i) Lease assets – Lessee

Leases that the Group assumes substantially all the risks and rewards of ownership of the underlying asset are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and present value of minimum lease payments. Subsequent to initial recognition, the leased asset is accounted for in accordance with the accounting policy applicable to that asset. All other leases are classified as operating leases.

(ii) Lease payments – Lessee

Payments made under operating leases are charged to profit or loss on a straight line basis over the period of the lease. When an operating lease is terminated before the lease has expired, any payment required to be made by the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

Minimum lease payments under finance leases are apportioned between finance expense and the outstanding lease liability. The finance expense is allocated to each period so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(iii) Lease assets – Lessor

If the Group is the lessor in a lease agreement that transfers substantially all of the risks and rewards incidental to ownership of the asset to the lessee, then the arrangement is classified as a finance lease and a receivable equal to the net investment in the lease is recognised and presented within loans and advances.

Ecobank Annual Report 2017 103 2.14 Property and equipment

(i) Recognition and measurement

Except for Land and Buildings which are stated at revalued amounts, all other property and equipment are stated at cost less depreciation. Cost includes expenditure that is directly attributable to the acquisition of the items.

Buildings are shown at valuation less subsequent depreciation. The fair values are determined every three (3) years by external, independent, professional valuers. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation increase arising on the revaluation of property is credited to the revaluation surplus in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the non- distributable reserve. All other decreases are charged to profit or loss.

(ii) Subsequent costs

Subsequent expenditures are included in the asset’s carrying amount or are recognised as a separate asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognised. All other repair and maintenance costs are charged to profit or loss during the financial period in which they are incurred.

(iii) Depreciation

Depreciation is recognised in profit or loss on a straight line basis to write off the gross value less residual amounts over their estimated useful lives. The estimated useful lives for the current and comparative periods are as follows:

Motor Furniture and Buildings Computers Vehicles equipment 40 4 5 3 Years Years Years Years

104 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

(iii) Depreciation (Cont’d)

Freehold land is not depreciated.

Depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

(iv) Capital work in progress

Property and equipment under construction is stated at initial cost and depreciated from the date the asset is made available for use over its estimated useful life. Assets are transferred from capital work in progress to an appropriate class of property and equipment when commissioned and ready for its intended use.

(v) Derecognition

Property and equipment are derecognised upon disposal or when no future economic benefits are expected to flow to the Group from either their use or disposal. Gains or losses on derecognition of an item of property and equipment are determined by comparing the proceeds from disposal, if applicable, with the carrying amount of the item and are recognised directly in profit or loss.

2.15 Intangible assets

Computer software

Intangible assets comprise computer software licences. Intangible assets are recognised at cost. Intangible assets with a definite useful life are amortised using the straight-line method over their estimated useful life, is 3 years. At the end of each reporting period, intangible assets are reviewed for indications of impairment or changes in estimated future economic benefits. If such indications exist, the intangible assets are analysed to assess whether their carrying amount is fully recoverable. An impairment loss is recognised if the carrying amount exceeds the recoverable amount.

2.16 Assets held for sale

Non-current assets are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets are generally measured at lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held-for-sale and subsequent gains and losses on remeasurement are recognized in profit or loss.

Once classified as held-for-sale, property and equipment are no longer amortised or depreciated.

Ecobank Annual Report 2017 105 2.17 Impairment of non-financial assets

The carrying amounts of the Group’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 or its cash generating unit (CGU) exceeds its recoverable amount.

The recoverable amount is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rates that reflect current market assessments of the time value of money and risks specific to the asset.

A previously recognised impairment loss is reversed where there has been a change in circumstances or in the basis of estimation used to determine the recoverable value, but only to the extent that the asset’s net carrying amount does not exceed the carrying amount of the asset that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.18 Income tax

(a) Current tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In which case, the corresponding tax is recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax laws enacted or substantially enacted at the reporting date and any adjustments to tax payable in respect of previous years.

(b) Deferred tax

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction neither affects accounting nor taxable profit or loss. Deferred tax is determined using tax rates that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset or liability is realised.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.

Deferred tax is provided on temporary differences except for deferred tax liabilities where the timing of reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the forseeable future.

106 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

(b) Defered tax (Cont’d)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority or either the same entity or different taxable entities where there is an intention to settle balances on a net basis.

2.19 Provisions and Contingent Liabilities

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events that can be reliably estimated and it is probable that an outflow of resources will be required to settle the obligation. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations which are likely to result in an outflow to settle related classes of obligations as a whole, a provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of expenditures expected to be required to settle obligations using pre-tax rates that reflect current market assessments of the time value of money and risks specific to the obligation. An increase in the provision due to passage of time is recognised as an interest expense.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the group, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. If the likelihood of an outflow of resources is remote, the possible obligation is neither a provision nor a contingent liability and no disclosure is made.

2.20 Financial guarantee contracts and loan commitments

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to financial institutions and other bodies on behalf of customers to secure loans and overdrafts. Loan commitments’ are firm commitments to provide credit under pre-specified terms and conditions.

Financial guarantees and loan commitments are initially recognised at the fair value and amortised over the life of contract. The financial guarantee or loan commitment is subsequently carried at the higher of the amortised amount and the present value of any expected payments, when payment becomes probable.

Ecobank Annual Report 2017 107 2.21 Stated capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity net of any tax effects.

Dividends on ordinary shares

Dividends on ordinary shares are recognised in equity in the period in which they are approved by the shareholders.

2.22 Fiduciary activities

The Group acts as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from these financial statements, as they are not assets of the Group.

2.23 Post balance sheet events

Events subsequent to the balance sheet date are reflected in the financial statements only to the extent that they relate to the year under consideration and the effect is material.

2.24 Employment benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit or loss when they are due.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit sharing plans, if the Bank has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

2.25 Earnings per share

The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the number of ordinary shares outstanding during the period. The Bank has no convertible notes and share options, which could potentially dilute its EPS and therefore the Bank’s Basic and diluted EPS are essentially the same.

108 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3. FINANCIAL RISK MANAGEMENT

The Group’s business involves taking on risks in a targeted manner and managing them professionally. The core functions of the Group’s risk management are to identify all key risks for the Group, measure these risks, manage the risk positions and determine capital allocations.

The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and best market practices. The Group’s aim is to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group’s financial performance.

The Group defines risk as the possibility of losses or profits foregone, which may be caused by internal or external factors.

Risk management is carried out by the risk department under policies approved by the Board of Directors. The department identifies and evaluates financial risks in close co-operation with the Group’s operating units. The Board provides guiding principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments. In addition, internal audit is responsible for the independent review of risk management and the control environment.

The risks arising from financial instruments to which the Group is exposed are financial risks; which includes credit risk, liquidity risk, market risk and operational risk (which are discussed below).

Credit Risk

Credit risk is the risk of suffering financial loss, should any of the Group’s customers, market counterparties fail to fulfil their contractual obligations to the Group. Credit risk arises mainly from commercial and consumer loans and advances, credit cards, and loan commitments arising from such lending activities, but can also arise from credit enhancement provided, such as financial guarantees, letters of credit, endorsements and acceptances. The Group is also exposed to other credit risks arising from investments in debt securities and other exposures arising from trading activities (‘trading exposures’), including non-equity trading portfolio assets, derivatives and settlement balances with market counterparties and reverse repurchase loans. Credit risk is the single largest risk for the Group’s business; management carefully manages its exposure to credit risk. Credit risk management and control are centralised in a credit risk management team, which reports to the Board of Directors and heads of each business unit regularly.

Credit Concentration Risk

Credit concentration risk is the risk of loss to the Bank arising from excessive concentration of exposure to a single counterparty, industry sector, product or geographic area. Large exposure limits have been established under the Bank’s credit policy in order to avoid excessive losses from any single counter-party who is unable to fulfill its payment obligations. These risks are monitored on an ongoing basis and subject to annual or more frequent reviews when considered necessary.

Ecobank Annual Report 2017 109 Credit Mitigation

Potential credit losses from any given account, customer or portfolio are mitigated using a range of tools such as collateral, credit insurance and other guarantees. The reliance that can be placed on these mitigants is carefully assessed in the light of issues such as legal certainty and enforceability, market valuation and counterparty risk of the guarantor. Risk mitigation policies determine the eligibility of collateral types.

Collateral

In order to proactively respond to credit deterioration, the Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advanced, which is common practice. Collateral is held to mitigate credit risk exposures. Collateral types that are eligible for risk mitigation include: cash; residential, commercial and industrial property; property and equipment such as motor vehicles, plant and machinery, bank guarantees and floating charge over other assets.

The risk mitigation policy prescribes the frequency of valuation for different collateral types, based on the level of price volatility of each type of collateral and the nature of the underlying product or risk exposure. Where appropriate, collateral values are adjusted to reflect current market conditions. Longer-term finance and lending to corporate entities are generally secured; individual credit facilities are generally unsecured. In addition, in order to minimize credit losses, the Bank seeks additional collateral from counterparties as soon as impairment indicators are noticed for relevant individual loans and advances.

Credit Related Commitments

Documentary and commercial letters of credit are written undertakings by the Bank on behalf of a customer authorising a third party to draw drafts on the Bank up to a stipulated amount under specific terms and conditions. The primary purpose of these instruments is to ensure that funds are available to a customer as required.

Guarantees and standby letters of credit carry less risk than direct loans. These arrangements are collateralised by the underlying shipments of goods. The likelihood of loss amounts is far less than the entire commitment as most commitments to extend credit of this nature are contingent upon the customer maintaining specific cash in margin accounts. The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.

Regulatory Impairment

An account is considered to be in default when payment is not received on due date. Accounts that are overdue by more than 90 days are considered delinquent. These accounts are closely monitored and subjected to a collection process. The process used for impairment is based on Bank of Ghana guidelines which recognize cash as a credit mitigant. Individual impairments are made for outstanding amounts depending on the number of days past due with full impairment made after 360 days. Loans and advances less than 90 days past due are generally not considered impaired unless other information is available to indicate otherwise.

110 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

Regulatory impairment (Cont’d)

The Bank of Ghana Guideline is as set out below:

Grade Description Number of days Impairment (%)

Current Less than 30 days 1

Other Loans Exceptionally Mentioned (OLEM) 30 to less than 90 days 10

Substandard 90 to less than 180 days 25

Doubtful 180 to less than 360 days 50

Loss 360 days and above 100

3.1.1 Credit risk measurement

(a) Loans and advances (including loan commitments and guarantees)

The estimation of credit exposure is complex and requires the use of models, as the value of a product varies with changes in market variables, expected cash flows and the passage of time. The assessment of credit risk of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, associated loss ratios and of default correlations between counterparties.

The Group has developed models to support the quantification of credit risk. These rating and scoring models are used for all key credit portfolios and form the basis for measuring default risks. In measuring credit risk of loans and advances at a counterparty level, the Group considers three components: (i) the ‘probability of default’ (PD) by the client or counterparty on its contractual obligations; (ii) current exposures to the counterparty and its likely future development, from which the Group derive the ‘exposure at default’ (EAD); and (iii) the likely recovery ratio on defaulted obligations (the ‘loss given default’) (LGD). The models are reviewed regularly to monitor their robustness relative to actual performance and amended as necessary to optimise their effectiveness.

(b) Debt securities

For debt securities, external ratings such as Standard & Poor’s rating or their equivalents are used by Group Treasury to manage credit risk exposures, supplemented by the Group’s own assessment through the use of internal rating tools.

Longer-term finance and lending to corporate entities are generally secured. In addition, in order to minimise credit loss, the Group seeks additional collateral from counterparties as soon as impairment indicators are identified for relevant individual loans and advances.

Collateral held as security for financial assets other than loans and advances depends on the nature of the instrument.

Ecobank Annual Report 2017 111 NOTES TO THE FINANCIAL STATEMENTS

3.1.2 Impairment policies

Impairment allowances are recognised for financial reporting purposes only for losses that have been incurred at the reporting date based on objective evidence of impairment.

3.1.3 Maximum exposure to credit risk before collateral held

Credit risk exposures relating to on-balance sheet assets were as follows:

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and cash equivalents 2,722,690 2,998,879 2,739,494 2,997,543 Investment securities 2,518,542 641,010 2,462,208 578,985 Loans and advances to customers 2,685,468 3,480,544 2,685,759 3,480,471

7,926,700 7,120,433 7,887,461 7,056,999

Credit risk exposures relating to off-balance sheet items are as follows: Financial guarantees 1,368,657 611,255 1,368,657 611,255 Loan commitments and other credit related liabilities 977,504 3,809,333 977,504 3,809,333

2,346,161 4,420,588 2,346,161 4,420,588

At 31 December 10,272,861 11,541,021 10,233,622 11,477,587

The above represents the maximum exposure to credit risk at 31 December 2017 and 2016, without taking account of any collateral held or other credit enhancements attached. For on-balance-sheet assets, the exposures set out above are based on net carrying amounts reported in the consolidated statement of financial position.

As shown above, 34% (2016: 48%) of the total on balance sheet exposure is derived from loans and advances to customers. Included in cash and cash equivalents and investment securities are loans and advances to banks and investments held in government securities which forms 21% (2016: 28%) and 32% (2016: 8%) of the total on balance sheet exposure respectively.

Management is confident in its ability to continue controlling and sustaining minimal exposure to credit risk arising from both its loans and advances portfolio and investment securities.

3.1.4 Credit quality per class of financial asset

The credit quality of financial asset is managed by the group using internal credit ratings. The table below shows the credit quality by class of financial assets and the allowance for impairment losses held by the group against those assets.

