Annual Report And Financial Statements | 2008 01 Financial Highlights 02 Vision, Mission & Values 03 Corporate Information 04 Board of Directors and Executive Committee Members 05 Message from The Chairman 07 Message from The Managing Director 11 Summary Overview 2008 14 Significant Facts 17 Corporate Banking 20 Commercial & Consumer Banking 23 Institutional Banking 26 Retail Banking & Funds Transfer Services 29 Corporate Governance & Ethical Conduct 31 Report of the Directors 33 Report of the Independent Auditors 34 The Financial Statements Income Statement 37 Balance Sheet 38 Cash Flow Statement 39 Notes to the Financial Statements 42-78 TTB Network (Branches) 79 Statement of Recognised Income and Expense 37 Passionate Solutions THE TRUST BANK LIMITED TABLE OF CONTENT
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Annual Report And Financial Statements | 2008
01
Financial Highlights 02
Vision, Mission & Values 03
Corporate Information 04
Board of Directors and Executive Committee Members 05
Message from The Chairman 07
Message from The Managing Director 11
Summary Overview 2008 14
Significant Facts 17
Corporate Banking 20
Commercial & Consumer Banking 23
Institutional Banking 26
Retail Banking & Funds Transfer Services 29
Corporate Governance & Ethical Conduct 31
Report of the Directors 33
Report of the Independent Auditors 34
The Financial Statements
Income Statement 37
Balance Sheet 38
Cash Flow Statement 39
Notes to the Financial Statements 42-78
TTB Network (Branches) 79
Statement of Recognised Income and Expense 37
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TABLE OF CONTENT
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02
For the year (Cedi million)
2003 2004 2005 2006 2007 2008
Total Income 8.72 13.12 15.42 19.06 25.76 37.371 Net Operating profits 4.58 7.03 7.93 9.02 16.59 16.06
Profits before tax 3.59 5.95 6.79 7.80 10.47 13.13
Net Profits 1.94 3.71 4.53 5.61 8.01 9.56
At year ended (Ghana Cedi Million) 2003 2004 2005 2006 2007 2008
Cost to Income (Excl. Depreciation) 47.40% 43.80% 43.80% 49.92% 52.00% 53.00%
Return on average Equity 46.10% 62.50% 52.50% 47.05% 46.80% 38.96%
Per Ordinary Share (GH¢) 2003 2004 2005 2006 2007 2008
Dividend 0.09 0.13 0.16 0.20 0.20 -
Earnings 0.19 0.37 0.45 0.56 0.80 0.96
1 2Notes: Before Bad Debt Provision & Depreciation Required Minimum – 10%
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FINANCIAL HIGHLIGHTS
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03
PassionateSolutions
THE TRUST BANKLIMITED
OUR VISION
OUR MISSION
OUR VALUES
To be the leading financial service provider in our target markets.To provide flexible financial solutions tailored to our customers’ needs.To think globally, act locally combining the various strengths of our network partners & shareholders.
To grow, manage and protect customers’ business & financial assets.To serve the customer better and faster.To conduct business in an ethical & responsible manner.To create sustainable shareholder value.
To be reliable, today and tomorrow.To be listening & responsive.To be innovative & efficient.To be transparent & honest.
Annual Report And Financial Statements | 2008
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PassionateSolutions
THE TRUST BANKLIMITED
Board of Directors:
Secretary:
Auditors:
Solicitors:
Registered Office:
Albert D. Osei (Chairman)
Isaac Owusu-Hemeng (Managing Director)
Thompson Kuduo Abu-Bakr Bibilazu
B. A. M. Zwinkels
W. O. Agbenyega
Michael Jacquemin
Kojo Okai Andah
Charles Obeng-lnkoom
Deloitte & Touche
Chartered Accountants
4 Liberation Road
P. O. Box GP 453
Accra
Bentsi-Enchill, Letsa & Ankomah
Legal Practitioners
1st Floor, West Wing
Teachers' Hall Annex 4
Barnes Close
P. O. Box 1632
Accra
Reinsurance House
68 Kwame Nkrumah Avenue
Adabraka
Accra
CORPORATE INFORMATION
Annual Report And Financial Statements | 2008
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BOARD OF DIRECTORS
MEMBERS OF EXECUTIVE COMMITTEE
Albert D. OseiChairman
Ben A. M. Zwinkels Isaac Owusu-HemengMD/CEO
Thompson K. A. Abu Bakr-Bibilazu
William Agbenyega Kojo Okai Andah Michel Jacquemin Charles Obeng-InkoomCompany Secretary
Isaac Owusu-HemengMD / CEO
Larry Yirenkyi-BoafoDMD
Asare-Boakye YiadomGM, Risk Management
Nat AkainyahGM, Operations & Systems
Charles Obeng-InkoomCompany Seccretary
Albert D. OseiChairman
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MESSAGE FROM THE CHAIRMANIntroduction
The Ghanaian Economy
The World Economy
recession in the first place. But while this has
The year 2008 was the one in which your bank finally shallowed the depth of the global economic
took its deserved place at the pinnacle of Ghana’s recession, it has not prevented it from happening
banking industry. Your bank was voted Bank of The altogether.
Year by the banking public at the Ghana Banking
Awards. Your bank accordingly had to cope with both the
global credit crunch and the ensuing global recession
The domestic and international recognition of your during the year under review.
bank last year has been once again justified by its
performance. During 2008, prudent professional risk
management has resulted in your bank growing in For the year 2008, Ghana recorded a GPD growth rate
size, expanding its horizons and increasing its profits of 7.3%, up from 6.4% the previous year and the
to record levels. highest growth rate in nearly two decades. The
growth rate of 7.3% was mainly driven by the
considerable growth in the services sector, which
The year under review was one that was marked by grew by 9.3% and contributed a total of 31.81% to
the near collapse of the global financial industry’s total GDP.
architecture as the sub-prime mortgage lending crisis
of the previous year exploded into a full-blown This was, however, accompanied by widespread
systemic credit crunch and ultimately into a financial deterioration in the performance of the Ghanaian
crisis, the likes of which has never been seen in more economy. Traditionally, there are severe fiscal
than 50 years. slippages in every election year and 2008 was no
different. Added to the deepening global economic
To stem the collapse of major international financial recession, the toll on the economy was inevitable.
institutions, governments across Europe, the The fiscal deficit rose to 14.8%(excluding divestiture
Americas and Asia sought to prop them up through proceeds) last year, its highest level in a quarter of a
multi-billion dollar bail-out plans, which, in effect century and the public debt rose to an estimated 55%
have led to the part-nationalisation of many leading of Gross Domestic Product.
banks and insurance firms although others have been
left to go under. Similarly the external current account deficit also
reached a high of about 20% of GDP, with the
With global economic growth already on the decline, International Reserves position falling to just 1.8
a descent into recession was inevitable and indeed months of import cover for goods and services.
