CMYK SP Orange 29.7 x 21cm AnnuAnnualal Report 2013 Report 2013
KOLOLO BRANCH
INDUSTRIAL AREA KAMPALA BRANCH 18, Kampala Road, Kampala 2/2B, Kampala Road, Kampala P.O. Box 73446 Clock Tower, Kampala Plot 37,39,41 & 43 Kibira Tel: 0414-256188 Road, Kampala Tel: 0414-237545 Plot No. 70/378, Plot No. 35/36, Gaba Road, Kansanga, Shree Hari Complex, Kawempe Plot 59-67, Jinja Road, Mukono
Plot 2, Aputi Road, Lira
16A/B, Iganga Road, Jinja 84A & 84B, Main Street, Iganga Baroda House, 3, Pallisa Road, KOLOLO BRANCH Mbale. Plot 31, Kira Road Kampala Tel: 0414-532227 KABALE BRANCH ENTEBBE BRANCH Plot No. 94, P.O. Box 1137, Plot 24, Gower's Road. 11, Masaka Road, Mbarara Kabale (Uganda) P.O. Box 723, Entebbe Uganda Tel: 0486-422087 Tel: 0414-323155
Offsite ATM’s at: OASIS MALL, KAMPALA, MAZIMA MALL IN KABALAGALA, NJERU INDUSTRIAL AREA, JINJA SHORTLY WILL OPERATIONALISE Offsite ATM’s at: LUGAZI
HEAD OFFICE Bank of Baroda (Uganda) Ltd P.O. Box 7197, 18 - Kampala Road, Kampala | Tel: 0414-233680 / 1 E-mail: [email protected] Website: www.bankofbaroda.ug banking with passion Continual Focus on Customer Satisfaction (Regulated by Bank of Uganda) Annual Report and Financial Statements for the year ended December 31, 2013 i AnnuCORPOalRA RepoTE OrFFICt 2013E, KAMPALA Baroda welcoming all the revellers at Kampala City Festival held onthe eve of Uganda’s Independence Day 2013.
ii Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Annual General Meeting - Notice Annual Report 2013 Bank Of Baroda (Uganda) Ltd Head Office : 18, Kampala Road P O Box 7197, Kampala (Uganda)
NOTICE IS HEREBY GIVEN that the 44th Annual General Meeting of the Bank of Baroda(U) Ltd will be held on 21st June 2014 at 3.00 pm at “Gardenia Hall” Imperial Royal Hotel, Plot NO 7, Kintu Road, P.O. Box 4326, Kampala to transact the following business:-
1. CONFIRMATION OF THE MINUTES OF THE 43rd ANNUAL GENERAL MEETING. To confirm the minutes of the 43rd Annual General Meeting of the Bank held on 7th June 2013.
2. FINANCIAL STATEMENTS. To receive and consider the audited financial statements – consolidated balance sheet as at 31st December 2013, consolidated income statement for the year ended 31st December 2013, report of the Board of Directors on the working and activities of the Bank, together with the Auditors’ report thereon.
3. DIVIDEND. To consider and if deemed fit, to approve the dividend proposed by the Directors at 20 % of the paid up share capital.
4. DIRECTORS. To ratify the appointment of Mr. B S Dhaka as Managing Director of the Bank w e f 19.12.2013 in place of Mr. Ashok Kumar Garg who has resigned on his repatriation to India.
5. AUDITORS. To consider and approve the appointment of M/s P K F Uganda Ltd as the Statutory Auditors of the Bank for the period up to the next Annual General Meeting and to approve their remunera- tion as proposed by the Board of Directors; in place of M/s Grant Thorton our existing Statutory Auditors, who cease to be eligible for being appointed as Statutory Auditor after being the Statu-
tory Auditor of the Bank for 4 consecutive years.
6. ANY OTHER BUSINESS. To transact any other business that may be legally transacted in the meeting.
BY ORDER OF THE BOARD
Company Secretary Date: 29.05.2014
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 1 Annual Report 2013 Notes to the Notice NOTES
1. Appointment of proxy.
The members entitled to attend and vote at the meeting are entitled to appoint a proxy to attend instead of her/him/itself. Such proxy need not be a member of the Bank. The proxy, in order to be effective must be appointed using the proxy form and the proxy form must be received at the Bank at least 48 hours before start of the meeting. The format of the proxy form is attached with the Annual Report.
2. Appointment of a representative.
No person shall be entitled to attend the meeting as a duly authorized representative of a Company, unless a copy of the resolution appointing her/him as a duly authorized representative certified to be true copy by the Chairman of the meeting at which the resolution was passed, has been deposited at the Head Office of the Bank at least 48 hours before the start of the meeting.
3. Admission Form.
For the convenience of the members, admission form is annexed to the Annual Report. The members are requested to fill in the same, affix their signature/s in the space provided therein and hand over the admission form at the entrance of the meeting place. Proxy / Representative of the Shareholders should mark on the attendance slip as proxy / representative as the case may be.
3. Closure of Register of Shareholders. The Register of members and share transfer book of the Bank will be closed on 7th July 2014 4. Payment of Dividend.
The final dividend as declared by the Board of Directors and approved by the members will be paid to those shareholders whose name/s appear on the Bank’s Register of Shareholders as on 7th July 2014 and the same will be sent on or before 15.09.2014 after deducting withholding tax wherever applicable.
5. Change of address / Dividend Mandate.
Information of change of address , dividend mandate and particulars of the Bank , Branch and Account Number , which the shareholder desires to incorporate in her/his dividend warrant should reach the Bank well before7th July 2014 to enable to give effect of such intimation.
6. Request to members.
Please note that the copies of the Annual Report will not be distributed at the Annual General Meeting, therefore members are requested to bring their copies of the Annual Report to the meeting. Members are also requested to inform the Bank at least 48 hours before commencement of the meeting, about any other business which they propose to legally transact at the meeting.
2 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Global Chairman & Managing Director’s Statement Annual Report 2013 GLOBAL CHAIRMAN’S STATEMENT Dear Shareholders, augmenting fee based income. The strategy th It’s my pleasure to welcome you to the 44 Annual is to achieve optimum General meeting of the Shareholders of Bank of Baroda growth through use of (Uganda) Ltd, one of the prominent subsidiaries of Bank technology. of Baroda.
I am happy to inform you that the performance of Bank Africa occupies a special of Baroda (Uganda) Ltd for the financial year ended 31st place in Bank of Baroda’s December 2013 has been satisfactory taking into account International Business, the challenging environment in the Banking Industry as Bank started its first globally as well as domestically. The business of your overseas Branch in Bank has maintained its robust growth and uptrend both this region. The broad in qualitative as well as quantitative terms thus making it business strategy for one of the most favoured Banks in Uganda. Africa inter alia includes:- Your Bank has been honoured with the International Increasing Bank’s reach by opening new Award for Business Excellence by the Global Trade Leaders Club in Madrid, Spain. This International Award branches. is recognition of the Bank’s Commitment to all round Thrust on core sectors like Agriculture, qualitative business management. Infrastructure etc. Increasing alternate channels for delivery There is a positive trend in the economic outlook of of Bank Services. Uganda with signs of improving domestic production, Introducing facilities for utility services employment opportunities and demand for goods. The through use of technology. overall prospects of the Ugandan Economy are brighter Improving Risk Management Systems. in the coming years. This is reflected in the increasing Aggressive marketing of Bank’s various interest evinced by the Overseas Investors in investing products. in the emerging economy of Uganda with its free market economy coupled with a secure and stable socio – economic environment. Foreign Direct Investment in I am happy to state that the performance and Uganda continues to remain buoyant. However there growth of Bank of Baroda (Uganda) Ltd is in line is continued concern related to Agriculture / Food with the strategy adopted for Africa. production which is dependent on the vagaries of nature. The redeeming feature is that the fiscal policy I take this opportunity to place my sincere thanks is expected to be growth oriented through expansion in and gratitude to the Government of the Republic Infrastructure spending / Agriculture development etc of Uganda and Bank of Uganda, the Central Bank which will boost economic growth. for their valuable guidance, advice and continued support in strengthening the operations of the Coming to the salient features of the performance of Bank. I thank officials of Indian Embassy for their your Bank, I am happy to state that the total business unstinted cooperation and support. I also thank of the Bank has increased by 23.95 %, with Growth in each one of you for your continued trust reposed Loans & Advances of 25.34 % and growth in Deposits in the Bank. I express my deepest gratitude to all of 23.50 % coupled with modest increase in Net Profit. our esteemed clients and all our associates for their These parameters of growth indicate high level of continued support and patronage. resilience shown by the Bank in the Challenging Banking / Economic environment. I acknowledge the dedication and contribution of the Management and all the staff members of Bank You will also be happy to know that Bank of Baroda, the of Baroda (Uganda) Ltd and I am confident that parent Bank has a presence in 25 countries around the their commitment and dedicated efforts will bring globe and the Bank has been conferred the Best Public further glory to the Bank. I look forward to a more Sector Bank Award for the year 2013. The Bank has also convincing & higher pace of qualitative business received award for Excellence in Social Banking. growth in the years to come.
The Bank believes in the policy of CUSTOMER FIRST. The I extend my good wishes to each one of you. thrust of Bank’s all efforts is oriented towards CUSTOMER Yours truly DELIGHT. Technology is an integral part of Banking. The objective of improvement in technology is to strengthen the business model with thrust on sustainable growth in business, quality of credit, NPA Management and S. S. MUNDRA Chairman & Managing Director of Bank of Baroda - India
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 3 Annual Report 2013 Chairman’s Statement Managing Director’s Statement CHAIRMAN’S STATEMENT Ugandan Children Dear Shareholders, for heart surgery It’s my honour to welcome you all to the 44th in India, providing Annual General Meeting of your Bank which Scholastic materials has entered into the 61st year of excellence to indigent students, and uninterrupted service to the Country. I have Medical Hampers to great pleasure to report the financial results needy patients, Bed of your Bank for the financial year ending 31st side cupboards / December 2013. Lockers to Hospital, Undertaken Blood The Ugandan economy is showing a positive donation drive, Tree outlook supported by the monetary policy Plantation Campaign initiatives taken to rein in inflation which had etc. spiraled to dizzy heights. The inflation is now within control and the same coupled with the Mr Ashok Kumar Garg Managing Director and Mr. rising Government spending on Infrastructure / R.K. Bansal Director of the Bank have resigned Agriculture etc will lead to further expansion and from the Bank and I place my sincere appreciation growth of the economy. In addition to this the for the valuable support and guidance given by discovery of oil as also the decision of setting them to the Bank during their tenure. up the Oil Refinery in the country has further On behalf of the Board of Directors, Management propelled the future prospects of the economic and Staff of the Bank I express my deep gratitude growth and development across the country. and sincere thanks to the Government, all The focused steps taken by the Government officials of Bank of Uganda, and Government for increasing food production / infrastructure Departments for their guidance and support in development / health and education etc have strengthening the operations of the Bank. led to direct improvement in the standard of living of the people across the board. I place on record; appreciation for the continued support received from all our valued shareholders In the above economic scenario your Bank and customers without whom the Bank would has done well both in quantitative and not have been able to achieve the appreciable qualitative terms showing increasing growth in results. all parameters ie total business increased by 23.95 % , advances by 25.34 %, deposits by I also place on record my appreciation to the 23.50 % and net profits by 4.84 %. valuable support and guidance of my Director Colleagues on the Board of the Bank. I also wish During the year 2013 your Bank has expanded to thank all the staff members at various levels its bouquet of services by offering E-Collection in the Bank for the commendable work done by of UMEME electricity bills both prepaid and post them during the year and am confident that the paid which has been started at all branches of same zeal and enthusiasm will be continued to the Bank. Your Bank has since operationalized take the Bank to further glories in coming years. a new branch at Kololo - Kampala. Thus taking the total service outlets to 34 consisting of 15 Bank of Baroda (Uganda) Ltd rededicates its branches and 19 ATMs. commitment to all its customers for rendering the highest standard of services and also for The commitment to customer is reflected in the enhancing the stakeholders’ value in coming motto of your Bank for the year 2014 “ Improving years. Profitability with Team Efforts”. Yours truly, The Bank is also committed to good Corporate Governance and has complied with all the applicable laws and regulations. Your Bank has also extended its commitment to be part of the development of the society through its Corporate Social Responsibility initiatives like sponsoring DR. W RAMA MAKUZA CHAIRMAN 4 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Managing Director’s Statement Annual Report 2013 MANAGING DIRECTOR’S STATEMENT Dear Shareholders,
It is my pleasure to welcome each one of you to this 2. Improvising 44th Annual General Meeting of your Bank. The Bank is the existing celebrating its diamond jubilee on completing 60 years products and of uninterrupted service to the Nation. services in sync with the The year 2013 has seen inflation within single digits in customer the band of 5 % to 7 % which is inter alia an outcome requirements. of the monetary policy adopted by Bank of Uganda. 3. New ATM at However there still remain the risks of variations in food Lugazi. prices / fuel prices / exchange rates etc. The global 4. New branches economy has also shown signs of revival. at some o f There is a positive trend in the economic growth and the upcoming centres. development of the country which is well supported All efforts of your Bank are directed at making your by the focus of the Government on core sectors Bank a one stop solution to cater to all the needs and like Agriculture / Agro Processing / Infrastructure requirements of our esteemed customers and to make Development etc. your Bank the Bank of FIRST CHOICE. Let me share with you the key financial highlights of I am happy to share with you that Bank of Baroda (U) your Bank for the financial year ended 31st December Ltd has been accorded the International Award for 2013, which reveals the inherent strength of the Bank. Business Excellence by the Global Trade Leaders Club and East Africa Superbrands Award for the year 2012- 1. Total Business increased by UGX 210 Bn 14 in recognition of the Bank’s commitment to quality showing a growth of 23.95 % over the previous of Business Management. year. 2. Deposit increased by UGX 123 Bn showing a I place on record my sincere appreciation of the continued growth of 23.50 % over the previous year. support received from all our valued shareholders, 3. Advances increased by UGX 88 Bn showing a customers; without whose trust and patronage the growth of25.34 % over the previous year. Bank would not have achieved the appreciable results. 4. Net Profit increased by UGX 1.42 Bn showing a I am thankful to the Government of Uganda and Bank growth of 4.84 % over the previous year. of Uganda for their valuable support and guidance. I 5. Gross NPA as a percentage of total advances also acknowledge the valuable support and guidance was 1.91 % as against 3.02 % in the previous rendered by our Global Chairman; Chairman Bank of year. Baroda (Uganda) Ltd as also other Director Colleagues 6. Capital Adequacy ratio as at 31st December on Board of the Bank. 2013 was at 32.26 % as against the minimum stipulated capital of 12 % (Tier I + II). I also place on record my sincere thanks to the retired directors Mr. R K Bansal and Mr. A K Garg for their During the year various customer centric measures valuable contribution. were taken by your Bank. Major ones are :- E-Collection of UMEME electricity bills both I wish to thank all the staff members for their prepaid and post paid at all the branches. commendable contribution during the year and seek Opening of a new branch at Kololo – Kampala. their continued dedication and commitment in the years to come to take this Bank to further heights of Continued focus on stakeholders satisfaction is the glory and success. hallmark of your Bank and we have rededicated ourselves to the same. It is reflected in the motto of We at Baroda rededicate ourselves in bringing delight to your Bank for the year 2014 :-“ Improving Profitability all our stakeholders by providing the highest standard with Team Efforts”. of service and our commitment towards enhancement of the stakeholders’ value. Your Bank is focused on continuous improvement in the service delivery to its customers and catering to Yours Truly, their varied needs. The initiatives planned for the year 2014 are:-
1. Offering alternate electronic delivery channels B S DHAKA like mobile banking. MANAGING DIRECTOR
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 5 Annual Report 2013 Mission, Vision & Belief
BARODA’S MISSION STATEMENT To be a Top Ranking Local Bank of International Standards Committed to augmenting Stake holders’ Value through Concern , Care and Competence.
BARODA’S VISION To double Bank’s Business in 2013-2015
BARODA’S BELIEF Trust, Transparency and Togetherness
6 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Motto 2013 Annual Report 2013
MOTTO OF THE YEAR 2014 IMPROVING PROFITABILITY WITH TEAM EFFORTS
The bottom line is one of the most important measures for the success of any organization. It is also the basis to augment the stakeholders’ value.
We at Baroda have made it our mission statement to augment stakeholders’ value through concern care and competence.
It is in quest of this mission that the motto for the year 2014 is “improving profitability with team efforts”.
As a banking organization where service is the major differentiator we have taken up various customer centric measures like acceptance of the utility bill / tax payments of UMEME / NWSC / URA / KCCA / NSSF across all the branches; Onsite ATMs at all the branches + Off site ATMs at very strategic locations; Internet Banking facility to help our customers enjoy hassle free banking experience from the comfortable confines to their home / office; International Operations for our clients in the Export / Import business; Treasury Operations for investment opportunities in Government Treasury Bills and Bonds; Baroda Capital Market for Investment options in the Capital Market so on and so forth. Thus making Baroda “the One Stop Solution for all your Banking and Investment needs.”
We believe in proactive interaction with our clients thereby bringing delight to their banking experience with Baroda.
Bank has been accorded with the International Award for Business Excellence by the Global Trade Leaders Club in Madrid Spain. This International Award is recognition of the Bank’s Commitment to qualitative all round business management.
THOU SHALL FOREVER PROSPER WITH BARODA
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 7 Annual Report 2013
AWARDS CONFERRED DURING 2013
Award for Business Superbrand East Africa Financial Reporting Award - 2012 Pearl of Africa Lifetime Excellence - 2013 2012-14 Achievement Award - 2013
8 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Annual Report 2013
TABLE OF CONTENTS
CONTENTS PAGE
1 Board of Directors
2 Know Your Bank
3 Corporate Governance
4 Share Holding Pattern
5 Company information
6 Annual Reports and Consolidated Financial Statements
6.1 Directors’ report
6.2 Statement of corporate governance
6.3 Statement of Directors’ responsibilities
6.4 Report of the Independent Auditors
6.5 Consolidated Financial Statements:
a) Income Statement
b) Balance sheet
c) Statement of changes in equity
d) Cash flow statement
6.6 Accounting policies
6.7 Notes to the financial statements
7 Proxy and Admission Form
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 9 Annual Report 2013 Board of Directors
BOARD OF DIRECTORS
Dr. W. Rama Makuza S. S. Mundra Chairman Global CMD
Mr. B.S. DHAKA Mr. Rakesh Kumar Bansal Mr. Dhizaala S. Moses Managing Director Director Director
10 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Know Your Bank Annual Report 2013 KNOW YOUR BANK
History Bank of Baroda (Uganda) Ltd started its operations in Uganda and opened Kampala (Main) branch on 18th December 1953. Bank has been incorporated as subsidiary of Bank of Baroda, India with 49 % shareholding of Government of Uganda on 01.11.1969. Subsequently Bank of Baroda – India took over 49 % shareholding of Government of Uganda on 07.06.1999 to comply with the privatization programme of Government of Uganda for which the Bank had signed an agreement with Government for divestment of 20 % shares to public. In the year 2002, 20 % of the shares were divested to the general public in Uganda. Bank of Baroda (Uganda) Ltd is the first Bank in this country to be listed on the Uganda Securities Exchange. Issuance of Bonus Shares Bank of Uganda, vide Circular No GOV.122.10 dated 10th December 2010, had advised all the Commercial Banks to build up its minimum paid up capital, unimpaired by losses, to Ugx 10 billion by March 01, 2011 and up to Ugx 25 billion by March 01, 2013. This change in the minimum capital was necessitated by the Financial Institutions (Revision in Minimum Capital Requirement) Instrument 2010.