112 Ecobank Annual Report 2017 (a) Maximum exposure credit risk ------2016 2016 GH¢’00 0 GH¢’00 0 4,420,588 4,420,588 4,420,588 4,420,588 4,420,588 4,420,588 ------2017 2017 GH¢’00 0 GH¢’00 0 Lending commitments Lending Lending commitments Lending & financial guarantees & financial guarantees 2,346,161 2,346,161 2,346,161 2,346,161 2,346,161 2,346,161 ------2016 2016

728,309 728,309 728,309 728,309 728,309 728,309 GH¢’00 0 GH¢’00 0 ------Cash equivalents Cash equivalents 2017 2017

GH¢’00 0 GH¢’00 0 1,096,954 1,096,954 1,096,954 1,096,954 1,096,954 1,096,954

------2016 2016

641,010 641,010 641,010 578,985 578,985 578,985 GH¢’00 0 GH¢’00 0 ------2017 2017 securities Investment securities Investment GH¢’00 0 GH¢’00 0 2,518,542 2,518,542 2,518,542 2,462,208 2,462,208 2,462,208 ------2016 2016 to bank to to bank to GH¢’00 0 GH¢’00 0 2,270,570 2,270,570 2,270,570 2,269,234 2,269,234 2,269,234 ------& advances Loans & advances Loans 2017 2017 GH¢’000 GH¢’000 1,625,736 1,625,736 1,625,736 1,642,540 1,642,540 1,642,540 2016 2016 566,267 566,267 110,324 110,324 GH¢’000 GH¢’000 (86,565) (86,260) 2,890,518 3,567,109 3,480,544 2,890,140 3,566,731 3,480,471 customers to customers to & advances Loans & advances Loans 2017 2017

443,481 443,481 198,053 198,053 GH¢’000 GH¢’000 (215,835) (215,529) 2,259,769 2,901,303 2,685,468 2,259,754 2,901,288 2,685,759 reputable institutions and are Amounts relating to Balances with Bank of Ghana included in cash and equivalents investment securities were held reputable institutions are still collectible in full and therefore no impairment losses were recognised on them. Individually impaired Individually impaired

impaired due but not Past impaired due but not Past The Group due or impaired Neither past Gross impairment for allowance Less Net The Bank due or impaired Neither past Gross impairment for allowance Less Net

Ecobank Annual Report 2017 113

OLEM OLEM Current Grades At 31 December 2016 Current Grades At 31 December 2016

OLEM OLEM Current Grades At 31 December 2017 The Bank Current Grades At 31 December 2017 The Group

(b) Loans and advances neither past due nor impaired Overdrafts Overdrafts GH¢’000 GH¢’000 11,527 11,527 11,527 11,527 9,013 9,013 9,013 9,013 - - - - Credit cards Credit cards Consumer Consumer GH¢’000 GH¢’000 9,880 9,880 9,880 9,880 7,349 7,349 7,349 7,349 - - - - Term loans Term loans GH¢’000 GH¢’000 194,417 194,417 194,396 194,396 337,812 337,812 337,812 337,812 21 21 - - Mortgages Mortgages GH¢’00 0 GH¢’00 0 181,372 181,372 181,372 181,372 37,481 37,481 37,481 37,481 - - - - Commercial Overdrafts Overdrafts Commercial GH¢’00 0 GH¢’00 0 122,004 122,004 122,004 122,004 155,309 155,309 155,309 155,309 - - - - GH¢’00 0 GH¢’00 0 Term loans Term loans 138,106 138,106 118,752 118,752 209,545 209,545 209,545 209,545 19,354 19,354 - - Overdraft Overdraft GH¢’00 0 GH¢’00 0 531,092 531,092 523,135 523,135 377,144 377,144 377,144 377,144 7,957 7,957 - - CIB CIB 1,729,074 Term loans Term loans 1,813,376 1,813,754 1,729,452 1,126,101 1,126,115 1,126,101 1,126,115 GH¢’00 0 GH¢’00 0 84,302 84,302 - - 111,634 3,001,774 3,002,152 2,890,140 2,890,518 2,259,754 2,259,768 2,259,754 2,259,768 GH¢’00 0 GH¢’00 0 111,634 TOTAL TOTAL - -

114 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

The credit quality of the portfolio of loans and advances to customers that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Group based on the various business segments.

As at the end of the year 2017, the Bank operated the following business units: a)• Consumer banking - This is personal banking and specializes in serving the Premier, Advantage, Classic and Direct customers •b) Commercial Banking - This is Business Banking and Medium Local Corporates with the following sub- segments SMEs, Medium Local corporates and Non-government public sector (schools, faith-based organisations, NGOs & professional bodies) •c) Corporate & Investment Banking - Specializes in serving the public sector, multinational institutions, financial institutions/international organizations and the Regional Corporate segment of the market.

Ecobank Annual Report 2017 115 (c) Loans and advances past due but not impaired

The Bank Consumer Commercial Corporate Loans and advances less than 90 days past due are not considered impaired, unless other information is Overdrafts Term loans Overdrafts Term loans Overdrafts Term loans TOTAL available to indicate the contrary. Gross amounts of loans and advances by class of customers that were past GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 due but not impaired were as follows: At 31 December 2017 The Group and The Bank Consumer Commercial Corporate Individually impaired loans - 1,446 - 3,432 - 438,603 443,481 Overdrafts Term loans Overdrafts Term loans Overdrafts Term loans TOTAL Impairment allowance - 1,091 - 2,968 - 173,999 178,058 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 Fair value of collateral - - - - - 50,216 50,216

At 31 December 2017 At 31 December 2016 Past due up to 30 days ------Individually impaired loans - - 67 19,165 7,957 539,078 566,267 Past due 30-60 days ------Impairment allowance - - 63 13,500 6,862 23,014 43,439 Past due 60-90 days - - - 3,600 18,793 175,660 198,053 Fair value of collateral - - 1,590 15,363 1,407 16,380 34,740

- - - 3,600 18,793 175,660 198,053

At 31 December 2016 Past due up to 30 days - 54 - - - 109,752 109,806 Past due 30-60 days - 4 - 514 - - 518 Past due 60-90 days ------

- 58 - 514 - 109,752 110,324

(d) Loans and advances individually impaired

A breakdown of the gross amount of individually impaired loans and advances by class, along with the fair value of related collateral held by the bank as security, is as follows:

The Group Consumer Commercial Corporate Overdrafts Term loans Overdrafts Term loans Overdrafts Term loans TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 31 December 2017

Individually impaired loans - 1,446 - 3,432 - 438,603 443,481

Impairment allowance - 1,091 - 2,968 - 173,999 178,058

Fair value of collateral - - - - - 50,216 50,216

At 31 December 2016

Individually impaired loans - - 67 19,165 7,957 539,078 566,267

Impairment allowance - - 63 13,500 6,862 23,014 43,439

Fair value of collateral - - 1,590 15,363 1,407 16,380 34,740

116 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

(D) LOANS AND ADVANCES INDIVIDUALLY IMPAIRED (CONT’D)

The Bank Consumer Commercial Corporate Overdrafts Term loans Overdrafts Term loans Overdrafts Term loans TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 31 December 2017 Individually impaired loans - 1,446 - 3,432 - 438,603 443,481 Impairment allowance - 1,091 - 2,968 - 173,999 178,058 Fair value of collateral - - - - - 50,216 50,216

At 31 December 2016 Individually impaired loans - - 67 19,165 7,957 539,078 566,267 Impairment allowance - - 63 13,500 6,862 23,014 43,439 Fair value of collateral - - 1,590 15,363 1,407 16,380 34,740

(e) Loans and advances renegotiated

Restructuring activities include extended payment arrangements, approved external management plans, modification and deferral of payments. Restructuring policies and practices are based on indicators or criteria which, in the judgment of management, indicate that payment will most likely continue.

These policies are kept under continuous review. Restructuring is most commonly applied to term loans.

Loans and advances to customers

The Group and The Bank 2017 2016 GH¢’000 GH¢’000

Continuing to be impaired after restructuring (included in non-performing loans) 124,659 1,560

Non-impaired after restructuring – would otherwise have been impaired 53,197 104,451

(f) Repossessed collateral

During the year ended 31 December, the Group took possession of the following collateral held as security:

The Group and The Bank 2017 2016 Collateral Related loan Collateral Related loan GH¢’000 GH¢’000 GH¢’000 GH¢’000

Commercial property 9,303 56,113 66,063 101,554 Vehicles and equipment - - 211 932

9,303 56,113 66,274 102,486

Repossessed properties are sold as soon as practicable and the proceeds used to reduce outstanding indebtedness. The group does not generally use the non-cash collateral for its own operations.

Ecobank Annual Report 2017 117 (g) Loans and advances per Bank of Ghana Classification

Set out below is an analysis of the gross (allowance for impairment) amounts of individually impaired loans and advances by risk grade.

At 31 December 2017 2016 Gross Gross GH¢’000 GH¢’000

Current 2,312,899 2,890,518 Olem 6,896 111,634 Substandard 3,272 448,625 Doubtful 496,408 30,125 Loss 81,828 86,207

2,901,303 3,567,109

3.2 Market risk 3.2.2 Interest rate risk

Market risk is the risk of loss arising from adverse Interest rate risk is the exposure of current and changes in market conditions (interest rates, future earnings and capital to adverse changes in the exchange rates and equity prices) during the year. level of interest rates. Exposure to interest rate risk Positions that expose the Group to market risk can result from a variety of factors, including: can be trading or non-trading related. Trading risk comprises positions that the Group holds as part of • Differences between the timing of market its trading or market-making activities, whereas non- interest rate changes and the timing of cash trading risk includes discretionary positions that the flows (repricing risk); Group undertake for liquidity. • Changes in the market interest rates producing different effects on yields on similar instruments 3.2.1 Risk identification with different maturities (yield curve risk); and • Changes in the level of market interest rates The Group identifies market risk through daily producing different effects on rates received monitoring of levels and profit or loss balances of or paid on instruments with similar repricing trading and non-trading positions. The Market Risk characteristics (basis risk). Controller together with the risk department monitor daily trading activities to ensure that risk exposures The Asset and Liability Management (“ALM”) process, taken are within approved limits and overall risk managed through ALCO, is used to manage interest tolerance levels set by the Board. In addition, Assets rate risks associated with the non-trading book. Gap and Liabilities Committee (ALCO) members, the analysis is used in measuring interest rate risk. It Treasurer, the Chief Finance Officer and the Country compares the values of interest rate sensitive assets Risk Manager monitor market risk factors that affect and liabilities that mature or are re-priced at various the value of trading and non-trading positions as time periods in the future. Subjective judgment/ well as income streams on non-trading portfolios on assumptions are made about the behavior of assets a daily basis. They also track liquidity indicators to and liabilities which do not have specific contractual ensure that Group subsidiaries meet their financial maturity or re-pricing dates. Interest rate risk obligations at all times. evaluates potential volatility to net interest income caused by changes in market interest rates and

118 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3.2.2 Interest rate risk (Cont’d)

represents the most significant market risk exposure to the Group’s non-trading book. The Group uses gap analysis to measure its exposure to interest rate risk. Through this analysis, it compares the values of interest rate sensitive assets and liabilities that mature or reprice at various time periods in the future. The Group may make judgmental assumptions about the behaviour of assets and liabilities which do not have specific contractual maturity or repricing dates.

The table below summarises the repricing profiles of the bank’s financial instruments and other assets and liabilities at 31 December 2017. Items are allocated to time periods with reference to the earlier of the next contractual interest rate re-pricing and maturity dates.