global economic growth halted in 2008. The waning
of confidence on the part of savers and investors has Inflation was propelled upwards by record high
created a veritable liquidity squeeze which has taken global crude oil and food prices during the first half of
its toll on liquidity in the international financial the year which fed into local consumer product
markets. prices. Rising inflation was sustained towards the end
of the year by sharply accelerated money supply
On the upside however, falling global demand led to growth, largely the result of rising demand for credit
a dramatic fall in international crude oil prices, which, by both the government and private enterprise. Year
when they peaked at US$147 a barrel in mid 2008, on year inflation stood at 18.13% by the end of 2008,
served as a major factor instigating the global drastically up from 12.7% a year earlier
Annual Report And Financial Statements | 2008
07
resulted in increased domestic debt issuance at
This put severe upward pressure on local interest shorter maturities, as rising inflation has shortened
rates. Indeed the Bank of Ghana’s Monetary Policy investors’ horizons, raising roll-over risks. Currency
Committee increased its prime rate from 13.5% to translation losses have persuaded foreign investors to
17% during the year in an effort to stem these disinvest from the Ghana Stock Exchange and local
inflationary pressures. This in turn persuaded the investors have followed suit as equity prices fall in
universal banks to increase both their average base result, and conversely, yields on money market fixed
rate quotations and their average lending rates in interest instruments rise in consonance with inflation.
tandem.
However, the lessons of the global credit crunch with
Instructively, strong credit from both the public and regards to ill-advised lending, coupled with the
private sectors, accompanied by a deteriorating deteriorating economic environment for borrowers in
balance of payments position weakened the cedi, Ghana have combined to make Ghanaian banks more
considerably in 2008. During the year the cedi cautious about lending, despite still strong demand
depreciated faster against the major international for bank credit, as the associated credit risks increase.
trading currencies – the US dollar, the Euro, the
British Pound and the Japanese Yen – than at any The Bank of Ghana has adopted a risk-based
other time since the year 2000. approach to banking supervision and your bank is
adapting to this, with a view to ensuring that it
prudently assesses and handles the rising risk levels
The environment in which your bank operates grew involved in our core business.
increasingly competitive and more difficult last year.
Two new universal banks opened their doors to the Another challenge that now confronts your bank is
public in 2008, bringing the total number to 25, that of meeting the first new minimum capital level set
nearly twice the number as at the beginning of the by the Bank of Ghana of GH¢25 million by the end of
decade. Yet another one was given a provisional 2010 and the ultimate one of GH¢60 million before
licence last year and is expected to commence the end of 2012.
operations shortly. Even more banking licence
applications are currently being considered by the Our merger with Merchant Bank Ghana which has
Bank of Ghana. the same majority shareholder – Social Security and
National Insurance Trust – will be consummated this
While Ghana’s banks have not been adversely year and this will go a long way towards ensuring that
affected directly by the global credit crunch, there are we meet the new minimum capital requirement, but
some dire indirect effects. Trade credit lines are no will also position us as a truly universal bank.
longer growing which means more and more
importers either finance their own imports with cash The merger of an erstwhile commercial bank (as was
upfront or their bankers have to finance them with the case of TTB) and an erstwhile merchant bank will
trade loans. Foreign credit lines for onward lending create a financial institution that can properly exploit
to local enterprises are also in jeopardy. the vast opportunities created through both widening
the combined product range and also, deepening our
A bigger impact however is being felt from the global ability to take advantage of larger opportunities.
economic recession itself and its effect on the Importantly it will greatly enhance our capabilities in
Ghanaian economy. Higher fiscal deficits have earning fee-based income as fund-based activities
The Operating Environment
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Annual Report And Financial Statements | 2008
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PassionateSolutions
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Isaac Owusu-HemengManaging Director
Introduction
Economic Environment
Competitive Environment
Overview Of TTB Performance In 2008
Fiscal deficit spending and the cedi depreciation
It is my pleasure to present the annual results of The contributed to a surge in inflation which rose sharply
Trust Bank (TTB) for the 2008 financial year. Once from 12.2% at the beginning of the 2008 to 18.13%
again, the bank has maintained its steady growth by the end of the year. The Bank of Ghana, through its
trend by posting impressive results, notwithstanding Monetary Policy Committee (MPC) responded to the
the challenges faced by the economy as a result of the rising inflationary pressures through several upward
upsurge in world crude oil and food prices for most adjustments in its Prime Rate, which was increased
part of the year under review from 13.5% at the beginning of 2008 to 17% as at the
end of the year. Both lending and deposit rates
increased in consonance. Importantly, the yield curve
In 2008, the Ghanaian economy came under intense on long dated securities is gradually getting inverted
pressure from deteriorating economic circumstances with 91 day treasury bills and 182 day securities
on both the global and local fronts. The global credit offering higher rates than medium-term instruments,
crunch assumed an alarming proportion ushering in leading investors to shorten their investment
an economic recession in the developed world. horizons.
Though the immediate impact to developing
countries like Ghana is yet to be fully felt, the macro-
economic indicators at the close of the year were not The Ghanaian banking industry saw a much
very favourable. intensified form of competition last year, as the
hitherto new banks literally gained their feet and
These problems were exacerbated by fiscal slippages, deepened their operations on all fronts. There were 2
a worsened external current account and budget additional banks, with the entry of BSIC and Bank of
deficits, with adverse consequence on the cedi Baroda during the year, bringing the total number of
exchange value and rising inflation. The overall fiscal players to 25. The combined effect of these factors
deficit hit a high of 14.8% (or 11.5%, including was a very keen kind of competition that was new to
divestiture proceeds) of Gross Domestic Product in the industry as the demand for cutting-edge
2008 and the current account deficit was even higher technology and quality human resources for
at about 20% of GDP, the latter fuelled by a widening providing the desired banking solutions increased
trade deficit and dwindling inward remittances. tremendously. At the other extreme end was
customer sophistication, which became progressively
These trends, in turn, put pressure on both the cedi more evident as customers began setting the grand
and on gross international reserves. As a result of rules of the game by being more demanding than
these negative factors, the cedi experienced its ever, and also being selective in their choice of
sharpest depreciation since 2001, falling by 20.1% products and services. The above notwithstanding,
against the US dollar, 16.3% against the euro and TTB stayed focused and met both challenges by
8.1% against the pound sterling. intensifying its Customer Relationship Management
(CRM) practices and also improving its Customer
Gross international reserves went down sharply by Service and Care initiatives. These indeed, propelled
the close of the year - down from 3.1 months import the bank to exceeding its targets for the year under
cover at the end of 2007 to 1.8 months of import cover review.
by the end of 2008.
