GCB BANK LIMITED ANNUAL REPORT 2017 · GCB BANK LIMITED ANNUAL REPORT 2017 Five Year Financial Summary (cont’d) FIVE YEAR FINANCIAL SUMMARY 2017 2016 2015 2014 2013 GH¢’000 GH¢’000

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GCB BANK LIMITED A N N U A L R E P O R T 2017

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VISIONWe aspire to be Ghana’s favorite Bank and one of the most recognised and preferred fi nancial

service brands in Africa and beyond

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MISSIONOur mission is to provide friendly, helpful and accessible banking services, combined with expert fi nancial solutions that help people and

businesses realize their goals.

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CONTENTS

Corporate Information

Financial Highlights

Appendix 1 - Value Added Statement

Board of Directors

Chairman’s Statement

List of Branches

Managing Director’s Review

Invitation and Form of Proxy

Report of the Directors

Five Year Financial Summary

Appendix 2 - Shareholder Information

Corporate Governance

Notice of Annual General Meeting

Statements of Financial Position

Profi les of the Board of Directors

Notes to the Financial Statements

Statements of Changes in Equity

Independent Auditor’s Report

Statements of Cash Flows

Statements of Comprehensive Income

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Corporate Information

CORPORATE INFORMATION

BOARD OF DIRECTORS Mr. Jude Kofi Arthur (Chairman)

Mr Anselm Ransford Adzete Sowah (Managing)

Mr. Socrates Afram

Mr. Samuel Amankwah Appointed 25/10/17

Mrs. Lydia Gyamera Essah

Mr. Nik Amarteifi o Appointed 07/06/17

Mr. Richard Oppong Appointed 07/06/17

Nana Ama Ayensua Saara III Appointed 07/06/17

Mr. Francis Arthur-Collins Appointed 25/10/17

Mr. Osmani Aludiba Ayuba Appointed 25/10/17

Mr. Ray Ankrah Appointed 25/10/17Mr. Kofi Worlanyo Resigned 03/04/17

Mr. Ernest Kwasi Okoh Retired 26/05/17

Mr. Samuel Sarpong Resigned 31/05/17

Nana Otuo Acheampong Appointed 07/06/17, Resigned 31/08/17

SECRETARY Mrs. Helen Addo GCB Bank Building, Thorpe Road, High Street P. O. Box 134,

Accra

AUDITOR KPMG Chartered Accountants, 13 Yiyiwa Drive, Abelenkpe P. O. Box GP 242,

Accra

REGISTERED OFFICE GCB Bank Building, Thorpe Road, High Street P. O. Box 134,

Accra

REGISTRAR Share Registry GCB Bank Limited, Head Offi ce, High Street,

Accra

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Notice of Annual General Meeting

Mrs. Helen AddoCompany Secretary

NOTICE OF AGENDA

Notice is hereby given that the 24th Annual General Meeting of GCB Bank Limited will be held at the Accra International Conference Centre on Friday, 6th July 2018 at 10:00am to transact the following business:

Agenda

Ordinary Business

1. To consider and adopt the fi nancial statements of the Company for the year ended 31st December 2017 together with the Reports of the Directors and Auditor’s thereon.

2. To declare a Dividend for the year ended 31st December 2017.

3. To re-elect Directors retiring by rotation.

4. To elect Directors.

5. To approve Directors’ remuneration.

6. To appoint a new Auditor.

7. To authorize the Directors to determine the fees of the Auditor.

Special Business

To consider and if thought fi t, to pass the following resolution which will be proposed as Special Resolution:

8. That an amount of GHS400 million (net of withholding tax) be transferred from the Company’s Income Surplus to Stated Capital in accordance with Section 66 (1) of the Companies Act, 1963 (Act 179).

Dated this 13th day of March, 2018

BY ORDER OF THE BOARD

Helen Addo (Mrs.)

Company Secretary

A member entitled to attend and vote at the meeting may appoint a proxy to vote in his/her stead. A form of proxy for it to be valid for the purposes of the meeting must be completed and deposited at the Share Registry, GCB Bank Ltd., Head Offi ce, High Street, Accra, not less than 48 hours before the meeting.

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BOARD OF DIRECTORS

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Mr. Francis Arthur-CollinsNon-Executive Director (Appointed 25/10/2017)

Mr. Richard OppongNon-Executive Director (Appointed 07/06/2017)

Mrs. Lydia Gyamera EssahNon-Executive Director

Board of Directors

Mr Anselm Ransford Adzete SowahManaging Director

Nana Ama Ayensua Saara III Queen Mother Of Denkyira Non-Executive Director (Appointed 07/06/2017)

Mr. Samuel AmankwahDMD Operations (Appointed 25/10/2017)

Mr. Jude Kofi Arthur Chairman

Mr. Socrates AframDMD Finance

Mr. Nik Amarteifi oNon-Executive Director (Appointed 07/06/2017)

Mr. Osmani Aludiba AyubaNon- Executive Director (Appointed 25/10/2017)

Mr. Ray AnkrahNon-Executive Director (Appointed 25/10/2017)

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Profi les of the Board of Directors

PROFILE OF DIRECTORS

Director Qualifi cationOutside Board and management position

Mr. Jude Kofi Arthur

Chairman

Fellow, The Chartered Institute of Bankers, Ghana; BSc. Administration, University of Ghana

Ghana International Bank

Mr. Anselm Ransford Adzete Sowah

Managing

Barrister-at-Law and Solicitor, Ghana Law School; Qualifying Certifi cate in Law, University of Ghana, Legon; BA English & Philosophy, University of Ghana

GCNet and Development Finance and Holdings Limited.

Mr. Socrates Afram Fellow, Association of Chartered Certifi ed Accountants; MBA Finance, University of Ghana; Bachelor of Commerce, University of Cape Coast.

Prairie Volta Limited, Oasis Capital Limited, Development Finance and Holdings Limited and NCR Corporation Ghana

Mr. Samuel Amankwah Fellow, Association of Chartered Certifi ed Accountants; MSc. Accounting & Finance, De-Montfort University.

Development Finance and Holdings Limited and VIVO Energy Ghana Limited

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Profi les of the Board of Directors cont’d



Mrs. Lydia Gyamera Essah MPHIL Business Administration, Ghana Institute of Management & Public Administration (GIMPA); BA English & Literature, University of Ghana, Legon.

None

Mr. Nik Amarteifi o MBA, Harvard Business School; BA Economics, Wesleyan University

Dannex Limited, Omini Media (Citi FM), Starwin Products Limited, Aryton Drugs Limited, Webster University, Ghana, African American Inst (NY) and Ghana Agro Food Company.

Mr. Richard Oppong MA Economics, Simon Fraser University; BA (Hons) Economics & Sociology, University of Ghana, Legon.

Labadi Beach Hotel

Nana Ama Ayensua Saara III B. Com, University of Cape Coast; Diploma Business Studies, Takoradi Polytechnic

Nasaa Company Limited

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Profi les of the Board of Directors cont’d



Mr. Francis Arthur-Collins MBA Information Technology, Leicester University; Member, British Computer Society; Member, Institute of Management Information Systems; Fellow, Ghana Institute of Information Technology Diploma, University of Science & Technology.

None

Mr. Osmani Aludiba Ayuba Member, Institute of Chartered Accountants Ghana; Member, Chartered Institute of Procurement and Supply; M.A. Economic Policy Management, University of Ghana; Bachelor of Commerce, University of Cape Coast; Diploma in Education, University of Cape Coast.

Finag Company

Mr. Ray Ankrah Fellow, Chartered Institute of Management Accountants (UK); Fellow British Society of Commerce; Member Institute of Chartered Accountants Ghana and Post Graduate Diploma Strategic Financial Management, Kingston University

National Insurance Commission

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Financial Highlights

FINANCIAL HIGHLIGHTS

The Group The Bank

At 31 December2017

GH¢’0002016

GH¢’0002017

GH¢’0002016

GH¢’000

Total assets 9,627,061 6,074,533 9,558,151 6,049,604

Loans and advances to customers 2,090,330 1,412,977 2,090,330 1,412,977

Investment securities 4,884,277 2,633,116 4,878,155 2,626,946

Cash and cash equivalents 1,022,684 1,179,975 1,022,684 1,179,975

Total liabilities 8,412,902 5,014,706 8,445,001 5,034,492

Customer deposits 6,924,041 4,259,933 6,956,190 4,279,775

Borrowings 959,105 523,281 959,105 523,281

Shareholders’ equity 1,214,159 1,059,827 1,113,150 1,015,112

For the year ended 31 December

Net interest income 895,311 885,807 894,400 884,488

Net fees and commission income 170,296 141,859 170,296 141,859

Impairment on loans and advances 49,904 27,160 49,904 26,531

Profi t before tax 331,983 466,994 308,894 446,782

Profi t after tax 234,598 318,116 212,715 299,007

Dividend per share (Ghana pesewas): 10 38 10 38

Earnings per share (Ghana pesewas):

-Basic 89 120 80 113

-Diluted 89 120 80 113

Return on equity (%) 21 30 21 29

Return on assets (%) 3 5 3 5

At 31 December

Number of staff * 1,915 1,532 1,915 1,532

Number of branches* 161 160 161 160

*Following the assumption of certain assets and liabilities of the erstwhile UT Bank and Capital Bank, GCB Bank Limited took over the management of the assumed Banks which resulted in 825 staff and 53 branches residing under the management of GCB Bank Limited. These are not included in the number of staff and branches disclosed above.

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2017 2016 2015 2014 2013

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Income Statement

Interest income 1,187,853 1,019,655 839,115 690,708 552,063

Interest expense (292,542) (133,848) (107,571) (92,982) (92,104)

Net interest income 895,311 885,807 731,544 597,726 459,959

Fee and commission income 207,787 174,585 132,374 114,392 88,566

Fee and commission expense (37,491) (32,726) (24,183) (22,422) (11,419)

Net fee and commission income 170,296 141,859 108,191 91,970 77,147

Net trading income 41,020 27,349 16,561 37,758 26,842

Other revenue 17,386 16,039 6,995 3,739 3,297

Revenue 1,124,013 1,071,054 863,291 731,193 567,245

Loss on derecognition of renegotiated loans (1,543) (912.00) - - -

Other income 3,049 1,803 2,715 100,058 944

Impairment (charge)/release on loans and advances (49,904) (27,160) (93,492) (23,832) 10,569

Operating expenses (756,938) (588,410) (425,752) (428,230) (270,394)

Operating profi t 318,677 456,375 346,762 379,189 308,364

Share of profi t of associates, net of tax 13,306 10,619 14,039 15,792 8,695

Profi t before tax 331,983 466,994 360,801 394,981 317,059

Taxation (81,940) (126,539) (88,645) (93,759) (80,030)

National fi scal stabilization levy (15,445) (22,339) (17,514) (19,074) (7,830)

Profi t for the year 234,598 318,116 254,642 282,148 229,199

Other Comprehensive Income (OCI)

Items that may be reclassifi ed to profi t or loss

Available-for-sale fi nancial assets - net changes in fair value 783 (3,783) (972) 1,898 1,464

Related tax (195) 946 243 (475) (366)

Share of associate OCI 2,483 2,315 (1,845) (1,515) -

Prior year movement in fair value - 40 - -

Items that will never be reclassifi ed to profi t or loss

Actuarial loss on defi ned benefi t liability (19,898) (13,689) (3,610) (4,134) (15,033)

Five Year Financial SummaryStatement of Comprehensive Income - Group

FIVE YEAR FINANCIAL SUMMARY

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Five Year Financial Summary (cont’d)

FIVE YEAR FINANCIAL SUMMARY

2017 2016 2015 2014 2013

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Related tax 4,975 3,422 903 1,034 3,758

Foreign currency translation diff erence for foreign operation 32,286 (14,022) - - -

Other comprehensive income, net of tax 20,434 (24,811) (5,241) (3,192) (10,177)

Total comprehensive income 255,032 293,305 249,401 278,956 219,022

Basic and diluted earnings per share (in GH¢) 0.89 1.20 0.96 1.06 0.86

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2017 2016 2015 2014 2013

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Assets

Cash and cash equivalents 1,022,684 1,179,975 544,683 758,081 338,797

Investment securities 4,884,277 2,633,116 2,042,542 1,862,336 1,711,957

Trading Assets 10,079 - - - -

Advances to banks 224,950 434,152 214,875 107,407 170,321

Loans and advances to customers 2,099,330 1,412,977 1,493,230 1,240,577 960,707

Investment (other than securities) 6,902 4,347 8,163 8,858 6,907

Investment in associates 88,460 46,000 53,135 49,468 41,013

Deferred tax asset 32,095 15,510 39,815 26,838 15,453

Income tax asset 578 4,387 6,454 5,418 -

Intangible assets 152,349 38,987 18,131 12,162 3,954

Other assets 882,496 114,020 98,264 64,021 74,318

Property and equipment 222,861 191,062 139,889 123,936 81,399

Total assets 9,627,061 6,074,533 4,659,181 4,259,102 3,404,826

Liabilities

Deposits from customers 6,924,041 4,259,933 3,360,596 3,074,821 2,624,975

Other liabilities 411,131 136,259 171,766 263,805 132,702

Borrowings 959,105 523,281 196,990 163,028 108,149

Income tax liabilities - - - - 11,258

Employee benefi t obligations 118,625 95,232 75,857 68,077 61,677

Total liabilities 8,412,902 5,014,705 3,805,209 3,569,731 2,938,761

Equity

Stated capital 100,000 100,000 100,000 100,000 100,000

Retained earnings 870,198 759,477 545,721 409,176 215,224

Fair value reserve 2,005 (1,066) (544) 1,990 2,082

Statutory reserve 274,062 247,473 210,097 179,505 145,748

Credit risk reserve - 3,412 23,878 21,173 22,384

Other reserves (32,106) (49,468) (25,180) (22,473) (19,373)

Total equity 1,214,159 1,059,828 853,972 689,371 466,065

Total liabilities and equity 9,627,061 6,074,533 4,659,181 4,259,102 3,404,826

Five Year Financial SummaryStatement of Financial Position - Group

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Dear Shareholders,

On behalf of the Board of Directors, Management and staff of your Bank, I am delighted to welcome each and every one of you to the 2018 Annual General Meeting. To both familiar faces and new participants, we are really grateful for your presence.

This year the banking market, of which we are a key participant, was faced with a major challenge which has had a signifi cant impact on the fi nancials of your Bank. Bank of Ghana (BoG), pursuant to its mandate revoked the licences of UT Bank Limited and Capital Bank Limited, and to ensure that there was no disruption to the Banking Sector sought to create an alternative platform for the customers of these banks, to enable them experience a seamless transition of their business from one bank to the other.

Accordingly, the BoG invited other banks to bid for the Purchase & Assumption of these two banks. The construct was that the nominated bank would assume the deposit liabilities and select the assets it chose to assume. The net gap would then be funded through the issuance of an appropriate fi nancial instrument.

Your Bank recognised that any form of destabilisation ensuing from this event would have adverse eff ects on the sector, but was also aware of the opportunities it off ered the Bank if properly handled, and accordingly participated in the tender, and won the bid for the

assumption of these two banks.

Our decision to assume these two banks was underpinned by the following factors:

• To mitigate or eliminate potential market destabilization and provide for a market of relatively greater stability and consumer certainty.

• Benefi t from the expanded client base and gain access to markets hitherto unavailable to us and enhance growth and shareholder value.

The “assumption” of these two banks, no doubt had signifi cant impact on our expenditures, staffi ng and systems rationalisation; which aff ected our bottom-line for 2017.

Quite apart from this, the rapidly declining returns on Treasury Bills, which constituted a signifi cant proportion of the bank’s investment portfolio, coupled with an unfavourable business environment adversely impacted profi tability leading to a decline of before-tax profi ts of 29%.

Our challenge, going forward, is to prudently adjust our risk-return investment portfolio, and effi ciently integrate the business of these two Banks to enable us attain a trajectory of sustained income growth and profi tability.

Trends in our Market

We are currently experiencing a relentless pace in digitalization in banking globally, coupled with high and changing expectations and behaviours.

The banking sector is increasingly becoming highly competitive, with an interesting twist. Our new competitors will not necessarily be banks. Mobile Money has shown us that you do not have to visit a bank to transfer money, make a deposit or to manage your transactions.

Given this growing trend in the wider economy, particularly against the background of the deep profi t pools of the unbanked sector, it is imperative that we aggressively leverage various technology platforms to garner an increasing proportion of this market and concurrently provide services that will enhance the experiences of our customers.

In pursuit of the use of technology we shall be mindful of the risk management challenges including money-laundering and other regulatory concerns. This calls for a cooperative linkage with technology security companies to enable us enhance shareholder value without

Chairman’s Statement

CHAIRMAN’S STATEMENT

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Chairman’s Statement (cont’d)


compromising regulatory rules of engagement.

So today, in reviewing our performance I will start with the Global Economic Outlook and its impact on the Domestic Economy. I shall then move on to the Operating Environment and how it aff ected the performance of the Bank, and with your permission, take you through our new Strategic Direction, which is largely driven by our vision to be the number one Bank. I shall end my report with comments on the future.

Global economic outlook

As reported by the World Bank, Ghana’s economic performance improved signifi cantly in 2017 after a diffi cult 2016. The fi scal defi cit dropped to 6.0% of gross domestic product (GDP) in 2017 from 9.3% in 2016, underpinned by serious fi scal consolidation eff orts. Despite that, total revenue (including grants) underperformed by 1.1% of GDP, the fi scal turnaround was achieved primarily through expenditure cuts (1.3% of GDP), which were imposed on recurrent and capital expenditures. The government also capped transfers to earmarked funds at 25% of tax revenues.

The primary balance improved from a defi cit in 2016 to a surplus of 0.8% of GDP in 2017. The debt to GDP ratio is estimated at 69.2% in December 2017 down from 73.4% in 2016 refl ecting a slowdown in the rate of external debt accumulation, as well as higher GDP growth. Domestic revenue mobilization is a key priority for the government,

According to the Ghana Statistical Service’s latest numbers, Ghana’s economy is estimated to have expanded by 8.5% in 2017 from 3.7% a year ago driven by the mining and oil sectors.

Oil production rose strongly because the Off shore Turret Remediation Project was deferred from 2017 to 2018. In addition to this one-off eff ect, gold output remained high, while cocoa production levels remained stable. Still, non-oil growth declined to 4.8% from 5.1% in 2016, as growth in the services sector decelerated in 2017.

The external sector improved as well, as the cedi remained stable, while the foreign reserves rose. End-2017 data show a substantial narrowing of the current account defi cit due to the large surplus in the trade balance and higher private transfers. This refl ects stronger performance in earnings from oil, gold, and cocoa, coupled with a decline in imports. The trade balance improved to a surplus equivalent to 2.3% of GDP at the end of 2017 (from a defi cit in 2016). The

current account defi cit narrowed to 4.6% of GDP (US$2.1 billion) from 6.7% of GDP) a year ago. Gross international reserves were estimated at US$ 7.6 billion, equivalent to 4.5 months of imports, up from US$6.2 billion equivalent to 3.1 months in 2016.

Operating environment

Growth in Total assets of banks declined from 30.4% in 2016 to a low of 15.3% in 2017. Asset quality worsened from 17.3% in December 2016 to 21.6% in December 2017. There was a general decline in interest rates, and Infl ation dropped 3.6 percentage points from 15.4% in December 2016 to 11.8% in December 2017.

Monetary Policy Rate (MPR) was reduced from 25.5% in December 2016 to 20.0% in December 2017 while the interbank rates dropped almost 600 basis points to 19.34% during the year. Similarly, rates on treasury securities declined: the 91-day dropped 3.48 percentage points to 13.3%; 182-day dropped 4.72 percentage points to 13.8%; and the 1-year shed off 6.5 percentage points to 15.0%.

Financial performance

Against this background, GCB Bank Limited recorded a fall in profi t from GHS 467 million in 2016 to GHS 332 million in 2017; a decline of 29%.

We recorded a modest growth of 16% in interest income. However there was a signifi cant increase of 119% in interest expense, due mainly to the legacy accounts inherited from the Assumption.

We recorded encouraging growth of 52% in net forex trading income, from GHS 27 million in 2016 to GHS41 million in 2017.

Our Non-funds based business also recorded encouraging growth, with Net Fees and Commissions, of 20%, leading to a modest growth of 5.0% in total revenue from GHs 1,071 million in 2016 to GHS 1,124 million in 2017.

The decline in our profi tability resulted mainly from signifi cant increase in other Operating Expenses and impairment charges, which together went up by 30%. A greater part of these expenditure was related to the assumption of the two banks.

Our total assets recorded a growth of 58.4% from GHS 6,075 million in 2016 to GHS 9,627 million in 2017. There was a signifi cant growth in deposits of 63%; from GHS

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4,260 million in 2016 to GHS6,924 million in 2017. Your Bank’s Equity recorded a growth of 15% from GHS 1,060 million in 2016 to GHS 1,214 million in 2017.

The consequences of the Assumptions and the other challenges of the year led to the marginal decline in earnings, from GHS 1.20 per share to GHS 0.89 per share and return on assets from 5.2% to 3.0%.

The Board has put in place a strategy to leverage the benefi ts of the Assumption, particularly in the signifi cant increases in the deposits and expanded horizon of business opportunities open to us, to reverse the negative trend of 2017.

Capitalisation

As you well know, the Central Bank has increased the minimum capital of banks to GHS400 million eff ective 31st December 2018. Your Bank has suffi cient resources to meet this requirement ahead of schedule. Accordingly, consistent with our strategy we will be seeking your approval at this AGM to transfer GHS400 million from Income Surplus to Stated Capital. This brings your Bank’s Stated Capital to GHS500 million.

Dividend

The Board in line with policy and guided by the need to provide both liquidity and value appreciation to shareholders has recommended a dividend of Ten (10) pesewas per share. This is a far cry from the dividend trend of previous years but you will no doubt agree that the challenges of the year and the need to increase our stated capital underpin this decision. It may be worth noting that notwithstanding the challenges, we are the only listed bank on the Ghana Stock Exchange to pay Dividends to shareholders for 2017.

Auditors

I need to mention that our Auditors, KPMG, in accordance with regulations governing the rotation of Auditors in the Banking sector, will be resigning after seven (7) years with us. On behalf of the Board, I thank them for their support and professionalism.

Your Board will recommend Deloitte & Touche as their replacement for your approval at this AGM.

Our strategy – going forward

As we reported last year, 2017 marked the end of our earlier fi ve-year Strategic Plan. Accordingly, we have put in place a four-year strategic plan that will drive our

transformation agenda. This Agenda hinges on breaking new frontiers and leveraging on technology to gain market share. Our Strategic Plan has six (6) pillars:

• Optimised Customer Focus

• A staff policy that focuses on career and talent development

• Operational Excellence

• Quantum Growth and Transformation driven by digitalization

• Eff ective expenditure control

• Maximising the Bank’s overall capabilities

Our priorities are driven by our determination to build a Bank with strong fi nancials that ensures fi rst class customer experience driven by a well-motivated workforce and supported by an effi cient operating model.

Stakeholder engagement

Stakeholder Engagement is at the heart of our strategy and we have taken steps within our Governance agenda to create clear lines of communication between the Bank and its stakeholders, such as your good selves.

Value for money

Critical to the success of our Transformation Agenda is expenditure control and the development of an eff ective IT Policy that drives our Business. The Board commissioned a Value-for-Money audit during the year and the review provided the Board and Management with insights of weaknesses within our procurement process, The Board has accordingly put in place procedures for an eff ective Expenditure Control Regime.

Corporate social responsibilty (CSR)

We have supported communities large and small and identify with the aspirations of the under privileged in our society. Our commitment to society is not for profi t, but premised on giving back to society the benefi ts that is truly theirs. In demonstration of this commitment we are focused on Health, Education, Environment and Sanitation. I am happy to report that in 2017, your bank made contributions totalling GHS5,787,000.00 towards supporting the societies in which we operate.

Corporate governance

GCB Bank Limited is committed to high standards of corporate governance through the eff ective functioning of its Board of Directors. We have in place a Corporate

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Governance Framework that includes a comprehensive range of policies and systems that ensure that the Bank is well-managed, with eff ective oversight and control. Our Governance Framework which refl ects best industry practice is founded on the three (3) Lines of Defence Model and provides Combined Assurance for Risk.

The Board aims to promote GCB Bank Limited’s long-term success, deliver sustainable value to shareholders and promote a culture of transparency and innovation.

GCB Bank Limited is committed to high standards of corporate governance and has taken steps to comply fully with the recently issued Bank of Ghana directives on Corporate Governance. Our controls and compliance framework are subject to independent assurance reviews.

Comments on the future

Ladies and gentlemen, what future do we seek for this great bank of ours? We have a strong balance sheet; we have the largest network of branches; 183 after the Assumption; a strong customer base and we have recently put in place a sound governance framework which refl ects best industry practices.

Our focus in the coming years is to deal with our weaknesses and enhance our strengths so we can be the number one bank in Ghana, once again. It is our view that to be able to do this we should take a strategic view to assess the threats and opportunities in our landscape. Today we all agree that digitalization is key for the banks that seek to lead the industry.

We also know that Transformation is happening rapidly, and business logic is now changing at a relentless pace in the banking sector. This is true in the fi nancial industry too, where these changes combined with new customer behavior has a major impact on the competitive landscape, cost levels and required competencies.

It is our view that in the long-term all these will lead to automated systems on digital platforms, backed by artifi cial intelligence. These systems may incorporate sophisticated bio-metric-identifi cation and state of the art executional systems. In short, these technologies will enhance topline revenues with rapidly decreasing long-term operating expenses. So those who can optimize the technology-labour-mix, will be tomorrow’s survivors and winners.

Therefore, as we seek to expand our frontiers to tap the profi t pools of markets in Africa, Europe, North America and the far East, and as we seek to diversify

into investment banking and create strategic alliances with partners in the fi nancial industry we should be mindful of the fact that the winners, as we stated earlier will be those who are able to use appropriate technology platforms to bring the profi t pools outside their markets eff ectively into theirs and create a defensible market niche.

We shall, in concert with our strategic partners strive with diligence, commitment and best business practices to achieve our primary objectives: a very competitively positioned bank that creates and sustains shareholder value.

In conclusion

I am honoured to serve as the Chair of your Bank. Your Board, is and, shall continue to be accountable to shareholders. We shall promote sound corporate governance practices and endeavour to execute our mandate within the construct of our regulations.

As Chairman of your Bank, I feel proud each day of the work our staff do to back our customers. On behalf of the Board, I thank them for their dedication, particularly for their resilience and understanding during the diffi cult times. Please join me in saluting our staff . We have no doubt that we can count on their support as we move towards creating a better future.

Ladies and gentlemen, we count on your support as we embark on our transformation journey - To build a strong and engaged workforce and get to speed with digitalization so we can capitalize on the opportunities of the unbanked platforms. We will deepen our strategic partnership with government in driving and achieving transformation through industrialization. This way, we can energize the communities we serve, become the bank of choice and optimize returns to our shareholders.

Thank you for the opportunity to serve you.

Jude Kofi Arthur

Chairman



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Managing Director’s Review of Operations

Dear Shareholders

I am delighted to present to you the bank’s performance for the 2017 fi nancial year. Within the year under review, your bank did not only emerge as the Winner of the Prestigious Most Active Ezwich Bank Award conferred by the Ghana Banking Awards but was also adjudged Africa’s Most Compliant Bank by the Association of Certifi ed Compliant Professionals. The year also ended your bank’s 5-Year Strategic Plan and ushered in a new Plan for a 4 Year Term ending 2021.

In order to have a better appreciation of your bank’s performance, permit me to provide you with a review of the context within which business was conducted in the fi nancial year under review.

Ghana’s economic environment

Ghana’s economy was remarkably resilient in 2017 compared with that of the preceding year.

In 2017, the country recorded a growth rate of 8.5 per cent compared with 3.7 per cent recorded in 2016. This impressive growth in Ghana’s GDP, the highest in the past 5 years has mainly been driven by the mining and oil sectors of the economy.

Notwithstanding the improved macroeconomic performance, total revenue underperformed by 1.1 per cent of GDP. The fi scal turnaround is said to have been

achieved primarily through expenditure cuts, which said cuts were imposed on recurrent and capital expenditures.

The debt to GDP ratio was estimated at 69.2 per cent in December 2017, down from 73.4 per cent in 2016 signifying a slowdown in the rate of external debt accumulation as well as higher GDP growth.

Financial performance

For the year under review, your bank recorded a profi t before tax of GH¢332 million compared to GH¢467 million for 2016, representing a 28.9 per cent decline over the 2016 performance.

Profit Before Tax

361

467

332

2016 2017

Total Assets

2015

(GHS'm)

Increased expenditure on the back of the purchase and assumption transaction coupled with declining rates on government securities mainly accounted for the drop in profi t.

Total Assets increased by 58.4 per cent over that of 2016 making GCB the biggest bank with total assets of GHS9.62 billion. The growth in total assets was due to the acquisition of the erstwhile UT and Capital banks following approval of a Purchase and Assumption agreement by the Bank of Ghana in August 2017.

Total Assets

4,670

6,074

9,627

2015 2017 2016

(GHS'm)

Mention must also be made of the fact that Customer Deposits also increased from GH¢4.3 billion in 2016 to GH¢6.9 billion in 2017 representing a rise of 62.5 per cent.

REVIEW OF OPERATIONS

21



Managing Director’s Review of Operations (cont’d)

Again, Loans and Advances to customers rose by 47.9 per cent over that of 2016. Thus whereas actual loans and advances in 2017 amounted to GH¢2.1 billion, that of 2016 was GH¢1.4 billion.

Key developments in your bank

i. One District One Factory

In support of the One-District One-Factory (1D1F) policy initiative instituted by the Government of the Republic of Ghana to address the challenge of slow economic development at the district level, the Bank earmarked GHS1 billion to strategically support the districts where these factories may be sited. So far, 270 applications have been received and they are at various stages of review by Management and the Board.

The applications were basically received through the Ministry of Trade & Industry, the 1D1F Secretariat and direct placements by promoters following your bank’s newspaper advertisements.

ii. Take-Over of Erstwhile UT and Capital banks

Following the revocation of the licenses of UT and Capital Banks in August 2017, the Bank of Ghana approved a Purchase and Assumption agreement, allowing your bank to take over all the deposits and purchases of selected assets of the erstwhile banks.

Following the acquisition, GCB now has a total branch network of 183 spread across all the district capitals and municipalities across the country. With this spread, our valued customers can now boast of variability of access to our branches for better service delivery.

iii. Investor Relations

One of the Strategic Units established following the implementation of your bank’s 4-Year Strategic Plan is the creation of the Investor Relations Department as a liaison between GCB and the investor public. The mandate of the Department also includes the development of new businesses within the investor community.

Highlights of business relationships created so far are:

• An approval of $30 million trade line by the Rand Merchant Bank of South Africa to GCB pending completion of documentation for disbursement to be made.

• Pending correspondent banking relationship with DBS Bank of Singapore and MUFG, the largest bank in Japan.

• Financing instruments by Sumitomo Mitsui Bank to support trade, project fi nance, liquidity and private sector fi nancing.

• Due diligence has begun for Africa Capital Investment to off er your Bank a medium term loan to support its strategic business initiatives.

Corporate social responsibility (CSR)

GCB Bank has not only been interested in the fi nancial fortunes of the business but has also been keen on creating value for our community by way of corporate social responsibility.

A report from the Centre for Media Analysis indicates that GCB undertook the highest Corporate Social Responsibility activities in the second quarter of 2017.

GCB CSR initiatives have impacted positively in areas of health, education, and others as follows:

• • In collaboration with Third Eye Care, funded a 3 – Day Eye Screening programme involving 3,000 inhabitants of Tamale with a total cost of GH¢0.20 million. The Screening included the provision of free spectacles and medication.

• Donation of Eye Auto-Refractor to the Tamale General Hospital.

