1 Standard Chartered Bank Ghana Annual Report 2011

Standard » Leading the way Chartered H in Ghana Here for good www.standardchartered.com/gh About us

Standard Chartered Ghana Consumer Banking Wholesale Banking

We are headquartered in Accra and have Helps meet the evolving financial needs of Helps corporate and institutional clients operated for over 115 years in the country's Private, Small and Medium-sized Enterprises facilitate trade and finance across the world's dynamic economic segments, leading the (SMEs), Priority, Preferred and Personal fastest-growing markets, leveraging our way in Ghana. Our income and profit streams banking customers across our franchise. Our solutions and a delivery footprint spanning are highly diversified, maximising returns to customer-focused and sen/ice approach our network. We are at the heart of our shareholders. enables our staff to offer solutions from an international trade flows, offering the innovative range of products and services to knowledge of a local bank with the For more information on the Bank's build stronger relationships with our capabilities of an international financial performance, go to page 12. customers. institution.

For more information on Consumer Banking, go to For more information on Wholesale Banking, go to page 14. page 16.

Operational Highlights in;

• Record operating profit of GH$114m, • A highly liquid, well diversified balance up by 12.3% from 2010. sheet.

• Overall balance sheet registered an • 93% of employees completed anti- impressive 18% growth to bribery e-Learning GH

What's inside this report

Country overview About us 2 Performance highlights 3 Our approach 5 Notice and Agenda 7 5 year Financial Summary

8 Chairman's statement Operating and Financial review 11 O 10 CEO's review 3 "D ID CD 12 CFO's statement 3 £ 01 D" ~ Q- 20 People < 22 Sustainability 26 Risk review

Corporate governance 29 Corporate Information r O 30 Board of Directors o •o 32 Senior Management o 34 Report of the Directors

Financial statements and Notes 36 Statement of comprehensive Income 37 Statement of financial position 38 Statement of changes in equity 39 Consolidated statement of changes in equity 40 Statement of cash flows 41 Notes to the financial statements

83 Proxy form 2 Standard Chartered Bank Ghana Annual Report 2011

Performance highlights Strong foundations, consistent growth

Financial highlights:

Operating Income Normalised return on equity Profit Before Tax

GH$218m

GH$114m GH$102m GH

36%

2009 2010 2011 2009 2010 2011 2009 2010 2011

Normalised Earnings Dividend per share Total Assets per share

GH

2009 2010 2011 2009 2010 2011 2009 2010 2011

Non-Financial highlights:

Employees Nationalities Branches 942 10 21 2010:986 2009:800 2010:11 2009:12 2010:21 2009:21 3 Standard Chartered Bank Ghana Annual Report 2011 Our approach A strong One Bank culture

Our strategic intent Our brand promise To be the world's best International bank, Here for good, our brand promise, Is a simple phrase leading the way In Asia, Africa and the Middle East. with multiple meanings. We describe Here for good In the following manner. To be here for people - reflects our belief In developing long-term and deep relationships with our customers and clients, and with each other. To be here for progress - captures our belief In doing the right thing, In being a force for good, In making a positive contribution to the economies and societies In which we operate. To be here for the long run - attests to our financial performance, longevity and history.

How we deliver Our strategic pillars

1. Clear geographic focus 2. Scale positions in 3. One Bank with two 4. Customer and client on Asia, Africa and the significant segments in strong businesses actively relationships, rather than Middle East Ghana reinforcing each other a product driven approach

We have an unequivocal We believe in combining We operate as One Bank We focus our capabilities focus on this steadily global capabilities with local with two major businesses, around customer and client growing economy in which scale. This is becoming an Wholesale Banking and needs, rather than seeking we have, or can achieve, ever-stronger competitive Consumer Banking, working a rapid return on products a clear competitive imperative in our markets. effectively together. or building product silos. advantage supported by We want to be considered superior insight and deep important to the banking local relationships. system in this market.

5. Distinctive culture 6. Conservative and 7. Organic growth the and values disciplined on risk, primary driver for our capital and liquidity strategy and value creation ii

Our unique culture and We regard balance sheet We believe that organic values are a source of strength as a cornerstone of growth drives the greatest significant advantage. our strategy, to build a value creation for our They reassure customers sustainable business and to shareholders. Where we and clients in a market create confidence with our cannot grow organically where trust and ethics customers and clients we explore acquisitions that have re-emerged as critical, through our ability to reinforce our core strategy. underpinning our One Bank continue lending in times of approach, attracting talent to scarce liquidity. the Bank, and strengthening our relationships with stakeholders, such as regulators and governments. Standard C# Chartered

Can a bank balance its ambition with its conscience?

We're working harder to create a brighter future for you. Our global guiding principles and ethical banking practices influence everything we do, from the customers we work with to the businesses we finance. By pursuing initiatives such as sustainable ventures, responsible forestry management and safer workplace conditions we're making a real difference to communities and the environment. Because as important as it is to deliver results, delivering them with a conscience matters more. Here for progress Here for good

standardchartered.com 5 Standard Chartered Bank Ghana Annual Report 2011

Notice and Agenda

Notice is hereby given that the Annual General Meeting of Standard Chartered Bank Ghana Limited will be held at the National Theatre, opposite the Efua Sutherland Children's Park, Accra on Wednesday, April 25,2012 at 11.00am for the ordinary business of the Company.

Agenda

1. To receive the reports of the directors and auditors, the balance sheet as of 3181 December, 2011 together with the profit and loss and income surplus accounts for the year ended on that date.

2. To declare a dividend.

3. To approve d i rectors' remuneration.

4. To approve the remuneration of the auditors

5. To appoint new auditors

A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not be a member.

A form of proxy is attached.

Dated the 10th day of February, 2012 BY ORDER OF THE BOARD hi Z^r I Dawn Kwesi Zaney (Board Secretary) Standard ^ Chartered

Can an international bank understand its local markets?

Your culture and beliefs matter to us. For 150 years, we've immersed ourselves in the countries where we do business. We have drawn on this experience to bring you world-class products and services that meet your individual needs. And we are helping hundreds and thousands of people buy their own home across Asia, Africa and the Middle East. We're an international bank that's truly at home in the world's most diverse markets. Here for people Here for good

standardchartered.com 7 Standard Chartered Bank Ghana Annual Report 2011

5 year Financial Performance

2007 2008 2009 2010 2011 GH0'OOO GH0'OOO GH^'000 GH^'OOO GH^'OOO

Interest income 94,866 110,402 155,492 213,941 195,775 Interest expense (30,727) (34,134) (36,073) (61,193) (45,372)

Net interest income 64,139 76,268 119,419 152,748 150,403

Commissions and fees 19,125 22,765 37,192 42,360 32,103 Other operating income 9,468 18,082 25,889 22,917 34,833

Net Revenue 92,732 117,115 182,500 218,025 217,339

Total operating expenses (47,770) (71,568) (83,712) (102,936) (93,454) Impairment loss (1,794) (1,707) (15,074) (13,576) (9,847) Operating Profit 43,168 43,840 83,714 101,513 114,038

Other income 6 • - - -

Profit before taxation 43,174 43,840 83,714 101,513 114,038 Taxation (10,136) (10,653) (26,217) (29,305) (36,362)

Profit after taxation 33,038 33,187 57,497 72,208 77,676 Transfer to Statutory and Other Reserves (6,098) (4,413) (14,231) (47,668) (17,288)

Retained Profit 26,940 28,774 43,266 24,540 60,388

Shareholders' Equity 88,394 89,461 159,578 195,981 232,576 Total Assets 773,737 984,944 1,404,213 1,667,882 1,971,062 Total Deposits 534,840 742,290 833,084 1,092,442 1,479,687 Loans & Advances 287,069 460,338 408,538 467,152 596,724

GH0 GH0 GH0 GH0 Earnings per share 1.88 1.89 2.99 3.64 3.97 Proposed Final Dividend per share 1.45 1.50 2.47 1.27 3.05 Return on Assets (PAT/Total Assets) 4% 3% 4% 4% 4% Return on Equity (PAT/Equity) 37% 37% 36% 37% 33% Capital Adequacy Ratio 17% 12% 22% 16% 17% Cost/Income Ratio 52% 61% 46% 47% 43% 8 Standard Chartered Bank Ghana Annual Report 2011

Chairman's statement Delivering consistent value

It affords me great pleasure to report a third consecutive year of excellent income and profits for the Bank. The bank Ishmael Yamson solidified its recent trend of exceptional results with a robust Chairman performance in 2011. We continued to use the power of our brand to establish new relationships and deepen existing ones for the long term in both the Wholesale and Retail Bank space. We have the right leadership in place to deliver consistent value for our stakeholders.

• Overall balance sheet registered an impressive 18 per cent growth to GH(fc1,971 m. • Profit before tax rose 12.3 per cent to GH(tl 14million • Normalised earnings per share grow 9 per cent to GH$ 3.97

Following this outstanding performance the Board is recommending a final dividend of GH(fc3.05 per share, which will take our total annual dividend up by 140 per cent from GH(fcl.27 per share in 2010.

Our dual strategy of establishing new relationships and deepening existing ones and the creation of a well balanced and diversified business should allow us to take advantage of future growth opportunities in Ghana. "Standard Chartered is very clearly During 2011, Ghana experienced its first full year of the impact of different from most other banks. Our oil production on GDP, making it one of the fastest growing performance has shown that we economies in the world with an annual GDP growth of 13.4 per are in the right segments, with the cent. Save some volatility in the foreign exchange market at the beginning of 2011 as well as during the latter part of the same year, right strategy, and have the right the Ghanaian economy experienced relative macroeconomic leadership in place to deliver stability during the year with sustained single digit inflation and consistent value for our declining interest rates. shareholders." Politically, Ghana remained democratic and stable, underpinned by the rule of law and freedom of speech and a free media. We look forward to a successful Presidential and Parliamentary elections in December this year.

The local banking front was dominated by the efforts by banks to Basic earnings per share meet the new minimal capital requirements announced by Bank of Ghana as well as strident calls for Banks to reduce the lending rates in the economy. Our approach at Standard Chartered Bank was to lead the way by being among the first banks to meet the new capital requirement in 2009. We also reaffirmed our market GH03.97 leadership by being the first to announce a significant reduction in lending rates last August.

2010: GH(t 3.64 I 2009: GH0 2.99 The conjunction of severe margin decline, increased competition, tighter credit standards and tighter regulations created considerable headwinds for our business during 2011. These strong headwinds had a big impact on income growth but this was countered with very Dividend per share robust discipline on cost management. This has enabled the Bank to maintain a balance between achieving profit growth, re-investing in the business and generating strong returns to our shareholders.

As Ghana's economic fortunes continued to improve, our well GH$3.05 capitalized and liquid balance sheet enabled us to remain focused on providing product innovation and diversification in a market with a burgeoning middle class. Going Forward we will continue to 2010: GH(t 1.27 I 2009: GH(t 2.47 combine our strong local heritage with our global reach to enable us grow our strategic and value-added businesses as a complement to our existing core transactional capabilities.

The Board continued to exercise effective governance oversight responsibility through reports from two of its sub committees 9 Standard Chartered Bank Ghana Annual Report 2011

namely the Audit and Risk Committees. These two committees While 2011 was a very challenging year, we are confident that the chaired by Independent Directors, reviewed on quarterly basis, right decisions were taken to safeguard the long term interest of the reports Issued by Internal and external bodies which review the Bank in a rapidly changing business environment. The key to operations of the bank. The Directors also monitored compliance Standard Chartered Ghana's long-term success is our clear and with critical regulatory requirements, risk exposure and appetite consistent strategy to be the best international bank, leading the levels of the two main businesses of the bank. way in Ghana. This focus enabled us to remain resilient and more often, ahead of our competitors in a very competitive industry. Our The Board on April 21, 2011 accepted the resignation of Mr. commitment to sustainability, thought leadership in Ghana, a very Frederick William Lee, former Regional Head, Global Markets strong emphasis on values, principles and ethics as well as our Africa and a Non-Executive Director of the Bank. Mr. Lee had been powerful brand promise, Here for good tells the full story of who we assigned new responsibilities in Asia. His contribution to the great are. change the Bank has experienced over the years is without question and his dedication and commitment will be missed. Together with the staff of the Bank and all other stakeholders your We are proud to announce our intention to appoint Mr. Anil Dua, Bank will continue to grow from strength to strength and deliver Area Chief Executive Officer, West Africa, as his replacement on sustainable value to all our stakeholders. the Board. Mr. Anil Dua has held various positions within Standard Chartered Bank including Regional Head, Origination & Client Coverage, Africa, Head of Structured Trade Finance for Africa, Executive Director, Corporate Banking in Botswana and Global Head, Project & Export Finance & Structured Trade Finance. I have the utmost confidence that Mr. Dua will bring his immense experience and expertise to bear on the board as we continue to make great strides and consolidate our position in the country. The Ishmael Yamson Board is also currently working on other additional appointments to Chairman strengthen the independent component of its composition. 27 February 2012 10 Standard Chartered Bank Ghana Annual Report 2011

Chief Executive's review Exciting growth opportunities

It Is my privilege once more to present a summary of the Bank's Kweku Bedu-Addo activities during 2011 to shareholders. The year 2011 has certainly been one of the most tumultuous in recent memory. Chief Executive The global economy continued to gyrate with no end in sight of the prevailing uncertainty coming from the Euro zone debt crisis, entrenched partisanship In the US Congress, the continued deleveraging by both the public sector and households in the West and economic slowdown in the East.

Back home in Ghana, we observed an economic trend that could be interpreted as almost contrary to the rest of Ghana's peers on the African continent. We experienced a generally stable macroeconomic environment with sustained single digit inflation, declining interest rates and a relatively stable currency with the exception of three significant cedi depreciation events which occurred at the beginning, middle and towards the end of the year.

With the improvement in market conditions, Standard Chartered Bank led the way, in the Banking industry in Ghana by being the first Bank to announce a significant drop in base lending rates from 22.5 per cent p.a. to 16.95 per cent p.a. This reduction was not only attributed to improvement in market conditions, but also a reflection i of the operating efficiency of the Bank. Our operating efficiency made it possible to pass on benefits to our clients through interest rate K i am both excited and confident that reduction. despite a challenging and uncertain global The Consumer Bank repositioning strategy is well underway with a environment and a sometimes 55 per cent growth in the asset book in 2011 relative to 2010. It also unpredictable and volatile local economy, grew its liabilities by 25 per cent. The asset growth, combined with careful adoption of credit standards means that our retail business is the Bank is very well positioned to on a stronger and sustainable growth path. The launch of SCB Way continue lifting our performance in 2012 in Ghana during 2011 introduces fundamental changes in our approach to retail banking. We are beginning to see the benefits of and beyond." this new approach.

The Wholesale Bank made great progress in 2011 in aligning the Bank with some emerging sectors and new entrants onto the Ghanaian market. At the same time it continued to focus on deepening existing relationships by offering innovative and value adding products to clients. The Wholesale Bank grew its assets by 30 per cent during 2011 while it remained flat on liabilities.

In a year in which the business was confronted by formidable challenges in its operating environment, the overall performance demonstrates the Bank's strength and its resilience in the face of challenges and as the Chief Executive, I am proud of the team that I work with everyday to make this possible. I must also commend the Board for their strong oversight and support to Management in the discharge of their duties.

Sustainability During 2011, the Bank launched the "Removing Barriers to Quality Eye care in Ghana" (RB2QE) Project in Accra. Through this initiative, 21 eye care centres in existing hospitals across 6 out of Ghana's 10 regions will become models of functioning, integrated, replicable and sustainable eye care services. Donations have already been made to hospitals in Achimota, Weija, Woarara, Apam, Twifo Praso, Juaben Mampong, Nyinanhin, Ejura, Amasaman, Nkwanta, Manhyia Gambaga, Wale Wale, Gushegu, Bongo, Pantang and Dodowa Hospital. It is significant to note that these projects represent a total investment of over US$2.2million on eye care in Ghana and by the end of 2014; we expect that roughly 6 million people across Ghana 11 Standard Chartered Bank Ghana Annual Report 2011

As a Bank we take a long term view of our actions and are committed to meeting the needs of the communities in which we live and work.

would have benefitted directly from our sponsorship of eye care in We are very much committed to achieving double digit income the country. growth, keeping a firm control on cost growth and an improvement in the EPS for 2012 relative to 2011. It is important also that we take Here for good note of the impact of a host of factors that are beginning to exert Here for good is our promise of commitment to our employees, our influence on the banking industry, globally. These factors include markets, our customers and clients, our regulators and our new regulations, technology, the level of loan impairments and the communities. It is who we are at our best and what each and every speed with which recoveries can be made and of course employee of Standard Chartered Bank Ghana, must live up to performance of both the domestic economy and the global markets. everyday, in our decisions and in our actions. Despite these factors which can present considerable headwinds to During 2011, we placed a strong focus on Service. We launched a the business momentum, we are confident that the Bank is well service behaviour training module and arranged service behaviour positioned to deliver yet another year of superior performance and training for more than 700 of our employees. Ultimately, we are of returns to shareholders. the firm conviction that sustained focus on improving our service delivery will play a key role in the sustained high performance of the Bank. Let me assure you that we are closely monitoring all the key indicators that measure customer satisfaction from the quality of our services. We are greatly encouraged by the trend we are observing /H as it confirms that our strategy is making an impact on our sen/ice J. Kweku Bedu-Addo delivery. Still on treatment of clients and customers, I have already indicated that Standard Chartered Bank was the first bank in Ghana Chief Executive to implement a drastic rate reduction in Ghana last year. These 27 February 2012 measures should send strong signals on our commitment to overall service delivery.

Management Changes In the last year, we have made several key appointments to our Management team. A new Head of Human Resources, Rosie Ebe- Arthur was appointed to replace Lucy Kimani, who has since returned to her native Kenya. In line with the Standard Chartered Bank Group's decision to separate Compliance and Audit functions into independent units, Joan Essel-Appiah was appointed as Head of Compliance, while Simon Burutu, has been appointed as the new Country Chief Risk Officer to replace Bubah Janneh. We thank Henry Dodoo-Amoo, Country Chief Risk Officer for West & Central Africa, who held the fort pending Simon's arrival in Ghana. Finally, Mansa Nettey was appointed the new Head of Global Markets, Ghana, to replace Mayokun Ajibade.

Challenges and prospects for 2012 The uncertainty in the global economy continues unabated. Several regions in the world continue to experience low growth accompanied by deep structural policy dilemmas. We are beginning to see cracks in the economic alliances and groupings of yesteryears with more strident demands by some political leaders for protective economic policies.

