Banking for Africa’s tomorrow, today Ecobank Group Annual Report 2017 Select Service Transfer Payee Akua Joyce Idris Amount: $35.00 PIN: SEND Banking for Africa’s tomorrow, today Ecobank Group Annual Report 2017 2017 Annual Report 2 Contents Contents 3 Performance Highlights 04 2017 Performance Highlights 06 A leading pan-African Bank 08 Business Model 09 Our Pan-African footprint 10 Board and Management Reports 12 Group Chairman’s statement 14 Group Chief Executive’s review 17 Consumer Bank 25 Commercial Bank 27 Corporate and Investment Bank 29 Corporate Governance 32 Board of Directors 34 Directors’ biographies 36 Directors’ report 41 Corporate Governance report 43 Sustainability report 58 People report 66 Risk Management 70 Business and Financial Review 102 Financial Statements 120 Statement of Directors’ responsibilities 122 Auditors’ report 123 Consolidated financial statements 128 Notes to consolidated financial statements 133 Five-year summary financials 213 Parent Company’s financial statements 214 Corporate Information 218 Executive management 220 Share capital overview 222 Holding company and subsidiaries 225 Shareholder contacts 226 Customer contact centers 227 2017 Annual Report 4 Our 2017 results were substantially better than in 2016 with marked improvements from all our three divisions, especially in our Corporate and Investment Bank. Ecobank achieved substantial cost savings as we ‘right-sized’ our businesses whilst we also restricted lending as we embedded greater discipline into our risk management procedures and took decisive action to significantly reduce impairment losses. Performance Highlights 2017 Performance Highlights 5 Select Service Transfer Payee Akua Joyce Idris Amount: $35.00 PIN: SEND 2017 Annual Report 6 Performance highlights Selected income statement data For the year ended 31 December (in millions of US$, except per share amounts) 2017 2016 Net revenue 1,831 1,972 Operating expenses 1,132 1,237 Pre-impairment profit 700 735 Impairment losses 411 864 Profit/(Loss) before tax 288 (131) Profit/(Loss) for the year 229 (205) Profit/(Loss) attributable to ETI shareholders (from continuing operations) 179 (250) Profit/(loss) attributable per share ($): Basic 0.01 (0.01) Diluted 0.01 (0.01) Selected statement of financial position data For the year ended 31 December (in millions of US$, except per share amounts) 2017 2016 Customer loans (net) 9,358 9,259 Total assets 22,432 20,511 Customer deposits 15,203 13,497 ETI's shareholders' equity 1,881 1,578 Total equity 2,172 1,764 Ordinary shares outstanding 24,730 24,730 Book value per ordinary share ($) 0.09 0.07 Tangible book value per ordinary share, TBVPS ($) 0.06 0.05 ETI share price($) High 0.05 0.04 Low 0.02 0.03 Period end 0.05 0.03 Selected ratios 2017 2016 Profit for the year to average total assets (ROA) 1.1% (0.9)% Profit for the year to total equity (ROE) 11.6% (9.6)% Profit for the year to tangible total equity (ROTE) 13.6% (11.3)% Basel I Tier 1 capital ratio 24.8% 23.4% Basel I total capital adequacy ratio 28.8% 25.3% Net interest margin 6.5% 6.9% Cost-to-income ratio 61.8% 62.7% Non-performing loans ratio 10.7% 9.6% Non-performing loans coverage ratio 52.4% 63.4% 2017 Performance Highlights 7 Net revenue Pre-impairment Profit before tax* (US$M) (US$M) (US$M) 789 2,280 738 735 50 700 2,106 2,003 ,92 , 598 288 222 205 (131) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Customer loans Customer deposits Total assets (US$B) (US$B) (US$B) 24.2 23.6 . 17.4 22.5 12.3 16.5 16.4 20.5 11.4 11.2 5. 13.5 9.3 9. 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Profitable attributable to ETI Earnings per share (Basic)* Return on average equity shareholders* (US$M ) (US$) (US$M) 339 16.5 . 9 .9 103 0.007 . 4.2 66 . (5) (9.6) (0.010) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 * For the periods 2013 to 2015 amounts relate to continuing operations EPS for 2014 has been restated to reflect the 1-for-15 bonus issue in June 2015 2017 Annual Report 8 Ecobank is the leading pan-African banking institution Founded in 1985 and headquartered in Lomé, Togo, Ecobank provides consumer and commercial banking, corporate and investment banking, and securities and asset management to approximately 14 million customers, ranging from individuals, small and medium-sized enterprises, regional and multinational corporations, financial institutions, international organisations and governments via 927 branches and offices, 2,665 ATMs, the internet (ecobank. com), and mobile banking. Ecobank is present in 36 African countries, Ecobank Transnational Incorporated (‘ETI’), the parent with international of offices in Paris, holding company of the Ecobank Group, is listed on the Nigerian Stock Exchange (‘NSE’), in Lagos, the London, Dubai and Beijing, to support our Ghana Stock Exchange (‘GSE’), in Accra and the customers who conduct business in the Bourse Régionale des Valeurs Mobilères SA (‘BRVM’) global economy. in