• Spent GH¢0.18 towards the maintenance of Sewuah L.A. Primary School in Kwahu, Afram Plains.

• Donation of GH¢0.06 million in support of 20 medical students to study abroad.

Our strategic focus for 2018

In view of the strong macroeconomic performance last year, and having regard to the new Strategic Plan with a focus on transforming the fortunes of your bank, the following priorities will be vigorously pursued by way of strategic focus in 2018 essentially to attract a lot of non-funded income:

• Prudent fi nancial management

• Double eff orts to grow the Bank’s deposit base

• Deepen and establish correspondent banking relationships with foreign banks, development partners and the investor community at large.

• Strengthen your banks relationship with the Government of Ghana to drive investments, trade and mobilise deposits.

• Streamline all operations including centralization

22



of back offi ce processes to achieve operational effi ciency in our service delivery.

• Upgrade of the Learning Centre to run both internal and external programmes to the general public

• Optimising E-banking to its full potential.

• Improving on customer experience and sales generation to engender increased market share and profi tability.

• Creating an Investment Banking subsidiary and also strengthening our new Custody Service business

• Introduction of Mortgage Financing as a new product off ering.

Conclusion

Distinguished shareholders, I can safely conclude that your Bank is ready to tackle challenges facing it with utmost determination so as to achieve set targets.

I express my gratitude to my Management Team and Senior Managers for the cooperation I received from them during the period and I look forward to the same level of cooperation, if not more, from them in managing the Bank in 2018.

I am also thankful to the Board of Directors for the high level of expertise and skills they brought to the operations of your Bank.

My sincerest appreciation goes to all of you, our cherished shareholders for your confi dence in the Bank and for considering GCB as your Bank in various transactions.

My appreciation also goes to the employees of GCB Bank for their dedication to duty and their endurance of the pressures and challenges of work.

Whatever was achieved in this year’s results is as a result of the eff ort you put into your work for the period under review. To you hardworking staff I say more hard work is expected from you in the coming years, so get yourselves prepared.

It is my fervent hope that you will put in even greater eff orts towards achieving higher results for the Bank, going forward.

Thank you.

Anselm Ransford Adzete Sowah

Managing Director

Managing Director’s Review of Operations (cont’d)

23


24


Report of the Directorsto the members of GCB Bank LimitedThe Directors present their report and the consolidated and separate fi nancial statements of the Bank for the year ended 31 December 2017.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible for the preparation of consolidated and separate fi nancial statements that give a true and fair view of GCB Bank Limited, comprising the statements of fi nancial position at 31 December 2017 and the statements of comprehensive income, changes in equity and cash fl ows for the year then ended and notes to the fi nancial statements, which include a summary of signifi cant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). In addition, the Directors are responsible for the preparation of the Report of the Directors.

The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an eff ective system of risk management.

The Directors have made an assessment of the ability of the Bank and its subsidiary to continue as going concerns and have no reason to believe that the businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the consolidated and separate fi nancial statements give a true and fair view in accordance with the applicable fi nancial reporting framework.

PRINCIPAL ACTIVITIES

The Bank is registered to carry on the business of consumer and corporate banking and treasury activities. It also engages in fi nancing of development projects and equity investments through its subsidiary. There was no change in the nature of the Group’s business during the year.

SHAREHOLDING STRUCTURE

The Bank’s shareholding structure at the end of the year was as follows:

ShareholderPercentage

Holding

Social Security and National Insurance Trust (SSNIT) 29.89%

The Government of Ghana 21.36%

Institutions and individuals 48.75%

SUBSIDIARY AND ASSOCIATE

Development Finance & Holdings Limited, a company incorporated in Ghana to engage in investment activities, is a wholly owned subsidiary of the Bank.

The Bank holds 20% interest in Ghana International Bank Plc, a company incorporated in the United Kingdom to provide universal banking services.

The Bank holds 40% interest in Activity Venture Finance Company, a company incorporated in Ghana, which provides credit and equity fi nancing to eligible small and medium scale enterprises (SMEs). The entity is currently dormant and the investment has been fully impaired.

The Bank in addition holds indirect interest of 20%, 25% and 34% in Ghana Textiles Manufacturing Company, Accra Markets Limited and NCR Ghana Limited respectively through its subsidiary.

Ghana Textiles Manufacturing Company is a company engaged in the production and processing of textile as well as warehousing.

REPORT OF THE DIRECTORS

25


Report of the Directorsto the members of GCB Bank Limited (cont’d)


Accra Markets Limited is a company incorporated in Ghana whose principal business is the management of the Kaneshie Market Complex.

NCR Ghana Limited is a leading technology and omni-channel solutions company incorporated in Ghana.

FINANCIAL STATEMENTS AND DIVIDEND

The fi nancial results of the Group for the year ended 31 December 2017 are set out in the attached fi nancial statements, highlights of which are as follows:

2017 2016

GH¢’000 GH¢’000

Profi t for the year (attributable to equity holders) 234,598 318,116

to which is added the balance brought forward on retained earnings of 759,477 545,721

994,075 863,837

out of which is transferred to the statutory reserve fund, in accordance with the, Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) an amount of (26,589) (37,376)

and transfers from/ (to) credit risk reserve of 3,412 20,466

and dividend declared and paid of (100,700) (87,450)

(123,877) (104,360)

leaving a balance to be carried forward on retained earnings of 870,198 759,477

In accordance with section 34 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), an amount of GH¢26,589,000 (2016: GH¢37,376,000) was transferred to the statutory reserve fund from retained earnings bringing the cumulative balance on the statutory reserve fund at the year end to GH¢274,062,000 (2016: GH¢247,472,883).

The Directors recommend the payment of dividend of GHp10 (2016: GHp38) per share amounting to GH¢ 26,500,000 (2016: GH¢100,700,000).

Related party transactions

Information regarding Directors’ interests in ordinary shares of the Bank and remuneration is disclosed in Note 40 to the fi nancial statements. No Director has any other interest in any shares or loan stock of any Group company. Other than service contracts, no Director had a material interest in any contract to which any Group company was a party during the year. Related party transactions and balances are also disclosed in Note 40 to the fi nancial statements.

Auditor

The Audit and Compliance Committee has responsibility delegated from the Board of Directors for making recommendations on the appointment, reappointment, removal and remuneration of the external auditor. Messrs KPMG has been the auditor of the Bank commencing with the fi nancial statements for the year ended 31 December 2011.The auditor, KPMG, will not continue in offi ce in accordance with Sections 81(4) and 81(5) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) with eff ect from 06 July 2018 after seven (7) years of service as auditor. In their stead, Deloitte & Touche, has been recommended in accordance with Section 134 (1) of the Companies Act, 1963 (Act 179). KPMG provided non-audit services to the Bank. Fees for approved non-audit services amounted to GH¢932,800.

26




Biographical information of Directors

Age category Number of Directors

Up to – 40 years 0

41 – 60 years 6

Above 60 years 5

Role of the Board

The Directors are responsible for the long term success of the Bank, determining the strategic direction of the Bank and reviews operating, fi nancial and risk exposures of the Bank. There is a formal schedule of matters reserved for the board of Directors, including approval of the Bank’s annual business plan, the Bank’s strategy, acquisitions, disposals and capital expenditure projects above certain thresholds, all guarantees, treasury policies, the fi nancial statements, the Bank’s dividend policy, transactions involving the issue or purchase of the Bank’s shares, borrowing powers, appointments to the Board, alterations to the regulations, legal actions brought by or against the Bank and the scope of delegation to Board committees, subsidiary boards and management committees. Responsibility for the development of policy and strategy and operational management is delegated to the executive Directors and a management committee, which as at the date of this report includes the executive Directors and nine (9) senior managers.

Internal control systems

The Directors have overall responsibility for the Bank’s internal control systems and annually review their eff ectiveness, including a review of fi nancial, operational, compliance and risk management controls. The implementation and maintenance of the risk management and internal control systems are the responsibility of the executive Directors and other senior management. The systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and to provide reasonable, but not absolute, assurance against material misstatement or loss. The Directors have reviewed the eff ectiveness of the internal control systems, including controls related to fi nancial, operational and reputational risks identifi ed by the Group as at the reporting date and found no signifi cant failings or weaknesses during this review.

Directors’ performance evaluation

Every year the performance and eff ectiveness of the Board of Directors (“the Board”), its committees and individual Directors is evaluated. The evaluation is conducted by assessing the Board structure and committees, Board Meetings and Procedures; Board Management Relations; Succession Planning and Training. The results of the evaluation is shared with all members of the Board. Overall, it was noted that the board of Directors and its committees were operating in an eff ective manner and performing satisfactorily, with no major issues identifi ed.

Professional development and training

On appointment to the Board, Directors are provided with full, formal and tailored programmes of induction, to enable them gain in-depth knowledge about the Bank’s business, the risks and challenges faced, the economic knowledge and the legal and regulatory environment in which the Bank operates. Programmes of strategic and other reviews, together with the other training programmes provided during the year, ensure that Directors continually update their skills, knowledge and familiarity with the Bank’s businesses. This further provides insights about the banking sector and other developments to enable them eff ectively fulfi l their role on the Board and committees of the Board.

Confl icts of interest

The Bank has established appropriate confl ict authorization procedures, under which actual or potential confl icts are regularly reviewed and authorizations sought as appropriate. During the year, no such confl icts arose and no such authorizations were sought.

27




Board balance and independence

The composition of the Board of Directors and its Committees is regularly reviewed to ensure that the balance and mix of skills, independence, knowledge and experience is maintained. The Board considers the Chairman to be independent. Non-Executive Directors are independent as it pertains to the management of the company. The continuing independence and objective judgment of the non-Executive Directors has been confi rmed by the Board of Directors.

Corporate social responsibility

Corporate social responsibility activities can be found on page 127.

The Directors confi rm that to the best of their knowledge:

• the fi nancial statements, prepared in accordance with applicable laws and the Group and Bank’s fi nancial reporting framework, give a true and fair view of the Group and Bank’s fi nancial position, performance and cash fl ows; and

• the state of the Group and Bank’s aff airs is satisfactory.

APPROVAL OF CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

The consolidated and separate fi nancial statements of GCB Bank Limited, as identifi ed in the fi rst paragraph, were approved by the Board of Directors on 30th May 2018 and signed on their behalf by:

Jude ArthurChairman

Anselm Ransford Adzete SowahManaging Director

28


Corporate Governance

Dear Shareholders,

I am pleased to present our corporate governance report for 2017. This report sets out our approach to governance in practice, how the Board works, and how it has spent its time during the year.

Good governance is vitally important as it underpins the delivery of our strategy to help GCB Bank Ltd. prosper and become the best bank for customers, shareholders, and stakeholders. It is essential to ensure good corporate governance and the associated values are embedded into the thinking and processes of the business driven by the Board.

The corporate governance report provides an overview of key roles and responsibilities of the Board, how the Board spent its time in 2017 and how we communicate with shareholders. The Board is the custodian of the Company’s Values and of its long-term vision and provides strategic direction and guidance for the Bank. To this end, the Board has developed a robust Corporate Governance Framework which shall be rigorously institutionalized and will guide the way the Bank is governed.

The Board is ultimately responsible for the adherence to the Corporate Governance Framework and the in-built Board Protocol. The Corporate Governance Framework is reviewed on an annual basis.

The Board

The Board is the ultimate decision-making body for the Bank and ensures that the Bank’s governance processes align with the Bank of Ghana Guidelines, Securities & Exchange Commission Guidelines and other regulatory framework on Corporate Governance. The Board is also guided by global principles of governance which are built in to the Bank’s governance framework. In 2017, the Board spent time focusing on forward-looking matters, including ring-fencing preparations for implementation of our strategic objectives; innovation; technology; and culture.

Roles and responsibilities

The Board

The Board is collectively responsible for the long-term success of GCB Bank Limited and the delivery of sustainable shareholder value. The terms of reference include a formal schedule of matters specifi cally reserved for the Board’s decision and are reviewed at least annually.

Chairman

The role of Chairman is distinct and separate from that of the Managing Director and there is a clear division of responsibilities with the Chairman leading the Board and the Managing Director being responsible for the Bank’s day to day business. The Board has delegated authorities to the Managing Director which can be found in the Board Policy on Delegated Authority in our Corporate Governance Framework. Matters reserved for the Board are also contained in the framework.

Non- Executive Directors

The non- executive directors combine broad business and commercial experience with independent and objective judgment and they provide independent challenge to the executive directors and the leadership team. The balance between non-executive and executive directors enables the Board to provide clear and eff ective leadership across GCB Bank’s business activities.

Board Committees

Comprising 11 Directors with the right mix of skills and experience, the Board is collectively responsible for overseeing the delivery of the Bank’ strategy. In order to provide eff ective oversight and leadership, the Board has established a number of Board committees with particular responsibilities and these are:

CORPORATE GOVERNANCE

29


Corporate Governance (cont’d)


Audit and Compliance Committee

The Audit and Compliance Committee is chaired by Mr. Ray Ankrah, a non-executive Director and has as its members, Mr. Nik Amarteifi o, Mrs. Lydia Essah, and Mr. Osmani Ayuba, all non-executive Directors.

The function of the Committee includes:

• Reviewing the expertise, resources and experience of the Bank’s fi nance function,

• Monitoring and reviewing the integrity of the fi nancial statements of the Bank including its monthly, quarterly, bi-annual and annual reports, trading statements and any other formal announcement relating to its fi nancial performance.

• Overseeing the compliance function to ensure adherence to applicable laws and operating standards.

• Approving Internal Audit plans, monitoring and reviewing the eff ectiveness of the Bank’s internal controls and internal audit function.

• Recommending the appointment of the External Auditor and to oversee the external process.

Risk and Capital Management Committee

This Committee has four (4) non-executive Directors as its members with the Chairperson being Mrs. Lydia Essah. The other members are Mr. Francis Arthur-Collins, Nana Ama Ayensua Saara III and Mr. Ray Ankrah

The functions of the Committee include:

• Establishing, reviewing, and recommending the Bank’s overall Risk Appetite as well as assessing the appropriateness of the strategy in the context of the Risk Appetite.

• Reviewing and recommending the Bank’s Risk Management Framework (i.e. policies, processes, models and limits).

• Monitoring the Bank’s risk exposures through the;

• review of the Bank’s risk profi le

• Review of management reports, monthly key performance Indicators, reports on any material breaches of risk limits, on the nature and extent of risk exposures of the Bank.

• Monitoring the adequacy of Asset and Liability Management and Capital Management processes.

• Establishing and maintaining an Internal Capital Adequacy Assessment process (ICAAP) and an Internal Liquidity Adequacy Assessment (ILAA) process for eff ective Capital and Liquidity management.

Human Resource (HR) and Remuneration Committee

The HR and Remuneration Committee is chaired by Nana Ama Ayensua Saara III, a non-executive Director. The other members are Mrs. Lydia Essah and Mr. Osmani Ayuba all non-executive Directors.

The functions of the Committee include:

• Establishing employment policies to support the Board‘s approved HR strategy.

• Overseeing the establishment of remuneration policies that promote the achievement of strategic objectives and encourage individual performance.

• Considering risks to the organization, which may arise from remuneration policies and practices that drive organizational behaviors.

• Regularly reviewing incentive schemes to ensure continued contribution to shareholder value.

• Advising the Board on the remuneration of Non-Executive Directors

• Overseeing the development and maintenance of the Code of Professional Conduct and monitoring compliance

30




therewith.

• Reviewing of disciplinary policies.

Large Credit Exposures/Non-Executive Committee

This Committee has Mr. Osmani Ayuba a non-executive Director as its Chairman. The other members include Mr. Nik Amarteifi o, Mrs. Lydia Essah, and Mr. Ray Ankrah, all non-executive Directors.

The functions of the Committee includes:

• Approving new lending in excess of delegated limits of the Executive Credit Committee.

• Reviewing sector, single name, and product/asset class concentration exposure reports in order to manage large credit exposures.

• Reviewing, at least annually, limits with respect to concentration risk, and make recommendations to the Board as necessary;

• Reviewing and monitoring the large credit exposure reports received from management, and ensure that exposures are maintained within the approved limits.

• Determining if additional Management action is required to manage or mitigate the large credit exposures risk, and escalate issues to the Board where it is deemed appropriate to do so.

Nominations Committee

The Nominations Committee is made up of four non-executive Directors including the chairman, Mr. Nik Amarteifi o. The other members are Mr. Osmani Ayuba, Nana Ama Ayensua Saara and Mr. Francis Arthur Collins.

The functions of the Committee includes:

• Regularly reviewing the structure, size and composition (including skills, knowledge, experience and diversity) of the Board and making recommendations to the Board with regard to desirable changes.

• Giving full consideration to succession planning for Directors and other senior executives.

• Evaluating the balance of skills, knowledge, experience and diversity on the Board and where considered relevant, preparing descriptions off roles and capabilities required for particular appointments.

• Reviewing the results of the evaluation of Board performance.

• Proposing recommendations to the Board concerning appointments to the Board and Committees.

The Company Secretary

The Company Secretary works closely with the Chairman, Directors and Senior Management to ensure eff ective functioning of the Board and appropriate alignment and information fl ows between the Board and its committees, including the Executive Committee. This includes Board succession planning, induction, and professional development; and providing support and advice to the Board on a broad range of strategic, governance, legal and regulatory issues.

Board Activities and Development

Annual Work Plan

The Board has an Annual Work Plan which provides Directors with an outline of the year ahead. This instructs Directors of their fi duciary duties; what their commitments for the year will be; and ensures adequate attention is given to various board functions which might otherwise be deferred or overlooked.

31



Board Development

Directors have had a robust induction to the Bank including the Bank’s business operations, legal and regulatory environment. The Directors have access to and regularly get briefed on both national and global trends in the banking sector; and external expert briefi ngs and training.

Board Evaluation

Global best practice in Corporate Governance requires that the boards of all publicly traded corporations conduct a self-evaluation at least annually to determine whether they are functioning eff ectively. The Board of the Bank has in place a process to ensure that this practice is met and that the Board is staff ed and led appropriately; that board members are eff ective in fulfi lling their obligations; and that reliable processes are in place to satisfy important oversight requirements.

Board Meetings and Attendance

The Board meets at least six times a year and has strategy sessions annually. For 2017, the Board had an Annual Work Plan which included two strategy sessions. The scheduled meetings ensure that the Board fulfi ls its oversight and foresight roles eff ectively. In addition, directors are engaged in strategy dialogues throughout the year in the pursuance of the Bank’s overall performance. Internal stakeholder engagement is key to all board activities so there is enterprise-wide understanding of the Bank’s strategic direction and operations.

Directors’ Remuneration

Directors are paid annual fees and a sitting allowance for meetings attended. Remuneration is approved by the shareholders.

Confl icts of interests

GCB Bank has procedures in place to ensure that the Board’s management of confl icts of interest and its powers for authorizing certain confl icts are operating eff ectively. The Corporate Governance Framework contains GCB Bank Limited’s guidelines for referring confl icts of interest to the Board. Each director is required to notify the Board of any actual or potential situational or transactional confl ict of interest and to update the Board with any changes to the facts and circumstances surrounding such confl icts.

Details of all directors’ confl icts of interest are recorded in an Interests Register which is maintained by the Company Secretary and reviewed annually by the Board.

Board Eff ectiveness

The Board is structured to ensure that the directors provide GCB Bank Limited with the appropriate balance of skills, experience and knowledge as well as independence. Given the nature of GCB Bank’s businesses, experience of banking and fi nancial services is clearly of benefi t, and we have a number of directors with substantial experience in that area. The Board also benefi ts from directors with experience in other fi elds.

Relations with investors

The Chairman is responsible for ensuring eff ective communication with shareholders. The company communicates with shareholders through the Annual Report and Accounts and by providing information in advance of the Annual General Meeting. Individual shareholders can raise matters relating to their shareholdings and the business of GCB Bank at any time throughout the year by letter, telephone or email via [email protected].

32


Internal Controls

The Audit and Compliance Committee is responsible for the eff ectiveness of internal controls. These include controls relating to the fi nancial reporting process, which are designed to ensure that accounting policies are consistently applied, transactions are recorded and undertaken in accordance with delegated authorities, that assets are safeguarded and liabilities are properly recorded; and enable the calculation, preparation and reporting of fi nancial, prudential regulatory and tax outcomes in accordance with applicable national and international fi nancial reporting standards and regulatory requirements. The Board ensures that any changes in regulations are monitored and put in place.

The Board is committed to a combined Assurance Framework which is in itself subject to regular independent assurance revisions. Accordingly, we continue to invest in strengthening our risk, internal audit and compliance framework.


33


Independent Auditor’s Report to the members of GCB Bank Limited

INDEPENDENT AUDITOR’S REPORT

Report on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated (“the Group”) and separate (“the Bank”) fi nancial statements of GCB Bank Limited, which comprise the statements of fi nancial position at 31 December 2017 and the statements of comprehensive income, changes in equity and cash fl ows for the year then ended and notes to the fi nancial statements which include a summary of signifi cant accounting policies and other explanatory information, as set out on pages 37 to 129.

In our opinion, these consolidated and separate fi nancial statements give a true and fair view of the consolidated and separate fi nancial position of GCB Bank Limited at 31 December 2017 and of its consolidated and separate fi nancial performance and consolidated and separate cash fl ows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), together with the ethical requirements that are relevant to our audit of the fi nancial statements in Ghana and we have fulfi lled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most signifi cance in our audit of the consolidated and separate fi nancial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate fi nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

(i) Impairment of loans and advances to customers (GH¢ 263m)

Refer to Note 26 to the consolidated and separate fi nancial statements

Impairment of loans and advances to customers is a key audit matter due to the signifi cance of the balances and the complexity and subjectivity over estimating timing and the amount of impairment. Loans for which there is objective evidence that an impairment event has occurred are assessed individually for impairment. If there is deemed to be no evidence that an impairment exists on an individual basis, loans are assessed collectively for impairment. The estimation of the impairment loss allowance on an individual basis requires management to make judgments to determine whether there is objective evidence of impairment and to make assumptions about the fi nancial conditions of the borrower and expected future cash fl ows. The key judgment for individual provisions on these portfolios is the recoverable value of any underlying collateral. The collective impairment loss allowance relates to losses incurred but not yet identifi ed on other loans and advances. The two key judgments in the collective provisioning assessment are the likelihood of default and the emergence period and it is the latter which is the single most critical judgment as there is limited historic data on which to accurately assess it and the most sensitive to adjustment.

How the matter was addressed in our audit:

• Assessed and tested the design, implementation and operating eff ectiveness of key controls over the capture, monitoring and reporting of loans and advances to customers;

• Assessed and tested the design and operating eff ectiveness of controls over the Group’s loan impairment process regarding management’s review process over impairment calculations;

• Substantively validated the year end impairment models for collective and individual provisioning by re-

34


Independent Auditor’s Report to the members of GCB Bank Limited (cont’d)


performing calculations and agreeing a sample of data inputs to source documentation. We also assessed whether the data used in the models is complete and accurate through testing a sample of relevant data fi elds and their aggregate amounts against data in the source systems;

• Critically assessed and challenged the assumptions used by the Group in their impairment models using our understanding of the Group, the historical accuracy of its estimates, current and past performance of the Group’s loans and our knowledge of the industry in respect of similar loan types;

• Undertook a detailed assessment of a sample of exposures for individual impairment on corporate portfolios, taking a risk based approach to focus on those with the greatest potential impact on the fi nancial statements. Our assessment specifi cally challenged the Group’s assumptions of expected future cash fl ows including the valuation of realizable collaterals through inquiry with credit managers and inspecting correspondence and independent valuation reports;

• Critically assessed and analysed the assumptions and data used by the Group in determining the likelihood of default and emergence period for collective impairment assessment;

• Examined a sample of performing loans to evaluate if any indicators of impairment existed to test the completeness of individual impairment provisions; and

• Considered the adequacy of the Group’s disclosures in relation to impairment about changes in estimates occurring during the period and its sensitivity to key assumptions.

(ii) Purchase and assumption of assets and liabilities of Erstwhile UT Bank and Capital Bank (GH¢95m)

Refer to Note 31 to the consolidated and separate fi nancial statements

On 14 August 2017, the Bank in a purchase and assumption agreement between Messrs. Vish Ashiagbor and Eric Nipah both of PricewaterhouseCoopers and GCB Bank Limited acquired specifi c assets and liabilities of the erstwhile UT Bank Limited and Capital Bank. The transaction is complex due to the signifi cant nature, size of the transaction and assumptions that are required to integrate the individual identifi able assets (including intangible assets) and liabilities assumed on the basis of their relative fair values at the date of purchase. Due to the risk and signifi cant nature of the transaction we consider this to be a key audit matter.

How the matter was addressed in our audit:

• Reviewed the accounting opinion of the purchase and assumption in determining whether the transaction constitute the acquisition of a business in accordance with IFRS 3 Business Combination.

• Identifi ed the individual assets acquired and liabilities assumed at the date of purchase

• Validated the existence and accuracy of the balances of the assets and liabilities acquired at the date of purchase.

• Assessed key assumptions used to determine the fair values of assets acquired and liabilities assumed and customer relationship intangible asset.

• Assessed the accuracy of allocating the consideration transferred to the individual identifi able assets and liabilities.

• Evaluated the adequacy of the fi nancial statements disclosure.

Other Information

The Directors are responsible for the other information. The other information comprises the Report of the Directors, Financial highlights and Corporate Governance included in the Annual Report as required by the Companies Act, 1963 (Act 179), and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) (but does not include the consolidated and separate fi nancial statements and our auditor’s report thereon) which we obtained prior to the date of this auditor’s report. The Chairman’s Statement and Managing Director’s Review which forms part of the Annual Report are expected to be made available to us after the date of this auditor’s report.

35


Independent Auditor’s Report to the members of GCB Bank Limited (cont’d)Our opinion on the consolidated and separate fi nancial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate fi nancial statements, our responsibility is to read the other information identifi ed above and, in doing so, consider whether the other information is materially inconsistent with the fi nancial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Consolidated and Separate Financial Statements

The Directors are responsible for the preparation of consolidated and separate fi nancial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), and for such internal control as the Directors determine is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate fi nancial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for overseeing the Group’s fi nancial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate fi nancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to infl uence the economic decisions of users taken on the basis of these consolidated fi nancial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate fi nancial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on the Bank and its subsidiary’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate fi nancial statements or, if such disclosures are inadequate, to modify our opinion.


36


Independent Auditor’s Report to the members of GCB Bank Limited (cont’d)

Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate fi nancial statements, including the disclosures, and whether the consolidated and separate fi nancial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or business activities within the Group to express an opinion on the consolidated and separate fi nancial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and signifi cant audit fi ndings, including any signifi cant defi ciencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Section 133 of the Companies Act, 1963 (Act 179) and Section 85 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930)

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

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

The Bank’s transactions were within its powers and the Bank generally complied with the relevant provisions of the Anti-Money Laundering Act, 2008 (Act 749) as amended by Anti-Money Laundering Amendments Act, 2014 (Act 874), the Anti-Terrorism Act, 2008 (Act 762) as amended by Anti-Terrorism Amendment Act 2012 (Act 842) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

The engagement partner on the audit resulting in this independent auditor’s report is Nana Akua Ayivor (ICAG/P/1058).

FOR AND ON BEHALF OF:

KPMG: (ICAG/F/2018/038)CHARTERED ACCOUNTANTS

13 YIYIWA DRIVE, ABELENKPE

P O BOX GP 242

ACCRA

30th May, 2018


37


Statements of Comprehensive Income for the year ended 31 December 2017

FINANCIAL STATEMENTS

The Group The Bank

Notes2017

GH¢’0002016

GH¢’0002017

GH¢’0002016

GH¢’000

Interest income 9 1,187,853 1,019,655 1,186,942 1,018,336

Interest expense 10 (292,542) (133,848) (292,542) (133,848)


Fee and commission income 11 207,787 174,585 207,787 174,585

Fee and commission expense 12 (37,491) (32,726) (37,491) (32,726)

Net fee and commission income 170,296 141,859 170,296 141,859

Net trading income 13 41,020 27,349 41,020 27,349

Other revenue 14 17,386 16,039 7,437 8,996

Revenue 1,124,013 1,071,054 1,113,153 1,062,692

Loss on derecognition of renegotiated

loans 15 (1,543) (912) (1,543) (912)

Other income 16 3,049 1,803 4,064 1,803

Impairment charge on

loans and advances 17 (49,904) (27,160) (49,904) (26,531)

Personnel expenses 19 (362,807) (305,019) (362,807) (305,019)

Depreciation and amortization 30, 31 (57,757) (41,325) (57,757) (41,325)

Other operating expenses 18 (336,374) (242,066) (336,312) (243,926)

Operating profi t 318,677 456,375 308,894 446,782

Share of profi t of associates, net of tax 29 13,306 10,619 - -


Income tax expense 20 (97,385) (148,878) (96,179) (147,775)

Profi t for the year 234,598 318,116 212,715 299,007

38


Statements of Comprehensive Income for the year ended 31 December 2017 (cont’d)


The Group The Bank

Note2017

GH¢’0002016

GH¢’0002017

GH¢’0002016

GH¢’000


Other comprehensive income

Items that may be reclassifi ed to profi t or loss

Available-for-sale fi nancial assets – net changes in fair value 27(a) 783 (3,783) 1,261 (3,727)

Related tax 20 (195) 946 (315) 932

Share of associate OCI, net of tax 29 2,483 2,315 - -

Prior year movement in fair value - - - -

Foreign currency translation diff erence for foreign operation 29 32,286 (14,022) - -

Items that will never be reclassifi ed to profi t or loss

Actuarial loss on defi ned

benefi t liability 36 (19,898) (13,689) (19,898) (13,689)

Related tax 20 4,975 3,422 4,975 3,422

Other comprehensive income, net of tax 20,434 (24,811) (13,977) (13,062)

Total comprehensive income 255,032 293,305 198,738 285,945

Profi t for the year attributable to:

Equity holders of the Bank 234,598 318,116 212,715 299,007

Total Comprehensive income for the year attributable to:

Equity holders of the Bank 255,032 293,305 198,738 285,945

Basic and diluted earnings per share (in pesewas) 21 89 120 80 113

The notes on pages 45 to 129 form an integral part of these fi nancial statements.