Ghana's resolve to march towards social, political and economic progress will be tested once more during the 2012 general elections scheduled for December, 2012. It remains our fervent hope that once again, the collective will for peace and stability which unifies the country will far outweigh the political and ideological leanings and that Ghana will once more emerge as a beacon of hope, political maturity and progress for Africa. In the short run, the economy may encounter some challenges which could affect interest rates and the exchange rate stability. However as a Bank, we take a long term view of Ghana and strongly believe in its resilience. We will continue to remain close to our clients and our customers, putting our capital and expertise behind their ideas. We will also continue to identify and support new and emerging opportunities in the country and continue to invest in our people, our infrastructure and our systems. Our franchise remains in good shape with a robust risk management culture, well capitalized and in a strong liquidity position. 12 Standard Chartered Bank Ghana Annual Report 2011

Standard Chartered Ghana in 2011 Consistent performance and disciplined execution

Our highlights and achievements in 2011 Sanjay Rughani Executive Director, Finance • Consistent performance as evidenced by four successive years of record profit

• Effectively managed inherent risk in the industry and have consistently been able to strengthen our foundation for efficient and sustainable growth within our strategic segments in the market

• Resilient and well diversified income growth for most product and client segments, with both businesses exhibiting good momentum

• Disciplined management of costs whilst continuing to invest in business to underpin future growth opportunities

'The Bank has delivered another record • A robust risk management process with lower impairment charge as we continue to support performance in 2011, as we continue to our clients in a volatile global environment while focus on the basics of banking. We ensuring credit quality is not compromised remain true to our strategy, managing a well diversified, strongly capitalised and • Strong capital position, with a Capital adequacy liquid balance sheet, and will continue to ratio of 16.68 percent invest". • Very strong, conservative balance sheet, with a highly liquid and stable mix of deposits, an advances-to-deposits ratio of above 40 per cent well positioned to cater for future expansion as the Ghanaian economy continues to grow Key Performance Our priories in 2012

Operating Income • We will continue to be disciplined in the execution of our strategy, focused on the fundamentals of our business and on segments GH$ 217m that have good growth prospects 2010:GH<£ 218m • Costs will continue to be tightly managed and investment deployed to ensure alignment with growth

Profit before taxation • We will continue to proactively manage balance sheet and remain committed to capital and GH$114m liquidity strength 2010:GH

ream

years of saving

excited family

The greatest gift we can all give our children is a good education and a solid foundation for the future. That is why Standard Chartered Bank is here, to help you lay that strong foundation with a "My Dream Account". Open a savings account for your children today and watch their savings for the future grow.

Speak to us today on 0302 740100 or visit our website for more details.

standardchartered.com/gh 14 Standard Chartered Bank Ghana Annual Report 2011

Consumer Banking Here for customers

Our Strategy

• Differentiated country business models with Andrew Okai a focus on high value segments Executive Director, Consumer Banking • Distinctive customer focused value propositions • Back to basics focus on cost, risk management and liquidity Our 2012 Priorities

Continuously driving revenue growth with better acquisition and attrition management Fundamentally transform sen/ice culture Roll out New Products and Capabilities with New Revenue Streams Deliver distribution network expansion to enhance customer experience "Our strategy continues to deliver. We see opportunities Continue to enhance risk culture, maintain cost for continued asset and liability growth as well as further addition to our world class product suite and distribution discipline and performance management to meet the ever evolving needs of our customers. We will focus on our key segments staying true to the pillars of our business model and basics of banking" Our Strategy continues to deliver Consumer banking delivered strong results in a challenging and increasingly competitive environment, giving further credence to our strategy of being a truly customer focused bank. The first phase of our transformation journey show positive results. Income grew by Sper cent to over GH$82m.

Our balance sheet remained well positioned to sustain further Key Performance expansion in the business in 2012 with a healthy double digit growth in both assets and liabilities. Liabilities increased by 25 per cent while assets increased by 55 per cent. Our disciplined approach to Operating Income risk management resulted in a very significant drop in operational losses by 85 per cent, positively impacting overall financial performance. We finished the year with positive relative performance against our targets and achieved strong improvement in customer metrics We see significant room for growth in the GH$82m industry and we will continue to invest in order to strengthen future income momentum. 2010:GH

Keychangesin2011 • Launch of SCB'Airtel1 Money

• Brought together our high value segments to accelerate growth

with our Priority customers as part of efforts to establish and Performance in 2011 maintain leadership In the High Value Segment through a series of Consumer banking continued to execute a strategic repositioning of engagements Including a networking cocktail reception at which we its business during 2011. Operating income increased by 3 per cent provided a preview of our refreshed Wealth Management suite. to GH$82m. Our non-funded income grew by an impressive Once fully launched, our proposition will further demonstrate and increase of 31 per cent over the previous year. Cost increased by 4 cement our leadership in this product category. per cent to GH$47m. Our operating profit was therefore higher at GH(t 29m an increase of 7 per cent over 2010. As part of our focus on providing transactional convenience to our customers, we aggressively promoted our debit card offering Our SME business has responded positively to the portfolio resulting in an increase in card transactions. Our unique full suite restructuring in 2010. Income from SME was slightly above the debit card propostion remains unmatched in the industry. performance last year. SME remains an engine for growth. Despite Our distinctive Personal Loan value proposition enabled relationship the growth in volumes, the pressure on margins reduced income based pricing to meet the evolving personal financing needs of our from our Consumer Transaction Banking business. This was customers resulting in record disbursals and awards. however offset by increased revenues from improved performance of the Wealth management business mainly on the back of Our first call resolution rate was 100 per cent giving further credence Bancassurance and value-added treasury products as customers to our commitment to deliver superior service. We increased the looked for alternative ways to invest for the future in the last quarter. number of products sold per customer significantly and also Personal loans performed impressively mainly driven by volume improved turnaround time for account opening and personal loan growth despite declining asset margins. Income increased by over products through re-engineering of processes. We implemented the 100 percent. provision of welcome packs to give our customers a seamless onboarding experience when they open an account relationship with Overall, the consumer banking business performed well and as we us. We also improved on our communication commitments to expand and modernize our network, we expect the trend to continue promptly advice customers on relevant updates. in 2012. We remain focused on our customer led strategy as it continues make impressive gains and remains a key element in Ultimately, meeting the needs of our customers and deepening delivering superior financial performance next year and beyond relationships with them will define success. Our customer charter and SCB way are the vehicles through which we deliver value to our Looking Ahead customers. Our strategy continues to deliver. We see opportunities for continued asset and liability growth as well as further addition to our Investing for sustainable growth. world class product suite and distribution to meet the ever evolving To accelerate the pace of our transformation we continued to needs of our customers. We will focus on our key segments staying improve on our distribution network. We expanded our alternate true to the pillars of our business model and basics of banking. 2012 channel functionalities to give around the clock basic banking will be an important year in our journey to transform. services to our customers thereby enhancing their experience with us. We actively migrated 50 per cent of our customers to electronic Our business is increasingly aligned to the needs of our customers statements. In 2012, we will look to continue this expansion and we are well positioned to navigate the challenges and programme with further investment in branches and ATMs at opportunities ahead. specified locations, bringing our services closer to our valued customers. This will enhance convenience and open up new opportunities for growth.

We continuously invested heavily in training for our staff to improve service and drive a culture of excellence across the bank. 16 Standard Chartered Bank Ghana Annual Report 2011

Wholesale Banking Committing our consistent support to clients

Ahmad Bilal Pirzadah Mansa Nettey Executive Director, Origination and Client Coverage Head, Global Markets

"Our overall strategy remains "In 2011 ,we continued to lead the way, unchanged. In line with the group's setting new standards for relationship collective agenda to help clients achieve excellence through, innovation and their ambitions, we continue to be client execution. We evolved our strategic led and solutions driven. Our client objectives further in order to be able to disposition also ensures that we provide support our clients; by focusing on solutions for managing the inherent risks product offerings that deliver solutions resulting from the turbulence which create real value for our clients." in the Global economy."

Key Performance

Operating Income GH$134m 2010:GH$136m 2009: GH0106m

Client income as a per cent of total income 60% 2010: 50% 17 Standard Chartered Bank Ghana Annual Report 2011

Keychanges in 2011

Core bank to more of our clients with record numbers of client relationships contributing higher income

Expanded our leadership in Financial Markets, Corporate Finance and Capital Markets by providing innovative solutions to support our clients'needs

Enhanced our foreign exchange and risk management solutions to cater to the need for clients to mitigate against the challenges and volatility Our Strategy Become the core bank to more of our clients Our Priorities in 2012 Remain committed to our business strategy Build scale and increase cross-border capabilities to better support our clients to achieve their ambitions Deepen our client relationships by increasing our offering of client solutions for key client segments Maintain our strong balance sheet to support our existing clients and guarantee the possibility for future growth Manage our costs, capital, risk and balance sheet to maximize our ability to support our clients

Strengthen our brand, people and diversity in culture to serve our clients better and outperform the competition

Strategy Driving continued performance improve the core base also provides us a firm launching pad for Wholesale Banking delivered another year of solid financial 2012. This has been achieved both by adding new high quality clients performance in 2011. Our disciplined approach in the execution of to our WB franchise and by deepening relationships with existing key our strategy to secure long-term shareholder value was the key driver clients in an effort to increase our penetration and overall share of of our success in 2011. This coupled with our dedication to deepen wallet. client relationships whilst at the same time delivering on the basics of banking has reinforced our position in the market as the premiere Our key segments saw solid performance in 2011. Income from our institution of choice. Global Corporate clients rose 28 per cent, led by demand for Corporate Finance solutions. Our Commodities and Local Corporate Our operating profit rose 14 per cent to GH$84.5m in 2011, resulting clients also increasingly rely on us for strategic solutions offered by in our ninth consecutive year of business growth for the Wholesale our Financial Markets, Corporate Finance and Capital Markets Bank. Income from our clients continues to be the key driver of our teams, resulting in client income growth. In 2011, Transaction business performance delivering 16 per cent year on year growth and banking delivered 21 per cent growth in income as a result of a accounting for 60 per cent of total Wholesale Banking income. Our strong Cash and Trade performance despite a significant reduction in Foreign exchange and risk management solutions business was interest rates. Securities Services completed its first full year with another key contributor to our success in 2011 delivering 63 per cent Standard Chartered Bank. This has been a particularly successful year on year growth for the franchise. Our passion for providing client acquisition for the Bank which ties in perfectly with our Transactional driven solutions was the linchpin of our success in 2011 and enabled Banking and Foreign Exchange expertise. The business registered us to introduce unique and often market leading solutions for our record volumes and is poised for further growth given the Bank's clients whilst at the same time expanding and deepening our core ability to attract portfolio investors to Ghana from across its network business of transactional banking. of clients, and the growth expected in the local industry on account of pension reforms. Client's performance drives our success We continue to broaden the Wholesale Banking product offering to Over the past decade, our disciplined approach to our strategy and the Ghanaian market. It has been our endeavor to replicate the more the fundamentals of banking have enabled us to overcome external sophisticated solutions offered across the Standard Chartered Group challenges and outperform the competition. We intend to continue in and tailor them to suit our local client's needs. Loan Syndications, this vein and place greater focus on building long-term strategic Debt and Capital Markets solutions, Commodity derivatives, Currency relationships with clients and gain greater share of mind. We value and Interest Rate Hedging, and Structured Trade Finance have highly this partnership and will continue to provide the most served to complement our existing Transaction Banking and innovative products tailored to the needs of our clients whilst Financial Markets capabilities and as a result has enhanced our maintaining the strength of our balance sheet to support funding product offerings to clients. Furthermore, through good quality needs. origination and client engagement, Wholesale Banking has successfully combined the local scale of our business with global In 2012 we expect the global economic environment to continue to expertise to address specific needs of our clients. This high degree of remain volatile given the continued uncertainty in the Euro market product innovation and cross sell resulted in a number of key deals and the relative slow down in some of the key developing nations. In especially in the Oil and Gas sector and in the Commodity Space Ghana, we expect the economy to continue its strong momentum and from cross listings on the Ghana Stock Exchange, strategic hedging we look forward to a broad based growth across industry, transactions to major syndications and capital market deals. A major manufacturing and agriculture. We expect this will spur the two example is the landmark US$ 2bn Cocobod syndication in which SCB critical elements of long term sustainable growth in the country, Local played a lead role in arranging the largest regional commodity related and Foreign Direct Investment, Our strategy of fostering deep and trade finance deal. long-term relationship with our clients in our target segments and growing our core business remains absolutely consistent. Growing from our foundation in commercial banking Attention to our core business of Commercial Banking - Lending, A continuing priority of the Wholesale Bank going into 2012 will be to Transaction Banking and related Foreign Exchange drove the diversify our revenue base and leverage our expertise in emerging fundamentals of our business in 2011, and the concerted effort to markets to deliver innovative solutions to our Ghanaian clients. Our 18 Standard Chartered Bank Ghana Annual Report 2011

151 years of experience in product innovation and roll outs across strong presence and track record in the most dynamic markets. In developing markets in Asia, Africa and the Middle East makes us Ghana, we will continue to cement our position as the market leaders ideally placed to play a leading role in Ghana given its current stage in our segments of choice, whilst demonstrating our full commitment of development and growth. We will continue to commit to and support to our employees, other stake holders, and particularly maintaining a structurally sound balance sheet and ensure the communities in which we operate. responsible management of risk is executed across the business.

This strategy has enabled us outperform our competitors in the industry and will remain the bedrock of our business model in 2012. Wholesale Banking is uniquely positioned to offer unparalleled business propositions to the most demanding and sought after Clients and we remain the only financial institution in Ghana with a

Managing Interest rate risk and mitigating Power generation and transmission is key to Derivatives that were flexible and affordable against volatility In the Global Economy the Ghanaian economy as it directly impacts to the client. More importantly it afforded the country's capacity for growth and them the ability to plan and forecast their development. In 2011 SCB provided a operations. This solution catered directly to Leading Power Services company in Ghana the clients needs and positively impacted not the ability to mitigate the risk of volatile only the client but the wider Ghanaian interest rates on their operations. The client population as a whole by enabling the client also had specific requirements and was to expand and improve its infrastructure. uncertain of the timings for drawdown. F TijMm Through the use of our extensive network, suite of products and innovative capabilities SCB was able to provide Interest Rate Standard W Chartered ^ Personal Loans Here for good

children with an endless playground

months to spread the payments

It's good to have the cash when you need it

That's why we offer you Personal Loans that put the things you want and need within reach.

• High loan amounts up to GHC54,000 • Extended repayment periods up to 60months • Competitive interest rates • Loan top-ups when you need additional cash • No security or collateral required • We can even come to you

Terms and Conditions apply.

To know more, call +233 302 740 100 or visit standardchartered.com/gh 20 Standard Chartered Bank Ghana Annual Report 2011

People Enabling the sustainable delivery of performance

Our approach Our highlights in 2011 We employ over 940 people, representing 10 nationalities, across our various businesses. We pride ourselves on being a truly diverse organization, combining an international footprint • We enhanced our distinctive culture by giving our with in-depth local understanding. Our sense of shared values employees practical guidance on our values thus helps us feel and behave as one bank across our business establishing an even closer link between values, functions. This unique culture is a strong competitive performance and reward advantage and enables us to deliver an equally strong performance. • We strengthened the transparent online system for managing individual performance by providing additional Growing our talent training and support to line managers in order to improve Our employer brand remains strong and attractive due to our sound their understanding and ownership of the system. financial performance and positioning and we have leveraged on this to attract the best talent in the market. We achieved a good mix • We provided training and development for our people of bringing in new talent whilst promoting talent from within. This managers through various leadership programmes enabled us to engage and retain our existing employees through including the Great Manager Programme stretching and fulfilling opportunities whilst attracting new talent from outside the bank by offering exciting opportunities in development • We improved our employer brand by embedding our and a compelling employer brand. Here for good brand promise in our recruitment tools thus attracting a high caliber of new recruits to the bank Our graduate programs continue to strengthen our future talent pipeline and 2011 saw the recruitment of 4 International Graduates and 2 Fast Track Graduates across Origination and Client Coverage Our Priorities in 2012 (O&CC) and Consumer Banking. • Continue to embed our brand promise, Here for good by Developing our leadership capabilities driving differentiation through our culture and values. In the last year, our leadership population has grown by 6.5% with 85% of new leaders recruited last year coming from within the Bank. • Strengthen the capabilities of our leadership and people This demonstrates the level of effort put into developing our managers by focusing on improving our ability to leadership capabilities across the business. We also maintained an anticipate and respond to change. impressive retention record for leaders and high-performing individuals, with an average attrition rate of less than 7 per cent. • Continue to enhance talent development and retention through the reinforcement of performance differentiation in We are committed to developing a robust leadership pipeline reward and diversity of pipeline. capable of driving sustained business performance in line with our Here for good strategy. Our leadership development programmes • To proactively manage our compliance, risk and regulatory and other forums support the personal development of our High requirements to ensure that our People processes reinforce Performers (HIPOs) and managers. In 2011, 50 of our managers our governance structures benefited from the Great Manager programme and other Leadership Development programmes.

Employees Our succession planning process in 2011 focused on the key roles in the organization. We made 4 appointments at senior management level, all of which were from the local talent pool and we continue to enrich our talent diversity from both within and 942 outside the Group. We delivered the first ever Leadership Conference that encompassed all our senior management in order People to improve their understanding of the broader context within which the bank operates and also build on their existing skills. We have developed a dedicated communication line to managers to enable 10 direct engagement through the sharing of information relevant solely to managers. Number of nationalities represented globally

Enabling Diversity and Inclusion Diversity and Inclusion (D&l) is an inherent part of our brand and culture. We strive to offer all our people an inclusive and supportive 79% environment in which they feel valued and appreciated for who they Proportion of new leaders recruited internally are and what they bring to the Bank. We strongly encourage gender diversity, with women representing 50 per cent of our staff in 2011. During the year we continued to develop our female leadership talent through Women development programmes and focus groups. 50% Ghana in 2011 drove a consistent approach to Diversity and Inclusion and achieved a significant step change, moving from level Female representation 1 to 4 (5 being the highest) on the D&l Country Performance 21 Standard Chartered Bank Ghana Annual Report 2011

framework. We continue to partner with the Ghana Federation of objectives in a timely and effective manner. The quality and clarity of the Disabled and Sightsavers in championing the promotion of objectives continue to improve as managers and employees take employment opportunities for persons with disabilities. advantage of the system to refine and discuss objectives in an increasingly transparent manner. Building our employee engagement The commitment of our employees is fundamental to our business Managing performance is core to our success as an organization success. We track our employee engagement annually, using the and the performance management system enables us to raise Gallup Organization's Q12 Employee Engagement survey. In 2011, standards of delivery at the individual and corporate level. Our however, the survey showed a marked decrease from 4.27 to 4.01 strong performance and development culture has placed us at the on a scale of 1 to 5. The drop in score was primarily due to the forefront of banking in Ghana. Remuneration in banking remains challenging labour climate that pursued the bank last year. We plan under close scrutiny due to the volatility of the global environment. to strengthen staff engagement with a comprehensive This, coupled with the inflationary challenges in-country continue to communication programme to improve the engagement of staff. We put pressure on budgets whilst setting staff expectations of salaries have already put in place robust impact plans and a monitoring above inflation rates. process to follow through to ensure that the teams remain engaged and work together to deal with issues as they arise. Other We continue to drive a high performance culture supported by a engagement tools that are being used are dedicated communication robust reward and recognition structure. We encourage long-term to support line managers and build on their leadership and performance and have structured our compensation packages to management skills in order to improve accountability of their reinforce this longer-term outlook. business. Summary Our Culture and values In 2011, our people strategy remained consistent and focused on Our distinctive culture is the reason why clients and customers sustainable high performance inspite of a challenging employee choose to bank with us. It is why employees want to join us and stay relations environment. By focusing on discipline and performance with us. Our five core values are at the heart of our culture: management we achieved our objectives and created a clearer link Courageous, Responsive, International, Creative and Trustworthy. between our values and business performance.

