2011 adb annual report.pdf
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Annual Report & Financial Statements 2011
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Annual Report &
Financial Statements
2011
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Corporate Information – 3
ProfileofDirectors – 5
FinancialHighlights – 6
Chairman’sStatement – 7
ProfileofExecutiveManagement – 10
ManagingDirector’sReviewofOperations – 11
ReportoftheDirectorstotheMembersof AgriculturalDevelopmentBank – 13
CorporateGovernance – 15
IndependentAuditors’Report – 18
ConsolidatedStatementof ComprehensiveIncomeStatement – 20
ConsolidatedStatementofFinancialPosition – 22
ConsolidatedStatementofChangesinEquity – 23
ConsolidatedStatementofCashflows – 25
NotestotheFinancialStatements – 26
ADBBranchNetwork – 74
CorrespondentBanks – 79
Contents
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BOARD OF DIRECTORS AlhajiIbrahimAdam - ChairmanMr.StephenKpordzih - ManagingDirectorMr.PaulAgyiri - ExecutiveDirectorDr.S.K.Dapaah - Non-ExecutiveDirectorDr.JohnsonAsiama - Non-ExecutiveDirectorMs.NancyAmpofo - Non-ExecutiveDirectorMajorM.S.Tara - Non-ExecutiveDirectorMrs.EstherKumado - Non-ExecutiveDirector
BOARD COMMITTEEAudit & Compliance Committee Dr.S.K.Dapaah - Chairman
MajorM.S.Tara - MemberDr.JohnsonAsiama - MemberMrs.EstherKumado - Member
Governance & Risk Management Dr.JohnsonAsiama - ChairmanDr.S.K.Dapaah - MemberMrs.EstherKumado - MemberMs.NancyAmpofo - Member
Loans and Advances Committee Dr.JohnsonAsiama - ChairmanMrs.EstherKumado - MemberMajorM.S.Tara - MemberMr.StephenKpordzih - MemberMr.PaulAgyiri - Member
Human Resources AlhajiIbrahimAdam - ChairmanMr.StephenKpordzih - MemberMrs.EstherKumado - MemberMs.NancyAmpofo - Member
COMPANY SECRETARY Mr.JamesK.AgbedorADBHouse,37IndependenceAvenueAccra
REGISTERED OFFICE ADBHouse,37IndpendenceAvenuePOBox4191Accra
AUDITORS KPMGCharteredAccountants13YiyiwaDrive,AbelenkpePOBoxGP242Accra
Board of Directors, Officials and Registered Office
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Board of Directors
1
3
9
2AlhajiIbrahimAdam
Mr.PaulAgyiri
8MajorM.S.Tara
Mr.JamesK.Agbedor
Mr.StephenKpordzih
5Dr.S.K.Dapaah
4Ms.NancyAmpofo
7Mrs.EstherKumado
6Dr.JohnsonAsiama
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Profile of Directors
1- Ibrahim ADAM (Chairman)Alhaji IbrahimAdamholdsaB.Sc (Hons)AgricDegree fromtheKwameNkrumahUniversity ofScience andTechnology.He has attended several short courses on rice production,administration and management. The list includes WARDA(Monrovia), IITA (Ibadan, Nigeria), Ghana Institute ofManagementandPublicAdministration (GIMPA).OthersareEDI (Maastricht)andFeldafing (Germany).Mr.Adamservedingovernmentforseveralyearsbetween1984and2001.HewasPNDCUnder-SecretaryforAgriculture(NorthernRegion)between1984and1985beforebecomingthePNDCDeputySecretary for Agriculture (Crops). He was promoted to thePNDCSecretaryforAgriculturein1992.AtthebeginningoftheFourthRepublicin1993,hefirstservedastheMinisterofFoodandAgricultureuntil1996whenhewasmadetheMinisterofTrade.Mr.AdamiscurrentlytheCEOofBradaVenturesandwasappointedtheChairmanoftheBoardon26thJune2009.
2 - Stephen KPORDZIH (Executive Director)Mr. Kpordzih holds an MBA (Finance) from University ofLeicester,UK,andaPost-GraduateCertificate-StrategicBankManagementfromOdenseBusinessSchool,Denmark.Hehasto his record immense banking experience and consultancyassignments with leading banks, including preparation of apaperonFinancingRuralAgricultureinGhanaaspartoftheGovernment’sCompactProgrammeforaccessingtheUS$547million Millennium Challenge Account. He also developedfeasibility reports for theestablishmentofnon-bankfinancialinstitutions.One-timelecturerinFinanceofInternationalTradeat the Chartered Institute of Bankers, Ghana, a resourceperson in Treasury Management at the Ghana BankingCollege,andanHonouredMemberoftheInternationalWho’sWhoofProfessionalsforhisachievementsinandcontributiontobanking,Mr.KpordzihtookofficeastheManagingDirectoroftheBankinAugust2009.
3 - Paul O. AGYIRI (Executive Director)Mr.AgyiriholdsaBachelorLawsDegreefromtheUniversityofGhana,LegonandaProfessionalQualifyingCertificate inLawfromtheGhanaSchoolofLaw.HeservedintheAttorney-General’sDepartmentbetween1978and1984.Between1984and 1991, he engaged in private consultancy practice withMaxwell&MaxwellLawOffices,LiberiaandtookthepositionofDirectorofLegalServicesoftheWestAfricanExaminationsCouncil, Head Office. He joined the Bank as Chief LegalAdvisorin1991.BetweenJune2003andJuly2005,Mr.AgyiriwassecondedtotheMinistryofFinance&EconomicPlanningasChiefDirector,returningtotheBanktoresumehispositionasSolicitor.
4 - Nancy Dakwa AMPOFO (Non-Executive Director)ANotaryPublic,SolicitorandBarrister,Ms.AmpofograduatedfromtheUniversityofGhanain1979withaB.A.(Combined)Degree in Law (with Political Science). She obtained aProfessionalLawQualifyingCertificatein1981fromtheGhanaLawSchoolandwascalledtotheGhanaBaron20thNovember1981.Ms.Ampofohashadatrackrecordandexpertiseinlegalconsultancy acquired throughundertaking legalwork for thepublic and private sector institutions, as well as individualsandmultinationals.Ms.Ampofo founded her own legal firm,N.D.AmpofoAssociatesin2000andhasbeenofferinglegalconsultancyservicestoboth localandinternationalclients inallareasofthelaw.ShewasappointedasDirectoroftheBankinJune2009.
5 - Dr. Samuel K. DAPAAH (Non-Executive Director)Dr. Dapaah has had a long professional experience inAgricultural Policy and Public Administration, Teaching,ResearchandManagement.HegraduatedfromtheUniversityof Ghana, Legon with a B.Sc. (Hons)Agriculture Degree inJune1972andproceededtotheUniversityofGuelph,Canadawhere he graduated with an M.Sc. Agricultural EconomicsDegree in February 1975 and Ph.D.Agricultural EconomicsDegree in February 1982. He returned to the Universityof Ghana, Legon as a Research Fellow at the Institute ofStatistical, Social and Economic Research (ISSER) andLecturer at the Department of Economics and DepartmentofAgriculturalEconomics.Dr.Dapaahserved in theMinistryofFoodandAgriculture,first,asDirectorofPolicy,Planning,Monitoring and Evaluation between 1986 and 1992, and asChiefTechnicalAdvisorandChiefDirectorbetween1993and2001.Amember of the Board between 1993 and 2001, Dr.DapaahwasreappointedasDirectorinJune2009.
6 - Dr. Johnson P. ASIAMAH (Non-Executive Director)Dr. Asiamah is the Chief Manager, Research Departmentof the Bank of Ghana. He holds a B.A. (Hons) Degree inEconomicswithStatisticsandanM.Phil.(Economics)issuedby the University of Ghana in 1993 and 1996 respectively,and a Ph.D. (Economics) Degree from the University ofSouthampton,England,UnitedKingdomin2005.Withahostofpublicationsandconferencepresentationstohisrecord,Dr.AsiamahwasappointedtotheBoardoftheBankinJune2009.
7 - Mrs. Esther KUMADO (Non-Executive Director)MrsEstherKumadoholdsaBA(Hons)DegreeandaQualifyingCertificate in Law (QCL) from the University of Ghana, anda Professional Diploma in Law issued by the Ghana LawSchool.She isamemberof theGhanaBarAssociationandInternationalBarAssociation, aswell asbeingaMemberoftheGoverningBodyoftheFinancialIntelligenceCentre(FIC).MrsKumadoiscurrentlytheHeadoftheLegalDepartmentofBankofGhanaandrepresentstheFinancialInvestmentTrust(asubsidiaryoftheBankofGhana)ontheBoard.
8 - Major Mahama S. TARA (Rtd) (Non-Executive Director)Major Tara (Rtd), a Chartered Management Accountant(ACMA)alsoholdsaBScAdministration(AccountingOption)Degree from theUniversityofGhana.His richexperience inthepublicsectorhasincludedservingasDirectorofFinanceand Administration of the Ghana Tourist DevelopmentCompanyLtd.,DirectorofFinanceofthethenArchitecturalandEngineeringServicesCorporation,andaDeputyController&Accountant-General.At theMinistry of Finance & EconomicPlanning,MajorTara(Rtd)hadpreviouslyservedat intervalsas Director of Budgets and Acting Chief Director. Amonghis achievements, he headed the Technical Team that re-organizedtheBudgetingandPublicExpenditureManagementSystemwithintheGovernmentmachineryandintroducedtheMediumTermExpenditureFramework (MTEF)as themodelforGovernmentalAccounting.HewasappointedtotheBoardinJune2009.
9 - James K. AGBEDOR (Secretary)Mr. Agbedor holds the Bachelor-of-Laws Degree from theUniversityofGhanaandaProfessionalLawCertificate fromtheGhanaSchoolofLaw.He joined theBank in1985asaLegal Officer and is currently the Solicitor & Head-GeneralCounseloftheBank.HewasappointedSecretarytotheBoardin2006.
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The Group The Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000At 31 December
Totalassets 1,213,671 968,199 1,205,757 964,503Loansandadvancestocustomers(net) 678,747 576,987 678,747 576,987Customerdeposits 827,718 536,079 827,718 536,079Shareholders’equity 181,707 106,353 176,164 106,279
For the year ended 31 December
Profitbeforetax 51,113 12,763 45,903 12,265Profitaftertax 48,557 12,118 43,608 11,652
Dividendpershare(Ghanacedis) - 0.39 - 0.39Earningspershare(Ghanacedis):-Basic 1.942 0.485 1.744 0.466-Diluted 1.942 0.485 1.744 0.466Returnonaverageequity(%) 33.7 10.6 30.9 10.2Returnonaverageassets(%) 4.5 1.4 4.0 1.4
At 31 December
Numberofstaff 1,345 1,168 1,345 1,168Numberofbranches 76 65 76 65
Financial Highlights
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Itismygreatestpleasuretopresenttoyou,theAnnualReportandthefinancialresultsofyourBankfortheyearended31stDecember2011.
1. World Economy
Globaloutputfor2011showedgrowthof3.8%comparedto5.2%recordedin2010perIMFestimates.Thiswaspoweredby1.6%growthintheadvancedeconomieswhiletheemergingeconomiesandSub-SaharanAfricarecorded6.2%and4.9%respectively.Developedcountries’economiesareexpected toexpandbyonly1.6%duetoshakyconsumerconfidence,fiscaltighteningandaformidabledebtoverhangespeciallyinEurope.Thismarkeda decline in the 2010economic growth performances of 3.2% for the advancedeconomiesandtherespective7.3%and5.3%forboththeemergingeconomiesandSub-SaharanAfrica.
Crudeoilpricebegantheyear2011atUSD92perbarrelandwasgenerallystablebutpeakedatUSD124perbarrelinMay2011beforerecedingtoUSD103perbarrelattheendof2011.
GoldpricerecordedsteadyincreasesfromUSD1,386perounceattheendof2010tothehighestofUSD1,900perounceinSeptember2011.However,itendedtheyearatUSD1,599perounce.CocoapriceremainedveryhighinthefirsthalfoftheyearandrosefromUSD2,951pertonattheendof2010toUSD3,654pertoninMarch2011.MostofthegainswerehowevererodedastheyearendedatthepriceofUSD2,101perton.
2. Domestic Economy
ProvisionalrealGDPgrowthwas13.6%andwasbelowtheprojectedtargetof14.4%for2011.Thiswashowever higher than the real GDP growth of 7.7% recorded in 2010. Government’s fiscal stability andconsolidationpolicieswereoncourse.Fiscaldeficit rose toGH¢2.1billioncompared toGH¢1.7billion in2010butwaswithinthebudgeteddeficitofGH¢2.4billion.
ThecurrentaccountdeficitwidenedfromUSD2.1billioninDecember2010toUSD3.1billioninDecember2011.This led toadecline in theoverall balanceof payments surplus fromUSD1.5billion toUSD546.5million.However,thegrossexternalreservespositionincreasedfromUSD4.7billionin2010toUSD5.4billioninDecember2011.
TheCedi depreciatedagainst themajor currencies in 2011 showingadeclineof 8.3%,7.9%and5.3%respectivelyfortheUSD,GBPandtheEURO.Inflationrosemarginallyto9.1%inFebruary2011buteasedthereafterandgenerallyremainedasingledigitendingtheyearat8.6%.Theyear2011openedwiththeBankofGhanaPrimeRateat13.5%.Twosuccessivecutsintheyearbroughttherateto12.5%attheendoftheyear2011.
3. Financial Performance
BoththeexternalanddomesticeconomicconditionsoutlinedabovegreatlyaffectedtheperformanceoftheBankin2011.
NetProfitaftertheNationalStabilizationLevyfor2011wasGH¢48.6millionandwasover300%abovetherestatedamountofGH¢12.1millionrecordedfor2010.ProfitwasrestatedtoenabletheBankprudentlymakeprovisionforcertainlongoutstandingiteminitsbooksdatingbackto2002andtoprovideitwithacleanbillofhealthtopursueitsoperations.TheBankwrotebackprovisionstotalingGH¢7.6millionasaresultoftheimprovingconditionsofitscreditportfolio.WewillcontinuetoprudentlyreviewthecreditportfoliotopreventpotentialdeteriorationintheassetsandthenegativeconsequencesofitsimpactonprofitabilityandstrengthoftheBank’sbalancesheet. Thebalancesheetshowedsignificantgrowthinthefinancialyear2011.Totalassetsgrewby25.4%fromtherestatedamountofGH¢968.2millionattheendofDecember2010toGH¢1,213.7millionatyearend
Chairman’s Statement – 2011
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December2011.ThiswasfundedmainlyfromtheincreaseindepositsmobilizedfromGH¢536.1milliontoGH¢827.7million-agrowthof54.4%.Shareholders’Fundsalsowentupby70.9%fromGH¢106.4millionattheendofDecember2010toGH¢181.7millionattheendofDecember2011.
4. Financing to Agriculture Sector
TheBank increased itscreditdisbursements tovariousproductiveagriculturalprojects totalingGH¢141.7million,inexcessoftheGH¢100.1millionrecordedin2010.Thisrepresented41.6%increase.Financingofagro-processingwaspredominantasitamountedtoGH¢84.5million.TotalcredittotheagriculturesectorattheendofDecember2011stoodatGH¢190.8millionandthisconstituted27.4%ofthetotalcreditportfolio.ThismarkedanincreaseofGH¢50.3millionor35.8%intheDecember2010positionofGH¢140.5million.
5. Update on Strategic Plan 2010 – 2012
TheBanksetitsvisiontobeamongthetop3performingbanksinGhanaby2012,balancingmarketorientationwithadevelopment focusonagricultureandmore.Key initiativesso far implemented included improvingservicedelivery, rollingoutnewproductsandservices,and introducingnewchannels forsales.Theyear2011sawfurtherexpansioninourbranchnetworkandconsolidationofourearlierstrategicinitiatives.WesuccessfullyimplementedournewIToperatingsystemwhichhasenabledtheBanktocopewithexpansionofserviceandproductdeliveryandenhanceditscompetitivepositionintheGhanaianbankingindustry.
6. Outlook for 2012
We look forward to a promisingbut challengingprospects as theworld economy is expected to registeragrowthof3.3%while thedomesticGhanaianeconomy faceschallengesofanelectionyear.However,weremainoptimistic thatGovernmentspending inkeysectorsof theeconomyespeciallyAgricultureandinfrastructure,willprovidethenecessaryexpansionineconomicactivitieswhichtheBankcantakeadvantageofandexpanditsbusinessoperations. 7. Conclusion
I take the opportunity on behalf of the Board to congratulate the shareholders and customers for theircontinuedloyaltyandsupportduringthepastyear.IalsothankManagementandstafffortheirhardworkandcommitmenttodutyandwishallstakeholdersasuccessfulYear2012.
ALHAJI IBRAHIM ADAMBOARD CHAIRMAN
Chairman’s Statement (Cont’d)
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Executive Management
Mr.StephenKpordzihManagingDirector
Abdul-SamedIddrisuExecutiveHead-TransactionBankingandTechnology
BernardAppiahGyebiExecutiveHead-CreditRiskManagement
JamesBaidooSagoeExecutiveHead-Finance&Planning
Mr.PaulAgyiriExecutiveDirector
AdamSulleyExecutiveHead-RetailBanking
EdwardIanArmah-MensahExecutiveHead-CorporateBanking
S.N.S.AbbeyExecutiveHead-Operations
JamesK.AgbedorBoardSecretaryandGeneralCounsel
AkwelleyAdoleyBulleyExecutiveHead-HumanResources
GeorgeBaahDanquahTreasurer
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Mr. Stephen Kpordzih – Managing DirectorAppointed Managing Director in August 2009, heholds anMBA (Finance) fromUniversity of Leicester,UK, andaPost-GraduateCertificate -StrategicBankManagementfromOdenseBusinessSchool,Denmark.His banking career spanned BBG, GCB and StanbicBank. One-time lecturer in Finance of InternationalTrade at the Chartered Institute of Bankers, Ghana,andaresourcepersoninTreasuryManagementattheGhana BankingCollege, he is anHonouredMemberoftheInternationalWho’sWhoofProfessionalsforhisachievementsinandcontributiontobanking.
Mr. Paul Agyiri - Executive DirectorHeholdsaBachelorofLawsDegreefromtheUniversityof Ghana, Legon and a Professional QualifyingCertificateinLawfromtheGhanaSchoolofLaw.Afterconsiderable legal practice in the Attorney-General’sDepartment and WAEC, and private consultancypracticeinLiberia,hefirstjoinedADBin1991asChiefLegalAdvisor.HeiscurrentlytheExecutiveDirectoroftheBank.
James K. Agbedor -- Board Secretary and General CounselHeholdsaBachelor-of-LawsDegreefromtheUniversityofGhanaandaProfessionalLawCertificate fromtheGhanaSchoolofLaw.He joinedtheBank in1985asaLegalOfficerandworkeduptheladderuntilhewasappointedSecretarytotheBoardin2006.HeisalsotheGeneralCounseloftheBank.
