Annual Report - nib-ghana.com€¦ · 2 [email protected] National Investment Bank Limited 2013 Annual Report

Annual Report

NATIONAL INVESTMENT BANK

Your Business is Our Business

2013

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National Investment Bank Limited | 2013 Annual Report

3Your business is Our Business


Notice and Agenda of Annual General Meeting

Chairman’s Statement

Corporate Information

Managing Director’s Statement

Pro�le of Board of Directors

Financial Highlights

Independent Auditor’s Report

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to Financial Statements

0405071012

Report of Directors 16

1725

2729

3031

6399

102104

Proxy Form

List of Correspondent Banks

Head O�ce and Branches

CONTENTS

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NOTICE IS HEREBY GIVEN that the 45th Annual General Meeting of the National Investment Bank Limited will be held at the La-Palm Royal Beach Hotel, Accra at 10:00 a.m. on Thursday, 12th June, 2014 to transact the following business:

1. To receive and consider the Financial Statements for the year ended 31st

December, 2013, together with the Reports of the Directors and Auditors

thereon.

2. To elect / re-elect Directors

3. To approve Directors‘ Fees

4. To authorize the Directors to determine the remuneration of the Auditors.

Dated this 12th Day of May, 2014.

BY ORDER OF THE BOARD.

Frank S. Aidoo

Board Secretary

NOTE: A member entitled to attend and vote may appoint a proxy who need not be a member of the Bank. The instrument appointing such proxy must be deposited at the offices of the Registrars, NTHC Limited, Martco House, No. D542/4 Okai Mensah Link, Adabraka, Accra, P. O. Box 9563, Airport-Accra, not less than 48 hours before the meeting. A proxy form is attached.

NOTICE AND AGENDA OF ANNUAL GENERAL MEETING



CORPORATE INFORMATION

THE VISION

To be the most renowned Ghanaian bank for growth and efficiency.

THE MISSION

Our mission is to offer the highest-quality, customer-focused banking services to our clients and

to create value for our shareholders.

MANAGEMENT TEAM

Managing Director : Mr. Ernest Mawuli Agbesi

Deputy Managing Director : Mr. Patrick Tei Kwapong

General Manager – Treasury : Mr. Emmanuel Dabi

General Manager – Risk : Mr. Alex Amadu Gariba

General Manager – Client Services : Mr. John Kweku Asamoah

General Manager – Finance & Strategy : Mr. Theophilus Dorgbetor

General Manager – Operations & Technology : Mr. Martin Amenyedzi

Board Secretary : Mr. Frank S. Aidoo

AUDITORS : Deloitte 4 Liberation Road P. O. Box GP 453 Accra Ghana

Registered Office : 37 Kwame Nkrumah Avenueand Contact Address P. O. Box GP 3726 Accra – Ghana

Swift and Website Address : SWIFT: NIBGGHAC www.nib-ghana.com

Registrar : NTHC Limited ` Martco House, Okai Mensah Link P. O. Box 9563, Airport Accra - Ghana

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CHAIRMAN‘S STATEMENTS

INTRODUCTION

Valued Shareholders, Distinguished Guests,

Directors, Management and staff, Ladies and

Gentlemen, it is my pleasure to welcome you

to the 45th Annual General Meeting of Nation-

al Investment Bank Limited. Another chal-

lenging but fruitful year has ended and it is a

privilege to present to you the Annual Report

and Financial Statements of our Bank for the

financial year ended 31st December, 2013.

Before I proceed, I want on behalf of the

Board, to take this opportunity to express my

appreciation to all shareholders, past Direc-

tors, Management and Staff of the Bank for

their dedication and commitment in support-

ing us to achieve quite impressive results in

the year under review.

The year 2013 was generally a difficult one,

but the Bank made some significant gains on

a number of fronts, consolidating the gains

made in 2012 and recording an increase in

the after-tax profit of the Bank. We believe,

however, that much more work requires to

be done in the years ahead in order to attain

sustained increases in profitability, and share-

holders’ value.

GLOBAL ECONOMY

The latest estimates by the IMF indicated a

pick-up in the pace of global activity at 2.9

percent in 2013, driven largely by the ad-

vanced economies, with the impulse to global

growth coming mainly from the United States,

against weaker prospects in emerging market

economies.

Growth in Sub-Sahara Africa remained robust

and is expected to accelerate to 6 percent in

2014, emanating from strong domestic de-

mand. However, spillovers from sluggish ex-

ternal demand, reversal of capital flows and

declines in commodity prices have affected

the growth prospects.

THE GHANAIAN ECONOMY

The above external economic developments

continue to feed through to the domestic

economy.

The domestic economy continues to experi-

ence fiscal pressures, resulting from:

• cost-push effects from higher petroleum

and utility prices.

• heightened inflation expectations.

• fiscal slippages due to slower than antici-

pated revenue inflows in 2013.

• worsened terms of trade, and

• significant decline in net current transfer

receipts and remittances.

Against the back-drop of a fragile global econ-

omy, the domestic economy registered a real

GDP growth of 5.9% in 2013 (down from 7.1%

in 2012), while headline inflation rose to 13.50

percent (up from 8.80 percent in 2012). In re-

sponse to the inflationary pressure, Bank of

Ghana revised the policy rate to 16% (up from

15% at the end of 2012). The cedi depreciat-

ed against the three major trading currencies.

The annual rate of depreciation of the cedi

recorded in 2013 against the US dollar, Brit-

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ish Pound Sterling and the Euro were 12.81%,

14.88% and 16.79% respectively.

THE BANKING SECTOR

The Ghanaian banking sector continued to

experience stiff competition, especially in the

areas of deposit mobilization, new product

development and service delivery channels.

Bank of Ghana has also stepped up its reg-

ulatory efforts because of the emergence of

many microfinance institutions.

In response to the upsurge in inflation, Trea-

sury bill rates moved up. Lending rates, how-

ever, have not changed as would have been

expected. The yield on the 91-Day Treasury

bills closed the year at 19.22%.

Total assets in the banking industry grew by

33.3% from GH¢27.2 billion in 2012 to GH¢36.2

billion at the end of 2013. Most banks focused

on growing quality assets in response to the

introduction by the Central Bank of stringent

risk-based banking supervision.

Similarly, total deposits of the banking indus-

try grew by 14.8% from GH¢20.3 billion at the

end of 2012 to GH¢23.3 billion at the end of

2013. The industry registered an overall aver-

age non-performing loans ratio (NPL) of 12%

in 2013 as compared to 13.6% in 2012, while

the average Capital Adequacy Ratio declined

marginally to 18.45% at the end of 2013 from

18.6% at the end of 2012.

NIB’S OPERATING RESULTS

For the fourth year in succession, the Bank

achieved very impressive operating results.

Total operating income for the year increased

by 38.3% to GH¢131.42 million in 2013 from

GH¢95.0 million in 2012. The correspond-

ing operating expenses increased by 32.1%

to GH¢61.2 million from GH¢46.3 million in

the previous year. Credit impairment losses

continued to plague the fortunes of the bank

as total provision for the year amounted to

GH¢26.1 million compared to GH¢37.3 million

in 2012 as the cleaning of the Bank’s books

continued. In spite of this, the Bank recorded

a profit after tax for the year 2013 of GH¢38.5

million, an increase of 231.1% over 2012 perfor-

mance of GH¢11.6 million.

The balance sheet of the Bank also continued

to strengthen as shareholders’ funds grew

by 184.8% to GH¢285.4 million by the end

of 2013 compared to GH¢100.02 million at

the end of 2012. Total Assets, grew by 35.7%

from GH¢876.9 million at the end of 2012 to

GH¢1,189.9 million at the end of 2013. The

growth was due largely to the 8.4% growth in

total deposit liability from GH¢700.5 million

at the end of 2012 to GH¢759.2 million at the

end of 2013, and revaluation of equity shares

in Nestle Ghana Ltd.

DIVIDEND

The Directors are proposing that the payment

of dividends out of the profit realised for the

year ended December 31, 2013 be shelved for

now until the income surplus account be-

comes positive in accordance with statutory

requirement and best practice.

CORPORATE SOCIAL RESPONSIBILITY

The Bank continued to live up to its responsi-

bility as a good corporate citizen by assisting

various organizations and supporting various

causes. The year 2013 was no exception as



several worthy causes were supported finan-

cially and otherwise. Some organizations and

corporate bodies that benefitted during the

year under review include the Ghana Heart

Foundation, Graft Foundation, Kpando En-

dowment Fund, Ghana Red Cross Society,

Commissioner of Police/CID and Obuasi Mu-

nicipal Assembly.

The Bank also assisted Ministry of Food and

Agriculture in its quest to reward our hard-

working farmers. Several educational institu-

tions and student bodies were also benefi-

ciaries including Ministry of Education, Cape

Coast Polytechnic, University for Develop-

ment Studies, Takoradi Polytechnic, Keta Se-

nior High School, and St. Margaret Mary Se-

nior High School, among others.

THE WAY FORWARD

The Bank celebrated its jubilee anniversa-

ry last year. In 2014 and beyond, the Board,

Management and Staff expect to maintain a

strong momentum buoyed by an aggressive

Strategic Plan put in place for 2014 to 2016.

This will enable the Bank forge the needed

strategic partnerships which will reposition it

for further competitiveness and to take ad-

vantage of the emerging improved business

environment. The Bank’s strategic plan aims,

among others, to enhance the recovery of

loans against which full provision have been

made, ensure the provision of quality service

to clients, enhance deposit mobilization, pro-

vide rigorous training to staff, ensure strategic

recruitment of manpower and ensure contin-

uous image building.

CONCLUSION

Your Bank is on a good trajectory of growth

and profitability. As Directors, we remain com-

pletely dedicated to our objective of helping

create value for our shareholders.

We take this opportunity to thank all share-

holders and other stakeholders of the Bank,

especially our customers for their support and

loyalty throughout the year. We also com-

mend the past Directors, Management and

Staff for their hard work. We have every hope

that with your support, NIB should achieve its

growth and efficiency objectives sooner than

later.

Thank you and God bless you all.

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THE MANAGING DIRECTOR‘S STATEMENTS

INTRODUCTION

Chairman of the Board of Directors, Directors,

distinguished Shareholders, Ladies and Gen-

tlemen, I am delighted to present your Bank’s

performance for the fiscal year 2013. Against

the backdrop of a very challenging financial

situation of the Bank in the year under re-

view, National Investment Bank Limited made

some modest gains. The bank is on track to

reversing its poor performances in the past

few years.

THE ECONOMY

The year 2013 started with deteriorating eco-

nomic conditions. Inflation was on the ascen-

dancy after its run in the single digit for nearly

three years. The value of the cedi fell drasti-

cally against the major currencies and interest

rates were high. The annual rate of deprecia-

tion of the cedi recorded in 2013 against the

US dollar, British Pound Sterling and the Euro

were 12.81%, 14.88% and 16.79% respectively.

Economic activities were generally sluggish in

the year. However, the fiscal-monetary policy

mix and the corrective measures put in place

by the government to halt the worsening eco-

nomic conditions which characterized the

year have started yielding dividends.

THE BANKING INDUSTRY

The Banking industry experienced keen com-

petition as the banks made efforts to increase

their market share and profitability. In re-

sponse to the inflationary pressure, Bank of

Ghana revised the policy rate to 16% (up from

15% in 2012). The upsurge in inflation, pro-

pelled Treasury bill rates to move up. Interest

rate on 91-day Treasury bills closed the year

at 19.22%. However, lending rates have not

responded due to their existing high levels.

A major blight to the industry was the high

levels of non-performing loans which posed

great risk to the overall credit delivery of the

banks. That notwithstanding, banks launched

a number of new products and services to

meet the growing needs of their customers

who have become more sophisticated and

well informed.

THE BANK’S OPERATING RESULTS

The Bank’s performance in 2013 was a ma-

jor improvement over that of 2012, which is

a clear indication of the Board and Manage-

ment’s commitment to restructure and repo-

sition the Bank to be more profitable in spite

of the systemic difficulties. The bank record-

ed a net profit after tax of GH¢38.5 million

for the year ended December 31, 2013. Also,

the bank registered 35.70 percent growth

in its total assets from GH¢876.94 million in

2012 to GH¢1,189.95 million in 2013. Custom-

ers deposits also increased by 8.4 per cent to

GH¢759.23 million in 2013 from GH¢700.53

million recorded in 2012. Shareholder’s Funds

increased from GH¢100.21 million in 2012 to

GH¢285.4 million in 2013. This represented an

annual growth of 184.8 percent. This was as a

result of revaluation of the bank’s equity stake

in Nestle Ghana Limited as well as the signifi-

cant net profit figure achieved in 2013.



At the end of 2013, the bank met the required

Tier One capital level.

HUMAN CAPITAL DEVELOPMENT

The Bank remained committed to its affirmed

aim of constantly improving the skills and ca-

pabilities of its human resource base. In view

of this, several training programmes were or-

ganized for staff to equip them with the requi-

site skills to be able to deliver in the face of the

intense competition in the banking industry.

The Bank relentlessly pursued its succession

plan to ensure a smooth and uninterrupted

transition from our experienced staff who will

shortly go on retirement to our young crop of

staff.

GOING FORWARD

We are committed to ensuring a complete

turnaround from 2014. In this regard, we are

laying emphasis on improving the Bank’s risk

management, credit delivery and monitoring,

work ethics and general productivity.

Aggressive branch network expansion will be

commenced in 2014 to 2016 in order to make

the bank’ products and services more accessi-

ble to customers. About six (6) new branches

will be opened in 2014.

There will be rigorous training of all staff mem-

bers. Additionally the Bank will embark upon

vigorous campaigns aimed at improving the

image of the Bank and deepening relation-

ships with customers and other stakeholders.

The signs are very positive and there is every

indication that 2014 will be a very successful

year.

Thank you.

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PROFILE OF BOARD OF DIRECTORS

Togbe Afede XIV (Chairman)

Togbe Afede XIV is the Pa-ramount Chief of the Asog-li Traditional Area, and the President of the Volta Re-gion House of Chiefs. He was educated in Ghana and the United States of Ameri-ca (USA). He received a BSc.

Administration (Accounting) from the University of Gha-na (School of Administra-tion), Legon, and a Master of Business Administration (MBA) from the Yale Univer-sity School of Management, New Haven, USA.

Among his key business ac-complishments, Togbe foun-ded Africa World Airlines Ltd, Initiatives Strategiques Cote D’Ivoire, SAS Finance Group Ltd, Sunon Asogli Power Ghana Ltd, World Trade Cen-tre Accra and co-founded the Databank (Ghana) Limited, among others. His key socio-economic development ini-tiatives include the initiation of the Volta-Ningxia Sister Regions Relationship and the founding of the Volta Region Development Agency and the

Asogli Education Fund.

He currently chairs the boards of Accra Hearts of Oak Sporting Club Ltd, Accra World Trade Centre Ltd, Afri-ca World Airlines Ltd, Pioneer Kitchenware Ltd and SAS Fi-nance Group Ltd. He is also a member of the boards of Africa Fertilizer and Agribusi-ness Partnership, Aluworks Ltd, Ensign College of Pub-lic Health, SAS Investment Management Ltd and Sunon Asogli Power (Ghana) Ltd.

He was the Chairman of the Economic Committee and the Head of Ministry of Fi-nance Management Team (Ghana Government Tran-sition Team), January-April, 2009, and a member of the President’s Economic Ad-visory Council, 2009-2012.

Mr. Ernest Mawuli Agbesi (Managing Director)

Mr. Ernest Mawuli Agbesi is a Banker by profession. He holds an MBA, P.GD and a Diploma in Accounting. He started his banking career in 1985 with the then Ghana Co-operative Bank Limited (in liquidation) rising to the position of Deputy Manager in January 2000.

