ecobank annual report 2013

Ecobank Group Annual Report 2013

Celebrating 25 years of pan-African banking

Celebrating 25 years of pan-African banking Ecobank would like to thank our customers, staff, shareholders and partners who have supported us in reaching this milestone of twenty five years of operations.

The Group has come a long way since opening its first branch in Togo in 1988. Africa has also developed rapidly during this time. We are confident about the opportunity and potential for the next 25 years, both for the Group and the continent.

The future is pan-African, and Ecobank is the pan-African bank.

1

2013 Highlights

Corporate Governance

Business and Financial Review

Risk Management

Board and Management Reports

Financial Statements

Corporate Information

Ecobank Group – Annual Report 2013

Contents

2

Ecobank at a glance 4

Performance highlights 6

The year in review 8

64

Corporate Governance report 66

Sustainability report 76

People report 94

34

100

10

Group Chairman’s statement 12

Directors’ report 14

Board of Directors 16

Group Chief Executive’s review 24

Group Chief Operating Officer’s review 28

Business report: Corporate and Investment Bank 30

Business report: Domestic Bank 31

Operations and Technology report 32

124

Statement of Directors’ responsibilities 126

Auditors’ report 127

Consolidated financial statements 128

Notes to consolidated financial statements 133

Five-year summary financials 206

Parent Company’s financial statements 207

Index to notes to the consolidated financial statements 211

212

Executive management 214

Shareholder information 216

Shareholder contacts 222

Holding company and subsidiaries 223

Customer contact centers 224

1988 1995 2000 2002

2013 Highlights

Our brand and appearance may have evolved over the years, but our core values have always remained the same.

VisionOur vision is to build a world class pan-African bank and contribute to the economic development and financial integration of Africa.

MissionOur mission is to provide all of our customers with convenient and reliable financial products and services.

2 2013 HighlightsEcobank Group – Annual Report 2013

This is our newest Ecobank Direct branch, located in Accra, Ghana. It was opened in April 2014.

2005 2007 2009 – Present

32013 HighlightsEcobank Group – Annual Report 2013


4

Our vision and mission Our vision is to build a world-class pan-African bank and contribute to the economic development and financial integration of Africa.

Our mission is to provide all of our customers with convenient and reliable financial products and services.

We believe we have a responsibility to be socially relevant to the communities that we serve. We are also strongly committed to sustainable development of the region and are a signatory of the Equator Principles, the UNEP Finance Initiative and the UN Global Compact.

We are optimistic about both Africa’s future and the prospects for its financial services sector. That optimism continues to underpin our pan-African strategy today, just as it did 25 years ago at the opening of our first branch in Togo. Every day our 19,546 employees work hard to service our more than 10.4 million customers, who range from households to governments, domestic and multinational businesses. By providing innovative products and excellent customer service, over time, we hope to create sustainable value for all Ecobank stakeholders.

Our businessesThrough our two customer-centric business segments, Domestic Bank and Corporate and Investment Bank, we provide a full range of retail, wholesale, investment and transactional banking services.

Corporate and Investment BankSee page 30We provide financial solutions to global, regional and public corporates, financial institutions and international organizations. Products and services include pan-African lending, trade services, cash management, internet banking and value-chain finance. We also provide treasury, corporate finance, investment banking and securities and asset management services.

Domestic BankSee page 31We provide a full range of convenient, accessible, and reliable financial products and services to more than 10 million individuals, small businesses, local corporates and public sector organizations, through our extensive network of 1,284 branches and offices, 2,314 ATMs and over 10,000 POS terminals.

Our geographical regions Our geographical regions in Africa are segmented according to shared attributes like common currency and central bank, size and along existing Regional Economic Communities. Within these clusters, Ecobank is structured as a network of locally incorporated, regulated banking entities.

Ecobank Nedbank Alliance: the African champion banking networkFormed in 2008, the Ecobank Nedbank alliance is the largest banking network in Africa, with more than 2,100 branches in 37 countries. As part of its commitment to offering a uniquely One Bank experience, the alliance provides tailored banking and business advisory solutions to Ecobank and Nedbank clients across Africa. This includes our advisory service, LocalKnowledgeAfricaTM, which provides tailored research and market intelligence for businesses seeking to expand their presence or taking their first steps in Middle Africa.

Ecobank at a glance

Ecobank is the leading pan-African banking group, with a presence in 35 African countries and international offices in Paris, London, Dubai and Beijing. At year-end 2013, the Group had US$22.5 billion in assets and US$2.1 billion in total equity. Ecobank is listed on the Lagos, Accra and Abidjan (BRVM) stock exchanges.

Our key figuresAs at 31 December 2013

Total equity (US$)

2.1bnTotal assets (US$)

22.5bn

Ecobank employees

19,546Ecobank customers

10.4m

Branches and offices

1,284Ecobank ATMs

2,314

Lomé(Headquarters)

Luanda(Rep. Office)

Johannesburg(Rep. Office)

Addis Ababa(Rep. Office)


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Unique pan-African footprint

Francophone West Africa

Revenue

$434mTotal assets

$6.5bnCountries

9 • Benin • Burkina Faso • Côte d’Ivoire • Cape Verde • Mali • Niger • Senegal • Togo • Guinea-Bissau

Branches

262Employees

2,954

Nigeria

Revenue

$819mTotal assets

$9.2bnCountries

1 • Nigeria

Branches

610Employees

10,097

Rest of West Africa

Revenue

$383mTotal assets

$3.0bnCountries

5 • Ghana • Guinea • Liberia • Sierra Leone • Gambia

Branches

150Employees

2,475

Central Africa

Revenue

$185mTotal assets

$2.3bnCountries

7 • Cameroon • Chad • Central Africa • São Tomé and Príncipe • Congo • Gabon • Equatorial Guinea

Branches

85Employees

1,200

East Africa

Revenue

$68mTotal assets

$1.0bnCountries

7 • Rwanda • Kenya • Burundi • Uganda • Tanzania • South Sudan • Ethiopia (rep. office)

Branches

93Employees

1,311

Southern Africa

Revenue

$76mTotal assets

$0.6bnCountries

5 • DR Congo • Malawi • Zambia • Zimbabwe • Angola (rep. office)

Branches

53Employees

598

International

Revenue

$30mTotal assets

$0.5bnCountries

5 • France • UK • Dubai • South Africa • China

Branches

–Employees

86

The number of employees for the Group is inclusive of employees of ETI, EDC and eProcess which are not represented in our geographic clusters. The number of branches for the Group is inclusive of number of offices which are not part of the numbers of the clusters. The Group total assets and revenues are made up of numbers from our geographic clusters, other entities not part of our cluster grouping and the impact of consolidation adjustments.


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Performance highlights

Net revenue for 2013 surpassed US$2.0bn, showing strong year-on-year organic growth of 16% despite a tough operating environment.

Selected income statement data

For the year ended 31 December (in millions of US Dollars, except per share data) 2013 2012 Change (%)

Net revenue 2,003 1,730 +16%

Operating expenses 1,405 1,236 +14%

Pre-impairment profit 598 494 +21%

Impairment losses 377 155 +143%

Profit before tax 222 338 -34%

Profit for the year from continuing operations 156 282 -45%

Profit attributable to owners of the parent (from continuing operations) 103 246 -58%

Earnings per share (from continuing operations)

Basic 0.60 1.67 -64%

Diluted 0.55 1.28 -57%

Dividend per share – 0.40

Selected statement of financial position data

As at 31 December (in millions of US Dollars, except per share data) 2013 2012 Change (%)

Loans and advances to customers (net) 11,422 9,441 +21%

Total assets 22,532 19,939 +13%

Customer deposits 16,490 14,620 +13%

Total equity 2,135 2,174 -2%

Book value per share ($ cents) 11.3 11.7 -3%

Selected ratiosAs at, or for year ended, 31 December 2013

Net interest margin

7.2% (2012: 6.5%)

Cost-to-income ratio

70.1% (2012: 71.4%)

NPL ratio

6.2% (2012: 5.6%)

Coverage ratio

79.0% (2012: 74.1%)

Tier 1 capital ratio

13.0% (2012: 15.2%)

Capital adequacy ratio

16.3% (2012: 19.3%)


7

2,003

1,730

1,196

900873

20102009 201320122011

11.4

9.4

7.3

5.24.7

20102009 201320122011

103

246

182

113

51

20102009 201320122011

598

494

363

270241

20102009 201320122011

16.5

14.6

12.1

7.9

6.4

20102009 201320122011

0.60

1.671.76

1.14

0.58

20102009 201320122011

222

338

277

169

101

20102009 201320122011

22.5

19.9

17.1

10.49.0

20102009 201320122011

6.9

15.815.9

10.4

5.6

20102009 201320122011

Customer loans (net)(US$bn)

Attributable profit*(US$m)

Pre-impairment profit*(US$m)

Customer deposits(US$bn)

Earnings per share (basic)*(US cents)

Profit before tax*(US$m)

Total assets(US$bn)

Return on average equity(%)

* 2012 and 2013 figures relate to continuing operations

Net revenue*(US$m)


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The year in review

Q1 – January – March Q2 – April – June

Ecobank hosted its inaugural Capital Markets Day at its Lomé headquarters, providing major shareholders and investment analysts with insights into the Group’s strategic priorities and its growth targets for 2013.

Ecobank won 2013 Award for Innovation in Banking in African Banker’s awards, in recognition of its significant contribution to improving financial inclusion across Africa, leveraging technology and its pan-African footprint.

April 2013

Ecobank senior management conducted “facts behind the figures” presentations at the Nigeria, Ghana and BRVM stock exchanges.

June 2013

Ecobank Ghana won the Bank of the Year category in the annual Ghana Banking Awards. The award is given to the bank with the highest weighted scores for customer satisfaction, corporate social responsibility and financial performance.

Ecobank announced that it is working with authorities in Côte d’Ivoire and Nigeria to finance the Abidjan–Lagos transport corridor, a transnational highway passing through five West African countries, due to be completed in 2016.

Senior management attend Ecobank Capital Markets Day (L–R Patrick Akinwuntan, Head of Domestic Bank; Graham Dempster, COO Nedbank Group, Evelyne Tall; Group COO, Samuel Ayim, Company Secretary; Laurence do Rego, Group Executive Director, Finance).

February 2013

African Development Bank approved US$200m facility to support Ecobank’s trade finance activities across Africa.

Ecobank sold majority stake in Oceanic Life, its life assurance business in Nigeria, to Old Mutual.

March 2013

Celent, the financial services consultancy firm, recognized Ecobank’s Omni online corporate cash management platform with a Model Bank award for its innovative approach, business success and integration excellence.

Launched in 2013, Ecobank’s “MobileMoney” service enables customers to make payments, collections and transfers, check balances and buy airtime via their mobile telephones.


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Q3 – July – September Q4 – October – December

Ecobank Research won Africa Investor’s award for Best Africa Research team for the third consecutive year.

Ecobank and the Global Fund to Fight AIDS, Tuberculosis and Malaria launched US$3m of innovative funding, aimed at strengthening financial management capabilities of grant recipients.

July 2013

Ecobank supported the development challenges facing Africa’s youngest state by setting up its 32nd African banking subsidiary in South Sudan.

September 2013

Airtel partnered with Ecobank to provide mobile banking in nine African countries.

African Guarantee Fund provided Ecobank with a US$50m portfolio guarantee to support SMEs in Benin, Burkina Faso, Nigeria, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo and Kenya.

Ecobank was a first-time participant in SIBOS, the global financial services forum, in Dubai in a joint initiative with Nedbank.

October 2013

Ecobank held its first ‘Ecobank Day’, encouraging all employees to devote a day of their free time to community volunteering.

Ecobank opened its Ethiopian representative office in Addis Ababa, bringing the total of African countries in which the bank is present to 35.

Ecobank won Global Finance’s inaugural Best Frontier Bank Award.

Omni, Ecobank’s real-time cross-border payment and cash management system, successfully deployed in 30 African countries.

Chairman Kolapo Lawson stepped down and André Siaka assumed Ecobank chairmanship

December 2013

Ecobank signed a US$50 million, 10-year loan agreement with French development institution, Proparco, to support the growth of its banking network.

Ecobank Capital acted as the Mandated Lead Arranger for a US$500 million pre-export deal on behalf of Orion Oil in the largest syndicated loan transaction in Central Africa to date funded solely by regional banks.

Albert Essien, Head of Corporate and Investment Banking, receives the award on behalf of Ecobank Research from Africa Investor’s MD, Hubert Danso.

Ecobank and Nedbank teams at SIBOS 2013 in Dubai.

Charles Kie (far right), Ecobank’s Head of Corporate Banking attends launch of the Global Fund’s Fourth Replenishment in Washington DC in the presence of Bill Gates and other corporate donors.

Board and Management Reports

Our founders and early shareholders had an entrepreneurial spirit of resilience and determination that saw them through many challenges.

This passion continues to drive us to learn from the challenges of today to build a stronger institution for the future.

The Ecobank spirit remains strong, over 25 years on.

10 Board and Management ReportsEcobank Group – Annual Report 2013

A meeting of the early shareholders/founders of Ecobank.

11Board and Management ReportsEcobank Group – Annual Report 2013

Board and Management ReportsEcobank Group – Annual Report 2013

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Group Chairman’s statement

I consider it a great honor to have the, albeit unexpected, privilege of reporting to you on Ecobank’s progress in 2013, our silver anniversary year. This represents a significant milestone in the life of any company, but particularly so for an organization which has become such a vital part of the banking and commercial life of Middle Africa. The past 25 years have proved to be an incredible journey, not least in terms of our growth from humble beginnings to becoming the leading pan-African bank, with more than US$22 billion of assets, revenue in excess of US$2 billion and more than 1,200 branches in 35 countries across our continent.

For, when Ecobank started out, nobody had a mobile phone, letters were being written with typewriters and correspondence was sent by post. Our strategy of leveraging technology to drive product and service innovation has been a hallmark of Ecobank’s success over the years and it will continue to be a key component in our mission to

shape the future of pan-African banking, thereby creating unprecedented opportunity and value for our customers, employees and shareholders alike.

We also consider ourselves to have been pioneers within the African banking sector in terms of the adoption of international best practice. So, the fact that management and corporate governance issues have dominated the headlines about Ecobank over the past year is a matter of deep regret. On behalf of the Board, I wish to convey our sincerest apologies to all our stakeholders that, of late, we have not always lived up to our own high standards in terms of business practice and transparency.

Given that Ecobank has more than doubled in balance sheet size over the past five years, these are the almost inevitable “growing pains” associated with accelerated business expansion. Nevertheless, the Board takes corporate governance very seriously – hence our decision to commission leading practitioners, such as the International Institute for Management Development and Ernst and Young (EY), to carry out independent reviews of our practices. We also welcome the open and constructive dialogue that we have had, and will continue to have, with the regulators of each of the three West African exchanges on which Ecobank Transnational Incorporated (ETI) is listed.

As a result of these interactions, we have instituted a detailed governance action plan to strengthen our ability to meet these challenges going forward, as well as measures to improve our systems and internal controls. Such a comprehensive refresh of our corporate governance should assure our stakeholders of the seriousness of our intent.

EnvironmentOur marketplace, Middle Africa, continues on its robust growth trajectory. According to the International Monetary Fund, GDP growth for the region is expected to rise to 6% this year, from 5% in 2013, ranking second only to developing Asia in terms of its pace of development. The larger economies of Nigeria, Ghana and Kenya are witnessing rapid economic growth, with substantial gains in the banking and financial services sectors. Elsewhere, growth has been particularly buoyant in resource-rich

“ The Board is committed to establishing the highest standards of corporate governance... we will learn from the past, address all of the issues and lay firm foundations for Ecobank’s continued success in the next 25 years.”


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countries, including the Democratic Republic of Congo and Sierra Leone. Improved political stability and security have led to economic recovery in the likes of Mali and Côte d’Ivoire.

Thanks to regulatory reforms, urbanization, the expanding middle class and advances in technology, the prospects for Africa’s banking sector remain highly attractive. According to Ernst and Young, at current growth rates, the financial services sector could make up around 20% of the continent’s collective GDP within the next decade, compared with 10% today. Significant growth opportunities remain in both the retail and wholesale sectors that will allow Ecobank to create significant shareholder value in the longer term.

Financial results Despite a challenging operating environment in 2013, Ecobank registered impressive organic growth in terms of both revenues and assets. Revenue broke through the US$2 billion mark, whilst strong growth in both customer loans and deposits led to a 13% year-on-year increase in total assets to US$22.5 billion.

Our continued focus on efficiency across our diversified platform is bearing fruit, with the cost-to-income ratio improving in each of our six geographical clusters in Africa. However, the 2013 results have been impacted by our conservative decision to take a one-off US$165 million provision against certain legacy non-performing assets in Nigeria. This led to a 34% decline in pre-tax profit to US$222 million in comparison with 2012 and a 48% decline in net profit to US$148 million.

As our parent company, Ecobank Transnational Incorporated, generated no distributable earnings in 2013, we are unable to propose a dividend payment for the financial year in review.

Board and management changesMr Kolapo Lawson stepped down as Group Chairman in October and retired from the Board at the end of 2013, after more than 20 years of dedicated service. During this period, he was instrumental in bringing into fruition his father’s and the other founding members’ vision of a genuinely African private sector bank. On behalf of the Board, employees and shareholders, I should like to express our appreciation to Kolapo for

his entrepreneurial spirit, leadership and unwavering commitment to Ecobank.

In addition to the departure of Mr Thierry Tanoh as CEO, three of the Group’s non-executive directors (Dr Babatunde A.M. Ajibade, Mr Paulo Gomes and Mr Isyaku Umar) resigned their Board positions during the first quarter of 2014. On behalf of the Board, I should like to thank them all for their valued contributions and wish them well in their future endeavors.

In line with a directive from the Securities and Exchange Commission of Nigeria, Mrs. Laurence do Rego has been reinstated to the position of Group Executive Director of Finance and Risk. We also recently announced the co-option of Hewitt Benson as a non-executive director. He will be the Board representative for Asset Management Corporation of Nigeria (AMCON), which currently holds a 10.4% equity interest in ETI.

As a result of these changes, Ecobank’s Board currently comprises five executive officers and eight non-executive directors. At our recent EGM, shareholders agreed to limit the size of the Board to a maximum of 15. Our new Search Committee (which includes two former chairmen, honorary president Gervais Djondo and Chief Philip Asiodu, two current Board members and three shareholder representatives) has been charged with finding a permanent Chairman with the banking industry stature and experience to reinvigorate the Board and ensure that Ecobank’s strategic direction is implemented effectively. The reconstituted Board should also reflect Ecobank’s cultural diversity, with a more balanced gender and professional mix. The Search Committee will also recommend potential new Board members for shareholder approval at the Annual General Meeting, to be held in June.

AppreciationOn behalf of the Board and all of our stakeholders, I wish to express a sincere vote of thanks to Mr Albert Essien for taking the helm at Ecobank. With a wealth of African banking and management experience and having been a loyal servant to the Group for over 20 years, we believe there is no-one better qualified to lead Ecobank at this stage. He has the business acumen, integrity and, indeed, passion, to re-establish Ecobank as the proud and successful institution it always has been and always will be.

2013 proved to be a testing year for everyone associated with the Group. We were particularly struck by the forbearance and rectitude of Ecobank’s staff. On behalf of the Board, I thank everyone for their efforts and encourage you all to embrace the undoubted challenges ahead with renewed confidence and vigor. For, make no mistake, we need to work in unison to restore Ecobank’s world-class reputation and regain the trust of our customers, partners and investors.

OutlookThe Ecobank spirit, which took the Group from a small bank in the 1980s in Togo to one of Africa’s largest financial institutions today, is one of resilience and determination. Fundamentally, all of our people are galvanized around the simple but ambitious goal of building a world-class, pan-African operation. The Board is committed to establishing the highest standards of corporate governance that enable effective decision-making, with clear responsibilities. We will learn from the past, address all of the issues and lay firm foundations for Ecobank’s continued success in the next 25 years.

André Siaka Interim Chairman


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Ecobank Transnational Incorporated (ETI), the parent company of the Ecobank Group, is a bank holding company. Its principal activity is the provision of banking and financial services through its subsidiaries and affiliates.

Business reviewDuring 2013, we continued to focus on the delivery of our key strategic pillars, namely providing an outstanding customer service experience to our clientele, improvement of long-term shareholder value and return as well as being the employer of choice in the markets where we operate.

In 2013, South Sudan was added to the Group’s network of banking operations while a representative office was also opened in Addis Ababa, Ethiopia, bringing the number of presence countries to 39.

A detailed review of the business of the Group during the 2013 financial year is contained in the Business and Financial Review section of this report.

Acquisitions and divestituresThe bank did not undertake any acquisitions during 2013. We divested certain non-core assets, including majority stakes in the Life Assurance and General Insurance businesses of the former Oceanic Bank, both sold to Old Mutual. We also sold majority stakes in Oceanic Health and Oceanic Homes.

ResultsThe Group’s profit after tax stood at US$148 million. Net profit attributable to the parent company was US$96 million.

The details of the results for the year are set out in the consolidated financial statements. The Board of Directors approved the financial statements of the Company and the Group for the year ended 31 December 2013 at the meeting of the Board held on 25 April 2014.

Messrs André Siaka and Albert Essien were authorized to sign the accounts on behalf of the Board.

International Financial Reporting StandardsThe accounts of both the parent company and the Group are prepared in accordance with International Financial Reporting Standards (IFRS). For 2013, the Group has classified certain businesses as held for sale in line with IFRS 5 (non-current assets held for sale and discontinued operations). We have therefore restated our 2012 financials on the same basis to facilitate year-on-year comparisons (refer to note 29 of our financial statements in this report for more detail).

DividendThe directors do not recommend the payment of a dividend, given that the parent company made a loss for the year 2013.

CapitalThe authorized share capital of the Company is US$1.277 billion, divided into 50 billion ordinary shares of 2.5 US cents per share and 1.07 billion preference shares of 2.5 US cents. At the beginning of 2013, there was a total of 17.21 billion ordinary shares in issue.

During the year, there was no change in the number of shares in issue.

The ordinary shares of the Company are traded on the three West African stock exchanges, namely the BRVM (Bourse Régionale des Valeurs Mobilières) in Abidjan, the Ghana Stock Exchange of Accra and the Nigerian Stock Exchange of Lagos.

DirectorsThe names of the directors of the Company appear on pages 16-17 of this Annual Report.

As of 31 December 2013, the Board was composed of 17 directors: 11 non-executive and 6 executive directors.

The Board of Directors met eight times during the year. The Governance Committee, the Audit and Compliance Committee and the Risk Committee each met four times to deliberate on issues under their respective responsibilities.

On 29 October 2013, Mr Kolapo Lawson stepped down as Chairman, with the Vice-Chairman, Mr André Siaka, taking over as interim Chairman of the Board of Directors on the same date. Mr Lawson retired from the Board on 31 December 2013 and the Board would like to thank him for his considerable service to the Group since its founding.

On 6 August 2013, Laurence do Rego, Group Executive Director for Finance and Risk, was suspended by the Board and did not play a further part in Board activities for the remainder of 2013. She was subsequently reinstated on 11 March 2014.

Corporate governance and complianceThere has been considerable focus on the Group’s corporate governance practices, particularly at the Board level, this year. Following a series of publications in the local and international media from July 2013 regarding alleged breaches of corporate governance and allegations against the Board of Directors and certain principal officers of the Company, the Securities and Exchange Commission (SEC) Nigeria undertook an independent review of these allegations through the professional services firm KPMG.

The purpose of the review was to ascertain the Company’s compliance with the SEC’s Corporate Governance Code as well as best practice and also to determine the veracity of the various allegations against principal officers of the Company. The Group also commissioned IMD and EY to conduct

Directors’ report


15

independent reviews of our corporate governance and assist with responding to regulatory reviews.

Following the SEC/KPMG review, an Extraordinary General Meeting of shareholders was held on 3 March 2014 to approve a 51-point Governance Action Plan designed to address the areas highlighted by the SEC/KPMG.

The Company maintains corporate policies and standards designed to encourage good and transparent corporate governance, avoid potential conflicts of interest and promote ethical business practices. These policies are being updated where relevant as part of the above plan, and further details are provided in the Corporate Governance Report on page 66 of this report.

The Board and the Group are committed to improving the governance of the institution and are working closely with regulators and other stakeholders to rebuild confidence in this area.

SubsidiariesIn 2013, the Group extended its African operations by opening an affiliate in South Sudan and a representative office in Addis Ababa, Ethiopia. This completes our coverage of the East African Community (EAC) cluster. Our investment banking subsidiary, Ecobank Development Corporation, has also opened an office in Kenya, adding to its operations in Ghana, Nigeria, Côte d’Ivoire and Cameroon.

eProcess International SA, our shared services and technology subsidiary, continued to provide the technology infrastructure and platform for the Group.

ETI has a majority equity interest in all its subsidiaries and provides them with management, operational, technical, training, business development and advisory services.

Post balance sheet eventsThere were no post balance sheet events that could materially affect either the reported state of affairs of the Company and the Group as at 31 December 2013 or the profit for the year ended on the same date which have not been adequately provided for or disclosed.

Responsibilities of DirectorsThe Board of Directors is responsible for the preparation of the financial statements, which give a true and fair view of the state of affairs of the company at the end of the financial period and of the results for that period.

These responsibilities include ensuring that:

• Adequate internal control procedures are instituted to safeguard assets and to prevent and detect fraud and other irregularities

• Proper accounting records are maintained

• Applicable accounting standards are followed

• Suitable accounting policies are used and consistently applied

• The financial statements are prepared on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

Independent External AuditorsThe Joint Auditors, PricewaterhouseCoopers, Lagos, Nigeria and PricewaterhouseCoopers, Abidjan, Côte d’Ivoire have indicated their willingness to continue in office.

A resolution will be presented at the 2014 AGM to authorize the directors to determine their remuneration.

Dated in Lomé, 30 April 2014By Order of the Board,

Samuel K. Ayim Company Secretary

1

2 3

4 5

6


16

Board of Directors

1 Evelyne Tall Deputy Group Chief Executive Officer, Group Chief Operating Officer, Senegalese

2 André Siaka Interim Chairman Cameroonian

3 Albert Essien Group Chief Executive Officer Head of Corporate and Investment Bank Ghanaian

4 Patrick Akinwuntan Group Executive Director, Head of Domestic Bank Nigerian

5 Eddy Ogbogu Group Executive Director, Operations and Technology Nigerian

6 Laurence do Rego Group Executive Director, Finance Beninese

910

11 127

8


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7 Bashir Mamman Ifo Non-executive Director Nigerian

8 Kwasi A. Boatin Non-executive Director Ghanaian

9 Assad J. Jabre Non-executive Director French

10 Daniel Matjila Non-executive Director South African

11 Sipho Mseleku Non-executive Director South African

12 Sena Agbayissah Non-executive Director French

Other directors as at 31 December 2013*Kolapo LawsonThierry TanohIsyaku UmarBabatunde A.M. AjibadePaulo Gomes

* Not pictured and no longer directors of Ecobank Group


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Directors’ biographies

Kolapo Lawson is the Chief Executive Officer of a diversified industrial and trading group with operations in the United Kingdom and West Africa.

He is the Chairman of Acorn Petroleum Plc and Agbara Estates Limited, as well as a Non-Executive Director of three publicly quoted companies: Beta Glass Plc, Pharma-Deko Plc and Sovereign Trust Insurance Plc. He was a Director of Ecobank Nigeria from 1989 to 1997 and of Ecobank Togo from 1990 to 1993.

He stepped down as Chairman of the Ecobank Group in October 2013 and resigned from the board effective 31 December 2013.

Kolapo Lawson has a degree in Economics from the London School of Economics and Political Science and is a Fellow of both the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Nigeria.

André Siaka is a Director on the Board of SA Brasseries du Cameroun (SABC). He was the Chief Executive Officer of SABC from 1988 to January 2014. He worked with SABC from 1977, rising from Production Engineer to Plant Manager, Deputy Regional Manager, Regional Manager and Deputy Managing Director. Before joining SABC, André Siaka worked with Société Générale in Paris from 1974 to 1976.

André was Vice-Chairman of the Board from 2009 until he was made interim Chairman in October 2013.

André Siaka is a member of the Financial Markets Commission and a Director of Orange Cameroun and Chanas Assurances SA. He holds an engineering degree from École Polytechnique, Paris. André Siaka has recently been appointed as the Honorary Consul for the Monaco Principality in Douala.

Thierry Tanoh joined the Ecobank Group as CEO designate in July 2012. Mr. Tanoh was Group CEO during the year 2013 and left the Company in March, 2014.

Thierry Tanoh joined Ecobank from the IFC, a member of the World Bank Group and a global financial institution that supports private sector development in developing countries. During his 17-year career with the IFC, Mr. Tanoh played a key role in expanding the latter’s investment activity in Sub-Saharan Africa from US$140 million in 2003 to more than US$3.5 billion in 2011. During this time, his responsibilities included business development, deal structuring and processing of some of IFC’s largest transactions, before taking on a broader management role.

He joined IFC in 1994 through the young professional program. He initially worked in the Asia Department. He then specialized in the chemicals and petrochemicals sector, working on transactions in Asia, Latin America and Eastern Europe. He became Regional Director in 2006 and Vice President, Latin America and the Caribbean, Sub-Saharan Africa and Western Europe in 2008.

An Ivorian national, he graduated from Ecole Supérieure de Commerce d’Abidjan. He is a certified public accountant in France and holds a Masters in Business Administration from the Harvard Business School.

Kolapo Lawson (63)Chairman 2009 to 2013Non-Executive Director from 1993 to 2013Nigerian

André Siaka (64)Interim Chairman since October 2013 Non-Executive Director since 2006Cameroonian

Thierry Tanoh (51)Group Chief Executive Officer during 2013 Ivorian


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Albert Essien was made Group CEO in March 2014, having been a Deputy Group CEO since 2012. He has been a Group Executive Director since 2005. He is also the Head of Corporate and Investment Bank.

Prior to that, he was the Regional Head for the Anglophone West Africa (excluding Nigeria) and the Eastern and Southern Africa (ESA) regions. As Regional Head for ESA, he had responsibility for Ecobank’s expansion into that region. He started his banking career in 1986 with the National Investment Bank in Accra, Ghana and joined the Corporate Banking Department of Ecobank Ghana in 1990. In 1997, he became Country Risk Manager. He was appointed Deputy Managing Director in 2001 and became Managing Director in December 2002.

Albert Essien has a degree in Economics from the University of Ghana (graduating in 1979) and is an alumnus of the Executive Development Program of INSEAD (France/Singapore). He is also an honorary fellow of the Chartered Institute of Bankers, Ghana.

Evelyne Tall is currently Deputy Group CEO and Group Chief Operating Officer. She oversees the banking subsidiaries and affiliates of ETI across Africa and the Group’s Internal Control, Customer Service and Compliance functions. Prior to that, she was the Head of Domestic Bank. She has been a Group Executive Director since 2005.

She started her banking career in 1981 with Citibank in Dakar. She left Citibank to join Ecobank Mali as Deputy Managing Director in 1998, and was made Managing Director in 2000. Evelyne Tall was later transferred to Ecobank Senegal as Managing Director. She was appointed Regional Head of the Francophone West Africa Region in October 2005.

Evelyne Tall holds a Bachelor’s degree in English (Dakar) and a diploma in International Trade, Distribution and Marketing from the Ecole d’Administration et de Direction des Affaires (ex EAD), Paris.

Patrick Akinwuntan is the Head of Domestic Bank, responsible for the retail, local corporate, public sector and microfinance businesses of the Group. Since joining Ecobank in 1999, he has held various Group management roles, including Group Head, Domestic Bank Products, Group Executive Director, Operations, Technology, Transaction and Retail Banking and Managing Director of eProcess International, where he spearheaded the establishment of the Ecobank Pan-African Technology and Shared Services Centre in Accra, Ghana. Between 2001 and 2005, he was Executive Director, Retail banking for Nigeria and from 1999 until 2001, Group Chief Financial Officer. Patrick has also been Group Coordinator, Commercial Banking and Zonal Head, Western II at Ecobank Nigeria between 1996 and 1999. Before joining Ecobank, he worked for Ernst and Young, Manufacturers Merchant Bank and Springfountain Management Consultants in Nigeria.

He holds an MBA (Finance Option) from the Obafemi Awolowo University, Ile Ife, Nigeria. He is a Fellow of the Institute of Chartered Accountants of Nigeria and an Associate of the Chartered Institute of Taxation of Nigeria. He is also an alumnus of the Harvard Business School’s Senior Executive Program.

Albert Essien (58)Group Chief Executive Officer since March 2014Head of Corporate and Investment BankGhanaian

Evelyne Tall (55)Deputy Group Chief Executive Officer since 2012 Group Chief Operating OfficerSenegalese

Patrick Akinwuntan (51)Executive Director since 2012 Head of Domestic BankNigerian


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Laurence do Rego was appointed Group Executive Director, Finance and Risk in January 2010, having previously been the Group Chief Financial Officer from 2005 to 2009. Following separation of the Finance and Risk functions in April 2014, she assumed the role of Group Executive Director, Finance.

She joined Ecobank in 2002 as Head of Financial Control for Ecobank Benin. Prior to this, Laurence do Rego had over 15 years of experience in senior financial roles, including being Financial Director at Binney & Smith, France, a subsidiary of the Hallmark Group (USA),and Group Thoer (France), and Managing Director of SOCIEC (Societe d’Expertise Comptable), an accountancy firm in France.

Laurence do Rego holds a bachelor and post-graduate degrees in Finance and Accounting.

Eddy Ogbogu has been the Group Executive responsible for Operations and Technology since August 2010. A seasoned operations professional, he has worked in senior banking operations and technology management roles for more than a decade in different organizations covering multiple geographies in Africa. Before his current appointment, he worked with Bank PHB Plc in Nigeria where he was an Executive Director, heading the bank’s service organization, with responsibility for Operations and Technology, including administrative services.

Prior to this, Eddy Ogbogu had an illustrious 19-year career at Citibank in different African countries. He was appointed the Senior Country Operations Officer for the Citibank franchise in Nigeria in 2005 after similar roles in Tanzania, Zambia and Kenya and also served as a Board Director. Eddy was also responsible for overseeing Citibank’s operations and technology in the West Africa cluster.

He is an Accountancy graduate and holds a professional ACA qualification of ACA. He is a member of the Institute of Chartered Accountants of Nigeria (ICAN), the Nigeria Institute of Management (NIM), an Honorary Fellow of the Nigeria Institute of Bankers (NIB) and active in charitable societies.

Sena Agbayissah is a qualified French lawyer and a partner at the law firm of Hughes Hubbard & Reed LLP in Paris. He began his career at Landwell (Pricewaterhouse), where he became a partner in 1999. His experience includes: project finance, securities issuance, financial and banking transactions, structured financing, derivatives, banking and financial regulations and group restructurings. He is also an expert in carbon trading. Sena Agbayissah is a member of the Board of Directors of the European Association for Banking and Financial Law.

He is a lecturer in financial law at Rennes University for DJCE (Diplôme de Juriste Conseil d’Entreprise) students, at Montpellier University and at University of Paris XI.

He holds a DEA (Diploma of advanced studies in private law), University of Paris XI; a DJCE and DESS (postgraduate degrees in business law), University of Rennes and an advanced diploma in taxation (‘Certificat d’Etudes Supérieures’), University of Montpellier.

Laurence do Rego (49)Executive Director since 2010Head of FinanceBeninese

Eddy Ogbogu (52)Executive Director since 2012 Head of Operations and TechnologyNigerian

Sena Agbayissah (51)Non-Executive Director since 2011 French


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Babatunde Ajibade is engaged in private commercial legal practice and is a Senior Advocate of Nigeria. He has been the Managing Partner of SPA Ajibade & Co, a leading commercial legal practice in Nigeria, since 1996.

He is the Chairman of the Capital Market Solicitors Association, Nigeria; Vice-Chairman of the Banking, Finance and Insolvency Committee of the Nigerian Bar Association’s Section on Business Law; Vice-Chairman of the Rules and Regulations Sub-Committee of the Nigerian Securities and Exchange Commission’s Capital Market Committee; a Fellow of the Institute of Advanced Legal Studies (UK); and an International Practice Fellow of the International Bar Association. Babatunde Ajibade holds a PhD in Private International Law and an LLM in Corporate and Commercial Law, both from King’s College, University of London, and an LLB from the Obafemi Awolowo University, Ile-Ife, Nigeria.

Kwasi Boatin is an experienced investment and asset management consultant and asset management consultant and former Director General of the Social Security and National Insurance Trust (SSNIT), with US$2.1 billion of assets under management for a defined benefit plan under the Social Security Scheme for Ghana. He was the General Manager in charge of Finance of SSNIT from 2003 to 2008.

In February 2006 he was appointed Reporter by the International Social Security Association (ISSA), under the ILO, Geneva, and was Vice-Chairperson of the Technical Commission on Investments from 2007 to 2010. From 1989 to 2003 he held senior finance positions in major UK companies including Barratt London Plc, AT&T (UK) and Winkworth. Kwasi Boatin holds an MBA from Henley Business School, Oxfordshire, England and is a Fellow of the Association of Chartered Certified Accountants, UK.

Paulo Gomes was an Executive Director of the World Bank Group in Washington DC from 1998 to 2006. From 1995 to 1998, he worked for the Ministry of Finance, Planning and Trade of Guinea-Bissau, where he was Principal Adviser, Director of Strategic Planning, Public Investment and Debt.

Paulo Gomes is the Founder and Manager of Constelor Holdings and Chairman of the AFIG Fund. He holds a Certificate in Political Studies (Institut d’Etudes Politiques de Paris), a Bachelor in Economics and International Trade (Institut d’Etudes Libres de Relations Internationales,Paris) and Masters in Economic Policy and Management from the Kennedy School of Government at Harvard (USA).

Babatunde A M Ajibade (46)Non-Executive Director from 2010 to February 2014 Nigeria

Kwasi A Boatin (52)Non-Executive Director since 2009 Ghanaian

Paulo Gomes (49)Non-Executive Director from 2006 to January 2014 Bissau Guinean


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Bashir Ifo is the current President of the ECOWAS Bank for Investment and Development (EBID), formerly known as the ECOWAS Fund for Cooperation, Compensation and Development in Togo.

He has 30 years of experience in both the public and private sectors. Between 1995 and 2011 he held several senior management positions at EBID.

These included Head of Financial Operations Division, Director of Treasury Department, Head of Finance and Administration Department, Acting Managing Director of the former ECOWAS Regional Investment Bank (ERIB) and Vice President for Finance and Corporate Services.

From 1982 to 1995, Bashir Ifo worked in both the public and private sectors in Nigeria. He holds a Bachelor’s degree in Business Administration (Banking and Finance) and an MBA (Finance), both obtained from the Ahmadu Bello University, Zaria, Nigeria.

Assaad Jabre is a Corporate Investment Advisor. From 1980 to 2005, he worked with the International Finance Corporation (IFC), a member of the World Bank Group, where he held a number of senior positions, including: Acting Executive Vice-President and Chief Executive Officer (2005); Vice-President, Investments and Advisory Operations (2000 – 2005) and Vice-President, Portfolio Management (1997 – 2000).

From 1997 to 2005 he was also a member of the IFC Corporate Investment Committee and its Finance and Risk Management Committee.

Mr Jabre currently sits on the advisory board of ICD, the private sector affiliate of the Islamic Development Bank; the strategic committee of Agence France-Tresor, the French sovereign debt management agency; and the board of the GSMA foundation – a foundation established by the association of worldwide mobile telecom operators.

He is a Graduate of the ‘Institut d’Etudes Politiques de Paris’ and holds a degree in International Law from the University of Paris and an MBA from the Wharton School (University of Pennsylvania).

Dr Daniel Matjila is a well-respected and experienced finance, investment risk management and investment specialist. He is also an academic. Currently, he is the Chief Investment Officer (CIO) and Executive Director of the Public Investment Corporation (PIC). PIC is the largest asset manager in South Africa and the rest the African continent. He manages an investment portfolio in excess of R1.1 trillion (approx. US$150 billion) across all asset classes. He is also spearheading the offshore investment strategy and Africa investment strategy for the PIC. He is also currently a Non-Executive Director and Board member at Afrisam Ltd, Entabeni Holdings (Chairman) and Harith Partners.

Prior to joining the PIC, he was the Senior Manager Quantitative Research Analysis for Stanlib, where he spearheaded the application of quantitative techniques in fund management and managed the Quant Portfolio for over two years. Before this, Dr Matjila worked for Anglo American, a JSE-listed company, for five years where he was the Senior Manager of Quantitative Research Analysis, responsible for Derivatives (Fixed Income, Equity and Currency) and the application of quantitative techniques in Fund Management.

Dr Matjila started his career as a Senior Mathematics lecturer at the University of the North working in academia for over nine years. He holds a Ph.D. (Wits), a M.Sc. (Rhodes) and a B.Sc. Hons (Fort Hare), amongst other qualifications.

Bashir M Ifo (54)Non-Executive Director since 2011Nigerian

Assaad J Jabre (61)Non-Executive Director since 2010 French

Dr. Daniel Matjila (51)Non-Executive Director since 2012 South African


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Sipho Mseleku is the Chairman of the Global Business Roundtable; he is the former Chief Executive Officer of the Association of SADC Chambers of Commerce and Industry (ASCCI), a Non-Executive Chairman of Sakhumnotho Group Holdings (Pty) Ltd amongst numerous other executive roles. He was the Chief Executive Officer of the Chambers of Commerce and Industry of South Africa (CHAMSA) from 2004 to 2005, of the National African Federated Chamber of Commerce and Industry (NAFCOC) and Sakhumnotho Group Holdings (Pty) Ltd from 2002 to 2005.

Sipho Mseleku has a background in investment banking, structured finance and legal practice. He is an Attorney of the High Court of South Africa and the current President of the Pan-African Chamber of Commerce and Industry.

He holds an LLM (Tax Law), an HDip Company Law, an LLB and a BA (Hons) of the University of Witwatersrand, Johannesburg.

Isyaku Umar started his career with UAC of Nigeria. From 1972 to 1976, he worked for Kano State Government and was at various times Secretary of the Draught Relief Committee and Principal Private Secretary to the Military Governor. Following that, he became the General Manager of Mai-Nasara and Sons Limited from 1977 to 1979, and Managing Director of Tofa General Enterprises Ltd from 1979 to date.

Isyaku Umar holds a Bachelor’s degree in Economics from Ahmadu Bello University, Zaria, a Master of Public Administration degree from Pittsburgh University (USA) and an Honorary Doctorate Degree from Nnamdi Azikiwe University Awka Anambra State, Nigeria.

Sipho G Mseleku (47)Non-Executive Director since 2009 South African

Isyaku Umar (66)Non-Executive Director from 2006 to February 2014 Nigerian


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To have the opportunity to lead Ecobank is most humbling, and in taking on the role I appreciate the support and trust of the Board and our major shareholders. This responsibility comes at a challenging time given recent governance issues, but the fundamentals of our business are strong and I am excited about the huge potential of our unique platform, built over the past 25 years. I have already begun the essential groundwork of reassuring our staff, shareholders, regulators, depositors and other customers of Ecobank’s organizational and financial stability. Together with my experienced executive and senior management team, the leadership rhythm of the institution has been re-established. This is essential to ensure our staff work together towards a common goal. Demonstrating this stability and unity of purpose amongst Ecobankers allows confidence to be restored, and shows our stakeholders that the Group is back to “business as usual”. The resilience of our institution has been tested during the governance crisis and we have come out stronger.

Whilst 2013 was a particularly challenging year, the underlying financial results are testament to Ecobank’s strong franchises across Africa and excellent products and services. Robust organic growth of 16% took net revenue to over US$2 billion for the first time and we increased our balance sheet during the year. The decision to make full provision for legacy assets in Nigeria was a prudent one. I recognize that the lack of a dividend this year will be a disappointment to our many shareholders, but the Board is committed to paying a dividend for 2014.

Delivering value for our shareholders is critical – we know that we have to improve our cost-to-income ratio and generate better returns from our pan-African network. We are driving efficiencies within both our retail and wholesale businesses and are seeing the benefits of operational synergies from our major acquisitions in Nigeria and Ghana. Our return on equity is set to improve as Nigeria delivers to its full potential, our newer geographical clusters (notably East and Southern Africa) gain appropriate scale and our focus on operational efficiencies across the Group feeds through to improved profitability. We have made a very promising start to 2014, which gives me confidence in Ecobank’s ability to deliver a much-improved performance for the current financial year.

Financial PerformanceOverall, despite the regulatory headwinds in Nigeria, we achieved most of the financial targets that we set out at the start of 2013. On the balance sheet side, we saw good opportunities to grow risk assets, particularly in the regional corporate business. Our net customer loans increased by 21% during the year to over US$11 billion, exceeding our target of approximately 10% growth. Customer deposits grew by 13% to US$16.5 billion and whilst we did not reach our

Group Chief Executive’s review

“ Delivering value for our shareholders is critical – we know that we have to improve our cost-to-income ratio and generate better returns from our pan-African network.”

“Together with my experienced executive and senior management team, the leadership rhythm of the institution has been re-established.”


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growth target of 20%, we ended the year strongly and improved our cost of funds. Clearly the legacy assets addressed at the end of the year have had an adverse impact on overall asset quality; we ended 2013 with a non-performing loan ratio of 6.2% against our target for the year of around 5.6%. This ratio has subsequently improved to 5.8% at the end of the first quarter of 2014 and our conservative approach to provisioning has increased the coverage ratio to 79% at year-end, above our guidance of 75%.

Group revenue growth was well balanced by region and between interest income and fees and commissions, exceeding our 15% target. Our newer geographical clusters of Central, East and Southern Africa registered net revenue increases of around 30% or more. Equally, our emphasis on efficiency continues to produce results, with the cost-to-income ratio improving in all our African clusters and pre-impairment profit rising by 21%. However, although the Group’s cost-to-income ratio fell by more than 1% year-on-year to 70%, there is still much more to be achieved if we are to meet our medium term objective of reducing this towards 60%.

Our profitability for 2013 has clearly been impacted by increased impairment provisions which, including the US$165 million provision on legacy loans in Nigeria, took up more than half of our pre-impairment profit. Combined with a higher effective tax rate, this led to the sharp (45%) fall in net profit for the year from continuing operations. Diluted earnings per share similarly declined by 57% to 0.55 US$ cents. We were unable to declare a cash dividend for 2013 as ETI, the parent company of the Group, made a loss of US$7.6m for the year.

A return on equity of 6.9% for 2013 is clearly well short of the performance expected, but we are confident that with the sustained growth seen so far in 2014 we are on our way to achieving double digit return on equity. Our unrelenting focus to bring the Nigerian operations to deliver superior performance is central to achieving mid-teens and greater returns in the medium-term.

Business SegmentsDomestic Bank, which includes our retail, SME, local corporate and public sector businesses, has had another year of growth, focused on developing alternative channels and improving efficiency and service quality.

We have segmented our personal banking business along customer-centric lines and increased the partnership with our corporate banking business to deliver banking services right across the value chain of employees, contractors and suppliers of our large corporate customers. For 2014, we will continue to focus on growing our customer base by delivering exceptional customer service. We expect to see growth in our deposit base with lower cost of funds and selectively to expand our loan book.

As part of our efficiency drive, we are encouraging our customers to migrate their routine transactions to our electronic platforms including ATMs, Internet and Mobile Banking. Mobile financial services have huge potential in Africa, where a mere 24% of the population has a bank account but 75% have a mobile phone. To capture this, we have formed multi-country alliances with leading mobile operators such as Bharti Airtel and MTN and are putting in place differentiated value propositions to deliver a distinctive customer experience.

We continue to innovate to reduce transaction costs and to reach out to the wider unbanked community. For example, to enhance customer convenience, we have rolled out our retail internet banking service and our Chip and Pin cards across 33 African countries, launched our MobileMoney offering in 12 countries and streamlined the approval process for personal loans.

Our Corporate and Investment Banking division has also recorded very strong year-on-year revenue growth, supported by balance sheet expansion, deepening customer relationships and an enhanced sales culture. Within Corporate Banking, our strategic focus is to grow our regional business, leveraging Africa’s trade corridors, to extend the reach of Omni, our corporate Internet banking platform, and to deepen our customer relationships to promote cross selling.

International businesses and non-profit organizations are expanding the range of African countries they operate in, increasing demand for our foreign exchange and treasury products. Then, as African companies expand further beyond national boundaries, seeking larger amounts of capital that a single lender might not be able to provide, demand for syndicated loans is also expected to increase. Ecobank is in the

“Although the Group’s cost-to-income ratio fell by more than 1% year-on-year to 70%, there is still much more to be achieved if we are to meet our medium term objective of reducing this towards 60%.”


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vanguard of Middle African banks that are progressively cooperating to finance major regional transactions and infrastructure projects. We have recently appointed a new Group Head of Investment Banking to oversee the development of our investment banking business. We are also looking to build up our asset management and wealth management activities, which, although currently at an embryonic stage, have great longer-term potential.

Geographical ClustersWe divide our operations into seven geographic regions; six clusters within Africa and our network of four international offices (Paris, London, Dubai and Beijing).

Despite the depreciation of the Cedi, Ghana and the Rest of West Africa region has again been the Group’s outstanding performer, registering a 34% increase in net profits overall, with Ghana achieving an impressive return on equity of 37%. Francophone West Africa, a consistently profitable business for Ecobank, benefitted from the recovery in economic activity in Mali and strong lending activity in Côte d’Ivoire and Burkina Faso.

Nigeria’s 17% year-on-year growth in net revenue was encouraging. An increase in lending activity within the power, telecoms and cement sectors led to an 18% growth in net interest income. However, the increase in the cash reserve ratio on public sector deposits from 12% to 50% impeded our ability to grow earning assets. Operating expenses declined by 9% as a result of our continued focus on cost control and improving branch efficiency. Given the one-off provision discussed earlier, as well as a conservative review of our portfolio, loan impairments increased significantly.

Revenues from Central Africa continue to grow at strong double-digit rates and with the cluster profit for the year up 150%, it is now a material contributor to Ecobank’s overall returns. We also are seeing increases in market share in this region, led by Cameroon, Chad and Congo Brazzaville. Equatorial Guinea was profitable in its first full year of operation.

Although East Africa managed to reduce its operating loss marginally in 2013, strategic challenges remain. To start addressing these, we have strengthened management and

injected US$25 million of additional capital into Ecobank Kenya. The Group intends to further capitalize the Kenyan business in 2014 so it can act as a strong hub for our operations in the region. We will also develop our investment banking operations, having acquired Iroko Securities, the investment advisory firm.

We expanded our presence in East Africa in 2013, commencing banking operations in South Sudan and opening a new representative office in Ethiopia. Both South Sudan and Ethiopia have expressed an interest in joining the East African Community (EAC), Africa’s fastest growing trading bloc. This presents major trade finance and banking opportunities for Ecobank in the longer term, as well as the potential to reach out to the unbanked population in both countries with mobile banking and microfinance services.

Southern Africa is now sustainably profitable as a cluster, led by the strong performance of DR Congo, which more than doubled profits. We were awarded a banking license in Mozambique in late 2013 and have recently acquired a majority stake in ProCredit’s subsidiary there, which specializes in SME banking and finance, to accelerate our entry into the country.

Lastly, we are continuing to build on our international presence. Our Paris subsidiary, EBI SA, has recently had its banking license upgraded to that of a specialized credit institution, thereby allowing it to take deposits from corporate, institutional and NGO clients with operations across Africa. We are also working on the upgrade of our London representative office to a full branch of our Paris operation.

StrategyHaving largely established our pan-African footprint, the focus now will be on boosting efficiency in all areas of the business, including at ETI, our parent company. The Group’s cost-to-income ratio of around 70% is still too high and we are focusing hard on reducing this to the high 60s percent for 2014 and nearer to 60% in the medium-term. To achieve this, we will need to grow revenues as well as control costs, and we are targeting 15% or more growth in revenues as well as loans and deposits for 2014.

A Group Strategic Project Implementation Office was established in early 2013 to track the performance of a number of programs that have been instigated in the areas of customer service, developing our staff and improving financial performance. We have already seen tangible results from this, such as improvements in ATM uptime, sales force effectiveness and loan processing times. However what is particularly important is the development of our people. Our staff are key to our success as a Group, and I echo the Chairman’s thanks to all Ecobankers for staying focused and delivering solid results through the recent difficult times. We have made significant process with our people strategy in 2013, including a new performance management system and branch manager training programs and we have more planned for 2014 to allow us to attract, retain and develop the best.

However, there are still key areas that need to be addressed, and I will not shy away from tackling these directly. I also look forward to working with the new Chairperson as selected by shareholders at this June’s AGM and welcoming other new Board members to the Group.

To enhance existing efficiency initiatives, we will re-examine more structural issues, such as growth in back-office staff relative to those facing customers, and how we optimize this mix. Also, across our diverse countries of operation, we must enhance alignment of our subsidiary banks’ business models with the local market opportunity so we can optimize our return on equity in each location. We have learnt from experience that “one size does not fit all”.

On asset quality, much progress has been made since the decision to centralize the Group’s risk management in 2010, but we will further embed our controls and risk management framework to ensure more rigorous monitoring. For 2014 we have committed to more detailed targets in this area, namely an NPL ratio of less than 5% and a cost of risk of under 2%.

Above all, we need to ensure that the Group is sufficiently capitalized and is optimizing the allocation of that capital. We will remain compliant with regulatory capital requirements in all our subsidiaries, including scope for growth in the business where the


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returns are attractive. We will also continue to make the case to shareholders for our entry into Mozambique, which provides sea access to other landlocked countries in the SADC region and completes our presence there. Similarly, planned investments in Kenya and Angola are warranted: alongside Nigeria and Ghana, they make up the big four Middle African economies with deep pools of banking revenue. We are convinced of the strategic value to Ecobank of investing in these businesses, which will help secure the medium- to long-term sustainable growth of the Group.

We are very conscious of per-share return metrics and so as we plan our capital strategy, we will look to raise non-dilutive Tier II capital, both at the Group level and for Ecobank Nigeria. Our capital mix will also be influenced by whether our existing convertible lenders become shareholders. In this regard our alliance with Nedbank, who have rights to take up to a 20% ownership, is key and we would look forward to welcoming them as a major shareholder and board member in addition to our ever growing business partnership.

ConclusionThe prospects for banking across Middle Africa remain very buoyant, driven by sustained high rates of economic growth, increasing levels of intra-African trade, and huge unmet needs for basic financial services and the emergence of new mobile technologies to provide them. Ecobank remains uniquely positioned to take advantage of these fundamental trends, which will also provide specific opportunities in corporate banking such as online cash and treasury management and structured commodity trade finance.

However regrettable 2013’s corporate governance issues may have been, they have provided us with a window of opportunity to refresh and improve our processes and systems, particularly at Board level. Ultimately, strong corporate governance enhances a company’s sustainable business performance, which is in the interests of all our stakeholders.

We do not underestimate the challenges ahead but, in learning from the recent past, Ecobank will undoubtedly emerge as a stronger institution. I have a loyal and

talented team behind me who can now focus on driving the business forward, providing excellent customer service and improving efficiency and returns. For Ecobank is so much more than a bank – it is a symbol of pan-African cooperation, with a unique platform, strong fundamentals and boasting the very best of Africa’s talent. Together, and with the continued support of our loyal customers, partners and shareholders, I am sure we will take this great pan-African bank from strength to strength.

Albert EssienGroup Chief Executive Officer

“We do not underestimate the challenges ahead but, in learning from the recent past, Ecobank will undoubtedly emerge as a stronger institution. ”


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Within its 25 years of business operation, Ecobank has grown hugely as a business, developing a valuable brand and a more balanced, diversified and resilient business model that is well equipped to meet the challenges of the future. We have updated our operating strategy to better align the business to the changing economic landscape and customers’ evolving needs. Our operating strategy is supported by four key non-negotiables: continuous focus on transforming the business, investment in Ecobank’s people and training, focus on risk and compliance, and strengthening process control. The many initiatives implemented over the past 25 years have made us more customer-centric and we have embarked on the next step in our journey towards excellence.

At Ecobank, we are now reshaping our distribution channels in response to evolving customer preferences in order to provide the access and convenience they expect while being positioned to offer them timely services regardless of the channel they choose. Online and mobile banking are growing and we are adapting our website, branches, call centres and mobile platform to offer the best service to our customers. By being in tune with our customers, we are gaining market share in middle Africa today and building momentum for the future.

We want customers and other key stakeholders to be at the heart of every decision and action that we will take. This will guide us towards offering the best customer experience and will be a competitive advantage. Technology remains a key enabler. As outlined in the Operations and Technology review, several technology and process enhancements will be rolled out in 2014 and subsequent years to support our employees in their efforts.

Performance Management Over the last twenty-five years, we have been growing our pan-African footprint in deliberate fashion and we continue to implement targeted initiatives to drive market penetration across the countries we operate in. We continue to focus on operating efficiency and other efforts to enhance the financial performance of our subsidiaries in order to achieve Group-wide financial targets and efficiencies.

We monitor the performance of our countries closely, given an environment that is

characterized by volatile exchange rates, new regulatory constraints, and an economic context that remains uncertain in some areas. For countries with particular challenges, like our newest subsidiary in South Sudan, we work with key stakeholders to appraise the business environment and provide additional support where necessary.