Abdul-Samed Iddrisu - Executive Head-Transaction Banking and TechnologyHewaspreviouslyDirectorofBusinessSolutionsandthenDirectorofTransactionBankingatFidelityBank.Prior to that,hewasHeadof ITatStanbicBankandFirst Atlantic Merchant Bank, and Systems Analyst/Programmer of the Volta RiverAuthority. He holds aBachelorofSciencedegreeinComputerSciencefromtheUniversityofScienceandTechnology.
Adam Sulley - Executive Head-Retail Banking He holds a B.Sc. in Industrial Management from theUniversity of Petroleum and Minerals (SaudiArabia),M.Sc. in International Business from South BankUniversity (UK), Dip M and MCIM of the CharteredInstitute of Marketing (UK). He was the immediatepastChairmanof theChartered InstituteofMarketing(UK),GhanaBranchandalsoaformermemberoftheGoverningCouncilofCIMG.HeisapanelmemberoftheNationalAccreditationBoard(NAB)andanexternalexaminer to the National Board for Polytechnic andTechnicalExaminationCouncil(NABPTEX).
Akwelley Adoley Bulley – Executive Head-Human Resources She joinedADB fromMillicomGhana Limited (TIGO)
whereshewastheHeadofHumanResources.Priortothat,shewastheHumanResourceManageratHolidayInn,AccraAirport, and Employee Relations ManagerandlaterHumanResourceManagerofCadburyGhanaLimited. She holds an MA Degree in EmploymentStudiesfromLondonMetropolitanUniversityandaBADegree inPsychologywithLinguistics fromUniversityofGhana.
Bernard Appiah Gyebi - Executive Head-Credit Risk ManagementHejoinedADBfromStanbicBankGhanaLimitedwherehewas theHead ofCredit. Earlier atBarclaysBank,he served in various capacities as Corporate CreditManager,ComplianceOfficer/ExecutiveAssistanttotheManagingDirector,andHeadofCorporateCredit.
Edward Ian Armah-Mensah - Executive Head-Corporate Banking HejoinedADBfromBarclaysBankGhanaLimitedwherehe was Head of SME (MediumUnit). He had earlierworked at Stanbic Bank as an Account RelationshipManager and Credit andMarketingManager at NDKFinancial Services Limited. He holds an ExecutiveMasters in Business Administration (Finance Option)andaBachelorofScienceinBusinessAdministration.
George Baah-Danquah - TreasurerHejoinedADBfromAccessBankGhanaLimitedwherehe was Head of Treasury. Prior to that, he occupiedvariouspositionsintheFinanceDepartment,TreasuryDepartment, and the Global Markets Department ofStanbicBank.HeholdsaMastersDegreeinBusinessAdministrationandaBachelorofScience inBusinessAdministration.
James Baidoo Sagoe - Executive Head-Finance & Planning He joined ADB from Merchant Bank Ghana Limitedwhere he was the Corporate Development AnalystandFinancialController.EarlieratVALCO,heservedasPlanning&FinancialAnalystandChiefAccountant.Mr. Sagoe is a Chartered Accountant and holds anExecutive Masters in Business Administration fromUniversityofGhanaBusinessSchool.
S. N. S. Abbey – Executive Head-OperationsHe holds BSc (Hons) Degree inAgriculture from theUniversityofGhana.HejoinedADBin1977andhasoccupiedvariouspositions.HewasmadeCo-ManageroftheBusinessBluePrintandtheMicroBankerbankingsoftwareimplementationprojects,andProjectManagerfor the Flexcube banking application implementationproject.
Profile Of Executive Management
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Introduction
TheAgriculturalDevelopmentBankconsolidatedtheimplementationofitskeystrategicinitiativesduringyear2011.Thoughtheyearwaschallenging,theBankmadesomeimpressivegainsandputtheachievementsofitsthreeyearstrategicobjectivesinfocus.
Strategic Initiatives
TheBankcontinuedthepursuitofitsagendaofpositioningitselfproperlyintheGhanaianbankingindustry.Thefollowingkeystrategieswereimplemented:increasedmobilizationandexpansionindeposits,openingofnewbranches,installationofanewFlexcubeUBSSystemandimprovementinstaffconditionsofservice.
Business Growth
Totalassetsgrewby25.4%fromGH¢968.2millionin2010toGH¢1,213.7millioninDecember2011.Thiswasmainlyonaccountof increases in loansandadvancesand investment insecurities.Total loansandadvances (net) recorded an increase of 17.6% fromGH¢577.0million at the end of December 2010 toGH¢678.8million.Thisconstituted55.9%oftotalassets.Similarly,investmentinGovernmentsecuritiesroseby26.3%fromGH¢165.9million toGH¢209.5million.Theassetswere fundedmainly fromdepositsandborrowings.Totaldepositsgrewby54.4%fromGH¢536.1millionattheendofDecember2010toGH¢827.7millionattheendof2011.Thisconstituted80.2%oftotalliabilities.However,borrowingswhichformed15.6%oftotalliabilitiesdeclinedby27.1%fromGH¢221.4milliontoGH¢161.4million.
Branch Expansion
Thebankcontinueditsbranchnetworkexpansionprogrammeduringtheyear.TennewbrancheswereopenedandtheseincludedNima,DanquahCircle,KasoainAccra,AgonaNkwanta,Bole,Buipe,TamaleKaladan,Tumu,KadeandAsiakwa.TheseincreasedtheBank’sbranchnetworktoseventysixattheendoftheyear2011.Additionally,threeExecutiveBankingUnitsweresetuponeeachatAccra,KumasiandTamale.
Funding for Agriculture and Allied Sectors
Credit to the agriculture and allied sectors amounted toGH¢190.8million and represented 27.4%shareof thecreditportfolioasat theendof2011asagainst the29.0%recorded inDecember2010.TotalnewlendingtothesectoramountedtoGH¢141.7millionin2011.Thisshowedanincreaseof41.6%inthetotaldisbursementsofGH¢100.1millionrecordedin2010.
Agro-processing dominated the credit disbursements as the sub-sector received an amount ofGH¢84.5millioncomparedtoGH¢72.3millionin2010.Thisrepresented59.6%ofthetotalnewlendingtotheagriculturesector.ThepiechartbelowgivesapictorialviewofthesectoralanalysisoftheBank’screditportfolioattheendofDecember2011.
Review Of 2011 Operations By Managing Director
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Profit Performance
TheBankrecordedasignificantimprovementinitsNetProfitafterNationalStabilizationLevyofGH¢48.6millionfor2011asagainsttherestatedprofitofGH¢12.1millionin2010,showinganincreaseofover300%.This translates intoReturn onAverageAssets andReturn onAverageEquity ratios of 4.5%and 33.7%respectively,comparedto1.4%and10.6%respectivelyfortherestatedprofitof2010.
Strategic Plan 2010-2012
2011markedthesecondyearoftheimplementationoftheBank’sstrategicplanandsawtheconsolidationofoperationsoftheBusinessUnits.TheBankinstalledanewFlexcubeUBSoperatingsystemtoimproveupontheefficiencyofitsbusinessoperationsandexpandservicedeliverytocustomers.TheBankremainscommittedtoitskeystrategicobjectiveofbeingamongthetopthreeperformingbanksinthebankingindustry.Theperformanceof theBank in2011hasbeenvery impressiveandweareoncourse toachievingourstrategicobjectives.
Corporate Social Responsibility
TheBankescalated itsCorporateSocialResponsibilityengagementsandspenta totalofGH¢1,295,518in2011whichshowedasignificantincreaseoverthe2010amountofGH¢605,725.ThiswasexclusiveofanamountofGH¢98,000sponsorship forour trademarkNationalBestFarmerAward.Wemadeseveralotherdonationstocharityduringtheyearincludingdonationofcomputerstothesecurityservicesandsomeselectededucationalinstitutions.
Outlook for Year 2012
Wewill continue the implementationof the lastphaseofourstrategicplanandensure thatall themajorstrategicactionstepsarefullyimplemented.WeexpectasteadybusinessandincomegrowthinspiteofthepotentialchallengestotheeconomyofGhanainanelectionyear.TheBankisalsokeentofollowthroughthenecessaryprocessestoenableitlistontheGhanaStockExchange. Conclusion
IwishtoexpressmyappreciationtotheBoardandtheshareholdersfortheircontinuedsupporttotheBankduringthepastyear.Ialsowishtothankourloyalanddedicatedcustomersforpatronizingourservices.IcongratulatethehardworkingstaffoftheBankfortheirgoodeffort.
STEPHEN KPORDZIHMANAGING DIRECTOR
Review Of 2011 Operations By Managing Director (Cont’d)
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TheDirectorssubmittheirreporttogetherwiththeconsolidatedfinancialstatementsoftheBankfortheyearended31December2011.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Bank’s Directors are responsible for the preparation and fair presentation of these consolidatedfinancialstatements inaccordancewith InternationalFinancialReportingStandardsand in themannerrequiredbytheAgriculturalDevelopmentBankAct1965(Act286)asamendedbyNLCD182of1967andAct352of1970andtheBankingAct,2004(Act673)asamendedbytheBanking(Amendment)Act,2007(Act738)andforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
TheDirectorshavemadeanassessmentoftheabilityoftheBankanditssubsidiariestocontinueasgoingconcernsandhavenoreasontobelieveanyoftheentitieswillnotbeagoingconcernintheyearahead.
TheDirectorsconsiderthestateoftheGroup’saffairstobesatisfactory.
PRINCIPAL ACTIVITIES
TheprincipalactivitiescarriedoutbytheBankduringtheyearunderreviewwerewithinthelimitspermittedbyitsregulations.
AUDITORS
TheAuditorsMessrsKPMGwereappointedonMarch5,2011toreplaceMessrsDeloitteandTouchewhoresignedtheirpositionasauditorsonMarch4,2011.ThiswasincompliancewiththedirectivefromtheBankofGhanarequiringallbankswhoseexternalauditorshavebeenatpostformorethanfiveyearstotakestepstoreplacethem.
DIRECTORS
Thepresentlistofmembersoftheboardisshownonpage3.
SUBSIDIARIES AND ASSOCIATE
TheBankhasthefollowingwhollyownedsubsidiaries,whichareincorporatedinGhanaandprovidethefollowingservices:• ADBPropertiesLimited - RealEstate
TheBankholdssignificantinterestinthefollowingcompanies:GlobalAccessSavingsandLoansLimited - SavingsandLoansAgricareLimited - AgroProcessingActivityVentureFinanceCompanyLimited - VentureCapital
FINANCIAL STATEMENTS AND DIVIDEND
TheBank’sresultsfortheyeararesetoutintheattachedfinancialstatements,highlightsofwhichareasfollows:
REPORT OF THE DIRECTORSTO THE MEMBERS OF AGRICULTURAL DEVELOPMENT BANK
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In accordance with section 29(c) of the BankingAct, 2004 (Act 673) as amended, an amount of GH¢21,804,063(2010:GH¢2,912,901)wastransferredto thestatutoryreservefundfromthe incomesurplusaccountbringingthecumulativebalanceonthestatutoryreservefundattheyearendtoGH¢52,076,405(2010:GH¢30,272,342).
RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS
Certaintransactions/balancesdatingbackanumberofyearshavebeenoutstandingintheBank’srecords.Effortshavebeenmadebymanagement in thepast to investigateandcorrect this.Adecisionwastakenduringthisyeartoprovideforthosewhichhavebeenlongoutstanding.
Suchtransactions/balanceshavebeencorrectedretrospectivelyandreflectedinthefinancialstatementsoftheprioryear.Detailsareshowninnote33ofthefinancialstatements.
APPROVAL OF THE FINANCIAL STATEMENTS
Thefinancialstatementsof theBankwereapprovedby theBoardofDirectorson29thMarch,2012andsignedontheirbehalfby:
…………………………….. ……………………………….CHAIRMAN MANAGINGDIRECTOR
…………………………… …………………………….. ……………………………….DIRECTOR EXECUTIVEHEAD-FINANCE&PLANNING SECRETARY
Restated2011 2010
GH¢’000 GH¢’000Profitaftertax(attributabletoequityholders) 48,557 12,147towhichisaddedthebalancebroughtforwardonincomesurplusaccount 3,685 (6,567)
--------- ----------52,242 5,580
outofwhichistransferredtothestatutoryreservefundinaccordancewiththeBankingActanamountof (21,804) (2,913)
transfersin/outofthecreditriskreserveof (8,299) -
transferstostatedcapital (25,000) -
Othermovements;
disposalofsubsidiary 521 -
surpluswrittenoffduetodepreciation 231 1,018
prioryearadjustments (736) -
disposalofproperty,plantandequipment 12,374 ---------- ---------
(42,713) (1,895)-------- ---------
leavingabalancetobecarriedforwardof 9,529 3,685===== =====
REPORT OF THE DIRECTORSTO THE MEMBERS OF AGRICULTURAL DEVELOPMENT BANK (CONT’D)
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Commitment to Corporate Governance
AgriculturalDevelopmentBankanditssubsidiariesoperateaccordingtotheBaselCommitteestandardsoncorporategovernance,whichconstituteinternationalbestpracticeinthisarea.
ThekeyguidingprinciplesoftheGroup’sgovernancepracticesare:
(i) Goodcorporategovernanceenhancesshareholdervalue
(ii) The respective roles of shareholders, Board of Directors and management in the governancearchitectureshouldbeclearlydefined
(iii) The Board of Directors should have majority membership of independent directors, definedbroadlyasdirectorswhoarenotemployedbytheGrouporcompany,orwhoarenotaffiliatedwithorganizationswithsignificantfinancialdealingswiththeGroup.
These principles have been articulated in a number of corporate documents, including the Bank’sregulations,rulesofproceduresforBoards,acodeofconductforDirectorsandrulesofbusinessethicsforstaff.
The Board of Directors
TheBoardisresponsibleforsettingtheinstitution’sstrategicdirection,leadingandcontrollingtheinstitutionandmonitoringactivitiesofexecutivemanagement.
Asof 31December 2011, theBoard ofDirectors ofAgriculturalDevelopmentBank consistedof eight(8)membersmadeupofanindependentNon-executiveChairman,6(six)Non-executiveDirectors,andtwo(2)ExecutiveDirectors. Theseboardmembershavewideexperienceand in-depthknowledge inmanagement,industryandthefinancialandcapitalmarkets,whichenablethemmakeinformeddecisionsandvaluablecontributionstotheGroup’sprogress.TheBoardmetthirteentimesduringtheyear.
TheBoardhasdelegatedvariousaspectsofitsworktotheGovernanceandRiskManagement,AuditandCompliance,LoansandAdvances,HumanResourceCommittees.
TheBoard has adopted standard evaluation tools that help assess the performance of theBoard, itscommitteesandindividualmembersonanannualbasis.
Governance and Risk Management Committee
ThiscommitteeischairedbyDr.JohnsonAsiamaanditsmembersarelistedonpagethreeofthisFinancialStatement.
Theroleofthecommitteeinclude:
1. ThereviewallriskstowhichtheBankisexposed,assessfromtimetotimetheirrelativeimportanceandevaluatewhethertheresourcesandcontrolsdesignedtomanageeachriskareproportionatetothequantumofriskinvolved:
2. Totheextentthatmanagementacceptsresidualrisk,becausetheresourcesrequiredtoreduceitfurtherareconsideredtobedisproportionate,theCommitteewilldeterminewhetheritiswithintheparameterssetbytheBoard.TheriskparameterssetbytheBoardwillgenerallybedefinedinterms
Corporate Governance
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ofaproportionoftheBank’scapitalorprofitsthatmaybeatriskoflossintheworstcaseifariskcrystallizes.TheCommitteewilltakeintoaccounttheconnectivityofrisks.
3. Reviewofriskwithafrequencythat it judgestobeproportionateto theirmateriality to theBankandshallpayparticularattentiontonewrisksarisingfromchangesintheBank’sbusinessstrategyand thosearising from thewider current commercial, economic andpolitical environment. TheCommitteeshallreviewthecomprehensivenessofrecordofrisksfromtimetotimeandshallupdateitwhereappropriate.
4. Consideringprior to implementation,all newproducts, significantchanges in thebalanceof thebusinessoftheBankorscaleofitsoperationsinanyarea.Itshallalsoconsiderallproposedchangestokeysystemsandoperationalcontrols,themanagementstructureandkeyresponsibilitiesoftheseniormanagementteam.
5. AssistingmanagementintherecognitionofrisksandalsotoensurethattheBoardismadeawareofchangesintheriskprofile.
- Counterpartylimits- Currency,maturityandinterestratemismatches- The external environment, including country risk for any country where the bank has a
significantexposure- Businessstrategyandcompetition- Operationalrisk,includingvulnerabilitytofraud,humanresourcesandbusinesscontinuity- Legal,complianceandreputationalrisk
Theannual reviewof its termsof referenceandmodusoperandiandmakeany recommendations forchangesthatitconsidersappropriatetotheBoard.
Audit and Compliance Committee
Theroleofthecommitteeinclude:
1. AnnuallyrecommendingtotheBoard&AGM,theappointmentoftheExternalAuditor,theauditfeeandtoadvisetheBoardonanyquestionsofresignationordismissaloftheExternalAuditors.
2. TokeepunderreviewtheBank’spolicyonnonauditservicesprovidedbytheExternalAuditorsandrecommendthistotheBoardhavingdueregardtoensuringthattheprovisionofsuchservicesdoesnotimpairtheExternalAuditor’sindependenceorobjectivity.
3. DiscussingwiththeExternalAuditorsbeforetheirauditcommences,thenatureandscopeoftheaudit.
4. Discussinganyissuesarisingfromtheinterimorfinalaudits,andanymatterstheExternalAuditorsmaywishtoraiseandtoreportonsuchmattersto-theBoard.
Loans and Advances Committee
Theroleofthecommitteeinclude:
1. SettingandreviewinglendinglimitsfortheCreditCommitteefromtimetotime;2. ConsideringandapprovingcreditexposureswhichexceedtheapprovallimitoftheCreditCommittee;
Corporate Governance (Cont’d)
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3. Consideringandapprovingfacilitieswhereamemberofmanagement,adirector,ashareholderhasaninterestintheborrower;
4. Consideringandapprovinginter-banklending5. ConsideringandapprovingfacilitiesreferredtoitbytheCreditCommittee
Human Resource Committee
Theroleofthecommitteeinclude:
1. ProposingandmakingrecommendationsonHumanResourceissuesandmattersrelatingtotermsandappointmentsofSeniorManagement.
Code of Conduct
ManagementhascommunicatedprinciplesintheGroup’sCodeofConducttoitsemployeestoprovideguidanceinthedischargeoftheirduties.ThiscodesetsthestandardsofprofessionalismandintegrityrequiredfortheGroup’soperations,whichcoverscompliancewithapplicablelaws,conflictsof interest,environmentalissues,reliabilityoffinancialreporting,briberyandstrictadherencetolaiddownprinciples,soastoeliminatethepotentialforillegalpractices.
Anti-Money Laundering
TheGroupalsohasanestablishedanti-moneylaunderingsysteminplaceincompliancewithrequirementsofGhana’sAnti-MoneyLaunderingAct2008. These includeduediligence foropeningnewaccounts,customeridentification,monitoringofhighriskaccounts,recordkeepingandtrainingandsensitisationofstaffonmoneylaundering,whichassistinreducingregulatoryandreputationalriskstoitsbusiness.