Our brand promise, Here for good, reaches out to all our We will continue to strengthen and equip our leadership with stakeholders, including our employees, through a simple and business and people management skills that will make them more compelling promise. It says who we are, what we stand for and what responsive to business needs and the market. We are committed to makes us different.Here for good captures our genuine commitment creating a compelling work environment that will reinforce our Here to our customers and clients, our staff and the communities where for good brand promise and build on our employer brand. we operate; our focus on consistently doing the right thing and acting responsibly. It has raised the bar on how we demonstrate our Our priorities into 2012 focus on becoming an agile, strengths-based values through our everyday business activity. In 2011, we focused organization delivering outstanding employee experience whilst on embedding our values further into our processes for managing improving on our risk and compliance culture in an ever changing individual performance thus establishing a clearer link between environment. performance and reward and how our people live our values. Using our online performance management system, all our employees are able to assess their own performance against our values. These assessments are then reviewed by their line manager as part of the basis for determining their annual reward.

Employee Relations Employee relations is an increasingly significant area of importance to us as we grow the business and align our governance structures to local laws, Group processes and increasing regulatory requirements. We continue to drive a consultative approach where both the unions and management share Information and work towards building a sustainable business. Discipline, consequence management and improved communication are being improved to support a forward-looking employee relations strategy. Ultimately, we are committed to the well being of our employees and in engaging their hearts and minds in order to make the Bank a compelling place to work. We have continued to build on our relationships with the unions, regulators and other stakeholders whilst remaining committed to developing a compelling work environment for our employees.

Performance and Reward Our performance and reward policies are designed to drive our business strategy and keep the bank competitive at all times. The Global Performance Management system launch, has enabled our 22 Standard Chartered Bank Ghana Annual Report 2011

Sustainability Our role in society

Our highlights in 2011 Our priorities in 2012

• GH

• 2.6 million people reached with essential eye • Continue to develop our people and embed care through Seeing is Believing in Ghana our brand promise, Here for good since 2003 • Work towards increasing skills-based • 2.04 million treated nets distributed through employee volunteering days our anti-malaria initiative, Nets for Life, since 2006 • Increase our employee volunteering to more than 753 days • 519 Consumer Banking staff undertook Customer Charter e-Learning

• 32,348 Access 247 accounts opened since 2007 Our sustainable business priorities • 18,800 school children have benefitted from the Schools Desk Project between 2007 and 2011

• GH$351,282.5 was spent on staff training in 2011

Number of staff (Including contract and agency staff) who undertook training from 2008 to 2011

1341 1141 1106 951

2008 2009 2010 2011 23 Standard Chartered Bank Ghana Annual Report 2011

Standard Chartered staff volunteers being read to by a visually-impaired student of the Akropong School for the blind.

Our approach Chartered Ghana's 178,018 individual account holders. Our ability to create sustained value for our shareholders Is intrinsically linked to the health and prosperity of the Responsible selling and marketing communities in which we operate. We aim to treat our customers fairly at all times, providing them with In the next few decades, our markets in Africa, especially Ghana, solutions that meet their needs. In 2011, 519 Consumer Banking are set for rapid growth, opening up huge opportunities for people to employees completed e-Learning on our Customer Charter, which better their lives. At the same time, meeting the rise in demand for includes our commitment to fair treatment of customers. We also energy, food and water will throw up significant challenges. As a continued to improve our Net Promoter Score (NPS) which bank, we will face tough trade-offs in deciding who and what to increased by 28 per cent from 32 In 2010 to 41 in 2011 meaning finance. Our approach is not to avoid these, but to seek a balance more customers would recommend the bank highly to other people. that minimizes any negative consequences of our decisions. We are In Wholesale Banking, treating clients fairly is a requirement of both determined to use our business model and influence to deliver value our Code of Conduct and our Financial Markets' Dealers Code of broadly in society. Our three key priorities remain unchanged: we Conduct. We have a series of procedures and controls in place to aim to contribute to the real economy, promote sustainable finance ensure that these codes are adhered to at all times. and lead the way in communities. Tackling financial crime Contributing to the real economy To guard against the risk of financial crime within our business, we Our aim is to promote sustainable growth in the real economy focus on training our employees, strengthening our screening through our core business of banking. That means providing finance systems and ensuring that our policies and procedures are effective efficiently and responsibly, while helping to widen access to finance and up to date. In 2011, as an international institution, we aligned in Ghana and our other markets. Focusing on what our customers our existing anti-bribery controls with the requirements of the new need, and treating them fairly at all times, is a key part of this UK Bribery Act 2010. More than 1136 staff completed anti-bribery e- commitment. We are also determined to prevent our products and Learning during 2011, representing over 92 per cent of our staff, services from being used for criminal financing activity, which can including lull-time employees (FTEs) and contract and agency staff. erode the positive impact of banking on the economy. We also undertook an enhanced Customer Due Diligence initiative which ensured that our customers in Consumer Banking and Access to finance Wholesale Banking provided up to date information on their activities Millions of people in Ghana remain unbanked or have limited access and businesses. to banking services. We continue to explore new ways of increasing financial inclusion. To strengthen the general effectiveness of our response to financial crime risk, we commenced a Group wide transformation Small and medium-sized enterprises (SMEs) play a crucial role in programme, due to complete in 2012. This will provide us with an generating jobs and economic growth in this market. In 2011, we improved financial crime risk framework based on regional centres continued to demonstrate our support for SMEs, increasing our of excellence. lending to the sector by more than 350 per cent to GHtfc 27.1 m; (GHtfc 5.98m in 2010 and GH$ 27.1 m in 2011) and assisting them to Promoting sustainable finance develop their capacity to manage their businesses successfully. In Our main impact on people and the environment stems from the September 2011, we partnered PriceWaterHouseCoopers (PwC) to business activities we finance. Our approach is to manage the organize a training programme for our SME clients to educate them environmental, social and governance risks that come with our on how best they can ran their businesses. financing decisions, working with our clients to encourage compliance standards. We remain committed to microfinance as a means of increasing financial inclusion in this market. Our approach is to support the In 2011, we launched a review of our financing position statements sector by providing a range of services to microfinance institutions to ensure that they remain aligned with international guidelines and (MFIs) who in turn finance their clients in the microfinance sector. emerging risk issues. To further deepen our employees' Since 2009, we have provided a total of GH$18m to MFIs. In this understanding of environmental and social risk in key industry way, we play a vital role in enabling lower income earners to expand sectors, we also launched a one-day classroom course. In 2011 this their opportunities, demonstrating the role that a major bank can was rolled out to frontline staff in Singapore, Mumbai and Dubai. play in financial deepening through forging effective partnerships with other institutions. As part of our commitment to sustainable finance, we aim to capture the growing opportunities presented by the emerging energy sector We continue to develop innovative financing solutions for the in Ghana. Since 2008 we have ensured that all our financing in this Ghanaian agricultural sector, helping to grow its output and sector was in alignment with our relevant position statements and contribution to the country's economy. Key among our efforts is the the Equator Principles, to which we are signatories. Cocobod financing which has over the years been instrumental in ensuring that the cocoa industry continues to deliver a significant Leading the way In communities share of Ghana's export revenue. At the end of 2011, our structured We aim to have a positive impact on people and communities within finance portfolio to this sector was valued at over GH0 465.08m Ghana. That means making Standard Chartered a great place to Providing solutions to populations with very specific financing needs work, minimising our operational impact on the environment and is a key part of our strategy to promote financial inclusion. Our focusing on investing in community programmes that promote Access 247 product enables customers with GH$10 to open an tangible, positive outcomes in our markets where we operate. account with the Bank and gain access to a variety of banking Employee volunteering is at the heart of this commitment. This year, services through its ATM network. This initiative, launched in 2007, our staff donated 691 days to the community, achieving 103 per cent provides almost 32,261 previously unbanked Ghanaians with above our 2011 target. banking services, making up a sizeable proportion of Standard 24 Standard Chartered Bank Ghana Annual Report 2011

Great place to work Living with HIV (LwHIV), our workplace HIV education programme, Our culture and values - encapsulated in our brand promise, Here continues to achieve significant impact in stemming the spread of for good - are a key reason why employees want to join and stay HIV. In the first half of 2011, we increased our education numbers with us. We focus on creating a working environment that respects from 40,648 to 62,765. This means, we empowered an additional our employees as individuals and offers opportunities for them to 22,117 people with critical information on HIV/AIDS that adequately develop, both personally and professionally. This is reflected in our equips them to protect themselves from the deadly virus. Standard high levels of employee engagement, with a 2011 score of 4.01 out Chartered has remained a key member of the Ghana Business of 5 in the Gallup Organisation's Q12 Employee Engagement Survey. Coalition against HIV/AIDS (GBCAA). The Ghana Team has participated in many of GBCAA's programmes during the year Protecting the environment offering valuable leadership to advance the agenda of fighting the We continually look for ways to minimise our direct impact on the HIV menace. As part of World Aids Day Celebrations the Bank environment, and set stringent targets for our environmental efforts. undertook a walk dubbed the Red Ribbon Race which saw over 500 In 2011 we set a target of planting 5000 trees to replace the volume people participating to raise awareness on HIV and AIDS. of paper used during the same period and to help reduce carbon dioxide in the environment. We exceeded this target. In partnership In partnership with the Ghana Education Service, we continue to with the Ministry of Environment, the Bank, through its employee- deliver Phase II of our Schools Desk Project. This project has been volunteers, planted a total of 7500 trees in Gbledi Gbogame in the very successful in helping address the classroom furniture challenge Hohoe District as part of World Environment Day Celebrations. of deprived schools across the country. Under this initiative we are distributing 6600 desks to 66 deprived schools across the country We also formed 10 environment clubs in 10 basic schools in the over a three-year period. This translates into 22 schools receiving a capital, Accra. These clubs served as platforms for the exchange of set of 100 dual desks each, every year, between 2010 and 2012. In information on the environment between the members who in turn 2011, a total number of 2200 dual desks were formally presented to shared their knowledge with the larger school community thereby 22 schools across Ghana enhancing the classroom experience of creating a bigger pool of knowledgeable school children who could over 4400 school children. also educate their peers on environmental protection. In 2006 Standard Chartered joined forces with five other donors to Community investment launch Nets for Life with the aim of distributing malaria-preventing bed Since 2003, we have reached more than 2.6 million people in Ghana nets and creating awareness on how to avoid the disease across 15 through our global flagship initiative to tackle avoidable blindness, countries in Africa. This was launched in Ghana in 2007 and so far Seeing is Believing. In 2011 we renewed our commitment to 2,039,157 million nets have been distributed across 6 regions in the improving eye care in Ghana through the launch of The Removing country alongside an awareness campaign on malaria prevention. In Barriers to Quality Eyecare Project" (RB2QE) under Phase IV of our 2011, a total of 810,492 nets were distributed in Ghana out of which Seeing is Believing Initiative. This project seeks to improve the 2000 went to the people of Ahwiam and Nima communities in the overall eye health of women, men, girls and boys in Ghana and is Greater Accra Region as part of an employee volunteering effort by ou r being undertaken through the development of primary and staff during World Malaria Day. secondary eye care services in 6 regions of Ghana. 21 eye care centres in existing hospitals will become models of functioning, integrated, replicable and sustainable eye care services in each identified region. Program components include: equipment and infrastructure, human resources development, awareness creation, and service delivery (including primary eye care). The project will ran over a 4 year period. In 2011,20 hospitals out of the 21 target- beneficiaries received their eye care equipment.

SME businesses are snglnes of economic growth efficiently, while accessing appropriate products and Unleashing the growth potential and job creation across our markets. In Ghana, we sendees to grow their business. of SMEs have shown consistent support for SMEs, Increasing our lending by over 350 per cent to Our partnership with PwC builds on successful pilots GH$ 27.1m since ths financial crisis began In mld- for SME training, which we completed In Pakistan In 2007. However, we recognize that SMEs need 2009 and Kenya in 2010. Following the pilots, training, not Just financing, to grow their businesses. participating SMEs reported increased awareness of financial management and the process involved when applying for bank credit. In 2011 we launched a partnership with PricewaterhouseCoopers (PwC) to deliver a tailored training programme to SMEs. We hosted a two-day The SME training programme is in line with a workshop in Ghana, and also in Nigeria and Zambia, commitment the Standard Chartered Group made in reaching over 40 SMEs. 2008 to train SMEs as part of the UN's Business Call to Action initiative. Since 2009, we have provided non-financial support to over 2000 key SMEs in The SME owners received training on financial Ghana. We plan to expand ourreach i n collaboration management and accounting along with an overview with PwC in order to positively impact more SMEs in of how we work with our SME customers. The aim Ghana in 2012. was to help SMEs manage theirfinances mor e Standard W Chartered °

Invest with confidence

We've made world-class investment solutions a priority. PRIORITY We give you: Banking • A comprehensive approach to meeting your financial goals • A full range of products on investments, insurance, treasury and financing • A dedicated relationship manager supported by qualified product experts No matter what your priorities are, our exceptional service, unique benefits and expert solutions are tailored to help you achieve them all. Speak to your relationship manager today or Call +233 (302) 740125 for more details. What's your priority?

Here for good priority.standardchartered.com/gh 26 Standard Chartered Bank Ghana Annual Report 2011

Risk review Maintaining discipline in risk management

Risk Overview The nature and impact of future changes in laws, regulations and Standard Chartered has a defined risk appetite, approved by the economic policies are not predictable and could run counter to our Board, which is an expression of the amount of risk we are prepared strategic interests. We support changes to laws, regulations or codes to take and plays a central role in the development of our strategic of practice that will improve the overall stability of the financial plans and policies. We also regularly conduct stress tests to ensure system. However, we also have concerns that certain proposals may that we are operating within our approved risk appetite. not achieve this desired objective and may have unintended consequences, either individually or in terms of aggregate impact. Through our proactive approach to risk management we constantly Proposed changes could affect the volatility and liquidity of the seek to reshape our portfolios and adjust underwriting standards financial markets and, consequently, the way we conduct business according to the anticipated conditions in our markets. In 2011, we and manage capital and liquidity. These effects may directly or maintained our cautious stance overall but continued to selectively indirectly impact our financial performance. increase our exposures in certain markets. Our balance sheet and liquidity have remained strong and we are well positioned for 2012. Financial markets dislocation There is a risk that a sudden financial market dislocation, perhaps as We have a well-established risk governance structure and an a result of a sharp slowdown in economic activity or further experienced senior team. Members of our Management Committee deterioration of the sovereign debt crisis in Europe, could significantly sit on our principal risk committees, which ensure that risk oversight increase general financial market volatility which could affect our is a critical focus for all our directors, while common membership performance. between these committees helps us address the inter-relationships between risk types. We maintain robust appropriateness and suitability processes to mitigate the risk of customer disputes. We closely monitor the Risk Performance Review performance of our financial institution counterparties and adjust our Following the significant improvement seen in 2010, credit conditions exposure to these counterparties as necessary. in 2011 have remained stable despite the uncertainty within the global financial sector. In 2011, we have maintained our cautious Fraud stance, our balance sheet and liquidity have remained strong We seek to be vigilant to the risk of internal and external crime in our throughout the year, and we are well positioned for 2012. management of people, processes, systems and in our dealings with customers and other stakeholders. We have a broad range of Principal uncertainties measures in place to monitor and mitigate this risk. Controls are We are in the business of taking selected risks to generate embedded in our policies and procedures across a wide range of the shareholder value, and we seek to contain and mitigate these risks to Bank's activities, such as origination, recruitment, physical and ensure they remain within our risk appetite and are adequately information security. compensated. However, risks are by their nature uncertain and the management of risk relies on judgements and predictions about the Exchange rate movements future. The key uncertainties we face in the coming year are set out We monitor exchange rate movements closely and adjust our below. This should not be regarded as a complete and exposures accordingly. Under certain circumstances, we may take comprehensive statement of all potential risks and uncertainties that the decision to hedge our foreign exchange exposures in order to we may experience. protect our capital ratios from the effects of changes in exchange rates. The effect of exchange rate movements on the capital Macroeconomic conditions adequacy ratio is mitigated to the extent there are proportionate Macroeconomic conditions have an impact on personal expenditure movements in risk weighted assets. and consumption, demand for business products and services, the debt service burden of consumers and businesses, the general Risk management framework availability of credit for retail and corporate borrowers and the Effective risk management is fundamental to being able to generate availability of capital and liquidity funding for our business. All these profits consistently and sustainably and is thus a central part of the factors may impact our performance. financial and operational management of Standard Chartered Bank, The Ghanaian economy has been growing steadily in spite of the Ghana. uncertain growth prospects in the global economy. The economy saw a GDP growth of 13.4% (among the highest in the world). The onset Through our risk management framework we manage enterprise- of oil exports and favourable outlook for gold, cocoa and oil prices wide risks, with the objective of maximizing risk-adjusted returns had a beneficial effect on Ghana's exports in 2011 which are while remaining within our risk appetite. projected to have increased from US$7.7bn in 2010 to US$13bn. As part of this framework, we use a set of principles that describe the risk management culture we wish to sustain: The economic challenges in the Eurozone would translate into downside risk given the dimension that this remains our key trading Balancing risk and return: risk is taken in support of block and therefore have a significant impact on trade. the requirements of our stakeholders, in line with our Regulatory changes and compliance strategy and within our risk appetite Our business as an international bank is subject to a complex regulatory framework comprising legislation, regulation and codes of Responsibility: it is the responsibility of all employees practice. A key uncertainty relates to the way the regulator may to ensure that risk-taking is disciplined and focused. We adjust laws, regulations and economic policies in response to take account of our social responsibilities and our macroeconomic and other systemic conditions. The financial crisis of commitments to customers in taking risk to produce a 2008-09 has spurred unprecedented levels of proposals to change return. the regulations governing financial institutions that are expected to Accountability: risk is taken only within agreed have a significant impact, such as changes to capital and liquidity authorities and where there is appropriate infrastructure regimes. and resource. All risk-taking must be transparent, controlled and reported. 27 Standard Chartered Bank Ghana Annual Report 2011