He joined International Com-mercial Bank in 2000 where he became a Divisional Head in 2006 in charge of Sales & Business Development, Esta-tes and General Services and

Retail Banking.

He joined uniBank (Gha-na) Limited in January 2008 where he was Head of Sales & Business Development and later Head of Banking Ope-rations where he supervised the organic growth of the Bank until his appointment as the Managing Director of the National Investment Bank Li-mited in March 2014. He has excelled over the years in the banking sector with his vast experience.



Mr. Patrick Tei Kwapong (Deputy Managing Director)

Mr. Patrick Tei Kwapong is the Deputy Managing Director of the Bank. He holds a BSc Admin. and an MBA (Accounting Option) from the University of Ghana, Legon. He is a mem-ber of the Institute of Chartered Accountant (Ghana).

He has over twenty years working experience in the banking sector and is currently a member of the Board of NTHC Li-mited and Metro Mass Transit Limited.

Mr. Emmanuel Adu-Sarkodee (Director)

An Entrepreneur by professi-on, Emmanuel Adu-Sarkodee holds a Bachelor of Arts (Ho-nours) degree in Sociology with Political Science, and an Executive MBA in Entrepre-

neurship from the Universi-ty of Ghana. He also holds a Bachelor of Law (LLB) degree from the GIMPA Law School and has undertaken a number of courses in Financial Ma-nagement and Communica-tions.

Mr. Emmanuel Adu-Sarkodee has over a decade blazed the trail with a number of corpo-rate re-engineering projects in Ghana and elsewhere.

He is currently the Group Chief Executive of CDH Financial Holdings Limited, while also acting as the Chief Executi-ve Officer (CEO) of Ivory Fi-nance Company Limited (a CDH Company). He presently occupies a number of Board

positions including those of Phoenix Insurance Company Limited, Phoenix Life Assu-rance Company Limited, Accra City Hotels (Novotel) among others.

Mr. Adu-Sarkodee is the ar-chitect of the Ghana National Buffer Stock Company Limited, a project he led from concep-tualization to implementation.

He has also been involved in some major transactions, in-cluding the acquisition of Be-nefits Insurance Ghana Limited by Regency Alliance Insurance and Capital Express Life Limi-ted as well as Nsia Insurance Limited.

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Mr. Michael Ayesu (Director) Mr. Michael Ayesu is an Econo-

mist and was educated in Gha-na and the United Kingdom. He holds a Bachelor of Arts De-gree in Social Sciences (Econs. & Sociology) and a Diploma in Education from the University of Cape Coast.

Mr. Ayesu then undertook a course of study at the Univer-sity of Glasgow, UK where he graduated with a Diploma and M.Phil. in Monetary Economics. He participated in various courses and seminars among which are seminar on Financi-al Management and Reporting, World Bank – Accra, Internati-onal Economic and Financial Negotiations at the Internatio-

nal Institute of Public Adminis-tration – Paris and Assuring the Quality of World Bank Opera-tions in Africa, World Bank – Washington D.C.

He was a teacher at the St. Martins Secondary School, an Economics Officer at the Mi-nistry of Finance – Policy Ana-lysis Division, a Senior Advisor to Ghana’s Executive Director at the World Bank Group, Wa-shington D.C. and Head of the World Bank Unit of the Ministry of Finance.

He is currently the Director, Ex-ternal Resource Mobilization Division at the Ministry of Fi-nance.

Ms. Florence Chambas (Director)

Ms. Florence Chambas is a Management Consultant by profession. Currently, she is the Business Development and Marketing Manager at EMPRETEC Ghana Foun-dation and an Accredited UNCTAD International Mas-ter Trainer in Entrepreneur-ship.

As Lead Trainer, she has facilitated over 50 Entre-preneurship Development Training, and Management Skills Workshops in Ghana, Nigeria, South Africa, Ethio-pia and South Sudan since 2006 and has over 18 years

of experience in private sec-tor development.

As a Business Development Advisor of vast experience, she has designed cutting edge solutions to manage-ment problems especially among women owned SMEs and mentored many suc-cessful young entrepreneurs.

Ms. Chambas has a degree in Psychology and Manage-ment and Executive MBA in Entrepreneurial Manage-ment. Ms. Chambas is mar-ried with three daughters.



Mrs. Dedaa Wiredu-Agyei (Director)

Mrs. Dedaa Wiredu-Agyei is a Civil Servant at the Minis-try of Trade & Finance. She holds an MSc Economics (Finance & Credit). Mrs. Wiredu Agyei rose through the ranks and is currently a Director at the Ministry of Trade and Industry.

Mrs. Dedaa Wiredu-Agyei has undertaken various trai-ning programmes both local and abroad among which are Diploma in Public Ad-

ministration, Programme Based Budgeting, Public Private Partnership (Univer-sity of Queensland and Uni-versity of Pretoria), and SME Development (JICA Training School, Kitakushu – Japan).

She has also participated in various workshops, Sympo-sia and Seminars both local and overseas and is cur-rently the secretary to the Ministerial Advisory Board.

Pimampim Yaw Kagbrese V (Director)

Pimampim Yaw Kagbrese V is the Omanhene of the Yeji Traditional Area. He is a farmer and a building contractor by profession.

Pimampim Yaw Kagbrese V was educated at the Yamba and the Bekwai College of Accountancy where he obtained a Royal Society of Arts (R. S. A.) Stage II. Currently, he is the President of the Brong-Ahafo (B/A) House of Chiefs and a member of the National House of Chiefs.

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REPORT OF THE DIRECTORS TO THEMEMBERS OF NATIONAL INVESTMENT BANK LIMITED

The Board of Directors in submitting to the shareholders their report and financial statements of the Bank for the year ended 31 December 2013 report as follows:

Statement of Directors’ Responsibility

The directors are responsible for the preparation and fair presentation of the consolidated financial statements, comprising the consolidated statement of financial position at 31 Decem-ber 2013 and the consolidated statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, and the notes to the financial state-ments which include general information and summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards, and in the manner required by the Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673) as amended by the Banking Act, 2007 (Act 738).

The Directors’ responsibility includes: designing, implementing and maintaining internal con-trols relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying ap-propriate accounting policies; and making accounting estimates that are reasonable to the circumstances.

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



The Bank The Group2013 2013

GH¢'000 GH¢'000

Prot for the year before taxation 45,012 281,44 From which is deducted:Taxation (1,321) (1,321) Deferred tax (4,038) (4,038) National fiscal reconstruction levy (1,125) (1,125)

Leaving a net Prot of 38,528 37,698 Add non - controlling share of loss - 375 deducted balance on retained earnings brought forward of (44,082) (44,082)

leaving a balance of (5,554) (6,009) Less: Transfer to Regulatory Reserves (19,264) (19,264) Transfer to credit reserve (799) (799)

leaving a balance carried forward tothe statement of nancial position (25,617) (26,072)

FINANCIAL STATEMENTS The following is a summary of the financial results for the year.

Dividend

The Directors have proposed no dividends for ordinary shares.

Directors

The Directors who held office during the year were as follows:

Name DesignationMadam Elizabeth Solomon Acting Chairperson Dr. P. A. Kuranchie Managing Director (Retired in June 2013)Mr. Patrick Tei Kwapong Deputy Managing DirectorMr. Sampson Akuetteh Nortey DirectorPimampim Yaw Kagbrese V Director Mr. D. K. Mensah Director Mr. Seth Ofori-Ohene Director Mr. Stephen Ahor Director Mrs. Catherine Hlodze DirectorHon. Inusah A. B. Fuseini Director Hon. Mrs. Della Sowah Director

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Principal Activities

The Bank is permitted by its regulations to carry on, inter alia, the business of banking in all aspects and other businesses and agencies incidental thereto. There was no change in the principal activities of the Bank during the year.

The Bank seeks to be a leading bank offering high quality customer-focused development banking and providing complementary range of services to industry and commerce.

Subsidiary Companies

The Bank is a parent of three subsidiary companies incorporated in Ghana namely First Ghana Loans and Savings company, NIB Assets Recovery Limited and NIB Pension Custodian Limited. The nature of the business carried on by NIB Assets Recovery Limited is the management and recovery of non-performing assets. The nature of the business carried on by NIB Pension Cus-todian Limited is management of pension funds.

The NIB Asset Recovery Company Limited (ARC) was incorporated on 4th February, 2010 with the main purpose of recovering the non-performing loans of National Investment Bank Limited (NIB). NIB is the sole shareholder of ARC. ARC is expected to be in existence for a period of five years, after NIB has transferred some of its non-performing loans to the Company.On 7th July, 2010 the Bank of Ghana granted approval to NIB for the establishment of ARC. In July 2010, NIB transferred a net loan portfolio of GH¢143,201,699.44, involving 2,902 loan and overdraft accounts to ARC for recovery. The breakdown is as follows: GH¢

Gross Loan 208,131,829.48Provision for bad debts 64,930,130.04 Net 143,201,699.44

ARC does not earn any income and all its expenses are paid by NIB. The only assets of ARC are the loans transferred by NIB to ARC.

NIB Pension Custodian Company Ltd is yet to commence operations. Therefore the consoli-dated financial statements presented are that of the Bank and First Ghana Savings and Loan Company Limited.



Dominion Corporate Trustees Limited Versus

National Investment Bank Limited

In March 2010 the Bank was sued by a foreign entity by name Standard Bank Offshore Trust Company Limited (later substituted by another foreign entity by name Dominion Corporate Trustees Limited) for the sum of US$60,000,000 with interest thereon from 29th January 2009 to the date of final payment. The case has been heard and judgement was delivered on 21st February 2013 in favour of the Plaintiffs for US$60,000,000 with interest thereon at 11% per annum from 29th January 2013 to date of the final payment. Culminating into US$90,000,000 as pronounced at the judgement

The Bank has appealed against the judgement citing 8 grounds. In the opinion of the Bank there has been a grievous miscarriage of justice. The US$60,000,000 debt arose from a frau-dulent promissory note transaction carried out in 2007 with the connivance of the then Ma-naging Director of the Bank. The transaction was not reflected in any of the books of the Bank and was done on the blind side of the Board of Directors. Funds from the transaction were not utili ed as advertised but were shared among the issuers of the promissory notes and the transaction advisors. The chances of success of the appeal are very high indeed.

No provisions have been made in the financial statements pending the determination by the Appeal Court.

Approval of the Financial Statements

The financial statements of the Bank, as indicated above, were approved by the Board of

Directors on ……………………………… 2014 and are signed on their behalf by:

………………………………….. ……………………………Chairman Managing Director

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200

920

1020

1120

1220

13G

H¢'

00

0G

H¢'

00

0G

H¢'

00

0G

H¢'

00

0G

H¢'

00

0

Tota

l Inc

ome

(Net

of I

nter

est E

xpen

ses)

47,118

60,512

74,116

95,780

133,824

Pro�

t Bef

ore

Tax

(21,062)

938

8725

11,782

45,012

Tax

Prov

isio

n(2,051)

1,649

-664

(145)

(4,038)

Rec

onst

ruct

ion

/Sta

biliz

atio

n Le

vy0

-163

(474)

0(1,125)

Pro�

t Aft

er T

ax &

Rec

onst

ruct

ion

Levy

(23,113)

2,424

7,587

11,637

38,528

Cas

h &

Bal

ance

s W

ith

Ban

k of

Gha

na, O

ther

Ban

ks &

Fin

anci

al In

stit

uito

ns107,464

164,907

196,032

210,645

251,853

Dep

osit

s &

Cur

rent

Acc

ount

s336,718

498,803

722,890

700,529

759,234

Adv

ance

s &

Loa

ns (G

RO

SS)

404,741

447,593

674,700

513,527

602,753

Inve

stm

ents

63,379

126,433

172,224

176,495

380,720

Tota

l Ass

ets

543,652

721,137

880,317

876,939

1,189,951

Shar

ehol

ders

Fun

ds60,555

66,093

84,065

100,209

285,397

Cap

ital

Ade

quac

y R

atio

14.37%

10.53%

11.36%

17.90%

22.51%

NA

TIO

NA

L IN

VE

ST

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NATIONAL INVESTMENT BANK LIMITEDPROFIT AFTER TAX ( 2009 TO 2013 )

2009 2010 2011 2012 2013

Pro�t After Tax -23,113 2,424 7,587 11,637 38,528

NATIONAL INVESTMENT BANK LIMITEDINVESTMENTS ( 2009 TO 2013 )

2009 2010 2011 2012 2013

Investments 63,379 126,433 172,224 176,495 380,720

NATIONAL INVESTMENT BANK LIMITEDTOTAL ASSETS ( 2009 TO 2013 )

2009 2010 2011 2012 2013Total Assets 543,652 721,137 880,317 876,939 1,189,951

2009 2010 2011 2012 2013

NATIONAL INVESTMENT BANK LIMITEDSHAREHOLDERS' FUNDS ( 2009 TO 2013 )

Shareholders' Funds 60,555 66,093 84,065 100,209 285,397

NATIONAL INVESTMENT BANK LIMITEDTOTAL INCOME/PROFIT BEFORE TAX ( 2009 TO 2013 )

Total Income 47,118 60,512 74,116 95,780 133,8242009 2010 2011 2012 2013

Pro�t Before Tax -21,062 938 8,725 11,782 45,012

NATIONAL INVESTMENT BANK LIMITEDADVANCES & LOANS ( 2009 TO 2013 )

2009 2010 2011 2012 2013Advances & Loans 404,741 447,593 674,700 513,527 602,753

NATIONAL INVESTMENT BANK LIMITEDCORPORATE TAX ( 2009 TO 2013 )

2009 2010 2011 2012 2013Tax Provision -2,051 1,649 -664 -145 -4,038

NATIONAL INVESTMENT BANK LIMITEDDEPOSIT & CURRENT ACCOUNTS ( 2009 TO 2013 )

2009 2010 2011 2012 2013Deposit & Current Accounts 336,718 498,803 722,890 700,529 759,234

NATIONAL INVESTMENT BANK LIMITEDCASH & BALANCES WITH BANK OF GHANA, OTHER BANKS & FINANCIAL INSTITUITIONS ( 2009 TO 2013 )

2009 2010 2011 2012 2013Cash & Balances With Banks Of Ghana, 107,464 164,907 196,032 210,645 251,853Other Banks & Financial Instituitions

Amount GH¢’000

[email protected]


CHART FOR THE OUTSTANDING GROSS LOANS, ADVANCES AND OVERDRAFTS AS AT 31ST DECEMBER, 2013

CONSTRUCTION 30.19% 182,002

MANUFACTURING 18.42% 111,032

COMMERCE AND FINANCE 15.37% 92,646

SERVICES 14.45% 87,090

AGRICULTURE, FORESTRY & FISHING 7.52% 45,348

TRANSPORT, STORAGE & COMMUNICATION 6.79% 40,918

MINING & QUARRYING 4.82% 29,032

MISCELLANEOUS 1.56% 9,416ELECTRICITY, GAS & WATER 0.88% 5,275

100.00% 602,759

NATIONAL INVESTMENT BANK LIMITED - GROSS OUTSTANDING TERM LOANS, OVERDRAFTS & OTHER ADVANCES BY SECTOR AS AT 31ST DECEMBER, 2013

30.19%

18.42%15.37%

14.45%

7.52%

6.79% 4.82%

1.56%

0.88%

CONSTRUCTION

MANUFACTURING

COMMERCE AND FINANCE

SERVICES

AGRICULTURE, FORESTRY & FISHING

TRANSPORT, STORAGE & COMMUNICATION

MINING & QUARRYING

MISCELLANEOUS

ELECTRICITY, GAS & WATER

Amount GH¢’000



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Report on the Financial Statements

We have audited the accompanying consolidated financial statements of National Investment Bank Limited on pages 8 to 74 which comprise the consolidated financial position as at 31 December, 2013, consolidated income statement, consolidated statement of changes in equity and consoli-dated statement of cash flows for the year then ended, together with the summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial Statements

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

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reaso-nable assurance as to whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclo-sures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control rele-vant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Bank and its subsidiaries have kept proper accounting records and the consoli-dated financial statements are in agreement with the records in all material respects and give in the

INDEPENDENT AUDITORS’ REPORTTo The Members Of National Investment Bank Limited

[email protected]


prescribed manner, information required by the Companies Act, 1963 (Act 179), and the Banking Act, 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738). The consolidated financial statements give a true and fair view of the consolidated financial position of the Bank and its subsidiaries as at 31 December 2013, and of their consolidated financial performance and con-solidated cash flows for the year then ended and are drawn up in accordance with the International Financial Reporting Standards (IFRS).