Corporate Governance (Cont’d)
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Report on the Financial Statements
WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofAgriculturalDevelopmentBankanditssubsidiarieswhichcomprisetheconsolidatedstatementoffinancialpositionasat31December,2011, and consolidated statement of comprehensive income, consolidated statement of changes inequity and consolidated statement of cashflows for the year then ended, the notes to the financialstatementswhich include significant accountingpoliciesandother explanatorynotes, as set out onpages26to73.
Directors’ Responsibility for the Financial Statements
TheBank’sDirectorsare responsible for thepreparationand fairpresentationof theseconsolidatedfinancialstatementsinaccordancewithInternationalFinancialReportingStandardsandinthemannerrequiredbytheAgriculturalDevelopmentBankAct1965(Act286)amendedbyNLCD182of1967andAct352of1970andtheBankingAct,2004(Act673)asamendedbytheBankingAmendmentAct2007(Act738)andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditor’s Responsibility
Our responsibility is toexpressanopinionon theseconsolidatedfinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.Thesestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceastowhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheconsolidatedfinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,including theassessment of the risks ofmaterialmisstatement of the financial statements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolsrelevantto the entity’s preparation and fair presentation of the consolidated financial statements in order todesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrols.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidatedfinancialpositionofAgriculturalDevelopmentBankat31December2011anditsconsolidatedfinancialperformanceandcashflowsfor theyearendedinaccordancewith InternationalFinancialReportingStandards and in the manner required by the Agricultural Development Bank Act 1965 (Act 286)amendedbyNLCD182of1967andAct352of1970andtheBankingAct,2004(Act673)asamendedbytheBankingAmendmentAct2007(Act738).
Independent Auditor’s ReportTO THE SHAREHOLDERS OF AGRICULTURAL DEVELOPMENT BANK
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Report on Other Legal and Regulatory Requirements
CompliancewiththerequirementsoftheAgriculturalDevelopmentBankAct1965(Act286)asamendedbyNLCD182of1967andAct352of1970 andSection78of theBankingAct,2004(Act673)asamendedbytheBankingAmendmentAct2007(Act738)
Wehaveobtainedalltheinformationandexplanations,whichtothebestofknowledgeandbeliefwerenecessaryforthepurposeofouraudit.
Inouropinion,properbooksofaccounthavebeenkeptandtheconsolidatedstatementsoffinancialpositionandcomprehensiveincomeareinagreementwiththebooksofaccount.
The Bank’s transactionswerewithin its powers and the Bank generally compliedwith the relevantprovisionsoftheBankingAct,2004(Act673)asamendedbytheBankingAmendmentAct,2007(Act738).
CHARTERED ACCOUNTANTS13 YIYIWA DRIVE, ABELENKPEP O BOX GP242ACCRA
29thMarch,2012
Independent Auditor’s Report (Cont’d)TO THE SHAREHOLDERS OF AGRICULTURAL DEVELOPMENT BANK
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The Group The BankRestated Restated
2011 2010 2011 2010Note GH¢’000 GH¢’000 GH¢’000 GH¢’000
Interestincome 5 119,189 126,915 119,189 126,915Interestexpense 6 (38,891) (37,411) (38,891) (37,411)
-------- --------- --------- ---------Net interest income 80,298 89,504 80,298 89,504
===== ===== ===== =====
Feesandcommissionincome 7 39,665 22,130 39,665 22,130Feesandcommissionexpense 7 (2,221) (1,095) (2,211) (1,095)
-------- --------- --------- ---------Net fees and commission income 37,444 21,035 37,454 21,035
-------- --------- --------- ---------Nettradingincome 8 27,996 12,544 27,995 12,544Otheroperatingincome 9 17,854 17,793 17,854 14,493
-------- --------- --------- ---------Net non-interest revenue 83,294 51,372 83,303 48,072
------- --------- --------- ---------
Operating income 163,592 140,876 163,601 137,576====== ====== ====== ======
Impairmentchargeonloansandadvances 19 7,610 (6,686) 7,610 (6,686)
--------- ---------- ----------- ---------NetOperatingIncome 171,202 134,190 171,211 130,890
Operatingexpenses 10 (132,984) (123,003) (135,508) (120,201)---------- ---------- ---------- ----------
Operating profit 38,218 11,187 35,703 10,689===== ===== ===== =====
Shareofpost-taxprofit/(loss)ofAssociatedCompany 17 (411) 775 (411) 775Profit/(Loss)fromdisposalofnon-currentassets 22 5,656 801 2,961 801Profit/(Loss)fromdisposalofassociatecompanies 17 6,088 - 6,088 -Profit/(Loss)fromdisposalofsubsidiary 18 1,562 - 1,562 -
------- --------- -------- ---------ProfitbeforeNationalStabilizationLevy 51,113 12,763 45,903 12,265NationalFiscalStabilizationLevy (2,556) (645) (2,295) (613)
-------- --------- -------- ---------Profit after National Stabilization Levy 48,557 12,118 43,608 11,652
===== ===== ===== =====
Thenotesonpages26to73formanintegralpartofthesefinancialstatements.
Consolidated Statement of Comprehensive IncomeFOR THE YEAR ENDED 31 DECEMBER 2011
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The Group The BankRestated Restated
2011 2010 2011 2010Note GH¢’000 GH¢’000 GH¢’000 GH¢’000
Profitafternationalstabilizationlevy 48,557 12,118 43,608 11,652Netchangeinvalueofavailableforsaleinvestmentsecurities 14,16 14,654 2,943 14,654 2,943
-------- -------- --------- ---------Totalcomprehensiveincomefortheyear 63,211 15,061 58,262 14,595
===== ===== ==== =====
Profitfortheyearattributableto:EquityholdersoftheBank 48,557 12,147 43,608 11,652Non-controllinginterest - (29) - -
--------- ---------- --------- ---------48,557 12,118 43,608 11,652
==== ===== ===== =====Totalcomprehensiveincomeattributableto:EquityholdersoftheBank 63,211 15,090 58,262 14,595Non-controllinginterest - (29) - -
-------- --------- --------- --------63,211 15,061 58,262 14,595===== ===== ===== =====
EarningspershareBasicanddiluted(inGhanapesewas) 12 1.942 0.485 1.744 0.466
Thenotesonpages26to73formanintegralpartofthesefinancialstatements.
Consolidated Statement of Comprehensive IncomeFOR THE YEAR ENDED 31 DECEMBER 2011 (Cont’d)
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The Group The BankRestated Restated Restated
2011 2010 2011 2010 1/1/2010Note GH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000
AssetsCashandbalanceswithCentralBankofGhana 13 81,660 89,010 81,660 89,010 72,263InvestmentinGovernmentSecurities 14 209,543 165,924 209,543 165,924 125,594DepositsandbalancesduefromBankingInstitutions 15 90,248 34,848 90,248 34,848 48,953Investmentinothersecurities 16 35,158 11,212 35,158 11,188 6,309Investmentinassociatecompanies 17 1,477 5,774 1,477 5,774 4,999Investmentinsubsidiaries 18 - - 14,493 15,644 1,151Loansandadvancestocustomers 19 678,747 576,987 678,747 576,987 393,449Otherassets 20 73,560 58,998 64,870 54,913 40,422Intangibleassets 21 11,974 564 11,974 564 787Propertyandequipment 22 31,304 24,882 17,587 9,651 24,271
----------- ----------- ---------- ------------ ----------Total Assets 1,213,671 968,199 1,205,757 964,503 718,198
====== ======= ====== ======= ======LiabilitiesCustomerdeposits 23 827,718 536,079 827,718 536,079 425,145Borrowedfunds 24 161,387 221,400 161,387 221,400 88,201Otherliabilities 25 42,859 104,248 40,488 100,745 96,331
---------- ------------ ----------- ------------ -----------1,031,964 861,727 1,029,592 858,224 609,677
====== ======= ====== ======= ======Capital ResourcesSharecapital 26 75,000 50,000 75,000 50,000 50,000Revaluationsurplus 1,748 1,979 1,748 1,979 15,372Incomesurplus 9,529 3,685 3,986 3,611 (6,146)Creditriskreserve 25,773 17,474 25,773 17,474 21,936Statutoryreserve 52,076 30,272 52,076 30,272 27,359Availableforsalereserve 17,581 2,943 17,581 2,943 -
---------- ---------- ----------- ---------- ----------Shareholders’ funds 181,707 106,353 176,164 106,279 108,521Non Controlling Interest - 119 - - -
---------- ----------- ---------- ----------- ----------Total liabilities and Shareholders’ Funds 1,213,671 968,199 1,205,757 964,503 718,198
====== ======= ====== ======= ======
ThesefinancialstatementswereapprovedbytheBoardofDirectorson29thMarch,2012andsignedonitsbehalfby:
…………………………….. ……………………………Director Director
Thenotesonpages26to73formanintegralpartofthesefinancialstatements.
Consolidated Statement of Financial PositionAT 31 DECEMBER 2011
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Page 23
Ava
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Page 24
The
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Thenotesonpages26to73formanintegralpartofthesefinancialstatements.
Con
solid
ated
Sta
tem
ent o
f Cha
nges
In E
quity
FOR
TH
E YE
AR
EN
DED
31
DEC
EMB
ER 2
011
(Con
t’d)
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Page 25
The Group The Bank2011 2010 2011 2010
Note GH¢’000 GH¢’000 GH¢’000 GH¢’000
Operating activitiesCashgeneratedfromoperations 27 168,508 (75,246) 170,237 (59,316)
Investing activitiesPurchaseofpropertyandequipment 22 (13,616) (5,414) (12,437) (5,676)Proceedsfromdisposalofpropertyandequipment 6,444 491 3,560 491AcquisitionofIntangibleassets (12,590) (1,124) (12,590) (1,124)Proceedsfromdisposalofassociatedcompany 10,200 - 10,200 -Proceedsfromdisposalsubsidiary 2,713 - 2,713 -Increaseinotherinvestmentsecurities (9,292) (1,246) (9,316) (1,270)Increaseinsubsidiaries - (15,644)Increaseinassociates 185 (4,999) 185 (4,999)
-------- --------- --------- ---------Net cash used in investing activities (15,956) (12,292) (17,685) (28,222)
-------- --------- -------- ---------Dividend paid - (2,000) - (2,000)National Stabilization Levy (2,169) (1,637) (2,169) (1,637)
Financing activitiesReceipts/(payments)inborrowedfunds (60,013) 133,199 (60,013) 133,199DividendIncome 1,298 949 1,298 949
--------- ---------- --------- ---------NetcashgeneratedfromfinancingActivities (58,715) 134,148 (58,715) 134,148
--------- --------- ---------- ----------Increaseincashandcashequivalents 91,668 42,973 91,668 42,973Cashandcashequivalentat1January 289,783 246,809 289,783 246,809
--------- ---------- ----------- ----------Cash and cash equivalents at 31 December 381,451 289,783 381,451 289,783
====== ====== ====== ======
Thenotesonpages26to73formanintegralpartofthesefinancialstatements.
Consolidated Statement of Cash FlowsFOR THE YEAR ENDED 31 DECEMBER 2011
NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2011
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Page 26
1. GENERAL INFORMATION
AgriculturalDevelopmentBank(ADB)isafinancialinstitutionincorporatedinGhana.Theregisteredofficeof theAgriculturalDevelopmentBank is located at 37 IndependenceAvenue,Accra. TheAgriculturalDevelopment Bank operates under the Banking Act, 2004 (Act 673) as amended by the Banking(Amendment)Actof2008(Act738),andtheAgriculturalDevelopmentBankAct1965(Act286)asamendedbyNLCD182of1967andAct352of1970.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Theprincipalaccountingpoliciesappliedinthepreparationoftheseconsolidatedfinancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.
2.1 Statement of Compliance
The Group’s consolidated financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.AdditionalinformationrequiredbytheCompaniesCode,1963(Act179)andBankingAct,2004(Act673)asamendedbytheBanking(Amendment)Act,2007(Act738)havebeenincluded,whereappropriate.Theconsolidatedfinancialstatementshavebeenpreparedunderthehistoricalcostconvention,exceptfortherevaluationofpropertyandavailable-for-salefinancialassets,financialassetsandfinancialliabilities,whicharemeasuredatfairvaluethroughprofitorloss.
The consolidated financial statements comprise the consolidated financial position, consolidatedstatementsofcomprehensive income,changes inequityandcashflowsandnotesto theconsolidatedfinancialstatements.
The consolidated financial statements are presented in Ghana cedis which is the group’s functionalcurrency.Theyarepreparedonthehistoricalcostbasisexceptforthefollowingassetsandliabilitiesthatarestatedattheirfairvalue:financialinstrumentsthatarefairvaluethroughprofitandlossandfinancialinstrumentsclassifiedasavailable-for-sale.
ThepreparationoftheconsolidatedfinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassets, liabilities, incomeandexpenses. Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgementaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates.
Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiodorintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.Inparticular,informationaboutsignificantareasofestimationuncertaintyandcriticaljudgementsinapplyingaccountingpolicies thathave themostsignificanteffecton theamount recognised in theconsolidatedfinancialstatementsaredescribedinnotesone(1).
2.1.1 New standards and interpretations not yet adopted
Therearenewor revisedAccountingStandardsand Interpretations in issue thatarenot yeteffective.These include the followingStandardsand Interpretations thatmayhavean impacton futurefinancialstatements:
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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Standard/Interpretation Effective dateIAS1amendment Presentation of Financial Statements:
Presentation of Items of Other Comprehensive Income
Annualperiodsbeginningonorafter1July2012*
IAS27 Separate Financial Statements (2011) Annualperiodsbeginningonorafter1January2013*
IAS28 Investments in Associates and Joint Ventures (2011)
Annualperiodsbeginningonorafter1January2013*
IFRS7amendment Disclosures – Transfers of Financial Assets Annualperiodsbeginningonorafter1July2011*
IFRS9(2009) Financial Instruments Annualperiodsbeginningonorafter1January2015*
IFRS9(2010) Financial Instruments Annualperiodsbeginningonorafter1January2015*
IFRS10 Consolidated Financial Statements Annualperiodsbeginningonorafter1January2013*
IFRS12 Disclosure of Interests in Other Entities Annualperiodsbeginningonorafter1January2013*
IFRS13 Fair Value Measurement Annualperiodsbeginningonorafter1January2013*
Amendment to IAS 1 Presentation of Financial Statements
Theamendment to IAS1will beadopted for thefirst time for thefinancial reportingperiodending31December2013.
TheBankwillpresentthoseitemsofothercomprehensiveincomethatmaybereclassifiedtoprofitorlossinthefutureseparatelyfromthosethatwouldneverbereclassifiedtoprofitorloss.Therelatedtaxeffectsforthetwosub-categorieswillbeshownseparately.
Thisisachangeinpresentationandwillhavenoimpactontherecognitionormeasurementofitemsinthefinancialstatements.Thisamendmentwillbeappliedretrospectivelyandthecomparativeinformationwillberestated.
IAS 27 (2011) Separate Financial Statements
IAS27(2011)willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2013.
IAS 27 (2011) supersedes IAS 27 (2008). IAS 27 (2011) carries forward the existing accounting anddisclosurerequirementsforseparatefinancialstatements,withsomeminorclarifications.
ThisamendmentwillnothaveasignificantimpactontheBank’sseparatefinancialstatementsfortheyearended31December2011.
IAS 28 (2011) Investments in Associates and Joint Ventures
IAS28(2011)willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2013.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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IAS 28 (2011) supersedes IAS 28 (2008) and carries forward the existing accounting and disclosurerequirementswithlimitedamendments.Theseinclude:
• IFRS5 isapplicable toan investment,oraportionofan investment, inanassociateora jointventurethatmeetsthecriteriatobeclassifiedasheld-for-sale;and
• Oncessationofsignificantinfluenceorjointcontrol,evenifaninvestmentinanassociatebecomesan investment ina jointventureorviceversa, thecompanydoesnot re-measure the retainedinterest.
ThisamendmentwillnothaveasignificantimpactontheBank’sfinancialstatementsfortheyearended31December2011.
Amendments to IFRS 7 Financial Instruments: Disclosures
TheamendmentstoIFRS7willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2012.
Intermsoftheamendmentsadditionaldisclosurewillbeprovidedregardingtransfersoffinancialassetsthatare:• notderecognisedintheirentirety;and• derecognisedintheirentiretybutforwhichtheBankretainscontinuinginvolvement.
ThisamendmentwillnothaveasignificantimpactontheBank’sfinancialstatementsfortheyearended31December2011.
IFRS 9 (2009) Financial Instruments
IFRS9willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2015.Thestandardwillbeappliedretrospectively,subjecttotransitionalprovisions.
IFRS9addressestheinitialmeasurementandclassificationoffinancialassetsandwillreplacetherelevantsectionsofIAS39.
UnderIFRS9therearetwooptionsinrespectofclassificationoffinancialassets,namely,financialassetsmeasuredatamortisedcostoratfairvalue.Financialassetsaremeasuredatamortisedcostwhenthebusinessmodelistoholdassetsinordertocollectcontractualcashflowsandwhentheygiverisetocashflowsthataresolelypaymentsofprincipaland interestontheprincipaloutstanding. Allotherfinancialassetsaremeasuredatfairvalue.Embeddedderivativesarenolongerseparatedfromhybridcontractsthathaveafinancialassethost.
ThisamendmentwillnothaveasignificantimpactontheBank’sfinancialstatementsfortheyearended31December2011.
IFRS 9 (2010) Financial Instruments
IFRS9(2010)willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2015.Thestandardwillbeappliedretrospectively,subjecttotransitionalprovisions.IFRS9(2010)addresses themeasurementandclassificationoffinancial liabilitiesandwill replace therelevantsectionsofIAS39.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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UnderIFRS9(2010),theclassificationandmeasurementrequirementsoffinancialliabilitiesarethesameasperIAS39,exceptforthefollowingtwoaspects:
• fairvaluechangesforfinancialliabilities(otherthanfinancialguaranteesandloancommitments)designatedat fairvalue throughprofitor loss, thatareattributable to thechanges in thecreditriskoftheliabilitywillbepresentedinothercomprehensiveincome(OCI).Theremainingamountof the fairvaluechange is recognised inprofitor loss.However, if this requirementcreatesorenlargesanaccountingmismatchinprofitorloss,thenthewholefairvaluechangeispresentedinprofitorloss.Thedeterminationastowhethersuchpresentationwouldcreateorenlargeanaccountingmismatchismadeoninitialrecognitionandisnotsubsequentlyreassessed.
• UnderIFRS9(2010)derivativeliabilitiesthatarelinkedtoandmustbesettledbydeliveryofanunquotedequityinstrumentwhosefairvaluecannotbereliablymeasured,aremeasuredatfairvalue.
IFRS9(2010)incorporates,theguidanceinIAS39dealingwithfairvaluemeasurementandaccountingforderivativesembeddedinahostcontractthatisnotafinancialasset,aswellastherequirementsofIFRIC9ReassessmentofEmbeddedDerivatives.
ThisamendmentwillnothaveasignificantimpactontheBank’sfinancialstatementsfortheyearended31December2011.