Anticipation: We seek to anticipate future risks and The second line of defence comprises the Risk Control Owners, ensure awareness of all known risks supported by their respective control functions. Risk Control Owners Competitive advantage: We seek to achieve competitive are responsible for ensuring that the risks within the scope of their advantage through efficient and effective risk management responsibilities remain within appetite. The scope of a Risk Control and control. Owner's responsibilities is defined by a given Risk Type and the risk management processes that relate to that Risk Type. These Risk Governance responsibilities cut across and are not constrained by functional and Ultimate responsibility for setting our risk appetite and for the business boundaries. effective management of risk rests with the Board. Acting within an authority delegated by the Board, the Board Risk The third line of defence is the independent assurance provided by Committee (BRC), whose membership is comprised exclusively of the Country's Internal Audit function. Its role is defined and overseen non-executive directors of the Board, has responsibility for oversight by the Audit Committee. and review of prudential risks including but not limited to credit, market, liquidity, operational and reputational. It reviews the country's The findings from the country audits are reported to management and overall risk appetite and makes recommendations thereon to the governance bodies - accountable line managers, relevant oversight Board. Its responsibilities also include reviewing the appropriateness function or committee and committees of the Board. and effectiveness of the country's risk management systems and controls, considering the implications of material regulatory change The country's internal audit provides independent assurance of the proposals, ensuring effective due diligence on monitoring the effectiveness of management's control of its own business activities activities of the Country Risk Committee and Asset and Liability (the first line) and of the processes maintained by the Risk Control Committee (ALCO). Functions (the second line). As a result, Internal Audit provides assurance that the overall system of control effectiveness is working The BRC receives quarterly reports on risk management, including as required within the Risk Management Framework. our portfolio trends, policies and standards, liquidity and capital adequacy, and is authorised to investigate or seek any information Credit Risk relating to an activity within its terms of reference. Credit risk is the potential for loss due to the failure of counterparty to meet its obligations to pay the bank in accordance with agreed terms. The Risk Committee (RC) is responsible for the management of all Credit exposures may arise from both the banking and trading books. risks other than ALCO and the Pensions Executive Committee (PEC). Credit risk is managed through a framework that sets out policies and The RC is responsible for the establishment of, and compliance with, procedures covering the measurement and management of credit policies relating to credit risk, market risk, operational risk, and risk. There is a clear segregation of duties between transaction reputational risk. The RC also defines our overall risk management originators in the businesses and approvers in the Risk function. All framework. credit exposure limits are approved within a defined credit approval authority framework. ALCO is responsible for the management of capital and the establishment of, and compliance with, policies relating to balance Credit monitoring sheet management, including management of our liquidity, capital We regularly monitor credit exposures, portfolio performance, and adequacy and structural foreign exchange and interest rate risk. external trends that may impact risk management outcomes. Internal risk management reports are presented to risk committees, The PEC is responsible for the management of pension risk. containing information on key environmental, political and economic trends across major portfolios; portfolio delinquency and loan The committee governance structure ensures that risk-taking impairment performance; and IRB portfolio metrics including credit authority and risk management policies are cascaded down through grade migration. to the appropriate functional, divisional and country-level committees. Information regarding material risk issues and compliance with Credit mitigation policies and standards is communicated to the functional committees Potential credit losses from any given account, customer or portfolio and country-level sub-committees. are mitigated using a range of tools such as collateral, netting agreements, credit insurance, and other guarantees. The reliance Roles and responsibilities for risk management are defined under a that can be placed on these mitigants is carefully assessed in light of Three Lines of Defence model. Each line of defence describes a issues such as legal certainty and enforceability, market valuation specific set of responsibilities for risk management and control. correlation and counterparty risk of the guarantor. Risk mitigation The first line of defence is that all employees are required to ensure policies determine the eligibility of collateral types. the effective management of risks within the scope of their direct Traded products organisational responsibilities. Business and function governance Credit risk from traded products is managed within the overall credit heads are accountable for risk management in their respective risk appetite for corporates and financial institutions. The credit risk businesses and functions. exposure from traded products is derived from the positive mark-to- market value of the underlying instruments, and an additional The second line of defence comprises the Risk Control Owners, component to cater for potential market movements. supported by their respective control functions. Risk Control Owners are responsible for ensuring that the risks within the scope of their Market risk responsibilities remain within appetite. The scope of a Risk Control We recognize market risk as the potential for loss of earnings or Owner's responsibilities is defined by a given Risk Type and the risk economic value due to adverse changes in financial market rates or management processes that relate to that Risk Type. These prices. Our exposure to market risk arises principally from customer- responsibilities cut across and are not constrained by functional and driven transactions. The objective of our market risk policies and business boundaries. processes is to obtain the best balance of risk and return whilst meeting customers' requirements. 28 Standard Chartered Bank Ghana Annual Report 2011

The primary categories of market risk for Standard Chartered are: Impairment losses identified in our books are prepared in tandem with GAAP principles/Bank of Ghana regulations which was until very interest rate risk: arising from changes in yield curves, recently replaced by IFRS provisioning used in this report. Any credit spreads and implied volatilities on interest rate difference which is the outcome of using the two principles above is options reported in our balance sheet under Credit Risk Reserve.

currency exchange rate risk: arising from changes in Consumer Banking exchange rates and implied volatilities on foreign exchange In Consumer Banking, where there are large numbers of small value loans, a primary indicator of potential impairment is delinquency. A options loan is considered delinquent (past due) when the counterparty has failed to make a principal or interest payment when contractually due. commodity price risk: arising from changes in commodity However, not all delinquent loans (particularly those in the early stage prices and commodity option implied volatilities; covering of delinquency) will be impaired. For delinquency reporting purposes energy, precious metals, base metals and agriculture we follow industry standards, measuring delinquency as of 1, 30, 60, 90,120 and 150 days past due. Accounts that are overdue by more equity price risk: arising from changes in the prices of than 30 days are more closely monitored and subject to specific equities, equity indices, equity baskets and implied collections processes. volatilities on related options Provisioning within Consumer Banking reflects the fact that the Operational risk product portfolios consist of a large number of comparatively small Operational risk is the potential for loss arising from the failure of exposures. people, process or technology or the impact of external events. We For the main unsecured products and loans secured, the entire seek to minimize our exposure to operational risk, subject to cost outstanding amount is generally written off at 150 days past due. trade-offs. Operational risk exposures are managed through a Unsecured consumer finance loans are written off at 90 days past consistent set of management processes that drive risk identification, due. For secured loans individual impairment provisions (MPs) are assessment, control and monitoring. generally raised at either 150 days (Mortgages) or 90 days (Wealth Management) past due. The Country Operational Risk Committee oversees the management of operational risks. This formal structure of governance provides The provisions are based on the estimated present values of future management with confidence that operational risks are being cash flows, in particular those resulting from the realization of proactively identified and effectively managed. security. Following such realization any remaining loan will be written off. The days past due used to trigger write-offs and I IPs are broadly Problem Credit Management and Provisioning driven by past experience, which shows that once an account Wholesale Banking reaches the relevant number of days past due, the probability of A non-performing loan is any loan that is more than 90 days past due recovery (other than by realizing security where appropriate) is low. or is otherwise individually impaired (which represents those loans For all products there are certain situations where the individual against which individual impairment provisions have been raised) and impairment provisioning or write-off process is accelerated, such as in cases involving bankruptcy, customer fraud and death. Write-off and excludes: MPs are accelerated for all restructured accounts to 90 days past due Loans renegotiated before 90 days past due and on (unsecured and automobile finance) and 120 days past due which no default in interest payments or loss of principal (secured) respectively. is expected Individually impaired loans for Consumer Banking will therefore not Loans renegotiated at or after 90 days past due, but on equate to those reported as non-performing, because non-performing which there has been no default in interest or principal loans include all those over 90 days past due. This difference reflects payments for more than 180 days since renegotiation, the fact that, while experience shows that an element of delinquent and against which no loss of principal is expected loans is impaired it is not possible to identify which individual loans the impairment relates to until the delinquency is sufficiently The loan loss provisions are established to recognize incurred prolonged that loss is almost certain, which, in the bank's experience, impairment losses either on specific loan assets or within a portfolio is generally around 150 days in Consumer Banking. Up to that point of loans and receivables. Individually impaired loans are those loans the inherent impairment is captured in portfolio impairment provision against which individual impairment provisions have been raised. (PIP).

Estimating the amount and timing of future recoveries involves The PIP methodology provides for accounts for which an individual significant judgment, and considers the level of arrears as well as the impairment provision has not been raised, either individually or assessment of matters such as future economic conditions and the collectively. PIP is raised on a portfolio basis for all products, and is value of collateral, for which there may not be a readily accessible set using expected loss rates, based on past experience market. supplemented by an assessment of specific factors affecting the relevant portfolio. These include an assessment of the impact of The total amount of the bank's impairment allowances is inherently economic conditions, regulatory changes and portfolio characteristics such as delinquency trends and early alert trends. The methodology uncertain being sensitive to changes in economic and credit applies a larger provision against accounts that are delinquent but not conditions. It is possible that actual events over the next year differ yet considered impaired. from the assumptions built into the model resulting in material 29 Standard Chartered Bank Ghana Annual Report 2011

Corporate Information

BOARD OF DIRECTORS Ishmael Yamson (Chairman) Kweku Bedu-Addo (Chief Executive Officer) Sanjay Rughani (Executive Director, Finance) Andrew Okai (Executive Director- Consumer Banking) Frederick William Lee (Non-Executive Director) Resigned April 21, 2011 Ahmad Bilal Pirzadah (Executive Director- Origination and Client Coverage) Felicia Gbesemete (Independent Non-Executive Director) Herbert Morrison (Independent Non- Executive Director)

SECRETARY Dawn Kwesi Zaney

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

SOLICITORS Bentsi-Enchill Letsa & Ankomah 1s1 Floor Teachers' Hall Complex Education Loop (Off Barnes Road) Adabraka, Accra PO Box GP 1632 Accra

REGISTRARS Computershare Pan Africa Ghana Limited, 23 Eleventh Lane Osu RE. P.O.BOX CT 2215 Cantonments, Accra

REGISTERED OFFICE Standard Chartered Bank Building High Street P O Box 768 Accra 30 Standard Chartered Bank Ghana Annual Report 2011

Board of directors The Board is accountable for ensuring that, as a collective body, it has the appropriate skills, knowledge and experience to perform its role effectively. It provides leadership through oversight, review and by providing guidance whilst setting the strategic direction. 31 Standard Chartered Bank Ghana Annual Report 2011

1. Ishmael Yamson 5. Felicia Gbesemete Chairman Non-Executive Director Appointed to the Board on February 1, 2005. Appointed to the Board on May 4 2009. She is a Former Chief Executive of Unilever Ghana and lawyer and a founding Partner and Director of current Chairman of the Board of Unilever. He Is a Lexconsult. member of the President's Economic Advisory Council and also Chairman of the Board of the Ghana Investment Promotion Council. 6. Ahmad Bilal Pirzadah Executive Director, Origination & Client Coverage Appointed to the Board on March 10 2011. Before 2. J. Kweku Bedu-Addo his appointment, he was Managing Director and Chief Executive Officer Regional Head for Structured Trade Finance and Appointed to the Board on 30 January 2009. Financing Solutions in Dubai and prior to that He Before his appointment, he was the Executive was Head of Corporate Relationship in Bahrain. Director for Origination and Client Coverage in Standard Chartered Bank Ghana. He also held the position of Program Director for Origination 7. Herbert Morrison and Client Coverage in Standard Chartered Non-Executive Director Bank Singapore and has also served on the Appointed to the Board on May 4 2009. He is Board of the Bank in Zambia. Managing Partner of Morrison and Associates, a firm of Chartered Accountants, Tax and Management Consultants. 3. Andrew Okai Executive Director, Consumer Banking Appointed to the Board on December 1 2010. 8. Dawn Kwesi Zaney Before his appointment, he was involved with Board Secretary strategy and corporate governance in the office Appointed to the board in October 1997. He is of the Chief Executive in Hong Kong. also the Area Head of Legal, West Africa with He has also served in various capacities in responsibility for SCB Ghana, Sierra Leone, Wholesale Banking, Consumer Banking and Gambia and Cote D'lvoire. General Management divisions in different locations within the Standard Chartered Group.

4. Sanjay Rughani Executive Director, Finance Appointed to the Board on January 26 2007. He is also the Regional Chief Finance Officer. Before his appointment, he held the position of Executive Director for Finance in Standard Chartered Bank Tanzania and prior to that he was the Regional Finance Manager for Africa. 32 Standard Chartered Bank Ghana Annual Report 2011

The Ghana Management Committee as of April Senior management 1,2012, comprises the executive directors of Standard Chartered Bank Ghana Limited, the Area Head of Legal, West Africa and the following senior executives: 33 Standard Chartered Bank Ghana Annual Report 2011

Senior management

1. Emmanuel Mayaki 5. Nii Okai Nunoo Emmanuel joined Standard Chartered In 2006. Nii joined Standard Chartered in 2006. He is He Is the Chief Information Officer, Ghana and Area Head, Corporate Affairs, West Africa and Area Head, GTO, West Africa and oversees has direct responsibility across West Africa for Consumer and Wholesale Banking Operations developing and protecting the Bank's reputation Unit. Emmanuel manages the bank's as one which can deliver long term shareholder automation and system enhancement related value whilst being a force-for-good. Additionally, projects and oversees the development of the Nii also the Regional Head of Sustainability, right technology framework or architecture for Africa, responsible for the Bank's sustainability Ghana. agenda across the continent.

2. Joan Essel-Appiah 6. Mansa Nettey Joan is the Head of Compliance, West Africa. Mansa joined the bank in 1998 coming from a She joined the Bank in 2011 and is directly previous role as Consultant with responsible for strengthening the Bank's PricewaterhouseCoopers. She is Head of Global Markets, compliance and regulatory framework across Ghana. In her previous role with the Bank as Head of West Africa. She has a combined work Financial Markets (FM) sales across West Africa, experience of 20 years in the public and private she was involved in assisting corporate and government sectors. entities understand and adopt value added financial market products. 3. Rosie Ebe-Arthur Joined the Bank in 2011. She has direct responsibility for developing, reviewing, establishing and recommending Human 7. Simon Burutu Resources policies and procedures to enable Head, Country Chief Risk Officer. He has been the country deliver its business strategy. She with the Bank for over 30 years. He was also manages efficient delivery of HR appointed Chief Risk Officer and Senior Credit processing activities through HRSSC. Officer in 2011. He has held various positions in the Bank including Senior Credit Officer (Zambia and Zimbabwe) and Senior Credit 4. Harry Denkyi Officer (Kenya, Tanzania and Uganda.) Harry joined Standard Chartered in 2002. He is Head of Audit, Ghana and West Africa and has direct responsibility for all audit related issues across Ghana and West Africa. Prior to joining Standard Chartered, Harry has worked as a Financial Accountant and a Treasury Officer for the Volta River Authority (VRA). 34 Standard Chartered Bank Ghana Annual Report 2011

Report Of The Directors To The Members Of Standard Chartered Bank Ghana Limited

The Directors in submitting to the shareholders their report and financial statements of the Bank for the year ended 31 December 2011 report as follows:

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

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

Financial Statement and Dividend GH£'000 Profit for the year was 77,676 Less: Transfer to Statutory Reserve Fund and Other Reserves of (17,288)

leaving a balance of 60,388

to which is added balance on Retained Earnings (Income Surplus Account) brought forward (excluding balance on Statutory Reserve Fund and Other Reserves) of 32,049

giving a cumulative amount available for distribution of 92,437

out of which was paid a final dividend for 2010 of GH01.27 per share for ordinary shares and GH0O.O413 per share for March 2011 and GH00.0404 per share for September 2011 for preference shares amounting to (25,877)

leaving a balance on the Retained Earnings (Income Surplus Account) carried forward of 66,560

The Directors are recommending a dividend of GH03.O5 per share for ordinary shares amounting to GH058.7 million.

In accordance with Section 29(c) of the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738), a cumulative amount of GH056.1 million has been set aside to a Statutory Reserve Fund from the Retained Earnings (Income Surplus Account).

Nature of Business The Bank is licensed to carry out Universal Banking business in Ghana. There was no change in the nature of the Bank's business during the year.

Holding company

The Bank is a subsidiary of Standard Chartered Holdings (Africa) B.V., a company incorporated in The Netherlands.

Subsidiary. The Bank has two subsidiaries namely Standard Chartered Ghana Nominees Limited and Standard Chartered Investment Services Limited. Both subsidiaries did not carry out operational activities during the year. The subsidiaries' financial statements have not been consolidated with that of the parent as the Directors are of the opinion that they are not material and would present no real value to members. Approval of the Financial Statements The financial statements of the Bank, as indicated above, were approved by the Board of Directors on 10 February 2012 and were signed on their behalf by:

Kweku Bedu-Addo Director 35 Standard Chartered Bank Ghana Annual Report 2011

Independent Auditor's Report To The Members Of Standard Chartered Bank Ghana Limited

Report on the Financial Statements We have audited the financial statements of Standard Chartered Bank Ghana Limited which comprise the statement of financial position at 31 December 2011, the statements of comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes as set out on pages 36 - 82

Directors' Responsibility for the Financial Statements The Bank's Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Code, 1963 (Act 179), and the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738); and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free 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, the financial statements give a true and fair view of the financial position of Standard Chartered Bank Ghana Limited at 31 December 2011, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Code, 1963 (Act 179), and the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738).

Report on Other Legal and Regulatory Requirements Compliance with the requirements of Section 133 of the Companies Code, 1963 (Act 179), and Section 78 of the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738).