As well as monitoring progress on a country level, the individual performance management of our staff is key. As described in our People Report, we have designed and rolled out a new Ecobank Performance Management (EPM) system across the Group in 2013 as well as implementing several training programs. For the future, we will maintain our focus on attracting, retaining and developing the best talent. Key initiatives include developing the leaders who will shape strategy and drive future performance, and continued efforts at driving an open and inclusive culture.

Customer ServiceEcobank delivers world class banking services to more than ten million customers in over 30 countries across Africa. We are known by our customers as the “pan-African bank” that provides convenient, reliable and accessible financial service in a seamless and consistent manner across its unique network like no other bank in Africa.

Our customers are at the centre of everything we do and we try to make our decisions from their perspective. To enhance our customer-centric approach, key service and feedback initiatives have been institutionalized across our network. These include customer forums, mystery shopping, benchmarking, and loyalty surveys across our network. In select sites, our customers call toll free lines using easily memorized short codes, a service that is being rolled out to all subsidiaries. In addition, the executive team across the countries spend time at the branches each year as guest tellers. During such visits, “executive guest tellers” make a conscious and proactive effort to engage staff and customers, elicit feedback and understand needs from a service improvement perspective.

In response to our commitment to customers, our net promoter score, which is our key loyalty metric, has improved significantly in recent years. In the coming years, we will continue to put our customers first and deepen the culture of service excellence.

Group Chief Operating Officer’s review

“ In 2014 and beyond, our central objective is to increase our ability to provide superior customer service in a multi-channel environment.”


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Compliance In the last 25 years, Ecobank has successfully embedded compliance thinking into its daily activities and decisions. We have properly resourced compliance teams supporting business leaders across their respective countries and divisions, with compliance training promoted across the Group. Risk accountabilities have been reinforced across our three lines of defence: our dedicated teams in the Compliance, Internal Control and Internal Audit departments.

Ecobank faces challenges as a result of significant regulatory changes both within our countries and globally. These challenges hold significant implications for our operations especially in the face of unrelenting competition. Nevertheless, we ensure that regulatory reforms and requirements do not create undue bureaucracy or disruption to our service. We have robust processes in place to ensure that we effectively and consistently comply with evolving laws and regulations. Our objective is to ensure that the brand is preserved from reputational risk and regulatory sanctions. Ecobank closely collaborates with local law enforcement authorities and financial intelligence units in an open and efficient manner. Our business is conducted in line with local regulations and international best practices.

Through our commitment to promoting compliance, we have committed resources to compliance monitoring tools, developed and implemented the framework for adapting to local regulations in all countries of operation, and have strengthened the Ecobank Compliance team.

In 2014 and onwards, Ecobank will continue to focus on strengthening and implementing its compliance and control strategy, an initiative focussed on strengthening its risk management framework, leadership, culture, capabilities and effectiveness.

Internal ControlEcobank’s Internal Control function is effective and founded on international principles and standards, including generally accepted accounting principles and fair presentation. This is governed by robust control policies, standards, procedures and guidelines, for pragmatic and consistent application, and these form the foundation of successful risk management.

The emphasis on risk governance is based on a “three lines of defence” concept, which is the backbone of the Group’s risk management framework, with emphasis on independence, accountability, transparency, responsibility, communication and reporting, both internally and to our key external stakeholders. At Ecobank, internal control is an independent assurance function.

Our internal control best practice ensures a proactive control culture through the Board, Executives and Senior Management being active in risk recognition and assessment, and through a strategic management reporting system. This supports the identification, prevention, correction, and monitoring of weaknesses and breakdowns of systems and controls across the Group. Through its periodic reviews, our internal control system is also subjected to regular evaluation by relevant regulatory authorities in all the countries in which we operate.

For the future, we are developing stronger and more robust control mechanisms through a proactive and preventive risk-based system of control which will support the increase in transaction volumes expected as we continue to grow our business. Also, we will continue to create an environment that develops the capabilities of our internal controls team to adapt to the ever evolving risk environment.

Evelyne TallDeputy Group CEOGroup Chief Operating Officer


30

Business report: Corporate and Investment Bank

The past year proved to be very testing, with a combination of regulatory increases in cash reserve requirements for public sector deposits in Nigeria and intensified competition across our markets, as well as our own highly publicized issues.

Despite these challenges, Corporate and Investment Bank (CIB) generated revenues of US$1.0 billion, a year-on-year increase of some 41%, supported by expansion of the balance sheet, improved customer relationship management and an enhanced sales culture. The business benefitted from significant growth in financing transactions, with higher volumes registered across most product lines, improved customer retention and acquisition, and increased collaboration between our local subsidiaries in Africa. This resulted in strong growth in both customer deposits (up 23% to US$5.6 billion) and net customer loans (up 33% to US$6.3 billion).

For the year ahead, our strategic focus is to continue to grow our regional business, leveraging Africa’s trade corridors, to extend the reach of Omni, our corporate internet banking platform, and to deepen our customer relationships to promote cross-selling. Our unique pan-African footprint will continue to be a key differentiator in growing our client base. Indeed, Ecobank is strategically positioned to take advantage of the increasing regionalization and intra-African trade that underpins the continent’s long-term growth prospects. We will make further progress in facilitating and supporting trade and banking transactions both within Africa and with its international trade and development partners.

We are relentless in our commitment to deliver superior customer service. We strive to deepen our client relationships by listening to their needs and working together to find solutions. We remain focused on strengthening the effectiveness of our sales process and business operations, investing further in our technology platform as well as on attracting and retaining high-caliber, experienced professionals.

Finally, I should like to thank our customers and partners for the faith they have placed in Ecobank, the institution and its people, during what has been a difficult year for the Group. I must also pay tribute to the dedication of each and every member of staff, whose hard work, professionalism and perseverance have contributed to sustaining our business relationships in uncertain times. We can all now focus on unleashing the full potential of our unrivalled pan-African corporate and investment banking platform.

Albert EssienGroup Chief Executive OfficerHead of Corporate and Investment Bank

“ Our strategic focus is to continue to grow our regional business, leveraging Africa’s trade corridors, to extend the reach of Omni, our corporate internet banking platform, and to deepen our customer relationships.”


31

Business report: Domestic Bank

With our pan-African network now extending across 35 countries, over 1,250 branches, 2,300 ATMs and 10,000 POS terminals, we are leveraging our unparalleled distribution platform to deliver quality payment services, collections, deposits and loans to our expanding customer base. We have established clear business verticals (public sector, local corporates, SMEs, personal banking and microfinance) to which we offer a full range of convenient, reliable and innovative products and services. Our aim is now to significantly grow cheaper deposits, good quality assets and revenues whilst reducing the cost-to-serve in order to deliver improved efficiency and profitability.

The Domestic Bank achieved two notable milestones in 2013 despite regulatory headwinds in our main markets during the year; revenues surpassed the US$1 billion mark and, for the first time, we exceeded 10 million customers. We grew our alternative channels strongly, with over 600 more ATMs deployed during 2013 and 29% more cards issued, as well as increasing customer deposits by over US$800 million, or 8%.

During 2013 we implemented a three-pronged strategic approach designed to position us as ‘best-in-class’ in our markets through customer service excellence, developing our people and improving shareholder value. These included training and certification of our ‘Top 100’ branch managers and roll-out of the Sales Force Effectiveness (SFE) program to embed best-in-class tools and practices within our sales teams. We have extended our network of ‘credit factories’ to reduce the turnaround time for retail loan origination, processing and disbursement, as well as introduced standardized SME loan products, bringing improved customer service and asset quality. Additionally, we made our key remittance products such as Rapidtransfer and Western Union available via alternative channels, rolled out Ecobank MobileMoney and Mobile banking in ten more countries and significantly improved the uptime of our ATMs and electronic banking channels to better serve our customers on a 24/7 basis.

At the end of 2013, we introduced Personal Banking services targeted at our High Net Worth, Mass Affluent, Mass Market and Youth customer segments in order to benefit from the rising profile of the middle class and youth in Africa. We have designed specific customer-centric offerings for each segment in order to improve our wallet share, benefit

from cheaper deposits and expand our loan book. Our Personal Banking strategy also complements our existing focus on the entire value chain of our corporate and public sector client base, including their employees, suppliers and distributors, to significantly improve our cross-sell ratio. Our focus on this value chain across our business verticals is also yielding positive results in terms of improved customer satisfaction. One way we track this is via our Net Promoter Score, i.e. whether customers would recommend our service, which is beginning to show improvements across our network.

In line with our commitment to financial inclusion, we have also deepened our collaboration with our partners in microfinance, major telcos, international cards associations and global remittance players as we leverage electronic and mobile platforms to reach the underbanked and unbanked across the continent.

In 2014, we will deepen our customer-centric approach whilst providing tailored products, services and channels to enhance customer loyalty and advocacy, thereby positioning Ecobank as the pan-African retail bank of choice. Our emphasis on people development and training will also continue as we have begun the second phase of our branch management certification program, covering the next 400 branch managers. We will also continue to leverage technology to migrate low-value transactions to electronic channels to improve productivity and efficiency.

We assure our 10+ million customers of our commitment to excellent banking services and thank them all for their continued loyalty and patronage. As the leading pan-African retail banking network, we are positive about the potential of our business. Our staff are passionate about Africa and are set to serve our customers better and deliver superior shareholder returns. The future is truly pan-African, and Ecobank is the pan-African bank.

Patrick AkinwuntanGroup Executive DirectorHead of Domestic Bank

“ Our aim is now to significantly grow cheaper deposits, good quality assets and revenues whilst reducing the cost-to- serve in order to deliver improved efficiency and profitability.”


32

The year 2013 was a very exciting one for Operations and Technology (O&T). We experienced remarkable platform and application stability across the Group. This allowed us to focus more on driving efficiency through systems and process improvements. We also made significant progress in key strategic initiatives covering system roll-outs; system integrations; information and physical security; staff training and development; operational controls and organizational changes.

Key achievements of 2013 included the successful completion of the IT integration of all 364 former Oceanic Bank branches in Nigeria, making us compliant with regulatory requirements. This also represents an important step in unlocking efficiency improvements in Nigeria as it brings the whole of our network onto the same core banking application, Flexcube.

A sustained focus on the improvement of our electronic platform is also paying off. Overall Group ATM uptime improved from 88% in January 2013 to a peak level of around 93%. This has contributed to an increase in alternate channel usage across the business. Our focus for 2014 is to increase ATM uptime to above 95%.

We have improved customer experience through several process streamlining and automation initiatives. Our Retail Internet Banking platform continues to gain customer acceptance; and following enhancements to make it even more user friendly, usage has increased. Significant work has also been done on our Ecobank Mobile Banking platform which has been successfully piloted. In the area of cards, the Instant Cards Issuing project and self-selection of PIN through Teller POS (paperless pin) was also successfully piloted in Ghana. Roll-out to other countries will follow in 2014. Ecobank’s corporate online banking platform, Omni, went live in a further 8 countries, bringing the number of countries covered to 32. The enhanced loan processing system, Kastle, has gone live in 2 countries and is set for full roll-out in 2014.

Our efforts in process streamlining and automation support the Group’s drive to improve efficiency. For example, we have deployed Omniflow, our workflow management system, across the network. Automation of incoming Swift transfers; account opening; account maintenance and outgoing funds transfers using Omniflow is now implemented in 28 countries. We continue to deploy improved business applications and enhancing old ones with the aim of impacting customers positively.

Gaining a 360 degree view of the customer is key to improving their overall experience and satisfaction. Deployment of our CRM platform, which will enable this, has begun and will continue into 2014.

Cost optimization is central to our ability to deliver shareholder value. We have identified and are driving some key initiatives that should enable us to achieve substantial cost savings and efficiency gains for the Group in the coming years. These include areas like travel, communications, contract reviews, real estate and procurement, among others

Information security, which is critical given the nature of our business, is of great concern, as the criminal threat is becoming increasingly sophisticated. Thus, a lot of focus in 2013 was placed on securing our platforms and systems, with commendable progress made in safeguarding the interests of our customers.

In the area of Business Continuity Management (BCM), we witnessed significant progress in 2013 with the rollout of the updated BCM policies, standards and procedures, BCM framework has now been implemented in 25 countries with various trainings conducted. With a robust foundation in place, we have now started the process of acquiring ISO certification for BCM.

An improved management process has seen the introduction of initiatives like regular country visits by senior managers from the Group office, branch visits by country heads of O&T and other management practices that have helped us to drive standardization

Operations and Technology report

“ Our improved systems and infrastructure will enable Ecobank to operate reliably and effectively across its uniquely diverse network.”


33

in our operations and move O&T closer to becoming ‘world class’. We will continue to drive more of such initiatives in 2014 and beyond.

Operations and Technology is committed to supporting the growth of the Group and delivering service excellence. Our improved systems and infrastructure will enable Ecobank to operate reliably and effectively across its uniquely diverse network. Our commitment to the strategic intent of providing world class customer service, improved shareholder value and being the employer of choice remains strong. In 2014, we will focus more on service and operational excellence, people development, technology and cost optimization.

Eddy Ogbogu Group Executive Director, Operations and Technology


Ecobank is proud to have been recognized with several awards again in 2013. They reflect achievements right across our platform.

We will continue to innovate and develop our business to serve our customers better and stay ahead of the competition.

34 Business and Financial ReviewEcobank Group – Annual Report 2013

A campaign advert showcasing the awards won across the Ecobank Group in the Financial Times in Dec 2013.

25 awards for excellence in 2013What better way to celebrate 25 years of building prosperity in Africa?

1. The Banker, Bank of the Year,

Ecobank Burkina Faso 2. The Banker, Bank of theYear, Ecobank Cameroon 3. The Banker, Bank of the Year,

Ecobank Liberia 4. The Banker, Bank of the Year, Ecobank Mali 5. The Banker, Bank of the Year, Ecobank Niger 6. Africa Investor,

Best African Research Team 7. African Banker, Innovation in Banking 8. Global Finance, Best Frontier Market Bank 9. Global Finance, Best Regional Bank 10. Global Finance, Best Emerging Market Bank in Burkina Faso 11. Global Finance, Best Emerging Market Bank in Côte d’Ivoire 12. Global Finance, Best Emerging Market Bank in Ghana 13. Global Finance,

Best Emerging Market Bank in Guinea 14. Global Finance, Best Emerging Market Bank in Togo 15. Trade & Forfaiting Review, Best Trade Bank, Silver Award

16. The Banker, Loan Deal of the Year 17. Global Trade Review, Best Local Trade Bank in Cameroon, Côte d’Ivoire, Niger, Senegal and

Sierra Leone 18. Trade Finance Award for Excellence, Best Nigerian Trade Bank

19. Trade Finance Deal of the Year 20. EMEA Finance African Banking Awards, Best

Bank, Benin 21. EMEA Finance African Banking Awards, Best Bank, Chad 22. EMEA Finance African Banking Awards, Best Bank, Côte d’Ivoire 23. EMEA

Finance African Banking Awards, Best Bank, Senegal 24. EMEA Finance African Banking

Awards, Best Bank, Togo 25. EMEA Best Investment Bank, Cameroon, Côte

d’Ivoire, Gabon, Senegal and Togo

35Business and Financial ReviewEcobank Group – Annual Report 2013

Business and Financial ReviewEcobank Group – Annual Report 2013

36


Economic environmentThe global economic environment was shaped by a number of themes in 2013, which had an impact in each of the 35 countries in Ecobank’s Middle African footprint:

• Fiscal and debt overhangs in the US that resulted in the shutdown of the Federal government

• Sustained debt and fiscal pressures in the eurozone that led to the European Central Bank (ECB) cutting rates

• US economic recovery that led the Federal Reserve advising that Quantitative Easing would be slowed

• The ensuing sell-off of debt in Emerging and Frontier Markets in May and the flight to safe havens following that advice destabilized domestic capital and FX markets

• Significant volatility in major currencies such as the Nigeria Naira and the Ghana Cedi increased during the period

• Ongoing deleveraging and recapitalization of globally active banks.

However, economic growth remained strong across Ecobank’s footprint in 2013. Real GDP in most countries where we operate expanded over 5%, a good result given ongoing weakness in developed economies (particularly Europe that remains an important trade partner). Growth was supported by a combination of sustained strong commodity prices, solid agricultural production, high levels of government spending (particularly in most oil producing countries), and increased provision of banking, telecoms and trade services. However, perennial problems such as poor infrastructure and insufficient power held back activity in many countries.

Average inflation remained relatively high across Middle Africa in 2013 at around 7%, somewhat lower than the year before. However, inflationary expectations remained high due to robust domestic demand and high government spending that pushed up prices, and strong global commodity prices that strained current accounts adding pressure onto African currencies. Trade imbalances partly driven by weak demand for Africa’s exports and high global commodity prices resulted in many Middle African currencies continuing to depreciate against the USD last year. In contrast, the CFA francs (XOF and XAF) appreciated moderately reflecting the strengthening of the EUR against the USD through most of 2013. Currency weakness increased imported inflation across Middle Africa, which in turn led to a tightening of monetary policy in some countries in

an effort to slow inflation, strengthen currencies and reduce capital flight.

Average oil prices remained surprisingly steady in 2013, with the annual average Brent crude oil price up US$4 per barrel compared to 2012. This benefited oil producers such as Nigeria, Angola, Ghana, Cameroon and Equatorial Guinea. However, monthly price swings were more pronounced due to large scale changes in supply and demand growth and in the volume and direction of trade flows. The single most important price driver was the steady increase in US oil production, which helped offset the impact of falling supply elsewhere (such as in Libya and Iran). This trend in US production looks set to continue in 2014 and beyond, providing once again one of the largest changes in the market.

Real GDP (annual % change)2008 2009 2010 2011 2012 2013e 2014f

World 2.8 -0.6 5.1 3.9 3.2 2.9 3.6

Sub-Saharan Africa 5.6 2.8 5.3 5.5 5.1 5.4 5.7

Europe 0.6 -4.2 2.1 1.5 -0.6 -0.4 1.0

e = estimate; f = forecast. Source: IMF

Inflation (annual % change)2008 2009 2010 2011 2012 2013e 2014f

Sub-Saharan Africa 12.9 9.4 7.4 9.3 9.0 6.9 6.3

Developed economies 3.4 0.1 1.5 2.7 2.0 1.4 1.8

Europe 0.6 -4.2 2.1 1.5 -0.6 -0.4 1.0

e = estimate; f = forecast. Source: IMF


37

Income statement analysisFor 2013, the Group has classified certain businesses as held for sale in line with IFRS 5 (non-current assets held for sale and discontinued operations). We have therefore re-stated our 2012 financials on the same basis to facilitate year-on-year comparisons. The re-statement of prior year financials did not create any major impact on the annual financial statements.

Net revenueNet revenue (operating income), the sum of net interest income and non-interest revenue was US$2.0 billion, increasing by US$273 million or 16%, from the prior year. The increase was driven by strong organic growth delivered by both funded and non-funded income despite the various regulatory headwinds we faced in Nigeria, our biggest market.

Net interest incomeNet interest income increased US$202 million or 24% to US$1.1 billion compared with the prior year, driven by strong loan growth among regional corporates. Gross interest income grew 19% to US$1.6 billion reflecting strong growth in interest earning assets and higher yields. Interest expense, on the other hand, increased by only 10% to US$549 million, because we managed to progressively reduce our cost of funds, ending the year at 3.1%. This reflects the benefits of our extensive branch network in helping to generate low-cost deposits and to make us more accessible to our clients. These factors led to a 70 basis point improvement in our net interest margin to 7.2% in 2013.

2013 Net revenue split by NII and NIR

Non-interest revenue 48%

Net interest income 52%

Net revenueYear ended 31 December In thousands of US$ 2013 2012 Change

Interest income 1,599,756 1,348,086 19%

Interest expense (548,998) (499,396) 10%

Net interest income (NII) 1,050,758 848,690 24%

Fees and commissions on loans 133,386 90,142 48%

Trade finance 117,790 85,732 37%

Markets, Asset Management and Corporate Finance 40,085 28,509 41%

ATM commissions 64,056 47,957 34%

Cash management 241,489 249,727 -3%

Other fees and commissions 29,742 13,160 126%

Fee and commission income 626,548 515,228 22%

Fee and commission expense (25,402) (26,809) -5%

Net fee and commission income 601,146 488,419 23%

FX income 228,999 189,767 21%

Securities trading 79,961 65,939 21%

Trading income 308,960 255,707 21%

Net losses from investment securities (1,581) (4,279) -63%

Other operating income 44,173 141,462 -69%

Non-interest revenue (NIR) 952,698 881,308 8%

Net revenue (NII + NIR) 2,003,456 1,729,999 16%


38


Non-interest revenueNon-interest revenue increased US$71.4 million or 8% to US$953 million compared with the prior year. The increase was driven by growth in fees and commissions income and trade finance. The increase in non-interest revenue would have been in excess of 20%, if adjusted for the approximately US$106 million one-off revenue gains reported in 2012 from the refund we received from AMCON and the fair value gains on real estate properties.

a. Net fee and commission income

Net fees and commission income was US$601 million, increasing US$113 million or 23% from the prior year. Fees and commission on loans were up 48% to US$133 million, reflecting the strong growth in loans. Trade finance, which continues to benefit from the growth in our regional business due to our geographical competitiveness, increased 37% to US$118 million, driven by volume of letters of credit established on imports and bills negotiated. Fees and commissions from our Capital Markets, Asset Management and Corporate Finance activities increased US$11.6 million or 41%, compared with the prior year, driven by financial advisory and portfolio management fees. We were encouraged by the increased client usage of our alternative channels, which helped to drive the strong growth in ATM commissions. Cash management, the largest component of fees and commissions income, declined 3% to US$242 million from the prior year, largely because of the impact of the regulatory changes introduced in Nigeria, among them the reduction in the commissions-on-turnover (COT), client charges paid on cash withdrawals from their bank accounts, from NGN5.00 per NGN1000 withdrawals to NGN3.00. These COT fees are being steadily withdrawn over the next couple of years. Additionally, we recorded reductions in cash management fees in Rest of West Africa, partially offset by increases in Francophone West Africa and Central Africa.

b. Trading income

Trading income increased US$53 million or 21% from the prior year to US$309 million, driven by growth in foreign exchange (FX) and securities trading income. Client-driven FX income increased 21% to US$229 million from the prior year, benefitting primarily from our ability to quote and cross simultaneously more than 25 functional African currencies for clients across our platform, from our Paris-based FX trading hub. This ability echoes our competitive advantage and the benefits of our geographical footprint in Middle Africa in delivering innovative service to our clients. Securities trading income, which is primarily derived from the trading of government securities, increased 21% to US$80 million from the prior year.

c. Other income

Other operating income fell US$97 million or 69% to US$44 million from the prior period. The decrease was primarily driven by the fact that 2012’s other operating income included a one-off gain of roughly US$106 million from refunds received from AMCON and fair value gains on real estate properties.


39

Operating expensesOperating expenses grew US$169 million or 14% to US$1.4 billion compared with the prior year, driven primarily by growth in other operating expenses and staff costs. Other operating expenses increased US$93 million or 17% from the prior year because of the impact of higher regulatory-driven fees in Nigeria, which saw the AMCON levy on total assets (both on- and off-balance sheet) increased, an increase in deposit premiums and a change in the structure of ATM fees. Other cost items that contributed to the growth in other operating expenses were communications and technology, which increased US$46 million, professional fees, which increased US$13 million, and operational losses and fines, which increased US$23 million, among others. Staff costs were up US$72 million or 13% from the prior year, driven by growth in headcount.

The cost-to-income ratio for the year improved to 70.1% compared with 71.4% in the prior year, demonstrating the benefits of our focus on cost efficiency and expense discipline. We are targeting further improvements in the cost-to-income ratio in future years as we bring our geographic expansion, both via acquisitions or greenfield, to an end; and our younger subsidiaries, mainly in our East Africa and Southern Africa clusters and branches become sustainably profitable. The cost-to-income ratio would have been approximately 76% in 2012 if income was adjusted for approximately US$106 million refund from AMCON and fair value gains on investment properties.

Operating expensesYear ended 31 December In thousands of US$ 2013 2012 Change

Staff expenses 639,459 567,464 13%

Depreciation and amortisation 134,898 131,032 3%

Communications and technology 110,531 64,060 73%

Professional fees 79,729 66,812 19%

Rent and utilities 70,376 62,398 13%

Repairs and maintenance 55,121 44,928 23%

Insurance 48,981 41,188 19%

Others (1) 265,870 258,124 3%

Other operating expenses 630,607 537,510 17%

Total operating expenses 1,404,964 1,236,007 14%

Note 1: Others include operational losses and fines, advertising and promotion, business travels, supplies and services, fuel, etc.

Cost-to-income ratio

2010 2011 2012 20132009

69.9%72.4%

69.6%71.4%

70.1%


40


Impairment losses

Impairment losses on loans increased US$215 million or 145% to US$363 million compared to the prior year. The primary driver of this significant increase was the conservative one-off provision of US$165 million taken on certain legacy assets in Nigeria in the fourth quarter of 2013.

On a cluster basis, Nigeria accounted for 74% of total impairment losses on loans due to the significant provisions that were taken for these legacy assets. Rest of West Africa accounted for 10% of total provisions largely due to higher impairments in Domestic and Corporate Bank in Ghana. East Africa, contributing 4% to impairments, recorded higher impairment losses in Kenya and Uganda.

The impact of the US$165 million provisions taken on certain legacy assets in Nigeria was within our Domestic Bank business (see pie chart on impairment losses by business segment). As a result, it constituted 84% of total impairment losses on loans.

Our cost-of-risk deteriorated to 3.3% for 2013 compared with 1.7% in the prior year. See historical 5-year chart of the cost-of-risk on page 41. The US$165 million provision is a one-off and not expected to recur.

Excluding this one-off charge, the increase in impairment losses on loans for 2013 would have been 34%.

Also included in reported total impairments on financial assets of US$377 million are US$14.1 million of impairments on doubtful receivables (2012: US$7.4 million). These are largely from Nigeria and include some long outstanding receivables related to reconciliation differences where we felt it prudent to take provisions.

Management continues to ensure that we only accept risks we thoroughly understand and are comfortable with. Our risk framework continues to be strengthened with improved credit underwriting standards and aggressive remedial and recovery efforts. As a result we are aiming to achieve a cost of risk below 200 basis points for 2014.

2013 Impairment losses on loans by cluster

Francophone West Africa 9%

Nigeria 74%

Rest of West Africa 10%

Central Africa 2%

East Africa 4%

Southern Africa 1%

2013 Impairment losses on loans by business segment

Corporate and 16%Investment Bank

Domestic Bank 84%

Impairment losses on loans and advancesYear ended 31 December In thousands of US$ 2013 2012 Change

Provision for loan impairment 411,963 187,713 119%

Provision no longer required (13,352) (31,136) -57%

Amounts recovered during the year (67,317) (62,500) 8%

Specific impairment losses on loans and advances 331,294 94,077 252%

Collective impairment losses (net) on loans and losses 31,334 53,833 -42%

Impairment losses on losses and advances 362,628 147,910 145%

Impairment losses on other financial assets 14,102 7,441

Impairment losses on financial assets 376,730 155,351


41

ProfitProfit before tax decreased by US$116 million or 34% from the prior year, largely due to the significant increase in impairment losses previously discussed. On a cluster basis, pre-tax profits grew solidly across most regions: Central Africa increased 74%, driven by non-interest revenue growth and efficiency gains; Rest of West Africa was up 35% as Ghana continued to deliver excellent results year-on-year; Francophone West Africa grew 19%, reflecting revenue and loan growth; and Southern Africa reported a pre-tax profit compared to a pre-tax loss in the prior year.

Taxation The effective tax rate for 2013 was 29.6% compared with 16.6% in 2012, an outcome which was driven by the fact that we generated more profits in relatively higher tax jurisdictions compared to lower tax jurisdictions. For example the untaxed exceptional income (AMCON refund) received at the parent company (ETI) level in 2012 did not recur in 2013.

Profit for the year

The factors discussed above, in summary, the significant increase in impairment provisions and the higher effective tax rate, combined to reduce profits in 2013. Overall, profit for the year decreased US$139 million or 48% to US$148 million. Profit for the year from continuing operations declined by a lesser amount, US$126 million or 45%, whereas results from discontinued operations moved from an after-tax profit in 2012 of US$4.9 million to an after-tax loss of US$8.3 million in 2013. See Note 29 on pages 188-189 for further information regarding discontinued operations.

Attributable profit to owners of the parent company (ETI) decreased US$154 million or 62% to US$96 million. Attributable profit from continuing operations was US$103 million, down 58%, whilst discontinued operations recorded an attributable loss of US$7.4 million.

Earnings per share (EPS) from continuing operations were 0.60 US$ cents (basic) and 0.55 US$ cents (diluted) compared with 1.67 US$ cents (basic) and 1.28 US$ cents (diluted) in the prior year, respectively. There were no new shares issued during the year, hence the share count used in the calculation of basic EPS remains 17,212.2 million (2012: 14,705.3 million). No dividend is proposed in respect of the 2013 financial year given the lack of earnings at the parent company (ETI) level.

Summary consolidated income statementYear ended 31 December In thousands of US$, except ratios 2013 2012 Change

Net revenue 2,003,456 1,729,999 16%

Operating expenses (1,404,964) (1,236,006) 14%

Pre-impairment income 598,492 493,993 21%

Impairment losses on financial assets (376,730) (155,351) 143%

Profit before income tax 221,778 338,029 -34%

Income tax expense (65,728) (56,207) 17%

Profit for the year from continuing operations 156,050 281,822 -45%

(Loss)/Profit for the year from discontinued operations (8,277) 4,910 n.m.

Profit for the year 147,773 286,732 -48%

Effective tax rate 29.6% 16.6%

Attributable to:

Owners of the parent (total) 95,541 249,743 -62%

Profit for the year from continuing operations 102,932 246,311 -58%

Profit for the year from discontinued operations (7,391) 3,432 n.m.

Non-controlling interest (total) 52,232 36,989 41%

Profit for the year from continuing operations 53,118 35,511 50%

Profit for the year from discontinued operations (886) 1,478 n.m.

Profit for the year 147,773 286,732 -48%

Return on average equity (ROAE) 6.9% 15.8%

Cost of risk

2010 2011 2012 20132009

1.9%

3.1%

1.3%

1.7%

3.3%


42

Balance Sheet AnalysisAssetsAs at 31 December 2013, total assets stood at US$22.5 billion, up US$2.6 billion or 13% from 31 December 2012. The predominant areas of asset growth were in loans and advances to customers, which increased US$2.0 billion and cash and balances with central banks, which increased US$896 million, driven by regulatory reforms. Customer deposits growth of US$1.9 billion was the predominant source of funding for our asset growth during 2013.

Cash and balances with central banks

As part of our normal course of business, we place deposits with central banks to meet bank reserve requirements and for liquidity management purposes. At the end of 2013 we had US$2.9 billion in cash and balances with central banks, which increased by US$896 million or 45% from the prior year. Cash in hand and in branch vaults and ATMs and other balances held with central banks other than for mandatory reserve requirements increased US$374 million or 39% from the prior year. Mandatory reserve deposits with central banks stood at US$1.6 billion at 31 December 2013, which increased US$522 million or 51%, from 2012, primarily driven by the increase in the the Central Bank of Nigeria’s cash reserve requirement to 50%

of public sector deposits from 12% during the year. This resulted in a reduction in certain earning assets, including available-for-sale securities and placement with other banks to meet the higher reserve requirements.

Loans and advances to banks

Loans and advances to banks largely constitute deposits we hold with other banks to facilitate correspondent banking relationships and those we place in banks on the interbank market to manage liquidity and interest rate risks. As at 31 December 2013, loans and advances to banks were US$1.3 billion, down US$863 million or 40% from the prior year. The decrease was primarily driven by Nigeria, where the central bank’s cash reserve ratio increase triggered a redeployment of earning assets into meeting the requirement. As a result, Nigeria recorded a 50% decline in loans and advances to banks.

Treasury bills and other eligible bills

The bank places deposits otherwise not immediately loaned out to clients in treasury bills and other eligible bills. Treasury bills and other eligible bills increased US$302 million or 37% to US$1.1 billion from the prior year. The increase was driven by Nigeria, where treasury bills increased US$130 million, Francophone West Africa, which increased US$84 million and an increase of US$46 million in the Rest of West Africa.


Consolidated balance sheet dataAs at 31 December (In thousands of US$) 2013 2012 Change

Earning assets

Treasury bills and other eligible bills 1,127,927 825,883 37%

Financial assets for trading 114,917 92,854 24%

Loans and advances to banks 1,312,150 2,175,156 -40%

Loans and advances to customers 11,421,605 9,440,945 21%

Investment securities: available-for-sale 1,893,489 2,331,748 -19%

Pleged assets 1,135,434 700,054 62%

17,005,522 15,566,640 9%

Non-earning assets

Cash and balance with central banks 2,877,868 1,981,625 45%

Intangible assets 496,748 503,149 -1%

Property and equipment 872,145 861,316 1%

Derivative financial instruments 141,346 143,417 -1%

Other non-earning assets 1,138,824 883,236 29%

5,526,931 4,372,743 26%

Total assets 22,532,453 19,939,383 13%

Liabilities

Deposits from other banks 706,953 662,201 7%

Deposits from customers 16,489,904 14,620,478 13%

Other deposits 677,960 369,360 84%

Borrowed funds 1,303,406 1,239,683 5%

Other liabilities 1,219,582 873,744 40%

Total liabilities 20,397,805 17,765,466 15%

Equity

Share capital 1,409,001 1,409,001 0%

Retained earnings and reserves 527,435 597,187 -12%

Total equity and reserves attributable 1,936,436 2,006,188 -3%

Non-controlling interest in equity 198,212 167,729 18%

Total equity 2,134,648 2,173,917 -2%

Total liabilities and equity 22,532,453 19,939,383 13%


43

Loans and advances to customers

The Group provides loans to a range of customers, from large global and regional corporates to individuals, households and small businesses. Total gross loans increased US$2.2 billion or 22% to US$12.0 billion from the prior year. The demand for credit in 2013 was especially favourable within global corporates and regional businesses, as companies ventured more into cross-border markets. As a result, Corporate Bank loans grew US$1.6 billion or 34% to US$6.4 billion from the prior year.

Even though credit demand remained fairly robust among Domestic Bank clients, we were cautiously selective in lending, instead focusing on low-cost deposits generation and increasing our alternative channels. As a result, loan growth in Domestic Bank was modest, increasing US$549 million or 11% to US$5.6 billion from the prior year with the increase primarily driven by local corporates.

Our loan portfolio is fairly diversified geographically, with Nigeria and Francophone West Africa contributing 36% and 34% of total loans respectively. Additionally, loan growth within each cluster was strong, averaging 22% growth over the prior year, with Francophone West Africa growing by US$792 million or 25% and Central Africa by US$304 million or 27%.

A large portion of the loans and advances are in term loans, constituting 76% of our total loan portfolio and 22% in overdrafts.

The allowance account for loan losses increased 45% to US$588 million. For Domestic Bank, the allowance account increased largely due to the US$165 million provision taken on legacy assets in Nigeria, which increased the gross provisions significantly, partially offset by loan write-offs. Corporate Bank reported an increase in its allowance account for loan losses too, driven by growth in the gross provisions, partially offset by loan write-offs. For a breakdown of 2013 allowances for loan losses by geography see the pie chart on page 44.

With the allowance account for loan losses increasing, the ratio of reserves available to cover non-performing loans, the coverage ratio, increased to 79.0% from 74.2% from the prior year. A chart of coverage ratio by geographic cluster is shown on page 44.

2013 Gross customer loans by geography


Nigeria 36%


Central Africa 12%

East Africa 4%

Southern Africa 4%

2013 Gross customer loans by type

Overdraft 22%

Term loans 76%

Others 2%

Loans and advances to customersAs at 31 December (In thousands of US$) 2013 2012 Change

Group

Gross loans 12,009,770 9,847,418 22%

Less: allowance for impairment (588,165) (406,473) 45%

Loans and advances to customers (net) 11,421,605 9,440,945 21%

Non-performing loans 744,572 548,053 36%

Non-performing loan ratio 6.2% 5.6%

Coverage ratio 79.0% 74.2%

Corporate Bank

Gross loans 6,385,035 4,772,018 34%



Domestic Bank

Gross loans 5,624,735 5,075,400 11%




44


Securities

We hold trading and investment securities in the normal course of business. We also hold securities for the purposes of cash, liquidity and asset-liability management.

Our securities held for trading purposes, almost all in government bonds, increased US$22 million or 24% to US$115 million from the prior year. The increase in the trading securities portfolio was driven largely by Nigeria.

Our investment securities are all held as available-for-sale (AFS) and constitute mainly, listed and unlisted debt and equity securities. As at 31 December 2013, the AFS portfolio stood at US$1.9 billion, decreasing US$438 million or 19% from US$2.3 billion in 2012. The decrease was primarily driven by Nigeria, where the AFS portfolio declined US$745 million, partially offset by increases in Francophone West Africa and Rest of West Africa.

Liabilities and equityDeposits from banks

Similar to how we place funds with other banks and engage in the interbank market to facilitate correspondent banking relationships and manage liquidity and interest rate risks, other banks also place funds with us for such purposes. These deposits from other banks increased US$45 million or 7% to US$707 million from the prior year.

Customer deposits

Customer deposits, which is the predominant source of funding for the Group, increased by US$1.9 billion or 13% to US$16.5 billion from the prior year period. Domestic Bank’s deposits, which constitute largely of low-cost and non-interest bearing current and savings accounts (CASA), increased US$812 million or 8% to US$10.9 billion from the prior year period. The increase was driven by term deposits, which increased US$1.5 billion or 66% from the prior year, partially offset by a decrease in current account deposits by 17% from the prior year.

Corporate Bank customer deposits increased US$1.1 billion or 23% to US$5.6 billion from the prior year. The increase was due primarily to growth in current account deposits, which increased US$575 million and term deposits, which increased US$482 million.

Our focus is to consistently generate low-cost CASA deposits, which are largely core and stable. As at 31 December 2013, CASA deposits constituted 66% of total customer deposits and continue to provide a stable source of funding for the Group.

The loans-to-deposits ratio stood at 72.8% at the end of the year compared with 67.4% at the end of 2012. The increase reflected the strong loan growth achieved in 2013. See historical 5-year chart of the loans-to-deposits ratio on page 45.

Borrowed funds

Borrowed funds are an alternative source of long-term funding and a critical component of the Group’s liquidity and capital management activities. ETI, the parent company of the Group oversees capital planning and funding strategy across the Group.

As at 31 December 2013, total borrowed funds stood at US$1.3 billion, increasing US$64 million or 5% from the prior year. The modest increase was driven by borrowings from certain Development Financial Institutions (DFIs) and other banks, partially offset by repayments.

Nigeria Rest ofWest Africa

Central Africa

Southern Africa

GroupFrancophone West Africa

East Africa

92.3%

57.0%

77.8%

57.7%

105.3%

79.0%

52.3%

Coverage ratio

2013 Allowances for loan losses


Nigeria 59%


Central Africa 6%

East Africa 4%

Southern Africa 2%


45

Total equity

Shareholders’ funds as at 31 December 2013 were US$1.9 billion, which decreased US$70 million or 3% from the prior year period. Share capital (paid-in capital) and premiums stayed unchanged at US$1.4 billion as we did not issue any new shares during the year. Retained earnings were the primary reason for the decrease, declining US$55 million or 9%, impacted by the lower level of profitability for 2013, the prior year dividend payment and reductions in AFS reserves and currency translation differences. The other reserves line increased US$14 million or 43% to US$47 million, driven by an increase in the transfer to statutory reserve.

As a result, total equity, including non-controlling interest, decreased US$39 million or 2% to US$2.1 billion in 2013.

2013 Customer deposits by geography


Nigeria 43%


Central Africa 11%

East Africa 4%

Southern Africa 2%

2013 Customer deposits by type

Current accounts 50%

Savings accounts 16%

Term deposits 34%

Customer depositsAs at 31 December In thousands of US$ 2013 2012 Change

Domestic Bank deposits 10,893,535 10,081,227 8%

Corporate Bank deposits 5,596,369 4,539,251 23%

Total customer deposits 16,489,904 14,620,478 13%

Loans-to-deposits ratio

2010 2011 2012 20132009

72.3%78.8%

62.9%67.4%

72.8%


46


Business segmentsEcobank’s activities are organized into two customer-focused business segments, namely Corporate and Investment Bank and Domestic Bank

Domestic BankWe provide a full range of convenient, accessible, and reliable financial products and services to more than 10 million individuals, small businesses, local corporates and public sector organisations, through our extensive network of 1,284 branches and offices, Internet and Mobile banking, 2,314 ATMs and over 10,000 points of sale (POS).

Corporate and Investment Bank We provide financial solutions to global, regional and public corporates, financial institutions and international organisations. Products and services include pan-African lending, trade services, cash management, internet banking and value-chain finance. We also provide treasury, corporate finance, investment banking and securities and asset management services.


47

Corporate and Investment Bank

Financial performance

Corporate and Investment Bank revenue increased US$289 million or 41% to $1.0 billion compared to the prior year. The increase was well balanced between funded and non-funded income and continued to benefit from new client acquisitions and increasing trade flows.

Net interest income increased US$142 million or 48% from the prior year primarily driven by loan growth, particularly among regional corporates and lower interdivisional funding charges. The growth of US$147 million or 35% in non-interest revenue was due to growth in trade finance, especially in the volume of letters of credit established, higher fees on loans on the back of strong loan growth, and higher spreads in the foreign exchange (FX) business.

Operating expenses increased US$81 million or 22% to US$451 million mainly driven by higher staff costs arising from an increase in headcount required to support business growth. The continued focus on expense control and discipline in managing our business reflected in a reduced cost-to-income ratio. The ratio improved to 45.1% compared with 51.9% in the prior year.

Impairment losses on loans increased US$47 million or 343% to US$60 million from the prior year, due primarily to provisions on non-performing loans in Ghana and Nigeria.

Strong revenue growth and efficiency gains benefited earnings. Profit before tax increased US$162 million or 49% to $490 million from the prior year.

Corporate and Investment Bank: Key Lines of Businesses and Products

Corporate Bank and Transaction Services Group

Treasury Investment BankSecurities and Asset Management

• Lending

• Cash management

• Trade finance

• Electronic Banking (Omni)

• Commodity finance

• Foreign exchange

• Fixed income

• African currency and asset distribution

• Structured trade finance

• Project finance

• Syndicated lending

• Capital markets

• Advisory (M&A)

• Brokerage

• Asset management

Key Customer Segments

Global corporates

Regional corporates

Public corporates

Financial institutions

International organisations

Customers with operations in several countries headquartered outside Middle Africa and whose operations are coordinated globally.

Customers with headquarters and operations in Middle Africa and whose operations are regionally coordinated.

Parastatal companies, such as airports, seaports, oil refineries and major state insurance companies, operating in one country.

Banks, pension funds, insurance companies, development finance institutions, central banks, asset managers, private equity funds etc.

Multilaterals, bi-laterals, international NGOs, embassies.

Corporate and Investment BankYear ended 31 December In thousands of US$, except ratios 2013 2012 Change

Net interest income 435.9 294.2 48%

Non-interest revenue 565.1 417.6 35%

Net revenues 1,001.0 711.8 41%

Operating expenses (451.0) (369.5) 22%

Impairment losses on loans (60.1) (13.6) 343%

Profit before tax (1) 489.9 328.2 49%

Loans (net), EOP 6,295 4,726 33%

Deposits, EOP 5,596 4,539 23%

Cost-to-income ratio 45.1% 51.9%

Non-performing loans ratio 1.2% 1.2%

(1) Profit before tax is less share of profit/(loss) of $0.02m and $(0.51)m for FY13 and FY14 respectively.


48


Domestic BankDomestic Bank has four lines of business, namely Personal Banking, Local Corporate/SME, Public Sector and Cards and eBanking. It also incorporates our microfinance businesses.

Financial performance

Domestic Bank revenues increased US$85 million or 9% to $1.0 billion from the prior year. Net interest income was US$664 million, up US$63 million or 10% from the prior year. The increase in net interest income was driven by higher yields and modest loan growth in local corporates. Non-interest revenue increased US$22 million or 6% to US$379 million, driven by remittances, particularly RapidTransfer, fees on loans through our credit factories, and cards and electronic banking.

Operating expenses decreased US$20 million or 2% to US$859 million driven mainly from lower staff costs due to the improved headcount efficiency in Nigeria. As a result of the cost discipline focus, the cost to income ratio improved from 91.8% in the prior year to 82.4% in 2013.

Impairment losses on loans increased US$182 million or 135% to US$316 million from the prior year, due primarily to provisions on non-performing loans in Nigeria (including the US$165 million one-off provisions discussed earlier).

The higher impairment losses on loans impacted earnings negatively and as a result Domestic Bank reported a pre-tax loss of US$132 million for 2013.

Domestic Bank: Key Lines of Businesses, Customers and Products

Personal Banking Local Corporate/SME Public Sector Cards and eBanking

Customers served:

Our Personal banking business caters to the banking needs of individuals with emphasis on professionals, civil servants, teachers, regular salary earners and Africans in the diaspora. It is further segmented into Classic and Direct Banking, Advantage Banking and Premier Banking to enable us deliver products and services tailored to the specific needs of customers.

The local Corporate business caters to the needs of the companies with annual revenues above US$5 million, with formal structures (typically with corporate governance systems) that operate only within national boundaries.

Our SME business is focused on entrepreneurs with annual revenues of less than US$5 million. This is the engine room for growth in Africa.

Public sector caters for all arms of the government at Federal, National, State, Municipal, County and Local levels including non-profit Non-Governmental Organizations (NGOs). As part of our value chain banking proposition, we also provide banking services to public sector staff, contractors and suppliers.

Cards and Electronic Banking business covers cards issuing, cards acquiring (providing our merchants with POS terminals to enable their customers to pay using cards). Alternative channels (deployment and management of ATMs and POS terminals), Internet banking, Mobile banking and MobileMoney. Cards and eBanking business enables customers to carry out banking outside the branch, anytime and anywhere. We strive to provide easy self-service banking with minimal assistance.

Products offered:

• Current, Savings and Domiciliary accounts

• Western Union, RapidTransfer, Money Gram, Ria, and Wari

• Ecobank Diaspora Current, Savings and Domiciliary Account

• Utility Payment/Collection

• Retail credits (Asset finance, auto loans, personal loans etc)

• Ecobank Advance Account

• Current and Domiciliary accounts

• Letters of Credit and Trade finance

• Bonds and Guarantees

• Payments and Collections

• Corporate Internet Banking (Omni)

• Remittances and Transfers

• Asset, Inventory, Lease, Contract, Import and Receivable finance

• Bills Discounting

• Current and Domiciliary accounts

• Bonds and Guarantees

• Tax and Utility Collections


• Salary credits

• Public Private Partnership

• Ecobank Regional, Visa and MasterCard debit and Credit cards

• Prepaid Visa/MasterCard

• E-alert, e-statement and SMS

• Mobile banking

• Retail Internet banking


• ATMs and ATM galleries

• POS terminals

Domestic BankYear ended 31 December In thousands of US$, except ratios 2013 2012 Change



Net revenues 1,042.1 957.6 9%

Operating expenses (858.7) (879.5) -2%

Impairment losses on loans (316.1) (134.5) 135%

Profit before tax (132.7) (56.5) 135%

Loans (net), EOP 5,126 4,715 9%

Deposits, EOP 10,894 10,081 8%




49

Luanda(Rep. Office)

Lomé(Headquarters)

Johannesburg(Rep. Office)


Geographical clusters in Africa

Ecobank’s market ranking by total assets

Rank Number of countries

No. 1 7

Top 3 14

Top 10 27

Not yet Top 10 5

Market position by country ranked by total assets

Francophone West Africa

1st: Burkina Faso2nd: Togo2nd: Benin2nd: Côte d’Ivoire1st: Guinea-Bissau2nd: Mali3rd: Niger3rd: Senegal7th: Cape Verde

Nigeria

6th: Nigeria

Rest of West Africa

1st: Ghana1st: Liberia1st: Guinea3rd: Gambia4th: Sierra Leone

Central Africa

1st: Cen. Africa Rep.

1st: Chad4th: Congo Brazza4th: Gabon4th: Sao Tome5th: Cameroon5th: Eq. Guinea

East Africa

4th: Rwanda4th: Burundi8th: South Sudan15th: Uganda20th: Kenya21st: Tanzania

Southern Africa

6th: DR Congo7th: Malawi11th: Zambia12th: Zimbabwe


50


Francophone West AfricaFrancophone West Africa comprises the eight countries of the Union Economique et Monétaire Ouest Africaine (UEMOA), namely Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. Cape Verde is also included for management purposes although it is outside UEMOA. The eight UEMOA countries have a common currency, the CFA franc (XOF), and the same regional central bank, the Central Bank of West African States or BCEAO. These countries have a common business law (OHADA) and one stock exchange (BRVM).

Lomé(Headquarters)

Francophone West AfricaDate commenced

operationsETI ownership

(%)GDP

US$ bnReal GDP Growth % Inflation %

2013e 2013 2014f 2013 2014f

Togo 1988 81.8 4.3 5.6 6.0 2.0 3.0

Côte d’Ivoire 1989 94.3 28.5 2.0 3.0 2.9 3.0

Benin 1990 78.7 7.9 5.6 5.5 1.0 2.0

Burkina Faso 1997 85.0 12.2 6.8 6.0 2.0 2.5

Mali 1998 92.8 11.4 1.7 6.5 -0.6 4.0

Niger 1999 99.96 7.3 3.6 6.6 2.3 2.5

Senegal 1999 80.5 15.1 4.0 4.6 0.8 1.4

Cape Verde 2004 94.0 1.9 0.5 3.0 1.5 2.0

Guinea Bissau 2007 100.0 1.0 0.3 3.0 0.6 2.5

Total Francophone West Africa 58.7


51

Economic environmentEconomic activity continued to pick up in 2013 across the region of 100 million people following the end of conflict in Côte d’Ivoire in April 2011 and a return to a more normal environment, and more recently the end to unrest in Mali following French military intervention. The euro-linked XOF appreciated nearly 4% against the USD last year reflecting the suppression of import demand caused by the weak recovery, although the exchange rate remained volatile throughout the year reflecting economic uncertainties in the eurozone. Meanwhile, inflation remained low at less than 3% for most countries in the region due to fiscal stability afforded by the exchange rate peg and despite sustained high global commodity prices.

Performance highlights Francophone West Africa reported profit after tax of US$105 million, up US$23 million or 28% from the prior year on net revenue of US$434 million, up US$66 million or 18% from the prior year.

Net interest income growth of US$40 million or 21% was driven by strong lending activity, both in our Domestic and Corporate banking businesses particularly in Côte d’Ivoire, Burkina Faso and Mali. Margins improved, with better yields on earning assets and a lower cost of funds. Non-interest revenue increased US$26 million or 15% benefitting from higher fees and commissions and trading income.

Operating expenses were up US$39 million or 17% reflecting higher staff costs. The cost-to-income ratio improved to 63.3% with a seasonally strong finish to the year and a fourth quarter cost-to-income ratio of 57%.

The US$7.1 million or 28% increase in impairments on financial assets were driven by Côte d’Ivoire, Senegal, and Niger following portfolio reviews, partially offset by a 63% decline in impairments in Mali, where the credit environment has continued to normalise. The effective tax rate was lower for 2013 due to the full recognition during the year of a significant amount of deferred tax asset from a tax credit resulting from the construction of a Head Office building in Côte d’Ivoire.

Francophone West Africa (UEMOA)Year ended 31 December In millions of US$, except ratios 2013 2012 Change



Net revenue 434.0 367.5 18%


Impairment losses on financial assets (33.1) (25.7) 29%

Profit before tax 126.2 106.2 19%

Tax expense (20.9) (24.0) -13%

Profit after tax 105.4 82.2 28%

Attributable profit 92.9

Loans (net), EOP 3,870 3,114 24%

Total assets, EOP 6,501 5,440 19%

Deposits, EOP 4,398 3,652 20%


Loans-to-deposit ratio 88.0% 86.8%



NB: selected income statement lines only so totals may not add up; EOP, end-of-period. Reported PBT after accounting for share of profit of associate of US$(0.1)m and US$(0.1)m for 2013 and 2012 respectively


52


NigeriaNigeria constitutes a cluster in itself by virtue of its size.

Economic environmentReal GDP growth slowed slightly in 2013 to just above 6% from 6.6% in 2012 due to a fall in oil production (caused by theft and vandalism) and despite robust non-oil activity stemming mainly from increased agriculture and services output, along with high levels of government spending. Oil GDP contracted around 7% although this was offset somewhat by the indirect effect of slightly higher oil prices. Average annual inflation slowed by 4 percentage points to 8.5%, a good result given robust liquidity fuelled by government spending. Nonetheless, the Central Bank of Nigeria maintained a tight monetary policy throughout the year in an effort to support the exchange rate (the NGN weakened 2.7% in 2013). The strong demand for imported goods and weaker than expected oil export revenue (which accounts for around 95% of total exports) halved the current account surplus to 3.5% of GDP.

NigeriaDate commenced


(%)GDP


2013e 2013 2014f 2013 2014f

Nigeria 1989 100.0 288.0 6.3 5.2* 8.5 8.5

*Growth and size of the economy are slower and larger, respectively, following Q1 2014 recalculation of national accounts.


53

Performance highlights Nigeria reported profit after tax of US$33 million, down US$19 million or 36% on net revenue of US$819 million, up US$120 million or 17% from the prior year.

Revenue growth in 2013 was robust. Interest income was driven by strong lending activity within the power, telecoms and cement sectors. However, the increase in the cash reserve ratio (CRR) on public sector deposits from 12% to 50% impacted our ability to grow earning assets. The net interest margin was helped by a steady improvement in the cost of funds during 2013 to below 4%.

Non-interest revenue increased US$48 million or 16% primarily driven by fees and commissions despite regulatory reductions in commissions-on-turnover (CoT) and other fees.

Operating expenses declined US$55 million or 9% benefitting from the continued focus on expense management and branch efficiency. Staff costs remained flat, and some reductions in headcount were made in the fourth quarter. Also, the fourth quarter saw a sharp decline in expenses due to the release of some accruals made earlier in the year, and also the reversal of approximately US$60 million of Group shared services costs (of which, approximately half related to costs from 2011 and 2012). These factors combined to improve the cost-to-income ratio by 19 percentage points to 65.7%

Impairment on financial assets, however, increased significantly. The fourth quarter provision of US$217 million included a US$165 million charge to address certain legacy non-performing assets. These loans have now been brought on to the Group’s balance sheet and fully provided for. We benefitted from a positive tax rebate during the year and continue to have significant tax assets in Nigeria.

NigeriaYear ended 31 December In millions of US$, except ratios 2013 2012 Change



Net revenue 819.3 699.6 17%

Operating expenses (538.1) (592.8) -9%


Profit before tax 9.4 35.2 -73%

Tax expense 23.3 16.3 44%

Profit after tax 32.8 51.5 -36%


Loans (net), EOP 3,918 3,501 12%


Deposits, EOP 7,001 6,608 6%





Note: Total impairment losses of $271.7m includes $13.5m of impairment losses on other assets. Note: Totals may not sum due to rounding. EOP end-of-period.


54


Rest of West AfricaEcobank’s Rest of West Africa cluster comprises five countries in the West African Monetary Zone (WAMZ) namely, Ghana, Guinea, Liberia, Sierra Leone and The Gambia.

Rest of West AfricaDate commenced


(%)GDP


2013e 2013 2014f 2013 2014f

Ghana 1990 68.9 45.2 5.4 4.8 11.7 13.5

Guinea 1999 83.1 6.2 2.5 4.0 2.5 4.0

Liberia 1999 96.5 2.0 8.0 7.0 7.6 9.0

Sierra Leone 2006 100.0 4.2 16.3 13.9 9.8 7.8

The Gambia 2007 96.9 1.1 6.3 7.4 5.2 6.0

Total Rest of West Africa 58.7

Source: IMF and World Bank


55

Economic environmentGrowth in the Rest of West Africa region picked up in 2013, to 6.4% in real terms. With a population of 46 million people, domestic demand for consumer goods remained robust, which was boosted by recent mining projects coming on stream in Sierra Leone, and a further increase in Ghana’s oil production. However, fiscal policy remained weak in the region, reflecting high levels of government spending and weak tax and non-tax revenue performance, which resulted in annual inflation accelerating to high single digits. As most countries are oil importers, sustained high oil prices in 2013 led to external sector underperformance, which in conjunction with weak demand for exports in Europe led to current account deficits widening. In addition, strong import demand in combination with high import prices led to currency depreciation (which was particularly intense in Ghana and The Gambia once more).

Performance highlights Rest of West Africa reported profit after tax of US$110 million, an increase of US$28 million or 34% from the prior year on net revenue of US$384 million, up US$77 million or 25% from the prior year.

The net interest income increase of US$50 million or 27% was primarily driven by strong lending activity in Corporate Bank, with Ghana accounting for 75% of the growth. The higher interest rate environment in Ghana supported higher yields on earning assets particularly on the short end of the yield curve while the cost of funds benefited from a significant increase in current account deposits. The US$27 million or 22% increase in non-interest revenue to US$148 million reflected higher FX sales and credit-related fees.