The Group At 31 December 2017 Up to 1 1 - 3 3 - 12 Over Non-Interest month months months 1 year bearing TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and Bank Balances 373,414 641,150 2,073 - 1,936,116 2,952,753 Investment securities 31,887 36,322 173,207 2,274,978 2,148 2,518,542 Loans and advances to customers 416,714 207,352 329,391 1,425,531 306,480 2,685,468 Other assets - - - - 375,174 375,174

Total financial assets 822,015 884,824 504,671 3,700,509 2,619,918 8,531,937

Liabilities Deposits from Banks 396,366 23,177 157,669 - 29,240 606,452 Customer deposits 227,218 51,562 322 353,106 5,909,440 6,541,648 Borrowings - - 42,677 160,523 - 203,200 Other liabilities - - - - 679,753 679,753

Total financial liabilities 623,584 74,739 200,668 513,629 6,618,433 8,031,053

Total interest re-pricing gap 198,431 810,085 304,003 3,186,880 (3,998,515) 500,884

At 31 December 2016

Assets Cash and bank balances 563,541 651,697 222,269 - 1,755,695 3,193,202 Investment securities 294,769 31,500 34,122 278,471 2,148 641,010 Loans and advances to customers 958,849 376,482 527,162 1,618,051 - 3,480,544 Other assets - - - - 311,497 311,497

Total financial assets 1,817,159 1,059,679 783,553 1,896,522 2,069,340 7,626,253

Liabilities Deposits from Banks 345,284 64,042 69,216 - 64,314 542,856 Customer deposits 1,030,001 26,356 75,044 863 4,284,652 5,416,916 Borrowings - - 535 232,209 - 232,744 Other liabilities - - - - 893,477 893,477

Total financial liabilities 1,375,285 90,398 144,795 233,072 5,242,443 7,085,993

Total interest re-pricing gap 441,874 969,281 638,758 1,663,450 (3,173,103) 540,260

Ecobank Annual Report 2017 119 3.2.2 Interest rate risk (Cont’d)

The Bank At 31 December 2017 Up to 1 1 - 3 3 - 12 Over Non-Interest month months months 1 year bearing TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and bank balances 381,816 647,598 4,027 - 1,936,116 2,969,557 Investment securities 5,319 13,385 166,982 2,274,374 2,148 2,462,208 Loans and advances to customers 417,005 207,352 329,391 1,425,531 306,480 2,685,759 Other assets - - - - 391,320 391,320

Total financial assets 804,140 868,335 500,400 3,699,905 2,636,064 8,508,844

Liabilities Deposits from Banks 504,802 23,177 157,669 - 29,240 714,888 Customer deposits 227,218 51,562 322 353,106 5,815,610 6,447,818 Borrowings - - 42,677 160,523 - 203,200 Other liabilities - - - - 675,821 675,821

Total financial liabilities 732,020 74,739 200,668 513,629 6,520,671 8,041,727

Total interest re-pricing gap 72,120 793,596 299,732 3,186,276 (3,884,607) 467,117

At 31 December 2016

Assets Cash and cash equivalents 562,857 651,132 222,182 - 1,755,695 3,191,866 Investment securities 264,857 6,111 27,939 277,930 2,148 578,985 Loans and advances to customers 958,839 376,419 527,162 1,618,051 - 3,480,471 Other assets - - - - 324,436 324,436

Total financial assets 1,786,553 1,033,662 777,283 1,895,981 2,082,279 7,575,758

Liabilities Deposits from Banks 345,284 64,042 69,216 - 151,746 630,288 Customer deposits 1,030,001 26,356 75,044 863 4,184,361 5,316,625 Borrowings - - 535 232,209 - 232,744 Other liabilities - - - - 886,835 886,835

Total financial liabilities 1,375,285 90,398 144,795 233,072 5,222,942 7,066,492

Total interest re-pricing gap 411,268 943,264 632,488 1,662,909 (3,140,663) 509,266

3.2.3 Foreign exchange risk

Foreign exchange risk is measured through the statement of comprehensive income. The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position

120 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3.2.3 Foreign exchange risk (Cont’d) and cash flows. The Board sets limits on the level of exposure by currency and in total for both overnight and intra-day positions. The table below summarises the company’s exposure by currency exchange rates on its financial position and cash flows.

The Group At 31 December 2017 EUR USD GBP GH¢ Others TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and cash equivalents 171,642 1,487,906 84,140 1,200,149 8,916 2,952,753 Investment securities - 1,087,009 - 1,431,533 - 2,518,542 Loans and advances to customers 1,868 849,203 9 1,834,388 - 2,685,468 Other assets 60,989 19,127 - 295,057 1 375,174

Total 234,499 3,443,245 84,149 4,761,127 8,917 8,531,937

Liabilities Deposits from Banks 19,595 233,243 394 351,884 1,336 606,452 Deposits due to customers 152,218 2,814,909 83,029 3,487,568 3,924 6,541,648 Other liabilities 2,202 193,929 491 481,073 2,058 679,753 Borrowings - 201,116 - 2,084 - 203,200

Total 174,015 3,443,197 83,914 4,322,609 7,318 8,031,053

Net on balance sheet position 60,484 48 235 438,518 1,599 500,884

Credit commitments 242,996 228,725 - 301,064 204,719 977,504

At 31 December 2016

Assets Cash and cash equivalents 196,245 1,722,525 69,905 1,192,666 11,861 3,193,202 Investment securities - 260,427 - 380,583 - 641,010 Loans and advances to customers 3,031 1,413,115 - 1,662,345 402,053 3,480,544 Other assets 751 18,031 6 292,709 - 311,497

Total 200,027 3,414,098 69,911 3,528,303 413,914 7,626,253

Liabilities Deposits from Banks 41,172 411,246 489 89,949 - 542,856 Deposits due to customers 135,323 2,366,164 65,986 2,519,447 329,996 5,416,916 Other liabilities 816 348,413 76 544,172 - 893,477 Borrowings - 227,934 - 4,810 - 232,744

Total 177,311 3,353,757 66,551 3,158,378 329,996 7,085,993

Net on balance sheet position 22,716 60,341 3,360 369,925 83,918 540,260

Credit commitments 948,200 892,512 - 1,174,788 793,833 3,809,333

Ecobank Annual Report 2017 121 3.2.3 Foreign excgange risk (Cont’d)

The Bank At 31 December 2017 EUR USD GBP GH¢ Others TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and cash equivalents 171,642 1,487,906 84,140 1,216,954 8,915 2,969,557 Investment securities - 1,087,009 - 1,375,199 - 2,462,208 Loans and advances to customers 1,868 849,203 9 1,834,679 - 2,685,759 Other assets 60,989 19,127 - 311,203 1 391,320

Total 234,499 3,443,245 84,149 4,738,035 8,916 8,508,844

Liabilities Deposits from Banks 19,595 233,243 394 460,320 1,336 714,888 Deposits due to customers 152,218 2,814,909 83,029 3,393,738 3,924 6,447,818 Other liabilities 2,202 193,929 491 477,141 2,058 675,821 Borrowings - 201,116 - 2,084 - 203,200

Total 174,015 3,443,197 83,914 4,333,283 7,318 8,041,727

Net on balance sheet position 60,484 48 235 404,752 1,598 467,117

Credit commitments 242,996 228,725 - 301,064 204,719 977,504

At 31 December 2016

Assets Cash and cash equivalents 196,245 1,722,525 69,905 1,191,331 11,860 3,191,866 Investment securities - 260,427 - 318,558 - 578,985 Loans and advances to customers 3,031 1,360,856 6 1,714,532 402,046 3,480,471 Other assets 751 18,031 - 305,653 1 324,436

Total 200,027 3,361,839 69,911 3,530,074 413,907 7,575,758

Liabilities Deposits from Banks 41,172 411,246 489 73,990 103,391 630,288 Deposits due to customers 135,323 2,366,164 65,986 2,449,155 299,997 5,316,625 Other liabilities 816 340,272 76 545,671 - 886,835 Borrowings - 227,934 - 4,810 - 232,744

Total 177,311 3,345,616 66,551 3,073,626 403,388 7,066,492

Net on balance sheet position 22,716 16,223 3,360 456,448 10,519 509,266

Credit commitments 948,200 892,512 - 1,174,788 793,833 3,809,333

122 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3.2.3 Foreign exchange risk (Cont’d)

The following significant exchange rates applied during the year - GH¢1 to:

The Group and The Bank Average Rate Reporting Rate 2017 2016 2017 2016

USD1 4.3504 3.9120 4.4157 4.2002

GBP1 5.5962 5.2896 5.9669 5.1965

EURO1 4.9202 4.3277 5.2964 4.4367

XOF1 0.0075 0.0100 0.00810 0.0067

3.2.4 Market risk measurement techniques

The Group applies the ‘value at risk’ methodology (VAR) to its trading and non-trading portfolios, to estimate exposure to market risk of positions held and maximum losses expected, based on a number of assumptions for various changes in market conditions. The Board sets limits on the value of risk that may be accepted for the Group, trading and non-trading separately, which are monitored on a daily basis by Group Treasury.

VAR is a statistically based estimate of the potential loss on the current portfolio from adverse market movements. It expresses the ‘maximum’ amount the Group might lose, but only to a certain level of confidence (98%).

There is therefore a specified statistical probability (2%) that actual loss could be greater than the VAR estimate. The VAR model assumes a certain ‘holding period’ until positions can be closed (10 days). It also assumes that market movements occurring over this holding period will follow a similar pattern to those that have occurred over the preceeding10-day period in the past.

The Group’s assessment of past movements is based on data for the past five years. The Group applies these historical changes in rates, prices, indices, etc. directly to its current positions − a method known as historical simulation. Actual outcomes are monitored regularly to test the validity of assumptions and parameters/factors used in the VAR calculation.

The use of this approach does not prevent losses outside of these limits in the event of more significant market movements. The table below shows a summary statistics of VAR for the bank’s trading portfolio during 2017 and 2016.

The Group and The Bank 2017 2016 Low Average High Low Average High GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Foreign exchange risk 10 23 36 87 295 637

Interest rate risk 258 337 408 56 63 89

Ecobank Annual Report 2017 123 3.2.5 Risk monitoring and control

The Risk Management department is responsible for reviewing exposure to market risk. The Treasury department monitors interest rate and liquidity risks through daily, weekly, and monthly reviews of the structure and pricing of assets and liabilities. Assets and Liability Committee (ALCO) meetings are also held monthly.

The Bank analyses the impact of unlikely, but not impossible events by means of scenario analysis, which enables management gain a better understanding of risks that it could be exposed to in extreme conditions. Both historical and hypothetical events are tested.

3.2.6 Risk reporting

Reports on the bank’s positions are reviewed daily by the Internal Audit and Compliance Unit. Reports include foreign currency positions and liquidity positions in all currencies. Variations to expectations are reviewed and corrected if need be.

3.3 Liquidity risk

Liquidity risk is the risk that the Bank will not be able to meet payment obligations associated with financial liabilities when they fall due and replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and fulfill commitments to lend. It is the policy of the Bank to maintain adequate liquidity at all times and to be in a position to meet all obligations, repay depositors, fulfill commitments to lend and meet any other commitments as and when they fall due.

The management of liquidity risk is governed by the Bank’s liquidity policy. Responsibility for the management of liquidity risk lies with the Bank’s Assets and Liability Management Committee (ALCO), which is chaired by an Executive Director. ALCO is responsible for both statutory and prudential liquidity as well as compliance with regulatory requirements.

The primary objective of liquidity risk management is to provide a planning mechanism for unanticipated changes in demand or needs for liquidity created by customer behavior or abnormal market conditions. ALCO emphasizes the maximization and preservation of customer deposits and other funding sources. ALCO also monitors deposit rates, levels, trends and significant changes.

Liquidity is managed on a short to medium-term basis. In the short term, the focus is on ensuring that cash flow demands can be met as and when required. The focus, in the medium term, is on ensuring that the balance sheet remains structurally sound and aligned to the bank’s strategy.

A substantial portion of the Bank’s assets are funded by customer deposits made up of current and savings accounts and other deposits. These customer deposits, which are widely diversified by type and maturity, represent a stable source of surplus funds. Lending is normally funded by liability in the same currency.

The Bank also maintains significant levels of marketable securities to meet compliance with prudential investment of surplus funds. ALCO oversees structural foreign currency and interest rate exposures that arise within the

124 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3.3 Liquidity risk (Cont’d)

Bank. These responsibilities are coordinated by ALCO during monthly meetings. The Bank places low reliance on interbank funding and foreign markets.

The table below presents the cash flows payable under non-derivative financial liabilities and assets held for managing liquidity risk by remaining contractual maturities at the reporting date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the Group manages the inherent liquidity risk based on expected undiscounted cash inflows.

The Group At 31 December 2017 Up to 1 1 - 3 3 - 12 Over month months months 1 year TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Liabilities Deposits from Banks 425,606 23,177 157,669 - 606,452 Customers deposits 6,136,658 51,562 322 353,106 6,541,648 Other liabilities 679,753 - - - 679,753 Borrowings - - 42,677 160,523 203,200

7,242,017 74,739 200,668 513,629 8,031,053

Assets Cash and cash equivalents 2,309,530 641,150 2,073 - 2,952,753 Investments securities 34,035 36,322 173,207 2,274,978 2,518,542 Loans and advances to customers 518,824 217,141 352,478 1,597,025 2,685,468 Other assets 375,174 - - - 375,174

Assets held for managing liquidity risk 3,237,563 894,613 527,758 3,872,003 8,531,937

Liquidity gap (4,004,454) 819,874 327,090 3,358,374 500,884

At 31 December 2016

Liabilities Deposits from Banks 409,598 64,042 69,216 - 542,856 Customers deposits 5,108,860 228,823 75,382 3,851 5,416,916 Other liabilities 893,477 - - - 893,477 Borrowings - - 535 232,209 232,744

6,411,935 292,865 145,133 236,060 7,085,993

Assets Cash and cash equivalents 2,319,235 651,697 222,270 - 3,193,202 Investment securities 296,917 31,500 34,122 278,471 641,010 Loans and advances to customers 1,595,539 96,665 229,061 1,559,279 3,480,544 Other assets 311,497 - - - 311,497

Assets held for managing liquidity risk 4,523,188 779,862 485,453 1,837,750 7,626,253

Liquidity gap (1,888,747) 486,997 340,320 1,601,690 540,260

Ecobank Annual Report 2017 125 3.3 Liquidity risk (Cont’d)

The Bank At 31 December 2017 Up to 1 1 - 3 3 - 12 Over month months months 1 year TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Liabilities Deposits from Banks 534,042 23,177 157,669 - 714,888 Customers Deposits 6,042,827 51,562 322 353,107 6,447,818 Other liabilities 675,821 - - 675,821 Borrowings - - 42,677 160,523 203,200

7,252,690 74,739 200,668 513,630 8,041,727

Assets Cash and cash equivalents 2,317,932 647,598 4,027 - 2,969,557 Investment securities 7,467 13,385 166,982 2,274,374 2,462,208 Loans and advances to customers 519,115 217,141 352,478 1,597,025 2,685,759 Other assets 391,320 - - - 391,320

Assets held for managing liquidity risk 3,235,834 878,124 523,487 3,871,399 8,508,844