Against the backdrop of the above local and global
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MESSAGE FROM THE MANAGING DIRECTOR
Annual Report And Financial Statements | 2008
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challenges, I am happy to report that the Bank infrastructure, a cost-conscious mindset and a
achieved significant growth in income and profits and performance-based culture underpinned by a reward
a commendable expansion in the size of its balance system to ensure attraction and retention of best
sheet. talents
For the 2008 financial year, the bank’s total income
grew by 45% to reach GH¢37.37 million. As you
might have expected, the intense levels of The bank was voted Bank of the Year 2007 at the
competition within the industry, coupled with our Ghana Banking Awards organized by Corporate
own strategic drive to selectively expand our delivery Initiative Ghana in May 2008. At that prestigious
channels and also widen the range of products and annual award ceremony, the bank was also voted
services on offer to our esteemed customers put Best Bank in Corporate Banking, First Runner-up in
pressure on our operating expenses which rose by Long Term Loan Financing, Short Term Loan
47.4% to GH¢19.58 million in 2008. As a bank that Financing and Product Innovation, and was again
focuses principally on SME financing, it was not voted Second Runner-up in Competitive Pricing.
unexpected that in periods of harsh economic
circumstances, the loan book should experience Also, in 2008, just as in the previous year, TTB was
greater impairment. However, as a result of prudent nominated among the top three banks in Ghana at the
lending and robust risk management practices, the Chartered Institute of Marketing Ghana’s prestigious
loan loss provisions were contained within annual awards.
acceptable norm.
Towards the end of the year, TTB again was conferred
Thus, we ended the year with an impressive pre-tax with the EMEAFINANCE Award for Best Bank in
profit of GH¢13.13 million, up by 25.45% over the Ghana 2008 by the authoritative London-based
previous year’s. However, after making a substantial finance magazine which covers Europe, Middle East
provision for income tax expense the net after –tax and Africa /.
profit was up by19.4% increase, from GH¢8 million
in 2007 to GH¢9.56 million in 2008. It is of interest to note that TTB is rated number one in
the banking sector and 12th overall in the Ghana Club
The bank experienced a significant growth in 2008, 100 rankings, which is the elite grouping of the
with total assets up 14.6% to reach GH¢253million country’s top 100 leading companies ranked annually
propelled by a 50.3% increase in loans and advances, by Ghana Investment Promotion Centre
which stood at GH¢161.9 million by the end of 2008.
Shareholders’ funds also experienced strong growth
of 35.2% in 2008 to reach GH¢29.4 million. TTB has an on-going corporate policy which guides its
donations and sponsorship programmes with a view
TTB’s financial performance for 2008 evidenced the to maximizing the social benefits. The policy
bank’s strong resilience to shocks from both domestic currently emphasizes providing interventions
and external fronts which in turn reflects management primarily in the areas of education and health, these
successes in pursuing its key strategic thrusts, namely, being key to improving living standards within local
achieving excellent customer service at profitable communities. This, the bank has done
levels, sound risk environment, cost efficient conscientiously and with unwavering commitment
operations by leveraging on the bank’s ICT systems & over the past few years, by donating in cash and kind
Brand Recognition And Marketing Achievements
Corporate Social Responsibility
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Annual Report And Financial Statements | 2008
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to beneficiary institutions and organizations. the total outlets to 17 and this will be further increased
The bank disbursed GH¢40,000 to various organiza- to 20 by midyear. We are currently in discussions
tions and institutions in 2004, GH¢47,000 in 2005, with a number of technology/telecommunications
over GH¢70,000 in 2006 and GH¢129,443 in 2007. companies seeking collaborations to bring more
convenience to our customers by introducing new
Last year, TTB provided reading books and teaching electronic payment systems that will enable cell
aids worth a total of GH¢48,000 to twelve deprived phone users to shop, top-up phone units, transfer
public basic schools spread across the Greater Accra, funds to third parties and pay bills using their mobile
Ashanti and Central Regions. The bank also donated phones. For the year under review, TTB was able to
GH¢10,000 to the Maternity Ward of the Korle-Bu deploy the platform that allows customers to check
Teaching Hospital in Accra, GH¢5,000 to the Ghana their account balances and view last 4 debit or credit
Society for the Blind among other corporate transactions via SMS messages. That same platform
donations and sponsorships, which also summed up also makes it possible for customers to receive SMS
to about GH¢40,000. Total disbursements to needy prompts on any transactions that hit their accounts in
institutions for 2008, therefore, totaled some Real-Time.
GH¢103,000.
An area of priority for 2009 is human resource
development. The bank is acutely conscious of the
The prognosis is that the year 2009 may turn out to be fact that behind its outstanding performance are its
one of the most difficult and challenging periods in employees who serve as the product architects and
this decade, as the financial system will have to cope engineers as well as those who provide the delivery
with the combined effects of the global financial crisis channels to meet the current and future needs of our
with accompanying deep recession in advanced banking public. TTB therefore remains totally
economies, as well as the threat of macro-economic committed to ensuring that we secure and retain the
instability on the domestic front. There are also the best talents and give them the right motivation so as to
industry specific challenges created by intense ensure their retention.
competition from both bank and non-bank financial
institutions as the lines of demarcation between Going forward, TTB is gearing itself to meet the new
commercial banking and other types of financial minimum capitalization level set by the Central Bank
service delivery channels are completely broken by 2012 and the preferred strategic vehicle chosen is
down. To overcome these challenges, TTB is taking a by way of a merger with Merchant Bank Ghana.
number of strategic steps: Under an agreed road map with the transaction
advisors, the merger is expected to be consummated
One of our main strategies is to widen the bank’s by mid-year 2009, baring any unforeseen
geographical reach, through branch expansion. In developments
2008, the bank opened three new branches bringing
The Way Forward
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The World economy plunged into a major downturn be managed very well until the bail-out planned of
in the year 2008 in the face of the worst financial our donor partners yield results that emerging
shock in mature financial markets since the 1930s. As economies like that of Ghana can benefit from.
major advanced economies were in or close to
recession during the most part of the year 2008, the
global economy slowed substantially in 2008 and a The aim of the monetary policy of Ghana, at bringing
modest recovery is anticipated to begin only in the inflation down to a single-digit level and limiting
latter part of the year 2009. The pick-up is anticipated exchange rate volatility, has been put to the test in the
to be unusually gradual as it will be held back by current year. The MPC had to deal with external
continued financial markets de-leveraging. Although pressures of the volatility of crude oil prices, global
developing economies did not have to deal with the inflation and its impact on imported goods and
level of financial turmoil faced by advanced nations, internal pressures from increased government
economic activities still slowed down and in many expenditure and domestic borrowing. These, among
cases to rates well below trend. Economies like that of others have caused the surge in inflation which rose
Ghana were faced with significant inflationary from a 2007 low of 10.14% in October 2007 to end
pressures even with more stable and in some cases the year (December 2007) at 12.75%. In the year
rising commodity prices. The lingering effects of the 2008 however, it shot to a record high of 18.41% in
financial market crisis on Ghana and other emerging June 2008, the worst performance since the year
economies has been among others, loss of confidence 2005, after which inflation fell steadily to 17.30% at
in counterparty trading, sharp fluctuations in the end of the period October 2008, when it began to
exchange rates, large depreciation of currencies, and take a rise to end the year 2008 at 18.13%.