Operating expenses grew US$26 million or 15% and were much lower than the net revenue growth of 25%. The increase in operating expenses was driven primarily by higher staff costs, particularly in Ghana. The cost-to-income ratio improved over 400 basis points plus to 50.6%, with improvements seen in all the constituent subsidiaries.

Impairment losses increased US$10 million or 44%, reflecting higher impairment losses in both our Domestic and Corporate Bank businesses. Having taken significant impairment provisions on The Trust Bank (TTB) loan portfolio up to end of the third quarter, the fourth quarter saw a net provision release in Ghana. Also encouraging were NPL ratio improvements in Guinea and Sierra Leone, together helping to improve asset quality in the cluster.

Our business in Ghana delivered strong growth rates in US Dollar terms despite the continued depreciation of the Ghana Cedi during 2013. However, the tax rate in Ghana increased in the second half of the year with the introduction of the National Fiscal Stabilization Levy.

Rest of West Africa (WAMZ)Year ended 31 December In millions of US$, except ratios 2013 2012 Change



Net revenue 383.5 306.9 25%




Tax expense (45.9) (33.1) 39%



Loans (net), EOP 1,326 977 36%


Deposits, EOP 2,126 1,872 14%





Note: totals may not sum due to rounding. EOP end-of-period. Reported PBT arrived after accounting for share of profit of associate of US$0.3m and US$0.2m for 2013 and 2012 respectively.


56


Central AfricaCentral Africa comprises the six countries of the Communauté Economique et Monétaire de l’Afrique Centrale (CEMAC) and Sao Tome & Principe. Ecobank is present in all the countries in the region. The six CEMAC countries have a common currency, the CFA franc (XAF), one regional central bank – the Banque des Etats de l’Afrique Centrale (BEAC), a common commercial law code (OHADA) and two stock exchanges: the Douala Stock Exchange (DSX) and the Gabon Stock Exchange.

Central AfricaDate commenced


(%)GDP


2013e 2013 2014f 2013 2014f

Cameroon 2001 79.7 27.7 4.8 5.0 2.1 2.7

Chad 2006 73.6 13.4 3.6 10.8 0.2 2.4

Central African Republic 2007 75.0 1.9 -36.0 1.5 6.6 4.5

Sao Tome & Principe 2007 99.3 0.3 4.0 5.0 8.1 7.0

Congo – Brazzaville 2008 89.2 14.2 4.5 8.0 4.6 2.5

Gabon 2009 75.0 20.3 5.9 5.0 0.5 5.6

Equatorial Guinea 2012 60.2 17.6 -4.9 -2.4 3.2 3.9

Total Central Africa 95.4


57

Economic environmentReal GDP growth in the CEMAC region also improved in 2013. As most countries are oil producers, despite output generally stagnating or contracting due to maturing fields, high oil prices indirectly boosted growth via robust levels of government spending. However, ongoing unrest in Central African Republic led to the economy contracting by nearly 20%. The XAF peg to the euro helped contain inflation at around 3% although inflationary pressures increased from the previous year owing to high levels of government spending. Apart from Congo and Gabon, current account deficits mostly widened, due to strong demand for consumer and capital goods from a population of 41 million people in the region along with high global commodity prices.

Performance highlights Central Africa reported profit after tax of US$39 million, up US$24 million or 150% from the prior year on net revenue of US$185 million, up US$41 million or 29% from the prior year.

Net interest income grew US$11 million or 15% due to strong retail and SME loan growth in Cameroon and Gabon. Non-interest revenue increased US$30 million or 42% reflecting higher FX sales and to a lower extent fees and commissions income. The ongoing political unrest in Central African Republic impacted negatively on performance.

The US$24 million or 25% increase in operating expenses reflected continued investments to grow the business, which has helped to increase market share in the region. The increase also reflected growth in wages and salaries in Cameroon and Gabon.

Initiatives to proactively engage clients with non-performing loans helped significantly increase recoveries and coupled with lower gross impairment provisions, the period’s impairment provisions fell 47% to US$7.4 million.

Equatorial Guinea was profitable in its first full year of operation.

The Cluster’s effective tax rate (ETR) reduced compared to 2012 due mainly to the significant increase in pre-tax profits in Congo Brazzaville and Equatorial Guinea where we enjoy corporate tax exemptions. In addition, pre-tax profit growth compared to 2012 in Cameroon and Chad coupled with effective management of our tax position contributed to the decrease in ETR.

Central Africa (CEMAC)Year ended 31 December In millions of US$, except ratios 2013 2012 Change



Net revenue 185.3 144.2 29%


Impairment losses on financial assets (7.5) (9.4) -20%


Tax expense (16.1) (16.0) 0%



Loans (net), EOP 1,410 1,110 27%


Deposits, EOP 1,850 1,463 27%





Selected income statement lines only and hence may not add up. EOP is end-of-period. Reported PBT arrived after accounting for share of profit of associate of US$(0.2)m and US$(0.5)m for 2013 and 2012 respectively.


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East AfricaOur East Africa region comprises the member countries of the East African Community (EAC), namely Burundi, Kenya, Rwanda, Uganda and Tanzania. During 2013, we commenced banking operations in South Sudan and opened a representative office in Ethiopia.


East AfricaDate commenced


(%)GDP


2013e 2013 2014f 2013 2014f

Rwanda 2007 91.3 7.6 5.0 7.5 4.2 6.0

Kenya 2008 95.7 43.6 5.6 6.0 5.7 8.0

Burundi 2008 75.0 2.7 4.5 4.7 8.8 7.0

Uganda 2009 99.9 21.5 6.0 6.4 5.4 6.5

Tanzania 2010 100.0 34.4 7.0 7.2 7.9 7.5

South Sudan 2013 94.0 13.5 24.4 7.1 0.0 12.0

Ethiopia 2013 Rep. office 48.9 9.7 7.5 8.0 6.2

Total East Africa 172.2


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Economic environmentGrowth in the EAC region in 2013 was led by South Sudan; however it was from a low base and reflected a rebound in oil production. The more sustained growth in Ethiopia, which expanded nearly 10%, was driven by higher agricultural output and increased construction and other services activities, in part reflecting government investment, global commodity demand, and incentives for specific export sectors. Growth in the other economies in the region accelerated between 5-7%, largely reflecting robust domestic demand from a population of 140 million and strong output across agriculture, manufacturing, industry and services. However, infrastructure bottlenecks continued to hold growth back. As inflation slowed, monetary policy was loosened from early 2013, a decision supported by relative currency stability in the remainder of the year. Although there was a slowdown in demand from the eurozone particularly for horticulture goods and flowers (supplied mainly by Kenya, the dominant economy in the region) and for tourism services, most EAC economies remained relatively insulated from the eurozone debt crisis, and focussed on diversifying exports toward Asia. However, import pressures remained elevated across the region, reflected in large current account deficits ranging from 8 to 16% of GDP.

Performance highlights East Africa reported an after-tax loss of US$19.7 million compared with an after-tax loss of US$19.1 million in the prior year on net revenue of US$68.0 million, up US$16 million or 35% from the prior year.

Kenya’s after-tax net loss for 2013 improved to US$10.2 million from US$12.5 million in the prior year, driven by revenue growth and expense management, partially offset by higher impairment provisions. Uganda reported an after-tax loss, which was driven by higher impairment losses and operating expenses, partially offset by moderate revenue growth. Tanzania, reported strong revenue growth helping to significantly reduce after-tax losses. The US$12 million or 57% increase in net interest income reflected net interest margin expansion and strong loan growth among regional corporates. Kenya contributed about 80% of the growth in net interest income. Fee and commission income recorded good growth in Burundi and Tanzania and this helped drive the US$3.8 million or 13% in non-interest revenue growth.

Operating expenses increased US$11 million or 16% driven by staff costs in Tanzania and communications and technology costs in Kenya and Tanzania. The cost-to-income

ratio in EAC improved substantially but still remained above 100%.

Increases in impairment losses in Kenya and Uganda contributed to the US$5 million or 58% increase in EAC’s impairment losses on loans. As a result, the non-performing loan ratio deteriorated to 8.4% from 6.1% in the prior year driven by retail and SME loans in Kenya.

We opened a new subsidiary in South Sudan in 2013, which has performed well in spite of ongoing challenges in that country, and a representative office in Ethiopia.

East Africa (EAC)Year ended 31 December In millions of US$, except ratios 2013 2012 Change



Net revenues 68.0 51.7 32%



Profit before tax (23.6) (24.1) -2%

Tax expense 3.9 5.0 -22%

Profit after tax (19.7) (19.1) 3%

Attributable profit (19.6)

Loans (net), EOP 461.9 370.1 25%

Total assets, EOP 953.9 764.7 25%

Deposits, EOP 640.7 524.7 22%





Note: totals may not sum due to rounding and selected income statement lines only. EOP end-of-period


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Southern AfricaThe Southern African Development Community (SADC) comprises Angola, Democratic Republic of Congo, Malawi, Mozambique, Zambia and Zimbabwe. After the year end, Ecobank commenced business in Mozambique in May 2014, completing our presence in SADC. In Angola we currently only have a representative office, but are pursuing full banking operations.

Luanda(Rep. Office)

Southern AfricaDate commenced


(%)GDP


2013e 2013 2014f 2013 2014f

Democratic Republic of the Congo

2008 99.7 20.6 8.5 8.0 0.8 3.0

Malawi 2008 90.3 3.9 5.0 6.1 27.7 15.1

Zambia 2009 100.0 22.6 6.0 7.3 7.0 8.8

Angola 2010 Rep. office 122.0 4.1 5.0 7.5 8.0

Zimbabwe 2011 81.5 13.0 3.4 5.7 1.6 -0.5

Total Southern Africa 182.1


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Economic environmentWith a population of 114 million in the Southern Africa cluster, strong domestic demand played a key role in sustaining growth at 5% in 2013. Given trade links with Europe, the region was similarly affected by the eurozone slowdown and to a lesser extent the adverse fiscal and debt developments in the US. Nonetheless, diversification of exports toward fast-growing Emerging Markets along with growing trade and capital flows with Asia particularly helped propel the region forward. Inflationary pressures remained pronounced owing to high global commodity prices and strong import demand. Sustained high commodity prices, particularly cereal prices, affected all countries (most of which are landlocked), which along with high oil prices, sustained large current account deficits, leading to currency depreciation most notably in Malawi (but excluding Zimbabwe, which is largely dollarized).

Performance highlightsSouthern Africa reported profit after tax of US$8.2 million compared with an after-tax loss of US$8.2 million in the prior year on net revenue of US$75.9 million, up US$31 million or 71% from the prior year. The turnaround in profitability was driven primarily by a reduction in net losses in Zambia by US$14.3 million to US$0.9 million in 2013 and growth in the other subsidiaries.

Net interest income increased US$15 million or 84%, benefitting from higher gross yields on earning assets and growth in interbank and customer loans. Overall our net interest margin improved, driven by lower cost of funds. The US$17 million or 62% increase in non-interest revenue was primarily driven by higher fees and commissions and FX sales in DR Congo and Zambia respectively.

Operating expenses grew US$14 million or 31%, significantly lower than the revenue growth of 71%, as we invested to grow the business further. Impairment provision releases in Zambia helped drive the US$3.5 million or 43% reduction in SADC’s impairment losses. The NPL ratio improved significantly to 4.4% from 8.0% in the prior year.

Southern Africa (SADC)Year ended 31 December In millions of US$, except ratios 2013 2012 Change



Net revenues 75.9 44.5 71%


Impairment losses on financial assets (4.8) (8.6) -45%

Profit before tax 12.5 (8.8) n.m.

Tax expense (4.2) 0.6 n.m.

Profit after tax 8.2 (8.2) n.m.


Loans (net), EOP 266.6 224.9 19%

Total assets, EOP 570.4 423.5 35%

Deposits, EOP 402.2 280.2 44%





EOP is end-of-period. Note: totals may not sum due to rounding and selected income statement lines only


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InternationalThe International cluster incorporates our business outside of Africa. In 2009 EBI SA, a non-banking financial institution was opened in Paris, France. Representative offices were opened in Dubai, UAE in 2010, London, United Kingdom in 2011, and Beijing, China in 2012. The focus is on serving global corporations and international institutions that do business with and in Middle Africa.

Performance highlightsThe international business reported net income of US$6.2 million, up US$2.3 million or 60% from the prior year on revenue of US$30.1 million, up US$9.8 million or 48%.

Revenue growth was predominately driven by fees and commissions related to foreign exchange and trade support activities for clients.

The increase of US$6.2 million or 43% in operating expenses was driven by higher staff costs, IT and regulatory compliance costs.

As at January 2014, EBI SA in Paris has become a specialized credit institution under Basel III, allowing it to take a wider range of customer deposits. We also aim to upgrade the London representative office to a branch status.

Our international offices:

• Paris

• London

• Dubai

• Beijing

InternationalYear ended 31 December In millions of US$, except ratios 2013 2012 Change

Total revenue, net of interest expense 30.1 20.3 48%


Net income 6.2 3.9 60%

Loans (net), EOP 199 202 -1%

Loans to banks, EOP 208 258 -19%

Deposits from banks, EOP 360 346 4%

Deposits from customers, EOP 71.5 89.0


EOP is end-of-period


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ConclusionIn concluding, I would reiterate that the opportunities available to Ecobank in the markets in which we operate are enormous. For example, GDP for most of these economies is expected to see continued structural growth. Innovation in technology is creating vast opportunities for financial institutions to serve their clients better and to reach the large numbers of un-banked or under-banked African people. Ecobank is well placed to benefit from these trends, given our uniquely diversified business model and top three market position in nearly half of our countries.

Going forward, our primary focus will be on delivering efficiencies and improving further our cost-to-income ratio. We expect revenues to grow in the region of 15% in 2014 and this, coupled with improved efficiency and lower cost of risk, should drive a better performance for our stakeholders.

Laurence do Rego Group Executive Director, Finance and Risk

Corporate Governance

The Ecobank Group is committed to ensuring good corporate governance.

Ecobank has been a pioneer in institutionalizing corporate governance principles in Africa as part of the Group’s corporate culture.

64 Corporate GovernanceEcobank Group – Annual Report 2013

65Corporate GovernanceEcobank Group – Annual Report 2013

Corporate GovernanceEcobank Group – Annual Report 2013

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Corporate Governance report

Commitment to corporate governanceThe Ecobank Group is committed to ensuring good corporate governance. The Group believes that good corporate governance enhances shareholder value. Ecobank has been a pioneer in institutionalizing corporate governance principles in Africa as part of the Group’s corporate culture.

To this end, Ecobank aims to comply with international practices in corporate governance. Adherence to corporate governance principles is articulated in a number of corporate documents. The Articles of Association of the Company and those of its subsidiaries define the respective roles of the Management, the Board of Directors and the shareholders (including the protection of minority rights) in the administration of the Group.

The Group Corporate Governance Charter, adopted by the Board of Directors to guide the Group’s corporate governance framework, is predicated on the International Finance Corporation (IFC) principles and methodology. The Group’s governance practices are also guided by the Basel Committee standards on corporate governance. There are standard written rules for the internal operation of the Boards of Directors, a code of conduct for Directors and rules on business ethics for staff, all of which are aimed at ensuring transparency and accountability.

In the last year, we have experienced several events that have led to a series of publications in the local and international media from July 2013 regarding alleged breaches of corporate governance and allegations against the Board of Directors and certain principal officers of the Company. The Securities and Exchange Commission of Nigeria undertook an independent review of these allegations through the professional services firm KPMG.

As shareholders are aware, the Company’s shares are currently listed on the Nigerian Stock Exchange, the Ghana Stock Exchange and the Bourse Régionale des Valeurs Mobilières (BRVM), the UEMOA Regional Stock Exchange in Abidjan and is therefore subject to their rules. The purpose of the review was to ascertain the Company’s compliance with the SEC’s Corporate

Governance Code as well as best practice and also to determine the veracity of the various allegations against principal officers of the Company.

The report identified certain gaps in the Company’s Corporate Governance policies and practices and made recommendations for improvement. The Board also appointed IMD, an international business school that specializes in Corporate Governance, to undertake a detailed review of governance within the Company. In light of these findings we have undertaken a comprehensive review of our Corporate Governance values and practices with a view to improving them based on the lessons learnt. The Board has also resolved to amend the Corporate Governance charter with a view to governance improvement in the company. An Extraordinary General Meeting of shareholders was held on 3 March 2014 to approve a 51-point Governance Action Plan designed to address the areas highlighted by the SEC/KPMG. The board believes that the implementation of this plan, which is available on the Company’s website, will further improve our governance culture and position us as a leader in corporate governance in Africa.

The composition of the Board includes executive, non-executive and Independent Directors.

Non-executive Directors always constitute a majority of the Board. Guided by the IFC’s suggested definition of an Independent Director, the Board has formally adopted the following definition for application throughout the Group.

‘Independent Director’ means a Director who:

• Has not been employed by Ecobank Transnational Incorporated (ETI) or any of its subsidiaries and affiliates in the past five years.

• Is not affiliated with a company that is an advisor or consultant to ETI or any of its subsidiaries and affiliates.

• Is not affiliated with a significant customer or supplier of the Group or any of its subsidiaries and affiliates.

• Has no personal service contracts with the Group, any of its subsidiaries and affiliates, or its senior management.


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• Is not affiliated with a non-profit organization that receives significant funding from the Group or any of its subsidiaries and affiliates.

• Is not employed as an executive of another company where any of the Group’s executives serve on that company’s Board of Directors.

• Is not a member of the immediate family of an individual who is, or has been during the past five years, employed by the Group or any of its subsidiaries and affiliates as an executive officer.

• Is not, nor in the past five years has been, affiliated with or employed by a present or former auditor of the Group or of its subsidiaries and affiliates; or

• Is not a controlling person of the Group (or member of a group of individuals and/or entities that collectively exercise effective control over the Group) or such person’s brother, sister, parent, grandparent, child, cousin, aunt, uncle, nephew or niece or a spouse, widow, in-law, heir, legatee or successor of any of the foregoing (or any trust or similar arrangement of which any such persons or a combination thereof are the sole beneficiaries) or the executor, administrator or personal representative of any person described in this sub-paragraph who is deceased or legally incompetent.

For the purposes of this definition, a person shall be deemed to be ‘affiliated’ with a party if such person (i) has a direct or indirect ownership interest in or (ii) is employed by such party.

By this definition, the Board of Directors considers most of the Company’s non-executive Directors are Independent Directors. However the SEC/KPMG report considered only one member as independent. The Board has initiated a process to identify new Board members to address the situation.

The Board also applies the following criteria for the appointment of non-executive Directors:

IndependenceAlthough not all non-executive Directors need to meet the Independent Director definition above, all Directors should be capable of exercising independent judgment and decision-making.

Demonstrated business acumenStrong business experience, a proven understanding of corporate and business processes through a successful track record and a strong reputation in the business community.

Leadership and board experienceA recognized ability to add value and display leadership at board level, and an ability to assert balanced and constructive views at board level.

Special technical skills or expertiseExperience in banking (particularly retail banking but also commercial and/or investment banking), accounting, and/or law and expertise not readily available to the executive team would be valuable, especially if this professional experience is in emerging markets.

IntegrityHigh level of integrity, and professional and personal ethics and values consistent with those of the Ecobank Group.

CharacterStrength of character and ability and willingness to challenge and probe; sound business judgment; strong interpersonal skills, and the ability to listen carefully and communicate with clarity, objectivity and brevity.

Time commitmentSufficient time to carry out effectively the duties of a non-executive Director.

Additional considerationsImportance of increasing the diversity of the Board in terms of age, gender, demographics.

With the assistance of IMD, the Board will develop and adopt a radical and novel process for introducing new members to the Board that will cater for induction and continuous training of Board members. The Board has agreed in principle to a mix of the Directors to ensure adequate representation of major shareholders, minority shareholders, geographical coverage of the Group, independent Directors, as well as executive and non-executive Directors. These details will be incorporated in the Group Corporate Governance Charter which is currently being reviewed.


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The Board has also adopted standard evaluation tools to help assess the performance of the Board as a whole, as well as that of individual Directors.

Governance structures within the Ecobank GroupThe Ecobank Group corporate governance documents outline corporate governance policies and clarify governance structures throughout the Group. They cover essentially the following areas:

• Role of the parent company.

• Relationships and interface between the parent company and subsidiaries.

• Standard of conduct and procedures for Directors.

The key principles underlying the Group’s governance structures are as follows:

• The parent company acts as a ‘strategic architect’ with appropriate input in operational management and decision-making at the subsidiaries’ level. It sets the overall strategy and direction of the Group, develops policies and procedures and monitors them through reviews and audits to ensure compliance, not only with Group strategy, policies and procedures, but also with local laws and regulations.

• Operational decision-making is individualized and maintained at an appropriate level, as close as possible to required action and customers.

• Individual accountability and responsibility are institutionalized and embedded through empowerment and the granting of relevant levels of authority.

• Coordination at the corporate centre and Group level is achieved through high levels of interaction between the parent company and its subsidiaries, as well as amongst subsidiaries at Board and executive management levels.

• Clear terms of reference and accountability are laid out for committees at Board and executive levels. There is effective communication and information-sharing outside of meetings.

The Group operates an ‘open-door’ policy.

• Application of Group decisions and policies by all Ecobank Group member companies is subject to applicable local laws and regulations. Where there is a conflict

between Group Policy and local laws and regulations, local laws and regulations shall prevail.

The following are the governance units within the Group:

• The parent company Board of Directors

• Country Board of Directors

• Group Executive Committee

• Country Executive Management Committee

• Business Leaders’ Conference

Appropriate sub-committees are also set up, either on a permanent or ad hoc basis, to handle issues as they arise. A brief overview of the roles and responsibilities of each of the governance units is provided below.

Parent Company Board of DirectorsThe Board of Directors of ETI is elected by, and accountable to, the company’s shareholders for the appropriate and effective administration of the Ecobank Group. Their primary responsibility is to foster the long-term success of the company, consistent with its fiduciary responsibility to the shareholders.

The Group’s governance charter requires the Board of Directors to be guided by the following principles:

• Ensure clear delineation and segregation of responsibilities between executive management and Board to ensure non-interference of the Board in the operational management of the Group.

• Exercise objective judgment on corporate affairs, independent of executive management.

• Take actions on a fully informed basis, in good faith, with due diligence and care and in the best interest of the Group and its shareholders.

• Comply with applicable laws and regulations in line with Group strategy and direction.

• Respect that local legislation is to prevail in the event of any conflict between Group policies and local laws.

• Operate in transparency to avoid conflict of interest between Directors and the business of the Ecobank Group.

• Ensure full disclosure of accurate, adequate and timely information regarding personal interests of Directors.


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The Group Corporate Governance Charter requires that there are more non-executive Directors than executives on the Board.

As at the end of 2013, the membership of the Board was seventeen, comprising six executive and eleven non-executive Directors. On 29 October 2013, Mr. Kolapo Lawson stepped down as Chairman, with the Vice-Chairman, Mr. André Siaka, taking over as interim Chairman of the Board of Directors on the same date. Mr. Lawson retired from the Board on 31 December 2013.

Subsequently, Mr. Paulo Gomes resigned from the Board on 22 January 2014. Messrs. Isyaku Umar and Babatunde Ajibade also resigned from the board on 6 February 2014. Mrs. Laurence Do Rego was suspended from her position as Group Executive Director, Finance and Risk, in August 2013 but was subsequently reinstated.

The Board has three committees, namely, the Governance Committee, the Audit and Compliance Committee and the Risk Committee. The Board of Directors met eight times during the year, while each of the three committees met four times to deliberate on issues under their respective responsibilities.

Governance Committee Composition and attendance

Mr. Kolapo Lawson resigned from the committee in October 2013 and was replaced as Chairman by Mr. André Siaka.

The Group General Counsel and Company Secretary is the Secretary to the Committee.

Responsibilities

• Formulates, reviews and generally ensures implementation of policies applicable to all units of the Group and ensures good governance throughout the Group.

Board Composition and AttendanceName Role Year appointed to Board Number of Meetings held Number of Meetings attended

Kolapo Lawson Chairman 1993 8 4

André Siaka Vice Chairman 2006 8 7

Sena Agbayissah Non-Executive 2011 8 8

Babatunde Ajibade Non-Executive 2010 8 8

Kwasi Boatin Non-Executive 2009 8 8

Paulo Gomes Non-Executive 2006 8 4

Bashir Ifo Non-Executive 2011 8 8

Assaad Jabre Non-Executive 2010 8 8

Sipho G. Mseleku Non-Executive 2009 8 6

Isyaku Umar Non-Executive 2006 8 7

Daniel M. Matjila Non-Executive 2012 8 4

Thiery Tanoh Executive 2012 8 8

Albert Essien Executive 2005 8 6

Evelyne Tall Executive 2005 8 6

Laurence do Rego Executive 2010 8 2

Patrick Akinwuntan Executive 2012 8 8

Eddy Ogbogu Executive 2012 8 8

Governance Committee Composition and AttendanceName Role Number of Meetings held Number of Meetings attended

Kolapo Lawson Chairman 4 3

André Siaka Member 4 3

Bashir Ifo Member 4 4

Sipho G. Mseleku Member 4 4

Thierry Tanoh Member 4 4


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• Manages the relationship between the company and its shareholders and subsidiaries, including relationships with the Boards of subsidiaries.

• Formulates new, and reviews existing, Group-wide policies including organizational structure.

• Handles relationships with regulators and third parties.

• Manages Board affairs in between the meetings of the Board or when the Board is not sitting.

• Recommends the appointment of executive and non-executive Directors.

• Reviews the human resources strategy and policies of the Group and the remuneration of senior executives.

Audit and ComplianceAll members have relevant business knowledge and skills and familiarity with accounting practices and concepts. On the recommendation of the SEC/KPMG, a decision has been made not to include executives as members of the Audit and Compliance Committee going forward.

The Group Head of Audit serves as the Secretary to the Committee.

Responsibilities

• Reviews internal controls including financial and business controls.

• Reviews internal audit function and audit activities.

• Facilitates dialogue between auditors and management regarding outcomes of audit reviews

• Makes proposals with regard to external auditors and their remuneration.

• Works with external auditors to review annual financial statements before full Board approval.

• Ensures compliance with all applicable laws, regulations and operating standards

Risk Committee Members have good knowledge of business, finance, banking, general management and credit. On the recommendation of the SEC/KPMG, a decision has been made not to include executives as members of the Risk Committee going forward.

The Group Head of Risk Management serves as Secretary to the Committee.

Responsibilities

• Initiates the determination and definition of policies and procedures for the approval of credit, operational, market/price and other

Audit and Compliance

Name Role Number of Meetings held Number of Meetings attended

Kwasi Boatin Chairman 4 4

Sena Agbayissah Member 4 4

Paulo Gomes Member 4 3

Evelyne Tall Member 4 3

Assaad Jabre Member 4 4

Patrick Akinwuntan Member 4 4

Risk Committee

Name Role Number of Meetings held Number of Meetings attended

André Siaka Chairman 4 3

Babatunde Ajibade Member 4 4

Isyaku Umar Member 4 3

Thierry Tanoh Member 4 4

Albert Essien Member 4 3

Eddy Ogbogu Member 4 4

Laurence do Rego Member 4 1


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risks within the Group; defining acceptable risks and risk acceptance criteria.

• Sets and reviews credit approval limits for management.

• Reviews and ratifies operational and credit policy changes initiated by management.

• Ensures compliance with the Bank’s credit policies and statutory requirements prescribed by the regulatory or supervisory authorities.

• Reviews periodic credit portfolio reports and assesses portfolio performance.

• Reviews all other risks, i.e. technology, market, insurance, reputation, regulations, etc.

Subsidiary Boards of DirectorsEcobank subsidiaries operate as separate legal entities in their respective countries. ETI is the majority shareholder in all the subsidiaries but host country citizens and institutions are typically investors in the local subsidiaries. Each subsidiary has a Board of Directors, the majority of whom are non-executive Directors.

The Group Governance Charter requires that country Boards be guided by the same governance principles as the parent company. As a rule, but subject to local regulations and the size of the Board, the Boards of Directors of subsidiaries have the same number of committees as the parent company. However this may differ from time to time depending on local regulatory requirements.

The Boards of Directors of the subsidiaries are accountable to the subsidiaries’ shareholders for the proper and effective administration of the subsidiaries in line with overall Group direction and strategy. These Boards also have statutory obligations based on company and banking laws in the respective countries. In the event of any conflict between the Group policies and local laws, the local laws prevail.

Group Executive CommitteeIn 2013, the Group Executive Committee (GEC) comprised the Chief Executive Officer and five other Executive Directors. Four other Group executives participate in the meetings of the GEC as attendees. The Group General Counsel and Company Secretary served as secretary to the GEC. The GEC meets monthly and is responsible for the day-to-day operational management of the Group and its subsidiaries.

The GEC is responsible to the Board and plays an important role in the Group’s corporate governance structure. The GEC manages the broad strategic and policy direction of the Group, submits them to the Board for approval where necessary, and oversees their implementation.

The GEC has decision-making powers in specific areas of Group management. In particular, the GEC works with, and assists, the Chief Executive Officer to:

• Define and develop Group strategy.

• Confirm alignment of individual subsidiaries’ plans with overall Group strategy.

• Track and manage strategic and business performance against plan.

• Implement Group policy and decisions.

• Make recommendations on various issues relating to staff.

• Track and monitor progress and accomplishments on major Group initiatives and projects at subsidiary level.

• Recommend opening or closing of subsidiaries.

• Articulate appropriate response to environmental factors, regulations, government policies, competition and other such issues across the Group.

• Articulate policies for advancing Group objectives.

• Make important decisions in areas where delegation of authority is granted to the GEC.

Business Leaders’ ConferenceThe Business Leaders’ Conference is a collegial meeting of all subsidiaries’ Managing Directors and Group Functional Heads for reviewing and embedding Group strategy and policies.

The Business Leaders’ Conference is the primary coordinating body for Group cohesion and integration and the actualization of Group strategy.

The Conference is a consultative body – not a decision-making body. Its role includes:

• Sharing and disseminating information, experiences and best practice across the Group.

• Initiating policies that encourage integration and promote the ‘One Bank’ concept.


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• Promoting integration and standardization of Group policies and procedures.

• Promoting and monitoring compliance with Group operational standards.

• Contributing to the formulation of Group policies.

Country Executive Management CommitteeThe Country Executive Management Committee consists of the Country Head and other senior executive members of each subsidiary. In addition to the day-to-day management of the subsidiary’s operations, the role of a Country Executive Management Committee includes the following:

• Managing the strategic objectives of the country’s operation in line with Group strategy.

• Defining overall business goals and objectives for the country’s operation.

• Ensuring alignment of operating plans with overall Group strategy.

• Approving business unit direction and strategies.

• Making decisions on operating plans and budgets.

• Reviewing the financial reporting and control framework.

• Tracking and managing country strategy and business performance against plan.

• Tracking and monitoring progress and accomplishments on major initiatives and projects at country level.

• Articulating appropriate response to environmental factors, regulation, government policies, competition and other such issues in the country.

• Articulating policies for advancing business objectives in the country.

• Advising the parent company on adaptation of overall strategy to the specifics of the local environment.

• Advising on local laws and regulation impacting on Group policies.

Board and Executive remunerationThe Remuneration of senior executives is one of the responsibilities of the Corporate Governance Committee. Consistent with our objective of being an employer of choice in our markets and attracting the best talent, senior executives are compensated with a mix of both fixed compensation (salary, benefits and pension) and variable compensation (bonus and share options scheme). The total remuneration paid to Group Executive Directors during the year amounted to US$5.935 million.

Non-Executive Directors’ remunerationNon-executive Directors receive fixed fees of US$100,000 per annum for services on the Board of ETI. The Vice-Chairman receives US$120,000 and the Chairman receives US$150,000. In addition, Directors receive sitting allowance as follows for each meeting: Chairman – US$1,000; Vice Chairman – US$900 and other members – US$75O.

Non-executive Directors do not receive any short-term or long-term performance incentives.

Subject to shareholders’ approval, the Board may propose a final discretionary payment to retiring Directors.


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Directors’ interests in ETI ordinary and preference sharesThe Directors’ interests in the issued ordinary and preference shares of the Company as at the date of the statement of financial position are disclosed in the tables below.

Directors’ interests in ETI ordinary sharesDirect Indirect Total

Name 2013 2012 2013 2012 2013 2012

Kolapo Lawson – – 48,754,802 49,520,334 48,754,802 49,520,334

André Siaka 1,183,500 1,146,000 – – 1,183,500 1,146,000

Sena Agbayissah – – – – – –

Babatunde A M Ajibade – – – – – –

Kwasi A Boatin 21,026 21,026 – – 21,026 21,026

Paulo Gomes – – – – – –

Bashir M Ifo 5,000 – 225,196,010 225,196,010 225,201,010 225,196,010

Assaad J Jabre – – – – – –

Sipho G Mseleku – – – – – –

Isyaku Umar 608,235 608,235 – – 608,235 608,235

Albert Essien 932,600 932,600 – – 932,600 932,600

Evelyne Tall 1,023,400 1,023,400 – – 1,023,400 1,023,400

Laurence do Rego 1,591,987 1,591,987 – – 1,591,987 1,591,987

Thierry Tanoh – – – – – –

Daniel Matjila – – – – – –

Patrick Akinwuntan 1,703,656 1,683,660 18,482 – 1,722,138 1,683,660

Eddy Ogbogu – – – – – –

Total 7,069,404 7,006,908 273,969,294 274,716,344 281,038,698 281,723,252

Directors’ interests in ETI preference sharesDirect Indirect Total

Name 2013 2012 2013 2012 2013 2012

Isyaku Umar 2,675 2,675 – – 2,675 2,675

Bashir M Ifo 2,140 2,140 – – 2,140 2,140

Total 4,815 4,815 – – 4,815 4,815


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Executive share optionsThe group awards share options to key staff as a means of retaining staff. Under the scheme 10% of the issued capital of the company at any point in time may be issued to employees. As at the end of 2013 a total of 422 million outstanding option shares, representing only 2.5% of the total issued shares, had been granted to a total of 153 employees group wide under the options scheme, of which 74.3% have vested and could be exercised at any point in time; the remainder is due to vest in 2015.

Shareholders’ Rights

The Board has always placed considerable importance on effective communication with its shareholders. It ensures that the rights of shareholders are protected at all times. Notice of meetings and all statutory notices and information are communicated to shareholders regularly.

Shareholders are encouraged to communicate their opinions and recommendations whenever they see the need to do so, to either the Investor Relations team and/or the Company Secretary. Their contact details are available on the Bank’s website.


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Executive share optionsOpening balance at 1 January 2013

Tranche of optionsNumber of options

(thousands) Date of issue Exercise price Exercisable from Expiry date

2010 tranche executive options 122,999 1 Jan 2007 US$0.08 1 Jan 2010 31 Dec 2016



2012 incoming CEO options 100,000 16 Jul 2012 US$0.063 16 Jul 2012 16 Jul 2017


Total 442,070

Exercised or cancelled during 2013

Tranche of optionsNumber of options

(thousands)Date of exercise/

cancellation Exercise price Exercisable from

Closing balance at31 December 2013

(thousands)

2010 tranche executive options 15,950 31 Dec 2013 n/a n/a 107,049

2011 tranche executive options – 57,372

2012 tranche executive options – 49,199

2012 incoming CEO options – 100,000

2016 tranche executive options 4,000 31 Dec 2013 n/a n/a 108,500

Total 19,950 422,120


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Sustainability report

Sustainability report1. Managing Sustainability DevelopmentSustainable development is about ‘meeting the needs of current generations without compromising the needs of future generations to meet those needs ’. Ecobank started operations in 1988 and ever since has acted as a development stakeholder to transform and positively impact the lives of its customers, shareholders and employees. In its 25 years of existence, Ecobank has endeavored to bring about positive change and promote environmental sustainability through banking and finance, its core competency.

The Bank is currently present in 35 countries in sub-Saharan Africa and four global business capitals (Paris, Dubai, London and Beijing). This geographical spread asserts its credentials as a truly pan-African and increasingly global bank which remains committed to the sustainability of its business activities, clients and communities where it operates.

At Ecobank, we believe that our business can only thrive over the long term if we pursue sustainable and responsible banking, as a balance between financial, socio-economic and environmental issues. We provide common strategic direction and standards on

sustainability by setting the tone at the top through our governance structure comprising Group Board of Directors, Country Board of Directors, Group Executive Committee, the Group Management Committee and Country Executive Management Committee. We ensure the buy-in of all stakeholders, while specific sustainability issues are addressed by country subsidiaries, business units, and relevant staff.

2. Sustainability FrameworkWe continue to ensure that our human , natural, economic and social capitals are being utilized effectively, efficiently and in a sustainable manner. We remain committed to driving economic transformation in Africa, protecting our environment, and being a socially responsible financial institution. We reaffirm our Sustainability Framework with focus on:

• Our stakeholder’s approach to sustainable development

• Our need to balance profitability with the fight against poverty and protection of our planet

• Our taking seriously the welfare and development of the communities in which we operate

• Our consistent factoring of social and environmental concerns into our business operations.

Driving economic transformation• Creating economic value

• Fostering integration

• Partnership for development

Human Capital: attracting and retaining employees• Diversity and culture

• Training and development

• Pan-African spirit

Protecting natural resources: environmental sustainability• Risk management

• Green business

• Global initiatives

• Internal carbon footprint management

Social responsible Finance• Microfinance and microbanking

• Women in business

• Ecobank Foundation

• Community engagement

Ecobank Sustainability Framework


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Sustainability Performance3. Driving Economic TransformationOver the years, we have undertaken development activities through collaborative engagement. We have adapted several platforms to create and deliver socio-economic values through our financial products, models and markets for long term sustainability as well as contributed through diverse ways, to the economic and financial development in countries where we are present, as reflected below:

3.1 Creating Economic ValueWe generated revenues of over US$2 billion in 2013. We have provided loans and other financial assistance of over US$11 billion to support private sector companies, enterprises, individuals as well as the public sector in Africa. These economic benefits have been distributed and applied in the form of taxes, salaries, operating expenses, dividends and retentions to support our future growth.

During the year 2013, the Ecobank Group contributed a total ‘value added’ amount of over US$1.5 billion to various stakeholders, as detailed in the table below.

We contributed to governments’ finances through tax remittances and duties payments to the tune of US$333 million. This Total Tax Contribution (TTC) consists of four types of taxes, namely the consumption taxes, the corporate taxes, people taxes and Stamp duties.

Consumption taxes at 36% represent the highest amount of contributions made by Ecobank Group in 2013. This is a testament to the spread of Ecobank’s banking activities in Middle Africa and beyond. They include value added tax, customs duties, tax on banking activities, tax on money transfers, withholding taxes on imported services and vehicle taxes among others.

People taxes at 34% are the evidence of Ecobank investment in human capital development, especially in the African Continent. They include employment income tax, employees’ social security contribution (SSC), payroll taxes and other related contributions.

Value added by Ecobank Groupas at Dec 2013

Financing Interest 35%

Profit After Tax 9%

Wages and Salaries 34%

Tax Borne 8%

Tax Collected 14%

Breakdown of Value Added

StakeholderValue Added

(US$ thousands)

Suppliers of Funds Financing Interest 548,998

Shareholders/Reinvestment Profit After Tax 147,773

Employees Wages and Salaries less Employment Taxes 525,861

Government Tax Borne 122,487

Government Tax Collected 210,747

Total 1,555,866

Total tax contribution by cluster 2013 (in US$ thousands)

InternationalEACSADCCEMACUEMOAWAMZNigeria

65,817

121,728

48,609

63,241

14,484 14,823

4,533


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Corporate taxes represent 28% of total Total Tax Contribution in 2013. In total, Ecobank affiliates paid over US$55 million, in compliance with country tax requirements.

Property taxes and other levies derive from compliance of Ecobank entities and their partners, to the tax imposition on the ownership, sale, transfer or occupation of property. They include business taxes, bank levies, stamp duties and other duties.

Additionally, Ecobank has also created value in the energy sector. In Ghana and Côte d’Ivoire, Ecobank has structured trade facilities for the importation of crude oil and other raw materials to boost the generation of electricity. In Ghana, we also funded the country’s national electricity company’s pre-paid meter project. This effectively positioned Ecobank as a financial partner of the Electricity company.

Similarly, in Chad and Burkina Faso, Ecobank is funding diverse stakeholders in the cotton industry to increase the region’s current modest contribution to global cotton production. Our support to the cotton stakeholders has contributed to the growth of agribusiness value-chain financing, which has reduced post-harvest losses as well as improved the price paid to cotton producers in both countries.

In Africa’s most populous country, Nigeria, which has over 177 million inhabitants , Ecobank has provided a term loan facility to the Federal Mortgage Bank of Nigeria for the construction of real estate, mostly in Lagos, the biggest city in Africa.

In addition, we ensure that all Public Corporate transactions that involve a significant economic expansion are reviewed against the Ecobank Environmental and Social Management System (ESMS) as well as the International Finance Corporation’s performance standards for Environment Social and Governance framework.

3.2 Fostering financial and economic integrationAfrica’s challenges often require a pan-African solution—harmonized policies, free cross-border trade, free movement of capital, people and goods. With our pan-African approach to banking and finance, we have been contributing to the financial and economic integration of African countries.

Our integrated competencies are unique in Middle Africa. We have built economies of scale with extensive coverage across Africa in 35 countries. We have 1,284 branches and offices and enable access to cash 24/7 at 2,314 ATMs and over 10,000 points of sale (POS) in Africa. No other bank in Africa has such breadth of coverage. We are making cross-border transactional banking more convenient, accessible, and efficient. The countries in which we operate have large numbers of migrant workers. Recognizing this, we created our unique Rapid Transfer product which is increasingly gaining market share amongst money transfer services in the region. This product enables clients to receive or remit funds between countries in our footprint.

Our transformational banking solution is premised on the need to support Africa’s trade and infrastructure development through private-public partnership and regional integration. This offers us the opportunity to finance projects of larger scale at lower unit costs. We leverage African trade corridors across the various sub-regions by providing integrated trade solutions using various payment methods to facilitate intra-African trade. The continent is witnessing the rise of businesses that are often considered emerging regional champions. Our unique ‘One Bank’ platform enables us to serve these regional corporates seamlessly. This regional approach is further cemented by our Ecobank-Nedbank Alliance. We have also become the gateway for international banks seeking to provide services to their clients operating in Africa.

In the bid to support African businesses, the Bank has continued to work on an agri-business initiative with the support of OPIC, the US Government’s Development Finance Institution. The aim of the initiative is to enable Processors to support contracted out-growers with finance to cover inputs such as fertilizer, pesticides and seeds. The US$60 million initiative will lend US$3 – 5 million to individuals in up to eight countries, that may include Nigeria, Burkina Faso, Benin, Côte d’Ivoire, Tanzania, Rwanda and Niger to assist in the production of nuts and ingredients for beverages. The project will provide technical assistance to support the farming groups and at least 25% of their crop sales will be to the United States. The Bank is also working with Technoserve, a highly reputable US non-governmental organisation (NGO), to


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come up with a business plan based on field studies in two of the target countries.

In the Healthcare sector in 2013 the Bank worked with Pledge Guarantee for Health, a ‘Not for Profit’ that has been spun out of the UN Foundation and is based in Washington DC. It has been working on a structure whereby local banks in Africa will provide bridging loans, most often to Ministries of Health, against donor pledges from respected entities such as The World Bank or the Global Fund. The initiative is supported by the US Agency for International Development (USAID) and the Swedish International Development Agency (SIDA). EBI SA (Paris) is at the heart of this initiative as the arranger with local Ecobank subsidiaries providing the bridging loans.

3.3 Partnership for DevelopmentThe Global Fund

In December 2013, Ecobank Transnational Incorporated (‘Ecobank’) and the Ecobank Foundation (‘the Foundation’) announced a joint 3-year partnership, with the option for a 2-year extension, with the world’s largest health donor organization of its kind, the Global Fund to Fight AIDS, Tuberculosis and Malaria (‘the Global Fund’). Ecobank committed a minimum contribution of US$3 million over the period, comprising both direct financial support and in-kind service contributions.

As part of this project Ecobank and the Foundation will be partnering with the Global Fund in innovative regional and country specific financing programs that will help strengthen the financial management capabilities of grant recipients. This will include the provision of pro bono training and mentoring in financial management skills, accounting and reporting to facilitate grant applications, as well as the implementation and evaluation processes.

In the press release issued at the end of 2013, Mark Dybul, Executive Director of the Global Fund, observed: “Ecobank is a natural partner for us with our work supporting programs in sub-Saharan Africa. Ecobank’s commitment to offer services to strengthen the financial management capabilities of grant recipients will help to facilitate the Global Fund’s local outreach to the most vulnerable in Africa.”

One Family Health/GlaxoSmithKline

2013 saw the further development of the partnership between One Family Health (OFH) Foundation, GlaxoSmithKline, Ecobank/Ecobank Foundation and the Rwandan Ministry of Health, in a coordinated effort to establish 240 healthcare dispensaries across Rwanda over the next three years. With support from the Ministry of Health, this innovative private/public partnership was set up with the aim to increase access to high quality essential medicines and basic healthcare for around two million people per year in rural communities in Rwanda.

The dispensaries will operate under a business-format franchise network run by experienced nurses. The franchisor (OFH) will provide nurses joining the franchise with access to financing and training in finance management, enabling them to earn a living whilst also increasing access to high quality essential medicines and basic healthcare for their local communities.

Ecobank Rwanda is supporting OFH with a loan that, in turn, it will use for supporting up to 180 franchisees. In addition, the Ecobank Foundation has agreed to provide an interest rate subsidy over 5 years that will make the loans affordable for the nurse franchisees.

3.3.1 Banking for the public sector

Ecobank’s goal is to be the preferred bank for the public sector business in Africa. In 2013, we redefined and re-focused our strategy for the sector taking into consideration the evolving dynamics of the public sector business which now includes all tiers of government: central, states, and local; the education sector; and public projects financed by bilateral and multilateral donors.

We have placed emphasis on delivering value chain services to public sector clients and their various stakeholders, i.e. civil servants, teachers, health workers, contractors, and suppliers. We provide customized products and services for public sector deposits, collections, payments, cash management solutions, payroll administration, and project accounts. We provide advanced payment guarantees to contractors, supplier payments and credits, and services for civil servants. In the education sector, we provide banking services for school fees collections, salaries, and bursary payments. The Ecobank Foundation also supports corporate social responsibility causes in education and health.


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In Nigeria, Ecobank participated as an issuing and receiving bank for bond issuance to finance socio-economic infrastructure projects in Lagos, Osun and Ekiti States. Ecobank also won the mandate for the salary administration of Abia State with expected salary payments of about US$10 million; while it approved a loan of about US$100 million to the Bayelsa State Government for airport infrastructure financing.

In Ghana, Ecobank is a major banking partner to various government entities including: the Ministry of Local Government, Ministry of Roads and Highways, in particular in respect of the Abidjan-Accra-Lagos Trade and Transport Project; the oil and gas project of the Ministry of Energy, Ghana Road Fund Secretariat, and the Export Development and Agricultural Fund.

In Liberia Ecobank remains the bank of choice for public sector. The Monrovia City Corporation is in partnership with Ecobank for daily collection of municipal taxes, fines, and fees in the City. Negotiations have also been concluded with the Ministry of Finance for Ecobank to carry out collection of customs taxes and internal revenue on behalf of the Ministry. Ecobank signed a Memorandum of Understanding with the Ministry of Transport to carry out collection of revenue from sales of motor vehicle license plates and stickers.

Ecobank Liberia is also now the main banker to the Small Holder Tree Crop Revitalization Support Project in the Ministry of Agriculture funded by IFAD.

Ecobank Benin is the bank of choice to provide support to the government: for example, we participated in the organization of the 2013 Hajj and offered financial products to the pilgrims. As a leading bank, we financed the 2013-2014 cotton ginning campaign for US$85 million. Ecobank Benin also financed the construction of Tourou airport for US$30 million.

Ecobank Côte d’Ivoire participated in a fundraising of US$310 million for Road Maintenance Fund, underwriting more than a third of the required funding. We tendered for the scholarships payment of US$20 million annually to over 20,000 students. Ecobank Senegal signed an agreement with the Tax department to collect electronically taxes, duties and levies starting in 2014. An agreement has also been reached to enable traders to pay duties electronically to the Customs department. Ecobank Togo has presented to the government an electronic platform, Omni to collect Customs duties and to facilitate treasury management. Ecobank Guinea-Bissau is the bank of choice to collect all taxes and duties for the government.

Sustainable finance products

FinancialInclusion

InnovativeFinancial products

SMEBanking

Green Business Finance

Microfinance SME Banking Mobile BankingSustainable

Energy Finance

Micro Banking Agribusiness Finance Diaspora BankingClimate Change

Adaptation

Women in Business

Trade Finance Rapid TransferEnvironmental

and Social Assessments


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In Cameroon, Ecobank Cameroon provided over 3,000 prepaid cards to pensioners to facilitate their banking transactions. We also signed a Memorandum of Understanding with the University of Buea that includes collection of fees, sale of prepaid cards and various other products to their staff and students. Ecobank Chad granted a US$70 million loan to the government for infrastructure development. We have also financed the acquisition of 400 vehicles for the various ministries for a total amount of US$20 million. Ecobank Gabon financed the set up of the Economic Zone (GSEZ) in combination with Olam International Group for US$38 million. In DR Congo, Ecobank is the preferred bank for civil servants for opening an account to receive their salaries, with over 100,000 such accounts opened in 2013.

4. Socially Responsible FinanceIn 2013, we further strengthened our position as a socially responsible bank through our sustainable banking solutions comprising inclusive financing, SMEs banking, innovative financial products, and green business finance.

4.1 Microfinance and SMEs

Ecobank Group remains committed to playing a key role in empowering low income but active micro and small entrepreneurs in Africa through wholesale and retail microfinance activities.

The prime objective of Ecobank microfinance is to provide financial services to the low income, unbanked or under-banked population. As illustrated in the figure below,

the millions of people in sub-Saharan Africa who live at or below the poverty line need tailor-made financial products and services, access to capital and financial education for smoothing consumption, to create wealth and generate employment.

Microfinance

Ecobank now has microfinance banking subsidiary and associated companies in 5 countries reaching over 300,000 clients;

• Burkina Faso – SOFIPE Limited

• Cameroon – EB-Accion Microfinance Limited

• Ghana – EB-Accion Microfinance Limited

• Nigeria – Accion Microfinance Bank Limited

• Sierra Leone – Ecobank Microfinance Limited.

Ecobank as Banker of Choice for Microfinance entitiesIn addition to its own microfinance operations, Ecobank is the main banker and partner to most of the leading microfinance institutions and cooperatives in many of the countries where Ecobank is present; with an indirect reach to over 10 million microfinance clients. Ecobank’s wholesale microfinance program is probably the largest linkage program with microfinance operators in Middle Africa

Ecobank is striving to serve the approximately 47 million people who constitute the bottom 40% of the 116 million bankable population in SSA (Source: Ecobank Group Research)

Unbanked and under-banked population in sub-Saharan AfricaBankable SSA population (million people)

Banked population 69.8

‘Bottom 40%’ (under-banked) 46.6

No access to financial services 368.6

The ‘Bottom 40%’ have very limited access (million people)

Access to formal financial services 6.5

Limited access 40.0

RapidTransfer customer at Ecobank branch.


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Ecobank’s success story is in building successful financial inclusion distribution networks/partnerships, and in creating opportunities by employing technology-enabled delivery models such as mobile banking as well as innovative approaches to risk management. All the key performance indicators (revenue, deposits, loans, number of savers and borrowers) of Ecobank Group’s microfinance operations from 2011 to 2013 showed positive growth. The graphs below depict revenue growth of 19% or US$1.6m in 2012 and 33% or US$3.3m in 2013. Deposits increased by 19% in 2012, with slower growth of 4% in 2013; and outstanding loans recorded growth of 44% and 21% in 2012 and 2013 respectively. Outreach showed significant improvement in 2012 and 2013. Savers increased by 24% in 2012 and 19% in 2013, with borrowers also increasing by 52% in 2012 and 29% in 2013.

4.2. Ecobank RapidTransfer enabling Diaspora Banking Experience

There are about 13 million African migrants living in African countries where Ecobank has a presence (Group Ecobank Research). These migrants often find it difficult to remit money back home to cater for loved ones. Where remittance services exist, they can be expensive.

Ecobank RapidTransfer is a proprietary money transfer product that has cross-border functionality and capability as well as handling domestic transfers. It can be used in any of our branches and is easy to use, fast and convenient. It offers traditional over-the-counter collections but much more importantly, it enables a migrant worker to maintain savings in his home country through the direct credit of funds into accounts maintained at Ecobank. We achieve this through tailor-made Diaspora accounts which we offer to Africans who are migrant workers.

The specific focus on the migrant worker has always influenced the pricing of Rapid Transfers at Ecobank and we are pleased to say that there has been a general price reduction for remittances in sub-Saharan Africa. The World Bank in its recent ‘Worldwide Remittances Price’ review indicates that the average rate for remittances in sub-Saharan Africa in the last quarter of 2013 is 12.55% as compared to rates in the region of 18% – 20% in prior years.

Ecobank Group’s microfinance operations show a strong growth trajectory across all key metrics.

13,385

10,078

8,413

201320122011

193,396

162,714

131,562

201320122011

25,62224,537

20,656

201320122011

29,991

23,893

15,765

201320122011

Number of Savers

Deposits(US$’000)

Number of Borrowers

24,948

20,559

14,306

201320122011

Outstanding Loans(US$’000)

Revenue(US$’000)


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Furthermore, with RapidTransfer, an African in the Diaspora does not suffer double foreign exchange impact. Funds are remitted in the currency of a country where a migrant resides and payment done in the currency of a beneficiary’s country. This unique attribute from Ecobank’s products and services is really helping to bridge the gap in financial intermediation in Africa.

Today, we have nearly one million Africans using our RapidTransfer service and we plan to expand this base to allow more migrants access and at affordable pricing.

Ecobank has also undertaken an extensive program of initiatives to promote financial inclusion and to bring African migrants into mainstream banking. These initiatives on the ground allow them to open bank accounts and securely mobilize much of their savings to their home country.

5. Social ResponsibilityAt Ecobank, we believe we have a role to play in building a better world for future generations. We measure our success not only by financial criteria, but also by focusing on customer satisfaction and employee engagement as well as supporting the communities in which we operate. We strive to make a real difference in the communities where we operate. So every year, we spend more time and resources of our workforce to serve our communities.

In 2013, we continued to grow the impact of our charitable programs by creating real opportunities for our employees to get involved and make the link with the people and communities we support through positive and inspiring projects.

5.1 The Ecobank Foundation

Founded in 2005, The Ecobank Foundation is a response to the desire of the Ecobank Group to include the individual at the heart of its business plan.

In accordance with the mission and vision of the Group, the Foundation works for wellness and a better future for communities in which the Group operates, focusing on innovative projects that promote creativity, excellence and regional integration in the following main areas:

• Entrepreneurship (especially in rural areas)

• Education

• Health

• Community development.

Each year ETI commits up to 1% of its profit after tax to the Foundation.

In 2013, ETI provided the Foundation with US$1.1 million, with 70% of interventions devoted to projects in the field of health, 25% in education and 5% for cultural and scientific research.

5.2 Community EngagementAs a responsible employer, we encourage our employees to give some of their time and to use their professional skills to communities in order to create positive change. Whether it is across the Group, or in the subsidiaries or at a personal level we are very active in Africa in the field of community engagement.

5.2.1 Special Community Event: Ecobank Day

In 2013, our staff dedicated a day of their time to community engagement projects for the inaugural ‘Ecobank Day’ on 5 October. The event, which will be held annually, has been set aside to celebrate Ecobank’s vision of contributing to the economic development and financial integration of Africa. Africa is the heart of Ecobank and we are absolutely committed to its future. We conduct business, develop ourselves and make profits based on our daily interactions with our communities. It is therefore right for us to give back by contributing both financially and through our own energy to improve the communities that have welcomed us and in whose territories we work.

Ecobank Foundation project at a school in Dominase in Ghana.

Renovation of the admission ward in Adjido Hospital in Aneho, Togo.


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Projects funded by Ecobank Foundation in 2013Building a brighter future for school children

Area of intervention: Education

Amount: US$70,495

Beneficiary: The SABRE Charitable Trust in partnership with Ghana Education Service

Purpose: Construction of a sustainable kindergarten complex in the village of Dominase in Cape Coast, Ghana.

The Ecobank Cancer Caravan in Kenya

Area of intervention: Health

Amount: US$13,647

Beneficiary: The Kenya Medical Women Association and The Kenyatta National Hospital (KNH)

Purpose: Awareness creation of cancer as a growing lifestyle disease in Kenya, a disease that is claiming lives of citizens at an alarming rate with emphasis on prostate and cervical cancer.

Young Scientists Tanzania


Amount: US$25,000

Beneficiary: Young Scientist Tanzania

Purpose: Promotion of science and technology among the Tanzanian youth through an annual science exhibition and competition. Students from over 60 schools from 16 regions in the country participated in the competition by showcasing innovative technologies taking advantage of locally available materials to develop useful products that can be sold in the global market.