Accordingly the Authorized Share Capital of the Bank was increased from Ugx 4 Billion to UGX 25 Billion. The Paid- up Share Capital was increased from UGX 4 Billion to Ugx 10 Billion by issuing Bonus Shares in the ratio of 1.5 equity shares for every one equity share held by a shareholder. The same was done by capitalizing UGX 6 Billion from the Retained Profits as on 28th February 2011. Dividend was paid on these Bonus Shares also.
Further in the year 2013 the Capital has been increased from Ugx 10 Billion to Ugx 25 Billion by issuance of Bonus shares in the ratio of 1.5 equity shares for every share held by a shareholder as approved by the Shareholders in the Annual General Meeting held on 02.06.2012. It was also proposed to pay dividend on the entire increased capital ie including Bonus Shares also.
Branch / ATM Network Presently the Bank has 34 outlets consisting of 15 branches and 19 ATMs. In the year 2013 delete new branch has been opened at Kololo.
All the branches have on site ATMs. Kampala main branch has two on site ATMs. In addition to this Bank has 3 offsite ATMs – one each at Oasis Mall – Kampala , Industrial Area Njeru- Jijna and Mazima Mall – Kabalagala –Kampala. Thus in all there are 34 outlets consisting of 15 branches and 19 ATMs. Alternate delivery channels like ATM and Internet Banking allow our customers to have 24*7*365 days hassle free banking experience.
Systems & Procedures
All the ATMs are supported by MTN back up lease lines leading to substantial reduction in downtime. Work on the Back up links for V-SAT connectivity at all the branches has since been completed; ensuring continuous connectivity at the branches in any unforeseen eventuality. The Bank has in place a Core Banking solution – ‘Finacle’ which is a flawless system ensuring real time reconciliation / settlement leading to consistent quality of transaction data and reporting. Deal Tracker system since been installed in the Treasury department complying with the guidelines of Bank of Uganda. Soft ware has since has deployed at the Treasury Department for carrying out regular valuation of Treasury Bills / Bonds. RTGS has been enabled in the CBS system from all the branches as against earlier facility of RTGS from Kampala Main branch only.
Risk Management Systems
The business of banking is bereft with various risks such as Credit Risk, Interest Rate Risk, Foreign Exchange Risk, Operational Risk etc. Bank has since adopted time tested methods to minimize and mitigate various risk factors. Some of the customer centric risk mitigating measures adopted include :- 24 Hours CCTV coverage in all the branches. Full time security personnel are deployed in all the braches. System generated Cash Receipt printout for cash deposit. Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 11 Annual Report 2013 Know your Bank (Continued)
Well laid out Business Continuity Plan – with time tested mock drill exercises being adopted. Robust Risk Based Internal Audit process coupled with bi monthly concurrent audit and half yearly System & Operations audit. Stress Testing in areas of Credit and Market risks are being carried out at regular intervals. The Bank has a robust Core Banking System (CBS – Finacle). This is a Transaction system based on Maker – Checker / Four Eye Principle concept thereby mitigating the risks of frauds to a large extent. The Data Center and the Backup for the CBS – finacle are housed in two geographically located separate seismic zones in India thereby ensuring Business Continuity incase of any eventuality.
The focus of the Bank is on identifying, measuring, monitoring and managing the various risks. While the risks cannot be fully eliminated, the Bank endeavours to minimize the same to a large extent by ensuring that appropriate infrastructure, controls and systems are in place within the predetermined procedures and constraints.
Human Asset Bank believes that the Human Resource is one of the major assets of the Bank and due care is taken at the time of recruitment / promotion with continuous upskilling through in-house and external trainings. Bank follows a policy of employing Ugandans among its staff.
The total staff strength is 192 consisting of 164 local staff and 28 expatriates.
Extensive promotion exercise has been carried out during the year across all cadres ie Non Clerical to Clerical, Clerical to Supervisor and Supervisor to Officer.
Bank also recruited, Officers / Supervisors directly attracting younger talent.
The Bank conducts extensive in house programmes training which are catered to by senior management staff at its state of the art Training Centre located at Head Office, Kampala. The training is imparted to staff members on different courses by in house trainers as also by invited / guest faculty from Uganda Institute of Banking and Financial Services etc.
External Training is also imparted by sending the candidates to other organizations within Uganda. 25 staff members were imparted training through external training programmes held by The Uganda Institute of Banking and Financial Services (UIBFS), Bank of Uganda, Uganda Manufacturers Association, M/s CRB Compuscan Ltd. Participants found the inputs of training useful to their working for efficiency & value addition.
3 Employees were sent on overseas training at Bank of Baroda Staff College, India; Baroda Corporate Centre- Mumbai, SME Banking & Financial Services EDI Campus – Ahmedabad- India enabling to enhance their working skills and knowledge in varied areas like Credit / Forex / Treasury and effective use of I T enabled systems and procedures in rendering effective and improved quality of service.
Staff meetings are held on regular basis where in suggestions are sought / problems understood and solutions thereof are arrived at relating to staff grievances.
Annual Staff family gathering is held on regular basis which is well attended by the staff along with their family members enabling further bonding among all the staff including their families.
There is active participation of the staff in the Annual Inter- Bank Sports meet organized by the Uganda Institute of Banking and Financial Services. During the year 2013 two Gold medals were won by our staff in Athletics.
Mr. Mpalanyi Fred in action for 100 metres race at the Annual Mr Mpalini Fred, Supervisor- Kampala Main Branch , receiving Gold Medals for 100 Mt. & 200 Mt. sprint during Banker’s Bankers’ Sports Gala 2013. Sports Gala 2013. 12 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Know your Bank (Continued) Annual Report 2013
Regulatory Compliance
The Central Bank of the country – Bank of Uganda carries out off site analysis on quarterly basis followed by on site examination / inspection on annual basis. They conduct comprehensive inspection of the Bank and comment on all facets of banking.
In the offsite analysis the Bank has been awarded SATISFACTORY rating consequently for all the four quarters in the year 2013 as also in the previous year 2012. As regards on site examination their ratings are based on CAMELS principle. The Regulators have awarded SATISFACTORY rating in all parameters to the Bank during the last on site examination carried out on 30.06.2013 and on 28.02.2012.
Customer Centric initiatives taken during 2013
. To cater to the ever changing requirements of our clients we have tied up with UMEME for collection of electricity bills (both prepaid and post paid). This is in addition to the existing arrangement with URA for collection of all types of taxes; NWSC for Water Bills; KCCA for Non Tax Revenue and NSSF for employee contributions. Thus all types of utility bills collections are being carried out at all the branches of the Bank.
. Expanding geographical reach of the Bank by operationalising branch at Kololo.
. All ATMs have since been migrated to MTN’s Leased Lines leading to reduction in downtime.
. A separate back up “V SAT” connectivity for the CBS system since set up at all the branches to ensure continuous banking services on account of unforeseen eventualities.
. Alignment with other Commercial Banks in Uganda and also with nearby subsidiaries of our parent Bank for credit sharing and raising of resources / placement of funds.
. Bank has participated in Banking Expo organized by Public Sector Foundation (Uganda) PSFU. The visitors were sensitized to the various products / services offered by the Bank. The response of the visitors was very encouraging.
Mr. B.S Dhaka, Managing Director, Bank of Baroda (Uganda) Ltd welcoming Rt Hon Prime Minister of Uganda Amama Mbabazi during the Private Sector Foundation Uganda (PSFU) SME event at Lugogo, Kampala.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 13 Annual Report 2013 Products & Services offered by the Bank PRODUCTS & SERVICES OFFERED BY THE BANK: The Bank is offering to its customers – both Individual and Corporate, different type of products and services which cater to the need for savings as well as loans. The products and services offered by the bank are general as well as customized products to suit the individual needs of the customers
Products / Services Offered to Individuals (Retail Products)
An Individual person can open a Savings Bank Account to route his salary, earnings and save for his future. A facility of Recurring Deposit is also available to enable an individual to save at regular frequency and get a lumpsum amount in future
Retail Products
1. Baroda Connect – transaction based internet banking facility
Deposit Products
The Bank also offers Fixed deposits to its customers. The different products are
1. Fixed Deposits for different tenures starting from 3 months 2. Baroda Festival Deposit Account (500 days and 700 days) 3. Baroda Recurring Deposit
Retail Loan Products
1. Baroda education loan Scheme for financing children’s education
2. Baroda Salary loan Scheme for salaried employees to meet Consumption needs and for purchase of consumer durables.
3. Baroda Housing loan loan for purchase of house / flat
4. Baroda Asset Finance – loans for purchase of cars or vehicles
5 Baroda traders loans – Finance of working capital for business /development of shop for individuals
14 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Products & Services offered by the Bank Annual Report 2013
Other Retail Loan Products:
1. Baroda Multipurpose loan for individual for different consumption for household needs
2. Baroda loan against own Deposits
3. Baroda IPO Finance - financing applications by individual to subscribe for any public issues of equity
4. Baroda Business loans to finance small businesses of individuals
Products / Services Offered to Businesses / Corporate – Small / Medium and Large
Bank offers different products / services to cater to the needs of businesses of individuals or corporate bodies. These products are designed to cater to the needs of various business units which can be a small, medium or a large unit. the products range from overdrafts to finance working capital for the businesses and term loans to finance acquisition of assets for businesses. the tenure depends on the business requirement
Products like Baroda Asset Finance can be availed for financing assets / plant and machinery for different businesses especially the Small & Medium enterprises (SME). Baroda traders loan will also be useful to the SME units. For the Small and Micro enterprises, Baroda Business loans is there. Customers can avail of letters of Credit and Bank Guarantees for their business needs
The Bank offers various other services to its customers for Remittance of funds through RTGS or EFT
1. Rapid Funds 2 India
2. SWIFT for international remittances
3. Foreign exchange services to buy and sell foreign currencies
4. Acceptance of School fees
5. Acceptance of Various tax Collections:
NWSC
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 15 Annual Report 2013 Corporate Governace CORPORATE GOVERNANCE
We believe that excellence emanates from good governance therefore, we have adopted high standards of transparency, accountability, professionalism, business ethics and social responsiveness with improved customer focus to maintain a value driven organization. The audited financial statements do not carry any qualification from the Statutory Auditors.
We have duly constituted various Committees of the Board such as Audit Committee, Credit Committee, Personnel & Administration, Asset Liability Committee (ALCO), Risk Management Committee to oversee the various provisions of corporate governance as required under the Financial Institutions Act. These Committees hold meetings at regular intervals to ensure compliance with the requirements of corporate governance. Board of Directors
Name of Director Designation Dr. W.R. Makuza Chairman Mr. S.S. Mundra Director Mr. B. S. Dhaka Managing Director Mr. R. K. Bansal Director Mr. D. S. Moses Director
Audit Committee of Board
Name of Director Designation Mr. D. S. Moses Chairman Mr. R. K. Bansal Director
Risk Management Committee of Board
Name of Director Designation Mr. R. K. Bansal Chairman Mr. B. S. Dhaka Managing Director Mr. D. S. Moses Director
Credit Committee of Board
Name of Director Designation Mr. S.S. Mundra Chairman Mr. B. S. Dhaka Managing Director Mr. D. S. Moses Director
Assets & Liability Committee of Board
Name of Director Designation Mr. D. S. Moses Chairman Mr. B. S. Dhaka Managing Director
Personnel & Administration Committee of Board
Name of Director Designation Mr. W. R. Makuza Chairman Mr. B. S. Dhaka Managing Director Mr. D. S. Moses Director
16 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Shareholding Pattern Annual Report 2013
Share holding Pattern as on 31st December 2013
Particulars Number of shares % Amt in Ugx Bank of Baroda India 1,999,998,750 19,999,987,500 80% Managing Director 1,250 12,500 Public Holding 500,000,000 20% 5,000,000,000 TOTAL 2,500,000,000 100% 25,000,000,000 Top 10 Shareholders as on 31st December 2013
Sr No. SHAREHOLDER NO. OF SHARES %
1 BANK OF BARODA 1,999,998,750 80.00
2 CRANE BANK LIMITED 62,500,000 3.13
3 MR. SUDHIR RUPARELIA 62,527,250 2.5 4 NATIONAL SOCIAL SECURITY FUND 49,956,250 2.00 MRS MAHESHWARY PURUSHOTTAM MORJARIA & PURSHOTTAM 5 25,000,000 1.00 MORJARIA 6 PARLIAMENTARY PENSION SCHEME 19,372,236 0.77
7 BANK OF UGANDA STAFF RETIREMENT BENEFIT SCHEME AIG 15,975,187 0.64
8 EPACK INVESTMENT FUND LIMITED 15,937,500 0.63 9 DR JOSEPH BYAMBARA BYAMUGISHA 15,625,000 0.62 10 NATIONAL SOCIAL SECURITY FUND-PINEBRIDGE 12,525,000 0.50
Financials for the last 5 years
Ushs in Mns
2009 2010 2011 2012 2013
Capital 4,000 4,000 10,000 10,000 25,000
Reserves 51,948 66,463 94,637 124,912 137,667
Deposits 214,132 271,702 404,725 524,302 647,540
Advances 112,715 150,063 293,241 347,490 435,560
Total Business 326,848 421,765 697,966 871,792 1,083,100
Investments 124,131 136,256 145,395 199,513 232,082
Net Profit 13,474 16,701 27,661 29,472 30,884
Adjusted Earnings per share * 41.75 53 27 29 12
Dividend per share * 8 3.2 4 2 2**
** The Bank has issued Bonus Shares in the ratio of 1.50 equity shares for every one equity share held by a share holder as on 22nd February 2013. Consequently , the equity share capital has increased to Ugx 25,000 million on 22nd February 2013. For the year 2013 the Board of Directors have recommended dividend Ugx 5 Bn (@ Ugx 2 per share)
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 17 Annual Report 2013 Growth at a Glance
Growth at a Glance
Deposits Gross Advances
UGX in Mn 647540 &&!*+)" 700000 '!!!!!" 600000 524301 %'%+($" &!!!!!" 500000 404726 $(++&+" 339559 400000 %!!!!!" 271701 $$+(**" 300000 $!!!!!" #'#%)*" 200000 100000 #!!!!!"
0 !" 2009 2010 2011 2012 2013 $!!(" $!#!" $!##" $!#$" $!#%"
Total Business Balance Sheet Size
UGX IN MN.
948,677 1,000,000 '!&&)!&" '#!!!!!" 900,000 709,177 '!!!!!!" &++(($" 800,000 +!')+#" 700,000 556,880 &!!!!!" *%%*)%" 600,000 496,662 %!!!!!" $#)!&&" 500,000 386,545 $!!!!!" 400,000 #!!!!!" 300,000 200,000 !" 100,000 #!!(" #!'!" #!''" #!'#" #!')" - 2009 2010 2011 2012 2013
Profit Shareholders Equity
)'$$$% )!'#'% *+##)% *(('*% '&!!!!" '%#%%*" )$$$$% '%!!!!" *'$$$% ')$('#" '$!!!!" *$$$$% &"*#)% '!$%)*" &()#&% *$++)% '#!!!!" &'$$$% &#""&% ,-./01%2/13-%425%267% &+#%(" &$*#&% ,-.8090.6% '!!!!!" &$$$$% &!&'!% *!$%)" ,-./01%:3/.-3%425%267% &!!!!" !'$$$% !"#$!% ,-.8090.6% %!!!!" !$$$$% $!!!!" '$$$% #!!!!" $% &$$(% &$!$% &$!!% &$!&% &$!*% !" #!!(" #!'!" #!''" #!'#" #!')"
18 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Subsidiary Annual Report 2013
Subsidiary
Baroda Capital Markets (U) Ltd is a fully owned subsidiary of the Bank. It was incorporated on 23rd of April 1997 to carry out the business of brokers / dealers in the Capital Market. The subsidiary is a Licensed Dealing Member (LDM) with the Uganda Securities Exchange and operates under license issued by Capital Markets Authority, Uganda. Baroda Capital Markets (U) Ltd is a member of the Governing Council of Uganda Securities Exchange.
The financial statements of the Baroda Capital Markets (U) Ltd have been consolidated with that of the Bank. A brief financials of the subsidiary is given here below:-
Income Statement (Ugx ‘000)
Particulars 31.12.2013 31.12.2012 Operating Income 115,460.00 129,055.00 Operating Expenses 30,555.00 28,449.00 Profit before Tax 84,905.00 100,606.00 Tax Expense 25,748.00 29,072.00 Profit after Tax 59,157.00 71,534.00
Statement of Financial Position
Particulars 31.12.2013 31.12.2012 Assets Property & Equipment 3,908.00 4,697.00 Trade & Other Receivables 259,879.00 212,513.00 Cash & Cash equivalent 190,522.00 260,435.00 Total Assets 454,309.00 477,645.00
Liabilities Trade & Other Payables 101,868.00 188,827.00 Deferred Tax Liabilities - - Total Liabilities 101,868.00 188,827.00
Shareholders equity Ordinary Share Capital 40,000.00 40,000.00 Accumulated Reserves 312,441.00 248,818.00 Total Shareholders Equity 352,441.00 288,818.00 Total Equity & Liabilities 454,309.00 477,645.00
The Financial Statements of Baroda Capital Markets (U) Ltd have been audited by M/s Grant Thorton who have given an unqualified report.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 19 Annual Report 2013 General Information GENERAL INFORMATION
Country of incorporation and domicile uganda Nature of business and principal activities Commercial banking activities
BOARD OF DIRECTORS
Dr. W. Rama Makuza* - Chairman / Director Mr. S.S.Mundra** - Director (Appointed on June 01, 2013) Mr. Rakesh Kumar Bansal** - Director Mr. Birbal Singh Dhaka** - Managing Director (Appointed on Dec 19, 2013) Mr. Ashok Kumar Garg** - Managing Director (Resigned on Nov 23, 2013) Mr. Dhizaala S. Moses* - Director Mr. B.R.Patel** - Director (Resigned on July 15, 2013) Mr. S.P.Mahawer** - Director (Resigned on July 15, 2013)
REGISTERED OFFICE Bank of Baroda (Uganda) Limited plot 18, Kampala Road, p. O. Box 7197 Kampala, Uganda
PRINCIPAL CORRESPONDENT BANKS Bank of Baroda, Mumbai Main Office, Vostro A/c Cell, 2nd Floor, Mumbai Samachar Marg, Mumbai - 400023 Standard Chartered Bank, 3, Madison Avenue # 1, New York
AUDITORS Grant Thornton Certified Public Accountants plot 5, 2nd Floor, Katego Road Off. Kira Road, Kamwokya p. O. Box 7158 Kampala, Uganda.