Liquidity gap (4,016,856) 803,385 322,819 3,357,769 467,117

At 31 December 2016

Liabilities Deposits from Banks 497,030 64,042 69,216 - 630,288 Customers Deposits 5,008,569 228,823 75,382 3,851 5,316,625 Other liabilities 886,835 - - - 886,835 Borrowings - - 535 232,209 232,744

6,392,434 292,865 145,133 236,060 7,066,492

Assets Cash and cash equivalents 2,318,551 651,132 222,183 - 3,191,866 Investment securities 267,005 6,111 27,939 27,930 578,985 Loans and advances to customers 1,595,466 96,665 229,061 1,559,279 3,480,471 Other assets 324,436 - - - 324,436

Assets held for managing liquidity risk 4,505,458 753,908 479,183 1,837,209 7,575,758

Liquidity gap (1,886,976) 461,043 334,050 1,601,149 509,266

126 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3.4 Country analysis

The Group In Ghana Outside Ghana In Ghana Outside Ghana 2017 2017 2016 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and bank balances 1,398,021 1,424,462 1,985,241 1,207,961 Investment securities 2,518,542 - 641,010 - Loans and advances to customers 2,685,468 - 3,480,544 -

Total assets 6,602,031 1,424,462 6,106,795 1,207,961

Liabilities Deposits from Banks 466,683 139,769 541,979 877 Deposits due to customers 6,541,648 - 5,416,916 - Borrowings 4,661 198,539 4,725 228,019

Total liabilities 7,012,992 338,308 5,963,620 228,896

The Bank In Ghana Outside Ghana In Ghana Outside Ghana 2017 2017 2016 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets Cash and bank balances 1,414,825 1,424,462 2,139,266 1,052,600 Investment securities 2,462,208 - 578,985 - Loans and advances to customers 2,685,759 - 3,480,471 -

Total assets 6,562,792 1,424,462 6,198,722 1,052,600

Liabilities Deposits from Banks 575,119 139,769 629,411 877 Deposits due to customers 6,447,818 - 5,316,625 - Borrowings 4,661 198,539 4,725 228,019

Total liabilities 7,027,598 338,308 5,950,761 228,896

Ecobank Annual Report 2017 127 3.5 Fair value of financial assets and liabilities

The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

(a) Valuation models

The Group measures fair values using the following fair value hierarchy, which reflects the significance of inputs used in making the measurements.

• Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

• Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.

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

Valuation techniques include net present value and discounted cash flow models, comparison with similar instruments for which market observable prices exist and other valuation models. Assumptions and inputs used in valuation techniques include risk free and benchmark interest rates, credit spreads and other premiums used in estimating discount rates and foreign currency exchange rates and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

The Group uses widely recognised valuation models for determining the fair value of common and more simple financial instruments that use only observable market data and require little management judgment and estimation.

Availability of observable market prices and model inputs reduces the need for management judgement and

128 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

(a) Valuation models (Cont’d)

estimation and also reduces the uncertainty associated with determining fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

(b) Financial instruments measured at fair value – fair value hierarchy

The following table analyses financial and non-financial assets measured at fair value at the reporting date, by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position.

(i) Land and Buildings

An external, independent valuation Company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s property. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Level 1 Level 2 Level 3 GH¢’000 GH¢’000 GH¢’000

The Bank 2017 Land and Building - - 149,759

The Bank 2016 Land and Building - - 87,406

Ecobank Annual Report 2017 129 (c) Financial instruments not measured at fair value

The following table sets out the fair values of financial instruments not measured at fair value in the statement of financial position, analysed by reference to levels in the fair value hierarchy into which each fair value measurement is categorised:

The Group Total At 31 December 2017 Total fair carrying Level 1 Level 2 Level 3 value amount GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Non-derivative financial assets Investment securities - 2,228,036 - 2,228,036 2,518,542 Loans and advances to customers - - 2,327,589 2,327,589 2,685,468 Cash and cash equivalents - 1,431,661 1,520,396 2,952,057 2,952,753 Other assets - - 375,174 375,174 375,174

- 3,659,697 4,223,159 7,882,856 8,531,937

Non-derivative financial liabilities Deposits from Banks - 600,448 - 600,448 606,452 Deposits from customers - 6,229,956 - 6,229,956 6,541,648 Borrowings - - 199,480 199,480 203,221 Other liabilities - - 679,732 679,732 679,732

- 6,830,404 879,212 7,709,616 8,031,053

At 31 December 2016

Non-derivative financial assets Investment securities - 629,870 - 629,870 641,010 Loans and advances to customers - - 3,347,648 3,347,648 3,480,544 Cash and cash equivalents - 1,030,139 2,141,019 3,171,158 3,193,202 Other assets - - 311,497 311,497 311,497

- 1,660,009 5,800,164 7,460,173 7,626,253

Non-derivative financial liabilities Deposits from Banks - 538,232 - 538,232 542,856 Deposits from customers - 5,354,900 - 5,354,900 5,416,916 Borrowings - - 230,548 230,548 232,744 Other liabilities - - 893,477 893,477 893,477

- 5,893,132 1,124,025 7,017,157 7,085,993

130 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

The Bank Total At 31 December 2017 Total fair carrying Level 1 Level 2 Level 3 value amount GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Non-derivative financial assets Investment securities - 2,171,745 - 2,171,745 2,462,208 Loans and advances to customers - - 2,327,589 2,327,589 2,685,759 Cash and cash equivalents - 1,431,661 1,537,132 2,968,793 2,969,557 Other assets - - 391,320 391,320 391,320

- 3,603,406 4,256,041 7,859,447 8,508,844

Non-derivative financial liabilities Deposits from Banks - 707,810 - 707,810 714,888 Deposits from customers - 6,140,779 - 6,140,779 6,447,818 Borrowings - - 199,480 199,480 203,200 Other liabilities - - 675,821 675,821 675,821

- 6,848,589 875,301 7,723,890 8,041,727

At 31 December 2016

Non-derivative financial assets Investment securities - 568,718 - 568,718 578,985 Loans and advances to customers - - 3,347,578 3,347,578 3,480,471 Cash and cash equivalents - 1,030,139 2,139,695 3,169,834 3,191,866 Other assets - - 324,436 324,436 324,436

- 1,598,857 5,811,709 7,410,566 7,575,758

Non-derivative financial liabilities Deposits from Banks - 624,919 - 624,919 630,288 Deposits from customers - 5,255,756 - 5,255,756 5,316,625 Borrowings - - 230,548 230,548 232,744 Other liabilities - - 886,835 886,835 886,835

- 5,880,675 1,117,383 6,998,058 7,066,492

The fair value of government securities is based on market prices or broker/dealer price quotations. Where this information is not available, fair value is determined using quoted market prices for securities with similar credit, maturity and yield characteristics.

Ecobank Annual Report 2017 131 (c) Financial instruments not measured at fair value (Cont’d)

Where applicable, the fair value of loans and advances to customers is based on observable market transactions. Where observable market transactions are not available, fair value is estimated using valuation models such as discounted cash flow techniques which represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates to determine the fair value. For collateral-dependent impaired loans, the fair value is measured based on the value of the underlying collateral.

The fair value of advances to and from Banks is based on discounted cash flow techniques applying the rates of similar maturities and terms.

The fair value of term deposits by customers is estimated using discounted cash flow techniques, applying the rates that are offered for deposits of similar maturities and terms. The fair value of deposits payable on demand is the amount payable at the reporting date.

Fair values of borrowings are estimated using discounted cash flow techniques, applying rates that are offered for borrowings of similar maturities and terms.

No fair value disclosures are provided for investments in other equity securities that are measured at cost less any impairment losses because their fair values cannot be measured reliably. These investments are unquoted equity investments with no observable market data. There is no active market for these investments and the Group does not intend to dispose off these investments in the foreseeable future.

132 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3.6 Classification of financial assets and financial liabilities

The Group classifies financial instruments into classes that reflect the nature and characteristics of those financial instruments. The table below provides reconciliation between the items in the statement of financial position and the categories of financial instrument.

The Group Other Total At 31 December 2017 Held-to Loans & Available- financial carrying Maturity receivables for-sal liabilities amount Note GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash and cash equivalents 23 - 1,327,017 - - 1,327,017 Investment securities 25 - 2,516,394 - - 2,516,39

Advances to banks 23 - 1,625,736 - - 1,625,736 Loans and advances to customers 24 - 2,685,468 - - 2,685,468 Investments (other than securities) 25 - - 2,148 - 2,148 Other assets 27 - 375,174 - - 375,174

Total assets - 8,529,789 2,148 - 8,531,937

Deposits from banks 31 - - - 606,452 606,452 Deposits from customers 32 - - - 6,541,648 6,541,648 Other liabilities 34 - - - 679,732 679,732 Borrowings 33 - - - 203,200 203,200

Total liabilities - - - 8,031,032 8,031,032

At 31 December 2016

Cash and cash equivalents 23 - 922,632 - - 922,632 Investment securities 25 - 638,862 - - 638,862 Advances to banks 23 - 2,270,570 - - 2,270,570 Loans and advances to customers 24 - 3,480,544 - - 3,480,544 Investments (other than securities) 25 - - 2,148 - 2,148 Other assets 27 - 311,497 - - 311,497

Total assets - 7,624,105 2,148 - 7,626,253

Deposits from banks 31 - - - 542,856 542,856 Deposits from customers 31 - - - 5,416,916 5,416,916 Other liabilities 25 - - - 893,477 893,477 Borrowings 23 - - - 232,744 232,744

Total liabilities - - - 7,085,993 7,085,993

Ecobank Annual Report 2017 133 3.6 Classification of financial assets and financial liabilities (Cont’d)

The Bank Other Total At 31 December 2017 Held-to Loans & Available- financial carrying Maturity receivables for-sal liabilities amount Note GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash and cash equivalents 23 - 1,327,017 - - 1,327,017 Investment securities 25 - 2,460,060 - - 2,460,060

Advances to banks 23 - 1,642,540 - - 1,642,540 Loans and advances to customers 24 - 2,685,759 - - 2,685,759 Investments (other than securities) 25 - - 2,148 - 2,148 Other assets 27 - 391,320 - - 391,320

Total assets - 8,506,696 2,148 - 8,508,844

Deposits from banks 31 - - - 714,888 714,888 Deposits from customers 32 - - - 6,447,818 6,447,818 Other liabilities 34 - - - 675,821 675,821 Borrowings 33 - - - 203,200 203,200

Total liabilities - - - 8,041,727 8,041,727

At 31 December 2016

Cash and cash equivalents 23 - 922,632 - - 922,632 Investment securities 25 - 576,837 - - 576,837 Advances to banks 23 - 2,269,234 - - 2,269,234 Loans and advances to customers 24 - 3,480,471 - - 3,480,471 Investments (other than securities) 25 - 2,148 - 2,148 Other assets 27 - 324,436 - - 324,436

Total assets - 7,573,610 2,148 - 7,575,758

Deposits from banks 31 - - - 630,288 630,288 Deposits from customers 31 - - - 5,316,625 5,316,625 Other liabilities 25 - - - 886,835 886,835 Borrowings 23 - - - 232,744 232,744

Total liabilities - - - 7,066,492 7,066,492

134 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

4. CAPITAL MANAGEMENT The risk-weighted assets are measured by means of The Group’s objectives when managing capital a hierarchy of five risk weights classified according include: to the nature and reflecting an estimate of credit, market and other risks associated with each asset • Complying with capital requirements set by the and counterparty. A similar treatment is adopted for Bank of Ghana off-balance sheet exposures, with some adjustments • Safeguarding the Group’s ability to continue as to reflect the more contingent nature of potential a going concern to enable it continue providing losses. returns for shareholders and benefits for other stakeholders The table below summarises the composition of • Maintaining a strong capital base to support the regulatory capital adequacy ratios of the Group and development of its business bank for the years ended 31 December 2017 and 2016. During these two years, the individual entities Capital adequacy and the use of regulatory capital within the Group and the Group itself complied with are monitored daily by management, employing all externally imposed capital requirements that they techniques based on guidelines developed by the are subject to. Basel Committee as implemented by Bank of Ghana for supervisory purposes. The required information is filed with Bank of Ghana on a monthly basis. Bank of Ghana requires each bank to:

• hold a minimum regulatory capital of GH¢60 million; and • maintain a ratio of total regulatory capital to risk- weighted assets plus risk weighted off balance sheet assets above a required minimum of 10%.

The Bank’s regulatory capital is divided into two tiers:

Tier 1 capital: includes shareholders’ equity and disclosed reserves after deducting specified assets such as intangibles and certain classes of investments.

Tier 2 capital: includes qualifying subordinated loan capital, collective impairment allowances and unrealised gains arising on the fair valuation of equity instruments held as available for sale.

Ecobank Annual Report 2017 135 The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Tier 1 Capital Share capital 226,641 226,641 226,641 226,641 Statutory reserves 355,064 323,124 354,546 322,623 Income surplus 208,393 271,445 198,782 260,078 Intangibles/other assets (120,072) (83,003) (181,073) (102,549)

Total qualifying tier 1 capital 670,026 738,207 598,897 706,793

Tier 2 Capital Subordinated debt 95,595 111,706 95,595 111,706 Other reserves 54,891 50,129 54,891 50,129

Total qualifying tier 2 capital 150,486 161,835 150,486 161,835

Total regulatory capital 820,511 900,042 749,382 868,628

Risk weighted assets On balance sheet 4,594,187 5,275,538 4,592,737 5,282,118 Off balance sheet 1,368,657 611,255 1,368,657 611,255

Total risk weighted assets 5,962,844 5,886,793 5,961,394 5,893,373

Capital adequacy ratio 13.76% 15.29% 12.57% 14.74%

The group complied with all external capital requirements.