39


The Group The Bank

Note2017

GH¢’0002016

GH¢’0002017

GH¢’0002016

GH¢’000

AssetsCash and cash equivalents 22 1,022,684 1,179,975 1,022,684 1,179,975Investment securities 23 4,884,277 2,633,116 4,878,155 2,626,946Trading assets 24 10,079 - 10,079 -Advances to banks 25 224,950 434,152 224,950 434,152Loans and advances to customers 26 2,099,330 1,412,977 2,099,330 1,412,977Investments (other than securities) 27 6,902 4,347 3,782 2,521Investment in subsidiary 28 - - 1,000 1,000Investment in associates 29 88,460 46,000 28,274 28,274Deferred tax asset 20 32,095 15,510 31,898 15,474Income tax asset 20 578 4,387 254 4,177Intangible assets 31 152,349 38,987 152,349 38,987Other assets 32 882,496 114,020 882,535 114,059Property and equipment 30 222,861 191,062 222,861 191,062Total assets 9,627,061 6,074,533 9,558,151 6,049,604

LiabilitiesDeposits from customers 33 6,924,041 4,259,933 6,956,190 4,279,775Other liabilities and provisions 34 411,131 136,260 411,081 136,204Borrowings 35 959,105 523,281 959,105 523,281Employee benefi t obligations 36 118,625 95,232 118,625 95,232Total liabilities 8,412,902 5,014,706 8,445,001 5,034,492

Equity Stated capital 37(a) 100,000 100,000 100,000 100,000Retained earnings 870,198 759,477 789,264 700,426Fair value reserve 37(d) 2,005 (1,066) 194 (752)Statutory reserve 37(b) 274,062 247,473 274,062 247,473Credit risk reserve 37(c) - 3,412 - 3,412Other reserves 37(e) (32,106) (49,469) (50,370) (35,447)Total equity 1,214,159 1,059,827 1,113,150 1,015,112Total liabilities and equity 9,627,061 6,074,533 9,558,151 6,049,604

The consolidated and separate fi nancial statements of GCB Bank Limited was approved by the Board of Directors on 30th May 2018 and signed on their behalf by:

Jude Arthur Anselm Ransford Adzete Sowah

Chairman Managing Director


Statements of Financial Position at 31 December 2017


40


Statements of Changes in Equity for the year ended 31 December 2017


The Group

Statedcapital

GH¢’000

RetainedearningsGH¢’000

Fairvalue

reserve GH¢’000

Statutoryreserve

GH¢’000

Creditrisk

reserveGH¢’000

OtherreservesGH¢’000

TotalGH¢’000

Balance at 1 January 2017 100,000 759,477 (1,066) 247,473 3,412 (49,469) 1,059,827

Total comprehensive income

Profi t for the year - 234,598 - - - - 234,598

Other comprehensive income, net of tax

Available-for-sale - net change in fair value - 588 - - - 588

Share of associate OCI - - 2,483 - - - 2,483

Actuarial loss on defi ned benefi t liability - - - - - (14,923) (14,923)

Foreign currency translation diff erences for Foreign operations - - - - - 32,286 32,286

Total comprehensive income - 234,598 3,071 - - 17,363 255,032

Transactions with equity holders

Dividends declared and paid - (100,700) - - - - (100,700)

Total contributions to equity holders - (100,700) - - - - (100,700)

Regulatory and other reserves

Transfer to statutory reserve - (26,589) - 26,589 - -

Transfer from credit risk reserve - 3,412 - - (3,412) - -

Net transfer to reserves - (23,177) - 26,589 (3,412) -

Balance at 31 December 2017 100,000 870,198 2,005 274,062 - (32,106) 1,214,159

Balance at 1 January 2016 100,000 545,721 (544) 210,097 23,878 (25,180) 853,972




Available-for-sale - net change in fair value - - (2,837) - - - (2,837)

Share of associate OCI - - 2,315 - - - 2,315


41


Statements of Changes in Equity for the year ended 31 December 2017 (cont’d)


The Group

Statedcapital

GH¢’000

RetainedearningsGH¢’000

Fairvalue

reserve GH¢’000

Statutoryreserve

GH¢’000

Creditrisk

reserveGH¢’000

OtherreservesGH¢’000

TotalGH¢’000


Foreign currency translationdiff erences for Foreign operations - - - - - (14,022) (14,022)

Total comprehensive income - 318,116 (522) - - (24,289) 293,305





Transfer to statutory reserve - (37,376) - 37,376 - - -


Net transfer to reserves - (16,910) - 37,376 (20,466) - -

Balance at 31 December 2016 100,000 759,477 (1,066) 247,473 3,412 (49,469) 1,059,827

Statedcapital

Retainedearnings

Fairvalue

reserve Statutory

reserve

Creditrisk

reserveOther

reserves Total

The Bank GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Balance at 1 January 2017 100,000 700,426 (752) 247,473 3,412 (35,447) 1,015,112




Available-for-sale - net change in fair value - - 946 - - - 946


Total comprehensive income - 212,715 946 - - (14,923) 198,738




(cont’d)

42


Statements of Changes in Equity for the year ended 31 December 2017 (cont’d)


Statedcapital

Retainedearnings

Fairvalue

reserve Statutory

reserve

Creditrisk

reserveOther

reserves Total

The Bank GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000



Transfer to statutory reserve - (26,589) - 26,589 - -


Net transfer to reserves - (23,177) - 26,589 (3,412) -

Balance at 31 December 2017 100,000 789,264 194 274,062 - (50,370) 1,113,150

Balance at 1 January 2016 100,000 505,779 2,043 210,097 23,878 (25,180) 816,617




Available-for-sale - net change in fair value - - (2,795) - - - (2,795)


Total comprehensive income - 299,007 (2,795) - - (10,267) 285,945





Transfer to statutory reserve - (37,376) - 37,376 - - -

Transfer to credit risk reserve - 20,466 - - (20,466) - -

Net transfer to reserves - (16,910) - 37,376 (20,466) - -

Balance at 31 December 2016 100,000 700,426 (752) 247,473 3,412 (35,447) 1,015,112


(cont’d)

43


Statements of Cash Flowsfor the year ended 31 December 2017


The Group The Bank

Note2017

GH¢’0002016

GH¢’0002017

GH¢’0002016

GH¢’000

Cash fl ows from operating activities


Adjustments for:

Depreciation and amortization 30, 31 57,757 41,325 57,757 41,325

Impairment charge on loans and advances 17 49,904 27,160 49,904 26,531

Employee benefi t expense 36 17,866 17,093 17,866 17,093

Share of profi t of associates 29 (13,306) (10,619) - -

Asset written off 30 2,457 731 2,457 731

Net interest income 9, 10 (895,311) (885,807) (894,400) (884,488)

Dividend income 14 (15,640) (14,214) (5,691) (7,171)

Profi t on sale of property and equipment 29 (247) (116) (247) (116)

Loss on derecognition of renegotiated loans 15 1,543 912 1,543 912

Unrealised exchange diff erences (18,434) (7,042) (18,434) (7,042)

(Reversal of)/Impairment of Associate 29 - (698) - 1,852

Write off of equity investment - 277 - 277

Tax adjustment 20 309 - 309 -

Tax expense 20 97,385 148,878 96,179 147,775

(481,119) (364,004) (480,042) (363,314)

Changes in:

Loans and advances to customers 26 (736,897) (137,568) (736,897) (137,547)

Advances to banks 25 209,202 (426,170) 209,202 (426,170)

Other assets 32 (768,476) (16,280) (768,476) (16,283)

Deposits from customers 33 2,622,472 896,313 2,634,780 908,345

Borrowings 35 423,700 516,783 423,700 516,783

Other liabilities and provisions 34 179,455 (47,085) 179,459 (47,093)

Employee benefi ts paid 36 (14,371) (11,407) (14,371) (11,407)

Investment securities 23 (2,062,606) (611,565) (2,062,653) (610,894)

Trading assets 24 (10,079) - (10,079) -

(638,719) (200,983) (625,377) (187,580)

Interest received 998,396 1,041,171 997,485 1,039,827

Dividend received 14, 29 21,281 20,959 5,691 7,171

Interest paid (238,781) (131,567) (238,781) (131,567)

44


Statements of Cash Flowsfor the year ended 31 December 2017 (cont’d)


The Group The Bank

Note2017

GH¢’0002016

GH¢’0002017

GH¢’0002016

GH¢’000

Income tax paid 20 (105,583) (118,138) (104,221) (116,653)

Net cash fl ow from operating activities 36,594 611,442 34,797 611,198

Cash fl ows from investing activities

Acquisition of investment in equity securities 26 (b) (1,797) (244) - -

Acquisition of property and equipment

less adjustment 29 (79,665) (84,837) (79,665) (84,837)

Proceeds from sale of property and equipment 29 382 116 382 116

Acquisition of intangible assets 30 (30,539) (29,248) (30,539) (29,248)

Net cash used in investing activities (111,619) (114,213) (109,822) (113,969)

Cash fl ow from fi nancing activities

Dividend paid (100,700) (87,450) (100,700) (87,450)

Net cash used in fi nancing activities (100,700) (87,450) (100,700) (87,450)

Net (decrease)/ increase in cash and cash equivalents (175,725) 409,779 (175,725) 409,779

Cash and cash equivalents at 1 January 22 1,179,975 763,154 1,179,975 763,154

Eff ect of exchange rate fl uctuations on cash held 18,434 7,042 18,434 7,042

Cash and cash equivalents at 31 December 22 1,022,684 1,179,975 1,022,684 1,179,975


45


Notes to the Financial Statementsfor the year ended 31 December 2017


1. REPORTING ENTITY

GCB Bank Limited is a limited liability company incorporated and domiciled in Ghana. These consolidated fi nancial statements as at and for the year ended 31 December 2017 comprise the Bank and its subsidiary, (together referred to as the ‘Group’) and the Group’s interest in associates. The separate fi nancial statements as at and for the year ended 31 December 2017 comprise the fi nancial statements of the Bank.

For Companies Act, 1963 (Act 179) reporting purposes, the balance sheet is represented by the statement of fi nancial position and the profi t and loss account by part of the statement of comprehensive income, in these fi nancial statements.

The Bank is listed on the Ghana Stock Exchange.

2. BASIS OF PREPARATION

2.1 Statement of compliance

The consolidated and separate fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act 1963, (Act 179), and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

2.2 Basis of measurement

The consolidated and separate fi nancial statements have been prepared under the historical cost convention, except for the following material items:

• available-for-sale fi nancial assets, measured at fair value

• investment in securities held for trading measured at fair value

• defi ned benefi t obligations measured at the present value of the defi ned benefi t obligation

2.3 Functional and presentation currency

The consolidated and separate fi nancial statements are presented in Ghana cedis, which is the Bank’s functional currency. All fi nancial information presented in Ghana cedis have been rounded to the nearest thousand, except when otherwise indicated.

2.4 Use of estimates and judgments

In preparing the consolidated and separate fi nancial statements, management has made judgments, estimates and assumptions that aff ect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may diff er from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

2.4.1 Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a signifi cant risk of resulting in a material adjustment in the year ending 31 December 2017 is set out below. These relate to the impairment of fi nancial instruments and in the following notes in relation to other areas:

• Note 6 – determination of fair value of fi nancial instruments with signifi cant unobservable inputs;

• Note 20 – recognition of deferred tax assets: availability of future taxable profi ts against which carry-forward of losses can be used;

• Note 36 – Key actuarial assumptions used in the measurement of defi ned benefi t obligations; and

• Note 34 and 38 – recognition and measurement of provisions and contingencies: Key assumptions about the likelihood and magnitude of an outfl ow of resources.

46


Notes to the Financial Statements (cont’d)


(i) Impairment of fi nancial instruments

Assets accounted for at amortized cost are evaluated for impairment on the basis described in Note 3.9.

The individual components of the total allowance for impairment applies to fi nancial assets evaluated individually for impairment and is based on management’s best estimate of the present value of cash fl ows that are expected to be received. In estimating these cash fl ows, management makes judgments about a debtor’s fi nancial situation and the net realizable value of any underlying collateral. Each impaired asset is assessed on its merits and the workout strategy. Estimates of cash fl ows considered recoverable are independently approved by the Credit Risk Function.

A collective component of the total allowance is established for:

• Groups of homogeneous loans that are not considered individually signifi cant; and

• Groups of assets that are individually signifi cant but that were not found to be individually impaired (loss ‘incurred but not reported’ or IBNR)

The collective allowance for groups of homogeneous loans is established using a formula approach based on historical loss rate experience.

IBNR allowance covers credit losses inherent in portfolios of loans and advances, and held-to-maturity investment securities with similar credit risk characteristics when there is objective evidence to suggest that they contain impaired items but the individual impaired items cannot yet be identifi ed.

The accuracy of the allowance depends on the model assumptions and parameters used in determining the collective allowance.

(ii) Impairment of available for-sale equity investments

Investments in equity securities are evaluated for impairment on the basis described in Note 3.9(b). For an investment in an equity security, a signifi cant and prolonged decline in its fair value below its cost is objective evidence of impairment. In this respect, the Group regards a decline in fair value in excess of 20% to be ‘signifi cant’ and a decline in a quoted market price that persists for nine months or longer to be ‘prolonged’.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all the periods presented in these fi nancial statements and have been applied consistently by Group entities.

3.1 Basis of consolidation

(i) Business combinations

Business combinations are accounted for using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is measured at fair value, as are the identifi able net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profi t or loss immediately. Transaction costs are expensed as incurred, except where they relate to the issue of debt or equity securities.

The consideration transferred does not include amounts that relate to the settlement of pre-existing relationships, such amounts are generally recognised in profi t or loss.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classifi ed as equity, then it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profi t or loss.

(ii) Subsidiaries

Subsidiaries are investees controlled by the Group. The Group controls an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to aff ect those returns through its power over the investee. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements from

47



(ii) Subsidiaries (cont’d)

the date on which control commences until the date when control ceases. The fi nancial statements of the subsidiary used to prepare the consolidated fi nancial statements were prepared as of the Bank’s reporting date.

(iii) Associates

Associates are all entities over which the Bank has signifi cant infl uence but not control, generally accompanying a shareholding of between 20% and 50% of voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost.

(iv) Loss of control

When the Group losses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, any related non-controlling interests and other components of equity. Any surplus or defi cit arising on the loss of control is recognized in profi t or loss. Any retained interest in the former subsidiary is accounted for as an equity-accounted investee or in accordance with the Group’s accounting policy for fi nancial instruments.

(v) Transactions eliminated on consolidation

Intra-group balances and transactions and any unrealised income and expenses (except foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated fi nancial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(vi) Separate fi nancial statements

In the separate fi nancial statements, investments in subsidiaries and associates are accounted for at cost less impairment. Cost also includes direct attributable costs of investment.

3.2 Foreign currency translation

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currency of the Group entities using exchange rates prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at exchange rates ruling at that date. Non-monetary items that are measured at historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.

Foreign currency diff erences arising on retranslation are generally recognized in profi t or loss.

Foreign exchange gains and losses arising from the translation of items recognized in other comprehensive income are presented in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations are translated into Ghana Cedis at the spot exchange rates at the reporting date. The income and expenses of foreign operations are translated into Ghana Cedis at the average exchange rates for the period.

Foreign currency diff erences arising on the translation are recognised in other comprehensive income and presented within equity.

When a foreign operation is disposed of, the cumulative amount in equity relating to that foreign operation is reclassifi ed to profi t or loss as part of the gain or loss on disposal.

3.3 Interest income and expense

Interest income and expense are recognized in profi t or loss using the eff ective interest method.

When calculating the eff ective interest rate, the Group estimates future cash fl ows considering all contractual terms of the fi nancial instrument, but not future credit losses. The calculation includes all transaction costs, fees and points paid or received that are an integral part of the eff ective interest rate. Transaction costs include incremental costs that


48



3.3 Interest income and expense (cont’d)

are directly attributable to the acquisition or issue of a fi nancial asset or liability.

Interest income and expense presented in profi t or loss includes interest on fi nancial assets and fi nancial liabilities measured at amortised cost calculated on an eff ective interest basis.

Once a fi nancial asset or a group of similar fi nancial assets have been written down as a result of an impairment loss, interest income is recognized using the rate of interest used to discount future cash fl ows for the purpose of measuring the impairment loss.

3.4 Fees and commission

Fees and commission income and expenses that are integral to the eff ective interest rate of a fi nancial asset or liability are included in the measurement of the eff ective interest rate.

Other fees and commission income and expenses are recognized on an accrual basis when the related services are performed. Loan commitment fees for loans that are not likely to be drawn down are deferred, together with related direct costs and recognized on a straight line basis over the commitment period.

Other fees and commission expenses, which relate mainly to transaction and service fees, are expensed as the related services are performed.

3.5 Net trading income

Net trading income comprises gains less losses related to foreign exchange diff erences on foreign currency deal transactions as well as all realised and unrealised fair value changes related to held-for-trading investment securities.

3.6 Dividend income

Dividend income is recognized when the right to receive income is established. Dividends are presented in other revenues.

3.7 Tax expense

Tax expense comprises current and deferred tax. Income tax is recognised in profi t or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income

(a) Current tax

Current tax comprises the expected tax payable or receivable on taxable incomes or losses for the year and any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

(b) Deferred tax

Deferred tax is recognised in respect of temporary diff erences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the corresponding amounts used for taxation purposes. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction aff ects neither accounting nor taxable profi t or loss.

Deferred tax is measured at tax rates that are expected to be applied to temporary diff erences when they reverse, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts 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 benefi t will be realised.

Deferred tax assets and liabilities are off set if there is a legally enforceable right to off set current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on diff erent tax entities, but they intend to settle current tax liabilities and assets on a net basis or the tax assets and liabilities will be realized and settled simultaneously.


49



3.8 Financial assets and liabilities

All fi nancial assets and liabilities are recognized in the statement of fi nancial position and measured in accordance with their assigned category.

The Group initially recognises loans and advances and deposits from customers on the date when they are originated. All other fi nancial assets and fi nancial liabilities are initially recognized on the trade date, which is the date on which the Group becomes a party to the contractual provisions of the instrument.

3.8.1 Financial assets

The Group classifi es its fi nancial assets in the following categories: held to maturity, loans and receivables, fair value through profi t or loss - held for trading and available-for-sale. Management determines the classifi cation of its fi nancial assets at initial recognition.

(a) Held-to-maturity

Held-to-maturity assets comprise investment securities with fi xed determinable payments and fi xed maturity that the Group has the positive intent and ability to hold to maturity.

Held to maturity assets are initially measured at fair value plus incremental direct transaction costs and subsequently measured at amortized cost using the eff ective interest method.

Any sale or reclassifi cation of a signifi cant amount of held to maturity asset not close to their maturity would result in the reclassifi cation of all held to maturity assets as available-for-sale, and would prevent the Group from classifying investment securities as held-to-maturity for the current and the following two fi nancial years. Diff erences between the carrying amount (amortized cost) and the fair value on the date of the reclassifi cation are recognized in other comprehensive income

(b) Loans and receivables

Loans and receivables comprises cash and cash equivalents, advances to Banks, loans and advances to customers and other assets

Loans and receivables are initially recognized at fair value plus incremental direct transaction costs and are subsequently measured at amortized cost using the eff ective interest method less any impairment losses.

(c) Fair value through profi t or loss - held-for-trading

Held-for-trading assets comprise investment in securities that the Group acquires principally for the purpose of selling or repurchasing in the near term or holds as part of a portfolio that is managed together for short term profi t or position taking.

Held-for-trading assets are initially recognised and subsequently measured at fair value in the statement of fi nancial position, with transaction costs recognised in profi t or loss. All changes in the fair value are recognised as part of net trading income in profi t or loss. Trading assets may be reclassifi ed out of the fair value through profi t or loss - i.e. trading category if they are no longer held for purpose of being sold or repurchased in the near term and the following:

o If the fi nancial asset would have met the defi nition of loans and receivables (if the fi nancial asset had not been required to be classifi ed as held for trading on initial recognition), then it may be reclassifi ed if the Group has the intention and ability to hold the fi nancial asset for the foreseeable future or until maturity.

o If the fi nancial asset would not have met the defi nition of loans and receivables then it may be reclassifi ed out of the trading category only in rare circumstances

(d) Available-for-sale fi nancial assets (AFS)

Available-for-sale fi nancial assets comprise investment in equity securities.

These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein are recognized in other comprehensive income and accumulated in the fair value reserve. When these assets are derecognized, the gain or loss accumulated in the fair (d)


50



(d) Available-for-sale fi nancial assets (AFS) (cont’d)

value reserve is reclassifi ed to profi t or loss. Unquoted equity securities whose fair value cannot be measured reliably are carried at cost.

3.8.2 Financial liabilities

The Group classifi es its fi nancial liabilities, other than fi nancial guarantees and loan commitments, as fi nancial liabilities measured at amortized cost. Financial liabilities measured at amortized cost include deposits from customers, other liabilities and borrowings. These liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the eff ective interest method.

3.8.3 Derecognition

Financial asset

The Group derecognises a fi nancial asset when the contractual rights to the cash fl ows from the asset expire, or it transfers the right to receive the contractual cash fl ows in a transaction in which substantially all of the risks and rewards of ownership of the fi nancial asset are transferred, or it neither transfers nor retains substantially all of the risk and rewards of ownership and does not retain control over the transferred asset.

On derecognition of a fi nancial asset, the diff erence between the carrying amount of the asset and the consideration received is recognized in profi t or loss. Any interest in transferred fi nancial assets that qualify for derecognition that is created or retained by the Group is recognized as a separate asset or liability. Any interest in such derecognized fi nancial asset that is created or retained by the Group is recognized as a separate asset or liability.

Financial liabilities

The Group derecognises a fi nancial liability when its contractual obligations are discharged or cancelled, or expire.

3.8.4 Off setting

Financial assets and liabilities are off set and the net amount presented in the statement of fi nancial position when, and only when, the Group has a legal right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under applicable accounting standards, or for gains and losses arising from a Group of similar transactions such as in the Groups’ trading activity.

3.8.5 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability refl ects its non-performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with suffi cient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The best evidence of the fair value of a fi nancial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial recognition diff ers from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the fi nancial instrument is initially measured at fair value, adjusted to defer the diff erence between the fair value at initial recognition and the transaction price. Subsequently, that diff erence is recognised in profi t or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market


51



3.8.5 Fair value measurement (cont’d)

data or the transaction is closed out.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.

The fair value of a demand deposit is not less than the amount payable on demand, discounted from the fi rst date on which the amount could be required to be paid.

The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

3.8.6 Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, balances held with Bank of Ghana, other bank balances and highly liquid fi nancial assets with original maturities of three months or less from the date of acquisition that are subject to an insignifi cant risk of changes in their fair value and are used by the Group in the management of its short-term commitments.

3.9 Impairment of fi nancial assets

(a) Assets carried at amortized cost

The Group assesses whether there is objective evidence that a fi nancial asset or group of fi nancial assets is impaired at each reporting date. A fi nancial asset or a group of fi nancial assets is considered impaired only if there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on estimated future cash fl ows of the fi nancial asset or group of fi nancial assets that can be reliably estimated.

The criteria used to determine whether there is objective evidence of an impairment loss include:

i. signifi cant fi nancial diffi culty faced by the issuer or obligor;

ii. a breach in the form of default or delinquency in interest or principal payments;

iii. granting the borrower, as a result of fi nancial diffi culty, a concession that the lender would not otherwise consider;

iv. a likely probability that the borrower will enter bankruptcy or other fi nancial reorganization;

v. the disappearance of an active market for that fi nancial asset because of fi nancial diffi culties; and

vi. observable data indicating that there is a measurable decrease in the estimated future cash fl ows from a group of fi nancial assets since their initial recognition, although the decrease cannot yet be identifi ed with the individual assets in the group.

The Group assesses whether objective evidence of impairment exists individually for fi nancial assets that are individually signifi cant and individually or collectively for fi nancial assets that are not individually signifi cant. If the Group determines that no objective evidence of impairment exists for an individually assessed fi nancial asset, whether signifi cant or not, it includes the asset in a group of fi nancial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

The amount of loss is measured as the diff erence between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original eff ective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is recognized in profi t or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current eff ective interest rate determined under the contract.

The calculation of the present value of estimated future cash fl ows of a collateralized fi nancial asset refl ects cash fl ows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.


52



(a) Assets carried at amortized cost (cont’d)

For the purposes of a collective evaluation of impairment, fi nancial assets are grouped on the basis of similar credit risk characteristics (that is, on the basis of the Group’s grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash fl ows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash fl ows in groups of fi nancial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash fl ows of assets in the group and historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted on the basis of current observable data to refl ect the eff ects of current conditions that did not aff ect the period on which historical loss experience is based and to remove the eff ects of conditions in the historical period that do not currently exist.

Estimates of changes in future cash fl ows for groups of assets should refl ect and be directionally consistent with changes in related observable data from period to period including property prices, payment status and other factors indicative of changes in the probability of losses and their magnitude. The methodology and assumptions used for estimating future cash fl ows are reviewed regularly by the Group to reduce any diff erences between loss estimates and actual loss experience.

When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after all necessary procedures have been completed and the amount of loss has been determined. Impairment charges relating to loans and advances are recognised in loan impairment charges whilst impairment charges relating to investment securities (held to maturity and loans and receivables categories) are recognised in ‘Net gains/ (losses) on investment securities’.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can objectively be related to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in profi t or loss.

(b) Assets classifi ed as available-for-sale (AFS)

The Group assesses whether there is objective evidence that a fi nancial asset or a group of fi nancial assets is impaired at each reporting date. In the case of equity investments classifi ed as available for sale, a signifi cant or prolonged decline in the fair value of the security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. In general, the Group considers a decline of 20% to be signifi cant and a period of nine months to be prolonged. However, in specifi c circumstances a smaller decline or a shorter period may be appropriate.

Impairment losses are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profi t or loss. The cumulative loss that is reclassifi ed from equity to profi t or loss is the diff erence between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss on that fi nancial asset previously recognized in profi t or loss.

If, in a subsequent period, the fair value of a debt instrument classifi ed as available for sale increases and the increase can objectively be related to an event occurring after the impairment loss was recognized in profi t or loss, the impairment loss is reversed through other comprehensive income.

(c) Renegotiated loans

‘Forbearance’ describes concessions made on the contractual terms of a loan in response to an obligor’s fi nancial diffi culties. A loan is classed as ‘renegotiated’ when the contractual payment terms are modifi ed, on concessionary terms, because the Group has signifi cant concerns about the borrowers’ ability to meet contractual payments when due. Loans that have been identifi ed as renegotiated retain this designation until maturity or derecognition.

A loan that is renegotiated is derecognised and the renegotiated loan recognised as a new loan at fair value if the existing agreement is cancelled and a new agreement is made on substantially diff erent terms, or if the terms of an (c)


53



(c) Renegotiated loans (cont’d)

existing agreement are modifi ed such that the renegotiated loan is substantially a diff erent fi nancial instrument. The diff erence between the carrying amount of the original facility and the new restructured facility is recognised in profi t

or loss as gain or loss on derecognition of renegotiated loans. Any fee income earned is recognised as part of the gain or loss on derecognition and do not adjust the carrying amount of the new modifi ed facility unless it can be demonstrated that the fee income relates to the new modifi ed facility and not to the existing one.

Loans arising as a result of derecognition events will continue to be disclosed as renegotiated loans.

Credit quality of renegotiated loans

On execution of a renegotiation, the loan will also be classifi ed as impaired if it is not already so classifi ed. All facilities are considered impaired following the provision of a renegotiated loan. Loans that are considered impaired retain the impaired classifi cation for a minimum of 180 days before being reclassifi ed as a performing loan. Renegotiated loans will continue to be disclosed as impaired until there is suffi cient evidence to demonstrate a signifi cant reduction in the risk of non-payment of future cash fl ows (the evidence typically comprises a history of payment performance against the original or revised terms), and there are no other indicators of impairment.

Renegotiated loans and recognition of impairment allowances

The impairment loss before an expected restructuring is measured as follows:

• If the expected restructuring will not result in derecognition of the existing asset, then the estimated cash fl ows arising from the modifi ed fi nancial asset are included in the measurement of the existing asset based on their expected timing and amounts discounted at the original eff ective interest rate of the existing fi nancial asset.

• If the expected restructuring will result in derecognition of the existing asset, then the expected fair value of new asset is treated as the fi nal cash fl ow from the existing fi nancial asset at the time of its derecognition. This amount is discounted from the expected date of derecognition to the reporting date using the original eff ective interest rate of the existing fi nancial asset.

3.10 Leases

(i) Lease payments - Lessee

Payments made under operating leases are recognized in profi t or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under fi nance lease are apportioned between fi nance expense and a reduction of the outstanding liability. The fi nance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confi rmed.

(ii) Lease assets - Lessee

Assets held by the Group under leases that transfer to the Group substantially all of the risks and rewards of ownership are classifi ed as fi nance leases. The leased asset is initially measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.

Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classifi ed as operating leases and are not recognized in the Group’s statement of fi nancial position.


54



(iii) Lease assets - Lessor

Where signifi cant portions of the risks and rewards of ownership of leases are retained by the lessor, such leases are classifi ed as operating leases.

Lease income from operating leases are recognized in other income on a straight-line basis over the period of the lease.

3.11 Property and equipment

(i) Recognition and measurement

Items of property and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the assets.

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment. When parts of an item of property or equipment have diff erent useful lives, they are accounted for as separate items (major components) of property and equipment.

The cost of self-constructed assets includes the cost of materials and direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use.

Any gain or loss on disposal of an item of property and equipment (calculated as the diff erence between the net proceeds from disposal and the carrying amount of the item) is recognized within other income in profi t or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that future economic benefi ts embodied within the part will fl ow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in profi t or loss as incurred.

(iii) Depreciation

Depreciation is recognised in profi t or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and the useful life of the asset. Freehold Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

Leasehold land - Over the lease term

Computers - 3 years

Motor vehicles - 4 years

Furniture and equipment - 3 - 4 years

Buildings - 50 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(iv) Capital work in progress

Property and equipment under construction is stated at initial cost and depreciated from the date the asset is made available for use over its estimated useful life. Assets are transferred from capital work in progress to an appropriate class of property and equipment when commissioned and ready for its intended use.

(v) Dual-use property

Properties that are partly used for own-use activities and partly for rental activities are considered dual-use properties. This would result in the property being considered to be classifi ed as part property and equipment and the other part as investment property. If a signifi cant portion of the property is used for own-use and the portion rented out cannot be sold or leased out separately under a fi nance lease, then the entire property is classifi ed as property and


55



(v) Dual-use property (cont’d)

equipment. The Group considers an own-use portion above 95% of the measure as signifi cant.

(vi) Derecognition

Property and equipment are derecognised upon disposal or when no future economic benefi ts are expected to fl ow to the Group from either their use or disposal. Gains or losses on derecognition of an item of property and equipment are determined by comparing the proceeds from disposal, if applicable, with the carrying amount of the item and are recognised directly in profi t or loss.

3.12 Intangible assets

Intangible assets comprise computer software licenses and customer relationship. Intangible assets acquired by the Group and have fi nite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases future economic benefi ts embodied in the specifi c asset to which it relates. All other expenditure is expensed as incurred.

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method and recognized in profi t or loss over its estimated useful life, from the date that it is available for use.

The estimated useful life for the current and comparative periods are as follows:

Software - 3 years

Customer Relationship - 5 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.

3.13 Impairment of non-fi nancial assets

The carrying amounts of the Group’s non-fi nancial assets other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or its cash generating unit (CGU) exceeds its recoverable amount.

The recoverable amount is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash fl ows are discounted to their present value using pre-tax discount rates that refl ect current market assessments of the time value of money and risks specifi c to the asset.

A previously recognised impairment loss is reversed where there has been a change in circumstances or in the basis of estimation used to determine the recoverable value, but only to the extent that the asset’s net carrying amount does not exceed the carrying amount of the asset that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognized.

3.14 Financial guarantees and loan commitments

Financial guarantee contracts are contracts that require the Group to make specifi ed payments to reimburse the holder for a loss it incurs because a specifi ed debtor fails to make payments when due, in accordance with the terms of a debt instrument. Loan commitments are fi rm commitments to provide credit under pre-specifi ed terms and conditions.

Liabilities arising from fi nancial guarantees or commitments to provide a loan at below-market interest rates are initially recognized at fair value and amortized over the life of the guarantee or commitment. The liability is subsequently carried at the higher of the amortized amount and the present value of any expected payments to settle the liability, when payment becomes probable. Financial guarantees and commitments to provide a loan at below-market rates are included within other liabilities.


56



3.15 Employment benefi ts

(i) Defi ned contribution plans

Obligations for contributions to defi ned contribution pension plans are recognized as personnel expenses in profi t or loss in the period during which related services are rendered. The Group has the following defi ned contribution schemes:

Social Security and National Insurance Trust

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

Provident Fund

The Group has a Provident Fund Scheme for all employees who have completed their probation period. Employees contribute 10% of their basic salary to the Fund whilst the Group contributes 12.5%. Obligations under the plan are limited to the relevant contributions which have been recognised in the fi nancial statements and are settled on due dates to the Fund Manager.

(ii) Defi ned benefi t plans

The Group’s obligation in respect of defi ned benefi t plans is calculated separately for each plan by estimating the amount of future benefi ts that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defi ned benefi t obligations is performed annually by a Qualifi ed Actuary using the projected unit credit method. Re-measurements of the net defi ned benefi t liability, which comprise actuarial gains and losses is recognised immediately in other comprehensive income.