Emphasis of Matter

We draw attention to note 32 to the financial statements which describes the uncertainty related to the outcome of the lawsuit in relation to the appeal filed by the Bank. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

The Ghana Companies Act, 1963 (Act 179) requires that in carrying out our audit work we consider and report on the following matters.We confirm that:i. We have obtained all the information and explanations which to the best of our knowledge and

belief were necessary for the purposes of our audit,ii. In our opinion proper books of accounts have been kept by the Bank and its Subsidiaries, so far

as appears from our examination of those books, andiii. The Consolidated Balance Sheet [Statement of Financial Position] and Consolidated Profit &

Loss [Statement of comprehensive income] of the Bank and its subsidiaries are in agreement with the books of accounts.

The Banking Act 2004 (Act 673), section 78 (2), requires that we state certain matters in our reportWe hereby state that:

I. The consolidated accounts give a true and fair view of the state of affairs of the Bank and its subsidiaries and its results for the period under review

II. We were able to obtain all the information and explanation required for the efficient perfor-mance of our duties as auditors

III. The Bank and its subsidiaries transactions are within their powers andIV. The Bank has generally complied with the provisions of Act 673 and the Banking (Amendment)

Act of 2007.

Chartered AccountantsAccra, GhanaLicence No. ICAG/F/12

27th March, 2014.

Felix Nana SackeyPractising Certificate: Licence No. ICAG/P/1131

........................................



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013

The Bank The Group

Notes 2013 2012 2013 2012

Interest Income 5 101,150 99,611 103,217 101,975

Interest Expense 6 (45,888) (45,288) ( 47,052) (46,154) -------- -------- -------- --------

Net Interest Income 55,262 54,323 56,165 55,821

Fees and Commission Income 7 16,260 14,926 16,616 15,293

Other Operating Income 8 59,896 25,788 59,896 25,788

-------- -------- -------- -------- Operating Income 131,418 95,037 132,677 96,902

Operating expenses 9 (61,236) (46,354) (63,334) (47,988)

--------- -------- -------- ---------

Operating Profit before Impairment 70,182 48,683 69,343 48,914

Provision no longer required 2,544 175,791 2,544 175,791

Bad Debts Written O� (3,854) (176,127) (3,862) (176,127)

Credit Impairment Loss 11 (26,074) (37,308) (26,154) (37,493) --------- --------- --------- ---------

Pro�t before taxation and other income 42,798 11,039 41,871 11,085

Share of loss of associate (192) - (192) -

Other Income 12 2,406 743 2,503 803

Pro�t before taxation 45,012 11,782 44,182 11,888

Income tax expense 13a (1,321) - (1,321) (30)

Deferred tax 13b (4,038) (145) (4,038) (145)

National Fiscal stabilization levy (1,125) - (1,125) -

---------- ---------- ---------- ----------

Prot for the year 38,528 11,637 37,698 11,713

Other Comprehensive Income Items that

Items that may be reclassi�ed subsequently to pro�t or loss;

Net fair value gain on available-for-sale �nancial assets

191,840 4,508 191,840 4,508

Deferred tax on fair value gain on available-for-sale �nancial assets

(25,519) - (25,519) -

Reclassi�cation adjustments relating to available for sale �nancial assets disposed of during the year

(20,935) - (20,935) -

Share of net fair value gain on available-for-sale �nancial assets of associate

1,274 - 1,274 -

--------- ---------- ---------- ----------

Total Comprehensive Income for the year 185,188 16,145 184,358 16,221 ========= ======== ======== ========

Amount GH¢’000

[email protected]


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013

Profit for the year attributable to; The Group

2013 2012

Owners of the company 38,073 11,679

Non – controlling interest (375) 34

--------- ---------

37,698 11,713

===== =====

Total comprehensive income at-tributable to;

Owners of the company 184,733 16,187

Non – controlling interest (375) 34

184,358 16,221

===== =====

Amount GH¢’000



CONSOLIDATED STATEMENT OF FINANCIAL POSITION For the year ended 31 December 2013

Notes 2013 2012 2013 2012Assets

Cash and Balances with Bank of Ghana 15 165,841 111,643 166,715 113,176 61seitiruceS tnemnrevoG 155,323 123,078 155,340 123,095

Due from other Banks & Financial Institutions 17a 86,012 99,002 87,999 100,860 Available-for-sale Equity Investments 18a 32,365 31,597 32,377 31,598

c81setaicossa ni tnemtsevnI 189,878 18,667 189,878 18,667 91sremotsuc ot secnavda dna snaoL 515,624 449,657 521,260 454,947 02stessA rehtO 13,020 10,959 11,671 9,723 a31tessA xaT tnerruC - 2,176 - 2,176 d81seiraidisbuS stnemtsevnI 3,154 3,154 - -

12tnempiuqE dna tnalP ,ytreporP 28,734 27,006 31,369 29,596 13lliwdooG - 936 936

--------------- ------------ ------------- --------------Total Assets 1,189,951 876,939 1,197,545 884,774

=============== ============ ============= ==============

Liabilities

22stisopeD remotsuC 759,234 700,529 770,897 710,942 32sgniworroB 59,231 51,190 59,231 51,190 42dnuf deganaM ni ytilibaiL 1,002 538 1,002 538

Interest payable & Other Liabilities 25 27,461 20,246 23,601 17,046 Due to other banks & �nancial institutions 17b 23,572 - 23,572 -

d31xat niag latipaC - 384 - 384b31ytilibaiL xaT derrefeD 32,340 2,783 32,340 2,783 c31yveL noitazilibatS lacsiF lanoitaN 1,125 474 1,125 474e31xat dnediviD - 586 - 586a31noitaxaT 589 - 619 30

--------------- ------------ ------------- --------------Total Liabilities 904,554 776,730 912,387 783,973

--------------- ------------ ------------- --------------

62latipaC detatS 70,000 70,000 70,000 70,000 72sdnuf evreser yrotutatS 36,443 17,179 36,443 17,179 82evreser ksir tiderc yrotalugeR 4,241 3,442 4,241 3,443 92sevreser rehtO 200,330 53,670 200,330 53,670 03sulprus emocnI (25,617) (44,082) (26,072) (44,082)

Non controlling interest - - 216 591 --------------- ------------ ------------- --------------

Total Shareholders' Funds 285,397 100,209 285,158 100,801 --------------- ------------ ------------- --------------

Total Liabilities and Shareholders' Funds 1,189,951 876,939 1,197,545 884,774 =============== ============ ============= ==============

64.1)erahs rep sideC anahG( erahs rep eulav stessA teN 0.51 1.45 0.51

The Bank The Group

Amount GH¢’000

[email protected]


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CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2013

2013 2012 2013 2012Cash �ow from operating activities

Net Pro�t for the year 45,012 11,782 44,182 11,887

Adjustment for:

Depreciation 3,568 4,037 3,675 4,131

Dividend received (10,632) (9,353) (10,632) (9,353)

Share of loss on associate 192 - 192 - Pro�t on disposal of Property, Plant and Equipment (33) (41) (33) (41) Pro�t on disposal of equity shares (20,053) - (20,053) -

-------------- -------------- ----------- -----------Operationg pro�t before working capital changes 18,054 6,425 17,331 6,624

(Increase)/decrease in Loans & Advances (65,967) 15,512 (66,195) 14,665 (Increase)/decrease in Other Asset Accounts (2,061) 5,779 (2,642) 6,020 Increase/(decrease)in Customer Deposits 58,705 (22,361) 59,955 (22,039) Increase/(decrease) in Interest Payable & Other Liabilities 7,216 (1,762) 7,249 (1,913) Corporate tax paid - (58) - (58)

-------------- -------------- ----------- -----------Net cash from operating activities 15,947 3,535 15,698 3,299

Cash flows from investing activities

Purchase of Property, Plant & Equipment (5,296) (3,014) (5,448) (3,320)

Proceeds from sale of Property, Plant and Equipment 32 47 32 47

Proceeds from sale of equity shares 20,061 - 20,061 - Investment in equity shares - - (11) -

Dividend received from Investments 10,632 9,353 10,632 9,353 -------------- -------------- ----------- -----------

Net Cash used in Investing actitives 25,429 6,386 25,266 6,080

Cash �ows from �nancing activities

Increase in borrowing due within one year 3,349 2,075 3,231 1,949

Increase in borrowing due after one year 4,692 3,034 4,692 3,034

Increase /(decrease)in Managed funds 464 (654) 464 (654)

Net Cash from Financing activities 8,505 4,455 8,387 4,329 -------------- -------------- ----------- -----------

Net increase in cash and cash equivalents 49,881 14,376 49,351 13,708

Cash & cash equivalents at beginning of year 333,723 319,347 337,131 323,423

Cash & Cash equivalents at end of period 383,604 333,723 386,482 337,131 ========= ========= ========= =========

Operational cash flow from interest

888,54diap tseretnI 45,287 47,052 46,052 528,46deviecer tseretnI 69,048 66,320 70,987

The Bank The Group

Amount GH¢’000

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NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Corporate information

National Investment Bank Limited, a public company limited by shares, was incorporated and domiciled in Ghana under the Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673). The Bank is permitted by its regulations to carry on, inter alia, the business of banking in all aspects and other businesses and agencies incidental thereto. The address of the registered office of the Bank is ‘37 Kwame Nkrumah Avenue, P. O. Box GP 3726, and Accra.

b. Statement of compliance

The consolidated financial statements have been prepared in accordance with Interna-tional Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673) and the Banking (Amendment) Act 2007 (Act 738).

c. Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis except for the following assets and liabilities that are stated at their fair values: financial instru-ments that are at fair value through profit or loss; and financial instruments classified as available-for-sale.

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Bank and entities controlled by the Bank and its subsidiaries. Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Bank reassesses whether or not it controls an investee in facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Bank has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.



The company considers all relevant facts and circumstances in assessing whether or not the Bank’s voting rights in an investee are sufficient to give it power, including:

• the size of Bank’s holding of voting rights relative to the size and disper-sion of holdings of the other vote holders;

• potential voting rights held by the Bank, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Bank has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiar-ies is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transac-tions between members of the Group are eliminated in full on consolidation.

e. Use of Estimates and Judgement

The preparation of financial statements in conformity with IFRSs requires Management to make judgement, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and the asso-ciated assumptions are based on historical experience and other factors that are reason-able under the circumstances, the results of which form the basis of making the judgement about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and the underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Some of the estimates made in the prepa-ration of the financial statements are as follows;

(i) Going concern

The Bank’s management has made an assessment of its ability to continue as a going con-cern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast

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significant doubt upon the Bank’s ability to continue as a going concern. Therefore, the consolidated financial statements continue to be prepared on the going concern basis.

(ii) Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are derived from observable market data where possible, but if this is not available, judgement is required to establish fair values. The judgements include consider-ations of liquidity and model inputs such as discount rates

(iii) Impairment losses on loans and advances

The Bank reviews its individually significant loans and advances at each statement-of-fi-nancial-position date to assess whether an impairment loss should be recorded in the income statement. In particular, management’s judgement is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may dif-fer, resulting in future changes to the allowance.

Loans and advances that have been assessed individually (and found not to be impaired) are assessed together with all individually insignificant loans and advances in groups of as-sets with similar risk characteristics. This is to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident. The collective assessment takes account of data from the loan portfolio (such as levels of arrears, credit utilisation, loan-to-collateral ratios, etc.), and judgements on the effect of concentrations of risks and economic data (including levels of unemploy-ment, real estate prices indices, country risk and the performance of different individual groups).

(iv) Impairment of available-for-sale investments

The Bank reviews its debt securities classified as available-for-sale investments at each reporting date to assess whether they are impaired. This requires similar judgement as ap-plied to the individual assessment of loans and advances.

The Bank also records impairment charges on available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below their cost. The de-termination of what is ‘significant’ or ‘prolonged’ requires judgement. In making this judge-ment, the Bank evaluates, among other factors, historical share price movements and du-ration and extent to which the fair value of an investment is less than its cost.

(v) Deferred tax assets

Deferred tax assets are recognised in respect of tax losses to the extent that it is prob-able that future taxable profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be rec-ognised, based upon the likely timing and level of future taxable profits, together with fu-ture tax-planning strategies



f. Summary of Significant Accounting Policies

The significant accounting policies adopted by National Investment Bank Limited under the International Financial Reporting Standards (IFRSs) are set out below:

i. Subsidiaries

The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries for the year ended 31 December 2013. The financial statements of National Investment Bank’s subsidiaries are prepared for the same reporting year as National Investment Bank, using consistent accounting policies.

All intra-group balances, transactions, income and expenses are eliminated in full.

ii. Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant in-fluence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when de-cisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in a associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s in-terest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are rec-ognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity meth-od from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is ac-quired.

The requirements of IAS 39 are applied to determine whether it is necessary to recog-nise any impairment loss with respect to the Group’s investment in an associate or a joint venture.

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When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the car-rying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the invest-ment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture.

In addition, the Group accounts for all amounts previously recognised in other compre-hensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as are classification adjustment) when the equity method is dis-continued.

The Group continues to use the equity method when an investment in an associate be-comes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other compre-hensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are rec-ognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

iii. Interest Income and Expense

Interest income and expenses are recognised in the statement of income for all instru-ments measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a finan-cial 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 fi-nancial asset or financial liability. When calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses.

The calculation includes all fees paid or received between parties to the contract that are an integral part of the instrument.

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 recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

iv. Commissions and Fees

Commissions and fees income are generally recognised on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an adjust-ment to the effective interest rate on the loan. Loan syndication fees are recognised as revenue when the syndication has been completed and the Bank retained no part of the loan package for itself or retained a part at the same effective interest rate for the other participants. Commissions and fees arising from negotiating or participating in the negotiation of a transaction for a third party are recognised on completion of the underlying transaction. Portfolio and other management advisory fees are recognised based on the applicable service contracts, usually on a time-proportionate basis. Asset management fees related to investment funds are recognised rateably over the period 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.

v. Financial Assets and Financial Liabilities

• Categorization of Financial Assets and Financial Liabilities

The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivable; and available-for-sale fi-nancial assets; and held-to-maturity investments. Financial liabilities are classified as either held at fair value through profit or loss, or amortised cost. Management determines the categorisation of its financial assets and financial liabilities at initial recognition.

• Financial Assets and Financial Liabilities at Fair Value through Profit or Loss

Financial asset or liability at fair value through profit or loss is a financial asset or financial liability that meets either of the following conditions:

• Held for trading

A financial asset or financial liability is classified as held for trading if it is: acquired or incurred principally for the purpose of selling or repurchasing in the near future; or 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.