IFRS 10 Consolidated Financial Statements
IFRS10willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2013.Thestandardmaybeappliedretrospectively.IFRS10introducesasinglecontrolmodeltoassesswhetheran investee should be consolidated. This control model requires entities to perform the following indeterminingwhethercontrolexists:
• Identifyhowdecisionsaboutrelevantactivitiesaremade;• Assess whether the entity has power over relevant activities by considering only the entity’s
substantiverights;• Assesswhethertheentityisexposedtovariabilityinreturns,and• Assesswhethertheentityisabletouseitspowerovertheinvesteetoaffectreturnsforitsown
benefit
Controlshouldbeassessedonacontinuousbasisandshouldbereassessedasfactsandcircumstanceschange.
ThisamendmentwillnothaveasignificantimpactontheBank’sfinancialstatementsfortheyearended31December2011.
IFRS 12 Disclosure of Interests in Other Entities
IFRS12willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2013.IFRS12combines, inasinglestandard,disclosure requirements forsubsidiaries,associatesand jointarrangements,aswellasunconsolidatedstructuredentities.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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Therequireddisclosuresaimtoprovideinformationtoenableusersevaluate:
• Thenatureof,andrisksassociatedwith,anentity’sinterestsinotherentities,and• Theeffectsof those interestson theentity’sfinancialposition,financialperformanceandcash
flows.
Theadoptionofthisstandardwillincreasethelevelofdisclosureprovidedforinterestsinsubsidiaries,jointarrangements,associatesandstructuredentities
IFRS 13 Fair Value Measurement
IFRS13willbeadoptedforthefirsttimeforthefinancialreportingperiodending31December2013.Thestandardwillbeappliedprospectivelyandcomparativeswillnotberestated.
IFRS13 introducesasinglesourceofguidanceonfairvaluemeasurement forbothfinancialandnon-financialassetsandliabilitiesbydefiningfairvalue,establishingaframeworkformeasuringfairvalueandsettingoutdisclosuresrequirementsforfairvaluemeasurements.ThekeyprinciplesinIFRS13areasfollows:
• Fairvalueisanexitprice• Measurementconsiderscharacteristicsoftheassetorliabilityandnotentity-specificcharacteristics• Measurement assumes a transaction in the entity’s principle (or most advantageous) market
betweenmarketparticipants• Priceisnotadjustedfortransactioncosts• Measurement maximises the use of relevant observable inputs and minimises the use of
unobservableinputs• Thethree-levelfairvaluehierarchyisextendedtoallfairvaluemeasurements
ThisamendmentofIFRS13willnothaveanimpactontheBank’sfinancialstatementsfortheyearended31December2011.
2.2 Foreign currency translation
Transactions and balances
Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingexchangeratesprevailingatthedatesofthetransactionsorvaluation,whereitemsarere-measured.
Monetaryitemsdenominatedinforeigncurrencyarere-translatedatclosinginterbankmidratesrulingatthereportingdate.Non-monetaryitemsmeasuredathistoricalcostdenominatedinaforeigncurrencyaretranslatedatexchangeratesrulingatthedatesofinitialrecognition;andnon-monetaryitemsinaforeigncurrencythataremeasuredatfairvaluearetranslatedatexchangeratesrulingatthedatewhenfairvaluewasdetermined.
Foreignexchangegainsandlossesresultingfromthesettlementofforeigncurrencytransactionsandfromre-translationatyear-endexchangeratesofforeigncurrencydenominatedmonetaryassetsandliabilitiesarerecognisedinprofitorloss.
Allforeignexchangegainsandlossesrecognisedinprofitorlossarepresentednetwithinthecorrespondingitem.Foreignexchangegainsandlossesonothercomprehensiveincomeitemsarepresentedinothercomprehensiveincomewithinthecorrespondingitem.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Changesinthefairvalueofmonetaryassetsdenominatedinforeigncurrencyclassifiedasavailableforsale,areanalysedbetweentranslationdifferencesresultingfromchangesinamortisedcostofthesecurityand other changes in the carrying amount of the security. Translation differences related to changesinamortisedcostare recognised inprofitor loss,whereasotherchanges incarryingamounts,exceptimpairment,arerecognisedinothercomprehensiveincome.
Translationdifferencesonnon-monetaryfinancialinstruments,suchasequitiesheldatfairvaluethroughprofitorloss,arereportedaspartofthefairvaluegainorloss.Translationdifferencesonnon-monetaryfinancialinstruments,suchasequitiesclassifiedasavailable-for-salefinancialassets,areincludedinothercomprehensiveincome.
2.3 Segment reporting
Asegment isadistinguishablecomponentof thegroup that isengagedeither inprovidingproductsorservices(businesssegment),orinprovidingproductsorserviceswithinaparticulareconomicenvironment(geographical segment), which is subject to risks and rewards that are different from those of othersegments.
TheBankcurrentlyusessinglesegmentalreportingtomanagement.
2.4 Interest income and expense
Interestincomeandexpenseforallinterest-bearingfinancialinstrumentsarerecognisedwithin‘interestincome’and‘interestexpense’inprofitorlossusingtheeffectiveinterestmethod.
Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancialassetorafinancialliabilityandallocatinginterestincomeorinterestexpenseovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashpaymentsorreceiptsthroughtheexpectedlifeofthefinancialinstrumentor,whenappropriate,ashorterperiodtothenetcarryingamountofthefinancialassetorfinancial liability. Whencalculating theeffective interest rate, theGroupestimatescashflowsconsideringallcontractualtermsofthefinancialinstrument,includingprepaymentoptions,butdoesnotconsiderfuturecreditlosses.
Thecalculationincludesallfeesandpointspaidorreceivedbetweenpartiestothecontractthatareanintegralpartoftheeffectiveinterestrate,transactioncostsandallotherpremiumsordiscounts.
2.5 Fees and commissions
Feesandcommissionsaregenerallyrecognisedonanaccrualbasiswhentheservicehasbeenprovided.Loancommitmentfeesforloansthatarelikelytobedrawndownaredeferred,togetherwithrelateddirectcosts,andrecognisedasanadjustmenttotheeffectiveinterestrateontheloan.LoansyndicationfeesarerecognisedasrevenuewhenthesyndicationhasbeencompletedandtheGrouphasretainednopartoftheloanpackageforitselforretainedapartatthesameeffectiveinterestrateastheotherparticipants.
2.6 Dividends
Dividendsarecharged toequity in theperiod inwhich theyaredeclared.ProposeddividendsarenotaccrueduntiltheyhavebeenratifiedattheAnnualGeneralMeeting.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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2.7 Net trading income
Nettradingincomecomprisesgainslesslossesrelatingtotradingassetsandliabilities,includingrealisedandunrealisedfairvaluechanges,interestandforeignexchangedifferences.
2.8 Impairment and uncollectability of financial assets
Ateachdateofthestatementoffinancialposition,allfinancialassetsaresubjecttoreviewforimpairment.Ifitisprobablethatthebankwillnotbeabletocollectallamountsdue(principalandinterest)accordingtothecontractualtermsofloans,receivables,orheld-to-maturityinvestmentscarriedatamortisedcost,animpairmentorbaddebtlosshasoccurred.Thecarryingamountoftheassetisreducedtoitsestimatedrecoverableamountthroughuseofanallowanceaccount.Theamountofthelossincurredisincludedinthestatementofcomprehensiveincomefortheperiod.
Ifalossonafinancialassetcarriedatfairvalue(recoverableamountisbeloworiginalacquisitioncost)hasbeenrecogniseddirectlyinequityandthereisobjectiveevidencethattheassetisimpaired,thecumulativenetlossthathadbeenrecogniseddirectlyinequityisremovedfromequityandrecognisedinthestatementofcomprehensiveincomefortheperiodeventhoughthefinancialassethasnotbeenderecognised.
Thebankconsidersevidenceof impairmentatbothaspecificassetandcollectivelevel.All individuallysignificant financial assets are assessed for specific impairment.All significant assets foundnot to bespecificallyimpairedarethencollectivelyassessedforanyimpairmentthathasbeenincurredbutnotyetidentified.Assetsthatarenotindividuallysignificantarethencollectivelyassessedforimpairmenttogetherwithfinancialassetswithsimilarriskcharacteristics.
Objective evidence that financial assets are impaired can include observable data that comes to theattentionofthebankaboutthefollowinglossevents:
• Significantfinancialdifficultyoftheborrower• Defaultordelinquencybyaborrower• Restructuringofaloanoradvancebythebankontermsthatthebankwouldnototherwiseconsider• Indicationthataborrowerorissuerwillenterbankruptcy• Thedisappearanceofanactivemarketforasecurity,or• Otherobservabledata relating toagroupofassetssuchasadversechanges in thepayment
statusofborrowersorissuersinthegroup,oreconomicconditionsthatcorrelatewithdefaultsinthegroup.
Inassessingcollectiveimpairmentthebankusesstatisticalmodellingofhistoricaltrendsoftheprobabilityofdefault,timingofrecoveriesandtheamountoflossincurred,adjustedformanagement’sjudgementastowhethercurrenteconomicandcreditconditionsaresuchthattheactuallossesarelikelytobegreaterorlessthansuggestedbyhistoricalmodelling.Defaultrates,lossratesandtheexpectedtimingoffuturerecoveriesareregularlybenchmarkedagainstactualoutcomestoensurethattheyremainappropriate.
a. Assets carried at amortised costs
Impairmentlossesonassetscarriedatamortisedcostaremeasuredasthedifferencebetweenthecarryingamountof thefinancialassetsandthepresentvalueofestimatedcashflowsdiscountedat theassets’original effective interest rate. Losses are recognised in the statement of comprehensive income andreflectedinanallowanceaccountagainstloansandadvances.Interestontheimpairedassetcontinuestoberecognisedthroughtheunwindingofthediscount.Whenasubsequenteventcausestheamountofimpairmentlosstodecrease,theimpairmentlossisreversedthroughprofitorloss.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
b. Assets carried at fair value
Impairmentlossesonavailable-for-saleinvestmentsecuritiesarerecognisedbytransferringthedifferencebetweentheamortisedacquisitioncostandcurrentfairvalueoutofequitytothestatementofcomprehensiveincome.Whenasubsequenteventcausestheamountofimpairmentlossonanavailable-for-saledebtsecuritytodecrease,theimpairmentlossisreversedthroughthestatementofcomprehensiveincome.
However,anysubsequent recovery in the fairvalueofan impairedavailable-for-saleequitysecurity isrecogniseddirectlyinequity.Changesinimpairmentprovisionsattributabletotimevaluearereflectedasacomponentofinterestincome.
c. Renegotiated loans
Loans thatareeithersubject tocollective impairmentassessmentor individuallysignificantandwhosetermshavebeenrenegotiatedareconsideredtobepastdue. 2.9 Impairment of non-financial assets
Intangibleassetsthathaveanindefiniteusefullifearenotsubjecttoamortisationandaretestedannuallyforimpairment.Assetsarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).Theimpairmenttestalsocanbeperformedonasingleassetwhenthefairvaluelesscosttosellorthevalueinusecanbedeterminedreliably.Non-financialassetsthatsufferimpairmentarereviewedforpossiblereversaloftheimpairmentateachreportingdate
2.10 Cash and cash equivalents
Forthepurposesofthestatementofcashflows,cashequivalentsincludeshorttermliquidinvestmentswhicharereadilyconvertibleintoknownamountsofcashandwhichwerewithinthreemonthsofmaturitywhenacquired,lessadvancesfrombanksrepayablewithinthreemonthsfromthedatesoftheadvances.
2.11 Repossessed property
In certain circumstances, property is repossessed following foreclosure on loans that are in default.Repossessedpropertiesaremeasuredatthelowerofcarryingamountandfairvaluelesscoststosellandreportedwithin‘Otherassets’.
2.12 Leasing
Leasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.
The Bank as lessor
AmountsduefromlesseesunderfinanceleasesarerecordedasreceivablesattheamountoftheBank’snetinvestmentintheleases.FinanceleaseincomeisallocatedtoaccountingperiodssoastoreflectaconstantperiodicrateofreturnontheBank’snetinvestmentoutstandinginrespectoftheleases.Rentalincomefromoperatingleasesisrecognisedonastraight-linebasisoverthetermoftherelevantlease.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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2.12 Leasing (cont’d)
Bank as lesee
Rentalspayableunderoperatingleasesarechargedtoincomeonastraight-linebasisoverthetermoftherelevantlease.
2.13 Property and equipment
Propertyandequipmentarestatedatcostorasprofessionallyrevaluedfromtimetotimelessaccumulateddepreciation.
Increasesinthecarryingamountarisingonrevaluationarecreditedtoarevaluationsurplus.Decreasesthatoffsetprevious increasesof thesameassetarechargedagainsttherevaluationsurplus. Allotherdecreasesarechargedtothestatementofcomprehensiveincome.Eachyearthedifferencebetweendepreciationbasedontherevaluedcarryingamountofanasset(thedepreciationchargedtothestatementof comprehensive income) anddepreciation basedon the asset’s original cost is transferred from therevaluationsurplustorevenuereserves.
Depreciation
Depreciationonotherpropertyandequipment iscalculated towriteoff theircostorvaluation inequalannualinstalmentsovertheirestimatedusefullives.Theannualratesinuseare:
Buildings 5% Motorvehicles 25% Furnitureandequipment 20% Computers 33.33% LeaseholdImprovement 20%
Wherethecarryingamountofanassetisgreaterthanitsestimatedrecoverableamount,itiswrittendownimmediatelytoitsrecoverableamount.
Leasehold Land
Paymentstoacquireleaseholdinterestinlandaretreatedasoperatingleaseprepaymentsandamortisedovertheperiodofthelease.
Computer Software Development cost
Generally, costs associated with developing computer software programmes are recognised as anexpensewhenincurred.However,coststhatareclearlyassociatedwithanidentifiableanduniqueproductwhichwillbecontrolledbythebankandhasaprobablebenefitexceedingthecostbeyondoneyear,arerecognisedasanintangibleasset.
Expenditure which enhances and extends computer software programmes beyond their originalspecificationsand lives is recognisedasacapital improvementandadded to theoriginal costsof thesoftware.
Computersoftwaredevelopmentcostsrecognisedasassetsarestatedatcostlessamortisation.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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Amortisationiscalculatedonastraightlinebasisovertheestimatedusefullivesnotexceedingaperiodof3years.
2.14 Taxation
TheBankisnotliablietocorporatetaxaspertheAgriculturalDevelopmentBankAct1965(Act286)asamendedbyNLCD182of1967andAct352of1970.
2.15 Provisions
ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpasteventsthatcanbereliablyestimatedanditisprobablethatanoutflowofresourceswillberequiredtosettletheobligation.Restructuringprovisionscompriseleaseterminationpenaltiesandemployeeterminationpayments.Provisionsarenotrecognisedforfutureoperatinglosses.
Wherethereareanumberofsimilarobligationswhicharelikelytoresult inanoutflowtosettlerelatedclassesofobligationsasawhole,aprovisionisrecognisedevenifthelikelihoodofanoutflowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.
Provisionsaremeasuredatthepresentvalueofexpendituresexpectedtoberequiredtosettleobligationsusingpre-taxratesthatreflectcurrentmarketassessmentsofthetimevalueofmoneyandrisksspecifictotheobligation.Anincreaseintheprovisionduetopassageoftimeisrecognisedasaninterestexpense.
2.16 Financial guarantee contracts
Financialguaranteecontractsarecontractsthatrequiretheissuertomakespecifiedpaymentstoreimbursetheholderforalossitincursbecauseaspecifieddebtorfailstomakepaymentswhendue,inaccordancewiththetermsofadebtinstrument.Suchfinancialguaranteesaregiventofinancialinstitutionsandotherbodiesonbehalfofcustomerstosecureloansandoverdrafts.
Financial guarantees are initially recognised at the fair value and amortised over the life of financialguarantee.Thefinancialguaranteeissubsequentlycarriedatthehigheroftheamortisedamountandthepresentvalueofanyexpectedpayments,whenpaymentbecomesprobable.
2.17 Derivative financial instruments
Derivative contracts are initially recognised at fair value on the date onwhich a derivative contract isentered intoandare subsequently re-measuredat their fair value. Fair valuesmaybeobtained fromquotedmarketpricesinactivemarkets,recentmarkettransactions,andvaluationtechniques,includingdiscountedcashflowmodelsandoptionpricingmodels,asappropriate. Allderivativesarecarriedasassetswhenfairvalueispositiveandasliabilitieswhenfairvalueisnegative.Thefairvaluechangesinthederivativearerecognisedinprofitorloss.
2.18 Dividend on ordinary shares
Dividendsonordinarysharesarerecognised inequity in theperiod inwhichtheyareapprovedbytheshareholders.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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2.19 Consolidation
(a) Subsidiaries
Subsidiariesareall theentitiesoverwhich theGrouphaspower togovern thefinancialandoperatingpoliciesgenerallyaccompanyingashareholdingofmorethanonehalfofthevotingrights.Theexistenceand effect of potential voting rights that are currently excisable or convertible are considered whenassessingwhethertheGroupcontrolsanotherentity.SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.Theyaredeconsolidatedfromthedateonwhichcontrolceases.Inter-companytransactions,balancesandunrealisedgainsontransactionsbetweengroupcompaniesareeliminated.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofimpairmentoftheassettransferred. (b) Associates
Associates are all entities over which the Group has significant influence but not control, generallyaccompanyingashareholdingofbetween20%and50%ofthevotingrights.Investmentsinassociatesareaccountedforbytheequitymethodofaccountingandareinitiallyrecognisedatcost.
2.20 Post balance sheet event
Eventssubsequenttothebalancesheetdatearereflectedinthefinancialstatementsonlytotheextentthattheyrelatetotheyearunderconsiderationandtheeffectismaterial.
2.21 Retirement benefit cost
Thebankoperatesadefinedcontributionbenefitschemeforitsemployees.Theassetsofthisschemeareheldbythetreasurydepartmentof thebank.Theschemeis fundedbycontributionsfromboththeemployeesandemployer.Benefitsarepaidtoretiringstaffinaccordancewiththeschemerules.
ThebankalsocontributestothestatutorySocialSecurity&NationalInsuranceTrust(SSNIT).ThisisadefinedcontributionschemeregisteredundertheNationalSocialSecurityAct. Thebank’sobligationsundertheschemearelimitedtospecificcontributionslegislatedfromtimetotimeandarecurrentlylimitedtoamaximumof13%ofanemployee’sbasicsalarypermonth.Thebank’sobligationstostaffretirementbenefitschemesarechargedtothestatementofcomprehensiveincomeintheyeartowhichtheyrelate.
2.22 Provision for employee entitlement
Employeeentitlementstoannual leavearerecognisedwhentheyaccruetoemployees. Aprovision ismadefortheestimatedliabilityforannualleaveaccruedatthedateofthestatementoffinancialposition.
2.23 Comparatives
Wherenecessary,comparativefigureshavebeenadjustedtoconformwithchangesinpresentationinthecurrentyear.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT
Introduction and overview
The bank’s activities expose it to a variety of financial risks and those activities involve the analysis,evaluation,acceptanceandmanagementofsomedegreeofriskorcombinationofrisks.Takingriskiscoretothebank’sbusiness,andtheoperationalrisksareaninevitableconsequenceofbeinginbusiness.Thebank’saimisthereforetoachieveanappropriatebalancebetweenriskandreturnandminimizepotentialadverseeffectsonitsfinancialperformance.