LEGAL ADVISORS Kateera & Kagumire Advocates & Solicitors 10th Floor, Tall Tower Crested Tower p O Box 7026 Kampala, Uganda
COMPANY SECRETARY Mr. K.R. Meena BRANCHES - Kampala Main - Railway Station, Kampala - Kansanga, Kampala - Kawempe, Kampala - Ovino Market, Kampala - Industrial Area, Kampala - Kololo, Kampala - Entebbe - Jinja - Mbale - Iganga - Mbarara - Mukono - Lira - Kabale *Ugandan **Indian
20 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Directors’ Report Annual Report 2013 DIRECTORS’ REPORT
The Directors submit their report and the audited financial statements for the year ended 31 December 2013 which disclose the state of affairs of Bank of Baroda (Uganda) Limited (“the company”).
PRINCIPAL ACTIVITIES
The principal activity of the company is to provide Commercial Banking services.
Key Financial Highlights as on 31 December 2013
• Deposits increased by 23.50% in 2013 to Ush.647,540 mn from Ush.524,302 mn in 2012 • Advances net of impairment provisions increased by 25.34% in 2013 to Ushs.435,560 mn from Ush.347,490 mn in 2012 • Total Business (Deposits + Advances) increased by 23.95% in 2013 to Ush. 1,088,308 mn. from Ush. 877,994, mn in 2012 • Balance sheet size increased by 33.79 % in 2013 to Ush.948,267 mn from Ush.708,739 mn in 2012. • Total income increased by 8.08% to Ush.108,228 mn in 2013 from Ush.100,137 in 2012. • Net Profit after Tax increased by 4.84% in 2013 to Ush. 30,825 mn from Ush.29,400 mn in 2012. • Gross NPA as a percentage of total advances is at 1.91% in 2013 decreased from 3.02% in 2012. • Capital Adequacy Ratio as at 31st December 2013 was 32.26%. • Return on Average Assets was 3.38% as at 31st December 2013. • Return on shareholders worth was 20.62% as at 31st December 2013.
SHARE CAPITAL
The Authorised Share Capital of the company was 2,500 million shares of Ushs 10 each as on 31st December 2013.
Pursuant to the Financial Institutions (Revision in Minimum Capital Requirement) Instrument 2010, Statutory Instrument No 43, 2010, Banks in Uganda are required to increase the paid up capital to atleast Ushs 10 billion by 1st March 2011 and Ushs 25 Billion by 1st March 2013.
To comply with the above statutory requirement, the shareholders of the Bank had accorded approval for increasing the paid up capital of the Bank from Ushs 10 billion to Ushs 25 billion by capitalizing the retained profit to the extent of Ushs 15,000,000,000 (Ugandan Shilling Fifteen Billion) by way of issue of Bonus Shares in the ratio of 1.50 shares for every 1 equity share held. Pursuant to the authority given to the Managing Director by the shareholders at the 42nd Annual General Meeting on 2nd June 2012, paid up capital has been increased from Ushs. 10 billion to Ushs 25 billion by capitalizing the retained profits towards issue of Bonus Shares on 22nd February 2013.
DIVIDEND
The Board of Directors recommend for payment of dividend of Ushs. 5 billion for the year 2013 @ Ushs. 2.0 per share (face value of Ushs. 10 per share) on the increased Share capital of Ushs. 25 Billion, (2012 : Ushs 5 billion at Ushs. 2.0 per share on 2,500 million shares).
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 21 Annual Report 2013 Directors’ Report
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The company’s activities expose it to a variety of financial risks, including credit risk and the effects of changes in liquidity, foreign currency exchange rates and interest rates. The company’s overall risk management programme focuses on the acceptable level of risk and the unpredictability of financial markets and seeks to minimize potential adverse effects on its financial performance. The company has policies in place to ensure that banking services are availed to customers with performance and credit history.
DIRECTORS
The names of the directors who held office during the year and on the date of this report are set out on page 24
CAPITAL ADEQUACY
Bank of Baroda (Uganda) Limited (the Company) monitors the adequacy of its capital using ratios established by Bank of Uganda with reference to computations from International Convergence of Capital Measurement and Capital Standards (Committee on Banking Regulations and Supervisory Practice, Basle, 1998). These ratios measure capital adequacy by comparing the Bank’s eligible capital with total risk-adjusted assets plus risk-adjusted off balance sheet items as may be determined by Bank of Uganda by statutory instrument. Assets are weighted according to broad categories of notional credit risk, being assigned a risk weighting according to the amount of capital deemed to be necessary to support them. Four categories of risk weights (0%, 20%, 50% and 100%) are applied. e.g. notes, coins and other cash assets, balances held with Bank of Uganda including securities issued by the Government of Uganda and securities held under the Bank of Uganda have a zero risk weightage, which means that no capital is required to support the holding of these assets. Loans and Advances, Property and equipment carry a 100% risk weightage. Based on the existing guidelines this means that they must be supported by capital equal to 100% of the carrying amount. Other asset categories have intermediate weightages.
Off-balance sheet credit related commitments such as guarantees and acceptances, performance bonds, documentary credit etc., are taken into account by applying different categories of credit risk conversion factors, designed to convert these items into balance sheet equivalents. The resulting credit equivalent amounts are then weighted for credit risk using the same percentages as for balance sheet assets. Core capital (Tier 1) consists of paid-up share capital, retained profits less non-dealing investments. Supplementary capital (Tier 2) includes revaluation reserves on property, general provisions and non-dealing investments.
22 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Directors’ Report (Continued) Annual Report 2013
(Amount in Ushs in thousands)
Balance Sheet Particulars 31.12.2013 31.12.2012 31.12.2013 31.12.2012 Weight Capital Capital Amount Amount ( %) Requirement Requirement Notes , Coins, Cash and other cash assets 8,183,175 11,828,005 0% 0 0 Balances with Bank of Uganda 35390662 39,042,518 0% 0 0 Placement with Bank of Uganda 142300000 0 0% 0 0 Dues from other Commercial Banks in Uganda 40,875,000 60,209,500 20% 8,175,000 12,041,900 Dues from Banks outside Uganda 12,735,124 34,379,049 100% 12,735,124 34,379,049 Dues from Banks outside Uganda 26,958,347 0 20% 5,391,669 0 Uganda Government Securities 232,082,019 199,513,541 0% 0 0 Bank of Uganda Schemes 0 0 0% 0 0 Advances & Discounts ( Excluding loans secured 406,466,517 322,639,177 100% 406,466,517 322,639,177 by 100 % cash margin) Outstanding Bal fully secured by FDR/SDR 29,093,400 24,849,923 0% 0 0 Equity Investment in Subsidiary 40,000 40,000 0% 0 0 Bank Premises and other Fixed Assets 11,033,085 12,090,843 100% 11,033,085 12,090,843 Items in transit , own offices (Net) 0 0 100% 0 0 Other Assets 2,847,849 2,933,024 100% 2,847,849 2,933,024 Deferred Tax 261,842 0% 0 Sub Total 948,267,020 707,525,580 446,649,244 384,083,993 Contingent Claims Contingents secured by cash collateral 14,397,011 3,253,427 0% 0 0 Direct Credit substitutes (guarantees & 15,970,897 18,805,955 100% 15,970,897 18,805,955 acceptances) Direct Credit substitutes (Multilateral Banks) 40,507,614 0 20% 8,101,523 Transaction related ( performance bonds & 12,963,058 4,601,988 50% 6,481,529 2,300,994 standbys) Documentary Credits (trade related & self 18,030,475 35,502,393 20% 3,606,095 7,100,479 liquidating) Other Commitments ( unused formal facilities) 11,856,332 9,565,065 50% 5,928,166 4,782,533 Sub Total 113,725,387 71,728,828 40,088,210 32,989,960 TOTAL 486,737,454 417,073,953
Capital adequacy requirement calculation Capital Ratio Tier I 147,961,539 115,097,394 30.39 27.60 Tier I + Tier II Capital 157,052,160 123,590,682 32.26 29.63
Tier I capital as at 31 December 2013 and 2012 comprised of the following : 2013 2012 Share Capital 25,000,000 10,000,000
Retained Earnings 111,169,756 123,263,850 Investment Fluctuation Reserve - (4,819,687) Unrealised Forex Gain ( 4 6 9 ) -
Investment in subsidiary (40,000) (40,000) Deferred Tax Asset (261,842) (1,212,675) Total 147,961,539 115,097,394
Tier II capital as at 31 December 2013 and 2012 comprised of the following :
Regulatory general credit risk reserve 4,247,868 3,474,891
Revaluation reserve 4,842,753 5,018,397 9,090,621 8,493,288
Risk weighted amounts for loans and advances to customers are stated net of impairment losses. These balances have also been offset against fixed deposits and short term deposits placed by customers as securities. There is no borrower with either funded or non-funded facilities, exceeding twenty five percent of total capital.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 23 Annual Report 2013 Directors’ Report (Continued)
OPERATING AND REGULATORY ENVIRONMENTS The year opened with US$/Ushs 2,700 in the month of January 2013. The Uganda shilling appreciated to a high of US$/Ushs. 2,500 in September 2013 and closed at around US$/Ushs. 2,525 by end of December 2013.
The bank complied with the minimum core capital and total capital requirements, which are 30.39% and 32.26 % as against regulatory requirement of 8% and 12% respectively.
CORPORATE GOVERNANCE
The Bank’s Corporate governance philosophy encompasses not only Regulatory and legal requirements, but also several best practices aimed at a high level of Business ethics, effective supervision and enhancement of value for all the stakeholders. The corporate governance framework is based on an effective and independent Board, the separation of the Board’s supervisory role from the Executive Management and the constitution of Board Committees comprising a majority of independent Directors and chaired by an independent Director, to oversee all functional areas. We believe that excellence emanates from good governance therefore, we have adopted high standard of transparency and accountability, professionalism and social responsiveness with improved customer focus to maintain a value driven organization. The audited annual financial statements do not carry any qualification from the statutory auditors.
HUMAN RESOURCE MANAGEMENT
The Human Resource Management department continues to play a very important role in the ever-changing competitive scenario. The Bank’s mission continues to be to convert every employee of the Bank into a knowledge worker to enable them to cope with increased customer expectations and new areas of Banking outside the traditional zone. Mainly Bank of Baroda, India and the Uganda Institute of Bankers conduct the training programmes in addition to Conferences and workshops organized by Bank of Uganda (BOU) and Federation of Uganda Employers (FUE). Furthermore, the bank has conducted a number of in-house training programmes in the process of empowering our staff so as to match with our standard operating procedures and any other changes affecting our Industry due to Globalization.
INFORMATION TECHNOLOGY
With effect from 25th February 2008 the bank has installed Banking Software (Finacle) which was developed by Infosys Technologies Limited. All the branches of the bank are inter-connected using Finacle System. We continue to deploy technology for use in Banking. The Bank has implemented transaction based internet banking “Baroda Connect” in June 2010. The Bank has launched its web-site in June 2011 facilitating our customers and public at large to have updated information about the Bank and its various Products / Services. The Bank has also implemented e-collection of Uganda Revenue Authority (URA) Taxes and National Water & Sewerage Corporation (NWSC) Water Taxes from November 2011 ; Collection of NSSF contributions from Employers since Auguist-2012 and Collection of UMEME bills since July -2013. Continued focus on leveraging technology has resulted in process efficiencies and enhanced customer convenience. BRANCH EXPANSION / ALTERNATE DELIVERY CHANNEL During the year 2013, the Bank has opened Branch at Kololo, with the opening of Kololo branch, the number of Branches has increased to fifteen (15).
AUDITORS The Company’s Auditors, M/s. Grant Thornton, Certified Public Accountants, Uganda were appointed as Statutory Auditors of the Company in accordance with Section 159 (1) of the Companies Act and were duly approved by Bank of Uganda in accordance with Section 62 of the Financial Institutions Act 2004. They have audited books of accounts of the Bank for the year 2010, 2011, 2012 and 2013. In terms of the provisions of Financial Institution Act, an External Auditor can conduct audit of a Bank for a maximum period of 4 years. As such, we recommended the name of “M/s. PKF Uganda” as the Statutory / External Auditors of the Bank for the year 2014 which is approved by the Board.
APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the Board of Directors on th4 March, 2014.
BY ORDER OF THE BOARD
COMPANY SECRETARY KAMPALA 29th May, 2014
24 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Statement on Corporate Governance Annual Report 2013
STATEMENT ON CORPORATE GOVERNANCE
Corporate Governance deals with the way companies are led and managed, the role of the Board of Directors and a framework of internal controls. The Board of Bank of Baroda (Uganda) Limited is committed to proper standards of corporate governance and confirms that the group has complied with the provisions of the regulators including Bank of Uganda, the Capital Markets Authority and the Uganda Securities Exchange.
Directors
The Board meets at least four times a year, and has a formal schedule of matters reserved for it. The directors are given appropriate and timely information so that they can maintain full and effective control over strategic, financial, operational and compliance issues.
Except for direction and guidance on general policy, the Board has delegated authority for the conduct of day to day business to the Managing Director. It however retains responsibility for establishing and maintaining the Bank’s overall internal control of financial, operational and compliance issues and monitoring the performance of the executive management. Three out of four members of the Board are non-executive and all Directors are subject to periodic reappointment in accordance with the company’s Articles of Association. On appointment, each Director receives information about the Bank and is advised of the legal, regulatory and other obligations of a director of a listed company. They have access to the Company Secretary, who is responsible for ensuring that Board procedures are followed and that applicable laws and regulations are complied with. Directors’ Remuneration
The remuneration of all directors is subject to regular monitoring to ensure that levels of remuneration are appropriate. Information on the remuneration received and the dealings of the directors with the Bank are included in the annual report in notes 8. Accountability and Audit
The Audit Committee chaired by a non-executive director receives reports on the findings of the Internal Audit and Fraud and Investigations departments that audit business operations and the internal control environment. It also receives input and reports from the external auditors. In addition, the Committee regularly reviews and considers changes to improve the bank’s security, internal control and risk management processes. Going Concern
The Board confirms that it is satisfied that the Bank has adequate resources to continue in business for the foreseeable future. For this reason, it continues to adopt the going concern basis when preparing the financial statements. Internal Controls
The Board has a collective responsibility for the establishment and maintenance of a system of internal control that provides reasonable assurance of effective and efficient operations. However, it recognizes that any system of internal control can provide only reasonable, and not absolute assurance against material misstatement or loss.
The Board attaches great importance for maintaining a strong control environment and the Group’s system of internal control includes the assessment of non-financial risks and controls. The Board has reviewed the Bank’s internal control policies and procedures and is satisfied that appropriate procedures are in place. The Board also reviewed the level of bad and doubtful debt provisioning as at 31 December 2013 and is satisfied with their adequacy to cover the credit risk exposure. The Bank ensures that there are written policies and procedures to identify and manage risk including operational risk, market and credit risk on an ongoing basis.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 25 Annual Report 2013 Statement on Corporate Governance (Continued)
The Bank’s business is conducted within a developed control framework, underpinned by policy statements, written procedures and control manuals. The Board has established a management structure which clearly defines roles, responsibilities and reporting lines. Delegated authorities are documented and communicated. The business performance of the Bank is reported regularly to its management and the Board. Performance trends, forecasts as well as actual performance against budgets and prior periods are closely monitored. Financial information is prepared using appropriate accounting policies, which are applied consistently. Operational procedures and controls have been established to facilitate complete, accurate and timely processing of transactions and the safeguarding of assets. These controls also include the segregation of duties, the regular reconciliation of accounts and the valuation of assets and positions.
The Bank has an approved Code of Conduct, which sets out the Bank’s core values relating to the lawful and ethical conduct of business. All employees have a copy of this Code of Conduct and are expected to observe high standards of integrity and fair dealing in relation to customers, staff and regulators in the communities in which the Bank operates. This forms part of a Bank compliance structure, which sets policies and standards for compliance with rules, regulations and legal requirements.
Relations with shareholders The Board recognizes the importance of good communication with all shareholders. The Annual General Meeting (AGM) as well as the published annual report is used as an opportunity to communicate with all shareholders. The Bank will give shareholders 21 days notice of the AGM as provided for in the Companies Act.
26 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Directors’ Responsiblilities and Approval Annual Report 2013 DIRECTORS RESPONSIBILITIES AND APPROVAL
The directors are required in terms of the Ugandan Companies Act, 2012 to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the bank as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards.
The financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.
The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the bank and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the bank and all employees are required to maintain the highest ethical standards in ensuring the bank’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the bank is on identifying, assessing, managing and monitoring all known forms of risk across the bank. While operating risk cannot be fully eliminated, the bank endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The directors have reviewed the bank’s cash flow forecast for the year to December 31, 2014 and, in the light of this review and the current financial position, they are satisfied that the bank has or has access to adequate resources to continue in operational existence for the foreseeable future.
The independent auditor is responsible for independently reviewing and reporting on the bank’s financial statements. The financial statements have been examined by the bank’s independent auditor and their report is presented on page 4.
The financial statements set out on pages 29 to 70, which have been prepared on the going concern basis, were approved by the board of directors on March 04, 2014 and were signed on its behalf by:
Dr. W. Rama Makuza - Chairman / Director Mr. S.S.Mundra - Director
Mr. Birbal Singh Dhaka - Managing Director Mr. Dhizaala S. Moses - Director
Tuesday, March 04, 2014
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 27 Annual Report 2013 Independent Auditor’s Report INDEPENDENT AUDITOR’S REPORT
Report on the Financial Statements
We have audited the accompanying financial statements of Bank of Baroda (Uganda) Limited; which comprise the company and its consolidated statement of financial position as at December 31, 2013, and the consolidated income statement, statement of comprehensive income, statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 29 to 70.