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• Designated at fair value through profit or loss

Upon initial recognition as financial asset or financial liability, it is designated by the Bank as at fair value through profit or loss except for investments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.

• Loans and Receivables

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

(a) Those that the company intends to sell immediately or in the near term, which shall be classified as held for trading.

(b) Those that company upon initial recognition designates as at fair value through profit or loss.

(c) Those that the company upon initial recognition designates as available for sale or

(d) Those for which the holder may not recover substantially all of its initial in-vestment, other than because of credit deterioration, which shall be classi-fied as available for sale.

• Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are neither classified as held for trading nor designated at fair value through prof-it and loss. They are held for an indefinite period of time and may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or

Non-derivative financial assets that are not classified as;

i) Loans and receivables

ii) Held-to-maturity investment or

iii) Financial assets as fair value through profit or loss.

• Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Bank has the positive inten-tion and ability to hold to maturity other than;

(a) Those that the entity upon initial recognition designates as at fair value through profit or loss.

(b) Those that the entity designates as available for sale and

(c) Those that meet the definition of loans and receivables.



• Initial Recognition of Financial Assets and Financial Liabilities

The Bank shall recognise a financial asset or financial liability on its statement of financial position when, and only when, the Bank becomes a party to the contractual provisions of the instrument subject to the provisions in respect of regular way purchases or sales of a financial asset which state that, ‘a regular way purchase or sale of financial assets is recognised and derecognized using either trade date or settlement date accounting’.

• Derecognition of Financial Assets and Financial Liabilities

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

A financial liability (or part of a financial liability) is removed from the Bank’s statement of financial position when, and only when, it is extinguished – i.e. when the obligation specified in the contract is: discharged, cancelled, or has expired.

• Initial Measurement of Financial Assets and Financial Liabilities

When a financial asset or financial liability is recognised initially, the Bank mea-sures it at its fair value plus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

When the Bank uses settlement date accounting for an asset that is subsequent-ly measured at cost or amortised cost, the asset is recognised initially at its fair value on the trade date.

• Subsequent Measurement of Financial Assets

After initial recognition, the Bank shall measure financial assets, including deriv-atives that are assets, at their fair value, without any deduction for transaction costs it may incur on sale or other disposal, except for the following financial assets: loans and receivables, which shall be measured at amortised cost us-ing the effective interest method; held-to-maturity investments, which shall be measured at amortised cost using the effective interest method; and investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, which shall be measured at cost.

• Subsequent Measurement of Financial Liabilities

After initial recognition, the Bank shall measure all financial liabilities at amor-tised cost using the effective interest method, except for: financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabili-ties, shall be measured at fair value except for a derivative liability that is linked to and must be settled by delivery of an unquoted equity instrument whose fair value cannot be reliably measured, which shall be measured at cost; and

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financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or is accounted for using the continuing involvement approach.

• Gains and Losses

The Bank shall recognise a gain or loss arising from a change in the fair value of a financial asset or financial liability that is not part of a hedging relationship as follows: a gain or loss on a financial asset or financial liability classified as at fair value through profit or loss shall be recognised in profit or loss; a gain or loss on an available for sale financial asset shall be recognised directly in equity, through the statement of changes in equity except for impairment losses and foreign ex-change gains and losses until the financial asset is derecognized, at which time the cumulative gain or loss previously recognised in equity shall be recognised in profit or loss. Foreign exchange on available for sale related to monetary assets is recognised through profit and loss. Foreign exchange related to non-monetary asset is recognised in equity.

Interest calculated using effective interest method is recognised in profit or loss; dividends on an available-for-sale equity instrument are recognised in profit or loss when the Bank’s right to receive payment is established;

For financial assets and financial liabilities carried at amortised cost, a gain or loss is recognised in profit or loss when the financial asset or financial liability is derecognised or impaired, and through the amortization process.

• Amortised Cost Measurement

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minus principal repayment, plus or minus the cumulative amortisation using the ef-fective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

• Fair Value Measurement

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

The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors that market participants take into account when entering into a transaction. Management believe that these valuation ad-justments are necessary and appropriate to fairly state financial instruments car-ried at fair value in the statement of financial position.

• Offsetting

Financial assets and financial liabilities are set off and the net amount presented



in the statement of financial position when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

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

• Measurement of Impairment and Provision for Credit Losses

The Bank shall assess at each statement of financial position date, whether there is any objective evidence that a financial asset or group of financial assets is im-paired.

A financial asset or group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a loss event) and that loss event(s) has an impact on the estimated future cash flows of the financial assets or group of financial assets that can be reliably estimated. It may not be possible to identify a single, discrete event that caused the impair-ment. Rather, the combined effect of several events may have caused the im-pairment. Objective evidence that a financial asset or group of financial assets is impaired includes observable data that comes to the attention of the Bank about the following loss events:

Øsignificant financial difficulty of the issuer or the obligor;

Øa breach of contract, such as a default or delinquency in interest or prin-cipal payment;

Øthe lender (the Bank), for economic or legal reasons relating to the bor-rower’s financial difficulty, granting to the borrower a concession that the Bank would not otherwise consider;

Øit is becoming probable that the borrower will enter bankruptcy or other financial reorganization;

Øthe disappearance of an active market for that financial asset because of financial difficulties; or

Øobservable data indicating that there is a measurable decrease in the es-timated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identi-fied with individual financial assets in the group, including:

• adverse changes in the payment status of borrowers in the group (e.g. an increased number of delayed payments); or

• national or local economic conditions that correlate with defaults in the group (e.g. an increase in the unemployment rate in the geograph-ical area of the borrowers, a decrease in property prices for mortgages in the relevant area, a decrease in oil prices for loan assets to oil com-panies, or adverse changes in the industry conditions that affect the

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borrowers in the group).

vi. Provision for credit losses is established if there is objective evidence that the Bank will be unable to collect all amounts due on a claim according to the orig-inal contractual term. A “claim” means a loan, a commitment such as a letter of credit, guarantee or commitment to extend credit or other credit product.

An allowance for credit loss is reported as a reduction in carrying value of a claim on the statement of financial position, whereas for an off-statement of financial position item such as a commitment, a provision for credit loss is reported in other liabilities. Additions to provisions for credit losses are made through credit loss expense.

Provision for credit losses is based on the following principles:

• Counterparty-specific – A claim is considered as a loss when manage-ment determines that it is probable that the Bank will not be able to col-lect all amounts due according to the original contractual terms.

• Individual credit exposures are evaluated based on the borrower’s char-acter, overall financial condition, resources and payment record, pros-pects of support from financially responsible guarantor and cash collat-erals.

• An impaired asset refers to an asset where there is no longer reasonable assurance of timely collection of the full amount of principal and interest due to deterioration in the credit quality of the counterparty. An asset is impaired if the estimated recoverable amount of an asset is less than its carrying amount shown in the books of the Bank. Impairment is measured and a provision for credit losses is established for the difference between the carrying amount and its estimated recoverable value.

• Estimated recoverable amount is measured by discounting the expected future cash flows at the effective interest rate inherent in the asset. When the amount and timing of future cash flows cannot be estimated with reasonable reliability, estimated, recoverable amounts may be measured at either:

• The fair value of any security underlying the assets, net of expected costs of recovery and any amount legally required to be paid to the borrowers; or observable market prices for the assets.

vii. Upon impairment the accrual of interest, income based on the original terms of the claim is discontinued until the asset has been written down to its estimat-ed recoverable amount. Interest income thereafter is recognized.

A write-off is made when all or part of a claim is deemed uncollectible or forgiv-en. Write-offs are charged against previously established allowances for credit losses or directly to credit loss expense and reduce the principal amount of a claim.



viii. Loans and Advances

Loans and advances originated by the Bank include loans where money is pro-vided directly to the borrower and are recognized when cash is advanced to the borrower. They are initially recorded at cost, which is fair value of cash originated by the Bank, including any transaction costs, and are subsequently measured at amortised cost using the effective interest method.

ix. Property, Plant and Equipment

Property, Plant and Equipment are stated at cost except Land and Building which are carried at revalued amount less accumulated depreciation and impairment losses. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of assets is the greater of their net selling price and value in use. The impairment losses are rec-ognized in the statement of income.

Land and buildings comprise mainly offices occupied by the company. All items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes the purchase prices of items of property, plant and equipment and directly attributable cost of ac-quisition.

Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future eco-nomic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the statement of comprehensive income during the financial period in which they are incurred.

Increase in the carrying amount arising on revaluation of asset is credited direct-ly to equity under the heading of revaluation surplus. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. On the other hand, a decrease in the carrying amount of an asset as a result of a revaluation is rec-ognised in profit or loss. However, a decrease is debited directly to equity under the heading of revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

Land is not depreciated. Depreciation on other assets is computed using the straight-line method to allocate the depreciable amounts over the assets’ useful lives, at the following annual rates:

Leasehold properties 5%

Improvement to Rented Premises 20%

Generating Plant 20%

Motor Vehicle 33.3%

Furniture and Equipment 20%

Computers 33.3%

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The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate.

An impairment loss is recognised whenever the carrying amount of an asset ex-ceeds its recoverable amount. The recoverable amount of assets is the greater of their net selling price and value in use. The impairment losses are recognised in the statement of comprehensive income.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount. These are included in other comprehensive income. When revalued assets are sold, the amount included in the revaluation surplus is trans-ferred to income surplus.

x. Translation of Foreign Currencies

The Bank’s functional currency is the Ghana Cedi. In preparing the statement of financial position of the Bank, transactions in currencies other than Ghana Cedis are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary items denominated in foreign currencies are retrans-lated at the rates prevailing at the statement of financial position date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retrans-lated.

Exchange differences arising on the settlement of monetary items, and on the retrans-lation of monetary items, are included in the statement of income. Exchange differenc-es arising on the retranslation of non-monetary items carried at fair value are included in the statement of income for the period except for differences arising on the retrans-lation of non-monetary items in respect of which gains and losses are recognised di-rectly in shareholders’ equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in the shareholders’ equity.

Reference Rate

The transaction rates used are the average of the buying and selling of the underlying inter-bank foreign exchange rate as quoted by the Association of Bankers – Ghana. 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. Non-mon-etary assets and liabilities are translated at historical exchange rates if held at historical cost or exchange rates at the date the fair value was determined if held at fair value, and the resulting foreign exchange gains and losses are recognised in the income statement or shareholders’ equity as appropriate.

xi. Cash and Cash Equivalents

For the purposes of cash flow statement cash and cash equivalents include cash, non-restricted balances with Bank of Ghana, amounts due from other banks and finan-cial institutions and short term government securities maturing in three months or less from the date of acquisition.



xii. Leases

Leases are tested to determine whether the lease is finance or operating lease and treated accordingly.

Finance leases - leases of property, plant and equipment where the Bank has substan-tially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at inception of the lease at the lower of the fair value of the lease property, plant and equipment and the present value of minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The corresponding rental obligations, net of finance charges, are included on other long term borrowings. The interest element of the finance cost is charged to the income statement over the lease period. The property, plant and equipment ac-quired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

Operating leases – leases where a significant portion of the risks and rewards of owner-ship are retained by the lessor are classified as operating lease. Rentals payable under operating leases are charged to income statement on a straight- line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into op-erating lease are also spread on a straight-line basis over the lease term.

xiii. Provision

Provisions for restructuring costs, legal claims and similar events are recognised when: the Bank has a present legal or constructive obligation as a result of past events; it is more likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

xiv. Financial Guarantee

Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make pay-ment when due in accordance with the term of a debt instrument.

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

xv. Deferred Taxation

Deferred income tax is provided in full, using the liability method, on temporary differ-ences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

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

xvi. Current Taxation

The Bank provides for income taxes at the current tax rates on the taxable profits of the Bank.

Current tax is the expected tax payable on the taxable income for the year, using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date, and any adjustment to tax payable in respect of previous years.

xvii. Ordinary shares

Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a deduction, net of tax, from the pro-ceeds

xviii. Dividend on Ordinary Shares

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

Dividends for the year that are declared after the statement of financial position date are dealt with in the subsequent events notes.

Interim dividends are recognised when paid.

xix. Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Bor-rowings are subsequently stated at amortised cost. Any difference between the amount initially recognised (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.

Borrowings are classified as non-current liabilities where the Bank has an uncondition-al right to defer settlement of the liability for at least 12 months after the statement of financial position date.

xx. Inventories

Inventory is stated at the lower of cost or net realisable value. Costs of inventories in-cludes, the purchase price, and related cost of acquisition. The cost of inventory is de-termined using weighted average cost formula.

xxi. Impairment of Non-financial Assets

The carrying amount of the Bank’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of im-pairment. If any such indication exists then the assets recoverable amount is estimated.



An impairment loss is recognised if the carrying amount of an asset exceeds its recover-able amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Impairment losses are recognised in the income statement.

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

xxii. Employee Benefits

• Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Bank pays fixed contributions into a separate fund and has no legal or contractual obligation to pay further contributions if the fund does not hold sufficient asset to pay all employee benefits relating to employee service in the current and prior pe-riods.

Obligation for contributions to defined contribution plans are recognised as an ex-pense in the statement of comprehensive income when they are due

• Short-Term Benefits

Short-term employee benefits are amounts payable to employees that fall due wholly within twelve months after the end of the period in which the employee ren-ders the related service.

The cost of short-term employee benefits are recognised as an expense in the peri-od when the economic benefit is given, as an employment cost. Unpaid short-term employee benefits as at the end of the accounting period are recognised as an ac-crued expense and any short-term benefit paid in advance are recognised as pre-payment to the extent that it will lead to a future cash refund a reduction in future cash payment.

Wages and salaries payable to employees are recognised as an expense in the state-ment of comprehensive income at gross. The Bank’s contribution to social security fund is also charged as an expense.

• Pension Scheme

The bank in compliance to the National Pension Act, 2008 has in place a contribu-tory three tier pension scheme:

o Tier One – a mandatory National Social Security Scheme, managed by the Social Security and National Insurance Trust, under which a 13.5% contribu-tion of employees’ total emoluments, is made by the bank.

o Tier Two – a fully funded privately managed occupational pension scheme under which employees contribute 5% of their total emoluments.

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• Termination Benefits

Termination benefits are recognised as an expense when the Bank is demonstra-bly committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognised if the Bank has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptance can be estimated reliably.

xxiii. Standards and Interpretations effective in the current period

The following standards, amendments to the existing standards and interpretations is-sued by the International Accounting Standards Board are effective for the current pe-riod:

• IFRS 10 “Consolidated Financial Statements” published by IASB on 12 May 2011. IFRS 10 replaces the consolidation guidance in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities by intro-ducing a single consolidation model for all entities based on control, irrespective of the nature of the investee (i.e., whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special pur-pose entities). Under IFRS 10, control is based on whether an investor has 1) power over the investee; 2) exposure, or rights, to variable returns from its involvement with the investee; and 3) the ability to use its power over the investee to affect the amount of the returns.

• IFRS 11 “Joint Arrangements” published by IASB on 12 May 2011. IFRS 11 introduces new accounting requirements for joint arrangements, replacing IAS 31 Interests in Joint Ventures. The option to apply the proportional consolidation method when accounting for jointly controlled entities is removed. Additionally, IFRS 11 eliminates jointly controlled assets to now only differentiate between joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets.

• IFRS 12 “Disclosures of Interests in Other Entities” published by IASB on 12 May 2011. IFRS 12 will require enhanced disclosures about both consolidated entities and unconsolidated entities in which an entity has involvement. The objective of IFRS 12 is to require information so that financial statement users may evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk exposures arising from involvements with unconsolidated structured entities and non-controlling in-terest holders’ involvement in the activities of consolidated entities.