Purchase of a 15-seater bus for an orphanage in Lagos, Nigeria


Amount: US$35,000

Beneficiary: Vigilant Heart Charitable Society Orphanage

Purpose: Purchase of a 15-seater bus to solve the problem of transportation faced by the orphanage when sending the children to schools in various locations in Lagos and back to the orphanage.

Construction and equipment of a computer room with internet access in Mali


Amount: US$35,000

Beneficiary: Ecole de Dio Gare in Bamako, Mali

Purpose: Financial support for the construction and equipment of a center to facilitate the access to the New Information Technologies for the School Improvement by students.

Wall fencing round the premises Shehu Malami Primary and Secondary School in Sokoto, Nigeria


Amount: US$90,000

Beneficiary: Shehu Malami Primary and Secondary School

Purpose: Wall fencing round the premises of the school to guard against encroachment and trespass.

Renovation of the admission ward in Adjido Hospital in Aneho, Togo

Area of intervention: Health

Amount: US$18,000

Beneficiary: Aquereburu and Partners Foundation

Purpose: Improvement of admission conditions in the hospital and making it a health center of reference as regards to quality care in the district of Aneho.

Managing Director, Ecobank Nigeria, Jibril Aku (right); Group Executive Director, Domestic Bank, Ecobank Transnational Incorporated (ETI), Patrick Akinwuntan (left) and Executive Director Domestic Bank, Ecobank Nigeria, Kingsley Aigbokhaevbo (behind), taking part in the renovation of class room block at the C and S Primary School in Ikorodu.


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US$2.5 million was budgeted for the 2013 Ecobank Day, with bulk of this amount spent on school renovation, provision of school supplies and sports equipment, construction of fences and walls and various activities to improve existing school infrastructures in all countries across the Ecobank network. Ecobank believes that by helping to ensure that young people have access to the best possible education, we contribute to harnessing the enthusiasm, creativity and talent of the youth thus giving them a better chance to succeed as individuals and advance the future of Africa as well.

Ecobank Day in Nigeria: In Nigeria, staff and executives of Ecobank Nigeria on the day engaged in various forms of community services as part of activities to mark the maiden ‘Ecobank Day’. The activities included the renovation/construction of classroom blocks in select schools across the country, donation of educational materials and assisting with cleaning immediate environment of the select schools and communities. Schools that benefited from the Bank’s gesture included C&S Primary School, Ikorodu, Lagos; Government Secondary School, Kubwa Abuja (FCT) and Eastern Academy, Onitsha, Anambra State.

Speaking at C&S Primary School Mr. Jibril Aku, Managing Director of Ecobank Nigeria, said the community-inspired day is part of Ecobank Group’s initiative to dedicate a day of every year for staff across the Group to devote the whole day to community-related services as a way of impacting immediate host communities.

Ecobank Day in Ghana: On 5 October corporate donations ceremonies were held simultaneously in 25 locations throughout the country. Ecobank Ghana identified 25 projects to celebrate the Silver Jubilee of the Group. Staff from across our operations in Ghana devoted the day to community related activities including renovation works, cleaning and painting of selected institutions. The beneficiary institutions received donations of textbooks for their libraries as well as Ecobank branded exercise books, teaching aids, white boards, school dual desks, teachers’ tables and chairs and computers.


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Speaking at Prampram Senior High School in the Ningo Prampram District of the Greater Accra Region, one of the beneficiary schools, Mr Eddy Ogbogu, the Group Executive Director of Operations and Technology stated: “We are by these donations, making a strong commitment for Ecobank to continue behaving as a good corporate citizen. We will continue to conduct our business activities in an ethically acceptable manner towards all stakeholders whilst contributing our quota towards the socio-economic development of our local communities and the country at large”. He added, “We are mindful of the fact that society, and in our case, the African society, has been kind to us and as a Group, we deem it most appropriate to reciprocate this kindness and love of Africa by giving back something in return every year, starting from today.”

Ecobank Day in Benin: On 5 October the Ecobank Benin team visited primary and secondary schools in the major centres across the country where Ecobank is present, to help celebrate this special day. Five primary schools, one agricultural high school and one general secondary school were selected by Ecobank Benin. Five teams of Ecobank staff, wearing the Ecobank Day T-shirt were constituted to carry the message of hope of the pan-African bank to the students and teachers. The first team, led by Roger Dah-Achinanon, the Managing Director of Ecobank

Benin, visited a primary school in Toyoyomè on the outskirts of Cotonou. The school is in an area with difficult access and the team was only able to reach it by canoe. Here the team distributed 300 scholar kits, which cost XOF3 million (US$ 6,000), to all the students. Thereafter, the team went to the General Secondary school of Tohouè, situated in Ouémé department, 60 km from Cotonou.

Ecobank Day in Central African Republic: The local Ecobank team, unperturbed by a heavy downpour of rain, mobilized for the commemoration of the Ecobank Day at the University of Bangui. The ceremony started at 10 am with a football match between Ecobank staff and the students of the University. The final score 9-0 was a big victory for the Ecobank team. The next part of the ceremony was held in the Faculty of Economic and Social Sciences where the management, the Rector of the University and their teams participated in the renovation of the faculty building which had deteriorating walls and whose roof had been blown off by a rain storm. It was the first time the building had been renovated since its construction in 1963. At this event Ecobank also donated 120 tables to equip the dilapidated tutorial rooms. The ceremony closed at 3.30pm with an Ecobank sponsored cocktail event in the Rectory hall, in a warm and friendly atmosphere.

Ecobank staff in Central African Republic renovating a faculty building at the University of Bangui.

The Ecobank Africa debate organized by Ecobank Uganda.


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5.2.2 Community Corporate Activity

Uganda (the Ecobank Africa Debate): the Ecobank Africa Debate, which was organised in partnership with Mt. St. Mary’s College Namagunga, attracted over 900 students from 20 secondary schools to discuss the topic: “Africa’s Education does not need any substantial changes; it is on track to place young people at the forefront of development both on the continent and globally.”

On 28 September, young people were able to discuss and share ideas on their role in developing Uganda and the continent at large and how Africa’s education can facilitate this dynamism. The Minister for Education and Sports, Hon. Jessica Rose Epel Alupo attended the function as the Chief Guest and in her remarks, she urged Ecobank not to relent in its efforts to empower young people, influence progress and transform lives.

On 3 October, Ecobank Uganda joined the rest of the Ecobank family to celebrate the 25th anniversary of the operations of the Group and also to commemorate five years of business growth in Uganda. Focusing on education for young people, the Bank engaged in various Corporate Social Investment initiatives while communicating the Ecobank story to Ugandans. These initiatives included a Customer Service Week, a debate about Africa’s education in relation to development opportunities for young people, a newspaper supplement

with editorial content about the Bank and various Corporate Social Investment Projects like visiting an orphanage and providing scholastic materials and basic items to disadvantaged children.

Zambia: Ecobank Zambia commemorated World AIDS Day by organizing a talk with two HIV/AIDS activists. The activists were Ms Bridget Michelo Chisenga and Ms Mary Mweemba. Ms Chisenga is an advocate/ counselor on HIV and AIDS and also a Provincial Community Health Coordinator working with the Zambia Integrated Systems Strengthening Program, an organization under USAID that deals with managing the delivery of high-impact health care. Ms Mary Mweemba is the Country Director of Orange Babies, an organization funded by the Netherlands Government.

The talk, held at the Ecobank Zambia Head Office provided employees an opportunity to learn about how the HIV Virus is transmitted, how it could be prevented, and most importantly the reality of living with HIV. Employees were advised on how to take care of their health and the health of others and ensure they treated everyone living with HIV with respect and understanding as the stigma of HIV/AIDS is still very alive in Zambia.

Furthermore, Ecobank Zambia signed a memorandum of understanding with Conservation Farming Unit (CFU) and Musika Development Initiative Limited. The

Staff in Ecobank Mali participating in the inaugural Ecobank Day, 5 October 2013.


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agreement is to finance emerging farmers under the tutelage of CFU to obtain asset finance facilities. This will enable the farmers to procure tractors and related farming implements used in the promotion of conservation farming in Zambia.

Under this arrangement Ecobank will provide finance with a tenor of 36 months (2013-2015) to farmers under its Asset Finance Product Program, which offers enhanced security. In its first year, 14 farmers benefitted from an aggregate loan amount of US$550,000.

Ecobank Tanzania: On 20 September, Ecobank Tanzania set the tone in social entrepreneurship in Tanzania from a technological standpoint. Underscoring the Bank’s commitment to promoting positive social and behavioral change among the Tanzanian youth through technology, the Ecobank Foundation was a major sponsor at the 2013 Young Scientist Tanzania Exhibition which was held at the Diamond Jubilee Hall in Dar es Salaam. The exhibition attracted students from over 60 schools from 16 regions in the country who came to see exhibitions showing various technologies which highlighted the innovative capabilities of the Tanzanian youth. The Guest of Honor for the occasion was the Deputy Minister of Communication, Science and Technology Hon. January Makamba.

Ecobank Tanzania also held the first ever media training workshop on financial inclusion at end of the first quarter 2013. The workshop titled ‘Bank Financial Statements: What do they mean and why does it matter?’ was in line with Ecobank’s efforts at promoting financial inclusion and helping the public understand the banking sector therefore creating financial literacy and opening new markets for the expanding banking industry in Tanzania.

Ecobank Mali cleans hospitals in Bamako, Sikasso and Kayes: Ecobank Mali organized a clean-up campaign day on May 25 at the public health centres at the University Hospital Gabriel Touré in Bamako, Sikasso Hospital and Fousseyni Daou Hospital of Kayes. The Bank seized this opportunity to donate cleaning products and equipment, in addition to hiring professional teams to clean these hospitals. Sidibé Aïssata Koné, Deputy Managing Director of Ecobank Mali, explained that this gesture of goodwill is an example of what the Bank has been doing within the scope of the Group CSR since its inception in Mali: “To mark our presence as a citizen and socially responsible bank, it is very important for us to implement this action with the active participation of all our staff”.

Ecobank Benin signs the ILO charter to fight against AIDS: On 16 April Ecobank Benin signed the charter for AIDS control and prevention with the local representative of the International Labour Office (ILO), during a solemn ceremony under the theme ‘Stop AIDS, keep our promises! Ecobank is committed. What about you?’.

The purpose of one of the ILO/AIDS program in Benin is to support companies to develop and implement policies and programs to prevent the spread of AIDS, protect the rights of workers infected and affected, and to mitigate the impact of the epidemic on their lives, on those of their families and on business productivity. According to the workers’ representative, Mr. Augustin Agbayazon, “Our commitment goes beyond a regulatory requirement. It is our awareness of the existence of this pandemic and our desire to partner with all stakeholders, such as Ecobank Benin who understand the need to fight against this scourge, that we intend to express through the signature of this charter”.

Ecobank Nigeria Receives Delta Football Association Platinum Award for Excellence: Ecobank Nigeria Limited was awarded the Delta State Football Association’s Platinum Award for Excellence. The award is in recognition of the bank’s constant support of and contribution to the development of grassroots football in the state. The award was presented at an event which was graced by notable personalities that included the Speaker of the Delta State House of Assembly Honourable Victor Ochei and renowned sports enthusiast and Chairman of the Delta Football Association, Pinnick Amaju.


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Ecobank Kenya signs Peace Pledge in Nairobi, 28 February 2013: Four days before Kenyans voted for their fourth President elected under a new constitution, members of the public and corporate citizens were promoting the message of peace all over the country. Staff of Ecobank Kenya across the nation met in their offices and sang the National Anthem together. This was followed by the signing of the Peace Pledges by everyone. The project was spearheaded by the Kenya Bankers Association, the umbrella body that brings together Kenya’s 43 banks. The signing of the Peace Pledge came on the eve of historic general elections which were held on March 4 and ushered in new constitutional office holders including the President, Governors, Senators, Members of Parliament, Women Representatives and County Ward Assembly Representatives.

6. Protecting Natural Resources: Environmental Sustainability6.1 Environmental and social risk management

We recognize that businesses we finance can have an impact on environment and social standards. In 2013 we intensified our efforts to develop, implement and refine our internal operations to work with our customers in the environmental and social risk sectors to understand and manage these risk issues. We continued to assess transactions in the environmentally and socially sensitive sectors (e.g. mining, oil and gas and other soft commodities) using our policies and, in a few instances of project financing, using the Equator Principles criteria. Through the

implementation of the Environmental and Social Management Policy and Procedures Manual (ESPPM), a total of 2,814 transactions with exposure of US$25.1 billion to sectors with significant Environmental and Social (E&S) risks have been screened, including soft and hard commodities, e.g. oil and gas.

Ecobank continues to review its environmental sustainability policy to ensure it reflects the latest risks and sector specific realities and issues. Ecobank implements and monitors the Environmental and Social Management System (ESMS) through a collective and collaborative approach of staff in the businesses, country risk management and Group risk management. While the business relationship managers have the proactive task of ensuring that transactions are properly screened and classified for E&S risks, the country risk managers have the oversight responsibility over the E&S Due Diligence assessment and the formulation of corrective action plans for compliance monitoring. The Group E&S manager helps formulate policy and has general oversight in ensuring compliance and adherence with E&S standards, as stipulated in the Ecobank E&S policy.

Furthermore, the Bank continues to invest in capacity building for effective environmental sustainability. In 2013, over 500 staff from key internal stakeholder units, including the country risk management, internal control, compliance, internal audit and relationship managers from the businesses were trained on enhanced Environmental and Social Management Systems.

Major E&S activities in 2013.

No breach of Environmental and Social Risk issues

in 2013

Responsible lending protects reputation and makes client

business sustainable

2,814 Credit applications in the

E&S impactful sectors were screened

Additional 500 staff trained on

Environmental and Social Management

System (ESMS)

Media recognition – Jeune Afrique 21 September 2013 edition

Additional staff assigned to the Environmental &

Sustainability unit

Solar powered ATM at an Ecobank branch in Accra, Ghana.


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Ecobank’s environmental sustainability practice is acknowledged by third parties. For example, we were recognized for our work on environmental sustainability and featured in the Africa Sustainability Barometer: gauging the state of sustainable business practice in Africa, a special report published by Financial Times for the United Nations Global Compact, which was released in September 2013. Similar recognition also featured in the Jeune Afrique edition of 21 September 2013.

ETI has a contractual obligation to submit an Annual Environmental Performance Report (AEPR) every year to its lenders, mainly the development financial institutions, including IFC, FMO (Dutch development financial institution) and AFD/Proparco (French development financial institution), for compliance monitoring review of environmental sustainability. Following a recent review session of the Group’s E&S portfolio with IFC, Ecobank’s ESMS was deemed to be compliant with major international standards.

6.2. Green businessEcobank sustainable finance continues to bring socio-economic and environmental value through financial models, products and markets to assist long term development in countries in which we operate. In 2013, our lending has contributed to the promotion of environmental resource efficiency. For instance, solar powered street lighting and indoor appliances, which were financed by Ecobank in Ghana and Nigeria, gave the opportunity to reduce the use of wood as a fuel as well as reducing health-related problems associated with its use, which affects the immune system of women exposed to indoor smoke or fumes while cooking.

With national governments across Middle Africa cutting subsidies to public utilities like water and electricity, Ecobank is doing its part to lessen the burden on affected rural and peri-urban communities by working with clients to finance renewable energy and energy efficient technologies to complement power generation for lightening and supply to hydraulic water pumping machines.

This project involved harnessing solar technology to power streetlights and water pumps. It is environmentally friendly and complementary to developmental needs. This is because low electricity access, coupled with erratic supply and blackouts, impacts on productivity, especially in more remote communities. Africa’s climate makes it a suitable region for harnessing solar power and therefore Ecobank is creating financial models and products to make the deployment of solar PV systems for street lighting, water pumps and other rural electrification activities accessible and affordable, as a complement to grid-connected energy.

In Ghana, Ecobank is financing installation of 18,000 units of solar streetlights across the rural communities. Similarly, in Nigeria, Ecobank is financing solar powered devices to power water pumps in the rural areas. This sustainable financing supports the development of rural communities, who are mostly primary commodity producers, such as agriculture and fishing communities. This enhances the quality of life of underserved communities, while encouraging social productivity, including entertainment, after sunset. In some of the rural locations, streetlights have been used to facilitate evening learning classes for adult education and contributed in increasing the enrolment in evening studies.

Policy advocacy: Ecobank has made strides in policy engagement towards enhanced environmental sustainability impact and reputation, and has become a leading voice of the banking industry in some countries, particularly on the issue of systemic sustainability. This progress has been achieved as a result of the contributions to the environmental sustainability policy discussions at the national, regional and global levels, which enables the Bank to continue to monitor the emerging environmental policies and regulations in a proactive manner for compliance. Currently, Ecobank is serving on the National Climate Change Committee in Ghana and it is also a member of the Peer Review Team for the National Climate Change Investment Plan in Malawi. In several countries, the Bank is actively engaging with governments and other stakeholders, including the United Nations to ensure effective balance between addressing environmental sustainability and the impacts of related policies and regulations.


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Leading by example, Ecobank has embarked on the application of solar power for its ATMs. Starting with remote locations in Ghana, 3D solar powered LED ATMs have been deployed across the country and also in the ATMs gallery locations across Ecobank Nigeria. This initiative will be replicated across the countries in Middle Africa in which the Bank operates.

6.3. Green initiativesAs a demonstration of its commitment to environmental sustainability, the Bank has integrated its environmental sustainability practice to reflect the emerging banking realities in its operations. For instance, in 2013, the Bank mainstreamed environmental sustainability in its travel policy, which highlights the need to reduce carbon emissions. As a result, alternative means of business engagement are being explored and where it is necessary to travel, staff are encouraged to use the most direct means. The Bank has also integrated environmental sustainability considerations in its merger and acquisition due diligence procedures. Meanwhile, the Bank is actively participating in the Environment Social and Governance (ESG) frameworks it has either subscribed or adopted. These include:

6.3.1. Nigerian Sustainable Banking Principles

In September 2012, the Central Bank of Nigeria (CBN) issued a circular directing banks, discount houses and development finance institutions to implement the Nigeria Sustainable Banking Principles, a non-prescriptive set of E&S tools aimed at mitigating potential negative E&S impacts of credit transactions. As required by the CBN, Ecobank Nigeria had developed and submitted an overarching Sustainable Banking Commitment, which articulates how Ecobank is applying the Principles and Guidelines as well as integration of the E&S risk management into the Enterprise Risk management framework and their implementation targets and milestones.

6.3.2. IFC Initiatives

The Bank continues to align its environmental and sustainability activities with the international best practices through exchange of ideas and participation in knowledge management events. As a leader in the implementation of the sustainable banking practices in Africa, Ecobank made a presentation and led in the discussion on the Sustainable Banking in Africa at the launch of the 2013 IFC/FT Sustainability Conference and Awards (Africa), held in Johannesburg, South Africa. Ecobank also participated in the IFC Community of Learning (COL) held in Tokyo, Japan and aimed at facilitating new information and practical realities in the implementation of environmental and social management system.


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6.3.3 Equator Principles

Since its formation Ecobank has been transforming lives and remains committed to the environmental sustainability practice. Our adoption of the Equator Principles (EP) in 2012 has further enhanced our environmental and social risk management, in line with the international best practice. The Bank continues to apply the Equator Principles to project finance transactions with a face value greater than US$10 million.

As an Equator Principles financial institution (EPFI), Ecobank is playing an active role in the Africa and Middle East outreach group in the NGOs and Civil Society stakeholder engagement and Social Risks and Biodiversity thematic areas. The Bank also participated in the Equator Principles workshop on Cross Sector Biodiversity Initiative (CSBI) in London, UK as well as the EPFI Annual General Meeting held in Tokyo, Japan.

Ecobank has integrated the Equator Principles with its internal Environment and Social Risk Management Systems, which were developed on the basis of our engagement with the IFC performance standards as well as our association with other Financial Institutions on their interpretation of environmental and social management as related to the credit review process.

EP guidelines were taken into consideration in financing a total of 21 project and project corporate related transactions in the EP environmental and social risk categories C and B in 2013. In line with the EP classifications, a total of 7 projects in 4 qualifying sectors in the Environment and Social Risks category B were financed. These sectors are:

a. Oil and gas exploration

b. Mining

c. Plantation agriculture

d. Telecom infrastructure

Also in line with the Principles’ guidelines, Ecobank funded a total of 14 transactions in 5 eligible sectors in the EP category C. These are transactions that have potentially low to medium impacts for the environment and social risks. These sectors are:

a. Manufacturing

b. Real Estate

c. Telecommunication downstream

d. Thermal power transmission

e. Oil and Gas

6.3.4 United Nations Environment Programme Finance Initiative (UNEPFI)

The Bank is a member of the United Nations Environment Programme Finance Initiative (UNEPFI) and contributes in the discussions of the Africa Task Force and the Banking Commission group. In November 2013 senior executive managers of the Bank participated in the UNEPFI Global Roundtable and the Annual General Meeting held in Beijing, China. Ecobank also participated in the IFC Community of Learning for knowledge exchanges on the industry best practices in tackling operational challenges of the environmental sustainability in banks.

Operationally, Ecobank is organizing banks to integrate environmental sustainability process in the banking operational procedures, through bankers’ associations and wider industry stakeholders, including the environmental and financial regulators. Across many countries where Ecobank is present, there is a need to mainstream the Environmental and Social Risk Management Systems in the risk management procedures and the general banking operations. This is aimed at creating a level playing field in the implementation of environmental sustainability and Ecobank has already made progress in drawing on the expertise of institutions such as the International Finance Corporation (IFC) and UNEPFI towards achieving this objective.


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Ecobank is engaging with other banks and regulators alike, through meetings and facilitation of knowledge exchange as well as sponsorship of events leading to the creation of enabling platforms. Notably, in April 2013, Ecobank collaborated with the Ghana Association of Bankers (GAB) and UNEPFI to organize a workshop of Environmental and Social Risk Analysis (ESRA) in Ghana. Representatives from the 24 commercial banks that attended the workshop resolved to establish a network of banks to champion the development of guidelines on the environment and sustainability mainstreaming in the industry, through the GAB.

6.3.5 United Nations Global Compact

THE G

LOBAL COMPACT

Ecobank is a signatory to the United Nations Global Compact (UNGC) and continues to abide with the Principles and tenets of the Compact and is fully implementing all its thematic areas of Human Right, Labour, Environment and Anti-Corruption. Over the years, Ecobank has undertaken development activities as well as worked with both local and international development institutions, including the UN agencies in promoting development initiatives, from our core competency, banking and finance; and these have invariably contributed towards the achievements of the Millennium Development Goals (MDGs) in Middle Africa. We have also committed to share our Annual Communication on Progress with our stakeholders and will continue to work with other stakeholders, including the United Nations in realizing our vision, while promoting private sector participation towards achieving genuine sustainability transformation in Africa.

6.4 Internal Carbon Footprint Management

Internal Carbon Footprint Management: Ecobank is working towards cost savings and conservation of the natural environment for sustainability. In 2013, we strengthened the Group’s environmental sustainability credentials by reducing consumption of fuel, energy, water, paper, and natural resources, while minimizing office waste generation. As the bank is committed to its pan-African strategy, continuous progress on sustainability will remain a measure of its success and therefore the carbon footprint management is refocused on sustainable travel, procurement and energy, as key sustainability performance indicators.

In our internal operations, the number of ATMs and signposts, being powered by solar technology has increased. This further demonstrates our commitment to environmental sustainability, as we aim at continuously improving the environmental performance of the bank.


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People report

Strengthening our employee value proposition

Our highlights in 2013 • Designed and rolled out a new Ecobank

Performance Management (EPM) system

• Revised the Rewards and Recognition systems to strengthen Performance link to Pay

• Continued implementation of the Human Resources Information System / Management Information System

• Developed and rolled out competency and curriculum frameworks for the Domestic Bank and Corporate and Investment Bank businesses

Our priorities for 2014 • Fully embed the Ecobank Performance

Management system across our countries

• Develop and roll out core leadership and functional curricula across the Group to build a motivated and high-performing workforce, and drive attainment of corporate strategic goals

• Build a holistic view of overall bench strength to inform targeted decisions to drive corporate strategy

• Continued implementation of a strategic approach to strengthen Performance link to Pay through revisions of current job grading evaluation system (and harmonised salary structures)

Number of employees

19,546Nationalities

46

Female representation

42%Attrition rate

7.9%

With 19,546 employees representing over 46 nationalities, the diversity of our workforce is a core strength and an important part of what makes the Ecobank culture distinctive.

Employees data (as at December 31st 2013)

Employee by geographic segments/clusters(% as at December 31st 2013)

Central Africa 7%

Nigeria 48%



East Africa 5%

Southern Africa 2%

Others 5%

Employee by Business/Functions(% as at December 31st 2013)

Corporate and 3%Investment Bank

Domestic Bank 35%

Support units/Functions 62%

Staff of Ecobank Zimbabwe during Ecobank Performance Management training in 2013.

Staff of Ecobank Gabon engaging in a problem solving session.


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At Ecobank, we focus on global financial trends and their impact on human capital. We recognize that to continuously execute, we must position human capital at the centre of our business strategy. Our human resource strategy provides clear direction on overall talent acquisition, development and retention. It emphasizes the significance of having the appropriate skills mix to meet business requirements. Our culture, reward and recognition programs are designed to create the right environment for our customers, staff and business.

The year 2013 has seen Group Human Resources (HR) executing its People Strategy, to further embed and drive the execution of the Ecobank employee value proposition through the successful implementation of a number of critical HR processes and systems to support the three-pillar corporate strategy: enhancing shareholder value, customer excellence, and people.

The focus for 2014 is to continue building on this platform by further streamlining processes and implementing initiatives that focus on the execution of the seven pillars of the Group HR’s People Strategy, namely:

1. Linking Business strategy to Human Capital needs

2. Attracting and Retaining the right people

3. Motivating, Recognizing and Rewarding performance

4. Growing Leaders

5. Improving the infrastructure supporting Human Capital

6. Creating and embedding a Talent culture

7. Developing the organisation.

Attracting and retaining talentIn line with our objective of attracting and retaining the right people, while creating and embedding a talent culture, we continue to streamline our recruitment process, build and enhance our specialist recruitment team with the aim of creating better in-house recruitment capabilities and more effective hiring processes.

In 2013 we implemented a group-wide Applicant Tracking System and candidate database which is being rolled out to all countries in 2014. Our unique pan-African footprint and our efforts to become Africa’s employer of choice have contributed to the hiring of over 1,640 individuals in 2013

through our executive, graduate and referral hiring programs across Africa. We have also been able to attract talented Africans from the diaspora to return to the continent.

In 2014 we will further focus on graduate programs as an important source of talent for the bank as well as on continually refining our Employer Brand Proposition to attract and retain the talented employees so crucial to Ecobank’s success. We plan to expand and enrich awareness of available career opportunities at Ecobank using social media, including LinkedIn and Facebook.

Growing LeadersWe identified and groomed future leaders for the Group and subsidiaries through various internal processes, management training programs and forums such as:

• Group Executive Committee

• CIB Management Committee

• DB Management Committee

• Business Leaders Conference

• Affiliate Management Committee

• Branch Manager Certification.

In 2013, within Domestic Bank, initiatives such as the Branch Manager Certification Program (BMCP), targeting the development of capabilities for all branch managers across the Group and delivered in partnership with the International Academy of Retail Banking (a member of the Lafferty Group), have contributed to the measurable development of critical competencies and a direct improvement in business performance.

Staff of Ecobank Rwanda engaged in a performance discussion.


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People report

Building Functional CapabilitiesOur Learning and Development programs are firmly anchored on linking business strategy with human capital needs and development, while developing the organization. The Ecobank Academy, launched in 2012, is at the center of realizing this objective. In 2013, we intensified the use of the Academy in building the capacity of employees to execute our strategy.

In 2013, we developed comprehensive competency frameworks for all job roles in Domestic Bank (DB) as well as the Corporate and Investment Bank (CIB), linking targeted training to business imperatives across these areas. This has allowed for the development and execution of programs within the Corporate and Investment Bank such as Trade Finance (leveraging the expertise of the International Finance Corporation as an academic partner), and Asset & Liability Management (ALM) program.

Initiatives such as the Sales Force Effectiveness program, and the Relationship Management Sales Effectiveness program, illustrate the value of identifying critical capabilities required to drive organisational strategy, aligning these across business functions, and leveraging economies of scale to deliver measurable, high-impact solutions, resulting in increased sales revenue and improved identification, and management of risks.

Work has already started to replicate these initiatives across all businesses and functions within Ecobank, with the intention of aligning Learning and Development initiatives to a benchmarked capability framework by the end of 2014.

In order to proactively engage our employees on regulatory requirements, Anti-Money Laundering and Counter Financing of Terrorism training programs were rolled out in 2013, with a specific focus on geographical requirements. All employees were required to complete this training by early 2014, with more than 80% having successfully completed this training as well as a series of assessments by end 2013.

In order to support the Group Customer Service strategy, the Service Behaviors Change programme was rolled out to all subsidiaries across the Ecobank network. This highly engaging instructor-led training critically examines obstacles to delivering world-class customer service, and seeks to collectively find solutions to those obstacles whilst aligning employee mindsets to deliver on our service promise. This was further supported by the Complaints Management training, rolled out to all employees as an online program with a mandatory assessment, supported by instructor-led training for complaints resolution specific functions.

Since its launch, the Ecobank Learning Centre at the Pan-African Centre (Lomé) has maintained its prominent position in delivering Group training, hosting on average, more than 170 employees a month for training and conferences.

In 2014, Group Learning and Development will continue to leverage synergies and economies of scale, to deliver relevant, targeted, and cost-effective training solutions across the Ecobank network, utilizing multiple platforms and methodologies to guide self-empowered career management and targeted capability building opportunities, from a functional as well as leadership and management perspective.

Ecobank Group Staff, citizens of different countries at the Ecobank day Event supporting a school in Togo.

Meeting of the Domestic Bank team at Ecobank Benin.


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Strengthening performance link to rewardsOur Ecobank Performance Management system (EPM) represents a best-in-class approach to performance management. The Group’s performance and reward approach is designed to harness a strong performance culture within Ecobank and to drive sustainability, by ensuring exceptional performance is identified, maintained and adequately rewarded. This aligns to our overall aim to be the ‘Employer of Choice’.

The success of Ecobank depends upon the performance, behaviours and commitment of our employees. With EPM, we have developed a structured, objective and transparent approach to managing employee performance. From defining the overall business strategy and financial targets at the Business Leader level, every employee has a clear set of objectives and targets which are cascaded from their line managers. These objectives include financial and non-financial indicators in line with our five Performance Areas.

Performance reviews and subsequent reward decisions are based not only on what employees have achieved, but on performance relative to their peers. Employees are awarded a rating (on a scale of 1 to 5) based on their achievement of the stipulated objectives and subsequently a calibration review of ratings within their peer group. The rating has an impact on the level of reward an employee receives. Best-practice performance discussions are held both at mid-year and year-end to ensure ongoing coaching and feedback is given to employees, and to ensure transparency and objectivity in the process.

Individual reward and incentives are thus linked directly to the performance of the employee, the performance of the business and the interests of shareholders. In 2013, we strengthened our focus on a consistent approach to evaluating performance by training all countries on the new EPM system and process guidelines. This in turn translates into a consistent approach to identifying and rewarding high performance.

Diversity and inclusionAt Ecobank, we continue to operate in an environment that values and integrates each person’s differences and provides the opportunity for everyone to participate in achieving our business goals. We strongly believe that an inclusive business culture will help create a global community in which people can be themselves, give their best and grow professionally. In line with previous years, our workforce is spread across 46 nationalities, gender mix consist of 42% female employees and 35% female representation at management level.

The company has advanced significantly in its Diversity Program during this period through direct engagement with the communities in which it operates.

On 5 October 2013, Ecobank staff across the entire country network were invited to participate in, and devote a whole day to, community related activities. This community-inspired day, officially established as an annual corporate activity, is officially titled “Ecobank Day”. The philosophy of this day is to give back to our communities. We conduct business, develop ourselves and make profits based on our daily interactions with our communities, our communities, and we therefore see it as our duty to give back to improve the communities that have welcomed us and in whose territories we operate. The objective is to exchange, inspire, motivate and equip members of these communities and by so doing improve their social conditions.


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People report

The theme for the first Ecobank Day was “Education for Young People in Africa”. Several Education-related initiatives were carried out in multiple countries across the continent. Examples of such initiatives included renovating school buildings and canteens, libraries, painting school interiors and exteriors, distributing sports equipment, books and stationery. The Ecobank Day was a great success with all employees looking forward to next year’s event.

Employee welfareEcobank policies on employee welfare have remained consistent with previous years. Ecobank continues to care for its employees and their families by providing various benefits to cater for their well-being, including full medical cover that includes medical examinations, repatriation and rescue in times of critical illness, as well as retirement schemes based on local regulations and practices, home leave benefits, year-end gifts and activities.

Various types of loans are provided to staff (mortgage, equipment, vehicle, etc.), irrespective of career level or job grade, at preferential rates, which afford employees the opportunity to invest in their own home and purchase other essential assets.

We are engaged in workplace programs and activities that offer employees increased opportunities to be physically active such as sports and social activities and club house activities.

Ecobank also provides assistance with various medical and quality-of-life initiatives across the Group, such as HIV/AIDS programs, Fight against Malaria and other types of infectious diseases. At the Pan African Centre, Lome, an infirmary has been established to take care of emergencies. The infirmary operates regular operational hours, with the presence of a full time nurse and bi-weekly doctor visits. Similar facilities are provided in most countries and in the countries where an infirmary does not exist, arrangements have been made with local medical practitioners, through which employees immediate needs are addressed.

Ecobank has also adopted Group policies around Health and Safety, Violence in the workplace, Stress Management, Bullying and Harassment, etc.

SummaryIn 2013, focused efforts have enabled us to achieve tremendous progress in rolling out and embedding a performance culture group-wide. Furthermore, we have revamped and strengthened our Performance link to Pay to drive transparency around our rewards structure.

We believe that our focus on building our bench strength will remain relevant given the global challenge in attracting and retaining top talent. We recognize the role our people play in building strong customer experiences and are committed to further strengthening our people capabilities and building a strong leadership pipeline to take the Bank to a leadership position in Middle Africa.

In 2014, we will continue to execute our People strategy to further reinforce the Ecobank Value Proposition by focusing on further strengthening performance link to pay, employee development and streamlining processes.

Ecobank Equatorial Guinea staff engaged in addressing a customer issue.


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Risk Management

Managing risk is core to our business. Since 2010 our centralized approach to risk management has delivered improvements.

We continue to embed our controls and risk management framework throughout the organization.

100 Risk ManagementEcobank Group – Annual Report 2013

Image taken from Ecobank’s “The future is pan-African” advertising brand campaign, Dec 2013.

101Risk ManagementEcobank Group – Annual Report 2013

Risk ManagementEcobank Group – Annual Report 2013

102

Risk Management

1. Risk Management FrameworkRisk is an inherent part of the business activities of the Ecobank Group. Accordingly, Ecobank has designed a risk management framework and governance structure to achieve an appropriate balance between risk and reward.

The risk management framework consists of a comprehensive set of policies, standards, procedures and processes designed to identify, measure, monitor, mitigate and report significant risk exposures in a consistent and effective manner across the Group.

1.1 Risk Identification The Group identifies risks by evaluating the potential impact of internal and external factors on business transactions and positions. Risk managers then develop strategies for mitigation of identified risks. Such strategies include setting of appropriate risk limits by customer, product and business, and obtaining sufficient collateral coverage. However, the usage of exotic derivatives to hedge against any identified risk is prohibited by policy.

1.2 Risk Measurement The Group uses a variety of methodologies to measure risk. These include calculating probable loss (both expected and unexpected), assessing risk rating, conducting stress tests and benchmarking.

1.3 Risk Monitoring and Control The Group reviews risk management policies and systems regularly to reflect changes in markets, products and emerging best practice. Risk monitoring is based on the following central risk areas: credit risk, including counterparty risk; market risk; liquidity risk; and operational risk. Risk professionals and internal auditors monitor risk exposures and adherence to approved risk limits on a daily, weekly and monthly basis, by means of reliable and up-to-date information systems.

1.4 Risk Reporting The Group allocates considerable resources to ensure on-going compliance with the approved risk limits. It has set guidelines for reporting to relevant management bodies, including the Board of Directors and the Group Executive Committee. Significant changes in the credit portfolio, non-performing loans and other risk measures are reported on a daily, weekly and monthly basis.

2. Major Risk TypesThe Group is exposed to the following major risk types:

Credit risk is the probability of financial loss arising from the default or the credit risk migration of a customer or counterparty. It can arise either because the borrower, or the counterparty is unwilling to perform, or because its ability to perform has been impaired. Credit risk is said to be direct credit risk when it arises in connection with credit facilities such as loans and advances and indirect or contingent credit risk when the Group has guaranteed contractual obligations of a client by issuing letters of credit and guarantees. Credit risk also exists when the Group and its client have mutual obligations to exchange (deliver) financial instruments at a future date. The risk of default before settlement, also called pre-settlement risk, arises when the counterparty defaults before the contract matures, and the Group suffers a financial loss in the process of replacing the unexecuted contract. The settlement risk becomes direct credit risk at the time of default.

Market risk is the risk of loss arising from adverse changes in market risk factors during the period required by the Group to close out its on- and off-balance sheet positions; losses may be driven by changes in interest rates, exchange rates, equity prices, commodity prices, etc. Positions that expose the Group to market risk can be trading or non-trading related. Trading risk comprises positions that the Group holds as part of its trading or market-making activities, whereas non-trading risk includes discretionary positions that the Group undertakes for liquidity, or capital hedging purposes. Sources of market risk include:

• Interest rate risk is the exposure of current and future earnings and capital to adverse changes in the level of interest rates. Exposure to interest rate risk can result from a variety of factors:

• Repricing risk arises from timing differences in the maturity or repricing of assets, liabilities and off-balance sheet instruments.

• Yield curve risk is the risk that changes in market interest rates may have different effects on prices of similar instruments with different maturities.


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• Basis risk is the risk that changes in market interest rates may have different effects on rates received or paid on instruments with similar repricing characteristics (e.g. funding an adjustable rate loan that is indexed to the 3-month Treasury bill with deposits that are indexed to the 3-month LIBOR). Interest rates for various assets and liabilities change at the same time, but not necessarily by the same amount.

• Options risk is inherent in embedded options in assets and liabilities. An example is provisions in agreements that give borrowers the right (and not the obligation) to prepay their loans, or give depositors the right (and not the obligation) to withdraw funds at any time, often with little or no penalty. These options, if exercised, can affect net interest income and underlying economic value.

• Liquidity risk arises from the general funding needs of the Group, and in the management of its assets and liabilities. The Group is exposed to the risk that depositors’ demands for withdrawals outstrip its ability to realise longer-term assets in cash. The Group, therefore, strikes a balance between its liquidity requirements and funding costs by capturing stable, reliable and low-cost sources of funding in all of its markets. There are two types of liquidity risk:

• Funding liquidity risk is the risk that funds will not be available when needed to meet our financial commitments.

• Trading liquidity risk is the risk that assets cannot be liquidated quickly enough. This can happen when the liquidity of a market disappears making it difficult, or costly to close, or modify positions.

Interest rate risk and liquidity risk are interconnected given that management of either side of the balance sheet has an impact on interest rate risk exposure.

• Foreign exchange risk is the risk to earnings and capital arising from sudden changes in the relative prices of different currencies. It can arise directly through trading in foreign currencies, making loans in a currency other than the local currency of the obligor, buying foreign-issued securities, or issuing foreign currency-denominated debt as a source of funds. It can also arise when assets and liabilities are denominated in foreign (as well as domestic) currencies. The Group is also exposed to foreign exchange risk arising from adverse changes in currency exchange rates used to translate carrying values and income streams in foreign currencies to the US Dollar, Ecobank’s reporting currency.

• Equity price risk is the risk of loss from adverse changes in the value of equity portfolios due to changes in the level of equity prices.

• Commodity price risk is the risk of loss from adverse changes in the value of commodity portfolios due to changes in the level of commodity prices.

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or external events. It is inherent in every product and service that Ecobank provides. It manifests itself in a variety of ways, including internal fraud, external fraud, transaction processing errors, business interruption, and disputes with employees, clients and vendors. Operational risk also includes legal risk, the risk of loss resulting from the failure to comply with laws, prudent ethical standards and contractual obligations. These events can potentially result in reputational harm to the Group (reputational risk).

Sovereign risk includes political, convertibility and cross-border risks. Such risks can arise from actions of a sovereign state or from unforeseen circumstances such as wars and uprisings. They affect the ability of residents to meet their obligations to a lender who is domiciled in another country. In as much as the West African Economic and Monetary Union (UEMOA) and the Central African Economic and Monetary Union (CEMAC) share a ‘common’ currency with the support of the Banque de France, risk exposures taken by Group subsidiaries registered within either economic union on residents of any country within either economic union are not considered cross-border risk.

Strategic and franchise risks arise whenever the Group launches a new product or a new service, or when it implements a strategy. The risk is that the strategy may fail, causing damage to the Group’s image, which may impair the Group’s ability to generate or retain business. However, the Group always carefully assesses both the impact of external factors on its strategic choices (strategic risk) and the feed-back from clients, shareholders and regulators on its results and capital (franchise risk).

Compliance risk is related to violations of rules and regulations in force in countries where the Group operates. Compliance risk also arises when the rules or regulations applicable to the products and activities of subsidiary banks are ambiguous. Such a risk could result in sanctions, penalties, damages and even the voiding of existing contracts. Legal and regulatory risks are part of compliance risk.

Disclosure risk is the risk of loss due to the presentation of incomplete or false information to the general public, or shareholders, or regulatory bodies. Non-compliance with accounting rules and requirements for rendition of reports to regulatory and supervisory or fiscal authorities could also give rise to strategic and franchise risks.

Non-Executive Directors(4)

Group CEO

Board of Directors

Risk CommitteeAudit and Compliance

Committee

GED Operations and TechnologyDeputy Group CEO and GED

Corporate and Investment BankGroup Executive Director (GED) Finance and Risk

Internal Audit, Internal Control, Treasury, Legal, Operations and

Technology functions

Group Head, Risk Management


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Risk Management

3. Governance StructureThe Board of Directors exercises its oversight of risk management through the Risk Committee and the Audit and Compliance Committee of the Board. The Board articulates the amount of risk that Ecobank is willing to accept in the normal course of business (risk appetite) and sets the overall risk profile for the Group. The Risk Committee proposes risk policies and the overall approach to risk management, and monitors the adequacy of controls, compliance with risk policies and the Group’s risk profile. The Audit and Compliance Committee ensures that the financial activities of the business are subject to independent review and external audit.

Group Risk Management, under the oversight of the Risk Committee and the supervision of the Group Head, Risk Management, develops the risk

management strategy, principles, framework and policies, and implements appropriate risk management processes, methodologies and tools for managing risk. For 2013, the Group Executive Director, Finance and Risk was responsible for all the finance and risk activities, and reporting to the Group Chief Executive Officer.

The Finance and Risk functions were separated in April 2014.

The Group Head, Risk Management is the most senior risk management officer in the organisation, and reports to the Risk Committee of the Board. The Group Head, Risk Management advises and coaches management and business units on risk management; monitors the application and effectiveness of risk management processes; and co-ordinates appropriate and timely delivery of risk management information to the Group Chief Executive Officer, the

Group Executive Committee (GEC), the Risk Committee and the Board. The Group Head, Risk Management provides overall supervision of a Corporate Credit Centre, a Domestic Credit Centre, an Early Warning, Remedial and Recovery Centre (EWRR), an Enterprise Risk Management (ERM) group, a Group Credit Administration unit and a Group Insurance unit. ERM is comprised of five departments in charge of Portfolio and Capital Management, Operational Risk Management, Market Risk Management, Risk Analytics and Environmental and Sustainability.

Within each subsidiary bank, Group Risk Management is represented by a risk management department, which is completely independent from all the operating and risk-taking units. The risk management department is managed by a Country Risk Manager, who reports to the Group Head, Risk Management.

Group Executive Director Finance and Risk

Group Head, Finance Group Head, Risk Management

Corporate Credit Centre

Domestic Credit Centre

Group Insurance

Early Warning, Remedial and

Recovery

Enterprise Risk Management

Cluster Risk Heads

Group Credit Administration

Reporting structure of Ecobank Group Risk

Risk management governance structure*

* Finance and Risk functions were separated in April 2014.


105

Within each business cluster, Group Risk Management is represented by a Cluster Risk Manager, who reports administratively to a Cluster Business Head and functionally to the Group Head, Risk Management.

The risk management approval process is centralised and fully independent of the businesses. Accordingly, all credit approval requests require the no objection of Group Risk Management before submission to the relevant board of directors for approval.

• Credits to Governments, Financial Institutions and Corporate businesses

• Subsidiary banks initiate and approve credits within their approved limits.

• Group Risk Management through its Corporate Credit Centre (CCC) reviews all credits initiated by the subsidiaries for consistency with Group policies and procedures and provides its no objection.

• Upon receipt of the no objection from CCC and other required Approvers depending on the facility limits and nature of the transaction, the initiating subsidiary submits the request to the local board for approval for transactions above their approved limits.

• Credit to Individuals and SMEs

• Credit transactions are approved under the terms and conditions of credit programs previously approved by Group Risk Management through its Domestic Credit Centre (DCC).

• DCC reviews all credits initiated by the subsidiaries for consistency with Group policies and procedures and provides its no objection.

• Upon receipt of no objection from DCC, the initiating subsidiary submits the request to the local board for approval.

The Group Asset and Liability Committee (GALCO), a sub-committee of the Group Executive Committee (GEC) is responsible for the supervision and management of market risk, mainly interest rate and liquidity risks. Its members are: Group Chief Executive Officer, Deputy GCEO and GED Corporate and Investment Bank, Deputy GCEO and Group Chief Operating Officer, GED Finance and Risk, GED Domestic Bank, GED Operations and Technology, Group Head Risk Management, Group Head, Internal Audit, Group Market Risk Manager, Group Head, Strategy Management, Group General Council, Group Head Compliance and Group Treasurer. The committee meets quarterly and on a more frequent basis when deemed

necessary to review the structure and pricing of Group assets and liabilities, to agree on the optimum maturity profile and mix of incremental assets and liabilities, to evaluate inherent market risks in new products and to articulate the Group’s interest rate view.

At the subsidiary bank level, the responsibility of asset and liability management lies with the Treasury Department. Specifically, the Asset and Liability Management (ALM) desk of the Treasury Unit manages the balance sheet. The results of balance sheet analysis along with appropriate recommendations are reviewed in monthly ALCO meetings where important decisions are made to minimise risk and maximise returns. Local ALCO membership includes the Country Managing Director, the Country Treasurer, the Country Risk Manager, the head of Internal Audit, the head of Finance and the head of Legal.

Corporate Credit Centre

Enterprise Risk Management

Domestic Credit Centre

Group Credit Administration

Early Warning, Remedial and

Recovery

Cluster and Country Risk Heads

Corporate Credit Risk Managers

Portfolio and Capital Management

OperationalRisk Management

Market RiskRisk Management Risk Analytics

Environmental and Sustainability

Domestic Credit Risk Managers

EWRR Managers

Group Insurance

Group Head,Risk Management

Organogram of Group Risk


106

Risk Management

4. Risk Management Approach4.1 Credit Risk4.1.1 Organisation

The Group manages credit risk by means of a governance structure with clearly defined responsibilities and credit approval authority.

The Board of Directors of ETI is the highest credit approval authority at Ecobank. It sets credit policies and ensures that all officers involved in the extension of credit across the Group strictly adhere to these policies.

From time to time, the Board delegates its credit approval authority to individual credit officers based on their credit skills, experience and independence of judgment. While credit approval limits are delegated to individual credit officers, no credit officer approves credits alone. All extensions of credit are approved by at least three credit officers, one of whom must have an individual credit limit equal to or greater than the amount of credit extension under consideration. Also, because of the separation of duties between origination and risk management, at least one of the three credit officers must come from the Risk Management department. Furthermore, all credits require the no objection of Group Credit risk managers at the Group level (as described in section 3 above).

Portfolio distribution by facility risk rating(Percent of total portfolio)

The Board reviews and approves all credits in excess of the policy limit, defined as the maximum credit exposure to any borrower or group of related borrowers, currently set at 7.5% of the group consolidated shareholders’ funds. It has, however, delegated this function to the Risk Committee, which has the authority to approve all such credits when the Board is not sitting. The Risk Committee comprises the Group Chief Executive Officer, two executive directors including the Group Executive Director Finance & Risk and four non-executive directors. One of the non-executive directors is the Committee Chairman. The Group Head, Risk Management participates in Risk Committee meetings in a consultative and record keeping capacity.

The primary responsibility for managing credit risk, however, lies with the Group Head, Risk Management. He ensures that Ecobank has resources, expertise, and controls in place for efficient and effective management of credit risk across the Group. The Group Head, Risk Management is expected to review all unusual risks as well as extensions of credit which exceed the credit authority granted to the Corporate Credit Centre and the Domestic Credit Centre and issue a no objection, where applicable. At the subsidiary bank level, the above functions are fulfilled by a specially designated country risk manager.

Ecobank subsidiaries receive delegations of credit approval authority from their respective boards of directors, in line with the general framework set up by the Group Chief Executive Officer, the Group Executive Director Finance and Risk and the Group Head, Risk Management.

10987654321

Dec 2013

469

2

1112

44

1013

5250

79

3301 00

Dec 2012


107

4.1.2 Risk Identification

The Group is involved in a number of business activities. These activities can be divided roughly into three segments: Domestic Bank, Corporate and Investment Bank and support units designed to improve operating efficiencies. Each of these activities entails various risks, which fall into the main categories of the Group risk management framework; these are credit, market, operational and liquidity risks.

Ecobank is exposed to credit risk through direct lending, issuance of financial and performance guarantees and capital market activities. Credit risk analysts work in partnership with the sales function in identifying risk exposures within each subsidiary bank.

Credit decisions are based on an in-depth review of obligor creditworthiness. The Group utilises an internal risk rating system that is based on a scale of 1 to 10 to rate commercial and industrial obligors, financial institutions, sovereign governments, as well as small and medium scale enterprises. A rating of ‘1’ identifies obligors of the highest quality, comparable to AAA on the scale of Standard and Poor’s. A risk rating of ‘10’ is assigned to obligors of lowest quality or highest risk, identical to D on the scale of Standard and Poor’s. Obligors risk rated 1 to 6 are considered as ‘normal borrowers’; those risk rated 7 and 8 are considered as ‘borrowers requiring caution’ while those risk rated 9 are ‘substandard borrowers’, and those risk rated 10, ‘borrowers at risk of permanent default’.

Risk ratings provide an objective means to compare obligors and facilities within a given portfolio, and to measure and manage credit risk across different geographies, industry segments, and business segments and other relevant risk factors using the same standards.Accordingly, the level of credit authority required to approve any credit transaction is also based on the risk rating of obligors and facilities involved.

Risk ratings are assigned to obligors based on the probability that the obligor will default, and to facilities based on the loss that is expected in the event of such a default. An obligor risk rating is defined as the risk of default on long-term unsecured debt in local currency over a twelve month period. It is assigned and approved when a credit facility is first extended and is reviewed annually and upon the occurrence of a significant adverse event. The risk of default is derived from an analysis of the obligor’s historical and projected financial statements and such qualitative criteria as industry issues, the obligor position in the market, the quality of the board and management and access to financing. The process for determining the obligor risk rating is carried out through automated decision-making tools.

With regard to consumer lending, the Group utilises a credit program approach whereby credit is extended on the basis of product-specific risk parameters, using manual scoring systems. The products involved are secured and of a self-liquidating nature.

A facility risk rating describes the risk associated with a particular facility of a given obligor. It is usually equivalent to the obligor risk rating; however, a different facility risk rating may be assigned by adjusting the obligor risk rating to take into account such factors as the facility structure or collateral.

As at 31 December 2013, the credit portfolio distribution by facility risk rating remained fairly stable with the normal credit risk category represented 87.6% of the portfolio compared to 89.5% as at 31 December 2012.

Portfolio breakdown by risk category(Percent of total portfolio)

Risk of Permanent Default (10)Substandard Risk (9)Risk Under Watch (7-8)Normal Risk (1-6)

9087

1012

01 00


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Risk Management

4.1.3 Risk Measurement

Credit risk measurement takes into account the actual risk exposure (‘Exposure at Default’ or EAD), the probability of default (PD), and the percentage of loss in the event of default (also called ‘loss given default’ or LGD).

To measure credit risk, the Group estimates the level of the statistical expected economic loss in the event of default. This figure measures the net present value of credit costs that the Group would face from the time of default until the end of the recovery process. Credit costs include all provisions taken against bad debts, write-offs, fully reserved interest earned not collected and possibly attorney fees incurred in the process of enforcing the Group’s claims in court. Under the current methodology, the Group proceeds by assigning risk ratings to credit facilities of all the obligors in the credit portfolio. Then, the amount of credit exposure with a given facility risk rating is multiplied by the corresponding loss norms to arrive at a statistical measure of loss in the event of default on the exposure involved. The loss norm is the probability that an obligor will default within the next twelve months multiplied by the economic loss expected in the event of such a default. The weighted average loss norm provides a measure of the portfolio risk profile and portfolio risk rating. The results are compared with statistical loss measurement under the Group economic capital model.

The portfolio risk rating remained stable at 6, as of December 2013, and the average probability of default for the portfolio increased from 6.1% in December 2012 to 6.7% in December 2013; this deterioration of the average probability of default was triggered by the increase in exposure to obligors with risk rating in the 7 to 9 bucket. Credit portfolio

Risk Assets (US$ millions) 2013 2012

Loans and advances to customers 11,422 9,441

Treasury bills and government bonds 4,048 3,720

Loans and advances to banks and financial institutions 1,312 2,175

Deposits with central banks 2,167 1,432

Other on-balance sheet assets 224 231

Sub-Total Direct Exposures 19,172 16,999

Import letters of credit 1,762 1,495

Other guarantees and undertakings 3,088 2,068

Sub-Total Contingent Exposures 4,850 3,563 Total Portfolio 24,022 20,562

4.1.4 Risk Monitoring and Control

Credit risk exposures of subsidiaries are monitored at both the subsidiary level and the Group Risk Management level. At the subsidiary level, credit administration units monitor the performance of individual exposures on a daily basis, ensure regularity of credit approvals and line utilisations, authorise disbursements of credit facilities when approval conditions are met and perform periodical reviews of collateral. These units are also responsible for the preparation of internal risk management reports for country management and Group Risk Management. Risk control units within internal control department provide a second line of defence as they ensure that controls are in place and are effective. Remedial management units identify early warning signals of portfolio quality deterioration, and monitor past due exposures with a view to maximizing collections of delinquent loans and recoveries of loans previously reserved or written-off.

At the Group level, the portfolio management unit monitors risks taken by subsidiaries on individual obligors and economic groupings through a review of monthly reports submitted by country risk management units of subsidiary banks. These reports include early warning systems designed to monitor troubled exposures and credit process problems. They also include detailed credit exposure data that enable the Group to monitor the risk profile in terms of obligors, business segments, industry segments, geography, currency, and asset maturity at country and Group level. Group Risk Management also determines the level

of the statistical unexpected and expected economic loss, and the overall direction of the portfolio risk profile.

The portfolio management unit ensures that the Group is not exposed to excessive concentration of credit risk on any one obligor, asset class, industry segment or geography. In particular, the unit ensures that the Group achieves its strategic diversification objectives within the prescribed time horizon.

4.1.4.1 Credit Risk PortfolioIn accordance with the Group Credit Policy, risk concentration limits are in place for managing the credit portfolio and monitoring compliance with the Group’s risk appetite. These limits are regularly reviewed by the Risk Committee to take into account changes in our operating environment, or in our business segments.

The Group has developed a framework for setting concentration limits. Concentration risk is monitored by addressing credit quality deterioration and portfolio diversification. With respect to portfolio quality, the probability of default (PD) of each risk factor (geography, industry segment, business sector, product, etc.) is the main driver for limit setting because any increase in the PD (loss norms) is an indication of portfolio quality deterioration; conversely, any decrease is indicative of an improvement in portfolio quality. With regard to portfolio diversification, concentration risk is measured by the level of statistical unexpected loss associated with each risk factor. Whereas the expected loss has a direct impact on Group profitability, unexpected loss affects Group capital, and consequently future


109

performance. With the unexpected loss concept, Group Risk Management has been able to cap risk factors, which otherwise would have widened the gap between regulatory capital and economic capital, and thus, improve the credit risk profile.

The credit portfolio, net of provisions, amounted to US$24.02 billion as of 31 December, 2013 (US$20.56 billion as of 31 December, 2012). The 17% increase was driven mainly by Loans and Advances to customers, which increased by 21% from December 2012 to December 2013. The portfolio consisted of loans and advances to customers, securities, deposits with central banks, loans, advances and placements with banks and financial institutions, as well as off-balance sheets exposures in the form of financial and performance guarantees as shown in the table opposite.