Themostimportanttypesofriskinclude:
• Creditrisk• Liquidityrisk• Marketrisk–includescurrency,interestrateandotherpricerisk• Operationalrisk
Risk management framework
TheBoardofDirectorshasoverall responsibility for theestablishmentandoversightof theBank’s riskmanagement framework. The board has established a BoardAudit and Risk Committees and a riskdepartment to assist in the discharge of this responsibility.The board has also established theCreditCommitteewhichisresponsiblefordevelopingandmonitoringriskmanagementintheirrespectiveareas.
Thebank’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbythebank,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagementpoliciesandsystemsarereviewedregularlytoreflectchangesinmarketconditions,productsandservicesoffered. The bank, through its training and management standards and procedures, aims to developa disciplined and constructive control environment, inwhich all employees understand their roles andobligations.
Thebank’sAuditandRiskManagementCommitteesareresponsibleformonitoringcompliancewiththebank’sriskmanagementpoliciesandprocedures,andforreviewingtheadequacyoftheriskmanagementframework in relation to the risks faced by the bank. The Audit and Risk Management Committeesareassisted in these functionsby InternalAudit and the riskmanagementdepartments. InternalAuditundertakesbothregularandad-hocreviewsofriskmanagementcontrolsandprocedures,theresultsofwhicharereportedtotheSubBoardAuditCommittee.
Credit Risk
Creditriskistheriskoffinanciallosstothebankifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligations,andarisesprincipallyfromthebank’sloansandadvancestocustomersandotherbanksandinvestmentsecurities.
Forriskmanagementreportingpurposes,thebankconsidersandconsolidatesallelementsofcreditriskexposure.
Management of credit risk
The Board of Directors has delegated responsibility for the management of credit risk to its Credit-CommitteeandSub-BoardRiskManagementCommittee.AseparateCreditdepartment,reportingtotheExecutiveCommittee,isresponsibleforoversightofthebank’screditrisk,including:
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT (CONT’D)
• Formulatingcreditpoliciesinconsultationwithbusinessunits,coveringcollateralrequirements,creditassessment,riskgradingandreporting,documentaryandlegalprocedures,andcompliancewithregulatoryandstatutoryrequirements.
• Establishingtheauthorisationstructurefortheapprovalandrenewalofcreditfacilities.Authorisationlimitsareallocatedtobusinessunits.LargerfacilitiesrequireapprovalbytheExecutiveCommitteemembersandtheBoard(SubCommittee)onriskmanagement.
• Reviewing and assessing credit risk. The Credit departments assess all credit exposures inexcessofdesignatedlimits,priortofacilitiesbeingcommittedtocustomersbythebusinessunitconcerned.Renewalsandreviewsoffacilitiesaresubjecttothesamereviewprocess.Limitingconcentrationsofexposuretocounterparties,geographiesandindustries(forloansandadvances),andbyissuer,creditratingband,marketliquidityandcountry(forinvestmentsecurities).
• Developingandmaintainingthebank’sriskgradinginordertocategoriseexposuresaccordingtothedegreeofriskoffinanciallossfacedandtofocusmanagementontheattendantrisks.Theriskgradingsystemisusedindeterminingwhereimpairmentprovisionsmayberequiredagainstspecific credit exposures. The current risk grading framework consists of 4 grades reflectingvaryingdegreesofriskofdefaultandtheavailabilityofcollateralorothercreditriskmitigation.TheresponsibilityforsettingriskgradeslieswiththeBoardofDirectors.RiskgradesaresubjecttoregularreviewsbytheRiskManagementDepartment.
• Reviewingcomplianceofbusinessunitswithagreedexposurelimits,includingthoseforselectedindustries,countryriskandproducttypes.Regularreportsareprovidedtothecreditdepartmentonthecreditqualityofportfoliosandappropriatecorrectiveactionistaken.
• Providing advice, guidance and specialist skills to business units to promote best practicethroughoutthebankinthemanagementofcreditrisk.
Risk management
TheBankhasariskmanagementdepartmentorganised intocreditcontrol, recoveriesandoperationalcontrol.Underthecreditcontroldepartment,ithascreditadministration,creditriskappraisalandcreditmonitoring.ThedepartmentisresponsibleformanagingallriskstowhichtheBankisexposed(operationalrisk,creditrisk,liquidityrisk,interestrateriskandforeigncurrencyrisk).TheriskmanagementdepartmentisdevelopingariskmanagementframeworkfortheBank.
TheBanktreatsallbranchesasindependentbusinessunitswhichgeneratetheirownincome,runtheirownprofitandlossaccountandstatementoffinancialposition.Theheadofficeconsolidatestheseandexercisesoversightresponsibilityoverallthebranches.Creditisgeneratedatthebranchlevelandisthenchanneledthroughthecreditcontrolunitoftheriskmanagementdepartmentwhereacreditriskappraisalisperformedtoassesswhethertoengagetheclientornot.Theclient’sfileisthenmovedtotheheadofriskmanagementandtotheotherappropriatelevels(creditcommittee,boardandsoon)forfinalapprovalbefore credit is granted. There is also themonitoring aspectwhere the head office creditmonitoringteammonitors the loans and their performance in addition to themonitoring performed at the branchlevel.Wherealoangoesbeyondcurrent,itisclassifiedaseitherolem,substandard,doubtfulorloss,asrecommendedbytheCentralBankofGhana.Wherealoangoesbeyondcurrent,thereistherecoveriesteamwhichmovesintorecoverloanlosses.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT (CONT’D)
After initial recognition, the bank measures all financial liabilities including customer deposits andborrowings other than liabilities held for trading at amortised cost. Liabilities held for trading (financialliabilitiesacquiredprincipallyforthepurposeofgeneratingaprofitfromshort-termfluctuationsinpriceordealer’smargin)aresubsequentlymeasuredattheirfairvalues.
Interest-bearing borrowings are initially measured at fair value, and are subsequently measured atamortised cost, using the effective interest ratemethod.Any difference between the proceeds (net oftransaction costs) and the settlement or redemption of borrowings is recognised over the term of theborrowings.
Repurchase agreement transactions
SecuritiespurchasedfromtheCentralBankofGhanaunderagreementstoresell(“reverserepo’s”),aredisclosedasoffbalancesheetguaranteesinthefinancialstatement.
On- statement of financial position itemsGroup Group Bank Bank
2011 2010 2011 2010Assets GH¢’000 GH¢’000 GH¢’000 GH¢’000
a) Governmentsecurities 209,543 165,924 209,543 165,924====== ====== ====== ======
b) Depositsduefromfinancialinstitutions:Local 35,466 30,997 35,466 30,996Foreign 54,782 3,851 54,782 3,851
--------- -------- --------- ---------90,248 34,848 90,248 34,848===== ===== ===== =====
c) LoansandadvancestocustomersLoanstoindividuals:Overdraft 12,596 64,108 12,596 64,108Termloans 127,215 86,770 127,215 86,770
---------- ---------- ---------- -----------139,811 150,878 139,811 150,878---------- ---------- ---------- -----------
d) Loanstocorporateentities:Overdrafts 192,642 187,999 192,642 187,999Termsloans 363,148 262,575 363,148 262,575
---------- --------- ---------- -----------555,790 450,574 555,790 450,574---------- ---------- ---------- -----------
Grossloansandadvances(includingsuspendedinterest) 695,601 601,452 695,601 601,452
====== ====== ====== ======Off-statementoffinancialpositionitems:Lettersofcredit 32,170 30,253 32,170 30,252Guaranteesandindemnities 131,520 114,065 131,520 114,065
----------- ----------- ---------- -----------163,690 144,318 163,690 144,317====== ====== ====== ======
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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Thebankdoesnotperceiveanysignificantcreditriskonthefollowingfinancialassets:
•InvestmentsinGovernmentsecuritiesandCentralBankofGhana.
Thetablebelowrepresentsthemaximumcreditriskexposuretothebankat31December2011,andaftertakingintoaccountcreditenhancements.
Gross Amount ImpairmentGH¢’000 %
2011Loans and Advances to CustomersNeitherpastduenorimpaired 659,182 0.95Pastduebutnotimpaired 6,995 0.01Impaired 29,424 0.04
---------- ------695,601 1.00====== ===
3. FINANCIAL RISK MANAGEMENT (CONT’D)
Eachbusiness unit is required to implement bank credit policies andprocedures,with credit approvalauthoritiesdelegatedfromthebanksRiskManagementDepartment.EachbusinessunithasaCreditRiskofficerwhoreportsonallcreditrelatedmatterstoRiskManagementDepartment.
Impaired loans
Impairedloansandsecuritiesareloansandsecuritiesforwhichthebankdeterminesthatitisprobablethatitwilleunabletocollectallprincipalandinterestdueaccordingtothecontractualtermsoftheloan/securitiesagreement(s).
Past due but not impaired loans
Loansandadvanceswherecontractualinterestorprincipalpaymentsarepastduebutthebankbelievesthatimpairmentisnotappropriateonthebasisofthelevelofsecurity/collateralavailableand/orthestateofcollectionofamountsowedtothebank.
Allowances for impairment
Thebankestablishesanallowanceforimpairmentlossesthatrepresentsitsestimateofincurredlossesin its loanportfolio.Themaincomponentsof thisallowanceareaspecific losscomponent that relatesto individually significant exposures, and a collective loan loss allowance established for banks ofhomogeneousassetsinrespectoflossesthathavebeenincurredbuthavenotbeenidentifiedonloanssubjecttoindividualassessmentforimpairment.
Write-off policy
The bankwrites off a loan/security balance (and any related allowances for impairment losses)whentheCredit department determines that the loans are uncollectible.This determination is reached afterconsideringinformationsuchastheoccurrenceofsignificantchangesintheborrower’sfinancialpositionsuchthattheborrowercannolongerpaytheobligation,orthatproceedsfromcollateralwillnotbesufficienttopaybacktheentireexposure.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT (CONT’D)
Forsmallerbalancestandardisedloans,chargeoffdecisionsgenerallyarebasedonaproductspecificpastduestatus.AformalapprovalissoughtfromtheBoardandBankofGhanabeforeawrite-offexerciseisdone.
Collateral held
Thebankholdscollateralagainstloansandadvancestocustomersintheformofcash,mortgageinterestsoverproperty,otherregisteredsecuritiesoverassets,andguarantees.Estimatesoffairvaluearebasedonthevalueofcollateralassessedatthetimeofborrowing,andgenerallyarenotupdatedexceptwhenaloanisindividuallyassessedasimpaired.CollateralgenerallyisnotheldoverInterbankplacements,exceptwhensecuritiesareheldaspartofreverserepurchaseandsecuritiesborrowingactivity.Collateralusuallyisnotheldagainstinvestmentsecurities,andnosuchcollateralwasheldat31December2011.
Anestimateofthefairvalueofcollateralandothersecurityenhancementsheldagainstfinancialassetsisshownbelow:
Loansandadvancestocustomers
Concentration of risk
Thebankmonitorsconcentrationsofcreditriskbysector.Ananalysisofconcentrationsofcreditriskatthereportingdateisshownbelow:
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Againstindividuallyimpairedproperty 117,932 51,845 117,932 51,845Againstneitherpastduenorimpairedproperty 642,798 481,737 642,798 481,737
--------- ---------- ---------- ----------Total 760,730 533,582 760,730 533,582
====== ====== ====== ======
Advancestocustomers-gross 2011 2010GH¢’000 % GH¢’000 %
Agriculture 190,819 27 174,223 29Manufacturing 34,631 5 34,524 6CommerceandFinance 114,888 17 149,158 25TransportandCommunication 13,905 2 12,853 2MiningandQuarrying 6,197 1 7,526 1BuildingandConstruction 35,869 5 47,940 8Services 293,325 42 168,446 28Others 5,967 1 6,782 1
----------- ----- ----------- -----695,601 100 601,452 100====== === ====== ===
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT (CONT’D)
a) Interestraterisk
Interestrateriskistheexposureofcurrentandfutureearningsandcapitaltoadversechangesinthelevelofinterestrates.Exposuretointerestrateriskcanresultfromavarietyoffactors,including:
(i) Differencesbetweenthetimingofmarketinterestratechangesandthetimingofcashflows (repricingrisk);(ii) Changesinthemarketinterestratesproducingdifferenteffectonyieldsonsimilarinstruments
withdifferentmaturities(yieldcurverisk);and(iii) Changesinthelevelofmarketinterestratesproducingdifficulteffectsonratesreceivedorpaid
oninstrumentswithsimilarrepricingcharacteristics(basisrisk)
TheGroup uses gap analysis tomeasure its exposure to interest rate risk. Through this analysis, itcomparesthevaluesofinterestratesensitiveassetsandliabilitiesthatmatureorrepriceatvarioustimeperiodsinthefuture.TheGroupmaymakejudgmentalassumptionsaboutthebehaviourofassetsandliabilitieswhichdonothavespecificcontractualmaturityorrepricingdates.
TheAssetsandLiabilityManagementCommitteecloselymonitorstheinterestratetrendstominimizethepotentialadverseimpactofinterestratechanges.
Thematchingandcontrolledmismatchingofthematuritiesandinterestratesofassetsandliabilities isfundamentaltothemanagementofthebank.
Theinterestrateriskssensitivityanalysisisbasedonthefollowingassumptions.
• Changesinthemarketinterestratesaffecttheinterestincomeorexpensesofvariableinterestfinancialinstruments
• Changesinmarketinterestratesonlyaffectinterestincomeorexpensesinrelationtofinancialinstrumentswith
• fixedinterestratesifthesearerecognizedattheirfairvalue.• Theinterestratechangeswillhaveasignificanteffectoninterestsensitiveassetsandliabilities
andhencesimulation• modelingisappliedtonetinterestmargins.• Theinterestratesofallmaturitiesmovebythesameamountand,therefore,donotreflectthe
potentialimpactonnetinterestincomeofsomerateschangingwhileothersremainunchanged.• Theprojectionsmakeotherassumptionsincludingthatallpositionsruntomaturity.
Interest rate risk and foreign currency risk
TheBankuses theReuters system tomonitor live interestandexchange rates to facilitate tradingbythetreasurydepartment.ThishelpstheBanktoknowwhatishappeningatanymomentintimeonthemarketsandwhereopportunitiesarepresenttomakegainsfromhighinterestrates.
ThebankhasalsoinstitutedaBaselIIcompliancecommitteewhichisscheduledtomeetthroughouttheyeartoreviewvariousrisksthattheBankfacesandhowtomovecloselytoBaselII.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT (CONT’D)
Less than less than less than less than less than Total 1 months 3 months 6 months 1 year 3 years GH¢’000
Financial assets
CashandbalanceswithCentralBankofGhana 81,660 - - - - 81,660GovernmentSecurities - - 16,133 193,410 - 209,543Depositsandbalancesduefrombankinginstituitions 90,248 - - - - 90,248Loansandadvancestocustomers(net) 210,858 78,076 132,514 168,801 88,498 678,797
---------- --------- ---------- ----------- ---------- --------Total financial assets 382,766 78,076 148,647 362,211 88,498 1,060,198
---------- --------- ---------- ---------- -------- -----------Financial liabilitiesCustomerdeposits 136,973 117,822 437,273 135,650 - 827,718Depositsandbalanceduetobankinginstitutions 33,400 7,579 11,363 78,930 30,115 161,387
---------- --------- ---------- --------- -------- ----------Total financial assets 170,373 125,401 448,636 214,580 30,115 989,105
---------- --------- --------- --------- -------- ----------Interest rate sensitivity gapAsat31December2011Totalfinancialassets 382,766 78,076 148,647 362,211 88,498 1,060,198Totalfinancialliabilities 170,373 125,401 448,636 214,580 30,115 989,105
---------- ---------- ------------ ---------- -------- ----------Interest rate sensitivity gap 184,713 (47,324) (299,119) 157,352 58,383 71,093
---------- ---------- ----------- --------- -------- ----------
Foreign exchange risk
Foreignexchangeriskismeasuredthroughtheincomestatement.TheGrouptakesonexposuretotheeffectsoffluctuationsintheprevailingforeigncurrencyexchangeratesonitsfinancialpositionandcashflows.TheBoardsetslimitsonthelevelofexposurebycurrencyandinaggregateforbothovernightandintragroup.
ThetablebelowsummarisestheGroup’sexposuretoforeigncurrencyexchangerateriskat31December.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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a) AssetsUSD GBP EUR Other
GH¢’000 GH¢’000 GH¢’000 GH¢’000
CashandbalancewithCentralBankofGhana 1,610 279 528 87Equityinvestment - 4,500 - -DepositsandbalanceduefrombankingInstituition 34,205 370 (149) -Loansandadvancestocustomers(net) 80,217 - 1,181 -Otherassets 976 244 548 -
----------- ------- ------- ---Total financial assets 117,008 5,393 2,108 87
====== ==== ==== ==
b) Financial liabilities
Customerdeposits 48,230 1,423 3,855 -Borrowings 58,500 - - -Otherliabilities 3,310 - 57 -
---------- -------- --------- ----Total financial liabilities 110,040 1,423 3,912 -
===== ==== ==== ===
Netbalancesheetposition 6,966 3,968 (1,804) 87
Asat31December2011 - - - -Totalfinanacialassets 117,008 5,393 2,108 87Totalfinancialliabilities 110,041 1,424 3,912 -
--------- -------- ------- ----Net balance sheet position 6,966 3,968 (1,804) 87
==== ==== ==== ===
Theexchangeratesusedfortranslatingthemajorforeigncurrencybalancesattheyearendwereasfollows:
UnitedStatesofAmericaDollars(USDollar$) 1.5841 1.4532GreatBritishPound(GBPound£) 2.4456 2.2511EuropeanUnionEuro 2.0501 1.9405
3. FINANCIAL RISK MANAGEMENT (CONT’D)
Liquidity risk
LiquidityriskistheriskthattheGroupisunabletomeetitspaymentobligationsassociatedwithitsfinancialliabilitieswhentheyfalldueandbeabletoreplacefundswhentheyarewithdrawn.Theconsequencemaybethefailuretomeetobligationstorepaydepositorsandfulfilcommitmentstolend.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3. FINANCIAL RISK MANAGEMENT (CONT’D)
Management of liquidity risk
TheBank’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquidity tomeet its liabilities when due, under both normal and stressed conditions, without incurringunacceptablelossesorriskingdamagetothebank’sreputation.
Thetreasurydepartmentmaintainsaportfolioofshort-termliquidassets,largelymadeupofshort-termliquid investmentsecurities, loansandadvancestobanksandother inter-bankfacilities, toensurethatsufficientliquidityismaintainedwithinthebankasawhole.
Exposuretoliquidityrisk
Thekeymeasureusedbythebankformanagingliquidityriskistheratioofnetliquidassetstodepositsfromcustomers.
Forthispurposenetliquidassetsareconsideredasincludingcashandcashequivalentsandinvestmentgradedebtsecuritiesforwhichthere isanactiveandliquidmarket lessanydepositsfrombanks,debtsecuritiesissued,otherborrowingsandcommitmentsmaturingwithinthenextmonth.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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3.