Directors’ Responsibility for the Annual Report and Financial Statements
The company’s directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act 2012 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, proper books of accounts have been kept and the financial statements, which are in agreement therewith, give a true and fair view of the state of the financial affairs of the bank and the group as at December 31, 2013, and its financial performance and its cash flows for the year then ended and comply with the Companies Act 2012 and International Financial Reporting Standards, and all material provisions under the Financial Institutions Act, 2004.
Report on Other Legal and Regulatory Requirements
As required by the Companies Act 2012, we report to you, based on our audit that:
i) 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:
ii) In our opinion, proper books of accounts have been kept by the company, so far as appears from our examination of those books; and
iii) The company and its consolidated statement of financial position and company and its consolidated statement of comprehensive income are in agreement with the books of accounts.
Grant Thornton
Certified Public Accountants
Kampala, Uganda
28 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Consolidated Income Statement Annual Report 2013
CONSOLIDATED INCOME STATEMENT
Group Company
2013 2012 2013 2012
Note(s) USh ‘000 USh ‘000 USh ‘000 USh ‘000
Interest income 5 95,036,709 89,444,760 95,036,709 89,444,760
Interest expense 6 (47,276,931) (37,470,239) (47,276,931) (37,470,239)
Net interest income 47,759,778 51,974,521 47,759,778 51,974,521
Non interest income / other income 7 13,306,253 10,820,837 13,190,792 10,691,783
Non interest expenses 8 (21,112,555) (21,220,196) (21,082,000) (21,191,747)
Profit before tax 10 39,953,476 41,575,162 39,868,570 41,474,557
Impairment gains / (losses) on loans and 994,834 (2,797,796) 994,834 (2,797,796) advances
Profit before taxation 40,948,310 38,777,366 40,863,404 38,676,761
Taxation 11 (10,064,585) (9,305,634) (10,038,837) (9,276,562)
Profit for the year 30,883,725 29,471,732 30,824,567 29,400,199
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 29 Annual Report 2013 Consolidated Income Statement CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group Company
2013 2012 2013 2012 Note(s) USh ‘000 USh ‘000 USh ‘000 USh ‘000
Profit for the year 30,883,725 29,471,732 30,824,567 29,400,199 Other comprehensive income: Available-for-sale financial assets 2,673,322 6,861,763 2,666,943 6,885,267 adjustments
Excess depreciation on property 250,920 260,021 250,920 260,021 revaluation Taxation related to components of other (877,273) (2,136,535) (875,359) (2,143,586) comprehensive income
Other comprehensive income for the 2,046,969 4,985,249 2,042,504 5,001,702 year net of taxation
Total comprehensive income 32,930,694 34,456,981 32,867,071 34,401,901
The accounting policies on pages 35 to 41 and the notes on pages 42 to 70 form an integral part of the financial statements.
30 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Statement of Financial Position Annual Report 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS ON DECEMBER 31, 2013
Group Company
2013 2012 2013 2012
Note(s) USh ‘000 USh ‘000 USh ‘000 USh ‘000
Assets
Cash and balances with Bank of Uganda 12 43,764,359 51,130,958 43,573,837 50,870,523
Other financial assets 13 450,607,019 292,726,091 450,607,019 292,726,091 Loans and advances to customers 14 435,559,917 347,489,912 435,559,917 347,489,912 Amounts due from overseas 16 4,343,471 1,375,999 4,343,471 1,375,999 branches of parent company Other assets 17 2,547,175 3,132,702 2,291,973 2,926,766
Current tax receivable 551,139 6,258 555,875 6,258 Investments in subsidiaries 18 - - 40,000 40,000 Deferred tax 19 266,519 1,219,252 261,842 1,212,675 Property and equipment 20 11,036,994 12,095,539 11,033,086 12,090,842 Total Assets 948,676,593 709,176,711 948,267,020 708,739,066 Equity and Liabilities Equity Share capital 22 25,000,000 10,000,000 25,000,000 10,000,000 Reserves 9,090,621 8,493,288 9,090,621 8,493,288 Proposed dividend 5,000,000 5,000,000 5,000,000 5,000,000 Retained income 123,576,288 111,418,571 123,263,850 111,169,756 162,666,909 134,911,859 162,354,471 134,663,044 Liabilities Other financial liabilities 25 101,363,797 14,940,857 101,363,797 14,940,857 Customer deposits 26 647,540,368 524,301,572 647,540,364 524,301,569 Deposit and balances due to other 15 572,392 270,103 572,392 270,103 financial institutions Amounts due to overses branches of 16 8,528 - 8,528 - parent bank Other liabilities 27 35,320,757 33,296,928 35,223,626 33,108,605 Current tax payable - 504 - - Retirement benefit obligation 28 1,203,842 1,454,888 1,203,842 1,454,888 Total Liabilities 786,009,684 574,264,852 785,912,549 574,076,022 Total Equity and Liabilities 948,676,593 709,176,711 948,267,020 708,739,066 Acceptances, guarantees & letters of credit for which 33 113,725,387 71,728,828 113,725,387 71,728,828 there are counter indemnities from customers The financial statements and the notes on pages 27 to 70, were approved by the board of directors on the March 04, 2014 and were signed on its behalf by:
Dr. W. Rama Makuza - Chairman / Director Mr. S.S.Mundra** - Director
Mr. Birbal Singh Dhaka** - Managing Director Mr. Dhizaala S. Moses - Director The accounting policies on pages 35 to 41 and the notes on pages 42 to 70 form an integral part of the financial statements.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 31 Annual Report 2013 Statement of Changes in Equity CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Fair value Regulatory adj assets- general Revaluation Proposed Retained Share available- Total Total equity capital credit reserves reserve for-sale dividend income reserve reserve
USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000
Group Balance at January 01, 10,000,000 2,932,413 5,200,411 - 4,000,000 12,132,824 82,504,068 104,636,892 2012
Changes in equity
Total comprehensive income for the year - - (182,014) 4,803,234 - 4,621,220 29,471,732 34,092,952
Transfer of investment fluctuation reserve - - - (4,803,234) - (4,803,234) 4,803,234 -
Movement in regulatory general credit risk reserve - 542,478 - - - 542,478 (542,478) -
Dividends paid - - - - (4,000,000) (4,000,000) - (4,000,000) Transfer of excess depreciation on ------260,021 260,021 revaluation Def. tax on depreciation transfer ------(78,006) (78,006) Dividends proposed - - - - 5,000,000 5,000,000 (5,000,000) -
Total changes - 542,478 (182,014) - 1,000,000 1,360,464 28,914,503 30,274,967
Balance at January 01, 10,000,000 3,474,891 5,018,397 - 5,000,000 13,493,288 111,418,571 134,911,859 2013
Changes in equity
Total comprehensive income for the year - - (175,644) 1,871,325 - 1,695,681 30,883,725 32,579,406
Transfer of investment fluctuation reserve - - - (1,871,325) - (1,871,325) 1,871,325 -
Issue of bonus shares 15,000,000 - - - - - (15,000,000) -
Movement in regulatory general credit risk reserve - 772,977 - - - 772,977 (772,977) -
Transfer of excess depreciation on ------250,920 250,920 revaluation Def. tax on depreciation transfer ------(75,276) (75,276) Dividends paid - - - - (5,000,000) (5,000,000) - (5,000,000)
Dividends proposed - - - - 5,000,000 5,000,000 (5,000,000) -
Total changes 15,000,000 772,977 (175,644) - - 597,333 12,157,717 27,755,050
Balance at December 31, 25,000,000 4,247,868 4,842,753 - 5,000,000 14,090,621 123,576,288 162,666,909 2013
Note(s) 22 23 24
32 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Statement of Changes in Equity Annual Report 2013 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Fair value Regulatory adj assets- general Revaluation Proposed Retained Regulatory Fair value adj Share available- Total Total equity general Revaluation assets- Proposed Total Retained capital credit reserves Share capital Total equity reserve for-sale dividend income credit reserve available-for- dividend reserves income reserve reserve reserve sale reserve
USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 USh ‘000 Group Company Balance at January 01, 10,000,000 2,932,413 5,200,411 - 4,000,000 12,132,824 82,504,068 104,636,892 2012 Balance at January 01, 2012 10,000,000 2,932,413 5,200,411 - 4,000,000 12,132,824 82,310,333 104,443,157 Changes in equity
Total comprehensive income for the year - - (182,014) 4,803,234 - 4,621,220 29,471,732 34,092,952 Changes in equity ------
Transfer of investment fluctuation reserve - - - (4,803,234) - (4,803,234) 4,803,234 - Total comprehensive income for - - (182,014) 4,819,687 - 4,637,673 29,400,199 34,037,872 the year Movement in regulatory general credit risk reserve - 542,478 - - - 542,478 (542,478) - Transfer of investment fluctuation - - - (4,819,687) - (4,819,687) 4,819,687 - reserve Dividends paid - - - - (4,000,000) (4,000,000) - (4,000,000) Transfer of excess Movement in regulatory general depreciation on ------260,021 260,021 - 542,478 - - - 542,478 (542,478) - revaluation credit risk reserve Def. tax on depreciation ------(78,006) (78,006) transfer Dividends paid - - - - (4,000,000) (4,000,000) - (4,000,000) Dividends proposed - - - - 5,000,000 5,000,000 (5,000,000) - Transfer of excess depreciation on ------260,021 260,021 Total changes - 542,478 (182,014) - 1,000,000 1,360,464 28,914,503 30,274,967 revaluation
Def. tax on depreciation transfer ------(78,006) (78,006) Balance at January 01, 10,000,000 3,474,891 5,018,397 - 5,000,000 13,493,288 111,418,571 134,911,859 2013 Dividends proposed - - - - 5,000,000 5,000,000 (5,000,000) -
Changes in equity Total changes - 542,478 (182,014) - 1,000,000 1,360,464 28,859,423 30,219,887
Total comprehensive income for the year - - (175,644) 1,871,325 - 1,695,681 30,883,725 32,579,406
Transfer of investment Balance at January 01, 2013 10,000,000 3,474,891 5,018,397 - 5,000,000 13,493,288 111,169,756 134,663,044 fluctuation reserve - - - (1,871,325) - (1,871,325) 1,871,325 - Changes in equity Issue of bonus shares 15,000,000 - - - - - (15,000,000) -
Total comprehensive income for Movement in regulatory - - (175,644) 1,866,860 - 1,691,216 30,824,567 32,515,783 general credit risk reserve - 772,977 - - - 772,977 (772,977) - the year
Transfer of excess Transfer of investment fluctuation depreciation on ------250,920 250,920 - - - (1,866,860) - (1,866,860) 1,866,860 - revaluation reserve
Def. tax on depreciation ------(75,276) (75,276) transfer Issue of bonus shares 15,000,000 - - - - - (15,000,000) - Dividends paid - - - - (5,000,000) (5,000,000) - (5,000,000) Movement in general credit risk - 772,977 - - - 772,977 (772,977) - Dividends proposed - - - - 5,000,000 5,000,000 (5,000,000) - reserve
Transfer of excess depreciation on ------250,920 250,920 revaluation Total changes 15,000,000 772,977 (175,644) - - 597,333 12,157,717 27,755,050
Def. tax on depreciation transfer ------(75,276) (75,276)
Balance at December 31, 25,000,000 4,247,868 4,842,753 - 5,000,000 14,090,621 123,576,288 162,666,909 Dividends paid - - - - (5,000,000) (5,000,000) - (5,000,000) 2013
Note(s) 22 23 24 Dividends proposed - - - - 5,000,000 5,000,000 (5,000,000) -
Total changes 15,000,000 772,977 (175,644) - - 597,333 12,094,094 27,691,427
Balance at December 31, 2013 25,000,000 4,247,868 4,842,753 - 5,000,000 14,090,621 123,263,850 162,354,471
Note(s) 22 23 24
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 33 Annual Report 2013 Statement of Cash flows CONSOLIDATED STATEMENT OF CASH FLOWS
Group Company
2013 2012 2013 2012
Note(s) USh ‘000 USh ‘000 USh ‘000 USh ‘000
Cash flows from operating activities
Cash generated from operations 30 8,613,144 37,099,300 8,661,527 36,866,200
Tax paid 31 (10,459,234) (10,786,899) (10,437,704) (10,756,395)
Net cash from operating activities (1,846,090) 26,312,401 (1,776,177) 26,109,805
Cash flows from investing activities
Purchase of property and equipment 20 (538,539) (1,890,083) (538,539) (1,890,083)
Sale of property and equipment 20 18,030 21,831 18,030 21,831
Net cash from investing activities (520,509) (1,868,252) (520,509) (1,868,252)
Cash flows from financing activities
Dividends paid (5,000,000) (4,000,000) (5,000,000) (4,000,000)
Total cash movement for the year (7,366,599) 20,444,149 (7,296,686) 20,241,553
Cash at the beginning of the year 51,130,958 30,686,809 50,870,523 30,628,970
Total cash at end of the year 12 43,764,359 51,130,958 43,573,837 50,870,523
34 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Accounting Policies Annual Report 2013 ACCOUNTING POLICIES
1. Presentation of Financial Statements
The financial statementshave been prepared in accordance with International Financial Reporting Standards, and the Ugandan Companies Act, 2012. The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain property, plant and equipment, and the carrying of available for sale investments at fair value and impaired assets at their recoverable amount. They are presented in Uganda Shillings and rounded to nearest thousands.
These accounting policies are consistent with the previous period.
1.1 Consolidation Basis of consolidation The consolidated financial statements incorporate the financial statements of the bank and its subsidiary, Baroda Capital Markets (U) Limited. All significant transactions and balances between group companies are eliminated on consolidation.
1.2 Significant judgements and sources of estimation uncertainty
In preparing the financial statements,in confirmity with International Financial Reporting Standards, management is required to make judgements, estimates and assumptions that affect the amounts represented in the financial statements and disclosure of contingent assets and liabilities at the date of the financial statements. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements. Significant judgements include:
Impairment losses on loans and advances
The bank reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an impairment loss should be recorded in the income statement, the bank makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that co-relate with defaults on assets in the group. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.
Impairment of available-for-sale financial assets
The bank determines that available-for-sale investments are impaired when there has been a significant, or prolonged, decline in the fair value below its cost. This determination of what is significant, or prolonged, requires judgement. In making this judgement, the bank evaluates among other factors, the normal volatility in prices. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows.
Fair value estimation of derivatives
The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the bank is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. The bank uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end of the reporting period.
1.2 Significant judgements and sources of estimation uncertainty (continued)
Taxation
Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
The bank recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the bank to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the bank to realise the net deferred tax assets recorded at the end of the reporting period could be impacted.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 35 Annual Report 2013 Accounting Policies ACCOUNTING POLICIES Useful life and residual value of property, plant and equipment
The estimates of useful lives as translated into depreciation rates are detailed in property, plant and equipment policy on the annual financial statements. These rates and residual lives of the assets are reviewed annually taking cognizance of the forecasted commercial and economic realities and through benchmarking of accounting treatments in the country.
Held-to-maturity financial assets
The bank follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable payments and fixed maturing as held-to-maturity. This classification requires significant judgement. In making this judgement, the bank evaluates its intention and ability to hold such assets to maturity. If the bank fails to keep these assets to maturity other than for the specific circumstances - for example, selling an insignificant amount close to maturity - it will be required to classify the entire class as available-for-sale. The assets would therefore be measured at fair value and not amortised cost.
1.3 Property and equipment
Property and equipment is initially measured at cost. Buildings are subsequently shown at market value, based on the valuations performed by professional independent valuers, less subsequent accumulated depreciation and impairment losses. All other property and equipment are stated at historical cost less depreciation.
Property and equipment are depreciated on the straight line basis and reducing balance basis to write down the cost of assets, or the revalued amounts, to its residual value over its estimated useful life using the following annual rates:
Item Rate % and Method of Depreciation Buildings 5.0 - Straight line basis Furniture and fixtures 12.5 - Reducing balance basis Motor vehicles 20 - Reducing balance basis IT equipment 20 - 33.3 - Straight line basis
The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.
On disposal of revalued assets, amounts in the revaluation reserve relating to that asset are transferred to retained earnings. With effect from 2000, excess depreciation computed each year on past revaluation surpluses are transferred from capital to revenue reserves, net of deferred tax.
Gain or losses on disposal of property and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit.
1.4 Intangible assets (Computer software)
Intangible assets (Computer software) costs which are clearly identifiable and controlled by the bank and have probable benefit exceeding the cost beyond one year are recognised as an intangible asset. These assets are amortised using the straight line method over their estimated useful life. Costs associated with the maintenance of existing computer software programs and modifications are expensed as incurred. Intangible assets are stated at cost net of accumulated amortisation and impairment losses.
Intangible assets (Computer software) (continued)
Item Useful life Computer software 3 years
1.5 Investments in subsidiaries Company financial statements
In the company’s separate financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.
1.6 Financial instruments
Classification
The bank classifies financial assets and financial liabilities into the following categories:
• Financial assets at fair value through income statement - held for trading • Financial assets at fair value through income statement - designated • Held-to-maturity investment • loans, advances and receivables • Available-for-sale financial assets
Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition.
36 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Accounting Policies Annual Report 2013 ACCOUNTING POLICIES Financial assets at fair value through income statement - This category has two sub-categories. Financial assets held for trading and those at fair value through income statement at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management.
Held-to-maturity - Held-to-maturity investments are non derivative financial assets with fixed or determinable payments and fixed maturities that management has the positive intention and ability to hold to maturity. Where a sale occurs other than an insignificant amount of held-to-maturity assets, the entire category would be treated and classified as available-for-sale.
Loans, advances and receivables - Loans, advances and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the bank provides money or services directly to a debtor with no intention of trading the receivable.
Available-for-sale financial assets - Financial assets that are not: (a) financial assets at fair value through profit or loss (b) loans, advances or receivables or (c) financial assets held-to-maturity; are recognised as available-for-sale financial assets.
Initial recognition and measurement
Financial instruments are recognised initially when the bank becomes a party to the contractual provisions of the instruments. The bank classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.
Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which are measured at cost and are classified as available-for-sale financial assets.
For financial instruments which are not at fair value through income statement, transaction costs are included in the initial measurement of the instrument. Transaction costs on financial instruments at fair value through income statement, are recognised in profit or loss. Regular way purchases of financial assets are accounted for at trade date.
Subsequent measurement
Financial instruments at fair value through income statement are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in income statement for the period.
1.6 Financial instruments (continued)
Net gains or losses on the financial instruments at fair value through income statement include dividends and interest. Dividend income is recognised in income statement as part of other income when the bank’s right to receive payment is established.
Loans, advances and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.
Held-to-maturity investments are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.
Available-for-sale financial assets are subsequently measured at fair value. This excludes equity investments for which a fair value is not determinable, which are measured at cost less accumulated impairment losses.
Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in equity until the asset is disposed of or determined to be impaired. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends received on available-for-sale equity instruments are recognised in profit or loss as part of other income when the bank’s right to receive payment is established.