4.1.4.2 Obligor ConcentrationA large exposure is defined as any individual exposure that represents at least 10% of the total portfolio, or at least 10% of the Group capital at the obligor level. As at December, 2013, there was no exposure equal to or greater than 10% of total portfolio. However, three non-bank obligors had individual outstanding balances in excess of 10% of Group capital. The twenty largest non-bank exposures represented 129% of the Group capital (December 2012: 107%) and 13% of the total non-bank credit exposures (December 2012: 14%). These exposures came mainly from four industry sectors (Oil and Gas, Manufacturing, Telecommunications and Services) and were all performing. Eighty-two percent (82%) of the top twenty exposures were ‘normal credit risk’ quality, i.e. with ratings ranging from 1 to 6 and 18% were classified as ‘exposures requiring caution’ (rating 7 and 8).

Top 20 exposures per industry sector

Top 20 exposures per risk category

Electricity 3%

Manufacturing 18%

Oil and gas 45%

Services 13%

Telecommunications 18%

Trade, service 3%and manufacturing

Normal borrowers 82%

Borrowers 18%requiring caution


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Risk Management

4.1.4.3 Industry DiversificationThe portfolio breakdown by industry is consistent with a well-diversified credit portfolio, notwithstanding the highlighted concentrations in the Government sector (mainly treasury bills held for liquidity management purposes), the Services sector, the oil and gas sector and the Wholesale and Retail trade sector. These four industry sectors accounted for 61% of the total credit portfolio (December 2012: 62%).

4.1.4.4 Geographic DiversificationThe Group has banking operations in 35 countries and benefits substantially from the geographic diversification of its credit portfolio. Thirty-three percent of the Group credit portfolio was granted to obligors in Nigeria (December 2012: 36%). Apart from Nigeria, no other country represented more than 10% of the portfolio.

At the regional level, Nigeria was the highest (33%) followed by the Francophone West Africa Region (31%), the Rest of West Africa excluding Nigeria (14%), Central Africa (8%), OECD countries (6%), EAC (4%), SADC (3%) and others countries (1%).

2012 exposures by region of residence percent of total portfolio

2013 exposures by region of residence percent of total portfolio

Central Africa 8%

Nigeria 33%



East Africa 4%

Southern Africa 3%

OECD countries 6%

Others 1%

Central Africa 8%

Nigeria 33%



East Africa 4%

Southern Africa 3%

OECD countries 6%

Others 1%

Credit portfolio per currency

XOF/XAF 34%

NGN 24%

USD 27%

EUR 5%

GHS 4%

Others 6%

Diversification by industry(Percent of total portfolio)

Dec 2013 Dec 2012

19

14

18

23Government

Services

Oil & Gas

Whol. & Retail T.

Commercial Bank

Manufacturing

Central Bank

Construction

Telecom.

All Others

Coffee & Cocoa T.

Cotton

1812

1010

86

88

79

67

45

11

11

22


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4.1.4.5 Asset Quality

4.1.4.5.1 Gross Loans and Advances to CustomersGross loans and advances to customers rose by 22% in 2013 to US$12.0 billion. The growth was mainly driven by the Corporate Bank segment (+34%) while the Domestic Bank segment increased by 11%.

UEMOA contributed 37% of the gross loan growth in 2013, followed by NIGERIA (28%), WAMZ (17%), CEMAC (14%), EAC (4%) and SADC (2%).

4.1.4.5 Currency BreakdownThe portfolio was mainly denominated in 3 major currencies, namely the CFA Franc (34%), the US Dollar (27%) and the Nigeria Naira (24%). The three currencies accounted for 85% of the lending portfolio.

Geographical contribution to the increase in loans to customers (US$m)

Loans: product concentration (2012)(%)

Overdrafts 24%

Credit Cards 0%

Term Loans 73%

Mortgage Loans 1%

Others 2%

NigeriaUEMOA WAMZ CEMAC EAC SADC Others 2013Gross Loans

2012Gross Loans

7929,847

600 364 304 95 39 -32 12,010

Gross loans by business segment(US$m)

5,625

4,7726,385

9,84712,010

20122013

5,075

Domestic Bank Corporate Bank

Loans: product concentration (2013)(%)

Overdrafts 22%

Credit Cards 0%

Term Loans 76%

Mortgage Loans 2%

Others 0%


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Risk Management

At the product level, loan growth was driven by term loans, which represented 76% of total loans (2012: 73%).

4.1.4.5.2 Non-Performing LoansNon-performing loans (NPLs) increased by 36% (+$197 million) from $548 million in December 2012 to US$745 million in December 2013.

At the regional level, Nigeria remained the Cluster with the highest NPLs at 48% (24% in December 2012) of total NPLs, followed by UEMOA which accounted for 22% (25% in December 2012) of total NPLs.

Due to the higher increase in total Non-Performing Loans (+36%) compared to Total Gross Loans and Advances to customers (+22%), the ratio of non-performing loans to gross loans and advances (‘NPL ratio’) increased from 5.6% as of December 2012 to 6.2% as of December 2013.

The breakdown of non-performing loans by business segment highlights a higher concentration of non-performing loans in the Domestic Bank (90%) relative to the Corporate Bank (10%). Within the Domestic

Non-performing loans by cluster

Non-performing loans by business segment

Central Africa 7%

Nigeria 48%



East Africa 5%

Southern Africa 2%

Others 5%

Domestic 90%

Corporate 10%

NPL ratio trend (%)(US$m)

NPL coverage and net open exposure(US$m)

Bank, non-performing loans are attributed to local corporate customers, SMEs and consumers who are more vulnerable to economic cycles.

Consistent with additional loan loss provisions established during the year, the NPL provisioning rate (‘NPL coverage’) improved from 74% in 2012 to 79% in 2013. However, the unreserved portion of the non-performing loans (i.e. the ‘open credit exposure ratio’) increased to 7.3% of the total equity (December 2012: 6.5%).

The cost of credit (i.e. impairment loss on loans) for the year increased to US$363 million compared to US$148 million in 2012. Ecobank Nigeria recorded a US$258 million cost of credit partly as a result of the one-off charge for impairment losses of $165 million relating to certain legacy assets in Nigeria.

As a ratio of average gross loans and advances to customers, the cost of credit also increased from 167 basis points in 2012 to 331 basis points in 2013.

Dec 2013 Dec 2012

Open Credit Exposure (%)Coverage Ratio (%)

6.57.3

74.279.0

Dec 2012Dec 2013

5.6

6.2

Dec 2013 Dec 2012


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4.1.5 Portfolio Stress Testing

Stress tests are an important means of analysing our risk profile since they give management a better understanding of how the Group portfolio is affected by macroeconomic changes, including the effects of negative events on Group capital. The tests support compliance with regulatory capital requirement and are an important tool in capital planning. When the Group uses stress tests in capital planning, stress is applied to risks, income and costs. Stressing income affects the Group capital, while stressing risk exposures affects the capital need. This means that the stress tests quantify the effect of macroeconomic changes on the capital buffer.

For credit risk, the Group uses statistical models that transform macroeconomic scenarios into loss levels. The models are used to stress the probability of default (PD), causing higher loan impairment charges and a greater need for capital. The exposure is stressed further by subjecting collateral to stress, that is, a reduction in the collateral value.

For other risk types, such as market risk, the Group uses scenario-specific variables on current market positions, and this can result in a decline in market values. The changes in market value are considered as losses that reduce Group earnings and capital.

The outcomes of stress test scenarios are reviewed on a consolidated basis across all risk types and compared with the Group risk appetite. They are reviewed by the management and the Risk Committee to ensure that the Group is prepared for worst case scenarios, and that appropriate decisions are taken in the areas of Group risk appetite and capital management.

Several stress testing exercises were undertaken during 2013 to assess the potential impact of various crisis (including political) on our businesses. The results showed that the Group had adequate capital in all scenarios.

4.1.6 Risk Reporting

Group Risk Management submits a monthly Dashboard to the Group Chief Executive Officer and Group Executive Committee (GEC). The Risk Committee reviews Risk Management’s quarterly reports to ensure that the portfolio performs in accordance with approved policies, limits and risk appetite. The Risk Committee refers decisions to the Board for final approval.

Ecobank maintains an Operational Risk Management Framework with a Governance Structure to support its core operational risk management activities of anticipation, mitigation and recovery. To ensure effective management of operational risk across Ecobank, the Governance Structure presents three lines of defence.

4.2 Market RiskMarket risk comprises both price risk and liquidity risk. Price risk measures the impact of changes in interest rates, foreign exchange rates, equity and commodity prices and their implied volatilities on earnings. Group trading and non-trading books are exposed to price risk. Liquidity risk on the other hand refers to the risk that an organisation is unable or is perceived to be unable to meet its financial commitments.

The objective of Ecobank market risk management policy framework is to ensure that all significant market risks are identified, measured, and managed in a consistent and effective manner across the Group in order to stabilise earnings and capital under a broad range of market conditions, and to ensure that the Group possesses adequate sources of liquidity.

4.2.1 OrganisationGroup market risk management oversees market risks related to all assets, liabilities and off-balance sheet items. The Risk Committee sets the overall risk policies for Group market risk exposures, including risk limits. Group Internal Audit provides timely and objective assurance regarding the continuing appropriateness of, and the adequacy of compliance with the policy framework.

The Group Market Risk Manager (GMRM) plays a coordination, aggregation, facilitation and enabling function. GMRM drafts market risk policies, defines market risk management standards, develops and distributes tools, techniques, and is responsible for training and promoting common risk language across the Group. GMRM also publicises knowledge on market risk to create awareness and understanding at all levels of employees. GMRM approves balance sheet limits, price risk limits and liquidity contingency plans for banking subsidiaries. In addition, GMRM constantly monitors market risk exposures and ensures that they are maintained within prudential levels at all times. GMRM also ensures that market risk management processes (including people, systems, operations, limits, and controls) satisfy Group policies.

The Group Treasurer is responsible for market risk taking activities and manages market risks within the limits approved by the Board. Group Treasurer reports market risk positions to GMRM and Group Executive Committee on a monthly basis and to the Board quarterly. He prepares an annual liquidity contingency and capital plan for the Group and provides the first-level approval for liquidity contingency and capital plans of subsidiary banks. Country treasurers report directly to Group Treasurer.

The Group Asset and Liability Committee (GALCO) is responsible for the supervision and management of market risk at the Group level. GALCO members meet quarterly, and more often if warranted by market conditions to review the Group’s liquidity and funding needs, the structure and pricing of the Group’s assets and liabilities, and market risk involved in new products. They articulate the Group’s interest rate view and decide on the required maturity profile and mix of incremental assets and liabilities. ALCO committees of subsidiary banks fulfil these functions monthly at the country level.

The staff and management working within or managing operational business units and their board of directors are responsible for the day-to-day management and control of market risk within their businesses.


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Risk Management

4.2.2 Risk Identification

Consistent with an independent and centralised risk management function, Ecobank measures, monitors, manages, and reports its exposure to market risk on a daily basis. It also conducts intraday spot checks of market risks in individual subsidiaries by calculating risk exposures with internally developed systems that cover all of its positions. In addition, conventional risk measures and mathematical and statistical measures, such as Value at Risk, are utilised to calculate market risk exposures as wells as economic and regulatory capital.

At the subsidiary level, trading units maintain blotters for recording movements and balance sheet positions of traded instruments, which include daily monitoring of profit and loss balances of trading and non-trading positions. Internal controllers and market risk managers monitor daily trading activities to ensure that risk exposures taken are within the approved price risk limits and the overall risk tolerance levels set by the Board. ALCO members, treasurers and market risk managers monitor market risk factors that affect the value of trading and non-trading positions as well as income streams on non-trading portfolios on a daily basis. They also track liquidity indicators to ensure that subsidiaries meet their financial obligations at all times.

4.2.3 Risk Measurement

4.2.3.1 Banking BookThe bank’s traditional banking loan and deposit products are non-trading positions and are generally reported at amortized cost. However, economic values of these positions may vary as a result of changes in market conditions, primarily changes in the levels of interest rates and foreign exchange rate given that the Ecobank group has operations in 35 countries in Africa with exposure to 17 different currencies. The risk of adverse changes in the economic value of our non-trading positions is managed through the bank’s Asset Liability Management activities.

The Group currently uses repricing maturity gap analysis to measure exposure to interest rate risk in its non-trading book. Through this analysis, subsidiary banks compare the values of interest rate sensitive assets and interest rate sensitive liabilities that mature or re-price at various time periods in the future. In performing this analysis, the Group may make judgmental assumptions about the behaviour of assets and liabilities which do not have specific contractual maturity or re-pricing dates.

An interest rate sensitive gap is positive or a gap profile is said to be asset sensitive when the amount of interest rate sensitive assets exceeds that of interest rate sensitive liabilities maturing or re-pricing within a specified time period. It is negative (liability sensitive) when the amount of interest rate sensitive liabilities exceeds that of interest rate sensitive assets maturing or re-pricing within a specified period.

In general, an asset sensitive institution may expect net interest income to increase with rising market interest rates and decline with falling market interest rates. Conversely, an institution with a negative gap can expect net income to increase when market interest rates are falling and to decline when interest rates are increasing.

4.2.3.2 Trading BookAt Ecobank, trading market risk generally emanates from the Group’s market making activities where the Group acts as principal with the market. It therefore arises from open positions in interest rate and foreign currency positions, and it is generally affected by changes in the level and volatilities of yields and foreign exchange rates.

Tools used to manage trading risk exposures include the following:

• Risk limits, driven by the notional size of net open positions (NOPs) by currency and subsidiary

• Management Action Triggers (MAT)

• Stop Loss Limits

• Value at Risk

4.2.3.3 Liquidity RiskLiquidity risk is currently managed using a balance sheet approach that estimates all sources and uses of liquidity including loans, investments, deposits and borrowings, as well as contingent off-balance sheet exposures. Respective subsidiary treasurers are generally responsible for formulating the subsidiary liquidity and contingency planning strategies and identifying, monitoring and reporting on all liquidity risks. The main tools used for liquidity risk measurement are the contractual maturity gap, ratio analysis and stress testing.

Contractual liquidity maturity gap(US$m)

1-5 years3-12 months)1-3 monthsUp to 1 month Over 5 years

-8,012

-385

1,8711,068

2,209

-4,155

3,551 3,003 2,644

1,903

Dec 2013 Dec 2012


115

As shown in the graph opposite, the Group is exposed to liquidity risk as of 31 December 2013 for maturities of up to one month; this is due mainly to the overnight contractual maturity of current and savings deposits which accounted for nearly 70% of total deposits and are included in this maturity bucket. However, the risk is mitigated by the stable nature of these deposits from a behavioural perspective and the Group’s ability to pledge its robust investments portfolio for cash at central banks.

The Group liquidity position slightly deteriorated from previous year; the liquidity ratio (LR) decreased from 32% to 26% while the loan-to-deposit ratio (LDR) increased from 67% in 2012 to 73% as at the end of 2013. The deterioration in both ratios was driven primarily by the increase in the Cash Reserve Requirement (CRR) for Public Sector Deposits from 12% to 50% by the Central Bank of Nigeria and a 14% increase in total assets during the year.

In line with policy, the Group conducts stress tests to measure its immediate liquidity risk and to ensure that it has enough time to respond to potential crises. The stress test, which is conducted monthly, covers a time horizon of up to six months. The test estimates liquidity risk in various scenarios, including three standard scenarios: a scenario specific to the Group, a general market crisis and a combination of the two.

The analyses are based on the assumption that the Group does not reduce its lending activities. This means that existing lending activities are maintained and require funding. Most of the Group’s unencumbered treasury bills and bonds holding can be used as collateral for loan facilities with central banks, and are thus, considered liquid. Scenario-specific haircuts are used on the treasury bills and bonds portfolio. Potential liquidity outflows from unutilised, but irrevocable loan commitments are also factored in.

The degree of possible refinancing of funding sources varies depending on the scenario in question as wells as on the specific funding source. To analyse the stability of funding, the Group breaks down deposits into personal/corporate, core/non-core and term/non-maturing as well as geographically according to the Group’s position in each market.

The Group monitors the diversification of funding sources by product, currency, maturity and counterparty to ensure that its funding base provides the best possible protection if the markets come under pressure.

Although the level of liquidity slightly deteriorated compared to 2012, the Group was able to largely remain within its internal stress test targets throughout 2013.

Key liquidity indicators

Loans-to-DepositsRatio (%)

NIB/Total Loans (%)Demand Deposits/Total Deposits (%)

Liquid Assets/Total Assets (%)

5950

736765

86

3226

Dec 2013 Dec 2012


116

Risk Management

4.2.3.4 Interest Rate RiskAs of 31 December 2013, the Group’s balance sheet showed a re-pricing profile that was less asset sensitive compared to the previous year. There was a significant decline in the re-pricing mismatch in the up to 1 month bucket and an increase in the re-pricing mismatch in the 1 to 5 years bucket. Overall, the Bank is liability sensitive up to the 1-month bucket, and asset sensitive through the rest of the time bands.

Based on the re-pricing profile as of 31 December 2013, it is estimated that a 200 basis points decrease (increase) in rates across the maturity buckets is expected to increase (reduce) one-year earnings by approximately US$39 million (US$22 million in 2012). This is a reflection of the re-pricing profile (liability sensitive on the up to 1 month bucket and asset sensitive on the rest of the tenors) because under rising

(falling) interest rate environments, the expected negative (positive) impact on net interest income as the negative gap exposure in the up to 1-month bucket re-prices more than offsets the positive (negative) impact on net interest income accruing from the longer buckets which are asset sensitive.

In order to estimate the impact of varying interest rates on the economic value of Ecobank’s equity, duration based weighting factors (based on an assumption of 200 basis points across the time frame) recommended by the Bank for International Settlements (BIS) were applied to exposures in different maturity buckets, and the results were expressed as a percentage of the Group capital. The results for the position as of 31 December 2013 are shown in the table below.

The aggregate interest rate risk ratio increased from 11.02% in December 2012 to 24.58% of capital as of December 2013. Thus, a 200 basis points increase in interest rates, is expected to reduce economic value by 24.58% (11.02% in 2012) Conversely, a 200 basis points reduction in rates is anticipated to positively impact the economic value of Group equity by the same magnitude. The deterioration was largely the result of a 21% growth in loans and advances to customers, an increase in securities with over 5 year tenor held in the available for sale portfolio and the shortening duration of long term borrowed funds. All the three developments resulted in an extension of the duration gap. The exposures nevertheless remain within Group approved limits.

Interest rate repricing profile(US$ millions)

Interest rate risk ratio

(US$ millions except ratios)Up to 1 month

1-3 months

3-12 months

1 - 5 years

Over 5 years Total

Gap -1,397 1,479 1,856 2,446 2,074

Weighting Factor (%) 0.08 0.32 1.08 5.28 17.94

Adjusted Gap -1 5 20 129 372 525

Interest Rate Risk Ratio (%) -0.05 0.22 0.93 6.05 17.43 24.58

1-5 years3-12 months1-3 monthsUp to 1 month Over 5 years

-1,397

615

1,479920

1,856

1,017

2,446

3,766

2,074

174

Dec 2013 Dec 2012


117

4.2.3.5 Foreign Exchange RiskForeign exchange risk is the risk of losses on foreign currency positions caused by changes in exchange rates.

The Group is exposed to foreign exchange rate fluctuations in 17 currencies. The Nigeria Naira and the CFA Franc continued to be the currencies to which the Group has significant exposure; accounting for 24% and 34% of the Group’s total assets respectively as of the end of the year. It is important to note that the CFA Franc is a common currency for 14 out of the 35 countries in which the Group operates, and it is pegged to the Euro under financial agreements between the French Treasury and countries in the Francophone West Africa and Central Africa regions.

As of 31 December 2013 the Group had a net on-balance sheet long open position in EUR of US$367 million (net long position of US$316 million in December 2012), a net short open position in USD of US$82 million (net short position of US$147 million in 2012) and a net long open position in the CFA of US$179 million (US$163 million short position in December 2012) as shown in the figure below.

Net foreign exchange position(US$ millions)

2013 value at risk (US$ millions)

2013

Risk category Average VaR Minimum VaR Maximum VaR Year End

Interest rate risk 2.06 0.17 3.92 2.3

Foreign exchange risk 5.28 0.84 9.16 4.0

Total VaR 7.34 1.01 13.08 6.30

A change in monitoring policy stance of the United States Federal Reserve had significant implications on some of the currencies in which the Group had major exposure, including the Nigeria Naira (NGN) and the Ghana Cedi (GHS); the NGN and the GHS came under severe pressure as the US Federal Reserve announced plans to moderate its bond purchase program. The year-on-year change from a net long to a net short USD position and the increase in the net long EUR position therefore were the result of efforts by some subsidiaries to reduce their vulnerability to their depreciating local currencies in line with a Group directive.

4.2.3.6 Value at RiskThe Group measures and manages price risks in its foreign exchange and fixed income trading portfolios on the basis of Value at Risk (VaR) calculations and stress testing. VaR represents the potential loss in the market value of a position or portfolio at a given confidence interval level and over a pre-defined time horizon, and it is used for risk monitoring and economic capital assessment. The table below shows basic statistics of the 10-day VaR for the foreign exchange and fixed income trading positions for 2013. The average VaR for 2013 was US$7.3 million (2012: US$7.4 million), of which US$5.28 million is attributable to foreign exchange risk and US$2.06 million to interest rate risk.

CFAEuroDollar

-82

367

-147

316

179

-163

Dec 2013 Dec 2012


118

Risk Management

4.3 Operational RiskEcobank Group defines operational risk as the risk of loss arising from failed or inadequate internal control processes, systems or people or from events external to the group. Operational risks include fraud, legal, regulatory, compliance and execution and business practices but exclude strategic and reputational risk. Other risks like reputational, credit and market risks are seen as potential consequences of operational risk events. Legal risk is the risk of loss resulting from the failure to comply with laws, prudent ethical standards and contractual obligations. Legal risk arises also when contracts executed with counterparties are not legally enforceable or documented correctly. The Group has established a common risk language to provide a consistent framework for the definition and categorization of risk.

General and specific trainings through workshops, newsletters and mandatory operational risk awareness are conducted throughout the Group. Group Operational Risk Management (GORM) acts as the coordinating point where all significant operational risks are identified, measured, assessed, prioritised, managed, monitored, reported and treated in a consistent and effective manner across the Group. GORM also ensures that existing policies and procedures adequately address risks emerging from changing operating environments. All subsidiaries have adopted the operational risk policies and procedures manual (ORPPM) approved by the Board.

4.3.1 Operational Risk Policy

The Group operational risk policy covers the following activities:

• Identifying, monitoring and managing current and potential operational risk exposures;

• Managing ‘critical risks’ identified in the course of business unit reviews;

• Following up on reports from Internal Audit and regulatory authorities and informing the Risk Committee of issues that involve Group operational risks;

• Preparing management information on issues such as IT security, physical security, business continuity and compliance with legislation in these areas.

The Group enforces other policies, including policies on security, fraud, control and compliance that also support operational risk management.

4.3.2 Organisation

4.3.2.1 Board Approval/Board ReportingPursuant to the Group Operational Risk Policies and Procedures Manual, ETI’s Board of Directors must be advised of Ecobank’s Operational Risk Management Framework, made aware of the major aspects of Ecobank’s Operational Risks, and receive periodic reporting of Ecobank’s Operational Risk exposures, Loss experience and other relevant Operational Risk information.

The Group operates an operational risk structure that ensures that the Board of Directors and the Group Chief Executive Officer have direct responsibility for operational risk throughout the Group. The Board acts through the Risk Committee, whose decisions are implemented by a centralised and independent Group Risk Management.

4.3.2.2 Operational Risk Governance StructureEcobank maintains an Operational Risk Management Framework with a Governance Structure to support its core operational risk management activities of anticipation, mitigation and recovery. To ensure effective management of operational risk across Ecobank, the Governance Structure presents three lines of defence.

First Line of Defence – The business: Owns its risks, including its operational risk, and is responsible for its management.

Second Line of Defence: Ecobank’s Control Functions make up the second line of defence to enhance the effectiveness of controls and manage operational risks across products and business lines. The Second Line of Defence includes Operational Risk Management, Compliance, Internal Control, Finance, Human Resources and Legal.Legal and Compliance additionally advise on legal and regulatory issues that affect our risk and control environment and provide certain information related to Emerging Risks.

The Operational Risk Management team oversees the management of operational risk framework for Ecobank. Group Operational Risk Management works proactively with Businesses and Functions at the Group and subsidiary levels to embed a strong operational risk management culture and framework across Ecobank through effective identification, anticipation and mitigation of risks that could impact business objectives; and in minimizing operational risk events and losses.

Third Line of Defence: Internal Audit recommends enhancements on an ongoing basis and provides independent assessment and evaluation of the control environment.

1st Line

2nd Line

3rd LineInternal

audit

Control functions

Business and functional units / departments

Operational risk governance structure: the three lines of defence


119

Events

• Capture

• Casual Analysis

• Back-testing

The Group Operational Risk Management (GORM) is a central function at the Group office, supported by operational risk officers in all the affiliates and subsidiaries. GORM drafts operational risk policies, defines operational risk management standards, and develops tools, techniques, analysis, reporting, communication and training. It partners with the Business Continuity Management (BCM) in preparing, testing and reviewing the business continuity and disaster recovery plans. Business Continuity is coordinated from the Business Continuity Management (BCM) program office. The Group Operational Risk Manager plays coordination, aggregation, facilitation and enabling functions.

GORM also continues to disseminate the operational risk governance structure which has been in existence since 2010. Over the past year, GORM worked closely with Business units and Control functions notably Internal Control, Compliance, Human Resources, Legal and Internal Audit to develop the foundational framework for the effective implementation of the risk and control self-assessment (RCSA) program across the group.

4.3.3 Operational Risk Management (ORM) Framework

An operational risk framework is an essential prerequisite for the effective and efficient implementation of a risk and control assessment. It provides a clear understanding of the structure and process around the identification of risks and controls and how the risk and control assessment fits into the overall management of operational risks. The figure below depicts the ORM framework. It anchors the Group’s operational risk management approach and escalation processes:

4.3.3.1 Risk and Control Self-Assessment (RCSA)The Risks and Controls Self-Assessment (RCSA) program provides a range of diagnostic tools that assist Senior Business Managers to:

• Identify the most Significant Operational Risks to Business activities

• Assess the overall effectiveness of Key Controls that mitigate Significant Operational Risks

• Detect and address specific weaknesses in the design and/or execution of Key Operational Controls and/or related Business processes, and

• Detect and address Emerging Operational Risks to business activities

RCSA also provides a common framework to facilitate comprehensive and consistent Risk and Control Assessments across Ecobank Group and its Subsidiaries, including consistent assessment of control issue materiality and RCSA Entity Ratings, and detection of Emerging Risks and Systemic Control weaknesses across Ecobank Group and its Subsidiaries.

4.3.3.2 Key Risk Indicators (KRIs)Key Risk and Control Indicators are tools that can be utilized to monitor the risk and control environment and assist in the assessment of Operational Risk. A Key Risk and Control Indicator’s threshold or limit is set to establish values or limits that, when exceeded, alert the Business to a potentially significant change in risk exposure and trigger escalation and action. They should be set with consideration of the Business’s overall risk appetite. Certain risks, e.g. emerging operational risks may not lend themselves well to establishment of Key Risk and Control Indicators, in which case, for Key Operational Risks, alternatives such as scenario analysis may be explored.

Key Risk Indicators (KRIs) complement the RCSA processes. They are quantifiable measures linked to the documented key risks in the risk evaluation processes. They enable changes in a risk level to be monitored for improvement. They are effective management tools for validating the RCSA process.

Operational Risk Management Framework

• Business Units

• Risks Owners

• Controls Owners

Governance Assurance

RCSA

• Identify risks

• Design controls

• Test controls

KRIs

• Select key risks

• Design indicators

• Track Breaches

Corrective Action Plans (CAPs)

Reviewing Scenarios, Modeling, Capital Assessments, Reporting Risks and Controls


120

Risk Management

Business units collect KRI data to signal issues where remedial action is required. The process thus leads to senior management committing to corrective action plans (CAPs) for KRI breaches, which are tracked by GORM.

4.3.3.3 EventsEvents management involves identifying, analysing and recording details of events such that the bank can avoid a repeated occurrence. Analysing root causes that crystallise into loss events assists management in taking the necessary steps to tighten controls. Early detection and escalation facilitates effective remediation and improves the chances of recovery of operational risk losses. The Group has implemented a centralized platform for managing all losses.

The process also leads to senior management committing to corrective action plans (CAPs) when root cause analyses are complete.

4.3.3.4 Risks and Controls Ownership, Governance, and AssuranceWithin the framework, business units own the risks and controls. Their efforts are guided by control and risk functions (Internal Control and Operational Risk) because these are independent from the business. Both Internal Control and Operational Risk track corrective actions plans (CAPs) and report on these to senior management. The Group Operational Risk unit has the primary responsibility for profiling business risks using methodologies covered in the ORM framework. It deploys the necessary tools across the Group. The Group Internal Audit function provides independent assurance through audits and risk reviews.

4.3.4 Risk identification, measurement, monitoring and control

Losses are categorised according to the Basel II event categories for operational risk losses. The loss categories are: internal fraud, external fraud, employment practices and workplace safety, disputes with clients, damage to physical assets, business disruptions and systems failure, and execution, delivery and process management.

The Group utilises an operational risk management application to collect, analyse and report operational loss event data across the network. Business units are thus able to monitor the key operational risk exposures and underlying drivers against policy thresholds set in the ORM framework.

Operational risk managers throughout the group ensure that all operational risk events are recorded and reported to the appropriate management levels. Internal loss events are categorised into actual loss (an incident that has resulted in a financial loss), potential loss (an incident that has been discovered, that may or may not ultimately result in a financial loss) and ‘near miss’ events. A ‘near miss’ event is an incident that was discovered through means other than normal operating practices and that, through good fortune or focused management action, resulted in no loss or a gain.

4.3.5 Compliance and Regulatory Risk

Ecobank has to deal with challenges as a result of significant regulatory changes in countries where it has footprints. These challenges could negatively impact its operations especially in the face of dwindling world economy and unrelenting stiff business competition. Ecobank continues to be impacted by significant number of new regulatory requirements from multiple sources. Therefore, management continues to provide attention and resources to ensure that regulatory reforms do not create disruption to our operations.

Ecobank has implemented robust processes to ensure business units comply with laws and regulations. The objective of the bank’s compliance program is to protect the company against reputational risk, regulatory sanctions and enable it to conduct its business the right way. This is complemented by strong support functions comprising of audit, legal and internal control.

In 2012, a set of compliance policies ensuring transparency and best corporate practices was unequivocally supported and approved by the Board of Directors. The compliance unit, which reports to the DGCEO/GCOO, has the primary duty of ensuring that the business complies with local regulations and that the risks identified are not above the risk appetite of the bank.

4.3.6 Know-Your-Customer (KYC) and Due Diligence

The Compliance unit ensures that the Bank’s network is firmly secured against money laundering, corruption or terrorism financing (AML/CFT). The bank, in order to effectively monitor these diverse risks and international financial crimes has put in place standard, effective and efficient automated monitoring tools through which compliance risks which are identified are monitored and reduced at their lowest level.

Ecobank closely collaborates with local law enforcement authorities and financial intelligence units (FIUs) in an open and efficient manner. Ecobank has planned to enhance AML/CFT monitoring processes further in 2014.


121

4.3.7 Business Continuity Management

Ecobank Business Continuity Management program is based on international BCM standards and principles. It outlines core business and function procedures for the recovery of operations or relocation in response to various disruptions. These procedures provide information for key Ecobank personnel responsible to:

• protect Ecobank staff safety and Ecobank property

• recover and resume operations to ensure continuation of business

• evaluate the disruption situation and commence appropriate action

• provide our clients with access to critical applications

• establish communication procedures between Ecobank and our employees, clients and regulators

• safeguard Ecobank records and intellectual property

Subsidiaries and Business Units are guided to develop, maintain and regularly test comprehensive business continuity plans (BCPs) to ensure continuous and reliable service. The BCPs are based on predefined strategies and are designed to ensure provision of critical business processes and applications within predefined recovery time frames.

The BCM Program has assigned roles and responsibilities, which are detailed in the corporate policy and standards. This stimulates an effective approach throughout Ecobank and results in efficient business continuity capability. Business continuity specialists manage the BCM Program at the local and group level. Group BCM provide expertise and guidance to all Ecobank subsidiaries in developing, implementing, testing and maintaining effective BCPs and recovery procedures.

4.3.8 People Risk

People risk is categorized into intentional or dishonest acts (frauds, unauthorized policy and procedure breaches, collusion, or sabotage) and unintentional causes (mistakes or errors due to lack of awareness of policies and procedures) both of which can lead to losses. The Group maintains zero tolerance for all dishonest acts and enforces Codes of Ethics for all staff. Management has implemented a number of control measures, including increasing on-site reviews, increased control awareness trainings, screening workers, and disciplining staff involved in dishonest behaviours. People risk is further managed through the hiring process. Management continued to maintain an efficient balance between sales and processing staff ratios. Where external organisations provided services, subsidiaries were guided to assign less sensitive roles to such support staff; employee screening was also extended to cover such non-permanent staffing arrangements.

4.3.9 Reputational Risk

The Ecobank brand is strong across Africa. Some events however happened which were reported in a way that was potentially detrimental to the Ecobank brand. There was thus the need to conduct a review of the overall impact of these events on the brand image. To perform this review, Operational Risk looked at public media information and records from internal sources including Internal Audit, Internal Control, Customer Service, Legal and Compliance, Finance, and Communications. Contributions of each of these sources to the reputational risk was based on scores arrived at based on the strength of their estimated severity and probability of occurrence. Generally, negative publications by globally renowned sources and national news media were rated higher than internal contributors for which management has implemented corrective actions for their remediation.

In conclusion, the review noted a reputational risk distribution of Negative: 63%, Positive: 34% and Other: 3%.

Reputational Risk Distribution

Negative 63%

Positive 34%

Others 3%

Reputational risk – Basic assumptionsType Risk score

International networks

Positive: critical/high 81-100%

Negative: critical/high 81-100%

Negative/positive: critical/high 10-50%

National networks

Positive: critical/medium 61-80%

Negative: critical/medium 61-80%

Negative/positive: critical/medium 5-20%

Positive: moderate/medium 51-60%

Negative: moderate/medium 51-60%

Internal sources

Negative: moderate/medium 31-50%

Positive: moderate/low 11-40%

Negative: moderate/low 11-40%

Positive: minor/low 0-10%


122

Risk Management

4.3.10 Legal Risk

The 2013 Legal risk exposure analysis looked at legal fines, penalties, or punitive damages resulting from supervisory actions, as well as private settlements. As at Q4 2013 the bank recorded a total of 1,143 lawsuits across the group with a potential liability impact of US$119.1 million. The breakdown of lawsuits by entity is shown in the table below.

4.3.11 Operational Risk Reporting

Operational risk reporting is an integral part of the governance structure. Clear mandates have been established in the group. In addition to the day-to-day monitoring of events and follow-ups, all Business Units Risk Committees (BURCs) in countries

meet monthly to review operational risks specific to those units and also identify emerging risks. Country Operational Risk and Country Internal Control or Internal Audit observed the meetings, which proceedings are documented and escalated to Group Operational Risk.

On quarterly basis, functional heads in countries meet as members of the Country Business Risk and Control Committee (BRCC) to review key operational risks. Responsibilities are assigned as appropriate for outstanding action plans for follow-up. Country Operational Risk reports to GORM for escalation of significant issues to Group BRCC and Group Risk Committee through the Group Head, Risk Management.

4.3.12 Events and Losses

Fraud events decreased between 2012 and 2013. Internal Frauds (US$3.8 million – of which US$1.6 million is attributable to Nigeria) constituted 51% of the total net loss for 2013 (2012: US$5.2 million or 45%). External Frauds amounted to US$2 million or 27% of the total net loss for 2013 (2012: US$4 million or 34%); Execution amounted to US$1.2 million or 16% of the total net loss for 2013 (2012: US$1.7 million or 15%) and Damage to Assets constituted 5% of the total net loss for 2013 (2012: 6%). Rebel attacks in Central African Republic resulted in a total loss of US$0.7 million comprising cash theft and damage to physical assets. Due to multiple attacks by rebels in the country, only branches in Bangui (4 out of 12) are currently operational.

Operational Risk Management Framework

Net Operational Losses(Percent of total)

Group Risk Committee (Board sub-committee)

Group BRCC Group Functional Heads (meets quarterly)

Country Business Risk and Control Committee Business and Functional Heads (meets quarterly)

Group Operational Risk Management (GORM)

Country Operational Risk Management

Country Business Units Risk Committee (BURC)

Treasury, Corporate, Domestic, Operations and Technology (separate monthly meetings)

Employment Practices

Business Disruption

Physical Assets

Business Practices

Execution

External Fraud

Internal Fraud

1516

66

34

27

4551

00

00

00

Dec 2013 Dec 2012

Legal risk distributionEntity No. of lawsuits Potential liability (US$ thousands)

ETI 7 11,050

Benin 28 18,712

Burkina Faso 244 3,386

Nigeria 720 17,996

Cameroon 60 3,274

Chad 15 7,173

Togo 20 10,300

Côte d’Ivoire 12 1,801

Senegal 6 8,213

Ghana 5 12,530

Others 26 24,662

Total 1,143 119,097


123

5. Capital Adequacy 5.1 Group LevelThe Group’s capital management policies support the Group’s business strategy and ensure that the Group is sufficiently capitalised to withstand severe macroeconomic downturns. In addition, they are designed to ensure that the Group complies with regulatory capital requirements and to support the Group’s credit rating objectives.

Ecobank has two approaches to the measurement of its capital requirements: a regulatory approach and an internal approach. The regulatory approach is based on fixed uniform rules for holding adequate capital to support the risk that the Group assumes. Therefore, in all the countries where Ecobank operates, banks are required to hold a minimum capital level, which is determined by the regulators, and is consistent with the recommendations of the Basel Committee on Banking Supervision. Under the original Basel accord, banks were to maintain a ratio of regulatory capital to risk-weighted assets of 8%. This ratio has been increased in some countries to 10%, and in some cases, 15%. Since 2007, the Group has been using an internal model based on Basel II standards for assessment of capital adequacy on a consolidated basis. In line with an evolving capital management framework and best-practice recommendations, the Board in 2010 approved the adoption of the economic capital concept as an additional internal method for capital assessment. At Ecobank, economic capital is defined as the amount of capital required to absorb unexpected losses arising from credit, operational and market risks over a one-year time horizon at a 95% confidence level.

Under Basel I standards, risk-weighted assets rose by 22% from US$12.87 billion in December 2012 to US$15.76 billion, largely driven by the increase in Loans and advances to customers (+$1.98 billion or 21%). The unimpaired capital, on the other hand, increased slightly from US$2.55 billion in December 2012 to US$2.57 billion in December 2013.

Accordingly, the capital adequacy ratio under Basel I as of December 31, 2013 was 16.3% (19.3% in December 2012), significantly exceeding regulatory requirements and minimum international standards and the core (Tier-1) capital adequacy ratio was 13.0% (15.2% in December 2012). The year-on-year decrease in the capital ratios was driven by a 22% increase in risk weighted assets while total regulatory capital remained fairly stable (+1%).

Our internal models (Basel II and economic capital) have also confirmed the adequacy of the capital funds of the Group.

5.2 Capital Adequacy in SubsidiariesIn line with our commitment to comply with local regulations and ensure that our subsidiaries are well-capitalized to meet local business needs, the Group continued to monitor capital adequacy in subsidiaries. All subsidiaries comply with limits imposed by local regulators, and when a shortage arises, proper actions are taken for immediate compliance with regulations.

Laurence do Rego Group Executive Director, Finance and Risk

Capital Adequacy Ratio (%)

Tier-1 Capital Adequacy RatioCapital Adequacy Ratio

19.3

16.3

13.0

15.2

Dec 2013 Dec 2012

Risk-weighted AssetsRisk-Weighted Assets (US$ millions) 2013 2012

Liquid assets 312 483

Loans to customers 11,422 9,441

Other on-balance sheet assets 3,052 2,235

Off-balance sheet assets 970 713 Total 15,755 12,871

Financial Statements

Improving infrastructure of all types is one of Africa’s key challenges, but also one of its biggest opportunities. Ecobank is using its financial resources and expertise to support vital infrastructure development across our countries, including both public and private sector projects.

124 Financial StatementsEcobank Group – Annual Report 2013

Image taken from Ecobank’s Corporate and Investment Bank advertising campaign, Q1 – 2014.

125Financial StatementsEcobank Group – Annual Report 2013

Financial StatementsEcobank Group – Annual Report 2013

126

Statement of Directors’ responsibilities

Responsibility for annual consolidated financial statements The directors are responsible for the preparation of the consolidated financial statements for each financial year that give a true and fair view of the state of the financial affairs of the Group at the end of the year and of its profit or loss. This responsibility includes ensuring that the Group:

(a) keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company and its subsidiaries;

(b) establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and

(c) prepares its consolidated financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, that are consistently applied.

The directors accept responsibility for the annual consolidated financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards.

Nothing has come to the attention of the directors to indicate that the Company and its subsidiaries will not remain a going concern for at least twelve months from the date of this statement.

The directors are of the opinion that the consolidated financial statements give a true and fair view of the state of the financial affairs of the Company and its subsidiaries and of its profit or loss. The directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of the financial statements, as well as adequate systems of internal financial control.

Approval of annual consolidated financial statements The annual consolidated financial statements, presented on pages 128 to 205 were approved by the Board of Directors on 25 April 2014 and signed on its behalf by:

André Siaka Interim Chairman, Board of Directors

Albert Essien Group Chief Executive Officer


127

Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Ecobank Transnational Incorporated and its subsidiaries (“the Group”) which comprise the consolidated statement of financial position as of 31 December 2013 and the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows, a summary of significant accounting policies and other explanatory notes.

Directors’ responsibility for the financial statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards 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 independent opinion on the consolidated 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 our audit to obtain reasonable assurance that 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 judgment, 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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, 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 opinion.

Opinion In our opinion the accompanying consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2013 and of its profits and cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report of the Independent Auditor to the Members of Ecobank Transnational Incorporated

PricewaterhouseCoopersChartered AccountantsLagos, Nigeria29 April 2014

PricewaterhouseCoopersChartered AccountantsAbidjan, Côte d’Ivoire29 April 2014


128

Year ended 31 December Note 2013 2012

Interest income 6 1,599,756 1,348,086

Interest expense 6 (548,998) (499,396)Net interest income 1,050,758 848,690

Fee and commission income 7 626,548 515,228

Fee and commission expense 7 (25,402) (26,809)

Net fee and commission income 601,146 488,419

Net trading income 8 308,960 255,707

Net losses from investment securities 9 (1,581) (4,279)

Other operating income 10 44,173 141,462

Other income 351,552 392,890

Operating income before impairment loss 2,003,456 1,729,999

Impairment losses for loans and advances 11 (362,628) (147,910)

Impairment losses on other financial assets 12 (14,102) (7,441)

Impairment losses on financial assets (376,730) (155,351)

Operating income after impairment loss 1,626,726 1,574,648

Staff expenses 13 (639,459) (567,464)

Depreciation and amortization 13 (134,898) (131,032)

Other operating expenses 13 (630,607) (537,510)

Total operating expenses (1,404,964) (1,236,006)

Operating profit 221,762 338,642

Share of profit/(loss) of associates 24 16 (613)

Profit before income tax 221,778 338,029

Income tax expense 14 (65,728) (56,207)

Profit for the year from continuing operations 156,050 281,822

(Loss)/Profit for the year from discontinued operations 29 (8,277) 4,910

Profit for the year 147,773 286,732

Profit attributable to:

Owners of the parent (total) 95,541 249,743

• Profit for the year from continuing operations 102,932 246,311

• (Loss)/Profit for the year from discontinued operations (7,391) 3,432

Non-controlling interests (total) 52,232 36,989


• (Loss)/Profit for the year from discontinued operations (886) 1,478

147,773 286,732

Earnings per share for the profit from continuing operations attributable to owners of the parent during the year (expressed in US cents per share):

• Basic 15 0.60 1.67

• Diluted 15 0.55 1.28

Earnings per share for the profit from discontinued operations attributable to owners of the parent during the year (expressed in US cents per share):

• Basic 15 (0.04) 0.02

• Diluted 15 (0.03) 0.02

The notes on pages 133 to 205 are an integral part of these consolidated financial statements.

Consolidated income statement

(All amounts in thousands of US dollars unless otherwise stated)


129


Profit for the year 147,773 286,732

Other comprehensive income:

Items that may be subsequently reclassed to profit or loss:

Exchange difference on translation of foreign operations (55,754) (32,443)

Available-for-sale investments:

Net valuation (loss)/gain taken to equity 40 (54,341) 58,555

Reclassified to income statement – (49)

Taxation relating to components of other comprehensive income that may be subsequently reclassed to profit or loss 36 12,013 (42,990)

(98,082) (16,927)

Items that will not be reclassed to profit or loss:

Property and equipment – net revaluation gain/(loss) 27 2,493 (1,143)

Taxation relating to components of other comprehensive income that will not be reclassed profit or loss 36 (517) (34)

1,976 (1,177)

Other comprehensive loss for the year, net of tax (96,106) (18,104)

Total comprehensive income for the year 51,667 268,628

Total comprehensive income attributable to:

Owners of the parent (2,649) 230,371

• Total comprehensive income for the year from continuing operations 4,742 226,939

• Total comprehensive (loss)/income for the year from discontinued operations (7,391) 3,432

Non-controlling interests 54,317 38,257

• Total comprehensive income for the year from continuing operations 55,203 36,779

• Total comprehensive (loss)/income for the year from discontinued operations (886) 1,478

51,667 268,628

Items in the statement above are disclosed net of tax. The deferred income tax relating to each component of other comprehensive income is disclosed in Note 36.


Consolidated statement of comprehensive income



130

As at 31 December Note 2013 2012

Assets

Cash and balances with central banks 16 2,877,868 1,981,625

Treasury bills and other eligible bills 17 1,127,927 825,883

Financial assets held for trading 18 114,917 92,854

Derivative financial instruments 19 141,346 143,417

Reinsurance assets – 5,262

Loans and advances to banks 20 1,312,150 2,175,156

Loans and advances to customers 21 11,421,605 9,440,945

Investment securities: available-for-sale 22 1,893,489 2,331,748

Pledged assets 23 1,135,434 700,054

Investment in associates 24 21,993 7,530

Other assets 25 689,913 580,110

Intangible assets 26 496,748 503,149

Property and equipment 27 872,145 861,316

Investment properties 28 168,048 196,588

Deferred income tax assets 36 122,747 93,746

22,396,330 19,939,383

Assets held for sale 29 136,123 –

Total assets 22,532,453 19,939,383

Liabilities

Deposits from banks 30 706,953 662,201

Due to customers 31 16,489,904 14,620,478

Other deposits 32 677,960 369,360

Derivative financial instruments 19 1,454 129

Insurance liabilities – 5,262

Borrowed funds 33 1,303,406 1,239,683

Other liabilities 34 926,098 732,659

Provisions 35 28,511 26,040

Current income tax liabilities 63,818 44,151

Deferred income tax liabilities 36 44,450 58,283

Retirement benefit obligations 37 8,019 7,220

20,250,573 17,765,466

Liabilities held for sale 29 147,232 –

Total liabilities 20,397,805 17,765,466

Equity

Equity attributable to the owners of the parent

Share capital and premium 39 1,409,001 1,409,001

Retained earnings and reserves 40 527,435 597,187

1,936,436 2,006,188


Total equity 2,134,648 2,173,917

Total liabilities and equity 22,532,453 19,939,383

The notes on pages 133 to 205 are an integral part of these consolidated financial statements. The financial statements were approved for issue by the Board of Directors on 25 April 2014 and signed on its behalf by:

Consolidated statement of financial position


André SiakaInterim Chairman, Board of Directors

Albert Essien Group Chief Executive Officer


131

Attributable to equity holders of the Company Total

Non-controlling

interests Total equity

Note

Share capital and

premiumRetained earnings

Other reserves

At 01 January 2012 1,080,186 315,209 (41,190) 1,354,205 105,131 1,459,336

Net changes in available-for-sale investments, net of tax 40 – – 15,515 15,515 – 15,515

Foreign currency translation differences 40 – – (33,711) (33,711) 1,268 (32,443)

Net gains on revaluation of property – – (1,177) (1,177) – (1,177)

Other comprehensive income for the year – – (19,373) (19,373) 1,268 (18,105)

Profit for the year – 249,743 – 249,743 36,989 286,732

Total comprehensive income for the year 249,743 (19,373) 230,370 38,257 268,627

Dividends relating to 2011 – (55,612) – (55,612) (22,525) (78,137)

Adjustments to opening retained earnings 40 – 44,715 – 44,715 – 44,715

Transfer to general banking reserves 40 – (22,791) 22,791 – – –

Transfer to statutory reserve 40 – (3,748) 3,748 – – –

Reclassification of share option reserve 40 – 181 (181) – – –

Gain on shares held in Ecobank Ghana used as purchase consideration 40 – 102,495 – 102,495 – 102,495

Share options granted 40 – – 1,200 1,200 – 1,200

Additional non-controlling interest from Ecobank Ghana – – – – 31,422 31,422

Net Proceeds from shares issued:

• Private placement 39 350,000 – – 350,000 15,444 365,444

Refund of deposit for shares (3) – – (3) – (3)

Treasury shares (13,299) – – (13,299) – (13,299)

Share issue expenses 39 (7,883) – – (7,883) – (7,883)

At 31 December 2012/01 January 2013 1,409,001 630,192 (33,005) 2,006,188 167,729 2,173,917

Net changes in available-for-sale investments, net of tax 40 – – (40,685) (40,685) – (40,685)

Foreign currency translation differences 40 – – (57,839) (57,839) 2,085 (55,754)

Net gains on revaluation of property – – 1,976 1,976 – 1,976

Other comprehensive income for the year – – (96,548) (96,548) 2,085 (94,463)

Profit for the year – 95,541 – 95,541 52,232 147,773

Total comprehensive income for the year – 95,541 (96,548) (1,007) 54,317 53,310

Dividends relating to 2012 40 – (68,879) – (68,879) (23,834) (92,713)

Transfer to general banking reserves 40 – (24,913) 24,913 – – –

Transfer to statutory reserve 40 – (57,172) 57,172 – –

Convertible loans – equity component – – 134 134 – 134

At 31 December 2013 1,409,001 574,769 (47,333) 1,936,436 198,212 2,134,648


Consolidated statement of changes in equity



132


Cash flows from operating activities

Profit before tax 221,778 338,029

Adjustments for:Net trading income – foreign exchange 8 (228,999) (190,450)Net gain from investment securities 9 1,581 3,570 Fair value losses/(gain) on investment properties 9 8,472 (33,735)AMCON refund relating to acquisition of Oceanic Bank 9 – (72,364)Impairment losses on loans and advances 11 362,628 140,936 Impairment losses on other financial assets 12 14,102 7,441 Depreciation of property and equipment 13 110,379 107,319 Net interest income 6 (1,050,758) (848,690)Amortization of software and other intangibles 13 24,519 25,050 Impairment charges:

• Property and equipment 13 – 172 Profit on sale of property and equipment 13 – (1,885)Share of (profit)/loss of associates 24 (16) 613

Income taxes paid (88,895) (60,172)

Changes in operating assets and liabilities

• Trading assets (22,063) (91,284)• Derivative financial assets 2,071 –• Other treasury bills (391,457) 70,932 • Loans and advances to banks 451,675 656,903 • Loans and advances to customers (2,162,352) (2,081,005)• Pledged assets (435,380) (602,608)• Other assets (109,803) (5,009)• Mandatory reserve deposits (522,048) (490,543)• Other deposits 308,600 199,261 • Due to customers 1,869,426 2,543,983 • Derivative liabilities 1,325 (10,141)• Other provisions 2,471 14,830 • Other liabilities 193,438 (296,425)

Interest received 1,599,756 1,348,086 Interest paid (548,998) (499,396)

Net cash flow (used in)/from operating activities (388,547) 173,418

Cash flows from investing activities

Acquisition of subsidiaries, net of cash acquired – 119,245

Disposal of subsidiaries, net of cash disposed 29 (5,807) –

Purchase of software 26 (17,158) (38,711)

Purchase of property and equipment 27 (163,877) (160,136)

Proceeds from sale of property and equipment 36,724 25,069

Purchase of investment securities 22 (4,301,604) (1,481,828)

Purchase of investment properties (11,519) (90,228)

Proceeds from sale and redemption of securities 4,591,754 1,747,571

Net cash flow from investing activities 128,152 120,981

Cash flows from financing activities Repayment of borrowed funds (897,690) (1,182,533)Proceeds from borrowed funds 970,249 1,012,307 Proceeds of subscription of ordinary shares 39 – 344,617 Dividends paid to non-controlling shareholders (23,834) (22,525)Dividends paid to owners of the parent 40 (68,879) (55,612)Net cash flow (used in)/from financing activities (20,154) 96,254

Net (decrease)/increase in cash and cash equivalents (280,189) 390,652

Cash and cash equivalents at start of year 42 1,813,053 1,330,596

Effects of exchange differences on cash and cash equivalents 108,886 91,804

Cash and cash equivalents at end of year 42 1,641,749 1,813,053


Consolidated statement of cash flows



133

Notes to consolidated financial statements


1. General informationEcobank Transnational Incorporated (ETI) and its subsidiaries (together, ‘the group’) provide retail, corporate and investment banking services throughout sub Saharan Africa outside South Africa. The Group had operations in 39 countries and employed over 19,546 people (2012: 18,564) as at 31 December 2013.

Ecobank Transnational Incorporated is a limited liability company and is incorporated and domiciled in the Republic of Togo. The address of its registered office is as follows: 2365 Boulevard du Mono, Lome, Togo. The company has a primary listing on the Ghana Stock Exchange, the Nigerian Stock Exchange and the Bourse Regionale Des Valeurs Mobilieres (Abidjan) Côte d’Ivoire.

The consolidated financial statements for the year ended 31 December 2013 have been approved by the Board of Directors on 25 April 2014.

2. Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1. Basis of presentationThe Group’s consolidated financial statements for the year ended 31 December 2013 have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.

The consolidated financial statements comprise the consolidated statement of comprehensive income shown as two statements, the statement of financial position, the statement of changes in equity, the statement of cash flows and the notes.

The consolidated financial statements have been prepared under the historical cost convention, except for available-for-sale financial assets, financial assets and financial liabilities held at fair value

through profit or loss, all derivative contracts and investment properties, which have been measured at fair value and property and equipment which have been revalued.

The consolidated financial statements are presented in US Dollars, which is the group’s presentation currency. The figures shown in the consolidated financial statements are stated in US Dollar thousands. The disclosures on risks from financial instruments are presented in the financial risk management report contained in Note 3.

The consolidated statement of cash flows shows the changes in cash and cash equivalents arising during the period from operating activities, investing activities and financing activities. Included in cash and cash equivalents are highly liquid investments as shown in Note 42.

The cash flows from operating activities are determined by using the indirect method. The Group’s assignment of the cash flows to operating, investing and financing category depends on the Group’s business model.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Directors to exercise judgment in the process of applying the Group’s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate and that the Group’s financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4

(a) Standards, amendment and interpretations effective on or after 1 January 2013 adopted by the GroupIn the current year, the Group has applied a number of new and revised IFRSs issued by the International Accounting Standard Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2013.

Standard Content Applicable for financial years beginning on/after

Amendments to IAS 1 Presentation of Financial statement, regarding other comprehensive income 1 July 2012

IAS 19 Employee benefits 1 January 2013

IFRS 7 Financial instruments: Disclosures 1 January 2013

IAS 27 IAS 27 (revised) separate financial statements 1 January 2013

IFRS 10 Consolidated financial statements 1 January 2013

IFRS 12 Disclosure of interests in other entities 1 January 2013

IFRS 11 Joint arrangements 1 January 2013

IFRS 13 Fair value measurement 1 January 2013

i) Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive incomeThe main change resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI. The impact of this amendment is the presentation of the items of other comprehensive income.

ii) IAS 19, ‘Employee benefits’This was amended in June 2011. The impact on the group will be as follows: to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset).


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iii) Amendment to IFRS 7 Disclosures – Offsetting financial assets and financial liabilitiesThe amendment to IFRS 7 requires entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement. As the Group does not have any offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in the consolidated financial statements.

iv) IAS 27, ‘Separate financial statements’IAS 27 was amended in May 2011 following the issuance of IFRS 10. The revised IAS 27 deals only with the accounting for subsidiaries, associates and joint ventures in the separate financial statements of the parent company.

v) IFRS 10, ‘Consolidated financial statements’This builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. There has been no change in the scope of consolidation as a result of applying this new standard.

vi) IFRS 12, ‘Disclosures of interests in other entities’This includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. See Note 43 for the detailed impact of this standard.

vii) IFRS 11, ‘Joint arrangements’’This focuses on the rights and obligations of the parties to the arrangement rather than its legal form. Proportional consolidation is no longer permitted. This standard has no impact on the Group as it does not have joint arrangements relationships.

viii) IFRS 13, ‘Fair value measurement’This aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. See Note 3 for the impact of this standard.

(b) New standards and interpretations not yet adoptedA number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

IFRS 9, ‘Financial instruments’This addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that

relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The group is yet to assess IFRS 9’s full impact. The Group will also consider the impact of the remaining phases of IFRS 9 when completed by the Board.