reversal of capital flows and diminished investor Throughout the year 2008, the level of inflation for
funding (contributing to liquidity crunch within the non-food group was predo-minantly higher than the
Ghanaian financial sector). As the biggest challenge food group.
confronting this new Government is to get the
economy back on track, it will be against the
backdrop of reduced funding from Ghana’s major The performance of the cedi against the US dollar
donors and the fulfilment of campaign promises of the especially in the year 2008 recorded its worst rate of
reduction of fuel prices and the improvement of the depreciation in eight years. At the end of the year it
general living standards of Ghanaians. Although the had fallen by 25.7% which compares unfavourable to
world price of crude has dropped below $40 per the performance the same period in previous year of
barrel, the gains expected form the fall in prices are 3.9%. Not too long ago the Cedi was considered safe
being threatened by the corresponding downward to hold as a store of value and therefore a good
slide of the Ghanaian Cedi against the US dollar. Also instrument for investment. But since the last month of
Ghana’s ability to borrow against future oil receipts is year 2008, that high level of confidence has waned
being derailed by the current weakness in crude oil dramatically with people holding large stocks of the
prices and the current fiscal situation of donor Cedi converting it especially in favour of the US
countries restricting the availability of credit, the dollar. The situation is no different with the
Ghanaian economy may not enjoy any significant oil performance of the Cedi against the EURO as it
revenue in the short-term. Thus, a rather looming dropped by 20.3% at end of 2008(previous year
economic situation may be underway which needs to 16.2%). However, the cedi has appreciated against
Interest Rates & Inflation
Exchange Rate
SUMMARY OVERVIEWECONOMIC BACKGROUND AND MONETARY POLICY
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GBP at Dec’08 by 8.8% against a depreciation of income for the year increased by 46% from
9.15% for the same period in previous year which is a GH¢25.6million to GH¢37.4 million, and a
reflection of weakening of GBP on the international corresponding increase in operating expenses of 44%
front. accounted for the results booked in the year. This
performance was due to normal operating activities of
the bank and no capitals gains were made in the year
The Bank performed within its strategic frame work in 2008 as was the case in the previous year. By this
the year 2008 as it sought to achieve all targets set for performance, the Bank generated an annualised
the year. The year 2008 has been particularly return on average equity of 46% at the end of the year
challenging to the Banking Industry as most banks had 2008 which is about 1% less than the performance of
to deal with the trickledown effect of the Global previous year.
financial crisis and rising rates on domestic market.
The ever increasing demand for higher rates by
wholesale depositors coupled with the occasional With the current trend of rising rates coupled with
liquidity crunch on the money market were among customer sophistication, and the demands of higher
others, some of the challenges faced by TTB during returns on their deposits, Net Interest Margins (NIM)
the year. showed signs of shrinkage. Whereas interest income
grew over the year by 60%, interest expense surged
The Bank however continued to focus on its core by 108% in the same period as borrowing cost
competences as outlined in the current business plan continue to rise. However, an average NIM of
in order to curtail competitive pressures and achieve 10.84%was generated during the year which
the expected performance. The highlights of TTB’s favourably compares with the performance of 9.78%
strategic priorities carried out in the year are as of previous year. Increased volumes accounts for the
follows: performance booked in the year 2008.
Becoming a more market driven and
customer focused financial services provi- The Bank performed favourably in its non-funded
der rendering excellent Customer Services at incomes. Exchange gains made during the year on
Profitable income levels forex trading contributed significantly to
Continue to pursue the aggressive retail drive commissions earned for the period. The improved
to increase cheaper sources of funds exchange gains posted for the year was as a result of
To continue to improve on our Risk Manage- increased demand for foreign exchange coupled with
ment Systems. the depreciation of the cedi against major world
To fully utilize our Information and Techno- currencies. Commissions, fees and other income
logy platform. totalled GH¢13.37 million and this represented
To continue to pursue a “Cost Conscious” 35.79% of total operating income.
Mindset.
To reinforce a performance–based culture
Total operating expenses for the period increased by
44% to GH¢19.3 million. TTB was able to slightly
The Year 2008 posted an after tax profit of outperform the Cost to Income Ratio target of 54.95%
GH¢9.56million which represented a growth of 18% by achieving 52.67% at the end of the year 2008.
over the performance of previous year 2007. Total
2008 Performance
Net Interest Income
Commissions, Fee and Other Income
Operating Expenses
Profitability
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Balance Sheet Advances formed 67.9% of total balance sheet size
The balance sheet of the Bank expanded by 8% over which is higher than the achievement of previous year
the previous year. Growth in loans and advances of by 50%. The year recorded a 12% growth in deposits
51% over the previous year were as expected, whilst, other borrowings grew by 53%. Shareholders’
although during the last quarter of the year an funds of GH¢29.1 million which includes, Statutory
accelerated growth in Government bills was initiated and other Reserves have grown by 47% over the year;
to take advantage of the rising interest rates. The year this has been solely due to the net profit of the Bank
ended with a 12% growth in Bills. Total gross Loans & posted for the year 2008.
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Annual Report And Financial Statements | 2008
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A Board Member being assisted by Management and Customers to cut the BANK OF THE YEAR 2007 Cake.
Strategic Positioning: Moving Ahead Of The Competition
The bank’s corporate objectives for the period were
achieved through:
The year 2008 marked the second year for the
implementation of the bank’s second 3-year rolling Excellent customer service delivery through
plan, having successfully implemented the first phase effective segmentation:
(first third) in the previous year with exciting results.
The prime ambition of positioning the bank as a Quality service delivery has been the most potent
preferred specialist bank through the provision of weapon in the arsenals of TTB and we persistently
excellent quality customer service to customers, be build on this as a way of ensuring continuous service
they Individuals, identifiable Professionals or improvements to customers in our chosen markets.
Business entities was taken to new heights. We We do this by identifying existing market needs and
focused our energies and resources on further tailoring our products and services to meet these
deepening existing relationships with our core target needs at all times. In doing so, we always ensure that
markets and this further strengthened the position of the Service Delivery Value far exceeds the
the bank as a preferred SME bank. Great efforts and expectations of our customers and that is why
resources were therefore, put in training the right customer delight remains the cornerstone of our
calibre of staff to revitalise their selling and marketing business. It is this desire to delight customers that
skills to keep them ahead of the competition. It is no informed our decision to build our business along
wonder therefore that the bank has, once again, customer needs rather than geographical locations or
accurately and in sync with recent trends, met the product category and we achieved this through
expectations of stakeholders, the key being customers effective Market Segmentation, Market Targeting and
and shareholders in terms of value addition over the Brand Positioning aimed at catching the attention of
period. customers in both the Business-to-Consumer (B2C)
and Business-to-Business (B2B) markets.