• IFRS 13 “Fair Value Measurement” published by IASB on 12 May 2011. IFRS 13 defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value measurements. However, IFRS 13 does not change the requirements regarding which items should be measured or disclosed at fair value.

• IAS 27 “Separate Financial Statements” (revised in 2011) published by IASB on 12 May 2011. The requirements relating to separate financial statements are unchanged and are included in the amended IAS 27. The other portions of IAS 27 are replaced



by IFRS 10.

• IAS 28 “Investments in Associates and Joint Ventures” (revised in 2011) published by IASB on 12 May 2011. IAS 28 is amended for conforming changes based on the issu-ance of IFRS 10, IFRS 11 and IFRS 12.

• Amendments to IFRS 1 “First-time Adoption of IFRS” – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters published by IASB on 20 December 2010. The first amendment replaces references to a fixed date of “1 January 2004” with “the date of transition to IFRSs”, thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs. The second amendment provides guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.

• Amendments to IFRS 1 “First-time Adoption of IFRS” – Government Loans pub-lished by IASB on 13 March 2012. This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRSs. It also adds an exception to the retrospective e appli-cation of IFRS, which provides the same relief to first-time adopters granted to ex-isting preparers of IFRS financial statements when the requirement was incorporat-ed into IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” in 2008.

• Amendments to IFRS 7 “Financial Instruments: Disclosures” – Offsetting Finan-cial Assets and Financial Liabilities published by IASB on 16 December 2011. The amendments require information about all recognised financial instruments that are set off in accordance with paragraph 42 of IAS 32. The amendments also re-quire disclosure of information about recognised financial instruments subject to enforceable master netting arrangements and similar agreements even if they are not set off under IAS 32.

• Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Ar-rangements” and IFRS 12 “Disclosures of Interests in Other Entities” – Transition Guidance published by IASB on 28 June 2012. The amendments are intended to provide additional transition relief in IFRS 10, IFRS 11 and IFRS 12, by “limiting the re-quirement to provide adjusted comparative information to only the preceding com-parative period”. Also, amendments were made to IFRS 11 and IFRS 12 to eliminate the requirement to provide comparative information for periods prior to the imme-diately preceding period.

• Amendments to IAS 1 “Presentation of financial statements” – Presentation of Items of Other Comprehensive Income published by IASB on 16 June 2011. The amend-ments require companies preparing financial statements in accordance with IFRSs to group together items within OCI that may be reclassified to the profit or loss sec-tion of the income statement. The amendments also reaffirm existing requirements that items in OCI and profit or loss should be presented as either a single statement or two consecutive statements.

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• Amendments to IAS 19 “Employee Benefits” – Improvements to the Accounting for Post-employment Benefits published by IASB on 16 June 2011. The amendments make important improvements by: (1) eliminating an option to defer the recognition of gains and losses, known as the “corridor method”, improving comparability and faithfulness of presentation; (2) streamlining the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasure-ments to be presented

in other comprehensive income, thereby separating those changes from chang-es that many perceive to be the result of an entity’s day-to-day operations; (3) enhancing the disclosure requirements for defined benefit plans, providing better information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans.

• Amendments to various standards “Improvements to IFRSs (cycle 2009-2011)” published by IASB on 17 May 2012. Amendments to various standards and interpre-tations resulting from the annual improvement project of IFRS (IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34) primarily with a view to removing inconsistencies and clarifying wording. The revisions clarify the required accounting recognition in cases where free interpretation used to be permitted. The most important changes include new or revised requirements regarding: (i) Repeated application of IFRS 1, (ii) Borrowing costs under IFRS 1, (iii) Clarification of the requirements for comparative information, (iv) classification of servicing equipment, (v) tax effect of distribution to holders of equity instruments, (vi) Interim financial reporting and segment information for total assets and liabilities.

• IFRIC 20 “Stripping Costs in the Production Phase of a Surface Mine” published by IASB on 19 October 2011. The interpretation states that costs associated with a “stripping activity” should be accounted for as an addition to, or an enhancement of, an existing asset, and that this component should be amortised over the ex-pected useful life of the of the identified component of the ore body that becomes more accessible as a result of the stripping activity (using the units of production method unless another method is more appropriate).

The adoption of these amendments to the existing standards and interpretations has not led to any change in the company’s accounting policies.



2. FINANCIAL RISK MANAGEMENT

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

• Credit risk

• Liquidity risk

• Market risk

• Operational risk

This note presents information about the Bank’s exposure to each of the risks, the Bank’s ob-jective, policies and processes for measuring and managing risks, and the Bank’s management of capital.

Risk management framework

The Bank maintains a Risk Management Framework (RMF), which is a document containing guidelines for the identification, measurement, control and management of credit, market, li-quidity and operational risks. The Board of Directors is vested with the primary responsibility of understanding the risk run by the bank and ensuring that risks are appropriately managed. Under the RMF the Board has established Board Sub Committee on Risk Management, Board Sub Committee on Audit, the Executive Committee, Asset and Liability Management

Committee (ALCO), Head Office Credit Committee (HOCC), Portfolio Quality Review Commit-tee, Loan Provisioning Committee, Tender Committee, Disaster Management and Recovery Committee and Information and Communication Committee, who are responsible for imple-menting, monitoring and reviewing the Bank’s risk management policies and procedures in their specified areas set out in the RMF. These committees report regularly to the Board of Directors through the Board Sub Committees and the Managing Director on their activities.

The risk management policies and procedures are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and ad-herence to limits. Risk management policies and procedures are reviewed regularly to reflect changes in market conditions, products and services offered. The Bank, through its training and management standards and procedures, aims to develop a disciplined and constructive con-trol environment in which all employees understand their roles and obligations.

The Board Sub Committee on Risk Management is responsible for the formulation of overall risk management policy to govern the operations of the bank particularly in the area of credit, market, liquidity, operational and reputational. It is also responsible for constant review of the bank’s strategies aimed at maintaining the acceptable risk tolerance consistent with optimum profitability targets of the bank subject to its statutory and regulatory and regulatory require-ments as well as ensuring strict monitoring, control and adequate measurement of risk expo-sure of the bank at all times and in all areas of operations. This Division is assisted in these functions by a risk management structure in all the units of the Bank which ensures a consis-tent assessment of risk management control and procedures.

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i) Credit Risk

Credit risk management

Credit risk is risk of financial loss to the Bank if a customer or a counterpart to a financial instru-ment fails to meet its contractual obligations, and arises principally from the bank’s loan and advances to customers and other banks and investment securities.

The HOCC has responsibility for credit risk issues. Procedures for managing credit risk are de-termined at the business levels with specific policies and procedures being adapted to dif-ferent risk environment and business goals. Risk officers are located in the business units to maximize the efficiency of decision making.

The business units working with the Risk Officers take responsibility for managing pricing for risk, portfolio diversification and overall asset quality within the requirement of bank’s stan-dards, policies and business strategy.

Wholesale Corporate Banking

Within the Wholesale or Corporate Banking business, a numerical grading system of 1-14 with 1 being the highest quality is used for quantifying the risk associated with counterparty. The grading is based on the probability of default measures. Expected loss is used for the further assessment of individual exposures and portfolio analysis. There is a clear segregation of du-ties with loan applications being prepared separately from the approval.

Consumer Retail Banking

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

Problem Credit Management and Provisioning

Consumer Banking

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

The process used for raising provisions is dependent on the product. For mortgages, individual impairment provisions (IIP) are generally raised at 150 days past due based on the difference between the outstanding amount of the loan and the present value of the estimated future cash flows. For unsecured products, individual provisions are raised for the entire outstanding amount at 150 days past due. For all product that have certain accounts, such as cases involv-ing bankruptcy, fraud and death, the loss recognition process is accelerated.

A portfolio impairment provision (PIP) is held to cover the inherent risk of losses, which al-though not identified, are known through experience to be present in the loan portfolio PIP covers both performing loans and loans overdue for less than 150 days. The provision is set with reference to past experience using flow rate methodology, as well as taking account of



judgmental factors such as the economic and business environment and the trends in a range of portfolio indicators.

Wholesale Banking

In wholesale Banking accounts or portfolios are placed on Early Alert when they display signs of weakness. Such accounts and portfolio are subject to a dedicated process with oversight involving senior Risk Officers and Remedial Officers and Loans Recovery Unit. Account plans are re-evaluated and remedial actions are agreed and monitored until complete. Remedial actions include, but are not limited to, exposure reduction, security enhancement, and exit of the account or immediate movement of the account into the control of Loans Recovery Unit.

Loans are designated as impaired and considered non-performing where recognized weak-ness indicates that full payment of their interest or principal has become questionable. Im-paired accounts are managed by Loans Recovery Unit, which is independent of the main busi-ness of the bank. Where any amount is considered uncollectible, an individual impairment provision is raised, being the difference between the loan carrying amount and the present value of the estimated future cash flows. In any decision relating to the raising of provision, the Bank attempts to balance economic conditions, local knowledge and experience, and the results of independent asset views. Where it is considered that there is no realistic prospect of recovering an account against which an impairment provision has been raised, then that amount will be written off.

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

Loans and advances less than 90 days past due are not considered impaired, unless other in-formation is available to indicate the contrary. Analysis of loans and advances to customers for impairment purposes were as follows:

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2013 2012GHC¢'000 GHC¢'000

Loans neither past due nor impaired: 413,611 342,932

Loans past due but not impaired 41,595 45,592(less than 90 days due)

Impaired loans 155,126 131,042-------------- ------------

Total loans 610,332 519,566

Less portfolio impairment loss 89,072 64,619-------------- ------------

Total net loans 521,260 454,947======= =======

The Group

Maximum credit exposure

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

Credit risk exposures of financial assets on the statement of financial position are as follows:

2013 2012 2013 2012GH¢'000 GH¢'000 GH¢'000 GH¢'000

Cash and Balances with Bank of Ghana 165,841 111,643 166,715 113,176

155,323 123,078 155,340 123,095

86,012 99,002 87,999 100,860

602,753 513,526 610,332 519,566

13,020 10,959 11,671 9,723

Available-for-sale Equity Investments 52,114 50,264 52,126 50,265---------------- ---------------- ---------------- ---------

1,075,063 908,472 1,084,183 916,685

Gross Loans and Advances

Other Assets

The Bank The Group

Government Securities

Placement with other Banks



2013 2012GHC¢'000 GHC¢'000

Loans neither past due nor impaired: 413,611 342,932

Loans past due but not impaired 41,595 45,592(less than 90 days due)

Impaired loans 155,126 131,042-------------- ------------

Total loans 610,332 519,566

Less portfolio impairment loss 89,072 64,619-------------- ------------

Total net loans 521,260 454,947======= =======

The Group

Maximum credit exposure

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

Credit risk exposures of financial assets on the statement of financial position are as follows:

2013 2012 2013 2012GH¢'000 GH¢'000 GH¢'000 GH¢'000

Cash and Balances with Bank of Ghana 165,841 111,643 166,715 113,176

155,323 123,078 155,340 123,095

86,012 99,002 87,999 100,860

602,753 513,526 610,332 519,566

13,020 10,959 11,671 9,723

Available-for-sale Equity Investments 52,114 50,264 52,126 50,265---------------- ---------------- ---------------- ---------

1,075,063 908,472 1,084,183 916,685

Gross Loans and Advances

Other Assets

The Bank The Group

Government Securities

Placement with other Banks

Credit risk exposures off the statement of financial position are as follows:

2012 2011 2012 2011GH¢'000 GH¢'000 GH¢'000 GH¢'000

Bid Performance Bond 9,232 1,223 9,232 1,223

Letters of Credit 8,238 5,944 8,238 5,944

Guarantees and Indemnities 10,959 14,310 10,959 14,310

28,429 21,477 28,429 21,477

The Bank The Group

Fair value of collateral held

An estimate of the fair value of collateral and other security enhancements held against finan-cial assets is shown below: These securities are in the form of mortgage interest over property, other registered securities over assets and guarantees.

Analysis of credit risk concentration:

The concentration of loans and advances by business segment and customer type are dis-closed in note 19b and c.

2013 2012 2013 2012

GH¢'000 GH¢'000 GH¢'000 GH¢'000

Against impaired assets 52,330 39,004 56,877 39,004Against past due but not impaired 44,860 5,489 47,892 5,489

--------------- -------------- ------------------ -------------97,190 44,493 104,769 44,493

======== ======== ========== ========

The Bank The Group

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Credit quality or financial assets neither past due nor impaired

Credit quality by class of financial assets

High Standard Sub-standard Past due but Individually

grade grade grade not impaired impaired2013 2013 Total

Cash and balances with Bank of Ghana 166,715 - - - - 166,715 Government Securities 155,340 - - - - 155,340 Due from other banks and - financial institutions 87,999 - - - - 87,999 Available-for-sale Equit invest. 32,377 - - - - 32,377 Investment in associates 189,878 - - - - 189,878 Loans and advances 366,276 44,860 42,118 109,495 47,582 610,332

---------------------- --------------------- --------------------- ----------------------- ------------------- ------------------------Total 998,585 44,860 42,118 109,495 47,582 1,242,641

============= ============ ============ ============= =========== ==============

High Standard Sub-standard Past due but Individually

grade grade grade not impaired impaired Total

2012 2012

Cash and balances with Bank of Ghana 113,176 - - - - 113,176 Government Securities 123,095 - - - - 123,095 Due from other banks and - financial institutions 100,860 - - - - 100,860 Available-for-sale Equit invest. 31,598 - - - - 31,598 Investment in associates 18,667 - - - - 18,667 Loans and advances 160,097 128,382 77,029 102,705 51,352 519,565

---------------------- --------------------- --------------------- ----------------------- ------------------- ------------------------Total 547,493 128,382 77,029 102,705 51,352 906,961

============= ============ ============ ============= =========== ==============

The Bank manages the credit quality of financial assets using internal credit ratings. The table below shows the credit quality by class ofasset for all financial assets exposed to credit risk, based on the Bank's internal credit rating system. The amounts presented are gross ofimpairment allowances.

Neither past due nor impaired 2013

Neither past due nor impaired 2012

Amount GH¢ ‘000

Amount GH¢ ‘000

ii) Liquidity risk

The Bank defines liquidity risk as the risk that the Bank either does not have sufficient financial resources available to meet all its obligations and commitments as they fall due, or can access them only at excessive cost.

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



commitments to lend and to meet any other commitments.

Liquidity risk management is governed by the Bank’s Asset and Liability Management Commit-tee (ALCO), which is chaired by an Executive Director. ALCO is responsible for both statutory and prudential liquidity. These responsibilities include the provision of authorities, policies and procedures.

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

A substantial portion of the Bank’s assets are funded by customer deposits made up of current and savings accounts and other deposits. These customer deposits, which are widely diversi-fied by type and maturity, represent a stable source of surplus funds.

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

An analysis of various maturities of the Bank’s assets and liabilities is provided in note 36.

The table below shows the contractual expiry by maturity of the bank’s contingent liabilities and commitments.

2013 On demandLess than 3months 3-12 months

Over one year Total

GH¢'000 GH¢'000 GH¢'000 GH¢'000 GH¢'000

Financial Guaranteeds 466 8,238 19,672 53 28,429 Other commitments - - - - -

------------------ ------------------ ------------------ ------------------------------------466 8,238 19,672 53 28,429

============ ============ ====================================

2012Financial Guaranteeds 1,679 4,259 15,455 85 21,478 Other commitments - - - - -

------------------ ------------------ ------------------ ------------------------------------1,679 4,259 15,455 85 21,478

============ ============ ====================================

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iii) Market risks

Management of market risk

The Bank recognizes market risk as the exposure created by potential changes in market prices and rates. The Bank is exposed to market risk arising principally from customer driven trans-actions.