136 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

NEW MINIMUM CAPITAL REQUIREMENT FOR BANKS

In September 2017, the Bank of Ghana announced a new minimum capital requirement, as part of a holistic financial sector reform plan to further develop, strengthen, and modernize the financial sector to support the government’s economic vision and transformational agenda.

In line with the above, and in accordance with Section 28 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Bank of Ghana (BOG) increased the minimum capital requirement for commercial Banks from GH¢120 million to GH¢400 million.

The Directive required all Banks to comply with the new capital requirement by 31 December 2018.

Banks are required to meet the new capital requirements using either of the following methods:

• Fresh capital injection; • Capitalisation of income surplus; and • A combination of fresh capital injection and capitalisation of income surplus

Ecobank Ghana Limited intends to meet the new capital requirement by transferring amounts from income surplus account to stated capital to ensure compliance with the new requirement by December 2018.

REGULATORY MATTERS (BASEL IMPLEMENTATION)

Bank of Ghana (BoG), in its bid to ensure the stability of the Ghanaian Banking Sector and keep pace with global development and growth in risk management practices rolled out, in October 2017, a Capital Requirement Directive (CRD) which require banks to implement Pillar 1 principles of Basel II. BoG requires banks to commence the implementation of the directive from 1 January 2018 with an effective compliance date of 1 July 2018.

The Capital Requirement Directive has four main parts. The first part provides principles for capital management and the constituents of eligible regulatory capital. The second, third and fourth parts provide guidance on the role of the board in the management of credit, operational and market risk respectively. Guidelines for the computation of credit risk weighted asset, operational and market risk capital charges are also detailed in the CRD document.

It is expected that the implementation of Basel principles will have a significant impact on the overall risk culture of banks and will ultimately enhance the risk and capital management of banks.

Ecobank Annual Report 2017 137 5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The Group’s financial statements and financial results are influenced by accounting policies, assumptions, estimates and management judgment, which necessarily have to be made in the course of preparing the financial statements.

The Group makes estimates and assumptions that affect reported amounts of assets and liabilities. All estimates and assumptions required in conformity with IFRS are based on best estimates undertaken in accordance with applicable standards. Estimates and judgments are evaluated on a continuous basis, based on past experience and other factors, including expectations with regard to future events.

(a) Impairment losses on loans and advances

The Group reviews its loan portfolio to assess impairment at least on a quarterly basis. In determining whether an impairment loss should be recorded in profit or loss, the Group considers observable data that may indicate measurable decreases in estimated future cash flows from a portfolio of loans before decreases can be identified with individual loans in that portfolio. This evidence may include observable data indicating adverse changes in the payment status of borrowers in a group, or economic conditions that correlate with defaults on assets in a group. Management uses estimates based on historical loss experience for assets with similar credit risk characteristics and objective evidence.

(b) Fair value of financial instruments

The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available are determined using valuation techniques. In these cases, fair values are estimated from observable data in respect of similar financial instruments or using models. Models are calibrated to ensure that outputs reflect actual data and comparative market prices.

(c) Income taxes

Significant estimates are required in determining provisions for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences are adjusted in the period in which such determination is made.

6. INTEREST INCOME The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Financial assets measured at amortised cost Placement and short-term funds 131,942 144,435 131,931 144,340 Treasury bills and Government securities 205,891 156,509 193,285 136,329 Loans and advances 566,744 604,360 560,267 598,245

904,577 905,304 885,483 878,914

138 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

7. INTEREST EXPENSE The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Financial liabilities measured at amortised cost Demand deposits 56,791 84,182 79,921 101,910 Time deposits 57,969 54,700 31,982 28,158 Borrowed funds 14,555 22,804 14,555 22,856 Savings 30,993 24,513 30,993 24,513

160,308 186,199 157,451 177,437

8. FEES AND COMMISSION INCOME

Trade finance fees 52,543 27,636 52,543 27,636 Credit related fees and commission 38,727 35,154 38,479 35,156 Cash management 66,151 50,724 66,151 50,724 Other fees and commission 44,855 46,975 44,897 46,987

202,276 160,489 202,070 160,503

9. FEE AND COMMISSION EXPENSE

Charges for services 3,521 3,267 3,471 3,233

10. NET TRADING INCOME

Foreign exchange: • translation gains less losses 14,763 13,559 14,678 13,403 • transaction gains less losses 119,301 103,381 119,301 103,381 Interest rate instruments 9,942 13,334 9,710 13,150

144,006 130,274 143,689 129,934

11. OTHER OPERATING INCOME

Other revenue 15,215 11,591 14,900 11,221 Finance lease 10,680 6,471 10,680 6,470

25,895 18,062 25,580 17,691

Ecobank Annual Report 2017 139 12. OTHER REVENUE The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Dividend income 3,921 4,140 19,931 16,942

13. GAINS FROM DERECOGNITION OF FINANCIAL ASSETS MEASURED AT AMORTISED COST

Gains from derecognition of financial assets - 177,854 - 177,854

In 2016 two (2) of Ecobank Ghana Limited’s key facilities were restructured. The new terms under the restructured facilities resulted in a significant modification of the existing facilities leading to the derecognition of the initial facilities and subsequent recognition of new facilities. The difference between the carrying amount of the initial facilities and the fair value of the restructured amount is recognised as gains or loss from derecognition of financial assets measured at amortised cost.

14. OTHER INCOME The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Profit on sale of equipment 267 291 267 291

15. NET IMPAIRMENT LOSS ON FINANCIAL ASSET

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Impairment charge Loan impairment: Individual 193,541 174,870 193,541 174,870 Collective 8,902 29,072 8,901 29,045 Recoveries (28,503) (25,345) (28,503) (25,345)

Charge to income statement 173,940 178,597 173,939 178,570

Impairment allowance At 1 January 86,565 159,670 86,260 159,392 Increase in impairment 173,940 178,597 173,939 178,570 Released on loan derecognised (90,211) (90,211) Amounts written off during the year as uncollectible (44,670) (161,491) (44,670) (161,491)

At 31 December 215,835 86,565 215,529 86,260

140 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

16. PERSONNEL EXPENSES The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Personnel expenses comprise: Wages and salaries 183,273 184,345 182,962 184,095 Social security fund contribution 16,804 16,041 16,768 16,017 Other allowances 143,595 115,973 143,378 115,881

343,672 316,359 343,108 315,993

17. DEPRECIATION & AMORTIZATION

Depreciation of property and equipment 22,640 17,115 22,640 17,114 Amortisation of software 3,656 4,419 3,656 4,419

26,296 21,534 26,296 21,533

18. OTHER EXPENSES

Rent 15,674 16,439 15,584 16,363 Travel 6,235 7,675 6,235 7,675 Technology and communication 76,520 72,877 76,517 72,877 Business promotion 9,275 13,051 9,275 13,051 Advertising 3,733 3,650 3,733 3,650 Training 3,065 5,726 3,065 5,726 Audit fees 786 718 635 581 Directors’ fees 1,554 1,000 1,550 1,000 Repairs and maintenance 11,756 9,756 11,744 9,756 Utilities 16,260 14,717 16,235 14,675 Loss on sale-non current asset held for sale 1,571 - 1,571 - Corporate social responsibility (Note 48) 1,716 3,387 1,716 3,387 Other administrative expenses 67,151 79,472 67,135 79,436

215,296 228,468 214,995 228,177

The other administrative expenses include stationery and supplies, insurance, office security, printing, fuel, cash in transit overheads and legal fees.

The number of persons employed by the Group at the year-end was 1,583 (2016:1,617).

Ecobank Annual Report 2017 141 19. INCOME TAX The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Income tax expense Current tax 83,796 113,738 81,815 111,064 National fiscal stabilisation Levy (Note 19) 17,467 22,737 17,088 22,219 Deferred tax (Note 17) 3,475 (1,695) 3,473 (1,691)

104,738 134,780 102,376 131,592

The tax on the Group and the Bank’s profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:

Profit before tax 358,383 462,676 357,760 457,186

Corporate tax rate at 25% (2016: 25%)

Tax using the bank’s domestic tax rate 89,596 115,669 89,440 114,296 Tax incentives (67) (17) (67) (17) Non-deductible 4,849 (521) 965 (529) Tax exempt income (7,107) (3,088) (5,050) (4,377) National fiscal stabilisation levy 17,467 22,737 17,088 22,219

Income tax expense 104,738 134,780 102,376 131,592

Effective tax rates 29% 29% 29% 29%

The movement on corporate tax payable was as follows:

Balance at Charge for Balance at The Group 1 January the year Payment 31 December GH¢’000 GH¢’000 GH¢’000 GH¢’000

Year of assessment Up to 2009 1,016 - - 1,016 2010-2012 4 - - 4 2013-2014 40 - - 40 2015 (15,321) - - (15,321) 2016 10,876 - (10,979) (103) 2017 - 83,796 (93,646) (9,850)

(3,385) 83,796 (104,625) (24,214) National fiscal stabilization levy (2,618) 17,467 (19,327) (4,478)

(6,003) 101,263 (123,952) (28,692)

142 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

Balance at Charge for Balance at The Bank 1 January the year Payment 31 December GH¢’000 GH¢’000 GH¢’000 GH¢’000

Year of assessment Up to 2009 1,016 - - 1,016 2013-2014 325 - - 325 2015 (15,303) - - (15,303) 2016 10,979 - (10,979) - 2017 - 81,815 (90,842) (9,027)

(2,983) 81,815 (101,821) (22,989) National fiscal stabilization levy (2,610) 17,088 (18,782) (4,304)

(5,593) 98,903 (120,603) (27,293)

Ecobank Annual Report 2017 143 20. DEFERRED TAX The Group The Bank 2017 Movement Movement Balance during the Balance Balance during the Balance at 1/1 year at 31/12 at 1/1 year at 31/12 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Gross value Recognized in OCI Revaluation of property 16,710 19,884 36,594 16,710 19,884 36,594

At 31 December 2017 16,710 19,884 36,594 16,710 19,884 36,594

Gross value Recognized in profit & loss Provision for loan impairment (10,705) (2,226) (12,931) (10,705) (2,226) (12,931) Accelerated tax depreciation 796 5,701 6,497 805 5,699 6,504

At 31 December 2017 (9,909) 3,475 (6,434) (9,900) 3,473 (6,427)

Net deferred tax (asset)/liability 6,801 23,359 30,160 6,810 23,357 30,167

2016

Gross value Recognized in OCI Revaluation of property 7,783 8,927 16,710 7,783 8,927 16,710 Available for sale securities (555) 555 - (275) 275 -

At 31 December 2016 7,228 9,482 16,710 7,508 9,202 16,710

Gross value Recognized in profit & loss Other provisions 1,310 (1,310) - 1,310 (1,310) - Provision for loan impairment (3,444) (7,261) (10,705) (3,444) (7,261) (10,705) Accelerated tax depreciation (6,080) 6,876 796 (6,075) 6,880 805

At 31 December 2016 (8,214) (1,695) (9,909) (8,209) (1,691) (9,900)

Net deferred tax (asset)/liability (986) 7,787 6,801 (701) 7,511 6,810

The movement on corporate tax payable was as follows: The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Profit or loss expense 3,475 (1,695) 3,473 (1,691)

Other comprehensive income 19,884 9,482 19,884 9,202

144 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

21. NATIONAL FISCAL STABILISATION LEVY

The National Fiscal Stabilization Levy Act, 2013 (862) was introduced in 2013 and is effective prospectively from July 2013 with an eighteen (18) months tenure. On 31 December 2014, Act (862) was amended by Act (882) to extend the date of expiration of the national fiscal stabilization levy and to provide for related matters. Under the amendment Act, the levy is payable in respect of profit before tax for the 2013, 2014, 2015, 2016 and 2017 years of assessment.

Under the Act, an additional 5% levy, which is payable quarterly, is charged on profit before tax of selected entities, including Banks.

22. EARNINGS PER SHARE

Basic and diluted earnings per share is calculated by dividing the net profit attributable to equity holders of the Bank by the weighted average number of ordinary shares in issue during the year.

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Profit attributable to equity holders of the Bank 253,645 327,896 255,384 325,594

Weighted average number of ordinary shares 293,228 293,228 293,228 293,228

Basic earnings per share (expressed in Ghana pesewas per share) 87 112 87 111 Diluted earnings per share (expressed in Ghana pesewas per share) 87 112 87 111

There is no potential dilution on basic earnings per share.

23. CASH AND BANK BALANCES The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash on hand 230,063 194,323 230,063 194,323 Balance with Bank of Ghana 1,096,954 728,309 1,096,954 728,309 Loan and advances to banks 1,625,736 2,270,570 1,642,540 2,269,234

2,952,753 3,193,202 2,969,557 3,191,866

Included in balance with Bank of Ghana is cash reserves maintained as part of the cash reserve requirements (10%) of the Central Bank amounting to GHS 644,781,800 (2016:531,662,500). Cash on hand and balances with Bank of Ghana are non-interest-bearing and will be recovered no more than 12 months after the reporting period.