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

In our opinion, proper books of account have been kept, and the statements of financial position and comprehensive income are in agreement with the books of account.

The Bank's transactions were within its powers, and the Bank generally complied with the relevant provisions of the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738)

CHARTERED ACCOUNTANTS 13 YIYIWA DRIVE, ABELENKPE P. O. BOX GP242 ACCRA.

27 February 2012 36 Standard Chartered Bank Ghana Annual Report 2011

Statement Of Comprehensive Income For The Year Ended 31 December 2011

2011 2010 Note GhC'000 GHC'000

Interest Income 8 195,775 213,941 Interest Expense 9 (45,372) (61,193)

Net Interest Income 150,403 152,748

Net Fees and Commissions Income 10 32,103 42,360 Other Operating Income 12 34,833 22,917

Operating Income 217,339 218,025 Operating Expenses 13 (93,454) (102,936)

Operating Profit before Impairment Loss and taxation 123,885 115,089 Impairment Loss 15 (9,847) (13,576) Profit before Taxatbn 114,038 101,513 Corporate Tax 17(1) (30,660) (24,229) National Fiscal Stabilization Levy 17(H) (5,702) (5,076) Profit for the Year 77,676 72,208 Other Comprehensive Income Net change in fair value of available for sale financial assets:

(Losses)/Gains recognised directly in equity (18,994) 18,349 Net amount transferred to the income statement 4,967 (4,324)

Other comprehensive income (14,027) 14,025

Total Comprehensive Income for the Year 63,649 86,233

Basic earnings per share (Ghana Cedi per share) 38(ii) 3.97 3.64 Diluted earnings per share (Ghana Cedi per share) 38(ii) 3.97 3.64

The notes on pages 41 to 82 form an integral part of these financial statements 37 Standard Chartered Bank Ghana Annual Report 2011

Statement Of Financial Position As At 31 December 2011

2011 2010 Note GHC'000 GHC'000 Assets Cash and Balances with Bank of Ghana 19 159,872 139,669 Short-Term Government Securities 20(i) 170,104 57,619 Due from Other Banks and Financial Institutions 21 479,245 374,482 Loans and Advances 22 596,724 467,152 Other Assets 25 68,848 89,660 Medium-Term Investments in Other Securities 20(ii) 469,322 510,463 Equity Investment 20(iii) 100 100 Property and Equipment 23 18,291 19,414 Intangible Assets 24 8,146 9,323 Deferred Taxation 18 410 — Total Assets 1,971,062 1,667,882

Liabilities Customer Deposits 27 1,479,687 1,092,442 Due to Other Banks and Financial Institutions 28 10,261 196 Provisions 31 40,828 48,103 Borrowings 32 90,976 252,863 Interest Payable and Other Liabilities 30 110,068 69,744 Taxation 17(ii) 6,666 3,210

Deferred Taxation 18 — 5,343

Total Liabilities 1,738,486 1,471,901

Shareholders' Funds Share Capital 33(i) 61,131 61,131 Retained Earnings 33(ii) 66,560 32,049 Statutory Reserve Fund 33(iii) 56,139 46,430 Credit Risk Reserve 33(iv) 36,898 29,319 Other Reserves 33(v) 11,848 27,052

Total Shareholders' Funds 232,576 195,981

Total Liabilities and Shareholders' Funds 1,971,062 1,667,882

Net Assets Value per Share (Ghana Cedi per share) 38(i) 12.1 10.2

The notes on pages 41 to 82 form an integral part of these financial statements These financial statements were approved by the Board of Directors on 10 February 2012 and signed on its behalf by:

Kweku Bedu-Addo Sanjay Rughani Director Director 38 Standard Chartered Bank Ghana Annual Report 2011

Statement of Changes in Equity For the year ended 31 December 2011

Share Retained Statutory Credit Risk Other Total Capital Earnings Reserve Reserve Reserves Equity GHfOOO GHfOOO GHfOOO GHfOOO GH^'OOO GHfOOO

Balance at 1 January 2011 61,131 32,049 46,430 29,319 27,052 195,981

Total comprehensive income for the year

Profit for the year - 77,676 - - - 77,676

Other comprehensive income net of income tax

Gains recognised directly in equity - - - - (18,994) (18,994) Net amount transferred to the income statement 4,967 4,967

Total other comprehensive income - - - - (14,027) (14,027)

Total comprehensive income for the year 77,676 (14,027) 63,649

Regulatory and other reserves

Transfer to statutory reserve (9,709) 9,709

Transfer to credit risk reserve - (7,579) 7,579 Transfer from other reserves (1,177) (1,177)

Total transfers to and from reserves - (17,288) 9,709 7,579 (1,177) (1,177)

Transactions with owners recorded directly in equity

Contributions by and distributions to owners ------

Dividends to shareholders - (25,877) - - (25,877)

Total contributions by and distributions to owners - (25,877) - - - (25,877)

Balance at 31 December 2011 61,131 66,560 56,139 36,898 11,848 232,576

The notes on pages 41 to 82 form an integral part of these financial statements. 39 Standard Chartered Bank Ghana Annual Report 2011

Statement of Changes in Equity (contd.) For the year ended 31 December 2011

Share Retained Statutory Credit Risk Other Total Capital Earnings Reserve Reserve Reserves Equity GHfOOO GH£'000 GHfOOO GHfOOO GH£'000 GH£'000

Balance at 1 January 2010 61,131 57,339 37,404 - 3,704 159,578

Total comprehensive income for the year

Profit for the year - 72,208 - - - 72,208

Other comprehensive income net of income tax

Gains recognised directly in equity - - - - 18,349 18,349 Net amount transferred to the income statement (4,324) (4,324)

Total other comprehensive income - - - - 14,025 14,025

Total comprehensive income for the year - 72,208 - - 14,025 86,233

Regulatory and other reserves

Transfer to statutory reserve - (9,026) 9,026

Transfer to credit risk reserve (29,319) 29,319 - Transfer to other reserves (9,323) 9,323

Total transfers to and from reserves - (47,668) 9,026 29,319 9,323 -

Transactions with owners recorded directly in equity

Contributions by and distributions to owners

Dividends to shareholders - (49,830) - - - (49,830)

Total contributions by and distributions to owners - (49,830) - - - (49,830)

Balance at 31 December 2010 61,131 32,049 46,430 29,319 27,052 195,981

The notes on pages 41 to 82 form an integral part of these financial statements. 40 Standard Chartered Bank Ghana Annual Report 2011

Statement Of Cash Flows For The Year Ended 31 December 2011

2011 2010 GHC'000 GHO'OOO

Cash flows from operating activities Profit before tax 114,038 101,513 Adjustments for: Depreciation 2,845 2,026 Impairment on financial assets 9,847 13,576

Write-offs 34 — 126,764 117,115 Change in investment other than those held for the purpose of trading (92,407) (11,675) Change in investments held for trading 2,361 (57,194) Change in loans and advances (139,419) (72,190) Change in other assets 20,812 (4,869) Change in customer deposits 387,245 259,358 Change in amounts due to other banks 10,065 (11,239) Change in interest payable, other liabilities 40,324 (20,853) Change in provisions (7,275) 20,716 Change in borrowings (161,887) (22,653) Cash generated from operating activities 186,583 196,516 Income tax paid (33,984) (22,544) Tax adjustments — (6,516) Net cash from operating activities 152,599 167,456

Cash flows from investing activities Purchase of property and equipment (1,756) (5,850) Acquisition of intangible assets (9,323) Net cash used in investing activities (1,756) (15,173) Cash flows from financing activities Dividends paid (25,877) (49,830)

Net cash used in financing activities (25,877) (49,830)

Net increase in cash and cash equivalents 124,966 102,453 Cash and cash equivalents at 1 January 514,151 411,698 Cash and cash equivalents at 31 December 639,117 514,151

The notes on pages 41 to 82 form an integral part of these financial statements 41 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

1. REPORTING ENTITY

Standard Chartered Bank Ghana Limited is a Bank incorporated in Ghana. The address and registered office of the Bank can be found on page 29 of the annual report. The Bank operates with a Universal Banking license that allows it to undertake Banking and related activities.

2. BASIS OF PREPARATION

a. Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations as issued by the International Accounting Standards Board (IASB).

b. Basis of measurement The financial statements are presented in Ghana cedis which is the Bank's functional currency. They are prepared on the historical cost basis except for the following assets and liabilities that are stated at their fair value: derivative financial instruments, financial instruments at fair value through profit or loss and financial instruments classified as available-for-sale.

c. Use of estimates and judgement The preparation of financial statements in conformity with IFRS requires management to make judgement, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgement about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differfrom these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the financial statements are described in notes 3h (ix), 3h (xi), 3h(xii) 35 and 43.

3. SIGNIFICANT ACCOUNTING POLICIES

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

a. Basis of Consolidation (i) Business combinations Business combinations are accounted for using the acquisition method at the acquisition date, which is the date on which control is transferred to the Bank. Control is the power to govern the financial and operating policies of entity so as to obtain benefits from its activities.

The Bank measures goodwill as the fair value of the consideration transferred including the recognised amount of any controlling interest in the acquiree less the net recognised amount of identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase is recognised immediately in profit or loss.

The Bank elects on a transaction by transaction basis whether to measure non-controlling interest at the fair value or its proportionate share of the recognised amount of the identifiable net assets at the acquisition date.

Transaction costs other than those associated with the issue of debt or equity securities that the bank incurs in connection with a business are expensed as incurred. 42 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(ii) Subsidiaries Subsidiaries are all entities including special purpose entities over which the Bank has the power to directly or indirectly govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.

Subsidiaries are fully consolidated from the date on which the Bank effectively obtains control. They are de-consolidated from the date that control ceases. Subsidiaries that are not considered material are not consolidated and the Bank's interests in those subsidiaries are classified as long term investments.

(iii) Investments in subsidiaries, associates and joint ventures Investments in subsidiaries, associates and Joint Ventures are held at cost less impairment and dividends from pre-acquisition profits received, if any.

b. Revenue Recognition Interest income and expense on available-for-sale assets and financial assets and liabilities held at amortised cost, are recognised in the income statement using the effective interest method.

Gains and losses arising from changes in the fair value of financial assets and liabilities held at fair value through profit or loss, as well as any interest receivable or payable, is included in the income statement in the period in which they arise. Gains and losses arising from changes in the fair value of available-for-sale financial assets, other than foreign exchange gains and losses from monetary items, are recognised directly in equity, until the financial asset is derecognised or impaired at which time the cumulative gain or loss previously recognised in equity is recognised in the income statement. Dividends are recognised in the income statement when the Bank's right to receive payment is established.

c. Interest Income and Expense Interest income and expense is recognised in the income statement using the effective interest method. The effective interest rate is the rate that discounts estimated future receipts or payments through the expected life of the financial instruments or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. The effective interest rate is established on initial recognition of the financial asset or liability and is not revised subsequently when calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees received or paid between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Transactions costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability.

When a financial asset or a group of similar financial assets have been written down as a result of impairment, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Interest income and expense on financial assets and liabilities held at fair value through profit or loss is recognised in the income statement in the period they arise.

d. Fees and Commissions Fees and commission income and expenses that are an integral part of the effective interest rate on financial instruments are included in the measurement of the effective interest rate.

Other fees and commission income, including account servicing fees, investment management fees, sales commission, placement and arrangement fees and syndication fees are recognised as the related services are performed.

Other fees and commission expense relates mainly to transaction and service fees, which are expensed as the sen/ices are received.

e. Other Operating Income Other operating income comprises other income including gains or losses arising on fair value changes in trading assets and liabilities, derecognised available for sale financial assets, and foreign exchange differences.

f. Foreign Currency Foreign currency transactions are translated into the Bank's functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in 43 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

the income statement. Non-monetary assets and liabilities are translated at historical exchange rates if held at historical cost or exchange rates at the date the fair value was determined if held at fair value, and the resulting foreign exchange gains and losses are recognised in the income statement or shareholders' equity as appropriate.

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

(ii) Lease payments Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. Minimum lease payments made under finance leases are apportioned between the finance expense and a reduction of the outstanding lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

h. Financial Assets and Liabilities (i) Categorisation of financial assets and liabilities The Bank classifies its financial assets in the following categories: financial assets held at fair value through profit or loss; loans and receivables and available-for-sale financial assets. Financial liabilities are classified as either held at fair value through profit or loss, or at amortised cost. Management determines the categorisation of its financial assets and liabilities at initial recognition.

(ii) Financial assets and liabilities held at fair value through profit or loss This category has two sub-categories: financial assets and liabilities held for trading, and those designated at fair value through profit or loss at inception. A financial asset or liability is classified as trading if acquired principally for the purpose of selling in the short term.

Financial assets and liabilities may be designated at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on a different basis, or a group of financial assets and/or liabilities is managed and its performance evaluated on a fair value basis.

(iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

(iv) Available for sale financial assets Available-for-sale assets are those non-derivative financial assets that are designated as available for sale or are not classified as financial assets at fair value through profit or loss, loans and receivable and held to maturity.

(v) Financial liabilities measured at amortised cost This relates to all other liabilities that are not designated at fair value through profit or loss.

(vi) Initial recognition Purchases and sales of financial assets and liabilities held at fair value through profit or loss, available for sale financial assets and liabilities are recognised on trade- date (the date the Bank commits to purchase or sell the asset). Loans and receivables are recognised when cash is advanced to customers or borrowers.

Financial assets and liabilities are initially recognised at fair value plus directly attributable transaction cost except for those that are classified at fair value through profit or loss.

(vii) Subsequent measurement Available for sale financial assets are subsequently measured at fair value with the resulting changes recognised in equity. The fair value changes on available for sale financial assets are recycled to the income statement when the underlying asset is sold, matured or derecognised. Financial assets and liabilities classified as at fair value through profit or loss are subsequently 44 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

measured at fair value with the resulting changes recognised in equity. The fair value changes on available for sale financial assets are recycled to the income statement when the underlying asset is sold, matured or derecognised. Financial assets and liabilities classified as at fair value through profit or loss are subsequently measured at fair value with the resulting changes recognised in income.

Loans and receivables and other liabilities are subsequently carried at amortised cost using the effective interest method, less impairment loss.

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

Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire.

(ix) Fair value measurement The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: • Level 1: Quoted market price (unadjusted) in an active market for an identical instrument. • Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. • Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

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

For complex instruments such as swaps, the Bank uses proprietary models, which are usually developed from recognised valuation models. Some or all of the inputs into these models may be derived from market prices or rates or are estimates based on assumptions.

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

(x) Offsetting Financial assets and liabilities are set off and the net amount presented in the balance sheet when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

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

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

(xii) Identification and measurement of impairment. The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets are impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group 45 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

of financial assets that can be reliably estimated.

Objective evidence that financial assets are impaired can include default or delinquency by a borrower, restructuring of a loan and other observable data that suggests adverse changes in the payment status of the borrower.

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 or continues to be recognised, are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on a loan and receivable has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the asset's original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement. If a loan and receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure, less cost for obtaining and selling the collateral, whether or not foreclosure is probable. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e. on the basis of the Bank's grading process which considers 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 group of such assets being indicative of the debtors' ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of 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 exist currently.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement.

Impairment losses on available-for-sale financial assets are recognised by transferring the difference between the amortised acquisition cost and current fair value out of equity to the income statement. When a subsequent event causes the impairment loss on an available for sale financial asset to decrease, the impairment loss is reversed through the income statement. However, any subsequent recovery in the fair value of an impaired available for sale financial asset is recognised directly in equity. i. Derivative Financial Instruments Derivative contracts are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. Fair values may be obtained from quoted market prices in active markets, recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. The fair value changes in the derivative are recognised in the income statement. 46 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

j. Cash and Cash Equivalents Cash and cash equivalents include notes and coins on hand, unrestricted balances held with the Bank of Ghana and highly liquid financial assets that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

k. Investment Securities This comprises investments in short-term Government securities and medium term investments in Government and other securities such as treasury bills and bonds. Investments in securities are categorised as available-for-sale or trading financial assets and carried in the balance sheet at fair values.

I. Loans and Receivables This is mainly made up of placements and overnight deposits with Banks and other financial institutions and loans and advances to customers. Loans and receivables are carried in the balance sheet at amortised cost, i.e. gross receivable less impairment allowance.

m. Property and Equipment (I) Recognition and measurement Items of property and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, and any other costs directly attributable to bringing the asset to a working condition for its intended use." Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components).

(ii) Subsequent costs The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in the income statement as incurred.

(iii) Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over their useful lives. Land is not depreciated. The estimated useful lives for the current and comparative periods are as follows:

Buildings 50 years Leasehold improvements life of lease up to 50 years IT equipment and vehicles 3 - 5 years Fixtures and fittings 5-10 years

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

Gains and losses on disposal of property and equipment are determined by comparing proceeds from disposal with the carrying amounts of property and equipment and are recognised in the income statement as other income.

n. Intangible Assets (i) Software Software acquired by the Bank is stated at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure on software is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation is recognised in the income statement on a straight-line basis over the estimated useful life of the software, from the date that it is available for use. The estimated useful life of software is three to five years. 47 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(ii) Goodwill Goodwill represents the fair value of the consideration transferred including the recognised amount of any controlling interest in the business acquired less the net recognised amount of the identifiable assets acquired and liabilities assumed all measured as of the acquisition date. When the excess is negative, a bargain purchase is recognised immediately in profit or loss.

Goodwill on acquisition of a business is included in 'Intangible assets'. Goodwill included in intangible assets is assessed at each balance sheet date for impairment and carried at cost less any accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash generating units for the purpose of impairment testing. Cash generating units represent the lowest level within the Bank at which the goodwill is monitored for internal management purposes. These are smaller than the Bank's reportable segments (as set out in note 7) as the Bank views its reportable segments on a global basis. Note 24 sets out the major cash generating units to which goodwill has been allocated.

(iii) Other Intangible Assets Other intangible assets that are acquired by the Bank and have finite useful lives are recognised at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenses excluding expenses on internally generated goodwill and brands is recognised in profit and loss as incurred.

Amortisation is based on the cost of the asset less its residual value. Amortisation is recognised in profit and loss on a straight line basis over the lifespan of the asset. The current estimated useful life is eight years.

o. Taxation Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

p. Deferred Taxation Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at tax rates that are expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or substantively enacted by the reporting date.