Market risk is governed by the Bank’s Market Risk Unit which is supervised by ALCO and which agrees policies, procedures and levels of risk appetite in terms of Value at Risk. The unit pro-vides market risk oversight and guidance on policy setting. Policies cover both the trading and non-trading books of the Bank.

The non-trading book is defined as the banking book. Limits are proposed by the businesses within the terms of agreed policy.

The unit also approves the limits within delegated authorities and monitors exposures against these limits. Additional limits are placed on specific instruments and currency concentrations where appropriate.

Value at Risk models are back tested against actual results to ensure pre-determined levels of accuracy are maintained. Bank’s Market Risk Unit complements the Value at Risk measure-ment by regularly stress testing market risk exposures to highlight potential risks that may arise from extreme market events that are rare but plausible. Stress testing is an integral part of the market risk management framework and considers both historical market events and forward looking scenarios.

Ad hoc scenarios are also prepared reflecting specific market conditions. A consistent stress testing methodology is applied to trading and non-trading books.

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

The Bank has not identified any limitations of the Value at Risk methodology it is currently using.

Foreign Exchange Exposure

The Bank’s foreign exchange exposures comprise trading and non-trading foreign currency translation exposures. Foreign exchange exposures are principally derived from customer driv-en transactions. Concentration of foreign currency denominated assets and liabilities are dis-closed in note 35.



Sensitivity Analysis

A 5% strengthening of the cedi against the following currencies at 31 December 2013 would have impacted equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2012.

Sensitivity analysisEffect in cedis31 December 2013

Profit or loss

GH¢’000

USD 756

GBP 45

EUR 50

Others 250

31 December 2012

USD 344

GBP 19

EUR 23

Others 125

A best case scenario 5% weakening of the Ghana cedi against the above currencies at 31 De-cember would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest Rate Exposure

The Group’s interest rate exposures arise from the differing re-pricing characteristics of bank-ing assets and liabilities.

Interest Rate Exposure

The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctua-tions in the future cash flows or fair values of financial instrument because of a change in mar-ket interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for reprising bands.

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

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

100 bp

Increase GH¢’000

100 bp

Decrease GH¢’000

31 December 2013

Interest income impact 12,522 (12,522)

Interest expense impact (14,861) 14,861

--------- -----------

Net impact 2,339 (2,339)

======= =======

100 bp

Increase GH¢’000

100 bp

Decrease GH¢’000

31 December 2012

Interest income impact 12,332 (12,332)

Interest expense impact (14,667) 14,667

--------- -----------

Net impact 2,335 (2,335)

======= =======



iv) Operational risks

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

The Group has established Risk Management Department (RMD) that supervises and directs the management of operational risks across the Bank. RMD is also responsible for ensuring ad-equate and appropriate policies and procedures are in place for the identification, assessment, monitoring, control and reporting of operational risks. The RMD is responsible for establishing and maintaining the overall operational risk framework and for monitoring the Bank’s key op-erational risk exposures.

v) Compliance and regulatory risk

Compliance and Regulatory risk include the risk of non-compliance with regulatory require-ments. The Bank’s compliance and regulatory risk unit or function is responsible for estab-lishing and maintaining an appropriate framework of the Bank’s compliance policies and pro-cedures. Compliance with such policies and procedures is the responsibility of all managers. However, compliance unit monitors and reports on compliance to executive management and the Board.

vi) Capital Management

The Central Bank sets and monitors capital requirements of the Bank.

In implementing current capital requirements, the Central Bank requires the Bank to maintain a prescribed ratio of total capital to total risk-weighted assets.

The Bank’s capital is analysed into two tiers:

Tier 1 capital, which includes ordinary paid up share capital and disclosed reserves, after de-ducting some assets such as investment in capital of other banks and financial institutions, investment in unconsolidated subsidiaries and associates.

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

Various limits are applied to elements of the capital base, and other assets and liabilities are given various classifications such as claims on government, claims on the central bank and contingent liabilities and risk-weighted assets are determined according to specified require-ments that seek to reflect the varying levels of risk attached to assets and off-financial position exposures.

The Bank’s policy is to maintain a strong base so as to maintain investor, and market confi-dence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also taken into consideration, and the Bank recognizes the need to

[email protected]


maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by sound capital position.

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

There have been no material changes in the Bank’s management of capital during the period.

3. REGULATORY DISCLOSURES

(i) Non – performing loans

Percentage of gross non-performing loans (sub-standard to loss) to total credit portfolio (in-cluding contingent liabilities) as 31 December 2013 is 24% (2012: 24%)

(ii) Capital Adequacy Ratio

The capital adequacy ratio at the end of December 2013 was calculated at approximately 22.51% (2012: 17.9%).



2013 2012 2013 2012

44. Amount spent on ful�lling social responsibility 173 84 174 85

5.. Interest Income

Loans and advances 65,484 69,048 66,978 70,987 Investment securities 35,666 30,563 36,239 30,988

---------- ----------- ---------- --------101,150 99,611 103,217 101,975

========== =========== ========== ========There was no interest accrued on impaired �nancial assets.

66. Interest expenses

Savings Accounts 4,996 3,956 5,035 3,995 Time Deposits 22,435 25,860 23,381 26,806Borrowings 10,596 9,407 10,715 9,526 Demand Deposit 158 203 218 263 Call Deposit 7,703 5,861 7,703 5,861

---------- --------- ---------- --------45,888 45,287 47,052 46,451

========== ======== ========== ========

77.. Commissions & fees

Investigation and Processing Fee 5,603 6,497 5,629 6,523 Commission on Guarantees 366 603 366 603 Commission, Discount and Related Exchange 6,891 4,367 6,891 4,367 Ledger Fees and Others 3,400 3,459 3,730 3,800

----------- --------- ---------- --------16,260 14,926 16,616 15,293

========== ======== ========== ========

The Bank The Group

The reported credit related fees and commissions are those which are not regarded as part ofthe e�ective interest rate on loans.


Amount GH¢’000

[email protected]



88.. OOtthheerr ooppeerraattiinngg iinnccoommee 2013 2012 2013 2012

Realised Gain on Foreign Exchange (Net) 11,546 5,383 11,546 5,383 Unrealised Gains on Foreign Exchange (Net) 15,228 10,991 15,228 10,991 Dividends from Investments (net) 10,632 9,353 10,632 9,353 Pro�t on disposal of equity shares 20,053 - 20,053 - Bad Debts Recovered 2,437 61 2,437 61

---------- --------- --------- ---------59,896 25,788 59,896 25,788

========== ========= ========= =========

99.. OOppeerraattiinngg EExxppeennsseess

Sta� Cost (Note 9b) 29,667 24,814 30,933 25,765 Donations 173 84 174 85 Depreciation 3,584 4,037 3,688 4,131 Directors Remuneration 384 408 384 408 Audit fees and Charges 130 80 150 100 Advertisements & Marketing Expenses 736 521 736 521 Repairs and Maintenance 2,624 1,374 2,677 1,411 Insurance 901 739 912 739 Electricity and Water 2,038 1,941 2,134 2,054 Motor Vehicle Expenses 2,501 2,228 2,562 2,290 Overseas Travel 6 10 6 10 Local Travel 1,343 1,252 1,423 1,315 Postage and Cables 353 343 359 343 Legal and Professional Fees 1,656 742 1,656 748 Computer Expenses 132 80 151 91 Police/other Security Guard Expenses 1,654 1,321 1,758 1,383 Printing & stationery 1,096 948 1,170 37 Other Expenses 12,258 6,378 12,461 6,555

---------- --------- --------- ---------61,236 46,352 63,334 47,986

========== ======== ========= =========

TThhee GGrroouuppTThhee BBaannkk

Amount GH¢’000




99bb.. SSttaaffff CCoosstt 2013 2012 2013 2012

Salaries and allowances 14,183 11,372 15,449 12,323 Social Security Fund Contributions 1,640 1,457 1,640 1,457 Provident Fund Contributions 1,267 1,135 1,267 1,135 Retirement Bene t 1,094 746 1,094 746 Training Expenses 298 133 298 133 Other employee costs 10,145 9,315 10,045 9,315 Medical Expenses 1,040 655 1,040 655

----------- ----------- ------------ -----------29,667 24,813 30,833 25,764

=========== =========== ============ ===========

1100.. PPaarrttiiccuullaarrss ooff ddiirreeccttoorrss eemmoolluummeennttss

Salaries and allowances 376,206 408,585 384,761 415,523 Pension contributions - - - - Bonus paid or receivables - - - - Others - - - -

----------- ----------- ------------ -----------376,206 408,585 384,761 415,523

=========== =========== ============ ===========1111.. CCrreeddiitt iimmppaaiirrmmeenntt lloossss

008egrahc tnemriapmi laudividnI 1,667 800 1,667 472,52egrahc tnemriapmi oiloftroP 35,641 25,354 35,826

----------- ------------ ------------ -----------26,074 37,308 26,154 37,493

=========== ============ ============ ===========

1122.. OOtthheerr IInnccoommee

Pro t on Sale of Non-current Assets 33 48 33 62 Rent 511 133 511 133 Sundries 1,862 562 1,959 608

----------- ------------ ------------ ------------2,406 743 2,503 803

=========== ============ ============ ============

TThhee BBaannkk TThhee GGrroouupp

In line with section 128 of the companies code, 1963 (Act 179), the following are the agregate of the directors emoluments;

Amount GH¢’000

[email protected]



2013 2012 2013 20121133.. TTaaxxaattiioonn

a. Corporate Tax

Balance at January 1, 2013 - (2,176) (2,118) (2,146) (2,118) Transfer from other tax accounts 1,444 (58) 1,444 (58) Charge for the year 1,321 - 1,321 30

---------- -------- --------- --------589 (2,176) 619 (2,146)

========== ======== ========= ========bb.. DDeeffeerrrreedd TTaaxx

Balance at January 1, 2013 2,783 2,638 2,783 2,638 Recognised in income statement 4,038 145 4,038 145 Recognised in reserves 25,519 - 25,519 -

---------- -------- --------- --------32,340 2,783 32,340 2,783

========== ======== ========= ========

cc.. NNaattiioonnaall FFiissccaall ssttaabbiilliizzaattiioonn lleevvyy

Balance at January 1, 2013 474 474 474 474 Transfer to corporate tax (474) - (474) - Charge for the year 1,125 - 1,125 -

---------- -------- --------- --------1,125 474 1,125 474

========== ======== ========= ========

dd.. CCaappiittaall GGaaiinn TTaaxx

Balance at January 1, 2012 384 384 384 384 Transfer to corporate tax (384) - (384) -

---------- -------- --------- --------- 384 - 384

========== ======== ========= ========

TThhee BBaannkk TThhee GGrroouupp

Deferred tax resulted from accelerated capital allowances on property, plant and equipment and revaluation of equity investments.

Amount GH¢’000




13e. Dividend Income Tax 2013 2012 2013 2012

Balance at January 1, 2013 586 586 586 586 Charge for the year 925 813 925 813 Payments (586) (813) (586) (813) Transfer to corporate tax (925) - (925) -

--------- ----------- --------- ------------ 586 - 586

========= =========== ========= ===========

13f. Factors affecting the current tax charged for the year

Profit for the year 45,012 11,781 44,182 11,888

Tax charge thereon at Ghana corporate tax 11,253 2,945 11,046 2,972

Factors affecting charge:

2,233 1,030 2,233 1,030Tax loss not utilised - - - - Net tax e�ect of deductible income and un (11,614) (2,759) (11,614) (2,759) Tax e�ect of capital allowance (1,252) (1,122.00) (1,252) (1,122) Items of di�erent tax rates - (2,338.00) - (2,338)

-------- ----------- --------- -----------619 (2,244) 412 (2,217)

======== =========== ========= ===========Current tax charge 619 Nil 619 Nil

%33%33etar xat evitceffE

A reconciliation of the charge that would result from applying the standard Ghana corporate

tax rate to pro�t before tax to tax charge for the year is given below:

TThhee GGrroouuppTThhee BBaannkk

Tax e�ect of items not deductible for tax purposes

Amount GH¢’000

[email protected]



2013 2012 2013 20121144.. TTaaxx eeffffeecctt rreellaattiinngg ttoo ootthheerr ccoommpprreehheennssiivvee iinnccoommee

Available for saleBefore tax amountTax expense/bene�t 191,841 4,508 191,841 4,508 Net of tax amount - - - -

---------- ---------- ---------- ----------191,841 4,508 191,841 4,508

========== ========== ========== ==========

1155.. CCaasshh aanndd bbaallaanncceess wwiitthh BBaannkk ooff GGhhaannaa

Cash in Hand 16,680 19,855 16,737 19,905 Balances with Bank of Ghana 149,161 91,788 149,978 93,271

---------- ---------- ---------- ----------165,841 111,643 166,715 113,176

========== ========== ========== ==========

1166.. GGoovveerrnnmmeenntt SSeeccuurriittiieess

Short-Term Investments in Bills Discounted 63,745 50,239 63,745 50,239 SADA Bonds 10,000 10,000 10,000 10,000 Treasury Bills 81,578 62,839 81,595 62,856

---------- ---------- ---------- ----------155,323 123,078 155,340 123,095

========== ========== ========== ==========

1177.. aa DDuuee ffrroomm ootthheerr bbaannkkss aanndd ffiinnaanncciiaall iinnssttiittuuttiioonnss

Time Deposits - 27,692 1,987 29,550 Nostro Account Balances - 41,107 - 41,107 Items in the course of Collection 7,754 7,703 7,754 7,703 Money at Short Notice 78,258 22,500 78,258 22,500

---------- ---------- ----------- ----------86,012 99,002 87,999 100,860

========== ========== =========== ==========

1177..bb DDuuee ttoo ootthheerr bbaannkkss aanndd ffiinnaanncciiaall iinnssttiittuuttiioonnss

Vostro Account Balances 3,372 - 3,372 - Bank of Ghana 20,200 - 20,200 -

---------- ---------- ---------- ----------23,572 - 23,572 -

========== ========== ========== ==========

List of correspondent banks with signi�cant balances included in the Nostro

Mandatory reserve deposits representing 9% of the bank's deposits are not available for use.

The Bank The Group

Items in course of collection were cheques that are still within the banking

Amount GH¢’000




The Group

1188.. EEqquuiittyy IInnvveessttmm eenntt

a) Available-for-sale equity investments (18e)

Listed Unlisted Total The Group

GH¢ GH¢ GH¢

Fair value at 1 January 2013 29,264 2,333 31,597 31,598

Movements in 2013:

Available for sale movement 21,711 - 21,711 21722

)349,02(lasopsid ot refsnarT - (20,943) (20,943)

Fair value at 31 December 2013 30,032 2,333 32,365 32,377

Fair value at 1 January 2012 24,756 2,333 27,089 27,090

Movements in 2012:

Available for sale movement 4,508 - 4,508 4,508

Fair value at 31 December 2012 29,264 2,333 31,597 31,598

b) Disposal of available-for-sale equity investments Listed

GH¢

8tsoC 8

439,02stnemtsujda noitaulaveR 20,934

249,02eulav kooB 20,942

160,02lasopsid morf sdeecorP 20,061

881 881

439,02439,02sulpruS .pac morf refsnarT

Profit on disposal 20,053 20,053

The Bank

Amount GH¢’000

[email protected]


18c. Investment in associate Bank

(i) Investment in associate measure at cost

The Company has a 20% or more interest in the following companies

Investee 2013 2012

GH¢’000 GH¢’000

Nexans Kable Metal Limited 0.02 0.02

Accra Markets Limited 0.04 0.04

Ayensu Starch Company Limited 750 750

These investees are private entities which are not listed on any stock exchange and there are no published price quotations for the fair value of this investment. In accor-dance with IAS 27, these investments are stated at cost.