Changes in fair value of available-for-sale financial assets denominated in a foreign currency are analysed between translation differences resulting from changes in amortised cost and other changes in the carrying amount. Translation differences on monetary items are recognised in profit or loss, while translation differences on non-monetary items are recognised in other comprehensive income and accumulated in equity.
Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.
Fair value determination
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the bank establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 37 Annual Report 2013 Accounting Policies ACCOUNTING POLICIES Impairment of financial assets
At each reporting date, all financial assets are subject to review for impairment. If it is probable that the bank will not be able to collect all amounts due (principal and interest) according to the contractual terms of loans, receivables or held-to-maturity investments carried at amortised cost, an impairment, or bad debt, loss has occurred. The amount of the loss is the difference between the asset’s carrying amount and the present value of expected future cash flows discounted at the financial instrument’s original effective interest rate (recoverable amount). The carrying amount of the asset is reduced to its estimated recoverable amount through use of the provision for bad and doubtful debts account. The amount of the loss incurred is included in the income statement for the period.
Amounts due to (from) overseas branches of parent bank
These include loans to and from holding companies, fellow subsidiaries, subsidiaries, joint ventures and associates and are recognised initially at fair value plus direct transaction costs.
Loans to group companies are classified as loans and receivables.
Loans from group companies are classified as financial liabilities measured at amortised cost.
Loans to shareholders, directors, managers and employees These financial assets are classified as loans and receivables. Loans, advances and receivables
Loans, advances and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the company provides money or services to a debtor with no intention of trading the receivable.
1.6 Financial instruments (continued)
Trade and other receivables are classified as loans and receivables.
Financial liabilities
After initial recognition, the bank measures all financial liabilities including customer deposits other than liabilities held for trading at amortised cost. Liabilities held for trading (financial liabilities acquired principally for the purpose of generating a profit from short term fluctuations in price or dealer’s margin) are subsequently measured at their fair values.
Cash and cash equivalents
Cash and cash equivalents comprise of balances with Bank of Uganda.
Bank overdraft and borrowings
Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs.
Derivatives
Derivative financial instruments, which are not designated as hedging instruments, consisting of foreign exchange contracts and interest rate swaps, are initially measured at fair value on the contract date, and are re-measured to fair value at subsequent reporting dates.
Derivatives embedded in other financial instruments or other non-financial host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contract and the host contract is not carried at fair value with unrealised gains or losses reported in profit or loss. Changes in the fair value of derivative financial instruments are recognised in profit or loss as they arise. Derivatives are classified as financial assets at fair value through profit or loss - held for trading.
Held-to-maturity
These financial assets are initially measured at fair value plus direct transaction costs.
At subsequent reporting dates these are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.
Financial assets that the bank has the positive intention and ability to hold to maturity are classified as held-to-maturity.
38 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Accounting Policies Annual Report 2013 ACCOUNTING POLICIES 1.7 Tax
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.
Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities
A deferred tax liability is recognised using the liability method for all taxable temporary differences.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Tax expenses
Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from: • a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or • a business combination.
Current tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged, in the same or a different period, to other comprehensive income.
Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in equity.
1.8 Leases
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
Operating leases – lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.
Any contingent rents are expensed in the period they are incurred.
1.9 Impairment of financial assets - loans
The bank assesses whether there is objective evidence that a financial asset or a portfolio of financial assets carried at amortised cost is impaired at least on a quarterly basis. A financial asset or portfolio of financial asset is impaired and impairment losses are incurred, if and only if, there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and prior to the balance sheet date and that loss event or events has had an impact on the estimated future cash flows of the financial asset or the portfolio that can be reliably estimated. Objective evidence that a financial asset or a portfolio is impaired includes observable data that comes to the attention of the bank about the following loss events
• significant financial difficulty of the issuer or obligor; • a breach of contract, such as a default or delinquency in interest or principal payments;. • the bank, for economic or legal reasons relating to the borrower’s financial difficulty, •granting to the brorrower a concession that the bank would not otherwise consider; • it becomes probable that the borrower will enter bankruptcy or other financial re-organisation; • the disappearance of an active market for that financial asset because of financial difficulties; or • observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio including, adverse changes in the payment status of the borrowers in the portfolio and national or local economic conditions that correlate with defaults on the assets in the portfolio.:
The bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is recognised or continues to be recognised are not included in a collective assessment of impairment.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 39 Annual Report 2013 Accounting Policies (Continued) ACCOUNTING POLICIES 1.9 Impairment of financial assets - loans (continued)
For loans and advances, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The amount of the loss is recognised using an allowance account and the amount of the loss is included in the income statement.
The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure costs for obtaining and selling the collateral, whether or not foreclosure is probable.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similar risk characteristics, taking into account asset type, industry, geographical location, collateral type, past due status and other relevant factors. These characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the counterparty’s ability to pay all amounts due according to the contractual terms of the asset being evaluated.
Future cash flows in a bank of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the bank and historical loss experience for assets with credit risk characteristics similar to those in the bank. Historical loss experience is adjusted based on current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.
The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.
When a loan is irrecoverable, it is written off against the related provision for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off decrease the amount of the provision for loan impairment in the income statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occuring after the impairment was recognised, the previously recognised impairment loss is reveserd by adjusting the allowance account. The amount of the reversal is recognised as a decrease in the amount of provision for loan impairment in the income statement.
1.10 Share capital
Ordinary shares are classified as equity.
1.11 Contingent liabilities
Letters of credit, acceptances, guarantees and performance bonds are accounted for as off balance sheet transactions and disclosed as contingent liabilities. Estimates of the outcome and of the financial effect of contingent liabilities is made by the management based on the information available up to the date the financial statements are approved for issue by the directors. Any expected loss is charged to the income statement.
Issue costs are apportioned between the liability and equity components of the compound instruments based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.
1.12 Employee benefits / Post employment benefits A majority of the bank’s employees are eligible for annual leave and long service awards. The bank also contributes for its employees to the National Social Security Fund (NSSF). Provisions for annual leave and long service rewards and contributions to NSSF are charged to the income statement as incurred. Any differences between the charge to income and NSSF contributions payable is recorded in the balance sheet under other payables, while separete provisions are made for leave pay and long service awards.
Employee entitlements
Employee entitlements to long term service awards are recognised when they accrue to employees. A provision is made for the estimated liability for such entitlements as a result of services rendered by employees up to the balance sheet date.
1.13 Provisions and contingencies
Provisions are recognised when: • the bank has a present obligation as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the obligation.
The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
40 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Accounting Policies (Continued) Annual Report 2013 ACCOUNTING POLICIES 1.14 Revenue recognition
Income is recognized on an accrual basis. Interest income and interest expense is recognized on an accrual basis taking into account the effective interest rate of the interest earning asset or the interest bearing liability. Interest income and expense includes the amortization of any discount or premium or other differences between the initial carrying amount of an interest bearing instrument and its amount on maturity calculated on an effective interest rate basis.
Interest is recognised, in profit or loss, using the effective interest rate method.
Dividends are recognised, in profit or loss, when the bank’s right to receive payment has been established.
1.15 Fees and commission income
Fees and commission income is recognized when the service is provided. Revenue is only recognized when it is probable that the economic benefits associated with the transaction will flow to the bank.
1.16 Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows: • Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any temporary investment of those borrowings. • Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.
The capitalisation of borrowing costs commences when: • expenditures for the asset have occurred; • borrowing costs have been incurred, and • activities that are necessary to prepare the asset for its intended use or sale are in progress.
Capitalisation is suspended during extended periods in which active development is interrupted.
Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
Translation of foreign currencies Foreign currency transactions
Transactions in foreign currencies during the year are converted into Uganda Shillings (functional currency) at rates ruling at the transaction dates.
At the end of the reporting period: • foreign currency monetary items are translated using the closing rate; • non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and • non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
1.17 Translation of foreign currencies (continued)
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period are recognised in income statement in the period in which they arise.
1.18 Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1.19 Regulatory general credit risk reserve
The regulatory general credit risk reserve represents amounts by which provisions for impairment of loans and advances, determined in accordance with the Financial Institution Act, 2004, exceed those determined in accordance with International Financial Reporting Standards. These amounts are appropriated from retained earnings.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 41 Annual Report 2013 Accounting Policies (Continued) ACCOUNTING POLICIES 1.20 Dividends
Dividends on ordinary shares are charged to equity in the period in which they are declared. Proposed dividend are shown as separete component of equity until declared.
2. New standards and interpretations
2.1 Standards and interpretations effective and adopted in the current year
In the current year, the bank has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:
IFRS 10 Consolidated Financial Statements
This new Standard replaces the consolidation sections of IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities. The standard sets out a new definition of control, which exists only when an entity is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to effect those returns through power over the investee.
The effective date of the standard is for years beginning on or after January 01, 2013. The bank has adopted the standard for the first time in the 2013 financial statements. The impact of the standard is not material.
IAS 27 Separate Financial Statements Consequential amendment as a result of IFRS 10. The amended standard now only deals with separate financial statements. The effective date of the amendment is for years beginning on or after January 01, 2013. The bank has adopted the amendment for the first time in the 2013 financial statements. The impact of the amendment is not material. IFRS 12 Disclosure of Interests in Other Entities
This new standard sets out disclosure requirements for investments in subsidiaries, associates, joint ventures and unconsolidated structured entities. The disclosures are aimed to provide information about the significance and exposure to risks of such interests. The most significant impact is the disclosure requirement for unconsolidated structured entities or off balance sheet vehicles.
The effective date of the standard is for years beginning on or after January 01, 2013. The bank has adopted the standard for the first time in the 2013 financial statements. The impact of the standard is not material.
IFRS 13 Fair Value Measurement
This new standard sets out guidance on the measurement and disclosure of items measured at fair value or required to be disclosed at fair value in terms of other IFRS’s.
The effective date of the standard is for years beginning on or after January 01, 2013. The bank has adopted the standard for the first time in the 2013 financial statements. The impact of the standard is not material.
IAS 1 Presentation of Financial Statements
The amendment now requires items of other comprehensive income to be presented as: • those which will be reclassified to profit or loss • those which will not be reclassified to profit or loss.
The related tax disclosures are also required to follow the presentation allocation.
42 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO FINANCIAL STATEMENTS 2. New standards and interpretations (continued)
In addition, the amendment changed the name of ‘‘ the statement of comprehensive income’’ to ‘’the statement of profit or loss and other comprehensive income’’. The effective date of the amendment is for years beginning on or after July 01, 2012. The bank has adopted the amendment for the first time in the 2013 financial statements. The impact of the amendment is not material.
IAS 19 Employee Benefits Revised
• Require recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements • Introduce enhanced disclosures about defined benefit plans • Modify accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits • Clarification of miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features The effective date of the amendment is for years beginning on or after January 01, 2013. The bank has adopted the amendment for the first time in the 2013 financial statements. The impact of the amendment is not material.
Standards and interpretations not yet effective
The bank has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the bank’s accounting periods beginning on or after January 01, 2014 or later periods:
IFRS 9 Financial Instruments This new standard was issued as part of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. To date, the standard includes chapters for classification, measurement and derecognition of financial assets and liabilities. The following are the main changes from IAS 39: • Financial assets will be categorised as those subsequently measured at fair value or at amortised cost. • Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All other financial assets are to be subsequently measured at fair value. • under certain circumstances, financial assets may be designated as at fair value. • For hybrid contracts, where the host contract is an asset within the scope of IFRS 9, then the whole instrument is classified in accordance with IFRS 9, without separation of the embedded derivative. In other circumstances, the provisions of IAS 39 still apply. • Voluntary reclassification of financial assets is prohibited. Financial assets shall be reclassified if the entity changes its business model for the management of financial assets. In such circumstances, reclassification takes place prospectively from the beginning of the first reporting period after the date of change of the business model. • Financial liabilities shall not be reclassified. • Investments in equity instruments may be measured at fair value through other comprehensive income. When such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on derecognition of the investment. The election may be made per individual investment. • IFRS 9 does not allow for investments in equity instruments to be measured at cost. • the classification categories for financial liabilities remains unchanged. However, where a financial liability is designated as at fair value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other comprehensive income. This excludes situations where such presentation will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in profit or loss. The effective date of the standard is for years beginning on or after January 01, 2015. The bank expects to adopt the standard for the first time in the 2015 financial statements. Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 43 Annual Report 2013 Notes to Financial Statements (Continued) NOTES TO FINANCIAL STATEMENTS 2. New standards and interpretations (continued)
It is unlikely that the standard will have a material impact on the company’s financial statements.
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting All standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements.
The effective date of the amendment is for years beginning on or after January 01, 2014. The bank expects to adopt the amendment for the first time in the 2014 financial statements. It is unlikely that the amendment will have a material impact on the company’s financial statements.
IAS 36 Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 to require disclosures about the recoverable amount of impaired assets. The amendments published clarify that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal.
The effective date of the amendment is for years beginning on or after January 01, 2014. The bank expects to adopt the amendment for the first time in the 2014 financial statements. It is unlikely that the amendment will have a material impact on the company’s financial statements.
IFRIC 21 Levies IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The effective date of the interpretation is for years beginning on or after January 01, 2014. The bank expects to adopt the interpretation for the first time in the 2014 financial statements. It is unlikely that the interpretation will have a material impact on the company’s financial statements.
IAS 32 Offsetting Financial Assets and Financial Liabilities
Application guidance is added to IAS 32 which introduces criteria to establish that: • an entity ‘currently has a legally enforceable right of set-off’ • an entity ‘intends either to settle on a net basis or to realise the asset and settle the liability simultaneously’ The effective date of the amendment is for years beginning on or after January 01, 2014. The bank expects to adopt the amendment for the first time in the 2014 financial statements. It is unlikely that the amendment will have a material impact on the company’s financial statements.
44 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements (Continued) Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management Financial risk management (a) Strategy in using financial instruments By their nature, the bank’s activities are principally related to the use of financial instruments including derivatives. The bank accepts deposits from customers for various periods, and seeks to earn above- average interest margins by investing these funds in high-quality assets. The bank seeks to increase these margins by consolidating short-term funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due. The bank’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls and to monitor the risks and adherence to limits by means of reliable and up- to-date information systems. The bank regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice. Risk management is carried out centrally under policies approved by the Board of Directors. The board provides written 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 most important types of risk are credit risk, liquidity risk, market risk and other operational risk. Market risk includes currency risk, interest rate and other price risk. The bank also trades in financial instruments where it takes positions in traded and over-the-counter instruments to take advantage of short-term market movements in bonds, currency and interest rate. The board places trading limits on the level of exposure that can be taken in relation to both overnight and intra-day market positions.
(b) Capital management The bank’s objectives when managing capital, which is a broader concept than the equity on the face of financial position are:
- To comply with the capital requirements set by the regulator, Bank of Uganda
- To safeguard the bank’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders
- To maintain a strong capital base to support the development of its business
The bank monitors the adequacy of its capital using ratios established by Bank of Uganda, which ratios are broadly in line with those for the Bank for International Settlements (BIS). These ratios measure capital adequacy by comparing the bank’s eligible capital with its statement of financial position assets, off-balance-sheet commitments and market and other risk positions at weighted amounts to reflect their relative risk.
The bank is required at all times to maintain a core capital (Tier 1) of not less than 8% of total risk adjusted assets plus risk adjusted off-balance sheet items and a total capital (Tier 1 + Tier 2) of not less than 12% of its total risk adjusted assets plus risk adjusted off-balance sheet items.
Tier 1 capital consists of shareholders’ equity comprising paid up share capital, share premium and retained earnings less intangible assets and investments in financial companies, not consolidated. Tier 2 capital includes the bank’s eligible long term loans, mark to market adjustment on available for sale securities and general provisions. Tier 2 capital includes the bank’s eligible long term loans, mark to market adjustment on available for sale securities and general provisions. Tier 2 capital is limited to 50% of Tier 1 capital.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 45 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) The table below summarizes the composition of the regulatory capital. Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
Core capital (Tier 1)
Share capital 25,000,000 10,000,000
Retained income 123,263,850 111,169,756
Unrealised gain/losses on forex (469) -
Investment fluctuation reserve (4,819,687)
Investments in subsidiaries (40,000) (40,000)
Deferred tax (261,842) (1,212,675) Total core capital 147,961,539 115,097,394
Supplementary capital (Tier 2)
Regulatory general credit risk reserve 4,247,868 3,474,891
Revaluation reserve 4,842,753 5,018,397 Total supplementary capital 9,090,621 8,493,288
Tier 1 capital 147,961,539 115,097,394
Tier 2 capital 9,090,621 8,493,288 Total capital (core and supplementary) 157,052,160 123,590,682
Particulars and % of risk
Dues from Banks in Uganda and Outside Uganda 13,566,669 12,041,900 (20%) Advances & Discounts ( Excluding loans secured by 433,082,575 372,042,092 100 % cash margin) and other assets (100%) Direct Credit Substitutes (Multilateral Banks), 11,707,618 7,100,479 Document Credits etc (20%) Transaction Related - Performance Bonds , Standbys 12,409,695 7,083,527 and unused formal facilities etc (50%) Direct Credit Substitutes (Guarantees and 15,970,897 18,805,955 Acceptances) (100%) Total risk weighted assets 486,737,454 417,073,953
‘’Detailed computation of risk weighted assets is mentioned on page -70 Bank ratios
Tier 1 capital ratio 30.39 27.60 Tier 1 + Tier 2 capital ratio 32.26 29.63
46 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
Liquidity risk
Liquidity risk is the risk that the bank is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are overdrawn. The consequence may be the failure to meet obligations to repay depositors and full commitments to lend.
The bank is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits and calls on cash settled contingencies. The bank does not maintain cash resources to meet all these needs as experience shat a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The Bank of Uganda requires that the bank maintain a Cash Reserve Ratio. In addition, the Board sets limits on the minimum proportion of maturing funds available to meet such calls and on the minimum inter-bank and other borrowing facilities that should be in place to cover withdrawals at unexpected level of demand. The treasury department of the bank monitors the liquidity ratio on a daily basis.