FIN
AN
CIA
L R
ISK
MA
NA
GEM
ENT
(CO
NT’
D)
Thetablebelowpresentsthecashflow
spayableundernon-derivativefinancialliabilitiesandassetsheldformanagingliquidityriskbyrem
aining
contractualm
aturitiesatthedateoftheconsolidatedstatementoffinancialposition.Theam
ountsdisclosedinthetablearethecontractualundiscounted
cashflow
,whereastheGroupmanagestheliquidityriskbasedonadifferentbasisnotresultinginasignificantlydifferentanalysis.
Car
ryin
gU
p to
11-
33-
12ov
erA
mou
ntm
onth
mon
ths
mon
ths
1-5
year
s5y
ears
Tota
l Fi
nanc
ial l
iabi
litie
sG
H¢’
000
GH
¢’00
0G
H¢’
000
GH
¢’00
0G
H¢’
000
GH
¢’00
0G
H¢’
000
Customerdeposits
827,718
136,973
117,821
437,273
135,650
-82
7,71
8Borrowings
161,387
33,401
7,579
11,363
78,930
30,114
161,
387
Otherliabilities
42,859
6,581
231
25,212
10,836
-42
,859
----
----
----
---
----
----
----
----
---
----
----
----
----
----
---
----
---
----
----
----
-Totalfinancialliabilities
1,03
1,96
417
6,95
512
5,63
147
3,84
822
5,41
630
,114
1,03
1,96
4--
----
----
----
----
----
----
----
---
----
----
----
----
---
----
---
----
----
----
Fina
ncia
l ass
ets
CashandbalanceswithCentralBankofGhana
81,660
81,660
--
--
81,6
60InvestmentinGovernm
entsecurities
209,543
--
9,858
199,685
-20
9,54
3Depositsandbalancesduefrombankinginstitutions
90,248
90,248
--
--
90,2
48Investmentinothersecurities
35,158
--
35,158
-35
,158
Investmentinassociatecompanies
1,477
-1,477
--
1,47
7Loansandadvancestocustomers(net)
678,747
210,858
78,077
132,515
178,523
78,774
678,
747
Otherassets
73,560
-7,054
7,916
58,590
-73
,560
IntangibleAssets
11,974
11,974
-11
,974
Propertyandequipment
31,304
--
31,304
-31
,304
----
----
----
----
----
----
----
----
----
---
----
----
----
----
----
----
----
----
-To
tal fi
nanc
ial a
sset
s1,
213,
671
382,
766
85,1
3115
1,76
651
5,23
478
,774
1,21
3,67
1--
----
----
----
----
----
----
----
----
----
---
----
----
---
----
----
----
----
----
-N
et L
iqui
dity
gap
181,
707
205,
811
(40,
500)
(322
,082
)28
9,81
848
,660
363,
414
Asat31Decem
ber2011
Totalfinancialliabilities
1,031,964
176,955
125,631
473,848
225,416
30,114
1,03
1,96
4Totalfinancialassets
1,213,671
382,766
85,131
151,766
515,234
78,774
1,21
3,67
1--
----
----
---
----
----
---
----
----
---
----
----
---
----
----
---
----
---
----
----
----
Net
liqu
idity
gap
181,
707
205,
811
(40,
500)
(322
,082
)28
9,81
848
,660
363,
414
----
----
----
----
----
---
----
----
---
----
----
----
----
----
---
----
---
----
----
----
Thebank’scashflow
how
evervarysignificantlyfrom
thisanalysis.Forexample,customerdepositsaremaintainedforlongerperiodsthanthecontractual
maturitydateshencethedepositbaseisconsideredtobeofastableandlongtermnature.
Not
es to
the
Con
solid
ated
Fin
anci
al S
tate
men
tsFO
R T
HE
YEA
R E
ND
ED 3
1 D
ECEM
BER
201
1
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Page 47
4. CAPITAL MANAGEMENT
Regulatory Capital
TheCentralBankofGhanasetsandmonitorscapitalrequirementsforthebank.Thebank’sobjectiveswhenmanagingcapitalare:
• Tosafeguardthebank’sabilitytocontinueasagoingconcernsothatitcancontinuetoprovidereturnsfortheshareholdersandbenefitsfortheotherstakeholders
• Tomaintainastrongcapitalbase tosupport thecurrentand futuredevelopmentneedsof thebusiness
• TocomplywiththecapitalrequirementssetbytheCentralBankofGhana
Capital adequacy and use of regulatory capital aremonitored bymanagement employing techniquesbasedontheguidelinesdevelopedbytheCentralBankofGhanaforsupervisorypurposes.TherequiredinformationisfiledwiththeCentralBankofGhanaonamonthlybasis
TheCentralBankrequireseachbankto:a) HoldtheminimumlevelofregulatorycapitalofGH¢60millionbytheendof2012b) Maintaina ratio total regulatory capital; to riskweightedassetsplus riskweightedoff balance
assetsatabovetherequiredminimumof10%
Thebank’sregulatorycapitalisanalysedintotwotiers:
• Tier 1 capital, which includes ordinary share capital, share premium, retained earnings, afterdeductionsforintangibleassets(excludingcomputersoftware),investmentsinequityinstrumentsofotherinstitutionsandotherregulatoryadjustmentsrelatingtoitemsthatareincludedinequitybutaretreateddifferentlyforcapitaladequacypurposes.
• Tier2capital,whichincludesCapitalisedRevaluationsReserves;LatentRevaluationReserves;UndisclosedReserves;RevaluationReserves;Sub-OrdinatedLoansandHybridCapitalsubjecttoalimitof100%ofTier1Capital.
Thebank’s policy is tomaintain a strong capital base soas tomaintain investor, creditor andmarketconfidence and to sustain future development of the business. The impact of the level of capital onshareholders’returnisalsorecognisedandthebankrecognisestheneedtomaintainabalancebetweenthehigherreturnsthatmightbepossiblewithgreatergearingandtheadvantagesandsecurityaffordedbyasoundcapitalposition.
Theallocationofcapitalbetweenspecificoperationsandactivitiesis,toalargeextent,drivenbyoptimisationofthereturnachievedonthecapitalallocated.Theamountofcapitalallocatedtoeachoperationoractivityisbasedprimarilyupontheregulatorycapital,butinsomecasestheregulatoryrequirementsdonotreflectfullythevaryingdegreeofriskassociatedwithdifferentactivities.Insuchcasesthecapitalrequirementsmaybeflexedtoreflectdifferingriskprofiles,subjecttotheoveralllevelofcapitaltosupportaparticularoperation or activity not falling below the minimum required for regulatory purposes. The process ofallocatingcapitaltospecificoperationsandactivitiesisundertakenindependentlyofthoseresponsiblefortheoperation,byBankRiskandBankCredit,andissubjecttoreviewbytheBankCreditCommitteeandorALCOasappropriate.
Althoughmaximisationofthereturnonrisk-adjustedcapitalistheprincipalbasisusedindetermininghowcapital isallocatedwithinthebanktoparticularoperationsoractivities, it isnot thesolebasisusedfordecisionmaking.Accountalsoistakenofsynergieswithotheroperationsandactivities,theavailabilityofmanagementandotherresources,andthefitoftheactivitywiththebank’slongertermstrategicobjectives.Thebank’spoliciesinrespectofcapitalmanagementandallocationarereviewedregularlybytheBoardofDirectors.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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4. CAPITAL MANAGEMENT – (CONT’D)
Critical accounting estimates and judgments in applying the bank’s accounting policies
Intheprocessofapplyingthebank’saccountingpolicies,managementhasmadeestimatesandassumptionsthat affect the reportedamountsof assetsand liabilitieswithin thenext financial year. Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.
Thesearedealtwithbelow:
Impairment losses on loans and advances
Thebankreviewsitsloanportfoliostoassessimpairmentregularly.Indeterminingwhetheranimpairmentlossshouldberecordedinthestatementofcomprehensiveincome,thebankmakesjudgementsastowhether there is anyobservable data indicating that there is ameasurable decrease in theestimatedfuturecashflowsfromaportfolioofloans,beforeadecreasecanbeidentifiedwithanindividualloaninthatportfolio.Thisevidencemayincludeobservabledataindicatingthattherehasbeenanadversechangeinthepaymentstatusofborrowersinabank,ornationalorlocaleconomicconditionsthatcorrelatewithdefaultsonassetsinthebank.
Impairment losses on loans and advances
Managementusesestimatesbasedonhistoricallossexperienceforassetswithcreditriskcharacteristicsandobjectiveevidenceofimpairmentsimilartothoseintheportfoliowhenschedulingitsfuturecashflows.Themethodologyandassumptionsusedforestimatingboththeamountandtimingoffuturecashflowsarereviewedregularlytoreduceanydifferencesbetweenlossestimatesandactuallossexperience.
Held -to-maturity investments
The bank follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed ordeterminable payments and fixed maturity as held-to-maturity. This classification requires significantjudgement.Inmakingthisjudgement,thebankevaluatesitsintentionandabilitytoholdsuchinvestmentstomaturity.Ifthebankfailstokeeptheseinvestmentstomaturityotherthanforthespecificcircumstances-forexample,sellinganinsignificantamountclosetomaturity-itwillberequiredtoreclassifytheentireclassasavailable-for-sale.Theinvestmentswouldthereforebemeasuredatfairvaluenotamortisedcost.
Property and equipment
Criticalestimatesaremadebythedirectorsindeterminingdepreciationratesforpropertyandequipment.
Going concern
As at 31 December 2011, the bank had an accumulated revenue surplus of GH¢ 9,528,722 (2010;GH¢3,684,830).
ThedirectorsareconfidentofcontinuedProfitableperformanceinthecomingyearsinviewofthecontinuedstabilityoftheGhanaianeconomyinthefaceofdauntingchallengesarousedbythecurrentglobalfinancialcrises.TheDirectorshaveputinplacemeasurestoensureconsistentgoodperformanceandavoidrisksthatmayimpairtheQualityoftheBankscreditportfolio.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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Inviewoftheabove,thedirectorsconsideritappropriatetopreparethesefinancialstatementsonagoingconcernbasis.
5. INTEREST INCOME
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000Loansandadvances 94,552 97,175 94,552 97,175InvestmentinGovernmentsecurities 23,155 27,931 23,155 27,931Interbankplacement 411 1,480 411 1,481Leases(includingagricinputs) 1,071 329 1,071 329
--------- --------- --------- -------- 119,189 126,915 119,189 126,916
====== ====== ===== =====
Includedwithininterestincomefromloansandadvancesfortheyearended31December2011isatotalofGH¢12,610,557(2010:GH¢10,595,061)accruedonimpairedfinancialassets.
6. INTEREST EXPENSE
Group Group Bank Bank(a)Ondeposits: 2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Fixed/Timedeposits 18,139 15,660 18,139 15,660SavingsDeposits 1,055 2,310 1,055 2,310Demand&Calldeposits 4,555 8,447 4,555 8,447
--------- -------- --------- --------- 23,749 26,417 23,749 26,417
--------- --------- --------- ---------
(b)Onborrowedfunds:Inter-BankBorrowing 8,106 5,463 8,106 5,463Long-TermBorrowings 7,036 5,531 7,036 5,531
--------- --------- --------- --------- 15,142 10,994 15,142 10,994
--------- --------- --------- ---------38,891 37,411 38,891 37,411===== ===== ===== =====
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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7. NET FEE AND COMMISSION INCOME
Group Group Bank Bank2011 2010 2011 2010
Fee and commission Income GH¢’000 GH¢’000 GH¢’000 GH¢’000CommissiononTurnover 8,544 5,955 8,544 5,955FeesandCharges 24,725 10,034 24,725 10,034SaleofChequeBookCharges 1,036 680 1,036 680LoanFeeIncomes 4,038 5,048 4,038 5,048GuaranteesCharges&Commission 1,322 413 1,322 413
---------- ---------- --------- ---------Total Fee and Commission Income 39,665 22,130 39,665 22,130
---------- ---------- ---------- ---------Fee and commission ExpenseChargesforServices (2,221) (1,095) (2,211) (1,095)
---------- ---------- --------- ----------TotalFeeandCommissionExpense (2,221) (1,095) (2,211) (1,095)
--------- --------- --------- ----------Net Fee and Commission Income 37,444 21,035 37,454 21,035
===== ===== ===== =====
8. NET TRADING INCOME
Group Group Bank Bank2011 2010 2011 2010
Foreign Exchange GH¢’000 GH¢’000 GH¢’000 GH¢’000-Translationgainslesslosses 18,465 8,246 18,464 8,246-Transactiongainslesslosses 9,531 4,298 9,531 4,298
-------- -------- ------- ------- 27,996 12,544 27,995 12,544===== ==== ===== ====
9. OTHER OPERATING INCOME
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000Baddebtsrecovered 6,672 2,616 6,672 2,616Dividendsfrominvestments 1,298 949 1,298 949Otherincome 9,884 14,228 9,884 10,928
------- ------- -------- -------- 17,854 17,793 17,854 14,493===== ===== ===== =====
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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10. OPERATING EXPENSES
Operating expenses Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Staffcosts(Note11) 68,256 70,951 68,256 70,951Directors’fees 728 585 728 585DepreciationandAmortization 4,857 2,892 4,493 2,892OccupancyCost 16,560 6,415 19,448 6,415AuditorsRemuneration 160 85 160 85DonationsandSocialResponsibility 1,296 478 1,296 478MotorVehicleRunningExpenses 9,128 4,346 9,128 4,346General&AdministrativeExpenses 20,539 28,388 20,539 28,388Others 11,460 8,863 11,460 6,061
---------- --------- --------- ---------132,984 123,003 135,508 120,202====== ===== ====== ======
11. STAFF COSTS
Staff costs Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Salariesandwages 42,988 42,150 42,988 42,150Pensioncosts-(DefinedcontributionschemetoSSNIT) 4,898 4,188 4,898 4,188StaffProvidentFund(DefinedContributionScheme) 5,640 4,853 5,640 4,853Staffloans-marketratecharge 4,522 4,658 4,522 4,658Otherstaffrelatedcosts 10,208 15,102 10,208 15,102
-------- -------- -------- --------68,256 70,951 68,256 70,951===== ===== ===== =====
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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12. EARNING PER SHARE
Earningpershareiscalculatedbydividingthenetprofitattributabletoshareholdersbythenumberofordinarysharesinissueduringtheyear.
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Earnings(GH¢) 48,557 12,118 43,608 11,652-------- -------- -------- --------
Earningsattributabletoordinaryshareholders 48,557 12,118 43,608 11,652===== ==== ===== =====
NumberofsharesNumberofordinaryshares 25,000 25,000 25,000 25,000
===== ===== ===== =====
Earningspershare 1.942 0.485 1.744 0.466==== ==== ==== ====
Basic(GH¢) 1.942 0.485 1.744 0.466==== ==== ==== ====
Therewerenopotentiallydilutiveinstrumentsoutstandingatthedateofthestatementoffinancialposition.
13. CASH AND BALANCES WITH CENTRAL BANK OF GHANA
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Cashonhand 27,875 20,758 27,875 20,758BalanceswithCentralBankofGhana 53,785 68,252 53,785 68,252
-------- -------- -------- --------81,660 89,010 81,660 89,010===== ===== ===== =====
Mandatoryreservedepositsrepresenting9%ofthebank’stotaldepositarenotavailableforuseinthebank’sdaytodayoperationsandarenon-interestbearing.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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14. INVESTMENT IN GOVERNMENT SECURITIES
Held to maturity
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
91-DayTreasuryBill - 4,000 - 4,000TreasuryNotes - 8,678 - 8,678182-DayTreasuryBill 9,858 - 9,858 -ForeignBills 244 854 244 854
-------- ------- ------- --------10,102 13,532 10,102 13,532===== ===== ===== =====
Available for sale
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
2-5yearfixedratenote 200,307 152,392 200,307 152,392Fairvaluemovements (867) - (867) -
--------- ---------- --------- ----------199,440 152,392 199,440 152,392====== ====== ====== ======
Maturingwithin90daysofthedateofacquisition - 4,000 - 4,000---- ------ ----- ------
- 4,000 - 4,000=== ==== === ====
Maturingwithin1-3yearsofthedateofacquisition 209,543 161,924 209,543 161,924---------- --------- ---------- ----------
209,543 165,924 209,543 165,924====== ====== ====== ======
LongtermgovernmentbondsareclassifiedasAvailable&for-saleandcarriedatfairvaluewiththefairvaluemovementsrecogniseddirectlyinequity;whilstshort-termtreasurybillshavebeenclassifiedasloansandreceivablesandheldatamortisedcost.
Theweighted average effective interest rate on treasury bills at 31December 2011was 16.09% (2010-16.75%)andtheratefortreasurybondsat31December2011was16.09%(2010-18.72%)
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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15. DEPOSITS AND BALANCE DUE FROM BANKING INSTITUITIONS
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000Itemsincourseofcollection 35,465 23,797 35,465 23,797Nostroaccountbalances 54,783 3,851 54,783 3,851Placementwithotherbanks - 7,200 - 7,200
-------- -------- -------- --------90,248 34,848 90,248 34,848 ===== ===== ===== =====
16. INVESTMENT SECURITIES: AVAILABLE FOR SALE
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000At1January 11,212 6,309 11,188 6,309Additionalinvestments 8,425 1,960 8,450 1,936
------- -------- ------- -------19,637 8,269 19,637 8,245
Fairvalueadjustments 15,521 2,943 15,521 2,943-------- --------- -------- --------
At31December 35,158 11,212 35,158 11,188==== ===== ===== =====
17. INVESTMENT IN ASSOCIATES
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000CostofInvestment 1,887 4,999 1,887 4,999Shareofresults (410) 775 775 775
------- ------- ------ -------At31December 1,477 5,774 1,477 5,774
==== ==== ==== ====
Cost of Interest Share ofInvestment Profit/(Loss) Held Result
2011 GH¢’000 GH¢’000 (%) GH¢’000ActivityVentureFinanceCompanyLimited 1,276 (556) 20 (111)AgricareLimited 1 - 40.5 -GlobalAccessSavings&LoansLimited 610 (855) 35 (300)
------- -------- -----1,887 (1,411) (411)==== ===== ===
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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17. INVESTMENT IN ASSOCIATES (CONT’D)
Cost of Profit/ Interest Share ofInvestment (Loss) Held Result
2010 GH¢’000 GH¢’000 (%) GH¢’000FidelityBankLimited 3,112 4,998 20 1,000ActivityVentureFinanceCompany 1,276 (446) 20 (89)AgricareLimited 1 (91) 40.5 (37)GlobalAccessSavings&LoansLimited 610 (282) 35 (99)
------- -------- -----4,999 4,179 775==== ==== ===
In2011,theBankdisposedoffitstwenty(20%)interestinFidelityBankLimitedtootherexistingshareholdersandrealisedagainofGH¢6,088,224asfollows:
2011 2010GH¢’000 GH¢’000
Proceedsfromsale 10,200 -Carryingvalueatdisposal (4,112) -
------- ----Profitondisposal 6,088 -
==== ==
18. INVESTMENT IN SUBSIDIARIES
Theprincipalsubsidiariesare: 2011 2010
Name of Business Country of IncorporationAmounts Invested
Percentage Interest
Amounts Invested
Percentage Interest
GH¢’000 GH¢’000
ADBPropertiesLimited Ghana 14,493 100 14,493 100JeiRiverFarmsLimited Ghana - - 1,151 77.5
-------- --------14,493 15,644===== =====
Investmentsinsubsidiariesarestatedatcostandcomprise:
Bank Bank Group Group2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000InvestmentinSubsidiaries 14,493 15,644 - -
===== ===== == ==
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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18. INVESTMENT IN SUBSIDIARIES (CONT’D)
In2011,theBankdisposedoffitscontrollinginterest(77.5%)inJeiRiverFarmsLimitedtootherexistingshareholdersandrealisedagainofGH¢1,561,791asfollows:
2011 2010GH¢’000 GH¢’000
BankProceedsfromsale 2,712 -Carryingvalueatdisposal (1,150) -
------- ----Profitatdisposal 1,562 -
==== ==
19. LOANS AND ADVANCES TO CUSTOMERS
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Overdrafts 250,488 234,545 250,488 234,545loans 417,022 366,907 417,022 366,907Leasereceivable 28,091 - 28,091 -
---------- ---------- ---------- ----------Gross loans and advances 695,601 601,452 695,601 601,452
Provision for impaired loans and advances (16,854) (24,465) (16,854) (24,465)---------- ----------- ----------- -----------678,747 576,987 678,747 576,987====== ====== ====== ======
TheaboveconstituteloansandadvancestocustomersandstaffStaffloansamountedtoGH¢36,368,299(2010-GH¢27,118,469.32)Theeffectiveinterestrateonloansandadvancesat31December2011was16.75%(2010-21.95%).Loanlossprovisionratiois4.42%ofgrossadvances(2010:7.74%).GrossNon-performingloansratioperBankofGhanarequirementis6.68%(2010:11.82%).Fifty(50)largestexposures(grossfundedandnon-funded)tototalexposuresis67.95%(2010:72.26%).