SIGNIFICANT FACTS
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The bank maintained its number of commercial assisted our ability to introduce new electronic-based
divisions at 4, with each division still fashioned along products, improved our capacity for service delivery
homogeneous customer groups that is based on the and aided the provision of a sound risk management
existence of similarities in their banking needs. These environment.
The TTB Kiddies Account is a savings vehicle devised
Our trademark Customer Relationship Management for our younger customers (0 – 18 years old). It is
style of a two-man team devoted to each customer recommended for parents and guardians who wish to
ensures constant accessibility and easy communi- provide a nest egg for their children and wards by
cation towards delivering the express attention and opening the account in their name and transferring
care our esteemed customers desire and truly the account to the child upon attainment of 18 years.
deserve. This dedication to your convenience is Not only does this inculcate the savings habit into the
underscored by our placing a unit in each and every child but ultimately helps secure their future.
branch to provide the sturdy support to your business
and consumer needs. We are steadfast in our pledge
to deliver superlative service and spot-on solutions to Business Advisory Services to provide the
you because it is mutual: we are partners in your requisite knowledge support for your business.
endeavours! Private Banking for High Networth Indivi-
duals and Professionals.
Our desire to move your business to the next success Domestic and International transfer services
level is seen in our constant interaction with you to Tailored credits for individuals, professionals
share ideas and impart business knowledge. We and small businesses
provide basic ‘one-on-one’ coaching in banking and Personal Loans
management best practices such as bookkeeping, Executive Loans
marketing strategies, time management, proper Loans for purchasing of gadgets for professional
account operation, facility utilisation etc. The result practice.
of this is growth in business for our mutual benefit. Overdrafts
Loans for Ghanaian professionals returning/
setting up at home
Being completely in tune with the operations and Business Loans
needs of our valued customers, we design products Group Lending Scheme
that anticipate and decisively meet those needs. LPO Financing
Bonds and Guarantees and many more
Our Import Clearing Facility, granted to both Family saving instruments and investment
borrowing and non-borrowing customers, has been services.
hailed by many of our customers for its Electronic card services including e-zwich
responsiveness. This facility is designed for the Fixed Deposit
payment of Import Duty, Freight and Part/Full- Call Deposit
payment of additional consignment of goods and Current account
patently aimed at the traders and importers among our Savings account
customers. Gold Account
COMMERCIAL & CONSUMER BANKING
At Commercial & Consumer Banking (CCB), we offer a hands-on approach to meeting the needs of our Individual, Professional and Small Business customers imaginatively and efficiently. Our focus is on providing customised solutions to meet diverse customer needs with a view to engendering satisfaction, confidence and trust.
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Annual Report And Financial Statements | 2008
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At Your Doorstep
Doing More For YOU
In Good Hands
Our Banking train chugs right to your door with our TTB online
17 branches / outlets located in the main commercial same day ATM card
centres of Accra, Tema and Kumasi. Our services can Ezwich card and POS machines
be availed from Monday through to Saturday. Indeed, on-line request for statement,
we are right on hand where, when and how you need foreign exchange rate enquiry
us. interest rate enquiry
cheque book request and status of request
funds tranfer to own and third party accounts
Our particular support for our customers is far- Letter of Credit & Bank Guarantee Applica-
reaching. It extends to various sectors of the economy tion
— construction, services, commerce, manufacturing cheque and IPC discounting
and many more. We have particularly supported Instant loans/overdrafts against cash/T-bills
professionals such as doctors, architects to either and many more
acquire professional gadgets to enhance their practice
or improve/ build their houses.
The CCB team is made up of well-trained
Our pledge for the years ahead is to constantly professionals with several years of relevant
evaluate the effectiveness and efficiency of our experience. We continue to invest in training and up
service to our customers. This is to ensure that we are skilling the team to build an improved knowledge and
not only effective in satisfying our customer’s needs, skills set. This ensures that our valued customers are
but that we are exceeding their expectations. served by people who know and can understand your
peculiar needs and provide solutions that work for
Our new banking software has enhanced our capacity you.
to offer range of services to our cherished customers…
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Annual Report And Financial Statements | 2008
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Management: Robert Danso-Boakye Tema: Samuel Ofori-Antwi
Directors’ Responsibility for the Financial Statements
Auditors’ Responsibility
Opinion
We have audited the accompanying financial statements of The Trust Bank Limited, as at December 31, 2008, set
out on pages 7 to 47 which have been prepared on the basis of the significant accounting policies on pages 10 to
18 and other explanatory notes on pages 19 to 47.
The Directors are responsible for the preparation and fair presentation of these financial statements in accordance
with the Companies Codes 1963, (Act 179) and the Banking Act 2004, (Act 673). This responsibility includes:
designing, implementing and maintaining internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
In our opinion, the Bank has kept proper accounting records and the financial statements are in agreement with
the records in all material respects and give in the prescribed manner, information required by the Companies
Codes 1963, (Act 179) and the Banking Act 2004, (Act 673). The financial statements give a true and fair view of
the financial position of The Trust Bank Limited as at December 31, 2008, and of its financial performance and its
cash flows for the year then ended, and are drawn up in accordance with the Statement of Accounting Standards
issued by the Institute of Chartered Accountants, Ghana and relevant International Financial Reporting Standards.
REPORT OF THE INDEPENDENT AUDITORSTO THE MEMBERS OF THE TRUST BANK LIMITED
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Report on Other Legal and Regulatory Requirements The Ghana Companies Code, 1963 (Act 179) requires that in carrying out our audit work we consider and report
on the following matters. We confirm that:
i. we have obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit;
ii. in our opinion proper books of accounts have been kept by the bank, so far as appears from our
examination of those books; and
iii. the balance sheet and income statements of the bank are in agreement with the books of
accounts.
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Annual Report And Financial Statements | 2008
35
REPORT OF THE INDEPENDENT AUDITORSTO THE MEMBERS OF THE TRUST BANK LIMITED
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The Banking Act 2004 (Act 673), Section 78 (2), requires that we state certain matters in our report. We hereby
state that:
i. the accounts give a true and fair view of the state of affairs of the bank and its results for the
period under review;
ii. we were able to obtain all the information and explanation required for the efficient
performance of our duties as auditors;
iii. the bank's transactions are within its powers; and
iv. the bank has complied with the provisions in the Banking Act 2004 (Act 673) and the Banking
(Amendment) Act 2008 (Act 738).