Ecobank Annual Report 2017 145 24. LOANS AND ADVANCES TO CUSTOMERS The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Overdrafts 567,610 905,797 567,610 905,797 Staff loans 116,172 91,365 116,172 91,365 Finance leases 118,138 159,075 118,138 159,075 Mortgage loans 37,482 37,424 37,482 37,424 Term loans 2,061,901 2,373,448 2,061,886 2,373,070

Gross loans and advances to customers 2,901,303 3,567,109 2,901,288 3,566,731 Allowances for impairment (Note 15) (215,835) (86,565) (215,529) (86,260)

Net loans and advances to customers 2,685,468 3,480,544 2,685,759 3,480,471

Analysis of allowance for impairment Loan impairment 215,835 86,565 215,529 86,260

Analysis of impairment allowance Specific impairment 163,807 43,439 163,807 43,439 Collective impairment 52,028 43,126 51,722 42,821

215,835 86,565 215,529 86,260

Specific allowance for impairment Balance at 1 January 43,439 145,616 43,439 145,616 Charge for the year 193,541 174,870 193,541 174,870 Amounts written off as uncollectible (44,670) (161,491) (44,670) (161,491) Released on loan derecognized - (90,211) - (90,211) Recoveries (28,503) (25,345) (28,503) (25,345)

Balance at 31 December 163,807 43,439 163,807 43,439

Collective allowance for impairment Balance at 1 January 43,126 14,054 42,821 13,776 Charge/(release) for the year 8,902 29,072 8,901 29,045

Balance at 31 December 52,028 43,126 51,722 42,821

Total allowance for impairment 215,835 86,565 215,529 86,260

Analysis by industry on gross loans Construction 76,657 86,301 76,657 86,301 Agriculture, forestry and fishing 7,103 6,133 7,103 6,133 Mining and quarrying 90,596 88,820 90,596 88,820 Manufacturing 286,659 320,628 286,659 320,628 Electricity, gas and water 109,109 92,459 109,109 92,459 Commerce and finance 809,696 1,196,322 809,696 1,218,228 Transport, storage and communication 319,019 247,407 319,019 247,407 Services 1,202,464 1,617,039 1,202,449 1,594,395

2,901,303 3,567,109 2,901,288 3,566,371

146 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

The fifty largest exposures by customers constituted 67.42% of the gross loans at the year-end (2016: 72.18%).

The total amount of allowance for impairment represent 7.44% of the gross loans at the year-end (2016:2.42%).

The maximum amount due from staff during the year amounted to GH¢116 million (2016: GH¢91.3 million).

The investment in finance lease is analysed as follows:

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Less than 1 year 2,191 1,463 2,191 1,463 Between 1 year and 5 years 115,893 157,612 115,893 157,612

Gross investment in finance leases 118,084 159,075 118,084 159,075

Unearned finance income on finance leases - (76) - (76)

Net investment in finance leases 118,084 158,999 118,084 158,999

The net investment in finance lease is analysed as follows:

Less than 1 year 2,191 1,462 2,191 1,462 Between 1 year and 5 years 115,893 157,537 115,893 157,537

118,084 158,999 118,084 158,999

25. INVESTMENT SECURITIES

Government securities (a) 2,516,394 638,862 2,460,060 576,837 Investment securities available for sale (b) 2,148 2,148 2,148 2,148

At 31 December 2,518,542 641,010 2,462,208 578,985

Ecobank Annual Report 2017 147 (a) Government Securities The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January 638,862 726,726 576,837 592,107 Additions 2,460,533 4,077,328 2,200,145 3,786,443 Redeemed on maturity (583,001) (4,167,413) (316,922) (3,802,813) Gains from changes in fair value (Note 36) - 2,221 - 1,100

At 31 December 2,516,394 638,862 2,460,060 576,837

Maturing within 90 days of acquisition 67,658 326,491 18,584 270,968 Maturing after 90 days but within 182 days 68,639 24,356 56,990 21,852 Maturing after 182 days of acquisition 110,099 9,124 109,066 5,667 Maturing after 1 year of acquisition 2,269,998 278,891 2,275,420 278,350

2,516,393 638,862 2,460,060 576,837

Government securities are treasury bills and bonds issued by the Government of Ghana. These are categorised as loans and receivables carried at amortised cost.

(b) Investment securities available for sale

At 1 January 2,148 2,148 2,148 2,148 Additions - - - - Impairment on investment securities - - - -

At 31 December 2,148 2,148 2,148 2,148

Non-current 2,148 2,148 2,148 2,148

26. INVESTMENT IN SUBSIDIARIES 2017 2016 Bank Bank Ordinary shares % GH¢’000 GH¢’000

Ecobank Investment Managers Limited 100 11,350 11,350 Ecobank Leasing Company Limited 100 1,000 1,000 Ecobank Venture Capital Fund 1 Company Limited 100 16,420 10,427 Ecobank Capital Advisors Limited 100 1 1

28,771 22,778

All these subsidiaries are incorporated and domiciled in Ghana.

(a) Significant restrictions

The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities.

148 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

27. OTHER ASSETS The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Fees receivable 40,088 37,325 56,065 50,093 Prepayments 34,289 30,765 34,271 30,765 Due from affiliates 24,763 56,369 24,763 56,369 Sundry receivables 310,323 217,803 310,492 217,973

409,463 342,262 425,591 355,200

Current 409,463 342,262 425,591 355,200

28. INTANGIBLE ASSETS

Cost At 1 January 32,421 31,465 32,421 31,465 Additions 2,449 956 2,449 956

At 31 December 34,870 32,421 34,870 32,421

Accumulated amortisation At 1 January 27,032 22,613 27,032 22,613 Charge for the year 3,656 4,419 3,656 4,419

At 31 December 30,688 27,032 30,688 27,032

Net book value 4,182 5,389 4,182 5,389

Intangible assets represent acquired licenses for computer software. Amortisation expense on intangible assets is included in other expenses in the statement of comprehensive income.

Ecobank Annual Report 2017 149 29. NON-CURRENT ASSET HELD FOR SALE

(a) In 2016, management committed to a plan to sell off landed properties taken over from its borrowers as part settlement of their outstanding loan balances with the Bank. Accordingly, two of the landed properties were sold in 2017. The total value of the remaining landed properties is presented as non-current asset held for sale. The Bank is actively marketing the sale of the non-current assets and a sale is expected by June 2018.

(b) Assets and liabilities of non-current asset held for sale

At 31 December 2017, the non-current asset held for sale was stated at carrying amount and comprised of:

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January 63,726 - 63,726 - Additions - 63,726 - 63,726 Disposals (29,239) - (29,239) -

At 31 December 34,487 63,726 34,487 63,726

(c) Disposal of Held for Sale Assets

Carrying Amount 29,239 - 29,239 - Sales Proceeds 27,668 - 27,668 -

Loss on disposal (1,571) - (1,571) -

Of the total proceeds of GH¢ 27,668,000, cash received amounts to GH¢ 16,418,000 (as seen in cash flow statement). The remainder of GH¢ 11,250,000 would be received in 2018.

(d) Cumulative income or expense included in OCI

There is no cumulative income or expenses included in OCI relating to the non-current asset held for sale.

150 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

30. PROPERTY AND EQUIPMENT

(a) Movement for the year Capital Land & Furniture & Motor work in The Group Buildings equipment Computers vehicles progress TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Gross value At 1 January 2017 91,145 66,286 45,915 22,356 190,307 416,009 Additions 171 2,872 17,493 1,929 60,392 82,857

Transfers 238,508 8,084 2 - (246,594) - Disposals - - - (2,362) - (2,362) Released on revaluation (5,666) - - - - (5,666) Revaluation surplus 79,537 - - - - 79,537

At 31 December 2017 403,695 77,242 63,410 21,923 4,105 570,375

Depreciation At 1 January 2017 3,739 46,907 37,016 11,686 - 99,348 Charge for the year 3,876 7,574 6,961 4,229 - 22,640 Disposals - - - (1,953) - (1,953) Released on revaluation (5,666) - - - - (5,666)

At 31 December 2017 1,949 54,481 43,977 13,962 - 114,369

Net book value At 31 December 2017 401,746 22,761 19,433 7,961 4,105 456,006

2016

Gross value At 1 January 2016 93,296 59,109 40,701 16,603 128,234 337,943 Additions - 7,167 5,214 8,630 62,073 83,094 Disposals (2,151) - - (2,877) - (5,028)

At 31 December 2016 91,145 66,286 45,915 22,356 190,307 416,009

Depreciation At 1 January 2016 1,845 39,999 32,373 10,893 - 85,110 Charge for the year 1,894 6,908 4,643 3,670 - 17,115 Disposals - - - (2,877) - (2,877)

At 31 December 2016 3,739 46,907 37,016 11,686 - 99,348

Net book value At 31 December 2016 87,406 19,379 8,899 10,670 190,307 316,661

Ecobank Annual Report 2017 151 Capital Land & Furniture & Motor work in The Bank Buildings equipment Computers vehicles progress TOTAL GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Gross value At 1 January 2017 91,145 66,095 44,440 22,357 190,207 414,244 Additions 171 2,868 17,493 1,929 60,393 82,854 Transfers 238,508 8,084 2 - (246,594) - Disposals - - - (2,362) - (2,362) Release on Revaluation (5,666) - - - - (5,666) Revaluation Surplus 79,537 - - - - 79,537

At 31 December 2017 403,695 77,047 61,935 21,924 4,006 568,607

Depreciation At 1 January 2017 3,739 46,033 36,126 11,685 - 97,583 Charge for the year 3,876 7,573 6,962 4,229 - 22,640 Disposals - - - (1,953) - (1,953) Release on Revaluation (5,666) - - - - (5,666)

At 31 December 2017 1,949 53,606 43,088 13,961 - 112,604

Net book value At 31 December 2017 401,746 23,441 18,847 7,963 4,006 456,003

2016

Gross value At 1 January 2016 93,296 58,918 39,226 16,604 128,134 336,178 Additions - 7,177 5,214 8,630 62,073 83,094 Disposals (2,151) - - (2,877) - (5,028)

At 31 December 2016 91,145 66,095 44,440 22,357 190,207 414,244

Depreciation At 1 January 2016 1,845 39,125 31,483 10,893 - 83,346 Charge for the year 1,894 6,908 4,643 3,669 - 17,114 Disposals - - - (2,877) - (2,877)

At 31 December 2016 3,739 46,033 36,126 11,685 - 97,583

Net book value At 31 December 2016 87,406 20,062 8,314 10,672 190,207 316,661

Contractual commitments for the acquisition of property and equipment not provided for in the financial statements as at 31 December 2017 was Nil (2016: GH¢20,325,613). The commitments are approved cost in respect of new head office projects.

152 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

Revaluation of property

The Bank’s buildings were revalued on the basis of their open market values by Valuation and Investments Associates (Fixed Assets Valuation, Project & Management Consultants) in March 2017. These figures were incorporated in the financial statements for the year ended 31 December 2017.

(b) Depreciation of property and equipment

Depreciation has been charged in the financial statements as follows:

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Operating expenses 22,640 17,115 22,640 17,114

(c) Cost component of revalued property

An analysis of the cost component of the revalued land and building was as follows:

Cost 75,888 51,285 75,888 51,285 Accumulated depreciation (5,666) (4,690) (5,666) (4,690)

Net book value 70,222 46,595 70,222 46,595

(d) Disposal of property and equipment

Gross value 2,362 5,028 2,362 5,028 Accumulated depreciation 1,953 2,877 1,953 2,877

Net book value 409 2,151 409 2,151 Sales proceeds 676 2,442 676 2,442

Gain on disposal of property and equipment 267 291 267 291

(e) Analysis of PPE gross (Property and equipment)

Cost 70,222 51,285 70,222 51,285 Revaluation surplus 79,537 42,011 79,537 42,011

149,759 93,296 149,759 93,296

Ecobank Annual Report 2017 153 31. DEPOSITS FROM BANKS The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Other deposits from Banks 606,452 542,856 714,888 630,288

Current 606,452 542,856 714,888 630,288

32. CUSTOMER DEPOSITS

Current accounts 4,799,063 4,064,888 4,824,817 4,085,111 Cash collateral 393,102 190,528 393,102 190,528 Savings account 879,534 724,425 879,534 724,425 Time deposit 350,401 321,311 350,365 316,561 Private placements 119,548 115,764 - -

6,541,648 5,416,916 6,447,818 5,316,625

Current 6,188,613 5,095,605 6,125,427 5,000,064 Non-current 353,035 321,311 322,391 316,561

6,541,648 5,416,916 6,447,818 5,316,625

The twenty largest depositors constituted 19.56% of the total deposits at the year-end (2016: 20.32%).

33. BORROWINGS At Exchange At 1/1/17 Drawdown Interest Repayment differences 31/12/17 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

International Finance Corporation 84,657 - 516 (653) 4,310 88,830 Export Development Investment Fund 4,725 - 77 (2,718) - 2,084 European Investment Bank 72,621 - 572 (2,476) 3,677 74,394 Ecobank Transnational Bank (IFC) 46,923 - 931 (24,229) 1,663 25,288 Ecobank Transnational Bank (EIB) 23,818 - 578 (12,691) 919 12,604 African Development Bank ------

232,744 - 2,674 (42,767) 10,569 203,200

154 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Current 42,677 4,189 42,677 4,189 Non-current 160,523 228,555 160,523 228,555

203,200 232,744 203,200 232,744

A loan of US$20 million was made available to the Bank by International Finance Corporation (IFC) under an agreement dated 20 July 2007. This loan is to be used as tier II capital, and attracts interest at LIBOR plus a margin of 5.5% per annum. This loan expired in June 2015 and has been renewed for another 7 years. The loan is unsecured.