3. Financial risk management (continued) The table below analyses the bank’s financial assets and liabilities into the relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. Total At December 31, 2013 Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years
Assets Cash and Bank of Uganda balances 43,573,837 - - - - 43,573,837
Other financial assets 169,585,400 59,237,500 175,252,884 46,531,235 - 450,607,019 Loans and advances to 25,203,863 35,429,325 64,728,633 161,641,072 435,559,917 148,557,024 customers Investment in subsidiary - - - - 40,000 40,000 Other assets 2,210,926 81,047 - - - 2,291,973 Amount due from 4,343,471 - - - - 4,343,471 overseas branches of parent bank
Property and equipments - - - - 11,033,086 11,033,086 Current tax receivable - - - - 555,875 555,875 Deferred tax - - - - 261,842 261,842 Total assets 244,917,497 94,747,872 239,981,517 208,172,307 160,447,827 948,267,020 Liabilities and shareholders’ equity Customer deposits 59,287,374 115,693,942 294,888,133 67,951,925 109,718,990 647,540,364 Other financial liabilities 92,223,300 - - 9,140,497 - 101,363,797 Amount due to overseas 8,528 - - - - 8,528 branches of parent bank Deposit and bal. due to other financial institutions 572,392 - - - - 572,392 Other liabilities 3,299,044 5,913,614 22,219,847 3,791,121 - 35,223,626 Retirement benefit - - - - 1,203,842 1,203,842 obligations Capital and reserves - - - - 162,354,471 162,354,471
Total liabilities and equity 155,390,638 121,607,556 317,107,980 80,883,543 273,277,303 948,267,020 Off balance sheet position 12,777,072 17,104,911 57,401,572 14,585,500 - 101,869,055 Credit committments 11,856,332 - - - - 11,856,332 Net liquidity gap as at 64,893,455 (43,964,595) (134,528,035) 112,703,264 (112,829,476) (113,725,387) December 31, 2013 At December 31, 2012
Total assets 141,032,252 92,683,243 169,929,488 172,066,007 133,028,076 708,739,066 Total liabilities and equity 45,392,047 77,654,049 265,394,821 81,949,321 238,348,828 708,739,066 Off balance sheet position 16,058,635 22,188,067 23,472,247 444,814 - 62,163,763
Credit commitments 9,565,065 - - - - 9,565,065 Net liquidity gap as at December 70,016,505 (7,158,873) (118,937,580) 89,671,872 105,320,752 (71,728,828) 31, 2012
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 47 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) The figures indicate a mismatch of assets and liabilities. Management is of the view that the mismatch does not subject the bank to severe liquidity risks because maturities for all government securities and balances with overseas banks can be restructured in accordance with business demands. Interest rate risk The bank’s operations are subject to the risk of interest rate fluctuations to the extent that interest earning assets and interest bearing liabilities mature or reprice at different times or in differing amounts. Risk management activities are aimed at optimizing net interest income, given market interest rates levels consistent with the bank’s business strategies.
The bank is exposed to various risks associated with the effects of fluctuation in the prevailing levels of market interest rates on its financial position and cash flows. The management closely monitors the interest rate trends to minimise the potential adverse impact of interest rate changes. The table summarises the exposure to interest rate risk at the balance sheet date. Included in the table are the assets and liabilities at carrying amounts, categorised by the earlier of contractual repricing on maturity dates. The bank does not have any derivative financial instruments. The bank does not bear an interest rate risk on off balance sheet items.
3. Financial risk management (continued) Cash flow interest rate risk At December 31, Non-interest Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total 2013 bearing Assets Cash and Bank of - - - - - 43,573,837 43,573,837 Uganda balances Other financial 169,585,400 59,237,500 175,252,884 46,531,235 - - 450,607,019 assets Loans and advances to 25,203,863 35,429,325 64,728,633 161,641,072 148,557,024 - 435,559,917 customers Investment in - - - - - 40,000 40,000 subsidiary Other assets - - - - - 2,291,973 2,291,973 Amount due from overseas branches 4,343,471 - - - - - 4,343,471 of parent bank Property and - - - - - 11,033,086 11,033,086 equipments Current tax - - - - - 555,875 555,875 Deferred tax - - - - - 261,842 261,842 Total assets 199,132,734 94,666,825 239,981,517 208,172,307 148,557,024 57,756,613 948,267,020
Liabilities and shareholders’ equity Customer deposits 59,287,374 115,693,942 294,888,133 67,951,925 109,718,990 - 647,540,364 Other financial 92,223,300 - - 9,140,497 - - 101,363,797 liabilities Amount due to overseas branches 8,528 - - - - - 8,528 of parent bank Dep. and bal. due to other financial 572,392 - - - - - 572,392 institutions Other liabilities - - - - - 35,223,626 35,223,626 Retirement benefit - - - - - 1,203,842 1,203,842 obligation Capital & reserves - - - - - 162,354,471 162,354,471 Total liabilities and 152,091,594 115,693,942 294,888,133 77,092,422 109,718,990 198,781,939 948,267,020 equity Interest sensitivity gap as at 47,041,140 (21,027,117) (54,906,616) 131,079,885 38,838,034 (141,025,326) - December 31, 2013 At December 31, 2012 Total assets 90,018,486 92,077,038 169,676,112 170,135,807 119,684,559 67,147,064 708,739,066 Total liabilities and 41,810,275 73,747,859 245,978,858 76,787,431 101,188,107 169,226,536 708,739,066 equity Interest sensitivity gap as 48,208,211 18,329,179 (76,302,746) 93,348,376 18,496,452 (102,079,472) - at December 31, 2012
48 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued)
Credit Risk
Credit risk means the risk of financial loss to the bank in the event the customer or borrower to a financial instrument fails to meet its contractual obligations and arises mainly from the bank’s loans and advances to the borrowers, other banks and investment in securities. For risk management purposes, credit risk arising on trading of securities is managed independently, but reported as a component of market risk exposure.
The bank manages its credit risk, inter-alia by: · Formulating credit policies covering collateral requirements, credit assessment risk grading, legal procedures for documentation, reporting and compliance with regulatory and statutory requirements. · Establishing the authority structure for approval and renewal of credit facilities. Discretionary lending powers have been allocated to the Credit Committee of Board, Credit Management Committee, Managing Director, Assistant General Managers, Chief Managers / Senior Branch Managers. Credit Committee of Board is a committee of the Board to oversee the credit portfolio of the bank. · Developing and maintaining the bank’s risk grading in order to categorise exposures according to degree of risk of financial loss faced and the focus on management of consequent risk or loss. The current risk grading framework consist of 5 categories of risk grades reflecting the varying grades of risk of default and availability of collaterals or other risk mitigants. risk grades are subject to regular review by the bank. · Setting of exposure limits i.e. credit concentrations : The bank has in place a framework of exposure ceiling of various industries, counterparties, country (for investment securities) etc. · Review and assessment of credit risk - bank carries out a conscious assessment of credit exposure in excess of designated limits, prior to the facilities being committed to the customer. This is a part of the appraisal system for processing the request of borrower for a credit facility. Renewals and review of credit facilities are also subject to the same appraisal criteria. · Review of the compliance of the various regulatory limits, exposure ceilings etc. at regular intervals by the bank. · The management provides assistance to the business units / branches to promote best practices for credit appraisal throughout the bank in management of credit risk.
Each of the branch / business units are responsible for implementing, complying and monitoring with the bank’s credit policies in order to build up a quality credit portfolio, including those which are sanctioned by head office. Regular audit of the branches is undertaken by the internal auditor.
The exposure to credit risk is also managed through regular analysis of the ability of the borrowers and potential borrowers to meet interest and capital repayment obligations and by changing lending limits where appropriate. Exposure to credit risk is also managed in part by obtaining collateral and corporate guarantee and personal guarantees, but a significant portion is personal lending where no such facilities can be obtained.
Credit related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letter of credit, which represents irrevocable assurance that the bank will make payments in the event that a customer cannot meet its obligation to third parties, carry the same credit risk as loans. Documentary and commercial letters of credit, which 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 specified conditions are collaterallised by the underlying shipment of goods to which they are related and therefore carry less risk than a direct borrowing.
Commitments to expend credit represent unused portion of authorisations to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on committments to extend credit the bank is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. The bank monitors the term to maturity of credit commitments because longer term commitments generally have a greater degree of credit risk than short term commitments. Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 49 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
3. Financial risk management (continued) Maximum exposure to credit risk before collateral held: Placement with other banks 218,525,000 93,212,550 Amount due from other group companies 4,334,943 1,375,999 Loans and advances to customers 435,559,917 347,489,912 Available-for-sale 202,794,681 149,630,341 Held-to-maturity 29,287,338 49,883,200 Other assets 2,291,973 2,926,766 Credit Risk exposures to off Balance Sheet items: Acceptances and letters of credit 21,031,217 38,093,222 Guarantees and performance bonds 80,837,838 24,070,541 Commitments to lend 11,856,332 9,565,065 1,006,519,239 716,247,596
The above figures represent a worst case scenario of credit risk exposure to the bank at December 31, 2013 and 2012, without taking into account any collateral held or other credit enhancement attached. For on balance sheet assets, the exposures set out above are based on carrying amounts as reported in the balance sheet. As shown above, 54.57% of the total maximum exposure is derived from loans and advances to banks and customers (2012: 58.53%), 23.05.% represents investment in debt securities (2012: 27.85%). Loans and advances to customers, other than to major corporate and to individuals borrowing less than USh 10 million is secured by collateral in the form of charges over land and building and /or plant and machinery or corporate guarantees. The management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the bank resulting from both its loan and advances portfolio and debt securities based on the following:
· The bank exercises stringent control over granting of new loans · 97.72% of the loans and advances portfolio are neither past due nor impaired · 97.52% of the loans are backed by collaterals · 99.54% of the investment in debt securities are Government Securities
Exposure to credit risk Financial assets that are past due or impaired Neither past due nor impaired 430,735,946 342,834,327 Past due but not impaired 1,605,137 161,389 Impaired 8,426,547 10,696,743 Gross advances 440,767,630 353,692,459 Less: allowances for impairment (5,207,713) (6,202,547)
Net advances 435,559,917 347,489,912 No other financial assets are either past due or impaired.
50 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) Loans and advances less than 90 days past due are not considered impaired, unless other information is available to indicate the contrary. The gross amounts of loans and advances that were past due but not impaired are as follows: Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
Past due up to 30 days 488,310 14,309 Past due 31- 60 days 659,980 87,761 Past due 61- 90 days 456,847 59,319 1,605,137 161,389 Individually assessed impaired loans and advances Loans and advances
Corporate 1,673,593 1,898,072 Retail 3,443,149 1,436,171 5,116,742 3,334,243
Overdrafts Corporate 931,156 7,141,612 Retail 2,378,648 220,888 3,309,804 7,362,500 Concentration of credit risk Economic sector risk concentrations within the customer loan and deposit portfolio were as follows: At December 31, 2013
Loans and Credit commitments Customer deposits advances % % % Manufacturing 21.03 13.65 3.93 Wholesale and retail trade 10.91 21.92 4.62 Transport and communication 1.06 - 0.23 Building and construction 20.13 0.83 2.34 Agricultural 20.02 27.18 3.48 Individuals 1.38 - 85.40 Others 25.47 36.42 - 100.00 100.00 100.00 At December 31, 2012 Loans and Credit commitments Customer deposits advances % % % Manufacturing 25.95 17.74 4.87 Wholesale and retail trade 13.98 29.65 4.18 Transport and communication 2.65 - 0.53 Building and construction 24.27 - - Agricultural 18.90 26.59 2.06 Individuals 1.59 - 88.36 Others 12.66 26.02 - 100.00 100.00 100.00
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 51 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued)
Currency Risk
The bank is exposed to currency risk through transactions in foreign currencies. The bank’s transactional exposures give rise to foreign currency gains and losses that are recognised in the income statement. In respect of monetary assets and liabilities in foreign currencies, the bank ensures that its net exposure is kept to an acceptable level by buying and selling foreign currencies at spot rates when considered appropriate.
The bank operates wholly within Uganda and its assets and liabilities are reported in Uganda shillings. Although it maintains trade with the majority shareholder and other correspondent banks, it held no significant foreign currency exposure as at December 31, 2013.
52 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) At December 31, 2013 Euro US dollar GBP Ush Others Total Assets ------Cash and bank of Uganda 101,380 5,329,224 219,337 37,911,859 12,037 43,573,837 balances Other financial assets - 73,225,000 5,780,019 371,602,000 - 450,607,019 Loans and advances to - 158,300,560 - 277,259,357 - 435,559,917 customers Investment in subsidiary - - - 40,000 - 40,000 Other assets 421,208 546,579 - 1,324,186 - 2,291,973 Amount due from overseas 404,725 3,714,135 114,487 - 110,124 4,343,471 branches of parent bank Property and equipments - - - 11,033,086 - 11,033,086 Current tax - - - 555,875 - 555,875 Deferred tax - - - 261,842 - 261,842
Total assets 927,313 241,115,498 6,113,843 699,988,205 122,161 948,267,020
Liabilities and shareholders’ equity
Customer deposits 650,127 212,917,300 5,931,408 427,924,775 116,754 647,540,364
Other financial liabilities 348,300 7,575,000 - 93,440,497 - 101,363,797 Amount due to overseas - - - - 8,528 8,528 branches of parent bank Deposit and balances due to - 572,392 - - - 572,392 other financial institutions Other liabilities 26,794 19,346,833 168,824 15,610,773 70,402 35,223,626 Retirement benefit obligation - - - 1,203,842 - 1,203,842 Capital and reserves - - - 162,354,471 - 162,354,471
Total liabilities and equity 1,025,221 240,411,525 6,100,232 700,534,358 195,684 948,267,020
Net balance sheet position (97,908) 703,973 13,611 (546,153) (73,523) - December 31, 2013
Off balance sheet position 262,229 74,844,182 29,775 23,619,064 3,113,804 101,869,054
Credit commitments - - - 11,856,332 - 11,856,332 At December 31, 2012
Total assets 2,167,269 207,720,151 2,152,086 496,497,836 201,724 708,739,066
Total liabilities and equity 1,927,523 208,645,859 2,139,572 495,911,612 114,500 708,739,066
Net balance sheet position 239,746 (925,708) 12,514 586,224 87,224 - December 31, 2012
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 53 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) Exchange rates used for conversion of foreign items were: ` Group Company
2013 2012 2013 2012
USh ‘000 USh ‘000 USh ‘000 USh ‘000 US Dollar 2525 2685 2525 2685 GBP 4162 4338 4162 4338 Euro 3483 3545 3483 3545 INR 40.90 49.10 40.90 49.10
Kshs 29.28 31.17 29.28 31.17
Market risk Market risk is the risk that changes in the market prices, which includes currency exchange rate and interest rates, will affect the fair value or future cash flows of financial instruments. Market risk arises from open positions in interest rates and foreign currencies, both of which are exposed to general and specific market movements and changes in the level of volatility. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while optimising on the return on risk. Overall management for management of market risk rests with the Assets & Liability Committee (ALCO). The treasury department is responsible for the development of detailed risk management policies, subject to review and approval by ALCO, and for the day to day implementation of the policies.
The major measurement techniques used to measure and control market risk are outlined below:
a) Value at risk
The bank applies a “Value at Risk” methodology (VaR) to its trading and non-trading portfolios, to estimate market risk of positions held and maximum losses expected based upon a number of assumptions for various changes in market conditions. The board sets limits on the value of risk that may be accepted by the bank, trading and non-trading separately, which are monitored on a daily basis by the treasury department.
VaR is a statistically based estimate of the potential loss on the current portfolio from adverse market movements. It expresses the maximum amount the bank 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 moves occurring over this holding period will follow a similar pattern to those that have over a 10 day period in the past. The bank’s assessment of past movement is based on data for the past five years. The bank applies these historical changes in rates, prices, indices etc directly to its current positions - a method known as historical simulation. The actual outcome is monitored regularly to test the validity of the assumptions and parameters / factors used in VaR calculation.
The use of this approach does not prevent losses outside these limits in the event of more significant market movements.
The quality of the VaR model is continiously monitored by back testing the VaR results after trading books. All back testing exceptions and any exceptional revenues on the profit side of the VaR distribution are investigated and all back testing results are reported to the Board of Directors.
54 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) b) Stress test
Stress Test provides an indication of the potential size of losses that could arise in extreme conditions.
The stress tests carried out by the treasury department include: risk factor, stress testing where stress movements are applied to each risk category, emerging market stress testing, where emerging market portfolios are subject to stress movements and adhoc stress testing, which includes applying possible stress events to specific positions or regions - for example the stress outcome to a region following currency peg break.
The results of the stress tests are reviewed by senior management in each business unit. The stress test is tailored to the business and typically uses scenario analysis.
VaR summary for 2013 and 2012: a) Bank VaR by risk type
12 Months ending December 31, 2013 12 Months ending December 31, 2012 Million Ush Million Ush Million Ush Million Ush Million Ush Million Ush Average High Low Average High Low
Foreign exchange 1,381,850 1,432,535 1,305,306 2,150,220 2,173,925 2,009,679 risk Interest rate risk 716,020 764,936 642,725 3,038,612 3,127,822 2,737,655 Total VaR 2,097,870 2,197,471 1,948,031 5,188,832 5,301,747 4,747,334
b) Non trading portfolio VaR by risk type
Foreign exchange 1,381,850 1,432,535 1,305,306 2,150,220 2,173,925 2,009,679 Interest rate risk 716,020 764,936 642,725 3,038,612 3,127,822 2,737,655
Total VaR 2,097,870 2,197,471 1,948,031 5,188,832 5,301,747 4,747,334
Foreign exchange risk
Effect on profit (decrease) Effect on equity (decrease) Financial instrument 2013 2012 2013 2012 US Dollar (774,368) (1,018,280) (774,368) (1,018,280)
Euro (107,698) (263,720) (107,698) (263,720) GBP (14,972) (13,765) (14,972) (13,765) Others (92,770) (95,947) (92,770) (95,947)
The table above summarises the effect on post-tax profit had the Uganda Shilling weakened by 10% against the United States Dollar, with all other variables held constant. If the Uganda shilling strengthened against each currency, the effect would have been the opposite.
Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the bank’s processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising out of legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risk arise from the bank’s operations and is faced by all other business entities.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 55 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
3. Financial risk management (continued) The bank endeavors to manage the operational risk by creating a balance between avoidance of cost of financial losses and damage to the bank’s reputation within overall cost effectiveness and to avoid control procedures that restrict creativity and initiative. The key responsibility for development and implementation of policies and programs to implement the bank’s operational risk management is with the senior management of the bank.
The above is tried to be achieved by development of overall standards for the bank to manage the risk in the following areas: Segregation of duties including independent authorisation of transactions Monitoring and reconciliation of transactions Compliance of regulatory and legal requirement Documentation of control and procedure Assessment of the operational risk on a periodic basis to address the deficiencies observed, if any Reporting of operational losses and initiation of remedial action Development of contingency plan Giving training to staff to improve their professional competency Ethical and business standards Obtaining insurance wherever feasible, as a risk mitigation measure.
Compliance of bank’s standards is supported by periodic reviews undertaken by internal audit. The observations of the internal audit is discussed with the management of the bank and the summaries are submitted to the Audit Committee of the board. Risk measurement and control
Interest rate, currency, credit, liquidity and other risks are actively managed by management to ensure compliance with the bank’s risk limits. The bank’s risk limits are assessed regularly to ensure their appropriateness given its objectives and strategies and current market conditions. A variety of techniques are used by the bank in measuring the risks inherent in its trading and non- trading positions.