Chartered Accountants
Accra, Ghana
17th March, 2009
Notes 2008 2007
Interest income 7 38,181,094 23,666,442
Interest expense 8 (14,189,303) (6,828,088)
Net interest income 23,991,791 16,838,354
Fees and commission income 9 6,815,300 4,965,312
Fees and commission expense 10 (62,383) (87,847)
Other operating income 11 6,625,057 4,041,424
Operating income 37,369,765 25,757,243
Operating expenses 12 (19,683,755) (13,356,929)
Impairment loss 14 (4,551,808) (1,930,501)
Profit before taxation 13,134,202 10,469,812
Income tax expense 16 (3,573,798) (2,460,581)
Profit after tax transferred to income surplus account 9,309,573 250,831
9,560,404 8,009,231
For the year ended 31 December, 2008
2008 2007
Income and expense recognised directly in equity: - -
Profit for the year 9,560,404 8,009,231
Total recognised income and expense for the period 9,560,404 8,009,231
The accompanying notes form an integral part of these financial statements.
STATEMENT OF RECOGNISED INCOME AND EXPENSE
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INCOME STATEMENT
BALANCE SHEET
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As at 31 December, 2008(All amounts are expressed in Ghana cedis)
Assets Notes 2008 2007
Cash and balances with Bank of Ghana 17 26,867,806 45,165,840
Treasury bills and other eligible bills 18 23,410,056 20,966,254
Due from other banks 19 25,107,618 28,928,360
Loans and advances to customers 20 161,912,902 107,723,462
Investment in associated companies 22 202,000 202,000
Property and equipment 23 2,867,945 1,729,719
Intangible assets 24 1,133,089 1,684,310
Other assets 25 11,490,289 14,387,676
Taxation 16 14,327 -
Total assets 253,006,031 220,787,621
Liabilities
Due to financial and other institutions 53,909,079 42,262,095
Due to customers 26 123,305,910 109,774,564
Other borrowed funds 27 17,823,712 4,534,126
Interest payable and other liabilities 28 28,565,075 41,869,128
Taxation 16 - 598,164
Total liabilities 223,603,776 199,038,077
Shareholders' fund
Stated capital 32 7,000,000 7,000,000
Income surplus 11,475,508 6,962,187
Statutory reserve fund 31 9,828,460 7,438,359
Other reserves 33 1,098,289 348,998
Total shareholders' fund 29,402,257 21,749,544
Total liabilities and shareholders' fund 253,006,031 220,787,621
The Board of Directors approved the financial statements on 20th March, 2009.
…………………………......… ……………………………
Director Director
For the year ended 31 December, 2008 (All amounts are expressed in Ghana cedis)
2008 2007
Operating activities
Operating profit 13,134,202 10,344,365
Adjustment to reconcile profit before tax to net cash flows
Non-cash:
Depreciation 1,567,366 995,889
Impairment of loans & advances 4,551,808 1,733,431
Income tax paid (4,117,328) (1,925,000)
Profit on disposal of investment - (1,207,279)
Profit on disposal of property, plant & equipment - (419,040)
Working capital adjustments
Increase in loans and advances (58,741,248) (39,580,919)
Decrease/(increase) in other assets 2,897,387 (9,828,633)
Increase in amounts due to customers 13,531,346 38,949,372
(Decrease)/increase in other liabilities (13,281,067) 29,154,510
Net cash used in operating activities (40,457,534) 28,216,697
Investing activities
Purchase of property, plant & equipment (1,980,617) (1,859,934)
Proceeds from sale of property, plant & equipment - 536,559
Purchase of treasury bills and other eligible bills (2,814,065) (470,495)
Proceeds from sale of investment securities - 1,250,404
Net cash used in investing activities (4,794,682) (543,466)
Financing activities
Proceeds from borrowed funds 14,036,570 3,297,400
Repayments of borrowed funds (746,984) (531,520)
Dividend paid (2,020,131) (1,961,909)
Net cash flow from financing activities 11,269,454 803,971
Increase in cash and cash equivalents (33,982,761) 28,477,203
Cash and cash equivalents at 1 January 32,201,920 3,724,717
Cash and cash equivalents at 31 December (1,780,842) 32,201,920
The accompanying notes form an integral part of these financial statements.
CASH FLOW STATEMENT
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PassionateSolutions
THE TRUST BANKLIMITED
TB’s Corporate Social Respon-
sibility covers the continuing
commitment by the bank, to Tbehave ethically and contribute to
economic development while improving
the quality of life of our staff and their
families as well as the local communities
within the bank’s catchment areas and
society at large. These include those
responsibilities which do not have
financial returns but which are demanded
of us under social contracts with our
publics/stakeholders.
ur donations policy is tilted in
favour of education, health, Otradition & culture and sports. In
the past few years, the bank has
conscientiously discharged its corporate
social responsibility obligations by donating
in cash and kind to beneficiary institutions of
all kinds from diverse backgrounds. The
bank disbursed GH¢40,000 to various
charitable organizations, ventures and
projects in 2004, GH¢47,000 in 2005,
GH¢70,000 in 2006 and a colossal
GH¢129,443 in 2007.
THE TRUST BANKLIMITED
Passionate Solutions
ast year, the bank made donations of
GH¢4,000 each to twelve (12) deprived
public basic schools spread across the LGreater Accra, Ashanti and Central Regions by
providing reading books and teaching aids at a
total cost of GH¢48,000. The bank also presented
GH¢10,000 to the Maternity Ward of the Korle-
Bu Teaching Hospital in Accra, GH¢5,000 to the
Ghana Society for the Blind among other
corporate donations and sponsorships, which
also summed up to about GH¢49,649, bringing
total disbursements for 2008 to about
GH¢112,649.
Representatives of one of the beneficiary institutions displaying their cheque.
Representatives of the Maternity block of Korlebu Teaching Hospital receiving a cheque for
GH¢10,000 from the Board Chairman, Mr. Albert D. Osei
Deprived Public Basic Schools 48,000
Ghana Society for the Blind 5,000
Children's sponsored events 15,000
Maternity Ward of Korle-Bu 10,000
Culture and Tradition 10,000
Rotary Club 2,000
Ghana Future Ladies Golf Ass. 2,000
Others Social Causes 20,500
Total 112,500
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THE TRUST BANKLIMITED
THE TRUST BANKLIMITED
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1. Reporting entity
2. Basis of preparation
a. Statement of compliance
b. Basis of measurement
c. Use of estimates and judgement
3. Significant accounting policies
Interest income and expense
The Trust Bank Limited (TTB) is a company domiciled in Ghana. The bank's country of incorporation is Ghana
and the address of the bank's registered office is P.O.Box 1862 Accra-Ghana The bank operates under Banking
Act, 2004 (Act 673), and is primarily involved in corporate and retail banking.