The Group determines the net interest expense (income) on the defi ned benefi t liability for the period by applying the discount rate used to measure the defi ned benefi t obligation at the beginning of the annual period to the defi ned benefi t liability at the period end, taking into account any changes in the defi ned benefi t liability during the period as a result of contributions and benefi t payments.

Net interest expense and other expenses related to defi ned benefi t plans are recognised in personnel expenses in profi t or loss. When the benefi ts of a plan are changed or when a plan is curtailed, the resulting change in benefi ts that relate to past service or the gain or loss on curtailment is recognised immediately in profi t or loss. The Group recognises gains and losses on the settlement of a defi ned benefi t plan when the settlement occurs.

The Group has the following defi ned benefi t plans:

Post-Retirement Medical Care

The Bank pays for post-retirement medical care of its staff .

Pension Benefi ts

The Group pays monthly pension benefi ts to retired employees, under a closed defi ned benefi t pension scheme. Under this scheme, benefi ciaries are paid pensions equal to 60% of the net basic salaries of their serving counterparts. The scheme has been discontinued since 1985. At the reporting date, the scheme covered a closed group of 369 (2016: 387) persons, who still receive monthly pensions. The monthly pensions are increased annually in line with adjustments to the basic salaries of their serving counterparts.

(iii) Other long-term employee benefi ts

The Company’s obligation in respect of long-term employee benefi ts is the amount of future benefi ts that employees have earned in return for their services in the current and prior periods. That benefi t is discounted to determine its present value. Remeasurement are recognised in profi t or loss in the period in which they arise.


57



Long service award

Long service awards accrue to employees based on graduated periods of uninterrupted service. These awards accrue over the service life of employees. Employees in service with the Bank after fi fteen (15) years become eligible to receive cash payments at graduated rates when employees achieve stipulated milestones set by the Bank.

(iv) Termination benefi ts

The Group recognizes termination benefi ts when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan; or providing termination benefi ts as a result of an off er made to encourage voluntary redundancy. If benefi ts are not expected to be wholly settled within 12 months of the reporting date, then they are discounted.

(v) Short-term Employment benefi ts

Short-term employee benefi t obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognized for the amount expected to be paid under short-term cash bonus or profi t sharing plans, if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

3.16 Provisions and Contingent Liabilities

Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outfl ow of the economic benefi ts will be required to settle the obligation. Provisions are not recognized for future operating losses.

Provisions are measured at the present value of expenditures expected to be required to settle obligations using pre-tax rates that refl ect current market assessments of the time value of money and risks specifi c to the obligation. The unwinding of the discount is recognised as fi nance cost.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the group, or a present obligation that arises from past events but is not recognised because it is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or the amount of the obligation cannot be measured with suffi cient reliability. If the likelihood of an outfl ow of resources is remote, the possible obligation is neither a provision nor a contingent liability and no disclosure is made.

3.17 Stated capital and reserves

(i) Share capital

The Group classifi es capital and equity instruments in accordance with the contractual terms of the instrument. Incremental costs directly attributable to the issue of ordinary shares, net of any tax eff ects are recognised as a deduction from equity.

(ii) Dividends

Dividends on ordinary shares are recognized in the period in which they are approved by the shareholders. Dividend proposed which is yet to be approved by shareholders, is disclosed by way of notes.

(iii) Statutory reserve

Statutory reserve is based on the requirements of section 29(1) of the Banking Act (Act 930). Transfers into statutory reserve are made in accordance with the relationship between the Bank’s reserve fund and it’s paid up capital, which determines the proportion of profi ts for the period that should be transferred.

(i) Where the reserve fund is less than fi fty percent of the stated capital, then an amount not less than 50% of net profi t for the year is transferred to the reserve fund.


58



(iii) Statutory reserve (cont’d)

(ii) Where the reserve fund is more than 50% but less than 100% of the stated capital, then an amount not less than 25% of net profi t is transferred to the reserve fund.

(iii) Where the reserve is equal to or more than 100% of the stated capital, then an amount not less than 12.5% of the net profi t for the year is transferred to the reserve fund.

(iv) Credit risk reserve

This is a reserve created to set aside the excess or shortfalls between amounts recognized as impairment loss on loans and advances based on provisions made for bad and doubtful loans and advances calculated in accordance with IFRS and the Central Bank’s prudential guidelines (see Note 5.1).

3.18 Fiduciary activities

The Group acts as trustees and in other fi duciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefi t plans and other institutions. The assets and incomes arising thereon are excluded from these fi nancial statements, as they are not assets of the Group.

3.19 Earnings per share

The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders by the number of ordinary shares outstanding during the period. The Bank has no convertible notes and share options, which could potentially dilute its EPS and therefore the Bank’s Basic and diluted EPS are essentially the same.

3.20 Segment reporting

Segment results that are reported to the Group’s Managing Director (being the chief operating decision maker) include items that are directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Bank’s property and equipment), head offi ce expenses and tax assets and liabilities.

The Group has three reportable segments: consumer banking, corporate banking and treasury which are the Group’s strategic operations. For each reportable segment, the Group’s Managing Director reviews internal management reports on the performance of each segment.

4. NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

A number of new standards and amendments to standards are eff ective for annual periods beginning after 1 January 2017, however, the Group has not applied these new or amended standards in preparing these fi nancial statements. Those which may be relevant to the Group are set out below. The Group does not plan to early adopt these standards.

• IFRS 9 Financial Instruments

In July 2014, the International Accounting Standards Board issued the fi nal version of IFRS 9 Financial Instruments. IFRS 9 is eff ective for annual periods beginning on or after 1 January 2018, with early adoption permitted. The Group currently plans to apply IFRS 9 initially on 1 January 2018.

The actual impact of adopting IFRS 9 on the consolidated and separate fi nancial statements in 2018 is not known and cannot be reliably estimated because it will be dependent on the fi nancial instruments that the Group holds and economic conditions at that time as well as accounting elections and judgements that it will make in the future.

The new standard will require the Group to revise its accounting processes and internal controls related to reporting fi nancial instruments and these changes are not yet complete. However, the Group has performed a preliminary assessment of the potential impact of adoption of IFRS 9 based on its positions at 31 December 2017.


59



(i) Classifi cation – Financial Assets

IFRS 9 contains a new classifi cation and measurement approach for fi nancial assets that refl ects the business model in which assets are managed and their cash fl ow characteristics.

IFRS 9 contains three principal classifi cation categories for fi nancial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profi t or loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale.

A fi nancial asset is measured at amortised cost if it meets both the following conditions and is not designated as at FVTL:

• the asset is held within a business model whose objective is to hold assets to collect contractual cash fl ows; and

• the contractual terms give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

A fi nancial asset is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:

• the asset is held within a business model whose objective is achieved by both collecting contractual cash fl ows and selling fi nancial assets; and

• the contractual terms give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest on the principal amount outstanding

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.

Financial assets not classifi ed as measured at amortised cost or FVOCI as described above are measured at FVTPL.

In addition, on initial recognition the Bank may irrevocably designate a fi nancial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or signifi cantly reduces an accounting mismatch that would otherwise arise.

A fi nancial asset is classifi ed into one of these categories on initial recognition. However, for fi nancial assets held at initial application, the business model assessment is based on facts and circumstances at that date. Also, IFRS 9 permits new elective designations at FVTPL or FVOCI to be made on the date of initial application and permits or requires revocation of previous FVTPL elections at the date of initial application depending on the facts and circumstances at that date.

Business Model assessment:

The Group will make an assessment of the objective of the business model in which a fi nancial asset is held at a portfolio level because this best refl ects the way the business is managed and information is provided to management. The information that will be considered includes:

o the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management’s strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profi le, matching the duration of the fi nancial assets to the duration of the liabilities that are funding those assets or realising cash fl ows through the sale of the assets;

o how the performance of the portfolio is evaluated and reported to the Group’s management;

o the risks that aff ect the performance of the business model (and the fi nancial assets held within that business model) and how those risks are managed;

o how managers of the business are compensated – e.g. whether compensation is based on fair value of the assets managed or the contractual cash fl ows collected; and

o the frequency, volume and timing of sales in prior periods, the reasons for such sales and expectations about future sales activity. However, information about sales activity will not be considered in isolation, but as part of an overall assessment of how the Group’s stated objective for managing the fi nancial assets is achieved and how cash fl ows are realised.


60



Business Model assessment (cont’d):

Financial assets that are held for trading and those that are managed and whose performance is evaluated on a fair value basis will be measured at FVTL because they are neither held to collect contractual cash fl ows nor held both to collect contractual cash fl ows and to sell fi nancial assets.

Assessment of whether contractual cash fl ows are solely payments of principal and interest

For the purpose of this assessment, “principal” is defi ned as the fair value of the fi nancial asset on initial recognition. ‘Interest’ is defi ned as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and cost (eg liquidity risk and administrative costs), as well as a profi t margin.

In assessing whether contractual cash fl ows are solely payments of principal and interest, the Group will consider the contractual terms of the instrument. This will include assessing whether the fi nancial asset contains a contractual term that could change the timing or amounts of contractual cash fl ows such that it would not meet this condition. In making the assessment, the Group will consider:

o contingent events that would change the amount and timing of cash fl ows;

o prepayment and extension terms; and

o features that modify consideration for the time value of money – e.g. periodic reset of interest rates.

The Bank has the ability to change the interest rates on variable rate loans at its discretion. The discretionary rate compensates for basic lending costs and allows the Bank to remain competitive in the industry. In this case the Bank will assess whether discretionary feature is consistent with the SPPI criterion by considering a number of factors, including:

o The borrower’s ability to repay the loans without signifi cant penalties

o The market conditions ensures that interest rates are consistent between banks; and

o Any regulatory or customer protection framework is in place that requires Banks to treat customers fairly

Some of the Bank’s loan agreement contain prepayment features. The borrower has the ability to early prepay (at a fee) and refi nance the loan with another lender if they fi nd these rates uncompetitive.

A prepayment feature is consistent with the SPPI criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract.

Preliminary impact assessment

Based on its preliminary high-level assessment of possible changes to the classifi cation and measurement of fi nancial assets held as at 31 December 2017, the Group’s current expectation is that:

o Trading assets, which are classifi ed as held-for-trading and measured at FVTPL under IAS 39, would also be measured at FVTPL under IFRS 9;

o Loans and advances to Banks and to customers that are classifi ed as loans and receivables and measured at amortised cost under IAS 39 would in general also be measured at amortised cost under IFRS 9;

o Held-to-maturity investment securities measured at amortised cost under IAS 39 would in general also be measured at amortised cost under IFRS 9; and

o Equity securities classifi ed as available-for-sale under IAS 39 would generally be measured at FVOCI under IFRS 9.

The Group’s preliminary assessment has not included a detailed review of the contractual terms of all fi nancial assets – which is ongoing – and it has not yet fi nalised its policies and methods for analysing certain prepayment features and variable interest-rate features.


61



(ii) Impairment – Financial assets

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with a forward looking ‘expected credit loss’ (ECL) model. This will require considerable judgement over how changes in economic factors aff ect ECLs, which will be determined on a probability-weighted basis.

The new impairment model will apply to the following fi nancial instruments that are not measured at FVTPL:

• Financial assets that are debt instruments;

• Loan commitments issued; and

• Financial guarantee contracts issued

No impairment loss will be recognised on equity investments.

IFRS 9 requires a loss allowance to be recognised at an amount equal to either 12-month ECLs or lifetime ECLs.

The Group will recognise loss allowance at an amount equal to lifetime ECLs, except in the following cases, for which the amount recognised will be 12-month ECLs:

• Debt investment securities that are determined to have low credit risk at the reporting date

• Other fi nancial instruments for which credit risk has not increased signifi cantly since initial recognition.

The impairment requirements of IFRS 9 are complex and require management judgements, estimates and assumptions, particularly in the following areas:

• Assessing whether the credit risk of an instrument has increased signifi cantly since initial recognition

• Incorporating forward-looking information into the measurement of ECLs.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a fi nancial instrument, whereas 12-month ECLs are the portion of ECLs that result from default events that are possible within 12 months after the reporting date.

Measurement of ECL

ECLs are a probability-weighted estimate of credit losses and will be measured as follows:

o Financial assets that are not credit-impaired at the reporting date: the present value of all cash shortfalls (i.e. the diff erence between the cash fl ows due to the entity in accordance with the contract and the cash fl ows that the Group expects to receive);

o Financial assets that are credit-impaired at the reporting date: the diff erence between the gross carrying amount and the present value of estimated future cash fl ows;

o Undrawn loan commitments: the present value of the diff erence between the contractual cash fl ows that are due to the Group if the commitment is drawn down and the cash fl ows that the Group expects to receive; and

o Financial guarantee contracts: the expected payments to reimburse the holder less any amounts that the Group expects to recover.

Financial assets that are credit-impaired are defi ned by IFRS 9 in a similar way to fi nancial assets that are impaired under IAS 39.

Defi nition of default

Under IFRS 9, the Group will consider a fi nancial asset to be in default when:

o The borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or

o The borrower is past due more than 90 days on any material credit obligation to the Group. Overdrafts are considered as being past due once the customer has breached an advised limit or been advised of a limit smaller than the current amount outstanding.


62



Defi nition of default (cont’d)

In assessing whether a borrower is in default, the Group will consider indicators that are:

o Qualitative – e.g. breaches of covenant;

o Quantitative – e.g. overdue status and non-payment on another obligation of the same issuer to the Group; and

o Based on data developed internally and obtained from external sources.

Inputs into the assessment of whether a fi nancial instrument is in default and their signifi cance may vary over time to refl ect changes in circumstances.

Signifi cant increase in credit risk

Under IFRS 9, when determining whether the risk of default on a fi nancial instrument has increased signifi cantly since initial recognition, the Group will consider reasonable and supportable information that is relevant and available without undue cost or eff ort, including both quantitative and qualitative information and analysis, based on the Group’s historical experience and expert credit assessment and including forward-looking information.

The Group is currently formulating its detailed methodologies for assessing increases in credit risk under IFRS 9.

The Group expects that identifying whether a signifi cant increase in credit risk has occurred for an exposure will entail comparing:

o The remaining lifetime probability of default (PD) at the reporting date; with

o The remaining lifetime PD for this point in time that was estimated at the time of initial recognition of the exposure.

The criteria for determining whether credit risk has increased signifi cantly vary by portfolio and will include quantitative changes in PDs and qualitative factors, including a backstop based on delinquency. The Group is yet to develop quantitative modelling for determining whether credit risk has increased signifi cantly using credit risk grades. As a backstop, as required by IFRS 9, the Group will presumptively consider that a signifi cant increase in credit risk occurs no later than when an asset is more than 30 days past due. The Group expects to determine days past due by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received.

Inputs into measurement of ECL

The key inputs into the measurement of ECL are likely to be the term structures of the following variables:

o Probability of default (PD)

o Loss given default (LGD)

o Exposure at default (EAD)

In general, the Group expects to derive these parameters from internally developed statistical models and other historical data. They will be adjusted to refl ect forward-looking information as described below.

PD estimates are estimates at a certain date, which the Group expects to calculate based on internal experience. Transition matrix was developed for corporate and retail portfolios based on delinquency information. If an exposure migrates between delinquency classes, then this will lead to a change in the estimate of the associated PD. Under IFRS 9, the Group will incorporate forward-looking information into both its assessment of whether the credit risk of an instrument has increased signifi cantly since its initial recognition and its measurement. This process would involve developing two or more additional economic scenarios and considering the relative probabilities of each outcome. External information may include economic data and forecasts published by governmental bodies and monetary authorities in the countries where the Group operates and selected private-sector and academics forecasters. The Group is in the process of identifying and documenting key drivers of credit risk and credit losses for each portfolio of fi nancial instruments and, using an analysis of historical data, estimating relationships between macro-economic variables and credit risk and credit losses.

LGD is the magnitude of the likely loss if there is a default. The Group plans to estimate LGD parameters based on


63



Inputs into measurement of ECL (cont’d)

the history of recovery rates of claims against defaulted counterparties. It expects the LGD models to consider the structure, collateral, seniority of the claim, counterparty industry and recovery costs of any collateral that is integral to the fi nancial asset.

EAD represents the expected exposure in the event of a default. The Group expects to derive the EAD from the current exposure to the counterparty and potential changes to the current amount under the contract including amortisation. The EAD of a fi nancial asset will be the gross carrying amount at default. For lending commitments and fi nancial guarantees, the EAD will consider the amount drawn, as well as potential future amounts that may be drawn or repaid under the contract, which will be estimated based on historical observations. For some fi nancial assets, the Group expects to determine EAD by modelling the range of possible exposure outcomes at various points in time.


The most signifi cant impact on the Bank’s fi nancial statements from the implementation of IFRS 9 is expected to result from the new impairment requirements. Management has performed an initial quantitative assessment of the expected impact of IFRS 9 on its fi nancial asset as 31 December 2017. Impairment losses will increase and become more volatile for fi nancial instruments in the scope of the IFRS 9 impairment model.

The Bank has estimated that, on the adoption of IFRS 9 at 1 January 2018, the impact of the change in loss allowance (before tax) will be between GH¢(40.83 million) and GH¢40.62 million. The initial quantitative impact does not represent the exact impact of IFRS 9 as at 1 January 2018 since the Group is in the process of building and testing models, assembling data and calibrating the impairment stage transfer criteria. The Group has not yet quantifi ed the impact of IFRS 9 impairment losses reported by its subsidiary, therefore the impact is unknown.

(iii) Classifi cation – Financial Liabilities

IFRS 9 largely retains the existing requirements in IAS 39 for the classifi cation of fi nancial liabilities. The Group has not designated debt securities issued at FVTPL, therefore IFRS 9 is not considered to have a signifi cant impact on the measurement of its fi nancial liabilities.

(iv) Disclosure

IFRS 9 will require extensive new disclosures, in particular about credit risk and ECLs. The Group’s preliminary assessment included an analysis to identify data gaps against current processes and the Group plans to implement the system and controls changes that it believes will be necessary to capture the required data.

(v) IFRS 9 impairment strategy

The Group’s IFRS 9 implementation process is governed by an implementation Committee whose members include representatives from Risk, Finance, Internal Audit, Treasury and IT functions. The implementation committee meets at least fortnightly or as agreed by committee members. The terms of reference of the committee include:

• Ensuring that the Group implements IFRS 9 successfully

• Identifying gaps (systems, tools, processes, etc) in the Group’s current set up and preferred solutions on how to bridge the gap

• Identify knowledge and skill gaps and propose training and development programmes

• Liaise with the Bank of Ghana, auditors and other stakeholders towards meeting the requirements of IFRS 9

• Provide updates on IFRS 9 project to the Board and Management

• Any other activities that will ensure a smooth implementation of IFRS 9

The Bank has completed the preliminary impact assessment and most of the accounting analysis and has commenced work on the design and build models, processes and controls.


64




The Bank will apply IFRS 9 as issued in July 2014 initially on 1 January 2018. Based on the assessments undertaken to date, the total estimated adjustment (net of tax) of the adoption of IFRS 9 on the opening balance of the Bank’s equity at 1 January 2018 is within the range of GH¢(40.83 million) and GH¢ 40.62 million representing about 14% change. The Bank has estimated that the adoption of IFRS 9 will have no impact on credit risk reserve since the loss allowance under IAS 39 and IFRS 9 is greater than the provisions determined using the Bank of Ghana prudential guidelines.

The above assessment is preliminary because not all transition work has been fi nalised. The actual impact of adopting IFRS 9 on 1 January 2018 may change because:

• IFRS 9 will require the Group to revise its accounting processes and internal controls and these changes are not yet complete;

• The Group is in the process of building and testing models, assembling data and calibrating the impairment stage transfer criteria;

• The Group has not fi nalised the testing and assessment of controls over changes in its governance framework;

• The Group is refi ning and fi nalising its models for ECL calculation; and

• The new accounting policies, assumptions, judgements and estimation techniques are subject to change until the Group fi nalises its fi rst fi nancial statements that include the date of initial application.

(vi) Impact on Capital planning

The Group’s lead Regulator (Bank of Ghana) is currently consulting on possible transition provisions relating to the implementation of IFRS 9 under which some of the capital impact of IFRS 9 would be phased over two years. The Bank of Ghana (“BoG”) has provided tentative guidelines on regulatory treatment of accounting provisions on capital. BoG recommended that Banks should compare Common Equity Tier 1 (CET1) capital based on the opening statement of fi nancial position using ECL accounting with CET1 capital based on the closing statement of fi nancial position (ie the day prior to the opening day) under the existing incurred loss accounting approach. Where this shows a reduction in CET1 capital due to an increase in provisions, net of tax eff ect, the decline in CET1 capital would be spread for regulatory purposes over two years.

The Bank has estimated that on adoption of IFRS 9, the impact on regulatory capital will be approximately between the ranges on 23.82% and 22.44%.

(vii) Transition

Changes in accounting policies resulting from the adoption of IFRS 9 will generally be applied retrospectively, except as described below:

o The Group plans to take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classifi cation and measurement (including impairment) changes. Diff erences in the carrying amounts of fi nancial assets and fi nancial liabilities resulting from the adoption of IFRS 9 will generally be recognised in retained earnings and reserves as at 1 January 2018.

• IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based fi ve-step analysis of transactions to determine whether, how much and when revenue is recognised

IFRS 15 is eff ective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

The adoption of IFRS 15 is considered to have an impact on the Group’s fees and commission income. The Group earns fees and commission income (other than fees included in the calculation of the eff ective interest rates) on the provision of services. The Group is yet to perform a detailed impact assessment of IFRS 15 on its fees and commission


65



IFRS 15 Revenue from Contracts with Customers (cont’d)

income, therefore the impact of IFRS 15 is currently unknown.

• IFRS 16 Leases

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use (ROU) asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as fi nance or operating leases.

IFRS 16 replaces existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The standard is eff ective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16.

The Group is yet to start an initial assessment of the potential impact on its consolidated and separate fi nancial statements.

Transition

The Group currently plans to apply IFRS 16 initially on 1 January 2019.

As a lessee, the Group can either apply the standard using a:

• Retrospective approach - the standard is applied retrospectively to each prior reporting period presented applying IAS 8; or

• Modifi ed retrospective approach with optional practical expedients - the standard is applied retrospectively with the cumulative eff ect of initially applying IFRS 16 recognised in the opening balance of retained earnings (or other component of equity, as appropriate) at the date of initial application, instead of restating comparative information.

The lessee applies the election consistently to all of its leases. The Group has not yet determined which transition approach to apply. As a lessor, the Group is not required to make any adjustments for leases except where it is an intermediate lessor in a sub-lease. The Group has not yet quantifi ed the impact on its reported assets and liabilities of the adoption of IFRS 16. The quantitative eff ect will depend on, inter alia, the transition method chosen, the extent to which the Group uses the practical expedients and recognition exemptions, and any additional leases that the Group enters into. The Group expects to disclose its transition approach and quantitative information before adoption.

5. FINANCIAL RISK MANAGEMENT

Eff ective risk management is of critical importance and key to the delivery of sustainable returns for shareholders. Risk taking is an inherent part of the Bank’s business activities and is defi ned as the possibility of losing some or all of an original investment. Risk management systems and governance structures are designed to reduce earnings volatility and achieve an appropriate balance between risk and reward and increased profi tability.

Current changes to regulations in the banking sector reinforce the Bank’s commitment to embed an enhanced risk based culture throughout the Bank. Risk policies and procedures are regularly reviewed to refl ect these changes as well as best practices in the market. The Bank has upgraded its risk infrastructure to enhance eff ective management and also to meet future regulatory demands.

Risk Management Framework

The risk management framework consists of a comprehensive set of policies, standards, procedures and processes designed to identify, measure, monitor, mitigate and report signifi cant risk exposure in a consistent and eff ective manner across the Bank. Through the framework, risk is managed at enterprise-wide level, with the objective of maximizing risk-adjusted returns within the context of the Bank’s risk appetite.


66



Risk Management Framework (cont’d)

The most important types of risk are credit risk, liquidity risk, market risk and operational risk.

• Credit risk refl ects the possible inability of a customer to meet his/her repayment or delivery obligations.

• Market risk, which includes foreign currency risk, interest rate risk and equity price risk, is the risk of fl uctuation in asset and commodity values caused by changes in market prices and yields.

• Liquidity risk results in the inability to accommodate liability maturities and withdrawals, fund asset growth or otherwise meet contractual obligations at reasonable market rates.

• Operational risk is the potential loss resulting from inadequate or failed internal processes, systems, people, legal issues, external events and non-compliance with regulatory issues.

The Board of Directors have overall responsibility for the establishment and oversight of the Bank’s risk management framework. The Board’s commitment to good risk management is supported by their continuing professional development in the fi eld of risk management and their support for the implementation and continued improvement of the risk management framework within the Bank.

The Board’s Risk and Capital Management Committee is responsible for monitoring risk positions which the Bank holds in the normal course of business as well as those risks that the Bank may take in alignment with approved limits and controls. The Committee also reviews the adequacy of the risk management framework in relation to risks faced by the Bank on an ongoing basis. The Committee is assisted in its functions by a risk management structure, which ensures consistent assessment of risk management controls and procedures.

The Board Audit Committee is responsible for reviewing the Bank’s accounting policies, the contents of fi nancial reports, disclosure controls and procedures, management’s approach to internal controls, the adequacy and scope of the external and internal audit functions, compliance with regulatory and fi nancial reporting requirements, overseeing relationships with the Bank’s external auditors and providing assurance to the Board that executive management’s control assurance process are complete and eff ective. It also has responsibility for Compliance & Anti-Money Laundering.

The Executive Credit Committee is the highest management level authority on all counterparty risk exposures. It oversees control and management of all policies, processes and procedures relating to the Bank’s lending function. The scope of risks covered by this Committee includes Credit Risk, Concentration Risk and Country & Cross Border Risk.

The Operational Risk and Control Committee is an Executive Management Committee with responsibility for monitoring and managing the level of operational risk exposures within the Bank as well as overseeing the control and management of all policies, processes and procedures relating to the Bank’s Operational Risk function.

Asset and Liability Committee (ALCO) is a Management Committee which is a decision making body for developing policies relating to all asset and liability management (ALM) matters.

The Risk Management Division (RMD) is responsible for developing and monitoring the Bank’s risk management policies and procedures over specifi ed areas on a day-to-day basis. It reports regularly to the Board on its activities through the Executive Management Committee. Policies and procedures have been established to identify and analyze risks faced by the Bank and put appropriate controls in place to monitor adherence to these policies. These are reviewed regularly to refl ect changes in market conditions, products and services off ered.

Functional units or divisions are accountable for executing specifi c aspects of the Bank’s activities. Authority is delegated to the Head of each functional unit by the CEO. The Head of each function in turn delegates responsibility to individual staff for carrying out specifi c tasks in accordance with delegated authorities and within the procedural disciplines of the Bank.

Functions are organized in accordance with the “Three Lines of Defence” governance model. The three lines of defence are constituted as follows:


67



Risk Management Framework (cont’d)

• The fi rst line of defence consists of functional units that are responsible for actual activities of the business and are responsible for managing their own risks.

• The second line of defence consists of functional units that are responsible for monitoring activities of the fi rst line of defence and exercising risk control. The second line functions of the Bank are Governance, Risk, Compliance and Control, Product Control and Performance Monitoring.

• The third line of defence consists of functional units that are responsible for reviewing the activities of line 1 and 2 functions at appropriate frequencies, assessing the robustness of control and mandating corrective action or improvement where necessary. Risk Assurance services are provided to the Bank by the Internal Audit function.

Risk Appetite

Risk appetite is an expression of the amount of risk the Bank is willing to take in pursuit of its strategic objectives, refl ecting capacity to sustain losses and continue to meet obligations arising from a range of diff erent stress conditions. This is used to maximize returns without exposing the Bank to levels of risk above its appetite.

In particular, the risk appetite framework assists in protecting fi nancial performance and improves management’s responsiveness. It also improves control and co-ordination of risk-taking across business units and identifi es unused risk capacity in pursuit of profi table opportunities. The Bank’s risk appetite statement is under review by the Board and will form the basis for establishing the risk parameters within which business units must operate, including policies, concentration limits and business mix.

5.1 Credit Risk Management

Credit risk is the potential for fi nancial loss due to the failure of counterparties to meet obligations to pay the Bank in accordance with agreed terms. Credit risk is the most important risk for the Bank’s business.

Management carefully manages its exposure to credit risk. Credit risk is attributed to both on-balance sheet fi nancial instruments such as loans, overdrafts, cash held with other fi nancial institutions, debt securities and other bills, investments, and acceptances and credit equivalent amounts related to off -balance sheet fi nancial items. The Bank’s approach to credit risk management preserves the independence and integrity of risk assessment, while being integrated into business management processes. Credit risk is managed through a framework that sets out policies and procedures covering the identifi cation, measurement and management of credit risk. The goal of credit risk management is to evaluate and manage credit risk in order to further enhance a strong credit culture.

Credit Concentration Risk

Credit concentration risk is the risk of loss to the Bank arising from excessive concentration of exposure to a single counterparty, industry sector, product or geographic area. Large exposure limits have been established under the Bank’s credit policy in order to avoid excessive losses from any single counter-party who is unable to fulfi l its payment obligations. These risks are monitored on an ongoing basis and subject to annual or more frequent reviews when considered necessary

Credit Mitigation

Potential credit losses from any given account, customer or portfolio are mitigated using a range of tools such as collateral, credit insurance and other guarantees. The reliance that can be placed on these mitigants is carefully assessed in the light of issues such as legal certainty and enforceability, market valuation and counterparty risk of the guarantor. Risk mitigation policies determine the eligibility of collateral types.

Collateral

In order to proactively respond to credit deterioration, the Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advanced, which is common practice. Collateral is held to mitigate credit risk exposures. Collateral types that are eligible for risk mitigation include: cash; residential, commercial and industrial property; property and equipment such as motor vehicles, plant and machinery,


68



Collateral (cont’d)

bank guarantees and fl oating charge over other assets.

The risk mitigation policy prescribes the frequency of valuation for diff erent collateral types, based on the level of price volatility of each type of collateral and the nature of the underlying product or risk exposure. Where appropriate, collateral values are adjusted to refl ect current market conditions. Longer-term fi nance and lending to corporate entities are generally secured; individual credit facilities are generally unsecured. In addition, in order to minimize credit losses, the Bank seeks additional collateral from counterparties as soon as impairment indicators are noticed for relevant individual loans and advances.

Credit Related Commitments

Documentary and commercial letters of credit are written undertakings by the Bank on behalf of a customer authorizing a third party to draw drafts on the Bank up to a stipulated amount under specifi c terms and conditions. The primary purpose of these instruments is to ensure that funds are available to a customer as required.

Guarantees and standby letters of credit carry less risk than direct loans. These arrangements are collateralized by the underlying shipments of goods. The likelihood of loss amounts is far less than the entire commitment as most commitments to extend credit of this nature are contingent upon the customer maintaining specifi c cash in margin accounts. The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.

Impairment Policies

Impairment

The Group regards a loan and advance or a debt security as impaired in the following circumstances.

• There is objective evidence that a loss event has occurred since initial recognition and the loss event has an impact on future estimated cash fl ows from the asset.

• A loan is overdue for 90 days or more.

The identifi cation and assessment of impairment is as described under Note 3.9. The estimated period between a loss and its identifi cation in general, vary between three months and twelve months and in exceptional cases, longer periods. In any decision relating to the raising of impairment charges, the Bank attempts to balance economic conditions, local knowledge and experience. Where it is considered that there is no realistic prospect of recovering an element of an account against which an impairment charge has been raised, then that amount is written off after obtaining approval from the Board as well as the relevant regulatory authorities.

A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be impaired unless there is evidence that the risk of not receiving contractual cash fl ows has reduced signifi cantly and there are no other indicators of impairment.

Loans that are subjected to a collective ‘loss incurred but not reported’ (IBNR) provision are not considered impaired.