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

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

r. Dividend Dividend income is recognised when the right to receive income is established. Dividend payable is recognised as a liability in the period in which they are declared.

s. Deposits, Amounts due to Banks and Borrowings This is mainly made up of customer deposit accounts, overnight placements by Banks and other financial institutions and medium term borrowings. They are categorised as other financial liabilities and carried in the balance sheet at amortised cost.

t. Provisions A provision is recognised if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 48 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

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

Financial guarantees are initially recognised at their fair value, and the fair value is amortised over the life of the financial guarantee. The financial guarantees are subsequently carried at the higher of the amortised amount and the present value of any expected payment (when a payment underthe guarantee has become probable).

v. Employee Benefits (i) Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when they are due.

(ii) Defined benefit plans The Bank's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and any unrecognised past service costs. The discount rate is the yield at the reporting date on a long-dated instrument on the Ghana market. The calculation is performed using the projected unit credit method. Changes in the fair value of the plan liabilities are recognised in the income statement. Actuarial gains and losses on the plan are recognised in the income statement.

(iii) Termination benefits Termination benefits are recognised as an expense when the Bank is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognised if the Bank has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. 49 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(iv) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Bank has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

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

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessment of the time value of money and risks specific to the asset.

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

x. Share Capital (i) Ordinary shares Ordinary shares are classified as equity.

(ii) Preference share capital Preference share capital is classified as equity if it is non-redeemable, or redeemable only at the Bank's option, and any dividends are discretionary. Preference share capital is classified as a liability if it does not meet the definition of equity.

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

z. Segment Reporting A segment is a distinguishable component of the Bank that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Bank's primary format for segment reporting is based on business segments.

aa. Share Based Payment Transactions Employees of the Bank participate in share based payment transactions with the Bank's parent company. The parent allocates cost to the Bank representing the fair value of the share based payments attributable to the employees of the Bank. The allocated cost is recognised as an expense in each period. 50 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

ab. New Standards and Interpretations not yet adopted There are new or revised Accounting Standards and Interpretations in issue that are not yet effective. These include the following Standards and Interpretations that may have an impact on future financial statements:

Standard/Interpretation Effective Date

IAS 1 Presentation of Financial Statements: Presentation of Annual periods beginning on or amendment Items of Other Comprehensive Income after 1 July 2012 IFRS 7 Annual periods beginning on or amendment Disclosures - Transfers of Financial Assets after 1 July 2011 IFRS 9 (2009) Financial Instruments Annual periods beginning on or after 1 January 2015 IFRS 9 (2010) Financial Instruments Annual periods beginning on or after 1 January 2015 IFRS 10 Consolidated Financial Statements Annual periods beginning on or after 1 January 2013 IFRS 12 Disclosure of Interests in Other Entities Annual periods beginning on or after 1 January 2013 IFRS 13 Fair Value Measurement Annual periods beginning on or after 1 January 2013

Amendment to IAS 1 Presentation of Financial Statements The amendment to IAS 1 will be adopted for the first time for the financial reporting period ending 31 December 2013.

The Bank will present those items of other comprehensive income that may be reclassified to profit or loss in the future separately from those that would never be reclassified to profit or loss. The related tax effects for the two sub-categories will be shown separately.

This is a change in presentation and will have no impact on the recognition or measurement of items in the financial statements.

This amendment will be applied retrospectively and comparative information will be restated.

Amendments to IFRS 7 Financial Instruments: Disclosures The amendments to IFRS 7 will be adopted for the first time for the fi nancial reporting period ending 31 December 2012. In terms of the amendments, additional disclosure will be provided regarding transfers of financial assets that are: • not derecognised in their entirety; and • derecognised in their entirety but for which the Bank retains conti nuing involvement.

This amendment will not have a significant impact on the Bank's financial statements.

IFRS9 (2009) Financial Instruments IFRS 9 will be adopted for the first time for the financial reporting period ending 31 December 2015. The standard will be applied retrospectively, subject to transitional provisions. IFRS 9 addresses the initial measurement and classification of financial assets and will replace the relevant sections of IAS 39.

Under IFRS 9 there are two options in respect of classification of financial assets, namely, financial assets measured at amortised cost or at fair value. Financial assets are measured at amortised cost when the business model is to hold assets in order to collect contractual cash flows and when they give rise to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value. Embedded derivatives are no longer separated from hybrid contracts that have a financial asset host.

This amendment will not have a significant impact on the Bank's financial statements.

IFRS 9 (2010) Financial Instruments IFRS 9 (2010) will be adopted for the first time for the financial reporting period ending 31 December 2015. The standard will be applied retrospectively, subject to transitional provisions.

IFRS 9 (2010) addresses the measurement and classification of financial liabilities and will replace the relevant sections of IAS 39. 51 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

Under IFRS 9 (2010), the classification and measurement requirements of financial liabilities are the same as per IAS 39, except for the following two aspects:

• fair value changes for financial liabilities (other than financial guarantees and loan commitments) designated at fair value through profit or loss, that are attributable to the changes in the credit risk of the liability will be presented in other comprehensive income (OCI). The remaining amount of the fair value change is recognised in profit or loss. However, if this requirement creates or enlarges an accounting mismatch in profit or loss, then the whole fair value change is presented in profit or loss. The determination as to whether such presentation would create or enlarge an accounting mismatch is made on initial recognition and is not subsequently reassessed.

• Under IFRS 9 (2010) derivative liabilities that are linked to and must be settled by delivery of an unquoted equity instrument whose fair value cannot be reliably measured, are measured at fair value.

IFRS 9 (2010) incorporates, the guidance in IAS 39 dealing with fair value measurement and accounting for derivatives embedded in a host contract that is not a financial asset, as well as the requirements of IFRIC 9 Reassessment of Embedded Derivatives.

This amendment will not have a significant impact on the Bank's financial statements.

IFRS 10 Consolidated Financial Statements IFRS 10 will be adopted for the first time for the financial reporting period ending 31 December 2013. The standard may be applied retrospectively. IFRS 10 introduces a single control model to assess whether an investee should be consolidated. This control model requires entities to perform the following in determining whether control exists: • Identify how decisions about relevant activities are made; • Assess whether the entity has power over relevant activities by considering only the entity's substantive rights; • Assess whether the entity is exposed to variability in returns, and

• Assess whether the entity is able to use its power over the investee to affect returns for its own benefit

Control should be assessed on a continuous basis and should be reassessed as facts and circumstances change.

This amendment will not have a significant impact on the Bank's financial statements.

IFRS 12 Disclosure of Interests in Other Entities IFRS12 will be adopted for the first time for the financial reporting period ending 31 December 2013. IFRS 12 combines, in a single standard, disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities. The required disclosures aim to provide information to enable users evaluate: • The nature of, and risks associated with, an entity's interests in other entities, and • The effects of those interests on the entity's financial position, financial performance and cash flows.

The adoption of this standard will increase the level of disclosure provided for interests in subsidiaries, joint arrangements, associates and structured entities.

IFRS 13 Fair Value Measurement IFRS 13 will be adopted for the first time for the financial reporting period ending 31 December 2013. The standard will be applied prospectively and comparatives will not be restated.

IFRS 13 introduces a single source of guidance on fair value measurement for both financial and non-financial assets and liabilities by defining fair value, establishing a framework for measuring fair value and setting out disclosures requirements for fair value measurements. The key principles in IFRS 13 are as follows: • Fairvalueisan exit price • Measurement considers characteristics of the asset or liability and not entity-specific characteristics • Measurement assumes a transaction in the entity's principle (or most advantageous) market between market participants • Price is not adjusted for transaction costs • Measurement maximises the use of relevant observable inputs and minimises the use of unobservable inputs • The three-level fair value hierarchy is extended to all fair value measurements

This amendment of IFRS 13 will not have an impact on the Bank's financial statements. 52 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

4. REGULATORY DISCLOSURES

(i) Non-Performing Loans Ratio Percentage of gross non-performing loans ("substandard to loss") to total credit/advances portfolio (gross) 10% (2010:12%).

(ii) Capital Adequacy Ratio The capital adequacy ratio at the end of December 2011 was calculated at approximately 16.68% (2010:15.61 %).

(iii) Regulatory Breaches There was one breach with respect to statutory liquidity requirements and a penalty of GH07.862 (2010: GH0 Nil) was imposed.

5. CONTINGENT LIABILITIES AND COMMITMENTS 2011 2010 GH^'OOO GH0'OOO (i) Contingent Liabilities • Pending Legal Suits 1,234 1,176

(ii) Commitments for Capital Expenditure There was no commitment for capital expenditure at the balance sheet date and at 31 December 2010.

(iii) Unsecured Contingent Liabilities and Commitments 2011 2010 GH£'000 GH£'000 • This relates to commitments for trade letters of credit and guarantees. 204,846 209,274

6. SOCIAL RESPONSIBILITY COST An amount of GH0176,325 (2010: GH0143,559) was spent under the Bank's social responsibility program.

7. SEGMENTAL REPORTING Segmental information is presented in respect of the Bank's business segments. The Bank is organised into two main business segments: Wholesale Banking and Consumer Banking.

Some of the Bank's corporate costs are managed centrally and standardised basis are used to allocate these costs to the business segments on a reasonable basis. 53 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

2011 Class of Business Consumer Wholesale Banking Banking Unallocated Total GH^'OOO GH^'OOO GH^'OOO GH^'000

Net Interest Income 55,657 93,028 1,718 150,403 Non Funded Income 26,380 40,556 66,936

Operating Income 82,037 133,584 1,718 217,339 Operating Expenses (47,092) (44,644) (1,718) (93,454)

Operating profit before Impairment

Losses and Taxation 34,945 88,940 - 123,885 Impairment Loss (5,411) (4,436) (9,847)

Profit before taxation 29,534 84,504 - 114,038

Total Assets 166,921 1,143,666 660,475 1,971,062

Total Liabilities 782,590 727,097 228,799 1,738,486

2010 Class of Business Net Interest Income 59,484 91,248 2,016 152,748 Non Funded Income 20,094 45,183 65,277

Operating Income 79,578 136,431 2,016 218,025 Operating Expenses (47,049) (53,871) (2,016) (102,936)

Operating profit before Impairment

Losses and Taxation 32,529 82,560 - 115,089 Impairment Loss (4,887) (8,689) (13,576)

Profit before taxation 27,642 73,871 101,513

Total Assets 107,354 880,455 680,073 1,667,882

Total Liabilities 625,559 719,815 126,527 1,471,901 54 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

8. INTEREST INCOME (I) Classification 2011 2010 GHfOOO GHfOOO Placements, Special Deposits 11,878 17,925 Investment Securities 111,755 107,140 Loans and Advances 72,142 88,876

195,775 213,941

(ii) Categorisation Financial assets held at fair value through Profit and Loss: Held for Trading 26,018 10,079 Available for Sale Instruments 85,737 98,923 Loans and Receivables 84,020 104,939

195,775 213,941

Included in interest income on loans and receivable is a total amount of GHtfNil (2010: GH0Nil) accrued on impaired financial assets.

9. INTEREST EXPENSE 2011 2010 GHfOOO GHfOOO Current Accounts 603 300 Time and other Deposits 10,221 14,026 Overnight and Call Accounts 8,620 7,321 Borrowings 25,928 39,546

45,372 61,193

Total interest expense on financial liabilities held at amortised cost was GH045,372,OOO (2010: GH061,193,000).

10. NET FEES AND COMMISSION INCOME 2011 2010 GHfOOO GHfOOO Fees and Commission Income [Note 10(i)] 34,941 47,676 Fees and Commission Expense [Note 10(H)] (2,838) (5,316)

Net Fees and Commission Income 32,103 42,360 55 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

10. NET FEE AND COMMISSION INCOME (CONT'D) i. Fees and commission income 2011 2010 GH£'000 GH£'000 Customer account servicing fees 14,444 13,186 Letters of credit issued 3,264 2,491 Others 17,233 31,999

Total fees and commission income 34,941 47,676

ii. Fees and commission expense Inter -Bank transaction fees (2,838) (5,316)

Fees and commission income and expenses disclosed above are fees other than those included in determining the effective interest rate on financial instruments.

11. OTHER INCOME Other income for the year was GHtfNil (2010: GHtfNil).

12. OTHER OPERATING INCOME 2011 2010 GH£'000 GH£'000 Gains on foreign exchange 34,833 22,917

13. OPERATING EXPENSES Staff costs (Note 14) 55,820 55,156 Advertising and marketing 748 1,161 Administrative 16,683 29,373 Training 562 652 Depreciation 2,845 2,026 Directors' emoluments 2,027 1,240 Auditors' remuneration 132 120 Donations and sponsorship 176 144 Others 14,461 13,064

93,454 102,936

14. STAFF COSTS 2011 2010 GH^'OOO GH^'OOO Wages, Salaries, Bonus and Allowances 47,191 47,293 Social Security Costs 3,450 2,764 Pension and Retirement Benefits 1,834 1,482 Other Staff Costs 3,345 3,617

55,820 55,156

The average number of persons employed by the Bank during the year was 942 (2010:986). Included in this figure is staff of 201 (2010:198) who work at the Shared Service Centre for processing transactions of six (6) countries in West Africa including Ghana. Cost incurred in processing transactions at SSC are appropriated based on volumes of transactions processed for each. 56 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

15. IMPAIRMENT LOSS 2011 2010 GHfOOO GHfOOO

Impairment Loss 9,847 13,576

16. FINANCIAL INSTRUMENTS CLASSIFICATION SUMMARY

Financial instruments are classified among four recognition principles: held at fair value through profit or loss (comprising trading and designated), available-for-sale, held-to-maturity and loans and receivables. These categories of financial instruments have been combined for presentation on the face of the financial position.

16a The Bank's classification of its principal financial assets and liabilities are summarised below:

Held at fair value Total through profit Available Loans & Carrying Fair Note or loss(Trading) for Sale Receivables Amount Value Financial Assets GHfOOO GHfOOO GHfOOO GHfOOO GHfOOO

Cash and balances with with Bank of Ghana 19 - 159,872 159,872 159,872 Gov't Securities 20 154,413 485,013 - 639,426 639,426 Due from other Banks and financial institutions 21 - 479,245 479,245 479,245 Loans and Advances 22 - 596,724 596,724 596,724 Equity Investment 20 100 - 100 100

Other Assets 25 8,164 • • 8,164 8,164

Total at 31/12/11 162,577 485,113 1,235,841 1,883,531 1,883,531

Cash and balances with with Bank of Ghana 19 - 139,669 139,669 139,669 Gov't Securities 20 156,774 411,308 - 568,082 568,082 Due from other Banks and financial institutions 21 - 374,482 374,482 374,482 Loans and Advances 22 - 467,152 467,152 467,152

Equity Investment 20 100 - 100 100

Total at 31/12/10 156,774 411,408 981,303 1,549,485 1,549,485

Financial Held Liabilities at fair value Measured at Total through profit Amortised Carrying Fair Financial Liabilities Note or Loss (Trading) Cost Amount Value GHfOOO GHl'OOO GHfOOO GHfOOO

Customer Deposits 27 1,479,687 1,479,687 1,479,687 Due to other Banks and financial institutions 28 - 10,261 10,261 10,261 Other Liabilities 30 - - - -

Borrowings 32 • 90,976 90,976 90,976

Total at 31/12/11 - 1,580,924 1,580,924 1,580,924

Customer Deposits 27 1,092,442 1,092,442 1,092,442 Due to other Banks and financial institutions 28 - 196 196 196 Other Liabilities 30 2,109 - 2,109 2,109

Borrowings 32 • 252,863 252,863 252,863

Total at 31/12/10 2,109 1,345,501 1,347,610 1,345,501 57 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

16b Fair value hierarchy as defined under Note 3(h-(ix)) analysis

The table below analyses financial Instruments measured at fair value at the end of the reporting period by the level In fair value hierarchy, Into which the fair value measurement is categorised.

LeveM Level 2 Level 3 Total Note GHfOOO GHfOOO GHfOOO GH?000 2011 Government Securities 20 639,426 639,426 Equity Investment 20 - 100 100 Other assets 25 8,164 8,164

Total at 31/12/11 647,590 100 647,690

2010 Government Securities 20 568,082 568,082

Equity Investment 20 - 100 100

Total at 31/12/10 568,082 100 568,182

2011

Other Liabilities 30 - -

2010 Other Liabilities 30 2,109 2,109

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

Equity Investments GHfOOO 2011 Balance at 1 January and at 31 December 100

2010 Balance at 1 January and at 31 December 100

There were no gains or losses recognised in the statement of comprehensive income relating to the assets disclosed in the above table for the period ending 31 December 2010 (2009 GH0 Nil).

17. TAXATION

(I) Income tax expense 2011 2010 Note GHl'OOO GHfOOO

Current Tax 17(iii) 31,738 20,578 Deferred Tax 18 (1,078) 3,651

30,660 24,229 58 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(ii) Taxation Payable Payments Balance at during Charge for Balance at 1/1/11 the year the year 31/12/11 GHfOOO GHfOOO GHfOOO GHfOOO Income Tax:- 2005 to 2009 (1,145) (1,145) 2010 293 293 2011 (24,699) (31,738) 7,039

(852) (24,699) 31,738 6,187 National Fiscal Stabilisation Levy 4,062 (9,285) 5,702 479

3,210 (33,984) 37,440 6,666

(iii) Reconciliation of Effective Tax Rate

Analysis of tax charge in the year: 2011 2010 GH^'OOO GHfOOO The charge for taxation based upon the profits for the year comprises:

Current tax on income for the year 31,738 20,578

Total current tax 31,738 20,578 Deferred tax: (Reversal) / Charge of temporary differences (1,078) 3,651 Tax on profits on ordinary activities 30,660 24,229

Effective tax rate 26.9% 23.9% The differences are explained below:

Profit before tax 114,038 101,503

Tax at 25% (2010:25%) 28,509 25,378 Non-deductible expenses 4,894 7,152 Tax exempt revenues (3,131) Capital allowances (534) (813) Deferred taxes (1,078) 3,651 Impairment losses (463) (8,008) Tax rebate (668)

Current tax charge 30,660 24,229 59 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(III) Reconciliation of Effective Tax Rate (cont'd)

The Income tax for the year Is based on a tax rate of 25% on profit before tax.

Tax liabilities up to 2004 have been agreed with the Ghana Revenue Authority. The remaining liabilities are subject to the agreement of the Ghana Revenue Authority

National Fiscal Stabilisation Levy is a levy introduced by the Government as a charge on profit before tax effective July 2009. The rate applicable to the bank is 5%.

(iv) Tax Recognised Directly in Equity

Current tax credit/charge on available-for-sale assets for the year was Nil (2009: Nil).