Amendments to IFRS 10 – Consolidated Financial Statements (effective 1 January 2014) The amendment to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and seperate financial statements. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. The group does not anticipate that investment entities will have any effect on the group’s consolidated financial statements.

Amendments to IAS 32 – Financial Instruments: Presentation (effective 1 January 2014) The IASB has issued amendments to the application guidance in IAS 32, ‘Financial instruments: Presentation’, that clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. However, the clarified offsetting requirements for amounts presented in the statement of financial position continue to be different from Generally Accepted Accounting practices in the United States of America.

Amendments to IAS 36 – Impairment of assets (effective 1 January 2014) These amendments address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. These amendments address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. To require disclosure of the recoverable amount of an asset or CGU when an impairment loss has been recognised or reversed; and to require detailed disclosure of how the fair value less costs of disposal has been measured when an impairment loss has been recognised or reversed. IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material.There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.


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2.2 Consolidation(a) SubsidiariesSubsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets for components that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, otherwise they are recognised at fair value. Measurement of non-controlling interest is required at the date of acquisition. Subsequent increase in equity holding of the acquirer is seen to be transaction between equity holders acting in their capacity as owners of business.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. For receivables in cash, changes in fair value is transferred to the income statement. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and peviously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised

losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the group’s accounting policies.

(b) Changes in ownership interests in subsidiaries without change of controlTransactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(c) Disposal of subsidiariesWhen the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(d) AssociatesAssociates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognised in the profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of associates in profit or loss.


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2.3 Foreign currency translationa) Functional and presentation currencyItems included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’).

The consolidated financial statements are presented in United States dollars, which is the Group’s presentation currency.

b) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. 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 the income statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.

c) Group companiesThe results and financial position of all group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

i) Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

ii) Income and expenses for each income statement are translated at average exchange rates; (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions) and

iii) All resulting exchange differences are recognized in other comprehensive income.

Exchange differences arising from the above process are reported in shareholders’ equity as ‘Foreign currency translation differences’. On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to ‘Other comprehensive income’. When a foreign operation is sold, such exchange differences are recognized in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in OCI.

2.4 Sale and repurchase agreementsSecurities sold subject to repurchase agreements (‘repos’) are reclassified in the financial statements as pledged assets when the transferee has the right by contract or custom to sell or repledge the collateral; the counterparty liability is included in deposits from banks or deposits from customers, as appropriate. Securities purchased under agreements to resell (‘reverse repos’) are recorded as loans and advances to other banks or customers, as appropriate. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method. Securities lent to counterparties are also retained in the financial statements.

2.5 Financial assets and liabilitiesAll financial assets and liabilities – which include derivative financial instruments – have to be recognized in the consolidated statement of financial position and measured in accordance with their assigned category.

2.5.1 Financial assetsThe Group allocates financial assets to the following IAS 39 categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Management determines the classification of its financial instruments at initial recognition. Financial assets are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

a) Financial assets at fair value through profit or lossThis category comprises two sub-categories: financial assets classified as held for trading, and financial assets designated by the Group as at fair value through profit or loss upon initial recognition. A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorized as held for trading unless they are designated and effective as hedging instruments. Financial assets held for trading consist of debt instruments, including money-market paper, traded corporate and bank loans, and equity instruments, as well as financial assets with embedded derivatives. They are recognized in the consolidated statement of financial position as ‘Financial assets held for trading’.

Financial assets and financial liabilities are designated at fair value through profit or loss when:

(i) Doing so significantly reduces measurement inconsistencies that would arise if the related derivative were treated as held for trading and the underlying financial instruments were carried at amortized cost for such loans and advances to customers or banks and debt securities in issue;


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(ii) Certain investments, such as equity investments, are managed and evaluated on a fair value basis in accordance with a documented risk management or investment strategy and reported to key management personnel on that basis are designated at fair value through profit or loss; and

(iii) Financial instruments, such as debt securities held, containing one or more embedded derivatives significantly modify the cash flows, are designated at fair value through profit or loss.

Gains and losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are included in ‘net income from financial instruments designated at fair value’.

Financial instruments included in this category are recognized initially at fair value; transaction costs are taken directly to the consolidated income statement. Gains and losses arising from changes in fair value are included directly in the consolidated income statement and are reported as ‘Net trading income’. Interest income and expense and dividend income and expenses on financial assets held for trading are included in ‘Net interest income’ or ‘Dividend income’, respectively. The instruments are derecognized when the rights to receive cash flows have expired or the Group has transferred substantially all the risks and rewards of ownership and the transfer qualifies for derecognizing.

Financial assets for which the fair value option is applied are recognized in the consolidated statement of financial position as ‘Financial assets designated at fair value’. Fair value changes relating to financial assets designated at fair value through profit or loss are recognized in ‘Net trading income’.

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

(a) those that the Group intends to sell immediately or in the short term, which are classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss;

(b) those that the Group upon initial recognition designates as available for sale; or

(c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.

Loans and receivables are initially recognized at fair value – which is the cash consideration to originate or purchase the loan including any transaction costs – and measured subsequently at amortized cost using the effective interest rate method. Loans and receivables are reported in the consolidated statement of financial position as loans and advances to banks or customers. Interest on loans is included in the consolidated income statement and is reported as ‘Interest income’. In the case of an impairment, the impairment loss is reported as a deduction from the carrying value of the loan and recognized in the consolidated income statement as ‘impairment losses for loans and advances’.

c) Held-to maturity financial assetsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity, other than:

(a) those that the Group upon initial recognition designates as at fair value through profit or loss;

(b) those that the Group designates as available for sale; and

(c) those that meet the definition of loans and receivables.

These are initially recognized at fair value including direct and incremental transaction costs and measured subsequently at amortized cost, using the effective interest method. Interest on held-to-maturity investments is included in the consolidated income statement and reported as ‘Interest income’. In the case of an impairment, the impairment loss is reported as a deduction from the carrying value of the investment and recognized in the consolidated income statement as ‘net gains/(losses) on investment securities’.

There were no held-to-maturity financial assets as at the reporting date.

d) Available-for-saleAvailable-for-sale investments are financial assets that are intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Available-for-sale financial assets are initially recognized at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognized in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognized. If an available-for-sale financial asset is determined to be impaired, the cumulative gain or loss previously recognized in the equity is recognized under income statement. However, interest is calculated using the effective interest method, and foreign currency gains and losses on monetary assets classified as available for sale are recognized in the consolidated statement of comprehensive income. Dividends on available-for-sale equity instruments are recognized in the consolidated income statement in ‘Dividend income’ when the Group’s right to receive payment is established.

2.5.2 Financial liabilitiesThe Group’s holding in financial liabilities is in financial liabilities at fair value through profit or loss (including financial liabilities held for trading and those that are designated at fair value) and financial liabilities at amortized cost. Financial liabilities are derecognized when extinguished.


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a) Financial liabilities at fair value through profit or lossThis category comprises two sub-categories: financial liabilities classified as held for trading, and financial liabilities designated by the Group as at fair value through profit or loss upon initial recognition.

A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorized as held for trading unless they are designated and effective as hedging instruments. Financial liabilities held for trading also include obligations to deliver financial assets borrowed by a short seller. Those financial instruments are recognized in the consolidated statement of financial position as ‘Financial liabilities held for trading’.

Gains and losses arising from changes in fair value of financial liabilities classified as held for trading are included in the consolidated income statement and are reported as ‘Net trading income’. Interest expenses on financial liabilities held for trading are included in ‘Net interest income’.

Financial liabilities for which the fair value option is applied are recognized in the consolidated statement of financial position as ‘Financial liabilities designated at fair value’. Fair value changes relating to such financial liabilities are passed through the statement of comprehensive income.

b) Other liabilities measured at amortized costFinancial liabilities that are not classified as at fair value through profit or loss fall into this category and are measured at amortized cost. Financial liabilities measured at amortized cost are deposits from banks or customers, borrowed funds which the fair value option is not applied, convertible bonds and subordinated debts.

c) Determination of fair valueFair value under IFRS 13 is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) at the measurement date under current market condition (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

For financial instruments traded in active markets, the determination of fair values of financial assets and financial liabilities is based on quoted market prices or dealer price quotations. This includes listed equity securities and quoted debt instruments on exchanges (for example, NSE, BVRM, GSE) and quotes from approved bond market makers.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that a

market is inactive are when there is a wide bid-offer spread or significant increase in the bid-offer spread or there are few recent transactions.

For all other financial instruments, fair value is determined using valuation techniques. In these techniques, fair values are estimated from observable data in respect of similar financial instruments, using models to estimate the present value of expected future cash flows or other valuation techniques, using inputs existing at the dates of the consolidated statement of financial position.

The Group uses widely recognized valuation models for determining fair values of non-standardized financial instruments of lower complexity, such as options or interest rate and currency swaps. For these financial instruments, inputs into models are generally market observable.

The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions the Group holds. Valuations are therefore adjusted, where appropriate, to allow for additional factors including model risks, liquidity risk and counterparty credit risk. Based on the established fair value model governance policies, and related controls and procedures applied, management believes that these valuation adjustments are necessary and appropriate to fairly state the values of financial instruments carried at fair value in the consolidated statement of financial position. Price data and parameters used in the measurement procedures applied are generally reviewed carefully and adjusted, if necessary – particularly in view of the current market developments.

The fair value of over-the-counter (OTC) derivatives is determined using valuation methods that are commonly accepted in the financial markets, such as present value techniques and option pricing models. The fair value of foreign exchange forwards is generally based on current forward exchange rates. Structured interest rate derivatives are measured using appropriate option pricing models (for example, the Black-Scholes model) or other procedures such as Monte Carlo simulation.

In cases when the fair value of unlisted equity instruments cannot be determined reliably, the instruments are carried at cost less impairment. The fair value for loans and advances as well as liabilities to banks and customers are determined using a present value model on the basis of contractually agreed cash flows, taking into account credit quality, liquidity and costs.

The fair values of contingent liabilities and irrevocable loan commitments correspond to their carrying amounts.

d) DerecognitionFinancial assets are derecognized when the contractual rights to receive the cash flows from these assets have ceased to exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets are also transferred. Financial liabilities are derecognized when they have been redeemed or otherwise extinguished.


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2.6 Reclassification of financial assetsThe Group may choose to reclassify a non-derivative financial asset held for trading out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near-term. Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near-term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

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

On reclassification of a financial asset out of the ‘at fair value through profit or loss’ category, all embedded derivatives are re-assessed and, if necessary, separately accounted for.

2.7 Financial guarantees and loan commitments‘Financial guarantees’ are contracts that require the Group to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with the terms of a debt instrument. ‘Loan commitments’ are firm commitments to provide credit under pre-specified terms and conditions.

Liabilities arising from financial guarantees or commitments to provide a loan at a below-market interest rate are initially measured at fair value and the initial fair value is amortised over the life of the guarantee or the commitment. The liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment to settle the liability when a payment under the contract has become probable.


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2.8 Classes of financial instrumentThe Group classifies the financial instruments into classes that reflect the nature of information and take into account the characteristics of those financial instruments. The classification made can be seen in the table below:

Financial assets Category (as defined by IAS 39) Class (as determined by the Group) Note

Financial assets at fair value through profit or loss Financial assets held for trading 18

Derivative financial assets 19

Loans and receivables Balances with central banks 16


Loans and advances to customers 20

Loans and advances to customers 21

Other assets excluding prepayments 25

Held-to-maturity Investments None Not applicable

Available-for-sale financial assets Treasury bills and other eligible bills 17

Investment securities – available for sale 22

Pledged assets 23

Hedging derivatives None Not applicable

Financial liabilities Category (as defined by IAS 39) Class (as determined by the Group) Note

Financial liabilities at fair value through profit or loss Derivative financial liabilities 19

Other deposits 32

Deposits from customers 31

Borrowed funds 33

Other liabilities, excluding non-financial liabilities 34

Off balance sheet financial instruments Category (as defined by IAS 39) Class (as determined by the Group) Note

Loan commitments Loan commitments 38

Guarantees, acceptances and other financial facilities Guarantees, acceptances and other financial facilities 38


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2.9 Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

2.10 Interest income and expenseInterest income and expense for all interest-bearing financial instruments are recognized within ‘interest income’ and ‘interest expense’ in the consolidated income statement using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

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

2.11 Fee and commission incomeFees and commissions are generally recognized on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognized as an adjustment to the effective interest rate on the loan. Loan syndication fees are recognized as revenue when the syndication has been completed and the Group has retained no part of the loan package for itself or has retained a part at the same effective interest rate as the other participants. Commission and fees arising from negotiating, or participating in the negotiation of, a transaction for a third party – such as the arrangement of the acquisition of shares or other securities, or the purchase or sale of businesses – are recognized on completion of the underlying transaction. Portfolio and other management advisory and service fees are recognized based on the applicable service contracts, usually on a time-apportionate basis. Asset management fees related to investment funds are recognized ratably over the period in which the service is provided. The same principle is applied for wealth management, financial planning and custody services that are continuously provided over an extended period of time. Performance-linked fees or fee components are recognized when the performance criteria are fulfilled.

2.12 Dividend incomeDividends are recognized in the consolidated income statement in ‘Dividend income’ when the entity’s right to receive payment is established.

2.13 Impairment of financial assetsa) Assets carried at amortized costThe Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the 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 of financial assets that can be reliably estimated.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

i) significant financial difficulty of the issuer or obligor;

ii) a breach of contract, such as a default or delinquency in interest or principal payments;

iii) the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

iv) it becomes probable that the borrower will enter bankruptcy or other financial reorganization;

v) the disappearance of an active market for that financial asset because of financial difficulties; or

vi) observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio.

The estimated period between a loss occurring and its identification is determined by local management for each identified portfolio. In general, the periods used vary between three months and 12 months; in exceptional cases, longer periods are warranted.

The Group 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 Group 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 recognized are not included in a collective assessment of impairment.

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 financial 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 consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate


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determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

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

Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other factors indicative of changes in the probability of losses in the Group and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience.

When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Impairment charges relating to loans and advances to banks and customers are classified in loan impairment charges whilst impairment charges relating to investment securities (hold to maturity and loans and receivables categories) are classified in ‘Net gains/(losses) on investment securities’.

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 recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in the consolidated income statement.

When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

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 recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in the income statement in impairment charge for credit losses.

b) Assets classified as available-for-saleThe Group assesses at each date of the consolidated statement of financial position whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is objective

evidence of impairment resulting in the recognition of an impairment loss. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the consolidated income statement. Impairment losses recognized in the consolidated income statement on equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through the consolidated income statement.

c) Renegotiated loans

Loans that are either subject to collective impairment assessment or individually significant and whose terms have been renegotiated are no longer considered to be past due but are treated as new loans. In subsequent years, the asset is considered to be past due and disclosed only if renegotiated again. Where possible, the Bank seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, any impairment is measured using the original EIR as calculated before the modification of terms and the loan is no longer considered past due. Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to an individual or collective impairment assessment, calculated using the loan’s original EIR.

2.14 Impairment of non-financial assetsIntangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-generating units). The impairment test also can be performed on a single asset when the fair value less cost to sell or the value in use can be determined reliably. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.15 Share-based paymentsThe Group engages in equity settled share-based payment transactions in respect of services received from certain categories of its employees. The fair value of the services received is measured by reference to the fair value of the shares or share options granted on the date of the grant. The cost of the employee services received in respect of the shares or share options granted is recognized in the consolidated income statement over the period that the services are received, which is the vesting period.


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The fair value of the options granted is determined using option pricing models, which take into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Except for those which include terms related to market conditions, vesting conditions included in the terms of the grant are not taken into account in estimating fair value.

Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of employee services so that ultimately, the amount recognized in the consolidated income statement reflects the number of vested shares or share options. Where vesting conditions are related to market conditions, the charges for the services received are recognized regardless of whether or not the market related vesting condition is met, provided that the non-market vesting conditions are met.

2.16 Cash and cash equivalentsCash and cash equivalents comprise balances with less than three months’ maturity from the date of acquisition, including cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

2.17 Repossessed collateralRepossed collateral are equities, landed properties or other investments repossessed from customers and used to settle the outstanding obligations. Such investments are classified in accordance with the intention of the Group in the asset class which they belong.

2.18 LeasesLeases are accounted for in accordance with IAS 17 and IFRIC 4. They are divided into finance leases and operating leases.

(a) A group company is the lesseeThe Group enters into operating leases. The total payments made under operating leases are charged to other operating expenses in 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 recognized as an expense in the period in which termination takes place.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other longterm payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.

(b) A group company is the lessorWhen assets are held subject to a finance lease, the present value of the lease payments is recognized as a receivable. The difference between the gross receivable and the present value of the receivable is recognized as unearned finance income. Lease income is recognized over the term of the lease using the net investment method (before tax), which reflects a constant periodic rate of return.

(c) Fees paid in connection with arranging leasesThe Group makes payments to agents for services in connection with negotiating lease contracts with the Group’s lessees. For operating leases, the letting fees are capitalized within the carrying amount of the related investment property, and depreciated over the life of the lease.

2.19 Investment propertiesProperties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the entities in the consolidated group, are classified as investment properties. Investment properties comprise office buildings and Domestic Bank parks leased out under operating lease agreements.

Some properties may be partially occupied by the Group, with the remainder being held for rental income or capital appreciation. If that part of the property occupied by the Group can be sold separately, the Group accounts for the portions separately. The portion that is owner-occupied is accounted for under IAS 16, and the portion that is held for rental income or capital appreciation or both is treated as investment property under IAS 40. When the portions cannot be sold separately, the whole property is treated as investment property only if an insignificant portion is owner-occupied.

Recognition of investment properties takes place only when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost can be measured reliably. This is usually the day when all risks are transferred. Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing parts of an existing investment property at the time the cost has been incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the date of the consolidated statement of financial position. Gains or losses arising from changes in the fair value of investment properties are included in the consolidated income statement in the year in which they arise. Subsequent expenditure is included in the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated income statement during the financial period in which they are incurred.

Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the lease.


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Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the lease.

The fair value of investment properties is based on the nature, location and condition of the specific asset. The fair value is calculated by discounting the expected net rentals at a rate that reflects the current market conditions as of the valuation date adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect the related future benefits from this future expenditure. These valuations are performed annually by external appraisers.

2.20 Property and equipmentLand and buildings comprise mainly branches and offices. All property and equipment used by the parent or its subsidiaries is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

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

After recognition as an asset, an item of property and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date. If an item of property, plant and equipment is revalued, the entire class of property, plant and equipment to which that asset belongs shall be revalued. The fair value of land and buildings is usually determined from market-based evidence by appraisal that is normally undertaken by professionally qualified valuers. The fair value of items of plant and equipment is usually their market value determined by appraisal.

If an asset’s carrying amount is increased as a result of a revaluation, the increase shall be credited directly to other comprehensive income. However, the increase shall be recognized in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognized in profit or loss. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease shall be recognized in profit or loss. However, the decrease shall be debited directly to equity under the heading of revaluation reserve to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

For assets revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

• Buildings: 25 – 40 years

• Leasehold improvements: 25 years, or over the period of the lease if less than 25 years

• Furniture, equipment and installations: 3 – 5 years

• Motor vehicles: 3 – 10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Assets are subject to review for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in other operating expenses in the consolidated income statement.

2.21 Intangible assetsa) GoodwillGoodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiaries and associates at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units is represented by each primary reporting segment.

Goodwill is tested annually as well as whenever a trigger event has been observed for impairment by comparing the present value of the expected future cash flows from a cashgenerating unit with the carrying value of its net assets, including attributable goodwill and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.

b) Computer software licencesAcquired computer software licences are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized on the basis of the expected useful lives.

Costs associated with developing or maintaining computer software programs are recognized as an expense incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Direct costs include software development employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognized as assets are amortized using the straight-line method over their useful lives (not exceeding three years).


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2.22 Income taxa) Current income taxIncome tax payable (receivable) is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognized as an expense (income) for the period except to the extent that current tax related to items that are charged or credited in other comprehensive income or directly to equity. In these circumstances, current tax is charged or credited to other comprehensive income or to equity (for example, current tax on of available- for-sale investment).

Where the Group has tax losses that can be relieved against a tax liability for a previous year, it recognizes those losses as an asset, because the tax relief is recoverable by refund of tax previously paid. This asset is offset against an existing current tax balance. Where tax losses can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the consolidated statement of financial position. The Group does not offset income tax liabilies and current income tax assets.

b) Deferred income taxDeferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the date of the consolidated statement of financial position and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

The principal temporary differences arise from depreciation of property, plant and equipment, revaluation of certain financial assets and liabilities, provisions for pensions and other post-retirement benefits and carry-forwards; and, in relation to acquisitions, on the difference between the fair values of the net assets acquired and their tax base, fair value changes on available for sale financial assets, tax loss carried forward, revaluation on property and equpment. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised when it is probable that future taxable profit will be available against which these temporary differences can be utilised. Deferred income tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not reverse in the foreseeable future.

The tax effects of carry-forwards of unused losses or unused tax credits are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised.

Deferred tax related to fair value re-measurement of available-for-sale investments, which are recognised in other comprehensive income, is also recognised in the other comprehensive income and subsequently in the consolidated income statement together with the deferred gain or loss.

2.23 Provisions Provisions for restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. The Group recognises no provisions for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

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

2.24 Employee benefitsa) Pension obligationsA defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in income.

For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.


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b) Other post-retirement obligationsThe Group also provides gratuity benefits to its retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries.

c) Termination benefitsTermination benefits are payable when employment is terminated by the group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

d) Profit-sharing and bonus plansThe group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.25 BorrowingsBorrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds net of transaction costs and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest method.

2.26 Borrowing costsGeneral and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

There were no such borrowing costs capitalised as at the reporting date.

2.27 Compound financial instrumentsCompound financial instruments issued by the group comprise convertible notes that can be converted to share capital at the option of the holder.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

2.28 Fiduciary activitiesGroup companies commonly act as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. An assessment of control has been performed and this does result in control for the group. These assets and income arising thereon are excluded from these financial statements, as they are not assets of the Group.

2.29 Share capitala) Share issue costsOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds.

b) Dividends on ordinary sharesDividends on ordinary shares are recognised in equity in the period in which they are approved by the Company’s shareholders. Dividends for the year that are declared after the reporting date are dealt with in the subsequent events note.

c) Treasury sharesWhere the company purchases its equity share capital, the consideration paid is deducted from total shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity.

2.30 Segment reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined the Group Executive Committee as its chief operating decision maker.

All transactions between business segments are conducted on an arm´s length basis, with intra-segment revenue and costs being eliminated in head office. Income and expenses directly associated with each segment are included in determining business segment performance.


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In accordance with IFRS 8, the Group has the following business segments: Domestic and Corporate and Investment Banking.

Domestic Bank: Focuses on serving local companies, small and medium scale enterprises, government and government agencies and the retail market.

Corporate and Investment Bank: Corporate Bank focuses on providing one-stop banking services to multinationals and regional companies, financial institutions and international organisations across network of the group. Investment Bank constitutes the treasury, corporate finance and asset management business. This unit provides value-added solutions primarily to corporate clients and governments.

2.31 Non-current assets (or disposal groups) held for saleNon-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interests in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Discontinued operations:The Group presents discontinued operations in a separate line in the Income statement if an entity or a component of an entity has been disposed of or is classified as held for sale and:

(a) Represents a separate major line of business or geographical area of operations;

(b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or

(c) Is a subsidiary acquired exclusively with a view to resale

Net profit from discontinued operations includes the net total of operating profit and loss before tax from operations, including net gain or loss on sale before tax or measurement to fair value less costs to sell and discontinued operations tax expense. A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group´s operations and cash flows. If an entity or a component of an entity is classified as a discontinued operation, the Group restates prior periods in the Income statement.

2.32 ComparativesExcept when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with comparative information.

Where IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ applies, comparative figures have been adjusted to conform with changes in presentation in the current year.


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3 Financial risk managementThe Group’s business involves taking on risks in a targeted manner and managing them professionally. The core functions of the group’s risk management are to identify all key risks for the Group, measure these risks, manage the risk positions and determine capital allocations. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and best market practice. The Group’s aim is to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group’s financial performance. The Group defines risk as the possibility of losses or profits foregone, which may be caused by internal or external factors.

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

The most important types of risk are credit risk, liquidity risk and market risk. Market risk includes currency risk, interest rate risk and other price risk.

3.1 Credit riskThe Group takes on exposure to credit risk, which is the risk that a counterparty will cause a financial loss to the Group by failing to pay amounts in full when due. Credit risk is the most important risk for the Group’s business: management therefore carefully manages the exposure to credit risk. Credit exposures arise principally in lending and investment activities. There is also credit risk in off-balance sheet financial instruments, such as loan commitments. Credit risk management and control is centralised in the risk management team, which reports regularly to the Board of Directors.

3.1.1 Credit risk measurement(i) Probability of default: The Group assesses the probability of default of individual counterparties using internal rating tools tailored to the various categories of counterparty. They have been developed internally and combine statistical analysis with credit officer judgment and are validated, where appropriate, by comparison with externally available data. Clients of the Group are segmented into three rating classes. The Group’s rating scale, which is shown below, reflects the range of default probabilities defined for each rating class. This means that, in principle, exposures migrate between classes as the assessment of their probability of default changes. The rating tools are kept under review and upgraded as necessary. The Group regularly validates the performance of the rating and their predictive power with regard to default events.

Group’s internal ratings scale and mapping of external ratings are as follows;

Group’s rating Description of gradeMapping to external rating (Standards and Poors)

1 – 4 Investment Grade AAA to BBB

5 – 6 Standard Grade BB to B

7 – 10 Non Investment Grade CCC to D

The ratings of the major rating agency shown in the table above are mapped to the group’s rating classes based on the long-term average default rates for each external grade. The Group uses the external ratings where available to benchmark our internal credit risk assessment. Observed defaults per rating category vary year on year, especially over an economic cycle.

The Group’s policy requires the review of individual financial assets that are above materiality thresholds at least annually or more regularly when individual circumstances require. Impairment allowances on individually assessed accounts are determined by an evaluation of the incurred loss at the reporting date on a case-by-case basis, and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual account.

Collectively assessed impairment allowances are provided for: (i) portfolios of homogenous assets that are individually below materiality thresholds; and (ii) losses that have been incurred but have not yet been identified, by using the available historical experience, experienced judgment and statistical techniques.

(ii) Exposure at defaultEAD is based on the amounts the Group expects to be owed at the time of default. For example, for a loan this is the face value. For a commitment, the Group includes any amount already drawn plus the further amount that may have been drawn by the time of default, should it occur.

(iii) Loss given default/loss severityLoss given default or loss severity represents the Group’s expectation of the extent of loss on a claim should default occur. It is expressed as percentage loss per unit of exposure. It typically varies by type of counterparty, type and seniority of claim and availability of collateral or other credit support.

(iv) Debt securities and other bills

For debt securities and other bills, external rating such as Standard & Poor’s rating or their equivalents are used by Group Treasury for managing the credit risk exposures. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain a readily available source to meet funding requirements at the same time.


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3.1.2 Risk limit control and mitigation policiesThe Group manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to individual counterparties and groups, and to industries and countries.

The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by product, industry sector and by country are approved quarterly by the Board of Directors.

The exposure to any one borrower including banks and other non bank financial institutions is further restricted by sub-limits covering on- and off-statement of financial position exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts. Actual exposures against limits are monitored daily.

Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by changing these lending limits where appropriate. Some other specific control and mitigation measures are outlined below:

(a) CollateralThe Group employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advances, which is common practice. The Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:

• Mortgages over residential properties;

• Charges over business assets such as premises, inventory and accounts receivable;

• Charges over financial instruments such as debt securities and equities.

Longer-term finance and lending to corporate entities are generally secured; individual credit facilities are generally unsecured. In addition, in order to minimise the credit loss the Group will seek additional collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances.

(b) Credit-related commitmentsThe primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which are written undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions – are collateralised by the underlying shipments of goods to which they relate and therefore carry less risk than a direct loan.

Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.

3.1.3 Impairment and provisioning policiesThe internal rating systems described above focus more on credit-quality mapping from the inception of the lending. In contrast, impairment provisions are recognised for financial reporting purposes only for losses that have been incurred at the statement of financial position date based on objective evidence of impairment. Due to the different methodologies applied, the amount of incurred credit losses provided for in the financial statements usually differs from the amount determined from the expected loss model that is used for internal operational management and banking regulation purposes.

The impairment provision shown in the statement of financial position at year-end is derived from each of the three rating classes.

The internal rating tool assists management to determine whether objective evidence of impairment exists under IAS 39, based on the following criteria set by the Group;

• Delinquency in contractual payments of principal or interest;

• Cash flow difficulties experienced by the borrower;

• Breach of loan covenants or conditions;

• Initiation of legal proceedings to enforce security;

• Deterioration of the borrower’s competitive position; and

• Deterioration in the value of collateral.


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2013 2012

Group’s rating Loans and advances Impairment provision Loans and advances Impairment provision

1 Current 10,356,072 87% 77,307 1% 8,417,199 86% 115,612 1%

1A. Watchlist 369,563 3% 10,661 3% 330,433 3% 5,501 2%

II. Substandard 539,563 4% 45,287 8% 551,733 6% 55,594 10%

III. Doubtful 442,736 4% 182,366 41% 428,724 4% 123,356 29%

IV. Loss 301,836 3% 272,544 90% 119,329 1% 106,410 89%

12,009,770 100% 588,165 5% 9,847,418 100% 406,473 4%

3.1.4 Credit ConcentrationMaximum exposure

Maximum exposure to credit risk before collateral held 2013 2012

Credit risk exposures relating to on-statement of financial position assets are as follows:

Balances with central banks 2,166,640 1,431,879

Treasury bills and other eligible bills 1,127,927 825,883

Loans and advances to banks 1,312,150 2,175,156

Loans and advances to customers:

Corporate Bank

• Overdrafts 1,357,792 1,087,778

• Term loans 4,917,436 3,408,201

• Others 20,233 229,927

Domestic Bank

• Overdrafts 1,117,730 1,065,990

• Credit cards 6,827 6,829

• Term loans 3,812,040 3,507,344

• Mortgages 189,547 134,875

Financial assets held for trading

• Debt securities 114,830 92,752

Derivative financial instruments 141,346 143,417

Investment securities - available-for-sale:

- Debt securities 1,669,321 2,100,978

Pledged assets 1,135,434 700,054

Reinsurance assets – 5,262

Other assets 529,006 392,441

Credit risk exposures relating to off-balance sheet items are as follows:

Financial guarantees 4,555,929 3,224,935

Loan commitments 293,909 338,143

At 31 December 24,468,097 20,871,844

The above table represents a worse case scenario of credit risk exposure of the Group at 31 December 2013 and 2012, without taking into account any collateral held or other credit enhancements attached. For on-balance-sheet assets, the exposures set out above are based on net carrying amounts as reported in the statement of financial position.

As shown above, 52% (2012: 56%) of the total maximum exposure is derived from loans and advances to banks and customers; 7% (2012: 10%) represents investments in debt securities.

Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the group resulting from its loan and advances portfolio, debt securities and other assets based on the following:

• 89% (2012: 89%) of the loans and advances portfolio are considered to be neither past due nor impaired;

• 68% (2012: 61%) of loans and advances are backed by collateral;

• Investment in debt securities are largely government securities.

• Other assets are considered to be neither past due nor impaired


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3.1.5 Loans and advancesLoans and advances are summarised as follows: 31 December 2013 31 December 2012





Neither past due nor impaired 1,312,150 10,725,635 2,175,156 8,747,632

Past due but not impaired – 539,563 – 551,733

Impaired – 744,572 – 548,053

Gross 1,312,150 12,009,770 2,175,156 9,847,418

Less: allowance for impairment – (588,165) – (406,473)

Net 1,312,150 11,421,605 2,175,156 9,440,945

(a) Loans and advances neither past due nor impairedThe credit quality of the portfolio of loans and advances that were neither past due nor impaired can be assessed by reference to the internal rating system adopted by the Group.

31 December 2013


Corporate Bank Domestic Bank Total

Grades: Overdrafts Term loans Others Overdrafts Credit cards Term Loans Mortgages

Current 1,249,176 4,654,635 20,264 673,131 4,427 3,569,939 184,500 10,356,072

Watchlist 34,948 191,419 – 14,312 15 123,052 5,817 369,563

Total 1,284,124 4,846,054 20,264 687,443 4,442 3,692,991 190,317 10,725,635

31 December 2012



Grades: Overdrafts Term loans Others Overdrafts Credit cards Term Loans Mortgages

Current 972,246 3,152,718 229,927 716,484 4,688 3,215,558 125,578 8,417,199

Watchlist 14,523 174,910 – 21,168 – 112,041 7,791 330,433

Total 986,769 3,327,628 229,927 737,652 4,688 3,327,599 133,369 8,747,632

All loans and advances to banks are neither past due nor impaired and all fall under the ‘current’ grade.


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(b) Loans and advances past due but not impairedLoans and advances less than 90 days past due are not considered impaired, unless other information is available to indicate the contrary. Gross amount of loans and advances by class of customers that were past due but not impaired were as follows:

31 December 2013


Past due Overdrafts Term loans Others Overdrafts Credit Cards Term Loans Mortgages

Past due up to 30 days 23,871 36,676 – 19,824 – 48,427 744 129,542

Past due 30-60 days 992 38,615 – 22,766 – 30,524 146 93,043

Past due 60-90 days 45,580 7,964 – 245,705 2,451 15,181 97 316,978

Total 70,443 83,255 – 288,295 2,451 94,132 987 539,563

Fair value of collateral 7,996 14,356 – 28,125 – 52,356 324 103,157

Amount of undercollateralisation 62,447 68,899 – 260,170 2,451 41,776 663 436,406

31 December 2012Corporate Bank Domestic Bank Total

Past due Overdrafts Term loans Others Overdrafts Credit Cards Term Loans Mortgages

Past due up to 30 days 19,582 20,141 – 30,410 – 34,549 1,409 106,091

Past due 30-60 days 55,124 26,045 – 34,887 – 36,730 557 153,343

Past due 60-90 days 27,514 22,503 – 214,173 1,937 24,708 1,464 292,299

Total 102,220 68,689 – 279,470 1,937 95,987 3,430 551,733


Amount of undercollateralisation 36,062 65,350 – 184,075 1,937 86,366 2,914 376,704

Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the corresponding assets. In subsequent periods, the fair value is updated by reference to market price.

c) Loans and advances individually impaired

i) Loans and advances to customersThe breakdown of the gross amount of individually impaired loans and advances by class, along with the fair value of related collateral held by the Group as security, are as follows:

31 December 2013


Overdrafts Term loans Others Overdrafts Credit Cards Term Loans Mortgages

Gross 19,689 57,573 – 254,925 237 411,986 162 744,572

Impairment allowance 11,400 31,387 – 87,659 182 323,769 513 454,910


Fair value of collateral 16,413 17,901 – 197,402 237 214,190 143 446,286

31 December 2012


Overdrafts Term loans Others Overdrafts Credit Cards Term Loans Mortgages

Gross 5,679 52,003 – 205,842 4,719 272,530 7,280 548,053

Impairment allowance 2,550 15,735 – 83,853 3,455 115,775 8,398 229,766

Fair value of collateral – 135 – 84,193 – 32,206 44 116,578

Fair value of collateral 5,679 51,868 – 121,649 4,719 240,324 7,236 431,475

ii) Loans and advances to banksThe total gross amount of individually impaired loans and advances to banks as at 31 December 2013 was nil (2012: nil).


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3.1.6 Concentration of risks of financial assets with credit risk exposurea) Geographical sectorsThe following table breaks down the Group’s main credit exposure at their carrying amounts, as categorised by geographical region as of 31 December 2013. For this table, the Group has allocated exposures to regions based on the country of domicile of our counterparties.

UEMOA Nigeria

West African Monetary

Zone Central Africa East AfricaSouthern

Africa Others Total

As at 31 December 2013Treasury bills and other eligible bills 321,023 389,076 307,534 32,131 48,664 29,499 – 1,127,927

Loans and advances to banks 110,437 241,851 120,558 35,270 38,257 99,704 666,074 1,312,150


Corporate Bank

• Overdrafts 415,716 489,077 193,269 172,990 43,903 42,837 – 1,357,792

• Term loans 1,536,592 1,742,510 572,862 529,694 182,139 102,751 250,888 4,917,436

• Others 19,014 – 178 992 – 49 – 20,233

Domestic Bank

• Overdrafts 209,869 561,900 190,597 86,399 44,702 24,235 28 1,117,730

• Credit cards – 5,110 1,717 – – – – 6,827

• Term loans 1,576,154 1,068,240 355,378 547,169 167,963 96,701 435 3,812,040

• Mortgages 113,542 25,692 11,995 14,950 23,228 – 140 189,547

Financial assets held for trading – debt securities – 113,367 – 1,463 – – – 114,830

Pledged assets – 1,135,434 – – – – – 1,135,434

Derivative financial instruments – – – – – – 141,346 141,346

Investment securities – debt securities 683,725 486,232 228,215 94,693 123,326 6,349 46,781 1,669,321

Other assets 173,753 244,926 60,554 29,980 12,160 6,141 1,492 529,006

Total 5,159,825 6,503,415 2,042,857 1,545,731 684,342 408,266 1,107,184 17,451,619

Credit commitments 1,276,996 1,845,200 652,339 497,444 147,659 173,212 256,988 4,849,838

As at 31 December 2012Treasury bills and other eligible bills 238,295 259,244 260,464 32,229 14,490 21,161 – 825,883

Loans and advances to banks 198,112 340,416 105,419 69,451 23,201 42,640 1,395,917 2,175,156


Corporate Bank

• Overdrafts 389,787 303,823 175,674 161,785 30,246 26,463 – 1,087,778

• Term loans 1,156,302 1,312,023 247,722 460,502 119,549 78,109 33,994 3,408,201

• Others – 33,573 – 406 – – 195,948 229,927

Domestic Bank

• Overdrafts 178,342 548,826 181,571 72,474 57,764 27,013 – 1,065,990

• Credit cards – 4,863 1,966 – – – – 6,829

• Term loans 1,343,128 1,169,188 359,709 401,285 139,228 94,199 607 3,507,344

• Mortgages 64,475 21,184 10,645 15,484 23,087 – – 134,875

Financial assets held for trading – debt securities – 92,752 – – – – – 92,752

Reinsurance assets – 5,262 – – – – – 5,262

Pledged assets – 700,054 – – – – – 700,054

Derivative financial instruments – 143,269 – – – 35 113 143,417

Investment securities – debt securities 408,445 1,315,614 170,846 94,653 106,921 2,708 1,791 2,100,978

Other assets 79,126 90,771 66,627 47,460 22,167 11,681 74,609 392,441

Total 4,056,012 6,340,862 1,580,643 1,355,729 536,653 304,009 1,702,979 15,876,887


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3.1.6 Concentration of risks of financial assets with credit risk exposure (continued)(b) Industry sectorsThe following table breaks down the Group’s main credit exposure at their carrying amounts, as categorised by the industry sectors of our counterparties.

Financial institutions

Wholesale and retail trading Manufacturing Government

Mining and construction

Services and others Total

31 December 2013Treasury bills and other eligible bills 7,374 – – 1,120,553 – – 1,127,927

Loans and advances to banks 1,281,736 – – – – 30,414 1,312,150


• Overdrafts 59,567 907,984 266,918 140,121 331,686 769,246 2,475,522

• Credit cards – – – – – 6,827 6,827

• Term loans 129,176 1,761,655 1,178,738 805,946 1,257,085 3,596,876 8,729,476

• Mortgages 426 46,772 4,462 6,770 12,970 118,147 189,547

• Others – 20,006 – – – 227 20,233

Financial assets held for trading 1,464 – – 113,366 – – 114,830

Reinsurance assets –

Pledged assets – – – 1,135,434 – – 1,135,434

Derivative financial instruments 141,346 – – – – – 141,346

Investment securities – available for sale 22,737 – – 1,452,924 – 193,660 1,669,321

Other assets 3,239 32,760 40 4,918 333 487,716 529,006

Total 1,647,064 2,769,177 1,450,158 4,780,032 1,602,074 5,203,114 17,451,619

Credit commitments 240,927 1,115,677 416,706 140,159 336,473 2,599,896 4,849,838

31 December 2012Treasury bills and other eligible bills – – – 825,883 – – 825,883

Loans and advances to banks 2,175,156 – – – – – 2,175,156


• Overdrafts 70,563 707,347 354,015 110,799 347,351 563,693 2,153,768

• Credit cards – – – – – 6,829 6,829

• Term loans 166,860 1,306,575 714,830 642,728 1,302,809 2,781,743 6,915,545

• Mortgages 314 11,479 308 – 9,294 113,480 134,875

• Others 84 10,567 10,594 7,477 296 200,909 229,927

Financial assets held for trading – – – 92,752 – – 92,752

Reinsurance assets 5,262 – – – – – 5,262

Pledged assets 700,054 – – – – – 700,054

Derivative financial instruments 143,304 – – – – 113 143,417

Investment securities – available for sale 149,183 – – 1,917,867 – 33,928 2,100,978

Other assets 25,836 1,660 720 1,008 – 363,217 392,441

Total 3,436,616 2,037,628 1,080,467 3,598,514 1,659,750 4,063,912 15,876,887

Credit commitments 1,447,560 453,005 684,651 233,770 72,747 48,730 2,940,463


155

3.2 Market riskMarket risk is the risk that changes in market prices, which include currency exchange rates and interest rates, will affect the fair value or future cash flows of a financial instrument. Market risk arises from open positions in interest rates and foreign currencies, both of which are exposed to general and specific market movements and changes in the level of volatility. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while optimising the return on risk. Overall responsibility for managing market risk rests with the Group Risk Management and the Board’s Risk Committee. The Group Risk Management is responsible for the development of detailed risk management policies and procedures (subject to review and approval Board’s Risk Committee) and for the day to day implementation of those policies.

The market risks arising from trading and non-trading activities are concentrated in Group Treasury. Regular reports are submitted to the Board of Directors and heads of each business unit. Trading portfolios include those positions arising from market-making transactions where the Group acts as principal with clients or with the market. Non-trading portfolios primarily arise from the interest rate management of the subsidiary’s banking assets and liabilities. Non-trading portfolios also consist of foreign exchange and equity risks arising from the Group’s held-to-maturity and available-for-sale investments.

The Group applies a ‘value at risk’ methodology (VAR) to its trading and non-trading portfolios, to estimate the market risk of positions held and the maximum losses expected.

2013 2012

Low Average High Low Average High

Foreign exchange risk 841 5,285 9,160 3,771 6,618 9,211

Interest risk 166 2,056 3,923 795 833 3,095


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3.2.1 Foreign exchange riskThe Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The Board sets limits on the level of exposure by currency and in total for both overnight and intra-day positions, which are monitored daily. The table below summarises the Group’s exposure to foreign currency exchange rate risk at 31 December. Included in the table are the Group’s financial instruments at carrying amounts, categorised by currency.

31 December 2013 Dollar Euro CFA Naira Cedis Others Total

Assets

Cash and balances with central banks 135,279 135,100 727,227 1,429,428 165,074 285,760 2,877,868

Treasury bills and other eligible bills – – 353,154 389,076 222,420 163,277 1,127,927

Loans and advances to banks 693,051 304,868 96,946 143,442 68,931 4,912 1,312,150

Loans and advances to customers 2,528,621 149,420 5,254,265 2,339,163 502,327 647,809 11,421,605

Financial assets held for trading – – 1,464 113,367 – 86 114,917

Derivative financial instruments 26 1,500 – 139,820 – – 141,346

Investment securities – available-for-sale 230,305 872 794,339 501,402 231,004 135,568 1,893,489

Pledged assets – – – 1,135,434 – – 1,135,434

Other assets 120,543 11,996 152,823 180,517 23,903 39,224 529,006

Total financial assets 3,707,825 603,756 7,380,218 6,371,648 1,213,659 1,276,636 20,553,742

Liabilities

Deposits from banks 303,830 31,639 123,538 35 156,429 91,483 706,953

Due to customers 2,683,139 187,610 6,137,479 5,786,554 787,838 907,284 16,489,904

Other deposits 2,666 – 673,091 – – 2,203 677,960

Derivative financial instruments 1,443 11 – – – – 1,454

Other borrowed funds 692,950 – 76,132 484,053 10,615 39,656 1,303,406

Other liabilities 105,357 17,066 191,145 482,169 72,625 57,735 926,098

Total financial liabilities 3,789,385 236,326 7,201,385 6,752,811 1,027,508 1,098,361 20,105,775

Net on-statement of financial position (81,560) 367,430 178,833 (381,162) 186,152 178,275 447,967

Credit commitments 1,875,868 499,726 1,265,436 665,860 28,046 514,902 4,849,838

31 December 2012Assets

Cash and balances with central banks 115,924 91,728 611,766 708,067 229,841 224,299 1,981,625

Treasury bills and other eligible bills – – 270,400 259,244 196,466 99,773 825,883

Loans and advances to banks 1,240,294 328,003 160,988 329,062 38,059 78,750 2,175,156

Loans and advances to customers 1,757,937 132,802 4,230,980 2,429,660 441,837 447,729 9,440,945

Financial assets held for trading – – – 92,752 – 102 92,854

Derivative financial instruments – 113 – 143,269 – 35 143,417

Investment securities – available-for-sale 412,523 859 499,399 1,119,851 185,832 113,284 2,331,748

Pledged assets – – – 700,054 – – 700,054

Other assets 98,560 58,593 80,696 82,545 17,947 54,100 392,441

Total financial assets 3,625,238 612,098 5,854,229 5,864,504 1,109,982 1,018,072 18,084,123

Liabilities

Deposits from banks 250,831 75,666 206,903 867 44,452 83,482 662,201

Due to customers 2,606,917 200,786 5,163,020 5,133,051 777,833 738,871 14,620,478

Other deposits 3 – 334,699 – 34,658 – 369,360

Derivative financial instruments 35 94 – – – – 129

Other borrowed funds 808,495 1,506 93,350 328,280 4,155 3,897 1,239,683


Total financial liabilities 3,771,868 296,012 6,003,322 5,835,722 885,741 831,845 17,624,510

Net on-statement of financial position (146,630) 316,086 (149,093) 28,782 224,241 186,227 459,613

Credit commitments 1,460,758 571,776 920,045 349,676 108,403 152,420 3,563,078


157

Currency Sensitivity Analysis ETI periodically performs sensitivity analysis to determine the impact on Group earnings resulting from a potential appreciation of the United States Dollars (USD) relative to the currencies to which the Group has major exposure namely; CFA Franc (FCFA), the Euro (EUR), the Nigerian Naira (NGN) and the Ghana Cedi (GHS). The results using data as of 31 December 2013 are shown in the table below.

Projected Appreciation of the USD 5% 10% 20%

Estimated Impact on Earnings ($ Million) 3.0 6.1 12.1

3.2.2 Interest rate riskCash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes but may reduce losses in the event that unexpected movements arise. The Board of Directors sets limits on the level of mismatch of interest rate repricing that may be undertaken, which is monitored daily by Group Treasury.

The table below summarises the Group’s exposure to interest rate risks. It includes the Group’s financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity dates. The Group’s derivatives will be settled on a net basis.


158



As at 31 December 2013 Up to 1 month 1-3 months 3-12 months 1-5 years Over 5 years Non-interest

bearing Total

Assets

Cash and balances with central banks 1,002,433 23,291 2 – – 1,852,142 2,877,868

Treasury bills and other eligible bills 105,037 203,916 658,637 160,337 – – 1,127,927

Loans and advances to banks 838,840 76,722 47,495 43,376 256,161 49,556 1,312,150

Loans and advances to customers 3,116,308 1,905,340 1,763,717 3,329,760 1,306,480 – 11,421,605

Financial assets held for trading – 31,609 82,115 1,193 – – 114,917

Derivative financial instruments 854 657 14 – – 139,821 141,346

Investment securities – available-for-sale 46,922 31,747 336,490 580,764 897,567 – 1,893,489

Pledged assets 434,905 362,324 144,876 123,564 69,765 – 1,135,434

Other assets 22,443 12,660 318,151 4,614 – 171,138 529,006

Total financial assets 5,567,742 2,648,265 3,351,497 4,243,607 2,529,973 2,212,657 20,553,742

Liabilities

Deposits from banks 340,934 27,030 183,518 17,164 – 138,307 706,953

Due to customers 5,638,633 1,118,671 915,414 877,987 90,426 7,848,773 16,489,904

Other deposits 674,945 – – 1,952 1,063 – 677,960

Derivative financial instruments 789 651 14 – – – 1,454

Borrowed funds 56,328 3,931 1,124 862,999 364,144 14,879 1,303,406

Other liabilities 253,365 18,776 395,279 38,311 – 220,367 926,098

Total financial liabilities 6,964,994 1,169,059 1,495,349 1,798,414 455,633 8,222,325 20,105,775

Total interest repricing gap (1,397,252) 1,479,206 1,856,148 2,445,193 2,074,339 (6,009,668)

As at 31 December 2012Assets

Cash and balances with central banks 544,130 – 185 61,659 – 1,375,651 1,981,625

Treasury bills and other eligible bills 116,608 281,758 354,507 73,010 – – 825,883

Loans and advances to banks 967,932 105,587 206,000 21,097 – 874,540 2,175,156

Loans and advances to customers 2,799,134 1,467,767 1,241,156 2,775,989 1,123,996 32,903 9,440,945

Financial assets held for trading – – 92,752 102 – – 92,854

Derivative financial instruments 113 35 – – – 143,269 143,417

Investment securities – available-for-sale 146,023 53,229 59,300 1,747,143 182,211 143,842 2,331,748

Pledged assets 91,561 368,882 16,968 102,337 120,306 – 700,054

Other assets 98,321 11,915 68,455 79,692 590 133,468 392,441

Total financial assets 4,763,822 2,289,173 2,039,323 4,861,029 1,427,103 2,703,673 18,084,123

Liabilities

Deposits from banks 488,321 31,975 20,371 1,118 – 120,416 662,201

Due to customers 3,153,337 1,212,152 817,857 839,126 170,306 8,427,700 14,620,478

Other deposits 369,316 20 – 24 – – 369,360

Derivative financial instruments 94 35 – – – – 129

Borrowed funds 43,696 10,130 3,637 90,096 1,077,061 15,063 1,239,683


Total financial liabilities 4,149,302 1,369,635 1,022,427 1,095,295 1,252,863 8,734,988 17,624,510

Total interest repricing gap 614,520 919,538 1,016,896 3,765,734 174,240 (6,031,315)

Interest Rate Sensitivity Analysis The Group performs a periodic analysis of the sensitivity of its one-year projected earnings to an increase or decrease in market interest rates assuming a parallel shift in yield curves and a constant balance sheet position and the results using data as of 31 December 2013 are shown below.

Projected Change in Interest Rates

25 basis points Increase



25 basis points decrease



Estimated Impact on Earnings ($ Million) 7.8 15.7 31.3 (7.8) (15.7) (31.3)


159

3.3 Liquidity riskLiquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and fulfil commitments to lend.

3.3.1 Liquidity risk management processThe Group’s liquidity management process, as carried out within the Group and monitored by a separate team in Group Treasury, includes:

• Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes replenishment of funds as they mature or are borrowed by customers;

• Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow;

• Monitoring statement of financial position liquidity ratios against internal and regulatory requirements; and

• Managing the concentration and profile of debt maturities.

Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets.

3.3.2 Non-derivative cash flowsThe table below presents the cash flows payable by the Group under non-derivative financial liabilities by remaining contractual maturities at the statement of financial position date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the Group manages the inherent liquidity risk based on expected undiscounted cash inflows.

As at 31 December 2013

Up to 1 month 1 – 3 months 3 – 12 months 1 – 5 years Over 5 years Total

Assets

Cash and balances with central banks 1,715,024 160,655 7,177 47,612 946,708 2,877,176

Treasury bills and other eligible bills 108,458 204,427 869,282 47,882 26,099 1,256,148

Loans and advances to banks 1,332,523 152,978 77,964 29,594 77 1,593,136

Loans and advances to customers 3,188,797 2,147,763 2,034,417 4,181,649 1,531,978 13,084,604

Trading assets 4,603 32,081 89,052 3,924 – 129,660

Investment securities – available-for-sale 51,472 314,749 119,767 1,434,763 348,007 2,268,758

Pledged assets 439,101 372,811 161,883 138,069 77,955 1,189,819

Other assets 272,541 78,947 323,281 25,466 – 700,234

Total assets (expected maturity dates) 7,112,519 3,464,410 3,682,823 5,908,958 2,930,824 23,099,535

Liabilities

Deposits from banks 581,873 112,490 230,674 8,872 – 933,909

Due to customers 13,535,886 1,284,332 798,033 1,064,284 92,983 16,775,518

Other deposits 675,780 – – 2,196 1,064 679,040

Other borrowed funds 191,464 154,587 4,229 978,198 193,024 1,521,502

Other liabilities 139,078 41,826 441,103 303,980 110 926,097

Total liabilities (contractual maturity dates) 15,124,081 1,593,235 1,474,039 2,357,531 287,181 20,836,067


160



3.3.2 Non-derivative cash flows (continued)As at 31 December 2012

Up to 1 month 1 – 3 months 3 – 12 months 1 – 5 years Over 5 years Total

Assets

Cash and balances with central banks 1,153,685 124,090 45,638 16,207 642,010 1,981,630

Treasury bills and other eligible bills 123,549 295,062 371,735 96,540 – 886,886

Loans and advances to banks 2,104,032 234,696 186,626 47,867 11,310 2,584,531

Loans and advances to customers 3,355,369 1,804,326 1,560,966 2,894,413 1,416,227 11,031,301

Trading assets 2,490 – 101,357 2,822 – 106,669

Investment securities – available-for-sale 229,893 162,044 422,321 1,442,170 381,881 2,638,309

Pledged assets – 700,054 – – – 700,054

Other assets 176,614 70,504 31,463 41,193 19,667 339,441

Total assets (expected maturity dates) 7,145,632 3,390,776 2,720,106 4,541,212 2,471,095 20,268,821

Liabilities

Deposits from banks 734,654 211,145 70,830 14,534 36,323 1,067,486

Due to customers 5,948,267 1,743,387 6,520,090 665,282 222,034 15,099,060

Other deposits 369,917 29,102 17,224 1,051 587 417,881

Other borrowed funds 231,947 143,314 45,416 785,711 435,427 1,641,815

Derivative financial instruments – 129 – – – 129

Other liabilities 246,311 195,874 223,227 72,023 17,180 754,615

Total liabilities (contractual maturity dates) 7,531,096 2,322,951 6,876,787 1,538,601 711,551 18,980,986

Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, central bank balances, items in the course of collection and treasury and other eligible bills; loans and advances to banks; and loans and advances to customers. In the normal course of business, a proportion of customer loans and advances contractually repayable within one year will be extended. The Group would also be able to meet unexpected net cash outflows by selling investment securities.

3.4 Off-balance sheet itemsThe dates of the contractual amounts of the Group’s off-balance sheet financial instruments that commit it to extend credit to customers and other facilities, provide financial guarantees and capital commitments are summarised in the table below.

At 31 December 2013 No later than 1 year Over 1 years Total

Loan commitments 234,270 59,639 293,909

Guarantees, acceptances and other financial facilities 3,273,764 1,282,165 4,555,929

Capital commitments 7,266 – 7,266

Total 3,515,300 1,341,804 4,857,104

At 31 December 2012

Loan commitments 289,592 48,551 338,143

Guarantees, acceptances and other financial facilities 2,566,787 658,148 3,224,935

Capital commitments 28,163 – 28,163

Total 2,884,542 706,699 3,591,241


161

3.5 Fair value of financial assets and liabilities(a) Financial instruments not measured at fair valueThe table below summarises the carrying amounts and fair values of those financial assets and liabilities not presented on the group’s consolidated statement of financial position.

Carrying value Fair value

2013 2012 2013 2012

Financial assets:

Loans and advances to banks 1,312,150 2,175,156 1,541,263 3,125,878

Loans and advances to customers 11,421,605 9,440,945 11,650,868 9,440,311

Financial liabilities:

Deposits from banks 706,953 662,201 988,280 1,218,340

Due to customers 16,489,904 14,620,478 16,605,661 14,587,833

Other deposits 677,960 369,360 931,904 325,284

Borrowed funds 1,303,406 1,239,683 1,504,674 1,460,623

All the fair values are determined using the Level 2 fair value hierarchy

(i) Loans and advances to banksLoans and advances to banks include inter-bank placements and items in the course of collection. The carrying amount of floating rate placements and overnight deposits is a reasonable approximation of fair value. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit risk and remaining maturity.

(ii) Loans and advances to customersLoans and advances are net of charges 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.

(iii) Deposit from banks, due to customers and other depositsThe estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount repayable on demand.

The estimated fair value of fixed interest-bearing deposits not quoted in an active market is based on discounted cash flows using interest rates for new debts with similar remaining maturity.

(iv) Borrowed fundsFor those notes where quoted market prices are not available, a discounted cash flow model is used based on a current yield curve appropriate for the remaining term to maturity.

(b) Fair value hierarchyIFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group’s market assumptions. These two types of inputs have created the following fair value hierarchy:

i) Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on exchanges.

ii) Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

iii) Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes equity investments and debt instruments with significant unobservable components.

This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible.