Early Alerts

Corporate Banking, Consumer Banking and Small and Medium Scale Enterprise (SME) accounts are placed on early alert status when they display signs of weakness. Such accounts and portfolios are subject to a dedicated process of oversight involving Senior Risk Offi cers and Remedial Offi cers in the Loans Recovery Unit. The approach to Early Alerts monitoring include but not limited to:

• Deterioration of the customer’s fi nancial position

• Delays by customers in settling their obligations

• Overdraft balances exceeding approved limits

• Clear indications of the customer not being able to settle commitments on due dates


69



Early Alerts (cont’d)

Customer payment plans are re-evaluated and remedial actions agreed and monitored until delinquency situations are resolved. Remedial actions include, but are not limited to, exposure reduction, security enhancement and movement of the account to the Loans Recovery Unit.

Write off policy

The Bank writes off loans and advances balance (and any related allowances for impairment losses) when the Bank’s Credit determines that the loans and advances and securities are uncollectible. This determination is reached after considering information such as the occurrence of signifi cant changes in the borrower’s fi nancial position such that the borrower can no longer discharge the obligation, or that proceeds from collateral will not be suffi cient to pay back the entire exposure. For smaller balance standardised loans, charge off decisions generally are based on a product specifi c past due status. Related and connected lending is not permitted to be written off unless with the approval of the Bank of Ghana and the Board of Directors.

Regulatory Impairment

An account is considered to be in default when payment is not received on due date. Accounts that are overdue by more than 90 days are considered delinquent. These accounts are closely monitored and subjected to a collection process. The process used for impairment is based on Bank of Ghana guidelines which recognize cash as a credit mitigant. Individual impairments are made for outstanding amounts depending on the number of days past due with full impairment made after 360 days. In certain situations such as bankruptcy, fraud and death, the loss recognition process is accelerated. Loans and advances less than 90 days past due are generally not considered impaired unless other information is available to indicate otherwise.

The Bank of Ghana Guideline is as set out below:

Grade Description Number of days Impairment (%)

Current Less than 30 days 1

Other Loans Exceptionally Mentioned (OLEM) 30 to less than 90 days 10

Substandard 90 to less than 180 days 25

Doubtful 180 to less than 360 days 50

Loss 360 days and above 100

(i) Analysis of credit quality

The tables below set out information about the credit quality of fi nancial assets and the allowance for impairment held by the Group against those assets:


70



Maximum exposure to credit risk – Group

Loans& advances

to customers

Loans& advances

to banksInvestmentsecurities*

Cashequivalents

LendingCommitments

& fi nancialguarantees

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Gross carrying amount 2,362,922 1,651,999 224,950 434,152 4,894,356 2,633,116 837,147 1,030,881 - -

Amount committed/ guaranteed - - - - - - - - 405,979 510,035

Allowance for impair-ment (263,592) (239,022) - - - - - - - -

2,099,330 1,412,977 224,950 434,152 4,894,356 2,633,116 837,147 1,030,881 405,979 510,035

At amor-tised cost

Grade 1-3: low fair risk – current 2,035,861 1,326,009 224,950 434,152 4,884,277 2,633,116 837,147 1,030,881 - -

Grade 4-5: watch list –

OLEM 91,758 101,141 - - - - - - - -

Grade 6: substandard 14,906 8,972 - - - - - - - -

Grade 7: doubtful 15,994 9,179 - - - - - - - -

Grade 8: loss 204,403 206,698 - - - - - - - -

Total gross amount 2,362,922 1,651,999 224,950 434,152 4,884,277 2,633,116 837,147 1,030,881 - -


Net carry-ing amount 2,099,330 1,412,977 224,950 434,152 4,884,277 2,633,116 837,147 1,030,881 - -

*Investment securities comprise investment securities and trading assets


71



Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


At fair value through profi t or loss

Grade 1-3: low fair risk – current - - - - 10,079 - - - - -

Total carry-ing amount - - - 10,079 - - - - -

Loans with renegoti-ated terms

Gross carry-ing amount 86,942 17,560 - - - - - - - -


Net carry-ing amount 46,005 1,245 - - - - - - -

**Impaired amount after rene-gotiation 46,005 1,245 - - - - - - - -

Off bal-ance sheet Maximum exposure

Lending commit-ments

Grade 1-4: low-fair risk - - - - - - - - 106,520 168,759


Maximum exposure to credit risk – Group (cont’d)

*Investment securities comprise investment securities and trading assets**Impaired amount after renegotiation

This represents the carrying amount of renegotiated loans and advances which have been tested for individual impairment and found to be impaired.

72



Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Financial guarantees-


Loss - - - - - - - - - -

Total expo-sure - - - - - - - - 405,979 510,035

Neither past due nor Impaired (Gross)

Grade 1-4: Low-fair risk 2,127,619 1,408,056 224,950 434,152 4,894,356 2,633,116 837,147 1,030,881 405,979 510,035

**Past due but not impaired (Gross)

Grade 5: Watch list - - - - - - - - - -

Grade 6: Substan-dard 95 166 - - - - - - - -

Grade 7: Doubtful - - - - - - - - - -

Grade 8: Loss 623 1,606 - - - - - - - -

718 1,772 - - - - - - - -




**Past due but not impaired

These are loans and advances that are past due and have been assessed for impairment. However, these loans and advances are sup-ported by signifi cant collaterals and cash fl ows extracted from agreed repayment terms. The present values of these estimated cash fl ows exceed the carrying amounts of the loans and advances.

73




Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Individual-ly impaired (Gross)

Grade 1–4: Low–fair risk - 19,016 - - - - - - - -

Grade 5: Watch list - 79 - - - - - - - -

Grade 6: Substan-dard 14,811 8,806 - - - - - - - -

Grade 7: Doubtful 15,994 9,179 - - - - - - - -

Grade 8: Loss 203,780 205,091 - - - - - - - -

234,585 242,171 - - - - - - - -

Allowance for impair-ment

Individual 210,488 219,479 - - - - - - - -

Collective 53,104 19,543 - - - - - - - -

Total allow-ance for impair-ment 263,592 239,022 - - - - - - - -



74



Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Gross carry-ing amount 2,362,293 1,651,370 224,950 434,152 4,888,234 2,626,946 837,147 1,030,881 - -

Amount committed/

guaran-teed - - - - - - - - 405,979 510,035


2,099,330 1,412,977 224,950 434,152 4,888,234 2,626,946 837,147 1,030,881 405,979 510,035

At amor-tised cost

Grade 1-4: low fair risk – current 2,035,861 1,326,009 224,950 434,152 4,878,155 2,626,946 837,147 1,030,881 - -

Grade 5: watch list – OLEM 91,758 101,141 - - - - - - - -

Grade 6: substandard 14,906 8,972 - - - - - - - -

Grade 7: doubtful 15,994 9,179 - - - - - - - -

Grade 8: loss 203,774 206,069 - - - - - - - -

Total gross amount 2,362,293 1,651,370 224,950 434,152 4,878,155 2,626,946 837,147 1,030,881 - -


Net carry-ing amount 2,099,330 1,412,977 224,950 434,152 4,878,155 2,626,946 837,147 1,030,881 - -

At fair value through profi t or loss


Maximum exposure to credit risk – Bank

*Investment securities comprise investment securities and trading assets**Past due but not impaired

These are loans and advances that are past due and have been assessed for impairment. However, these loans and advances are supported by signifi cant collaterals and cash fl ows extracted from agreed repayment terms. The present values of these estimated cash fl ows exceed the carrying amounts of the loans and advances.

75



Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Grade 1-3: low fair risk – current - - - - 10,079 - - - - -

Total gross amount - - - - 10,079 - - - - -

Loans with renegoti-ated terms

Gross carry-ing amount 86,942 17,560 - - - - - - - -


Net carrying amount 46,005 1,245 - - - - - - - -

**Impaired amount after rene-gotiation 46,005 1,245 - - - - - - - -

Off balance sheet maximum exposure

Lending commit-ments


Financial guarantees


*Investment securities comprise investment securities and trading assets**Impaired amount after renegotiationThis represents the carrying amount of renegotiated loans and advances which have been tested for individual impairment and found to be impaired.


Maximum exposure to credit risk – Bank (cont’d)

76



Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Total expo-sure - - - - - - - - 405,979 510,035

Neither past due nor Impaired (Gross)

Grade 1-4: Low-fair risk 2,127,619 1,408,056 224,950 434,152 4,885,589 2,626,946 837,147 1,030,881 405,979 510,035

**Past due but not impaired (Gross)

Grade 5: Watch list - - - - - - - - - -

Grade 6: Substan-dard 95 166 - - - - - - - -

Grade 7: Doubtful - - - - - - - - - -

Grade 8: Loss 623 1,606 - - - - - - - -

718 1,772 - - - - - - - -

Individually impaired (Gross)

Grade 1–4: Low–fair risk - 19,016 - - - - - - - -

Grade 5: Watch list - 79 - - - - - - - -

Grade 6: Substan-dard 14,811 8,806 - - - - - - - -

Grade 7: Doubtful 15,994 9,179 - - - - - - - -

*Investment securities comprise investment securities and trading assets.



77



Loans& advances

to customers

Loans& advances


Cashequivalents

LendingCommitments


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Grade 8: Loss 203,151 204,462 - - - - - - - -

233,956 241,542 - - - - - - - -

Allowance for impair-ment

Individual 209,859 218,850 - - - - - - - -

Collective 53,104 19,543 - - - - - - - -

Total allow-ance for impair-ment 262,963 238,393 - - - - - - - -


The above represents the maximum exposure to credit risk at 31 December 2017 and 2016, without taking account of any collateral held or other credit enhancements attached. For on-balance-sheet assets, the exposures set out above are based on the gross carrying amounts reported less allowance for impairment.

As shown above, 29% of the total maximum exposure is derived from loans and advances to customers and banks (2016: 37%) whilst investments held in investment securities represents 56% (2016: 42%).

Management is confi dent in its ability to continue controlling and managing exposure to credit risk arising from both its loans and advances portfolio and investment securities.

(a) Financial assets neither past due nor impaired

Loans and advances to customers

The credit quality of the portfolio of loans and advances to customers that were neither past due nor impaired is assessed by reference to an internal rating system adopted by the Bank. Loans graded as current loans are considered as neither past due nor impaired.

Cash and cash equivalents

Included in the Group and Bank’s cash and cash equivalents are balances held with Bank of Ghana and other fi nancial institutions. None of these balances were impaired at the year end and at 31 December 2016.

Investment securities

The Group and Bank’s investments comprise investment in investment securities as well as equity securities. None of these investments were impaired at the year end and at 31 December 2016.



78



Advances to Banks

These are the Bank’s placements with other Banks and fi nancial institutions. None of these placements were impaired at the year end and at 31 December 2016.

(b) Loans and advances past due but not impaired

Loans and advances where contractual interest or principal payments are past due and have been assessed for impairment, however are not treated as impaired when the discounted cash fl ows of the forced sale value of the collateral exceeds the carrying amounts of the loans and advances.

(c) Loans and advances renegotiated

Loans with renegotiated terms are loans that have been restructured due to deterioration in the borrower’s fi nancial position and where the Group has made concessions that it would not otherwise consider. The status or risk grade of a restructured facility does not change until there is evidence of performance over a reasonable period of time. The revised terms usually include extending the maturity, changing the timing of interest payments, modifying and extending payment arrangements and approving external management plans. Corporate loans are subject to forbearance activities. An existing loan whose terms have been modifi ed may be derecognised and the renegotiated loan recognised as a new loan at fair value in accordance with the accounting policy set out in Note 3.9 (c).

Irrespective of whether loans with renegotiated terms have been derecognised, they remain disclosed as impaired until there is suffi cient evidence to demonstrate a signifi cant reduction in the risk of non-payment of future cash fl ows and there are no other indicators of impairment.

(ii) Concentrations of credit risk – Group

The Group monitors concentrations of credit risk by industry, product and geographical location. An analysis of concentrations of credit risk from loans and advances, lending commitments, fi nancial guarantees and investment securities is shown below:

Loans& advances

to customersAdvancesto banks

Investmentsecurities*

Cashequivalents

Commitments& fi nancialguarantees

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016



Amount commit-ted/guar-anteed - - - - - - - - 405,979 510,035

Concentra-tion by sector:

Construc-tion 56,996 33,835 - - - - - - - -



79



Loans& advances



Cashequivalents


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Agricul-ture, for-estry and fi shing 43,264 22,905 - - - - - - - -

Mining and quar-rying 2,979 2,886 - - - - - - - -

Manufac-turing 187,576 25,198 - - - - - - - -

Electricity, gas and water 20,549 55,212 - - - - - - - -

Com-merce and fi nance 817,831 508,322 224,950 434,152 - - 105,843 326,129 405,979 510,035

Transport, storage and com-munica-tion 34,753 41,223 - - - - - - -

Services 244,940 199,376 - - - - - - - -

Miscella-neous 954,034 763,042 - - - - 213,885 432,354 - -

Govern-ment - - - - 4,894,356 2,633,116 517,419 272,398 - -

2,362,922 1,651,999 224,950 434,152 4,894,356 2,633,116 837,147 1,030,881 405,979 510,035

Concentra-tion by product:

Term loans 1,860,770 1,201,907 - - - - - - - -

Overdraft 445,639 408,461 - - - - - - - -

Staff loans 56,513 41,631 - - - - - - - -

Bonds and guarantees - - - - - - - - 80,417 115,950

Letters of credit - - - - - - - - 219,042 225,326

Loan com-mitments - - - - - - - - 106,520 168,759


(ii) Concentrations of credit risk – Group (cont’d)


80



Loans& advances



Cashequivalents


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


2,362,922 1,651,999 - - - - - - 405,979 510,035

Concentra-tion by location

Within Ghana 2,362,922 1,651,999 189,031 404,107 4,894,356 2,633,116 753,244 854,752 405,979 510,035

Outside Ghana - - 35,919 30,045 - - 83,903 176,129 - -

2,362,922 1,651,999 224,950 434,152 4,894,356 2,633,116 837,147 1,030,881 405,979 510,035

Key ratio for loans and advances are as follows:

The total impairment charge for the year represents 2.11% of gross loans at the year-end (2016: 1.64%)

The total amount of allowance for impairment represents 11% of gross loans at the year-end (2016: 14%). Gross non-performing loans amounted to GH¢234,674,000 (2016: GH¢224,849,000) representing a ratio of 11% at year end (2016:15%).

The maximum amount due from staff during the year amounted to GH¢58,217,450 (2016: GH¢41,631,000).

(ii) Concentrations of credit risk – Bank

The Group monitors concentrations of credit risk by industry, product and geographical location. An analysis of concentrations of credit risk from loans and advances, lending commitments, fi nancial guarantees and investment securities is shown below:

Loans& advances



Cashequivalents


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016



Amount commit-ted/guar-anteed - - - - - - - 405,979 510,035

Concentra-tion by sector:


(ii) Concentrations of credit risk – Group (cont’d)


81



Loans& advances



Cashequivalents


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Construc-tion 56,996 33,835 - - - - - - - -

Agricul-ture, for-estry and fi shing 43,264 22,905 - - - - - - - -

Mining and quarrying 2,979 2,886 - - - - - - - -

Manufac-turing 187,576 25,198 - - - - - - - -

Electricity, gas and water 20,549 55,212 - - - - - - - -

Com-merce and fi nance 817,202 507,693 224,950 434,152 - - 105,843 326,129 405,979 510,035

Transport, storage and com-munication 34,753 41,223 - - - - - - - -

Services 244,940 199,376 - - - - - - - -

Miscella-neous 954,034 763,042 - - - - 213,885 432,354 - -

Govern-ment - - - - 4,888,234 2,626,946 517,419 272,398 - -

2,362,293 1,651,370 224,950 434,152 4,888,234 2,626,946 837,147 1,030,881 405,979 510,035

Concentra-tion by product

Term loans 1,860,141 1,201,278 - - - - - - - -

Overdraft 445,639 408,461 - - - - - - - -

Staff loans 56,513 41,631 - - - - - - - -

Bonds and guarantees - - - - - - - - 80,417 115,950

Letters of credit - - - - - - - - 219,042 225,326

Loan com-mitments - - - - - - - - 106,520 168,759

2,362,293 1,651,370 - - - - - - 405,979 510,035


(ii) Concentrations of credit risk – Bank (cont’d)


82



Loans& advances



Cashequivalents


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016


Concentra-tion by location

Within Ghana 2,362,293 1,651,370 189,031 404,107 4,888,234 2,626,946 753,244 854,752 405,979 510,035

Outside Ghana - - 35,919 30,045 - - 83,903 176,129 - -

2,362,293 1,651,370 224,950 434,152 4,888,234 2,626,946 837,147 1,030,881 405,979 510,035


Key ratio for loans and advances are as follows:

The total impairment charge for the year represents 2.11% of gross loans at the year-end (2016: 1.64%)

The total amount of allowance for impairment represents 11.13% of gross loans at the year-end (2016: 14.44%).

Gross non-performing loans amounted to GH¢234,674,000 (2016: GH¢224,220,000) representing a ratio of 10% at year end (2016: 14%).

The maximum amount due from staff during the year amounted to GH¢58,217,450 (2016: GH¢41,631,000).

(iii) Collateral held and other credit enhancements, and their fi nancial eff ect

The Bank holds collateral and other credit enhancements against certain types of its credit exposures. The table below sets out the principal types of collateral held against diff erent types of fi nancial assets.

Type of exposure – Group and Bank

Percentage of exposure that is subject to collateral

requirement Principal type of collateral held

Dec. 2017 Dec. 2016

Loans and advances to customersCorporate term loans and overdraft

100% 100% Legal mortgages over commercial and residential properties;debentures and fl oating charges

Personal loans 0% 0%

Staff loans 70% 67%

Collateral on impaired exposures

The general creditworthiness of a corporate customer tends to be the most relevant indicator of credit quality of a loan extended to it. However, collateral provides additional security and the Group generally requests that corporate borrowers provide it. The Group may take collateral in the form of a fi rst charge over real estate, fl oating over all corporate assets and other liens and guarantees. Because of the Group’s focus on corporate customers’


(ii) Concentrations of credit risk – Bank (cont’d)

83



Collateral on impaired exposures (cont’d)

creditworthiness, the Group does not routinely update the valuation of collateral held against all loans to corporate customers. Valuation of collateral is performed at the time of borrowing and generally are not updated except when a loan is individually assessed as impaired. Valuation of collaterals is updated in a three year cycle for loans whose credit risk has deteriorated signifi cantly and are being monitored more closely.

Collateral is not normally held for loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity. Collateral is not usually held against investment securities, and no such collateral was held at 31 December 2017. Collateral values of impaired loans are at cash fl ows of the forced sale values less estimated costs of sale as discounted to present values.

For impaired loans, the Group obtains appraisals of collaterals because the current values of the collaterals are an input to the impairment measurement. An estimate of the fair value of collateral and other credit enhancements held against loans and advances to customers and Banks is shown below:

Loans& advances


2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Against individually impaired

Property 22,367 21,059 - -

Against past due but not impaired

Property 1,594 4,835 - -

23,961 25,894 - -

(iv) Impaired loans and advances

See Note 3.9 for the defi nition of “impaired fi nancial asset”.

The table below sets out a reconciliation of changes in the carrying amount of impaired loans and advances to customers.

2017 2016

GH¢’000 GH¢’000

Impaired loans and advances to customers at 1 January 241,541 227,886Change in allowance for impairment 793 492Classifi ed as impaired during the year 22,087 23,342Transferred to not impaired during the year 717 1,773Net repayments (1,656) (10,279)Amount written off (25,334) (547)Recoveries of amounts previously written off (4,192) (1,126)Disposals - -

Other movements - -

Impaired loans and advances to customers at 31 December 233,956 241,541

See Notes 17 and 26 for details of impairment allowances for loans and advances to customers. During the year, loans and advances to customers amounting to GH¢396,004,510 (2016: GH¢546,646) were written off due to unrealistic prospects of recovery.

Set out below is an analysis of the gross and net (of allowance for impairment) amounts of individually impaired loans and advances by risk grade.


84



Loans and Advances to Customers

Gross Impairment Allowance

Net

GH¢’000 GH¢’000 GH¢’000

The Group

December 2017

Grade 6: Substandard 14,811 (9,876) 4,935

Grade 7: Doubtful 15,994 (11,872) 4,122

Grade 8: Loss 203,780 (188,740) 15,040

234,585 (210,480) 24,097

December 2016


Grade 7: Doubtful 9,179 (7,999) 1,180

Grade 8: Loss 205,091 (188,070) 17,021

223,076 (203,425) 19,651

The Bank

December 2017


Grade 7: Doubtful 15,994 (11,872) 4,122

Grade 8: Loss 203,151 (188,111) 15,040

233,956 (209,859) 24,097

December 2016


Grade 7: Doubtful 9,179 (7,999) 1,180

Grade 8: Loss 204,462 (187,441) 17,021

222,447 (202,796) 19,651

Assets obtained by taking possession of collateral

The Group’s policy is to pursue timely realisation of the collateral in an orderly manner. The Group does not generally use the non-cash collateral for its own operations. Repossessed items are expected to be sold within one year of repossession. Repossessed items are not recognised in the Group’s books. Proceeds from their sale are used to reduce related outstanding indebtedness.

The Group did not hold any fi nancial and non fi nancial assets resulting from taking possession of collaterals held as security against loans and advances at the reporting date.

Off setting fi nancial assets and fi nancial liabilities

The Group did not hold any fi nancial assets and fi nancial liabilities that are off set in the statement of fi nancial position at the reporting date.

5.2 Liquidity Risk Management

Liquidity risk is the risk that the Group will not be able to meet payment obligations associated with fi nancial liabilities when they fall due and replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and fulfi l commitments to lend. It is the policy of the Group to maintain adequate liquidity at all times and to be in a position to meet all obligations, repay depositors, fulfi l commitments to lend and meet any other commitments as and when they fall due.


85



Liquidity Risk Management (cont’d)

The management of liquidity risk is governed by the Bank’s liquidity policy. Responsibility for the management of liquidity risk lies with the Bank’s Assets and Liability Management Committee (ALCO), which is chaired by an Executive Director. ALCO is responsible for both statutory and prudential liquidity as well as compliance with regulatory requirements.

The primary objective of liquidity risk management is to provide a planning mechanism for unanticipated changes in demand or needs for liquidity created by customer behaviour or abnormal market conditions. ALCO emphasizes the maximization and preservation of customer deposits and other funding sources. ALCO also monitors deposit rates, levels, trends and signifi cant changes.

Liquidity is managed on a short to medium-term basis. In the short term, the focus is on ensuring that cash fl ow demands can be met as and when required. The focus, in the medium term, is on ensuring that the balance sheet remains structurally sound and aligned to the Bank’s strategy.

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 diversifi ed by type and maturity, represent a stable source of surplus funds. Lending is normally funded by liability in the same currency.

The Bank also maintains signifi cant levels of marketable securities to meet compliance with prudential investment of surplus funds. ALCO oversees structural foreign currency and interest rate exposures that arise within the Bank. These responsibilities are coordinated by ALCO during monthly meetings. The Bank places low reliance on interbank funding and foreign markets.

Exposure to liquidity risk

The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. For this purpose, net liquid assets include cash and cash equivalents and investment securities for which there is an active and liquid market less any deposits from banks, debt securities issued, other borrowings and commitments maturing within the next month. Details of the reported Bank’s ratio of net liquid assets to deposits from customers at the reporting date and during the reporting period were as follows:

2017 2016

% %At 31 December 80.81 85.73Average for the period 81.31 73.57Maximum for the period 99.58 87.38Minimum for the period 71.64 66.06

Maturity analysis for fi nancial assets and liabilities

The amounts disclosed in the table are the remaining contractual undiscounted cash fl ows which include estimated interest payment, whereas the Group manages liquidity risk.


86



Up to 1 month 1-3 months

3-12 months

Over 1 year Total

Carrying Amount

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Group

At 31 December 2017

Financial liabilities by type

Non-derivative liabilities

Deposits from customers 5,520,643 761,711 638,974 2,713 6,924,041 6,924,041Borrowings 304,088 20,486 623,048 11,483 959,105 959,105Other liabilities 21,048 13,739 168,238 44,822 247,847 247,847Financial guarantee contracts 46,641 74,267 133,875 44,676 299,459 -Unrecognised loan commitments 106,520 - - - 106,520 -

5,998,940 870,203 1,564,135 103,694 8,536,972 8,130,993Financial assets by type

Non-derivative assets

Cash and cash equivalents 1,001,572 21,112 - - 1,022,684 1,022,684Advances to banks - 31,913 193,037 - 224,950 224,950Investment securities 2,030,925 1,200,055 829,693 823,594 4,884,277 4,884,277Trading Assets 10,079 - - - 10,079 10,079Loans and advances to customers 136,421 282,749 516,640 1,163,520 2,099,330 2,099,330Investments (other than securities) 4,639 - - 2,263 6,902 6,902Other assets 17,499 11,585 32,086 668,531 729,701 729,701Assets held for managing liquidity risk 3,201,135 1,547,414 1,571,456 2,657,908 8,977,923 8,977,923

Liquidity gap (2,797,805) 677,211 7,321 2,554,214 440,951 846,930

At 31 December 2016



Deposits from customers 4,160,875 61,268 37,790 - 4,259,933 4,259,933

Borrowings 202,132 307,459 2,954 10,736 523,281 523,281

Other liabilities 63,165 20,863 7,292 - 91,320 91,320

Financial guarantee contracts 11,771 122,655 70,659 136,191 341,276 -

Unrecognised loan commitments 168,759 - - - 168,759 -

4,606,702 512,245 118,695 146,927 5,384,569 4,874,534

Financial assets by type


Cash and cash equivalents 1,176,600 3,375 - - 1,179,975 1,179,975

Advances to banks 840 3,997 400,000 29,315 434,152 434,152

Investment securities 902,236 1,156,415 333,169 241,296 2,633,116 2,633,116

Loans and advances to customers 63,653 279,003 441,993 628,328 1,412,977 1,412,977

Notes to the Financial Statements (cont’d)Maturity analysis for fi nancial assets and liabilities (cont’d)

87




3-12 months

Over 1 year Total

Carrying Amount

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Investments (other than securities) 3,856 - - 491 4,347 4,347

Other assets 13,291 5,670 4,109 66,365 89,435 89,435

Assets held for managing liquidity risk 2,160,476 1,448,460 1,179,271 965,795 5,754,002 5,754,002

Liquidity gap (2,446,226) 936,215 1,060,576 818,868 369,433 879,468

The Bank

At 31 December 2017



Deposits from customers 5,552,792 761,711 638,974 2,713 6,956,190 6,956,190

Borrowings 304,088 20,486 623,048 11,483 959,105 959,105

Other liabilities 21,048 13,672 145,545 44,822 225,087 225,087



6,031,089 870,136 1,541,442 103,694 8,546,361 8,140,382




Advances to banks - 31,913 193,037 - 224,950 224,950

Investment securities 2,024,813 1,200,055 829,693 823,594 4,878,155 4,878,155

Trading Assets 10,079 - - - 10,079 10,079

Loans and advances to customers 136,421 282,749 516,640 1,163,520 2,099,330 2,099,330


Other assets 17,499 11,585 32,123 668,531 729,738 729,738

Assets held for managing liquidity risk 3,194,053 1,547,414 1,571,493 2,655,758 8,968,718 8,968,718

Liquidity gap (2,837,036) 677,278 30,051 2,552,064 422,357 828,336

At 31 December 2016



Deposits from customers 4,180,717 61,268 37,790 - 4,279,775 4,279,775

Borrowings 202,132 307,459 2,954 10,736 523,281 523,281


Maturity analysis for fi nancial assets and liabilities (cont’d)

The Group (cont’d)

88




3-12 months

Over 1 year Total

Carrying Amount

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Other liabilities 63,109 20,863 7,292 - 91,264 91,264



4,626,488 512,245 118,695 146,927 5,404,355 4,894,320




Advances to banks 840 3,997 400,000 29,315 434,152 434,152

Investment securities 896,066 1,156,415 333,169 241,296 2,626,946 2,626,946

Loans and advances to customers 63,653 279,003 441,993 628,328 1,412,977 1,412,977


Other assets 13,330 5,670 4,109 66,365 89,474 89,474

Assets held for managing liquidity risk 2,152,897 1,448,460 1,179,271 965,417 5,746,045 5,746,045

Liquidity gap (2,473,591) 936,215 1,060,576 818,490 341,690 851,725

The amounts in the table above have been compiled as follows:

• Non-derivative fi nancial liabilities and fi nancial assets – undiscounted cash fl ows, which include estimated interest payment

• Issued fi nancial guarantee contracts, and unrecognised loan commitments – Earliest possible contractual maturity. For issued fi nancial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.

As part of the management of liquidity risk arising from fi nancial liabilities, the Group holds liquid assets comprising cash and cash equivalents, and investments in government securities, which can be readily sold to meet liquidity requirements

As part of the management of liquidity risk arising from fi nancial liabilities, the Group holds liquid assets comprising cash and cash equivalents, and investments in government securities, which can be readily sold to meet liquidity requirements.

Financial assets available to support future funding

In the normal course of business, assets are sometimes pledged for specifi c purposes. The table below sets out the availability of the Group’s fi nancial assets to support future funding.


Maturity analysis for fi nancial assets and liabilities (cont’d)

The Bank (cont’d)

89



Unencumbered

NoteAvailable as

collateral Other* Total

The Group

31 December 2017

Cash and cash equivalents 22 1,022,684 - 1,022,684

Loans and advances to customers 26 - 2,099,330 2,099,330

Advances to banks 25 224,950 - 224,950

Investment securities 23 4,363,355 - 4,363,355

Trading assets 24 10,079 - 10,079

Investments (other than securities) 27 6,902 - 6,902

Non-fi nancial assets - 375,210 375,210

Total assets 5,627,970 2,474,540 8,102,510

31 December 2016





Investments (other than securities) 27 3,856 491 4,347


Total assets 3,147,799 1,643,517 4,791,316

The Bank

31 December 2017





Trading assets 24 10,079 - 10,079

Investments (other than securities) 27 3,782 - 3,782


Total assets 5,630,972 2,474,540 8,105,512


Financial assets available to support future funding (cont’d)

90



Unencumbered

NoteAvailable as

collateral Other* Total

The Bank

31 December 2016





Investments (other than securities) 27 2,408 113 2,521


Total assets 3,140,181 1,643,139 4,783,320

* Represents assets that are not restricted for use as collateral, but the Group would not consider them as readily available to secure funding in the normal course of business.

Financial assets pledged as collateral

The Group pledged GH¢394,302,557 (2016: GH¢531,300,000) of its investments in Government securities as collateral to Bank of Ghana and SSNIT. The Group has not received collateral that it is permitted to sell or re-pledge in the absence of default.

5.3 Market Risk

Management of Market RiskThe Group takes on exposure to market risk, which is the risk of potential loss of earnings or economic value due to adverse changes in fi nancial market rates or prices. Market risks arise from open positions in interest rates, currency and equity products, all of which are exposed to general and specifi c market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates and equity prices. The Group’s exposure to market risk arises principally from customer-driven transactions and pension obligations. The Group does not engage in proprietary trading.

Foreign Exchange Exposure

Foreign exchange or currency risk is the risk of loss that results from changes in foreign exchange rates. The Bank’s exposure to foreign currency risk is limited to non-trading book and is strictly controlled by the Treasury and Risk Management units. Non-trading book refers to the assets of the Bank that are not traded or held with the intent of trading. The Group’s foreign exchange exposures are principally derived from customer-driven transactions.

The table below summarises the Group’s signifi cant exposure to foreign exchange risk at 31 December.