(ii) Investment in associate measured at fair value

Investee 2013 2012

GH¢’000 GH¢’000

Nestle Ghana Limited 188,046 17,917

Group

Details of the bank’s associate at the end of the reporting period are as follows:

(iii) Name of associate: NTHC Limited

Principal activity: Assets management and corporate Finance and advisory,

Place of incorporation: Ghana

Proportion of Ownership and voting right; 25%

The financial year end; 31st December

Financial year end 2013 2012

GH¢’000 GH¢’000




Balance at 1 January - -

Share of loss (192) 633

Share of movement in available for share equity 1,274

Balance as at December 31 1,082 633

Details of associate financial statements

Total Assets 319,645 228,693

Total Liabilities 296,172 208,775

Net assets 23,473 19,918

Share of net asset of associate 5,868 4,979

Total revenue of associate 59,645 27,545

Total (loss)/profit after tax of associate (768) 1,930

Share of (loss)/profit of associate

(iv) For the rest of the investees (Nestle Ghana Limited, Nexans Kable Metal Limited, Ayensu Starch Company Limited and Accra Markets Limited), the bank does not have the power to participate in their financial and the operating policy decisions, hence these investments are stated at their respective values in the consolidated financial statements but not equity accounted for.

(v) The associates had no contingent liabilities or capital commitments as at 31 Decem-ber 2013 (2012 Nl)


Amount GH¢’000

[email protected]


18d. Subsidiary Companies

Details of the Group material subsidiaries at the end of the reporting period are as follows:

Refer to Director’s report on page 18 for the rationale behind non-consolidation of NIB Pension Custodians Co. Ltd and NIB Asset Recovery Co Ltd.

Name of lapicnirPseiraidisbus Activities Place of incorporat

2013 2012

anahGdtL .oc sgnivaS dna snaoL anahG tsriF 54.85% 54.85%

NIB Asset Recovery Co Ltd Management of non performing loans and anahGBIN fo secnavda 100% 100%

NIB Pension Custodians Co Ltd Management of pension fund Ghana 100% 100%

Proportion of ownership interest and voting power





FFiirrsstt GGhhaannaa LLooaannss aanndd SSaavviinnggss LLttdd Amount GH¢’000

2013 2012

Current assets 10,293 10,003

Non-current assets 2,635 2,590

Current liabilities (12,449) (11,284)

Non-current liabilities - -

Equity attributable to owners of the Company (263) (718)

Non-controlling interests (216) (591)

Revenue 2,520 2,791

Expenses 3,350 (2,685)

Pro�t (loss) for the year 830 106

Pro�t (loss) attributable to owners of the Company (455) 42

Pro�t (loss) attributable to the non-controlling interests (375) 34

Other comprehensive income attributable to owners of the Company - -

Other comprehensive income attributable to the non-controlling interests - -

Other comprehensive income for the year - -

Total comprehensive income attributable to owners of the Company (455) 42

Total comprehensive income attributable to the non-controlling interests (375) 34

Dividends paid to non-controlling interests - -

Net cash in�ow (out�ow) from operating activities (249) (236)

Net cash in�ow (out�ow) from investing activities (163) (306)

Net cash in�ow (out�ow) from �nancing activities (530) (126)

Net cash in�ow (out�ow) (530) (668)

Summarised �nancial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below. The summarised �nancial information below represents amounts before intragroup eliminations.

[email protected]



18e. Details of equity investments of the Bank at the end of the year are as follows:

2013 2012

Holdings Holdings

Listed equity

Aluworks Company Limited 1% 1%

Total Ghana Limited 5.36% 13.50%

Unlisted equity

Intravenous Infusion Limited 17.9% 17.9%

Accra City Hotel Limited 10% 10%

Eximguaranty Company Limited 2.25% 2.25%

Metro Mass Transit Limited 9.3% 9.3%

Twofo Oil Palm Plantation 0.3% 0.3%

Subri Industrial Plantation 1.0% 1.0%

Consolidated Discount House 9.0% 9.0%

Securities Discount House 1.1% 1.1%

Vacuum Salt 10.0% 10.0%




19. Loans and advances to customers 2013 2012 2013 2012

a. Analysis by type

Loan 306,057 206,544 313,636 212,584

Overdraft 233,081 217,172 233,081 217,172

Loans - NIB Asset Recovery Ltd. 63,615 89,810 63,615 89,810 ------------ ------------ ------------ ----------

Gross Loans & Advances 602,753 513,526 610,332 519,566

Loans Impairment Allowance Account (d) (87,129) (63,869) (89,072) (64,619) ------------ ------------ ------------ ----------

Net Loans & Advances 515,624 449,657 521,260 454,947 ============ ============ ============ ==========

(i) Loans and advances (including credit bills negotiated)

Loans and advances 602,753 513,526 610,332 519,566

Credit commitments 28,429 21,478 28,429 21,478 ------------ ------------ ------------ ----------

631,182 535,004 638,761 541,044 ------------ ------------ ------------ ----------

(ii) Loans loss provision ratio 0.14:1 0.12:1 0.15:1 0.12:1

(iii) Gross non-performing loans ratio 0.24:1 0.14:1 0.24:1 0.14:1

(iv) Ratio of 50 largest exposures (funded and non-funded)

to total exposures 0.59:1 0.48:1 0.59:1 0.48:1

The Bank The Group

Amount GH¢’000

[email protected]



2013 2012 2013 2012

19b. Loans and advances to customers

Analysis by Business segment

Agriculture, Forestry and Fishing 45,348 75,624 45,348 75,624

Mining and Quarrying 29,032 36,480 29,032 36,480

Manufacturing 111,032 103,729 111,032 103,729

Construction 182,002 71,096 182,002 71,096

Electricity, gas and water 5,275 1,809 5,275 1,809

Commerce and Finance 92,640 60,575 92,640 60,575

Transport, storage and communication 40,918 22,352 40,918 22,352

Services 87,090 137,867 87,090 137,867

Miscellaneous 9,416 3,995 16,995 10,034 ------------ ---------- ------------ ----------

602,753 513,527 610,332 519,566 ============ ========== ============ ==========

19c. Analysis by type of customers

Individuals 2,373 2,021 9,595 7,501

Private Enterprises 514,012 437,923 514,012 437,923

Public Enterprises 74,475 63,451 74,475 63,451

Sta� 11,893 10,132 12,250 10,691 ------------ ---------- ------------ ----------

602,753 513,527 610,332 519,566 ============ ========== ============ ==========

The Bank The Group

Amount GH¢’000




19d. Movement in Bank's provisions for impairment are 2013 2012 2013 2012as follows:

Balance as at 1 January 63,869 209,530 63,869 209,530

General Provision 22,874 25,904 24,817 25,904

Speci�c Provision 2,930 4,225 2,930 4,225

Provision no longer required (2,544) (175,790) (2,544) (175,790) ---------- ----------- ---------- ------------

87,129 63,869 89,072 63,869 ========== =========== ========== ============

20. Other Assets

Sundry Debtors (20b) 5,864 5,326 7,208 6,119

Stock Account 352 514 362 541

Accountable Imprest 221 201 232 201

Prepayments 3,803 2,832 3,869 2,862

Asset Recovery Ltd 2,780 2,084 - - ---------- ----------- ---------- ------------

13,020 10,957 11,671 9,723 ========== =========== ========== ============

20b. Analysis of sundry debtors

Other debtors 144 377 1,488 1,170

MOWAC - NIB contribution - 447 - 447

Western union reimbursables 5,720 4,325 5,720 4,325

41tnuocca gnidloh eeF hciwz-E - 14

First Ghana Building Company Limited 800 692 800 692---------- ----------- ---------- ------------

6,664 5,855 8,008 6,648 Provision for sundry debtors (800) (529) (800) (529)

---------- ----------- ---------- ------------5,864 5,326 7,208 6,119

========== =========== ========== ============

The Bank The Group

Amount GH¢’000

[email protected]


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21b. Disposal of non-current assetsThe Bank The Group

Motor MotorVehicles Vehicles

GH¢ GH¢Less carrying amount:

Cost 128 128

)821(noitaicerped detalumuccA (128) -------- --------

- -

Proceeds from disposal 33 33 -------- --------

33lasopsid no tiforP 33 ========= =========

Amount GH¢’000

[email protected]



22. Customers deposit 2013 2012 2013 2012

Current Account 353,014 351,380 358,827 357,125

Savings Account 177,186 170,342 177,594 170,722

Time Deposit 169,453 107,599 174,895 111,887

Call Deposit 59,581 71,208 59,581 71,208 ---------- ---------- ----------- -----------

759,234 700,529 770,897 710,942 ========== ========== =========== ===========

Analysis by type of Depositors

Individuals and other Private Enterprises 598,644 552,355 607,840 560,567

Government departments and agencies 127,170 117,337 129,124 119,081

Public Enterprises 22,722 20,965 23,071 21,277

Others 10,698 9,871 10,862 10,017 ---------- ---------- ----------- -----------

759,234 700,528 770,897 710,942 ========== ========== =========== ===========

Ratio of 20 largest depositors to total dep 0.34:1 0.28:1 0.34:1 0.28:1

23. Borrowings

Borrowing due within one year 17,266 13,917 17,266 13,917

Borrowing due after one year 41,965 37,273 41,965 37,273 ---------- ---------- ----------- -----------

59,231 51,190 59,231 51,190 ========== ========== =========== ===========

Local currency borrowing 59,231 46,732 59,231 46,732

Foreign currency borrowing - 4,458 - 4,458 ---------- ---------- ----------- -----------

59,231 51,190 59,231 51,190 ========== ========= =========== =========

The Bank The Group

Amount GH¢’000




The Bank The Group

Analysis of Borrowings

Details of borrowings:Name

26,730 26,730

OVCF/KFW 1,410 1,410

GH Private Sector Development Fun 204 204

Government of Ghana (Rubber Proje 23,313 23,313

Government of Ghana (Oil Palm) 7,574 7,574

------------------------59,231 59,231

========================

Summary of contract details

This carries an interest rate of 7% and matures in March 2026. There is no security given.

Export Development and Investment Fund (EDIF)

This amount is made up of two separatefacilities of GHS17,265,592.36 andGHS9,464,230. They carry interest ratesof 22% and 5% and will mature on June2013 and November 2015 respectively .No security was given for these facilities.

This facility is foa a period of twenty-two years, with eight years grace period on the principal and interest shall be repaid over a period of fourteen years.

This carries an interest rate of 3% and matures in December 2014. There is no security given.

This carries an interest rate of 7% and matures March 2028. There is no security given.

Amount GH¢’000

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24. Liability on managed funds 2013 2012 2013 2012

EEC II 256 256 256 256

Japanese grant - 265 - 265

PSI 15 16 15 16

Masloc 13 1 13 1

Mowac 267 - 267 -

SIF 451 - 451 - -------------- ------------ ----------- --------

1,002 538 1,002 538 ============== ============ =========== ========

25. Interest payable and other liabilities 2013 2012 2013 2012

Sta� Provident Fund 181 1,017 398 1,017

Interest Payable 9,458 6,187 9,458 6,187

Predisbursement charges 622 742 622 742

Bankers Payment and Payment Orders 4,315 1,907 4,315 1,907

Other Creditors 6,206 8,229 4,903 7,085

Other accruals 3,899 80 3,905 108

NIB Asset recovery company 2,780 2,084 - - ------------- ------------ ---------- --------

27,461 20,246 23,601 17,046 ============ ============ ========== ========

GroupBank

The Group The Bank

Amount GH¢’000




26. Stated Capital

a. Authorised ordinary shares 2013 2012

Shares of no par value 1,000,000,000 1,000,000,000

Number Value Number ValueGH¢’000 GH¢’000

b. Ordinary Shares:

Issued for Cash Consideration 178,359,255 423,05 178,359,255 423,05

Capitalisation issue 17,751,056 2 17,751,056 2

Transfer from Capital Surplus - 19,674 - 19,674 --------------- ------------------- -------------- -------------------

196,110,311 70,000 196,110,311 000,07 --------------- ------------------- -------------- -------------------

There is no unpaid liabilities on any of the shares in treasury.

27. Statutory reserve fund

This represents the cumulative amounts set aside as a non-distributable reserve fund from annual netpro�t after tax in accordance with Section 29 (1) of the Banking Act, 2004 (Act 673) as amended by theBanking (Amendement Act of 2007), Act (738). The amounts transferred represent 50% of net pro�tafter tax.

[email protected]



2013 2012 2013 201228. Regulatory credit risk reserve

Balance at 1 January 3,442 2,764 3,442 2,764

Transfer from income surplus 799 678 799 678

Balance at 31 December 4,241 3,442 4,241 3,442============== ============ =========== ========

29. Other reserveThis consists of gains on property, plant and equipment, available for sale investmentsstated at fair value and related taxes. Movement during the year is set out below:

2013 2012 2013 2012Available- Revaluation

for-Sale Surplus Total TotalFin. Assets

Balance at 1 January 2013 40,983 12,687 53,670 49,162 53,670 49,162

Available for sale movement 172,179 - 172,179 4,508 172,179 4,508

(25,519) - (25,519) - (25,519) -

Balance at 31 December 2013 187,643 12,687 200,330 53,670 200,330 53,670============== ============ =========== ======== ========== ========

30. Income surplus

This represents the excess of provision for bad and doubtful debts in respect o�oansas per Bank of Ghana prudential guidelines and loan impairment loss provision as perIFRS computations. Movement is as follows:

This represents the residual of cumulative annual pro�ts or (loss) that are available fordistribution to shareholders.

puorG ehTknaB ehT

Deferred tax on available for sale movement

31 Goodwill 2013 2012

Cost 936 936

Impairment - - -----------------------

Goodwill 936 936========= =========

Amount GH¢’000




Impairment testing of Goodwill

Goodwill acquired through business combinations has been allocated to two individual cash generating units, which is also reportable segment for impairment testing as follows:

2013 2012

Retail 28 27

Corporate 908 909

936 936

Key assumptions used in value – in – use calculations:

The recoverable amount of the retail and corporate banking units have been determined based on value- in- use calculations using cash flow projections based on financial budgets approves by senior management covering a five year period. The following rates are used by the bank.

Corporate

2013 2012

Discount rate 10% 9%

Projected growth rate 5% 5%

Inflation rate 13.1% 8.8%

Retail

2013 2012

Discount rate 10% 9%

Projected growth rate 5% 5%

Inflation rate 13.1% 8.8%

The calculation of value in use for both corporate banking and retail banking units is almost sensitive to interest margin, discount rate, market share during the budget period, projected growth rate used to extrapolate cash flows beyond the budget period and local inflation rates.

Amount GH¢’000

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Interest Margin:

Interest margins are based on current fixed interest yields.

Discount Rates:

Discount rates reflect the pre-tax rate of assessment of the risk specific to each cash generat-ing unit.

Market share assumption

These assumptions are important because, as well as using industry data for growth rates, management assesses how the unit’s relative position to its competitors might change over the budget period. Management expect its share to be stable over the budget period.

Projected growth rate and local inflation rates

Assumptions are based on published industry research.

Sensitivity to change in assumptions

Management believes that no reasonably possible change in any of the above key assump-tions would cause the carrying value of the unit to exceed their recoverable amount.