The financial statements have been prepared in accordance with International Financial Reporting Standard
(IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB). These are TTB's
first set of financial statements prepared in accordance with IFRS and IFRS 1 has been applied. In accordance with
the transitional requirements of these standards, TTB has provided full comparative information.
The financial statements are presented in Ghana cedis which is TTB's functional currency, rounded to the nearest
thousand. They are prepared on the historical cost basis except for the following assets and liabilities that are
stated at their fair values: financial instruments that are fair valued through profit and loss and financial
instruments classified as available-for-sale. An explanation of how the transition to IFRS has affected the reported
financial position, financial performance and cash flows of the bank is provided in note 42 to the financial
statements.
The preparation of financial statements in conformity with IFRS requires management to make judgement,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgement about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and future periods. In particular, information
about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that
have the most significant effect on the amount recognised in the financial statements are described in notes 6.
Interest income and expense for all interest-bearing financial instruments, except for those classified as held for
trading or designated as fair value through profit and loss, are recognized within interest income and interest
expense in the income statement using the effective interest method. The effective interest rate is the rate that
exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset
or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The
effective interest rate is established on initial recognition of the financial asset and liability and is not revised
subsequently.
NOTES TO THE FINANCIAL STATEMENTS
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Interest income includes interest on loans and advances and placements with other banks, and is recognised in
the period in which it is earned.
Fees and commission income and expenses that are an integral part to the effective interest rate on financial
instruments are included in the measurement of the effective interest rate.
Other fees and commission income are recognised as the related services are performed.
Government securities comprise treasury bills and treasury bonds which are debt securities issued by the
Government of Ghana. These are classified as available-for-sale and are stated at fair value.
Unquoted investments are stated at cost less impairment loss where applicable.
Assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather
than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset
is available for immediate sale in its present condition. Management must be committed to the sale, which should
be expected to qualify for recognition as a completed sale within one year from the date of classification.
Assets classified as held for sale are measured at the lower of the assets previous carrying amount and fair value
less costs to sell.
Property, plant and equipment is stated at cost net of accumulated depreciation and or accumulated impairment
losses, if any. Such costs include the cost of replacing part of the plant & equipment and borrowing cost for long-
term construction projects if the recognition criteria are met. Likewise when a major inspection is performed, its
costs is recognised in the carrying amount of the plant & equipment as a replacement if the recognition criteria are
satisfied. All other repairs & maintenance costs are recognised in the income statement as incurred.
The bank’s policy is to professionally revalue property at least once every five years.
Depreciation on other property, plant and equipment is calculated to write off their cost or valuation in equal
annual instalments over their estimated useful lives. The annual rates in use are:
Computers 33%
Motor vehicles 25%
Furniture and fittings 20%
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount.
Payments to acquire leasehold interest in land are treated as operating lease prepayments and amortised over the
period of the lease.
Fees and commissions
Government securities
Unquoted investments
Assets held for sale
Property, plant and equipment
Depreciation
Leasehold land
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Computer software development costs
Computer software development costs recognised as assets are stated at cost less amortisation.
Taxation
Foreign currencies
Offsetting
Statutory reserve
Retirement benefit costs
Generally, costs associated with developing computer software programmes are recognised as an expense as
incurred. However, costs that are clearly associated with an identifiable and unique roduct which
will be controlled by the bank and has a probable benefit exceeding the cost beyond one year, are recognised
as an intangible asset.
Expenditure which enhances and extends computer software programmes beyond their original specifications
and lives is recognised as a capital improvement and added to the original costs of the software.
Amortisation is calculated on a straight line basis over the estimated useful lives not exceeding a period of 3 years.
Current taxation is provided on the basis of the results for the year as shown in the financial statements, adjusted in
accordance with the tax legislation.
Assets and liabilities expressed in foreign currencies are translated into Ghana Cedis at the rates of exchange
ruling at the balance sheet date. Transactions during the year are translated at the rates ruling at the dates of the
transactions. Gains or losses on exchange are dealt with in the income statement.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the
asset and settle the liability simultaneously.
IAS 39 requires the bank to recognise an impairment loss when there is objective evidence that loans and
advances are impaired. However, Bank of Ghana prudential guidelines require the bank to set aside amounts
for impairment losses on loans and advances in addition to those losses that have been recognised under IAS 39.
Any such amounts set aside represent appropriations of retained earnings and not expenses in determining profit
or loss. These amounts are dealt with in the statutory reserve. The provision for this additional impairment
amounts is to be made only when impairment amounts provided under IFRS rules is lower than the figure to be
provided under BoG Prudential Guidelines.
The bank operates a defined benefits retirement scheme for its employees. The assets of the scheme is held in a
separate trustee administered fund. The scheme is funded by contributions from the employer. Benefits
are paid to retiring staff in accordance with the scheme rules.
The bank also contributes to the statutory Social Security & National Insurance Trust (SSNIT). This is a
defined contribution scheme registered under the National Social Security Act. The bank’s obligations under
the scheme are limited to specific contributions legislated from time to time and are currently limited to a
maximum of 12.5% of an employee's basic salary per month. The bank’s obligations to staff retirement
benefit schemes are charged to the income statement in the year to which they relate.
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Provision for employee entitlements
Financial instruments
Financial assets
Financial assets at fair value through profit or loss
Loans, advances and receivables
Held to maturity
Available-for-sale financial assets
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is mad
for the estimated liability for annual leave accrued at the balance sheet date.
A financial asset or liability is recognised when the bank becomes party to the contractual provisions of the
instrument.
The bank classifies its financial assets into the following categories: Financial assets at fair value through profit
or loss; loans, advances and receivables; held-to- maturity investments; and available-for-sale assets.
Management determines the appropriate classification of its investments at initial recognition.
This category has two sub-categories: Financial assets held for trading and those designated at fair value through
profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term or if so designated by management. Derivatives are also categorised as held for trading.
Loans, advances and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the bank provides money, goods or services directly to a
debtor with no intention of trading the receivable. Loans and advances are recognized when cash is advanced
to borrowers. They are categorized as originated loans and carried at amortised cost.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that management has the positive intention and ability to hold to maturity. Where a sale
occurs, other than an insignificant amount of held-to-maturity assets, the entire category would be tainted and
classified as available for sale.
Financial assets that are not (a) financial assets at fair value through profit or loss, (b) loans, advances and
receivables, or (c) financial assets held to maturity. Financial assets are initially recognised at fair value plus
transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are
derecognised when the rights to receive cash flows from the financial assets have expired or where the bank
has transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently
carried at fair value. Loans, advances and receivables and held-to-maturity investments are carried at
amortised cost using the effective interest method. Gains and losses arising from changes in the fair value of
“financial assets at fair value through profit or loss” are included in the income statement in the period in
which they arise. Gains and losses arising from changes in the fair value of available-for-sale financial assets
are recognised directly in equity, until the financial asset is derecognised or impaired, at which time the
cumulative gain or loss previously recognised in equity is recognised in the income statement.