4. Business segments
The major part of business of the bank, which is all within Uganda, falls under the category of banking, with other income comprising less than 2% of the total income of the bank. No segment information is therefore provided.
5. Interest income
Income from treasury bills 13,871,109 8,408,342 13,871,109 8,408,342 Income from treasury bonds 7,720,537 9,118,441 7,720,537 9,118,441 Income earned from placements, corporate bonds and 11,722,869 10,832,265 11,722,869 10,832,265 repos Income from loans and advances 61,722,194 61,085,712 61,722,194 61,085,712 95,036,709 89,444,760 95,036,709 89,444,760
6. Interest expense
Demand deposits 24,897 45,238 24,897 45,238 Savings accounts 1,477,054 1,157,207 1,477,054 1,157,207 Time deposits 41,805,779 32,598,853 41,805,779 32,598,853 Others 3,969,201 3,668,941 3,969,201 3,668,941 47,276,931 37,470,239 47,276,931 37,470,239 56 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
7. Non interest income / other income
Profit and loss on sale of property and equipments 11,346 - 11,346 - Fees and commission income 10,614,974 9,004,932 10,614,974 9,004,932 Gains less losses arising from dealing in foreign 2,199,165 2,357,419 2,199,165 2,357,419 currencies Profit / (loss) on sale of investments 365,307 (670,568) 365,307 (670,568) Other income 115,461 129,054 - - 13,306,253 10,820,837 13,190,792 10,691,783
8. Non interest expense Employee costs 8,362,435 7,460,690 8,362,435 7,460,690 Advertising 203,340 338,540 203,340 338,540 Auditors remuneration 100,822 110,891 100,822 110,891 Depreciation, amortisation and impairments 1,590,401 1,635,531 1,589,612 1,634,514 Repairs and maintenance 551,149 666,674 551,149 666,674 Directors’ emoluments as executives 227,994 386,523 227,994 386,523 Administration and management fees 3,334,648 2,685,000 3,334,648 2,685,000 Consulting and professional fees 381,978 126,969 381,978 126,969 General expenses 5,401,002 4,964,556 5,371,236 4,937,124 Bad debts written off 958,786 2,791,785 958,786 2,791,785 Loss on sale of property and equipment - 53,037 - 53,037 21,112,555 21,220,196 21,082,000 21,191,747
9. Employee costs
Salaries and wages 7,187,889 6,374,709 7,187,889 6,374,709 Other benefits 429,460 475,868 429,460 475,868 Post-employment benefits 745,086 610,113 745,086 610,113 8,362,435 7,460,690 8,362,435 7,460,690
10. Profit before tax
Profit before tax for the year is stated after accounting for the following:
Profit (loss) on sale of property and equipment (11,346) 53,037 (11,346) 53,037 Depreciation 1,590,401 1,635,531 1,589,612 1,634,514 Employee costs 8,362,435 7,460,690 8,362,435 7,460,690 Auditors remuneration 103,056 112,661 100,822 110,891
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 57 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
11. Taxation Major components of the tax expense
Current
Current tax 5,516,333 7,347,319 5,490,847 7,317,185 Income tax - recognised in current tax for prior periods 96,894 157,026 96,618 157,026
WHT as final tax 4,300,622 2,733,708 4,300,622 2,733,708 9,913,849 10,238,053 9,888,087 10,207,919
Deferred
Deferred tax charge / (credit) 150,736 (932,419) 150,750 (931,357) 10,064,585 9,305,634 10,038,837 9,276,562 Reconciliation of the tax expense
Tax on bank’s profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:
Accounting profit 40,948,310 38,777,366 40,863,404 38,676,761
Tax at the applicable tax rate of 30% (2012: 30%) 12,284,493 11,633,210 12,259,021 11,603,028 Tax effect of adjustments on taxable income
Tax effect of non-taxable income (7,494,876) (5,608,506) (7,494,876) (5,608,506)
WHT as final tax 4,300,622 2,733,708 4,300,622 2,733,708
Tax effects of non-deductible costs 877,452 390,016 877,452 391,306 Fines and penalties 96,894 157,206 96,618 157,026 10,064,585 9,305,634 10,038,837 9,276,562 12. Cash and balances with Bank of Uganda
Cash and cash equivalents consist of:
Cash on hand 8,183,175 11,840,819 8,183,175 11,840,819
Balances with Bank of Uganda 35,581,184 39,290,139 35,390,662 39,029,704 43,764,359 51,130,958 43,573,837 50,870,523
Balances with Bank of Uganda include the mandatory deposits which are advised fortnightly by the Central Bank based on the deposit balances held for the past two weeks. As at December 31, 2013, the mandatory deposits were 8% of total deposits (2012: 9.50% of total deposits).
58 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
13. Other financial assets
Available-for-sale Treasury bills for 91 days 141,013,004 109,376,696 141,013,004 109,376,696 Corporate bonds 1,060,713 1,319,959 1,060,713 1,319,959
Treasury bonds for 91 days 59,120,520 36,845,284 59,120,520 36,845,284
Interest receivable 1,600,444 2,088,402 1,600,444 2,088,402 202,794,681 149,630,341 202,794,681 149,630,341 Held-to-maturity
Treasury bills for 91 days 1,868,600 2,680,200 1,868,600 2,680,200
Treasury bills between 92 days to 1 year 8,000,000 20,200,000 8,000,000 20,200,000
Treasury bonds after one year 19,418,738 27,003,000 19,418,738 27,003,000 29,287,338 49,883,200 29,287,338 49,883,200 Due from other banks
Placement with other banks 218,525,000 93,212,550 218,525,000 93,212,550 Total other financial assets 450,607,019 292,726,091 450,607,019 292,726,091 Total other financial assets 202,794,681 149,630,341 202,794,681 149,630,341 Available-for-sale Held to maturity 29,287,338 49,883,200 29,287,338 49,883,200 Due from other banks 218,525,000 93,212,550 218,525,000 93,212,550 450,607,019 292,726,091 450,607,019 292,726,091 Movement in investment securities - available-for-sale The movement in investment securities available-for-sale during the year 2013 may be summarised as follows: Net gain/(loss) Opening Opening in fair value of Addition / Interest Closing balance Balance available-for- (deduction) receivable balance sale securities (net) Available-for- sale 149,630,341 2,666,943 50,985,355 (487,958) 202,794,681
The movement in investment securities available-for-sale during the year 2012 may be summarised as follows: Net gain/(loss) Opening Opening in fair value of Addition / Interest Closing balance Balance available-for- (deduction) receivable balance sale securities (net) Available-for- sale 80,931,934 3,654,846 62,955,159 2,088,402 149,630,341
The weighted average effective interest rate on treasury bonds as at December 31, 2013 was 11.84% and on treasury bills 11.07% (2012: treasury bonds 11.24% and treasury bills12.52%).
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 59 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
13. Other financial assets (continued)
The weighted average effective rate of interest on local placements as at December 31, 2013 was 11.68% and foreign placements 2.55% (2012: local placements - 18.23% and foreign placements 2.78%).
The bank has not reclassified any financial assets from cost or amortised cost to fair value, or from fair value to cost or amortised cost during the current or prior year.
There were no gains or losses realised on the disposal of held-to-maturity financial assets in 2013 and 2012, as all the financial assets were disposed of at their redemption date.
14. Loans and advances to customers
Overdrafts 231,745,749 199,040,130 231,745,749 199,040,130
Demand and term loans 208,485,678 154,033,257 208,485,678 154,033,257 Personal loans 536,204 619,073 536,204 619,073 Provisions for impairment losses (5,207,714) (6,202,548) (5,207,714) (6,202,548) 435,559,917 347,489,912 435,559,917 347,489,912 Provision for impaired loans and advances At start of the year 6,202,548 3,404,752 6,202,548 3,404,752 Additional provision in the year - 6,028,874 - 6,028,874 Recoveries / upgradation (35,220) (472,513) (35,220) (472,513) Write offs during the year (959,614) (2,758,565) (959,614) (2,758,565) 5,207,714 6,202,548 5,207,714 6,202,548
Advances to customers include loans to employees of Ush. 536 million (2012: Ush. 619 million). The weighted average effective interest rate on Ushs loans and advances to customers at December 31, 2013 was 17.67% (2012: 24.56%) and 7.44% (2012: 9.49%) for foreign currency loans and advances.
The aggregate amount of impaired loans are Ush. 8,426.55 million, of which provision of Ush. 5,207.71 million is made as at December 31, 2013 (2012: Ush. 6,202.54 million).
60 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
15. Deposits and balances due from other financial institutions
Nostro accounts (572,392) (270,103) (572,392) (270,103)
16. Due to / (from) overseas branches of parent company
Bank of Baroda, London - GBP 114,487 474,891 114,487 474,891
Bank of Baroda, Nairobi - Kshs 110,124 54,513 110,124 54,513
Bank of Baroda, Mumbai - INR (8,528) 134,397 (8,528) 134,397
Bank of Baroda, Brussels - Euro 404,725 51,109 404,725 51,109
Bank of Baroda, New York - US Dollar 3,714,135 661,089 3,714,135 661,089
4,334,943 1,375,999 4,334,943 1,375,999
The weighted average effective interest rate on amounts due from group companies as at December 31, 2013 was 1.13% (2012: 1.25%).
Current assets 4,343,471 1,375,999 4,343,471 1,375,999 Current liabilities (8,528) - (8,528) - 4,334,943 1,375,999 4,334,943 1,375,999
17. Due to / (from) overseas branches of parent company (continued) Currencies The carrying amount of dues to and from group banks are denominated in the following currencies:
Kenya Shillings 3,761,068 1,748,907 3,761,068 1,748,907 G.B. Pounds 27,507 109,472 27,507 109,472 U.S. Dollars 1,470,944 246,215 1,470,944 246,215 Euro 116,200 14,417 116,200 14,417 Indian Rupees (208,504) 2,737,211 (208,504) 2,737,211
17. Other asset Clearing account 257,369 136,985 257,369 136,985 Stationery account 14,727 9,875 14,727 9,875 Others 2,275,079 2,985,842 2,019,877 2,779,906 2,547,175 3,132,702 2,291,973 2,926,766
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 61 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
18. Investments in subsidiaries
Group Company 2013 2012 2013 2012 USh ‘000 USh ‘000 USh ‘000 USh ‘000
Name of bank Held by % voting % voting % holding % holding Carrying Carrying power 2013 power 2012 2013 2012 amount amount 2013 2013 Baroda Capital Bank of 100.00 % 100.00 % 100.00 % 100.00 % 40,000 40,000 Markets (U) Limited Baroda (U) Limited 40,000 40,000
The interest in the above fully owned undertaking is carried at cost.
19. Deferred tax
Deferred tax asset / (liability)
Deferred tax asset 266,519 1,219,252 261,842 1,212,675
Deferred tax assets and deferred tax credited / (charged) to the income statement and statement of comprehensive income are attributable to the following:
At beginning of the year 1,219,252 2,345,361 1,212,675 2,346,898 Excess depreciation over capital allowances 52,862 (41,113) 52,848 (42,176) Property revaluations 75,276 78,006 75,276 78,006 Fair value reserves-available for sale (801,997) (2,058,529) (800,083) (2,065,580) securities (charged to statement of comprehensive income) Provisions (278,874) 895,527 (278,874) 895,527
266,519 1,219,252 261,842 1,212,675
Recognition of deferred tax asset / liability
Deferred tax is calculated on all temporary timing differences under the liability method using a tax rate of 30% (2012: 30%).
62 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 20. Property and equipment
Group 2013 2012
Accumulated Accumulated Cost / Valuation Carrying value Cost / Valuation Carrying value depreciation depreciation
Buildings 11,187,780 (4,370,534) 6,817,246 11,187,780 (3,811,146) 7,376,634 Furniture and 6,296,656 (3,130,361) 3,166,295 6,019,455 (2,677,997) 3,341,458 fixtures
Motor vehicles 1,039,780 (730,780) 309,000 1,062,172 (673,518) 388,654
IT equipment 3,585,842 (2,841,389) 744,453 3,327,768 (2,338,975) 988,793
Total 22,110,058 (11,073,064) 11,036,994 21,597,175 (9,501,636) 12,095,539
Company 2013 2012
Accumulated Accumulated Cost / Valuation Carrying value Cost / Valuation Carrying value depreciation depreciation
Buildings 11,187,780 (4,370,534) 6,817,246 11,187,780 (3,811,146) 7,376,634 Furniture and 6,289,953 (3,126,919) 3,163,034 6,013,284 (2,675,553) 3,337,731 fixtures Motor vehicles 1,039,780 (730,780) 309,000 1,062,172 (673,518) 388,654 IT equipment 3,581,508 (2,837,702) 743,806 3,323,918 (2,336,095) 987,823 Total 22,099,021 (11,065,935) 11,033,086 21,587,154 (9,496,312) 12,090,842
Movement in property and equipment - Group - 2013
Opening balance Additions Disposals Depreciation Total
Buildings 7,376,634 - - (559,388) 6,817,246 Furniture and fixtures 3,341,458 280,949 (4,280) (451,832) 3,166,295 Motor vehicles 388,654 - (2,404) (77,250) 309,000 IT equipment 988,793 257,590 - (501,930) 744,453
12,095,539 538,539 (6,684) (1,590,400) 11,036,994
Movement in property and equipment - Group - 2012
Opening Additions Disposals Transfers Depreciation Total balance Buildings 7,868,257 67,765 - - (559,388) 7,376,634 Furniture and fixtures 2,751,237 1,143,331 (73,468) - (479,642) 3,341,458 Motor vehicles 411,718 75,500 (1,400) - (97,164) 388,654 IT equipment 880,576 603,487 - 2,518 (497,788) 988,793 11,911,788 1,890,083 (74,868) 2,518 (1,633,982) 12,095,539
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 63 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
Movement in property and equipment - Company - 2013
Opening Additions Disposals Depreciation Total balance Buildings 7,376,634 - - (559,388) 6,817,246 Furniture and fixtures 3,337,731 280,949 (4,280) (451,366) 3,163,034 Motor vehicles 388,654 - (2,404) (77,250) 309,000 IT equipment 987,823 257,590 - (501,607) 743,806 12,090,842 538,539 (6,684) (1,589,611) 11,033,086
20. Property and equipment (continued)
Movement in property and equipment - Company - 2012
Opening additions Disposals Transfers Depreciation Total Balance Buildings 7,868,257 67,765 - - (559,388) 7,376,634 Furniture and fixtures 2,746,978 1,143,331 (73,468) - (479,110) 3,337,731 Motor vehicles 411,718 75,500 (1,400) - (97,164) 388,654 IT equipment 879,123 603,487 - 2,518 (497,305) 987,823 11,906,076 1,890,083 (74,868) 2,518 (1,632,967) 12,090,842
Other information
The carrying value of the Kampala main property (freehold) as at the year-end, therefore represented 84% of the total carrying value of Land and Buildings.
IAS 17 requires that payment made to secure a lease for land should be presented as Prepaid Operating Lease Rentals under non-current assets in the balance sheet and amortised over the period of the lease. In view of the difficulty in apportioning the cost of land from the purchase price, since these properties were already developed prior to acquisition, and the weak market price of land outside Kampala resulting in a significant portion of the valuation being attributed to the leasehold improvements, management have attributed the entire valuation to leasehold improvements. Leasehold land is therefore not considered material to warrant separate disclosure. Land and buildings on leasehold are therefore deemed to represent buildings and therefore presented as part of the Property and Equipment and depreciated at 5%.
64 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 21. Intangible assets (Computer software)
Group 2013 2012 Accumulated Accumulated Cost / Valuation Carrying value Cost / Valuation Carrying value amortisation amortisation Computer 53,286 (53,286) -- 53,286 (53,286) -- software Company 2013 2012 Accumulated Accumulated Cost / Valuation Carrying value Cost / Valuation Carrying value amortisation amortisation Computer 53,286 (53,286) - 53,286 (53,286) - software
Movement of intangible assets (computer software) - Group - 2012
Opening balance Transfers Amortisation Total
Computer 4,064 (2,518) (1,546) - software
Movement of intangible assets (computer software) - Company - 2012
Opening balance Transfers Amortisation Total
Computer 4,064 (2,518) (1,546) software
22. Share capital Authorised
2,500,000,000 Ordinary shares of Ush. 10 each 25,000,000 25,000,000 25,000,000 25,000,000
Reconciliation of number of shares issued:
Reported as at January 01, 2013 1,000,000 1,000,000 1,000,000 1,000,000
Issue of bonus shares 1,500,000 - 1,500,000 - 2,500,000 1,000,000 2,500,000 1,000,000 Issued Ordinary 25,000,000 10,000,000 25,000,000 10,000,000
23. Movement in regulatory general credit risk reserve
At start of the year 3,474,891 2,932,413 3,474,891 2,932,413 Increase in risk reserve during the year 772,977 542,478 772,977 542,478 4,247,868 3,474,891 4,247,868 3,474,891
24. Revaluation reserve Revaluation reserves are created based on valuations by professional independent valuers, Excess depreciation counted on revaluations are transferred from capital to revenue reserves, net of deferred tax on a year to year basis. At start of the year 5,018,397 5,200,411 5,018,397 5,200,411 Excess depreciation on revaluation (250,920) (260,020) (250,920) (260,020) Deferred tax on excess depreciation 75,276 78,006 75,276 78,006 4,842,753 5,018,397 4,842,753 5,018,397
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 65 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
25. Other financial liabilities At fair value through profit or loss Bank loan 92,223,300 8,055,000 92,223,300 8,055,000 Held at amortised cost Other bank borrowings 9,140,497 6,885,857 9,140,497 6,885,857 101,363,797 14,940,857 101,363,797 14,940,857
The weighted average effective rate of interest on foreign bank borrowings at December 31, 2013 was 0.41% (2012: 0.33%). The weighted average effective rate of interest on local bank borrowings at December 31, 2013 was 10.94% (2012: 17.74%). Current liabilities Fair value through profit or loss 92,223,300 8,055,000 92,223,300 8,055,000 At amortised cost 9,140,497 6,885,857 9,140,497 6,885,857 101,363,797 14,940,857 101,363,797 14,940,857 26. Customer deposits
Current deposits 129,445,191 104,465,775 129,445,187 104,465,772
Savings deposits 90,026,305 97,910,437 90,026,305 97,910,437
Time deposits 428,068,872 321,925,360 428,068,872 321,925,360 647,540,368 524,301,572 647,540,364 524,301,569
The weighted average effective interest rate on interest bearing current and saving deposits at December 31, 2013 was 0.54% (2012: 0.72%) and 11.23% (2012: 12.06%) for time deposits.