The borrowing from Export Development Fund (EDIF) was made available for the purposes of on-lending to small scale enterprises, export insurance re-financing and credit guarantee. This is a revolving fund, which attracts interest at a rate of 2.5% per annum. The loan is unsecured.

Borrowings totaling US$25 million from International Finance Corporation and European Investment Bank were obtained through Ecobank Transnational Incorporated. These borrowings are unsecured subordinated debts, which attract interest at 9.75% and 6.13% respectively, and are repayable on 5 November 2018 and 14 June 2023.

34. OTHER LIABILITIES

Collections on behalf of customers 437,879 623,083 437,879 623,083 Bankers drafts and managers cheques 16,718 25,223 16,718 25,223 Point of sale terminals 3,483 4,888 3,483 4,888 Accruals 47,434 107,610 47,266 107,422 Payables & sundry liabilities 174,239 132,673 170,475 126,219

679,753 893,477 675,821 886,835

Current 314,450 314,428 237,833 312,092 Non-current 365,303 579,049 437,988 574,743

679,753 893,477 675,821 886,835

Ecobank Annual Report 2017 155 35. STATED CAPITAL No. of shares Proceeds 2017 2016 2017 2016 GH¢’000 GH¢’000

Bank Authorised: Ordinary shares of no par value 500,000,000 500,000,000

Issued and fully paid Ordinary shares of no par value 293,228,372 293,228,372

Issued ordinary shares comprise: Issued for cash 88,692 88,692 Issued for consideration other than cash 137,949 137,949

At 31 December 226,641 226,641

There is no unpaid liability and no call or instalment unpaid on any share. There is no share in treasury.

36. INCOME SURPLUS The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January 271,445 272,852 260,078 263,775 Profit for the year 253,645 327,896 255,384 325,594 Dividend paid relating to prior year (240,447) (246,312) (240,447) (246,312) Transfer to statutory banking reserve (Note 40) (31,940) (40,712) (31,923) (40,700) Transfer to regulatory credit risk reserve (Note 41) (44,310) (42,279) (44,310) (42,279)

At 31 December 208,393 271,445 198,782 260,078

37. REVALUATION RESERVE

(a) Capital surplus – land and building revaluation

At 1 January 50,129 59,056 50,129 59,056

Revaluation gain (Note 30) 79,537 - 79,537 -

Deferred tax (Note 20) (19,884) (8,927) (19,884) (8,927)

At 31 December 109,782 50,129 109,782 50,129

156 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

38. OTHER RESERVE

(b) Available for sale instruments The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January - (1,666) - (825)

Realised gain on securities disposed off (Note 25) - 2,221 - 1,100

Deferred income taxes (Note 20) - (555) - (275)

At 31 December - - - -

39. CASH AND CASH EQUIVALENTS

Cash balances (Note 23) 230,063 194,323 230,063 194,323 Government securities (Note 25) 67,658 326,491 18,584 270,968 Due from other Banks (Note 23) 1,625,736 2,270,570 1,642,540 2,269,234 Deposits from Banks (Note 31) (606,452) (542,856) (714,888) (630,288)

As shown in the statement of cash flows 1,317,005 2,248,528 1,176,299 2,104,237

Cash and cash equivalents comprise balances with less than three months maturity from the date of acquisition, including cash on hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less.

40. STATUTORY RESERVE

Statutory reserve represents cumulative amounts set aside from annual profits after tax required under the Banking Act for Banks and the Non-Bank Financial Institutions Business Rules for leasing companies.

The proportion of net profits transferred to reserves ranges from 12.5% to 50% of net profit after tax, depending on the ratio of the balance on statutory reserves to paid up capital.

At 1 January 323,124 282,412 322,623 281,923 Transfer from income surplus 31,940 40,712 31,923 40,700

At 31 December 355,064 323,124 354,546 322,623

Ecobank Annual Report 2017 157 41. CREDIT RISK RESERVE

Regulatory credit risk reserve represents cumulative amounts required to meet the Bank of Ghana prudential guidelines for allowances on impairment. The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January 92,737 50,458 92,737 50,458 Transfer to income surplus 44,310 42,279 44,310 42,279

At 31 December 137,047 92,737 137,047 92,737

42. INVESTMENT IN ASSOCIATE

At 1 January 8,073 7,387 4,841 4,841 Share of associate profit 474 686 - -

At 31 December 8,547 8,073 4,841 4,841

The Bank has one associate, Pan African Savings and Loans Company Limited, whose results are incorporated into its financial statements using equity accounting.

Pan African Savings and Loans Company Limited

The relationship with the Bank Strategic investment which provides microfinance to small and medium scale enterprises.

Principal place of business/country of incorporation Accra, Ghana

Ownership interest/voting rights of the Bank 49% (2016: 49%)

Fair value of ownership interest (if listed) N/A

158 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

Financial statements extract of associates 2017 2016 GH¢’000 GH¢’000

Revenue 27,181 24,128

Profit from continuing operations 702 884 Other comprehensive income - -

Total comprehensive income 702 884

Attributable to investee’s shareholders 702 884

Total assets 64,683 55,382 Total liabilities 53,134 44,726

Net assets 11,549 10,656

Attributable to investee’s shareholders 5,659 5,221

Group’s interest in net assets at 1 January 8,073 7,387 Total comprehensive income to the Group 474 686 Dividends received during the year - -

Group’s interest at 31 December 8,547 8,073

43. CONTINGENT LIABILITIES AND COMMITMENTS

Off balance sheet items

In common with other banks, the bank conducts business involving acceptances, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. In addition, there are other derivative instruments, including forwards and option contracts or combinations thereof (all commonly known as derivatives), the nominal amounts of which are not reflected in the consolidated balance sheet.

Nature of instruments

An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The Bank expects most acceptances to be presented, but reimbursement by the customer is normally immediate.

Other contingent liabilities include transaction related customs and performance bonds, which are generally short-term commitments to third parties that are not directly dependent on the customer’s creditworthiness.

Commitments to lend are agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made for a fixed period, or have specific maturity dates but are cancellable by the lender subject to notice requirements. Documentary credits commit the Bank to make payments to third parties, on production of documents, which are usually reimbursed immediately by customers.

Ecobank Annual Report 2017 159 The following, summarise the nominal principal amount of contingent liabilities and commitments with off- balance sheet risks. The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Contingent liabilities Guarantees and indemnities 368,789 397,413 368,789 397,413 Documentary and commercial letters of credit 999,868 213,842 999,868 213,842

1,368,657 611,255 1,368,657 611,255

Legal proceedings

There were a number of legal proceedings outstanding against the Group at 31 December 2017. Although liabilities are not admitted, if defense against the legal action is unsuccessful, potential liabilities estimated at GH¢15,735,495.10 would be payable. Total provision of GH¢13,348,343.38 (2016: GH¢16,406,388.49) has been made by the Group as at 31 December 2017 against losses which may arise.

44. RELATED PARTY TRANSACTIONS

(a) Transactions with executive directors and key management personnel

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of Ecobank Ghana Limited (directly or indirectly) and comprise the Executive Directors and Senior Management of Ecobank Ghana Limited.

There were no material related party transactions with companies where a Director or other member of key management personnel (or any connected person) is also a Director or other member of key management personnel (or any connected person) of Ecobank Ghana Limited.

No impairment losses have been recorded in respect of loans to Directors or other members of key management personnel (or any connected person).

Details of transactions between Directors and other key management personnel (and their connected persons) and the Group are as follows:

160 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

2017 2016 GH¢’000 GH¢’000

Short term employee benefits Salaries and other short term benefits 9,974 7,666 Social security contributions 388 27

10,362 7,693

Loans Loan outstanding at 1 January 10,203 7,269 Net movement (2,639) 2,934

Loans outstanding at 31 December 7,564 10,203

Interest income 646 763

Deposits Deposits at 1 January 3,081 2,420 Net movement during the year (711) 661

Deposits at 31 December 2,370 3,081

Interest expense 143 186

Loans to Executive Directors and key management personnel include housing, car and other personal loans which are given under terms that are no more favorable than those given to other staff. No impairment has been recognized in respect of loans granted to Executive Directors and key management personnel at 31 December 2017 and 2016. The housing and car loans are secured by the underlying assets. All other loans are unsecured.

(b) Transactions with non-executive directors

Included in (a) above are loans to non-executive directors. Amount outstanding as at year end is GH¢ 1,197,258.91. An amount of GH¢ 236,649.76 as deposits by non-executive directors is also included in total deposits in (a).

(c) Transactions and balances with subsidiaries

The Bank has 100% shareholdings in four (4) Subsidiaries (refer to page 148). Fixed deposit investments are placed with the subsidiaries. The subsidiaries current accounts are held with the Bank. Interest accrues on these placements at normal commercial rates.

Balances due to/from the subsidiary at the year-end were as follows:

Placement with subsidiary 130,302 113,029 Deposits with subsidiary 25,821 118,962 Interest income from placements 28,275 27,000 Interest expense on deposits 5,079 12,001

Ecobank Annual Report 2017 161 (d) Transactions and balances with parent company

The Bank is a subsidiary of Ecobank Transnational Incorporated (ETI), a company incorporated in the Republic of Togo.

A number of transactions were entered into with the parent company in the normal course of business. These transactions include loans, placements, deposits, foreign currency and other operational transactions. These transactions were carried out on commercial terms and at commercial market rates and went through the normal channels of approval.

Transactions during the year and balances at 31 December are as follows: 2017 2016 GH¢’000 GH¢’000

Placements with related parties (foreign) - 178,123 Borrowings 36,922 70,705 Interest income from placements 11,859 20,082

(e) Transactions and balances with subsidiaries of the parent company (ETI)

A number of transactions were entered into with other subsidiaries of the parent company (Ecobank Transnational Incorporated) in the normal course of business. These transactions include loans, placements, deposits, foreign currency and other operational transactions. These transactions were carried out on commercial terms and at commercial market rates and went through the normal channels of approval.

Placements 478,414 855,090 Other assets - 72 Interest income from placements 45,302 32,726

45. REGULATORY DISCLOSURES

1. Non-performing loans ratio

The percentage of gross non-performing loans (“substandard to loss”) to total credit/advances portfolio (gross) was 20.04% (2016: 11.90%) per Bank of Ghana’s prudential guidelines. As per IFRS, the Bank recorded NPL of 15.29% (2016: 15.87%)

2. Capital adequacy ratio

The capital adequacy ratio at the end of December 2017 was calculated as stated below:

The Group - 13.76% (2016: 15.29%) The Bank - 12.57% (2016: 14.74%)

162 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

3. Compliance with statutory liquidity requirement

• Default in Statutory Liquidity-None • Default in Statutory Liquidity- Sanction (GH¢ Nil)

4. Liquid ratio

The key measure used by the bank or Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. For this purpose net liquid assets are considered as including cash and cash equivalents and investment grade debt securities for which there is an active and liquid market less any deposits from banks, debt securities issued, other borrowings and commitments maturing within the next month. Details of the reported bank or Group (liquid ratio) ratio of net liquid assets to deposits and customers at the reporting date and during the reporting period were as follows:

2017 2016

Group 36.90% 54.95% Bank 35.26% 53.28% Average for the period 44.27% 53.01% Maximum for the period 36.90% 54.95% Minimum for the period 35.26% 36.26%

46. BUSINESS SEGMENTS

As at the end of the year 2017, the Bank operated the following business units:

• Consumer banking - This is personal banking and specializes in serving the Premier, Advantage, Classic and Direct customers

• Commercial Banking - This is Business Banking and Medium Local Corporates with the following sub- segments SMEs, Medium Local corporates and Non-government public sector (schools, faith, NGOs & professional bodies)

• Corporate & Investment Banking - Specialises in serving the public sector, multinational institutions, financial institutions/international organizations and the Regional Corporate segment of the market.

Transactions between business segments are on normal commercial terms and conditions. Funds are ordinarily allocated between segments, resulting in funding cost transfers disclosed in operating income. Interest charged for these funds is based on the Group’s cost of capital.

Ecobank Annual Report 2017 163 The Group’s operations are based in Ghana. There are no separately distinguishable geographical segments.