18. DEFERRED TAXATION 2011 2010 GHfOOO GHfOOO

Balance at 1 January 5,343 (2,983) (Released)/charge to profit and loss (1,078) 3,651 (Released)/charge to equity (4,675) 4,675

Balance at 31 December (410) 5,343

(i) Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

2011 2010 Assets Liabilities Net Assets Liabilities Net GHl'OOO GHfOOO GH^'OOO GHfOOO GHfOOO GH£'000

Property and equipment - 2,132 2,132 - 2,628 2,628

Portfolio impairment (2,462) - (2,462) (3,393) - (3,393)

Unrealised gains on trading investments (1,103) - (1,103) - 3,065 3,065 Available for sale assets - 1,235 1,235 - 5,910 5,910

Provisions (212) - (212) (2,867) • (2,867)

Net tax (assets) / liabilities (3,777) 3,367 (410) (6,260) 11,603 5,343

Included in deferred taxes are amounts of GH01,234,000. (2010: GH05,910,000) recognised directly in equity in respect of mark to market valuation on available for sale financial assets.

19. CASH AND BALANCES WITH BANK OF GHANA

2011 2010 GHfOOO GHfOOO

Cash on Hand 45,743 33,349 Balances with Bank of Ghana 114,129 106,320

159,872 139,669 60 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

20. INVESTMENTS

(I) Short-Term Government Securities 2011 2010 GH?000 GHfOOO

Short-Term Investments 170,104 57,619

Short-term Government Securities comprises of Ghana Government fixed and floating rate instruments. The floating rate instruments are benchmarked against the 91 day Treasury Bill rate plus a markup.

(ii) Government Securities

2011 2010 GH?000 GHl'OOO

Government Bonds 469,322 510,463

These are fixed and floating Government of Ghana Bonds maturing between 2012 and 2016. The floating rate instruments are bench marked against the 91 day Treasury Bill rate plus a markup.

(iii) Equity Investment 2011 2010 GH?000 GHl'OOO

Investment in Subsidiary 100 100

Investment in subsidiaries represents the Bank's equity interest in Standard Chartered Investment Services Limited and Standard Chartered Ghana Nominees Limited, wholly owned subsidiaries.

21. DUE FROM OTHER BANKS AND FINANCIAL INSTITUTIONS

2011 2010 GH?000 GHfOOO

Nostra Account Balances 10,906 52,286 Items in course of Collection 52,765 17,614 Placement with other Banks 415,574 304,582

479,245 374,482

22. LOANS AND ADVANCES i.Analysis by Type 2011 2010 GHfOOO GH0'OOO

Overdrafts 194,288 255,079 Term Loans 433,849 238,598

Gross Loans and Advances 628,137 493,677 Impairment Allowance (31,413) (26,525)

Net Loans and Advances 596,724 467,152

The above constitutes loans and advances (Including credit bills negotiated) to customers and staff. 61 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

ii. Impairment Allowance

2011 2010 GHfOOO GHfOOO

Specific 25,736 22,083 Portfolio 5,677 4,442

31,413 26,525

iii. Key ratios on Loans and Advances

a. Loan loss provision ratio was 5% (2010: 5%). b. Gross non-performing loan ratio was 10 % (2010:12%). c. Ratio of fifty (50) largest exposure (gross funded and non-funded) to total exposures was 52% (2009:65%).

iv. Analysis by Business Segments 2011 2009 GH£'000 GHfOOO

Agriculture, Forestry and Fishing 24,219 7,212 Mining and Quarrying 3,227 3,306 Manufacturing 135,204 179,801 Construction 11,422 8,716 Electricity, Gas and Water 11,780 7,806 Commerce and Finance 318,821 212,159 Transport, Storage and Communication 25,698 14,947 Sen/ices 56,011 19,460 Miscellaneous 41,755 40,270

Gross Loans and Advances 628,137 493,677 Impairment Allowance (31,413) (26,525)

Net Loans and Advances 596,724 467,152

v. Analysis by Type of Customer 2011 2010 GH0-OOO GHfOOO

Individuals 165,803 108,853 Private Enterprises 414,021 322,159 Joint Private and State Enterprises 5,027 19,120 Public Institutions 1,531 3,275 Staff 41,755 40,270

Gross Loans and Advances 628,137 493,677 Impairment Allowance (31,413) (26,525)

Net Loans and Advances 596,724 467,152 62 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

23. PROPERTY AND EQUIPMENT Assets in course Land and Furniture & Motor of Construction Buildings Computers Equipment Vehicles Total GHfOOO GHfOOO GHfOOO GHfOOO GHfOOO GHfOOO Cost

Balance at 1/1/11 164 17,744 12,719 8,625 404 39,656

Additions 1,756 • • • • 1,756

Write-offs • • • (416) • (416)

Transfers (1,612) 597 • 1,015 • •

Balance at 31/12/11 308 18,341 12,719 9,224 404 40,996

Depreciation

Balance at 1/1/11 • 4,250 11,587 4,156 249 20,242

Charge for the year • 1,093 548 1,124 80 2,845

Write - off • • • (382) • (382)

Balance at 31/12/11 - 5,343 12,135 4,898 329 22,705

Carrying amount

Balance at 31/12/11 308 12,998 584 4,326 75 18,291

Cost

Balance at 1/1/10 2,661 13,065 12,471 5,230 379 33,806

Additions 4,382 731 103 609 25 5,850

Reclassification (6,879) 3,948 145 2,786 • •

Balance at 31/12/10 164 17,744 12,719 8,625 404 39,656 63 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

23. PROPERTY AND EQUIPMENT Assets in course Land and Furniture & Motor of Construction Buildings Computers Equipment Vehicles Total GHfOOO GHfOOO GHl'OOO GHfOOO GH0'OOO GHfOOO Depreciation Balance at 1/1/10 - 3,552 10,920 3,559 185 18,216

Charge for the year • 698 667 597 64 2,026

Balance at 31/12/10 • 4,250 11,587 4,156 249 20,242

Carrying amount Balance at 31/12/10 164 13,494 1,132 4,469 155 19,414

(i) Operating Lease

Non cancellable operating lease rentals are payable as follows:

2011 2010 GHfOOO GHfOOO

Less than one year 683 228 Between one and 5 years 492 257 More than 5 years 1,483 1,196

2,658 1,681

24. INTANGIBLE ASSETS

Other Intangibles Software Total GHtfOOO GH0OOO GH0OOO At Cost Balance at 31/12/11 9,323 9,323

Provision for Amortisation

Balance at 1/1/11 - Amortisation for the year 1,177 1,177

Balance at 31/12/11 1,177 - 1,177

Carrying Amount 8,146 - 8,146 at at 31/12/11 64 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

24. INTANGIBLE ASSETS (Contd)

Other Intangibles Software Total GH0OOO GH0OOO GH£000

At Cost Balance at 1/1/10 - 378 378

Acquisition 9,323 - 9,323

Balance at 31/12/10 9,323 378 9,701

Provision for Amortisation

Balance at 1/1/10 378 378

Amortisation for the year - - -

Balance at 31/12/10 - 378 378

Carrying Amount 9,323 - 9,323

Goodwill

The goodwill arising on acquisition of the intangible asset was GHcNil.

All recoverable amounts were measured based on value in use. The key assumptions and approach to determining value in use calculations, as set out below, are solely estimates for the purposes of assessing impairment on acquired goodwill. The calculation for the custody business unit uses cash flow projections based on budgets and forecasts by management covering a four year period. Management forecasts projected revenue growth rates which are in line with past performance and management's expectation of what the performance should be after the takeover. The cash flows are discounted using a pre-tax discount rate which reflects current market rates appropriate to the cash generating unit. Management believes that reasonable possible change in any of the key assumptions on which the recoverable amounts have been based would not cause the carrying amounts to exceed their recoverable amount.

Other Intangibles Other intangibles relates to the fair value of the acquired Custody Business of Barclays Bank Ghana Limited in 2010. This intangible asset would be amortised over a period of 8 years

Software This relates to the cost of purchased software.

25. OTHER ASSETS 2011 2010 GHfOOO GH0'OOO

Accounts Receivable and Prepayments 27,973 56,716 Accrued Interest Receivable 30,310 31,141 Impersonal Accounts 2,401 1,803

Other Assets (Note 26) 8,164

68,848 89,660 65 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

26. DERIVATIVES

Included in other assets are fair values of cross currency swaps of GH08,164,33O (2010: GH0NN) and GH0Nil (2010:2,108,887) in other liabilities. The fair value movement on these derivatives are recognised in the income statement.

27. CUSTOMER DEPOSIT AND CURRENT ACCOUNTS

2011 2010 GHfOOO GH?000

Current Accounts 828,407 618,550 Time Deposit 73,508 85,507 Savings Deposit 368,656 287,595 Call Deposit 209,116 100,790

1,479,687 1,092,442

i. Analysis by Type of Depositors

Individuals and other Private Enterprises 1,477,625 1,091,106 Public Enterprises 2,062 1,336

1,479,687 1,092,442

Ratio of twenty largest depositors to total deposit is 25% (2010: 22%).

28. DUE TO OTHER BANKS AND FINANCIAL INSTITUTIONS

2011 2010 GHl'OOO GH0-OOO

Nostra Account Balances 10,261 196 66 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

29. DIVIDENDS 2011 2010 GHfOOO GHfOOO

Ordinary Dividend 24,449 47,550 Preference Dividend 1,428 2,280

25,887 49,830 Payments during the year (25,887) (49,830)

Balance at 31 December

The Directors are recommending a dividend of GH03.O5 per share for ordinary shares (2010: GH01.27 per share) amounting to GH058.7 million (201O:GH024.5 million).

30. INTEREST PAYABLE AND OTHER LIABILITIES

2011 2010 GH£'000 GH£'000

Accrued Interest Payable 1,799 3,015 Other Creditors and Accruals 108,269 64,620

Others (Note 26) - 2,109

110,068 69,744

31. PROVISIONS Staff related Others Total GHfOOO GH^'OOO GHfOOO

Balance at 1 January 10,456 37,647 48,103 Charged to Income Statement 13,333 1,357 14,690

23,789 39,004 62,793 Utilised during the year (15,940) (6,025) (21,965)

Balance at 31 December 7,849 32,979 40,828

Staff related This relates to provisions made for staff related obligations that exist at the year end.

Others This comprises provisions made for various operational obligations during the year. These are expected to be utilised during the year 2012. Provisions include retired staff medical benefit of GH0Nil (2010: GH0762.516). 67 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

32. BORROWINGS 2011 2010 GH£000 GH£000

Intra-Group 90,976 237,362 Short-term Loan 15,501

90,976 252,863

The short -term loan represents borrowing on the local market. The applicable interest rates are bench marked against the 91 -day Treasury Bill rate.

33. CAPITAL AND RESERVES

(i) Share Capital (Stated Capital) 2011 2010 No of Shares Proceeds No of Shares Proceeds '000 GH0OOO '000 GH0OOO (a). Ordinary Shares

Authorised

No. of Ordinary Shares of no par value 250,000 100,000

Issued and Fully Paid

Issued for Cash Consideration 5,655 48,001 5,655 48,001 Transferred from Income Surplus Account 13,596 4,040 13,596 4,040

19,251 52,041 19,251 52,041

(b). Preference Shares

Issued and Fully Paid

No. of Preference Shares 17,486 9,090 17,486 9,090

Total Share Capital 61,131 61,131

There is no share in treasury and no call or installment unpaid on any share.

The preference shares are irredeemable and non-cumulative with respect to dividend payments.

(ii) Retained Earnings (Income Surplus Account)

This represents the residual of cumulative annual profits that are available for distribution to shareholders. 68 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(iii) Statutory Reserve

This represents amounts set aside as a non-distributable reserve from annual profits in accordance with section 29 of the Banking Act, 2004 (Act 673) and guidelines from the Central Bank.

(iv) Credit Risk Reserve

This represents amounts set aside from the retained earnings account to meet the minimum requirements of statutory impairment allowance for non- performing loans and advances.

(v) Other Reserves

This comprises the following: 2011 2010 GH^'OOO GHfOOO

Marked -to- market gains on available for sale securities 4,937 23,639 Deferred taxes recognised directly in equity (1,235) (5,910) Amount relating to intangible asset 8,146 9,323

11,848 27,052

34. RELATED PARTY TRANSACTIONS

(i) Parent and ultimate controlling party

The Bank is a subsidiary of Standard Chartered Holdings (Africa) B.V and its ultimate parent company is Standard Chartered PLC.

(ii) Transactions with Directors, Officers and other Employees

The following are loan balances due from related parties:

2011 2010 GHl'OOO GHfOOO

Directors 582 361 Officers and other Employees 41,173 39,909

41,755 40,270

Interest rates charged on balances outstanding from related parties are lower than the bank's market rate for similar products. This is due to the risk inherent in these products. Mortgages and secured loans granted are secured over property of the respective borrowers. Other balances are not secured and no guarantees have been obtained.

No impairment losses have been recorded against balances outstanding during the period with Directors, Officers and Employees and no specific allowance has been made for impairment losses on balances with these persons at the period end

Key management personnel compensation forthe period comprised:

2011 2010 GH£'000 GHfOOO

Short-term employee benefits 1,432 837 Share-based payment transactions 2,244 1,506

3,676 2,343 69 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

iii. Affiliated Companies

Amounts due from affiliated companies at the balance date sheet were as follows: 2011 2010 GH0OOO GH£000

Nostros 10,703 51,919 Inter Bank advances 275,574 139,582

286,277 191,501

Amounts due to affiliated companies at the balance sheet date were as follows:

Short -term borrowing 90,976 237,362 Other creditors outstanding 10,261 196

101,237 237,558

iv. Management and Technical Services Fees The Bank has a number of agreements with its parent company, one of which has been approved by the Ghana Investment Promotion Council (GIPC). Total charges made in respect of these agreements amounted to GH03,119,852 (2010: GH03,894,813) The Bank has three (3) other agreements with the SCB Group under the Technology Transfer Regulation (LI1547) of Ghana which are pending approval by the (GIPC). The bank has made provisions relating to charges on these totaling GH026,586,128 (2010: GH03O,85O,526). These charges are, however, not due for settlement until the agreements are approved by GIPC.

v. Share based Payments Included in staff cost is an amount of GH02,243,643 (2010: GH01,505,732) payable to the Holding company in respect of value of equity settled share based payments allocated to employees of the Bank on a group arrangement basis.

35. FINANCIAL RISK MANAGEMENT

(i) Introduction and Overview

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

credit risk liquidity risk market risks operational risks.

This note presents information about the Bank's exposure to each of the above risks, the Bank's objectives, policies and processes for measuring and managing risk, and the Bank's management of capital.

Risk management framework The Board of Directors have overall responsibility for the establishment and oversight of the Bank's risk management framework. The Board has established the Asset and Liability Management Committee (ALCO), Credit Committee and the Country Operational Risk Group (CORG), which are responsible for developing and monitoring the Bank's risk management policies in their specified areas. All these committees include members of the Bank's Management Committee and report regularly to the Board of Directors on their activities.

The Bank's risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. The Bank, through its training and management standards and procedures, has developed a disciplined and constructive control environment, in which all employees understand their roles and obligations. 70 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

The Bank's Audit Risk Committee (ARCO) is responsible for monitoring compliance with the Bank's risk management policies and procedures, and reviewing the adequacy of the risk management framework in relation to the risks faced by the Bank. This committee is assisted in these functions by a risk management structure in all the units of the Bank which ensures a consistent assessment of risk management controls and procedures.

(ii) Credit Risk

Credit Risk Management Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Bank's loans and advances to customers and other Banks and investment securities.

The Credit Committee (CC), a sub-committee of the board has responsibility for credit risk issues. Procedures for managing credit risk are determined at the business levels with specific policies and procedures being adapted to different risk environment and business goals. Risk officers are located in the business to maximise the efficiency of decision making.

The businesses working with the Risk Officers take responsibility for managing pricing for risk, portfolio diversification and overall asset quality within the requirements of Bank's standards, policies and business strategy.

Wholesale Banking

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

Consumer Banking

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

Problem Credit Management and Provisioning

Consumer Banking

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

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

A portfolio impairment provision ("PIP") is held to cover the inherent risk of losses, which although not identified, are known through experience to be present in the loan portfolio. PIP covers both performing loans and loans overdue for less than 150 days. The provision is set with reference to past experience using flow rate methodology, as well as taking account of judgmental factors such as the economic and business environment and the trends in a range of portfolio indicators. 71 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

Wholesale Banking

In Wholesale Banking, accounts or portfolios are placed on Early Alert when they display signs of weakness. Such accounts and portfolios are subject to a dedicated process with oversight Involving Senior Risk Officers and Group Special Asset Management ("GSAM"). Account plans are re- evaluated and remedial actions are agreed and monitored until complete. Remedial actions Include, but are not limited to, exposure reduction, security enhancement, exit of the account or Immediate movement of the account Into the control of GSAM, the specialist recovery unit.

Loans are designated as Impaired and considered non-performing where recognised weakness Indicates that full payment of either Interest or principal becomes questionable. Impaired accounts are managed by GSAM, which Is Independent of the main businesses of the Bank. Where any amount Is considered uncollectible, an Individual Impairment provision Is raised, being the difference between the loan carrying amount and the present value of estimated future cash flows. In any decision relating to the raising of provisions, the Bank attempts to balance economic conditions, local knowledge and experience, and the results of Independent asset reviews. Where It Is considered that there Is no realistic prospect of recovering an element of an account against which an Impairment provision has been raised, than that amount will be written off.

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

Set out below is an analysis of various credit exposures.

Analysis by credit grade of loans and advances

Loans and Receivables 2011 2010 GH?000 GH?000 Impaired loans Individually impaired 77,645 73,917 Allowance for impairment (25,736) (22,083)

Impaired loans, net of individual provisions 51,909 51,834

Past due up to 30 days 631 788 Past due 31-60 days 435 408 Past due 61-90 days 302 219 Past due 91-120 days 201 1,046 Past due 121-150 days 371 260 Past due more than 150 days 13,890 36,213

15,830 38,934

Loans neither past due nor impaired Credit grading 1-12 or equivalent 534,662 380,826 Less: Portfolio impairment provision (5,677) (4,442)

544,815 415,318

Total net loans 596,724 467,152

Analysis of credit concentration risk

The concentration of loans and advances by business segment and customer types are disclosed in Note 22 (iv) and 22 (iv) respectively. Investment securities are held largely in Government instruments. 72 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

35. FINANCIAL RISK MANAGEMENT (CONT'D)

Maximum credit exposure

At 31 December 2011, the maximum credit risk exposure of the Bank in the event of other parties failing to perform their obligations is detailed below. No account has been taken of any collateral held and the maximum exposure to loss is considered to be the instruments' balance sheet carrying amount or, for non-derivative off-balance sheet transactions, their contractual nominal amounts.