Dividends on available-for-sale equity instruments are recognised in the income statement when the bank’s
right to receive payment is established.
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Fair values of quoted investments in active markets are based on quoted bid prices. Equity securities for which fair
values cannot be measured reliably are measured at cost less impairment.
At each balance sheet date, all financial assets are subject to review for impairment.
If it is probable that the bank will not be able to collect all amounts due (principal and interest) according to
the contractual terms of loans, receivables, or held-to-maturity investments carried at amortised cost, an
impairment or bad debt loss has occurred. The carrying amount of the asset is reduced to its estimated
recoverable amount through use of an allowance account. The amount of the loss incurred is included in
income statement for the period.
If a loss on a financial asset carried at fair value (recoverable amount is below original acquisition cost) has
been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative
net loss that had been recognised directly in equity is removed from equity and recognised in the income
statement for the period even though the financial asset has not been derecognised.
The bank considers evidence of impairment at both a specific asset and collective level. All individually
significant financial assets are assessed for specific impairment. All significant assets found not to be
specifically impaired are then collectively assessed for any impairment that has been incurred but not yet
identified. Assets that are not individually significant are then collectively assessed for impairment together with
financial assets with similar risk characteristics.
Objective evidence that financial assets are impaired can include observable data that comes to the
attention of the bank about the following loss events:
Significant financial difficulty of the borrower
default or delinquency by a borrower,
restructuring of a loan or advance by the bank on terms that the bank would not otherwise consider,
indications that a borrower or issuer will enter bankruptcy,
the disappearance of an active market for a security, or
other observable data relating to a group of assets such as adverse changes in the payment status of
borrowers or issuers in the group, or economic conditions that correlate with defaults in the group.
In assessing collective impairment the bank uses statistical modelling of historical trends of the probability of
default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether
current economic and credit conditions are such that the actual losses are likely to be greater or less than
suggested by historical modelling. Default rates, loss rates and the expected timing of future recoveries are
regularly benchmarked against actual outcomes to ensure that they remain appropriate.
Impairment losses on assets carried at amortised cost are measured as the difference between the carrying
amount of the financial assets and the present value of estimated cash flows discounted at the assets’ original
effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against
loans and advances. Interest on the impaired asset continues to be recognised through the unwinding of the
discount. When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is
reversed through profit or loss.
Impairment and uncollectability of financial assets
Impairment and uncollectability of financial assets
Assets carried at amortised cost
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Assets carried at fair value
Renegotiated loans
Financial liabilities
Repurchase agreement transactions
Leasing
The Bank as lessor
Impairment losses on available-for-sale investment securities are recognised by transferring the difference
between the amortised acquisition cost and current fair value out of equity to profit or loss. When a
subsequent event causes the amount of impairment loss on an available-for-sale debt security to decrease, the
impairment loss is reversed through profit or loss.
However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is
recognised directly in equity. Changes in impairment provisions attributable to time value are reflected as a
component of interest income.
Loans that are either subject to collective impairment assessment or individually significant and whose terms
have been renegotiated are no longer considered to be past due but are treated as new loans. In subsequent years,
the renegotiated terms apply in determining whether the asset is considered to be past due.
Debt and equity instruments are classified, as either financial liabilities or as equity in accordance with the
substance of the contractual agreement.
After initial recognition, the bank measures all financial liabilities including customer deposits and
borrowings other than liabilities held for trading at amortised cost. Liabilities held for trading (financial
liabilities acquired principally for the purpose of generating a profit from short-term fluctuations in price or
dealer's margin) are subsequently measured at their fair values.
Interest-bearing borrowings are initially measured at fair value, and are subsequently measured at amortised
cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and
the settlement or redemption of borrowings is recognised over the term of the borrowings.
Securities purchased from the Bank of Ghana under agreements to resell (“ reverse repo’s”), are disclosed as
balances with the Bank of Ghana as they are held to maturity after which they are repurchased and are not
negotiable/discounted during the tenure. The difference between the sale and repurchase price is treated a
interest and accrued over the life of the repurchase agreement using the effective yield method.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Amounts due from lessees under finance leases are recorded as receivables at the amount of the Bank’s net
investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant
periodic rate of return on the Bank’s net investment outstanding in respect of the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
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The Bank as lessee
Contingent liabilities
Fiduciary activities
Cash and cash equivalents
Dividends
Segmental reporting
Comparatives
Amendments to published standards and interpretations not yet adopted
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant
lease.
Letters of credit, acceptances, guarantees and performance bonds are generally written by the bank to support
performance by a customer to third parties. The bank will only be required to meet these obligations in the
event of the customer’s default. These obligations are accounted for as off balance sheet transactions and
disclosed as contingent liabilities.
Assets and income arising thereon together with related undertakings to return such assets to customers are
excluded from these financial statements where the bank acts in a fiduciary capacity such as nominee, trustee
or agent.
For the purposes of the cash flow statement, cash equivalents include short term liquid investments which are
readily convertible into known amounts of cash and which were within three months of maturity when
acquired, less advances from banks repayable within three months from the dates of the advances.
Dividends are charged to equity in the period in which they are declared. Proposed dividends are not accrued
until they have been ratified at the Annual General Meeting.
A segment is a distinguishable component of the bank that is engaged either in providing products or services
(business segment), or in providing products or services within a particular economic environment (geographical
segment), which is subject to risks and rewards that are different from those of other segments.
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the
current year.
The bank has chosen not to early adopt the following standards, amendments and interpretations to existing
standards that were issued, but not yet effective, for the accounting periods beginning on 1 January 2008. The
application of these standards, amendments and interpretations will not have material impact on the Bank's
financial statements in the period of initial application.
IFRS 2 amendments - Share based payment: vesting conditions and cancellations (effective from January 2009);
IFRS 3 revised - Business combinations (effective from 1 July 2009);
IFRS 8 - Operating segments (effective from 1 January 2009);
IAS 27 - Consolidated and separate financial statements (effective from 1 July 2009);
IAS 1 revised - Presentation of financial statements (effective from 1 July 2009)
IAS 23 revised Borrowing Costs (effective 1 January 2009);
IAS 32 amendment - Financial Instruments: Presentation and IAS 1:Presentation of Financial
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THE TRUST BANKLIMITED
Annual Report And Financial Statements | 2008
48
Statements: Puttable Financial Instruments and Obligations Arising on Liquidation (effective from 1 January
2009);
IFRIC 15 - Agreements for the Construction of Real Estates (effective from 1 January 2009)
IFRIC 13 Customer Loyalty Programmes (effective 1 January 2009)