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3.5 Fair value of financial assets and liabilities (continued)31 December 2013 31 December 2012

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Treasury and other eligible bills 330,816 797,111 – – 825,883 –

Trading assets 113,454 1,463 – 102 92,752 –

Derivative financial instruments – 141,346 – – 143,417 –

Investment securities – available-for-sale (AFS) 760,554 1,026,482 106,453 742,309 1,490,517 85,427

Total financial assets 1,204,824 1,966,403 106,453 742,411 2,552,569 85,427

Derivative financial instruments – 1,454 – – 129 –

Total financial liabilities – 1,454 – – 129 –

There are no movements between Level 1 and Level 2. The following table presents the changes in Level 3 instruments for the available for sale securities:

2013 2012

Level 3 Level 3

Opening balance 85,427 –

Transfer into Level 3 8,900 109,677

Gains and losses recognised in profit or loss – –

Gains and losses recognised in other comprehensive income 12,126 (24,250)

Closing balance 106,453 85,427

Total gains or losses for the period included in profit or loss for assets held at the end of the reporting period – –

*Cappa D’Alberto was transferred from level 2 hierarchy to level 3 during the year. This follows from a change in the method of valuation of the unquoted securities. In the prior period, valuation was measured in relation to the quoted price of similar companies in the same industry. EV/EBITDA method of valuation was considered more appropriate in the current period in line with IFRS 13 guidelines on the determination of fair value. Fair value loss on the valuation of Cappa D’Alberto has been recognised in other comprehensive income.

Level 3 fair value measurementThe table below sets out information about significant unobservable value inputs used at year end in measuring financial instruments categorised as Level 3 in the fair value hierarchy.

Type of financial instrument

Fair value as at 31 Dec 2013 Valuation technique

Significant unobservable input

Range of estimates for unobservable input

Fair value measurement sensitivity to unobservable inputs

Airtel Network Limited ( Airtel)

97,900 Comparable multiples EV/EBITDA multiple 4.00 – 5.80Significant increase in multiple would result in a higher fair value.

Cappa d'Alberto 6,845 Comparable multiples EV/EBITDA multiple 2.0% – 6.0%Significant increase in multiple would result in a higher fair value.

Compagnie Aerienne ASKY S.A

1,700 Discounted cash flowWeighted average cost of capital

11.5% – 12.0%Significant increase in WACC rate would result in a lower fair value.


163

(c) Financial instrument classification

At 31 December 2013

Assets at fair value through

profit or lossLoans and

receivables

Available-for-sale financial

assets

Liabilities at fair value through

profit or lossLiabilities at

amortized cost Total

Assets

Cash and balances with central banks – 2,877,868 – – – 2,877,868

Treasury bills and other eligible bills – – 1,127,927 – – 1,127,927

Financial assets held for trading 114,917 – – – – 114,917

Derivative financial instruments 141,346 – – – – 141,346

Loans and advances to banks – 1,312,150 – – – 1,312,150

Loans and advances to customers – 11,421,605 – – – 11,421,605

Investment securities: available-for-sale – – 1,893,489 – – 1,893,489

Pledged assets – – 1,135,434 – – 1,135,434

Other assets, excluding prepayments – 529,006 – – – 529,006

Total 256,263 16,140,629 4,156,850 – – 20,553,742

Liabilities – – – – – –

Deposits from banks – - 706,953 706,953

Due to customers – – – – 16,489,904 16,489,904

Other deposits – – – – 677,960 677,960

Derivative financial instruments – – – 1,454 – 1,454

Borrowed funds – – – – 1,303,406 1,303,406

Other liabilities, excluding non-financial liabilities – – – – 926,098 926,098

Total – – – 1,454 20,104,321 20,105,775

At 31 December 2012

Assets at fair value through

profit or lossLoans and

receivables

Available-for-sale financial

assets

Liabilities at fair value through

profit or lossLiabilities at

amortized cost Total

Assets

Cash and balances with central banks – 1,981,625 – – – 1,981,625

Treasury bills and other eligible bills – – 825,883 – – 825,883

Financial assets held for trading 92,854 – – – – 92,854

Derivative financial instruments 143,417 – – – – 143,417

Loans and advances to banks – 2,175,156 – – – 2,175,156

Loans and advances to customers – 9,440,945 – – – 9,440,945

Investment securities: available-for-sale – – 2,331,748 – – 2,331,748

Pledged assets – – 700,054 – – 700,054

Other assets, escluding prepayments – 392,441 – – – 392,441

Total 236,271 13,990,167 3,857,685 – – 18,084,123

Liabilities – – – – – –

Deposits from banks – – – – 662,201 662,201

Due to customers – – – – 14,620,478 14,620,478

Other deposits – – – – 369,360 369,360

Derivative financial instruments – – – 129 – 129

Borrowed funds – – – – 1,239,683 1,239,683

Other liabilities, excluding non-financial liabilities – – – – 732,659 732,659

Total – – – 129 17,624,381 17,624,510


164



3.6 Capital ManagementThe Group’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of statement of financial positions, are:

• To comply with the capital requirements set by the banking regulators in the markets where the entities within the Group operate;

• To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

• To maintain a strong capital base to support the development of its business.

Capital adequacy and the use of regulatory capital by the subsidiaries are monitored daily by the Group’s Risk Management, employing techniques based on the guidelines developed by the Basel Committee as implemented by the respective central banks. Monthly reports are submitted to the central banks in the various jurisdictions by the individual subsidiaries.

The central banks in the various jurisdictions require each bank to: (a) hold the minimum level of the regulatory capital determined by the banking regulations of the respective country, and (b) maintain a ratio of total regulatory capital to the risk-weighted asset (the ‘Basel ratio’) at or above the internationally agreed minimum of 8%.

The Group’s capital is divided into two tiers:

• Tier 1 capital: share capital (net of any book values of the treasury shares), non-controlling interests arising on consolidation from interests in permanent shareholders’ equity, retained earnings and reserves created by appropriations of retained earnings. The book value of goodwill is deducted in arriving at Tier 1 capital; and

• Tier 2 capital: subordinated loan capital, unrealised gains arsing on the fair valuation of equity instruments held as available for sale.

The risk-weighted assets are measured by means of a hierarchy of risk weights classified according to the nature of − and reflecting an estimate of credit, market and other risks associated with − each asset and counterparty. A similar treatment is adopted for off-statement of financial position exposure, with some adjustments to reflect the more contingent nature of the potential losses.

The table below summarises the composition of regulatory capital and the ratios of the Group for the years ended 31 December 2013 and 2012. During those two years, the individual entities within the Group complied with all of the externally imposed capital requirements to which they are subject.

2013 2012

Tier 1 capital

Share capital 1,409,001 1,411,556

General bank reserves 117,399 92,486

Statutory reserve 185,270 128,098

Retained earnings 574,768 630,192


Less: goodwill (433,167) (433,167)

Total qualifying Tier 1 capital 2,051,484 1,996,894

Tier 2 capital

Redeemable preference shares 116,515 116,327

Convertible loans (including liability and equity portions) 466,816 453,834

Revaluation reserve – available-for-sale investments (41,027) (342)

Total qualifying Tier 2 capital 542,304 569,819

Less investments in associates 21,993 21,077

Total regulatory capital 2,571,794 2,545,636

Risk-weighted assets:

On-statement of financial position 14,785,153 12,444,196

Off-statement of financial position 969,968 712,616

Total risk-weighted assets 15,755,120 13,156,812

Basel ratio 16.3% 19.3%

Tier I 13.0% 15.2%

The increase of the capital in the year of 2013 is mainly due to contribution of the current-year profit.


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4. Critical accounting estimates, and judgements in applying accounting policiesThe Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

a) Impairment losses on loans and advances The Group reviews its loan portfolios to assess impairment at least on a monthly basis. In determining whether an impairment loss should be recorded in the income statement, the Group makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that porfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in the group. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

b) Fair value of financial instrumentsThe fair value of financial instruments that are not quoted in active markets are determined by using valuation techniques. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of the area that created them. To the extent practical, models use only observable data; however, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments.

c) Impairment of available for-sale equity investments The Group determines that available-for-sale equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgement. In making this judgement, the Group evaluates among other factors, the normal volatility in share price. In addition, impairment may be appropriate when there is evidence of a deterioration in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows.

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

e) Share-based paymentThe Group granted shares and share options to the employees as a common feature of employee remuneration. IFRS 2 requires recognition of an expense for those shares and share options at the fair value on the grant date (equity-settled plans). For shares granted to employees, the fair value is measured directly at the market price of the entity’s shares, adjusted to take into account the terms and conditions upon which the shares were granted. For share options granted to employees, in many cases market prices are not available because the options granted are subject to terms and conditions that do not apply to traded options. If this is the case, the Group estimates the fair value of the equity instruments granted using a valuation technique, which is consistent with generally accepted valuation methodologies.

f) Goodwill impairmentThe Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.6. These calculations require the use of estimates. The recoverable amount of all CGUs has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a three-year period. Cash flows beyond the three-year period are extrapolated using the estimated growth rates. By adjusting the three main estimates (cashflows, growth rate and discount rates) by 10%, no impairment charge on goodwill will arise.

g) Retirement benefitsThe present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the group considers the interest rates of high-quality bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation. Other key assumptions for pension obligations are based in part on current market conditions.


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h) Investment propertiesThe fair value of investment properties is based on the nature, location and condition of the specific asset. The fair value of investment property does not include future capital expenditure that will improve or enhance the property and does not reflect the related future benefits from this future expenditure. These valuations are performed annually by external appraisers.

i) Revaluation of property,plant and equipment Appropriate indices, as determined by independent experts, are applied in the intervening periods to ensure that the assets are carried at fair value at the reporting date. Judgement is applied in the selection of such indices. Fair value is derived by applying internationally acceptable and appropriately benchmarked valuation techniques such as depreciated replacement cost or market value approach.

The depreciated replacement cost approach involves estimating the value of the property in its existing use and the gross replacement cost. For this appropriate deductions are made to allow for age, condition and economic or functional obsolescence, environmental and other factors that might result in the existing property being worth less than a new replacement.

The market value approach involves comparing the properties with identical or similar properties, for which evidence of recent transaction is available or alternatively identical or similar properties that are available in the market for sale making adequate adjustments on price information to reflect any differences in terms of actual time of the transaction, including legal, physical and economic characteristics of the properties.

The useful life of each asset group has been determined by independent experts based on the build quality, maintenance history, operational regime and other internationally recognised benchmarks relative to the assets.

5. Segment AnalysisFollowing the management approach of IFRS 8, operating segments are reported in accordance with the internal reporting provided to the Group Executive Committee (the chief operating decision-maker), which is responsible for allocating resources to the reportable segments and assesses its performance. All operating segments used by the group meet the definition of a reportable segment under IFRS 8.

In 2010, the group implemented a new structure. This new structure which is based on business replaced the erstwhile geography based structure and now constitutes the operating segments of the group. This was further streamlined in 2012 with the combination of Corporate Bank and Investment Bank.

The group operating segments are described below:

a) Domestic Bank:Focuses on serving local companies, small and medium scale enterprises, government and government agencies and the retail market.

b) Corporate and Investment Bank:Corporate Bank focuses on providing one-stop banking services to multinationals and regional companies, financial institutions and international organisations across network of the group. Investment Bank constitutes the treasury, corporate finance and asset management business. This unit provides value-added solutions primarily to corporate clients and governments.

Apart from Domestic Bank and Corporate and Investment Bank segment, our non-banking affiliates other than the EDC group are aggregated under ‘others’.

All revenues are external revenues.

Segment assets and liabilities comprise operating assets and liabilities, being the majority of the statement of financial position, but exclude items such as taxation and borrowings.


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5. Segment Analysis (continued)The following table shows the Group’s performance by business segments.

At 31 December 2013Corporate and

Investment Bank Domestic Bank Others Group

Net interest income 435,858 663,547 (48,647) 1,050,758

Net fees and commission income 244,417 349,174 46,367 639,958

Other income 320,709 29,420 196,118 546,247

Operating income 1,000,984 1,042,141 193,838 2,236,963

Impairment losses (60,073) (316,148) (47,018) (423,239)

Operating expenses (450,975) (858,699) (159,214) (1,468,888)

Operating profit 489,936 (132,706) (12,394) 344,836

Share of profit of associates 20 – – 20

Profit before tax from continuing operations 489,956 (132,706) (12,394) 344,856

Total assets 10,109,094 12,957,996 3,665,521 26,732,611

Total liabilities 8,286,142 10,893,535 3,513,035 22,692,712

Other segment items Depreciation and amortisation 54,937 54,585 25,376 134,898

At 31 December 2012

Net interest income 294,154 600,528 (45,992) 848,690

Net fees and commission income 161,792 331,582 34,604 527,978

Other income 255,848 25,511 304,361 585,720

Operating income 711,794 957,621 292,973 1,962,388

Loan impairment charges (13,562) (134,547) 199 (147,910)

Operating expenses (369,537) (879,533) (120,035) (1,369,105)

Operating profit 328,695 (56,459) 173,137 445,373

Share of profit of associates (510) – – (510)

Profit before tax from continuing operations 328,185 (56,459) 173,137 444,863

Total assets 9,021,961 4,715,039 9,963,049 23,700,049

Total liabilities 6,810,624 10,081,227 2,940,005 19,831,856

Other segment items

Depreciation and amortisation 55,474 58,512 18,383 132,369


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5. Segment Analysis (continued)Reconciliation of segment results of operations to consolidated results of operations.

At 31 December 2013 Total management

reporting Consolidation

adjustments Total consolidation

Net interest income 1,050,758 – 1,050,758

Net fees and commission income 639,958 38,812 601,146

Other income 546,247 194,695 351,552

Operating income 2,236,963 233,507 2,003,456

Impairment losses (423,239) (46,509) (376,730)

Operating expenses (1,468,888) (63,924) (1,404,964)

Operating profit 344,836 123,074 221,762

Share of profit of associates 20 4 16

Profit before tax from continuing operations 344,856 123,078 221,778

Total assets 26,732,611 4,200,158 22,532,453

Total liabilities 22,692,712 2,294,907 20,397,805

At 31 December 2012

Net interest income 848,690 – 848,690


Other income 585,720 192,830 392,890


Loan impairment charges (147,910) 7,441 (155,351)



Share of profit of associates (510) 103 (613)


Total assets 23,700,049 3,760,666 19,939,383


5.1 Entity-wide disclosuresThe group is also further organised under the following geographical clusters:

i) Union Economique et Monétaire Ouest Africaine (UEMOA) region comprises all subsidiaries within the UEMOA monetary zone. Countries in this zone share a common currency except Cape Verde. This region currently includes subsidiaries in Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Mali, Niger, Senegal, Togo and Guinea Bissau.

ii) Nigeria region is made up of Ecobank Nigeria.

iii) West African Monetary Zone (WAMZ) region comprises all subsidiaries in West African countries not included in the common monetary zone described as UEMOA. This region currently includes subsidiaries in Ghana, Guinea, Liberia, Sierra Leone, Gambia.

iv) Communauté Economique des Etats de l’Afrique Centrale (CEEAC) region comprises all subsidiaries within the CEMAC monetary zone. Countries in this zone share a common currency except Sao Tome. Cameroon, Chad, Central Africa, Congo Brazaville, Gabon, Sao Tome and Equatorial Guinea are the only countries currently included in this segment.

v) Eastern Africa Community (EAC) comprises of Burundi, Kenya, Rwanda, Tanzania, Uganda and South Sudan.

vi) Southern Africa Development Co-operation (SADC) comprises of Democratic Republic of Congo, Malawi, Zambia and Zimbabwe.

Transactions between the business segments are carried out at arm’s length. The revenue from external parties reported to the Group Executive Committee is measured in a manner consistent with that in the consolidated income statement. Funds are ordinarily allocated between segments, resulting in funding cost transfers disclosed in inter-segment net interest income. Interest charged for these funds is based on the Group’s cost of capital. There are no other material items of income or expense between the business segments.


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5.1 Entity-wide disclosures (continued)Internal charges and transfer pricing adjustments have been reflected in the performance of each business. Revenue-sharing agreements are used to allocate external customer revenues to a business segment on a reasonable basis. The Group’s management reporting is based on a measure of operating profit comprising net interest income, loan impairment charges, net fee and commission income, other income and non-interest expenses. This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs, legal expenses and goodwill impairments when the impairment is the result of an isolated, non-recurring event. As the Group Executive Board reviews operating profit, the results of discontinued operations are not included in the measure of operating profit.

The information provided about each segment is based on the internal reports about segment profit or loss, assets and other information, which are regularly reviewed by the Group Executive Management Committee. Segment assets and liabilities comprise operating assets and liabilities, being the majority of the consolidated statement of financial position, but exclude items such as taxation.

Segment results of operations

The segment information provided to the Group Executive Board for the reportable segments for the year ended 31 December 2013 is as follows:

At 31 December 2013 UEMOA Nigeria WAMZCentral Africa East Africa

Southern Africa Others Total

Net interest income 234,704 469,826 235,269 83,700 34,420 32,603 (39,764) 1,050,758

Net fees and commission income 126,668 210,618 91,166 60,417 19,666 32,962 98,461 639,958

Other income 72,643 138,810 57,045 41,214 13,959 10,341 212,234 546,246

Operating income 434,015 819,254 383,480 185,331 68,045 75,906 270,931 2,236,962

Loan impairment charges (33,114) (271,707) (33,619) (7,377) (14,389) (4,764) (58,268) (423,238)

Operating expenses (274,580) (538,106) (193,990) (122,516) (77,284) (58,670) (203,744) (1,468,890)

Operating profit 126,321 9,441 155,871 55,438 (23,628) 12,472 8,919 344,834

Share of profit of associates (78) – 261 (163) – – – 20

Profit before tax from continuing operations 126,243 9,441 156,132 55,275 (23,628) 12,472 8,919 344,854

Taxation (20,880) 23,348 (45,909) (16,051) 3,881 (4,225) (5,892) (65,728)

Profit after tax 105,363 32,789 110,223 39,224 (19,747) 8,247 3,027 279,126

Total assets 6,500,712 9,231,950 3,025,533 2,260,341 953,915 570,418 4,090,237 26,633,106

Total liabilities 6,076,216 8,238,967 2,692,436 2,077,200 824,202 479,955 2,156,499 22,545,475

At 31 December 2012

Net interest income 194,427 397,771 185,197 72,812 21,927 17,759 (41,203) 848,690

Net fees and commission income 108,803 179,249 79,448 50,433 16,445 20,639 72,961 527,978

Other income 64,289 122,564 42,240 20,929 13,354 6,100 316,244 585,720

Operating income 367,519 699,584 306,885 144,174 51,726 44,498 348,002 1,962,388

Loan impairment charges (25,756) (71,533) (23,302) (9,445) (9,135) (8,304) (435) (147,910)

Operating expenses (235,482) (592,810) (168,334) (102,460) (66,735) (44,960) (158,324) (1,369,105)

Operating profit 106,281 35,241 115,249 32,269 (24,144) (8,766) 189,243 445,373

Share of profit of associates (120) – 160 (550) – – – (510)

Profit before tax from continuing operations 106,161 35,241 115,409 31,719 (24,144) (8,766) 189,243 444,863

Taxation (23,995) 16,252 (33,060) (16,004) 4,957 591 (4,948) (56,207)

Profit after tax 82,166 51,493 82,349 15,715 (19,187) (8,175) 184,295 388,656

Total assets 5,440,358 8,545,164 2,549,432 1,835,381 765,277 423,480 4,214,001 23,773,093

Total liabilities 5,076,352 7,597,648 2,233,494 1,684,198 675,744 366,124 2,198,293 19,831,853


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5.1 Entity-wide disclosures (continued)Reconciliation of segment results of operations to consolidated results of operations

At 31 December 2013 Total management

reporting Consolidation

adjustments Total consolidation

Net interest income 1,050,758 – 1,050,758


Other income 546,246 194,694 351,552


Loan impairment charges (423,238) (60,610) (362,628)



Share of profit of associates 20 4 16


Taxation (65,728) – (65,728)

Profit after tax 279,126 108,974 170,152

Total assets 26,633,106 4,100,653 22,532,453


At 31 December 2012

Net interest income 848,690 – 848,690


Other income 585,720 192,830 392,890


Loan impairment charges (147,910) 7,441 (155,351)



Share of profit of associates (510) 103 (613)


Taxation (56,207) – (56,207)

Profit after tax 388,656 106,834 281,822

Total assets 23,773,093 3,822,758 19,950,335



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6. Net interest incomeYear ended 31 December 2013 2012

Interest income

Loans and advances to banks 34,490 52,830


• Corporate Bank 542,190 428,494

• Domestic Bank 616,280 507,209

Treasury bills and other eligible bills 234,244 79,934

Investment securities – available for sale 133,271 129,621

Financial assets held for trading 29,369 147,242

Others 9,912 2,756

1,599,756 1,348,086

Interest expense

Deposits from banks 8,767 55,701

Due to customers:

• Corporate Bank 156,150 122,643

• Domestic Bank 277,830 271,815

Borrowed funds 98,454 43,601

Others 7,797 5,636

548,998 499,396

7. Net fee and commission incomeYear ended 31 December 2013 2012

Fee and commission income

Credit related fees and commissions 251,177 175,874

Corporate finance fees 27,873 20,944

Portfolio and other management fees 7,813 3,038

Brokerage fees and commissions 4,398 4,527

Cash management and related fees 241,489 249,727

Card management fees 64,056 47,958

Other fees 29,742 13,160

626,548 515,228

Fee and commission expense

Brokerage fees paid 2,933 6,330

Other fees paid 22,469 20,479

25,402 26,809

The Group provides custody, trustee, investment management and advisory services to third parties, which involve the Group making allocation and purchase and sale decisions in relation to a wide range of financial instruments. Those assets that are held in a fiduciary capacity are not included in these financial statements.

8. Net trading incomeYear ended 31 December 2013 2012

Foreign exchange 228,999 189,768

Income on securities measured at fair value through P&L 164 163

Other trading income on securities 79,797 65,776

308,960 255,707


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9. Net gain from investment securitiesYear ended 31 December 2013 2012

Derecognition of available-for-sale financial assets – 5

Impairment of available-for-sale equity securities (1,581) (4,284)

(1,581) (4,279)

10. Other operating incomei) Lease income

Year ended 31 December 2013 2012

Equipment 1,049 8,819

Motor vehicles 374 1,289

Other leased assets 11,536 466

12,959 10,574

ii) Dividend income


Trading securities 87 300

Available-for-sale securities 3,523 1,946

3,610 2,246

iii) Others


Fair value (loss)/gain on investment properties (8,472) 33,735

AMCON refund relating to acquisition of Oceanic Bank – 72,364

Profit on sale of property and equipment 1,755 1,876

Others 34,321 20,667

27,604 128,642

Total other operating income 44,173 141,462

11. Impairment losses on loans and advancesYear ended 31 December 2013 2012

Provision for loan impairment (Note 21) 485,245 241,546

Provisons no longer required (Note 21) (55,300) (31,136)

Amounts recovered during the year (Note 21) (67,317) (62,500)

362,628 147,910


173

12. Impairment losses on other financial assetsYear ended 31 December 2013 2012

Impairment charge on doubtful receivables 14,102 7,441

13. Operating expensesYear ended 31 December 2013 2012

a) Staff expensesSalaries, allowances and other compensation 572,549 508,647

Social security costs 48,909 33,704

Pension costs:

defined contribution plans 13,747 23,090

Other post retirement benefits (Note 37) 4,254 2,023

639,459 567,464

b) Depreciation and amortisationDepreciation of property and equipment (Note 27) 110,379 106,126

Amortisation of software and other intangibles (Note 26) 24,519 24,906

134,898 131,032

c) Other operating expensesDirectors’ emoluments 1,652 2,580

Impairment charges on property and equipment (Note 26) – 172

Restructuring costs 326 31,437

Social responsibility 4,084 2,018

Rent and utilities 70,376 62,398

Insurance 48,980 41,188

Advertising and promotion 31,164 25,920

Professional fees 79,729 66,812

Operational losses and fines 45,328 22,131

Communications and technology 110,531 64,060

Business travels 32,869 29,115

AGM and board activities 5,248 2,892

Training 7,886 8,810

Employee activities 16,332 10,351

Repairs and maintenance 55,121 44,928

Supplies and services 23,684 23,370

Allocated cost 4,324 4,818

Cash transportation 17,150 13,172

Fuel 20,071 18,132

Other taxes 12,314 12,023

Non capitalised items 1,375 2,697

Pre-opening expenses 112 1,229

Listing fees 2,973 2,194

Other administrative expenses 38,978 45,063

Total 630,607 537,510

Total operating expenses 1,404,964 1,236,007


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14. Income tax expenseYear ended 31 December 2013 2012

Current income tax 94,687 71,451

Deferred income tax (Note 36) (28,959) (15,244)

65,728 56,207

The income tax rate applicable to the majority of income of the subsidiaries ranged from 25% to 45%. Further information about deferred income tax is presented in Note 38. The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the parent as follows:

Profit before tax 221,778 338,028

Tax calculated at local tax rates applicable to profits in the respective countries 96,902 71,246

Tax impact on income not subject to tax (16,731) (9,619)

Tax impact on expenses not deductible for tax purposes: (25,388) 15,187

Utilisation of previously unrecognised tax losses 10,945 (21,107)

Others – 500

Income tax expense 65,728 56,207

Under the Headquarters Agreement between Ecobank Transnational Incorporated (ETI) and the Republic of Togo signed in October 1985, ETI is exempt from tax on all its income arising from operations in Togo.

15. Earnings per shareBasicBasic earnings per share is calculated by dividing the net profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue outstanding during the year.


Profit attributable to equity holders of the Company from continuing operations 102,932 246,311

Profit attributable to equity holders of the Company from discontinued operations (7,391) 3,432

Weighted average number of ordinary shares in issue (in thousands) 17,212,153 14,705,322

Basic earnings per share (expressed in US cents per share) from continuing operations 0.60 1.67

Basic earnings per share (expressed in US cents per share) from discontinued operations (0.04) 0.02


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15. Earnings per share (continued)DilutedDiluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has two categories of dilutive potential ordinary shares: convertible debts and share options granted to employees.

The convertible debt is assumed to have been converted into ordinary shares, and the net profit is adjusted to eliminate the interest expense less the tax effect. For the share options, a calculation is made to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.


Profit attributable to equity holders of the company from continuing operations 102,932 246,311

Interest expense on dilutive convertible loans 22,368 37,929 Adjusted profit 125,300 284,240

Profit attributable to equity holders of the company from discontinued operations (7,391) 3,432

Interest expense on dilutive convertible loans – –

Adjusted profit (7,391) 3,432

Weighted average number of ordinary shares in issue (in thousands) 17,212,153 14,705,322

Adjustment for dilutive convertible loans 5,325,753 7,432,653

Adjustment for share option 86,973 7,685

Weighted average number of ordinary shares for diluted earnings per share (in thousands) 22,624,879 22,145,660

Dilutive earnings per share (expressed in US cents per share) from continuing operations 0.55 1.28

Dilutive earnings per share (expressed in US cents per share) from discontinued operations (0.03) 0.02

16. Cash and balances with central banksAt 31 December 2013 2012

Cash in hand 711,228 549,746

Balances with central banks other than mandatory reserve deposits 612,485 399,772

Included in cash and cash equivalents (Note 42) 1,323,713 949,518

Mandatory reserve deposits with central banks 1,554,155 1,032,107

2,877,868 1,981,625

Mandatory reserve deposits are not available for use in the group’s day-to-day operations. Cash in hand and balances with central banks and mandatory reserve deposits are non-interest-bearing.


176



17. Treasury bills and other eligible bills At 31 December 2013 2012

Maturing within three monts (Note 42) 308,953 398,366

Maturing after three months 818,974 427,517

1,127,927 825,883

The movement in Treasury bills and other eligible bills may be summarised as follows:

At 1 January 825,883 745,943

Additions 11,048,636 2,311,833

Acquisition of subsidiaries – 53,097

Disposals (sale and redemption) (10,696,304) (2,233,817)

Gains/(loss) from changes in fair value (5,908) (11,523)

Exchange differences (44,380) (39,650)

At 31 December 1,127,927 825,883

Current 967,590 752,873

Non current 160,337 73,010

1,127,927 825,883

Treasury bills and other eligible bills are debt securities issued by the government of various countries in which the Group operates.

18. Financial assets held for tradingAt 31 December 2013 2012

Debt securities:

• Government bonds 114,830 55,354

• Other debt securities – 37,398

Total debt securities 114,830 92,752

Equity securities

• Listed 87 102

• Unlisted – –

Total equity securities 87 102

Total financial assets held for trading 114,917 92,854

Current 113,724 92,752

Non current 1,193 102

114,917 92,854


177

19. Derivative financial instruments and trading liabilitiesThe Group uses the following derivative instruments for non-hedging purposes.

Currency forwards represents commitments to purchase foreign and domestic currency, including undelivered spot transactions. Foreign currency and interest rate futures are contractual obligations to receive or pay a net amount based on changes in currency rates or interest rates or buy or sell foreign currency or financial institution on a future date at a specified price. The credit risk is negligible, as futures contracts are collateralised by cash or marketable securities, and changes in the futures contract value are settled daily with the exchange.

At 31 December 2013 At 31 December 2012

Assets Assets

Notional Amount Assets Liabilities Notional Amount Assets Liabilities

Derivatives

Currency forwards 373,791 1,525 1,454 27,697 113 94

Currency swaps – – – – 35 35

Options 188,732 139,821 – 193,046 143,269 –

Total 562,523 141,346 1,454 220,743 143,417 129

The Group has not designated at initial recognition any financial liability as at fair value through profit or loss.

All derivative financial instruments, other than the options, are current.

20. Loans and advances to banksAt 31 December 2013 2012

Items in course of collection from other banks 82,154 80,584

Deposits with other banks (Note 42) 716,036 1,127,367

Placements with other banks 513,960 967,205

1,312,150 2,175,156

All loans and advances to banks are current.


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21. Loans and advances to customersAt 31 December Corporate Bank Domestic Bank Total

2013 2012 2013 2012 2013 2012

a) Analysis by type:• Overdrafts 1,378,066 1,094,835 1,225,803 1,224,900 2,603,869 2,319,735

• Credit cards – – 7,131 11,345 7,131 11,345

• Term loans 4,986,705 3,447,256 4,200,334 3,695,033 9,187,039 7,142,289

• Mortgage loans – – 191,467 144,122 191,467 144,122

• Others 20,264 229,927 – – 20,264 229,927

Gross loans and advances 6,385,035 4,772,018 5,624,735 5,075,400 12,009,770 9,847,418

Less: allowance for impairment (89,573) (46,112) (498,592) (360,361) (588,165) (406,473)

6,295,462 4,725,906 5,126,143 4,715,039 11,421,605 9,440,945

b) Analysis by security:Secured against real estate 444,961 381,259 1,480,035 1,055,577 1,924,996 1,436,836

Otherwise secured 3,840,259 2,627,867 2,413,874 1,907,444 6,254,133 4,535,311

Unsecured 2,099,815 1,762,892 1,730,826 2,112,379 3,830,641 3,875,271

6,385,035 4,772,018 5,624,735 5,075,400 12,009,770 9,847,418

Current 7,208,901 5,752,779

Non current 4,800,869 4,094,639

12,009,770 9,847,418

Non-impaired 6,307,773 4,714,210 4,957,425 4,585,155 11,265,198 9,299,365

Impaired 77,262 57,808 667,310 490,245 744,572 548,053

6,385,035 4,772,018 5,624,735 5,075,400 12,009,770 9,847,418


179

c) Movements in loans and advancesReconciliation of loans and advances by class is as follows:

At 31 December 2012 Corporate Bank Domestic Bank Total

Overdrafts Term loans Others Overdrafts Credit cards Term loans Mortgage

At 1 January 2013 1,009,330 3,532,760 229,927 1,224,900 11,345 3,695,033 144,122 9,847,417

Disbursed during the year 1,145,101 3,224,338 47,398 413,562 625 5,568,271 50,294 10,449,589

Paid off during the year (856,285) (1,765,002) (277,069) (361,303) (4,383) (4,842,319) (50,598) (8,156,959)

Amounts written off as uncollectibles (16) (13,340) – (80,244) – (23,772) – (117,372)

Reclassification 2,942 15,779 18,372 91,342 – (185,668) 57,233 –

Exchange difference 76,994 (7,830) 1,636 (62,454) (456) (11,211) (9,584) (12,905)

At 31 December 2013 1,378,066 4,986,705 20,264 1,225,803 7,131 4,200,334 191,467 12,009,770


Overdrafts Term loans Others Overdrafts Credit cards Term loans Mortgage

At 1 January 2012 804,764 2,383,334 141,676 1,071,935 14,812 3,039,535 138,551 7,594,607

Acquistion of subsidiaries – – – 96,834 – 139,648 – 236,482

Disbursed during the year 1,518,112 1,971,612 205,257 890,719 945 1,534,642 67,731 6,189,018

Paid off during the year (1,252,765) (914,512) (100,209) (703,602) (4,383) (972,346) (61,153) (4,008,970)

Amounts written off as uncollectibles (7,111) (312) – (44,137) – (22,335) – (73,895)

Reclassification 28,929 14,447 (21,584) (28,611) – 9,874 (3,055) –

Exchange difference (82,599) 78,191 4,787 (58,238) (29) (33,985) 2,048 (89,823)

At 31 December 2012 1,009,330 3,532,760 229,927 1,224,900 11,345 3,695,033 144,122 9,847,418


180



d) Allowance for impairmentReconciliation of allowance account for losses on loans and advances by class is as follows:


Specific allowance for impairment Overdrafts Term loans Others Overdrafts Credit cards Term loans Mortgage

At 1 January 2013 2,435 21,485 – 150,385 4,516 164,869 8,950 352,640

Provision for loan impairment 9,364 39,750 – 90,290 – 269,923 2,636 411,963

Provisons no longer required 811 (474) – (2,722) – (10,974) 7 (13,352)

Amounts recovered during the year (3,008) (11,718) – (25,621) (4,114) (19,894) (2,962) (67,317)

Loans written off during the year (16) (13,340) – (80,244) – (23,772) – (117,372)

Exchange difference 2,428 (2,094) – (33,208) (165) (24,442) (8,140) (65,621)

At 31 December 2013 12,014 33,609 – 98,880 237 355,710 491 500,941


Collective allowance for impairment Overdrafts Term loans Others Overdrafts Credit cards Term loans Mortgage

At 1 January 4,622 17,570 – 8,525 – 22,820 296 53,833

Provision for loan impairment 4,274 15,247 30 12,973 67 39,727 964 73,282

Provisions no longer required (negative) (514) (76) – (12,187) (70) (28,764) (337) (41,948)

Reclassification (359) 2,088 – (8) – (705) (13) 1,003

Exchange difference 237 831 1 (110) 70 (494) 519 1,054

At 31 December 2013 8,260 35,660 31 9,193 67 32,584 1,429 87,224

Total allowance for impairment 20,274 69,269 31 108,073 304 388,294 1,920 588,165


Specific allowance for impairment Overdrafts Term loans Others Overdrafts Credit cards Term loans Mortgage

At 1 January 2012 8,607 18,686 40 106,102 8,973 86,623 5,637 234,668

Acquistion of subsidiaries – – – 9,383 – 13,532 – 22,915

Provision for loan impairment 1,559 870 – 113,113 – 65,197 – 180,739

Provisons no longer required (15) (1,457) – (1,677) – (27,987) – (31,136)

Amounts recovered during the year (4,328) (2,492) (2,571) (13,000) (4,600) (35,043) (466) (62,500)

Loans written off during the year (7,111) (312) – (44,137) – (22,335) – (73,895)

Exchange difference 3,723 6,190 2,531 (19,399) 143 84,882 3,779 81,849

At 31 December 2012 2,435 21,485 – 150,385 4,516 164,869 8,950 352,640


Collective allowance for impairment Overdrafts Term loans Others Overdrafts Credit cards Term loans Mortgage

At 1 January – – – – – – – –

Provision for loan impairment 4,622 17,570 – 8,525 – 22,820 296 53,833

Provisions no longer required (negative) – – – – – – – –

Reclassification – – – – – – – –

Exchange difference –

At 31 December 2012 4,622 17,570 – 8,525 – 22,820 296 53,833

Total allowance for impairment 7,057 39,055 – 158,910 4,516 187,689 9,246 406,473


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21. Loans and advances to customers (continued)At 31 December 2013 2012

Loans and advances to customers include finance lease receivables analysed below.

Gross investment in finance leases, receivable

No later than 1 year 58 13,927

Later than 1 year and no later than 5 years 2,450 72,584

Later than 5 years – –

2,508 86,511

Unearned future finance income on finance leases (376) (19,454)

Net investment in finance leases 2,132 67,057

The net investment in finance lease may be analysed as follows:

No later than 1 year 427 12,726

Later than 1 year and no later than 5 years 1,705 54,331

Later than 5 years – –

2,132 67,057


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22. Investment securitiesAt 31 December 2013 2012

Securities available-for-sale

Debt securities – at fair value:

• listed 730,632 718,197

• unlisted 938,689 1,382,781

Total 1,669,321 2,100,978

Equity securities – at fair value:

• listed 29,922 24,060

• unlisted 205,035 244,148

Total 234,957 268,208

Total securities available-for-sale before impairment 1,904,278 2,369,186

Allowance for impairment (10,789) (37,438)

Total securities available-for-sale 1,893,489 2,331,748

Current 415,159 258,552

Non current 1,478,330 2,073,196

1,893,489 2,331,748

The Group has not reclassified any financial asset measured at amortised cost to fair value during the year. (2012: nil)

The movement in securities available-for-sale may be summarised as follows:

At 1 January 2,318,201 2,551,507

Additions 4,301,604 1,626,556

Acquisition of subsidiary – 70

Disposals (sale and redemption) (4,591,754) (1,747,571)

Losses from impairment of available-for-sale equity securities (1,581) (4,284)

Gains/(loss) from changes in fair value (46,578) 70,078


At 31 December 1,893,489 2,318,201

The movement in impairment allowance on securities available-for-sale may be summarised as follows:

At 1 January 37,438 47,703

Additional provision 1,581 4,284

Reclassification (19,355) (12,926)


At 31 December 10,789 37,438


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23. Pledged assetsAt 31 December 2013 2012

Treasury bills 880,495 246,267

Government bonds 254,939 453,787

1,135,434 700,054

Pledged assets have been stated at fair values

Current 942,105 477,415

Non-current 193,329 222,639

1,135,434 700,054

24. Investment in associatesAt 31 December 2013 2012

At 1 January 7,530 3,436

Additions – 4,451

Disposal – –

Share of results 16 (613)

Reclassification 13,714 –

Exchange differences 733 256

21,993 7,530


EB-ACCION Ghana

EB-ACCION Cameroon SOFIPE

OLD MUTUAL

Life insurance

OLD MUTUAL General

insurance EB-ACCION

Ghana EB-ACCION Cameroon SOFIPE

Current assets 13,604 8,714 3,985 27,969 27,841 13,715 5,817 3,403

Non-current assets 1,019 753 253 714 12,476 699 961 675

Total assets 14,623 9,467 4,238 28,682 40,318 14,414 6,778 4,078

Liabilities 11,006 7,410 1,636 12,532 8,672 10,772 5,214 1,116

Total Liabilities 11,006 7,410 1,636 12,532 8,672 10,772 5,214 1,116

Revenues 7,145 2,461 655 2,997 – 5,105 1,547 299

Profit after tax 470 (354) (163) (3,242) – 326 (1,196) (251)

None of the associates are listed.


Country of incorporation

Net assets of associate

Share Holding (Direct and Indirect)

Country of incorporation

Net assets of associate

Share Holding (Direct and Indirect)

EB-ACCION Ghana 3,642 39.78% Ghana 3,617 39.78%

EB-ACCION Cameroon 1,564 47.00% Cameroon 2,058 47.00%

SOFIPE Burkina Faso 1,116 40.80% Burkina Faso 2,602 40.80%

OLD MUTUAL Life insurance Nigeria 16,150 30.00%

OLD MUTUAL General insurance Nigeria 31,646 30.00%


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25. Other assetsAt 31 December 2013 2012

Fees receivable 13,401 12,088

Accounts receivable 463,274 348,500

Prepayments 160,907 240,114

Sundry receivables 108,980 31,853

746,562 632,555

Impairment charges on receivable balances (56,649) (52,445)

689,913 580,110

Current 657,632 518,325

Non-current 32,281 61,785

689,913 580,110

The movement in impairment allowance on other assets may be summarised as follows:

1 January 52,445 52,287

Increase in impairment 14,102 7,441

Write-off (9,898) (7,283)

At 31 December 56,649 52,445

26. Intangible assets 2013 2012

Goodwill

At 1 January 433,167 404,623

Acquisition of subsidiary – 24,199

Adjustment – 4,345

At 31 December 433,167 433,167

Goodwill is tested annually for impairment, or more frequently when there are indications that impairment may have occurred. There was no impairment identified in 2013 (2012: nil). The adjustment in 2012 was in relation to the revision of the provisional goodwill figure for Oceanic Bank. The review and adjustment was completed within the 12 months period permitted by IFRS 3.

2013 2012

Software costs

At 1 January 69,982 55,887

Purchase 17,158 38,711

Amortisation (Note 13) (24,519) (25,050)

Exchange differences 960 434

At 31 December 63,581 69,982

Total intangibles 496,748 503,149

Impairment testing for cash-generating units containing goodwill


185

For the purpose of impairment testing, goodwill acquired through business combinations is allocated to cash-generating units (CGUs). The recoverable amounts of the CGUs have been determined based on the value-in-use calculations; using cash flow projections based on the financial budgets approved by senior management covering a period of three years.

The goodwill is arising on acquisitions in the following subsidiaries:

At 31 December 2013 2012

Ecobank Nigeria (Oceanic Bank) 386,749 386,749

Ecobank Ghana (The Trust Bank) 24,199 24,199

Ecobank Rwanda 6,930 6,930

Ecobank Zimbabwe 6,550 6,550

Ecobank Chad 2,962 2,962

Ecobank Central Africa 1,860 1,860

Ecobank Burundi 1,592 1,592

Ecobank Sierra Leone (ProCredit) 1,056 1,056

Ecobank Malawi 700 700

Ecobank Burkina Faso 569 569

433,167 433,167

The calculation of value-in-use was based on the following key assumptions:

• the cash flows were projected based on the Bank’s approved budget. The cash flows were based on past experiences and were adjusted to reflect expected future performances of the company putting into consideration the country’s gross domestic product. To test the sensitivity of this assumption, with a stressed decrease in cashflows by 10%, the goodwill will not be impaired.

• a terminal growth rate of between 3% and 8.6% were applied in determining the terminal cash flows depending on the country the entity is domiciled. To test the sensitivity of this assumption, with a stressed terminal growth rate of 0%, the goodwill will not be impaired.

• discount rates of 17.1% wase applied in determining the value in use, being the determined pre-tax cost of equity of a listed entity that has a portfolio of assets similar in terms of service potential and risks. To test the sensitivity of this assumption, with a stressed increase in discount rate by 10%, the goodwill will not be impaired.

• the Group expects that through this acquisition, it would create synergy that enhances its ability to tap into opportunities in the respective countries where the entities are domiciled;

• The key assumptions described above may change as economic and market conditions change. The Group estimates that reasonably possible changes in these assumptions would not cause the recoverable amount of either CGU to decline below the carrying amount.


186



27. Property and equipmentMotor

Vehicles Land and Buildings

Furniture and Equipment Installations

Construction in progress Total

At 1 January 2012

Cost or Valuation 86,207 567,780 422,562 97,019 129,116 1,302,684

Accumulated depreciation 65,629 89,698 283,534 43,457 – 482,318

Net book amount 20,578 478,082 139,028 53,562 129,116 820,366

Year ended December 2012

Opening net book amount 20,578 478,082 139,028 53,562 129,116 820,366

Acquisition of subsidiaries 500 88 3,131 – 1,522 5,241

Additions 29,130 25,565 69,222 11,071 25,147 160,135

Revaluation – (1,143) – – – (1,143)

Disposals – cost (13,021) (18,509) (49,325) (3,434) (2,662) (86,951)

Disposals – accumulated depreciation 8,254 3,387 49,722 2,404 – 63,767

Reclassifications – cost – 13,515 1,418 2,217 (17,150) –

Reclassifications – accumulated depreciation – 2,456 – (2,456) – –

Impairment charge – (172) – – – (172)

Depreciation charge (14,061) (20,720) (61,699) (10,840) – (107,320)

Exchange rate adjustments (375) (814) (300) 7,013 1,869 7,393

Closing net book amount 31,005 481,735 151,197 59,537 137,842 861,316

At 31 December 2012/1 January 2013

Cost or Valuation 104,530 588,175 499,320 114,336 137,842 1,444,203


Net book amount 31,005 481,735 151,197 59,537 137,842 861,316

Year ended December 2013

Opening net book amount 31,005 481,735 151,197 59,537 137,842 861,316

Additions 10,674 54,696 65,987 21,831 10,689 163,877

Revaluation – 2,493 – – 2,493

Disposals – cost (6,349) (15,639) (12,936) (13,344) (8,167) (56,435)

Disposals – accumulated depreciation 7,026 2,785 5,845 4,056 – 19,712

Reclassifications – cost – 10,163 1,663 6,135 (17,961) –

Reclassifications – accumulated depreciation – 74 (415) 340 – –

Depreciation charge (10,933) (19,434) (65,812) (14,200) – (110,379)

Exchange rate adjustments (477) (7,316) (2,068) 2,178 (756) (8,439)

Closing net book amount 30,947 509,556 143,460 66,535 121,647 872,145

At 31 December 2013

Cost 105,139 631,401 544,746 132,660 121,647 1,535,593


Net book amount 30,947 509,556 143,460 66,535 121,647 872,145


187

28. Investment properties 2013 2012

1 January 196,588 72,177

Additions 11,519 90,228

Fair value gains (8,472) 33,735

Disposal (32,252) –

Exchange rate adjustments 665 448

At 31 December 168,048 196,588

The following amounts have been recognised in the income statement:

Rental income 1,611 325

Direct operating expenses arising from investment properties that generate rental income (539) (80)

1,071 245

Investment properties are carried at fair value. The valuation of investment properties has been done using the level 2 technique (inputs other than quoted prices that are observable for the asset or liability). The values have been derived using the sales comparison approach.


188



29. Held for sale and discontinued operationsThe assets and liabilities of Union Bank of Cameroon (UBC) have been classified as held for sale in line with IFRS 5 (Non current assets held for sale and discontinued operations). UBC was acquired as part of the Oceanic transaction in 2011 but was deemed as non-core to ETI’s operations. Regulatory approval has been obtained for the sale and it is expected to be completed during 2014.

2013 2012

a) Assets classified as held for saleCash and balances with central banks 61,296 –

Treasury bills and other eligible bills 20,922 –

Loans and advances to banks 7,273 –

Loans and advances to customers 16,482 –

Investment securities–available for sale 23,713

Intangible assets 33 –

Property and equipment 2,013 –

Deferred income tax assets 2,435 –

Other assets 1,957 –

136,123 –

b) Liabilities classified as held for saleDeposits from banks 1,079 –

Due to customers 134,779 –

Other liabilities 6,937 –

Current income tax liabilities 80 –

Retirement benefit obligation 742

Deferred income tax liabilities 3,615 –

147,232 –

c) Profit from discontinued operationsRevenue 10,443 22,755

Costs (including impairments) (11,735) (12,759)

Profit before tax of discontinued operations (1,292) 9,996

Tax 1,330 (5,086)

Profit from discontinued operations after tax 38 4,910

(Loss)/gain on disposal (8,315) –

(Loss)/Profit from discontinued operations (8,277) 4,910


Owners of the parent (7,391) 3,432

Non controlling interests (886) 1,478

(8,277) 4,910


189

d) Disposal of businessesDuring the year, ETI sold majority interests in some Oceanic entities.These entities were acquired as part of the Oceanic transaction in 2011 but were deemed as non-core assets. Oceanic Life was disposed in January 2013, Oceanic Health in June 2013, Oceanic Insurance and Oceanic Homes in November 2013.

Oceanic Life Oceanic Health Oceanic Insurance Oceanic Homes Total

Total assets

Cash and balances with Central Banks 1,281 – 2,018 – 3,299

Loans and advances to banks 17,315 3,262 17,912 1,557 40,046

Investment securities 1,355 309 2,748 104 4,516

Loans and advances to customers – – 516 1,981 2,497

Property and equipment 24 88 46 – 158

Investment property 5,253 – 11,688 15,019 31,960

Intangible assets – 43 – – 43

Deferred income tax asset 14 2 743 – 758

Other assets 1,215 1,019 4,648 1,265 8,146

Total assets 26,456 4,723 40,318 19,925 91,422

Total liabilities

Deposits from banks – – – 9,068 9,068

Deposits from customers – – – 395 395

Current tax liability 53 170 620 20 864

Borrowings – – 945 – 945

Other liabilities 9,073 1,796 7,107 2,490 20,466

Total liabilities 9,126 1,966 8,672 11,974 31,738

Net assets at date of disposal 17,330 2,757 31,646 7,951 59,684

Net proceeds from disposal 13,900 2,229 18,100 3,308 37,537

Fair value of net assets retained 5,957 117 7,757 – 13,832

Profit/(loss) from disposal 2,527 (410) (5,789) (4,643) (8,315)

Net cash inflow arising on disposal

Net proceeds from disposal 13,900 2,229 18,100 3,308 37,537

Cash and cash equivalents disposed 18,596 3,262 19,930 1,557 43,345

(4,696) (1,033) (1,830) 1,751 (5,807)

Cash flow:

• Cash inflow on disposal of subsidiaries 13,900 2,229 18,100 3,308 37,537

• Cash outflow on disposal of subsidiaries (18,596) (3,262) (19,930) (1,557) (43,345)


190



30. Deposits from other banksAt 31 December 2013 2012

Operating accounts with banks 562,282 308,781

Deposits from other banks 144,671 353,420

706,953 662,201

All deposits from banks are current and have variable interest rates.

31. Due to customersAt 31 December 2013 2012

Corporate Bank

• Current accounts 3,670,418 3,094,973

• Term deposits 1,925,951 1,444,278

5,596,369 4,539,251

Domestic Bank

• Current accounts 4,612,885 5,578,911

• Term deposits 3,668,329 2,209,264

• Savings deposits 2,612,321 2,293,052

10,893,535 10,081,227

Total 16,489,904 14,620,478

Current 7,672,718 5,183,346

Non current 8,817,186 9,437,132

16,489,904 14,620,478

Customer deposits carry variable interest rates.


Current account Term deposits Current account Term deposits Savings

At 1 January 3,094,973 1,444,278 5,578,911 2,209,264 2,293,052 14,620,478

Additions 2,845,875 702,479 7,277,060 1,573,389 700,748 13,099,551

Acquisition of subsidiaries – – – – – –

Withdrawals (2,228,043) (215,485) (8,112,678) (83,809) (320,348) (10,960,363)

Reclassification 16,646 – (16,646) – – –

Exchange difference (59,033) (5,321) (113,763) (30,515) (61,131) (269,763)

At 31 December 2013 3,670,418 1,925,951 4,612,884 3,668,329 2,612,321 16,489,903


Current account Term deposits Current account Term deposits Savings

At 1 January 2,325,410 1,140,173 4,810,067 1,774,811 2,026,034 12,076,495

Additions 4,441,451 521,513 11,887,285 605,896 625,552 18,081,697

Acquisition of subsidiaries 74,948 39,603 81,986 14,143 – 210,680

Withdrawals (3,715,001) (288,487) (11,097,495) (408,691) (424,921) (15,934,595)

Reclassification (26,980) 2,736 (147,774) 171,864 154 –

Exchange difference (4,855) 28,740 44,842 51,241 66,233 186,201

At 31 December 2012 3,094,973 1,444,278 5,578,911 2,209,264 2,293,052 14,620,478


191

32. Other depositsAt 31 December 2013 2012

Other money-market deposits 677,628 369,077

Certificates of deposits 332 283

677,960 369,360

All certificate of deposits are current and have variable interest rates.

33. Borrowed fundsAt 31 December 2013 2012

a Nedbank 281,090 277,355

b 4% Convertible preference shares 109,794 109,606

c Proparco 82,320 50,480

d Opec Fund for International Development 35,077 30,688

e Bank of Industry of Nigeria 282,263 281,180

f Central Bank of Nigeria 11,393 24,459

g Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V (FMO) 17,678 27,807

h European Investment Bank 114,716 98,112

i International Finance Corporation 203,336 230,285

Social Security and National Insurance Trust 2,016 2,313

Banque Centrale des Etats de l’Afrique de L’Ouest (BCEAO) – 46,745

Banque Ouest-Africaine de Dévelopment (BOAD) 3,893 5,348

Societe Mamadou Dalaba 2,107 596

j Atlantic Coast Regional Fund (ACRF) 8,348 6,791

k Societe de Promotion et Participation pour la Coopération Economique (PROPARCO) 8,083 12,402

l Caisse Régionale de Refinancement Hypothécaire (CRRH) 19,332 –

Export Development Investment Fund (EDIF) Ghana 6,383 –

Advanced Finance and Investment Group (AFIG) Rwanda 2,949 –

East African Development Bank (EADB) Kenya 2,900 –

m Standard Chartered Bank, Nigeria 45,000 –

n Keystone Bank, Nigeria 20,000 –

o Other loans 44,727 35,516

1,303,406 1,239,683

Current 61,384 57,463

Non current 1,242,022 1,182,220

1,303,406 1,239,683

a) NEDBANK loan is a convertible loan to ETI. It is repayable at once, at the end of 2014 if the share subscription option is not exercised.

b) In 2011, ETI issued 1.07 billion units of convertible, redeemable and cumulative preference shares to the shareholders of Oceanic Bank International Limited at US$0.1032 per share. Dividend is payable on the preference shares at the higher of 4% per annum and proposed ordinary dividend per share.

c) PROPARCO, the Development Financial Institution arm of the French Development Agency (AFD), provided a 7-year loan facility to ETI.

d) Opec Fund for International Development (OFID) Loan is a convertible and subordinated loan repayable in seven (7) equal semi-annual installments starting from 2016. The subsidiaries that benefitted from this loan are: Ecobank Senegal, Cameroon, Kenya and Côte d’Ivoire.

e) The Bank of Industry (BOI) loan to Oceanic Bank is for on-lending to customers in the manufacturing sector with a maximum tenure of 15 years. The facility is 15 years.

f) Central Bank of Nigeria loan represents 7-year intervention funds for on-lending to a customer of the Bank in the agricultural sector. The funds are administered at a maximum interest rate of 9% per annum.


192



33. Borrowed funds (continued)

g) Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V (FMO) loan to ETI is repayable over five (5) years in twenty (20) equal quarterly instalments from 2010-2015. Interest rate is based on 3 month LIBOR rate plus margin of 4.0% payable quarterly.

h) European Investment Bank (I) Loan is repayable in ten equal semi-annual instalments which started from 2010. Interest is payable semi-annually at an annual rate of 2.4% plus 6 month LIBOR. European Investment Bank (II) Loan is a convertible and subordinated loan repayable in ten equal semi-annual instalments which started from 2010. The subsidiaries that benefitted from this loan are: Ecobank Burkina, Côte d’Ivoire, DR Congo, Ghana, Guinea Bissau, Mali, Rwanda, Chad, Senegal, Togo, Uganda, and Zambia.

i) International Finance Corporation (IFC) Loan is a convertible and subordinated loan repayble in thirteen (13) equal semi-annual installments starting from 2015. The subsidiaries that benefitted from this loan are: Ecobank Benin, Burkina, Guinea Bissau, Mali, Niger, Senegal, Togo, Gambia, Ghana, Sierra Leone, Cameroun, Central African Republic, Chad, Rwanda, and Nigeria. There were other IFC loans to Ecobank Nigeria and Ecobank Ghana expiring on 2013 and 2015 respectively and attracting interest rates of LIBOR+2.75% and LIBOR+3% respectivley.

j) Atlantic Cost Regional Fund (ACRF) to Ecobank Chad, Ecobank Liberia and Ecobank Rwanda are convertible loans expiring in 2015.

k) PROPARCO loan to Ecobank Kenya was a 5-year term loan maturing in 2015 with a rate of LIBOR + 7%.

l) Caisse Régionale de Refinancement Hypothécaire loan to Ecobank Côte d’Ivoire is maturing in 2022 with a rate of 6%.

m) The loan from Standard Chartered Bank Nigeria was obtained by Bewcastle Limited (a subsidiary of ETI) for a tenor of 36 months with interest rate at 90day LIBOR plus 7%.

n) The loan from Keystone Bank Nigeria was obtained by Bewcastle Limited (a subsidiary of ETI) for a tenor of 36 months with interest rate at 90day LIBOR plus 7%.

o) The Group also received other loans in several of our subsidiaries with interest ranging between 3% and 5% with maximum maturity of 10 years.