31a. Contingencies & Commitments

2013 2012(GH¢’000) (GH¢’000)

Bid performance bond 2,441 1,224 Letters of credit 8,238 5,944 Guarantees and indeminities 17,750 14,310

---------------- -------------28,429 21,478

================ =============

In common with other banks, the bank conducts business involving acceptances,guarantees, performance bonds and indemnities. The majority of these facilitiesare o�set by corresponding obligations to third parties.

As at 31 December, 2013 the Bank has contingencies and commitments as follows:




32. Legal proceedings:

3102smialc lageL

000,000,09$SUdtL seetsurT etaroproC noinimoD

967,851,2SHGdtL gnireenignE moR

33. Related parties 2013 2012 2013 2012

a.

Current directors - 34 - 34 Ex - directors 3,369 5,412 3,369 5,412

O�cers and other employees 2,869 9,045 2,869 9,045 --------- -------- --------- --------

6,238 14,491 6,238 14,491 ======== ======== ========= ========

33b.

NIB Asset Recovery Company Ltd 2,780 1,149 2,780 1,149 --------- -------- --------------- --------

2,780 1,149 2,780 1,149 ========= ======== ======= ========

Administrative expenses paid on behalf of subsidiary companies which were outstanding were as follows;

The GroupThe Bank

Advances include the following amounts lent to related parties:

Subsidiary companies

The GroupThe Bank

The Bank is currently involved in a number o�egal proceedings that are incidental to theiroperations. Due to the inherent uncertainty of these legal cases no accurate quanti�cationof all costs related to the case can be made. Amount disclosed above represent currentquanti�ed signi�cant claims for which judgements were pronounced. Based on the adviceof the legal counselors of the Bank, no provisions have been made in the �nancialstatements pending the determination by the Appeal Court.

Interest rates charged on balances outstanding from related parties are lower than thebank's base rate which is in compliance with Bank of Ghana notice numberBG/GOV/SEC/2012/02. No signi�cant impairment losses have been recorded againstbalances oustanding during the period from directors, o�cers and employees.

Amount GH¢’000

[email protected]



33c. Key management compensation 2013 2012 2013 2012

Salaries/allowances 1,309 - 1,367 -

Pension contribution 737 - 737 -

Bonus paid or receivables 47 - 47 - ------------ ----------- ----------- -----------

2,093 151,2 ============ =========== =========== ===========

34 Cash and cash equivalents 2013 2012 2013 2012

For the purpose of the cash �ow

Cash and balances with central bank 165,841 111,643 166,715 113,176

Government securities 155,323 123,078 155,340 123,095

Due from other banks 86,012 99,002 87,999 100,860

Due to other banks (23,572) - (23,572) 1,907 ------------- ----------- ------------ -----------

383,604 333,723 386,482 339,038 ============= =========== ============ ===========

The Bank The Group

Bank Group

Amount GH¢’000

Amount GH¢’000




[email protected]



36. MATURITY ANALYSIS OF ASSETS AND LIABILITIESAs at 31 December

Assets 0-3 Months 3-6 Months 6-12 Months Over I Year TotalGH¢’000GH¢’000GH¢’000GH¢’000GH¢’000

Cash & Balances with Bank of Ghana 166,715 - - - 166,715

141,54seitiruceS tnemnrevoG 19,125 17,329 73,745 155,340

Due from Other banks & Financial Institutio 87,999 - - - 87,999

552,222tnemtsevni ytiuqE - - - 222,255

Loans and Advances to Customers 187,459 168,918 41,595 123,288 521,260

176,11stnuoccA stessA srehtO - - - 11,671

Property, Plant and Equipment 31,369 - - - 31,369

739lliwdooG - - - 937 ------------- -------------- --------------- ------------- -----------

Total Assets 753,546 188,043 58,924 197,033 1,197,546 ============= ============== =============== ============= ===========

Liabilities

368,145stisopeD remotsuC 147,550 30,125 51,359 770,897

-sgniworroB - 17,266 41,965 59,231

200,1dnuf deganam no ytilibaiL - - - 1,002

106,32seitilibaiL rehtO - - - 23,601

275,32sknab rehto ot euD - - - 23,572

-xat derrefeD - - 32,340 32,340

916xat etaroproC - - - 619

National Fiscal Stabilisation Levy 1,125 521,1 ------------- -------------- --------------- ------------- -----------

Total Liabilities 591,782 147,550 47,391 125,664 912,387 ============= ============== =============== ============= ===========

Net Liquidity Gap 161,764 40,493 11,533 71,369 285,159 ------------- -------------- --------------- ------------- -----------

At 31 December 2012 269,696 (358,714) 48,301 140,927 100,210 ------------- -------------- --------------- ------------- -----------




37a. Segmental Reporting

For management purposes, the Bank is organised into four operating segments based on products and services, as follows:

Retail banking: Individual customers’ deposits and consumer loans, overdrafts, credit facilities and funds transfer facilities

Corporate banking: Loans and other credit facilities and deposit and current accounts for cor-porate and institutional customers

SME banking: Loans and other credit facilities and deposit and current accounts for small and medium enterprises.

The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profits or losses and is measured consistently with operating profits or losses in the financial statements. However, income taxes are managed at the bank level and are not allocated to operating segments.

Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Bank’s total revenue in 2013 or 2012.

[email protected]


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38. Comparative Information

The comparative financial information, have been restated to achieve consistency with pre-sentation of current year figures.

39. Determination of Fair Value and Fair Values Hierarchy

The Bank measures fair values using the following fair value hierarchy that reflects the signifi-cance of the inputs used in making the measurements:

• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

• Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using quot-ed market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation tech-niques where all significant inputs are directly or indirectly observable from market data.

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar in-struments where significant unobservable adjustments or assumptions are required to re-flect differences between the instruments.

Financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions are assets and lia-bilities for which pricing is obtained via pricing services, but where prices have not been deter-mined in an active market, financial assets with fair values based on broker codes, investment in private equity funds with fair values obtained via fund managers and assets that are valued using the bank’s own models whereby the majority of assumptions are market observable.

Non-market observable inputs means that fair values are determined in whole or in parts, using a valuation technique, based on assumptions that are neither supported by prices from observable current market transactions in the same instrument, nor are they based on avail-able market data. The main asset classes in this category are unlisted equity investments and debt instruments. Valuation techniques are used to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Therefore, observable inputs reflect the Bank’s own assumption about the assumptions that market participants will use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available which might include the Bank’s own data.

[email protected]


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The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy.

2013 Note Level 1 Level 2 Total

Government securities 16 155,340 - 155,340

Equity investments 18 - 32,377 32,377

155,340 32,377 187,717

2012 Note Level 1 Level 2 Total

Government securities 16 123,095 - 123,095

Equity investments 18 - 31,598 31,598

123,095 31,598 154,693

40. Financial Instruments Classification Summary

Financial instruments are classified along three recognition principles: held at fair value through profit or loss (comprising trading and designated), available-for-sale and loans and receivables.

The Bank’s classification of its principal financial assets and liabilities are summarised below:

Amount GH¢’000



41. Regulatory Breaches

The following breaches occurred during the year;

i. The bank did not fully comply with the Bank of Ghana’s criteria in classifying some loan account resulting into downgrading of some loan balances hence provision.

ii. The bank did not include outstanding contingent liabilities in the fifty (50) largest expo-sures to the non-monetary sector returns submitted to the bank of Ghana.

iii. The bank did not sort the approval of Bank of Ghana before outsourcing its teller func-tions to Agate-Mabot Company Limited to provide teller services to Tamale, Dunkwa, Wenchi and Tema Habour branches.

42. Details of Shareholders at 31 December 2013

NamePercentage

Holding

Ghana Government 52.58%

Financial Investment Trust 44.65%

Others 2.77%


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PROXY FORM

CU

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I/We --------------------------------------------------------- (BLOCK CAPITAL LETTERS)

Of -------------------------------------------------------- Being member/members of National l Investment Bank, hereby appoint -------------------------------------------------------- (Insert full name)

Of -------------------------------------------------------- (of failing him the duty appointed Chairman of the meeting) as my/our proxy to vote for me/us at the Annual General Meeting to be held on 12th June 2014 at 10:00am and at every adjournment thereof.

Resolution

To receive and consider the financial statement for the year ended 31st December 2013 together with the Report of the Director and Auditors thereon.

To elect/re-elect DirectorsTo approve Directors’ FeesTo authorise the Directors to determine the remuneration of the Auditors.To appoint auditors

Signed this ---------------------- Day of----------------------2014

---------------------------Shareholder’s Signature

[email protected]


This Proxy Form should not be sent to the

Registrar if the member will be attending the meeting

Notes

1. A member (Shareholder) who is unable to attend the Annual General Meeting is by law to vote by proxy. The above proxy form has been pre-pared to enable you exercise your vote if you cannot personally attend.

2. Provision has been made on the form for the Chairperson of the Meeting to act as your proxy but, if you wish, you may insert in the blank space marked “x” the name of any person whether a Member of the company or not who will attend the meeting and vote on your behalf instead of the Chairperson on the Meeting.

3. In case of joint holders, each holder should sign

4. If executed by a corporation, the proxy form should bear its common seal or be signed on its behalf by a Director.

5. Please sign the above proxy form and post it so as to reach the address shown below not later than 48hours.

6. The proxy must produce the Admission Slip sent with the notice of the meeting to obtain entrance to the meeting.

THE REGISTRAR

NTHC LIMITED

MARTCO HOUSE

OKAI MENSAH LINK

P. 0. BOX 9563

AIRPORT, ACCRA, GHANA.

CU

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National Investment Bank Limited 37 Kwame Nkrumah Avenue P. O. Box GP 3726 Accra.

Telephones and Fax Main Lines: +233-30-2661701 - 10 Fax: +233-30-2661730/2673114/2673124/2673114

Swift: NIBGGHAC

Website: www.nib-ghana.com

General Information/Enquiries:

[email protected]

Banking:

[email protected]

International Banking:

[email protected]

Head Office

[email protected]


A Presence across the entire countryNIB is one of the few banks in Ghana that has at least one bank branch in every administra-tive region of the country. All 28 branches and two agencies are networked nationwide.

Ashanti Region

Kumasi Central Branch (Kejetia)P. O. Box PMB, KumasiTel: +233-32-2081800-2Fax: + [email protected]

Kumasi Main Branch (Adum)P. O. Box 1294, KumasiTel: +233-32-2025188/25635Tel: +233-32-2027197/23874Fax: [email protected]

Obuasi BranchP. O. Box 1067, Obuasi-AdansiTel: +233-32-2541273/41274/41276Fax: [email protected]

Brong Ahafo Region

Kintampo BranchP. O. Box 214, KintampoTel: +233-35-2092042Fax: [email protected]

Sunyani BranchP. O. Box 389, SunyaniTel: +233-35-2027217/27353/27089Fax: [email protected]

Techiman BranchP. O. Box TM 741, TechimanTel: 233-35-2091064-6Fax: [email protected]

Wenchi BranchP. O. Box 233, WenchiTel: +233-35-2092494 +233-35-2092096Fax: [email protected]

Central Region

Cape Coast BranchP. O. Box 397, Cape CoastTel: 233-33-2132649/34567Telefax: [email protected]

Dunkwa-on-Offin BranchP. O. Box 20, Dunkwa-on-OffinTel: +233-33-2228229/28449Tel: +233-33-2228439/28470Fax: [email protected]

Eastern Region

Koforidua BranchP. O. Box 106, KoforiduaTel: +233-34-2022600/23093Telefax: [email protected]

Oda BranchP. O. Box 926, OdaTel: +233-34-292861-3Fax: [email protected]

Greater Accra Region

Abeka Branchc/o Accra Main BranchP. O. Box GP 3726, AccraTel: + 233-30-2400113/400157/406080 + 233-28-9548314/5Fax: + [email protected]

Accra Main BranchTel: + 233-30-2661725Fax: + [email protected]

Dansoman Agencyc/o Accra Main BranchP. O. Box GP 3726, AccraTel: + 233-20-2025012 +233-302-312763 +233-24-4341329 +233-24-4341332Fax: +233-30-312762



International Banking P. O. Box GP 3726, Accra Tel: +233-30-2661733 Fax: [email protected]

North Industrial Area BranchC/o Accra Main BranchP. O. Box GP 3726, AccraTel: + 233-30-2246682 + 233-28-9548324Fax: + [email protected]

Osu Branch Osu Mail Bag, AccraTel: +233-30-2770287 +233-30-2770491 +233-20-2025005 +233-28-9548301/3Fax: [email protected]

Spintex Road BranchC/o Accra Main BranchP. O. Box GP 3726, AccraTel: + 233-30-2814093/4/6Fax: + [email protected]

Adenta BranchC/o Accra Main BranchP. O. Box GP 3726, AccraTel: +233-28-954308/9Fax: + [email protected]

Harbour Area BranchP.M.B., TemaTel: +233-30-3200474/78/79 +233-28-9548306Fax: [email protected]

Tema Community 9 BranchC/o Tema BranchP.M.B. TemaTel: + 233-30-3311203-4Fax: + [email protected]

Tema Main BranchP.M.B., TemaTel: +233-30-3204531/203305Fax: [email protected]

Winneba Road Branch C/o Accra Main BranchP. O. Box 3726, AccraTel: + 233-30-2850905/6/8 +233-28-9548312Fax: [email protected]

Northern Region

Tamale BranchP. 0. Box 400, TamaleTel: +233-37-2022420/22738/22106Fax: [email protected]

Tamale AgencyP. 0. Box 400, TamaleTel: +233-37-2028115

Upper East Region Bolgatanga BranchP. O. Box 343, BolgaTel: +233-38 2023481 /23826/23457Fax: [email protected]

Upper West Region

Wa BranchP. O. Box 365, WaTel: +233-39-2020850-2Fax: [email protected]

Volta Region

Ho BranchP. O. Box 303, HoTel: +233-36-2026401 +233-36-2028567 +233-20-2025024Fax: [email protected]

Western Region

Takoradi BranchP. O. Box 609, TakoradiTel: +233-31-2024601/22962/23813Fax: [email protected]

Tarkwa BranchP. O. Box 609, TakoradiTel: +233-31-2321851 +233-31-2321848/9Fax: [email protected]

A National Presence

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LIST OF CORRESPONDENT BANKS

NAME & ADDRESS ACCOUNT NO. CURRENCY 1. JP MORGAN CHASE BANK 400210541 USD 4 NEW YORK PLAZA NEW YORK, NY 10004, U.S.A. 400210533 USD SWIFT: CHASUS33

2. GHANA INTERNATIONAL BANK PLC 69 CHEAPSIDE, P. O. BOX 77, 0001287201 GBP LONDON EC2P 2BB, U.K. 0001287204 USD SWIFT: GHIBGB2L 0001287209 EUR 3. BHF BANK A. G. 800721555 EUR 60302 FRANKFURT AM MAIN 100721555 EUR FRANKFURT, GERMANY SWIFT: BHFBDEFF

4. STANDARD CHARTERED BANK 3582023628001 USD 23RD FLOOR, AMERICAN EXPRESS TOWER, 200 VESSEY STREET NEW YORK, NYÅ 10285- 2300, U.S.A SWIFT: SCBLUS33

5. STANDARD CHARTERED BANK THEODORE – HEUSS- ALLLEE 112 18144206 EUR D- 60486 FRANKFURT MAN. GERMANY SWIFT: SCBLDFEFX

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Documents

Annual Report - nib-ghana.com€¦ · 2 [email protected] National Investment Bank Limited 2013 Annual Report