EUR USD GBP

The Group and The Bank GH¢‘000 GH¢‘000 GH¢‘000

At 31 December 2017

Assets

Cash and cash equivalents 4,855 19,559 4,103

Advances to banks 761 5,576 1,222


Financial assets available to support future funding (cont’d)

91



EUR USD GBP

Loans and advances to customers 780 79,779 -

Total 6,396 104,914 5,325

Liabilities

Deposits due to customers 14,714 162,961 7,337

Net on balance sheet position (8,318) (58,047) (2,012)

Credit commitments 4,518 34,226 8,919

At 31 December 2016

Assets

Cash and cash equivalents 5,736 39,817 3,705

Advances to banks - 5,686 1,277

Loans and advances to customers 38 29,166 -

Total 5,774 74,669 4,982

Liabilities

Deposits due to customers 6,641 72,299 7,040

Net on balance sheet position (867) 2,370 (2,058)

Credit commitments 3,899 40,040 10,913

The following mid inter-bank exchange rates were applied during the year:

Average Rate Reporting Rate

GH¢ to 2017 2016 2017 2016

USD 1 4.3373 3.9299 4.4157 4.2002

EUR 1 4.9563 4.3344 5.2964 4.4367

GBP 1 5.6538 5.2753 5.9669 5.1965

Foreign Exchange Sensitivity

The following table shows the eff ect of a strengthening or weakening of GH¢ against the currencies listed below on profi t or loss and equity. This sensitivity analysis indicates the potential impact on profi t or loss and equity based on foreign currency exposures recorded at 31 December. (See “currency risk” above).


Foreign Exchange Exposure (cont’d)

92



It does not represent actual or future gains or losses.

A strengthening/weakening of the GH¢ by the rates shown in the table against the following currencies at 31 December would have impacted equity and profi t 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 2016.

As of 31 Dec 2017 2016

in GH¢’000 % Change

Profi t or loss impact:

StrengtheningEquity impact: Strengthening % Change

Profi t or loss impact:

StrengtheningEquity impact: Strengthening

US$ ±1 (2,563) (2,563) ±1 100 100

EUR ±1 (441) (441) ±1 (38) (38)

GBP ±1 (120) (120) ±1 (107) (107)

A 1% weakening of the GH¢ against the above currencies at 31 December would have had an equal but opposite eff ect.

Interest Rate Risk

Interest rate exposure

Interest rate risk is the risk that future cash fl ows or fair values of a fi nancial instrument will fl uctuate because of changes in market interest rates. The Group is exposed to the eff ects of fl uctuations in the prevailing levels of market interest rates on both fair value and cash fl ow risks. Interest margins may increase as a result of such changes, which may cause losses to be incurred, in the event of unexpected movements.

The Asset and Liability Management (“ALM”) process, managed through ALCO, is used to manage interest rate risks associated with the non-trading book. Gap analysis is used in measuring interest rate risk. It compares the values of interest rate sensitive assets and liabilities that mature or are re-priced at various time periods in the future. Subjective judgment/assumptions are made about the behaviour of assets and liabilities which do not have specifi c contractual maturity or re-pricing dates.

Interest rate risk evaluates potential volatility to net interest income caused by changes in market interest rates and represents the most signifi cant market risk exposure to the Group’s non-trading book. The management of interest rate risk against interest rate gap limits is supplemented by monitoring sensitivity of the Group’s fi nancial assets and liabilities to various standard and non-standard interest rate scenarios.

Up to 1 month

1-3 months

3-12 months Over 1 year Total

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Group

At 31 December 2017

Assets

Investment securities 2,030,935 1,200,055 829,693 823,594 4,884,277

Trading assets 10,079 - - - 10,079

Advances to banks - 31,913 193,037 - 224,950

Loans and advances to customers 136,421 282,749 516,640 1,163,520 2,099,330

Total fi nancial assets 2,177,435 1,514,717 1,539,370 1,987,114 7,218,636

Notes to the Financial Statements (cont’d)Foreign Exchange Sensitivity (cont’d)

93



Up to 1 month

1-3 months


GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Liabilities

Interest bearing deposits 2,845,692 761,711 638,974 2,713 4,249,090

Borrowings 304,088 20,486 623,048 11,483 959,105

Total fi nancial liabilities 3,149,780 782,197 1,262,022 14,196 5,208,195

Total interest rate gap (972,345) 732,520 277,348 1,972,918 2,010,441

At 31 December 2016

Assets

Investment securities 902,236 1,156,415 333,169 241,296 2,633,116

Advances to banks 840 3,997 400,000 29,315 434,152

Loans and advances to customers 63,653 279,003 441,993 628,328 1,412,977

Total fi nancial assets 966,729 1,439,415 1,175,162 898,939 4,480,245

Liabilities

Interest bearing deposits 2,219,049 61,268 37,790 - 2,318,107

Borrowings 202,132 307,459 2,954 10,736 523,281

Total fi nancial liabilities 2,421,181 368,727 40,744 10,736 2,841,388

Total interest rate gap (1,454,452) 1,070,688 1,134,418 888,203 1,638,857

The Bank

At 31 December 2017

Assets

Investment securities 2,024,813 1,200,055 829,693 823,594 4,878,155

Trading assets 10,079 - - - 10,079

Advances to banks - 31,913 193,037 - 224,950

Loans and advances to customers 136,421 282,749 516,640 1,163,520 2,099,330

Total fi nancial assets 2,171,313 1,514,717 1,539,370 1,987,114 7,212,514

Liabilities

Interest bearing deposits 2,845,692 761,711 638,974 2,713 4,249,090

Borrowings 304,088 20,486 623,048 11,483 959,105

Total fi nancial liabilities 3,149,780 782,197 1,262,022 14,196 5,208,195

Total interest rate gap (978,467) 732,520 277,348 1,972,918 2,004,319

Notes to the Financial Statements (cont’d)Interest rate exposure (cont’d)


94



Up to 1 month

1-3 months


GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 31 December 2016

Assets

Investment securities 896,066 1,156,415 333,169 241,296 2,626,946

Advances to banks 840 3,997 400,000 29,315 434,152

Loans and advances to customers 63,653 279,003 441,993 628,328 1,412,977

Total fi nancial assets 960,559 1,439,415 1,175,162 898,939 4,474,075

Liabilities

Interest bearing deposits 2,219,049 61,268 37,790 - 2,318,107

Borrowings 202,132 307,459 2,954 10,736 523,281

Total fi nancial liabilities 2,421,181 368,727 40,744 10,736 2,841,388

Total interest rate gap (1,460,622) 1,070,688 1,134,418 888,203 1,632,687

Analysis of the Group’s sensitivity to market interest

Standard scenarios that are considered on a monthly basis include a 200 basis point (bp) parallel fall or rise in market interest rates. A change of a 200 basis points in interest rates at the reporting date would have impacted equity and profi t or loss by the amounts shown below:

2017 2016

Increase200bp

Decrease200bp

Increase200bp

Decrease200bp

GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Group

Interest income impact 23,757 (23,757) 20,393 (20,393)

Interest expense impact (5,851) 5,851 (2,677) 2,677

Net impact 17,906 (17,906) 17,716 (17,716)

The Bank

Interest income impact 23,739 (23,739) 20,367 (20,367)

Interest expense impact (5,851) 5,851 (2,677) 2,677

Net impact 17,888 (17,888) 17,690 (17,690)

Market risk monitoring and control

The Risk Management Division (RMD) is responsible for monitoring the Bank’s exposure to market risk. The analysis of impact of unlikely but plausible events by means of scenario analysis enables management to gain a better understanding of risks that the Bank is potentially exposed to under adverse conditions.

Notes to the Financial Statements (cont’d)Interest rate exposure (cont’d)

The Bank (cont’d)

95



5.4 Operational Risk

Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, systems or human factors, or from external events. Operational risk is inherent in the Group’s business activities and, as with other risk types, is managed through an overall framework designed to balance strong corporate oversight with well-defi ned independent risk management. The Group endeavours to minimize operational losses by ensuring that eff ective infrastructure, controls, systems and individuals are in place throughout the organization.

Operational Risk Framework

To monitor, mitigate and control operational risk, the Group maintains a system of policies and has established a framework for assessing and communicating operational risks as well as the overall eff ectiveness of the internal control environment across business lines. Each major business segment is expected to implement an operational risk process consistent with the requirements of this framework. The process for operational risk management includes the following steps:

• identify and assess key operational risks;

• establish key risk indicators;

• produce comprehensive operational risk reports; and

• prioritize and ensure adequate resources to actively improve the operational risk environment and mitigate emerging risks.

The operational risk standards facilitate the eff ective communication and mitigation actions both within and across businesses. The Group is committed to continuously enhancing its operational risk framework to encourage a culture of eff ective accountability and responsibility.

5.5 Compliance and Regulatory Risk

Compliance and Regulatory risk includes the risk of non-compliance with regulatory requirements. The Group’s Compliance Unit is responsible for establishing and maintaining an appropriate framework for the Group’s compliance policies and procedures. Compliance with such policies and procedures is the responsibility of all managers. However, the Compliance Unit monitors and reports on compliance to Executive Management and the Board. The Group generally complied with regulatory requirements.

5.6 Capital Management

The Group’s policy is to maintain a strong capital base so as to maintain investor and market confi dence and sustain future development of the business. The impact of the level of capital on shareholders’ return is also taken into consideration in addition to security aff orded by sound capital positions. The Bank complied with the statutory capital requirements throughout the period under review. The subsidiary is not subject to externally imposed capital requirements.

Capital adequacy and the use of regulatory capital are monitored daily by management, employing techniques based on guidelines developed by the Basel Committee as implemented by Bank of Ghana for supervisory purposes. The required information is fi led with Bank of Ghana on a monthly basis. Bank of Ghana requires each bank to:

• Hold a minimum regulatory capital of GH¢120 million; and

• Maintain a ratio of total regulatory capital to risk-weighted assets plus risk weighted off balance sheet assets above a required minimum of 10%.

The Bank generally complied with all externally imposed capital requirements.

The Bank’s capital is divided into two tiers:

Tier 1 capital includes ordinary paid up capital and disclosed reserves, excluding the value of assets such as investment in other banks and fi nancial institutions.


96



Capital Management (cont’d)

Tier 2 capital is made up of reserves such as unrealized gains on equity instruments classifi ed as available for sale.

Non-risk weighted assets are classifi ed as cash on hand, claims on government and claims on the Central Bank. Risk-weighted assets are determined according to specifi ed requirements that seek to refl ect the varying levels of risk attached to assets and off -balance sheet exposures.

The table below summarizes the composition of regulatory capital and ratios of the Group and the Bank.

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Tier 1 Capital

Share capital 100,000 100,000 100,000 100,000

Statutory reserve 274,062 247,473 274,062 247,473

Retained earnings 870,198 759,477 789,264 700,426

Credit risk reserve - 3,412 - 3,412

Intangibles/other assets (31,113) (76,211) (31,113) (76,211)

Investments in capital of other Banks

and fi nancial/other institutions (95,385) (50,346) (32,054) (30,794)

Losses not provided for - (3,412) - (3,412)

Total qualifying tier 1 capital 1,117,762 980,393 1,100,159 940,894

Tier 2 Capital

Fair value reserve 2,005 (1,066) 194 (752)

Other reserve (32,106) (49,469) (50,370) (35,447)

Total qualifying tier 2 capital (30,101) (50,535) (50,176) (36,199)

Total regulatory capital 1,087,661 929,858 1,049,983 904,695

Risk weighted assets

On balance sheet 3,548,846 2,058,386 3,549,389 2,059,179

Off balance sheet 299,459 341,277 299,459 341,277

50% of net open position (156,932) 18,363 (156,932) 18,363

100% of previous 3 years average

annual gross income 923,371 755,149 871,746 758,270

Total risk weighted assets 4,614,744 3,173,175 4,563,662 3,177,089

Capital adequacy ratio 23.57% 29.30% 23.01% 28.48%

(i) New Capital RequirementsIn September 2017, the Bank of Ghana announced a new minimum capital requirement, as part of a holistic fi nancial sector reform plan to further develop, strengthen, and modernize the fi nancial sector to support the government’s economic vision and transformational agenda.

In line with the above, and in accordance with Section 28 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Bank of Ghana (BOG) increased the minimum capital requirement for commercial Banks from GHS 120 million to GHS 400 million.


97



(i) New Capital Requirements (cont’d)

The Directive required all Banks to comply with the new capital requirement by the end of December 2018. Non-compliance with the new minimum paid up capital requirement shall be dealt with in accordance with section 33 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

Banks are required to meet the new capital requirements using either of the following methods:

• Fresh capital injection;

• Capitalisation of income surplus; and

• A combination of fresh capital injection and capitalisation of income surplus.

GCB Bank Limited intends to meet the new capital requirement by capitalisation of income surplus to ensure compliance with the new requirement by December 2018.

(ii) Implementation of Basel II

Bank of Ghana (BoG), in its bid to ensure the stability of the Ghanaian Banking Sector and keep pace with global development and growth in risk management practices rolled out, in October 2017, a Capital Requirement Directive (CRD) which require banks to implement Pillar 1 principles of Basel II. BoG requires banks to commence the implementation of the directive from 1 January 2018 with an eff ective compliance date of 1 July 2018.

The Capital Requirement Directive has four main parts. The fi rst part provides principles for capital management and the constituents of eligible regulatory capital. The second, third and fourth parts provide guidance on the role of the board in the management of credit, operational and market risk respectively. Guidelines for the computation of credit risk weighted asset, operational and market risk capital charges are also detailed in the CRD document.

It is expected that the implementation of Basel principles will have a signifi cant impact on the overall risk culture of banks and will ultimately enhance the risk and capital management of banks.

6. FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of fi nancial assets and fi nancial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other fi nancial instruments, the Group determines fair values using other valuation techniques.

For fi nancial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks aff ecting the specifi c instrument.

(a) Valuation models

The Group measures fair values using the following fair value hierarchy, which refl ects the signifi cance of inputs used in making the measurements.

• Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

• Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all signifi cant inputs are directly or indirectly observable from market data.

• Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a signifi cant eff ect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which signifi cant unobservable adjustments or assumptions are required to refl ect diff erences between the instruments.


98



(a) Valuation models (cont’d)

Valuation techniques include net present value and discounted cash fl ow models, comparison with similar instruments for which market observable prices exist and other valuation models. Assumptions and inputs used in valuation techniques include risk free and benchmark interest rates, credit spreads and other premiums used in estimating discount rates and foreign currency exchange rates and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that refl ects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

The Group uses widely recognised valuation models for determining the fair value of common and more simple fi nancial instruments that use only observable market data and require little management judgment and estimation.

Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determining fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specifi c events and general conditions in the fi nancial markets.

(b) Valuation framework

The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions. A fair value measurement requires an entity to determine all the following:

(i) The particular asset or liability that is the subject of measurement (consistently with the unit of account);

(ii) The principal (or most advantageous) market for the asset or liability;

(iii) The valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs are categorized

(c) Financial instruments measured at fair value – fair value hierarchy

The following table analyses fi nancial instruments measured at fair value at the reporting date, by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of fi nancial position.

The Group The Bank

Level 1 Level 1

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Investment in equity securities – AFS 4,639 3,856 3,669 2,408Investment securities – FVTPL 10,079 - 10,079 -

14,718 3,856 13,748 2,408


99



(d) Financial instruments not measured at fair value

The following table sets out the fair values of fi nancial instruments not measured at fair value in the statement of fi nancial position, analysed by reference to levels in the fair value hierarchy into which each fair value measurement is categorized:

Level 1 Level 2 Level 3 Total fair valueTotal carrying

amount

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Group

December 2017

Assets

Cash and cash equivalents - 1,022,684 - 1,022,684 1,022,684

Advances to banks - - 224,950 224,950 224,950

Loans and advances to customers - - 2,143,541 2,143,541 2,099,330

Investment securities - 4,059,361 - 4,059,361 4,884,277

Other assets - - 729,701 729,701 729,701

- 5,082,045 3,098,192 8,180,237 8,960,942

Liabilities

Customer deposits - 6,771,282 - 6,771,282 6,924,041

Borrowings - - 960,597 960,597 959,105

Other liabilities - - 247,847 247,847 247,847

- 6,771,282 1,208,444 7,979,726 8,130,993

December 2016

Assets





Other assets - - 89,435 89,435 89,435

- 3,812,083 1,928,069 5,740,152 5,749,655

Liabilities


Other liabilities - - 91,320 91,320 91,320

Borrowings - - 523,057 523,057 523,281

- 4,259,872 614,377 4,874,249 4,874,534


100



Level 1 Level 2 Level 3 Total fair valueTotal carrying

amount

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Bank

December 2017

Assets





Other assets - - 729,738 729,738 729,738

- 5,075,919 3,098,229 8,174,148 8,954,857

Liabilities


Borrowings - - 960,597 960,597 959,105

Other liabiliti es - - 247,847 247,847 247,847

- 6,803,431 1,208,444 8,011,875 8,163,142

December 2016

Assets




Investment securiti es - 2,632,108 - 2,632,108 2,626,946

Other assets - - 89,474 89,474 89,474

3,812,083 2,020,943 5,833,026 5,743,524

Liabilities


Other liabiliti es - - 91,264 91,264 91,264

Borrowings - - 523,057 523,057 523,281

4,279,714 614,321 4,894,035 4,894,320

The fair value of investment securities is based on market prices or broker/dealer price quotations. Where this information is not available, fair value is determined using quoted market prices for securities with similar maturity and yield characteristics.

Where applicable, the fair value of loans and advances to customers is based on observable market transactions. Where observable market transactions are not available, fair value is estimated using valuation models such as discounted cash fl ow techniques which represents the discounted amount of estimated future cash fl ows expected to be received. Expected cash fl ows are discounted at current market rates to determine the fair value. For collateral-dependent impaired loans, the fair value is measured based on the value of the underlying collaterals.

Notes to the Financial Statements (cont’d)(d) Financial instruments not measured at fair value (cont’d)

101



The fair value of advances to and from Banks is based on discounted cash fl ow techniques applying the rates of similar maturities and terms.

The fair value of term deposits by customers is estimated using discounted cash fl ow techniques, applying the rates that are off ered for deposits of similar maturities and terms. The fair value of deposits payable on demand is the amount payable at the reporting date.

Fair values of borrowings are estimated using discounted cash fl ow techniques, applying rates that are off ered for borrowings of similar maturities and terms.

No fair value disclosures are provided for investments in other equity securities that are measured at cost less any impairment losses because their fair values cannot be measured reliably. These investments are unquoted equity investments with no observable market data. There is no active market for these investments and the Group does not intend to dispose off these investments in the foreseeable future.

7. CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The table below provides reconciliation between the items in the statement of fi nancial position and the categories of fi nancial instrument.

Fair value through profi t or

loss

Held-to-Maturity

Loans and receivables

Available-for-sale

Other Financial

Liabilities

Total carrying amount

Note GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Group

31 December 2017

Cash and cash equivalents 22 - - 1,022,684 - - 1,022,684

Investment securities 23 - 4,884,277 - - - 4,884,277

Trading Assets 24 10,079 - - - - 10,079

Advances to banks 25 - - 224,950 - - 224,950

Loans and advances to customers 26 - - 2,099,330 - - 2,099,330

Investments (other than securities) 27 - - - 6,902 - 6,902

Other assets 32 - - 729,701 - - 729,701

Total assets 10,079 4,884,277 4,076,665 6,902 - 8,977,923

Deposits from customers 33 - - - - 6,924,041 6,924,041

Other liabilities 34 - - - - 247,887 247,887

Borrowings 35 - - - - 959,105 959,105

Total liabilities - - - - 8,131,033 8,131,033

Notes to the Financial Statements (cont’d)(d) Financial instruments not measured at fair value (cont’d)

102




loss

Held-to-Maturity


Available-for-sale

Other Financial

Liabilities



31 December 2016





Investments (other than securities) 27 - - 4,347 - 4,347

Other assets 32 - - 89,435 - - 89,435

Total assets 2,633,116 3,116,539 4,347 - 5,754,002



Borrowings 35 - - - - 523,281 523,281


Bank

31 December 2017



Trading Assets 24 10,079 - - - - 10,079



Investments (other than securities) 27 - - - 3,782 - 3,782

Other assets 32 - - 729,738 - - 729,738

Total assets 10,079 4,878,155 4,076,702 3,782 - 8,968,718



Borrowings 35 - - - - 959,105 959,105

Notes to the Financial Statements (cont’d)7. Classifi cation of fi nancial assets and fi nancial liabilities (cont’d)


103




loss

Held-to-Maturity


Available-for-sale

Other Financial

Liabilities




31 December 2016





Investments (other than securities) 27 - - 2,521 - 2,521

Other assets 32 - - 89,474 - - 89,474

Total assets - 2,626,946 3,116,578 2,521 - 5,746,045



Borrowings 35 - - - - 523,281 523,281


8. OPERATING SEGMENTSa. Segment information

For performance management purposes, the Bank is organized into 3 core segments based on their products and services. These are:• Consumer Banking;• Corporate Banking; and • Treasury

The Consumer Banking arm of the business concentrates mainly on individual customers and therefore provides the required platform to enhance service delivery to that segment. The coverage of this function also extends to sole proprietorships and very small and medium scale enterprises.

Corporate Banking is responsible for the Business Banking customer profi le. The function is sub-categorized into Multi-national Corporate, Large Local Corporate, Development Organizations, Public Sector and Small and Medium Scale Enterprises. Depending on customer profi ling, clients of this function are mostly relationship managed with a few of them managed on portfolio basis.

The Treasury function provides the expertise and platform for the centralized management of the Group’s market risk exposures. The function manages the funding requirements and ensures that the Bank is well capitalized to boost investor confi dence and sustain future development of the business.

Management monitors the operating results of business segments separately for the purpose of making decisions about resource allocation and for assessing performance. Segment performance is evaluated based on operating profi t or loss together with the underlying balance sheet position for the reporting period. To be able to assess each of the three businesses in a fairer and consistent manner, common corporate operating expenses are allocated to segments based on an established cost-sharing policy that permits a reasonable and consistent allocation of central management expenses.

Notes to the Financial Statements (cont’d)7. Classifi cation of fi nancial assets and fi nancial liabilities (cont’d)

The Bank (cont’d)

104


b. Information about reportable segments

Consumer Corporate Treasury Total

GH¢’000 GH¢’000 GH¢’000 GH¢’000

December 2017

External Revenue


Inter-segment revenue 283,211 198,766 (481,977) -

Net fees and commission income 104,243 63,580 2,473 170,296

Net trading income - 11,120 29,900 41,020

Other income/other revenue 2,290 4,004 5,207 11,501

Total segment revenue 533,345 377,809 206,063 1,117,217


Loans - (1,543) - (1,543)

Operating expenses (412,909) (244,006) (99,961) (756,876)

Other material non-cash items:

Impairment loss on loans and advances (17,302) (32,602) - (49,904)

Reportable segmental profi t before tax 103,134 99,658 106,102 308,894

Reportable segment assets 979,819 1,119,511 5,113,184 7,212,514

Reportable segment liabilities 2,051,253 4,904,937 959,105 7,915,295

December 2016

External Revenue


Inter-segment revenue 240,773 158,490 (399,263) -

Net fees and commission income 78,427 62,715 717 141,859

Net trading income - 6,858 20,491 27,349

Other income/other revenue 2,424 5,162 3,213 10,799

Total segment revenue 487,434 354,455 222,606 1,064,495


Loans - (912) - (912)

Operating expenses (342,503) (168,569) (79,198) (590,270)

Other material non-cash items:

Impairment loss on loans and advances (9,344) (17,187) - (26,531)

Reportable segmental profi t before tax 135,587 167,787 143,408 446,782

Reportable segment assets 641,953 771,024 3,317,798 4,730,775

Reportable segment liabilities 2,487,046 1,772,887 523,281 4,783,214



105



c. Reconciliations of information on reportable segment

i. Assets

2017 2016

GH¢’000 GH¢’000

Total assets for reportable entities 7,212,514 4,730,775

Unallocated amounts 2,345,637 1,318,829

Total assets 9,558,151 6,049,604

ii. Liabilities

2017 2016

GH¢’000 GH¢’000

Total liabilities for reportable entities 7,915,295 4,783,214

Unallocated amounts 529,706 251,278

Total liabilities 8,445,001 5,034,492

d. Geographic information

In Ghana Outside Ghana Total

2017 2016 2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Revenues 1,111,576 1,055,947 5,641 6,745 1,117,217 1,062,692

No individual customer contributed 10% or more to revenue.

Segment revenue is based on the geographical location of customers, whilst segment asset is based on the geographical location of assets.

In Ghana Outside Ghana Total

2017 2016 2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Non-current assets

Property and equipment 222,861 191,062 - - 222,861 191,062

Intangible assets 152,349 38,987 - - 152,349 38,987

Total 375,210 230,049 - - 375,210 230,049


106



9. INTEREST INCOME

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash and short term funds 96,511 73,901 96,511 72,582Investment securities 673,887 538,981 672,976 538,981Loans and advances 417,455 406,773 417,455 406,773

1,187,853 1,019,655 1,186,942 1,018,336

Total interest income calculated using the eff ective interest method reported above that relate to fi nancial assets not carried at FVTPL are GH¢ 1,088,402,000 (2016: GH¢ 945,754,000).

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

10. INTEREST EXPENSE

Financial liabilities measured at amortised cost

Current and savings accounts 76,765 76,464 76,765 76,464

Time and other deposits 135,353 43,776 135,353 43,776

Borrowings 80,424 13,608 80,424 13,608

292,542 133,848 292,542 133,848

11. FEE AND COMMISSION INCOME

Commission on letters of credit and guarantees 6,233 6,596 6,233 6,596Commission on foreign services 11,173 10,347 11,173 10,347Commission on turnover 54,778 54,353 54,778 54,353Processing and facility fees 26,432 21,558 26,432 21,558Other fees and commissions 109,171 81,731 109,171 81,731

207,787 174,585 207,787 174,585

12. FEE AND COMMISSION EXPENSE

Fees and commission expense 37,491 32,726 37,491 32,726

13. NET TRADING INCOME

Foreign exchange 40,361 27,349 40,361 27,349

Fixed income trading 659 - 659 -

41,020 27,349 41,020 27,349

14. OTHER REVENUE

Dividend income 15,640 14,214 5,691 7,171

Bad debt recoveries 1,746 1,825 1,746 1,825

17,386 16,039 7,437 8,996


107



The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

15. LOSS ON DERECOGNITION OF RENEGOTIATED ASSETS

Loss on derecognition of loans and advances 1,543 912 1,543 912

During the year, GCB Bank Limited renegotiated the terms of fi ve (5) existing facilities due to deterioration in the cus-tomers’ fi nancial position. The renegotiated terms of four out of the fi ve loans, resulted in a signifi cant modifi cation of the existing facilities resulting in derecognition of the existing facilities and the recognition of new facilities. The diff er-ence between the carrying amount of the existing facilities and the restructured amount of the new facilities is recog-nised as gain or loss on derecognition of renegotiated assets.

16. OTHER INCOME

Other income 2,483 1,126 3,498 1,126

Rental Income 319 561 319 561

Profi t on sale of property and equipment 247 116 247 116

3,049 1,803 4,064 1,803

17. IMPAIRMENT CHARGE ON LOANS AND ADVANCES

Impairment charge on loans and advances to customers 49,904 27,160 49,904 26,531

Analysis of impairment charge

Individual impairment 20,535 55,808 20,535 55,179

Collective impairment 33,561 3,039 33,561 3,039

Recoveries of loans previously impaired (4,192) (31,140) (4,192) (31,140)

Write off s - (547) - (547)

49,904 27,160 49,904 26,531

18. OTHER OPERATING EXPENSES

Technology and communication 70,634 72,665 70,634 72,665

Advertising and marketing 1,745 2,470 1,745 2,470

Training 7,482 12,815 7,482 12,815

Audit fees 1,400 735 1,364 696

Donations (Note 39) 5,785 2,785 5,785 2,785

Utilities 28,682 23,114 28,682 23,114

Other professional fees 20,133 13,254 20,133 13,254

Rent and rates 19,636 9,566 19,636 9,566

Repairs and maintenance 19,619 11,431 19,619 11,431

Security services 11,455 7,887 11,455 7,887

Travelling 10,414 6,059 10,414 6,059

Business promotion 2,556 7,092 2,556 7,092

Settlement of legal cases (Note 38) 50,160 - 50,160 -

Other administrative expenses 86,673 72,193 86,647 74,092

336,374 242,066 336,312 243,926


108



The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

19. PERSONNEL EXPENSES

Staff expenses comprise:

Wages and salaries 143,362 111,169 143,362 111,169

Staff allowances 107,047 77,273 107,047 77,273

Performance award 37,333 22,323 37,333 22,323

Social security fund contributions 17,525 12,934 17,525 12,934

Provident fund contributions 14,826 12,489 14,826 12,489

Retirement benefi t obligations 17,866 17,093 17,866 17,093

Restructuring costs 1,207 32,603 1,207 32,603

Other staff costs 21,494 16,512 21,494 16,512

Directors fees 2,147 2,623 2,147 2,623

362,807 305,019 362,807 305,019

The number of persons employed by the Bank at the year-end was 1,915 (2016: 1,532).

Following the assumption of certain assets and liabilities of the erstwhile UT Bank and Capital Bank, GCB Bank Limited took over the management of the assumed Banks which resulted in 825 staff residing under the management of GCB Bank Limited. These are not included in the number of staff disclosed above.

20. INCOME TAX

a. Amounts recognized in profi t or loss

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Current tax expense

Corporate tax 90,928 98,562 89,680 97,459

National fi scal stabilization levy 15,445 22,339 15,445 22,339

Change to estimates for prior years 2,710 (696) 2,710 (696)

109,083 120,205 107,835 119,102

Deferred tax expense

Origination and reversal of temporary diff erences (11,698) 28,673 (11,656) 28,673

Total income tax expense 97,385 148,878 96,179 147,775

The tax charge on the Group and Bank’s profi t before tax diff ers from the theoretical amount that would arise using the basic tax rate as follows:



109



The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000


Corporate tax rate at 25% (2016: 25%)

Tax calculated at corporate tax rate 82,996 116,749 77,224 111,696

Non-deductible expense 4,043 17,587 4,043 17,587

Tax exempt income (7,298) (8,494) (1,484) (3,441)

Tax incentive (2,186) (250) (2,186) (250)

Income subject to tax at diff erent rate 1,675 1,643 427 540

National fi scal stabilization levy 15,445 22,339 15,445 22,339

Change in estimates relating to prior years 2,710 (696) 2,710 (696)

Income tax expense 97,385 148,878 96,179 147,775

Eff ective tax rates 29% 32% 31% 33%

Balance at 1 January

Charge for the year Payment

Balance at 31 December

GH¢’000 GH¢’000 GH¢’000 GH¢’000

The movement on the current tax account was as follows:

The Group - 2017

Year of assessment

Up to 2016 (2,367) 2,710 - 343

2017 - 90,928 (94,733) (3,805)

Tax on Staff cost (operating expenses) - - - 309

(2,367) 93,638 (94,733) (3,153)

National fi scal stabilization levy (2,020) 15,445 (10,850) 2,575

(4,387) 109,083 (105,583) (578)

The Group - 2016

Year of assessment

Up to 2015 (3,405) (696) - (4,101)

2016 - 98,562 (96,828) 1,734

(3,405) 97,866 (96,828) (2,367)

National fi scal stabilization levy (3,049) 22,339 (21,310) (2,020)

(6,454) 120,205 (118,138) (4,387)


Notes to the Financial Statements (cont’d)a. Amounts recognized in profi t or loss (cont’d)

110



Balance at 1 January

Charge for the year Payment

Balance at 31 December

GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Bank - 2017

Year of assessment

Up to 2016 (2,157) 2,710 - 553

2017 - 89,680 (93,371) (3,691)

Tax on Staff cost (operating expenses) - - - 309

(2,157) 92,390 (93,371) (2,829)

National fi scal stabilization levy (2,020) 15,445 (10,850) 2,575

(4,177) 107,835 (104,221) (254)

The Bank - 2016

Year of assessment

Up to 2015 (3,577) (696) - (4,273)

2016 - 97,459 (95,343) 2,116

(3,577) 96,763 (95,343) (2,157)

National fi scal stabilization levy (3,049) 22,339 (21,310) (2,020)

(6,626) 119,102 (116,653) (4,177)

The tax position up to the 2016 year of assessment have been agreed with the tax authorities. Liabilities arising have been settled as of 31 December 2016 and a tax credit realised after the tax audit. The tax position for the remaining year of assessment is yet to be agreed with the tax authorities.