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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19. LOANS AND ADVANCES TO CUSTOMERS (CONT’D)
Loansandadvancesarecarriedatamortisedcost.Therewerenoloanscarriedatfairvaluethroughprofitorloss
Group Group Bank Bank2011 2010 2011 2010
AnalysisBymaturity GH¢’000 GH¢’000 GH¢’000 GH¢’000Maturing:Withinoneyear 328,483 295,676 328,483 295,676OnetoThreeyears 350,264 281,311 350,264 281,311
---------- --------- --------- --------- 678,747 576,987 678,747 576,9867
====== ====== ====== ======
b) Impairment of loans and advances
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
At1January 24,465 82,262 24,465 82,262AmountWritten-off - (64,483) - (64,483)Additionalimpairmentchargeduringtheyear (7,610) 6,686 (7,610) 6,686
--------- --------- --------- ---------At31December 16,854 24,465 16,854 24,465
===== ====== ===== =====
c) Impairment of loans and advances
Impairmentcharge (7,610) 6,686 (7,610) 6,686===== ==== ===== ====
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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20. OTHER ASSETS
Other assets Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Advancepayment 338 4,148 338 4,148Prepayments 6,614 5,393 6,614 5,393StationeryStocks 1,872 1,299 1,872 1,299Sundryreceivables 33,803 22,647 32,774 22,647Others 30,303 24,534 22,977 21,044NationalFiscalLevy 629 977 295 382
---------- --------- --------- --------- 73,560 58,998 64,870 54,913
====== ===== ===== =====
21. INTANGIBLE ASSETS
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
PurchasedSoftwareCostBalance as at 1st January 2,811 1,687 2,811 1,687Acquisitions 12,590 1,124 12,590 1,124
-------- -------- --------- --------Balanceasat31stDecember 15,401 2,811 15,401 2,811
===== ==== ===== ====
AmortisationBalance as at 1st January 2,247 899 2,247 899Chargefortheyear 1,180 1,348 1,180 1,348
------- ------ ------- ------Balanceasat31stDecember 3,427 2,247 3,427 2,247
==== ==== ==== ====
CarryingAmounts 11,974 564 11,974 564===== ==== ===== ===
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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22.
PRO
PER
TY A
ND
EQ
UIP
MEN
T
Land
&Fu
rnitu
re &
Mot
orC
apita
l Le
aseh
old
Bui
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ompu
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GH
¢’00
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H¢’
000
GH
¢’00
0G
H¢’
000
GH
¢’00
0G
H¢’
000
GH
¢’00
0C
ost/
Valu
atio
n (G
roup
)At1January2010
16,919
10,969
9,856
5,949
267
-43
,960
Additions
138
2,314
2,317
116
529
-5,
414
Disposal
--
-(1,032)
--
(1,0
32)
Write-offs
-(1,136)
(1,833)
(2,453)
(29)
-(5
,451
)--
----
----
----
---
----
----
---
----
---
----
----
----
----
---
At31Decem
ber2010
17,0
5712
,147
10,3
402,
580
767
-42
,891
====
===
===
====
===
====
===
====
=
AtJanuary2011
17,057
12,147
10,340
2,580
767
-42
,890
Additions
1,178
4,699
2,238
559
799
4,143
13,6
16Disposals
(2,614)
(30)
(68)
(412)
--
(3,1
24)
Releasedondisposalofsubsidiary
(332)
-(2,324)
(331)
--
(2,9
87)
Transfers
1,037
--
-(1,291)
254
-Write-offs
(1,821)
--
--
-(1
,821
)--
----
----
----
---
----
----
---
----
---
---
----
---
----
----
-At31Decem
ber2011
14,5
0516
,816
10,1
862,
396
275
4,39
748
,575
====
===
===
====
===
====
===
====
===
Not
es to
the
Con
solid
ated
Fin
anci
al S
tate
men
tsFO
R T
HE
YEA
R E
ND
ED 3
1 D
ECEM
BER
201
1
Agric and more...
« 2011 - Annual Reports & Financial Statements
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22.
PRO
PER
TY A
ND
EQ
UIP
MEN
T (C
ON
T’D
)
Land
&Fu
rnitu
re &
Mot
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aseh
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ompu
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GH
¢’00
0G
H¢’
000
GH
¢’00
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H¢’
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GH
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0D
epre
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At1January2010(Group)
2,020
6,313
4,763
2,829
--
15,9
25Chargefortheyear
459
2,487
1,082
509
--
4,53
7ReleasedonDisposal/R
evaluation
--
-(613)
--
(613
)Transfers
-(99)
-(1,741)
--
(1,8
40)
----
---
----
---
----
---
----
---
----
---
----
----
--At31Decem
ber2010
2,47
98,
701
5,84
598
4-
-18
,009
====
====
====
===
===
====
===
Dep
reci
atio
nAt1January2011(Group)
2,479
8,701
5,845
984
--
18,0
09Chargefortheyear
363
1,688
992
479
-304
3,82
6ReleasedonDisposal/R
evaluation
(1,830)
(28)
(68)
(412)
--
(2,3
38)
Releasedondisposalofsubsidiary
(182)
-(1,760)
(241)
--
(2,1
83)
Write-off
(42)
--
--
-(4
2)--
----
---
----
---
----
----
---
---
----
----
--At31Decem
ber2011
788
10,3
615,
009
810
-30
417
,272
====
====
===
====
===
===
====
=
Net
Boo
k Va
lue
At31Decem
ber2010(Group)
14,5
773,
446
4,49
51,
596
767
-24
,882
====
===
====
====
===
====
==
At31Decem
ber2011(Group)
13,7
176,
457
5,17
61,
585
274
4,09
331
,304
====
===
===
====
===
====
===
==
Not
es to
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Fin
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1 D
ECEM
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1
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Annual Reports & Financial Statements - 2011 »
Page 61
22.
PRO
PER
TY A
ND
EQ
UIP
MEN
T (C
ON
T’D
)
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&Fu
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ost/
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At 1
Jan
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201
016,622
10,969
7,689
5,718
267
-41
,264
Additions
658
2,314
2,159
16529
-5,
676
Disposal
--
-(1,032)
--
(1,0
32)
Transfers
--
--
--
-TransfertoADBProperties
(17,279)
(1,136)
(1,833)
(2,452)
(29)
-(2
2,72
9)--
----
---
----
----
----
----
----
---
----
----
---
----
----
---
At31Decem
ber2010
112
,147
8,01
52,
250
767
-23
,180
====
===
===
====
====
===
===
====
==
At1January
112,147
8,015
2,248
767
-23
,178
Additions
-4,699
2,237
559
799
4,143
12,4
37Disposal
(1,267)
(29)
(68)
(411)
--
(177
5)Transfersto/from
ADBProperties
1,267
--
-(1,036)
-23
1Transfers
--
--
(254)
254
---
----
---
----
----
----
----
----
---
----
----
---
----
----
--At31Decem
ber2011
116
,817
10,1
842,
396
276
4,39
734
,071
====
===
===
====
====
===
===
====
==
Not
es to
the
Con
solid
ated
Fin
anci
al S
tate
men
tsFO
R T
HE
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R E
ND
ED 3
1 D
ECEM
BER
201
1
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22.
PR
OPE
RTY
AN
D E
QU
IPM
ENT
(CO
NT’
D)
Land
&Fu
rnitu
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GH
¢’00
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H¢’
000
GH
¢’00
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H¢’
000
GH
¢’00
0D
epre
ciat
ion
At1January2010(Bank)
1,852
6,313
3,351
2,673
--
14,1
89Chargefortheyear
146
2,487
733
424
--
3,79
1ReleasedonDisposal/R
evaluation
--
-(612)
--
(612
)Transfers
(1,998)
(99)
-(1,741)
--
(3,8
38)
----
---
----
---
----
---
----
---
----
---
----
----
--At31Decem
ber2010
-8,
701
4,08
474
4-
-13
,529
====
====
====
===
===
====
==
Dep
reci
atio
nAt1January2011(Bank)
-8,701
4,084
742
--
13,5
29Chargefortheyear
-1,688
992
479
-304
3,46
4ReleasedonDisposal/R
evaluation
(669)
(28)
(68)
(411)
--
(1,1
77)
Transfers
669
--
--
-66
9--
----
----
---
----
----
---
---
----
----
----
At31Decem
ber2011
-10
,361
5,00
881
2-
304
16,4
84==
====
===
====
===
====
===
===
Net
Boo
k Va
lue
At31Decem
ber2010(Bank)
13,
446
3,93
01,
505
767
-9,
651
===
====
====
===
===
====
==
At31Decem
ber2011(Bank)
16,
457
5,17
71,
585
275
4,09
317
,587
===
====
===
====
===
===
====
===
Not
es to
the
Con
solid
ated
Fin
anci
al S
tate
men
tsFO
R T
HE
YEA
R E
ND
ED 3
1 D
ECEM
BER
201
1
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Page 63
22.
PR
OPE
RTY
AN
D E
QU
IPM
ENT
(CO
NT’
D)
Land
&Fu
rnitu
re &
Mot
orC
apita
l Le
aseh
old
Bui
ldin
gC
ompu
ters
Equi
pmen
tVe
hicl
esW
IPIm
prov
emen
tTo
tal
GH
¢’00
0G
H¢’
000
GH
¢’00
0G
H¢’
000
GH
¢’00
0G
H¢’
000
GH
¢’00
0D
epre
ciat
ion
At1January2010(Bank)
1,852
6,313
3,351
2,673
--
14,1
89Chargefortheyear
146
2,487
733
424
--
3,79
1ReleasedonDisposal/R
evaluation
--
-(612)
--
(612
)Transfers
(1,998)
(99)
-(1,741)
--
(3,8
38)
----
---
----
---
----
---
----
---
----
---
----
----
--At31Decem
ber2010
-8,
701
4,08
474
4-
-13
,529
====
====
====
===
===
====
==
Dep
reci
atio
nAt1January2011(Bank)
-8,701
4,084
742
--
13,5
29Chargefortheyear
-1,688
992
479
-304
3,46
4ReleasedonDisposal/R
evaluation
(669)
(28)
(68)
(411)
--
(1,1
77)
Transfers
669
--
--
-66
9--
----
----
---
----
----
---
---
----
----
----
At31Decem
ber2011
-10
,361
5,00
881
2-
304
16,4
84==
====
===
====
===
====
===
===
Net
Boo
k Va
lue
At31Decem
ber2010(Bank)
13,
446
3,93
01,
505
767
-9,
651
===
====
====
===
===
====
==
At31Decem
ber2011(Bank)
16,
457
5,17
71,
585
275
4,09
317
,587
===
====
===
====
===
===
====
===
22. PROPERTY AND EQUIPMENT (CONT’D)
Disposal Schedule (Bank)Land & Furniture & Motor
Building Computers Equip’t vehicles TotalGH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000
Cost 1,267 29 68 411 1,775 Accumulateddepreciation (669) (28) (68) (411) (1,176)
------ ---- ----- ------ -------Net book value 598 1 - - 599Proceeds 3,375 - 44 141 3,560
------ --- --- ---- -------Profit/(Loss) 2,777 (1) 44 141 2,961
==== == == == ====
Disposal Schedule (Group)Land & Furniture & Motor
Building Computers Equip’t vehicles TotalGH¢’000 GH¢’000 GH¢’000 GH¢’000 GH¢’000
Cost 2,614 29 68 411 3,122 Accumulateddepreciation (1,830) (28) (68) (411) (2,337)
------ ---- ----- ------ -------Net book value 784 1 - - 785 Proceeds 6,259 - 44 141 6,444
------ --- --- ---- -------Profit/(Loss) 5,475 (1) 44 141 5,659
==== == == == ====
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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23. CUSTOMER DEPOSIT
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
SavingsDeposits 157,856 119,036 157,856 119,036DemandandCallDeposits 487,579 297,780 487,579 297,780Fixed/TimeDeposits 182,283 119,263 182,283 119,263
---------- ---------- ---------- ---------- 827,718 536,079 827,718 536,079
====== ====== ====== ======
Customer deposits Group Group Bank BankMaturity analysis of customer deposits 2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000FromGovernmentandparastatals:Payablewithin90days 4,678 12,330 4,678 12,330Payableafter90daysandwithinoneyear - 186,288 - 186,288
-------- ---------- ------- ---------- 4,678 198,617 4,678 198,617-------- ---------- -------- ----------
FromPrivateSectorandindividuals:Payablewithin90days 254,794 185,644 254,794 185,644Payableafter90daysandwithinoneyear 568,247 151,818 568,247 151,818
---------- ----------- ---------- -----------823,041 337,462 823,041 337,462---------- ----------- --------- ----------
At31December 827,719 536,079 827,719 536,079====== ====== ====== ======
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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24. BORROWED FUND
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
OtherFinancialInstitutions 111,976 53,914 111,976 53,914CentralBankofGhana 586 722 586 722GovernmentofGhana 38,281 37,872 38,281 37,872OvernightBorrowing 10,544 128,892 10,544 128,892
--------- --------- --------- --------- 161,387 221,400 161,387 221,400
====== ====== ====== ======
25. INTEREST PAYABLE AND OTHER LIABILITIES
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
InterestPayable 3,384 1,803 3,384 1,803Payables 25,391 34,061 23,020 34,061Accruals 14,084 68,384 14,082 64,881
------- --------- --------- ---------- 42,859 104,248 40,487 100,745
==== ====== ===== ======
26. STATED CAPITAL
StatedCapitalismadeupasfollows: 2011 2010No. of Shares Proceeds No. of Shares Proceeds
GH¢’000 GH¢’000 IssuedforCash 900,352 450 900,352 450ForConsiderationotherthancash 638,772 320 638,772 320TransferfromIncomeSurplus 23,460,876 74,230 23,460,876 49,230
------------- --------- ------------- --------25,000,000 75,000 25,000,000 50,000 ======== ===== ======== =====
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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27. NOTES TO THE STATEMENT OF CASH FLOWS
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000Reconciliation of profit before taxation tocash generated from operationsProfitbeforetaxation 51,113 12,763 45,903 12,265Adjustmentsfor:DepreciationandAmortization
4,857 2,892
4,494
2,892
Changeinprovision (7,610) 6,686 (7,610) 6,686(Gain)/lossondisposalofpropertyandequipment (5,656) (801) (2,961) (801)ShareofPost-tax(Profit)/LossofAssociatedCompany 411 (775) 411 (775)(Profit)/LossfromDisposalofAssociateCompanies (6,088) - (6,088) - (Profit)/LossfromDisposalofSubsidiary (1,562) - (1,562) - MovementinPPE 1,570 (6,829) 439 9,017
-------- -------- --------- --------Profitbeforeworkingcapitalchanges 37,035 13,929 33,026 29,284
(Increase)/decreaseinloans&advances (94,149) (190,233) (94,149) (190,233)(Increase)/decreaseinotherassets (14,972) (17,801) (10,367) (13,716)Increase/(decrease)incustomerdeposits 291,639 110,935 291,639 110,935Increase/(decrease)ininterestpayable&otherliabilities (51,045) 7,917 (49,912) 4,414
------------ ---------- --------- -----------Cashgeneratedfromoperations 168,508 (75,246) 170,237 (59,316)
====== ======= ====== =======
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
Analysis of the balances of cash Group Group Bank Bankand cash equivalents 2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000Cash&balanceswithBankofGhana 81,660 89,010 81,660 89,010Governmentsecurities 209,543 165,924 209,543 165,924Depositsandbalancesduefrombankinginstitutions 90,248 34,848 90,248 34,848
---------- ---------- ---------- ---------- 381,451 289,782 381,451 289,782
===== ====== ====== ======
Forthepurposesofthestatementofcashflows,cashequivalentsincludeshorttermliquidinvestmentswithmaturitieslessthanthreemonths.
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28. CONTIGENCIES AND COMMITMENTS INCLUDING OFF BALANCE SHEET ITEMS
Incommonwithotherbanks,thebankconductsbusinessinvolvingacceptances,guarantees,performancesandindemnities.Themajorityofthesefacilitiesareoffsetbycorrespondingobligationsofthirdparties.Thegroupalsoholdscertainsecuritiesinitsownnameonbehalfofcustomers.Thevaluesofthesesecuritiesarenotrecognisedintheconsolidatedbalancesheet.
Lettersofcreditcommitthegrouptomakepaymentstothirdparties,onproductionofdocuments,whicharesubsequentlyreimbursedbycustomers.
Guaranteesaregenerallywrittenbyabanktosupportperformancebyacustomertothirdparties.Thegroupwillonlyberequiredtomeettheseobligationsintheeventofcustomer’sdefault.
Contingenciesandcommitmentsnotprovidedforinthefinancialstatementsasat31stDecember2011inrespectoftheaboveamountedtoGH¢163.7million(2010:GH¢144.3million),asdetailedbelow:
Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Lettersofcredit 32,170 30,253 32,170 30,253GuaranteesandIndemnities 131,323 114,065 131,323 114,065
---------- ---------- ---------- ---------- 163,493 144,318 163,493 144,318
====== ====== ====== ======
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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28 CONTINGENCIES AND COMMITMENTS INCLUDING OFF BALANCE SHEET ITEMS (CONT’D)
Capital Expenditure
Capitalcommitmentsnotprovidedforinthefinancialstatementsasat31stDecember2011wasnil(2010:nil).