Abidjan. Our vision, which steers us towards growth and For management reporting purposes Ecobank is success, is to build a world-class pan-African bank and organised into three customer-centric business contribute to the economic development and financial segments and four geographical regions: integration of Africa. The business segments are Consumer Bank, Our mission is to provide all of our customers with Commercial Bank, and Corporate and convenient and reliable financial products and services. Investment Bank. As at 31 December 2017, Ecobank had $22.4 billion in total assets and $2.2 billion in total equity. Ecobank business segments and geograpical regions Consumer Commercial Corporate and Bank Bank Investment Bank Francophone Anglophone Central, astern Nigeria West Africa West Africa and Southern (UMOA) (AWA) Africa (CSA) 2017 Performance Highlights 9 At Ecobank we serve our customers in each of our geographical regions through our three customer-centric business segments – Consumer Bank, Commercial Bank, and Corporate and Investment Bank – with a product suite that meets the financial needs of our customers Business segments Consumer Commercial Corporate and Bank Bank Investment Bank Customers – Personal Banking – Small and Medium Sized – Governments – Direct Banking Enterprises (SMEs) – Regional and Global Corps – Microfinance – Medium Local Corporations – Financial Institutions – High Value Local – International Organisations Corporations – Non-Government Public Sector (Local Governments, Domestic NGOs, Faith- based institution, Educational Institution, Healthcare Institutions). Products – Current & Savings Accounts – Cash Management – Trade Finance & Services – Remittances – Trade Finance – Cash Management and – Cards – Fixed income, currencies Client Access – Mobile & Internet and commodities (FICC) – Loans & Liquidity Payments – Internet é &Banking – Fixed income, currencies – Personal Loans – Loan and Liquidity and commodities – Mortgages – Investment Banking – Bancassurance – Securities Wealth & Asset Management – Asset management for High Net Worth Individuals – Research & Economics (HNWI) 2017 Net revenue – $1.8 billion 2017 Pre-impairment Income - $700 million 2017 Profit before tax – $288 million CB 25% CMB 20% CIB 55% CB 11% CMB 14% CIB 75% -50 0 50 100 150 200 250 300 CB 25% CMB CB 20% 25% CIBCMB 55% 20% CIB 55% CB 11% CMB CB 14% 11% CIBCMB 75% 14% CIB 75%CB $46 CMB $(32) CIB $268 The breakdown of revenue, pre-impairment income and profit before tax reflects performance figures for each line of business only and has not incorporated the impact of other non-banking entities and consolidation adjustments. -50 0 50 100-50 1500 20050 250100 300150 200 250 300 CB $46 CMB CB$(32) $46 CIBCMB $268 $(32) CIB $268 2017 Annual Report 10 Our pan-African footprint Our pan-African geographical footprint is segmented into the four regions of Nigeria, Francophone West Africa (‘UEMOA’), Anglophone West Africa (‘AWA’) and Central, Eastern and Southern Africa (‘CESA’). TUNISIA MOROCCO ALGERIA LIBYA WESTERN EGYPT S AHARA MAURITANIA CAPE VERDE MALI NIGER SUDAN E R I T R E A SENEGAL CHAD THE GAMBIA BURKINA GUINEA-BISSAU D J I B O U T I FASO GUINEA BENIN NIGERIA Addis Ababa (Representative Office) CÔTE SIERRA LEONE D’IVOIRE G HANA SOUTH E T H I O P I A CENTRAL AFRICAN SUDAN REPUBLIC Lomé (Headquarters) CAMEROON S O M A L I A EQUATORIAL GUINEA UGANDA K E N Y A SÃO TOMÉ & PRÍNCIPE CONGO GABON RWANDA D.R. CONGO BURUNDI Map Key TANZANIA Luanda Francophone West Africa (UEMOA) ANGOLA Nigeria ZAMBIA Anglophone West Africa (AWA) ZIMBABWE Central, Eastern and M A D A G A S C A R Southern Africa (CESA) BOTSWANA NAMIBIA Non-Ecobank region Johannesburg SWAZILAND (Representative Office) Ecobank representative offices SOUTH AFRICA LESOTHO 2017 Performance Highlights 11 In millions of US Dollars unless otherwise stated Nigeria UEMOA AWA CESA Net revenue 557 477 354 393 Pre-impairment income 272 193 162 106 Profit before tax 67 111 105 49 Total assets 6,056 9,222 2,951 4,657 Countries 1 9 5 18 Branches 435 217 121 154 Employees ATMs 1,212 532 333 588 2017 Total assets – $22.4 billion 2017 Net revenue – $1.8 billion Nigeria 27% Nigeria 31% UEMOA 40% UEMOA 27% AWA 13% AWA 20% NigeriaNigeria 27%27% NigeriaNigeria 31%31% CESA 20% CESA 22% UEMOAUEMOA 40%40% UEMOAUEMOA 27%27% AWAAWA 13%13% AWAAWA 20%20% CESACESA 20%20% CESACESA 22%22% 2017 Pre-impairment income – $700 million 2017 Profit before tax – $288 milliom Nigeria 37% NigeriaNigeria 20%20% UEMOA 26% UEMOAUEMOA 33%33% AWA 22% AWAAWA 32%32% NigeriaNigeria 37%37% NigeriaNigeria 20%20% CESA 15% CESACESA 15%15% UEMOAUEMOA 26%26% UEMOAUEMOA 33%33% AWAAWA 22%22% AWAAWA 32%32% CESACESA 15%15% CESACESA 15%15% The breakdown of revenue, pre-impairment income and profit before tax reflects performance figures for each individual region only and has not incorporated the impact of ETI , other subsidiaries, affiliates and structured entities and consolidation adjustments.