2011 2010 GHl'OOO GHfOOO

Placements with other Banks 415,574 304,582 Loans and Advances 596,724 467,152 Unsecured Contingent Liabilities and Commitments 190,549 209,274

1,202,847 981,008

Fair value of collateral held

The Bank holds collateral against loans and advances to customers in the form of mortgage interests over property, other registered securities over assets, and guarantees. Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as impaired.

An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below

Loans and Receivables

2011 2010 GHfOOO GHfOOO

Against impaired assets 40,003 25,079 Against past due but not impaired assets 5,605 44,039

45,608 69,118

(iii) Liquidity Risk

The Bankdefines liquidity risk as the risk that the Bank will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash oranotherfinancial asset.

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

Liquidity risk management is governed by the Bank's Asset and Liability Management Committee (ALCO), which is chaired by the Chief Executive Officer. ALCO is responsible for both statutory and prudential liquidity. These responsibilities include the provision of authorities, policies and procedures.

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

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

The Bank also maintains significant levels of marketable securities either for compliance with local statutory requirements or as prudential investments of surplus funds.

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

An analysis of various maturities of the Bank's assets and liabilities is provided below. Maturities of assets and liabilities

0-3 months 3-6 months GHC'000 GHC'000 Assets Cash and Balances with Bank of Ghana 159,872 Short-Term Government Securities 40,739 129,365 Due from other Banks and Financial Institutions 479,245 Loans and Advances 250,868 27,776 Investment in Subsidiaries Other Assets 68,848 Government Bonds 127,084 71,119 Property, and Equipment Intangible Assets Deferred Tax

1,057,808 297,108

Liabilities Non Derivative: Customer Deposits 1,469,180 3,097 Due to other Banks and Financial Institutions 10,261 Interest Payables and other Liabilities 110,068 Taxation Deferred Tax Borrowings 49,623 24,812 Provisions 40,828 Derivative

Total Liabilities 1,639,132 68,737

Net liquidity Gap Total Assets 1,057,808 297,108 Total Liabilities 1,639,132 68,737

Net Liquidity Gap (581,324) 228,371 6-12months over 1 year 2011 2010 GH^'000 GHC'000 GHC'000 GHC'000

- - 159,872 139,669 - - 170,104 57,619 - - 479,245 374,482 113,552 204,528 596,724 467,152 - 100 100 100 - - 68,848 89,660 32,506 238,613 469,322 510,463 - 18,291 18,291 19,414 - 8,146 8,146 9,323

410 - 410 -

146,468 469,678 1,971,062 1,667,882

7,410 1,479,687 1,092,442

_ _ 10,261 196 - - 110,068 67,635 6,666 - 6,666 3,210 - - - 5,343 16,541 - 90,976 252,863 - - 40,828 48,103

- - - 2,109

30,617 - 1,738,486 1,471,901

146,468 469,678 1,971,062 1,667,882

30,617 - 1,738,486 1,471,901

115,851 469,678 232,576 195,981 74 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

35. FINANCIAL RISK MANAGEMENT (CONT'D)

(iv) Market Risks

Management of Market Risk

The Bank recognises market risk as the exposure created by potential changes In market prices and rates, such as Interest rates, equity prices and foreign exchange rates. The Bank Is exposed to market risk arising principally from customer driven transactions.

Market risk Is governed by the Bank's Market Risk unit which Is supervised by ALCO, and which agrees policies, procedures and levels of risk appetite In terms of Value at Risk ("VaR"). The unit provides market risk oversight and guidance on policy setting. Policies cover both the trading and non- trading books of the Bank. The non trading book is defined as the Banking book. Limits are proposed by the businesses within the terms of agreed policy.

The unit also approves the limits within delegated authorities and monitors exposures against these limits. Additional limits are placed on specific instruments and currency concentrations where appropriate. Sensitivity measures are used in addition to VaR as risk management tools.

VaR models are back tested against actual results to ensure pre-determined levels of accuracy are maintained. The Bank's Market Risk unit complements the VaR measurement by regularly stress testing market risk exposures to highlight potential risks that may arise from extreme market events that are rare but plausible. Stress testing is an integral part of the market risk management framework and considers both historical market events and forward looking scenarios. Ad hoc scenarios are also prepared reflecting specific market conditions. A consistent stress testing methodology is applied to trading and non-trading books.

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

The Bank has not identified any limitations of the VaR methodology.

Foreign Exchange Exposure

The Bank's foreign exchange exposures comprise trading and non-trading foreign currency translation exposures. Foreign exchange exposures are principally derived from customer driven transactions. Concentration of foreign currency denominated assets and liabilities are disclosed in note 36.

Sensitivity Analysis

A 5% strengthening of the cedi against the following currencies at 31 December 2011 would have impacted equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2010.

Sensitivity analysis

Effect in cedis Profit or loss GHfOOO 31 December 2011

USD (922) GBP (129) EUR (65) Others 1

31 December2010

USD (748) GBP (433) EUR (5) Others 18

A best case scenario 5% weakening of the Ghana cedi against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. 75 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

Interest Rate Exposure

The principal risk to which non-trading portfolios are exposed Is the risk of loss from fluctuations In the future cash flows or fair values of financial Instrument because of a change In market Interest rates. Interest rate risk Is managed principally through monitoring Interest rate gaps and by having pre-approved limits for repricing bands. ALCO Is the monitoring body for compliance with these limits and Is assisted by the Bank's Market Risk unit in its day-to-day monitoring activities.

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

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

100 bp 100 bp Increase Decrease GHfOOO GHfOOO 31 December 2011

Interest Income impact 12,724 (12,724) Interest Expense impact (13,580) 13,580

Net impact (856) 856

100 bp 100 bp Increase Decrease GHfOOO GHfOOO 31 December 2010

Interest Income impact 14,096 (14,096) Interest Expense impact (7,280) 7,280

Net impact 6,816 (6,816)

(v) Operational Risks

Operational risk is the risk of direct or indirect loss due to an event or action resulting from the failure of internal processes, people and systems, or from external events. The Bank seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of policies, procedures and tools to identify assess, monitor, control and report such risks. 76 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

The Bank's Country Operational Risk Group (CORG) has been established to supervise and direct the management of operational risks across the Bank. CORG is also responsible for ensuring adequate and appropriate policies, and procedures are in place for the identification, assessment, monitoring, control and reporting of operational risks.

The CORG is responsible for establishing and maintaining the overall operational risk framework and for monitoring the Banks key operational risk exposures. This unit is supported by Wholesale Banking and Consumer Banking Operational Risk units. These units are responsible for ensuring compliance with policies and procedures in the business, monitoring key operational risk exposures, and the provisions of guidance to the respective business areas on operational risk.

(vi) Compliance and Regulatory Risk

Compliance and Regulatory risk includes the risk of non-compliance with regulatory requirements. The Bank's compliance and Regulatory Risk function is responsible for establishing and maintaining an appropriate framework of the Banks compliance policies and procedures. Compliance with such policies and procedures is the responsibility of all managers.

(vii) Capital Management

The Central Bank sets and monitors capital requirements for the Bank. Under the guidelines of the Central Bank, the Bank is required to maintain a prescribed ratio of total capital to total risk-weighted assets.

The Bank's capital is analysed into two tiers:

Tier 1 capital, which includes ordinary paid up share capital, permanent preference shares and disclosed reserves, after deducting some assets such as investments in capital of other Banks and financial institutions.

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

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

The Bank's policy is to maintain a strong capital base so as to maintain investor, and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders' return is also taken into consideration, and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.

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

There has been no material changes in the Bank's management of capital during the year.

36. CONCENTRATION OF GHANACEDI EQUIVALENT OF FOREIGN CURRENCY DENOMINATED ASSETS, LIABILITIES AND OFF BALANCE SHEET ITEMS

USD GBP EUR Others 2011 2010 GH£'000 GH£'000 GH£'000 GHfOOO GH£'000 GH£'000 Assets

Cash and Balances with Bank of Ghana 28,109 9,922 6,423 - 44,454 84,341 Due from other Banks and Financial Institutions 254,220 18,800 2,064 111 275,195 53,166

Loans and Advances 246,675 507 37,908 507 285,597 163,519

Other Assets 4,281 8,695 2,258 - 15,234 37,474

Total Assets 533,285 37,924 48,653 618 620,480 338,500 77 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

USD GBP EUR Others 2011 2010 GHfOOO GH?000 GHfOOO GHfOOO GH?000 GH?000 Liabilities

Customer Deposits 484,002 30,161 38,076 19 552,258 635,218 Due to other Banks and Financial Institutions 9,758 186 4 281 10,229 196 Interest Payable and Other Liabilities 34,951 720 2,980 96 38,747 16,035

Total Liabilities 528,711 31,067 41,060 396 601,234 651,449

Net-on Balance Sheet Position 4,574 6,857 7,593 222 19,246 (312,949)

Off-Balance Sheet Credits And Commitments 171,184 805 17,686 394 190,069 199,359

At 31 December 2010 Total Assets 282,406 16,265 39,094 735 338,500 Total Liabilities 586,656 25,548 38,913 332 651,449

Net-on Balance Sheet Position (304,250) (9,283) 181 403 (312,949)

Off-balance Sheet Credit And Commitments 172,032 440 26,727 160 199,359

37. DIRECTORS'SHAREHOLDING

The Directors named below held the following number of shares in the Bank as at 31 December 2011:

Ordinary Shares 2011 2010

Ishmael Yamson 2,000 2,000

38. NUMBER OF SHARES IN ISSUE

(i) Dividend and net assets per share Dividend and net assets per share are based on 19,251,214 (2010:19,251,214) ordinary shares in issue during the year.

(ii) Basic and diluted earnings per share The calculation of basic and diluted earnings per share at 31 December 2011 was based on the profit attributable to ordinary shareholders after adjustments for preference dividends of GH076,39O,8OO (2010: GH070,156,000) and 19,251,214 (2010:19,251,214)) weighted average shares in issue. 78 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

39. NUMBER OF SHAREHOLDERS

The company had 4,967 ordinary and 998 preference shareholders at 31 December 2011 distributed as follows:

(i) Ordinary Shares Number of Range of shares Shareholders Holding Percentage

1-1,000 4,629 869,567 4.52 1,001 - 5,000 256 539,328 2.80 5,001 -10,000 49 369,279 1.92 Over 10,000 33 17,473,040 90.76

4,967 19,251,214 100.00

(ii) Preference Shares Number of Range of shares Shareholders Holding Percentage

1-1,000 794 283,896 1.62 1,001 -5,000 152 339,861 1.94 5,001-10,000 16 112,124 0.64 Over 10,000 36 16,750,202 95.80

998 17,486,083 100.00

40. EMPLOYEE BENEFITS

(i) Defined Contribution Plans

(a) Social Security

Under a national pension scheme, the Bank contributes 13% of employee's basic salary to the Social Security and National Insurance Trust (SSNIT) for employee pensions. The Bank's obligation is limited to the relevant contributions, and these have been recognised in the financial statements. The pension liabilities and obligations, however, rest with SSNIT.

(b) Provident Fund

The Bank has a provident fund scheme for staff under which the Bank contributes 7% of staff basic salary. The Bank's obligations under the plan is limited to the relevant contributions and these have been recognised in the financial statements.

(ii) Defined Benefit Scheme

Retired Staff Medical Plan

The Bank has a scheme to pay the medical cost of some retired staff and their spouses from the date of retirement till death. Under the scheme, the Bank pays the medical cost of eligible persons with a cost cap of GH05OO per person. The scheme is accounted for as a defined benefit plan. The total provision carried in the balance sheet in respect of this scheme was GH0Nil (2010: GH0762,516).

The Bank has taken an insurance policy to cover the scheme. The plan assets covered fully the obligation at the year end.

41. CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASHFLOW

For the purposes of the cash flow statement, cash and cash equivalents comprise the following balances with less than three months maturity from the date of acquisition. 2011 2010 GHfOOO GH0'OOO Cash and balances with Bank of Ghana 159,872 139,669 Nostro account balances 10,906 52,286 Items in course of collection 52,765 17,614 Placement with other Banks 415,574 304,582

639,117 514,151 79 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

42. DETAILS OF SHAREHOLDERS AT 31 DECEMBER 2011

(i) Details of 20 Largest Ordinary Shareholders at 31 December 2011

Number Name of of shares (%) Shareholder held holding

Standard Chartered Holdings (Africa) BV 13,363,5 1 6 69.42

Social Security & National Insurance Trust 2,761,102 14.34

SCBN/SSB TSTX71AX71 6169E 360,414 1.87

SCBN/RBC Dexia Investor Services Trust 165,00 0 0.86

Teachers Fund 90,682 0.47

SCBN/EPACK Investment Fund Limited 75,868 0.39

Ghana Union Assurance Company Limited 72,464 0.38

Council for University of Ghana. Endowment 60,3 9 0 0.31

SSNIT SOS Fund 39,355 0.20

SCBN/ELAC Policyholders Fund 37,963 0.20

Edward Kojo Amoma Anim-Addo 37,008 0.19

SCBN/SSB Eaton Vance Tax-Managed Emerging Market Fund 34,600 0.18 80 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(i) Details of 20 Largest Ordinary Shareholders at 31 December 2011 (cont'd)

Number Name of of shares (%) Shareholder held holding

SCBN/Barclays Mauritius Re Africa Opp Fund LP 34,046 0.18

BBGN/Unilever Ghana Managers Pension Fund 31,922 0.17

SSNIT Informal Sector Fund 28,584 0.15

STD Noms Tvl Pty/BNYM/Frontier Market Select Fund 11 LP 26,433 0.14

University of Science & Technology 24,750 0.13

SCBN/SSB Eaton Vance Structured Emerging Market Fund 24,700 0.13

Enterprise Group Limited 24,249 0.13

Government of Ghana 21,102 0.11

17,314,148 89.95

(ii) Details of 20 Largest Preference Shareholders at 31 December 2011

Number Name of of shares (%) Shareholder held holding

Standard Chartered Holdings (Africa) BV 15,220,598 87.04

Barton Kwaku Glymin Jnr. 364,775 2.09

SSNIT SOS Fund 307,692 1.76

Edward K Amoma Anim-Addo 106,806 0.61

Ghana Union Assurance Co Limited 99,351 0.57

Norbert Kwasivi Kudjawu 68,775 0.39

Ophelia F. Akosa-Bempah 54,150 0.31

Glymin Barton Kwaku 44,544 0.25

Kwaku Akosah- Bempah 40,654 0.23

SCBN/Barclays Mauritius Re Africa Opp. Fund LP. 28,568 0.16 81 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

(ii) Details of 20 Largest Preference Shareholders at 31 December 2011 (cont'd)

Number Name of of shares (%) Shareholder held holding

Clifford Aryee 25,000 0.14

Ebenezer Magnus Boye 25,000 0.14

Afedo Moses Kwasi 20,450 0.12

E3 A Holdings Company Limited 20,661 0.12

Anthony Minkah 20,268 0.12

Safo Kwakye Eddie 20,000 0.11

Edem Yankson 20,000 0.11

John Percival Awuku Nyako 20,000 0.11

SIC - FSL / SIC Staff Provident Fund 19,231 0.11

SIC - Insurance Company Limited 19,231 0.11

16,545,754 94.60

43. COMPARATIVE INFORMATION

The comparative financial information, where considered necessary, have been reclassified to achieve consistency with presentation of current year figures.

44. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The following sets out the Bank's basis of establishing fair values of financial instruments disclosed under note 16.

Cash and balances held at Central Bank

The fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using the prevailing money-market rates for debts with a similar credit risk and remaining maturity.

Loans and advances to customers

Loans and advances are net of allowance for impairment. The estimated fair value of loans and advances represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates to determine fair value. 32 Standard Chartered Bank Ghana Annual Report 2011

Notes To The Financial Statements

Investment securities

Investment securities with observable market prices, including debt are fair valued using that information. Equity instruments held that do not have observable market data to reliably estimate their fair values are presented at cost. Debt securities that do not have observable market data are fair valued by either discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity or using quoted market prices for securities with similar credit, maturity and yield characteristics.

Deposits and borrowings

The estimated fair value of deposits with no stated maturity is the amount repayable on demand. The estimated fair value of fixed interest bearing deposits and other borrowings without quoted market prices is based on discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity.

Debt securities in issue subordinated liabilities and other borrowed funds

The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remaining term of maturity.

Derivatives

The fair value of derivatives is based on discounted cash flows of using observable market quotes of similar credit risk and maturity. Form of Proxy

(Block Capitals Please)

Of being Member/Members of STANDARD CHARTERED BANK GHANA LIMITED hereby appoint

Of

or failing him the duly appointed Chairman of the Meeting, as my/our Proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 11.00 am on Wednesday 25"1 day of April, 2012 and at every adjournment thereof.

Please indicate with an X in the spaces below how you wish your votes to be cast.

RESOLUTION FOR AGAINST 1. Declaring a Dividend 2. Approving Directors' Remuneration 3. Appointment of New Auditors 4. Approving the Remuneration of the Auditors

Signed day of. 2012 Signature

cut here cut here

IMPORTANT: Before posting the Form of Proxy above, please tear off this part and retain it - see over. If you wish to insert in the blank space on the form the name of any person, whether a Member of the company or not, who will attend the meeting and vote on your behalf, you may do so; if you do not insert a name, the Chairman of the Meeting will vote on your behalf. If this Form is returned without any indication as to how the person appointed a proxy shall vote, he will exercise his discretion as to how he votes or whether he abstains from voting. To be valid, this Form must be completed and must reach the Registered Office of the Company not less than 48 hours before the time fixed for holding the Meeting or adjourned Meeting.

This Form is only to be completed if you will NOT attend the Meeting PLEASE AFFIX LU STAMP cc HI HERE LU oc X LU Q X Q o LL O W O tr LU CO

The Secretary Standard Chartered Bank, Ghana Limited Head Office P. O. Box 768, Accra

THIRD FOLD HERE

CUT HERE CUT HERE

IMPORTANT: A person attending the meeting should not produce this form Standard Chartered ^ Personal Loans Here for good

brand new car

It's good to have the cash when you need it

Thatfs why we offer you Personal Loans that put the things you want and need within reach.

• High loan amounts up to GHC54,000 • Extended repayment periods up to 60months • Competitive interest rates • Loan top-ups when you need additional cash • No security or collateral required - We can even come to you

Terms and Conditions apply.

To know more, call +233 302 740100 or visit standardchartered.com/gh Standard ^ Chartered fs Here for good