27. Other liabilities
Unearned interest 8,140,528 7,662,262 8,140,528 7,662,262 Interest payable 23,461,541 20,669,993 23,461,541 20,669,993 Bills payable 137,374 330,739 137,374 330,739 Uncleared effects (Net) 1,125,075 928,693 1,125,075 928,693 Others 2,456,239 3,705,241 2,359,108 3,516,918 35,320,757 33,296,928 35,223,626 33,108,605 28. Retirement benefit obligations Carrying value Provision for gratuity 1,203,842 1,454,888 1,203,842 1,454,888
The retirement benefit obligations comprise of gratuity and social security. The gratuity is computed at 75% of the monthly salary last drawn by each employee multiplied by each completed year of service, subject to eligibility under the terms and conditions of the scheme.
Movements for the year Opening balance 1,454,888 1,580,670 1,454,888 1,580,670 Additional provision made during the year 238,360 143,493 238,360 143,493 Benefits paid (489,406) (269,275) (489,406) (269,275) 1,203,842 1,454,888 1,203,842 1,454,888
The bank also makes contribution to the National Social Security Fund. Contributions are determined by local statute and are shared between employer and employee. For the year ended December 31, 2013, the bank contributed Ush 745 million (2012: Shs. 610 million), which has been charged to the income statement.
66 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 29. Dividend payable The proposed dividend for the year 2013 is Ush. 5,000,000,000 (2012: Ush. 5,000,000,000). The dividend is at 20% of paid up share capital of Ush. 25,000,000,000 (2012: 20% of paid up share capital of Ush. 25,000,000,000).
The payment of dividend is subject to withholding tax @ 15% or the rates specified under applicable double taxation agreements. 30. Cash generated from operations Profit before taxation 40,948,310 38,777,366 40,863,404 38,676,761 Adjustments for: 1,590,401 1,635,531 1,589,612 1,634,514 Depreciation and amortisation (Profit) / loss on sale of assets (11,346) 53,037 (11,346) 53,037 Movement in impaired loans and advances (994,834) 2,797,796 (994,834) 2,797,796 Movements in retirement benefit liabilities (251,046) (125,782) (251,046) (125,782) Fair value adjustments - Investments 2,673,321 6,861,762 2,666,942 6,885,267 available-for-sale Changes in working capital: (87,075,171) (57,046,399) (87,075,171) (57,046,399) Loans and advances to customers Loans to (from) group companies (2,958,944) 2,426,070 (2,958,944) 2,426,070 Financial assets (157,880,928) (80,988,257) (157,880,928) (80,988,257) Financial liabilities 86,422,940 (11,419,490) 86,422,940 (11,419,490) Other assets 585,527 (53,695) 634,793 (40,802) Deposit and balances due to / (from) other (579,690) 302,289 (579,690) 302,289 financial Customer deposits 123,238,796 119,575,841 123,238,795 119,575,840
Other liabilities 2,023,829 15,185,210 2,115,021 15,017,335 8,613,144 37,099,300 8,661,527 36,866,200 31. Tax paid
Balance at beginning of the year 5,754 (543,092) 6,258 (542,218) Current tax for the year recognised in profit (9,913,849) (10,238,053) (9,888,087) (10,207,919) or loss
Balance at end of the year (551,139) (5,754) (555,875) (6,258)
(10,786,899) (10,437,704) (10,756,395) 32. Capital commitments
Outstanding capital commitments as at December 31, 2013 were Ush. 65 million (2012: Ush. Nil).
Off balance sheet financial instruments, contingent liabilities and commitments In common practice with banking business, the bank conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations from third parties. At the year end, the contingencies were as follows: Contingent liabilities Acceptance and letters of credit 21,031,217 38,093,222 21,031,217 38,093,222 Letters of guarantees and performance bonds 80,837,838 24,070,541 80,837,838 24,070,541 101,869,055 62,163,763 101,869,055 62,163,763 Commitments Undrawn formal stand-by facilities, credit 11,856,332 9,565,065 11,856,332 9,565,065 lines and other commitments to lend 113,725,387 71,728,828 113,725,387 71,728,828
Contingent liabilities are secured by both cash and property collaterals.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 67 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS 34. Contingent liabilities
Note 1: The above assessment was related to Valued Added Tax (VAT) on financial services which URA has interpreted as “management services”. As this was not a liability of the bank (but of the provider of service), it has been adjusted.
Note 2: The NSSF Department, in its audit during the year 2012 has raised demand of Ush. 1,307.26 million being the NSSF contribution for expatriate employees of the bank. The claim has been disputed by the bank and representation has been made to the Ministry for waiver of the same as expatriate officers of the bank are employees of parent bank i.e. Bank of Baroda India and are covered under a similar social security scheme operational in India with the parent bank.
The directors are not aware of any other contingent liabilities, existing on the date of balance sheet.
The bank is severally liable for the liabilities of its subsidiary. The subsidiary is profitable and is currently able to meet all of it present obligations.
35. Related parties
Holding company Bank of Baroda Limited, India Subsidiaries Refer to note 18 Related parties
Directors involved in key management Bank of Baroda, Brussels Mr. Dhizaala S. Moses
On placements (384,498) (300,177) (384,498) (300,177) On borrowings 17,953 4,916 17,953 4,916
Director’s remuneration & benefits 227,994 386,523 227,994 386,523
Bank of Baroda, Mumbai 3,334,648 2,685,000 3,334,648 2,685,000
36. Assets pledged as Security
As at December 31, 2013, bank has pledged treasury bill of 91 days of amounting to Ush. 1,868,600,000 with Bank of Uganda (2012: Ush. 2,680,200,000).
37. Country of incorporation
The bank is incorporated in Uganda under the Companies Act 2012 and has been licensed under the Financial Institutions Act 2004 to conduct business of commercial banking.
38. Events after the reporting period
The management of the bank is not aware of any events after the reporting period; which may have a significant impact on the operational existance or on the financial performance of the bank for the period.
68 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Notes to Financial Statements Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS 39. Ultimate parent bank
The ultimate parent bank is Bank of Baroda Limited, a Public Sector Bank, a bank incorporated in India.
40. Currency
The financial statements are presented in Uganda Shillings rounded to the nearest thousand (Ush ‘000). 41. Earnings per share
Net income/loss for the period 30,883,726 29,471,732 Number of ordinary shares outstanding during the year (‘000) 2,500,000 1,000,000 Basic earnings per share (Ush) (rounded to nearest shilling) 12.35 29.47 Diluted earnings per share (rounded to nearest shilling) 12.35 29.47 There were no potentially dilutive shares outstanding at December 31, 2013 (2012: Nil)
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 69 Annual Report 2013 Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
Break up of Risk Weighted Assets ( Ush in ‘000’)
Particulars 31.12.2013 31.12.2012 31.12.2013 31.12.2012
Weight Capital Amount Amount Capital Requirement (%) Requirement
Notes, Coins, Cash and other cash assets 8,183,175 11,828,005 - - 0%
Balances with Bank of Uganda 35,390,662 39,042,518 - - 0%
Placement with Bank of Uganda 142,300,000 - - - 0% Dues from other Commercial Banks in 40,875,000 60,209,500 8,175,000 12,041,900 Uganda 20%
Dues from Banks outside Uganda 12,735,124 34,379,049 12,735,124 34,379,049 100%
Dues from Banks outside Uganda 26,958,347 - 5,391,669 - 20%
Uganda Government Securities 232,082,019 199,513,541 - - 0%
Bank of Uganda Schemes - - - - 0%
Advances & Discounts ( Excluding loans 406,466,517 322,639,177 100% 406,466,517 322,639,177 secured by 100% cash margin)
Outstanding Bal fully secured by FDR/SDR 29,093,400 24,849,923 - - 0%
Equity Investment in Subsidiary 40,000 40,000 - - 0%
Bank Premises and other Fixed Assets 11,033,085 12,090,843 11,033,085 12,090,843 100%
Items in transit, own offices (Net) - - - - 100%
Other Assets 2,847,849 2,933,024 2,847,849 2,933,024 100%
Deferred Tax 261,842 0% - -
Sub Total 948,267,020 707,525,580 446,649,244 384,083,993
Contingent Claims
Contingents secured by cash collateral 14,397,011 3,253,427 - - 0% Direct Credit substitutes (guarantees & 15,970,897 18,805,955 15,970,897 18,805,955 acceptances) 100%
Direct Credit substitutes (Multilateral Banks) 40,507,614 - 20% 8,101,523
Transaction related ( performance bonds & 12,963,058 4,601,988 50% 6,481,529 2,300,994 standbys)
Documentary Credits (trade related & self 18,030,475 35,502,393 20% 3,606,095 7,100,479 liquidating)
Other Commitments ( unused formal 11,856,332 9,565,065 50% facilities) 5,928,166 4,782,533
Sub Total 113,725,387 71,728,828 40,088,210 32,989,960
TOTAL 486,737,454 417,073,953
70 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Proxy Form Annual Report 2013
Bank of Baroda (Uganda) Ltd. PROXY FORM
I /We...... of...... being (a) member (s) of the above named company, hereby appoint...... as proxy to vote for me/us and on my / our behalf at the 44th Annual General Meeting of the Company, to be held on the 21st June 2014 and at every adjournment thereof.
As witness my / our hand(s) this...... day of ...... 2014.
Share Certificate No......
...... Signature(s)
NOTE: This form should be deposited with Company Secretary of the Bank within not later than 48 hours before the time of the meeting.
Bank of Baroda (Uganda) Ltd.
ADMISSION FORM
The Shareholders or his / her proxy must produce this admission form in order to obtain admission to the Annual General Meeting.
Shareholders or their proxies are requested to sign the admission form before attending the meeting.
Signature of person attending :......
Shareholder Certificate Number:......
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 71 Annual Report 2013
72 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 Annual Report 2013
Cake cutting ceremony. During Diamond Jubilee Celebration by Bank to mark successful completion of 60 years of operation in Uganda. Seen in picture: Mr. Rajesh Kumar (extreme left), Asst. General Manager, Bank of Baroda (U) Ltd, Mr. R.K Bansal (second from left), Chief General Manager, Bank of Baroda- India and Director- BoB(U) Ltd, Mr. Rama Makuza (center), Chairman, Bank of Baroda (U) Ltd and Mr. B.S Dhaka (second from right), Managing Director, Bank of Baroda (U) Ltd. with local staff members.
Annual Report and Financial Statements for the year ended December 31, 2013 Continual Focus on Customer Satisfaction 73 Outside view of Jinja Branch CMYK SP Orange 29.7 x 21cm
Annual Report 2013
KOLOLO BRANCH
INDUSTRIAL AREA KAMPALA BRANCH 18, Kampala Road, Kampala 2/2B, Kampala Road, Kampala P.O. Box 73446 Clock Tower, Kampala Plot 37,39,41 & 43 Kibira Road, Kampala Tel: 0414-237545 Plot No. 70/378, Plot No. 35/36, Gaba Road, Kansanga, Shree Hari Complex, Kawempe Plot 59-67, Jinja Road, Mukono
Plot 2, Aputi Road, Lira
16A/B, Iganga Road, Jinja 84A & 84B, Main Street, Iganga Baroda House, 3, Pallisa Road, KOLOLO BRANCH Mbale. Plot 31 Kira Road Kampala Tel: 0414-532227 KABALE BRANCH ENTEBBE BRANCH Plot No. 94, P.O. Box 1137, Plot 24, Gower's Road. 11, Masaka Road, Mbarara Kabale (Uganda) P B No 723 Entebbe Uganda Tel: 0486-422087 Tel: 0414-323155
Offsite ATM’s at: OASIS MALL, KAMPALA, MAZIMA MALL IN KABALAGALA NJERU INDUSTRIAL AREA JINJA SHORTLY WILL OPERATIONALISE Offsite ATM’s at: LUGAZI
HEAD OFFICE P.O. Box 7197, 18 - Kampala Road, Kampala | Tel: 0414-233680 / 1 E-mail: [email protected] Website: www.bankofbaroda.ug banking with passion (Regulated by Bank of Uganda) Serving the people of Uganda uninterruptedly since 1953
CMYK SP Orange 29.7 x 21cm
Annual Report 2013
KOLOLO BRANCH
INDUSTRIAL AREA KAMPALA BRANCH 18, Kampala Road, Kampala 2/2B, Kampala Road, Kampala P.O. Box 73446 Clock Tower, Kampala Plot 37,39,41 & 43 Kibira Road, Kampala Tel: 0414-237545 Plot No. 70/378, Plot No. 35/36, Gaba Road, Kansanga, Shree Hari Complex, Kawempe Plot 59-67, Jinja Road, Mukono
Plot 2, Aputi Road, Lira
16A/B, Iganga Road, Jinja 84A & 84B, Main Street, Iganga Baroda House, 3, Pallisa Road, KOLOLO BRANCH Mbale. Plot 31 Kira Road Kampala Tel: 0414-532227 KABALE BRANCH ENTEBBE BRANCH Plot No. 94, P.O. Box 1137, Plot 24, Gower's Road. 11, Masaka Road, Mbarara Kabale (Uganda) P B No 723 Entebbe Uganda Tel: 0486-422087 Tel: 0414-323155
Offsite ATM’s at: OASIS MALL, KAMPALA, MAZIMA MALL IN KABALAGALA NJERU INDUSTRIAL AREA JINJA SHORTLY WILL OPERATIONALISE Offsite ATM’s at: LUGAZI
HEAD OFFICE P.O. Box 7197, 18 - Kampala Road, Kampala | Tel: 0414-233680 / 1 E-mail: [email protected] Website: www.bankofbaroda.ug banking with passion (Regulated by Bank of Uganda) Serving the people of Uganda uninterruptedly since 1953
CMYK SP Orange 29.7 x 21cm
Annual Report 2013 Annual Report 2013
KOLOLO BRANCH
INDUSTRIAL AREA KAMPALA BRANCH 18, Kampala Road, Kampala 2/2B, Kampala Road, Kampala P.O. Box 73446 Clock Tower, Kampala Plot 37,39,41 & 43 Kibira Road, Kampala Tel: 0414-237545 Plot No. 70/378, Plot No. 35/36, Gaba Road, Kansanga, Shree Hari Complex, Kawempe Plot 59-67, Jinja Road, Mukono
Plot 2, Aputi Road, Lira
16A/B, Iganga Road, Jinja 84A & 84B, Main Street, Iganga Baroda House, 3, Pallisa Road, KOLOLO BRANCH Mbale. Plot 31 Kira Road Kampala Tel: 0414-532227 KABALE BRANCH ENTEBBE BRANCH Plot No. 94, P.O. Box 1137, Plot 24, Gower's Road. 11, Masaka Road, Mbarara Kabale (Uganda) P B No 723 Entebbe Uganda Tel: 0486-422087 Tel: 0414-323155
Offsite ATM’s at: OASIS MALL, KAMPALA, MAZIMA MALL IN KABALAGALA NJERU INDUSTRIAL AREA JINJA SHORTLY WILL OPERATIONALISE Offsite ATM’s at: LUGAZI
HEAD OFFICE P.O. Box 7197, 18 - Kampala Road, Kampala | Tel: 0414-233680 / 1 E-mail: [email protected] Website: www.bankofbaroda.ug banking with passion 74 Continual Focus on Customer Satisfaction Annual Report and Financial Statements for the year ended December 31, 2013 (Regulated by Bank of Uganda) Serving the people of Uganda uninterruptedly since 1953
CMYK SP Orange 29.7 x 21cm
Annual Report 2013
KOLOLO BRANCH
INDUSTRIAL AREA KAMPALA BRANCH 18, Kampala Road, Kampala 2/2B, Kampala Road, Kampala P.O. Box 73446 Clock Tower, Kampala Plot 37,39,41 & 43 Kibira Road, Kampala Tel: 0414-237545 Plot No. 70/378, Plot No. 35/36, Gaba Road, Kansanga, Shree Hari Complex, Kawempe Plot 59-67, Jinja Road, Mukono
Plot 2, Aputi Road, Lira
16A/B, Iganga Road, Jinja 84A & 84B, Main Street, Iganga Baroda House, 3, Pallisa Road, KOLOLO BRANCH Mbale. Plot 31 Kira Road Kampala Tel: 0414-532227 KABALE BRANCH ENTEBBE BRANCH Plot No. 94, P.O. Box 1137, Plot 24, Gower's Road. 11, Masaka Road, Mbarara Kabale (Uganda) P B No 723 Entebbe Uganda Tel: 0486-422087 Tel: 0414-323155
Offsite ATM’s at: OASIS MALL, KAMPALA, MAZIMA MALL IN KABALAGALA NJERU INDUSTRIAL AREA JINJA SHORTLY WILL OPERATIONALISE Offsite ATM’s at: LUGAZI
HEAD OFFICE P.O. Box 7197, 18 - Kampala Road, Kampala | Tel: 0414-233680 / 1 E-mail: [email protected] Website: www.bankofbaroda.ug banking with passion (Regulated by Bank of Uganda) Serving the people of Uganda uninterruptedly since 1953
CMYK SP Orange 29.7 x 21cm
Annual Report 2013
KOLOLO BRANCH
INDUSTRIAL AREA KAMPALA BRANCH 18, Kampala Road, Kampala 2/2B, Kampala Road, Kampala P.O. Box 73446 Clock Tower, Kampala Plot 37,39,41 & 43 Kibira Road, Kampala Tel: 0414-237545 Plot No. 70/378, Plot No. 35/36, Gaba Road, Kansanga, Shree Hari Complex, Kawempe Plot 59-67, Jinja Road, Mukono
Plot 2, Aputi Road, Lira
16A/B, Iganga Road, Jinja 84A & 84B, Main Street, Iganga Baroda House, 3, Pallisa Road, KOLOLO BRANCH Mbale. Plot 31 Kira Road Kampala Tel: 0414-532227 KABALE BRANCH ENTEBBE BRANCH Plot No. 94, P.O. Box 1137, Plot 24, Gower's Road. 11, Masaka Road, Mbarara Kabale (Uganda) P B No 723 Entebbe Uganda Tel: 0486-422087 Tel: 0414-323155
Offsite ATM’s at: OASIS MALL, KAMPALA, MAZIMA MALL IN KABALAGALA NJERU INDUSTRIAL AREA JINJA SHORTLY WILL OPERATIONALISE Offsite ATM’s at: LUGAZI
HEAD OFFICE P.O. Box 7197, 18 - Kampala Road, Kampala | Tel: 0414-233680 / 1 banking with passion E-mail: [email protected] Website: www.bankofbaroda.ug (Regulated by Bank of Uganda) Serving the people of Uganda uninterruptedly since 1953