Analysis of the convertible loansThe convertible loans are presented in the consolidated statement of financial position as follows:

Name of Institution Contract interest rate Effective interest rate Tenor (Years) Face value Amount

European Investment Bank (II) 4.267% + 6 months Libor 5.43% 7 68,205 68,252

Opec Fund for International Development 5.75% + 6 months Libor 6.53% 8 30,000 30,598

International Finance Corporation 8% +6 months Libor 8.78% 7 75,180 67,962

NEDBANK 2.95% + 3 months Libor 5.43% 3 285,000 281,090

Preference share 4% 5.43% 5 110,071 109,794

568,456 557,696


Initial recognition:

• Face value of convertible bond issued 568,456 562,856

• Equity conversion component net of deferred tax liability (Note 40) (25,635) (25,501)

Liability component 542,821 537,355

The convertible bond is presented in the statement of financial position as follows:

Liability component 544,634 537,670

Interest expense 31,780 7,834

Interest paid (18,718) (871)

Liability component at 31 December 557,696 544,634

Interest on the convertible loan is calculated on the effective yield basis by applying the effective interest rate for an equivalent non-convertible loan to the liability component of the convertible loan and for the year ended 31 December 2013 amounted to US$38.02million (2012: $31.7million). The actual interest paid in 2013 was US$37.5 million (2012: $29.9million).


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33. Borrowed funds (continued)


Summary of subordinated loans

European Investment Bank (II) 68,252 67,861

Opec Fund for International Development 30,598 30,526

International Finance Corporation 138,063 130,821

236,913 229,208

34. Other liabilitiesAt 31 December 2013 2012

Accrued income 44,993 36,126

Unclaimed dividend 1,676 6,112

Accruals 646,700 457,511

Obligations under customers’ letters of credit 45,246 70,678

Bankers draft 52,151 85,469

Others 135,332 76,763

926,098 732,659

Other liabilities are expected to be settled within no more than 12 months after the reporting date.

35. Provisions 2013 2012

At 1 January 26,040 11,210

Additional provisions charged to income statement 13,319 14,887

Provision no longer required (388) (199)

Utilised during year (4,618) (3,480)

Exchange differences (5,842) 3,622

At 31 December 28,511 26,040

Other provisions represent amounts provided for in respect of various litigations pending in court. Based on professional advice, the amounts for pending litigations have been set aside to cover the expected losses to the Group on the determination of these litigations.


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36. Deferred income taxesDeferred income taxes are calculated using the enacted tax rate of each subsidiary.

The movement on the deferred income tax account is as follows:

2013 2012

At 1 January (35,463) (35,424)

Income statement charge (28,959) (15,244)

Available-for-sale securities (directly in OCI):

• fair value remeasurement (11,801) 42,999

• transfer to net profit – (9)

Revaluation of property and equipment (directly in OCI) 517 34


At 31 December (80,475) (35,463)

Deferred income tax assets and liabilities are attributable to the following items:

Deferred income tax liabilities

Accelerated tax depreciation 6,675 6,832

Available-for-sale securities 2,693 11,633

Revaluation of property and equipment 30,408 30,296

Provision for loan impairment (recovery) 3,813 4,175

Other temporary differences 861 5,347

44,450 58,283

Deferred income tax assets

Pensions and other post retirement benefits 51 280

Provisions for loan impairment 25,587 4,799

Other provisions 1,637 181

Tax loss carried forward 26,725 42,125

Other temporary differences 60

On untilised capital allowances 16 18,075

On revaluation PPE 17,035 24,406

On Impairment of assets 51,636 3,880

122,747 93,746

Deferred tax liabilities

• To be recovered within 12 months 18,622 8,747

• To be recovered after more than 12 months 25,829 49,535

44,451 58,282

Deferred tax assets

• To be recovered within 12 months 25,164 21,197

• To be recovered after more than 12 months 97,583 72,547

122,747 93,744

The deferred tax charge in the income statement comprises the following temporary differences:

Accelerated tax depreciation (157) (4,736)

Provision for loan impairment (recovery) (362) 4,175

Pensions and other post retirement benefits 229 (216)

Allowances for loan losses (20,788) (1,951)

Other provisions (1,456) 10,479

Other temporary differences (4,486) 10,955


(28,959) (15,244)


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36. Deferred income taxes (continued)Deferred income tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes related to the same fiscal authority.

Income tax effects relating to components of other comprehensive income:

2013 2012

Gross Tax Net Gross Tax Net

Fair value gains/loss on available for sale (52,486) 11,801 (40,685) 58,506 (42,990) 15,516

Revaluation gains/loss on property and equipment 2,493 (517) 1,976 (1,143) (34) (1,177)

(49,993) 11,284 (38,709) 57,363 (43,024) 14,339


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37. Retirement benefit obligationsAt 31 December 2013 2012

Amounts recognised in the statement of financial position:

Other post retirement benefits 8,019 7,220

Other post-retirement benefits

Apart from the pension schemes, the Group operates a post employment gratuity payment scheme. The method of accounting and the frequency of valuations are as described in Note 2.22.

The Group operates a post employment gratuity payment scheme. The amounts recognised in the statement of financial position are as follows:

Present value of funded obligations 43,798 38,473

Fair value of plan assets (45,017) (36,499)

(1,219) 974

Present value of unfunded obligations 9,238 5,246

Liability in the statement of financial position 8,019 7,220

Income tax effects relating to components of other comprehensive income

Current service cost 4,022 2,287

Net interest cost 232 40

Total included in staff costs 4,254 2,327

The movement in benefit obligation is reconciled as follows:

At 1 January 43,719 21,966

Current service cost 4,022 2,287

Net interest cost 232 40

Benefits paid (2,901) (853)

Contributions to the scheme 7,923 16,404

Exchange differences 41 3,875

At 31 December 53,036 43,719

The movement in the fair value of the plan assets for the year is as follows:

At 1 January 36,499 18,789

Return on plan assets 3,254 954

Contributions to the scheme 7,923 16,404

Benefits paid (2,901) (853)

Exchange differences 241 1,205

At 31 December 45,017 36,499

The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current investment policy.

The principal assumptions used for the subsidiaries operating in the UEMOA region were as follows:

Discount rate 3% 3%

Expected return on plan assets 1.8% 1.8%

Future salary increases 2% 2%

The principal assumptions used for the employees of Ecobank Nigeria Plc were as follows:

Discount rate 13% 14%

Expected return on plan assets 9% 9%


The principal assumptions used for the employees of Ecobank Transnational Incorporated were as follows:

Discount rate 3% 3%



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38. Contingent liabilities and commitmentsa) Legal proceedingThere were a number of legal proceedings outstanding against the Group at 31 December 2013. No provision has been made as professional advice indicates that it is unlikely that any significant loss will arise.

b) Capital commitmentsAt 31 December 2013, the Group had capital commitments of $28.2m (2012: $28.2m) in respect of buildings and equipment purchases. The Group’s management is confident that future net revenues and funding will be sufficient to cover this commitment.

c) Loan commitments, guarantee and other financial facilitiesAt 31 December 2013 the Group had contractual amounts of the off-statement of financial position financial instruments that commit it to extend credit to customers guarantees and other facilities are as follows:


Acceptances – 7,107

Guaranteed commercial papers 295,415 186,396

Documentary and commercial letters of credit 1,761,659 1,494,695

Performance bond, guarantees and indemnities 2,498,855 1,536,737

Loan commitments 293,909 338,143

4,849,838 3,563,078

39. Share capital No of shares (‘000) Ordinary shares Share premium Treasury shares Total

At 1 January 2012 12,837,153 320,928 759,258 – 1,080,186

Proceeds from share subscription:

• Private placement 4,375,000 109,372 240,625 – 349,997

Share issue expenses – – (7,883) – (7,883)

Treasury shares (183,754) – – (13,299) (13,299)

At 31 December 2012/1 January 2013 17,028,399 430,300 992,000 (13,299) 1,409,001

Proceeds from share subscription:

• Private placement – – – – –

Share issue expenses – – – – –

Treasury shares – – – – –

At 31 December 2013 17,028,399 430,300 992,000 (13,299) 1,409,001

The total authorised number of ordinary shares at year end was 50 billion (2012: 50 billion) with a par value of US$0.025 per share (2012: US$0.025 per share).

Total issued shares as of 31 December 2013 were 17.2 billion. The adjustment for treasury shares in 2012 and 2013 on consolidation resulted in the share count of 17.0 billion shares. The treasury shares were ETI shares held by a subsidiaries within the Group as at year end.


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39. Share capital (continued)Share optionsThe Group offers share option to certain employees with more than three years’ service. Options are conditional on the employee completing three year’s service (the vesting period). The options are exercisable starting three years from the grant date. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Movement in the number of share options outstanding are as follows:

2013 2012

At 1 January 442,070 245,997

Granted – 219,000

Exercised – –

Lapsed (19,950) (22,927)

At 31 December 422,120 442,070

The range of exercise price of outstanding shares as at 31 December 2013 is 6 cents to 8 cents while the weighted average remaining life of the outstanding shares as at 31 December 2013 is 3 years.

Employee share options were granted on 1 January 2007 at a price of US$ 0.08 (restated for share splits) per share and options may be exercised prior to the tenth anniversary of the grant, no later than 31 December 2016. New employee share options totalling 119 million shares were granted on 1 January 2012 with same terms as the previous scheme. Additional share options totalling 100 million shares were also granted on 16 July 2012 with a contractuallife of 5 years.

The number of shares outstanding at the end of the year was as follows:


Expiry date: 000 000

2016 322,120 342,070

2017 100,000 100,000

422,120 442,070

For the general employees share option plan, options may be exercised prior to the tenth anniversary of the grant, no later than 31 December 2016.

Measurement of fair values – share options The fair value of services received in return for share options granted is based on the fair value of share options granted, measured using the Black-Scholes formula. The service and non-market performance conditions attached to the transactions were not taken into account in measuring fair value.The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows.

Fair value of share options and assumptions 2006 scheme 2011 scheme 2012 scheme

Fair value at grant date (US$) 0.056 – 0.012

Share price at grant date (US$) 0.229 0.067 0.063

Exercise price (US$) 0.08 0.08 0.06

Expected volatility 2.68% 2.25% 0.75%

Expected life (number of years) 7 7 4

Expected dividends 10% 10% 6%

Risk-free interest rate 4.68% 0.89% 11.8%

The expected volatility is based on both historical average share price.


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40. Retained earnings and other reserves



Other reserves (47,333) (33,005)

527,435 597,187

a) Retained earningsMovements in retained earnings were as follows:

At 1 January 630,192 315,209

Net profit for year 95,541 249,743

Adjustments to opening retained earnings – 44,715

Dividend (68,879) (55,612)

Reclassification of share option reserve – 181

Transfer to general banking reserve (24,913) (22,791)

Transfer to statutory reserve (57,172) (3,748)

Gain on shares held in Ecobank Ghana used as purchase consideration – 102,495

At 31 December 574,768 630,192

b) Other ReservesGeneral banking reserve 117,399 92,486

Statutory reserve 185,270 128,098

Revaluation reserve – Available-for-sale investments (41,027) (342)

Convertible bond – equity component 25,635 25,501

Revaluation reserve – property and equipment 65,601 63,624

Share option reserve 14,056 14,056

Translation reserve (414,267) (356,428)

(47,333) (33,005)

Movements in the other reserves were as follows:

i) General banking reserveAt 1 January 92,486 68,676

Increase in share option reserve – 1,200

Reclassification of lapsed share option – (181)

Transfer from retained earnings 24,913 22,791

At 31 December 117,399 92,486

The general banking reserve represents transfers from retained earnings for unforeseeable risks and future losses. General banking reserves can only be distributed following approval by the shareholders in general meeting.

ii) Statutory reserveAt 1 January 128,098 124,350

Transfer from retained earnings 57,172 3,748

At 31 December 185,270 128,098

Statutory reserves represents accumulated transfers from retained earnings in accordance with relevant local banking legislation. These reserves are not distributable.


200



40. Retained earnings and other reserves (continued)

2013 2012

iii) Revaluation reserves – Available-for-saleAt 1 January (342) (15,858)

Net (loss)/gains transferred to comprehensive income – (49)

Less deferred tax – 9

Net gain/loss from changes in fair value (Notes 17 and 22) (52,486) 58,555

Deferred income taxes (Note 36) 11,801 (42,999)

At 31 December (41,027) (342)

The revaluation reserve shows the effects from the fair value measurement of available-for-sale investment securities after deduction of deferred taxes.

iv) Convertible bond - equity componentMovement in equity component of convertibles were as follows:

At 1 January 25,501 25,501

Arising during the year 134 –

At 31 December 25,635 25,501

The equity component of the convertible bond is computed as a residual amount after determining the loan amount using the market rate of an equivalent loan.

v) Revaluation Reserve – property and equipmentAt 1 January 63,624 64,801

Net gains/(losses) from changes in fair value 2,493 (1,143)

Deferred income taxes (517) (34)

At 31 December 65,601 63,624

vi) Translation reserveAt 1 January (356,428) (322,717)

Currency translation difference arising during the year (57,839) (33,711)

At 31 December (414,267) (356,428)

41. Dividends per shareFinal dividends are not accounted for until they have been ratified at the Annual General Meeting. At the forthcoming annual general meeting, no dividend in respect of 2013 is to be proposed.


201

42. Cash and cash equivalentsFor the purposes of statement of cash flows, cash and cash equivalents comprise the following balances with less than three months maturity.


Cash and balances with central banks (Note 16) 1,323,713 949,521

Treasury Bills and other eligible bills (Note 17) 308,953 398,366

Deposits with other banks (Note 20) 716,036 1,127,367

Deposits from other banks (Note 30) (706,953) (662,201)

1,641,749 1,813,053

43. Group entitiesa) Significant subsidiaries

Country of incorporation Ownership interests

2013 2012

Ecobank Nigeria Limited Nigeria 100% 100%

Ecobank Ghana Limited Ghana 69% 69%

Ecobank Côte d’Ivoire Côte d’Ivoire 96% 96%

Ecobank Burkina Burkina Faso 85% 85%

Ecobank Senegal Senegal 80% 80%

Ecobank Benin Benin 79% 79%

Ecobank Cameroon Cameroon 80% 80%

Ecobank Mali Mali 93% 93%

Ecobank Togo Togo 82% 82%

b) Non-controlling interests in subsidiariesThe following table summarises the information relating to the Group’s subsidiary that has material non-controlling interests (NCI), before any intra-group eliminations

Entity Ecobank Ghana Ecobank Senegal Ecobank Benin

NCI percentage 31% 31% 20% 20% 21% 21%

Period 2013 2012 2013 2012 2013 2012

Loans and advances to customers 983,910 740,065 573,489 453,350 575,746 464,593

Investment securities 228,919 171,651 171,923 97,656 89,321 61,245

Other assets 970,442 906,676 286,781 235,381 279,198 307,956

Deposits from customers 1,501,977 1,298,394 712,437 575,177 677,476 583,543

Other liabilities 425,824 278,109 256,073 393,334 207,490 199,277

Net assets 2,183,271 1,818,391 1,032,193 786,387 944,265 833,794

Carrying amount of NCI 678,342 564,974 201,794 153,739 201,034 177,515

Operating income 295,605 229,431 66,759 52,397 62,972 50,941

Profit before tax 134,302 101,418 10,898 8,218 20,475 12,488

Profit after tax 95,515 72,192 9,020 9,471 15,648 10,173

Total comprehensive income 90,775 64,370 7,647 11,028 15,760 10,748

Profit allocated to NCI 29,677 22,430 1,763 1,852 3,332 2,166

Cashflows from operating activities 87,990 144,485 149,668 145,370 80,182 37,525

Cashflows from investing activities (101,829) (105,794) (78,727) (61,762) (29,432) (9,118)

Cashflows from financing activities (40,162) 55,422 9,895 (48,353) (11,706) (22,932)

Net increase/(decrease) in cash and cash equivalents (54,002) 94,113 80,837 35,254 39,044 5,475


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c) Significant restrictionsThe Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from the supervisory frameworks within which banking subsidiaries operate. The supervisory frameworks require banking subsidiaries to keep certain levels of regulatory capital and liquid assets, limit their exposure to other parts of the Group and comply with other ratios.

d) Involvement with unconsolidated structured entitiesThe table below describes the structured entities in which the Group does not hold an interest but is a sponsor. The Group considers itself a sponsor of a structured entity when it facilitates the establishment of the structured entity. These entities were not consolidated in 2013.

Name Type of structured entity Nature and purpose Investment held by the Group

Singularity Africa PCC (incorporated in Mauritius in 2013) Asset-backed structured entity

a) Provide investors with an exposure to a referenced asset such as a debt instrument b) Generate fees for agent activities and funding for the Group’s lending activities.

None

Creative Africa B.V. (incorporated in Netherlands in 2013) Asset-backed structured entity None

FCP UEMOA DIVERSIFIE (incorporated in Côte d’Ivoire in 2007) Asset-backed structured entity None

FCP UEMOA RENDEMENT (incorporated in Côte d’Ivoire in 2007) Asset-backed structured entity None

The table below sets out information for 2013 in respect of structured entities that the Group sponsors, but which the Group does not have an interest.

Asset-backed structured entities FCP UEMOA DIVERSIFIEFCP UEMOA

RENDEMENT Singularity Africa PCC Creative Africa B.V.

Fee income earned from asset-backed structured entities 5,249 872

*Carrying amount of assets transferred by third parties to conduit vehicle 13,261 3,942 82,152 88,525

Carrying amount of the financing received from unrelated third parties 63,673 65,473

The carrying value is stated at book value (costs less impairment)

The Group does not have any exposure to any loss arising from these structured entities.

44. Related party transactionsThe related party is the key management personnel, their related companies and close family relations. The key management personnel included directors (executive and non-executive),and other members of the Group Executive Committee.

A number of banking transactions are entered into with related parties in the normal course of business and at commercial terms. These transactions include loans, deposits, and foreign currency transactions. The volumes of related party transactions, outstanding balances at the year end, and relating expense and income for the year as follows:

Loans and advances to related parties Directors and key management personnel Related companies

2013 2012 2013 2012

Loans outstanding at 1 January 3,568 8,260 134,412 27,898

Loans issued during the year 20,889 992 112,960 106,225

Loan repayments during the year (7,074) (5,733) (219,161) (2,060)

Exchange difference (16,674) 49 (12,116) 2,349

Loans outstanding at 31 December 709 3,568 16,095 134,412

Interest income earned 35 47 288 5,959

No provisions have been recognised in respect of loans given to related parties (2012: nil).

The loans issued to executive directors during the year and related companies controlled by directors were given on commercial terms and market rates.


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44. Related party transactions (continued)Deposits from related parties Directors and key management personnel Related companies

2013 2012 2013 2012

Deposits at 1 January 14,504 37,917 11,378 98,557

Deposits received during the year 212 4,241 4,165 8,135

Deposits repaid during the year (12,730) (3,822) (10,414) 1,818

Exchange difference (920) (23,832) (4,067) (97,132)

Deposits at 31 December 1,066 14,504 1,062 11,378

Interest expense on deposits 16 12 16 155

Year ended 31 December 2013

Directors’ remuneration

Total remuneration of the non-executive directors 1,652

Related party credits During the period the Group through its subsidiaries granted various credit facilities to directors and companies whose directors are also directors of ETI at rates and terms comparable to other facilities in the Group’s portfolio. An aggregate of US$16.8 million was outstanding on these facilities at the end of the reporting period. The status of performance of each facility is as shown below:

Name of company/individual Relationship Type Status Nature of security Amount

Evelyne Tall Director Term loan Non-impaired Legal mortgage 249

Eddy Ogbogu Director Term loan Non-impaired Legal mortgage 460

Brasserie du Cameroun Director related Term loan Non-impaired Unsecured 4,206

BIDC Director related Bonds Non-impaired Unsecured 11,889

16,804


204



45. Prior period corresponding balancesCertain prior period balances have been reclassified in line with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, to reflect current period presentation due to the following reasons:

Note Year ended 31 December

Reported 2012 US$’000

IFRS 5 discontinuing operations

Restated 2012 US$’000

Interest income a 1,356,967 (8,881) 1,348,086

Interest expense a (501,954) 2,558 (499,396)

Net interest income 855,013 (6,323) 848,690

Insurance premium income a 7,826 (7,826) –

Insurance premium ceded to reinsurers a (1,792) 1,792 –

Net insurance premium 6,034 (6,034) –

Fee and commission income a 524,632 (9,404) 515,228

Fee and commission expense a (28,214) 1,405 (26,809)

Net fee and commission income 496,418 (7,999) 488,419

Lease income b 10,574 (10,574) –

Dividend income b 2,362 (2,362) –

Net trading income a 256,388 (681) 255,707

Net losses from investment securities a (3,570) (709) (4,279)

Other operating income a,b,c 127,658 13,804 141,462

Other income 393,412 (522) 392,890

Operating income before impairment loss 1,750,877 (20,878) 1,729,999

Impairment losses for loans and advances a (140,936) (6,974) (147,910)

Impairment losses on other financial assets c – (7,441) (7,441)

Impairment losses on financial assets (140,936) (14,415) (155,351)

Operating income after impairment loss 1,609,941 (35,293) 1,574,648

Insurance benefits a – –

Insurance claims and loss adjustment expenses a (4,194) 4,194 –

Insurance claims and loss adjustments recovered from insurers a 2,148 (2,148) –

Investment contract benefits a – – –

Expenses for acquisition of insurance and investment contracts a (204) 204 –

Staff expenses a (577,571) 10,107 (567,464)

Depreciation and amortization a (132,369) 1,337 (131,032)

Other operating expenses a,c (549,114) 11,604 (537,510)

Total operating expenses (1,261,304) 25,298 (1,236,006)

Operating profit 348,637 (9,995) 338,642

Share of (loss)/profit of associates (613) – (613)

Profit before income tax from continuing operations 348,024 (9,995) 338,029

Income tax expense a (61,292) 5,085 (56,207)

Profit for the year from continuing operations 286,732 (4,910) 281,822

Profit for the year from discontinuing operations – 4,910 4,910

Profit for the year 286,732 0 286,732


Owners of the parent (total) 249,743 – 249,743


• Profit for the year from discontinuing operations 3,432 3,432 –

Non-controlling interests (total) 36,989 – 36,989


• Profit for the year from discontinuing operations 1,478 1,478

286,732 – 286,732


205

a) As required by IFRS 5 (Non-current Assets Held for sale and Discontinued Operations ), when amounts relating to discontinued operations are seperately presented, the comparative figures for prior periods are also re-presented, so that the disclosures relate to all operations that have been discontinued by the end of the reporting period for the latest period presented.

Hence, the 2012 numbers relating to the discontinued operations and held for sale (disclosed in Note 27) have been reclassified from the individual income statement lines to a seperate line ‘Profit/loss from discontinued operations’:

b) This relates to the reclassification of lease and dividend income to ‘other operating income’ line.

c) This relates to the reclassification of impairment on other financial assets from ‘other operating expenses’ line to ‘impairment’ line and reclassification of profiton disposal of property and equipment from ‘other operating expenses’ to ‘other operating income’.

46. Major business acquisitionsOn 1 January 2012, ETI obtained control of The Trust Bank Ghana Limited (TTB) by acquiring 61% equity interest in the company. The remaining equity interest of 39% were acquired in piecemeal and were completed during January 2012. The consideration for the purchase was by way of a share swap in exchange for shares in Ecobank Ghana. As a result of the acquisition, the Group is expected to increase its market share in Ghana. It also expects to reduce costs through economies of scale. The goodwill of $24.2 million arising from the acquisition is attributable to acquired customer base and economies of scale expected from combining the operations of the TTB and Ecobank Ghana.

The details of the fair value of the assets and liabilities acquired and goodwill arising from both acquisitions are as follows:

The Trust Bank (TTB)

Fair values on date of Acquisition

Acquiree’s previous carrying value

1 January 2012 31 December 2011

Cash and cash equivalent 119,245 119,245

Loans and advances to customers 213,566 213,566

Investment securities 70 70

Property, plant and equipment 5,241 5,241

Other assets 26,422 26,422

Deposit from banks (25,212) (25,212)

Deposit from customers (210,680) (210,680)

Other borrowed funds (15,767) (15,767)

Other liabilities (25,396) (25,396)

Net assets acquired 87,489 87,489

Cost of acquisition 77,690

Non-controlling interest 33,998

Total identifiable net assets 87,489

Goodwill 24,199

Cost of acquisition (discharged by cash) –

Cash and cash equivalents in subsidiaries acquired 119,245

Net cash flow 119,245

The operations of TTB have been combined with that of Ecobank Ghana. The revenue included in the consolidated statement of comprehensive income since 1 January 2012 contributed by the enlarged Ecobank Ghana was $229 million. The enlarged Bank also contributed profit of $101 million over the same period.

There were no business combinations in 2013.

47. Events after reporting dateIn February 2014, Ecobank Transnational Incorporated (ETI) and ProCredit Holding Germany (PCH) announced that they are in discussions with the view to ETI acquiring a majority stake in PCH’s Mozambican subsidiary – Banco ProCredit Mozambique (PCM). ETI has formally expressed an interest in purchasing Banco ProCredit in Mozambique by acquiring the shares currently held by ProCredit Holding and DOEN Foundation, representing 96% of Banco ProCredit’s total capital. The transaction is subject to the approval of the regulatory authorities in Mozambique.


206

Five-year summary financials


2013 2012 2011 2010 2009

At the year end

Total assets 22,532,453 19,939,383 17,161,912 10,466,871 9,006,523 Loans and advances to customers 11,421,605 9,440,945 7,359,940 5,264,184 4,766,197 Deposits from customers 16,489,904 14,620,478 12,076,495 7,924,585 6,472,459 Total equity 2,134,648 2,173,917 1,459,336 1,292,610 1,235,565

For the year

Revenue 2,003,456 1,729,999 1,195,628 899,643 873,318 Profit before tax 221,778 338,029 277,422 169,026 101,066 Profit after tax 147,773 286,732 206,840 131,819 64,600 Profit attributable to owners of the parent 95,541 249,743 182,207 112,716 51,075

Earnings per share – basic (cents) 0.60 1.67 1.76 1.14 0.58 Earnings per share – diluted (cents) 0.55 1.28 1.55 1.13 0.57 Dividend per share (cents) – 0.40 0.40 0.40 0.30

Return on average equity (%) 6.9 15.8 15.9 10.4 5.6Return on average assets (%) 0.73 1.55 1.50 1.40 0.70Cost-to-income ratio (%) 70.1 71.4 69.6 69.9 72.4

* Results for 2012 and 2013 are shown for continuing operations


207

Income statementYear ended 31 December 2013 2012

Interest income 17,321 19,679

Finance cost (64,515) (64,067)

Net interest income (47,194) (44,388)

Fees and commission income 41,838 38,706

Fees and commission expense (748) (798)

Net fees and commission income 41,090 37,908

Dividend income 114,817 103,873

Other operating income 3,245 85,923

Personnel expense (26,765) (25,333)

Depreciation and amortization expense (6,837) (5,370)

Other operating expense (32,122) (29,188)

Provision for doubtful receivable (47,017) –

Foreign exchange translation gain (6,773) (713)

(Loss)/Profit for the year (7,556) 122,712

Parent Company’s financial statements


Statement of comprehensive incomeYear ended 31 December 2013 2012

(Loss)/Profit for the year (7,556) 122,712

Other comprehensive income:

Items that will be reclassified to profit or loss

Fair valuation gain/(loss) on available-for-sale securities (net of tax) 10,075 (28,497)

Other comprehensive income/(expense) for the year 10,075 (28,497)

Total comprehensive income for the year 2,519 94,215


208

Statement of financial positionYear ended 31 December 2013 2012

Assets

Loans and advances to banks 292,698 298,242

Investment in securities: available-for-sale 111,226 101,141

Other assets 129,171 113,099

Investment properties 36,600 37,500

Investment in associates 14,354 789

Investment in subsidiaries 2,281,515 2,228,926

Intangible assets 721 1,369

Property, plant and equipment 59,459 62,982

Total assets 2,925,744 2,844,048

Liabilities

Borrowed funds 906,872 757,996

Other liabilities 310,304 313,236

Retirement benefit obligations 5,388 4,313

Provision 1,170 267

Total liabilities 1,223,734 1,075,812

Equity

Share capital 430,300 430,300

Share premium 992,000 992,000


Other reserves 101,832 73,216

Total equity 1,702,010 1,768,236

Total liabilities and equity 2,925,744 2,844,048




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Statement of changes in equity

Share capital Share premiumRetained earnings Other reserves Total

At 01 January 2012 320,928 759,258 113,800 89,838 1,283,824

Profit for the year 2012 – – 122,712 – 122,712

Net unrealized loss on available-for-sale investments – – (28,497) (28,497)

Total comprehensive income – – 122,712 (28,497) 94,215

Dividends relating to 2011 – – (55,612) – (55,612)

Share option granted – – – 1,200 1,200

Share option lapsed – – 181 (181) –

Gain on partial disposal of investment in subsidiaries – – 102,495 – 102,495

Transfer to general banking reserve – – (10,856) 10,856 –

Proceeds from issue of shares 109,375 240,625 – – 350,000

Share issue expenses – (7,883) – – (7,883)

Refund of deposit for shares (3) – – – (3)

At 31 December 2012/01 January 2013 430,300 992,000 272,720 73,216 1,768,236

Profit for the year – – (7,556) – (7,556)

Equity component of convertible loan issued during the period – – – 134 134

Net unrealized gain on available-for-sale investments – – – 10,075 10,075

Total comprehensive income – – (7,556) 10,209 2,653

Dividends relating to 2012 – – (68,879) – (68,879)

Transfer to general banking reserve – – (18,407) 18,407 –

At 31 December 2013 430,300 992,000 177,878 101,832 1,702,010


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Statement of cash flows2013 2012

Cash flows from operating activities

Profit for the year (7,556) 122,712

Adjustment for non cash items:Interest income (17,257) (19,679)Finance cost 64,515 64,067 Income on AMCON bonds – (72,359)Dividend income (114,817) (103,873)Fair value gain on investment property (600) (13,346)Gain on disposal of property plant and equipment (21 ) (26) Loss on disposal of investment in subsidiary 1,815 – Gain on disposal of investment property (1,300) – Gain on disposal of available for sale investment securities (28) 4,090 Share option granted – 1,200 Depreciation and amortization 6,837 5,370 Amortization of government grant (192) (192)Provision for doubtful receivables 47,017 – Foreign exchange loss on retirement benefit obligation 195 – Current service cost and interest on benefit obligation 880 614 Net cash used in operating activities before changes in working capital (20,512) (11,422)

Interest paid (55,694) (50,616)

Interest received 16,515 13,803

Addition to loans and advances (21,786) (23,467)

Changes in working capital

• net increase in other assets (62,349) (5,010)

• net increase in other liabilities 17,742 (15,749)

Net cash used in operating activities (126,084) (92,461)

Cash flows from investing activities

Dividend received 114,817 103,873 Purchase of property, plant and equipment and intangible assets (2,725) (9,189)Proceeds from the sale of property, plant and equipment 80 37 Proceeds from disposal of investment property 2,800 – Proceeds from repayment of loans to subsidiaries – 3,326 Addition to investment in subsidiaries (108,255) (459,109)Proceeds from sale of investment in subsidiaries 37,538 – Proceeds from sale of AFS investment 157 53,203 Additions to investment in associates (1,559) (58)

Net cash generated from/(used in) investing activities 42,853 (307,917)

Cash flows from financing activities

Proceeds from borrowings 165,264 85,906 Repayment of borrowed funds (44,654) (79,544)Proceeds from share issue – 350,000 Refund of deposit for shares – (3)Share issue expenses – (5,383)Dividends paid (68,879) (55,612)

Net cash generated from financing activities 51,731 295,364

Net decrease in cash and cash equivalents (31,500) (105,014)

Cash and cash equivalents at the beginning of the year 50,351 155,365

Cash and cash equivalents at end of the year 18,851 50,351


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Note Description Page

1 General information 133

2 Summary of significant accounting policies 133

3 Financial risk management 148

4 Critical accounting estimates, and judgements in applying accounting policies 165

5 Segment Analysis 166

6 Net interest income 171

7 Net fee and commission income 171

8 Net trading income 171

9 Net gain from investment securities 172

10 Other operating income 172

11 Impairment losses on loans and advances 172

12 Impairment losses on other financial assets 173

13 Operating expenses 173

14 Income tax expense 174

15 Earnings per share 174

16 Cash and balances with central banks 175

17 Treasury bills and other eligible bills 176

18 Financial assets held for trading 176

19 Derivative financial instruments and trading liabilities 177

20 Loans and advances to banks 177

21 Loans and advances to customers 178

22 Investment securities 182

23 Pledged assets 183

24 Investment in associates 183

25 Other assets 184

26 Intangible assets 184

27 Property and equipment 186

28 Investment property 187

29 Held for sale and discontinued operations 188

30 Deposits from other banks 190

31 Due to customers 190

32 Other deposits 191

33 Borrowed funds 191

34 Other liabilities 193

35 Provisions 193

36 Deferred income taxes 194

37 Retirement benefit obligations 196

38 Contingent liabilities and commitments 197

39 Share capital 197

40 Retained earnings and other reserves 199

41 Dividends per share 200

42 Cash and cash equivalents 201

43 Group entities 201

44 Related party transactions 202

45 Prior period corresponding balances 204

46 Major business acquisitions 205

47 Events after reporting date 205

Index to notes to the consolidated financial statements

Corporate Information

ETI, the parent company of the Group, acts as the strategic controller for the Group and its subsidiaries.

Our head office complex, the pan-African Centre in Lomé, Togo, includes the Ecobank Learning Centre, a training facility used by our businesses across the continent.

212

Ecobank’s head office in Lomé, Togo.

Corporate InformationEcobank Group – Annual Report 2013

213Corporate InformationEcobank Group – Annual Report 2013


214

Group Executive Management

Albert EssienGroup Chief Executive Officer Head of Corporate and Investment Bank

Laurence do RegoGroup Executive Director, Finance

Evelyne TallDeputy Group Chief Executive Officer, Group Chief Operating Officer

Patrick AkinwuntanGroup Executive Director, Head of Domestic Bank

Eddy OgboguGroup Executive Director, Operations and Technology

Country Heads (African banking subsidiaries)

Roger Dah-AchinanonBenin

Cheick TravalyBurkina Faso

Alassane SissokoBurundi

Moustapha FallCameroon

Jose MendesCape Verde

Stephane DoukoureCentral African Republic

Mahamat Ali KerimChad

Lazare NoulekouCongo (Brazzaville)

Serge AckreCongo (Democratic Republic)

Charles DaboikoCôte d’Ivoire

Alfred KasongoEquitorial Guinea

Jean-Baptiste Siate Gabon

Marème Mbaye NdiayeGambia

Samuel Adjei Ghana

Adama Sene CisséGuinea-Bissau

Moukaram ChanouGuinea (Conakry)

Ehouman KassiKenya

Kola AdelekeLiberia

Charles Asiedu Malawi

Coumba Sidibé TouréMali

Ibrahim Aboubakar BagaramaNiger

Jibril Aku Nigeria

Gilles GuérardRwanda

Nadeem Cabral De Almada Sao Tome and Principe

Yves Coffi Quam-DessouSenegal

Clement DodooSierra Leone

Robert WabbiSouth Sudan

Enoch Osei-SarfoTanzania

Didier CorreaTogo

Michael MonariUganda

Jolone OkoroduduZambia

Daniel SackeyZimbabwe

Executive management


215

Heads of Representative Offices and Paris Subsidiary

Albert EssienSouth Africa(Johannesburg)

Baba JahateAngola(Luanda)

James R KanagwaEthiopia(Addis Ababa)

Christophe Jocktane-LawsonFrance(Paris)

Jaimal ShergillUnited Arab Emirates(Dubai)

Monica Xiaoning LUChina(Beijing)

David PittsUnited Kingdom(London)

DisclaimerThis annual report or any extract thereof including its abridged version could or may contain forward looking statements that are based on current expectations or beliefs, as well as assumptions about future events.

These forward looking statements involve known and unknown risks, uncertainties and other important factors that could in future cause actual results, performance or achievements of the Group to be materially different from those expressed or implied in the forward looking statements.

These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “will”, “may”, “should”, “would”, “could” or other words of similar meaning.

Such forward looking statements are based on assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate in the future.

The Group expressly disclaims any obligation or undertaking to release any updates or revisions to any forward looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Ecobank has made every effort to ensure the accuracy of the information contained in this annual report relating to such forward looking statements and believes such information is reliable but does not warrant its completeness or accuracy. The Company shall not be held liable for errors of fact or opinion connected to such forward looking statements. This however does not exclude or restrict any duty or liability that Ecobank has to its customers under any regulatory system.


216

Ordinary shareholding structureAs at 31 December 2013, ETI had authorized share capital of 50,000,000,000 ordinary shares with a par value of US$0.025 per share.

Distribution of shareholdingsShare range Number of shareholders % of shareholders Number of shares held % shareholding

1 - 1,000 500,573 76.93% 155,225,978 0.90%

1,001 - 10,000 129,341 19.88% 411,267,193 2.39%

10,001 - 100,000 17,733 2.73% 503,970,908 2.93%

100,001 - 1,000,000 2,545 0.39% 760,041,803 4.42%

1,000,001 - 10,000,000 435 0.07% 1,177,281,821 6.84%

10,000,001 - 100,000,000 78 0.01% 2,291,972,365 13.32%

100,000,001 - 1,000,000,000 15 0.00% 4,953,661,624 28.78%

1,000,000,001 and above 4 0.00% 6,958,730,516 40.43%

Total 650,724 100% 17,212,152,208 100%

Top 10 shareholders as at 31 December 2013Shareholders Number of shares held % of total

Government Employees Pension Fund (PIC) 3,125,000,000 18.16%

Asset Management Corporation of Nigeria 1,402,674,653 8.15%

Stanbic Nominees Nigeria Ltd/C002 - Main 1,250,000,000 7.26%

The International Finance Corporation 1,181,055,863 6.86%

Social Security and National Insurance Trust 895,958,412 5.21%

Stanbic Nominees Nigeria Ltd/C014 - Trad 600,539,475 3.49%

IFC Capitalization (Equity) Fund, L.P. 596,590,900 3.47%

Stanbic Nominees Nigeria Ltd/C005 - Main 576,510,526 3.35%

Africa Capitalization Fund Ltd (IFC) 340,909,100 1.98%

SCGN/Pictet re Latitude Zero Financial Inv. Fund 319,148,936 1.85%

Total of top 10 ordinary shareholders 10,288,387,865 59.77%

Substantial interests as at 31 December 2013The following shareholders had a beneficial ownership of greater than 5% in Ecobank.

Shareholders Number of shares held % of total

Government Employees Pension Fund (PIC) 3,125,000,000 18.16%

Asset Management Corporation of Nigeria 1,798,016,891 10.45%

The International Finance Corporation 1,621,788,812 9.42%

JP Morgan Bank Luxembourg 1,421,622,661 7.26%

Social Security and National Insurance Trust 895,958,412 5.21%

Shareholder information


217

ETI shares are listed on three stock exchanges under the ISIN TG000A1JS796 and are fungible between the three exchanges.

ETI Shares by listing venue as at 31 December 2013Shares

Nigeria Stock Exchange (NSE) 12,871,160,587

Ghana Stock Exchange (GSE) 2,755,639,474

Bourse Régionale des Valeurs Mobilières (BRVM) 1,585,352,147

Total 17,212,152,208

Major shareholders

Dilutive securitiesThe Group has a number of dilutive securities, as outlined below.

ConvertiblesIFC, EIB and OFID hold a total of approximately US$175 million of convertibles, which are exchangeable into ordinary shares at market-related prices.

NedbankNedbank Group holds a US$285 million loan with subscription rights into 2,478 million shares (equivalent to a proforma 12.6% stake based on the December 2013 shares in issue).

Nedbank Group also has the right to purchase additional shares at a market-based price to reach a proforma ownership of 20% in ETI.

Share optionsThere are options outstanding to staff and management in respect of 422 million shares.

Ordinary share dividend historyFinancial Year Dividend per ordinary share (US$ cents) Total dividend (US$ thousands)

2006 3.0 18,355

2007 2.0 26,940

2008 0.2 17,500

2009 0.3 29,744

2010 0.4 39,653

2011 0.4 51,349

2012 0.4 68,849

2013 – –

PIC (GEPF) 18.2%

AMCON 10.4%

IFC Managed Funds 7.2%

IFC Direct* 6.9%

* total direct and indirect ownership of IFC is 9.4%

SSNIT 5.2%

Free Float 52.1%


218


10

12

14

16

18

20

J F M A M J J A S O N D

ETI share price NSE Index (rebased)

Source: Bloomberg

Nigeria: Summary of tradingQuarter Volume (shares) Value (NGN) Average daily volume (shares) Average daily value (NGN)

Jan-Mar 847,787,490 11,268,966,427 13,673,992 181,757,523

Apr-Jun 724,815,227 11,052,620,183 11,690,568 178,268,067

Jul-Sep 396,446,565 5,707,920,924 6,194,478 89,186,264

Oct-Dec 848,948,251 12,079,585,947 13,692,714 194,832,031

Total/average 2,817,997,533 40,109,093,481 11,312,938 161,010,972

Source: Bloomberg

NGN

NigeriaETI Share price relative to NSE Index: 2013


219

0.10

0.15

0.20

0.25

0.30


ETI share price GSE Index (rebased)

Source: Bloomberg

Ghana: Summary of tradingQuarter Volume (shares) Value (GHS) Average daily volume (shares) Average daily value (GHS)

Jan-Mar 5,277,520 867,030 87,959 14,451

Apr-Jun 6,312,324 1,105,247 101,812 17,827

Jul-Sep 3,839,079 755,975 60,938 12,000

Oct-Dec 5,408,296 972,669 98,333 17,685

Total/average 20,837,219 3,700,921 87,260 15,490

Source: Bloomberg

GHS

GhanaETI Share price relative to GSE Index: 2013


220


XOF

30

40

50

60

70

80


ETI share price BRVM Index (rebased)

Source: Bloomberg

Côte d’Ivoire: Summary of tradingQuarter Volume (shares) Value (XOF) Average daily volume (shares) Average daily value (XOF)

Jan-Mar 16,050,390 818,431,517 254,768 12,990,976

Apr-Jun 11,375,408 648,468,373 186,482 10,630,629

Jul-Sep 10,564,821 583,985,215 179,065 9,898,054

Oct-Dec 26,155,433 1,349,907,783 421,862 21,772,706

Total/average 64,146,052 3,400,792,888 260,544 13,823,092

Source: Bloomberg

Côte d’IvoireETI Share price relative to BRVM Index: 2013


221

Preference shareholding structureAs part of the consideration for the Oceanic Bank acquisition in 2011, Ecobank issued participating cumulative convertible preference shares. The key terms and holdings are outlined below.

Issue date 31 October 2011

Nº outstanding 1,066,580,478

Issue price $0.1032

Dividends Higher of 4% of issue price or dividend paid on ordinary shares. Paid in priority to dividends on ordinary and cumulative shares. Dividends will be paid in US$.

Voting No voting rights attached.

Liquidation In the event of liquidation, dissolution or winding up of the Company, the holders of preference shares shall enjoy priority of repayment before the holders of ordinary shares and shall receive, an amount payable in cash equal to the issue price plus any dividend that has not been declared or that has been declared but which remains unpaid

Conversion Holders have the right, exercisable between 3rd and 5th anniversaries of issue date to convert into ordinary shares at the rate of 0.76923 ordinary shares to each preference share, all or part of such preference shares into ordinary shares of the Company, such ordinary shares to rank pari passu with, and have the same rights as, all other ordinary shares of the Company.

Redemption At any time after the 5th anniversary of issue, ETI has a right to redeem the preference shares into ordinary shares if not already converted. This right extends into perpetuity. The redemption price shall be a 6% premium to the issue price, i.e. $0.1094.

The preference shares are not listed on an exchange.

Share Range Number of shareholders % of shareholders Number of shares held % Shareholding

1 – 1,000 386,516 93.65% 43,128,129 4.05%

1,001 – 10,000 23,894 5.79% 57,459,809 5.39%

10,001 – 100,000 2,093 0.50% 49,333,079 4.63%

100,001 – 1,000,000 198 0.05% 51,839,077 4.86%

1,000,001 – 10,000,000 19 0.00% 72,962,737 6.85%

10,000,001 – 100,000,000 5 0.00% 68,399,089 6.42%

100,000,001 – 500,000,000 1 0.00% 132,415,381 12.43%

500,000,001 – 1,000,000,000 1 0.00% 590,352,295 55.39%

Total 412,727 100% 1,065,889,596 100%

Top 10 preference shareholdersShareholders Number of shares held % of total

Asset Management Corporation of Nigeria 590,352,295 55.39%

Fcust/AMCON/C-ibru & others* 132,415,381 12.42%

Ibru V, Oboden 21,846,830 2.05%

Bayelsa State Min. of Finance Incorp. 13,377,632 1.26%

Ministry of Finance Incorporated 11,492,074 1.08%

Ibru Obaro, s e 10,923,647 1.02%

F/am/ocbk/Falcon Securities Ltd* 10,758,906 1.01%

Ethos Capital VGP (Jersey) Ltd 9,637,150 0.90%

Fcust/AMCON/bfcl assets & sec.Trad.Stock* 8,774,000 0.82%

Old Mutual Life Assurance 8,300,605 0.78%

Total of top 10 817,878,520 76.73%

Total number of preference shares 1,065,889,596

*Beneficial ownership is AMCON


222

Questions about your shares?Please contact the Registrars for queries about:

• Missing dividends

• Lost share certificates

• Estate questions

• Address change to the share register

• Having dividends paid directly into bank accounts

• Eliminating duplicate mailings of shareholder materials

• Uncashed dividend cheques.

RegistrarsAbidjanEDC Investment Corporation Immeuble Alliance, 4ème étageAvenue Terrasson de Fougères01 BP 4107 – Abidjan 01Côte d’IvoireTel: (225) 20 21 10 44Fax: (225) 20 21 10 46Contact: Jean-Noël Delafosse, [email protected]

AccraGhana Commercial Bank LimitedShare Registry DepartmentThorpe Road, High StreetP.O. Box 134, Accra – GhanaTel: (233) 0 302 668 656Fax: (233) 0 302 668 712Contact: Gladys Wuo Asare, [email protected] Essel, [email protected]

LagosEDC Securities Limited154 Ikorodu RoadOnipanu Bus stop, ShomoluLagos – NigeriaTel: (234) 704 3721311Contact:[email protected] Enwe, [email protected] Onyejiuwa, [email protected]

To buy or sell shares in ETINigeriaEDC Securities Limited19A Adeola Odeku StreetVictoria Island Lagos, Nigeria(234) 1 270 8955(234) 1 271 3407 Contact: Josephine Onwubu,[email protected]

Côte d’IvoireEDC Investment CorporationImmeuble Alliance, AvenueTerrasson de Fougères 01BP 4107 Abidjan 01 Côte d’IvoireTel: (225) 20 21 10 44 Fax: (225) 20 21 10 46Contact: Brice Allet,[email protected] Delafosse,[email protected]

CameroonEDC Investment Corporation2ème Etage, Immeuble ACTIVA Rue Prince de GallesAkwa, Douala – CamerounTel: (237) 33 43 13 81Contact: Adonis Seka,[email protected]

GhanaEDC Stockbrokers Limited5 Second Ridge LinkNorth Ridge, Accra – GhanaTel: (233) 302 25 17 20 – 3Contact: Mahama Alhassan Iddrisu,[email protected]

Other investor queriesFor other queries about investing in ETI

Investor RelationsEcobank Transnational Incorporated2365, Boulevard du MonoB.P. 3261, Lomé – TogoTel: (228) 22 21 03 03 Fax: (228) 22 21 51 19Contact: James Etherington, Ato Arku,[email protected]

Company SecretarySamuel K. AyimGroup Office2365, Boulevard du MonoB.P. 3261, Lomé – TogoTel: (228) 22 21 03 03 (228) 22 21 31 68Fax: (228) 22 21 51 19Contact: [email protected]

Shareholder contacts


223

Headquarters: Ecobank Transnational Incorporated2365, Boulevard du Mono B.P. 3261, Lomé – TogoTel: (228) 22 21 03 03 (228) 22 21 31 68Fax: (228) 22 21 51 19

1. BeninRue du Gouverneur Bayol01 B.P. 1280, RP Cotonou – BeninTel: (229) 21 31 30 69 (229) 21 31 40 23Fax: (229) 21 31 33 85

2. Burkina Faso49, Rue de l’Hôtel de Ville01 B.P. 145Ouagadougou 01–Burkina FasoTel: (226) 50 33 33 33 (226) 50 49 64 00Fax: (226) 50 31 89 81

3. Burundi6, Rue de la ScienceB.P. 270, Bujumbura – BurundiTel: (257) 22 20 8100 (257) 22 20 8200 (257) 22 20 8299Fax: (257) 22 22 5437

4. ChadAvenue Charles de GaulleB.P. 87, N’Djaména – TchadTel: (235) 2252 43 14/21Fax: (235) 2252 23 45

5. CameroonBoulevard de la LibertéB.P. 582, Douala – CamerounTel: (237) 33 43 82 51 (237) 33 43 84 88/89Fax: (237) 33 43 86 09

6. Cape VerdeAvenida Cidade de LisboaCP 374CPraia – Cabo VerdeTel: (238) 260 36 60Fax: (238) 261 82 50

7. Central African Republic Place de la RépubliqueB.P. 910 Bangui – République CentrafricaineTel: (236) 21 61 00 42Fax: (236) 21 61 61 36

8. CongoImmeuble de l’ARC, 3ème étageAvenue du CampB.P. 2485, Brazzaville – CongoTel: (242) 06 621 08 08 (242) 05 778 79 08

9. Côte d’IvoireImmeuble AllianceAvenue Terrasson de Fougères01 B.P. 4107– Abidjan 01 Côte d’IvoireTel: (225) 20 31 92 00Fax: (225) 20 21 88 16

10. Democratic Republic of the Congo47, Avenue Ngongo LuteteGombe – RD CongoB.P. 7515, KinshasaTel: (243) 99 60 16 000Fax: (243) 99 60 17 070

11. Equatorial GuineaAvenida de la Independencia APDO.268, Malabo – Républica de Guinea Ecuatorial Tel: (240) 333 098 271 (240) 555 300 203

12. Gabon214, Avenue Bouët9 Étages, Montagne SainteB.P. 12111Libreville – GabonTel: (241) 01 76 20 71 (241) 01 76 20 73Fax: (241) 01 76 20 75

13. The Gambia42 Kairaba AvenueP.O. Box 3466Serrekunda – The GambiaTel: (220) 439 90 31 – 33Fax: (220) 439 90 34

14. Ghana19 Seventh Avenue, Ridge WestP.O. Box AN 16746Accra North – GhanaTel: (233) 302 68 11 46/8Fax: (233) 302 68 04 28/37

15. Guinea (Conakry)Immeuble Al ImanAvenue de la RépubliqueB.P. 5687Conakry – GuinéeTel: (224) 63 70 14 34 (224) 63 70 14 35 Fax: (224) 30 45 42 41

16. Guinea-BissauAvenue Amilcar CabralB.P. 126, Bissau – Guinée-BissauTel: (245) 320 73 60/61Fax: (245) 320 73 63

17. KenyaEcobank TowersMuindi Mbingu StreetP.O. Box 49584, Code 00100Nairobi – KenyaTel: (254) 20 288 3000 /0719 098 000Fax: (254) 20 224 9670

18. LiberiaAshmun and Randall StreetP.O. Box 48251000 Monrovia 10 – LiberiaTel: (231) 886 74 76 93 (231) 886 97 44 94 Fax: (231) 701 22 90

19. MalawiEcobank House Corner Victoria Avenue andHenderson Street, Private Bag 38 Chichiri, Blantyre 3 – MalawiTel: (265) 01 822 099/808/681Fax: (265) 01 820 583

20. MaliPlace de la NationQuartier du FleuveB.P. E1272Bamako – MaliTel: (223) 20 70 06 00Fax: (223) 20 23 33 05

21. NigerAngle Boulevard de la Libertéet Rue des BâtisseursB.P.: 13804, Niamey – NigerTel: (227) 20 73 10 01 – 83 Fax: (227) 20 73 72 03 – 04

22. NigeriaPlot 21, Ahmadu Bello WayP.O.: Box 72688, Victoria IslandLagos – NigeriaTel: (234) 1 2710391–5Fax: (234) 1 2710111

23. RwandaPlot 314, Avenue de la PaixP.O. Box 3268, Kigali – RwandaTel: (250) 788 16 10 00Fax: (250) 252 50132

24. São Tomé and PríncipeEdifício HB, Travessa do Pelourinho C.P. 316São Tomé – São Tomé e PríncipeTel: (239) 222 21 41 (239) 222 50 02Fax: (239) 222 26 72

25. SenegalKm 5 Avenue Cheikh Anta DIOPB.P. 9095, Centre DouanesDakar – SénégalTel: (221) 33 859 99 99Fax: (221) 33 859 99 98

26. Sierra Leone7 Lightfoot Boston StreetP.O. Box 1007Freetown – Sierra LeoneTel: (232) 22 221 704 (232) 22 227 801Fax: (232) 22 290 450

27. South SudanKoita Complex, Ministries Road,P.O. Box 150, JubaSouth SudanTel: (211) 954 018018 (211) 955 541683

28. TanzaniaKarimjee Jivanjee BuildingPlot Nº 19, Sokoine DriveP.O. Box 20500Dar es Salaam – TanzaniaTel: (255) 22 213 7447 (255) 22 212 5592 (255) 22 212 5594Fax: (255) 22 213 7446

29. Togo20, Avenue Sylvanus OlympioB.P. 3302Lomé – TogoTel: (228) 22 21 72 14Fax: (228) 22 21 42 37

30. UgandaPlot 4, Parliament AvenueP.O. Box 7368 Kampala – UgandaTel: (256) 417 700 100Fax: (256) 312 266 079

31. Zambia22768 Thabo Mbeki RoadP.O. Box 30705Lusaka – ZambiaTel: (260) 211 250 056 – 7 (260) 211 250 202 – 4 (260) 211 367 390Fax: (260) 211 250 171

32. ZimbabweBlock A, Sam Levy’s Office Park 2 Piers RoadP.O. Box BW1464, BorrowdaleHarare – ZimbabweTel: (263 – 4) 851644-9Fax: (263 – 4) 852632 (263 – 4) 851630-9

33. EBI SA Groupe EcobankLes Collines de l’ArcheImmeuble Concorde F76 route de la Demi-Lune92057 Paris La Défense Cedex FranceTel: (33) 1 70 92 21 00Fax: (33) 1 70 92 20 90

34. EBI SA Representative Office2nd Floor, 20 Old Broad StreetLondon EC2N 1DP, United KingdomTel: +44 (0)20 3582 8820Fax: +44 (0)20 7382 0671

35. Ecobank Office in ChinaRepresentative OfficeSuite 611, Taikang International Tower 2 Wudinghou, Financial Street Xicheng District, 100033Beijing, China Tel: (8610) 66 29 00 98 Fax: (8610) 66 29 00 98

36. Ecobank Office in South AfricaRepresentative Office4 Sandown Valley Crescent4th Floor, Sandton 2196Johannesburg – South AfricaTel: (27) 11 783 6197 – 6431/6391Fax: (27) 11 783 6852

37. Ecobank Office in DubaiRepresentative OfficeLevel 26d, Jumeirah Emirates TowersShaikh Zayed Road, P.O. Box: 29926Dubai – UAETel: (971) 4 327 6996Fax: (971) 4 327 6990

38. Ecobank Office in AngolaRepresentative OfficeRua Joaquim Kapango Nº31Ingombota-LuandaC.P 25, Luanda – AngolaTel: (244) 938 910 345

39. Ecobank Office in EthiopiaGerdi Rd Yerer Ber Area, SAMI Building, 6th Floor 602AAddis Ababa, EthiopiaTel: (251) 934 169 784 (Cell) (251) 116 291 101Fax: (251) 116 291 425

eProcess International SA2365, Boulevard du MonoB.P. 4385, Lomé –TogoTel: (228) 22 22 23 70Fax: (228) 22 22 24 34

Holding company and subsidiaries


224

Customer contact centres

Services:

Balance enquiry• Account balance

• Transaction confirmations

• Transfer confirmations

Card services• Card activation for online transaction

• Pin resets

• Card blocking

Complaints• ATM complaints

• Card complaints

• Transaction complaints

• Service/product delivery delays

• Staff attitude

General enquiries• Information on Ecobank services/products

• Interest/exchange rates

• Directions to ATMs/branches

• Account opening requirements

• Branch contacts

• Fees and charges

For all enquiries, kindly email or call one of our Contact Centers listed below:

Côte d’Ivoire

KenyaPlease dial: (254) 20 288 3000 (254) 71 909 8000

Toll free (Kenya only): 0800 221 221 8 (free from landlines)

Nigeria

Please dial: (234) 700 500 0000

Toll free (Nigeria only): 0800 326 2265

Ghana

All countries:

[email protected]

Please dial: (233) 302 21 39 99

Toll free (Ghana only): 3225 (MTN, Airtel, Vodafone)

Please dial: (225) 22 40 02 00

Toll free (Côte d’Ivoire only): 800 800 88 (MTN, Orange, CITelecom, Moov and Comium)

CameroonPlease dial: (237) 33 43 13 63

Ecobank Transnational Incorporated2365, Boulevard du MonoB.P. 3261, Lomé – Togo

Ecobank Group Abridged Annual Report 2013

Celebrating 25 years of pan-African banking