The segmental information provided to the Board for reportable segments for the year ended 31 December is as follows:

The Group Consumer Commercial Corporate Group At 31 December 2017 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Net interest income 190,331 131,777 422,161 744,269 Net fees and commission income 76,636 38,749 83,370 198,755 Net trading income 21,503 35,474 87,029 144,006 Other operating income 4,276 5,909 15,710 25,895 Other revenue - - 3,921 3,921

Revenue 292,746 211,909 612,191 1,116,846 Other income - - 267 267 Loan impairment loss (1,446) (3,432) (169,062) (173,940)

Net operating income 291,300 208,477 443,396 943,173

Personnel expenses 110,352 88,471 144,849 343,672 Depreciation and amortization 7,127 5,462 13,707 26,296 Other operating expense 76,554 55,524 83,218 215,296

Operating profit 97,267 59,020 201,662 357,909 Share of profit of associate (net of tax) - - 474 474

Profit before income tax 97,267 59,020 202,096 358,383 Tax expense (27,854) (16,902) (59,982) (104,738)

Profit for the year 69,413 42,118 142,114 253,645

Segment assets 1,048,573 704,409 7,345,158 9,098,140

Segment liabilities 2,490,160 1,955,646 3,615,407 8,061,213

164 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

The Group Consumer Commercial Corporate Group At 31 December 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Net interest income 279,885 177,449 261,771 719,105 Net fees and commission income 39,329 21,775 96,118 157,222 Net trading income 24,034 22,545 83,695 130,274 Other operating income 6,706 6,275 5,081 18,062 Other revenue - - 4,140 4,140 Gains from derecognition of financial assets measured at amortised cost - - 177,854 177,854

Revenue 349,954 228,044 628,659 1,206,657 Other income - - 291 291 Loan impairment loss (5,531) (24,579) (148,487) (178,597)

Net operating income 344,423 203,465 480,463 1,028,351

Personnel expenses 111,450 80,589 124,320 316,359 Depreciation and amortization 5,620 3,981 11,933 21,534 Other operating expense 79,605 56,496 92,367 228,468

Operating profit 147,748 62,399 251,843 461,990 Share of profit of associate (net of tax) - - 686 686

Profit before income tax 147,748 62,399 252,529 462,676 Tax expense (43,040) (18,177) (73,563) (134,780)

Profit for the year 104,708 44,222 178,966 327,896

Segment assets 928,565 623,790 6,504,515 8,056,870

Segment liabilities 2,191,009 1,720,708 3,181,077 7,092,794

Ecobank Annual Report 2017 165 The Bank Consumer Commercial Corporate Group At 31 December 2017 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Net interest income 190,331 131,777 405,924 728,032 Net fees and commission income 76,636 38,749 83,214 198,599 Net trading income 21,503 35,474 86,712 143,689 Other operating income 4,276 5,909 15,935 25,580 Other revenue - - 19,931 19,931

Revenue 292,746 211,909 611,176 1,115,831 Other income - - 267 267 Loan impairment loss (1,446) (3,432) (169,061) (173,939)

Net operating income 291,300 208,477 442,382 942,159

Personnel expenses 110,352 88,471 144,285 343,108 Depreciation and amortization 7,127 5,462 13,707 26,296 Other operating expense 76,554 55,524 82,917 214,995

Operating profit 97,267 59,020 201,473 357,760

Profit before income tax 97,267 59,020 201,473 357,760 Tax expense (27,854) (16,902) (57,620) (102,376)

Profit for the year 69,413 42,118 143,853 255,384

Segment assets 3,301,116 938,180 4,859,396 9,098,692

Segment liabilities 2,678,286 4,052,330 1,341,278 8,071,894

166 Ecobank Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS

The Bank Consumer Commercial Corporate Group At 31 December 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Net interest income 279,885 177,449 244,143 701,477 Net fees and commission income 39,329 21,775 96,166 157,270 Net trading income 24,034 22,545 83,355 129,934 Other operating income 6,706 6,275 4,710 17,691 Other revenue - - 16,942 16,942 Gains from derecognition of financial assets measured at amortised cost - - 177,854 177,854

Revenue 349,954 228,044 623,170 1,201,168 Other income - - 291 291 Loan impairment loss (5,531) (24,579) (148,460) (178,570)

Net operating income 344,423 203,465 475,001 1,022,889

Personnel expenses 111,450 80,589 123,954 315,993 Depreciation and amortization 5,620 3,981 11,932 21,533 Other operating expense 79,605 56,496 92,076 228,177

Operating profit 147,748 62,399 247,039 457,186

Profit before income tax 147,748 62,399 247,039 457,186 Tax expense (42,526) (17,960) (71,106) (131,592)

Profit for the year 105,222 44,439 175,933 325,594

Segment assets 928,565 623,790 6,473,155 8,025,510

Segment liabilities 2,191,009 1,720,708 3,161,585 7,073,302

47. DIVIDEND PER SHARE

At the forthcoming meeting, the directors do not recommend any dividend payment (2016: Divident of 82 Ghana Pesewas per share amounting to a total of GH¢240,447,265.04).

48. CORPORATE SOCIAL RESPONSIBILITY

Ecobank recognizes the role the communities play in ensuring the Bank remains in business. Giving back to these communities is a core objective for the Bank at both the corporate and individual levels. During the year, the Bank continued with its corporate social responsibility (CRS) programs with a key focus on education, health, financial inclusion and others. A total of GH¢1.71 million was committed to CSR activities this year.

Ecobank Annual Report 2017 167 NOTES TO THE FINANCIAL STATEMENTS

49. NON-COMPLIANCE WITH SECTIONS OF THE BANKS AND SPECIALISED DEPOSIT- TAKING INSTITUTIONS ACT, 2016 (ACT 930)

Section 64(2) of Act 930 prohibits a bank, specialised deposit-taking institution or financial holding company from taking an aggregate financial exposure in respect of its affiliates in excess of twenty-five percent (25%) of its net own funds. The Bank had placements with its affiliates exceeding this prescribed exposure limit as at the end of the year.

Section 69(3) of the Act also states that the aggregate amount of loans on preferential terms, both secured and unsecured by a bank or specialised deposit-taking institution to its employees shall not exceed twenty percent (20%) of the net own funds of that bank or specialised deposit-taking institution. As at the end of the year, the Bank had exceeded the prescribed limit.

168 Ecobank Annual Report 2017 Ecobank Annual Report 2017 169 APPENDICES

• Shareholders’ Information • Five year Financial Summary • Value Added Statement

170 Ecobank Annual Report 2017 Ecobank Annual Report 2017 171 APPENDIX I

SHAREHOLDERS’ INFORMATION

Number of Shareholders

The Bank had 13,705 ordinary shareholders at 31 December 2017 distributed as follows:

2017 2016 No. of % of shares No. of % of share holders held holders held

Category

1-1,000 12,261 1.14 12,280 1.15 1,001-5,000 1,081 0.70 1,087 0.70 5,001-10,000 168 0.39 167 0.39 10,000 and over 194 97.77 171 97.76

Total 13,704 100.00 13,705 100.00

Directors’ Shareholding

The Directors named below held the following number of shares in the Bank at 31 December 2017:

No. of shares % Holding

Terence Ronald Darko 80,000 0.027 Daniel Kwei-Kuma Sackey 10,000 0.003 Samuel Ashitey Adjei 41,260 0.014 Martin Eson-Benjamin 2,590 0.001 Morgan Fianko Asiedu 2,025 0.001 Rosemary Yeboah 758 0.000 Felicity Acquah 640 0.000

Total 137,273 0.046

172 Ecobank Annual Report 2017 APPENDIX I

20 Largest Shareholders

No. of shares % Holding

Ecobank Transnational Incorporated 202,129,934 68.93 Social Security and National Insurance Trust 47,527,858 16.21 SCGN/SSB & T AS Custodian Re SQM Frontier Africa Masters 8,207,445 2.80 Compagnie Africaine de Financement et de Participation-Holing 6,897,425 2.35 African Tiger Mutual Fund 4,407,075 1.50 Ghana Reinsurance Company Limited General Business 3,901,190 1.33 Teachers Fund 1,809,738 0.62 Verdipapirfondet Holberg Rurik Scgn/ London 1,171,700 0.40 SCGN/Citibank London Verdipapirfondet Holberg Global 1,081,042 0.37 SCGN/Enterprise Tier 2 Occupational Pension Scheme 436,640 0.15 SCGN/Citibank Kuwait INV Authority 393,500 0.13 HFCN, Cocobod Tier 3 Pension Scheme 285,960 0.10 HFCN/ Cocobod Tier 3 Pension Scheme (Old Fund) COL, 255,098 0.09 Boateng, Opoku Gyamfi 250,000 0.09 SIC Insurance Company Ltd 232,603 0.08 SCGN/CACEIS Bank Lux Re Intereffekt Investment, Funds N.V 224,600 0.08 Okubanjo, Oloye Oladotun Okunowo 210,096 0.07 HFCN, EDC Ghana Balanced Fund Ltd 199,728 0.07 SCGN/JP Morgan Chase Duet Victoire Africa, Index Fund IC 196,428 0.07 SCGN/U.P.S BBG Staff Occupational Pension FD Sch 190,064 0.06

280,008,124 95.49

Ecobank Annual Report 2017 173 APPENDIX II

FIVE YEAR FINANCIAL SUMMARY

(All amounts are expressed in thousands of Ghana Cedis)

2017 2016 2015 2014 2013

Income Statement

Revenue 1,116,845 1,206,657 1,023,129 857,737 589,603 Profit before tax 358,383 462,676 458,560 446,941 267,874 Profit after tax 253,645 327,896 321,266 319,965 190,633 Dividend - 240,447 246,312 231,650 126,088

Statement of Financial Position

Loans and advances to customers 2,685,467 3,480,544 3,117,873 2,709,517 2,126,820 Customer deposits 6,541,648 5,416,916 4,837,950 4,234,434 3,246,674 Total assets 9,098,140 8,056,870 6,691,810 5,767,608 4,694,261 Shareholder equity 1,036,927 964,076 889,753 798,423 560,929

Statistics

Dividend per share in pesewas - 82 84 79 43 Earnings per share in pesewas 87 112 110 109 65 ROAE (%) 25 35 38 47 37 ROAA (%) 3.0 4.4 5.2 6.1 4.7

174 Ecobank Annual Report 2017 APPENDIX III

VALUE ADDED STATEMENT

Value added statements for the year ended 31 December 2017

The Group The Bank 2017 2016 2017 2016 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Interest earned and other operating income 770,163 915,021 753,613 897,022

Direct cost of services (214,295) (227,468) (213,997) (228,177)

Value added by banking services 555,868 687,553 539,616 668,845

Non-banking income 347,423 292,613 362,486 304,437

Impairments (173,940) (178,597) (173,939) (178,570)

Value added 729,351 801,569 728,163 795,712

To employees Directors (without executives) 1,554 1,000 1,550 1,000 Employees (Including directors) 344,226 316,359 343,658 315,993

To Government Income tax 104,738 134,780 102,376 131,592

To providers of capital Dividends to shareholders - 240,447 - 240,447

To expansion and growth Depreciation 22,640 17,115 22,639 17,114

Amortisation 3,656 4,419 3,656 4,419

Retained earnings 253,645 87,449 255,384 85,147

Ecobank Annual Report 2017 175 PROXY FORM

I/WE, being a Member(s) of the above-named Company hereby appoint or failing him/her the Chairman of the Meeting as my/our Proxy to vote on my/our behalf at the Annual General Meeting (AGM) of the Company to be held on Friday, 11th May, 2018 at 10:30 am prompt.

DATED THE DAY OF , 2018.

MEMBER

This Form is to be used in favour of/against the Resolution set out in the Agenda. FOR AGAINST

1. TO ADOPT ACCOUNTS

2. TO RATIFY the appointment of the following Director for a 3 year term MR. HENRY DODOO-AMOO

3. TO RATIFY the appointment of the following Director for a 3 year term DR. OHENE AKU KWAPONG

4. TO RATIFY the appointment of the following Director for a 3 year term DR. JOHN OFORI-TENKORANG

5. TO APPOINT MESSRS PWC as Auditors

6. TO AUTHORISE Directors to fix remuneration of the Auditors

SPECIAL RESOLUTIONS

7. TO AUTHORISE an increase in Stated Capital up to GHS 416,641,000

8. TO AUTHORISE a transfer the sum of GHS 190,000,000 from Income Surplus to Stated Capital

9. TO AUTHORISE a Capitalization Issue by the issuance of one (1) ordinary share to each existing shareholder for every ten (10) ordinary shares held, to be credited as fully paid for

Please indicate with an “X” in the spaces above how you wish your vote to be cast. Unless otherwise instructed, the Proxy will vote as he thinks fit.

If executed by a body corporate, this Proxy Form should be completed by the signature of a duly authorized Officer and should be accompanied by a resolution in accordance with Section 165 of the Companies Act, 1963 (Act 179).

To be valid, this Proxy Form must be filled up, signed and lodged (together with any authority under which it is signed) with the Registrars at Ghana Commercial Bank, Registrars Office, Thorpe Road, High Street, Accra no later than 3:00 pm on Thursday, the 10th day of May, 2018.

176 Ecobank Annual Report 2017 DRAFT RESOLUTIONS

Draft Resolutions of Annual General Meeting of Ecobank Ghana Limited

Ordinary Resolutions

1. The General Meeting hereby adopts the Statement of Accounts of the company for the year ended the 31st day of December, 2017 together with the reports of the Directors and auditors thereon.

2. The General Meeting hereby ratifies the appointment of Mr. Henry Dodoo-Amoo as a Director for a 3 year term.

3. The General Meeting hereby ratifies the appointment of Dr. Ohene Aku Kwapong as a Director for a 3 year term.

4. The General Meeting hereby ratifies the appointment of Dr. John Ofori-Tenkorang as a Director for a 3 year term.

5. The General Meeting hereby appoints Messrs PricewaterhouseCoopers as Auditors for the Bank.

6. The General Meeting hereby authorises the Directors to fix the remuneration of the Auditors.

Special Resolutions

7. The General Meeting hereby authorizes the Directors to increase the stated capital of the Company up to GHS 416,641,000 in accordance with Section 66 (1) of the Companies Act, 1963 (Act 179).

8. The General Meeting hereby authorizes the Directors to transfer the sum of GHC190,000,000 from Income Surplus to Stated Capital pursuant to section 66 (1) of the Companies Act, 1963 (Act 179).

9. The General Meeting hereby authorizes the Directors to undertake a Capitalization Issue in accordance with Section 74 (1) of the Companies Act, 1963 (Act 179) and section 43 (a) of the Regulations of the Company by the issuance of one (1) ordinary share to each existing shareholder for every ten (10) ordinary shares held, to be credited as fully paid for.

Ecobank Annual Report 2017 177 178 Ecobank Annual Report 2017 32.

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39. Ecobank Ghana Ltd 2 Morocco Lane Off Independence Avenue – Accra Ghana ecobank.com