Deferred tax

Balanceat 1/1

Movement during the year

Balance at 31/12

Deferredtax assets

Deferredtax liablities

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Group

2017

Recognised in profi t and loss

Property and equipment 13,362 1,744 15,106 - 15,106

Loans and advances (4,885) (11,932) (16,817) (16,817) -

Employee benefi t obligations (11,993) (874) (12,867) (12,867) -

Provisions - (594) (594) (594) -

Tax losses carried forward - (42) (42) (42) -

(3,516) (11,698) (15,214) (30,320) 15,106

Recognised in OCI

Employee benefi t obligations (11,818) (4,975) (16,793) (16,793) -

Available for sale investments (176) 195 19 19 -

Adjustment AFS equity investments - - (107) (107) -

(11,994) (4,780) (16,881) (16,881) -

Total (15,510) (16,478) (32,095) (47,201) 15,106

Notes to the Financial Statements (cont’d)The movement on the current tax account was as follows: (cont’d)

111



Balanceat 1/1


Balance at 31/12

Deferredtax assets


GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

2016



Loans and advances (4,126) (759) (4,885) (4,885) -

Employee benefi t obligations (18,062) 6,069 (11,993) (11,993) -

Provisions (17,316) 17,316 - - -

(32,189) 28,673 (3,516) (16,878) 13,362

Recognised in OCI


Available for sale investments 770 (946) (176) (176) -

(7,626) (4,368) (11,994) (11,994) -

Total 39,815 24,305 (15,510) (28,872) 13,362

The Bank – 2017



Loans and advances (4,885) (11,932) (16,817) (16,817) -

Employee benefi t obligations (11,993) (874) (12,867) (12,867) -

Provisions - (594) (594) (594) -

(3,516) (11,656) (15,172) (30,278) 15,106

Recognised in OCI


Available for sale investments (140) 315 175 - 175

Adjustment AFS equity investments - - (108) - (108)

(11,958) (4,660) (16,726) (16,793) 67

Total (15,474) (16,316) (31,898) (47,071) 15,173

Notes to the Financial Statements (cont’d)Deferred tax (cont’d)


112


Balanceat 1/1


Balance at 31/12

Deferredtax assets


GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

The Bank

2016



Loans and advances (4,126) (759) (4,885) (4,885) -

Employee benefi t obligations (18,062) 6,069 (11,993) (11,993) -

Provisions (17,316) 17,316 - - -

(32,189) 28,673 (3,516) (16,878) 13,362

Recognised in OCI

Employee benefi t obligati ons (8,396) (3,422) (11,818) (11,818) -

Available for sale investments 792 (932) (140) (140) -

(7,604) (4,354) (11,958) (11,958) -

Total (39,793) 24,319 (15,474) (28,836) 13,362

Deferred tax assets have been recognised in respect of the above items, because management considers it probable that future taxable temporary diff erences will be available against which the Group can use the benefi t therefrom

21. EARNINGS PER SHAREBasic earnings per share is calculated by dividing the net profi t attributable to equity holders of the Bank by the weighted average number of ordinary shares in issue during the year.

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Profi t attributable to equity holders 234,598 318,116 212,715 299,007

Weighted average number of ordinary shares (basic and diluted) 265,000 265,000 265,000 265,000

Basic earnings per share (expressed in Ghana pesewas per share) 89 120 80 113

Diluted earnings per share (expressed in Ghana pesewas per share) 89 120 80 113


Notes to the Financial Statements (cont’d)Deferred tax (cont’d)

113



22. CASH AND CASH EQUIVALENTS

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Cash on hand 185,536 149,094 185,536 149,094

Balance with Bank of Ghana 517,419 272,398 517,419 272,398

Items in the course of collection 213,885 432,354 213,885 432,354

Accounts with other Banks 67,508 69,429 67,508 69,429

Short term investments with other Banks 38,336 256,700 38,336 256,700

1,022,684 1,179,975 1,022,684 1,179,975

Included in balances with Bank of Ghana is an amount of GH¢ 506,153,310 (2016:GH¢ 445,661,407.98) representing the mandatory cash reserve as per the weekly Banking Supervision Department (BSD1) returns for the week ending 29 December 2017 (2016: 28 December 2016). This reserve represents and complies with the mandatory minimum of 10% (2016: 10%) of the Bank’s total deposits and is not available for use in the Bank’s day-to-day operations. Cash on hand, items in course of collection and balances with Bank of Ghana are non-interest-bearing.

23. INVESTMENT SECURITIES

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January 2,633,116 2,042,542 2,626,946 2,037,543

Additions 17,930,205 18,993,898 17,916,729 18,980,761

Redeemed on maturity (15,923,407) (18,501,792) (15,909,578) (18,489,325)

Accrued income 244,363 98,468 244,058 97,967

At 31 December 4,884,277 2,633,116 4,878,155 2,626,946

Current 4,060,683 2,391,820 4,054,561 2,385,650

Non-current 823,594 241,296 823,594 241,296

Investment securities comprise of Government Treasury bills and bonds classifi ed as held-to-maturity. Included in additions for the year is bonds issued to cover the funding gap from the purchase and assumption arrangement amounting to GH¢1,600,284,292.18.

There was no indication of impairment of investment securities held at the year end.

The Group pledged GH¢394,302,557 (2016: GH¢531,300,000) of its investments in Government securities as collateral to Bank of Ghana and SSNIT. The Group has not received collateral that it is permitted to sell or re-pledge in the absence of default.


114



24. TRADING ASSETS

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January - - - -

Additions 40,175 - 40,175 -

Disposals (30,872) - (30,872) -

Gains from changes in fair value 776 - 776 -

At 31 December 10,079 - 10,079 -

Trading assets comprise of Government treasury bills and bonds held for trading purposes.

25. ADVANCES TO BANKS

Placements with other Banks 224,950 434,152 224,950 434,152

Current 224,950 404,837 224,950 404,837

Non-current - 29,315 - 29,315

26. LOANS AND ADVANCES TO CUSTOMERS

Term loans 1,860,770 1,201,907 1,860,141 1,201,278

Overdraft 445,639 408,461 445,639 408,461

Staff loans 56,513 41,631 56,513 41,631

Gross loans and advances to customers 2,362,922 1,651,999 2,362,293 1,651,370

Allowance for impairment (263,592) (239,022) (262,963) (238,393)

Net loans and advances to customers 2,099,330 1,412,977 2,099,330 1,412,977

Current 935,810 784,649 935,810 784,649

Non-current 1,163,520 628,328 1,163,520 628,328

Analysis of allowance for impairment

Loan impairment 263,592 239,022 262,963 238,393

Analysis of impairment allowance

Individual impairment 210,488 219,479 209,859 218,850

Collective impairment 53,104 19,543 53,104 19,543

263,592 239,022 262,963 238,393

Individual allowance for impairment

Balance at 1 January 219,479 195,358 218,850 195,358

Charge for the year (Note 17) 20,535 55,808 20,535 55,179

Recoveries of loans previously impaired (4,192) (31,140) (4,192) (31,140)

Write off s (25,334) (547) (25,334) (547)

Balance at 31 December 210,488 219,479 209,859 218,850


115



The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Collecti ve allowance for impairmentBalance at 1 January 19,543 16,504 19,543 16,504

Charge for the year (Note 17) 33,561 3,039 33,561 3,039

Balance at 31 December 53,104 19,543 53,104 19,543

Total allowance for impairment 263,592 239,022 262,963 238,393

The fi fty largest exposures represents 49% of the loans and advances at the end of the year (2016: 46%).

27. INVESTMENTS (OTHER THAN SECURITIES)

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Investment securities: available-for-sale (note 27(a)) 4,639 3,856 3,669 2,408

Investment in other equity securities (note 27(b)) 2,263 491 113 113

6,902 4,347 3,782 2,521

a) Investment securities - available for sale

At 1 January 3,856 7,639 2,408 6,135

Changes in fair value 783 (3,783) 1,261 (3,727)

At 31 December 4,639 3,856 3,669 2,408

This represents investments in the ordinary shares of a number of listed companies.

(b) Investment in other equity securities

The Group The Bank

Ordinary shares 2017 2016

Ordinary shares 2017 2016

% GH¢’000 GH¢’000 % GH¢’000 GH¢’000

National Investment Bank 2.5 29 29 2.5 29 29

CDH Financial Holdings 7.1 6 6 7.1 6 6

Securities Discount Company 1.1 16 16 1.1 16 16

Fidelity Bank 0.6 62 62 0.6 62 62

Vacuum Salt Project Limited 10 1 1 - - -

Accra Markets Limited 25 - 25 - - -

Ghana Community Network 5 108 108 - - -

Oasis Africa Fund 9.3 2,041 244 - - -

2,263 491 113 113

Notes to the Financial Statements (cont’d)26. LOANS AND ADVANCES TO CUSTOMERS (CONT’D)

116



28. INVESTMENT IN SUBSIDIARY

a. Signifi cant subsidiaries

Development Finance & Holdings Limited, an entity incorporated in Ghana that engages in equity investments is the only subsidiary of the Bank.

The Bank’s holding in this entity is as set out below:

The Bank

% Ordinary shares 2017 2016

GH¢’000 GH¢’000

Development Finance & Holdings Limited 100 1,000 1,000

b. Signifi cant restrictions The Group does not have signifi cant restrictions on its ability to access or use its assets and settle its liabilities.

29. INVESTMENT IN ASSOCIATES

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January 46,000 53,135 28,274 30,126

Share of associate profi t 13,306 10,619 - -

Share of associate OCI 2,483 2,315 - -

Dividend received (5,641) (6,745) - -

Impairment of associates - (1,852) - (1,852)

Reversal of impairment - 2,550 - -

Reclassifi cation of unlisted equities 26 - - -

Foreign currency translation diff erences on foreign operation 32,286 (14,022) - -

At 31 December 88,460 46,000 28,274 28,274

The Bank has two direct associates Ghana International Bank (GIB) and Activity Venture Finance Company (AVF), and it considers Ghana International Bank (GIB) as material to the Group. The Bank in addition holds indirect interest of 20%, 25% and 34% in Ghana Textiles Manufacturing Company, Accra Markets Limited and NCR Ghana Limited respectively through its subsidiary. The fi nancial information of Accra Markets Limited and Ghana Textiles Manufacturing Company has been equity accounted for, however, that of NCR Ghana Limited and Activity Venture Finance Company have not been equity accounted as the indirect associate is immaterial to the Group fi nancial statements. The Bank impaired its investment in Activity Venture Finance Company in the prior year.


The relationship with the Group Strategic investment that facilitates the Group’s international trade

Principal place of business/country of incorporation London, United Kingdom

Ownership interest/voting rights 20% (2016: 20%)

Fair value of ownership interest (if listed) N/A


117



Summarised Financial Statements of Associate


2017 2016

GH¢’000 GH¢’000

Revenue 115,234 87,105

Profi t from operations 56,803 53,097

Other comprehensive income 12,417 11,574

Total comprehensive income 69,220 64,671

Attributable to investee’s shareholders 69,220 64,671

Current assets 4,094,566 4,221,439

Non-current assets 568,992 110,037

Total assets 4,663,558 4,331,476

Current liabilities (3,789,351) (3,613,357)

Non-current liabilities (39,088) (25,109)

Total liabilities (3,828,439) (3,638,466)

Net assets 835,119 693,010

Attributable to investee’s shareholders 835,119 693,010

Group’s interest in net assets 167,024 138,602

Carrying amount 88,460 46,000

30. PROPERTY AND EQUIPMENT

The Group and The Bank

Leasehold land & buildings

Furniture & equipment

Computers Motor vehicles

Capital work in progress

Total

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

2017

Cost

At 1 January 2017 60,983 138,531 88,501 12,384 58,518 358,917

Additions 16,318 16,471 6,908 4,513 35,455 79,665

Transfers 30,056 20,580 12,304 - (64,200) (1,260)

Disposals - (251) - (462) - (713)

Write off - - - - (2,425) (2,425)

Reclassifi cations 16 (16) 251 - - 251

At 31 December 2017 107,373 175,315 107,964 16,435 27,348 434,435


118



Leasehold land & buildings

Furniture & equipment

Computers Motor vehicles

Capital work in progress

Total

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

Depreciation

At 1 January 2017 12,677 87,177 61,876 6,125 - 167,855

Charge for the year 1,649 22,404 17,490 2,754 - 44,297

Released on disposals - (251) - (327) - (578)

At 31 December 2017 14,326 109,330 79,366 8,552 - 211,574

Carrying amount

At 31 December 2017 93,047 65,985 28,598 7,883 27,348 222,861

2016

Cost

At 1 January 2016 53,245 102,301 67,819 8,282 43,531 275,178

Additions 4,838 26,964 19,391 4,413 45,056 100,662

Transfers 2,900 9,322 1,291 - (13,513) -

Disposals - (56) - (311) - (367)

Write off - - - - (731) (731)

Adjustment - - - - (15,825) (15,825)

At 31 December 2016 60,983 138,531 88,501 12,384 58,518 358,917

Depreciation

At 1 January 2016 11,456 70,290 48,780 4,763 - 135,289

Charge for the year 1,221 16,943 13,096 1,673 - 32,933

Released on disposals - (56) - (311) - (367)

At 31 December 2016 12,677 87,177 61,876 6,125 - 167,855

Carrying amount

At 31 December 2016 48,306 51,354 26,625 6,259 58,518 191,062

There was no indication of impairment of property and equipment held by the Group at 31 December 2017 (2016: Nil). None of the property and equipment of the Group had been pledged as security for liabilities and there were no restrictions on the title of any of the Group’s property and equipment at the reporting date and at the end of the previous year.

Contractual commitment for the acquisition of property and equipment

Contractual commitments for the acquisition of property and equipment not provided for in the fi nancial statements as at 31 December 2017 was GH¢11,968,058 (2016: GH¢22,427,000). The capital commitments are approved costs in respect of renovation of existing branches.



30. PROPERTY AND EQUIPMENT (CONT’D)

119



Disposal of property and equipment

2017 2016

GH¢’000 GH¢’000

Cost 713 367

Accumulated depreciation (578) (367)

Net book value 135 -

Sales proceeds 382 116

Profi t on disposal 247 116

31. INTANGIBLE ASSETS

The Group and The Bank

31 Dec 2017 2016

SoftwareCustomer

Relationship CWIP Total software

GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000

CostAt 1 January 50,549 - 14,986 65,535 36,287Acquisitions 22,809 95,306 7,730 125,845 29,248Transfer 1,245 - 15 1,260 -Reclassifi cation (126) - (125) (251) -Write off - - (32) (32) -At 31 December 74,477 95,306 22,574 192,357 65,535Accumulated amortisationAt 1 January 26,548 - - 26,548 18,156Charge for the year 13,460 - - 13,460 8,392At 31 December 40,008 - - 40,008 26,548Net book value 34,469 95,306 22,574 152,349 38,987

Intangible assets represent licenses for computer software and customer relationship. There was no indication of impairment of intangible assets held by the Group at the reporting date and at the end of the previous year.

Purchase and Assumption – Customer Relationship Intangible Asset

On 14 August 2017, the Bank of Ghana revoked the banking licence of UT Bank Limited and Capital Bank Limited and appointed Messrs. Vish Ashiagbor and Eric Nipah as joint receivers of the Banks. GCB Bank Limited with the approval from its Board of Directors and the Bank of Ghana was appointed to purchase selected assets and liabilities of UT Bank and Capital Bank under a Purchase and Assumption agreement. The excess of liabilities assumed over assets acquired was funded by bonds issued by the Government of Ghana. The purchase and assumption of specifi c assets and liabilities of the erstwhile Banks was assessed not to constitute a business since processes of the erstwhile Banks such as treasury processes, employees, core banking systems were not acquired. The consideration paid is allocated to the identifi able assets acquired and liabilities assumed on the relative fair value basis.

The terms of the Purchase and Assumption agreement dated 14 August 2017 between the Joint Receivers and GCB Bank Limited is summarised below:

The total consideration for this transaction is GH¢95.31 million. The consideration paid represents amounts payable by GCB Bank Limited to the Bank of Ghana for customers acquired from the assumed Bank. The acquisition of assets and liabilities had the following eff ect on the Bank’s assets and liabilities:



120



2017

GH¢’000

(a) Consideration transferred

Consideration paid in cash – Erstwhile UT Bank Limited 60,051

Consideration paid in cash – Erstwhile Capital Bank Limited 35,255

95,306

(b) Identifi able assets acquired and liabilities assumed

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:

2017

GH¢’000

Loans and advances to customers 79,482

Advances to Bank 42,189

Investment in securities 23,315

Cash and Bank balances 33,502

Deposits from customers (2,291,293)

Interbank borrowings (88,475)

Total identifi able net liabilities assumed (2,201,280)

(c) Customer relationship (intangible asset)

Intangible asset arising from the acquisition has been recognised as follows:

Consideration transferred (a) 95,306

Fair value of identifi able net assets (b) (2,201,280)

Consideration received for excess liabilities assumed – Government Bonds 2,201,280

Intangible assets 95,306

The Government of Ghana on 6 April 2018 issued the following bond certifi cates to cover the funding gap arising from the purchase and assumption arrangement.

• Bond principal value of GH¢1,600,284,292.18 at an interest rate of 18.25% with eff ective and maturity dates of 14 August 2017 and 31 December 2017 respectively.

• Bond principal value of GH¢2,201,280,634 at an interest rate of 12% with eff ective and maturity dates of 1 January 2018 and 31 December 2027 respectively.

Notes to the Financial Statements (cont’d)Purchase and Assumption – Customer Relationship Intangible Asset (cont’d)

121



32. OTHER ASSETS

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Account receivables 185,696 37,893 185,735 37,932

Receivable from GoG* 600,996 - 600,996 -

Prepayments 95,804 76,127 95,804 76,127

882,496 114,020 882,535 114,059

Current 882,496 57,670 882,535 57,709

Non-current - 56,350 - 56,350

*Included in other assets is the unissued portion of the bond from the purchase and assumption arrangement amounting to GH¢600,996,342. The bond was subsequently issued on 6 April 2018 with an eff ective date of 1 January 2018.

33. DEPOSITS FROM CUSTOMERS

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Current accounts 2,652,905 1,941,826 2,685,054 1,961,668

Savings accounts 2,236,683 1,917,753 2,236,683 1,917,753

Time deposits 2,034,453 400,354 2,034,453 400,354

6,924,041 4,259,933 6,956,190 4,279,775

Current 6,921,328 4,259,933 6,953,477 4,279,775

Non-current 2,713 - 2,713 -

The twenty largest depositors made up 18% of total deposits at the end of the year (2016: 27%).

34. OTHER LIABILITIES AND PROVISIONS

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000Creditors 117,769 66,921 117,769 66,921

Accruals 26,933 24,399 26,886 24,343

Other liabilities 266,429 44,940 266,426 44,940

411,131 136,260 411,081 136,204

Current 411,131 136,260 411,081 136,204

Non-current - - - -

(a) Included in other liabilities is an amount of GH¢2.37 million being provision for legal actions brought against the Bank by customers and its employees.


122


35. BORROWINGS

2017 2016

The Group and Bank GH¢’000 GH¢’000

At 1 January 523,281 196,990

Additions 740,000 516,783

Repayments (322,798) -

Accrued Interest 18,622 6,498

Derecognition of loan - (196,990)

At 31 December 959,105 523,281

Comprising:

Bank of Ghana 907,104 506,498

Exim Bank (EDAIF) 11,483 16,783

Social Security and National Insurance Trust (SSNIT) 40,518 -

Total 959,105 523,281

36. EMPLOYEE BENEFIT OBLIGATIONS

2017 2016


Post-employment defi ned benefi t plan (a) 117,192 95,232

Other long-term employee benefi t (b) 1,433 -

118,625 95,232

Post-employment defi ned and other long-term benefi t plan

Apart from the legally required social security scheme, the Bank contributes to the following post-employment defi ned benefi t plans and other long-term employee benefi t plan. These plans expose the Bank to actuarial risks, such as longevity risk, interest rate risk and market (investment risk).

Other long-term employee benefi t plan• Plan A - long service awards accrue to employees based on graduated periods of uninterrupted service. These

awards accrue over the service life of employees. Employees in service with the Bank after fi fteen (15) years become eligible to receive cash payments at graduated rates when employees achieve stipulated milestones set by the Bank. During the year, the Bank amended the terms of settlement of long service award from retirement date to settlement on the achievement of every milestone. The amendment to the settlement terms resulted in a reclassifi cation of long service award from defi ned benefi ts plan to other long-term employee benefi ts plan. The diff erence between the employee benefi t obligation under the existing terms and the obligation determined under the current terms at the date of amendment is recognised directly in profi t or loss.

Post-employment defi ned benefi t plan• Plan B - The Bank pays monthly pension benefi ts to retired employees, under a closed defi ned benefi t pension

scheme. Under this scheme, benefi ciaries are paid pensions equal to 60% of the net basic salaries of their serving counterparts.

• Plan C - The Bank also pays post-retirement medical care for its retired staff and their dependents below 18 years of age.



123


a. Movement in defi ned benefi t liability

The following table shows a reconciliation of the opening and closing balances of the net defi ned benefi t liability and its components.

2017 2016

GH¢’000 GH¢’000

Balance at 1 January 95,232 75,857

Included in profi t and loss

Current service costs 413 410

Interest costs 16,641 16,683

17,054 17,093

Included in other comprehensive income

Re-measurement of loss/(gain)

- Actuarial loss/(gain) arising from:

- Financial assumptions 5,044 14,824

- Experience 14,854 (1,135)19,898 13,689

Other

Benefi ts paid (14,062) (11,407)

Reclassifi cation to other long-term benefi ts (930) -

(14,992) (11,407)

Balance at 31 December 117,192 95,232

Represented by:

Net defi ned benefi t liability (Plan A) - 930

Net defi ned benefi t liability (Plan B) 88,450 72,332

Net defi ned benefi t liability (Plan C) 28,742 21,970

117,192 95,232

Actuarial assumptionsThe following are the principal actuarial assumptions at the reporting date:

2017 2016

% %

Discount rate 17.35 19.00

Future salary growth 12.50 14.00

Future pension growth 12.50 13.50

Medical infl ation 11.80 13.50



124


Sensitivity analysisReasonably possible changes at the reporting date to any of the relevant actuarial assumptions, holding other assumptions constant, would have aff ected the defi ned benefi t obligation by the following amounts shown below:

The Group The Bank

31 December 2017 31 December 2016

IncreaseGH¢’000

DecreaseGH¢’000

IncreaseGH¢’000

DecreaseGH¢’000

Discount rate (2% movement) (12,995) 16,819 (10,540) 13,355

Future pension growth (2% movement) 9,823 (8,381) 8,142 (7,089)

Medical infl ation (2% movement) 7,485 (5,307) 6,010 (4,433)

Although the analysis does not take account of the full distribution of cash fl ows expected under the plans, it does provide an approximation of the sensitivity of the assumptions shown.

(b) Other long-term employee benefi ts

2017 2016


At 1 January - -

Reclassifi cation from defi ned benefi t plan 930 -

930 -

Included in profi t and loss

Current service cost 36 -

Interest costs 154 -

Actuarial loss/(gain) arising from:

- Financial assumptions 67 -

- Experience 555 -

812 -

Other

Benefi ts paid (309) -

At 31 December 1,433 -



125


37. STATED CAPITAL AND RESERVES

a. Stated capital

No. of shares Proceeds

2017 2016 2017 2016

’000 ’000 GH¢’000 GH¢’000

Bank

Authorized:

Ordinary shares of no par value 1,500,000 1,500,000 -

Issued:

Issued for cash 115,000 115,000 60,030 60,030

Transfer from retained earnings 86,500 86,500 343 343

Transfer from retained earnings - - 10,000 10,000

Capitalization of reserves 1,000 1,000 2 2

Transfer from other surplus 62,500 62,500 1,625 1,625

Transfer from retained earnings - - 28,000 28,000

At 31 December 265,000 265,000 100,000 100,000

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

b. Statutory reservesStatutory reserve represents cumulative amounts set aside from annual profi ts after tax required under the Banking Act. The proportion of net profi ts transferred to reserves ranges from 12.5% to 50% of net profi t after tax, depending on the relationship that the balance on statutory reserves bears to paid up capital.

c. Credit risk reservesCredit risk reserve represents the cumulative balance of amounts transferred from/to retained earnings to meet gaps in impairment allowances based on Bank of Ghana’s provisioning guidelines and IFRS.

Credit risk reserves – Loans and advances

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

IFRS impairment 297,254 239,022 296,625 238,393

Bank of Ghana provision 245,635 242,434 245,635 242,434

Excess of BOG provision over IFRS

Impairment - 3,412 - 3,412

Total credit risk reserve - 3,412 - 3,412



126


d. Fair value reserves

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale fi nancial assets, until the assets are derecognized or impaired.

e. Other reservesOther reserves represent actuarial gains and losses on pension obligations and foreign currency diff erences arising from the translation of the fi nancial statements of foreign operations.

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

At 1 January (49,469) (25,180) (35,447) (25,180)

Actuarial loss (19,898) (13,689) (19,898) (13,689)

Deferred tax 4,975 3,422 4,975 3,422

Foreign currency translation diff erences on foreign operations 32,286 (14,022) - -

At 31 December (32,106) (49,469) (50,370) (35,447)

38. CONTINGENT LIABILITIES AND COMMITMENTS

Off balance sheet items

As with other banks, the Bank engages in business activities involving acceptances, performance bonds and indemnities. The majority of these facilities are off set by corresponding obligations of third parties, the nominal amounts of which are not refl ected in the statements of fi nancial position.

Nature of instruments

An acceptance is an undertaking by a Bank to pay a bill of exchange drawn on a customer. The Bank expects most acceptances to be presented, but reimbursement by the customer is normally immediate.

Other contingent liabilities include transaction related customs and performance bonds and are generally short-term commitments to third parties.

Commitments to lend to a customer in the future are made subject to certain conditions. Such commitments are either made for a fi xed period or agreed maturity dates but are cancellable by the lender subject to notice requirements. Documentary credits commit the Bank to make payments to third parties on the production of documents, which are usually reimbursed immediately by customers. Customers are required to deposit cash in a margin account in respect of documentary and commercial letters of credit.

The following summarize the nominal principal amounts of contingent liabilities and commitments with off -balance sheet risks.

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Contingent liabilities

Guarantees and indemnities 80,417 115,950 80,417 115,950

Documentary and commercial letters of credit 219,042 225,326 219,042 225,326

299,459 341,276 299,459 341,276

Commitments

Loan commitments 106,520 168,759 106,520 168,759

405,979 510,035 405,979 510,035



127


Legal proceedings

The bank is defending a number of pending legal actions brought against it at 31 December 2017. Some of these cases have been brought against the Bank by former employees, customers and others. Although liabilities is not admitted, if defence against the legal action is unsuccessful, then potential liabilities estimated at GH¢ 37,887,163 (2016: GH¢66,469,260) would be payable. Based on legal advice, management believes that its defence of the legal action will be successful.

(a) Included in the contingent liabilities for the year is an amount of GH¢32.78 million (US$7.43 million) for a legal action brought by a customer of the erstwhile UT Bank. The Bank has fi led to the court of appeal seeking for a reversal of the ruling given by the High Court requesting the Bank to pay the said amount into the Registrar of the Court following the assumption of UT Bank. The Joint Receivers have also fi led a certiorari application in the Supreme Court for orders to quash the decision of the High Court as same was made in breach of the rules of natural justice.

The amount has not been provided for on the grounds that the said deposits was not part of deposits assumed because no evidence of such funds existed at the date of the assumption and the Bank is indemnifi ed of all liabilities that may arise outside the purchase and assumption agreement. The outcome of the Supreme Court application would have an impact on the Bank’s appeal before the Court of Appeal. Although liability is not admitted, if defence against the action is unsuccessful, then fi nes and legal costs could be levied against the Bank. Based on legal advice and the Receiver’s action pending before the Supreme Court, management believes that its defence action will be successful.

(b) In 2015, the Bank fi led a claim for recovery of an overdraft facility due from one of its customers. The customer fi led a counterclaim against the Bank to recover GH¢45 million plus interest on the grounds that the overdraft facility emanated out of the negligence of the Bank in performing its duties. On 14 November 2013, the trial high court dismissed the case of the Bank and granted the customer’s counterclaim against the Bank for the payment of the sum of GH¢82,000,000 with costs of GH¢15,000. The trial court mandated the Bank to pay immediately an amount of GH¢20,126,873 being 25% of the judgment debt to the customer. The Bank sought for a stay of execution on injunction against the judgement but lost on all its applications for stay all the way through the High Court to the Supreme Court and subsequently paid the amount to the customer. The Bank appealed against the judgement and the customer also fi led a cross-appeal.

During the year, the Bank under the authority of its Board of Directors resolved to settle the matter out of court and made a further payment of GH¢50,159,695 in full and fi nal settlement of the case.

39. CORPORATE SOCIAL RESPONSIBILITYThe group recognises its social responsibilities to improve the wellbeing of the society and is committed to being a responsible citizen and believes in giving back to society. A total of GH¢ 5,787,000 (2016: GH¢2,785,000) was spent under the Group’s social responsibility programme with key focus on education, health, fi nancial inclusion and others.

40. RELATED PARTY TRANSACTIONS

a. Transactions with Executive Directors and key management personnelKey management personnel are defi ned as those persons having authority and responsibility for planning, directing and controlling the activities of the Group (directly or indirectly) and comprise the Directors and Senior Management of GCB Bank Limited.There were no material transactions with companies in which a Director or other members of key management personnel (or any connected person) is related.No provisions have been made in respect of loans to Directors or other members of key management personnel (or any connected person).



128



Remuneration of Executive Directors and other key management personnel.

2017 2016

GH¢’000 GH¢’000Salaries and other short-term benefi ts 6,782 3,846Post-employment benefi ts 118 61

6,900 3,907

Remuneration of the Executive Directors during the year amounted to GH¢2,276,900 (2016: GH¢1,247,000).

Details of transactions and balances between the Bank and Executive Directors and other key management personnel are as follows:

2017 2016

GH¢’000 GH¢’000LoansLoans outstanding at 1 January 1,289 478Net movement (139) 811Loans outstanding at 31 December 1,150 1,289

Interest income 73 32

DepositsDeposits at 1 January 328 266Net movement during the year 114 62Deposits at 31 December 442 328

Interest expense 5 2

Loans to Executive Directors and key management personnel include housing, car and other personal loans are given under terms that are no more favourable than those given to other staff . No impairment has been recognized in respect of loans granted to Executive Directors and key management personnel at 31 December 2017 and 2016. The housing and car loans are secured by the underlying assets. All other loans are unsecured.

b. Transactions with non-executive DirectorsNo loans were advanced to non-executive Directors during the year. There were no balances outstanding on account of loans due from non-executive Directors at the year end.

Fees and allowances paid to non-executive Directors during the year amounted to GH¢1,289,523 (2016: GH¢1,061,439).

c. Transactions and balances with subsidiaryDevelopment Finance & Holdings Limited

Fixed deposit investments are placed with the Bank. The subsidiary’s current account is held with the Bank. Interest accrues on these placements at normal commercial rates.