Pending Legal Claims
Attheyearendthereweretwentynine(29)legalcasespendingagainstthebank.Shouldjudgmentgoinfavouroftheplaintiffs,likelyclaimsagainstthebankhavebeenestimatedatGH¢3,226,038.Noprovisionshavebeenmadeinthefinancialstatementsinrespectoftheseamounts.
Funds Under Management
InvestmentsandfundsbeingmanagedbytheGrouponbehalfofclientsamountingtoGH¢9.62million(2010:GH¢9.06million)
29 RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability to control the other party or exercisesignificant influenceover theotherparty inmakingfinancialoroperatingdecisions,oroneotherpartycontrolsboth.TheBankisjointlyownedbytheGovernmentofGhanaandFinancialInvestmentTrustwithholdingsof51.8%and48.2%respectively.
At31December2011,theBankheldGH¢209,542,687(2010:GH¢165,924,199)inGovernmentSecurities(refertonote14)andhadanexposureofGH¢28,835,222(2010:GH¢25,316,614)aspartofLoansandadvancestocustomersowedbytheNationalYouthEmploymentprogram(NYEP).
Subsidiaries
DetailsofprincipalsubsidiariesareshowninNote18.
Associated Company
TheGroupprovidescertainbankingandfinancialservicestoitsassociatedcompany.Thesetransactionsareconductedonsimilartermstothird-partytransactions.
DetailsofinvestmentsinassociatedcompanyisprovidedinNote17.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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Management compensation
Theremunerationofdirectorsandothermembersofkeymanagementduringtheyearwereasfollows: Group Group Bank Bank
2011 2010 2011 2010GH¢’000 GH¢’000 GH¢’000 GH¢’000
Salaries 3,952 2,912 3,952 2,912Allowances 2,866 1,357 2,866 1,357
------ ------- ------- ------- 6,818 4,269 6,818 4,269
==== ==== ==== ====
29. RELATED PARTY TRANSACTIONS – (CONT’D)
Group Group Bank Bank2011 2010 2011 2010
Directors’ remuneration GH¢’000 GH¢’000 GH¢’000 GH¢’000
Feesforservicesasdirectors 728 585 728 585=== === === ===
Loans
NoloansoradvancewasgrantedtocompaniesinwhichDirectorshaveaninterestin2011.(2010;nil)
Noprovisionshavebeenrecognisedinrespectofloanstodirectorsorothermembersofkeymanagementpersonnel(oranyconnectedperson)
Interest rates charged on loans to staff are at rates below that would be charged in an arm’s lengthtransaction.Theseloansaresecuredovertheassetsfinancedoftherespectiveborrowers.
No impairment losses have been recorded against balances outstanding during the period with keymanagementpersonnel,andnospecificallowancehasbeenmode for impairment lossesonbalanceswithkeymanagementpersonnelandtheirimmediaterelativesattheperiodend.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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30. DEFINED CONTRIBUTION PLAN
Defined contribution obligations Group Group Bank Bank2011 2010 2011 2010
GH¢’000 GH¢’000 GH¢’000 GH¢’000Contributionstothestatutorydefinedcontributionpensionscheme,theNationalSocialSecurityFund 4,898
4,188 4,898 4,188
ProvidentFund 5,640 4,853 5,640 4,853------- ------- --------- -------
10,538 9,041 10,538 9,041===== ==== ===== ====
31. ASSETS PLEDGED AS SECURITY
Asat31December2011,therewerenoassetspledgedtosecureliabilities.
32. SOCIAL RESPONSIBILITY
AmountsspentonsocialresponsibilityamountedtoGH¢1,295,518(2010:GH¢605,725)whichexcludesbuildingforthe2010NationalBestFarmerofGH¢98,000(2010:GH¢75,000).
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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33 PRIOR YEAR RESTATEMENT
(a) Income Recognition
In2010thebankidentifiedthatithadunderchargedinterestonanumberofloanaccountsinprioryears.ThetotalamountofGHC33,669,515wasrecognisedintheprofitandlossaccountfor2010inrespectoftheunderchargedinterest.Sincethebankdidnotearnthefullamountin2010,theamounthasbeenapportionedbetween those relating to2010and those relating toprior yearsby restating thefinancialstatementsof2010asfollows:
Apportionment GH¢’000 2002-2009 20,5842010 13,086 ---------- 33,670 ======
Effect on 2009 GH¢’000 Statement of financial positionIncreaseinloansandadvances 20,584 ----------Increase in equity 20,584 ======
Effect on 2010 GH¢’000 Statement of comprehensive incomeDecreaseininterestincome (20,584)DecreaseinNationalFiscalStabilisationLevy 1,029 ----------Decrease in profit (19,555) ======
Statement of financial positionDecreaseinloansandadvances (20,584)IncreaseinNationalFiscalStabilisationLevy 1,029 ----------Decrease in equity (19,555) ======
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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33. PRIOR YEAR RESTATEMENT (CONT’D) (b) Investments in Associates and Subsidiaries In2010,thebank’sinvestmentsinassociatesandsubsidiarieswereincorrectlyclassifiedasInvestmentSecuritiesavailableforsalewithchangesinfairvaluerecognisedthroughequityasat31December2010thoughthebankheldsignficantandcontrollinginterest intheseentities.The2010financialstatementshavebeenrestatedasfollows:
Effect on 2010 GH¢’000 Statement of comprehensive incomeIncreaseinbank’sshareofassociatesprofit 775IncreaseinNationalFiscalStabilisationLevy (39) ------Increase in profit 736 ===
Statement of financial positionDecreaseinInvestmentinOtherSecurities (20,643)IncreaseinInvestmentinAssociates 4,999IncreaseinInvestmentinSubsidiaries 15,644DecreaseinAFSreserves (3,326) ---------Decrease in equity (3,326) =====
(c) LONG OUTSTANDING BALANCES Duringtheperiod,certainlongoutstandingitemsdatingasfarbackas2002relatingtoCashandbankbalanceswithBOG,sundrydebtorsandsundrycreditorsbalanceswereidentified.Duetothehighprobabilityoftheunrecoverabilityoftheseoutstandingitems,provisionshavebeenmadeonthesebalancesinthefinancialstatementsbyrestatingthe31December2009and31December2010financialstatementsasfollows:
Effect on 2009 GH¢’000 StatementoffinancialpositionDecreaseinCashandbankbalanceswithBOG 3,628DecreaseinSundryCreditors (11,848)DecreaseinSundryDebtors 40,871 ----------Decrease in equity 32,651 ======
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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33. PRIOR YEAR RESTATEMENT (CONT’D)
Statement of comprehensive incomeIncreaseinotherexpenses (1,871)DecreaseinNationalFiscalStabilisationcharge 94 ---------Decrease in profit (1,777) =====
Effect on 2009 GH¢’000Statement of financial positionDecreaseinCashandbankbalanceswithBOG (626)DecreaseinSundryCreditors 1,155DecreaseinSundryDebtors (2,400)DecreaseinNationalFiscalStabilisationlevy 94 ---------Decrease in equity (1,777) =====
34. NATIONAL FISCAL STABILISATION LEVY
TheNationalFiscalStabilisationLevyAct,2009,becameeffectivefrom1July2009toDecember2011.UndertheAct,anadditional5%levywillbechargedonprofitbeforetaxandispayablequarterly. 35. REGULATORY DISCLOSURES
(i) Non–Performing Loans Ratio
Percentageofgrossnon-performingloans(“substandardtoloss”)tototalcredit/advancesportfolio(gross):6.68%(2010:11.82%).
(ii) Capital Adequacy Ratio
ThecapitaladequacyratioattheendofDecember2011wascalculatedatapproximately10.76%(2010:6.52%).
(iii) Regulatory Breaches
Therewerenobreacheswithrespecttostatutoryrequirements.
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2011
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BRANCHES & AGENCIES
ASHANTI REGION
1. Ashanti Bekwai BranchPMB,AshantiBekwaiTel:032-2420315,2420357Fax:032-2420315
2. Ejura FLOc/oP.O.Box3841,KumasiTel:032-2322042
3. Kumasi-Adum BranchP.O.Box3841,KumasiTel:032-2039854,2031537,2021521,2024333Fax:032-2026215
4. Kumasi-Amakom BranchP.O.BoxAH9428,KumasiTel:032-2049576,2049579,2032982Fax:032-2049577
5. Kumasi-Central Market BranchP.O.BoxR-204,KumasiTel:032-2033461,2033455,2033914,2033913Fax:032-2033465
6. Kumasi-Nhyiaeso BranchP.O.BoxAH9428,KumasiTel:032-2039752,2190006Fax:
7. Kumasi-Nhyiaeso Executive BankingP.O.BoxAH9428,KumasiTel:032-2190008,2035460Fax:032-2035461
8. Kumasi-Prempeh II St. Branch P.O.BoxKS8494,KumasiTel:032-2045263,2045275,2045276Fax:032-2045269
9. New Edubiase Branch P.O.Box33,NewEdubiase Tel:033-2194674,2192202
10. Obuasi BranchPrivateMailBag,ObuasiTel:032-2540701,2540700Fax:032-2540672
HEAD OFFICE
37IndependenceAvenueP.O.Box4191,AccraTel:(030)2770403,2762104,2783122,2784394Fax:(030)2784893,2770411E-mail:[email protected]:www.adb.com.ghToll-free:0800-10034
ZONAL OFFICES
1. Retail Performance Monitoring – Central Zone P.O.Box3841KumasiTel:032-2045262,2045260Tel(LegalDept):032-2045268Tel(CorporateBanking):032-2045273Tel(DFU):032-2045265Fax:032-2045270
2. Retail Performance Monitoring – Southern Zone P.O.BoxDS2270,DansomanTel:030–2220993,2230440,2230439Fax:030-2220993
3. Retail Performance Monitoring – Northern Zone P.O.Box376,TamaleTel:037-2022629/2022938Fax:037-2023634
ADB Branch Network
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BRONG-AHAFO REGION
11. Atebubu BranchP.O.Box18,AtebubuTel:032-2099568,032-2099574Fax:035-2622026
12. Berekum BranchP.O.Box209,BerekumTel:035-2222104,2222153,2222507Fax:035-2222104
13. Dormaa Ahenkro Branch PMB,DormaaAhenkro Tel:035-2322037,2322165 Fax:035-2322251
14. Goaso Branch P.O.Box72,Goaso Tel:035-2091918,2094370,024-4312134
15. Kenyasi BranchP.O.BoxKN2,KenyasiTel:035-2094858,2094859
16. Kwapong BranchPrivateMailBag,KwapongTel:035-2192102,2192033
17. Nkoranza BranchP.O.Box70,NkoranzaTel:035-2092074,2097313
18. Sunyani Branch P.O.Box110,Sunyani Tel:035-2027192,2027075
19. Techiman BranchP.O.Box16,TechimanTel:035-2091080,2091686,2091312
20. Techiman AgencyP.O.Box16,TechimanTel:035-2091312Fax:035-2522304
CENTRAL REGION
21. Agona Swedru Branch P.O.Box200,AgonaSwedru Tel:033-2020348,2020522Fax:033-2021683
22. Assin Fosu Branch P.O.Box151,AssinFosu Tel:033-219220,2192203,2192205
23. Buduburam Agency c/oP.O.Box11957,Kaneshie Tel:030-2277092,2277109
24. Cape Coast Branch P.O.Box160,CapeCoast Tel:033-2132834,2132836,2132563Fax:033-2132836
25. Kasoa BranchP.O.Box4191,AccraTel:030-2863346,2863347,020-7848993Fax:030-2863347
26. Mankessim BranchPMBMK286,MankessimTel.034-2093015
27. UCC BranchP.O.Box160,CapeCoastTel:033-2131989,2131806,2137791Fax:033-2130630
28. Winneba Agencyc/oP.O.Box200AgonaSwedru
EASTERN REGION
29. Asiakwa BranchC/OP.O.Box4191,AccraTel:030-2962145,2962144
30. Juapong BranchP.O.Box31,JuapongTel:034-2091530,2094299,2094376
31. Kade Branch P.O.BoxKD234,KadeTel:030-2963285,2963286
32. Koforidua Branch P.O.Box124,KoforiduaTel:034-2022292,2022739Fax:034-2022292
33. Nkawkaw Branch P.O.Box86,Nkawkaw Tel:034-3122041,3122068,3122028,3122457 Fax:034–3122446
34. Suhum BranchP.O.Box229,SuhumTel:034-2522373Fax:034-2522374
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GREATER-ACCRA REGION
35. Abeka La-Paz Branch P.O.Box4191,Accra Tel:030-2950925,028-9535075Fax:030-2244649
36. Accra Makola Branchc/oP.O.Box4191,AccraTel:030-2668265,2674308,2675596Fax:030-2668740
37. Accra New Town BranchP.O.Box15AccraNewTownTel:030-2220989,2220986Fax:030-2220990
38. Achimota BranchP.O.BoxAT997AchimotaMarket,AccraTel:030-2420038,2420036Fax:030-2420038
39. Adabraka BranchP.O.Box452,AccraNewTownTel:030-2221047,2242417,2242420Fax:030-2221047
40. ADB House BranchP.O.Box4191,AccraTel:030-2785473,2783730Fax:030-2783590
41. Ashaiman Branchc/oP.O.Box692,TemaTel:030–3308011,3308063Fax:030-3308094
42. Cedi House BranchPMB,MinistryPostOffice,AccraTel:030-2662745,2662519Fax:030-2662951
43. Danquah Circle BranchP.O.Box4191,AccraTel:030-2215777
44. Danquah Circle Executive BankingP.O.Box4191,AccraTel:030-2215777
45. Dansoman Branch P.O.BoxDS2270,Dansoman,AccraTel:030-2312414,2312415,2318065,2311636 Fax:030-2318064
46. Gulf House BranchP.O.Box4191,AccraTel:030-2506201,2506202,2506203Fax:030-2506220
47. Kaneshie Branch P.O.Box11957 Kaneshie,AccraTel:030-2688399,2688400,2688411-14Fax:030-2688415
48. Korkordzor Branch c/oP.O.Box11957, Kaneshie,Accra Tel:030-2853081,2853083,2850428,2850429Fax:030-2850428
49. Madina BranchP.O.Box4191,Accra Tel:030-2518455,2518457Fax:030-2518456
50. Nima BranchP.O.BoxNM4,Nima,AccraTel:030-2264510,2264512
51. Nungua Branch P.O.Box875,TNE,Accra Tel:030-2712660,2717078,2717079Fax:030-2717078
52. Osu Branch P.O.Box2502,Osu,Accra
Tel:030-2782385,2779696 Fax:030-2782386
53. Ring Road Central Branch P.O.Box01557,Osu,Accra Tel:030-2228121,2229110,2239409 Fax:030-2227280
54. Spintex Road BranchP.O.Box4191,AccraTel:030-2816212,2816213,2816215Fax:030-2816214
55. Tema Branch P.O.Box692,TemaTel:030-3216100,3204305,3203371,3206396Fax:030-3203372
56. Tema-Mankoadze AgencyP.O.Box875,TemaTel:030-3204756,3200041
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57. Teshie BranchP.O.BoxTNE875,AccraTel:030-2712549,2712664Fax:030-2712549
NORTHERN REGION
58. Bole BranchP.O.BoxC/OADB,BoleTel:037-2092172/2092170
59. Buipe BranchP.O.Box376,TamaleTel:037-2092171Fax:N/A
60. Savelugu BranchC/oP.O.Box376,TamaleTel:037-2095822,2095820
61. Tamale-Aboabo BranchP.O.Box376,TamaleTel:037-2026242,2023700Fax:037-2026242
62. Tamale-Kaladan BranchP.O.Box376,TamaleTel:037-2202214Fax:037-2202214
63. Tamale-Kaladan Executive BankingP.O.Box376,TamaleTel:037-2202214Fax:037-2202214
64. Tamale-Main Branch
P.O.Box376,Tamale Tel:037-2022629,2022938,2027339Fax:037-2023634
65. Walewale BranchP.O.Box19,WalewaleTel:037-2095818,2095816Fax:037-2095818
66. Yendi BranchC/oP.O.Box376,TamaleTel:0244512604,0244215539,0240665189
UPPER-EAST REGION
67. Bawku Branch P.O.Box85,Bawku Tel:038-2222330,2222298,2222299Fax:038-2222330
68. Bolgatanga Branch P.O.Box159,Bolgatanga Tel:038-2022321,2022439,2022172,2022178 Fax:038-2023443
69. Navrongo BranchP.O.Box47,NavrongoTel:038-2122200,2122204,2122010
UPPER-WEST REGION
70. Tumu Branch C/oP.O.Box130,Wa Tel:039-2022869
71. Wa Branch P.O.Box130,WaTel:039-2022095,2022090,2022342Fax:039-2022090
VOLTA REGION
72. Denu BranchP.O.Box31,DenuTel:036-2530612,2530313,2530613Fax:036-2530612
73. Ho BranchP.O.BoxHP1277,HoTel:036-2028250,2028284,2028289Fax:036-2028274
74. Hohoe Branch P.O.Box143,Hohoe Tel:036-2722027,2722008Fax:036-2722951
75. Kpando BranchP.O.Box10,KpandoTel:036-2350939,2350941,2350942Fax:036-2350940
76. Kpeve Branchc/oP.O.Box10,KpandoTel.036-2095097
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« 2011 - Annual Reports & Financial Statements
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77. Nkwanta BranchP.O.Box40,NkwantaTel:054-4338198,054-4338199
78. Sogakope BranchPrivateMailBag,SogakopeTel.036-2095710,028-9556697Fax:036-2095710
79. Vakpo FLOc/oP.O.Box27Hohoe
WESTERN REGION
80. Agona Nkwanta BranchP.O.Box19,AgonaNkwantaWesternRegionTel:030-2962148
81. Bonsu Nkwanta Branchc/oP.O.Box3841,KumasiTel.032-2190715
82. Enchi Branchc/oP.O.Box3841,KumasiTel:031-2622124Fax:031-2622082
83. Sefwi Essam Branchc/oP.O.Box3841,KumasiTel:024-0813416
84. Sefwi Wiawso Branch P.O.Box108,SefwiWiawso Tel:024-3081183,031-2092093/2094487
85. Takoradi BranchP.O.Box600,TakoradiTel:031-2029049,2029060,2029068,2029080,2028488Fax:031-2029060
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Annual Reports & Financial Statements - 2011 »
Page 79
Bank Currency
Bankers Trust Company USDP.O.Box318 ChurchSt.Station,NewYork N.Y.10008,USA
BHF-BANK EURO P.O.Box110311,Brockenheimer Landstrasse10 D-600Frankfurt1,Germany
Citibank N.A. USDEuropeanTradeFinanceGroupCottonCentre,HaysLaneLondonSE12BXUnitedKingdom
Citibank, N.A. USD111WallStreet,NewYorkN.Y.10043,USA
Commerzbank AG EUROInternationalBankRelationsNeueMainzerStrass32-36FrankfurtAMMain,Germany
Ghana International Bank USD 69CheapsideStreet EUROLondonEC22BB GBPUnitedKingdom
CORRESPONDENT BANKS ABROAD
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Page 80
Notes
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