Balances due to/from the subsidiary at the year-end were as follows:

2017 2016

GH¢’000 GH¢’000

Other Assets

Amounts due from subsidiary in respect of unpaid expenses 36 42

Deposits

Current account 32,149 19,842


129



c. Transactions and balances with subsidiary (cont’d)

The Bank entered into the following transactions with its subsidiary:

2017 2016

GH¢’000 GH¢’000

Management fees 1,015 640

d. Transactions and balances with associates

Balances due to/from associates at year end were as follows:

Overnight placements (Foreign) 36,357 33,050

Current account balances (Foreign) 45,087 55,635

Current account balances (Local) 105 105

The Group entered into the following transactions with its associates:

Dividend received 5,641 6,745

Interest received on current account balances (foreign) 80 293

e. Government of GhanaThe Government of Ghana directly holds 21.36% shares in GCB Bank Limited and 29.89% indirectly through its shareholding in SSNIT. The total of its direct and indirect shareholding is 51.25%.

41. DIVIDEND PER SHAREThe Directors wish to propose a dividend of GHp10 (2016: GHp38) per share amounting to GH¢ 26,500,000 (2016: GH¢100,700,000) at the forthcoming annual general meeting.

42. SUBSEQUENT EVENTSEvents subsequent to the reporting date are refl ected in the fi nancial statements only to the extent that they relate to the year under consideration and the eff ect is material. The Group had no material subsequent events that required adjustments to or disclosure in the fi nancial statements.

130


APPENDIX I - Value Added Statementsfor the year ended 31 December 2017

The Group The Bank

2017 2016 2017 2016

GH¢’000 GH¢’000 GH¢’000 GH¢’000

Interest earned and other operating income 1,454,046 1,237,628 1,443,186 1,229,266

Direct cost of services (666,407) (442,091) (666,345) (445,775)

Value added by banking services 787,639 795,537 776,841 783,491

Non-banking income 16,355 12,422 4,064 1,803

Impairments (49,904) (27,160) (49,904) (26,531)

Value Added 754,090 780,799 731,001 758,763

Distributed as follows:

To employees:

Directors (without executives) 1,290 1,061 1,290 1,061

Executive Directors 2,277 1,247 2,277 1,247

Other employees 359,240 268,348 359,240 268,348

362,807 270,656 362,807 270,656

To Government:

Income tax 97,385 148,878 96,179 147,775

To providers of capital

Dividends to shareholders 100,700 87,450 100,700 87,450

To expansion and growth:

Depreciation 44,297 32,933 44,297 32,933

Amortisation 13,460 8,392 13,460 8,392

Retained earnings 236,141 230,666 214,258 211,557

293,898 271,991 272,015 252,882


131


Number of shareholders

The Bank had 92,757 ordinary shareholders at 31 December 2017 distributed as follows:

Category No. of Holders No. of Shares % of shares held

1 - 1000 85,581 18,581,726 7.01

1,001 - 5,000 6,213 13,621,602 5.14

5,001 - 10,000 530 3,950,263 1.49

Above 10,000 433 228,846,409 86.36

Total 92,757 265,000,000 100

Directors’ Shareholders

The Director named below held the following number of shares in the Bank at 31 December 2017:

No. of Shares % of Holding

Samuel Amankwah 1,500 0.0006

APPENDIX IIShareholders’ Information - Unaudited


132


20 Largest Shareholders

Share holding % of Holding

SOCIAL SECURITY AND NATIONAL INSURANCE TRUST 79,199,550 29.89

GOVERNMENT OF GHANA C/O MINISTRY OF FINANCE 56,608,613 21.36

SCGN/NTGS RE: HANDELSBANKEN NORWAY UCITSCL.A, 133880500003 18,001,604 6.79

DANIEL OFORI 10,095,736 3.81

SCGN/JPMC RE DUET AFRICA OPPORTUNITIES MASTER FUND C/O SCB GH. LIMITED 5,811,116 2.19

SCGN/ BANQUE PICTET & CIE SA RE NON TAX 6275J 5,566,090 2.10

SCGN/CITIBANK KUWAIT INV AUTHORITY 3,565,900 1.35

GCB STAFF PROVIDENT FUND 2,996,695 1.13

SCGN/PICTET AFRICA NON TAX 6275J PICTETMAST 2,038,878 0.77

NORTHERN TRUST GLOBAL SERVICES LTD LUX CLIENT ACCNORTHERN TRUST GLOBAL SV 1,975,210 0.75

GHANA REINSURANCE COMPANY LTD GENERAL BUSINESS 1,799,651 0.68

SCGN/SSB EATON VANCE STRUCTURED, EMERGING MARKET FUND 1,626,918 0.61

SCGN/JP MORGAN CHASE DUET GAMLA LIV AFRICA,

OPPORTUNITIES FUND IC 1,625,000 0.61

GHANA COCOA BOARD 1,600,000 0.60

STD NOMS/EATON VANCE COLL. INV TRUST FOR EMP BEN, 1,577,818 0.60

SCGN/'EPACK INVESTMENT, SCGN/'EPACK INVESTMENT

FUND LIMITED TRANSACTION E I F L 1,531,200 0.58

SCGN/SSB EATON VANCE TAX- , MANAGED EMERGING MARKET FUND 1,384,370 0.52

STD NOMS/BNYM SANV/KAPFRG INVESTIN PRO STD NOMS/BNYM SANV/KAPFRG INVESTIN PRO AFRIKANSK, AFRIKANSK 1,208,682 0.46

STD NOMS/BNYM SA NV/ADV SRS TRST-AST PTRIC EMG MKT, 1,190,800 0.45

SCGN / ENTERPRISE LIFE ASS. CO. POLICY HOLDERS, SCGN/ ENTERPRISE LIFE ASS. CO. POLICY HOLDERS SCGN / E.L.A.C.P.H. 1,119,476 0.42

200,523,307 75.67

Others 64,476,693 24.33

265,000,000 100.00

Control rights: Each share is entitled to the same voting rights.

Changes in shareholding: For the fi nancial year ended 31 December 2017, there were no material changes to the shareholding structure of the Bank.

APPENDIX IIShareholders’ Information - Unaudited (cont’d)


Haatso

8

133


Haatso

8

134


List of Branches

AGENTS OF CORRESPONDENT BANKS

Vis

ACCRA ZONE

Regional Manager's O�ceP. O. Box NT 96, Accra New [email protected]: 0302-249772/ 222641/0302-225928 Fax:0302-236671

Accra High StreetP. O. Box 2971, [email protected]: 0302-662337/ 672857/0302-668743Fax: 0302-673496

Accra New TownP. O. Box NT 96, Accra New [email protected]: 0302-236935/ 222641/0203916587Fax: 0302-236935

Liberty HouseP.O. Box 4443, Accra [email protected]: 0302-663556/ 666631-7Fax: 0302-663556

Republic HouseP.O. Box 5550, [email protected]: 0302-681810/ 0302-680355/0302681862Fax: 0302-681812

Dome P. O Box KW 247, [email protected]: 0302-420039/0302-420041

Kwame Nkrumah Circle

Ring Road WestP. O. Box ST 498, Kaneshie, [email protected]:0302-224703/0302-225605/0500404543Fax: 0302-225270

Kaneshie MarketP. O. Box 171, Kaneshie [email protected]: 0302-227568/0302-2290050577076454Fax: 0302-227568

Kaneshie Industrial AreaP. O. Box AN 12513, Accra [email protected]:0302-220551/0302-2205910289700359

Boundary RoadP.O. Box 819, Accra [email protected] Mgr: 0302-6829920302-682993

OsuP.O. Box 0212, Osu, [email protected]:020-2011912/0302-782798/9Fax: 0302-782812

MinistriesP.O. Box MB.8, Accra [email protected]: 0302-673950/ 0302-662170Fax: 0302-674150

Korle-BuP.O. Box 3852, Accra [email protected]: 0302-666524/0302-666521Fax:0302-666522

Trade Fair SiteP.O. Box 198, Trade Fair Centre [email protected] Mgr: 0302-774270/0302-778274Fax: 0302-778275

Burma CampP.O Box B.C. 268, Burma Camp, Accra [email protected] Mgr:0302-784182Fax:0302-770341

Makola Market P.O. Box 4832, Accra [email protected] Mgr: 0509677577Fax : 0509677577

Kasoa MainP. O. Box KS 557, [email protected]:0302-862430/0302-862429

Kasoa MarketP. O. Box KS 557, [email protected]: 0302-862831-3/02445702530208249987

KisseimanP. O. Box AT 1946, [email protected]:0302-410444/0302-410724Fax: 0302-410799

Tantra Hill

[email protected]:020-2015795/0302-412817 Fax:0302-412822

NimaP.O. Box, NM 24, [email protected]: 0302-222441/0302-2224390508535112

DansomanPMB 17,[email protected]:0302-301410 Fax: 0302-301454

Accra NorthP.O.Box AN 5206, Accra-North [email protected]: 0302-253055/0302-223645Fax: 0302-250245

AbelenkpePMB, Achimota School Accra [email protected]:0206889721/02615519410547296708

Abeka Lapaz P.O. Box AN 5288, Accra [email protected]:0509738320/0540319854

37 Military Hosp. AgencyP. O. Box BC 268, Burma CampMgr: 0302-784182

135


List of Branches (cont’d)


TEMA ZONEHaatso P. O. Box WY 2115, [email protected]: 0303-966759/0303-966760

AmasamanP. O. BoxAM 117, [email protected]/0303-969959

WeijaP.O. Box WJ 643, Weija Accra [email protected] 0303-969962/0244362091

Area Manager's O�ceP.O. Box CO 152, [email protected]

Tema MainP.O. Box CO 152, [email protected]:0303-202760

Tema Agency (Long Room)- do -0303-204768

Tema Agency (Golden Jubilee)

Tema MarketP.O. Box CO173, [email protected]:0303-202861/0303-201422Fax: 0303-204763

Evergreen Agency0303-202094

Tema Ind. AreaP.O. Box CS 8202, Tema Ind [email protected]:0303-302818/0303-300575Fax.-0303-306082

Tema Fishing HarbourP. O. Box CO 281, Fishing [email protected]:0303-202413/0206733090Fax: 0303 202344

Safe BondP. O. Box CO 1737, [email protected].: 0303-215588/0303-215576

AshaimanP.O. Box AS 199, [email protected]:0208556770/ 0242900000

LegonP.O. Box LG 17, [email protected]/7, 0502568708

MadinaP.O. Box MD 431, Madina,[email protected]/0208161580

AburiP.O. Box 98, [email protected]: 0502939961

Mampong-AkwapimP.O. Box 54, [email protected]:03427-22049/0205467887

Akropong-AkwapimP.O. Box 83, Akropong - [email protected]:0200229369/02451308500574602154

SomanyaP.O. Box 78, [email protected]: 03420-91421/03420- 91428 Fax: 027-8787060

Tetteh Quarshie CircleP. O. Box, LG14, [email protected]. O. Box, LG14, [email protected]

AdaP. O. Box AF55, [email protected]: 0303-910411/0303-9104120573331212

Kantamanto [email protected]

Adabraka [email protected]/

Airport City [email protected]

Okaishie/Makola [email protected]/7,0302669104

Labone [email protected]/3

Achimota [email protected]/8385

Tesano [email protected]

Abossey Okai [email protected]/0501328300

Osu Oxford Street [email protected]/0577670550

AkosomboP.O. Box 24, [email protected]: 03430-21142/03430-20472 Fax: 03430-20530

AkuseP. O. Box 40, [email protected]: 03420-91311/0504637316 Fax: 0577900013

136




SpintexC/O P.O.Box 152 Tema,[email protected]: 0302-816966/0249852546

NunguaP.O. Box TN 30, [email protected]:0302-715352 /0302-715365

Adenta Shopping Centre P. O. Box AF 2070, [email protected]: 0302-522541/0302-522542

KOFORIDUA ZONE

AdjiringanoP. O. Box MD 1727, [email protected]: 0303-3969960/0303-969961

Regional Manager's O�ceP.O. Box KF 286, [email protected]: 03420-26790/03420-26791

KoforiduaP. O. Box KF 286, [email protected]:03420-26831/03420-2304903420-23059/03420-2306903420-22258

New TafoP.O. Box 42, New [email protected]:0244329645

HO ZONE

Regional Manager's O�ceP.O. Box HP 164, [email protected]:03620-28251, 03620- 26543Fax: 03620-27598

SuhumP.O. Box SU 155, [email protected]:0207270828

AsamankeseP.O. Box 167, [email protected]: 03420-91135/03420-91011

Akim OdaP.O. Box 364, Akim [email protected]: 03429-22124

KadeP.O. Box 62, [email protected]:0241905665/0502268334

NsawamP.O. Box NW 280, [email protected]: 0244312757

KibiP.O. Box 97, [email protected]:0245336157/03420-26832

AnyinamP.O. Box AY 46, [email protected]:0302- 964838

NkawkawP.O. Box 272, [email protected]:03431-22222Fax: 03431-22105

MpraesoP.O. Box 56, [email protected]:020-2310400

AgogoP.O. Box AG74, [email protected]:03720-98727/03720-98731

JuasoP.O. Box 51, [email protected]:

Ho BranchP.O. Box HP 164, [email protected]:03620-28905/03620-2643603620-27067Fax: 03620-28396

Ho MarketP. O. Box HP 841, Ho [email protected]:/Fax: 03620-26459/03620-26491

Ho PolytechnicP. O. Box 164, [email protected]: 03620-27472/0362027441Fax:03620-2027446

HohoeP.O. Box 178, [email protected]: 03627-22070/ 03627-22133Fax: 03627-22432

Tema Community 2 [email protected]/210154

Central University College - CUC [email protected]/0501327283

A&C Mall (East Legon) [email protected]/0303-970189-90

Ashaiman- Mandela [email protected]/0289553503/0577670520

Tema Meridian House [email protected]/0303211802/9

Madina Zongo Junction [email protected]

Koforidua Central [email protected]/24432/24249

DonkorkromP.O. Box 11, Donkorkrom [email protected] :03424-22039

KonongoP.O. Box 137, [email protected]:03221-24336 Fax:03221-24209

Martey Tsuru

137




DzodzeP.O. Box DJ88, [email protected]:03620-91227

Aflao

Mgr: 0208182258/05036201750244728844/0248809498020953200

GCNET- do -03625-31119

AborP. O. Box AB 48, [email protected]: 0244313679/0244313379Fax: 027-8787059 KetaP.O. Box KW 133, [email protected]/03626-42664

AkatsiP.O. Box 39, [email protected]: 03626-44401/03626-44754

SogakopeP.O. Box SK 8, [email protected]: 03621-92803

KpandoP.O. Box 70, Kpando [email protected]::0507626707/02432686470509155042/0244564209

PekiP.O. Box 12, [email protected]: 0244313094Fax:0577900044

JasikanP.O. Box 85, Jasikan [email protected]: 05425-98548

KadjebiP.O. Box 27, [email protected]: 03620-92950/02088816260249889001/0506649150

Krachi - NkwantaP. O Box 56, [email protected] Mgr: 0244334835/02006084640277808121Fax:0278787051

DambaiP. O. Box DM38, [email protected]: 05469264880209401244

AhinsanP.O. Box 8818, Ahinsan, [email protected]: 03220-31964 /33452/28255 Fax: 03220-24129

Regional Manager's O�ceP.O. Box SE 1212,Suame, [email protected]:03220-31604 Fax: 03220-23512

Regional Manager's Secretariat- do -

Tel: 03220-81812/82812/29001Fax: 03220-23512

GCNetTel: 03220-32525

Properties & Facilities Management UnitP. O Box SE 1212,Suame,KumasiTel: 03220-26468 Fax:03220-26468

Corporate O�ceP. O. Box SE 1212, KumasiTel: 03220-81884/81888 Fax: 03220-81885

Kumasi MainP.O. Box 852, Kumasi [email protected]:03220-25291/03220-25292-303220-37303Fax: 03220-24569

KUMASI ZONE

KejetiaP.O. Box 1630, Kumasi [email protected]:03220-44660/03220-31446 Fax: 03220-31446

Asafo MarketP.O. Box 3696, Kumasi [email protected]:03220-45251/03220- 4525203220-23514Fax: 03220-36721

Jubilee HouseP.O. Box SE 1212, Suame Kumasi [email protected]:03220-26366/03220-30819

KNUSTP. O. UP 35 KNUST, Kumasi [email protected]:03220-62136/03220-60153/62135 Fax: 03220-62136

EjuraP.O Box 24, [email protected]: 03220-97147/05776048540206650040

YejiP.O. Box 29, [email protected]:0500498310/0500498311

ObuasiP.O. Box 290, [email protected]:03225-40255/42669Fax:03225-40255

Harper Road

Bekwai AshantiP.O. Box 127, Bekwai [email protected]:03224-20143/20204

138




TAMALE ZONE

New EdubiaseP.O. Box 42, New [email protected]:03223-98280/0249420290

New O�nso

Mgr:03220-91590/03220-987920208182789/0244563896

NkawieP.O Box 69, [email protected]:03223-92269/98739

Mampong AshantiP.O. Box 94, Mampong- Ashanti [email protected]:0502985191/05000627770502791888Fax: 03222-22327

E�duase Ashanti

Mgr: 03220-92173/0246952910

EjisuP.O. Box 49, Ejisu [email protected]:03220- 94280, 99449 Fax – 03220-20183

Agona AshantiP.O. Box 16, Agona Ashanti [email protected]:03220-91820

Sefwi-WiawsoP.O. Box 59, Sefwi-Wiawso [email protected]: 03223-95199

Tech JunctionP. O. Box UP1151, KNUST, Kumasi [email protected]: 03220-64830/03220-64832Fax: 03220-64831

Regional Manager's O�ceP.O. Box TL 228, Tamale [email protected]:03720-26415/03720-25715 Fax:03720-22765

Tamale MainP.O. Box TL 228, Tamale [email protected]: 03720-99346/0208149820Fax: 03720-22455

Tamale MarketP.O. Box TL 766, Tamale [email protected]:03720-22608Fax: 03720-22608

Properties & Facilities O�ceP. O. Box TL 228, TamaleTel:03720-27276

Tamale Hospital RoadP. O. Box TL. 2240, Tamale [email protected]: 03720-27279/03720-27278Fax: 03720-27279

BolgatangaP.O. Box 12, [email protected]: 03820-24961/0244777134/02440244229645

BawkuP.O. Box 38, Bawku [email protected]: 03820-95691/02448021070243514991

NavrongoP.O. Box 28, [email protected]:03821-22318/02084066820247262517

TumuP.O. Box 2, [email protected]: 0208482076/03920-21214

WaP.O. Box 66, [email protected]: 03920-20501/03920-220390244802107

BoleP.O. Box 24, Bole [email protected]: 03720-98393

DamongoP.O. Box DM 40, [email protected]:0266340632/0266345443

YendiP.O. Box 32, Yendi [email protected] Mgr: 03720-95241/02081802050208169462/0506390974

SalagaP.O. Box SL 7, [email protected]: 03720-95192

Kete-KrachiP.O. Box 13, [email protected]: 03620-99680/0248507816

LawraP.O. Box 92, Lawra lawramgr@gcb,com.ghMgr: 03920-96412/02084126600244431708

Dunkwa-On-O�n

[email protected]:03322-28236/0322-493316Fax: 03322-28673

BantamaP. O. Box PT 80, Kumasi [email protected]: 03220-48820/03220-48821/2Fax: 03220-48823

Assistant SecurityP. O Box SE1212 Suame, KumasiTel:03220-29002

Suame [email protected]/0577184775/0322036705

Suame [email protected]

139




SUNYANI ZONE

WenchiP.O. Box WC 49, Wenchi [email protected]/0209777303Fax: 03521-95282

BimbillaP.O. Box 27, [email protected]:0205219977//0208038689

WalewaleP. O Box 91, [email protected] Mgr:03820-94326/0243568303

Saboba GCB Bank Ltd., [email protected]: 03422-93950/03422-93951

Regional Manager's O�ceP.O. Box 34, Sunyani [email protected] Mgr: 03520-25957/03520-24084 Fax: 03520-27162

Sunyani MainP.O. Box 34, [email protected]:03520-27716/27157/0277423156Fax: 03520-27087

Sunyani MarketP. O. Box 325, Sunyani sunyanimktmgr@gcb/com.ghMgr:03520-24267/03520-2410303520-24193Fax: 03520-24474

BerekumP.O. Box 115, [email protected]: 03522-22567/03522-221930208159767 Fax:03522-22042

Dormaa AhenkroP.O. Box: 16, DormaaAhenkro [email protected]:03523-22047/ 03523-9075903520-96115/ 03520-96124 Fax: 027-8787012

Techiman MainP.O. Box TM 196, [email protected]:03525-22048/02443638390208405735Fax: 03525-22048

Techiman MarketP. O. Box TM 796, Techiman [email protected]:03525-22395/0241150681Fax: 03525-22394

DroboP. O. Box 27, [email protected]/02442259400244201795

Regional Manager's O�ceP.O. Box 475, Takoradi [email protected]/03120-23072/ 22355Fax: 03120-25255

Corporate Banking- do -Tel:03120-26700/Fax: 03120-25226

Takoradi MainP. O. Box 475, [email protected] 03122-95475/03122-9547103129-97650

Takoradi Harbour P.O. Box 707, Takoradi [email protected]/03122-9111703122-91118/0505787911 Fax:03120-27309

Takoradi Market CircleP.O. Box MC 098, Takoradi [email protected]/03039-62099 Fax: 03123-20374

TAKORADI ZONE

Tamale Aboabo [email protected]/9 Kintampo

P.O. Box 31, [email protected]/02447726380202345092

Duayaw NkwantaP.O. Box 66, [email protected]/02436691140205884858

BechemP.O. Box 69, Bechem [email protected]/0244863778/0207260869

AkumadanP.O. Box 33 Akumadan, Ash. [email protected]/0244313714/0244297259

TepaP.O. Box 103, Tepa, [email protected]/0207447016/0244454607

HwidiemP.O. Box 11, [email protected]/0208191399/0244575164

GoasoP.O. Box 83,Goaso [email protected] 0581950/0244775193/0205894329

MimP.O. Box 33, [email protected]/050 1307193/0242880192

SankorePrivate Post Bag, [email protected]/02094166770242736800

NkoranzaP.O. Box 44, [email protected]/02082162640243241681

SampaP. O. Box 90, Sampa, [email protected]/0242171585

140




EnchiP.O. Box 15, Enchi [email protected]

SekondiP.O. Box 101, Sekondi [email protected]/02441474720208165421

TarkwaP. O. Box 90, [email protected]/03122-2910650247290011Fax: 03123-20374

CAPE COAST ZONE

SamreboiP.O. Box S 40, [email protected] /050245908803122-92709Fax: 0278787066

Regional Manager's O�ceP.O. Box 65, Cape Coast [email protected]/03321-37887 Fax: 03321-32625

Cape Coast MainP.O. Box 65, Cape Coast [email protected]/03321-32354 Fax:03321-32813

University of Cape CoastP.O. Box 046, Cape Coast [email protected]:03321-30069/03321-32287 Fax: 03321-36377

Cape Coast Coronation [email protected]/2,03321303330/0553397358

UEW North Campus AgencyC/O P. O. Box 128, Winneba0200123666

Agona SwedruP.O. Box 186, Agona [email protected] /03320-21091Fax:03320-20414

Assin FosuP.O. Box AF 76, Assin [email protected]/0507465096

MankessimP.O. Box 78, Mankessim [email protected]/020201162003321-91435 Fax:0277-900113

WinnebaP.O. Box 128, [email protected]/03323-21064Fax:03323-22133

Twifu PrasoP.O. Box TW 84, [email protected]/0244314810 Fax: 027 7900 124

Breman AsikumaP.O. Box 60, [email protected]/0277777655 Fax:277900128

SaltpondP.O. Box SP. 096, [email protected]/024729001103321-92003

Abura Dunkwa P.O. Box 29, Abura Dunkwa [email protected]/055756782303321-91964

ElminaP. O. Box EL 113 Elmina [email protected]: 0206297167/03320-94899

GCNET Elubo- do -03122-22547/03122-90714

AximP.O. Box 55, Axim [email protected]/03121-98735

Half-AssiniP.O. Box 54, [email protected]/03122-91097

DadiesoPrivate Mail Bag, Dadieso [email protected] Fax: 0277900136

EluboP. O. Box 134, [email protected]/0208165048 Fax: 03122-22546

PresteaP.O. Box 102, [email protected]/0244589287 Fax: 0277900138

BogosoP.O. Box 42, [email protected]/0277801256

141




REGIONAL OFFICES

SunyaniP.O. Box 34, Sunyani [email protected]/8, 24084 Fax: 03520-27162

AccraP.O. Box K.96 Accra New Town [email protected] Mgr: 0302-249772/0302-2259280302-222641 Fax: 0302-236671

Cape CoastP.O. Box 65, Cape Coast [email protected],37887 Fax: 03321-32625

HoP.O. Box 164, Ho [email protected],26543 Fax:03620-27598

KoforiduaP.O. Box KF286, [email protected]/26791Fax:03420-23042

KumasiP.O. Box SE 1212 Suame, [email protected],29001Fax:03220-23512

TakoradiP. O. Box 475, [email protected]/22355/24948Fax: 03120-25226

TamaleP.O. Box 228, Tamale [email protected], 25715,22999 Fax: 03720-22765

Tema P. O. Box CO152, Temaareatema@gcb .com.gh0303-204824Fax: 0303-204824

New Year’s Day 1st January

Independence Day 6th March

Good Friday 30th March

Easter Sunday 1st April

Easter Monday 2nd April

Workers’ Day 1st May

African Union Day 25th May

Republic Day 1st July

Founder's Day 21st September

National Farmers Day 1st December

Christmas Day 25th December

Boxing Day 26th December

Eid Ul Fitr A Day After The End

Of The Muslim Fast

Eid Ul Adha 3 Months After

The Ramadan

Public Holidays

142


To be held at 10.00am on Friday, July 06, 2018 at the Accra International Conference Centre

Dear Member(s) You are hereby cordially invited to the 24th Annual General Meeting of GCB Bank Limited, for which the details are as given above. If you will be attending in person, please bring along to the meeting this invitation or the counterfoil printed below, to facilitate registration, which will begin at 7:00 a.m. If you are unable to attend the meeting, you may use the Form below to exercise your vote by filling in the appropriate sections; then fold the Form as instructed overleaf and return it to GCB Share Registry at least 48 hours before the meeting. Alternatively you may appoint a Proxy (who need not be a Member of the Company) to attend and vote in your stead.

PROXY FORM

RESOLUTION

FOR

AGAINST

NOTES 1. A member (shareholder)

who is unable to attend an Annual General Meeting is allowed by law to vote by proxy. The proxy form at the left has been prepared to enable you to exercise your vote if you cannot attend personally.

2. Provision has been made

for the Chairman of the Meeting to act as your proxy, but you may wish to name any person to attend the meeting and vote on your behalf.

3. In case of joint holders,

each holder should sign 4. If executed by a Company/

Corporation, the admission card should bear the Common Seal or be signed on its behalf by a Director.

5. For a postal proxy, please

sign and post it so as to reach the GCB Share Registry not later than 10a.m on Wednesday, July 04, 2018.

1. To consider and adopt the Financial Statements of the Company for the year

ended 31st December, 2017 together with the Reports of the Directors and Auditors thereon.


3. To re-elect the following Directors:

i. Jude Kofi Arthur (Mr.)

ii. Lydia Konadu Essah (Mrs.)

4. To elect the following Directors:

i. Nik Amarteifio (Mr.)

ii. Nana Ama Ayensua Saara III

iii. Francis Arthur-Collins (Mr.)

iv. Osmani Aludiba Ayuba (Mr.)

v. Emmanuel Ray Ankrah (Mr.)

vi. Samuel Amankwah (Mr.)

5. To approve Directors’ remuneration

6. To appoint Messrs Deliotte & Touche as Auditor of the Bank.


SPECIAL RESOLUTION 8. To authorise the transfer of GHS400m from Income Surplus to Stated Capital

Shareholder Details Folio No. All Signatories to Sign Below

Please use this Counterfoil to indicate whom (if any) you might wish to act as your Proxy

FORM OF PROXY FOR USE AT AGM I/We ……………………………................................…………………………………a member/members(*) of GCB

Hereby appoint ………………………………………................................………..or failing whom, the Chairman of the meeting as my/our(*) proxy to vote for me/us on my/our(*) behalf at the Annual Meeting of the Company to be held at 10am on July 06, 2018 and at any adjournment therefore.

Date

………….................….….2018

(*) Delete whichever is not applicable

GCB BANK LIMITED INVITATION AND FORM OF PROXY

FOR USE AT ANNUAL GENERAL MEETING

143


To be held at 10.00am on Friday, July 06, 2018 at the Accra International Conference Centre

Dear Member(s) You are hereby cordially invited to the 24th Annual General Meeting of GCB Bank Limited, for which the details are as given above. If you will be attending in person, please bring along to the meeting this invitation or the counterfoil printed below, to facilitate registration, which will begin at 7:00 a.m. If you are unable to attend the meeting, you may use the Form below to exercise your vote by filling in the appropriate sections; then fold the Form as instructed overleaf and return it to GCB Share Registry at least 48 hours before the meeting. Alternatively you may appoint a Proxy (who need not be a Member of the Company) to attend and vote in your stead.

PROXY FORM

RESOLUTION

FOR

AGAINST

NOTES 1. A member (shareholder)

who is unable to attend an Annual General Meeting is allowed by law to vote by proxy. The proxy form at the left has been prepared to enable you to exercise your vote if you cannot attend personally.

2. Provision has been made

for the Chairman of the Meeting to act as your proxy, but you may wish to name any person to attend the meeting and vote on your behalf.

3. In case of joint holders,

each holder should sign 4. If executed by a Company/

Corporation, the admission card should bear the Common Seal or be signed on its behalf by a Director.

5. For a postal proxy, please

sign and post it so as to reach the GCB Share Registry not later than 10a.m on Wednesday, July 04, 2018.

1. To consider and adopt the Financial Statements of the Company for the year

ended 31st December, 2017 together with the Reports of the Directors and Auditors thereon.


3. To re-elect the following Directors:

i. Jude Kofi Arthur (Mr.)

ii. Lydia Konadu Essah (Mrs.)

4. To elect the following Directors:

i. Nik Amarteifio (Mr.)

ii. Nana Ama Ayensua Saara III

iii. Francis Arthur-Collins (Mr.)

iv. Osmani Aludiba Ayuba (Mr.)

v. Emmanuel Ray Ankrah (Mr.)

vi. Samuel Amankwah (Mr.)

5. To approve Directors’ remuneration

6. To appoint Messrs Deliotte & Touche as Auditor of the Bank.


SPECIAL RESOLUTION 8. To authorise the transfer of GHS400m from Income Surplus to Stated Capital

Shareholder Details Folio No. All Signatories to Sign Below

Please use this Counterfoil to indicate whom (if any) you might wish to act as your Proxy

FORM OF PROXY FOR USE AT AGM I/We ……………………………................................…………………………………a member/members(*) of GCB

Hereby appoint ………………………………………................................………..or failing whom, the Chairman of the meeting as my/our(*) proxy to vote for me/us on my/our(*) behalf at the Annual Meeting of the Company to be held at 10am on July 06, 2018 and at any adjournment therefore.

Date

………….................….….2018

(*) Delete whichever is not applicable

GCB BANK LIMITED INVITATION AND FORM OF PROXY

FOR USE AT ANNUAL GENERAL MEETING

144


145


GCB Bank Limited

VOTING CARDANNUAL GENERAL MEETING

GCB Bank Limited

ADMISSION CARDANNUAL GENERAL MEETING

SIGNATURE

NAME OF PERSON ATTENDING

NAME OF SHAREHOLDER

146


GCB Bank Limitedwww.gcbbank.com.gh

GCB Bank Limitedwww.gcbbank.com.gh

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Documents

GCB BANK LIMITED ANNUAL REPORT 2017 · GCB BANK LIMITED ANNUAL REPORT 2017 Five Year Financial Summary (cont’d) FIVE YEAR FINANCIAL SUMMARY 2017 2016 2015 2014 2013 GH¢’000 GH¢’000